Europe’s bond taboo finally broken by pandemic 27 May 2020 Brussels wants to raise 750 bln euros to help EU members recover from Covid-19. Hard-hit Italy and Spain would get the lion’s share, chiefly in grants rather than loans. Though obstacles remain, the health crisis may have helped the EU overcome its aversion to joint deficits.
Stock-pickers will join endangered species list 27 May 2020 Active fund managers failed to outperform as the pandemic struck. A Covid-19 legacy of corporate disruption and central bank support will make gaining an edge even harder. As the shift towards passive investments accelerates, fees will be compressed and mergers may be necessary.
Hadas: Covid gives monetary extremists false hope 27 May 2020 Those who fear rising prices think anti-pandemic stimulus will surely unleash uncontrolled inflation. Deflation-worriers are just as certain that the global demand shock means their old enemy is lurking. Both disasters are possible, but policy and habit point to price stability.
Corona Capital: Hockey, HBO, Minority businesses 27 May 2020 Concise views on the pandemic’s corporate and financial fallout: A plan to get pucks back on the ice offers a sporting template. Meanwhile, HBO’s streaming service may have missed its moment, and a survey shows minority-owned businesses have mixed feelings about life after Covid.
Renault-Nissan repair job needs governance fix 27 May 2020 The French carmaker and its Japanese partner are merging production in a bid to revive their grim alliance. Yet the union’s uneven power split is a brake on integration. Luckily for incoming Renault CEO Luca de Meo there’s a way to mend relations, without losing control.
Bankers’ share sale boom hints at fragile recovery 27 May 2020 Saint Gobain sold $2.7 bln of shares in Sika, one of several recent so-called block trades. Such deals are a quick way for banks to win business but, as Citi’s experience with the Swiss group shows, carry risks. Companies’ rush to exit suggests stock market gains may be fleeting.
Europe has way out of Covid corporate debt trap 27 May 2020 Germany, Britain and France have approved $140 bln in state-backed loans to firms. As that number rises, so does the risk of a damaging debt overhang. Linking repayments to profit, so that some companies pay nothing, would help forestall that growth-sapping scenario.
U.S. Senate could shift China risk into overdrive 26 May 2020 A bipartisan bill would impose sanctions on Beijing officials and local banks for new Hong Kong curbs. Tensions between the two superpowers are already high. The legislation would bump that up several notches. And the economic fallout would be worse than that of the trade war.
Apply political-capital discount to Abe’s cash 27 May 2020 Japan’s prime minister is prepping $930 bln of fresh stimulus. Funds are critical as the economy staggers, but the crisis also offers a golden chance to ram through overdue changes for Japan Inc. Alas, Abe’s sinking popularity hobbles his ability to do much more than spend.
Bad borrowing habits come home to roost in India 27 May 2020 A London court ordered Anil Ambani, the brother of Asia’s richest man, to pay $700 mln to Chinese banks led by ICBC over a personal guarantee on a loan. The case is indicative of the unorthodox funding practices used by the country’s tycoons. It should help clean up their acts.
Warner Music IPO is priced to sing 26 May 2020 Lizzo’s record label is returning to the stock market at a lower valuation than Vivendi scored selling 10% of Universal Music. But Warner is smaller and not growing as fast. Still, at $13 bln the discount looks big enough to strike a chord with buyers itching for a new hit.
Latin America puts new spin on airline distress 26 May 2020 The region’s largest carrier, Latam Airlines, has filed for bankruptcy protection weeks after rival Avianca did. It can’t bank on government bailouts and has hefty dollar liabilities, amplifying the shock of having to ground planes. The future looks a lot smaller.
Hertz is a study in financial comorbidities 26 May 2020 The car-hire company’s heavy debts crushed it when Covid-19 curtailed travel. Other businesses with overengineered balance sheets have similarly come unstuck. It’s not that Hertz could have seen this coming – but the system has quickly switched to favoring flexibility over risk.
Stanley Ho made sure his house kept winning 26 May 2020 The Macau gambling doyen, who has died aged 98, once provided half the former colony’s tax revenue. His SJM empire weathered the handover of the territory to China, its emergence as a competitive Las Vegas-beating hub, and family feuds. Punters have proved resiliently profitable.
JAB’s $23 bln coffee unit is priced to take away 26 May 2020 The investor is offering shares in JDE Peet’s at a decaffeinated 20% discount to Nestlé. Consumers stuck at home are giving packaged brands like Kenco a boost, but prices per cup can still grind higher when cafes reopen. Europe’s biggest float this year can brew a robust return.
The Exchange: Vaccine optimist 26 May 2020 Lloyd Minor, the dean of Stanford’s school of medicine, tells Rob Cox that research into the coronavirus shows promising signs for the discovery of a vaccine. Just the same, the world needs to better prepare for pandemics, and medicine is at the cusp of extraordinary change.
Vegan boom is heading for a meat-fuelled bust 26 May 2020 Sales of animal product-free food soared in May, bumping up shares in the likes of Beyond Meat. Viral outbreaks at slaughterhouses suggest vegan supply chains are more durable. But as beef giant Tyson cuts prices and a slump looms, appetite for pricier foods could wane.
Corona Capital: Texas bank merger 26 May 2020 Concise views on the pandemic’s corporate and financial fallout: Texas Capital and Independent Bank ditched their almost $3 bln deal as Covid-19 played havoc with oil-and-gas loans. It is, at least, a mutual decision.
Sanofi finds M&A cure to CEO foot-in-mouth disease 26 May 2020 The French drugmaker is selling a $13 bln stake in biotech Regeneron. CEO Paul Hudson, recently chastised for saying America would get first dibs on a Covid-19 vaccine, now has a pristine balance sheet to do deals and invest. It helps Sanofi’s growth problem, and public image.
Big Elevator faces a cable-free race to the top 26 May 2020 Social distancing is accelerating the ascent of next-generation lifts from Otis, Thyssen, Kone and Schindler. Powered by magnets, cars will whizz round a circuit like a vertical bullet train rather than shuttling passengers up and down a rope. Eat your heart out, Roald Dahl.
French plutocratic raiders rally around their kind 26 May 2020 LVMH’s Bernard Arnault helped the activist-besieged owner of Paris Match by snagging 25% of the Lagardere family’s holding company. And Vivendi’s Vincent Bolloré raised his stake in the media group to 16%. Mogul overcrowding risks blunting Amber’s bid for better governance.
Meituan Dianping cooks up some tasty scraps 25 May 2020 Covid-19 hit China’s $83 bln takeaway-to-taxis company, whose quarterly sales fell 13%. The outlook is shaky, but more restaurants have signed up and new initiatives like contactless delivery should provide value longer-term. Merging Western peers are in comparative disarray.
Guest view: Debt crisis will delay global recovery 25 May 2020 The world is facing an emerging market blowup of unprecedented breadth that will damage confidence in the international financial system, former Citibank Chairman William Rhodes and Stuart Mackintosh argue. Easing the blow requires the United States and China to work together.
Stimulus blunder Down Under sends Big Data alert 25 May 2020 Australia overfunded an $85 bln wage subsidy programme due to excessively pessimistic epidemic models and data entry errors. Canberra thought 6.5 mln workers needed help, nearly twice the real number. Others will find it similarly difficult to cut through the noise.
Luckin spill will get China coffee war brewing 25 May 2020 The reeling chain once worth $12 bln is getting booted off the Nasdaq for fraud. Its brand might be toxic, but it has assets and ideas that Yum China, Tim Hortons and HeyTea could buy or adapt. Such deep-pocketed competitors may present a more formidable challenge to Starbucks.
A Ford-VW tie-up would solve a ton of problems 22 May 2020 The two rivals’ souped-up electric and autonomous collaboration won’t solve their respective geographic weaknesses. A merger would. It’d also create value and give Ford’s underperforming boss a graceful exit. The biggest sticking point is the firms’ convoluted ownership.
Review: Michael Jordan marks capitalism’s end, too 22 May 2020 ESPN’s documentary “The Last Dance” explores the basketball legend who defined the 1990s and the modern sports industry. He personifies U.S. business – with his intense competitiveness and bullying. He’s a reminder of when U.S. dominance looked like a slam dunk.
Still time to make U.S. airlines pay their way 22 May 2020 Germany’s tough bailout of Lufthansa makes the U.S. government look a soft touch. True, it doesn’t make sense to punish an industry for problems not of its own making. But assuming more bailouts may be needed, there could be a chance for Uncle Sam to get more for the taxpayer.
Alibaba may be China’s secret stimulus weapon 22 May 2020 The e-commerce firm is benefiting as millions of shoppers turn online - quarterly sales rose 22% to $16 bln. But overall domestic demand is weak and Alibaba has been handing out subsidies to kickstart businesses. That makes the $569 bln giant ideally suited to revive consumption.
Bard bailout won’t keep all the world a stage 22 May 2020 Shakespeare’s Globe theater in London is asking for state aid to avoid closing its doors for good. It’ll likely get it to avoid the lousy symbolism. But live theater – including the more commercial variety on Broadway – needs more than a quick fix, or it may be curtains.