United States of America

Frackers need to get ahead of the regulatory curve

12 Dec 2011

A report linking hydraulic fracturing to polluted drinking water is a significant setback for U.S. shale gas. Fracking’s economic benefits are huge, but drillers risk losing public support. To avoid a backlash, they should embrace more centralised regulation.

Lehman rump moves to control firm’s former nemesis

12 Dec 2011

Its holding in property outfit Archstone helped bring Lehman down. Now the bankrupt estate may spend up to $2.6 bln to buy control and fend off Sam Zell, architect of the ill-fated Tribune buyout. It’s odd for a liquidating firm to join an M&A fight, but creditors could benefit.

Canaries in Q4 earnings coal mine looking sickly

9 Dec 2011

DuPont and Texas Instruments now expect weaker fourth quarters. Both say customers in most sectors are reducing inventory to be conservative and raise cash. U.S. multinationals’ earnings have been surprisingly robust – but these bellwethers suggest that may be changing.

U.S. bond markets not immune to bank wariness

9 Dec 2011

Bonds give American companies an alternative to bank loans – one that European counterparts often lack. But banks lubricate U.S. bond trading too. Their reluctance to use their oil cans has jammed up the $7.7 trln market. This mini credit-crunch pain may, however, bring gains.

JPMorgan faces tangle in cable M&A

9 Dec 2011

The U.S. bank agreed to be a backstop buyer if Liberty Global’s takeover of Germany’s KabelBW is blocked. But JPM wouldn’t find it hard to sell KabelBW on, and it shouldn’t lose money. A clean execution of the JPM plan B could be a boost for devices neutralising regulatory risk.

Ford’s bold dividend revival looks defensible

8 Dec 2011

The automaker is reinstating a payout after a five-year hiatus despite its junk-bond rating, Europe’s debt woes and U.S. economic wobbles. The $760 mln a year represents less than 10 pct of profits. That should be manageable even in a downturn and reinforces Ford’s pole position.

Headless financial watchdogs needn’t be toothless

8 Dec 2011

Senate Republicans blocked another Obama nominee to lead a key agency, the Consumer Financial Protection Bureau. Politics is making it tough to solidify leadership at a handful of top regulators. But as the FDIC is proving, acting directors can still get things done.

Cuomo’s new millionaire tax walks knife-edge

8 Dec 2011

On its own, the New York governor’s temporary 2 pct surtax on incomes above $2 mln is well judged. But with New York City’s extra levies, the top tax rate in the metropolis is higher than in other states. Add federal tax hikes, and New York could suffer economically.

Exxon nicely hedged against its own green guess

8 Dec 2011

Tighter environmental rules will curb coal, boost cleaner gas and cause a leap in vehicle efficiency, the energy titan says. This rosy scenario has the growth in CO2 emissions halting by 2030. But despite hefty gas investments, a less green future would also suit Exxon dandily.

Corzine apology little better than Fuld’s defiance

8 Dec 2011

The ex-CEO of defunct MF Global told Congress he regrets the loss of money and jobs. But his prepared statement is also full of dubious excuses that are hardly better than Dick Fuld’s blame-game tactics. Wall Street bosses still haven’t learned to take responsibility.

Fed needs better PR on last-resort lending, too

7 Dec 2011

The U.S. central bank is working on its monetary policy communications. But its key role as a crisis lender is also in the spotlight over a $7.8 trln number that has been mischaracterized by some news outlets. The Fed would get less flak if it managed this message better as well.

Better to extend, not expand, U.S. payroll tax cut

7 Dec 2011

Democrats want to cut further the rate of Social Security tax paid by employees. That might not achieve much, as this year’s tax reduction hasn’t obviously boosted the economy. Even so, letting the rate go back up could have a negative effect. It’s safest to stand pat.

Ethical Economy: Eat more, pay more

7 Dec 2011

The United States leads the world in both obesity and health care spending. The two are tied together by a wilful attitude to health. The combination of “I want what I want” with “society pays” is unjust and expensive. It’s time to consider some medical de-socialisation.

Don’t boo U.S. football’s zero-coupon perpetuals

7 Dec 2011

The Green Bay Packers are selling shares that pay no dividend and can’t be sold. What sounds like a sucker’s bet - or a donation - at least gives fans a tangible stake in the local champs. And as it happens, since the team’s last sale, plenty of “real” stocks are down.

Pleading the Fifth smart but risky for Corzine

6 Dec 2011

The U.S. Congress has ordered the former CEO of defunct MF Global to testify Thursday. For a famously garrulous ex-politician, invoking the right to clam up might seem to imply guilt. But with criminal investigators sniffing around, there’s no upside to giving them fodder.

Michael Kors IPO cut from same cloth as Prada’s

6 Dec 2011

The U.S. designer’s eponymous firm is seeking a luxury price tag of up to $3.6 bln in a New York float. It’s an all-American fashion name and the high-end valuation isn’t out of line with Prada’s Hong Kong listing this year. But Kors may struggle to keep up the pace of growth.

Pharma center of gravity shifts eastward

6 Dec 2011

Drug research tends to follow spending. Take Merck’s pledge to invest $1.5 bln in R&D in China. Emerging economies’ citizens are growing wealthier and living longer, while their governments’ fiscal health is robust. Merck’s step suggests drug development is shifting accordingly.

Oracle needs to read Cisco cautionary tale

5 Dec 2011

Empires built on acquisitions can run into problems as they sprawl. That’s doubly so in tech, where obsolescence is a risk. Oracle has used database profits to buy new businesses. So far, so good - but Cisco’s record suggests success will be hard to sustain.

Courts more willing to second-guess Wall Street

5 Dec 2011

U.S. judges have typically trodden softly over financial disputes and settlements for fear of ruffling markets. But the rejection of the SEC-Citi CDO deal is the latest sign times are changing. Activist courts aren’t good for certainty, but they’re filling a gap left by Congress.

SAP pays $3.4bln to ride rise of "cloud" computing

5 Dec 2011

The German software giant is swallowing a fast-growing yet barely profitable upstart, Successfactors. The price is a lofty 8 times sales but SAP needed a deal. It risked missing out on a huge shift by corporate clients to cloud-based technology applications.