United States of America

US housing recovery shows subsidies need trimming

17 May 2012

Recent strong data, including property prices, suggest the market is bottoming. It’s cheap to borrow, too. Mortgage interest tax deductions and above all loan guarantees look ripe for cutting. The cash saved could then be put to more productive uses.

Samsung investors should worry less about Apple

17 May 2012

The Korean company’s shares slid over fears Apple might use fewer of its chips, and buy more Japanese ones instead. Apple may diversify its suppliers, but that just reflects the fact that smartphone demand is outpacing parts supply. Samsung’s valuation looks too low.

GE Capital cash cow reincarnated as goat

16 May 2012

General Electric is finally milking its finance unit after stopping dividends in 2009. But GE Capital is slimmer now and, special dividends aside, will also be passing on less of its earnings than in the past. It’s still good, just not as rewarding for its parent as it once was.

Exxon attacks straw man to defend CEO’s pay

16 May 2012

The oil giant is trying to calm shareholder anger over Rex Tillerson’s $35 mln bonanza before the say-on-pay vote at its AGM. Exxon argues that its long-term goals obviate the need for annual targets. But that just sounds like an excuse for C-suite largesse.

Law site’s IPO evokes a future beyond dying firms

16 May 2012

It’s coincidence that LegalZoom’s $120 mln float is coming as Dewey & LeBoeuf evaporates. But the rise of the U.S. online legal document site is a warning to old-line lawyers. There’s plenty of work for savvy legal eagles, but those who aren’t lean and innovative could perish.

JPMorgan shareholders give Dimon slap on wrist

15 May 2012

The U.S. mortgage hangover eclipsed last week’s trading losses at the bank’s annual meeting. And subdued investors were mostly supportive of Dimon. But they didn’t let him off entirely: 40 pct voted to split the chair and CEO roles. While falling short, it’s still a protest vote.

Goldman extracts pound of flesh from Chesapeake

15 May 2012

The troubled U.S. gas company has received the Wall Street firm’s expensive imprimatur as a lender on its now upsized $4 bln loan. At an onerous rate of interest, the cash buys Chesapeake time to finish asset sales. Barring an outright default, Goldman has the best of the deal.

Oracle suit gives Google a chance not to be evil

15 May 2012

The search giant has been thumped on privacy, antitrust and governance grounds. But it looks almost virtuous in a patent spat with troll-like Oracle. Investors and watchdogs may still have beefs, but for now Google can milk its role as defender of software’s right to be free.

Brazilian meddling threatens shareholders, again

15 May 2012

Dilma appears to be widening her interventions from the industrial sector to the banks. Having ousted Banco do Brasil execs this weekend, it’s hard to miss the state’s hand in a worrisome plan for the bank to take control of troubled car-lender Votorantim. Investors, look out.

Facebook winning Keynesian beauty contest

15 May 2012

Investors devouring the social network’s IPO shares have pushed its top valuation to over $100 bln. To justify the lofty figure, buyers are using everything from eyeballs to credit scorers. But such analytical gymnastics are merely a way to rationalize the Facebook hype.

Avon punishes its own investors with its dawdling

15 May 2012

The cosmetics group’s hapless board compounded its enabling of failed former CEO Andrea Jung by offering a wishy-washy response to Coty’s compelling $10.7 billion merger offer. The deal is dead for now: No wonder shareholders’ mascara is running.

Chesapeake’s evasive tactics compound crisis

14 May 2012

After securing $3 bln of emergency funds, the gas producer’s CFO couldn’t say how much of its credit line had been drawn. Chesapeake was also vague with investors about the loan’s net proceeds and terms. Such guile doesn’t inspire confidence that a cash crunch has been avoided.

Apple’s TV quest probably could do with some help

14 May 2012

Luxury television set maker Loewe’s shares jumped on a blog report that Apple had offered to buy it. Even if the German manufacturer has nothing to do with Apple’s future, TV almost certainly does. Joining up with a company with like-minded designers and engineers wouldn’t hurt.

Dan Loeb enters pantheon of bad-ass investors

14 May 2012

Résumé-gate claimed Yahoo CEO Scott Thompson. But the hedge fund manager still needs to articulate a credible plan to return the internet also-ran to relevance. What’s undeniable is that Loeb has proven to Corporate America that underestimating him can prove perilous.

Murky U.S. bribery law gets a dose of clarity

14 May 2012

Morgan Stanley recently showed how to avoid legal charges, and an appeals court will soon define whose palm can’t be greased. That’s good news for multinationals sweating unpredictable enforcement of a very confusing statute. But an overhaul by Congress is still long overdue.

Jamie Dimon should show some clawback cojones

14 May 2012

JPMorgan may have stomped on Dodd-Frank’s spirit, but it should comply with the letter of the law when it comes to compensation. To remain credible, Dimon should insist that Ina Drew and other CIO execs responsible for its trading losses hand back some of last year’s pay.

Dodd-Frank opponents return to the drawing board

14 May 2012

JPMorgan’s prop-like $2 bln trading flub gives ammo to proponents of more stringent bank oversight. Yet Mitt Romney and many in the GOP have promised to gut Dodd-Frank and Volcker. One tactic may be to embrace Dallas Fed President Richard Fisher’s call to make banks smaller.

ResCap bankruptcy brings Ally full circle

14 May 2012

Seven years ago, Ally Financial - then GMAC - was worried its GM links would bring down high-flying ResCap. It’s an irony of the financial cycle that cutting loose the U.S. mortgage unit may now give the car finance firm its best chance of repaying Uncle Sam’s $17 bln bailout.

JPMorgan hammers another nail in VaR coffin

14 May 2012

The U.S. bank’s $2 bln loss has again highlighted the flaws of using Value-at-Risk to gauge trading exposures. That will help regulators ditch the measure. The bigger challenge, however, will be making capital rules less dependent on figures produced by banks’ computer models.

Yahoo needs more than a revolution at the top

14 May 2012

The dysfunctional web firm is much like a failing country. It has been mismanaged and suffers from bureaucracy and an anachronistic business. Until recently it even had a dictator for life. Third Point’s shareholder revolt promises a fresh start, but fixing Yahoo won’t be simple.