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UBS’s slimming strategy deserves two cheers

17 Nov 2011

The Swiss lender is halving its investment bank’s risk assets, closing units and putting its private and Swiss banking ops front and centre. It’s also cutting jobs and return targets. It’s all sensible stuff, but UBS has taken its time and must prove it can stick with the plan.

U.S. patent law mission creep needs to be reversed

17 Nov 2011

The system is supposed to reward inventors but not stifle innovation. Fuzzy concepts like the interpretation of data aren’t protected. Yet one firm says it owns a way to read medical tests. The U.S. Supreme Court has a chance to serve the law’s original intent by disagreeing.

Equity-bond decoupling shows risks have changed

17 Nov 2011

Investors may be rethinking the inherent riskiness of equities, especially compared to sovereign bonds. That is a logical response to seismic shifts in the european debt markets. Shares aren’t invincible but they are pretty well equipped for these rough times.

Bankers not entirely political pariahs

16 Nov 2011

The banking crisis might have made financiers unacceptable in the corridors of government. Yet Italy’s new premier – once an adviser to Goldman Sachs – just handed Intesa’s CEO a key position. New leaders of the ECB and FSB are also ex-Goldman. Oddly this all makes some sense.

Spanish debt storm piles the pressure on Rajoy

16 Nov 2011

At current yields, Spain would need a primary surplus of 1.8 percent just to keep its debt/GDP stable in the long run, according to a Breakingviews calculator. Madrid is forecast to have a deficit of 3.5 percent in 2012. The next PM will need to re-establish confidence fast.

Apple rightly keeps chairman, CEO roles split

16 Nov 2011

The divide may have looked temporary when Tim Cook replaced the ailing Steve Jobs as chief. But making Arthur Levinson chairman is smart. He’s a canny operator and his appointment lets Cook concentrate on running Apple day to day. The separation of duties is long overdue.

MF Global could finally help SarbOx prove itself

15 Nov 2011

The Enron-inspired Sarbanes-Oxley Act helped clean up U.S. companies’ books, albeit at a cost. But approaching 10 years on, enforcers have filed few cases, despite glaring failures in the crisis. Jon Corzine’s fallen firm may at last offer a chance to test the reform’s teeth.

Buffett’s IBM has rare mix of growth and value

15 Nov 2011

Berkshire Hathaway’s investment success is built on common sense stock picks such as the tech-turned-consultancy firm. But only four other global large-cap stocks match Big Blue’s downhome growth-and-value qualities of a sort so admired by the Sage of Omaha.

Europe’s great bank balance sheet fiddle

14 Nov 2011

EU lenders can meet capital targets by raising equity, selling assets or shrinking loan books. But they may also change their risk-weighted asset calculations. The process looks open to abuse. Far from restoring confidence in the sector, it may have the opposite effect.

Music gods again divert EMI’s destiny

11 Nov 2011

With both EMI and Warner under new owners, it seemed the stars might finally uncross for their long-awaited union. But Sony and Universal brought their own karma and cash to the EMI auction, and Warner is again alone at the altar. Further twists of fate are in regulators’ hands.

Life continues sweetly for the .001 percent

10 Nov 2011

Hours after another market meltdown, plutocrats spent over $300 mln at Sotheby’s in what connoisseurs called an epic auction of contemporary art. Celebrity chef Mario Batali also learned that even besieged bankers wield clout. This time doesn’t seem all that different.

Green Mountain shows how momentum works both ways

10 Nov 2011

The coffee company’s stock is the latest to crash down from a nose-bleed trading multiple, following Netflix and OpenTable. Fast growth can help paper over valuation or accounting worries, but in time they often catch up. Chipotle and Salesforce.com investors should take note.

U.S. money funds may not be players in next crisis

9 Nov 2011

Money market funds have a bit part in the euro zone crunch as short-term lenders to European banks. U.S. regulators, meanwhile, want to end the fiction that they are just rebadged savings accounts. The industry won’t like that, but the global financial system could be safer.

China’s Tencent slows as new Internet models bloom

9 Nov 2011

China’s second-biggest dot-com by market value saw its slowest quarterly earnings growth in four years. Gaming customers are defecting to new Internet models. Higher costs in micro-blogging and video are hurting margins. Tencent needs a strategy beyond simply getting bigger.

Citi risk measurement scheme warrants closer look

8 Nov 2011

CEO Vikram Pandit is touting a plan for financial firms to disclose regularly how risk scenarios play out for a standard, hypothetical portfolio, as well as their own assets. Such a comparative tool might have raised red flags about MF Global -one reason it deserves attention.

Crisis anniversary marked with much dead wood

8 Nov 2011

Five years ago today, Meritage became the first notable subprime mortgage lender to fail. Too few heeded this canary in the coal mine. Now, while there are some signs of progress, the mortgage market remains moribund. It’s worth a look back - and forward.

When is a merger-of-equals really a takeover?

7 Nov 2011

One easy way to tell is when the top brass get rich, undeserved paydays. Take NSTAR’s pending $4.7 billion “merger” with Northeast Utilities. NSTAR’s top five executives could feast on $50 mln of payouts from change of control even though they’ll stay, and even run, the place.

Japan Inc’s earnings problems are home grown

7 Nov 2011

Honda, Panasonic and Sony all reported grim quarterly earnings. Weak global demand, a strong yen and natural disasters are partly to blame. But they underscore deeper problems caused by domestic policies and Japanese exporters’ long-standing neglect of profit margins.

De Beers buyout adds polish to Anglo American

4 Nov 2011

The miner is paying the Oppenheimer family a reasonable $5.1 bln to take majority control of De Beers, the world’s top diamond producer. It’s another step to a streamlined Anglo, making it look like a more straightforward takeover target.

Less, not more, better for New England utilities

3 Nov 2011

Too many customers of Northeast Utilities lost power for too long after recent storms. As with banks, risk management and regulation failures are to blame. Towns that run their own utilities offer an alternative; meanwhile, Northeast’s planned $4.7 bln deal needs to be torpedoed.