Senate could become Wall Street’s house of horrors 30 Oct 2020 The financial industry has been treated with kid gloves under Republican rule. That will change if Democrats win the upper house. With Sherrod Brown as banking czar, the Senate could take a tough line on trading rules and mergers. Bank breakups may even be back on the agenda.
Exxon is shrinking in all the wrong places 30 Oct 2020 The $137 bln oil giant is laying off staff and posting losses. It continues to bleed money, and over the past decade spent $15 bln more on its dividend and capex than cash generated by its business. As its earnings get smaller, its balance sheet gets weaker.
Review: What can be more premium than luxury? 30 Oct 2020 The next generation of affluent shoppers will spend more on experiences and edgy products, says Erwan Rambourg in “Future Luxe”. That may dim the appeal of classic deluxe products like Gucci bags or Cartier watches. Luxury will be more about what you do than just what you own.
Corona Capital: Netflix price hike 30 Oct 2020 Concise views on the pandemic’s corporate and financial fallout: The streaming-video service hiked the price on subscriptions as binge-watching booms during the pandemic.
Bank dividend bans have passed their sell-by date 30 Oct 2020 European supervisors in March halted payouts so that lenders could keep credit flowing and absorb losses. Yet earnings and capital have held up, while bond markets are booming. Regulators can drop the restrictions, as long as banks keep big shock absorbers and don’t cut lending.
Naspers finds one bargain internet stock: its own 30 Oct 2020 The $82 bln South African group and its Amsterdam-listed offshoot have lagged behind a surge in big technology stocks this year. A $5 bln buyback highlights the discount to its stake in China’s Tencent and shows it won’t chase overpriced deals. Other investors should take notice.
Spain’s cheapest bank is only for the brave 30 Oct 2020 Sabadell is worth less than a fifth of its 11 bln euro book value. With rivals consolidating, it could become a target for BBVA or Santander. While lowly capital buffers leave little room for a spike in bad debts, cost savings worth 6 bln euros mean a deal could still make sense.
Trump vs. Biden is sideshow for Xi 30 Oct 2020 U.S. elections are closely followed in China, but the outcome of this year’s presidential ballot may matter less this time. Trump's tough act on Beijing has wrought little real damage. And while neither candidate is likely to thaw relations, the pandemic has left America weaker.
Lufax slips softly priced IPO past Ant hullaballoo 30 Oct 2020 The Ping An-backed Chinese fintech outfit has garnered less hype than Jack Ma’s record-shattering rival. It isn’t growing as fast, but its online lending unit is profitable and established. A $33 bln valuation, at 13 times forecast 2021 earnings, makes for a compelling option.
Apple’s reinvention risks are yet to be priced in 29 Oct 2020 Services revenue surged 16% in its last quarter to $14.5 bln. With iPhone markets mature, it's the main reason Apple's stock price has doubled in two years. Yet rivals and regulators have that business in their sights. The company's $1.9 trln valuation assumes they get nowhere.
Facebook nears moment when world is not enough 29 Oct 2020 The summer’s ad boycott made no dent on revenue, which grew 22% in the third quarter, and didn’t deter the social network’s users. Facebook’s apps now reach 41% of the global population. Expansion on that front is bound to slow down. Revenue per user will get more important.
Amazon’s twin engines ready for the stratosphere 29 Oct 2020 The company had a stellar quarter from e-commerce and cloud computing. Those businesses were already good, and 2020’s challenges made them better. With a market value of $1.6 trln, Amazon is either a bargain or an antitrust target. Threading the needle is getting harder.
Europe virus defences can manage one more lockdown 29 Oct 2020 France and Germany are imposing tough restrictions to stem the pandemic. The economic shock should be milder than the first Covid-19 crisis, and government spending and the ECB can cushion the blow. Yet the region would struggle to cope with a protracted shutdown.
Nokia makes a meal of its Huawei free lunch 29 Oct 2020 The $19 bln telecom giant’s shares slumped after it slashed operating margins. New boss Pekka Lundmark is right to beef up investment to improve its 5G offering as China’s Huawei battles U.S. hostility. But right now Nokia is losing out on new business rather than snapping it up.
The Biden portfolio is mainly the Trump portfolio 29 Oct 2020 It might matter for mini sectors, like solar power and cannabis, who wins next week’s U.S. presidential election. But as Trump’s impact on coal shows, it’s not that predictable. Instead the Fed, stimulus, taxes and the post-Covid economy are cause for an asset-allocation rethink.
Biden win would clear multiple green roadblocks 29 Oct 2020 The Democratic nominee will rejoin the Paris agreement on emissions cuts if he wins the U.S. election. That’s good, but largely symbolic. More important are a pledge to hike clean energy spending and the scope for his administration to advance green financing and carbon pricing.
Ford accelerates turnaround with pickup pricing 29 Oct 2020 The $30 bln automaker blew past third-quarter estimates, reporting $2.4 bln in earnings. Vehicle prices benefited from low Covid-affected supply and hearty demand. That's a helpful bequest from the old CEO. It's now down to the new boss to deliver on electric-vehicle promises.
Viewsroom: What we’re expecting on election night 29 Oct 2020 If Joe Biden wins Donald Trump’s place as POTUS on Nov. 3, and the Senate turns Democrat, lots of things will change – chief among them tax and economic policy. But big tech companies and China’s Communist Party will gain no reprieve. Rob Cox, Gina Chon and John Foley discuss.
Corona Capital: Utah Jazz, Comcast, Kraft 29 Oct 2020 Concise views on the pandemic’s corporate and financial fallout: Utah Jazz’s owners sign off with a respectable return; Comcast shoots the light out on broadband; and Kraft rides the stay-at-home wave.
Arnault’s Tiffany tantrum was not worth the fuss 29 Oct 2020 The luxury tycoon trashed the U.S. jeweller’s management, went to legal war in Delaware and enlisted Paris to wriggle off the hook. In a U-turn, LVMH will now swallow its target for a discount of perhaps below $290 mln. That’s far less than the long-term hit to LVMH’s reputation.
UK banks’ mortgage wave may only be knee-high 29 Oct 2020 Lloyds CEO António Horta-Osório hopes a home-loan boom will offset pain from lower central-bank interest rates. But the spike in credit applications is partly pent-up demand from lockdowns. And stiff competition from HSBC and others may force lending margins downwards again.
Pandemic complicates AB InBev’s debt rehab 29 Oct 2020 The $93 billion brewer canned its interim dividend but its ideal leverage of 2 times EBITDA remains out of reach. CEO Carlos Brito is expected to step down soon, his successor will need cash to invest in brands hit by Covid-19. Selling another chunk of the Asian unit would help.
Beijing comes banging on real estate’s door 29 Oct 2020 The central bank has asked developers to report monthly investments, loans and more. It’s an extraordinary step to rein in China Evergrande and peers, which have amassed over $2.5 trln of debt. President Xi Jinping’s push to reallocate investment out of property is gaining steam.
Chinese lender IPO mess holds rules up to ridicule 29 Oct 2020 Xiamen Bank shares surged by the maximum allowable 44% in their Shanghai debut. That’s par for the course on primary mainland boards, but a day-two 10% plunge and trading halt are not. Semi-official guidance distorts bank pricing in particular, and is overdue for revision.
Big Tech backlash will hurt Little Tech more 28 Oct 2020 Facebook, Twitter and Google hide behind a law that protects them from liability for toxic content but lets them censor when they see fit. Removing that shield, as some lawmakers want to do, would be inconvenient and expensive for them, but brutal for smaller rivals like Yelp.
Boeing’s question is not how much but how long 28 Oct 2020 The $86 bln aerospace firm jettisoned $5.1 bln of cash in the latest quarter, not much better than the three months before. Other airborne industries are suffering too, but despite a reasonable balance-sheet cushion, Boeing is even less suited to endure prolonged disruptions.
Apollo would carry on just fine without Leon Black 28 Oct 2020 The 30-year-old investment shop is under intense scrutiny because of revelations about its co-founder’s dealings with the late sex offender Jeffrey Epstein. At this stage, credit eclipses buyouts anyway. And the firm has deepened its bench enough to move forward without Black.
Argentina’s creditors made two silly mistakes 28 Oct 2020 Some investors say their newly restructured bonds have tanked due to President Fernandez’s lousy policies. They’re right. But they’re shouting in the wind, because they agreed to a debt rejig based on unenforceable promises, and gave up what leverage they had in the process.
Europe’s new lockdowns are Covid-19 reality check 28 Oct 2020 France is the latest nation to mull tough restrictions to curb infections. Companies are in a weaker state than in the first wave having racked up $765 bln of new debt. Despite the selloff, investors are pricing in a swift recovery. That’s hard to square with a lingering virus.
Fiat and Peugeot need each other more than ever 28 Oct 2020 Jeep-maker FCA made a strong profit in its key North American market. That’s helpful for marriage partner Peugeot, whose European heartland faces new pandemic lockdowns. Neither has much business in rebounding China. Their 5 bln euros of merger savings can’t come soon enough.