Cox: Why we remember the 2008 financial crisis 6 Sep 2018 Over the coming weeks, Breakingviews will publish numerous columns and a podcast series with politicos, regulators and bankers involved in resolving the mess 10 years ago. The reason is simple: When people forget what went awry, they risk repeating the errors of the past.
Holding: Top U.S. judges are fairer than they seem 6 Sep 2018 Supreme Court nominee Brett Kavanaugh says he’ll act like a baseball umpire, making calls based on rules. That’s a bit facile. Recent research suggests, though, that jurists are mostly objective, while differing in interpreting laws. Congress and the public may never believe it.
Rising generic-drug pressure may produce M&A panic 6 Sep 2018 Novartis has dumped part of its unit producing copycat medicines. Mylan and Perrigo are mulling sales, too. Regulators’ attempts to encourage competition and the emergence of a large nonprofit pill producer mean multiple sellers risk fetching only bargain basement prices.
UK power price caps will give banks jitters 6 Sep 2018 Britain’s energy regulator has put a ceiling on default energy bills. While Ofgem’s plan won’t hurt utilities as much as feared, the precedent is important. Domestic banks can only hope politicians fail to spot that their business models similarly rely on consumers’ apathy.
Farfetch IPO carries luxury price tag 6 Sep 2018 The deluxe clothing website may be valued at $4.6 billion. That makes sense if it can outgrow rivals. A model that links buyers and boutiques potentially means higher profit, but gives it less control over stock and prices. Well heeled customers may be tempted to go elsewhere.
Vivendi gives Elliott a taste of activist medicine 6 Sep 2018 Telecom Italia is turning into the U.S. fund’s worst big investment in Europe. Vivendi, which used to run the telco and is its biggest investor, blames Elliott’s boardroom overhaul for the share price slump. Such squabbles distract from the problem of competition from new rivals.
Bondholders face risky last bet at Casino owner 6 Sep 2018 Credit markets are growing increasingly nervous about Rallye, the indebted parent of the French grocer. Luckily, owner Jean-Charles Naouri can draw on bank lines to repay debt. But the more Rallye borrows from lenders, the fewer assets will be left if it eventually collapses.
Sodexo’s recovery plan looks half-baked 6 Sep 2018 After a profit warning in March, the French catering giant wants to boost sales and profitability. Its targets still lag those of peer Compass. And boss Denis Machuel hopes to grab market share in the United States, where Compass has an edge, and staff costs are rising.
Norway’s anti-plastics push has firm foundations 6 Sep 2018 Oslo’s $1 trillion wealth fund wants its investments to flag what they’re doing on ocean pollution. As a recent spat over oil and gas holdings shows, political meddling means good intentions don’t always translate into action. That should be less of a problem this time around.
China flaunts firepower in Canadian copper deal 6 Sep 2018 Zijin Mining agreed to buy Nevsun for $1.4 bln, trumping hostile suitor Lundin. A cash bid at a 57 pct premium mostly to bet on a project in Serbia speaks to Beijing's relentless appetite for important metals, but also to scarce supply. Pockets of outbound M&A exuberance persist.
Indonesia can best defend rupiah by staying calm 6 Sep 2018 An emerging markets rout has pushed the rupiah to its weakest since the 1998 Asian crisis. Policymakers, who have until now been laudably proactive, appear rattled. But threats against speculators are less helpful than higher interest rates and reforms that encourage investment.
Getty family takes negatives off Carlyle 5 Sep 2018 The founders of the eponymous stock-photo company are paying $250 mln to regain control after handing the camera to private equity a decade ago. Getty Images is swimming in debt, short on cash and growing slowly. Developing it into a healthy company requires sharp focus.
Jack Dorsey tops Sheryl Sandberg as tech’s DC rep 5 Sep 2018 The usually dry Twitter CEO seemed more genuine than Facebook’s polished No.2 at a Washington hearing. Dealing with fake accounts, election meddlers and the like may hurt growth. But the industry needs a good envoy to tackle the regulatory threat. Dorsey may be the one.
Theranos got one diagnosis spot on 5 Sep 2018 The once-$9 bln medical testing firm’s technology never worked – something it covered up – and now Theranos is being wound down. Founder Elizabeth Holmes faces fraud charges. But she was right that patients shouldn’t have to wait and pay huge sums to know what’s wrong with them.
Prem Watsa’s Africa punt may avoid Greek tragedy 5 Sep 2018 The Canadian investor owns 41 pct of African bank Atlas Mara. Given Bob Diamond’s outfit just made a half-year operating loss, the risk is a re-run of Watsa’s awry Greek bank bet. Still, stabilising commodity prices means there’s more chance Watsa has bought in at the bottom.
Pimco finds finance role robots can’t yet play 5 Sep 2018 John Studzinski, a Blackstone consigliere and consummate networker, is joining the bond fund manager to help woo rich and powerful investors. Pimco, like its rivals, is investing in big data and machine learning, but hiring “Studs” shows the high-touch stuff still matters too.
Hadas: The paradox of risk-free finance 5 Sep 2018 A new study claims that national deposit insurance makes financial crises more likely. It may exaggerate, but guarantees are a sign of a basic problem in banking. The mix of public service and private risk is always potentially toxic. Separation would be hard but worthwhile.
Time breathes life into America’s mortgage zombies 5 Sep 2018 It’s 10 years since Washington took over Fannie Mae and Freddie Mac, injecting $187 bln to render them undead. Reforms have not touched the supposedly temporary fix. A functioning home-loan market, revenue for the Treasury and inertia suggest taxpayers may be stuck with them.
Vodafone’s new CEO has sticks to repel activists 5 Sep 2018 The $57 bln telecom group’s sagging shares may have attracted Elliott’s attention. Newly-promoted Nick Read needs to show he can afford the pricey Liberty Global deal and still pay a fat dividend. Cost cuts and mobile-towers sales would soothe investors’ worries.
Bayer’s lowly valuation lacks positive catalyst 5 Sep 2018 The German drugs-to-seeds maker’s sales rose 9 pct in the second quarter, helped by its pricey acquisition of Monsanto. That deal is tarnished by lawsuits, while Bayer’s consumer and pharma units also face challenges. Though the bad news is priced in, the discount will persist.
Scor’s go-it-alone plan is short on growth 5 Sep 2018 After rebuffing an 8.3 bln euro bid from largest shareholder Covea, the French insurer promised to lift premium income by 5 to 7 pct a year. The board had good reasons to reject an offer worth just 1.3 times book value. Even so, Scor will struggle to achieve that price by itself.
China’s London stock bridge goes halfway across 5 Sep 2018 Beijing has new draft rules for investing between the Shanghai and London exchanges. In theory the channel could see Chinese punters put billions into UK shares, as they have in Hong Kong. It’s otherwise more about diplomatic relations than market demand.
China 5G ambitions cross wires with M&A logic 5 Sep 2018 Beijing might merge wireless carriers China Unicom and China Telecom, creating a $70 bln-plus telco giant - and a market duopoly. As with T-Mobile and Sprint, consolidation could accelerate development of ultra-fast networks. But industrial policy will limit financial benefits.
The Exchange: From slump to Trump 4 Sep 2018 In the first of our “Ten Years After” series, Peter Thal Larsen talks to Adam Tooze. The Columbia University history professor joins the dots from the 2008 crash to Brexit and U.S. elections, noting a declining faith in U.S. willingness to be the global lender of last resort.
Amazon’s next challenge: $1 trillion of revenue 4 Sep 2018 The U.S. retailer’s 13-digit market capitalization puts it in a club whose only other member is iPhone maker Apple. But market values have limited real-world meaning. Achieving sales of the same magnitude – twice top dog Walmart’s – would be more crunchy. It could happen.
Trump inadvertently makes free trade cool again 4 Sep 2018 Blaming cheap imports for destroying U.S. jobs helped him win the presidency. Now polls show Americans disapprove of his tariff wars as they could hurt the economy. Even the China-wary Rust Belt worries about import duties raising prices. Trump’s trade blowback could be costly.
Nike puts politically divisive spring in its step 4 Sep 2018 The U.S. brand is putting Colin Kaepernick, the first NFL player to kneel for the national anthem, in its revived “Just Do It” ads. Airlines, sports stores and pizza chains have wrestled with partisan issues. In the commoditized sneaker trade, it’s a risk worth taking.
Guest view: Italy’s autumn of discontent 4 Sep 2018 Market tensions are rising as the government prepares for negotiations with the European Union over the country’s budget for 2019. However, both Italy and the euro zone are better placed than before to cope with turmoil, writes Fabrizio Pagani of Muzinich & Co.
South Africa slump comes at worst possible time 4 Sep 2018 The first recession in nearly a decade is a blow for President Cyril Ramaphosa. Barring a sharp recovery, it will be harder to control debt and push through reform. Jittery emerging market investors and an election in eight months put his credibility as economic saviour at risk.
Latest Gulf bank merger is defensive on all fronts 4 Sep 2018 Abu Dhabi Commercial Bank is following UAE and Saudi peers in mulling a merger. Synergies from a tie-up with Union National Bank and Al Hilal Bank would offset oil-related headaches. But it also makes ADCB better able to challenge newly merged rival First Abu Dhabi Bank at home.