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David Callaway
Feb. 17, 2011, 12:01 a.m. EST
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Complacent bulls ignore January turmoil
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Sanofi's big Genzyme hedge
By David Callaway, MarketWatch
SAN FRANCISCO (MarketWatch) "” As a young reporter 15 years ago in London covering a series of German takeovers of British investment banks "” and finally, the UK's futures and options exchange by Deutsche Boerse "” I was always struck by the anti-German reaction in the tabloid press.
Pictures of well-known bankers in Nazi uniforms, references to Blitzkreigs and the ubiquitous "Fritz" references to anybody of German origin underscored most coverage of the takeover of largely failing British financial companies by their stronger German rivals.
The Bank of England stuck to its party line when presenting its quarterly Inflation Report: price strength is temporary, growth is fragile. Sterling markets were looking for something more hawkish, to say the least, which explains the pound's weakness.
Fair enough. The British have a longer, tougher history with Germany than the U.S., including the two world wars, months of direct bombing raids on London in 1940 and 1941, and the consistent victory of Germany's national soccer team over Britain in big tournaments, often in penalty kicks.
The relative absence of such commentary in the U.S. press during the sale of the New York Stock Exchange to Deutsche Boerse this week underscores the lack of historical antipathy for Germany, the world wars not withstanding, but also something more significant. The deal officially slammed the door on the surge of protectionist overreaction that sprang from the global financial crisis.
A year ago, this might have been a lot harder to do, especially with Germany under fire for its reluctance, now proved correct, to back a European bailout of Greece and Ireland. The Canadian government slammed the door on BHP Billiton's /quotes/comstock/13*!bhp/quotes/nls/bhp (BHP 93.30, -1.26, -1.33%) bid for Potash Corp. /quotes/comstock/13*!pot/quotes/nls/pot (POT 185.53, +1.89, +1.03%) at the end of last year. And the Singapore exchange's bid for its Australian counterpart is still facing some heat from politicians in Canberra.
Of course, the NYSE deal carried its share of excuses and justifications, mostly tied to the major shareholders not being German and the boards being international as well. This is nothing new in the global marketplace. It just seemed to go over better on this deal.
Make no mistake. This will be a German-led operation, just as Deutsche Boerse ran the London International Financial Futures and Options Exchange from Frankfurt before it went electronic, and just as it runs Deutsche Bank from there, even though the investment banking arm is arguably stronger in both London and New York.
The real story here is that after three years of hiding in the public relations shadows, globalization is back. Yes, it caused the financial crisis to spread from Las Vegas houses to Icelandic debt and crush British and Irish banks, but it's also helped the recovery happen faster.
The fact that most savvy investors hid out in emerging markets during the crisis also should not be lost on those who claim national treasures as a pretense for protectionist political policies.
Only six weeks ago, as we recovered from the holiday season, nobody was expecting that a major event of 2011 would be the ouster of Hosni Murbarak in Egypt or the spread of protests across the Middle East. Go back and check everybody's 2011 predictions. Not there.
The global market presents sudden challenges but also enormous opportunities for those prepared to act quickly. Deutsche Boerse has never been shy. It was championing electronic trading when futures traders in London and Chicago were still gung-ho on open outcry pits, and when there were still enough specialists on the NYSE to jostle Maria Bartiromo for camera time as she gave her daily reports from the floor.
Expect more exchange mergers this year, with Hong Kong Exchanges and Clearing Ltd. /quotes/comstock/22h!e:388 (HK:388 166.50, -1.00, -0.60%) a focus of enormous attention. A global exchange is coming fast, but we're still at the regional stage, at least for stocks, bonds and commodities.
Most politicians, led by former British Prime Minister Gordon Brown, railed against rising protectionism during the crisis. Now that the threat has passed, the major global economies can concentrate on growing again "” just in time for the two-year anniversary of the bull market next month that saw it all coming.
David Callaway is editor-in-chief of MarketWatch.
David Callaway is editor-in-chief of MarketWatch, responsible for the global news coverage of 100 journalists in 12 bureaus in the U.S., Europe and Asia. A financial journalist for more than 20 years, Callaway has worked for Bloomberg News, the Boston Herald, and assorted television and cable stations as a reporter, columnist and commentator.
Sanofi-Aventis closed the buyer-seller gap with a pledge to pay full value to Genzyme shareholders upon delivery of an unfinished product, writes Jim Jelter.
5:08 p.m. Feb. 16, 2011
"NYSE deal ends crisis-inspired protectionism: A surge in global protectionism after the financial crisis ha... http://on.mktw.net/dIe52c" 12:43 a.m. EST, Feb. 17, 2011 from dcallaway
"Complacent bulls ignore January turmoil: A volatile January of storms and global turmoil has underscored a ... http://on.mktw.net/fumZfv" 7:45 a.m. EST, Feb. 3, 2011 from dcallaway
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