Apr 16, 2013 02:08 UTC

Weaker yen won’t halt Japan Inc’s overseas spree

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By Peter Thal Larsen

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

A weaker yen won’t reverse Japan Inc’s overseas M&A drive. While a strong currency, low interest rates and a stagnant home market fuelled an international shopping spree in 2012, the promise of a domestic revival under new Prime Minister Shinzo Abe has caused buyers to temporarily put away their wallets. But even so-called Abenomics can’t cure Japan’s ageing and shrinking population.

Apr 9, 2013 22:21 UTC

J.C. Penney exposes inefficiency valuing CEOs

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By Richard Beales

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The debacle at J.C. Penney exposes a glaring inefficiency in how the market values corporate chieftains. When the struggling U.S. retailer hired Apple whiz Ron Johnson in 2012, the company’s equity value spiked by more than $1 billion. On Monday evening, news of his departure added $350 million. The return of ex-Chief Executive Mike Ullman – the man Johnson replaced – swiftly erased some $700 million. Such big swings make no sense.

COMMENT

A lack of products, focus, and brand image are serious weaknesses for any company. A CEO has to be flexible and willing to use test marketing strategies. Johnson was neither. I would suggest that the European firm Migros look at at Penney as an acquisitions candidate.

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Apr 9, 2013 22:18 UTC

Satellite IPO launches risk tolerance into orbit

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By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Intelsat’s initial public offering could be a telling launch for stock markets. The owners want a full valuation despite the satellite operator’s slow growth and stratospheric debt. If investors are ready to buy, it suggests risk tolerance is heading sky-high.

Apr 4, 2013 23:37 UTC

HBOS top brass reap what they sowed

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By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

HBOS’s top managers are finally starting to reap what they sowed. So far, official blame for the spectacular collapse of one of the UK’s biggest banks has been restricted to its former head of corporate lending Peter Cummings, who was fined 500,000 pounds by the UK regulator in September. A hard-hitting report by Britain’s Parliamentary Commission on Banking Standards has rightly begun to point the finger at the very top.

COMMENT

Dear Sir/Madam,

Deterrence only Works where it is Not Profitable for Someone to do Wrong.

Small Fines are not a deterrent – Large Fines and Prison Sentences could be the way to go..

Calculations for fines should at the minimum be what the culprit earned (including any phoney Bonus payment and Share purchase offer purchase Profits) multiplied by 4.

If they cannot pay then Prison with Hard Labor should apply.

Payment of fines should not be paid out of any of the Company or Banks assets etc. otherwise the culprit has not paid for his/her crimes – others will have done it – the innocent will have paid out twice for the villains.

We must change the Laws so that People working for Companies/Banks etc. cannot vote at shareholders meetings, cannot have any means of determining their pay – Shareholders must set Pay and rewards for all staff from the Chairman down.

We must stop the loopholes used to destroy our institutions and we must endeavour to protect and serve those who invest in the Free World.

God Bless

TLS-2

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Mar 12, 2013 18:34 UTC

U.S. stocks may soar higher – only to crash-land

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By Martin Hutchinson

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The S&P 500 Index of U.S. stocks is nearing a new record close to eclipse the peak of 1,565.15 set in October 2007. Simple interest-rate based valuations, such as the so-called Fed model, suggest the benchmark could more than double again – but on long-term assumptions, it would then crash-land.

COMMENT

Thanks for this. A good (circular) assessment…

Interested to hear and see a similar your assessment on the Fed exit options i.e., to unwind the balance sheet of the Fed and pull in Money Supply.

Would the argument be that at some turning point – 6.7% UE, LTI of 2.5% and rising “real wealth” asset prices – bonds and MBS will normalize in price (i.e., yields will rise)? And that the normalization of yields would not be seen as detrimental to US economic B/S because of the impact lower relative currency position (vs. 2008) will have on corporate profits?

This would seem to make sense of the Feds position i.e., that Bernanke then can unwind or sell back MBS or sit on the expiring bonds acquired – provided the world does not have a “shock” event (i.e., major war, loss of faith in US credit, or trade / currency wars or regional economic collapse or basic resource shortage) emerge. True?

Or is it that we are missing something here… namely that the NAM and EUR flat lines under austerity (i.e., corporate cost cutting can go no further) – resulting in stubbornly high unemployment, capital / human flight to high risk / emerging assets and/or capital being returned to its owners? Thus perhaps stimulating a re-emergence of inflation – led by the emerging economies who perhaps may stimulate a wealth effect for their households through political means), which in turns lifts yields/the price of risk in the developed economies thus stifling credit and growth further = stagflation?

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Mar 12, 2013 15:23 UTC

Stock sales make IPO rebound more than a pipedream

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By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Two big equity deals in 24 hours have made a rebound in Europe’s new-issues market look less of a pipedream. Tuesday’s placings in landlord British Land and wealth manager St. James’s Place suggest that those with equity to sell are ready to push the button.

Mar 11, 2013 04:54 UTC

China starts 2013 the way it can’t hope to go on

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By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

China began 2013 with the same old economic model. Growth for the first two months of the year was driven mainly by exports and real estate. The increase in construction appears to have been fuelled by credit. The current trajectory can continue only by pumping ever more leverage, and risk, into the system.

Mar 4, 2013 08:33 UTC

China’s gains tax won’t put a roof on house prices

By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

China’s house prices are too high and local tax revenue too low. What better way to address both problems than taxing capital gains on property? China’s cabinet has promised to enforce such a levy on homeowners. While that drove down the share prices of property developers, it is unlikely to do the same for real estate values.

Mar 1, 2013 04:57 UTC

Weak CEO the least of Groupon’s woes

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By Robert Cyran 

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Groupon’s woes won’t end by firing Chief Executive Andrew Mason. The troubled Internet daily deal firm’s stock rallied around 5 percent after the board sent its witty boss packing. But with overseas operations a mess, coupons in decline and a controversial chairman calling the shots, the company has bigger problems.

Feb 25, 2013 22:03 UTC

$6.6 bln won’t be enough to end Elan’s rash dreams

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By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Royalty Pharma’s $6.6 billion indicative offer for Elan probably won’t be enough to end the latter’s ambitious dreams. The biotechnology company has grand M&A plans after selling most of the rights to its blockbuster drug, Tysabri, for $3.25 billion earlier this month. Royalty Pharma may well use that cash more wisely than Elan’s current bosses, but a 4 percent premium won’t seal the deal.