United States of America

SEC’s ballplayer cases no substitute for homeruns

22 Dec 2011

The U.S. regulator is on a streak of fraud suits against retired athletes and other minor celebrities. That may help deter wrongdoers, but it doesn’t improve a thin record against big-league financial miscreants. If the watchdog wants respect, it needs to swing for the fences.

Corporate bonds push for sovereign status

21 Dec 2011

Finance directors may start giving finance ministers a run for their money. The woeful state of national balance sheets will push risk-averse investors into highly rated companies such as Microsoft. Corporate bonds could prove more attractive than even top quality sovereigns.

Oil services outlook firmer than stocks suggest

21 Dec 2011

Halliburton, for one, has lost a third of its value in six months. Yet capital spending by big energy groups, which becomes revenue for services firms, is set to rise to a record $600 bln in 2012 - even if oil prices decline. It’s hard to justify the sector’s low multiples.

Oracle’s rare stumble triggers double concern

21 Dec 2011

The software giant lost some $20 bln in market value after a subpar earnings report. The sell-off could be overdone: Larry Ellison’s firm may soon regain ground, as its bosses expect. But the rare miss could signal both a weak environment and a hiccup in Oracle’s own trajectory.

Delphi slips Tokio Marine a $2.7 bln spiked cocktail

21 Dec 2011

That’s one explanation for the Japanese insurer’s Godzilla-sized overpayment for the U.S. group. Including a special dividend, it’s paying a near 80 pct premium. It’s another example of Japan Inc throwing shareholders under the bus in the name of international expansion.

Global bank capital rules add “G-Sifi envy” to mix

20 Dec 2011

Labeling 29 lenders as globally systemic will introduce a new dynamic to finance in 2012. Banks on the list must hold more capital, yet gain a too-big-to-fail halo. Smaller competitors may try to join the club. It’s a race to the top, but not in the way regulators envisaged.

U.S housing in recovery, but morphing in shape

20 Dec 2011

Housing indicators continue to gather strength, helping the economy, in a new reality of lower home ownership with more multi-family rentals. If house prices decline and rents rise in 2012 the sector’s current huge subsidies may become irrelevant - even economically damaging.

Obama should go big hiring watchdogs – or pass

20 Dec 2011

Senate GOPers have vowed to block any nominee to head the new consumer finance bureau. Other appointments also face opposition. But over the holidays, the president could hire people without the Senate. If he takes that contentious path, he might as well fill all the big jobs.

U.S. Constitution’s hidden parts are oddly useful

20 Dec 2011

Clauses like the ban on bills of attainder may not ring a bell, but a new book says they shed needed light on fuzzy concepts like free speech and due process. Occupiers should take note. In protesting inequality, they could do worse than cry: “Down with Titles of Nobility.”

Exxon bets its size, not troops, will help in Iraq

20 Dec 2011

American forces may have left, but the world-dominating U.S. oil giant is still willing to take risks. Exxon is playing Baghdad off with the Kurdish government, wagering the spoils are worth it and that the company is too important for Iraq’s own oil wealth to be forced out.

Jefferies proves benefit of being small on Wall St

20 Dec 2011

The securities firm was able to swiftly cut back its risk positions in its fourth quarter. Jefferies shrank the balance sheet by a fifth to $35 billion. That’s a powerful defense against market attacks - and a good advertisement for keeping investment banks nimble and fallible.

AT&T throws in towel, but not without squawking

19 Dec 2011

The telecoms group’s $39 bln bid for T-Mobile USA has been deader than Francisco Franco for months. Now the company’s using the failed deal to fight for more spectrum. AT&T has a point – but shareholders shouldn’t let it obscure management’s risky roll of the dice.

Fannie, Freddie role funding tax cut is perilous

19 Dec 2011

U.S. lawmakers are struggling with the details of extending the payroll tax reduction. But both sides want to pay for it by raising the mortgage finance giants’ guarantee fees. That’s a needed change - but siphoning the extra money straight to Treasury sets a dangerous precedent.

Directors and officers insurance declaws clawbacks

19 Dec 2011

Forcing bosses to repay undeserved rewards is central to U.S. financial reforms. But new D&O policies are now covering the risk of lost comp - at shareholder expense. Insurers deny helping executives skirt accountability. Investors and watchdogs may see things differently.

Alwaleed pushes the limits with edgy Twitter stake

19 Dec 2011

Even though Prince Alwaleed bin Talal is known as a bold investor, his $300 mln stake in the regime-usurping social network is decisively edgy. The Saudi royal family member increases his cool factor, but supporting unregulated speech might not sit well in the kingdom.

SEC’s GSE charges underline need for revamp

16 Dec 2011

The U.S. watchdog has charged six ex-executives of Fannie Mae and Freddie Mac, the biggest bailout recipients, over subprime loans. It’s about time. Wherever the charges go, they’re symptomatic of the twisted consequences of the U.S. mortgage lending model. Its reform is overdue.

Gray market trading sucking life from IPOs

16 Dec 2011

Facebook’s float will grab headlines next year. But as Zynga’s tepid debut shows, multiple private investment rounds and the ability to trade shares before going public mean there are slim pickings when public market investors finally get their chance to participate.

Did MF Global clients forget Lehman’s lessons?

16 Dec 2011

The bankrupt broker stands accused of misusing client funds. One theory is that it used customers’ money through a legal process called rehypothecation. The U.S. imposes limits on the practice, but the UK doesn’t. It’s a lesson investors could have learned from Lehman’s collapse.

Savvy NRG step may tip scale against utility deal

16 Dec 2011

It’s uncommon to see a supplier try to spoil a marriage between customers. But the U.S. power producer is hoping to break up Northeast Utilities’ $4.7 bln takeover of NSTAR. NRG’s arguments hint at how big and inflexible a utility the deal, if approved, could create.

Fracking tie-up makes sense for shale-rich China

16 Dec 2011

Buying a piece of Frac Tech, a U.S. gas services company, for a mooted $2.2 billion would be a savvy move by China’s national energy majors. Frac Tech’s drilling technology should be easy to copy, and could help China unlock 140 years of gas supplies. The strategic benefits justify a premium price tag.