United States of America

U.S. housing policy tilts further to richest 1 pct

21 Oct 2011

Legislators seem hell-bent on defending the millionaire property market. Raising the limit on government-backed loans and giving home-linked visas to rich foreigners won’t help the worst-hit low end. Tea Partiers and OWS protesters can find common cause in opposing these turkeys.

Celluloid hopes mean more to Tesla than earnings

21 Oct 2011

The $2.8 bln firm makes pure electric cars, but it’s valued as a hybrid. Sure, quarterly numbers hint at its ability to hit manufacturing targets. But Silicon Valley-style growth is central to the story. Tesla will be hoping a new documentary helps electric cars catch on.

Groupon’s "first mover advantage" probably isn’t

21 Oct 2011

Burning huge sums of cash to get ahead of rivals can work - look at Amazon. Groupon thinks a bit more capital can cement its position atop the Internet coupon heap. But this strategy works when it creates costly barriers to entry - which Groupon shows little evidence of doing.

China best to keep cool head over yuan bill

21 Oct 2011

Beijing has hit out over a mooted U.S. currency bill that could lead to tariffs. China is getting more assertive, and can no longer rely on U.S. firms to fight its corner. But starting a war of words may alienate its remaining supporters, and make the bill more likely to pass.

Greenhill scrapes itself from bottom of the barrel

20 Oct 2011

Until unveiling bumper Q3 results, the advisory firm boasted Wall Street’s worst performing stock - even BofA fared better. After staff losses elicited a panic, a change was welcome. Challenges remain, but with M&A share solid and CEO Bok sounding upbeat, the worst may be over.

Cisco stops descent, stuck in purgatory for now

20 Oct 2011

After years of chasing growth - and seeing its stock crumble - the company is now focusing on profit. This should buy CEO John Chambers enough time from investors to retire gracefully. But outsized gains for shareholders look elusive, if rival big tech valuations are any guide.

Citi’s CDO payout is ripe for the Rakoff treatment

19 Oct 2011

The bank’s $285 mln settlement with the SEC is about half what Goldman paid on Abacus. And yet Citi allegedly picked the assets in the CDO itself while keeping buyers in the dark. Judge Jed upbraided the watchdog for its light touch on BofA. This case warrants a similar hearing.

Closed-door justice will leave dealmakers in dark

19 Oct 2011

A spat between Skyworks and takeover target Advanced Analogic will play out in private instead of open court under Delaware’s new arbitration system. That may save the parties time and money. But it cheats the M&A world - and investors - of valuable legal guidance.

Morgan Stanley makes best of turbulent time

19 Oct 2011

The bank’s $100 mln Q3 profit after accounting funnies might not look like much. But it beats Goldman. Also, Morgan Stanley’s traders outperformed rivals, the brokerage held its own and more details on European risks should calm nerves. CEO Gorman’s plan may be starting to gel.

Inflation may join jobs in 2012 presidential race

19 Oct 2011

On its own, a 3.9 pct annual rise in U.S. CPI won’t raise big inflation fears. But M2 data suggests price rises will accelerate further. If so, by next summer CPI increases could potentially hit red-zone levels. That would inject inflation, and Fed policy, into the electoral mix.

Abbott prescribes a dose of financial engineering

19 Oct 2011

The runaway success of blockbuster drug Humira has been a mixed blessing. It larded the healthcare group’s attractive nutrition and generic drug businesses with a pedestrian Big Pharma multiple. Splitting off its research drug arm should rectify the valuation mismatch.

Occupy Wall Street is poor vessel for discontent

19 Oct 2011

The protesters may be channelling justified public anger against high finance, but they are too intellectually incoherent to start any sort of revolution. Edward Hadas suggests the mourning over Apple’s Steve Jobs is a better cultural indicator than the Wall Street movement.

Apple’s rare letdown looks more form than function

18 Oct 2011

The firm known for perfectly marrying technology with design usually manages the same élan with its finances. Under Steve Jobs, Apple blew by forecasts. The latest results, without him, missed. But there’s still plenty of value substance beyond issues of Wall Street style.

Free trade unlikely to help end U.S. jobs crisis

18 Oct 2011

The Obama administration is on a free trade roll; it’s pushing for new deals with Vietnam and Malaysia. But for rich America, freer trade with poor countries creates few new jobs. It may also exacerbate something its citizens are growing to hate: inequality.

Goldman’s loss far less worrying than it appears

18 Oct 2011

Diving into the red is rare for the Wall Street firm and confirms Goldman is losing some luster. But despite these challenges, its investment banking and trading ops held up relatively well. The pain was in private equity. Yet even that reassures the firm takes its lumps quickly.

Bank of America suffers worst of both worlds

18 Oct 2011

Forget the reported $6.2 bln profit. Both the commercial bank and the Wall Street operations fared worse than rivals in the third quarter. Even a very low tax rate couldn’t help. Strip out the accounting funnies and the CCB sale gain and BofA lost money again.

Through adversity, Goldman still plays all angles

17 Oct 2011

The $38 bln Kinder Morgan deal epitomizes what the bank does best. It owns a stake in the pipeline operator, underwrote its IPO and worked with its takeover target, El Paso. Such finesse is what sets Goldman apart. It’s just not clear it’s a gift that will keep on giving.

Wells Fargo’s premium suffers justifiable hit

17 Oct 2011

Its record $4.1 bln Q3 earnings barely missed estimates. But revenue slipped, too. Returns just beat the cost of capital and a struggling American economy won’t help the U.S.-centric bank. That makes it harder to rationalize Wells trading much above rivals, or its own book value.

Hulu owners destined to be regretful refuseniks

17 Oct 2011

Disney, News Corp and Providence pulled the plug on the video streaming service’s auction after bids were too cheap and conditional. But the media giants have struggled with their own digital transitions. Hulu is likely to become a distracting headache they’ll wish they’d exited.

Citi gets the jitters in emerging markets

17 Oct 2011

Fears of another recession already have hammered the bank’s shares. Now, Citi is slowing lending in developing countries, one of its fastest-growing businesses. With reserve releases slowing and Citi’s ROE just 3 pct after one-offs, it’s another obstacle to a banking recovery.