Where to put Europe’s bank regulator? Try Bulgaria 26 May 2017 Brussels has invited member states to bid to host the European Banking Authority when its current host, Britain, quits the EU. The EBA hasn’t exactly dazzled in its handling of bank stress tests. But it could be a decent trophy for a non-euro country that feels unloved by the bloc.
Review: A premature requiem for the liberal order 26 May 2017 Globalisation is in retreat and democracy under attack. Two new books foresee a gloomy future for the Western-led economic and political system. Yet just as some were too quick to proclaim its triumph in 1989, the obituaries sparked by Donald Trump’s election may prove too hasty.
ChemChina creates new strain of LBO funding 26 May 2017 The chemicals giant is refinancing the debt backing its $44 bln purchase of Switzerland’s Syngenta. This involves less equity than a typical leveraged buyout, and $18 bln of perpetual bonds sold to three Chinese entities. This is M&A finance cross-bred with government policy.
Condom boom and two-child policy make odd couple 26 May 2017 A Chinese drugmaker and a buyout firm are buying the world's No. 2 condom-maker for $600 mln. The rich price could pay off, as Chinese couples invest more in safer sex. But this also highlights the difficulties Beijing faces in convincing the middle class to have more children.
Fox pokes sleeping advertising bear 25 May 2017 Cars.com, Peloton and others yanked commercials from Sean Hannity's popular prime-time show as he pushes a fake conspiracy theory. Brands also have targeted Bill O’Reilly and YouTube of late. Madison Avenue may slowly be transforming from a passive investor to a more activist one.
Holding: Courts may save startups from redemptions 25 May 2017 Cashing out venture capitalists on demand can leave other investors in a lurch. A case involving onetime dot-com darling Oversee.net and Oak Hill suggests judges have growing concerns. It’s an overdue warning about how such conflicts can hurt fledgling firms and their owners.
Viewsroom: Trump budgets his way to la-la land 25 May 2017 Basic economics - and decency - fall by the wayside in the administration’s pitch that it can create $2 trln of revenue by cutting $3.6 trln of costs. OPEC and U.S. fields battle for oil supremacy. Zimbabwe invents the zollar. And Bill Ford escapes his CEO’s crash unscathed.
Retailers’ upturn is a false bill of goods 25 May 2017 Sears laid out a rare profit, Abercrombie & Fitch sold more surfer-inspired apparel than expected and Best Buy got a jolt from electronics sales. While that's encouraging, Tiffany’s quarterly slump is a reminder the industry remains under pressure. The only certainty is more volatility.
French telecoms merit a Macron premium 25 May 2017 The new president has indicated he might sell some of France’s corporate shareholdings. A 23 pct stake in telco Orange looks a logical selloff candidate, which could spark domestic market consolidation. That would give peers like Bouygues, SFR and Iliad a boost as well.
FX market might benefit from statement of obvious 25 May 2017 New guidelines for the $5 trln-a-day currency trading market exhort participants to behave ethically and fairly. That will hardly deter miscreants. Still, the code has a good stab at clarifying grey areas and avoids creating exploitable loopholes. Best of all, it will evolve.
Post-election Merkel might change her spots 25 May 2017 Angela Merkel may have the option to pick the right-of-centre FDP as her new coalition partner in September, polls suggest. The FDP advocates low taxes, fiscal discipline and a euro zone without Greece. That could be an obstacle to euro reform, or a grand bargain with France.
Italy’s latest bank mess allows EU to act tough 25 May 2017 For a variety of reasons, the European Commission hasn't forced losses on Monte dei Paschi senior creditors. Tumbling bond prices of the smaller Veneto banks suggest they will be an easier target. Robust action would partially restore the credibility of Europe’s bail-in regime.
Daily Mail owner risks firing on no cylinders 25 May 2017 The UK newspaper’s parent DGMT has been able to offset media-sector ailments by growing in business information and events. A new cut to its forecasts suggests that formula could be reversing. The problem is that profitability could prove elusive at online crown jewel MailOnline.
Market forces fail working women in Asian hubs 25 May 2017 Hong Kong and Singapore are depressing places for women aspiring to boardroom roles. There has been glacial progress in promoting the gender, despite the proven business benefits and an ample talent pool in both cities. Authorities should embrace quotas to fix the imbalance.
Indian banks pile up risks with shock absorbers 25 May 2017 Lenders have pumped out more than $7 bln of contingent bonds that are written down if capital falls short. But implicit state support means investors are ill-prepared for losses. As some banks edge close to missing coupons, it is easy to imagine a system-wide freakout.
Human cost of Obamacare repeal bill is too high 24 May 2017 The U.S. House legislation, newly scored, threads the financial needle by cutting healthcare outlays and taxes about equally. But 23 mln Americans could lose insurance by 2026, doubling the number without cover, and premiums may skyrocket. It's hard to see the Senate buying it.
ETF industry dances faster with risky new ideas 24 May 2017 The tradable funds have grown wildly popular as an easy way to play the market. Now sponsors are dialing it up with plans for ETFs tracking asset-backed securities and the first fund to lever stock exposure four times, among others. The frenzy may end with a bang, not a whimper.
Trump budget is schizophrenic on infrastructure 24 May 2017 This week's White House plan adds $200 bln of federal money over a decade. On the flipside, though, it slashes several existing infrastructure-related programs. There are some practical suggestions but, as in the overall budget, smoke and mirrors hamper any real analysis.
Twin aims push Toshiba, Western Digital to a deal 24 May 2017 The Japanese firm needs cash quickly while its U.S. partner hopes to buy its chip unit on the cheap. Yet Toshiba wants certainty and Western can’t afford to see a rival steal the prize. An $18 bln bid by Western shows the forces pushing the two sides toward an agreement.
Hadas: The next financial crisis could be in forex 24 May 2017 Foreigners are happy to hold U.S. dollars, but a swelling supply of currency brings risks of a disastrous loss of confidence. With overseas greenbacks at 11 pct of world GDP and global politics fractious, the dilemma identified by Robert Triffin in 1960 remains all too pertinent.
Safran engineers itself halfway out of a hole 24 May 2017 The French engine maker has re-sculpted its offer for hapless peer Zodiac. The price has been cut by around 15 percent to $7.7 billion, and some of the original bid’s complexity is ironed out. The main unresolved issue: a bad investment now looks like a mediocre one.
“Too big to fail” trade backfires in Baku 24 May 2017 International Bank of Azerbaijan is restructuring $3.3 bln of foreign debt after loan and currency losses. Bondholders had counted on the Caucasus state to prop up the lender, despite weaker finances. The hunt for yield in emerging markets is bound to throw up other nasty shocks.
Sovereign downgrade will keep Beijing on its toes 24 May 2017 Moody’s has downgraded China for the first time since 1989, now ranking it below Taiwan. It is mostly symbolic as foreign debt ownership is minimal and local corporate ratings follow their own logic. But the public reprimand will check Beijing's ambition to attract funds onshore.
Glencore food binge could leave investors hungry 24 May 2017 An offer to merge with U.S. agricultural trader Bunge has strategic vision but lacks obvious financial returns. A full acquisition could cost the Swiss group’s food unit at least $15.3 billion, and that could affect Glencore’s ability to pay dividends later.
DONG’s green energy premium is a work in progress 24 May 2017 By hiving off its North Sea oil and gas assets for $1.3 bln, the state-owned Danish utility is now one of the biggest clean energy pure-plays. Yet its stock market value does not reflect this unique position. A 20 pct discount to German rival Innogy seems excessive.
Geely grabs a new growth engine on the cheap 24 May 2017 The Chinese carmaker is set to buy 49.9 pct of Proton. Reversing the Malaysian marque’s long decline won’t be easy, especially as a back-seat driver. But it is unlikely to cost much upfront. The Volvo owner’s latest bit of bargain-hunting could help it rev up in Southeast Asia.
Indian yogi shows power of local consumer kings 24 May 2017 Baba Ramdev says his group Patanjali doubled sales last year, making it bigger than the local arms of Colgate and GSK. A hand from India's ruling party may have helped. But his success also underscores how emerging markets consumers are increasingly sticking with national brands.
Jump at Bunge shows Glencore has its M&A mojo back 24 May 2017 The commodity giant's agricultural arm approached the $11 bln U.S. grain trader about a friendly deal. A takeover may not be the goal, and Bunge is cool on a tie-up. But after some tough balance-sheet repair, Ivan Glasenberg’s trading powerhouse is clearly back on the offensive.
Whiskey and wine can make fine corporate cocktail 24 May 2017 At first blush, Constellation Brands, with roots in an upstate New York vineyard, and Brown-Forman, maker of Confederate tipple Jack Daniel's, seem to have little in common. But a heritage of family control, maintained via dual-class shares, makes a $56 bln union look doable.
Brazil’s economy teeters at the abattoir gates 23 May 2017 Laws and sausages alike are famously messy to make. That Brazil's President Temer, a master of the dark legislative arts, may lose his job over meatpacker JBS's corruption charges is perhaps fitting. But pension reform still needs forcing through Congress, whoever's in charge.