Fiat-Renault M&A collapse creates losers all round 6 Jun 2019 The Italian-American carmaker withdrew a merger offer after the French state sought to delay a decision. The companies lose 5 bln euros of synergies, while Renault and Nissan remain stuck in a frayed alliance. Paris has flubbed an opportunity to show its pro-business credentials.
Viewsroom: Hong Kong’s scary extradition idea 6 Jun 2019 The territory's government, under pressure from Beijing, is trying to ram through a rule change that would allow suspects to be transferred to mainland courts. Foreign executives have cause to be worried. Plus: Steve Bannon wants to ban Chinese IPOs from New York.
Wells Fargo CEO hunt is chicken-and-egg dilemma 6 Jun 2019 The scandal-racked U.S. lender may make its interim chief permanent, a suggestion it can’t find an outsider to take the job. Wells Fargo needs a strong boss to mend regulatory fences – but with so much hostility, it may be hard and expensive to get someone who fits the bill.
SEC’s new conflict rule does investors few favors 5 Jun 2019 The U.S. securities watchdog is tightening conduct standards a bit for brokers while loosening them for investment advisers. The industry-friendly fudge leaves investors to fend for themselves. Sharp dissent within the commission underscores the weakness of that approach.
Canada is caught in America’s trade-war crossfire 5 Jun 2019 President Donald Trump’s threat to impose tariffs on Mexico puts at risk the new version of the three-way NAFTA trade deal. Canada’s arrest of Huawei’s CFO at America’s request upset China. And its uranium exports may now face levies, too. Ottawa can’t catch a break.
Fed could do worse than mimic Donald Rumsfeld 5 Jun 2019 George W. Bush’s defense secretary famously talked of known knowns, known unknowns, and unknown unknowns. The U.S. central bank, seeking better communication, could borrow the categories. They help explain why markets now expect interest-rate cuts while Fed rate-setters don’t.
EU’s debt warning to Italy is just opening salvo 5 Jun 2019 The European Commission says the country’s borrowing, which grew to 132% of GDP last year, could justify unprecedented sanctions. That move would need the support of EU governments, and Rome has some wiggle room. But political and economic signs point to a future showdown.
South Africa’s central bank debate goes off-piste 5 Jun 2019 A shrinking economy is prodding the ruling ANC to talk of “quantity easing” and changing the respected central bank’s remit. The constitution protects monetary policymakers’ independence and inflation mandate. But the growing confidence of would-be money printers is worrying.
Hadas: Shaky assumption underpins debt demand 5 Jun 2019 Investors are rushing into high-grade bonds even though long-term yields are falling. Real returns will be acceptable if disinflation persists. But that’s a big if. More active use of fiscal policy or worsening trade frictions could reverse a trend that’s lasted nearly 40 years.
UK bank watchdog throws wrench into hostile M&A 5 Jun 2019 Lender Non-Standard Finance scrapped its $1.4 bln bid for Provident Financial after the UK regulator took a harsher-than-expected view on capital. It didn’t help that many shareholders hated the deal. The strict approach means bankers will shy away from similar raids in future.
Sticks will help Africa debt more than carrots 5 Jun 2019 One idea to curb binge borrowing is to offer UK legal protection to creditors only if financing terms are publicly disclosed. London may lose business but those who go elsewhere will look shifty and end up paying higher rates. The proposal is better than more debt forgiveness.
Beijing needs to pick a bank bailout message 5 Jun 2019 Regulators downplayed their decision to take over troubled Baoshang Bank, just as another small lender with over $100 bln in assets said auditor EY quit. Officials can rescue banks, or not, but history shows they need to be clear about their reasoning when markets are anxious.
Thrice-ditched Aussie telco has its work cut out 5 Jun 2019 Swedish fund EQT has dropped its toppy $2.3 bln bid for Vocus after due diligence. Shares dropped 20%. It’s the third financial buyer to walk since 2017. It casts doubt on the target’s efforts to integrate deals. New boss Kevin Russell has to find a way to dial up confidence.
Chinese vocational school IPO taps job anxiety 5 Jun 2019 China East Education has raised $625 mln in Hong Kong, valuing it at $3.1 bln. Beijing’s push to retrain millions of laid-off workers could boost its bottom line, but the market is fragmented, and earnings are volatile. This price implies very optimistic growth expectations.
Uber analysts ride dreams to common destination 4 Jun 2019 They expect the $70 bln ride-hailing app to lose money for years but see various grounds for optimism, from cross-platform synergies to flying cars to demographics. Yet most roads lead to a forecast price upside of around 25%. It’s Wall Street’s form of herd immunity.
Mexico tariffs may lead to more bills for America 4 Jun 2019 The southern neighbor hopes to avoid import taxes by doing more to stop migrant crossings. But a weak economy and lower oil revenue have already forced Mexico to cut its 2019 budget. President Donald Trump may need to stump up even more aid to help the country meet his demands.
China’s censors expose a truth about corporate JVs 4 Jun 2019 Reuters’ 30th anniversary coverage of Tiananmen was blocked by Blackstone-backed partner Refinitiv in China amid pressure from Beijing. The $20 bln data provider’s priorities deviate from those of the news publisher. It’s a prime example of how partnerships can be strained.
UK stocks ignore Boris Johnson’s roar 4 Jun 2019 Prime Minister Theresa May will probably be replaced by a eurosceptic like the former foreign secretary. He and other contenders threaten to drag Britain out of the EU without a deal. Yet while Brexit has hit UK share prices, investors are showing little sign of rising alarm.
U.S.-PRC tensions upend tech funding supply chain 4 Jun 2019 American venture capitalists pumped a record $19 bln into Chinese startups in 2018 while flows the other way reached a high of $3.6 bln. Tougher foreign-investment rules and rising nationalism are set to add friction to capital movement, creating new winners and losers.
Shell’s giant cash gusher is climate-change hedge 4 Jun 2019 The oil major plans to hand half its $250 bln market cap to investors from 2021-2025. As a result, the share of resources poured into capital investment will fall. It may look short-termist, but it’s really a sensible admission of uncertainty about the future of fossil fuels.
UK fund wreck shows risk of overactive management 4 Jun 2019 Stock-picker Neil Woodford had to halt redemptions after outflows. Contrarian bets on cheap stocks and unquoted companies were ill-suited to a $5 bln fund that allowed clients to withdraw money easily. Manager hubris is another reason for investors to use passive funds instead.
Aussie rate cut demands fiscal backup 4 Jun 2019 The RBA trimmed its benchmark interest rate to a record low 1.25% from 1.5%. Another chop is expected, which would bring closer the limits of conventional monetary policy. It puts the onus on Scott Morrison’s government to loosen purse strings and avoid mistakes made elsewhere.
South Korean infighting hobbles recovery plan 4 Jun 2019 Revised GDP showed the export-dependent economy shrank more than expected amid a U.S.-China trade spat. The central bank, stuck between anaemic inflation and a plummeting currency, has dithered. A rate cut might help, but political squabbles are short-changing fiscal stimulus.
Beijing tries the patience of Tiananmen’s children 4 Jun 2019 After crushing student protests in 1989, the government promised prosperity in exchange for compliance. Wages have soared, but so has inequality. Now President Xi is calling on youth to shoulder bad debts and trade war costs. Their disaffection is as big a risk as revolution.
Pricey Japan is best game in town for U.S. casinos 4 Jun 2019 Operators like Las Vegas Sands and MGM have vowed to spend $10 bln each developing new resorts, and may pledge more. A tough rule book makes the country particularly attractive to Americans, given compliance risks in other emerging markets. But a bidding war will reduce returns.
Buffett may find value in crypto lunch ‘n’ learn 3 Jun 2019 Blockchain developer Justin Sun can afford the $4.6 mln he has bid for lunch with the Berkshire Hathaway boss. Any shift by Buffett, who has labeled bitcoin a fraud, could ignite digital assets. The sage of Omaha will get a check for his charity and a much-needed tech tutorial.
IPO gives pet store chain’s creditors sloppy kiss 3 Jun 2019 Chewy is seeking to go public at a $7.2 bln valuation, more than double what private-equity owned PetSmart paid for the online business in 2017. That deal ended up making the overleveraged PetSmart’s lenders howl. The listing price, if it sticks, should help them settle down.
Google and Amazon are the antitrust appetizer 3 Jun 2019 U.S. regulators may be divvying up oversight of the tech giants, paving the way for potential investigations. Facebook ought to worry too. The social network creates less overt competition risk, but the experience of vetting Google and Amazon could guide tougher fights.
The Exchange: Dustin Yellin 3 Jun 2019 Is there a better way to signal the hydrocarbon era’s end than by flipping a 1,000-foot oil tanker vertically from the sea to create the world’s largest sculpture? Not according to the artist behind “The Bridge,” who discussed his project with Rob Cox at his Brooklyn studio.
Trump gives Britain glimpse of post-Brexit reality 3 Jun 2019 Before his plane had touched down, the U.S. president intervened in the race to replace Prime Minister Theresa May and insulted London’s mayor. Leaving the EU will make the UK more dependent on its erratic ally for trade and security. Trump’s visit makes that look less appealing.