Why Spotify’s Daniel Ek is sticking with Joe Rogan 7 Feb 2022 The streaming group’s CEO condemned the talk show host’s use of racial slurs but refused to axe him. Ek is betting that financially motivated music labels will resist artist boycotts, and that users are locked in. Rogan represents a podcast pivot that’s key to boosting earnings.
Offshore wind power gets a tartan quantum leap 7 Feb 2022 The green energy’s drawback is its major use of scarce coastal shelf. Scotland’s recent auction of 15 gigawatts of floating turbines, enough to power 60% of UK homes, changes the game. The economies of scale created should make a nascent technology cost-competitive quicker.
Andrew Bailey pay rise clanger has tiny PR upside 7 Feb 2022 The Bank of England chief’s call for wage restraint has gone down badly with workers facing soaring prices. The ensuing controversy, has, however, done more to inform the public about the central bank’s mission to control inflation than many past communications campaigns.
Toshiba rejig goes long pragmatism, short vision 7 Feb 2022 The $18 bln Japanese titan now intends to split into two, not three. Ditching its earlier plan as too costly makes some sense, while buybacks and more asset sales may somewhat placate its most vocal critics. What’s lacking, though, is a longer-term strategy – and leadership.
Capital Calls: Wizz investor sides with workers 7 Feb 2022 Concise views on global finance: Denmark’s AkademikerPension picks an odd moment to offload its stake in the $6 bln budget airline over a lack of union representation among its staff.
Ford split idea rolls back the odometer 4 Feb 2022 Tesla’s valuation makes contemplating a breakup tempting for Ford, and boss Jim Farley even sounds open to it. But its EV business is intertwined with combustion, which still lags crosstown rival GM. Plus Delphi shows how separating linked car businesses can go wrong.
Clorox shrinks in violent profit spin-cycle 4 Feb 2022 The bleach-maker is now worth less than it was before the pandemic. A boost to sales of wipes and bleach is being negated by rising costs, and overzealous production puts Clorox in a worse place than where it started. It won’t be the only one left hanging on the clothesline.
Snap investors have too many stars in their eyes 4 Feb 2022 The messaging app’s shares soared 50% even though it warned ad privacy changes could hit revenue – something that clobbered Meta Platforms. They share risks, including an ascendant TikTok. Snap looks extra pricey given it lacks peers’ ability to hurl money at new problems.
Guest view: Fed hikes spell emerging-market strain 4 Feb 2022 Poorer indebted economies face growing difficulties as the U.S. Federal Reserve signals its readiness to raise interest rates. William Rhodes, former president of Citibank, and economist Stuart Mackintosh lay out what creditors, borrowers and the IMF can do to avert a crisis.
Tech slump forces IPO hopefuls to consider Plan B 4 Feb 2022 Fintech Klarna, payroll provider Justworks and mobility upstart Lime are among those that were planning a listing in 2022. Yet tumbling valuations are prompting a rethink. Profitable companies can afford to wait. Others may have to find a buyer, or merge with a blank-cheque firm.
Italy’s top banks raise stakes in shareholder duel 4 Feb 2022 Intesa Sanpaolo CEO Carlo Messina pledged to lift the lender’s return on tangible equity to 14% by 2025, topping a bold target set by new UniCredit boss Andrea Orcel. Intesa starts from a strong base but lacks M&A options. Rising interest rates could give both an extra boost.
Capital Calls: U.S. jobs growth gives Fed cover 4 Feb 2022 Concise views on global finance: Employers added a solid 467,000 positions, reflecting economic resiliency despite a new wave of Covid-19 infections.
India’s rush to list LIC is a mistake in making 4 Feb 2022 New Delhi wants to secure proceeds from the insurer’s IPO by the end of the fiscal year. That’s less than two months away and there’s no draft prospectus yet for a company with $500 bln of assets to review. Rising risks include mispriced shares or scaring off overseas investors.
Amazon has a unique inflation problem 3 Feb 2022 Like peers, the $1.4 trillion giant dominates markets and has businesses that are growing rapidly. Yet Amazon has about 10 times as many workers, and a vast network of infrastructure vulnerable to rising prices. Yet it’s valued as if it does not.
Lazard bets it can continue to be different 3 Feb 2022 The advisory firm’s shares have underperformed Wall Street peers recently and through past cycles. It has still found ways to attract and retain talent. Yet competition for rainmakers is mounting. If stock appreciation isn’t a lure, Ken Jacobs’ firm may have to pay in other ways.
Big Oil elbows out banks as Fed’s new kingmaker 3 Feb 2022 The energy sector has come out swinging against Sarah Bloom Raskin, President Biden’s pick to lead supervision at the U.S. central bank. The ex-Fed governor is outspoken on climate risks. The business lobby could frustrate her confirmation, even with Democrats in Senate control.
Rishi Sunak bets he’s a good gas trader 3 Feb 2022 The UK chancellor is spending 9 bln pounds to help consumers facing a 50% hike in energy costs. If gas prices fall back by next year, he’ll get most of that back. If they don’t, the state faces a bigger hit. Either way, this package looks too small to prevent a political furore.
ECB shows words matter more than actions 3 Feb 2022 President Christine Lagarde left interest rates unchanged while the Bank of England raised them. Yet she made the bigger market splash by admitting inflation risks had grown. It was the first clear sign that she may join global peers this year in tightening monetary policy.
New Bank of England guessing game begins 3 Feb 2022 A second rate rise in as many months raises the question of how quickly Governor Andrew Bailey will reduce bond holdings accumulated during the pandemic. A gradual approach won’t cause economic or market pain. But debt yields will become more volatile once the Fed follows suit.
Shell oddly well placed to resist oil’s siren call 3 Feb 2022 The $200 bln UK driller is keeping a lid on new investment, despite $90-a-barrel oil prices. A court order to cut emissions and investors’ desire for cash explain why. But Shell’s recent exit from shorter-life U.S. shale makes a sensible ramp-up of new output harder anyway.
Siemens Gamesa’s new Mr. Fixit can take his time 3 Feb 2022 The wind turbine maker has ousted its second CEO in two years. As another German, Jochen Eickholt may get a frosty reception from Spanish bits of the firm. Parent Siemens Energy won’t mind. The longer Gamesa’s woes drag on, the easier it will be to buy out minority investors.
Capital Calls: Playtech breakup 3 Feb 2022 Concise views on global finance: After investors rejected a 3.2 bln euro buyout offer from rival Aristocrat, a breakup of the gambling software maker looks the best way to maximise value.
Swiss generics buyout requires flawless treatment 3 Feb 2022 Blackstone and Carlyle are eyeing Novartis’ Sandoz unit, worth perhaps $25 bln. The reported valuation looks punchy given the misfiring off-patent pill producer’s limited scope to grow. The slightest hiccup could leave private equity buyers swallowing a meagre return.
The Exchange: UniCredit’s Andrea Orcel 3 Feb 2022 The Italian banker wants to return 16 bln euros to investors by 2024. Choppy markets and growing geopolitical risks raise the bar for European banks’ promised returns. UniCredit CEO Andrea Orcel tells Breakingviews how his $35 bln lender can navigate through uncertain times.
Facebook’s grip on online ads may be slipping 2 Feb 2022 Parent Meta Platforms lost some $200 bln of market cap after an earnings report that suggested weaker-than-expected advertising growth to come. Headwinds ranging from Apple to TikTok are part of the problem; Mark Zuckerberg’s expensive pivot to the metaverse doesn’t help.
Nelson Peltz board swap leaves unresolved conflict 2 Feb 2022 The activist gave up a board seat at Invesco to take one at rival Janus Henderson, while holding stock in both fund managers. If the companies decide to merge, Peltz is a conflicted broker with inside knowledge. Even a good suggestion becomes unnecessarily controversial.
PayPal tries to suck more juice from fewer lemons 2 Feb 2022 The $160 bln payment firm has admitted that piling on 50 mln new customers a year isn’t the path to profit it previously thought. From now on it will seek to get more out of the customers it has. As other financial firms have a similar epiphany, a land grab may become a turf war.
Mark Zuckerberg’s startup project bets the company 2 Feb 2022 Meta Platforms has signaled a $10 bln hit to 2021 operating profit from investments in nascent virtual- and augmented-reality worlds. The founder has lots of advertising cash from his social networks to deploy. But reinventing an 18-year-old firm is a real-world uphill challenge.
Wall St can have $47 trln field day in wetlands 2 Feb 2022 Swamps, mangroves and reefs store surprising value. Some is tied to services like tourism but much comes from these ecosystems’ ability to suck up carbon and reduce flood risk. The headline number may be heady but creative financiers ready to dive in will find a deep opportunity.
Capital Calls: Julius Baer, Siltronic 2 Feb 2022 Concise views on global finance: A slip in the Swiss wealth manager’s shares is an incentive for M&A sooner rather than later; strong results suggest the German wafer maker can expand despite Berlin’s failure to approve a 4.4 bln euro takeover by Taiwan’s GlobalWafers.