Capital Calls: Royal Mail, Europe’s chip champion 20 Jul 2022 Concise views on global finance: Britain’s postal provider is eyeing a potentially messy separation, but a nationalisation would make more sense; shares of ASML, which provides cutting-edge machines for chipmaking, look more appealing despite inflation and geopolitical worries.
Australia green fail is global net-zero liability 20 Jul 2022 Canberra is pledging action after a grim report detailing Down Under’s deteriorating environment. But coal and gas exports help fuel disasters at home and abroad, like Europe’s wildfires. Refusing to tackle it sends a gloomy signal about countries’ willingness to cut emissions.
Netflix only partly dressed for ad auditions 19 Jul 2022 The $90 bln streaming service’s subscribers grew faster than expected, boosting revenue and sending shares up 7% after Tuesday’s close. But cash flow is still under pressure. As the ads business kicks in, Netflix can’t rely just on lazy users. Eyeballs on content matter more.
Twitter-Musk divorce court favors the kids 19 Jul 2022 A Delaware judge set a speedier October trial for the deal fight with Tesla’s boss. That leans towards Twitter’s wishes, but only because Musk was asking for the house, the dog, and his in-law’s silver. A quick resolution is in everyone’s interest, but mostly shareholders’.
Why is Tiger dodging family office-dom? 19 Jul 2022 Chase Coleman’s main fund has lost about 50% in the year to May. Often this would prompt others, who struggle to recoup losses, to return cash. But Tiger’s fee structure enables it to keep going. That’s a more transparent way of doing things as long as managers stick around.
Solar twine holds creaking Texas grid together 19 Jul 2022 Power in the Lone Star state has held up, despite record demand and past blackouts. Regulatory actions, like forcing plants to stay online, help, but they carry some costs and risks. The rapid growth of solar offers more durable aid, if not a solution.
Capital Calls: Hasbro’s inflation transformation 19 Jul 2022 Concise views on global finance: The Monopoly maker is scrambling to offset input cost increases and a stronger dollar – but while these pressures might be temporary, increased prices to consumers will last.
Putin gas assault is a survivable test of EU unity 19 Jul 2022 Moscow’s key pipeline to Germany is offline for repairs, stoking fears Russia may cut off all its gas for good. That would mean soaring energy costs and a big economic contraction. But the worst outcome, where Germans hoard gas and splinter the European Union, looks less likely.
ESG is more of a muddle than a fiddle 19 Jul 2022 Environmental, social and governance investing is under the spotlight. In this episode of The Exchange podcast, Bridgewater’s sustainable finance gurus Karen Karniol-Tambour and Carsten Stendevad explain how ESG’s main problem is a lack of clarity over its goals.
Insurers can boost carbon credits, and themselves 19 Jul 2022 The market for planting trees to offset carbon could be worth $50 bln by 2030. But the unregulated space means large corporate buyers could face heavy losses and even fraud. Insurance could help tame the market, and give companies like Allianz and Zurich a sales boost.
Chinese banks’ half-truths hinder mortgage fix 19 Jul 2022 Banks say homebuyers' refusal to pay instalments warrants little concern but the unfolding pain might double the underreported bad debt ratio to 3%. Coming clean on the mess in a big and traditionally safe part of the loan book is a prerequisite to stemming systemic risk.
China’s great outdoors opens up for business 19 Jul 2022 Tired of lockdowns and wary of Covid contagion, citizens are embracing camping, glamping and recreational vehicles. For now, the market is tiny compared to the $700 bln U.S. industry. It’s a great opportunity for foreign brands to pitch their tents in a fast-growing luxury space.
Edtech giant faces hard slog on its M&A field trip 19 Jul 2022 Byju’s, India’s most valuable startup, is eyeing U.S. higher-learning specialist 2U in the latest period of both firms’ deal frenzy. It’s betting education technology can be outsourced to its home country. If wrong, Byju’s will be an M&A version of a Dr. Frankenstein experiment.
GE’s new branding is appropriately pedestrian 18 Jul 2022 It took six months and thousands of conversations to name the $69 bln firm’s post-split divisions: GE Healthcare, GE Aerospace, and – the creative bit – GE Vernova. The separation is an effort to help shareholder value. With those names, GE is setting expectations low.
Gap’s business is retro in all the wrong ways 18 Jul 2022 The retailer tossed aside CEO Sonia Syngal after just two years but its problems go back further. In 20 years Gap’s revenue hasn’t grown, even as Americans roughly doubled their apparel spending. As investor patience frays, the best thing the new CEO inherits is low expectations.
Goldman Sachs revamp gets a pre-recession shove 18 Jul 2022 Earnings halved in the second quarter as deals dried up. Sprightly trading made up for it, but that won't last. Beneath the noise, Goldman's pivot to being a fee-and-interest machine is accelerating. That's good for its valuation - and for closing the gap with Morgan Stanley.
GSK spinoff boost may be as good as it gets 18 Jul 2022 The drugmaker’s Haleon consumer unit started trading at 40 bln pounds including debt – below the 50 bln pound offer it rejected from Unilever. The Sensodyne maker has hefty borrowings and two big investors eager to sell. But its valuation mostly prices in a healthier future.
ECB risks forgetting 1990s currency crisis lessons 18 Jul 2022 President Christine Lagarde may soon unveil the central bank’s tool to control sovereign bond yields. Struggles with semi-fixed exchange rates before the euro offer a cautionary tale. To fend off speculative attack, authorities are best off keeping targets and methods vague.
Cathay Pacific charts hopeful course for Hong Kong 18 Jul 2022 Huge capacity cuts and a bailout put a lid on debt as quarantine rules keep its home city isolated. Its shares, better performing than Singaporean and Western peers, imply the airline and the Asian hub will make a quick turnaround. But it faces a harder slog back to normal.
Australian bank deal puts shareholders in suspense 18 Jul 2022 ANZ is paying $3.3 bln for insurer Suncorp’s lending business, but there are concerns. Most synergies will take years to materialise. The target’s own cost-cutting plans may warrant a higher price. And a regulatory blessing is uncertain. Signed and sealed isn’t yet delivered.
Elliott’s Pinterest vision board has Twitter pins 15 Jul 2022 The activist has a 9% stake in the $13 bln company after investing in its rival in March 2020, then stepping back a year later. Twitter’s returns while Elliott was active outperformed competitors. A similar outcome, including a sale, is possible but without the Elon Musk circus.
Wells Fargo battles forces it chose not to control 15 Jul 2022 Higher interest rates lifted the scandal-plagued U.S. lender’s second-quarter income. But a mortgage slowdown, private-equity losses and the cost of past bad behavior erased the benefits. Under it all is a bank worth more than the current $147 bln, but it’s still well hidden.
Review: The cat and mouse game of Russia sanctions 15 Jul 2022 In “Freezing Order”, investor Bill Browder describes lobbying to suspend the assets of those responsible for the death of his Russian employee. Moscow used economic interests and U.S. lawyers to undermine the sanctions. The same tactics threaten the response to the Ukraine war.
Capital Calls: Citi’s luck, BlackRock’s blues 15 Jul 2022 Concise views on global finance: Citigroup’s second-quarter earnings were buoyed by its focus on trade flows and helping companies. Meanwhile, the world’s largest asset manager thinks investments will shift further into bonds but that business is less lucrative.
Aston Martin cash call leaves a sputtering engine 15 Jul 2022 The luxury-car maker may raise 653 mln pounds from its shareholders and Saudi’s state fund. That would avert an imminent crash, and the terms are less painful than investors feared. But the group will still be laden with heavy borrowings amid a worrying economic backdrop.
GSK split gives CEO fresh M&A test 15 Jul 2022 Emma Walmsley is hiving off the $102 bln drugmaker’s consumer unit. What’s left is currently valued at a discount to pharma peers, despite fast-growing vaccines sales, due to loss of exclusivity on key drugs. Walmsley needs to show she can buy businesses as well as break them up.
Alibaba suffers under someone else’s cloud 15 Jul 2022 Investors erased $14 bln of the company’s value on news that authorities summoned executives after a breach of a police database it hosts. The hack of 1 bln Chinese citizens’ details seems mostly an embarrassing government cybersecurity flop. But Alibaba is an easy proxy target.
China’s economy could beggar its neighbours 15 Jul 2022 Gross domestic product grew 0.4% in the second quarter, and even that grim official figure is too rosy. Infrastructure spending and a record trade surplus are propping up activity. Given weak consumption and cooling global demand, China may try to take export share from rivals.
New York City is losing its real estate swagger 14 Jul 2022 Global investors are eyeing alternative destinations, like Atlanta. Meanwhile high mortgage rates and market jitters are chilling Manhattan’s residential sales. The Big Apple relies on property for half of its taxes, and its economy is slowing to a crawl. A downturn could smart.
Draghi’s exit is bad news for Italy and the euro 14 Jul 2022 The ex-ECB chair has quit as Italy’s premier and may struggle to form a new executive. Early elections risk producing a less euro-friendly government amid a spiralling gas crisis. Without Draghi’s cover, Italy’s large sovereign debt looks more vulnerable to market turbulence.