Viewsroom: UK’s new PM looks for the exit 25 Jul 2019 Boris Johnson helped persuade Britons to vote to leave the EU. London’s former mayor now leads the country – and may find his pledge to quit the European bloc hard to keep. Meanwhile, U.S. watchdogs are circling Amazon, Alphabet, Apple and Facebook. Plus: Protests rock Hong Kong.
Puerto Rico leadership change offers second chance 25 Jul 2019 Governor Ricardo Rossello is resigning after mass protests over crude chat messages and a corruption probe. Political turmoil has stymied efforts to restructure the U.S. territory’s debt and strengthen fiscal oversight. The next leader can’t afford to waste Puerto Rico’s crisis.
Markets want to see colour of Mario Draghi’s money 25 Jul 2019 The European Central Bank chief opened the door to even looser monetary policy. The dearth of decisions or details meant the euro reversed initial losses while bond and stock prices gave up brief gains. He will have to deliver on his big promises before investors give him credit.
DowDuPont shows M&A demands timing – and humility 25 Jul 2019 Two chemical companies merged to form a $130 billion behemoth and then split into three. The goal was to boost shareholder value. That has so far been thwarted by the business cycle and other factors. Complexity has also played a role. It’s a lesson for ambitious dealmakers.
Renault’s de-Ghosnification helps up to a point 25 Jul 2019 The French carmaker is parting ways with bankers and other consiglieri tied to former CEO, and recent Japanese jailhouse guest, Carlos Ghosn. It may help Chairman Jean-Dominique Senard put his stamp on the $17 bln group. But the government is still an obstacle to merger hopes.
Tata adds fuel to India’s automotive misery 25 Jul 2019 Cars are a potent symbol of rising wealth, and Indians are buying fewer of them. Tata Motors’ earnings add to fears of a deep slowdown. There are various causes, from mounting ownership costs to adoption of Uber. Yet the automobile still looms large in the country’s future.
VW debt paints fairer picture than battered shares 25 Jul 2019 The carmaker’s valuation implies it will be worthless by the mid-2020s. Yet its 10-year bonds yield just 1.4%. Shareholders are panicked by the threat of tariffs, ride-sharing, and self-driving cars. But the disparity shows investor pessimism towards the auto sector is overdone.
AB InBev makes Australia sale look like insurance 25 Jul 2019 Sales and EBITDA at the $163 bln brewer expanded strongly in the second quarter. It's a decent recipe for gradually reducing its $104 bln debt load. But the decision to sell AB InBev's business Down Under to Asahi suggests CEO Carlos Brito doesn't want to rely on that.
Metro Bank tries cosmetic surgery on gaping wounds 25 Jul 2019 Chairman Vernon Hill will step down after the UK lender lost a tenth of its deposits. But the founder’s decision to stay on the board may undermine his successor. It’s far from the clean sweep Metro needs to restore confidence amid an accounting mess and collapsing profitability.
UK defence buyout is Exhibit A for cash glut 25 Jul 2019 Private-equity firm Advent and Blackstone funds are buying Cobham for 4 bln pounds, larding up to 2.5 bln pounds of leverage onto a company that has worked hard to have essentially none. It suggests both equity and debt investors have plenty of money and limited opportunities.
Nissan’s awful earnings deliver a gift to Renault 25 Jul 2019 The Japanese car giant’s 95% drop in quarterly earnings has prompted it to announce 12,500 job cuts and plans to reduce capacity. But boss Hiroto Saikawa has previously underestimated how bad things are. That weakens his hand in resisting closer ties with Nissan’s French partner.
Jollibee risks indigestion with U.S. coffee deal 25 Jul 2019 The $5 bln Philippine fast-food chain is buying Los Angeles-based retailer The Coffee Bean & Tea Leaf. It gives Jollibee 1,189 stores, over 400 of them in fast-growing Southeast Asia. But the company is losing money in the battle with Starbucks. A quick turnaround looks unlikely.
Japan-Korea spat returns chip price error message 25 Jul 2019 Earnings at semiconductor giant SK Hynix plunged 88%, weighed down by a worldwide glut. Yet shares rose on hopes that Tokyo's export curbs to South Korea will depress supply and lift prices. The risks of weaker demand and supply chain ruptures suggest the rally looks premature.
China has a template to remake its Belt and Road 25 Jul 2019 The Asian Infrastructure Investment Bank has financed over $8 bln of projects while promoting high standards and responsible lending. It’s a sharp contrast to the amorphous, opaque Belt and Road. Officials looking to retool that initiative should learn from their own successes.
Tesla has to drive faster to avoid losing ground 24 Jul 2019 Elon Musk managed to rev up the electric-car maker’s production and deliveries last quarter. But selling more low-priced cars put the brakes on margins. Cost-cutting is helping some but needed investments remain parked in the garage. The road to sustained profit remains unclear.
Facebook ad gusher easily washes away its fines 24 Jul 2019 The social network reported a 28% rise in quarterly revenue hours after U.S. regulators fined it $5 bln. Privacy violations haven’t deterred advertisers or users. More inquiries are looming, including on antitrust issues. But if Facebook can maintain growth, it can pay the piper.
New UK finance minister is a man for all seasons 24 Jul 2019 Boris Johnson picked Sajid Javid, an ex-Deutsche banker, to run the economy. The former home secretary's ideas chime with his boss’s plans to spend more. And while some Brexiteers may mistrust him, his business-friendly past offers comfort to those fearing a disorderly EU exit.
LVMH basks in hand-stitched luxury bubble 24 Jul 2019 The $220 bln French fashion-to-wine giant leads a platoon of increasingly pricey European bling stocks. Double-digit sales growth and a diverse business empire should help boss Bernard Arnault extend the run. Smaller peers may be the ones to watch for early signs of lost sparkle.
Vivendi’s music bankers have a tough job ahead 24 Jul 2019 Vincent Bolloré’s $35 bln media group will soon appoint advisers to sell up to 50% of music label Universal, Reuters reported. That will cheer investors, who have waited a year to see progress. But it will be hard to find a buyer who is happy to let the Frenchman call the shots.
Boeing is in a textbook crisis of its own making 24 Jul 2019 The aerospace giant’s 737 MAX scandal has not only hit the top and bottom lines. It has also exposed worrying cracks below the surface, from an obsession with margins to a weak board and management to supine investors. Without proper fixes, Boeing is on a dangerous course.
Silicon Valley giants face regulatory quicksand 24 Jul 2019 The DOJ is investigating whether Apple, Alphabet, Amazon and Facebook wield too much power. The mandate is broad, could conflict with other watchdogs’ efforts and may yield little. After all, Microsoft and AT&T prevailed. But getting out of the muck was a costly distraction.
Hadas: U.S. slavery reparations might just work 24 Jul 2019 In terms of race, American society remains stubbornly separate and unequal 155 years after abolition. Much of the economy still works as if racial attitudes had not changed. One way to reduce the black-white social gap is a womb-to-tomb campaign of well-targeted incentives.
Sewing’s Deutsche gamble is off to a rocky start 24 Jul 2019 The German lender announced a 3 bln euro loss in the second quarter, as CEO Christian Sewing kicked off a plan to shrink the investment bank. More worrying is flat revenue across the core business. Sewing needs much faster growth to convince investors his restructuring will work.
If only James Bond could rescue Aston Martin 24 Jul 2019 The $2.2 bln maker of 007’s legendary sports car is struggling. With the auto industry’s future in flux, once-reliable buyers like VW or Ford are no longer in the business of collecting trophy assets. Barring the odd billionaire, Aston looks destined to continue skidding out.
Peugeot’s Tavares could use another deal 24 Jul 2019 The 20 bln euro French group’s CEO quickly turned around Opel Vauxhall, bought from GM in 2017. Now operating margins seem near their peak, and global car sales are stalling. Teaming up with Fiat Chrysler or Jaguar Land Rover would give the famous cost-cutter more fat to trim.
China’s hardline premier set peak for gigantomania 24 Jul 2019 Former premier Li Peng died on Monday. Infamous for crushing protesters in 1989, he was also known for championing the giant, controversial Three Gorges Dam. China still likes mega-projects, but officials can’t flout financial and environmental concerns so easily these days.
Macquarie is both target and role model on pay 24 Jul 2019 Aussie watchdogs are cracking down on bank remuneration, and a group of shareholders plans to contest Macquarie’s pay at this year’s shareholder meeting. That’s odd, because Macquarie’s practices are pretty sensible – and its rewards pale versus poorer performers on Wall Street.
Weak Facebook penalty mirrors weak U.S. watchdog 23 Jul 2019 The social network will pay a $5 bln fine and must form a privacy oversight panel after accusations it mishandled user data. The Federal Trade Commission doesn’t have enough powers or staff to punch harder. Unless Congress acts, Big Tech can expect more slaps on the wrist.
U.S. bond vigilantes morph into deficit patsies 23 Jul 2019 Treasury prices didn’t budge after lawmakers struck a spending deal, even though it promises years of trillion-dollar deficits. Investors used to target congressional profligacy. But a world awash in money has co-opted them. Now they won’t enforce discipline until it’s too late.
Big Tech labors under Trump-First policy 23 Jul 2019 The U.S. president may weigh in on a $10 bln Pentagon contract where Amazon is a lead bidder after rivals slammed the process. He also questioned Google’s China ties and may use Huawei licenses to help or punish others. Targeting firms with fear or favor is a worrying disruption.