Gary Cohn could go from White House to blackboard 7 Mar 2018 President Trump’s departing economic adviser may fancy staying in government. Or perhaps he’ll try to return to finance. But America is awash with politicians and bankers. Becoming a teacher would be a fine display of public service. Cohn now has some valuable lessons to pass on.
Dollar is Trump’s measuring stick, and cudgel 7 Mar 2018 Stocks fell after President Donald Trump’s top economic adviser resigned, but a better gauge of his performance is the dollar. It has dropped nearly 10 pct versus major currencies since he took office. This market no-confidence vote nonetheless serves Trump’s purpose on trade.
Trump tariffs risk more than just a new trade war 7 Mar 2018 Europe will retaliate if U.S. President Donald Trump slaps tariffs on steel and aluminium imports. A transatlantic trade fight is just one danger. By invoking a little-used national security loophole, Trump is setting a precedent of how to subvert international commerce rules.
Kraft Heinz next M&A meal could be breakfast 7 Mar 2018 The $83 billion food company looks due for a deal. Mondelez is a logical target but is expensive. Hershey is growing but gives Kraft less room for error. Kellogg is cheaper and offers room to cut costs, so long as Kraft can convince insiders to sell.
Smurfit Kappa can get better mix of paper and pulp 7 Mar 2018 The Irish packaging group rejected International Paper’s approach despite a 27 pct premium. The U.S. suitor will need to offer more cash to tempt investors, but is restrained by high debt. With targets scarce at home, though, the lure of a European foothold may be worth the risk.
Hadas: Doughnut economics needs a new flavour 7 Mar 2018 Author Kate Raworth’s image refers to both the hole of deprivation and ecological disaster beyond the outer rim, both of which are to be avoided. But her recipe is contaminated with eco-left prejudice. A more wholesome blend would start by recognising the current system’s gains.
Rolls-Royce’s cash engine roars into life 7 Mar 2018 The UK aerospace group churned out 273 mln pounds of free cash in 2017, more than twice what analysts expected. It should do even better this year. Boss Warren East has been understandably stingy with dividends after profit warnings and a bribery scandal. Expect that to change.
HNA is enjoying a pleasant stay at Hilton 7 Mar 2018 The cash-strapped Chinese group bet $6.5 bln on the U.S. hotelier, using lots of borrowed money. It has now sold stock in the spun-off Park Hotels for $1.4 bln, while retaining another $7.6 bln stake. HNA has been a crazily prolific investor, but this trip was worth it.
L&G’s bet on UK and pensions paying off for now 7 Mar 2018 A roaring retirement business helped the British insurer boost operating profit by nearly a third to 2.1 bln pounds in 2017. More than rivals, L&G depends on a growing UK economy and its ability to buy pools of pension funds others don’t want. Investors still need convincing.
Telecom Italia investors find two reasons to cheer 7 Mar 2018 Boss Amos Genish has kicked off the separation of the telco’s fixed-line network, and will slash debt. A rerating of the network could help the group’s valuation, and a step-up in free cash flow brings the prospect of long-awaited dividends. Both should please shareholders.
China’s softening on bad loans looks complacent 7 Mar 2018 The regulator is easing buffers required for problem loans, according to media reports. This is another incremental move to relieve struggling lenders and borrowers amid a shadow banking squeeze. That’s good for them, but Beijing appears too relaxed about bank balance sheets.
Ctrip may lose altitude as China travels 7 Mar 2018 The $25 bln online travel agency built a dominant position by aggressively buying small rivals. Now ones backed by giants Alibaba and Tencent are taking off in far flung cities, where tourism is booming. Ctrip's early lead looks precarious now it will have serious competition.
Cohn exit makes White House chaos markets’ problem 6 Mar 2018 The ex-Goldman Sachs banker was a buffer against anti-trade voices in President Donald Trump’s administration. Now Gary Cohn is leaving, and Trump is ramping up protectionist talk. Markets have been phlegmatic about disorder in Washington. That can no longer be taken for granted.
U.S. bank mergers creep one step closer 6 Mar 2018 The Senate looks set to raise the $50 bln level at which a bank comes in for extra regulation. Received wisdom is that doing so will set off a wave of deals for small and mid-size lenders. But amid falling taxes and rising rates, comfortable CEOs may have other ideas.
Qualcomm deal delay hints at new tech nationalism 6 Mar 2018 U.S. authorities fear the $95 bln chipmaker could lose its innovative edge if acquired by rival Broadcom. Yet objections to a foreign buyer look like a fig leaf for the real message: Qualcomm is too strategic to be taken over by a suspect suitor, regardless of its nationality.
Akorn deal could crack M&A MAC nut 6 Mar 2018 Merger escape clauses are notoriously hard to trigger. Even performance woes at drugmaker Akorn aren’t enough for Fresenius to demand a discount on an agreed $4.3 bln tie-up. If the German healthcare group can prove Akorn misled regulators, though, it is a different story.
Disney’s Sky choices: bid, barter or back down 6 Mar 2018 Comcast’s swoop on the British broadcaster puts the U.S. group’s $52 bln tie-up with Rupert Murdoch’s Fox at risk. CEO Bob Iger can enter a bidding war he may lose, offer U.S. assets in exchange, or give up on Sky. The third option is most logical, but hard to sell to Murdoch.
Oscars signal spread of sports-led live-TV decline 6 Mar 2018 Sunday’s Academy Awards show was the least-watched in its history. Viewers are also losing interest in American football and the Winter Olympics. Dwindling audiences for real-time events suggest one of U.S. broadcast television’s last bulwarks is in danger of collapse.
HNA’s Swiss airplane food IPO is far from gourmet 6 Mar 2018 The former Chinese deal machine is listing up to 65 pct of Gategroup to help ease its liquidity crunch. The maker of in-flight meals has expanded since HNA paid $1.5 bln for it in 2016. Factor in an IPO discount, though, and HNA will do well to recoup its original investment.
Smurfit Kappa takeover is difficult to repackage 6 Mar 2018 The Irish company rejected an unspecified cash-and-stock approach from U.S. rival International Paper. Similar deals suggest the buyer may have to pay up to 40 euros per share to get a hearing. But a cash deal would stretch leverage, while Smurfit investors are wary of U.S. stock.
FCA spinoff tests carmakers’ financial engineering 6 Mar 2018 The Italian auto group may hive off a non-core unit to earn a better valuation. Volkswagen and Daimler may do the same. The sums work on paper, but a lasting uplift hinges on investors reassessing the remaining businesses. M&A and operational improvements may have more impact.
Elliott’s tilt puts heat on Vivendi’s TIM strategy 6 Mar 2018 The activist fund has bought 6 pct of Telecom Italia, according to reports. A small stake could give Paul Singer’s group big influence thanks to investors’ faint support for top shareholder Vivendi. The French company may also have to contend with a more nationalist government.
Kobe Steel forges useful case study from scandal 6 Mar 2018 In a welcome show of accountability, the Japanese manufacturer is cleaning house and its chairman is leaving. Kobe Steel’s account of profit-obsessed management, divisional silos and fragile quality controls also should be required reading for the country's captains of industry.
Beijing electric car leader runs on policy power 6 Mar 2018 A $4.5 billion backdoor listing offers the first pure play on China’s new energy auto market. Beijing Electric Vehicles leans heavily on subsidies and patronage - a precarious position as the central government reworks support for the sector. Its alliance with Daimler might help.
India’s bankruptcy regime requires pragmatic touch 6 Mar 2018 Essar Steel could fetch $6 bln, with bids from groups led by ArcelorMittal and Russia's VTB. Both suitors sit awkwardly with tough rules barring defaulters from buying stressed assets. However, it is better to get good proceeds for creditors than to be purist and fail.
Trade tensions curb spirits in U.S. energy sector 5 Mar 2018 OPEC is breaking bread with U.S. shale producers at an industry confab in Houston. It’s a sign of American wildcatters’ influence on the global market. But infrastructure bottlenecks and Trump’s new tariffs threaten to prevent drillers from taking full advantage of their clout.
Trump’s immigration aims undermine economic goals 5 Mar 2018 Court rulings are preventing the deportation of people who entered the U.S. illegally as minors even as protections were due to expire. Yet many remain in legal limbo, and the White House wants to reduce new arrivals. Faster growth, which depends on migrants, will be a casualty.
Election leaves Italy with only radical options 5 Mar 2018 An anti-establishment surge has crushed the chances of another moderate government. The maverick 5-Star Movement or the hard-right League are best placed to lead a coalition. The winners share some goals. But personal rivalry will make it hard for them to work together.
Euro zone reform faces green and red lights 5 Mar 2018 Germany’s new ruling coalition has cleared the way for reforms to strengthen the single currency area. Yet proposals to backstop banks and governments remain contentious. Italy’s new government adds uncertainty. With the ECB’s firepower waning, delay may prove costly.
U.S. simplifies Qualcomm decision by complex means 5 Mar 2018 The foreign-investment watchdog has told the chipmaker to delay a vote that could give board control to nominees of Singapore-based Broadcom, which wants to buy its rival for $117 bln. It’s a surprising twist in a tangled situation. But it removes a big unknown from the equation.