“America First” mantra is here to stay 22 Jul 2020 President Donald Trump says election rival Joe Biden’s $700 bln "Buy American" plan is policy plagiarism. Both are running partly as economic nationalists. Biden would repair international relations, but he's no fan of globalized supply chains or unfettered trade.
Bill Ackman’s $5 bln SPAC debut is market moment 22 Jul 2020 The biggest-ever listed vehicle designed solely to buy another company starts trading on Wednesday. In 2020, SPAC IPOs and their acquisitions have already both outpaced previous full years. The structures have improved, too. Ackman’s hope is to turn them from fad to fixture.
Can the Fed help close the racial prosperity gap? 22 Jul 2020 Economists advising U.S. presidential hopeful Joe Biden have proposed making racial equity part of the Federal Reserve’s mandate. That chimes with the zeitgeist. But if it means rate-setters ignore too-high inflation for too long, it could hurt those Biden aims to help.
Euro moves a step closer to becoming a safe haven 22 Jul 2020 The EU’s 750 bln euro fund makes the bloc more resilient and creates easily traded common bonds, boosting the single currency’s appeal. Yet political splits are only patched up. It may take new crises to fix them. Only then will the euro stand a chance of supplanting the dollar.
Melrose will need more than cost cuts to cut debt 22 Jul 2020 The $7 bln UK engineer’s shares fell 15% after quarterly sales slumped. CEO Simon Peckham plans $126 mln in savings. But net debt is worth 3 times 2019 operating profit and the aerospace arm is struggling. A sale of its Nortek air conditioning systems unit is even more urgent.
Corona Capital: Thanksgiving shopping, Airlines 22 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: Walmart gives thanks to employees; Airlines’ relative winners emerge.
Hydrogen investing is a lottery worth playing 22 Jul 2020 The element has huge potential as a carbon-free energy source. Prior false dawns, sky-high valuations and the difficulty of identifying which companies will endure are causes for investor caution. But the scale of the opportunity means there’s also a risk of missing out.
Unilever almost looks fair and lovely in India 22 Jul 2020 A focus on hygiene, health and nutrition helped lift earnings at the consumer giant’s local unit, a $73 bln maker of skin-lightening products and more. Newly acquired Horlicks is pulling its weight, too. It goes some way to justifying a valuation three times its global parent.
China’s firewater bulls need some liquid courage 22 Jul 2020 Moutai shares took a hit after state media lambasted the booze group for lubricating graft. They’re still up 40% this year, valuing it at more than twice Diageo and Pernod combined. But with Beijing fretting over stock bubbles and corruption, Moutai faces puritans on two fronts.
Carlyle completes the first of two bake-offs 21 Jul 2020 The investment firm has gone from co-CEOs down to one, naming Kewsong Lee to run the business. That’s helpful – with its founders also sharing control, Carlyle looked crowded. It might also help in another, wider contest: Carlyle’s stock has trailed peers KKR and Blackstone.
Coronavirus vaccine hopes inflate bubble 21 Jul 2020 Multiple biotechs like Moderna are developing vaccines. The market capitalization of five of them is up over eightfold, adding more than $50 billion of value. That's excessive even if they capture the entire benefit – and there are over 150 competing efforts in all.
The Exchange: Brave new credit world 21 Jul 2020 The crisis unearthed land mines in the fixed-income market – many of which Arena Investors Chief Executive Dan Zwirn had previously identified. He now explains how to navigate this opaque universe with deep dives on leveraged finance, liquidity crunches and an activist Fed.
Deutsche Bank’s shock absorbers get vital padding 21 Jul 2020 An impromptu release showed the 18 bln euro lender has bigger capital buffers than investors had expected. A dicey cash call is even unlikelier. Yet it may be years before the bank generates much profit. With interest rates set to stay low, investors have little reason to cheer.
Coke’s slip raises stakes in battle of bubbles 21 Jul 2020 The sugary drinks maker’s revenue fell 28% in the second quarter, whereas selling snacks helped rival PepsiCo weather Covid-19 lockdowns. Coca-Cola has traditionally been the more highly valued of the two, but the gap is now the lowest in a decade.
Investors emerge faster than emerging economies 21 Jul 2020 Fitch Ratings may soon label more countries in the world as junk than investment grade. And Covid-19 has added to the problems that many poorer countries already faced. Even so, falling U.S. bond yields are forcing money managers to raise their exposure to riskier markets.
UK rules need more bite to combat Russia influence 21 Jul 2020 Welcoming Russian money without many checks was counterproductive, a parliamentary report said. Attempts made so far to tackle the issue don’t go far enough. Investing more in regulatory and crime-fighting bodies and asking tougher questions about the source of wealth may help.
Corona Capital: Movies, Basketball, Tech optimism 21 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: Warner Bros’ indefinite delay of its blockbuster movie “Tenet” spells bad news for the industry; healthy players and good social-media stats give the NBA a boost; Silicon Valley shows a hint of pessimism.
EU deal offers model for future crises 21 Jul 2020 The bloc agreed to 750 bln euros of grants and loans backed by common funds to help pandemic-hit member states. Despite some concessions on size, the plan looks workable and creates incentives for reform. Europe has moved on from its messy handling of the euro zone debt crunch.
Goldman’s Permira punt looks better for the target 21 Jul 2020 The U.S. bank is taking a 10% stake in the buyout shop for $500 mln. Permira is recovering after a tricky period and the sale values it at a lower multiple than rivals. But unlisted players merit discounts, and access to Goldman’s network may mean the seller gets the better deal.
UBS offers bank investors safe haven at a price 21 Jul 2020 The $43 bln Swiss lender avoided the virus-induced bad debt plaguing peers, and should pay a dividend sooner than most. That protects its shares from a sector-wide slump. But, given its relatively rich valuation and weak growth prospects, any upside will now depend on cost cuts.
ByteDance will bust a softer groove without TikTok 21 Jul 2020 Political pressure from Washington could prompt a sale of the video app, curtailing the global ambitions of $140 bln Chinese parent ByteDance and erasing a fifth or more of its value. TikTok’s local equivalent, plus news, music and other apps, will help it retain viral appeal.
Crisis forces Australia and China closer 21 Jul 2020 Despite diplomatic tension, miners BHP and Rio are cashing in on Beijing's infrastructure stimulus. Supply disruptions in Brazil and weak global demand have left the two trading partners even more dependent on each other. Politics can’t change facts under the ground.
Rosetta Stone cracks code as autopay pusher 20 Jul 2020 Though the $500 mln online language tutor’s shares peaked 10 years ago, the stock has been on a tear since mid-March, helped by deal rumors. Like gyms, users ignore small monthly payments once they sign up for an improved or enlightened self. That is, until wallets get squeezed.
Ecuador is willing pawn in Argentina debt standoff 20 Jul 2020 Quito will tweak voting rules in its $17.4 bln restructuring, helping creditors pressure the larger LatAm debtor to do likewise. It’s an easy change to make and would still help emerging-market borrowers avoid being held to ransom in the future. Buenos Aires should take the hint.
Chevron snags Noble deal thanks to Anadarko miss 20 Jul 2020 The oil giant, which let Occidental impale itself on Anadarko last year, is lobbing a scant 7% premium for Houston’s $5 bln Noble Energy. While driller shares have rebounded, savings alone will account for half the bid’s value. Chevron can even afford to keep interlopers at bay.
Ant IPO puts Chinese bourses on collision course 20 Jul 2020 Jack Ma's $200 bln fintech group wants to list in Hong Kong and on Shanghai's hot STAR market. Ant can find global investors and hard currency in the former, and higher valuations in the latter. Having to share coveted tech listings, however, ups their rivalry several notches.
Seller wins in eBay’s $9 bln classifieds auction 20 Jul 2020 Norway’s Adevinta, controlled by media conglomerate Schibsted, won the race to buy the U.S. group’s online-listings business, Reuters reported. It may struggle to make a decent return. EBay, however, gets a good price and the chance to gain from likely consolidation in Europe.
Corona Capital: Uber, Tokyo Olympics 20 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: Uber’s contact-tracing program could help stem Covid-19’s spread and mend relationships with municipalities; and Japan PM Shinzo Abe faces discontent over his handling of both the virus and the postponed Olympics.
Intesa’s UBI sweetener may be just enough 20 Jul 2020 Italy’s largest bank added an 18% cash top-up to its unsolicited offer for the smaller lender, lifting the price to 4.2 bln euros. Even after the hike, Intesa should make an attractive return. UBI shareholders hoping for more also have to consider the downside if the deal fails.
Wirecard’s red flags offer lessons for investors 20 Jul 2020 Shareholders couldn’t have known that $2 bln of the payments group’s cash was missing. But its seemingly unnecessary reliance on debt finance raised questions. A weak board and short-term executive pay packages were further warning signs. All three serve as a teachable moment.