There’s nowhere left for M&A bankers to hide 30 Sep 2022 Even after quarters like the latest one, when volume fell 58% to $640 bln, dealmakers find silver linings. The pipeline somehow stays full and there are reasons for firms to buy despite bleak economic prospects. Breakingviews instead imagines what a candid rainmaker might say.
Meta dethrones employees, elevates investors 30 Sep 2022 Facebook’s parent announced a hiring freeze and warned of restructuring. That’s reasonable for a firm exposed to an advertising slowdown. But Zuckerberg, who controls Meta, doesn’t have to care as much about profit. His decision spells trouble for Silicon Valley writ large.
“Help to Refi” could be UK’s next financial wheeze 30 Sep 2022 Prime Minister Liz Truss’s rash tax cuts have rattled the government bond market. She needs to attract investors and bring yields back down. The “Help to Buy” scheme to subsidise mortgages offers a template. Breakingviews imagines a fictional adviser taking up the challenge.
Capital Calls: Google and gaming 30 Sep 2022 Concise views on global finance: The search giant is binning “cloud gaming” service Stadia three years after its launch.
German energy bailout belatedly outclasses Europe 30 Sep 2022 Berlin will borrow 200 bln euros to help consumers cope with rocketing energy prices. It’s not the first state to go for a shock and awe approach, but Germany’s ample fiscal space gives it way more scope to go big. Unlike the UK, it can also do so without spooking investors.
Review: U.S.-China tech fight leaves global losers 30 Sep 2022 Historian Chris Miller’s “Chip War" offers a timely account of America’s increasingly frantic efforts to stay ahead of China on semiconductors. Both sides have policy and trade weapons at their disposal. The collateral damage to big companies and other countries will be immense.
Currency crash forces Beijing back into bad habits 30 Sep 2022 The yuan touched 7.2 per dollar, a level not seen since 2008. Verbal warnings to the market achieved little, so the central bank has relapsed to using blunt force to restrain prices and is prepping banks to dump dollars. That’s bad for liquidity, and damages credibility.
ESG debate comes down to returns, stupid 29 Sep 2022 Bosses are speaking out on sustainability issues. Yet BlackRock’s socially conscious chief Larry Fink and anti-woke activist Vivek Ramaswamy agree on one thing: stock price performance. And customers may ultimately be hard to sway, so CEOs are better off biting their tongues.
Wall Street job cuts will be shallow and painful 29 Sep 2022 The slowdown in trading and dealmaking may suggest it’s time to swing the axe. But despite big firms’ headcount growing 10% since the pandemic, there’s surprisingly little fat to cut. Those on the front line will have to jostle with new recruits who don’t directly bring in bacon.
Porsche IPO leaves VW stock in Skoda territory 29 Sep 2022 The German carmaker listed its luxury unit at 75 bln euros, nearly matching its own market capitalisation. That makes the rest of VW look cheap. Unfortunately for shareholders, a complex spinoff and muddied governance mean that discount is there for a reason.
BoE remedy can only be partial cure for UK ills 29 Sep 2022 The UK central bank launched $70 bln of bond-buying after PM Liz Truss’s budget triggered market chaos. That has stemmed a financial crisis among indebted pension funds. Stopping the market exerting economic pain requires a fiscal rethink from politicians, not more BoE action.
Capital Calls: Chevron, Pickleball 29 Sep 2022 Concise views on global finance: The oil driller has sold its California headquarters building and is moving employees to Texas, while one of the fastest-growing U.S. games is beefing up its professional ambitions with an investment from basketball superstar LeBron James.
Macau keeps poker face on its gambling future 29 Sep 2022 Beijing is allowing punters back to the Chinese gaming enclave but the odds of a full recovery are long. Gambling looks increasingly out of sync with Xi Jinping’s bigger policy priorities. As casinos including Sands and Wynn apply to renew licenses, the future looks less golden.
Biogen’s $11 bln Alzheimer’s gain has cushion 28 Sep 2022 The U.S. biotech firm has developed a drug that may slow dementia, sending Biogen shares surging 40%. The assumptions it takes to validate the gain don’t seem crazy. Decades of failure to find a cure explain why investors are gun-shy. That may mean opportunity for the bold.
Cheerios can eat VCs for breakfast 28 Sep 2022 General Mills’s investment in food platform GrubMarket looks speculative. But manufacturers from United Airlines to General Motors have made similar bets. The cereal company doesn’t have to answer to capital providers like VCs do. With valuations falling, it’s not a bad idea.
Goldman’s buyout push casts shade on its home turf 28 Sep 2022 The bank’s $10 bln buyout fund puts it back in the arena with the likes of Blackstone. Being both adviser and investor benefits the firm’s shareholders. But banking clients may not like Goldman cornering the market, and past lessons show crossing the streams can cause tension.
Behind Britain’s self-inflicted financial crisis 28 Sep 2022 Sterling fell to a record low and gilt yields soared after finance minister Kwasi Kwarteng unveiled a raft of unfunded tax cuts. In this Viewsroom podcast, Breakingviews columnists explain the long-term damage to the UK’s credibility and what will rebuild investors’ confidence.
Capital Calls: Apple tests discretionary spending 28 Sep 2022 Concise views on global finance: The company’s reversal on iPhone 14 production is a sign that inflation-battered consumers are thinking differently about discretionary items.
BoE’s bond-buying U-turn is worth the risk 28 Sep 2022 The Bank of England will buy UK sovereign debt and delayed sales of its $915 bln bond portfolio due to market “dysfunction”. The danger is Governor Andrew Bailey looks too close to the government whose tax cuts caused the turmoil. Yet calmer markets make it easier to hike rates.
China tea IPO bubbles up on skinny consumers 28 Sep 2022 A $900 mln float by Mixue Bingcheng would be one of the mainland’s biggest this year. It implies a Starbucks-like valuation for a franchise serving less affluent customers and boasting four times the outlets. As the economy stalls, spending habits are shifting in its direction.
Wall Street sends regulators a poop emoji 28 Sep 2022 Eleven firms have paid $1.8 billion in fines for employees’ unapproved use of platforms like WhatsApp. The rules may have been hard to enforce. But the response — to collectively flout them at every level — is alarming. Meanwhile the mass fine looks essentially toothless.
Guest view: Russia sanctions lack decisive punch 27 Sep 2022 Restrictions imposed by the United States and its allies following President Vladimir Putin’s invasion of Ukraine have done economic damage, write William Rhodes and Stuart Mackintosh. But Cuba and Iran show American sanctions are not decisive in changing geopolitical outcomes.
Gold will keep losing its irrational luster 27 Sep 2022 A pandemic, war and high inflation should be pushing the yellow metal’s price higher. Instead, at about $1,635 an ounce, it’s worth less than it was a decade ago. Miners also are extracting it at a faster rate than population growth. Farmland, for one, has become a better hedge.
Silicon Valley’s post-Covid brain drain 27 Sep 2022 Before the pandemic, 75% of venture capital was invested in California, New York and Massachusetts. In this Exchange podcast, AOL co-founder Steve Case explains that a hybrid working revolution is reversing that trend and encouraging permanent investment away from the coasts.
UK swaps one cost-of-living crisis for another 27 Sep 2022 The Bank of England may raise rates past 5% to stem the inflationary effect of Chancellor Kwasi Kwarteng’s tax cuts. Homeowners, saved by the government’s energy price cap, now face a surge in mortgage costs. That will sap growth and add to pressure for banks to help customers.
Capital Calls: EasyJet, Nexi 27 Sep 2022 Concise views on global finance: The budget airline scraps its offset plan and focuses efforts on cleaner technology; the 12 bln euro payment company’s valuation gap with peer Worldline looks increasingly hard to justify.
CVC’s burial business bets on lively market growth 27 Sep 2022 The buyout shop is mulling offers for Nirvana, a Southeast Asian funeral services outfit offering family plots. A sale for up to $2 bln, almost double what it paid, would imply robust demand for financial planning. Asia’s booming life insurers underscore the opportunity in death.
Mega-bank status weighs on U.S. banking’s B-team 26 Sep 2022 Bosses from U.S. Bancorp, Truist and PNC joined their JPMorgan and Bank of America counterparts for a Capitol Hill grilling, and could face similar capital rules, too. It wouldn’t help the system much, but might hurt competition. There are better ways to keep goliaths in check.
Cohn SPAC investors choose cash over connections 26 Sep 2022 Goldman Sachs alum Gary Cohn’s blank-check firm ended a $9 bln merger with lottery operator Allwyn after 91% of his shareholders asked for their cash back. Cohn had touted the value of his deal nous and contacts. The case for paying up for those qualities has got less persuasive.
Ukraine has more pluses than minuses for climate 26 Sep 2022 The Russian invasion has prompted other countries to boost gas production and burn more coal. Climate diplomacy is on ice. But this crisis will also prompt a dash for cheaper and more secure renewable energy. That helps the fight to slow global warming, says Hugo Dixon.