Timing of S&P U.S. downgrade couldn’t be better 6 Aug 2011 Markets may be wobbly, but interest rates are at historic lows and buyers of U.S. debt plentiful as the world braces for another economic slowdown. There may be some initial turbulence, but it would be worse for Uncle Sam if the rating agency waited until markets acted first.
Credit ratings love-hate has simple answer 6 Aug 2011 The White House doesn’t like S&P’s downgrade of U.S. debt. European officials don’t welcome critiques of sovereign credit, either. Yet governments also mostly want to hold big raters closer by regulating them. The better idea is to push through nascent efforts to cut them loose.
US jobs report reaffirms the pain of a new normal 5 Aug 2011 July’s 117,000 new jobs may have stopped investors from panicking further, but they do little to dispel the gloom about the economy’s prospects. Fears of a double-dip recession look premature. But the data confirm the arduous task ahead of getting Americans back to work.
Investors in Motown see nothing but recession 4 Aug 2011 GM posted its best earnings in years and Ford’s looking solid even with subdued U.S. sales. Both are sitting on piles of cash. Yet shareholders have wiped a combined $49 bln off their value since January amid economic worries. They’re right to be cautious. But it looks overdone.
Voting equality could bring big payoff for Murdoch 3 Aug 2011 Change is needed at News Corp. Scrapping the dual share structure would signal a fresh start and could create a big slug of value. Reform could also reward the Murdochs handsomely for ceding control. A rejig would dilute today’s non-voters, but even they might end up ahead.
Corzine covenant smacks more of PR than protection 3 Aug 2011 Bondholder activism is a good thing. But investors in MF Global’s $300 mln offering have only $3 mln a year to gain and little to obviously lose if the former Goldman Sachs boss and New Jersey governor heads to Washington. This key-man clause benefits Corzine more than creditors.
Debt deal suggests ideal successor for Geithner 2 Aug 2011 The U.S Treasury boss may go now that Congress has reached agreement. But the conclusions of last year’s deficit commission, jointly led by Erskine Bowles, are back in focus. Obama snubbed the former Clinton official’s fiscal ideas then - but might see the value of a rethink.
Investors right to shake up S&P parent 2 Aug 2011 An Ontario pension fund and JANA Partners have bought 5 pct of McGraw-Hill and want strategic changes. The $13 bln textbook-to-credit rating group trades at a discount and is already considering its options, but restless investors may force action sooner rather than later.
Loss of bankruptcy card would weaken cities’ hand 2 Aug 2011 In high-stakes talks with unions and bondholders, the threat to file for protection in U.S. court gives local officials leverage. But states are blocking that option, fearing it spooks markets. For teetering local governments, the alternatives may be costly defaults or bailouts.
Sweeter PR not enough to revitalize M&A deal 1 Aug 2011 U.S. reinsurer Validus may hope that by switching flacks in the heat of battle it can persuade its shareholders to like the bid for $3.2 bln rival Transatlantic they have so far scorned. But messaging doesn’t win deals, numbers do. On that score, Validus isn’t far enough ahead.
Weak U.S. growth could swamp $1 trln deal on cuts 1 Aug 2011 The debt ceiling is set to rise. But Friday’s anemic GDP report casts doubt on the associated deficit reductions. On a simple analysis, if the official 3.25 pct economic growth assumption for 2011-16 falls short by 0.5 percentage point, the expected initial cuts disappear.
Bipartisan dislike of U.S. budget deal a good sign 1 Aug 2011 If a sign of compromise is a frown from both sides, then Congress is close to an equitable agreement. Members of both parties have major gripes about the debt deal cooked up by their leaders. Importantly for markets, the compact would maintain momentum for further fiscal fixes.
Foreign borrowing undermines China’s tightening 1 Aug 2011 Better-than-expected factories data shows China hasn’t over-tightened. Beijing has curbed domestic loans, but Hong Kong banks are lending and offshore bond issuance also surged. The practice adds risk for foreign investors, and hinders China’s efforts to squash inflation.
How much is Comcast on the hook for with NBC? 16 Dec 2009 Brian Roberts, the cable group’s boss, said buying control of GE’s media business made him “strategically complete.” But if NBC Universal keeps growing, GE’s remaining stake could be worth some $20 bln in a few years. Thankfully, however, the deal could end up paying for itself.
Bankers need to learn from bakers 27 Nov 2008 The baking business runs very smoothly. Bread is delivered in the desired quantities, technology advances (sliced bread was not the last word) and consumer tastes are satisfied. But add an “n” and the picture changes. As a business, banking is much less healthy.
Why isn’t every bank like Goldman? 18 Jan 2008 Ironically, it’s because they tried to copy Wall Street’s most successful firm. The banks most scarred by the subprime debacle - like Citi, Merrill and UBS - were infected by what could be called “Goldman envy”. Those that emerged unscathed were relatively immune to the disease.