Draghi’s hints have more clout than Yellen’s deeds 28 Jun 2017 ECB chief Mario Draghi had more market impact by alluding to higher rates than Fed Chair Janet Yellen did by hiking them two weeks ago. That fits a recent pattern: central bankers who have yet to tighten policy are more apt to upset expectations – and that’s what moves prices.
Rio Tinto right to take China’s $2.7 bln and run 27 Jun 2017 In selling a group of thermal coal mines, the miner weighed up a higher, less certain price from China’s Yancoal, or a lower, more secure bid from Glencore. The former looks better. Selling to China could bring other benefits. The main thing is to get shot of dirty fuel assets.
Philips deal healthier for patients than investors 28 Jun 2017 The Dutch healthcare equipment maker is buying loss-making US rival Spectranetics for more than 6 times next year's revenue in a $2.2 bln deal. Ramping up expertise in treating cardiac disease makes strategic sense, but the high price adds unhealthy financial side-effects.
Cornered Toshiba rounds on Western Digital 28 Jun 2017 A $1 bln Tokyo lawsuit is meant to force Western Digital to back off from its U.S. litigation. If it doesn't, a vital $18 bln sale could be held up. That would imperil Toshiba’s future, but could hurt Western Digital too. Compromise appears implausible, yet it's urgently needed.
Hong Kong finds Beijing flunking soft-power test 28 Jun 2017 The central government is investing heavily overseas and touting itself as a benign benefactor. But in 20 years it has alienated many Hong Kongers. The bad PR is a blot on China’s image. It suggests Beijing has a lot to learn about winning friends and influencing people.
Breakdown: A graphic portrait of Hong Kong 28 Jun 2017 The city’s fortunes have become ever more entangled with China’s. Breakingviews shows through graphics how the turbulent relationship has shaped the economy and markets, whilst stoking property prices and political tensions.
Hong Kong’s test-bed role is valuable and fragile 28 Jun 2017 Beijing has gifted the city with schemes linking investors to mainland currency, stock and bond markets. The tightly controlled pilots offer unique access to China. But they could either be swept away by deeper overhauls, or hobbled if the central government retreats on reform.
Nestlé serves up only semi-sweet buyback 27 Jun 2017 Days after being put on the spot by Dan Loeb, the Kit Kat maker said it would repurchase up to $21 bln of shares over three years. It's an incremental step, like a review of the U.S. candy arm. Ignoring bigger issues, however, could allow the activist to marshal more support.
Exchange Podcast: Giuseppe Sala 27 Jun 2017 The mayor of Milan celebrated his first year in office as authorities completed Italy's largest bank bailout. The Exchange visited Milan's city hall, the 16th century Palazzo Marino, to hear Mayor Sala's plans for making the city a post-Brexit financial capital.
Brazil shambles toward zombie rule 27 Jun 2017 President Temer probably can cling to his job despite corruption charges leveled by the country's top prosecutor. His focus on survival, however, is apt to sap life from much-needed efforts at fiscal restraint. Semi-paralysis will be the state of play until 2018 elections.
Google’s EU fine more about principle than money 27 Jun 2017 While a 2.4 billion euro penalty is the biggest Europe has ever applied for antitrust violations, Google is rich enough to absorb the hit. More damaging, if it sticks, is the new idea that the search giant ought not to use its market dominance to privilege its own products.
Cable guys’ Sprint lurch bound for crossed wires 27 Jun 2017 Comcast and Charter are in talks with the $33 bln U.S. mobile carrier that may include a range of options, from the use of airwaves to an acquisition. Wherever they end up, a ménage-à-trois involving moguls John Malone, Brian Roberts and Masayoshi Son could prove ungainly.
London fire hits at Arconic’s weakest spot 27 Jun 2017 Fear of lawsuits over cladding involved in a deadly high-rise fire knocked the company’s stock. The blow to its image may compound the damage. A recent proxy fight revealed an insular corporate culture. With only an interim management, Arconic will struggle to contain the crisis.
Bank of England tries surrogate rate hike 27 Jun 2017 The central bank’s bubble-pricking committee is raising the minimum capital ratio for UK banks by up to a full percentage point. The surgical tool may help to rein in frothy consumer lending. But the blunt instrument of higher policy rates cannot be delayed forever.
Stada fiasco has roots in flawed German M&A rules 27 Jun 2017 Bain and Cinven’s 5.3 billion euro offer for the drugmaker collapsed despite a 49 percent premium. While the bidders may have a second go, the debacle is a lesson in how investment strategies that exploit misguided takeover rules can go terribly wrong.
Politics are a bar to faster AIB selldown 27 Jun 2017 Shares in the Irish bank rose 8 percent after a heavily oversubscribed IPO. The government - still the lender’s majority owner - may be tempted to rethink a self-imposed cap on how fast it can offload its remaining stake. But political wrangles make a speedy exit unlikely.
Germany can jump growth hurdle courtesy of Brexit 27 Jun 2017 Europe’s biggest economy is expanding so quickly that there’s a growing dearth of skilled labour. The shortage may be severe enough to depress the long-term growth rate, the Bundesbank says. One way to plug the gap is to attract EU workers who no longer feel welcome in Britain.
China’s latest logistics IPO is hard to unpack 27 Jun 2017 Alibaba-backed Best Inc could raise $1 bln in New York, a few months after a rival's disappointing debut. The loss-making group is faster-growing and more diverse. But the extra complexity could make this a hard sell for already-wary investors.
Time for Hong Kong to steer a new economic course 27 Jun 2017 The fragrant harbour has long been China’s gateway to the world in trade, finance, and much else. Two decades after the handover, some traditional middleman roles are waning. Reinvigorating the economy means playing to existing strengths - and fixing some glaring problems.
U.S. Senate healthcare bill lacks “heart” to pass 26 Jun 2017 Donald Trump wanted a less "mean" rollback of Obamacare. Yet the Senate spared only 1 mln of 23 mln set to lose health cover under the House plan, by Congressional Budget Office figures. The White House is undermining the CBO, but even a Republican-only deal will need surgery.
U.S. waterworks wrestle with funding spigot 26 Jun 2017 The industry needs some $5 trln to patch up pipes, yet is getting little help from Washington. Water leaders convening in New Orleans this week have plenty of ways to woo investors. Fragmentation, cash-strapped customers and struggling utilities present significant risks, though.
Silicon Valley reinvents avoidable sexism scandals 26 Jun 2017 Binary Capital is imploding amid claims of predatory behavior. Uber is belatedly tackling similar issues. Venture-capital doyen Reid Hoffman wants an industry “decency pledge.” That's fine, but the tech world could have learned long ago from experience, including on Wall Street.
U.S. GOP tries version of “extend and pretend” 26 Jun 2017 The mantra used to defer the reckoning on dodgy loans has come to Congress. Some lawmakers want to extend the 10-year budget horizon to at least 20 years. That would allow bigger tax cuts and deficits in the near term, but would be as irresponsible as the worst of Wall Street.
Brexit assurances give EU citizens scant comfort 26 Jun 2017 The government has told Europeans they will not be forced to leave the United Kingdom. That’s welcome. But many grey areas will depend on the judgement of overworked bureaucrats. Worse still, any pledges could be rendered invalid if Britain crashes out of the EU without a deal.
Time’s Fortune 500 index reeks of desperation 26 Jun 2017 The publisher hopes a new stock benchmark based on its business magazine’s list of the largest U.S. companies can bring in much-needed revenue. It may have worked over a decade ago. But rivals like the S&P 500 have already won over the most promising users: passive funds.
Match.com owner leaves investors looking for love 26 Jun 2017 A CalPERS lawsuit has forced IAC to scrap plans to use non-voting stock to give Chairman Barry Diller eternal control of the company. Legal threats may thwart similar egregious ideas. But to remove existing supervoting powers at Facebook, Snap and the like is a far harder task.
Russia’s Fridman goes from bitter pill to UK tonic 26 Jun 2017 The oligarch, once made to divest oil assets by a Russia-averse UK government, has offered a punchy 2.9 times sales for vitamin retailer Holland & Barrett. It’s a new direction, but an uncontroversial one. This time, Britain ought to thank Fridman for the vote of confidence.
Italian bailout is setback for Europe bank regime 26 Jun 2017 Intesa Sanpaolo is taking over the good bits of two smaller failed lenders, leaving taxpayers to foot a bill of up to 17 billion euros. Protecting savers is politically expedient. But the rescue exposes a gaping hole in Europe’s new regime for dealing with troubled banks.
Nestle’s big problem is its crunchy governance 26 Jun 2017 Hedge fund Third Point’s ideas for the Swiss maker of KitKat are sensible but obvious. Nestle is already weighing up asset sales. It has set and missed targets before. Shaking up the company’s slow-moving culture would achieve more – starting with a new chairman.
Merkel’s best economic policy belongs to her rival 26 Jun 2017 The German Chancellor has a record of swiping others’ ideas. She could usefully repeat the trick with the Social Democrats’ Martin Schulz. His pledge to invest more and cut taxes for those on low incomes is better than anything her centre-right party has come up with so far.