Saudi dollars overexcite Blackstone’s investors 23 May 2017 They've pushed the private-equity firm's shares up 9 pct since the kingdom's possible $20 bln infrastructure commitment was revealed, bringing the market cap to $38 bln. But finding investments will take time, and fees will be on the low side. The value uplift looks overdone.
Trump’s oil-reserve selloff plan is too hasty 23 May 2017 With U.S. crude imports decreasing, rethinking the size of the government's 688 mln barrel stockpile may make sense. But flattering the White House budget by $17 bln isn't a good reason for selling nearly half of it. Strategic and market factors should be the drivers.
CFAs look past financial returns for their rewards 23 May 2017 Philadelphia is a long way from Wall Street, judging by the atmosphere at the annual confab of investment advisers. With Jack Bogle and Robert Shiller warning of a subdued outlook for percentage gains, ethics and client service rang out in the city of brotherly love.
Twitter’s savior may yet be a socialism network 23 May 2017 The $13 bln microblogging site’s investors voted against studying whether to become a user-owned cooperative. It would be a smart solution for a company with lots of dedicated users but few revenue opportunities. Twitter’s sky-high valuation would need to drop considerably, though.
Nokia-Apple spat lays bare tech law of the jungle 23 May 2017 The two groups settled a patent row with a deal that includes the U.S. giant buying extra kit, and selling Nokia products in Apple stores. Patent wars may appear to be about legal rights and wrongs. They’re really just a fight over who gets what share of the value chain.
Euro rally is on probation 23 May 2017 The single currency is at six-month highs above $1.12. The euro zone economy’s improving health is being acknowledged, and French political risk has diminished even as it has risen in the United States. Yet options prices show little conviction that the gains will continue.
Suicide bombing brings tragic twist to UK election 23 May 2017 The attack that killed at least 22 concertgoers in Manchester is Britain’s deadliest in more than a decade. Its aftermath will dominate the remaining two and a half weeks of campaigning. As in other European countries, economic issues will take a back seat to security concerns.
Universal Music spinoff could be a one-hit wonder 23 May 2017 Vivendi could float a stake in its music label, the French media group’s CEO has said. The growth of online streaming has revived the industry’s prospects, but the long-term economics are still shaky. An offering would say more about chair Vincent Bolloré’s empire-building.
Only Russia can make OPEC great again 23 May 2017 Moscow is giving the cartel more pricing clout. A mooted deal to extend output cuts and drain global crude stockpiles can only succeed with the continued support of the world’s biggest crude producer. With U.S. drillers recovering, it may be time to make the alliance permanent.
Germany is dealing with its bank-branch addiction 23 May 2017 Measly interest margins and rising capital requirements are forcing the country’s savings institutions to cut costs and shut branches. Germany still has more banks than petrol stations, but the shift is helpful, and may benefit big lenders like Deutsche Bank and Commerzbank.
China’s noodle master has to get nimbler 23 May 2017 A profit rebound at Hong Kong-listed Tingyi is less than meets the eye. Rising ingredient costs are squeezing the firm, which works with Starbucks and Pepsi, and it relies too much on instant noodles and soft drinks. As China’s tastes get healthier, Tingyi needs to adapt faster.
India’s RBI risks a reputational downgrade 23 May 2017 The central bank may pick credit agencies to rate stressed loans, and help pay for the job. It is a bid to stop borrowers shopping for good scores. That could force agencies to adapt. But the idea may lead the regulator further into commercial decision-making.
HNA sees Value in connecting East and West 23 May 2017 The deal-hungry Chinese conglomerate reportedly wants to buy into Value Partners. The $2 bln fund manager trades on a lofty percentage of assets under management, thanks partly to high fees. Still, if HNA wants to link Chinese investors with the wider world, this could be handy.
Trump’s fanciful budget relies on voodoo economics 22 May 2017 Paid parental leave and caps on repaying student loans sound appealing. But the rest of the president’s budget plan to cut $3.6 trln relies on pie-in-the-sky assumptions about employment rates and reforming Obamacare and welfare. It’s a non-starter even for a Republican Congress.
Bill Ford deserves some blame for carmaker pain 22 May 2017 The Model T creator's great-grandson won plaudits for stepping down as CEO in 2006. But as executive chairman he was on hand for everything that led to Mark Fields’ ouster. The family's supervoting stake guarantees Ford’s job, but slashing his 2017 pay should be a no-brainer.
Wal-Mart’s online therapy may revive ailing retail 22 May 2017 Embracing e-commerce sparked a turnaround at the behemoth, while stocks plummeted at internet laggards Macy’s, J.C. Penney and others after poor sales. The industry’s online revenue is set to grow 70 pct by 2021. Stragglers risk ceding yet more business to Wal-Mart and Amazon.
Elliott’s hard work is just starting at Arconic 22 May 2017 The activist fund’s deal ending its bitter fight with the car- and plane-parts maker strengthens its grip on the board. It also puts one of its picks into the ring to be CEO. That shifts Elliott’s role from attacking poor results and governance to showing it can improve them.
Zimbabwe takes monetary lunacy to the next level 22 May 2017 The African state suffered hyperinflation in 2007 after paying bills by printing its own currency. A decade on, it is doing so by printing U.S. dollars instead. The idea of conjuring foreign currency from nowhere with the tap of a keyboard sounds too good to be true – and is.
Time for UK to lose timidity on taxing property 22 May 2017 Theresa May has backed down on a so-called “dementia tax” following a backlash against older Britons using their homes to fund social care. How much the state should subsidise these costs is up for debate. But unearned housing equity should be taxed more.
Wasted time is U.S. healthcare’s big hidden cost 22 May 2017 America spends 18 pct of GDP on the medical-industrial complex, almost double most countries and for poorer results. Yet the figure excludes the effort of finding approved doctors, getting reimbursed and the like. That makes the potential gains of health reform even greater.
Clariant-Huntsman tests formula for big M&A 22 May 2017 The $14 bln Swiss-American chemicals merger stacks up strategically, is fairly priced and could create $2.6 bln in post-tax savings. Yet the market initially factored in only half of the upside. The unpredictability of antitrust vetting and U.S. politics may explain the gap.
Two Irans go in different directions 22 May 2017 Reformist Hassan Rouhani was re-elected president in a landslide victory over hardliners. At the same time, U.S. President Trump placed the country firmly back into the “axis of evil”. The former ought to make Iran more investor-friendly, but it’s the latter that will shape its destiny.
Spain is beginning to look more like Italy 22 May 2017 Pedro Sanchez’s unexpected victory in Socialist primaries could weaken the already fragile minority government. The risk of a crisis is low, but a more fragmented parliament, similar to Italy, makes economic reforms harder, and undermines Spain’s call for European integration.
CEO ejection hardly gets Ford back in the race 22 May 2017 The $43 bln carmaker lags domestic rivals on many fronts, including self-driving and electric vehicles. The stock's 36 pct decline under Mark Fields was the most visible manifestation of it flaws. But naming a 62-year-old furniture executive to replace him is a puzzling remedy.
Clarity missing from SoftBank’s $100 bln Vision 22 May 2017 Japanese maverick Masayoshi Son has closed the first round of his huge tech fund. If he can find more gems like Alibaba, this could be a bonanza for SoftBank investors. For now, he has kept them in the dark without crucial details on everything from fees to profit sharing.
Hong Kong fights losing battle with property boom 22 May 2017 The territory is trying yet again to cool a red-hot real estate market. New curbs will make home loans less profitable for banks and increase down payments for borrowers. An acute land shortage and Chinese buyers' desire to diversify away from the yuan will limit the impact.
Saudis place $20 bln bet against U.S. dysfunction 21 May 2017 The Kingdom's pledge to Blackstone may turn into $100 bln of firepower aimed at upgrading American infrastructure. The problem is finding states and cities that want private cash. Riyadh will need a lot more patience than with its equally huge SoftBank-led tech venture.
Water investors will get used to cash calls 19 May 2017 Shares in Sao Paulo utility Sabesp plunged on news it may raise equity for post-drought projects. But its funding needs and already high leverage were no secret. With the global water sector requiring $10 trln of investment, this Brazilian capital raise won’t be the last.
OPEC caught in vicious Permian cycle 19 May 2017 As President Trump heads to Saudi Arabia, the oil cartel looks set to extend production cuts. It may buoy prices and keep drills running. But efficient U.S. wells in the Permian and elsewhere will benefit most, limiting increases. It’ll be hard for OPEC to regain the upper hand.
Review: Democrats’ chief firebrand fumbles message 19 May 2017 Elizabeth Warren's "This Fight is Our Fight" reads like a marker for a 2020 White House run. The senator from Massachusetts targets Donald Trump, lobbyists and Wall Street. Tales of struggling Americans are engagingly woven into the outrage. But her rote views limit her appeal.