Macquarie accelerates into the market’s blind spot 6 May 2022 Despite a sparkling set of results, the financial conglomerate’s stock fell 7% after it warned that commodities and investment gains would be hard to repeat. Even the sensible long game boss Shemara Wikramanayake is playing makes trading at 3.2 times book value hard to justify.
Musk coinvestor roster underwhelms multiple ways 5 May 2022 Placing money alongside the world’s richest man should be an easy pitch. But tech heavyweights backing his $44 bln Twitter bid with $7 bln still leave a hole, and checks from smaller investors suggest he was scraping the barrel. It indicates skepticism about Musk’s latest idea.
Andrew Bailey unwillingly channels Paul Volcker 5 May 2022 The Bank of England boss raised rates to 1% to curb high inflation and may hike further despite the risk of recession. It’s old-school policymaking as practised by the former Fed chief. The more central banks behave this way, the more likely and severe a global downturn will be.
The elusive value of past investment mistakes 5 May 2022 A new library in Edinburgh hopes to improve financial understanding by studying historical errors. The best investors understand the importance of learning from their painful howlers. Yet, says Edward Chancellor, ultra-low interest rates have induced a kind of collective amnesia.
Europe’s oil major discount grows ever more stark 5 May 2022 Exxon Mobil and Chevron trade at big premiums to Shell, BP and Total, despite all benefitting from soaring fossil fuel prices. The Americans’ slower pivot to renewable energy is one reason why. Europeans’ lucrative trading arms give cause for investors to be more generous.
Windmill makers’ vicious cost cycle has an ending 5 May 2022 Denmark’s Vestas and rival Siemens Gamesa have failed to turn booming demand for wind farms into higher earnings. Increased prices to offset soaring raw material costs will take several years to kick in. But now wind power is cheaper than fossil fuels, price pressures are easing.
HSBC breakup, Big Oil’s surprise restraint 5 May 2022 The $129 bln bank is under pressure from its largest shareholder to spin off its Asian unit. In this Viewsroom podcast, Breakingviews columnists discuss why the plan deserves short shrift. Also, the decision by oil giants to limit production will win few friends.
European banks mount fragile trading fightback 5 May 2022 The markets divisions of Deutsche Bank, BNP and Barclays are outpacing U.S. rivals, reversing a decade of plunging market share. Yet sustaining that growth will be hard, and shareholders clearly dislike the business. It may be a blip on a long-term trend of American dominance.
Capital Calls: AB InBev 5 May 2022 Concise views on global finance: Anheuser-Busch InBev’s revenue grew 11% in the first quarter compared to last year, but rising prices are a particular headache for the debt-laden brewer.
Anti-Americanism is blinding Chinese policy 5 May 2022 President Xi Jinping’s obsession with surpassing his country’s top trading partner is distorting his approach to growth and the pandemic. Bad debts, crackdowns and Covid-zero could slow China’s push to double output by 2035 and become the world’s largest economy.
Fed jumps into field of financial land mines 4 May 2022 The American central bank has little choice but to hike interest rates and cut its balance sheet to fight inflation. But Chair Jay Powell’s moves make the $24 trln U.S. Treasury market more vulnerable to shocks. Bigger future increases could even tip the U.S. into recession.
EU’s oil embargo is slave to volatile crude price 4 May 2022 The bloc wants to stop buying Russian exports within six months. That looks too slow to properly choke off funding for President Vladimir Putin’s war machine. Yet going any faster could make crude prices spike, exacerbating Europe’s battle against inflation.
SlimFast maker could be tasty swig for Nestlé 4 May 2022 An activist wants Irish protein powder seller Glanbia to break up. Listing its consumer unit in the U.S. could double its 3 bln euro value, but would take time and carries risk. That opens the door to a cash-rich buyer like the Swiss giant, which is bulking up its health lines.
Capital Calls: Uber vs. Lyft, GE executive pay 4 May 2022 Concise views on global finance: Shares in both ride-hailing firms fell on Wednesday despite Uber signaling it doesn’t have to invest to attract drivers like its smaller rival. And only two-thirds of investors backed CEO Larry Culp’s compensation, even after a $10 mln bonus cut.
Adler gifts German watchdog a shot at redemption 4 May 2022 BaFin’s probe into the property group has gained added weight after KPMG’s refusal to approve its 2021 accounts. The mess is an important test for new boss Mark Branson after the regulator’s Wirecard failings. Adler’s patchy disclosure and shaky governance make it an easy target.
Goldman’s financial alchemy extends to crypto too 4 May 2022 The U.S. bank made a bitcoin-backed loan to $27 bln Coinbase. Regulatory suspicion of cryptocurrency means a third party will hold Goldman’s collateral, which the latter won’t touch. If it avoids censure, the loan’s lucrative nature means the rest of Wall Street could pile in.
Australia’s ANZ spoils interest rate party 4 May 2022 Boss Shayne Elliott is downplaying the benefits of central bank action at his $770 bln lender and ditching cost targets because of inflation. It’s a sober message compared to peers like HSBC counting on hikes for a boost. Erring on the side of caution is a better approach.
Didi’s New York woes mask deeper problems 4 May 2022 The Chinese ride-hailing group hopes leaving the Big Board will ease Beijing’s cybersecurity probe. It now faces a U.S. investigation into its IPO. Yet the bigger blow in its new annual report is rising regulatory pressure at home, raising fresh doubts about Didi’s core business.
Switch may be high-water mark for data center M&A 3 May 2022 The company, in which activist Elliott has invested, could attract a bid from Brookfield. Even after 2021’s landmark deals, a market cap of nearly $8 bln would make Switch a pricey target. With tech valuations under pressure, this might be the top for data-center dealmaking.
Robinhood’s growing pains could use some Buffett 3 May 2022 The Sage’s deputy, Charlie Munger, said the platform encouraged short-term gambling. But perhaps not enough: Robinhood is cutting jobs and revenue is falling. New ideas – like accounts that stimulate investment – aren’t horrible, but only if they invoke old, boring philosophies.
Capital Calls: Airbnb 3 May 2022 Concise views on global finance: The $97 bln vacation-booking platform’s post-pandemic bounceback has beat expectations. It helps that CEO Brian Chesky quickly adapted the business, including cutting costs.
Russian nickel king laughs all the way to the bank 3 May 2022 Vladimir Potanin has snapped up his third financial asset since the war began. The Norilsk Nickel CEO has so far evaded U.S. sanctions despite links to President Putin. Dozens of Russian billionaires are in similar boats, poised to make out like bandits from the Western exodus.
Russia plays the fool in its own default theatre 3 May 2022 Moscow looks set to meet foreign currency bond payments, after saying a month ago it could only pay in roubles. High oil and gas prices mean it has ample revenue to meet its obligations. But the debt grandstanding may not yet be over, notably if the EU imposes an energy embargo.
How the UK can cut power bills and go green 3 May 2022 The government is so scared of the cost-of-living crisis that it doesn’t want consumers to pay for low-carbon wins like heat pumps, even though this cuts energy bills in the long run. Instead utilities could do the job and spread the cost over 20 years, argues Hugo Dixon.
Breakup opposition will smoke out AGL’s C-suite 3 May 2022 A lacklustre plan to split coal power from the retail business is sputtering after Atlassian co-CEO Mike Cannon-Brookes grabbed an 11% stake and vowed to vote no. It leaves boss Graeme Hunt and his team vulnerable. Their exit would open the door to a fresh takeover approach.
China’s ZTE answers the call on Huawei’s crisis 3 May 2022 Fresh off five years of U.S. probation, the $16 bln telecom-equipment maker is growing sales and improving margins as American sanctions hurt its larger rival. An expanding 5G rollout leaves additional market share up for grabs. Its discounted valuation is poised to be dialed up.
Capital Calls: JetBlue antitrust risk haunts Spirit 2 May 2022 Concise views on global finance: The low-cost U.S. airline rejected its midmarket rival's takeover offer. Spirit reckons that even a price 50% higher than its agreed sale to Frontier doesn't compensate for Washington's anti-merger stance.
Elon Musk Twitter coinvestors will be rare birds 2 May 2022 The billionaire’s $44 bln bid for the social media group stretches his Tesla wealth. Lenders with claims on Twitter’s cash are handing him a quarter of the price. But managers of other people’s money, like buyout firms, will struggle to justify investing with the mercurial Musk.
Bitcoin’s African outpost raises several red flags 2 May 2022 War-torn Central African Republic is following El Salvador in adopting the crypto unit as legal tender. The surprise of the region’s central bank and Bangui’s use of sanctioned Russian mercenaries are warning signs. Bitcoin’s quest for mainstream acceptance just got harder.
HSBC breakup push requires delicate brushoff 1 May 2022 Chinese insurer Ping An wants the $125 bln bank to spin off its Asian arm. Overall performance has been disappointing, but a messy and costly split could negate any valuation uplift. The challenge for Chair Mark Tucker is to politely tell his biggest investor that it’s wrong.