China embraces troublesome cult of consumption

November 11, 2014

E-commerce giant Alibaba shifted $2 billion of goods in the first hour of its “Singles’ Day” shopping festival. It looks like consumers are doing their bit to rebalance China’s economy. But like investment, consumption is a poor target. It can be wasteful as well as productive.

Global banks prepare for un-level playing field

November 10, 2014

Under new rules, taxpayer-funded bailouts will be less likely, because banks will hold bail-inable debt of as much as 25 pct of risk-weighted assets. But emerging market banks and non-systemic peers are exempt. That could mean the days of borderless banking are numbered.

Obama and Xi compete to put the “I” in “APEC”

November 10, 2014

Both the U.S. and Chinese leaders are using the Beijing summit to push their own rival trade and investment deals. Sift through the alphabet soup and domestic politics is clearly foremost. There’s room for these big personalities to compromise, but also for dangerous mistakes.

Sears investors too giddy about slow-mo breakup

November 7, 2014

The stock jumped 35 pct on news its hedge fund boss Eddie Lampert might create a REIT for many of its stores and lease them back. It’d raise much-needed cash. But shareholders, Lampert included, would finance the deal. And the prospects for the rump retailer remain pretty dim.

German carmakers tune up the basics of banking

November 5, 2014

The in-house operations of VW, Daimler and BMW are all solidly profitable. They follow some basic rules that rivals and bigger institutions often forget. Lend to people who can repay, expand carefully and find secure and cheap funding. Successful owners also help.

Bank of Japan bond vault may resemble a black hole

November 5, 2014

The central bank will suck more than 7 percent of outstanding government bonds into its gravitational pull next year. The longer this goes on, the stronger the investors’ belief that they will never see that debt again. Any dent in that confidence could be highly upsetting.

Alibaba delivers chunky growth, but at a cost

November 4, 2014

The Chinese e-commerce giant pulled off a 54 pct revenue increase for the second quarter, its first results since listing in New York. But earnings slipped, only in part because of big IPO payouts to staff. Alibaba also says it targets sales, not margins. That’s not reassuring.

Xiaomi’s upward valuation hike hard to justify

November 4, 2014

A new funding round could give the Chinese smartphone group a valuation of $50 billion - five times its mooted price last August. That suggests a valuation comparable to tech giant Apple. While Xiaomi is growing fast, it lacks its U.S. rival’s dominance or innovation.

Don’t blame the messenger, Jefferies

By Rob Cox
November 3, 2014

Top brass at the $45 bln Wall Street firm peed in cups and chastised the press for writing about salacious charges against one of its rainmakers. The response is not exactly confidence-inducing behavior for a business built as much on trust as the assets on the balance sheet.

Publicis overpays with $3.7 bln digital takeover

November 3, 2014

The French ad giant is buying U.S. digital specialist Sapient. The all-cash takeover comes at a big premium and with limited scope for synergies. This looks a value-destructive attempt to distract from Publicis’ faltering performance after its failed merger with Omnicom.