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Blog Profile / Reuters Breakingviews Blog

Filed Under:News
Posts on Regator:3049
Posts / Week:17
Archived Since:June 19, 2011

Blog Post Archive

Double-digit oil forces majors into more self-help

The Big Oil groups already had a profitability issue before prices started falling. There’s no quick fix. They will have to step up efforts to boost cashflow by cutting costs and capex, and selling assets. At least balance sheets aren’t stretched, so dividends are safe – for now.

BofA delivers good governance a kick in the teeth

The mega-bank has given CEO Brian Moynihan the additional title of chairman. The move not only puts too much power in one person’s hands, it reduces the position to a perk that can be granted or taken away, depending on performance. That’s a lousy governance deal for investors.

Occupy misses real threats to Hong Kong’s future

Most citizens have shied away from protests calling for electoral reform. Universal suffrage deserves public support, but erosion of rule of law and creeping censorship are bigger threats to prosperity. It’s unlikely these issues will erupt into an open standoff with Beijing.

Cameron takes deficit amnesia to a new level

The UK prime minister crowed when opposition leader Ed Miliband forgot the deficit in a keynote speech. Yet David Cameron has gone further, insisting on the need to tackle the country’s biggest problem and then pledging a tax giveaway. It’s an electoral bribe he can’t afford.

Ebola sets clock ticking on West African economy

Growth may yet survive the deadly epidemic. The last four years’ 28 pct pace isn’t realistic, but controlling the outbreak soon should at least preserve investment. That won’t be easy, given the virus has now spread to the U.S. In saving lives and the economy, every day counts.

Goldman’s new conflict rules raise bigger question

Bankers there face fresh limits on investing in stocks, bonds and hedge funds. Goldman knows how easy it is to cross a line when treading close to it. Why Wall Street dealmakers can own individual securities at all is the real mystery that speaks to a culture loath to change.

Hong Kong harmony hits Beijing’s worst fears

The tens of thousands of protesters occupying Central send a disturbing message to authorities: unrest can be both disruptive and peaceful. That resonates far more than images of violent conflict. Little wonder China is trying to make sure citizens look the other way.

Sovereign doom loop haunts EU bank stress tests

The euro zone banking union was meant to start with a robust bank solvency test. Yet national regulators have successfully lobbied the ECB to count deferred tax credits as capital. That restores the state/bank dependency the single banking supervisor is trying to sever.

PayPal forced to rev after eBay’s belated U-turn

The $70 bln online auction company has for years resisted setting free its payments business. Apple and Alibaba created more urgency than Carl Icahn and other investors could. EBay squandered a big early advantage, but independence may yet give PayPal a chance to play catch-up.

UK retail fails to weather the patently obvious

Clothes shop Next says Britain has had an unseasonably warm September. Who knew? Shares across the sector took fright at the ramifications for earnings. Investors may be venting other fears, maybe of a price war. Still, the reaction reveals a bizarrely inefficient market.

China house prices on brink of pessimism spiral

As prices fall in most big cities, developers and banks are trying to lure buyers back to the market. But cheaper mortgages and less red tape are no match for sagging real price expectations. Short of giving cash to buyers, it is hard to arrest negative thinking once it sets in.

SoftBank and Shrek may lack on-screen chemistry

The Japanese conglomerate may offer $3.4 bln for movie studio DreamWorks Animation. Softbank’s giant balance sheet can easily absorb the hit-and-miss earnings of film production. But with each big acquisition, it becomes less clear how the group’s parts fit together.

Commodity bear market looks entrenched

A rising dollar, the prospect of U.S. rate rises, and moderating Chinese growth are casting long shadows over the asset class. The threats to the bear case are strong supply-side responses, or successful economic stimulation by the ECB. Neither looks very likely.

Hong Kong shreds hopes for orderly disorder

Thousands of protestors have taken to the streets, at times clashing violently with police. Markets remain open, and the financial sector hasn’t been targeted directly. But the loss of control over a carefully planned disobedience movement has damaging long-term implications.

Rock star Modi needs more business-friendly riff

The Indian prime minister used a sold-out Madison Square Garden gig to make an emotional sales pitch. While Indian-Americans may want to take up Narendra Modi’s offer to invest freely in their ancestral land, the country’s business-unfriendly reputation remains a big obstacle.

Bill Gross and Janus Capital made for each other

Both are formerly hot fund managers looking for a fresh start. Investors are exuberant about the possibilities of Gross recapturing some old glory under Janus, the Roman god of new beginnings. It is more likely a case of past performance not being indicative of future results.

Santander has a 6 bln euro capital opportunity

The Spanish bank’s diversification and earnings power are cushions against a shock. But the core capital ratio looks tight. Given Santander’s high valuation, there may not be a better time to boost equity and silence capital sceptics. Raising 6 bln euros would do the trick.

Apple CEO Tim Cook gets $25 billion warning shot

That’s the value wiped off the stock after a botched system update and reports its new phones can be bent. It’s a small hit for a $600 bln company. But the 2012 Maps fiasco is a reminder that one-off issues may presage more pain. Cook needs to nip this one in the bud.

Sam Waksal’s new biotech tests Wall Street amnesia

The former ImClone boss who went to prison for an insider trading scandal that also ensnared Martha Stewart plans to take his latest venture public this year. He follows second-chancers like Donald Trump and LTCM founder John Meriwether. Investors can be astonishingly forgiving.

World should steel for peak China demand

Chinese consumption of crude steel fell in August for the first time this century. Slowing housebuilding is adding financial strain to a troubled supply chain. A rethink of how much is enough for the world’s biggest steel user could also throw the global market off kilter.

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