Considering how much growth has come from emerging markets over the last five years, it's strange that EM M&A activity has been so much lower than Western M&A activity over the last five years. Emerging market IPOs have long dominated the West. Just last quarter, Asian IPOs amounted to $70B, much more than the $16B of the US. 6 of 2009's 10 biggest IPOs were in EM. But EM M&A has never been equal to European or US M&A for any full quarter. Q1 2010 might well be the first quarter to break this trend. For the first 1.5 months of the year, EM M&A has equaled 40% of global M&A activity, about equal to US + European M&A for the same time period.
Monday, February 22, 2010
EM M&A Activity
Saturday, February 20, 2010
Social Instability in the New Normal
John Mauldin has a great quote from Greek lawmakers regarding the debt crisis (from Reuters):
"Greek opposition lawmakers said on Thursday that Germans should pay reparations for their World War Two occupation of Greece before criticizing the country over its yawning fiscal deficits.
"How does Germany have the cheek to denounce us over our finances when it has still not paid compensation for Greece's war victims?" Margaritis Tzimas, of the main opposition New Democracy party, told parliament."
Monday, February 15, 2010
Scars from Contagion Fears
Much has been written on the fate of Greece and the other PIGS. It is clearly a watershed year for Greece. Jim Rogers predicted years ago that the euro would fail because of the inability of forcing member states to follow the Maastricht treaty and the inability of currencies to adjust to fiscal imprudence. The 2009 recession is the first time the self-restraint of EU member states has been tested. But, as the media often reminds us, at issue with Greece is not just the integrity of the EU and the euro, but the socio-political stability of the whole country.
Saturday, February 13, 2010
The Fed's War on Inflation Expectations
When the Fed more than doubled its balance sheet during the financial crisis, many believed inflation was unavoidable. Since then, the dollar has fallen 15% and gold, other commodities, and commodity-linked currencies have soared. But the inflation expectations that moved markets throughout 2009 were never justified by data, with economic data indicating deflation was the real concern.
Thursday, February 11, 2010
Two Watersheds for the West
Lewis Spellman believes the major trends in financial markets during 2009 will reverse in 2010 because of (1) the Fed's exit and (2) sovereign debt issues. Over the last few weeks, sovereign risk and the Fed's exit strategy have brought uncertainty into markets: the S&P500 is down, the VIX is up, and the dollar is rallying as investors flood back into dollar-denominated assets. Will this reversal continue as Spellman predicts?
Tuesday, February 9, 2010
Goldman Sachs and the Volcker Proposal
Peter Lattman and Kate Kelly report on pg. C1 of the Journal today: "The [Volcker] proposal, debated on Capitol Hill last week, is short on detail. But, should it become law, it could have by far the biggest impact on Goldman [Sachs] ... The firm's private-equity exposure exceeds that of the world's largest buyout firms. Goldman has roughly $14 billion of corporate and real-estate private-equity holdings on its balance sheet ... Under Mr. Obama's proposal, banks would likely be free to manage customer money earmarked for private-equity funds. But Goldman would have to divest its own holdings, a complicated task. One alternative would be to spin out its private-equity arm, according to people familiar with the firm. Goldman could also give up its bank-holding-company license to avoid spinning out the private-equity business."
Monday, February 8, 2010
Female Employment Now Greater than 50% of Workforce
One trend often-cited during the recession is that men have lost their jobs much quicker than women. Over the past 24 months, the number of female payroll employees fell 2.6 million, while the number of men fell 5.8 million. Intuitively, this makes perfect sense since the recession has heavily affected man-intensive manufacturing and construction industries, while also bringing educated women back into the workforce (according to the NYTimes). However, this relative surge in women's employment is not specific to the current recession. In fact, the same effect occurred during past recessions. Economist Casey Mulligan estimates recessions are the only times in recent history when women can significantly gain market share.
Positive NFP Number: Maybe Next Month
As I wrote about last month, economists keep expecting NFP (nonfarm payroll) numbers to come in positive though this has yet to happen (except the paltry 4,000 increase in November but that was a revision and doesn't count). For the NFP January numbers that came out last Friday, analysts at BoA, DB, JPMorgan, Barcap, and MS were predicting in excess of 25,000 new jobs were added during January. Just like in December, NFP numbers have disappointed at -20,000 jobs.
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