U.S. Midwest election ditches free trade boogeyman 11 Mar 2020 Former Vice President Joe Biden scored a huge win in Michigan’s Democratic presidential primary. Senator Bernie Sanders’ attacks on trade deals didn’t resonate like in 2016. Tariff wars have hurt the region, lowering Donald Trump’s popularity and changing the economic calculus.
No Dolce Vita: Life inside the Italian lockdown 11 Mar 2020 A national quarantine prompted by coronavirus threatens the social contacts essential to Italian life, while gut-punching the economy. Italy’s experience also highlights the struggle ageing societies face in fighting epidemics. Breakingviews offers glimpses from the red zone.
Mark Carney’s joined-up thinking does what it can 11 Mar 2020 The outgoing Bank of England boss unexpectedly eased policy with measures that used most of his armoury. It came just before finance minister Rishi Sunak unveils steps to help the economy deal with virus disruptions. Euro zone policymakers struggle to act with such unity.
MbS vs. Putin will be an oil drama in several acts 11 Mar 2020 The Saudi crown prince and Russian president’s crude supply pact has blown up into a full-on price war. On the face of it, Moscow’s budget means Vladimir Putin is better able to bear extended low prices. But Mohammed bin Salman also has options to keep the wolf from the door.
Big banks’ oil slick looks mostly fireproof 11 Mar 2020 Shares in lenders from JPMorgan to ING fell after Monday’s Brent crude selloff. Yet big U.S. banks weathered the last oil-price storm, while Europeans are nowadays probably lending to safer majors. More worrying is a general economic slowdown and continued lower rates.
Prudential’s U.S. listing throws spotlight on Asia 11 Mar 2020 CEO Mike Wells plans to sell a slab of the UK insurer’s Jackson unit. It’s the second stage of a breakup, and partly satisfies activist Dan Loeb’s call for a full split. But any meaningful boost in the $37 bln company’s value depends on investors reassessing its Asian business.
Japan is stuck with curse of safe-haven yen 11 Mar 2020 Anxious investors have flocked to the currency, fuelling a rally that could hammer exporters. Tokyo will struggle to persuade other major industrial nations the yen is overvalued, so won’t win their help to curb the move. Solo action won’t work. Only calmer markets can help.
Ailing U.S. consumers need cash, not tax cuts 10 Mar 2020 U.S. President Donald Trump wants to reduce payroll levies to ease virus-related economic pain. But workers often don’t spot such changes and it doesn’t help those who end up not getting paid at all. A direct payment would be more useful and help shore up consumer spending.
Occidental divi cut puts Buffett in driver’s seat 10 Mar 2020 The oil driller slashed its payout in response to crude prices plummeting. That is the last straw for CEO Vicki Hollub, who staked her credibility on a debt-fuelled purchase of Anadarko. Oxy now looks like an appealing M&A morsel, though all hangs on kingmaker Warren Buffett.
Wells Fargo stuck on hidden route to recovery 10 Mar 2020 New boss Charlie Scharf won’t say when he thinks the U.S. bank will have fixed the “broken culture” that led to fines, or even if it will hit an important Fed deadline. It can be sensible not to chase milestones too doggedly. But the opacity leaves investors in valuation limbo.
Holding: Governance brawl a boon for stakeholders 10 Mar 2020 Attorney Martin Lipton and Harvard’s Lucian Bebchuk are at it again, with the latter saying company pledges to serve the greater good are illusory. Lipton counters that firms really are moving past shareholder primacy. At least the debate could benefit all corporate constituents.
Virus pain may leave CoCos with lasting infection 10 Mar 2020 Monday’s selloff was the worst ever for bank contingent convertible bonds. More could lie ahead if losses caused by the coronavirus and oil collapse allow lenders to stop paying coupons. The more banks that trigger hybrids, the less they will worry about spooking bond markets.
Oil slump puts African states on devaluation hook 10 Mar 2020 Hydrocarbons account for 90% of exports in Nigeria and Angola, despite years of talk about diversification. With crude at $36 a barrel, they’re both in trouble. Speedy devaluation means inflation-related pain but should help make the shift to a greener, low-carbon future.
Virus storm will challenge cruise liners’ buoyancy 10 Mar 2020 Shares in $15 bln Carnival have halved since Covid-19 broke out on two of its ships. Demand has recovered quickly after past disasters, including illnesses and the fatal sinking of the Costa Concordia. Persuading core older clients to reboard may be tougher this time.
Blackstone unearths rough Chinese property gem 10 Mar 2020 The private equity firm is in talks to buy Soho China for $6.3 bln. A 101% premium is eye-catching, but the collection of skyscrapers – some designed by Zaha Hadid – look cheap. After Blackstone’s lucrative run selling to mainland buyers, this deal’s timing warrants attention.
Ironman sale threatens Chinese owner’s endurance 10 Mar 2020 Wanda Sports had lost 70% of its value since going public last July, hurt by disappointing results and debt concerns. It may now offload the division that houses the crown-jewel triathlon. Parting with such a big part of the IPO pitch hardly inspires confidence about the rest.
Xerox drawn into duplicative Japanese fight 10 Mar 2020 After pushy investor Carl Icahn showed up, the U.S. printer maker rancorously rewrote a 57-year relationship with Japan’s Fujifilm. Xerox’s next move, a hostile $35 billion bid for HP, has now riled Canon, a 35-year HP partner. Aggressive tactics invite copycat responses.
White House can lend U.S. shale a helping M&A hand 9 Mar 2020 Black gold’s rapid price drop makes many Texas drillers and frackers uneconomic, threatening U.S. energy independence touted by President Trump. His administration could offer merger sweeteners, effectively forging state-backed oil giants to compete with OPEC and Russia.
OPEC shock pours fuel on credit-market cinders 9 Mar 2020 The collapse in oil prices and worsening epidemic are causing turmoil in corporate debt markets. Yet the price moves are hard to justify, even matching the damage from Lehman Brothers’ failure in 2008. That adds weight to fears that bank trading limits can exacerbate a crisis.
Boeing airworthiness takes new viral hits 9 Mar 2020 The aircraft maker’s shares have plunged 25% in under a month – double the damage to the S&P 500. On top of the 737 MAX grounding, a possible pandemic weakens Boeing’s airline customers while also disrupting its supply chain. New CEO David Calhoun needs more than an apology tour.
Aon repeats gaffe with $30 bln Willis deal 9 Mar 2020 Investor skepticism quickly torpedoed the insurance broker’s idea, exactly a year ago, of buying rival Willis Towers Watson. Now the two have signed a deal – and it still looks unrewarding for Aon’s owners. Announcing it amidst market virus panic adds insult to injury.
Big Oil’s wipeout invites a new sort of activist 9 Mar 2020 Plunging crude prices have sent BP shares down 20%, with Shell and Total close behind. The rout could make it harder for oil majors to shift away from fossil fuels. Dirt-cheap valuations offer a way for activists to push CEOs to cut investment and return cash to shareholders.
Activists leave Twitter with unspoken ultimatum 9 Mar 2020 The $26 bln social network struck a deal with Elliott and Silver Lake involving board seats, fresh capital and a $2 bln share buyback. Twitter also effectively pledged to grow users by 20%. If CEO Jack Dorsey can’t deliver, he may find himself under pressure to sell the company.
Lebanon faces long road to default exit 9 Mar 2020 The debt-burdened country is set to miss a debt payment due on Monday, a first-time default. The debt’s outdated fine print could give creditors leeway to reject stiff haircuts. But Lebanon could also dust off an old tool in its defense. It’s likely to be a long grind.
Saudi sets global oil a stress test few will pass 9 Mar 2020 An all-out price war launched by the kingdom crashed the crude price over 20%. Values well below $40 a barrel are a setback for U.S. shale producers, global oil majors, national budgets, and the climate change fight. At least Saudi oil giant Aramco will share the short-term pain.
Oil shock gives central banks excuse to be bold 9 Mar 2020 Crude prices plunged days before the ECB meets. While Christine Lagarde and her global peers are supposed to look beyond one-off jolts, inflation expectations have been crushed in a market already gripped by virus fears. That gives rate-setters another reason to be decisive.
Italy’s virus mitigation comes at a hefty price 9 Mar 2020 Rome has quarantined 16 mln people to beat Covid-19. Such harsh steps may slow contagion and relieve a strained health service. The risk is that the economy suffers lasting damage before the epidemic is bested. Other developed countries will inevitably confront the same dilemma.
Tesco’s Asia retreat seals humdrum UK future 9 Mar 2020 The retailer sold its Thai and Malaysian units for $10.6 bln. The price of 12.5 times EBITDA suggests CEO Dave Lewis prioritised a fast sale. Investors will pocket a 5 bln pound special dividend. With a clear focus on its dominant British business, Tesco will be safer but duller.
Big shots will help women bridge startup gap 9 Mar 2020 The average value of a seed round for female-founded ventures tripled to $1.2 mln in the past decade. And a record number of outfits with women founders achieved “unicorn” status in 2019. The divide is still huge. Even so successes like Luckin Coffee will accelerate progress.
Coronavirus infects air over global markets 9 Mar 2020 Monday’s plunge in oil prices and signs that Western nations may act drastically to slow the virus reversed a Chinese stock rally; some major Asian indexes fell 6%. Any benefits of cheaper energy are overshadowed by fear of the unknown in export dependent East Asia and beyond.