Apple marching to the drum of its own Beats 30 Jun 2015 The company’s new subscription music streaming and online radio services could upend markets dominated by Pandora, Spotify and SiriusXM. Their combined annual revenue of $6.4 bln would be equaled by just 6 pct growth in iPhone sales. The hardware angle sets Apple’s effort apart.
New Greek bailout bid mixes chutzpah with caution 30 Jun 2015 Athens wants a last-minute EU backstop loan to avoid a technical default if it doesn’t repay the IMF on Tuesday. Assuming the answer is no, it might convince Greeks to vote for euro exit. It could also serve as a signal to the ECB not to cut off emergency Greek bank loans.
Breakups, activists presage more industrial M&A 30 Jun 2015 Emerson said it plans to hive off its struggling network power business, a possible prelude to more spinoffs at the $37 bln conglomerate. And Nelson Peltz took a stake in $12 bln rival Pentair, saying he wants management to do deals. It’s more fuel for the mergers fire.
Rob Cox: Uber gets a pass on its Wall Street habit 30 Jun 2015 Big banks break rules and pay fines. Traditionally it’s just a cost of doing business. Uber, meanwhile, pays fines when drivers violate regulations that stand in the way of its business model. Nowadays banks attract outrage, but Uber is often forgiven in the name of disruption.
EU’s net neutrality pragmatism looks prudent 30 Jun 2015 The European Commission says its new internet access rules are the world’s strongest. A carve-out for high-quality services might be abused: definitions of specialised content will shift as technology advances. Still, Europe’s nod to the web’s commercial realities is welcome.
Winners’ bets get bolder in the biotech casino 30 Jun 2015 Celgene is paying a 100 pct premium for a 10 pct slice of two-and-a-half year-old Juno Therapeutics. That sounds bonkers, even for a fast-moving technology like immune cell modification. The sector is on a streak, but the risk of crapping out in drug development remains high.
Willis-Towers Watson insure against market turmoil 30 Jun 2015 The insurance broker and the risk consultant plan to merge. There’s positive logic: combining Towers’ knowhow and Willis’ client relationships could drive revenue. But $125 mln of cost synergies would also help the group weather an insurance sector wrestling with low rates.
Greece makes IMF stooge in game-theory drama 30 Jun 2015 Athens probably won’t pay the IMF debt due on June 30. It’s a tactic - the Greek government can and will honour the debt eventually. But non-payment puts pressure on the euro zone to sweeten its deal – or to collapse Greek banks and accelerate euro exit.
Corporate financiers put brave face on Greek crisis 30 Jun 2015 Dealmakers would be forgiven for putting almost any plan on ice, pending some sort of resolution of the Greek debt drama. The $18 billion Towers Watson-Willis merger and the IPO of market maker Flow Traders suggest that deals can still get done, even if it’s with gritted teeth.
Chinese stock markets need more than lip service 30 Jun 2015 The selloff is dramatic but only affects the relatively few people who own equities. A wider risk is that a prolonged slump would slow reforms and undermine faith in China’s rulers. In the short run, overt state support may be the most effective way to avoid losing credibility.
KKR pioneers dubious sort of private equity deal 29 Jun 2015 The firm that helped blaze the trail on LBOs four decades ago has become one of the first to settle with the SEC over expenses charged to investors in its funds. KKR will have company, however. Individual sums may be small but, like the fees themselves, they’ll start to add up.
Supreme Court alters rulemaking costs and benefits 29 Jun 2015 U.S. justices quashed air-pollution limits whose expense seemed to far exceed their worth. Though a narrow decision, it’s a growing problem in financial regulation, too. With judicial knives out for questionable rules, agencies drafting them may have to adjust their own thinking.
Capital controls hit Greek economy at worst time 29 Jun 2015 Closing the stricken state’s banks would be a disaster at any time of year. But Athens’ capital controls are kicking in just as one of Greece’s main drivers – tourism – hits peak season. Even if Greeks don’t leave the euro, 2015 will be a writeoff.
Puerto Rico mixes bitter sovereign-muni cocktail 29 Jun 2015 The U.S. territory says it can’t repay $72 bln of debt. A national borrower could try to devalue its way out of the mess. But Puerto Rico, like Greece, doesn’t have that option. A Detroit-style bankruptcy would require changes in U.S. law. It’s the worst of both worlds.
SpaceX flameout hardly heralds failure 29 Jun 2015 Space flight is like the venture capital industry in reverse: Most launches succeed, but a prominent few explode spectacularly. The formidable barriers to entry, rivals’ similar failures and SpaceX’s relatively low costs mean Elon Musk’s company remains on the right trajectory.
Muted markets validate EU hardball with Athens 29 Jun 2015 Next Sunday’s referendum could force Greece to leave the single currency. Yet bond markets are trading shy of full crisis levels. If things stay that way it eases the pressure on euro zone politicians to offer sweeter terms to the country’s leader, Alexis Tsipras.
Bafin spat suggests Deutsche reshuffle was timely 29 Jun 2015 The German regulator’s review of the lender’s Libor affairs has accused outgoing co-CEO Anshu Jain of lying. Jain rejects the allegation as baseless, says Deutsche. But the resulting tension would have made it difficult for him to stay on.
China’s rate cut leaves central bank in a trap 29 Jun 2015 The People’s Bank is justified in cutting rates and giving banks extra lending power. But unfortunately the authorities look like they are trying to stop bubbly stock markets from sliding. They are damned if the easing works, and even more damned if it doesn’t.
Hugo Dixon: It’s still possible to stop Grexit 29 Jun 2015 Athens has declared a six-day bank holiday after talks with its creditors broke down. But there are several ways Greece can still avoid quitting the euro. The most obvious is to vote in the coming referendum for the terms offered by the euro zone and International Monetary Fund.
China taxi apps speed towards subsidy showdown 29 Jun 2015 Local taxi-hailing app Didi Kuaidi is raising up to $2 bln less than a month after rival Uber said it will invest $1 bln in the People’s Republic. Both are racing for market share by spending heavily on subsidies for drivers. The question is whose investors lose patience first.
BIS’s prudence ignores central banks’ pay problem 29 Jun 2015 The Basel-based body wants central banks to focus more on fighting financial excesses and less on stoking demand. That’s fine, but labour’s falling share in output – and the disinflation that it helps create – present challenges that monetary authorities will have to deal with.
ECB should resist giving Tsipras more ammunition 28 Jun 2015 Greece will shutter banks and limit withdrawals after the ECB refused to increase funding. That could help leader Alexis Tsipras convince Greeks to back euro exit in a July 5 referendum. The ECB could counter by maintaining its loans even if Greece defaults on the IMF this week.
Hugo Dixon: Tsipras gambles Greece 27 Jun 2015 The Greek PM is offering the people a choice between bad and extremely bad. Capital controls are likely before a July 5 vote on the creditors’ terms. It’s not clear their offer will be on the table even if the people want it. If they don’t, the drachma and more misery lie ahead.
Supreme Court slices Wall Street some wedding cake 26 Jun 2015 The landmark ruling approving gay marriage gives even banks reason to celebrate. Benefits for same-sex spouses will be far cheaper and easier to grant, enabling stronger competition with more progressive Silicon Valley for workers. It’s a joyous union of equality and utility.
Brazil needs Dilma 2.0 to shine on U.S. visit 26 Jun 2015 President Rousseff’s statist policies helped put Brazil’s economy in the tank. Her task now is to convince U.S. investors the more market-friendly persona she has adopted since re-election is real and resilient. Robust backing for her finance minister would reassure Wall Street.
WeWork stretches sharing-economy valuations 26 Jun 2015 The groovy provider of office space - and beer - to millennial workers is now worth $10 bln after its latest funding round, doubling in just six months. WeWork is growing fast, but based on established rivals’ metrics earnings would need to jump 15-fold to justify that price tag.
Rising China: a required reading list 26 Jun 2015 China has towering international influence and a huge population. It will soon be the world’s largest economy too. But it’s hard to know what makes the People’s Republic tick. Enter the Breakingviews required reading list, eight works agreeably free of “dragon” in the title.
Thiam needs $5 bln to transform Credit Suisse 26 Jun 2015 The Swiss bank’s weak capital position is a strategic straitjacket. For incoming boss Tidjane Thiam to be able to grow its private bank in Asia or elsewhere, a big rights issue is essential. Cutting a third of investment banking assets would ease the burden on shareholders.
Potash Corp’s German foray reflects cartel woes 26 Jun 2015 The Canadian group that controls a fifth of global potash wants to buy K+S for over 7 bln euros. Success would give Potash Corp its German rival’s new Canadian mine and more pricing power. With a Russian cartel in flux and BHP also a threat, the move looks defensive.
Endesa LBO merchants may fall between two stools 26 Jun 2015 Private equity funds eyeing Spanish energy utility Endesa might need to go big to get anywhere at all. There’s reported interest in buying a chunky stake from Italy’s Enel. A takeover costing 29 bln euros with debt would make more sense. But that could prove too gutsy.