BREAKINGVIEWS

Jefferies faces half-a-million-dollar question

21 September 2018

That’s what the average employee of the Wall Street firm earns – some 25 pct more than peers at Goldman Sachs. Jefferies hands staff a higher portion of its revenue, yet has paltry returns. After a restructuring of its listed parent the gap is more prominent, and unsustainable.

$100 bln weed company is still in the pipe

21 September 2018

Cannabis producer Tilray’s shares have risen and fallen at a rate that makes virtual currency bitcoin look lethargic. Its CEO claims it could have a 12-digit valuation. He’s half right. A producer of that size is likely one day, but assuming it will be Tilray is foolish.

A message for HSBC’s disgruntled rainmakers

21 September 2018

An anonymous letter purportedly sent by “extremely concerned” employees accuses the lender’s investment banking division of lacking credibility and offering “rewards for persistent failure”. Breakingviews imagines CEO John Flint’s reply to the self-proclaimed whistleblowers.

Lobbyists reopen mutual funds’ $2 bln paper cut

21 September 2018

That’s what an SEC rule shifting printed and mailed shareholder reports online could save the $19 trln U.S. investment industry. The paper sector is suing to shred the plan, the latest chapter in a saga pitting economic and environmental common sense against D.C. dysfunction.

Uber’s profitability recipe starts with Deliveroo

21 September 2018

The taxi app may buy the $2 bln European food-delivery group, says Bloomberg. It’s a hefty mouthful for a company that’s steered clear of large dealmaking. As long as Uber Eats and Deliveroo are tearing chunks off each other, though, investors have little chance of a full belly.

Danske can deflect pitchforks with bonus clawbacks

21 September 2018

CEO Thomas Borgen may have resigned after the Danish bank’s money-laundering scandal. But if he’s allowed to keep bonuses awarded during the time in question, Danske’s reputation will fall further. Its board has powers to claw back unjustified variable pay – it should use them.

Smiths wobble fortifies case for more surgery

21 September 2018

The $8 bln engineer reported its first sales growth in five years, but the shares fell due to a weaker-than-expected outlook. After rejecting a sale of its medical unit, CEO Andy Reynolds is pruning assets and investing. That may not be enough to close a steep valuation discount.

Rodrigo Duterte’s toughest foe may be inflation

21 September 2018

The Filipino strongman finds himself under pressure from quickly rising prices for fuel, rice and more. The weaker peso and the president’s ill-timed tax overhaul are factors. The central bank, late to recognise the scale of the issue, could help with an aggressive rate hike.

Trump tariffs fallout hints at protracted battle

21 September 2018

As U.S. companies brace for taxes on another $200 bln of Chinese exports, many say they’re considering leaving the People’s Republic. That has Beijing wondering if such an exodus is as much a policy aim as IP theft. It’s one more reason to think the trade war is here to stay.

Chinese movie app IPO misses the red carpet

21 September 2018

The owner of ticket seller Maoyan wants to raise up to $1 bln in Hong Kong. Revenue has been climbing, but the unprofitable group is fending off Alibaba in a subsidy war. Box office numbers have cooled too, after a crackdown on fraudulent sales figures and several major flops.

Lone Star tactics can’t fix Chicago pension woes

20 September 2018

The Windy City is considering issuing debt to help plug a $28 bln retirement gap. Houston did a similar bond deal last year, but it had a smaller deficit and coupled borrowing with benefit cutbacks. Illinois law rules those out, making Chicago’s problem more difficult to solve.

Robocall infestation demands robot solution

20 September 2018

Scam calls may make up nearly half U.S. traffic next year, data suggests, up from under 4 pct last year. Society bears the costs in wasted time and swindles. The experience with email shows engineering will eventually provide more consistent relief than laws or fines.

Emirate airline M&A makes sense, if not quite yet

20 September 2018

Dubai’s Emirates and Abu Dhabi’s Etihad denied merger talks. But higher fuel costs, overlapping networks and Etihad’s woes make it an idea worth considering. A single UAE player might better address the threat from long-haul routes that will inevitably bypass the Middle East.