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Blog Profile / Reuters Breakingviews Blog

Filed Under:News
Posts on Regator:2982
Posts / Week:17
Archived Since:June 19, 2011

Blog Post Archive

Euro has further to fall

The single currency has dropped sharply since the ECB eased policy this week. The central bank now openly hankers for a weaker euro to boost inflation, and is doing all it can to bring this about. Traders sometimes fight central bankers. This time they look happy to go along.

South Korea repeats Sweden’s monetary mistake

Finance Minister Choi Kyung-hwan warns the country is entering “an early stage of deflation”. That’s a swipe at the Bank of Korea, which has kept borrowing costs unsuitably high. The central bank’s strategy, similar to the Swedish Riksbank’s now-abandoned approach, has backfired.

LendingClub IPO mixes disruption with confusion

The peer-to-peer lender is growing fast, with fans ranging from John Mack to Larry Summers to Google. But it’s struggling to turn a profit, lacks some advantages of traditional banks and has yet to be tested by an economic slump. Investors need to know whether it’s fish or fowl.

Scottish secessionists in bind over North Sea oil

Both sides of the independence debate are arguing over how many barrels are left. Oil revenue is key for an independent Scotland to manage its finances. But the need to raise funds could undermine an equally vital imperative: tax breaks to incentivise flagging exploration.

China’s consumers show early signs of a debt wish

It’s time to retire the idea that Chinese shoppers don’t borrow. Companies have racked up most of the country’s debt mountain. But credit card debt, which delivers generous fees for banks, is rising fast. Though the numbers are small, bad incentives could store up future trouble.

Home Depot hack scarier than Hollywood breach

Maybe Apple et al can make the cloud more secure, but celebrities like Jennifer Lawrence also probably need to be extra careful. Violations that expose millions of people to financial loss are in a different league. Investors should punish companies that skimp on security.

LVMH, Hermes in five-year handbag peace

The French luxury leader will distribute to its shareholders the stake it stealthily built up in the Birkin bags maker. The founding family remains in control of Hermes. But Groupe Arnault will retain 8.5 pct of its capital, suggesting it is keeping its long-term options open.

E-book: Alibaba and the twelve digits

China’s e-commerce colossus is hitting the road for a $100-billion-plus IPO. But a spectacular growth story comes with quirks, including bizarre governance and founder Jack Ma’s penchant for offbeat deals. Breakingviews offers a punchy primer on the risks and rewards.

Tianhe fraud claims hit at China free-rider effect

An anonymous group says the chemical group cooked its books. Yet the allegations would have been easy to verify by pre-IPO backers like Morgan Stanley. If proven, the charges will undermine the notion that big-name investors can provide insurance against China’s opaque practices.

Why Citigroup would be better in bits

Nine years ago, Breakingviews proposed slicing the giant New York bank into smaller pieces to benefit shareholders. Post-crisis, the advantages of the idea extend beyond the stock market to global regulators and even taxpayers. It’s time to revisit breaking up Citi.

Banks risk provoking EU with bonus get-arounds

Firms are paying top staff extra “allowances” in response to European bonus caps. That avoids raising base salaries and keeps costs flexible. The risk is that successful avoidance of the rules will prompt policymakers to shift the attack to pay quantum rather than pay structure.

Six steps to Alibaba’s twelve-figure valuation

As the Chinese e-commerce giant launches its IPO, investors must decide what the shares are worth. Growth, profitability and stock market multiples are a factor. So are potential new businesses, though shaky governance merits a discount. Breakingviews spells out the key numbers.

Gold’s geopolitical ledge won’t hold up

International tension has helped stabilise the gold price after a 2013 plunge. But the fundamentals are bad. ETF redemptions persist while bar and coin investment has dropped heavily. Jewellery demand remains soft. Consumers want cheaper gold. They are likely to get it next year.

Democracy snub leaves Hong Kong only bad choices

Citizens in the former colony have two options: choose between Beijing-approved chief executive candidates, or don’t vote at all. The new ruling leaves little room for compromise and risks a showdown with protesters. China’s leaders seem to care ever less what the world thinks.

TV broadcasters missing big picture in Aereo fight

CBS, Disney and others oppose the Barry Diller-backed streaming startup’s rebirth as a cable firm. But conceding could put online services and, say, Time Warner Cable on equal legal footing and create more competition for content. That’s a win for viewers and networks alike.

Square swipes a hollow-looking $6 bln valuation

That’s what the payments company may be worth after its latest fundraising. It’s big, but a deflated figure, considering Square’s former hype, the small amount raised, and tech rivals’ ease securing higher valuations. Blame increasing competition for Square’s comparative malaise.

Agenda for Tesco CEO: price cuts, board and UK

There’s a jumbo profit alert, a hacked-back dividend and lower capex. The new chief exec is also bringing forward his start date. Dave Lewis needs to reduce prices, rebuild the board, and launch a strategic review of the international business.

Review: A pained call for radical financial reform

Financial Times writer Martin Wolf’s new book is partly a cogent review of what went wrong in the 2008 crisis. But the message economists and policymakers should focus on, especially from a centrist intellectual, is that the best ideas for the future are far from the mainstream.

Global poverty needs a post-industrial definition

Criticism is mounting against the $1-a-day threshold, a legacy of industrial-age thinking that equated penury with calorie deficiency. That’s too narrow. Being unable to afford education, medication or old-age security counts as deprivation. So does exclusion from modern jobs.

Vivendi boosts shareholder credentials in GVT sale

The French media group says it favors Telefonica’s $10 bln bid for its Brazilian mobile unit. Telefonica could pay more, but it’s good that Vivendi has chosen the surest exit for shareholders. As for rival bidder Telecom Italia, it now faces an uncertain future.

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