Review: The hollowing out of white-collar work 25 Jan 2019 New technologies and international trade have been disrupting jobs for some time. Now automation and global competition will do the same thing to Western services industries, Richard Baldwin argues in “The Globotics Upheaval”. Dysfunctional democracies are ill-prepared to cope.
Self-inflicted U.S. economic wounds multiply 25 Jan 2019 The government shutdown could wipe out first-quarter growth. Tone-deaf officials don’t help unpaid federal workers. Thousands of small businesses aren’t being paid either, and housing aid may run out. Absent a China trade deal, prices for consumer goods will go up, too.
U.S. corporate borrowing slump is a bearish signal 25 Jan 2019 American companies are issuing much less debt in 2019, even after a 20 pct slump in 2018. One reason is higher earnings after lower taxes, but another is cuts in planned investments. That’s how a trade war and political dysfunction could put the economy on a slower growth track.
Vodafone’s good signals are jammed by interference 25 Jan 2019 The $50 billion telco’s revenue is shrinking in Europe and slowing elsewhere. On top of that, 5G spectrum looks pricey, while its acquisition of Liberty Global assets faces regulatory risks. CEO Nick Read can only expect credit for cost cuts after some of these worries disperse.
Downbeat Davos is still short on introspection 25 Jan 2019 Corporate and political leaders in the Swiss resort fretted about slowing economies, angry citizens, and clashes over technology. The gloom contrasted with last year’s misplaced optimism. Yet delegates remain bafflingly confident about their ability to predict what’s next.
Deutsche-Commerz even more defensive than it looks 25 Jan 2019 The German government is still exploring a merger between the ropey domestic lenders. As a way to create economic returns for investors, it’s underwhelming. As a means to limit capital injections if Deutsche Bank’s various U.S. woes become massive fines, it has some logic.
China outlook from Davos goes a little off-piste 25 Jan 2019 A sharper slowdown is high on the list of worries at the economic retreat. George Soros warns a Cold War with the country could turn hot. For now, China’s growth is merely cooling and Beijing has ammunition left. Its Alpine promise of "modest prosperity" may be feasible.
Singapore’s $40 bln flash crash clouds IPO push 25 Jan 2019 Jardine Matheson shares abruptly plummeted some 80 pct before rebounding. A fat finger trade is being ruled out, but the cause remains unknown. Either way, it’s a setback for a market already plagued by outages and liquidity concerns. Attracting new listings just got tougher.
Chasing $13 bln Nexon throws Tencent off its game 25 Jan 2019 The Chinese titan behind “League of Legends” is eying control of its rival, which makes “Counter-Strike.” Tencent probably could help Nexon move faster from PCs to mobile. But slower industry growth and a Beijing crackdown suggest boss Pony Ma would be wiser to focus elsewhere.
New media’s latest challenge is old media 24 Jan 2019 BuzzFeed and Verizon Media are slashing jobs. Like mature counterparts in a changing advertising world, upstart news outfits may need to merge to survive. But at least older players like the New York Times can sell their content. Some latecomers will have a hard time doing that.
Viewsroom: Global elite-lite takes Davos downer 24 Jan 2019 Pessimism reigns supreme at the annual gathering in the Swiss Alps thanks to trade wars, the U.S. government shutdown and rising populism. Several major leaders stayed away entirely. The event remains a networker’s dream, but self-awareness and problem-solving are sorely lacking.
BlueMountain is tardy with PG&E activism 24 Jan 2019 The hedge fund firm wants to oust the California utility’s directors, who are heading toward bankruptcy. It has a point: The hit from wildfires is not yet defined, and PG&E has stumbled in other ways. But BlueMountain is running out of time to rouse bigger, longer-term owners.
IAG is surprise first loser in airline fuel casino 24 Jan 2019 The BA owner is set to sell its stake in Norwegian Air. When IAG bought in last April, higher oil prices made it plausible that its unhedged smaller rival would become vulnerable to a takeover. As it happens, a sharp fall in crude values means the egg is instead on its own face.
Mario Draghi will deploy old tools in new slowdown 24 Jan 2019 The European Central Bank boss said growth may slow but offered no fixes. Resuming bond buying would be controversial, and a rate cut could hurt the financial sector. Renewing cheap loans to banks is his likeliest choice. The only question is how generous his terms will be.
The “gilets jaunes” invade Davos if only in spirit 24 Jan 2019 While yellow-vested protesters aren’t clogging the Davos Promenade, the French movement’s presence was felt on the World Economic Forum’s stages and backrooms. And at least one European government, Italy’s, made the case for policies that might as well be called gilet-ist.
Hadas: Larry Fink can’t reshape capitalism 24 Jan 2019 The BlackRock boss wants big firms to think long term and balance the interests of all stakeholders. That’s noble, but passive investors are poor strategic guides, while active fund managers have other priorities. Also, BlackRock's profit margins and Fink’s pay are bad examples.
Ghosn successors may further strain Nissan ties 24 Jan 2019 Renault has well-qualified successors lined up to replace its former CEO and chair, who resigned. They have the French state’s implicit backing. The political association could, however, raise hackles at its Japanese partner, making it harder to resolve the crisis in the alliance.
Pernod Ricard takes baby step towards Elliott 24 Jan 2019 The French spirits maker has named a lead independent director. The increased focus on corporate governance is a welcome start and one of the demands of the activist investor. More radical changes and cost cuts will be needed to close its operating margin gap with rival Diageo.
LSE Nordic raid would be expensive complication 24 Jan 2019 The London Stock Exchange is mulling a bid for Oslo Bors, says the Evening Standard. The Norwegian group is already the target of a pricey offer by Euronext, and LSE’s links with it limit cost savings. The takeover would be a costly distraction from bigger issues, like Brexit.
Big Brother startups offer white knuckle returns 24 Jan 2019 Facial recognition startups SenseTime and Megvii are in fundraising mode. Video surveillance in China is tipped to be a $20 bln industry by 2022. Sticky questions could result in volatile valuations, but Beijing’s resolve to watch its citizens closely will drive growth.
Evergrande’s desperation to drive could find road 24 Jan 2019 The Chinese conglomerate’s health unit is making another quirky bet on electric vehicles as the property market at its core stalls. Yet a $900 mln move for NEVS might make more sense than earlier purchases if Evergrande can use it to help startups overcome production problems.
Venezuela’s Maduro caught in pincer movement 23 Jan 2019 Protesters are demanding the socialist leader’s ouster. Opposition leader Juan Guaidó has, with U.S. blessing, declared himself interim president. But a self-inflicted wound will get Maduro in the end: By tanking oil output, he robbed himself of a key means of clinging to power.
Trump risks Pyrrhic victory in China trade war 23 Jan 2019 Market woes could push the U.S. president to accept superficial concessions such as Beijing buying more American goods without cutting subsidies or stopping tech transfers. Yet the damage inflicted by his tariff fights on everything from farmers to supply chains could be lasting.
Viacom zigs as wannabe Netflix peers zag 23 Jan 2019 The MTV owner is buying a free streaming-TV service for $340 mln. That’s chump change compared with the $180 bln Disney, AT&T and Comcast have collectively spent on media deals to keep pace with Reed Hastings’s firm. Low-budget Viacom is wisely choosing a less-traveled path.
WeWork offers glimpse of conflicts to come 23 Jan 2019 The shared-office upstart and potential IPO candidate rents buildings part-owned by its co-founder and CEO. Private-company trends arguably encourage such blurred lines, but public investors tend to distrust them. It’s another reason to doubt WeWork’s high-rise valuation.
EU “golden visa” alarm is too little too late 23 Jan 2019 Brussels is right to worry that dodgy tycoons can buy their way into Europe. But national governments are the only ones with the power to close these back doors. Given the benefits that countries such as Cyprus and Malta reap from such schemes, the gates will swing shut slowly.
Oleg Deripaska’s En+ deal is more sour than sweet 23 Jan 2019 The settlement that distanced the Russian oligarch from his power company has favourable aspects, the New York Times says. Certain provisions could even limit the financial hit from U.S. sanctions still in place against him. The overall outcome is, however, still pretty painful.
Cracks at Apple appear in Asia’s supply chains 23 Jan 2019 The iPhone-screen maker Japan Display may get a $550 mln lifeline from investors including a Chinese state-backed fund. Weak sales of the handsets have hurt. A rescue would point to the severe ripple effects of Apple’s woes, and herald pain for other suppliers like Foxconn.
Apollo makes a $6 bln virtue of plastic accounting 23 Jan 2019 The buyout group is getting RPC on the cheap. That’s partly because investors were spooked by the packaging-maker’s alleged misleading financials, which Apollo has had a chance to scrutinise through due diligence. Call it an informational arbitrage – at public markets' expense.
Metro Bank’s capital fail has wider consequences 23 Jan 2019 The UK challenger bank’s solvency slumped after it said it had been risk-weighting its assets too generously. Metro Bank’s valuation hinges on getting investors to put growth potential before current returns. If it can’t do the basics right, it’s no surprise they are fretting.