Australian election augurs serious climate upgrade 23 May 2022 Labor’s more ambitious green goals helped unseat the conservative coalition. Wins by climate-focused independents warn further against complacency. New Prime Minister Anthony Albanese also will rely on Greens for support. Bolder 2035 emissions targets would set the right tone.
Musk’s get-out-of-Twitter card is worth $5 bln 20 May 2022 Their $44 bln deal looks shaky but both parties risk a protracted fight if they go to court. That would distract both Tesla and Twitter when neither company needs it. Instead, Elon Musk can free himself by paying a break fee plus some. And the social network could use the cash.
Boeing’s chief pilot has risky path out of dive 20 May 2022 A blizzard of bad news has pushed the $75 bln U.S. plane-maker’s market value below rival Airbus for the first time. Customers are fuming about delayed orders. Assuming it can actually deliver jets, the risk is CEO Dave Calhoun keeping buyers sweet with ever bigger discounts.
Review: War on digital payment fails to hit target 20 May 2022 Brett Scott’s “Cloudmoney” seeks to remind the world of the value of physical cash. It’s true that an overly automated system of money carries risks like the potential for surveillance. But the campaigner underestimates consumer demand for digital transactions.
Capital Calls: Richemont’s China fears, THG offer 20 May 2022 Concise views on global finance: Shares in the Cartier owner shed 13% after caution about a rebound in the People’s Republic added to subpar full-year results and slow progress on the YOOX Net-a-Porter sale; the UK online retailer rejected one bid, yet higher ones look unlikely.
ECB caught in a rate quagmire of its own making 20 May 2022 The European Central Bank may raise rates in July but is divided on how high it should go. By then, weakening growth will make it harder for President Christine Lagarde to end the eight-year era of negative rates. Moving earlier to curb inflation would have avoided the dilemma.
Ukraine’s spare energy can help itself and Europe 20 May 2022 The war-torn nation generates more electricity than it needs, and from carbon-neutral nuclear plants, too. But its links to the EU power grid are sketchy. Helping Ukraine bolster exports to the EU would support Kyiv’s economy while easing the bloc’s energy headache.
Xiaomi epitomises risks of supply chain buffering 20 May 2022 The Chinese handset maker and peers weathered component shortages by stockpiling. Xiaomi's shrinking quarterly sales of $11 bln, and a net loss, make clear how the country’s Covid-19 lockdowns are hurting consumers. A reckoning of bloated inventories and falling demand awaits.
Drought of economic ambition blots Aussie election 20 May 2022 Despite a 48-year low in joblessness and navigating the pandemic, Prime Minister Scott Morrison’s party is in a dogfight. Homebuyer and dam-building policies smell fishy, and a lack of climate leadership hurts too. As times get tougher, whoever wins will have to be bolder.
Deal odds in the face of market pain 19 May 2022 Market pain is changing the math for arbitrageurs, as targets' shares may drop further if mergers fail. A Breakingviews calculator shows the odds of a deal going through. Run the numbers here.
Spirit shareholders can push for more legroom 19 May 2022 The budget airline wants shareholders to reject a $3.3 bln hostile offer from JetBlue, and stick by a merger with rival Frontier. But Spirit investors would be losing out on a potential bidding war. Frontier can probably pay more, and sitting tight could nudge it into doing so.
Capital Calls: Stablecoin’s safety measures 19 May 2022 Concise views on global finance: As crypto assets wobble, Tether, with $75 bln worth of digital tokens in circulation pegged to the U.S. dollar, is boosting its reserves of cash and U.S. Treasury bills while shrinking its commercial paper holdings.
Crypto’s day of reckoning, Goldman holiday perks 19 May 2022 Terra unravelled while $75 bln Tether wobbled. In this Viewsroom podcast, Breakingviews columnists discuss why reforming stablecoins which are supposedly linked to the dollar could dent their allure. Also, the Wall Street firm’s vacation offering is unlikely to benefit staff.
Inflation revives spectre of the long bear market 19 May 2022 The S&P 500 Index has fallen almost 20% from its early January peak. Such downturns have become shorter and less frequent due to support from the Federal Reserve, says Edward Chancellor. But rising prices have removed the safety net. The next selloff could inflict more damage.
Klarna’s $46 bln price tag endures only in theory 19 May 2022 Investors heavily marked down the value of the Swedish startup’s buy-now-pay-later rivals like Affirm. On their sales multiples, privately held Klarna’s valuation would be cut by 75%. While the business is diversified with better funding, it still requires lots of red pen.
German fiscal obsession is ill-timed and untenable 19 May 2022 Finance Minister Christian Lindner is keen to reinstate a debt limit that was waived during the pandemic. The Ukraine war means the economy is facing new problems. And massive investments are needed in the green transition. This is no time for fiscal fetishes.
Egypt’s hunger pangs are like 2011, but worse 19 May 2022 A decade ago the soaring cost of bread helped unseat Cairo’s long-term ruler, Hosni Mubarak. In 2022 food prices are rising faster, and Egypt’s population and debt are bigger. The more prices rise, the trickier the tradeoff between enraging financial and domestic constituencies.
Hong Kong can afford slow road to digital currency 19 May 2022 There’s some FOMO in the local e-HKD effort. Central banks elsewhere have better reasons to act faster, including low rates of financial inclusion and less use of physical cash. Hong Kong would do well to think longer about privacy concerns and to learn from other experiments.
China sits in Russia oil sanction sweet spot 19 May 2022 Moscow’s cheap crude, spurned by the West, is heading to Asia. Yet the increase in China is less than in India, and European states like Italy are still snapping it up. That reduces the scope for Beijing to suffer blowback, and raises the chance that it will buy more.
Market rout throws off math for open deals 18 May 2022 Unlike Twitter, whose shares dived on Elon Musk’s waning enthusiasm for his $44 bln offer, other stocks pending a deal are down on little news. Market pain changes the math for arbitrageurs as target shares may drop further if mergers fail. A Breakingviews calculator shows how.
EU funds can ease, not end common energy pain 18 May 2022 Brussels has earmarked 300 bln euros to cut fossil fuel ties with Russia. Rising rates make cheap, repurposed Covid-rescue loans more attractive to many EU states, increasing the chance they’ll be used. But higher fuel purchases will still have to come from national budgets.
Wanted: Chillaxed CEO for $21 bln French laggard 18 May 2022 Frédéric Oudéa will depart from SocGen after 15 years at the helm. He leaves a bloated bank with one of the lowest valuations in Europe and an unclear appetite for change. Breakingviews imagines a letter from a headhunter specialising in cushy job placements.
Tencent gives China bulls little to run with 18 May 2022 The $450 bln video-games giant said sales stalled in the first quarter, below expectations. Despite signs Beijing may rein in tech crackdowns, the government’s Covid-19 lockdowns are creating more uncertainty. Investors hoping to ride out the volatility will get no such reprieve.
Zara owner has $10 bln for online shopping spree 18 May 2022 Marta Ortega, the fresh-faced boss of the world’s largest fashion retailer, is sitting on a record cash pile. Typically, such spoils trickle back to shareholders as special dividends. But with its battered share price, buying an online upstart like Zalando may create more value.
India’s energy-storage fix has virtue of speed 18 May 2022 As the West obsesses over building the perfect battery, Singapore- and Abu Dhabi-backed Greenko is launching the largest long-lasting renewable power-storage project. It’s a low-tech leap towards a greener energy system. Big customers like ArcelorMittal are lined up too.
Capital Calls: Twitter, Peloton 18 May 2022 Concise views on global finance: The social media company’s directors have too much at stake to renegotiate a deal with Musk; and Apollo and Blackstone’s interest in the $5 bln virtual workout company could benefit more if it fails rather than succeeds.
Fortescue energy transition loses sight of another 18 May 2022 The $42 bln miner and wannabe green hydrogen champ is hiring older white men as part of a management shakeup that repositions two women. Chair Twiggy Forrest and former GE, AGL and RBA bosses may bring useful experience, but it’s important to keep making progress in all phases.
Being Jamie Dimon just became less fun 17 May 2022 Over two-thirds of JPMorgan investors rejected the CEO’s pay package, the worst rebuke at a big U.S. bank in a decade. That won’t hit Dimon in the wallet, and there’s no sign shareholders want him gone. But his bully pulpit, like his bank, is smaller than it was a year ago.
Allianz’s U.S. wound is not entirely staunched 17 May 2022 Europe’s largest insurer has effectively been kicked out of the U.S. market after admitting fraud and being forced to pay $6 bln in fines and compensation. CEO Oliver Baete will hope these body blows enable closure. But the fiasco raises questions about the rest of the business.
Unlimited vacation is a classic Goldman trade 17 May 2022 Goldman’s offer of unchecked time off for senior partners, and more vacation days for the rest, has some sincere aspects. But employees will still have strong incentives to work as hard as possible, and harder. As a rule, Goldman rarely ends up on the wrong end of a transaction.