New trade-war ceasefire has familiar feel 29 Jun 2019 Donald Trump will restart talks with Xi Jinping and hold off imposing new tariffs on about $300 bln of Chinese exports. Huawei also got a nod at the G20 meeting. A deal may seem closer, but investors would be wise to hedge their bets. The last détente wound up falling apart.
Bank payout party is a lavish but sober affair 28 Jun 2019 JPMorgan, Goldman Sachs and large peers plan to hand $150 bln back to shareholders this year. Jumbo payouts were once a sign of excess profit. Now they show a lack of alternatives. Yet an old incentive is unchanged – buybacks’ ability to juice profit per share.
American M&A makes excess great again 28 Jun 2019 U.S. deals jumped 19% in the first half even as activity ebbed in Europe and Asia. Topping the list are pricey purchases by AbbVie, Bristol-Myers and Occidental, plus Raytheon’s questionable merger with United Technologies. Most buyers’ owners will regret their CEOs’ ambitions.
San Francisco vaping ban shows warped agenda 28 Jun 2019 Juul Labs’ home is the first U.S. city to block its sales. Local agencies can’t use facial-recognition software. Meanwhile the area has a property-crime problem and human feces on its streets. The place boasting the highest density of billionaires is neglecting basic services.
Review: An economist learns the value of the local 28 Jun 2019 States and markets are major economic actors. Yet they are insufficient for understanding or fixing the world’s problems, Raghuram Rajan says in “The Third Pillar”. Communities play an underappreciated role. While fuzzy at times, it’s a refreshing way to look at familiar issues.
Blackstone opens child-friendly Legoland LBO ride 28 Jun 2019 The private equity firm will help Denmark’s founding Lego family take Merlin Entertainments private for $6 bln. Rather than slashing costs and flipping the theme park owner, they’ll invest in growth. The trade-off is that returns may be much lower than a typical leveraged buyout.
EU-Swiss bourse punch-up foreshadows Brexit pain 28 Jun 2019 Bern’s failure to agree a pact with Brussels will see its stock markets stripped of preferential EU treatment. Transactions will be more costly, cumbersome and opaque. The UK faces similar issues if it crashes out, but the hit will be worse, and London’s defences weaker.
John Malone’s M&A nous gets short shrift in Europe 28 Jun 2019 The cable cowboy’s Liberty Global should get $15 bln of cash from Swiss and German asset sales. A lowly share price means investors are worried Malone will waste the money. That’s unmerited: share buybacks and further selloffs seem likelier than a risky acquisition.
Nio’s upscale brand singed by battery blazes 28 Jun 2019 The New York-listed group has recalled almost 5,000 ES8 cars, more than a quarter of those delivered, after fires. Samsung recovered from worse, but Nio is a startup betting on quality to stand out from electric-car rivals in China. Much-needed cost cuts may have to wait too.
Casino takes baby step on road to redemption 28 Jun 2019 The French grocer has simplified its Latin American structure. The bankruptcy of Casino’s parent company Rallye frees it to recapture some value for investors, and offloading stakes in Latam supermarkets would cut leverage. A focused French business could be an easier sell.
China is elephant in the room amid 2020 Democrats 27 Jun 2019 White House contenders touted better healthcare access, immigration reform and college aid in their first debates. Donald Trump’s China trade war was briefly discussed. It’s an awkward topic as many agree with the president. The question is if they would continue his legacy.
Singapore Airlines reroutes back to Malaysia 28 Jun 2019 The $8 bln carrier is deepening ties with its struggling Kuala Lumpur rival, from code-sharing to maintenance. It may be a precursor to merging again nearly 50 years after the two split. Reuniting would benefit both, but politics and regulation will be hard to navigate.
A “shareholder” vote would help Hong Kong CEO 28 Jun 2019 Locals want Carrie Lam to quit her rare political chief executive role. But no corporate boss could succeed under such suffocating governance. Some pressure would be eased by letting subjugated shareholders pick a leader from a field nominated by Beijing's entrenched board.
Apple tastes luxury’s less lustrous side 28 Jun 2019 Jony Ive, whose iMac and iPhone designs fueled the $920 bln firm’s meteoric rise, is leaving - and at a time when phone sales are falling and trade flows under threat. Design-dependent brands can recover from creative brain drain, but it’s sometimes a painful process. Just ask Gucci.
U.S. private prisons set investors easy ESG test 27 Jun 2019 Bank of America is the latest lender to quit the sector amid an outcry over immigrant detentions. Vanguard, BlackRock and State Street own 30% of GEO Group and CoreCivic, which run migrant facilities and jails. If indexers can’t escape, they can at least agitate for change.
U.S. healthcare reform ideas are too single-minded 27 Jun 2019 Americans are dissatisfied with the only rich-world system that isn’t universal. Democratic presidential candidates and others tend to fixate on either nudging the status quo or so-called “Medicare for all.” Other nations actually offer more varied examples – all costing less.
Congo deaths are a new stick to beat Glencore 27 Jun 2019 The Swiss commodity giant’s shares fell 5% after an accident killed dozens of illegal miners at one of its DRC pits. It’s difficult for resource groups to stop these incursions. But Kinshasa’s record of miner shakedowns implies it might still find a way to penalise Glencore.
Viewsroom: What makes companies proud of Pride? 27 Jun 2019 Neither profit nor investor pressure explain U.S. firms lining up to mark 50 years of the LGBT-rights movement. They may simply be doing the right thing. But the nation still has a long way to go. Plus: how the UK prime minister race affects the Bank of England’s next boss.
Swiss Re takes out insurance on its own IPO 27 Jun 2019 The reinsurer is listing nearly 30% of its UK life arm. Of late, investors have backed Trainline’s IPO growth plan and been cooler on that of fellow UK listee Finablr. Swiss Re will hope that a discount to listed peer Phoenix and 9% yield is enough to get investors on side.
Carl Icahn lands blow on weakened Occidental 27 Jun 2019 The activist’s bid to oust four directors at the oil driller over its $38 bln purchase of rival Anadarko is overkill. The board will face a grilling next year anyway. But the rash deal has tested investors’ patience. Oxy might be wise to compromise and give Icahn a partial win.
European IPO investors show reassuring rationality 27 Jun 2019 VW’s truck unit and telco Africa Airtel will sell shares at the bottom of their respective ranges while Global Fashion Group cut its price. Unlike recent U.S. mega-floats such as Uber, valuations were cheap. It’s a welcome sign credulity has limits despite buoyant stock markets.
Bayer takes small steps to placate shareholders 27 Jun 2019 The German drugs and seeds group has hired an expert adviser for its litigation over weed killer Roundup. That boosts the chances of a swift settlement. Yet, if boss Werner Baumann can’t revive Bayer’s lowly valuation and challenged business, pressure to break it up will grow.
H&M gets too much credit too soon 27 Jun 2019 The Swedish fashion retailer’s shares rose 10% after strong June sales. The company also said it would sell more clothes at full price and divert more resources to its online business. But to fully deserve the richer valuation, a drop in the operating margin has to be reversed.
Private equity’s broken record plays on in Japan 27 Jun 2019 Buyout barons gathered in Tokyo were giddy again about corporate carve-outs, inspired partly by Hitachi. Some of the latest exuberance is merely driven by fresh funds. Although Japan Inc may be changing, there are few signs yet of any bonanza. And sellers now have some leverage.
Capitalism will be villain of 2020 U.S. elections 26 Jun 2019 Democratic presidential contenders sparring in their first debate agreed on one thing: America’s economic system has helped mainly the rich. Even on socialism-averse Wall Street that idea has gained traction. Free markets are emerging as a political bogeyman.
Washington could set the pace for Chinese property 27 Jun 2019 Home prices are notching up annual increases of nearly 11%, in spite of restrictions and a cooling economy. Real estate, which drives as much as a fifth of GDP, is one of Beijing’s most powerful levers to crank up growth. The trade war will determine how forcefully it is used.
Pushy dealmakers ignore their best M&A advisers 26 Jun 2019 AbbVie and Occidental have structured huge acquisitions so shareholders don’t get a vote. Research suggests that when owners get a say, as happens more often in the UK, it can save a lot of scorched value. Bypassing them means acquisitive CEOs are losing a valuable sanity check.
Facebook discovers money is tougher than data 26 Jun 2019 Fed Chair Jerome Powell joined foreign watchdogs in vowing tough scrutiny of the $539 billion company’s planned crypto coin. Some of its own partners may have doubts about the project, too. The tactics Facebook used to pioneer social networking don’t transfer easily to finance.
Creepy data practices go beyond Silicon Valley 26 Jun 2019 A U.S. Senate plan requires big tech firms like Facebook to disclose the value of user information. Large merchants such as Walmart are included; financial firms like JPMorgan aren’t. Yet they all monetize data in ways not clear to consumers. There’s a case for widening the net.
Emmanuel Macron’s sermon to Nissan is unhelpful 26 Jun 2019 France’s president is calling for more integration with Renault. The Japanese automaker’s shareholder meeting this week exposed deepening suspicions of the alliance, with CEO Hiroto Saikawa threatening to upend it. Paris will serve Renault better by keeping quiet.