BREAKINGVIEWS

Buffett’s main asset isn’t money but patience

3 April 2020

The Nebraska billionaire rescued companies before - think GE and Goldman. Lower asset prices give him a chance to double down on troubled investments, or buy firms outright. But with government aid buoying values, there's little reason to move until things get really desperate.

Starboard takes no prisoners, offers no pity

3 April 2020

A pandemic hasn’t stopped the activist fund from going hard on companies like eBay and GCP. Other notoriously difficult investors – Elliott, Icahn – are showing restraint. Covid-19 shouldn’t be a shield for badly run businesses, but cutthroat tactics are best used sparingly.

Money-market funds feel stimulus ripple effect

3 April 2020

Some Fidelity funds turned away investors for fear that yields on the products could turn negative. It’s not the same as a dreaded breaking-the-buck moment, but is still a headache. Massive issuance of new Treasuries should help, but it’s another case of unintended consequences.

Payment companies will emerge as lockdown winners

3 April 2020

Reluctance to touch banknotes and fewer chances to spend them are speeding the shift to digital money. The $1.9 trln global industry will take a short-term hit from lower volumes. But once the pandemic eases, cash will be less relevant. The likes of Adyen and Nexi should benefit.

Virgin has bailout headwinds besides Branson

3 April 2020

The bearded businessman’s airline wants 500 mln pounds in UK state aid. Supplier Rolls-Royce wants it to stay aloft; arch-rival British Airways does not. Branson’s non-resident status, a big U.S. co-owner and Virgin’s shaky financial record mean the government may agree.

Amadeus ups the bar for travel-sector crisis prep

3 April 2020

The $20 bln Spanish IT group is raising $1.6 bln in debt and equity to bolster its balance sheet. The financial terms are fairly beneficial for Amadeus, implying that it’s not exactly desperate for cash. Still, with steep declines in air traffic it’s wise to plan for the worst.

Virus hands Elon Musk electrifying cost challenge

2 April 2020

Tesla’s boss has ironed out most of its production snafus and amassed enough cash for the carmaker to go almost a year without revenue before running out of juice, longer than Ford or GM. But Musk can only pull that off if he has finally mastered how to keep costs under control.

China’s wannabe fashion empire unravels

3 April 2020

Two years after agreeing to buy Swiss luxury brand Bally from JAB for $600 mln, Shandong Ruyi has failed to nail down financing. Its large and complex debt structure looks increasingly shaky. Even an HNA-like fire sale for the Lycra and SMCP owner will be tough in these times.

Brazen Trump oil claims may yet fire partial deal

2 April 2020

A day before meeting with beleaguered U.S. crude-industry execs, the American president predicted an epic supply cut by Saudi Arabia and Russia. Yet he may only need a chunk of the 10 mln barrels a day reduction he’s hoping for to keep the U.S. shale industry from total collapse.

Meaning of U.S. jobs market data mutates

2 April 2020

Last week’s record-busting 6.6 mln new unemployment claims say something about the sudden impact of the Covid-19 pandemic, but not much at all about longer-term economic trends. Friday’s monthly report is already history. The hope is the rebound will also be unprecedented.

Luckin spills hot bezzle over credulous investors

2 April 2020

Fraud expands with good times and emerges in bad. A U.S.-listed Chinese coffee-shop disruptor once worth $13 bln just said much of its revenue last year may be fictitious. In this case, it didn’t take a downturn, just auditors doing their job. Just wait until the tide goes out.

Germany is in the fast lane for an auto bailout

2 April 2020

EU auto manufacturers are shutting factories and furloughing workers. Current liquidity buffers can keep them going on average for around five months, assuming sales evaporate. If a virus-induced lockdown drags on, Volkswagen and Daimler could be the first to face a cash crunch.

Mr. Whatever It Takes is Italy’s post-corona card

2 April 2020

As ECB chief, Mario Draghi saved the euro in 2012 with monetary policy magic and prevented an Italian default. As Italy crumbles under the cost of a spiralling epidemic, his name has emerged as either the next premier or president. But he shouldn’t rush into either job just yet.