January 17, 2014 3:31 pm

Letter from Lex: Beam me up

A big M&A deal and the latest results from US banks


The week has ended with a small flurry of mildly dreary reports from major companies. At Shell, a new CEO informed the market that both the exploration and the refining business had struggled in the fourth quarter, and earnings would be well lower than analysts hoped. Intel saw decent sales growth in the quarter, but profits were a disappointment. The company sees no sales growth this year. UPS blamed bad numbers on bad weather and a short Thanksgiving to Christmas shopping season.

The weather excuse always looks like humbug. More generally, though, Lex is wondering whether the recovery we are seeing in economic data in the US, China, and Europe is going to start to show up in company reports. Consider this wildly unscientific survey of the issues Lex looked at this week:

• Good earnings numbers from JPMorgan – but where’s the loan growth?

• Goldman and Citigroup’s fixed-income trading businesses continue to struggle. It will be interesting to see if their fortunes improve now that a decision on tapering has been taken by the US Fed.

• The wealth management businesses at Bank of America, BlackRock, and Morgan Stanley did quite well – but this is a reflection of the elevated stock market more than the economy.

• News that GM would pay a dividend is an encouraging expression of confidence for that company, as is its beefy investment plan – but not much growth is expected in 2014.

No terrible news; nothing really buoyant, either. For optimists, however, there was one major piece of exuberance that outweighs all this moaning. Suntory ponied up $14bn in cash to buy whiskey maker Beam – 20 times the target’s operating cash flow. Japan Inc is on the prowl.

It’s Friday. How about a drink?

Robert Armstrong, Head of Lex

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.