Continue reading EU Is Not the United States of Europe

EU Is Not the United States of Europe originally appeared on BloggingStocks on Thu, 18 Mar 2010 12:00:00 EST. Please see our terms for use of feeds.

Banks around the world have been raising capital in the last few months. If the market is efficient, then the cost of capital for these banks should tell us something about how risky they are. Based on the relative cost of capital of banks in the U.S. compared to those in France, Germany and Switzerland, the world's riskiest banks are right here in the good old USA. The safest banks? French ones.

How so? Here is the rough (due to different capital structures) after-tax cost of capital for the banks in different countries:

• U.S.: Morgan Stanley (NYSE: MS) is paying a 17% interest rate and Goldman Sachs Group (NYSE: GS) pays almost 17%
• UK: Barclays pays 16%; HBOS, Lloyds TSB; and Royal Bank of Scotland pay about 12%
• Germany: Commerzbank pays 10%
• Switzerland: UBS's interest rate is relative bargain of 9.9%
• France: BNP Paribas, Societe Generale, and four others pay the lowest rate -- 5% -- for their capital

Maybe there's some sort of trading opportunity to short U.S banks and go long French ones. C'est la vie!

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008. He has no financial interest in Goldman or Morgan Stanley securities.

American banks pay the most for their capital originally appeared on BloggingStocks on Wed, 19 Nov 2008 16:45:00 EST. Please see our terms for use of feeds.

Continue reading Iranian concerns push oil higher

Iranian concerns push oil higher originally appeared on BloggingStocks on Mon, 21 Jul 2008 12:42:00 EST. Please see our terms for use of feeds.

BusinessWeek reports that some companies are now making it possible for people to buy products that are NOT made in China. For example, Swiss ingredient maker DSM Nutritional Products launched a "premium" Vitamin C that's made in Scotland rather than China, which provides 80% of the world's supply. Now DSM's Quali-C Vitamin C brand is benefiting from consumer's reluctance to buy Chinese products in the wake of the contamination incidents.

Here are three other companies likely to benefit from this anywhere-but- China sentiment:

• Fairway, an upscale New York grocery, reassures consumers that none of its seafood is Chinese;
• International Business Machines Corp. (NYSE: IBM) is pushing systems to trace the food supply from source to market so that people will know where their products come from;
  
• Freshpet, a Secaucus, NJ all-natural producer of premium dog food blended from meat and vegetables has seen its distribution increase from 200 stores to 1,000 stores, with another 1,000 coming by the end of 2007, tripling its sales to $50 million.

I sense an opportunity for a publicly-traded purveyor of anywhere-but-China consumer products -- maybe Freshpet can do an IPO. It looks to me like IBM's offering will not grow to be big enough to make a significant boost to its corporate profits.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in IBM.

Buying from anywhere but China originally appeared on BloggingStocks on Mon, 23 Jul 2007 12:54:00 EST. Please see our terms for use of feeds.