Rising costs put U.S. auto revamp in a jam 29 Apr 2022 Prices of cars from makers like Ford and GM are up by 13% in a year. But higher costs have caused profits to stagnate. Revamping businesses away from combustion engines is expensive, and adds pressure. They have few levers to pull, and little cushion to fund change.
Big Oil snubs commodity shortages 29 Apr 2022 Neither Exxon nor Chevron posted big increases to production last quarter despite surges to commodity prices caused by the conflict in Ukraine. Their decision is rational based on future prices and investor pressure. But it won’t make them friends in the court of public opinion.
Italy’s financial order repels attack on Generali 29 Apr 2022 Mediobanca-backed CEO Philippe Donnet overcame opposition from investors with 30% of the $30 bln insurer to win a third term. That preserves a key financial link with the merchant bank. Donnet now has to deliver on his growth plan. The rebel investors will keep him on his toes.
Capital Calls: Amazon and consumers 29 Apr 2022 Concise views on global finance: People are spending more amid price hikes, while the e-commerce giant struggles with them.
Inflation exposes consumer groups’ portfolio duds 29 Apr 2022 Companies like Danone and Nestlé had some success in flogging more stuff while hiking prices last quarter. Water and healthcare enjoyed a post-Covid boost. But groups peddling inflation-proof wares, such as pet care, look better prepared for sustained high prices.
UK grocer buyout creates bond market indigestion 29 Apr 2022 Banks led by Goldman and BNP Paribas that funded CD&R’s $9 bln Morrisons buyout have sold a chunk of the debt at a big discount. Inflation and a supermarket price war mean bondholders can now name their price. The debt hangover may make other deals trickier.
Arm IPO bankers will struggle to tell growth story 29 Apr 2022 Owner SoftBank is picking advisers for what CEO Masayoshi Son calls the most significant float in the chip industry’s history. A boost from 5G phones and data-centre demand may lure growth-hungry investors. But that won’t be enough to justify a mooted $60 bln valuation.
Chinese buyout baron’s dissent challenges Beijing 29 Apr 2022 Shan Weijian, a frequent defender of Xi Jinping’s tough policies, broke ranks to warn of an economic crisis and discontent from lockdowns. It adds risk to the IPO of his firm, PAG, but making an example of him would be tricky. His sentiments are shared in the financial community.
Apple collects Big Tech quarterly earnings Oscar 28 Apr 2022 The $2.6 trln iPhone maker’s financial report for January to March showed it had a winning season compared to its Big Tech fellows. CEO Tim Cook’s business got less of a Covid boost than, say, Amazon, and had early supply-chain jams. Now it’s more than catching up.
Amazon takes hit from foggy outlook 28 Apr 2022 The e-commerce giant shed nearly $140 bln in market value after it forecast sluggish sales growth. The pandemic was good for Amazon and other online retailers. Now, while cloud services remain a bright spot, shipping, wage costs and macroeconomic factors are stumbling blocks.
NFTs are more opportunity than threat for Spotify 28 Apr 2022 Music streamers have cause to fear so-called non-fungible-token platforms, which enable artists to nab bigger royalties. Yet Spotify and its peers are where the fans are. If digital collectibles take off, streamers may be able to take a piece of the pie rather than being eaten.
Elon Musk can’t buy his other “censorship” foe 28 Apr 2022 The billionaire is set to buy Twitter, motivated by perceived restraints on free speech. But his legal quest to get the U.S. SEC off his back when it comes to vetting tweets about carmaker Tesla failed this week. The regulator won't roll over as easily as Twitter's board.
Musk has at least three Twitter problems to fix 28 Apr 2022 In the first quarter, the $37 bln network’s expenses rose twice as fast as revenue. Users were up 16%, but Twitter admitted it had mistakenly puffed those up in the past. Plus, still it hasn’t proven it can be regularly profitable. That all takes attention Musk may not have.
How to return control of companies to their owners 28 Apr 2022 Investors used to argue that companies exist to maximise profits. Now they want executives to consider environmental, social and governance issues. The danger is that money managers impose their priorities, Edward Chancellor says. But there are ways to give ultimate owners a say.
Elon Musk’s Twitter funds, Netflix with ads 28 Apr 2022 Tesla’s boss is close to clinching control of the social network, having secured financing from Wall Street. Breakingviews columnists discuss why the bet makes sense for banks in this Viewsroom podcast. Also, the streaming service’s subscriber pain may lead to bountiful change.
Africa is imperfect solution to Europe’s gas woes 28 Apr 2022 The continent’s vast reserves and growing liquefied gas supplies can cut some of the bloc’s energy dependence on Russia. Yet lack of infrastructure, domestic needs and rigid contracts limit Africa’s ability to boost exports quickly. Political instability is a further headache.
ECB forecasting snafus may turn into trust problem 28 Apr 2022 Christine Lagarde’s central bank underestimated how high inflation would soar and deferred rate hikes. Its own research says rising inequality hurts faith in public institutions. Soaring prices risk undermining such confidence, which is critical in a still-young currency union.
Sands’ Singapore bet turns into crucial hedge 28 Apr 2022 Core profit at its Marina Bay resort held up relatively well last quarter. Its larger Macau hub dipped into the red, and China’s Covid curbs are dealing it another bad hand. Relaxed tourist restrictions mean the Lion City casino is now the $27 bln gambling group’s prize property.
Capital Calls: U.S. GDP fall masks solid economy 28 Apr 2022 Concise views on global finance: Consumer spending and business investment are resilient amid price hikes.
South Korea Inc heaps added pressure on Samsung 28 Apr 2022 The Galaxy maker’s 51% rise in quarterly operating profit, to $11 bln, only underscores its dependence on memory chips. Despite its ambitions in autos, biotech and other areas, peers Hyundai, SK and LG are moving faster to capitalise on new markets. Idle cash is a growing risk.
TikTok is eating Facebook from the inside 27 Apr 2022 Slowing revenue and barely-there user growth show Mark Zuckerberg’s social network is still losing ground to its video-app rival. The Russia-Ukraine war has turned TikTok into a news source too. Facebook owner Meta Platform’s best defense? Copy its rival as fast as it can.
Elon Musk probably won’t buy Twitter 27 Apr 2022 Sure, the Tesla boss will be on the hook for at least $1 bln if he walks away from the $44 bln deal. But shares in his electric-vehicle firm could rise by more than he loses. The risks to Musk’s China business, regulatory pushback, and Musk’s general flightiness further lengthen the odds.
Dollar is worst reserve choice except for the rest 27 Apr 2022 Sanctions on Russia raise questions about the U.S. currency's reliability for foreign governments. But options like the euro are also tied to restrictions. And the Chinese yuan lacks convertibility, rule of law and safe-haven appeal. Reports of the dollar's demise are premature.
China takes new tack on emerging market debt 27 Apr 2022 Beijing has agreed to work with the Paris Club of official creditors to clear up Zambia’s $17.3 bln debt mess. That’s a major shift from the bilateral approach it usually adopts. An even bigger sign of progress would be accepting a haircut on the $5.8 bln that China is owed.
Just Eat investors are stuck with its founder 27 Apr 2022 Some shareholders want to oust the Dutch takeaway group’s finance chief and supervisory board. Yet they have no obvious replacement for CEO Jitse Groen, architect of its disastrous U.S. expansion. It exposes the limits of investors’ ability to challenge powerful entrepreneurs.
Putin’s gas shock is acid test of EU unity 27 Apr 2022 In severing Polish and Bulgarian supply, the Russian leader shattered a fragile equilibrium that had seen European energy buyers fund his war. He hopes other EU states will carry on, dividing the bloc. Instead, Europe should backstop the costly process of ditching Moscow’s fuel.
Deutsche can leave Credit Suisse in the dust 27 Apr 2022 Europe’s erstwhile bank basket case is now valued by investors on the same multiple of book value as the Swiss wealth manager. Rate hikes and a debt-trading boom will play to its strengths. Meanwhile, Credit Suisse’s weak capital ratio and slow growth will keep its shares gloomy.
Capital Calls: GM electrifies executives’ pay 27 Apr 2022 Concise views on global finance: The Detroit automaker’s move to tie boss Mary Barra’s pay to electric vehicles goals is a new spin on pledges to shift away from combustion-engine cars.
India’s IPO hubris takes a deserved beating 27 Apr 2022 New Delhi has had to slash the price of state-owned insurer LIC by some two-thirds after pushback from potential shareholders. That leaves the company valued at a big discount to rivals and is a blow to the government’s pride plus its coffers. But it’s a welcome dose of realism.
Elon Musk’s Twitter deal sullies his climate cred 27 Apr 2022 The Tesla CEO’s master plan is to combat global warming, which he calls the “biggest threat” to humanity. Committing most of his available wealth to buying a social media company doesn’t much help the cause. It’s a $33 bln missed opportunity to reduce even more carbon emissions.