BREAKINGVIEWS

GE’s clean sheet reveals real turnaround challenge

20 July 2018

A 30 pct fall in earnings in the latest quarter represented a victory of sorts for boss John Flannery’s restructuring. There were no big writedowns, a rarity in recent times, and cost cuts are ahead of schedule. But two of his three core businesses are still in serious decline.

U.S. farm tariff antidote would be fiscal venom

20 July 2018

President Trump wants a government credit agency to help farmers hurt by tariffs. It can borrow up to $30 bln from Treasury and is already in the red. Estimates show the U.S. deficit hitting $1.1 trln next year. What’s more, farmers prefer trade deals over Uncle Sam handouts.

Powell is ideal Fed chief for Trumpian times

20 July 2018

The U.S. president’s criticism of interest-rate hikes is a challenge to the Federal Reserve’s independence - but it shouldn’t trouble investors. Chair Jerome Powell is politically savvy and has earned bipartisan praise. Not being an econo-wonk like his predecessor probably helps.

State Street deal sends shareholders into tizzy

20 July 2018

They wiped about as much off the custodian’s value as the $2.6 bln it’s paying for Charles River. State Street’s optimistic assumptions warrant skepticism, as do suspending buybacks and selling stock to finance it. But it’s nuts for owners to react as if the tie-up has no value.

UK takes space leap as it leaves EU orbit

20 July 2018

Exiting the European Union has cast a cloud over Britain’s membership of the Galileo satellite-navigation project. Going it alone could leave the government with a big bill. Building Europe’s first launch pad, though, taps into strong demand for new commercial satellites.

Burberry spotlights fashion’s burning issue

20 July 2018

The brand is under fire for incinerating 29 million pounds of unwanted stock last year. It is unusually transparent about a common practice in the luxury sector. As consumers become more sensitive about carbon emissions and waste, the wider industry can expect greater scrutiny.

HNA’s market thaw provides only cold comfort

20 July 2018

Three listed units of the troubled Chinese conglomerate lost a combined $1.5 bln in value after long trading halts ended. It signals a lack of confidence about HNA’s restructuring plans as it regroups without its late chairman. Pity investors trapped by a 10 pct downside limit.

Lloyd’s insurer battered by twin setbacks

20 July 2018

Beazley shares dropped 5 pct after the insurer’s first-half pre-tax profit fell by two-thirds. A hit to its bond portfolio from higher U.S. yields should have been expected. But boosting reserves for property claims following last year’s natural disasters is a nastier surprise.

Aussie tycoon hammers home overboarding message

20 July 2018

James Packer resigned from a whopping 22 more directorships after he quit the Crown Resorts board for mental health reasons. Campaigns against such overstretched executives are on the rise, as evidence suggests returns can suffer. Companies would be wise to demand greater focus.

China’s air quality depends on its debt clean-up

20 July 2018

Efforts to reduce smog have been an underrated success, with air pollution down by around 33 pct in some cities last winter. The campaign to trim the $20 trln corporate debt pile helped, as it cut credit to inefficient factories. If Beijing resumes easing, haze could reappear.

Microsoft could use some self-inflicted activism

19 July 2018

The software giant now has more than $50 bln in net cash, thanks in part to successfully growing its cloud platform. Tax changes will boost its hoard even faster. With debt easily manageable, the company ought to boost dividends and buybacks, before pushy investors force it to.

Automakers’ U.S. tariff fight heads down dead end

19 July 2018

The industry argues import duties would force Americans to pay an extra $83 bln a year for new cars. There’s a chance next week’s Trump-Juncker summit will yield a deal. But the U.S. president seems determined to punish countries for past trade wrongs, real or perceived.

High hopes accompany Wall Street’s first weed IPO

19 July 2018

Canadian cannabis producer Tilray's stock opened a third above its already raised IPO price, nudging its value above $2.1 bln. That's hefty, but still below bigger Canadian peers Aurora and Canopy Growth. Investors seem undeterred by industry risk - and a dual-class share structure.