Tesla hits speed bump but with improved suspension 26 Jan 2022 Elon Musk’s electric-car maker’s revenue increased 65% in the fourth quarter. Like rivals it’s battling higher costs and parts shortages, but unlike them it has a 31% gross profit margin as a buffer. Even if the market shifts down a gear, that ought to help it remain in front.
Jay Powell embarks on difficult Goldilocks act 26 Jan 2022 The Fed boss is likely to signal rates will start rising in March to curb inflation. The robust economy can cope with that as well as the three other hikes that investors expect him to deliver before year-end. Anything more will leave little room to deal with economic hiccups.
Citi picks odd time for a Mexican standoff 26 Jan 2022 The U.S. banking giant’s plan to divest $44 bln of assets under its Banamex banner has long been on investors’ wish lists. But in finding a buyer, Citi will have to navigate Mexico’s protectionist streak, and the fact that cross-border banking has fallen out of fashion.
Capital Calls: TCI’s railroading tactics 26 Jan 2022 Concise views on global finance: The fund run by Chris Hohn has settled with Canadian National after a messy battle for the board.
Boris Johnson’s fate is an economic sideshow 26 Jan 2022 The partygoing prime minister’s antics have cast doubt over his political future. Past upheaval had far-reaching consequences, particularly for Brexit. But Britain’s direction is now mostly fixed. And a new leader would have to grapple with the same contradictions as Johnson.
Italian CEOs’ Putin call exposes European discord 26 Jan 2022 Rome is pushing the firms to scrap their virtual chat with the Russian leader. With their varying degrees of investment, trade and energy dependence, Europeans have more to lose from sanctions against Moscow than the United States. That lets Putin pit them all against each other.
China flexes to bring home Olympic tech gold 26 Jan 2022 Hosts like South Korea and Japan used the games to showcase cutting-edge advances like 5G and robots. February's event will deploy apps, automation and more to manage Covid-19 outbreaks. Beijing is also keen to prove its growing prowess in digital currencies and hydrogen energy.
Japanese inequality lives in a retirement home 26 Jan 2022 Prime Minister Fumio Kishida wants to shrink the widening wealth gap. One big factor is decaying elderly finances as inflation ticks up and fiscal coffers shrink. More transfers to retirees would be smart politics, yet young Japanese pay too high a price supporting the old.
The Exchange: Morgan Stanley’s James Gorman 25 Jan 2022 After a year of record revenue and global dislocations, the Wall Street CEO talked with Breakingviews about the future of wealth, why Morgan Stanley won’t be buying an European rival anytime soon, and how the market will have to get used to the end of free money, like it or not.
Microsoft’s scale and M&A invite scrutiny 25 Jan 2022 The $2.2 trln software giant's quarterly sales jumped 20% last quarter. Boss Satya Nadella has outperformed many Big Tech peers of late. After last week's deal to buy Activision for $69 bln, Microsoft's uncanny ability to avoid regulators' crosshairs may be running out.
Defense deal crackdown is a bipartisan affair 25 Jan 2022 After killing Nvidia’s $40 bln Arm deal, U.S. regulatory agency FTC’s head Lina Khan won Republican support to block Lockheed Martin’s deal to buy Aerojet. Defense companies have historically gotten a free antitrust pass. Blocking a merger in that sector leaves little hope for others.
IMF’s economic crystal ball is cracked 25 Jan 2022 The Washington-based lender slashed global growth forecasts and hiked inflation predictions. The IMF has been too late to admit that Fed policy tightening is needed. That’s damaging for an institution that doles out economic advice and monitors financial stability risks.
Credit Suisse shock holds warning for new strategy 25 Jan 2022 The $20 bln bank, whose Chair António Horta-Osório just quit after nine months, took more legal charges and expects a slowdown in trading and wealth management. Investors can look past old litigation. But sluggish revenue raises doubts over how it can grow while slashing risk.
Italy telco deal would open European floodgates 25 Jan 2022 Vodafone and Iliad may merge their Italian units, cutting the number of operators in the country to three. EU competition boss Margrethe Vestager has less scope than previously to scupper such a tieup. Copycat consolidation in Germany, Spain, France and Britain could follow.
New backer would fuel Aussie hydrogen hype machine 25 Jan 2022 Fortescue’s ambitious plans to use the gas for renewable energy help it trade at a premium to mining peers. Scant detail raises concerns, however. Chair Andrew Forrest could ease them by selling a stake in the FFI green unit, as GM and Ford did with their self-driving outfits.
Capital Calls: GE’s Larry Culp learns to say “no” 25 Jan 2022 Concise views on global finance: It will be a while before the industrial conglomerate’s markets normalize, and its planned breakup takes place. In the meantime GE is trying to cut costs and be more selective. That means less revenue, at least at first.
Capital Calls: KKR’s e-bike push 24 Jan 2022 Concise views on global finance: The buyout firm leads a 1.6-billion-euro takeover of Dutch bikemaker Accell.
Peltz’s Unilever fight is easy; winning is harder 24 Jan 2022 The investor who took on Procter & Gamble has bought a stake in its European rival. Sluggish growth and CEO Alan Jope’s failed bid for GSK’s consumer arm give Unilever shareholders more reason to welcome an activist. Reshaping the company to boost performance requires more work.
Gary Cohn lottery deal gives investors extra plays 24 Jan 2022 The former Goldmanite's SPAC is merging with Allwyn, implying an $8 bln market cap for the European lottery operator. There's a novel twist: Bonus shares will go to owners who don't redeem their stock. It should help an already sensible-looking bet get over a common SPAC hurdle.
Peloton activist has right diagnosis, dubious cure 24 Jan 2022 Blackwells Capital wants CEO John Foley out and the $9 bln online fitness firm put on the block. An 80%-plus slump from the home-exercise group's peak stock price confirms a squandering of its pandemic advantage. But a big-name buyer like Apple or Disney is an improbable answer.
Italy’s presidential race revives political risk 24 Jan 2022 Former premier Silvio Berlusconi abandoned a divisive bid to become the country’s president. The absence of decent alternatives favours Prime Minister Mario Draghi’s ascent. If he makes the switch, however, Italy could have another ineffective government or face early elections.
Eni’s quirky rejig may turn rivals green with envy 24 Jan 2022 Italy’s $54 bln oil major may list stakes in its green energy and biofuels arms, as well as a Norwegian subsidiary. That’s different from rivals which are financing green investments by selling fossil fuels. Yet if Eni’s spinoffs get cheaper financing, others may follow suit.
Ferretti float may be back in same boat 24 Jan 2022 After a bold $1.2 bln valuation target sank its Milan IPO effort in 2019, the Italian yacht maker owned by China’s Weichai is now sailing for Hong Kong. Growth is buoyant, but luxury goods have charted a patchy course on Asian bourses. It’ll be hard, again, to make a splash.
India Insight: Narendra Modi’s sale of the century 24 Jan 2022 The prime minister is taking a calculated risk with a record IPO of $200 bln Life Insurance Corp. It will attract millions of first-time investors and boost the country’s spending power. How, and whether, that will affect the financial system’s shock absorber is a big question.
Jamie Dimon’s pay is fair, but only if you’re him 21 Jan 2022 The JPMorgan boss was awarded $34.5 mln for 2021, a 10% increase, on top of an extra bonus last summer worth perhaps $50 mln. Much of it is deferred, and CEOs value future payoffs differently from mere mortals. Boards are often hostages to that mindset.
Pandemic darlings now need reinvention 21 Jan 2022 Netflix and Peloton stocks tanked as it became clear lockdown fortunes are changing. Investors may be overreacting to a dose of business reality. Even so, such companies' success has invited copycats, and they’ll have to change to stay ahead.
Lululemon’s valuation makes it a target 21 Jan 2022 The yoga-pants maker is facing a fresh legal battle from Nike after already being hit by Peloton. Such lawsuits are common, but the athletic business is highly competitive, easily replicable and hard to differentiate. Success means rivals take notice and play defense.
Review: Venture capital is a victim of own success 21 Jan 2022 Sebastian Mallaby’s “The Power Law” traces the $1.8 trln industry’s history back to the 1950s. Early investors’ triumphs invited imitators, making capital into a commodity and empowering cocksure startup founders. The lesson is that VCs’ influence over companies may have peaked.
Just Eat Takeaway’s best U.S. call is late dropoff 21 Jan 2022 The food delivery group paid $7.3 bln for Grubhub last year, but investors now attach little value to its American business. CEO Jitse Groen could sell it or spin it off, but only by recognising a big loss. Waiting for the unit’s prospects to improve might be a better plan.
Serbia’s Rio smash dents EU electric-car dream 21 Jan 2022 The Balkan state nixed the $120 bln miner’s lithium project on environmental grounds. A looming election and spat over tennis ace Novak Djokovic didn’t help. Belgrade’s status as an investment destination is at stake. So are European hopes for reliable local battery ingredients.