Apple may bruise but it should still bounce back 30 Apr 2020 The 7% fall in iPhone sales over the last quarter was predictable, but also self-limiting. It’s partly offset by selling more services, which are now over 20% of revenue. And unlike some goods during Covid-19, demand for Apple products will be deferred rather than destroyed.
Jeff Bezos puts shareholders in the corner 30 Apr 2020 Amazon’s revenue jumped 26% in the first quarter. Conditions are just right: more online shopping and a growing pool of jobless people from which to hire. But shareholders will have to join the queue, thanks to a giveaway of some $4 bln to customers and staff. It's classic Bezos.
Chevron is M&A-ready. Exxon, not so much. 30 Apr 2020 The oil-price rout has left small and mid-tier U.S. drillers in pain and ripe for takeovers. Major players are hurting too, but Chevron, though not as big as Exxon, has been more prudent with cash and debt, and its stock has held up better. Occidental may even be in its sights.
Viewsroom: Big trouble ahead 30 Apr 2020 Breakingviews columnist and founder Hugo Dixon discusses his column with Rob Cox on how taxpayer-funded bailouts are likely to encourage excessive risk-taking in the future and provoke new populist backlashes when the bills need to be paid. Also, where’s Kim Jong Un?
Guest view: Climate change is the next Covid-19 30 Apr 2020 The failure to properly plan for the coronavirus outbreak has made dealing with it much harder. As former White House energy and climate adviser John E. Morton argues, the cost of addressing damaging global warming will be similarly increased unless governments show leadership.
Tesla’s Elon Musk turns from prey to predator 30 Apr 2020 The electric-car maker’s boss lashed out at state-imposed “fascist” lockdowns. Truth is, Tesla’s having a good crisis. Its $160 bln valuation bests all but Toyota. Rather than kvetching, Musk could use this firepower to seize the moment and expand global manufacturing capacity.
ECB’s low inflation problem is worse than it looks 30 Apr 2020 Depressed energy costs meant euro zone consumer prices rose 0.4% in April from a year ago. But President Christine Lagarde may in reality be even further away from her just-below 2% goal. Statisticians’ efforts to fill data gaps during lockdown risk overstating price pressures.
Phones will restore freedom at the cost of privacy 30 Apr 2020 Contact-tracing apps like Apple-Google’s will allow more public mobility but only if related testing is quick and easy, and everybody plays ball. That means democracies will wave sticks, disguised as carrots, to encourage use. Good results would outweigh the Orwellian overtones.
Corona Capital: Tepid earnings, red-hot bonds 30 Apr 2020 Concise views on the pandemic’s corporate and financial fallout. Halfway through earnings season, things are going from mediocre to bad at big U.S. companies. Meanwhile, Boeing’s $25 billion bond issue shows the Fed has cast a spell on the corporate debt market.
Shell’s dividend surrender is a necessary evil 30 Apr 2020 Given it hadn’t reduced shareholder payouts since WW2, the Anglo-Dutch major’s two-thirds cut hurts its pride. But amid an epic price crash boss Ben van Beurden couldn’t have kept Shell’s rating and paid to transition from oil. Stubbornly clinging on would have been even worse.
SocGen hits replay button on trading horror show 30 Apr 2020 The French bank plunged into the red due to $277 mln in losses on equity bets. That contrasts with investment banking peers who reported sharp rises in trading income. CEO Frederic Oudea’s pledge of more cost cuts does little to reassure there won’t be more goofs to come.
Debt freeze for poor nations is in interest of all 30 Apr 2020 Private creditors can choose to join rich countries in giving lower-income economies a payments holiday. The G20, IMF and World Bank have sticks and carrots to encourage participation. And a temporary pause is better than a series of defaults that would disrupt emerging markets.
How Goldman Sachs walked into a pay trap 29 Apr 2020 CEO David Solomon’s $27.5 million package for last year is deservedly in the crosshairs at this week’s shareholder meeting. Goldman’s problem is the method rather than the magnitude, which isn’t out of whack with rivals. Still, it might want to borrow some of their good habits.
Facebook goes on viral offensive 29 Apr 2020 While Alphabet is cutting costs, Facebook will hire 10,000 people and just did its biggest deal since 2014 in India. Revenue growth fell to 18% last quarter, but the $550 bln social network is not slowing down. Mark Zuckerberg can afford to ignore any reluctant shareholders.
U.S. moviegoers will never again fill theaters 29 Apr 2020 Attendance was already declining, and Covid-19 has completely shut down the likes of AMC. Netflix is ascendant, and Comcast's Universal managed a successful release of "Trolls" without cinemas. Add wariness of social contact, and the industry's bleak future may already be here.
Central bankers have more cards up their sleeves 29 Apr 2020 Fed Chair Jay Powell and his peers have fashioned new tools to fight the Covid-19 crisis. In future downturns, they could copy the BOJ’s stock buying and, in extremis, consider financing governments directly. Only surging inflation or overt political meddling will hold them back.
UK picks odd time to query investment bank model 29 Apr 2020 The Financial Conduct Authority has berated banks that lend to firms weakened by Covid-19 for demanding mandates on equity offerings. But companies have long used the promise of future fees to extract cheap loans from lenders. The watchdog risks further muddling the market.
Kim Jong Un unnerves the world equally in absentia 29 Apr 2020 The North Korean leader is rumoured to be sick, comatose or dead due to heart problems at around 36. Ill or healthy, Kim has identified no successor, and an internal power struggle would destabilise the region. Investors should pray for his health now, and reformist heirs next.
Beware hidden hazards in Nio’s China rescue route 29 Apr 2020 The electric-car maker secured a $1 bln lifeline from state-backed funds. Existing shareholders get diluted in a deal that injects mainland assets into a new entity, but it’s a clever way to tap local financing. Two distinct sets of investors may challenge boss William Li.
Corona Capital: U.S. GDP, Gilead’s drug, Spotify 29 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: the U.S. economy takes a dive; Gilead’s antiviral drug may help a bit; and Spotify sings an upbeat tune.
Barclays’ JPMorgan impression may fall flat 29 Apr 2020 The UK bank, like CEO Jes Staley’s former employer, is preparing for the worst with a huge bad-debt charge. Peer Deutsche is looking through the virus pain. Barclays’ move could be a sign of strength, but investors may see it as evidence of the lender’s risky mix of businesses.
British Airways jobs cull sends EU bailout Mayday 29 Apr 2020 The airline owned by IAG is axing a quarter of its staff amid the virus fallout, rather than seek state aid. The move highlights the limits of using government funds in the face of wrenching change. It’s ominous for Paris and Berlin, who may dole out $17 bln of taxpayer cash.
Christine Lagarde will need an even bigger bazooka 29 Apr 2020 The ECB boss is snapping up so many bonds to keep Italian and other southern euro zone debt yields in check that she may soon have to augment the 750 billion euro purchase plan unveiled less than two months ago. The more she does, the more squabbling time she buys EU leaders.
Coronavirus can spur ad companies’ transformation 29 Apr 2020 Groups like Publicis and WPP are grappling with the collapse in demand. The crisis may help them shift from traditional advertising into data-led services. Painful cost cuts can speed tough decisions. But it will be hard to judge the success of the shake-up until demand recovers.
Cards played well in three-handed casino deal 29 Apr 2020 Blackstone is buying 10% of Australia’s Crown Resorts from Lawrence Ho’s Melco. The buyout shop antes up at a discount while the Macau operator sensibly folds a busted bet. And amid a crisis, Crown gets staked by a shrewd backer. It may take time, though, for the pot to grow.
Wall Street awaits Chinese oil crash post-mortem 29 Apr 2020 The country’s fourth-largest lender fumbled a crude product, leading to $1.4 bln in losses. Regulators have pushed wealth management assets onto commercial bank balance sheets, with uneven results. Foreigners mulling market entry should watch how watchdogs tackle the mess.
China’s tough Luckin line faces deaf U.S. ears 29 Apr 2020 Authorities raided the embattled coffee chain’s office, partly to limit collateral damage from the accounting scandal. Beijing also may be trying to placate impatient U.S. regulators. It will take far more, though, to satisfy hawks demanding China Inc delistings and divestments.
Google’s falling ad star puts focus on the cloud 28 Apr 2020 Revenue growth at Alphabet’s core division slowed to 12% in the three months to March, with a bigger dip expected this quarter. Still, its $117 bln cash pile buys time and its growing cloud-computing unit helps offset the drop. But a big obstacle is Amazon, a rival on both fronts.
U.S. oil bailout should pay to still the drill 28 Apr 2020 The White House is mulling how to keep the fossil-fuel industry afloat. Emergency loans or equity stakes have many drawbacks. Compensating companies for keeping black gold in the ground has risks, too. But it would give Uncle Sam a semblance of control over demand and price.
Boeing faces MAXed-out negative feedback loop 28 Apr 2020 Boss David Calhoun has boosted cash by cutting costs and borrowing billions. Government aid would help, too. But getting more 737 MAXs out the door – whether ones already on order or new sales – is key. Beaten-down airlines, though, are unlikely to want many of them.