United States of America

UPS love letter validates TNT’s earlier break-up

19 Feb 2012

Long-term suitor UPS made a $6.4 bln proposal to the Dutch courier just before Valentine’s day. For now TNT is being rightly coy. And FedEx may yet disrupt the courtship. But clearly TNT’s break from dowdy domestic mail unit PostNL is achieving the desired effect.

Citi, BofA prove too big to punish harshly

17 Feb 2012

The banks will pay fines - $158 mln and $1 bln respectively - to settle claims they defrauded Uncle Sam through mortgage insurance. Citi even admitted it. Its awful quality control lapses make a ban on government business seem in order. But Washington needs big banks too much.

Rickonomics don’t add up but could win U.S. votes

17 Feb 2012

The GOP’s problem is that free-market capitalism seems to be a minority enthusiasm. Rick Santorum waters it down even further with his approach, emphasizing budget-busting manufacturing and family-oriented tax policies. While his math doesn’t work, it may still prove popular.

Congress may protect its own insider traders

16 Feb 2012

The SEC could soon have far greater license to pursue insider trading on Capitol Hill. But new research suggests U.S. enforcers go easier on bosses of companies that make political contributions. If even donors are shielded, lawmakers themselves stand to get off lightly.

Would President Romney sell Uncle Sam’s GM stake?

16 Feb 2012

Sure, governments should try not to hold stakes in private firms. But selling now, as Political Romney just proposed, would cost taxpayers $14 bln. That’s a hit Private Equity Romney would surely avoid. As long as D.C. leaves GM alone, it’s smarter to wait for a better price.

Congratulations Google, you’re now a conglomerate

15 Feb 2012

U.S. and EU antitrust authorities have cleared the search firm’s $12.5 bln purchase of Motorola. Its hardware foray might open new markets - or be a vital means of defending its advertising business. But on Wall Street, diversification like this merits a valuation discount.

Gridlocked Congress might respond to docked pay

15 Feb 2012

California now cuts lawmakers’ income if they don’t pass budgets on time. That could work in Washington, too, where a bill to the same effect was just introduced. As Wall Street knows, financial incentives are powerful. Many politicians would be loath to lose generous perks, too.

LightSquared darkens skies for Falcone’s Harbinger

15 Feb 2012

The U.S. FCC has dealt a huge blow to the wireless business on which formerly high-flying hedgie Philip Falcone bet his firm’s future. Harbinger’s main fund lost nearly half its value last year and the SEC is circling, too. The firm’s time looks to be running out.

Kellogg rescues P&G from over-cleverness

15 Feb 2012

The maker of Corn Flakes and Froot Loops is paying $2.7 bln for Pringles, the snacks business that P&G hoped to sell to Diamond Foods in a complex tax-minimizing deal. Kellogg can justify a premium, while P&G will net less after tax. But the consumer giant gets a valuable lesson.

Corporate nurture can end up stifling

15 Feb 2012

There was a time when Yahoo helped Alibaba, Glencore was vital to Xstrata and Steve Wynn leaned on Kazuo Okada. But fortunes change, relationships become less mutually beneficial - and shareholders often wind up losers. It’s a problem, but one that may not have a solution.

High yield U.S. tourists sail into European storm

15 Feb 2012

The European Central Bank’s cheap money and the siren call of high yields are luring global investors into the European junk bond market. But the region’s slowing economy could suck the wind out of the market’s sails.

Alibaba and Yahoo could live unhappily ever after

15 Feb 2012

Talks on Alibaba buying back Yahoo’s stake in the Chinese tech giant may have hit an impasse. The deal’s valuation, structure and its financing are key roadblocks. This adds more strain to their relationship. They may want to rebuild trust before going back to the table.

Steve Wynn comes up unlucky in business love, too

14 Feb 2012

The casino magnate has already divorced the same woman twice, the second time coughing up a $1 bln stake in Wynn Resorts. Now, his decade-long financial union - and close friendship - with pachinko king Kazuo Okada is also on the rocks. Even in Las Vegas, money can’t buy love.

Fed’s Capital One/ING deal delay raises questions

14 Feb 2012

The watchdog has finally approved the bank’s proposed $9 bln marriage to ING Direct. The largest post-crisis bank deal warranted added parental concern. But they are a good match and pose little threat. Keeping them waiting at the altar seemed borderline heartless.

Carlyle makes a mint in $1 bln cash-handling sale

14 Feb 2012

The buyout firm may make a near-40 pct annual return on Talaris, a maker of money-counting kit. Carlyle nurtured a corporate castoff, and bet against the supposedly rapid trend to a “cashless” society. The big win also alleviates the same fund’s embarrassing Greek blow-up.

U.S. payroll tax fight shows faux fiscal restraint

14 Feb 2012

Using seized mortgage backers Fannie Mae and Freddie Mac to fund a short extension of the tax cut was bad enough, but Congress is about to do worse. It’s ready to pay for another 10 months’ worth by adding $100 bln to the deficit. Politics and dogma are foiling needed discipline.

Dreamworks’ China deal won’t be access all areas

14 Feb 2012

Vice President Xi Jinping may unveil a China joint venture for the creators of “Kung Fu Panda” as part of his U.S. tour. China’s $2 billion in annual cinema takings mean a back-row seat is better than nothing, but the deal does little to level the playing field for foreign media.

Volcker muddies debate about his own rule

13 Feb 2012

The former Fed chairman’s eleventh-hour comments serve as a decent primer for why banning prop trading is a good idea. But he doesn’t address any of the practical concerns big banks have raised. And Volcker’s argument about the downside of liquidity seems a dangerous red herring.

U.S. budget can-kicking is running out of road

13 Feb 2012

Barack Obama’s $3.8 trln plan is more position paper than economic blueprint, as soaking the rich is a non-starter with Republicans. And when politicians promise deficit-reduction jam in future years, tomorrow rarely comes. But for both parties, the fiscal reality soon will.

Complexity caps allure of Yahoo’s Alibaba solution

13 Feb 2012

A mostly cash split-off promises a tax-efficient way for the troubled U.S. Internet firm to cut its stake in a Chinese rival. Yahoo also would accept a group of assets as part of the deal being discussed. But the more elaborate it gets, the more diluted the benefits may be for Yahoo.