Exxon saves oil that will have nowhere to go 30 Jul 2021 The $250 billion giant booked its highest profit in more than a year as oil prices top $75 a barrel. Darren Woods’ firm is showing restraint, getting more from pumping less. That’s important to sustain profit now. When the party ends, Exxon may have squandered an opportunity.
U.S. IPO market hits oversupply problem 30 Jul 2021 There are too many companies coming to market, even excluding record numbers of blank-check vehicles. Robinhood’s vaunted offering fell flat, battery maker Clarios delayed its debut, and fruit purveyor Dole downsized. Other IPOs did better, but investors can afford to be choosy.
Chancellor: U.S. credit cycle close to overheating 30 Jul 2021 Home prices and private-sector borrowing have taken off and credit standards continue to deteriorate. The end may not be nigh, but overvalued stocks and a massive lending boom, especially to corporations, make U.S. financial markets a particularly dangerous place for investors.
Capital Calls: China, Disney, Banks, P&G, Fintech 30 Jul 2021 Concise views on global finance: The SEC wants more disclosures on IPO risks related to Beijing regulators; plus Scarlett Johansson’s lawsuit, EU stress tests, consumer prices, and Qatar’s investment in an African fintech.
Andrea Orcel dives for treasure in MPS wreck 30 Jul 2021 Three months after taking charge of UniCredit, the veteran dealmaker is considering a takeover of state-controlled Monte dei Paschi. The Tuscan lender’s capital needs, bad debts and legal woes have scared off other suitors. Strict conditions should help calm wary investors.
Nomura trails in race to cast off Archegos mess 30 Jul 2021 The lender has not laid out how it lost $2.9 bln in the U.S. fund’s collapse although fellow loser Credit Suisse just did so in painful detail. With the Japanese bank’s investment unit still wilting from the hit, recovering profits elsewhere will only help to a point.
Xavier Niel makes virtue of Iliad investor myopia 30 Jul 2021 The French tycoon offered to buy the 29% of the telecom group he doesn’t already own at an 11 bln euro equity valuation. It’s well-timed: dividend-hungry investors have been spooked by Iliad’s rising 5G investments. Lowly valued rivals like Bouygues may look to do the same.
Grab’s tiny deal spotlights big Indonesia turf war 30 Jul 2021 A deal to shore up ties with a Jakarta conglomerate recalls the country’s importance for the super-app’s growth ahead of its $40 bln New York debut, and as top local rivals merge. Grab’s Southeast Asian footprint has benefits, but Indonesia carries outsize strategic value.
Review: Turning Beijing’s playbook against it 30 Jul 2021 China wants to become a global hegemon, Rush Doshi, the White House’s lead China wonk, argues in “The Long Game”. To halt its advance, he suggests copying Beijing’s strategy, and discouraging U.S. corporate engagement with China by tweaking taxes. He has few allies and less time.
Evergrande’s downward spiral runs off the page 30 Jul 2021 Beijing managed the market impact when it allowed quasi-state entity HNA to slide into bankruptcy. It will face more complex problems if privately-run Evergrande folds. The longer authorities wait to signal support, the more pages it will need to add to its corporate disaster playbook.
New Amazon CEO will have cloud and ads in his cart 29 Jul 2021 Andy Jassy now has the reins at the $1.8 trln group. E-commerce is the base, but cloud services and advertising, both growing fast and with high margins, account for the bulk of operating profit. The two businesses face challenges: one from competitors, the other from regulators.
Robinhood spoons up taste of own medicine 29 Jul 2021 The limp day one stock performance of Vlad Tenev’s online brokerage following its $32 bln IPO says little about its prospects. Consider Facebook’s debut on the one hand, or Ask Jeeves on the other. The sour part is that rapid growth for Robinhood depends on share prices going up.
TPG-backed vacation deal is a worthy destination 29 Jul 2021 One of the private equity firm’s SPACs is merging with Vacasa in a $4.5 bln deal. The firm helps owners list and manage their vacation properties including on Airbnb. The management is experienced, the concept is solid and Vacasa could be a strategic fit for others down the line.
SPAC sheriff shows up not a moment too soon 29 Jul 2021 The U.S. Department of Justice accused electric-truck maker Nikola’s founder Trevor Milton of making false and misleading statements. He had already stepped down from the $5 bln firm. But investors have started pushing back elsewhere. These are needed steps to legitimize SPACs.
IPO U-turn is probably Didi’s most sensible route 29 Jul 2021 The beleaguered $40 bln Chinese ride-hailing group denied a report that it plans to go private a month after its U.S. debut. Changing course would be embarrassing and quite costly. But it may be the best way to get back in Beijing’s good graces amid a continuing crackdown.
Viewsroom: Climate transition, Chinese stocks 29 Jul 2021 Some of the biggest investors, including Brookfield and TPG, are launching mega-funds to invest in the global transition to a net-zero economy in what could be the ultimate new asset class. Richard Beales and Rob Cox discuss. Plus, Beijing’s crackdown on after-school tutoring.
Big Oil’s generosity has limited shelf life 29 Jul 2021 Royal Dutch Shell and Total will return billions of dollars to investors. High crude prices mean they can cut debt, invest in green energy and crank up payouts. Such largesse may get harder given growing pressure to cut emissions. Prudent payouts will limit future disappointment.
Credit Suisse’s Archegos albatross is hard to dump 29 Jul 2021 A clampdown on risk after the lender lost $5.5 billion on Bill Hwang’s fund contributed to outflows of client assets and lower investment-bank revenue. And a review of the sorry saga found deep cultural failings. That complicates Chair António Horta-Osório’s efforts to move on.
Danone board gets much-needed upgrade in a Schnepp 29 Jul 2021 The $46 bln dairy group’s chairman will replace nearly all its directors in two years, drawing a line under years of misses, crummy governance and underperformance. Adding more consumer-goods expertise and international heft should help narrow Danone’s chunky discount to peers.
Volkswagen makes timid bet on brave new car world 29 Jul 2021 A group led by the German carmaker will pay $3.4 bln for Europcar. The rental company’s city sites may help CEO Herbert Diess sell new services like subscriptions and self-driving taxis. But keeping the unit at arm’s length suggests caution at odds with the optimistic vision.
Capital Calls: U.S. GDP 29 Jul 2021 Concise views on global finance: Supply chain woes are tripping up solid U.S. economic growth. GDP grew 6.5% in the second quarter, a big miss from estimates of 8.5%.
Robinhood at $32 bln more option than meme-stock 29 Jul 2021 The digital brokerage’s IPO values its 21.3 mln customers at about $1,500 each, below one-tenth of peer Interactive Brokers. Robinhood users have less in their accounts, but demographics are on their side. For investors unfazed by its quirks, Robinhood’s beachhead has real value.
Samsung scrambles signals out of Southeast Asia 29 Jul 2021 The Galaxy maker partly blamed Vietnam’s virus resurgence for a 24% decline in mobile unit sales from the previous quarter. Low vaccination rates are thwarting the region’s recovery and raise fresh questions about just how reliable it can be for suppliers shifting out of China.
Facebook is a one-trick pony that can still kick 28 Jul 2021 Mark Zuckerberg’s firm raked in $29 bln in quarterly revenue, almost all of it from selling ads. Unlike rivals, Facebook hasn’t found a reliable second source of revenue and says its growth is slowing. Even so, with TV on the decline, there’s more than enough to go around.
Fed can’t ignore even fleeting inflation 28 Jul 2021 The U.S. central bank reiterated its belief that price spikes won't last. Still, polls show consumers worrying, making politicians edgy. Tapering the Fed's bond buying wouldn't directly counter inflation. But it has to happen sometime, and it would give Chair Jay Powell cover.
Evercore’s pay has the sweet kind of inflation 28 Jul 2021 The biggest impediment to the M&A trade now is not a lack of deals but a shortage of bankers to execute them. That’s why pay is surging. The $6 bln boutique is threading the needle with comp jumping less than revenue. But keeping talent, even at Evercore’s top, won’t be easy.
Apollo SPAC offers cheap ride on EV hype freeway 28 Jul 2021 Electric vehicle charging group Allego is listing through one of the buyout firm’s blank-cheque companies for $3 bln. It’s a crowded space, but a valuation multiple of 5 times 2024 sales is less racy than rivals. Still, only booming battery car demand will avoid a short-circuit.
Pfizer’s pandemic wealth produces ideal dealmaker 28 Jul 2021 The pharma giant raised its 2021 guidance, partly due to bumper Covid-19 vaccine sales. Free cash flow could hit $20 billion this year as a result. Even if share buybacks resume, CEO Albert Bourla has scope to take advantage of cheap biotech valuations by making acquisitions.
Temping giant pays rich price for staying power 28 Jul 2021 Switzerland’s Adecco will buy Belgium’s Akka for $2.3 bln. The deal accelerates its shift towards technology consulting and away from low-growth businesses like short-term office workers. But the returns seem thin and rely partly on revenue boosters, which look challenging.
Cost control gives Barclays edge over Deutsche 28 Jul 2021 Robust capital markets helped boost both lenders’ earnings in the first half. But the German bank run by Christian Sewing likely needs top-line growth to hit its 2022 profit goal. Rival Jes Staley’s tighter efficiency means the UK group is less reliant on unreliable revenue.