United States of America

Just let housing regulator DeMarco do his job

8 Mar 2012

The knives are out for Frannie’s overseer for not cutting principal on underwater home loans backed by the agencies. Borrowers would hail him a hero if he changed his mind. But he has a broader duty to taxpayers. His stance as a clear-eyed regulator deserves praise, not punishment.

Apple’s latest iPad looks sufficiently incremental

7 Mar 2012

The new tablet device comes with a sharper screen, more powerful chip and better camera. The update is evolutionary, not revolutionary. That may disappoint gadget fiends hoping for something more. But history suggests it should be plenty for Apple investors craving growth.

Fortune 500 plays tough for home-court advantage

7 Mar 2012

Weary of fighting shareholders in multiple states, big U.S. companies want to force M&A lawsuits into their preferred forum, Delaware. But investors deserve a say in the matter. Deal lawyers and bankers will give the hot-button issue a hearing at their annual New Orleans confab.

Apple needs good, not just better, supply chain

7 Mar 2012

Despite the bad press, Chinese workers preparing the iPad 3 are treated less badly than many in electronics - which in turn beats the toy and clothing sectors. But with the “lonely leadership” of Apple’s brand and cash, doing things relatively well isn’t enough.

Republican hopefuls rely on faith in economics too

7 Mar 2012

Romtorumgrich promise tax cuts while simultaneously shrinking the U.S. deficit. Economists criticize their math, which doesn’t add up. The candidates say that critics aren’t accounting for stronger growth from lower taxes, or “dynamic scoring.” Neither should voters.

Lehman is back! Is the financial crisis over?

6 Mar 2012

If only. Sure, the worst may be history as the ghost of the Wall Street firm finally emerges from bankruptcy. But uncertainty still obscures new rules and how another Lehman meltdown will be avoided. Worse, governments look far more enmeshed in financial markets than before.

Texan mini-Madoff gets comeuppance

6 Mar 2012

The cricket-loving Allen Stanford topped the Ponzi master for chutzpah, cheating almost 30,000 investors of $7 bln. His conviction is a win for prosecutors. But it’s also a reminder that crooks exposed by the crisis are easier to catch out than financiers who helped cause it.

Exxon fears hammer home risks of Kurdish oil rush

6 Mar 2012

Speculation the U.S. major may not enter Iraqi Kurdistan after all has pummeled shares in the region’s oil companies, including a 24 pct drop in Gulf Keystone. Exxon was meant to break the political impasse in Baghdad, without which big energy bets in the region may be off.

Demographic flip endangers U.S. jobs recovery

6 Mar 2012

Some 4 mln people under 55 may soon seek employment, a Breakingviews analysis of labor participation rates shows. Yet the share of older folks working has grown – and they might not retire so fast. As the economy improves, the two trends could wreak havoc on the jobless rate.

Peugeot’s $1.3 bln cash call inspires confidence

6 Mar 2012

Underwriters sought a 32 pct discount to the theoretical ex-rights price for the carmarker’s fundraising in its alliance with GM. That seems steep, but reflects a challenged industry. Indeed, for a company raising a third of its market value, the 6 pct share price drop is muted.

U.S. stock bubble is in profit, not value metrics

5 Mar 2012

The S&P 500 trades at 14 times earnings, so valuation multiples aren’t excessive. But U.S. domestic corporate profitability is running 50 pct above the long-term average, while global profits have soared even higher. This is unlikely to last long.

Who cares how many jobs Apple has created?

5 Mar 2012

Shareholders should be scratching their heads after the gadget king commissioned a study showing it produced half a million jobs. This subjective report misses the point. Apple has created $400 bln of value in the past three years - that’s good for the economy and capitalism.

U.S. natural gas looks irresistibly cheap vs oil

5 Mar 2012

With crude prices rising and gas sliding further, oil is now eight times dearer than gas based on energy content - the biggest gap since the 1950s. Global shifts dictate the price of the black stuff but, as news from Detroit shows, local market forces should work on American gas.

Citi steals governance march as Parsons quits

5 Mar 2012

The recovering megabank is keeping the split at the top when the current chairman leaves in April. That’s an example other Wall Street firms should follow. After sitting on Citi’s board for 16 years through several crises, it’s finally a decent legacy for Parsons’s reputation.

Zynga has less to fear from mobile than Facebook

2 Mar 2012

The online gaming company is diversifying away from the social network. But one trend affecting its giant symbiotic partner shouldn’t much worry Zynga - the shift to mobile devices. Ad-dependent firms like Facebook and Yelp could lose out, but Zynga’s revenue model is different.

Corporate political donors don’t need SEC policing

2 Mar 2012

As election spending soars, the watchdog faces pressure to make firms disclose their campaign contribution largess. Some already do, thanks to shareholder proposals. A broad rule would be an unnecessary venture into politics and stretches the idea of investor protection.

Would-be U.S. TV disrupter reveals flaws in law

2 Mar 2012

Broadcasters claim online TV startup Aereo is violating copyright by streaming programs with tiny antennas. The company says it merely mimics what viewers did for decades with set-top and roof-top versions. The legal contortions show how old rules often fail new technology.

Review: Free will, shopping and bad habits

2 Mar 2012

We have free will, but less than we think - unconscious routines fill our lives. Charles Duhigg’s “The Power of Habit” taps brain science to explore the ramifications of this, both hopeful and sinister. We can  change habits, as people and groups. But habits destroy, too.

Top hedgies show Wall Street how it’s done

1 Mar 2012

The $3 bln paycheck for Bridgewater’s Ray Dalio, as calculated by Forbes, hasn’t generated the outrage directed at investment bankers. The message seems pretty clear: Create your own business, reward investors, too, and don’t go public. Oh, and skip the government bailout.

Kinder deal conflicts deserve a second hearing

1 Mar 2012

A judge was right not to block the pipeline owner’s $21 bln acquisition of El Paso over the skewed motives of Goldman, Morgan Stanley and the target’s CEO. But it’s also a good idea for shareholders to keep the fight going. Penalizing misaligned incentives is the best way to stop them.