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Forward Guidance

Today and Tomorrow in Business from Paula Dwyer


September 23, 2014

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Welcome to Forward Guidance, your daily briefing on important business, financial and economic developments. Our goal is to keep you informed and help you get ready for tomorrow. Please stay in touch by sending comments to pdwyer11@bloomberg.net. To continue receiving this newsletter, sign up
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here .

Inversion Immersion.
How effective will new Treasury Department rules be in
http://click.email.bloomberg.com/?qs=67f51ee266ef26d27afb39f7942c04ce8ad2181c626367cac785f7bb5802ebad
stopping inversions ?Not very, if you consider the day-after decision by Burger King Worldwide Inc. to continue its merger plan with Canada's Tim Hortons and to move its address to Canada. Tax experts
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predicted that Medtronic Inc. will also proceed to merge with Ireland's Covidien Plc and that Abbvie Inc.'s acquisition of the U.K.'s Shire Plc will stay on track. Treasury's announcement -- just six weeks before U.S. midterm elections -- looked well-timed politically, since most Democratic voters favor an immediate crackdown on inversions. Most Republicans want
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broad corporate tax reform and are reluctant to be seen as supporting inversions, which President Barack Obama has called unpatriotic.

Pfizer Goes Back to the Well.
Bloomberg News
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reports that Pfizer Inc. has approached Ireland's Actavis Plc about an acquisition. The U.S. drugmaker set off the inversion wave earlier this year when it unsuccessfully sought to merge with AstraZeneca Plc. Pfizer will be at a competitive disadvantage if it can't move its tax charter abroad, now that many of its rivals have.

Climate-Change Free Credit.
One after another, world leaders promised to reduce carbon emissions at the United Nations
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Climate Change Summit in New York. The European Union offered to cut greenhouse gases to 40 percent below the 1990 level by 2030. Leonardo DiCaprio, the actor turned UN ambassador on climate change, called on nations to tax carbon. And more than 150 countries set the first-ever deadline to end deforestation by 2030. But the goals are all
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nonbinding and a key player for the deforestation effort, Brazil, said it wouldn't join. Still, countries may have a renewed interest in climate change because they anticipate the UN will be pushing harder for a binding grand bargain among rich and poor countries at the end of next year in Paris.

Flying on Grease.
Finnair Oyj planned to fly an Airbus A330 from Helsinki to New York Tuesday, partly powered by
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recycled cooking oil. It's an interesting concept, but it could be a long while before commercial planes are powered by biofuel, which is still too expensive to collect and refine.

Governor Moonbeam's Moonshot.
Jerry Brown, the Democratic governor of California, the world's eighth-largest economy, has set himself a
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moonshot goal of licensing 1.5 million zero-emission cars in the next decade. California has long been the U.S. leader in pollution controls for autos.

Alibaba Banks Bring Home Bacon.
Alibaba Group Holding Ltd.'s underwriters
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raked in $300 million in fees after completing the largest initial public offering in history. The banks received 1.2 percent of the $25 billion proceeds in fees. Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley each took home 15.7 percent of the fees, while Citigroup Inc.'s share represented 7.9 percent. The fee structure is different from
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typical IPOs in the U.S., in which a lead manager gets most of the fees, usually 5 percent to 7 percent of proceeds.

Slapping Google.
Google poses potentially bigger antitrust problems than even Microsoft in its heyday, Europe's competition enforcer
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said in testimony to the European Parliament. Joaquin Almunia, the departing European Union competition commissioner, cast his four-year probe into Google as merely the start of an epic regulatory battle, like the one that embroiled Microsoft for 16 years. And this from a commissioner who had been criticized for being too soft on Google.

When It Rains on Deutsche Bank, It Pours.
German prosecutors filed
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criminal charges against Juergen Fitschen, the co-chief executive officer of Deutsche Bank, and several former bank leaders. They are accused of colluding to give false testimony in a long-running lawsuit over the collapse of media empire Kirch Group. The late Leo Kirch had sued the bank after its former CEO questioned the media company's creditworthiness on Bloomberg Television in 2002. Deutsche Bank already is facing numerous probes into its role in manipulating benchmark interest rates and currencies. Regulators are also reviewing whether it has adequate capital.

Corporate Bond Market as Casbah.
Most trades in the $10 trillion U.S. corporate bond market are still done by phone. Price transparency is minimal, allowing the large banks that control the market to mark up the bonds in their inventories with little resistance. BlackRock Inc., the world's largest asset manager, wants to
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unseat the middleman banks , shift more transactions to electronic platforms and move to quarterly debt issuance with standardized terms.BlackRock and its partner, MarketAxess Holdings Inc., happens to run a bond-trading system that lets asset managers trade directly without going through bank dealers. (They compete with Bloomberg LP, the parent company of Bloomberg News.)

Retail Slump.
U.S. retailers are suffering through the
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slowest back-to-school shopping season since the recession ended in 2009, raising concern that the year-end holidays will bring more of the same. Gap Inc., the biggest clothing-focused retailer in the U.S., and teen mecca Urban Outfitters Inc. reported sales declines in August from a year earlier. The drop stems in part from fewer school-age kids in U.S. households. Sluggish wage growth also may be keeping shoppers from spending more.

Attention Carrie Bradshaw.
Jimmy Choo Ltd. plans an initial public offering in London next month, betting that
http://click.email.bloomberg.com/?qs=090b3282cdd3edf72f1e98e21f249d4892d70cc418df1ada02a50136b761d9f3
consumer demand for its $1,995 Lust peep-toe sandals can draw investors as larger luxury companies confront slumping demand in Asia. The company shot to fame on the feet of the stars of "Sex and the City." The offering could value the company at more than $1 billion. It would be the first publicly traded, stand-alone luxury footwear brand, and if successful would reverberate through the fashion world and Wall Street. The company has about 170 stores in 34 countries.

Recall Madness.
If it seems like auto recalls have become more common, it's because they have,
http://click.email.bloomberg.com/?qs=090b3282cdd3edf7bdd43f58dfec4b6b2da8bbe94e5101042201d97011aa6b6e
writes Oliver Roeder in FiveThirtyEight. He projects 41.2 million vehicles could be affected by recalls in 2014, the most in history. The recall wave is driven in large part by General Motors. More than 10.5 million of its Chevrolet cars have been recalled this year. Honda comes in a distant second, at 3.9 million. Not even Ferrari is immune: Its $230,000 F458 was just recalled because anyone locked in the trunk can't get out.

World's Most Expensive City.
Rising rents and a strong pound have made London the world's most costly city to live and work in,
http://click.email.bloomberg.com/?qs=090b3282cdd3edf71f99d58cb49cc0e984bcfae9b5e8ce860c52fb15bb6cac0e
according to Savills, the real-estate agency. London knocked Hong Kong off the top spot for the first time in five years.

Democrats' Fat-Cat Donors.
U.S. Democrats love to cast Republicans as the party of big money, beholden to the out-of-touch billionaires bankrolling their campaigns. But Democrats are
http://click.email.bloomberg.com/?qs=090b3282cdd3edf7cf5d10686aea25a09b9076993d4e6cc32e5ee75aabc72099
raising more big money than their adversaries. In August, Democratic groups pulled in more than twice as much as their Republican counterparts -- $51 million to $21 million -- thanks to a spike in massive checks from labor unions and liberal billionaires like Tom Steyer and Fred Eychaner.

Less Sugar, Please.
The three largest soda companies -- Coca-Cola Co., PepsiCo and the Dr. Pepper Snapple Group -- have pledged to cut the number of calories that Americans consume in sugary drinks by one-fifth in about a decade, through a combination of marketing, distribution and packaging. The commitment was made at the
http://click.email.bloomberg.com/?qs=090b3282cdd3edf70d7409c01167a9c015aea201d5e65e77aba2c85fda231ee1
Clinton Global Initiative in New York. It's an acknowledgment by the companies that their products play a role in the country's obesity crisis.

Recycle This.
The Seattle City Council
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passed a new ordinance Monday that could mean $1 fines for people who toss too many table scraps into the trash.

And Don't Forget.

- U.S. Commerce Department releases new home sales for August at 10 a.m. EDT tomorrow.
- United Nations 69th General Assembly opens. Speakers include U.S. President Barack Obama, Iranian President Hassan Rouhani, Iraqi President Fouad Masoum, U.K. Prime Minister David Cameron, Egyptian President Abdel-Fattah El-Sisi, French President Francois Hollande, Argentinian President Cristina Fernandez de Kirchner and Japanese Prime Minister Shinzo Abe.
- U.S. Vice President Joe Biden travels to Norfolk, Virginia, for an event on infrastructure investment.
- Travelport Worldwide Ltd., owned by Blackstone Group, hopes to raise $480 million in an initial public offering.
- French President Hollande holds a news conference during his visit to the U.N. General Assembly in New York.
- Australia's Bureau of Resources and Energy Economics issues its latest forecasts for prices and exports of iron ore, nickel and gold.
- Portuguese government releases its year-to-date budget report.
- The fourth LNG Shipping Forum takes place in London.
- Tomorrow's economic indicators include: Argentina GDP for the second quarter; Mexico biweekly inflation; Italian consumer confidence for September; Dutch producer confidence index for September; Netherlands GDP for the second quarter; Swiss consumption in August; French jobless claims in August; September business climate index for Germany; Czech consumer business confidence for September; and Turkey capacity utilization for September.

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