United States of America

Vivendi will struggle to get clean Activision exit

18 Jul 2012

Shareholders in the French conglomerate will be glad it’s mulling options for its $8 bln controlling stake in the U.S. software developer. The snag is the sheer size of the desired deal. Vivendi may have to sell the holding in pieces - or simply wait for a stronger M&A market.

U.S. student debt on scary trajectory

18 Jul 2012

New statistics from the New York Fed show education loans piling up at an unsustainable rate and delinquencies staying high even as the economy improves. The path to serious trouble is becoming more obvious. Rather than tackling it, though, policymakers are fueling the problem.

Goldman’s pay-earnings balancing act looks wobbly

17 Jul 2012

The firm has tweaked capital and trimmed costs to boost returns to shareholders. But it still set aside 44 pct of Q2 revenue for pay. With return on equity running at just 5.4 pct, that looks unsustainable. Absent a market rebound, cutting comp is the least investors will expect.

Calpers’ 1 pct return is grim for pension savers

17 Jul 2012

One miserable year won’t ruin the $233 bln California fund. And 20-year returns for Calpers and fellow Calstrs still meet 7.5 pct targets. But with today’s low interest rates it gets harder for funds to keep up. Future retirees everywhere need to put more away.

Yahoo tackles existential problem with engineering

17 Jul 2012

Google’s Marissa Mayer is one of the few accomplished females to rise to the top echelon of Silicon Valley’s geek hierarchy. She’s certainly qualified, and probably eager, to become CEO of something. But Yahoo’s problems won’t be so easily solved by rewriting code.

Libor jailbirds would be hollow symbols

16 Jul 2012

Rate-rigging sentences might assuage public lust for Wall Street scalps. But U.S. prosecutors have missed big on financial-crisis villains. Al Capone was nailed for tax evasion. Libor convictions would also miss the point - and might only get real banksters’ distant cousins.

IMF takes forecasting lesson from Wall Street

16 Jul 2012

Sell ratings from stock analysts are rare. So is pessimism from the IMF, which has reduced its outlook for global growth by only a fraction. But the fund has to make the case its crisis loans will be repaid. So it should be no surprise if, as with Greece, it proves too optimistic.

A Vanguard bank might struggle to find assets

16 Jul 2012

The $1.6 trln U.S. mutual fund giant is mulling a deeper move into retail banking. Vanguard could leverage its gold-plated reputation to woo customers and sidestep stricter fund rules. But consumer lending is a higher-risk business than it’s used to that could sully its image.

Citi global retail bank worth more than the whole

16 Jul 2012

It’s big in Asia and Latam as well as in mature markets. But ascribing just a low-growth multiple makes it worth $83 bln. That’s more than Citi’s market cap. Sure, the consumer business is Citi’s biggest unit by profit and revenue. Even so, something doesn’t add up.

U.S. student loan fix robs the old to pay the young

16 Jul 2012

To keep borrowing rates low for education, Congress is using some devilish hocus-pocus. An accounting change will allow employers to kick in less to a pension guarantee fund. That could leave Uncle Sam owing more to retirees while also increasing taxpayer risk on student debts.

Investment banks’ Asian love affair cools rapidly

16 Jul 2012

After the 2008 crisis, it was “Shanghai, Mumbai or goodbye” for the financial industry. But the swingeing decline in Asian equity volumes and commissions has skewered that logic. What was once a growth driver is now an albatross. A second-tier retreat from Asia looks likely.

Jamie Dimon can’t swim past the whale just yet

13 Jul 2012

The JPMorgan boss reckons the CIO trading debacle is behind him. Explanations and fixes from Dimon and his deputies are solid. But it’s still unclear if they’ll pay a price. And newly revealed bad risk data and mismarked trades mean JPMorgan still has a lot of trust to win back.

Wells Fargo displays its anti-JPMorgan colors

13 Jul 2012

Like its New York rival, the San Francisco-based bank posted a profitable quarter, but its results came with almost none of the baggage. Wells is hardly pure, paying $175 mln to settle charges of discriminatory lending. But it continues to reap the rewards of keeping it simple.

Replacing P&G boss may be Bill Ackman’s best hope

13 Jul 2012

The uppity investor’s latest target is the Pampers-to-Crest giant. But traditional activist tactics like a breakup won’t work at the $178 bln company. New leadership might help get P&G back on track. Maybe Ackman could even recruit vaunted former CEO A.G. Lafley to help.

Geithner memo puts Bank of England in tight spot

13 Jul 2012

In June 2008, the then president of the New York Fed wrote to the BoE proposing reforms to prevent “deliberate misreporting” of Libor. It’s hard to square that with the BoE deputy governor’s evidence to MPs that he only just found out about allegations of Libor “low-balling”.

Divided ConocoPhillips may yet win over investors

13 Jul 2012

It has been a year since CEO Jim Mulva vowed to unlock value by splitting exploration from refining. His timing was off, though. Jittery shareholders seem to want the safety of diverse income streams. Separated, the shares lag conglomerate peers. But Mulva should be vindicated.

Review: A woman’s view of the boys at Facebook

13 Jul 2012

Katherine Losse was Facebook’s 51st employee, so she is in a good position to chronicle the company’s long adolescence. “The Boy Kings” is the story of a culture that mixed Peter Pan with “Mad Men.” The preparation for the IPO brought some maturity, but may have ruined the dream.

Global warming adds to food inflation risk

13 Jul 2012

Corn prices spike after the hottest U.S. six months ever. Russian wheat is also afflicted. Does global warming threaten a food price shock? For now, the risk is mitigated by a big commodity price retreat from 2011’s speculative bubble. But in the long term, the threat is serious.

Guide for the perplexed: Libor litigation

12 Jul 2012

It’s unclear who got hurt in the rate-rigging mess, but banks will pay big bucks just fighting mounting lawsuits. How much is still anyone’s guess. Bank investors can hope for full disclosure and quick settlements, but as this primer shows, the legal battles have just begun.

Booz recap lets it suck from government teat again

12 Jul 2012

The Carlyle-controlled defense consultant is mulling a big, debt-financed dividend. Investors sent the shares up 15 pct despite the extra risks Booz Allen Hamilton would take on by borrowing another $1.3 bln. Credit the perverse debt incentives built into the U.S. tax code.