Boom and Bust In Shipbuilding

China has a voracious appetite for commodities, which means it has a tremendous appetite for shipping to carry those commodities.  In a Communist twist on Say's Law, demand creates its own supply.  Since there is a long lead time in ship building, shipping rates are very volatile.  

In this video, the FT's Jonathan Wheatley interviews shipping industry expert, Dinesh Sharma, a senior consultant at Drewry Maritime Advisors, about the boom and bust business.  Jonathan Wheatley is the FT's deputy emerging markets editor.

A Top European Fund Manager Is Bullish On European stocks

Britta Weidenbach is the portfolio manager for large European equities at DWS Investments. Weidenbach says the timing is right to go back into European stocks in this interview with the FT on December 4th. She sees a selective approach delivering total returns of around 12 per cent next year. Now DWS is even bullish on some European banks.



Frau Weidenback explains her portfolio's organization, approach, and performance:

Australia Going the Way of Spain? That's a Bit of an exaggeration Mate!

Billionaire Gina Rinehart, Asia’s richest woman, said Australia risked facing a debt crisis similar to European nations because of overspending and a loss of competitiveness.  Bloomberg reports:

What do the Long Haul Pull Backs Mean For Spirit and the 787?

High fuel prices and fewer people paying premium fares persuaded Singapore Airlines to cut back on ultra long-haul flights. The WSJ's Jeffery Ng explains why airlines may be better off aiming for the lower end of the market:



Mammon Among Friends wonders if this is bad news for Spirit.  Spirit is a major partner in the production of the Boeing 787, which is the premier aircraft for such routes.  

 Boeing has made a strategic choice in building the 787 about how its customers, the world's airlines, will deal with passenger growth:  "As the busiest airports get more and more congested, the airlines will either have to fly bigger planes with more seats into those hubs or fly longer point-to-point routes to relieve pressure on the hubs. Airbus in the A380 bet on the former, while Boeing in the 787 bet on the latter."

In the Asian Wall Street Journal, Jeffery Ng reports "The cuts were caused by a combination of economics and physics. Amid the sluggish global economy, fewer fliers were willing to pay premium fares, which can be more than five times the standard coach fare. The rise of discount carriers in Asia has also put additional pressure on the regional operations of premium carriers."  

The 787 goes a long way toward dealing with the challenge of higher fuel prices.  Yet the fundamentals may still have weakened.   Investment banking has been shrinking since the financial crisis and many firms may be less willing to pay for fancy flights in less profitable economic times.

Santander Takes a Big Writedown on Its Spanish Real estate Loans

10/25/2012
Banco Santander said profit fell after it amassed provisions against real-estate losses in Spain and as economic activity stuttered in some Latin American markets. Dow Jones's Margot Patrick reports:

Visa Raids JPMorgan for Its CEO

Jamie Dimon has built a powerhouse in JPMorganChase and demonstrated that good management can weather financial crises and prosper.  Visa, which went public a few years ago, poached some of Dimon's talent to head the payments giant.  In this October 25th video Robin Sidel on Markets Hub reports Charles Scharf is stepping out of James Dimon's shadow and into Visa's executive chair:




Sidel tells us "Mr. Scharf is well-known within J.P. Morgan as a methodical, decisive and sometimes prickly executive who doesn't like loads of bureaucracy. Those traits may shake up employees at Visa, which relies heavily on meetings and group discussions, according to people familiar with Visa's corporate culture."  Furthermore, in his new job, "Mr. Scharf's job will be to manage delicate relationships with millions of merchants, and to steer through rising competition from nontraditional payment companies such as eBay Inc.'s PayPal division."

It Sounds Like There Is An IPO in CorpGroup's Future

Chile is a country with a very dynamic economy.   Conglomerate CorpGroup is a major player in the Chilean economy. Alvaro Saieh, its Chairman, speaks about the capital-raising plans of its retail division SMU:

Merkel Wants 15% of EADS outright

Germany spoiled the wedding party of EADS and BAE Systems by vetoing their proposed merger.

The combination of the British and European defense and aerospace companies balanced by EADS's commercial business (think Airbus) would have given American competitors a bulked up rival. EADS was looking at the deal as a means of reducing political influence on the firm only to have that political intervention do the deal in.

Germany now makes it clear that it wants an equal say with France: that means the government of Germany wants an equal say with the government of France.

European corporate structure is not for the faint hearted. Consider the complicated structure of EADS. EADS is the holding company which owns Airbus and the defense businesses. It is owned by various national entities. The German ownership has been in the form of Daimler-Benz's control of a 22.5% interest: Gerrit Wiesmann reports in the Financial Times today (10/24), "Daimler officially controls 22.5 per cent of EADS, although it sold a 7.5 per cent stake to the Dedalus group a few year ago to raise funds for its core business. The group, which also includes Allianz, Deutsche Bank, Goldman Sachs and Morgan Stanley, has the right to sell back its stake to Daimler in the middle of next year."  The German government has been interested in buying all or part of this interest. The proposed BAE Systems-EADS merger moved Berlin into action. Wiesmann reports that "The German government is bringing forward [its] purchase of 15 per cent of EADS."

Another Crisis Is 'Inevitable'

at the bottom of the financial crisis, congress set up a Troubled Asset Relief Program (TARP) which allowed the federal government to invest in banks and other firms likely to go under. Neil Barofsky was the program's Inspector General. In this Wall street Journal interview he explains how the factors that led to the 2008 crisis have only gotten worse. In consequence he views another crisis as "inevitable." Photo: Getty Image.