European banks have little to lose from rate cuts 25 Apr 2024 Tighter monetary policy boosted revenue at BNP Paribas, Deutsche and Barclays, who now face ECB and BoE loosening. Markets expect some 50 basis points of rate cuts, but that shouldn’t hurt bank income much. Deposits may get cheaper, while old loans keep rolling onto higher rates.
Time for Kering’s king to consider a step back 24 Apr 2024 François-Henri Pinault, heir to the family fortune, has been at the helm of the 40 bln euro French luxury conglomerate for nearly 20 years. With returns shrinking and as flagship brand Gucci struggles, Kering may benefit from fresh blood – and possibly a new CEO.
Macron wades into a very French debt crisis 24 Apr 2024 Some investors are avoiding the country’s bonds after its budget deficit topped 5% of GDP. Paris is unlikely to require an IMF or European bailout. But President Emmanuel Macron has to bring public finances under control. That will come at a heavy political and economic price.
European airlines’ hot summer belies sector clouds 23 Apr 2024 Jet shortages mean that carriers may be able to charge higher fares this summer, ending years of overcapacity. For stronger players like $25 bln Ryanair, that could mean fatter margins. But it’s likely to be a short-term reprieve for a sector that’s grappling with other costs.
Telecom tycoon ensnared by his hefty debt machine 18 Apr 2024 Patrick Drahi built the ocean-spanning Altice empire on the back of aggressive dealmaking and $60 bln of borrowing. The bill is coming due with interest rates elevated. In this Viewsroom podcast, Breakingviews columnists discuss what comes next as bondholders get restless.
Luxury’s great divide will get more striking 17 Apr 2024 Sales at $420 bln LVMH rose a dull 3% in the first quarter. The Tiffany-to-Dior behemoth’s insipid performance points to a broader fragility within the sector. With revenue in the luxury industry flattening, the gap between winners and losers is set to grow wider.
Sotheby’s next hot auction: a Picasso-backed bond 11 Apr 2024 The auctioneer owned by Patrick Drahi is selling securities backed by collectors’ hoards. With only $34 bln of art-based lending, there’s scope to reach more borrowers. But there are good reasons why art, which is hard to verify and value, has resisted slice-and-dice financing.
How Boeing’s woes change everything but planes 11 Apr 2024 Grave problems with the jetmaker’s 737 MAX have sparked a crisis. In this Viewsroom podcast, Breakingviews columnists explain whether rival Airbus offers a template for policymakers, the impact of a US export champion floundering, and why others may struggle to capitalize.
Société Générale CEO is pruning a decaying tree 11 Apr 2024 Slawomir Krupa agreed to sell an equipment-financing unit to local French rival BPCE for 1.1 bln euros. It’s a good price, and Krupa is right to clear out peripheral assets that languished under his predecessor. The problem is that the bank’s core isn’t alluring either.
How Patrick Drahi can clamber out of his debt hole 11 Apr 2024 The tycoon’s Altice telecom empire is straining under $60 bln of borrowings, and creditors of its French unit are gunning for a fight. Yet loose bond terms, and the debt’s low trading prices, lend Drahi an escape route. He just needs to hope investors have short memories.
Airbus obsessives have a shaky grasp of history 9 Apr 2024 The $140 bln pan-European group is flying high as rival Boeing stutters. Now carmakers and others are wondering if similar collaboration could help them face down overseas competitors. But Airbus’s idiosyncrasies and convoluted road to success make copycat plans pie-in-the-sky.
Vivendi gives Canal+ a South African dowry 8 Apr 2024 The French pay-TV operator has offered $1.9 bln to buy out South African broadcaster MultiChoice. Despite a significant increase on an earlier bid, the price looks reasonable. Consolidating its presence in a fast-growing market may boost Canal+’s appeal in an upcoming IPO.
Profitability is next sacrifice at inflation altar 2 Apr 2024 Central bankers want LVMH, Pepsi and others to pay higher wages without raising prices. Bottom lines in the euro zone already have dipped to 40% of output, the lowest rate since 2020, and Big Tech accounts for most US margin growth. CEOs and investors can expect leaner times.
Macron’s fiscal chickens come home to roost 21 Mar 2024 The French president is scrambling to deal with an official report likely to show dismal public finances and a deficit near 6% of GDP. He ignored warnings as debt topped 110% of economic output. Bond investors are relaxed but spending cuts will be the price of his insouciance.
Deeper Gucci woes test new CEO’s luxury touch 20 Mar 2024 Sales at Kering’s top brand are falling fast. An unproven designer, China weakness and a volatile client base are behind the group’s discount valuation. With M&A limiting hopes of buybacks, Gucci boss Jean-François Palus has a harder task convincing investors to stay the course.
European telcos’ new deal hopes face reality check 1 Mar 2024 Executives gathered in Barcelona this week to plead for lighter regulation, cheaper spectrum and some financial help. Policymakers are unlikely to agree. Deutsche Telekom, Telefónica and others will have to convince investors that future growth requires more investment today.
Europe defence requires more than a $75 bln boost 16 Feb 2024 Non-US NATO members will spend 2% of GDP on their militaries in 2024. Yet the extra $75 bln a year it entails remains below what Europe will need. Ukraine, technological advances and US wavering mean their true requirement is more like 3% of their output.
The green agenda’s best shot at a revival 13 Feb 2024 Economic distress prompted by globalisation undermines support for the energy transition, climate change economist Valentina Bosetti tells The Exchange podcast. That matters as key US and EU elections approach. Using proceeds from carbon taxes to address inequality is paramount.
Hermès’ winning style is hard to replicate 9 Feb 2024 The French seller of $10,000 Birkin bags has outshined rivals, shrugging off inflation fears and a slowing China. Elite shoppers who see its high-end leather products as a store of value create resilience. Gucci-like brands, more exposed to fashion moods, look more fragile.
Publicis lead over WPP looks hard to overturn 8 Feb 2024 The $25 bln French ad giant is growing faster than its $11 bln UK rival. Publicis’s relative lack of exposure to the tech sector is one key advantage, but it’s also run more efficiently and has made better strategic choices. WPP’s plan to stop the rot looks unlikely to do so.