United States of America

Global currency war would lack euro fighter

22 Jan 2013

Jens Weidmann is afraid that major central banks are bowing to their governments’ pressures to push down currencies. The Bundesbank head wants Europe to stay above the fray. For once, he and Mario Draghi agree. Japan’s new policies won’t tempt the ECB to take up arms.

Hugo Dixon: When is it OK to avoid tax?

21 Jan 2013

It is clearly wrong to infringe the letter of the law as, for example, many Greeks do. It is also wrong to infringe the spirit of the law. But, as last week’s Goldman Sachs UK bonus row shows, it is also important to take account of the spirit of the times.

Caterpillar’s Chinese lesson: dig below top line

21 Jan 2013

Getting stung by accounting fraud is unfortunate. But Caterpillar’s $580 mln write-down - three-quarters of the price it paid for ERA Mining just last year - suggests a bigger misjudgment. The Chinese machine maker’s potential was clear, but so was the low quality of its growth.

James Gorman must shine or resign in 2013

18 Jan 2013

The Morgan Stanley boss presided over a poor Q4. Even so, there are some encouraging signs. The trouble is, investors have seen them before and not yet reaped the benefits. Success requires cutting pay and other costs and improving FICC. This year Gorman needs to make it happen.

JPMorgan flaws should ring alarms everywhere

18 Jan 2013

The huge U.S. bank is supposed to be among the top risk managers. If the conflicting mandates, discredited theory, inadequate checks and primitive technology behind its $6.2 bln trading losses in 2012 are really as good as it gets, plenty of regulators and investors should worry.

McMoRan flop makes Freeport bid more like bailout

18 Jan 2013

The U.S. explorer is bleeding cash after plowing $1 bln into a failing deep gas well. That makes the 74 pct premium offered by miner Freeport, whose chairman also runs McMoRan, look even richer - especially with gas cheap and abundant. Freeport’s shareholders are the losers.

U.S. trade arbiter is wrong referee in patent wars

17 Jan 2013

The ITC is supposed to stop foreign infringers. But the speed of its process and a fuzzy remit are making it a popular place to sue American firms, too. While patent trolls benefit, so do companies seeking to block rivals in a hurry. The losers may be investors and innovation.

Carbon tax would beat green energy credits

17 Jan 2013

A new bill to end U.S. energy tax handouts doesn’t go far enough. Washington’s problem is an excess of expenses over revenue. Replacing preferential treatment for government darlings with a tax on discouraged emissions could help fix that while also reducing market distortions.

AT&T should beware a value trap across the pond

17 Jan 2013

The U.S. telco is reportedly eyeing deals in Europe. With valuations at their current low, running numbers makes sense. But cross-border tie-ups offer limited cost savings, and operators are only cheap because markets are tough. AT&T would need to spot some serious hidden value.

Citi, BofA give investors only reasons to fret

17 Jan 2013

Both U.S. banks had a messy fourth quarter full of litigation expenses and other charges. Stripping those out still left each with measly single-digit returns. With rivals more solid, BofA chief Brian Moynihan and new Citi boss Mike Corbat are under even more pressure to perform.

Rich country services deal looks worth the effort

17 Jan 2013

With global trade talks stymied and bilateral deals proliferating, a multilateral services deal among mostly rich countries could cover a lot of trade and address numerous knotty problems. Even without the BRICs, it would fight creeping protectionism and should bring big returns.

$20 bln Dell LBO could be worth the stretch

16 Jan 2013

It’s too big for one buyout firm, and club deals are infamous – think TXU. Moreover, the computer maker’s shrinking business doesn’t look that attractive. But an LBO could still deliver high returns because – unlike bubble-era targets – Dell is cheap.

Boeing flagship glitches look like mere turbulence

16 Jan 2013

The grounding of two Japanese airlines’ Dreamliner fleets is a warning: Boeing needs a fix to ensure a smooth future for the much ballyhooed and delayed 787. But the problems aren’t so far bigger than the Airbus A380’s teething troubles. Investors’ mild reaction seems right.

Goldman and Wall Street finally wake up on pay

16 Jan 2013

The firm led by Lloyd Blankfein gave more to investors by taking from bankers. Morgan Stanley is deferring all bonuses for top staff and should be trimming payouts. Jamie Dimon is taking a hit for the whale debacle. These are encouraging signs of a new attitude on compensation.

JPMorgan board goes soft on Jamie Dimon over whale

16 Jan 2013

The bank’s 132-page report into the trades that cost it $6.2 bln dishes out blame to several now departed managers. But it just echoes the chairman and CEO’s own mea culpa. The $10 mln docked from Dimon’s pay will sting but the board could do more, like removing one of his hats.

Don’t look to MLPs for window into IPOs

16 Jan 2013

Three master limited partnerships, one led by Carl Icahn, are poised to kick off the year’s new listings. Higher taxes on the rich make the sector more appealing to some buyers. That’s why MLPs are expanding beyond pipelines - and why they won’t reflect broad investor sentiment.

Facebook creativity isn’t too destructive yet

15 Jan 2013

The social network unveiled a new tool that allows users to find people, photos and interests more easily. It should make Facebook’s site stickier and could eat into Yelp, LinkedIn and IAC. But the search results will still be limited and there’s also no clear revenue windfall.

Digital TV revolution gets a fresh spark

15 Jan 2013

U.S. cord-cutting has been a slow migration not a stampede. However, a launch into 22 big cities for Aereo, which bypasses cable operators with broadcast channels, could nudge the herd. When mixed with the likes of Netflix, it renders traditional pay TV far less compelling.

JPMorgan risk scrutiny better late than never

15 Jan 2013

Two U.S. watchdogs have put the bank on notice over risk management following last year’s $6 bln trading loss. CEO Jamie Dimon has tried to put the episode behind him. The regulators may be late to the game, but they’re right to focus on improving how complex banks are managed.

U.S. manufacturing could use some long-term help

15 Jan 2013

Rising global labor costs have brought jobs back to America in a sign of how markets are helping. Impatient investors, however, won’t allocate the capital needed to jumpstart the sector. New proposals urging the government to invest in research and training are smart next steps.