Biden’s oil plan is a drop in a leaking bucket 20 Oct 2022 High gasoline prices are a big problem, but the U.S. president has little power to help. His plan to tap America’s oil reserve, and refill it at a price high enough to spur more drilling, is good economics – just not the kind likely to make much impact by November’s elections.
Britain’s next leader will be on a short leash 20 Oct 2022 Prime Minister Liz Truss is out after just 44 days in office. Whoever replaces her will have to endorse fiscal discipline or risk a similar fate. The ruling Conservatives have little in common except fear of an early election. But only a national vote can restore political order.
The urgent search for the perfect inflation hedge 20 Oct 2022 Nearly every major asset class has lost money this year, leaving investors scrambling to protect their wealth from rising prices. Traditional alternatives such as gold and property also have drawbacks, writes Edward Chancellor. The best shield may be the most obvious one.
Capital Calls: Philip Morris/Swedish Match 20 Oct 2022 Concise views on global finance: The Marlboro maker has raised its already pricey $16 bln offer for the Swedish seller of nicotine pouches.
French protesters have a point on wages 20 Oct 2022 Inflation running at 10.9% is eroding European workers’ salaries. Companies benefitting from a power crisis, like 139 bln euro TotalEnergies, can afford pay hikes. For others, one-time bonuses are a better way to keep workers happy and cushion the downside of looming recession.
Grocery deal could have European interloper 20 Oct 2022 Kroger’s $25 bln deal for Albertsons inks its position as the second largest U.S. grocer. That has lawmakers nervous. But Stop & Shop owner Ahold is a more palatable partner. Plus jumping into the fray puts it in prime spot to make its competitor pay more or pick up castoffs.
Britain’s bond crisis reverses over the government 20 Oct 2022 New finance minister Jeremy Hunt has scrapped most of his predecessor’s unfunded tax cuts, scuppering Prime Minister Liz Truss’s growth plan. In this Viewsroom podcast, Breakingviews columnists debate what the U-turn means for markets – and whether Truss can survive.
Kakao has plenty more data fires to put out 20 Oct 2022 The $16 bln South Korean superapp owner's co-CEO has stepped down following a massive outage. Given how dependent the country is on the company's online services, that's unlikely to quell a rising public backlash. The costs of added rules and regulatory scrutiny will add up.
Zooming car sales will hit China’s growth limit 20 Oct 2022 The country’s drivers bought 2.3 mln vehicles in September, a one-third acceleration. But incentives greased a fragile recovery by pulling demand forward. The truck market is already decelerating after a short-lived boom: carmakers from BMW to Volkswagen could be next.
Tesla’s Apple-sized goals have cash risks 19 Oct 2022 The electric-vehicle leader’s growth keeps it on track to have iPhone-like dominance of its industry. That could justify its $700 bln valuation, unless worrying signs that demand might be flagging transpire. In that context, returning cash to shareholders is a bad idea.
A decade after split, Mondelez eats Kraft’s lunch 19 Oct 2022 The two food companies were once housed under Kraft’s brand. After a breakup 10 years ago, Mondelez bought smaller food businesses and stayed the course. Kraft plunged into a $80 bln deal with Heinz, and spent years integrating. Returns show big mergers don’t always pay off.
P&G’s pricing power hangs by a floss 19 Oct 2022 The $300 bln maker of Pampers and Puffs charged more in the latest quarter without scaring off too many customers. It’s a good sign, but some of its brands are weaker and costs are rising at a faster pace. As a lens into the global consumer, the results are cause for concern.
Time for Europe to tame its energy cravings 19 Oct 2022 After paying through the nose to fill its gas storage reserves to 92%, the bloc is seeking to secure more affordable fuel. Measures like curbing price volatility, club purchases or flexible caps will be no panacea. While supply is tight, curbing demand is the key.
Brain drain solution is staring Hong Kong in face 19 Oct 2022 Leader John Lee hopes lower property taxes and a new visa scheme will persuade foreign talent not to move to destinations like Singapore. But it’s piecemeal stuff and ignores what’s easily the biggest cause of foreigners fleeing: the city’s increasingly nonsensical Covid policy.
Capital Calls: Coal’s fear-then-greed trade 19 Oct 2022 Concise views on global finance: Shares of Aussie coal miners fell on production disruptions from floods, only to quickly rise as investors bet on tighter supplies and higher prices.
Fintech fight adds fillip to M&A Down Under 19 Oct 2022 Westpac, a buyout group supported by Atlassian co-CEO Mike Cannon-Brookes and other bidders are chasing $500 mln Tyro Payments. After months of floundering tie-ups, like KKR’s pulled Ramsey pitch, and a 60% drop in deal volume, bankers would be content just to get this deal done.
Mobileye sees IPO market with surprising clarity 18 Oct 2022 Five years after buying the auto tech developer, Intel is taking it public again. A shaky market and the chipmaker’s special voting stock support the swift 68% drop in valuation expectations, to the same $15 bln it originally paid. Desperation has a way of sharpening focus.
Goldman’s brainwaves are best left for its clients 18 Oct 2022 The Wall Street firm’s consumer bank Marcus – now being dismantled – was a good idea that was executed better by others. With a new revamp, Goldman is sticking to what it does best: marketing to companies instead. Its third-quarter earnings show that’s enough.
Debt adds to the heap of media problems 18 Oct 2022 Disney, Paramount and Warner Bros.’ leverage ratios are above the median for peers as the chances for a recession increases. That's as an economic slump pressures advertising and subscriptions. It bodes ill for cash gobbling streaming services.
Capital Calls: Netflix struts 18 Oct 2022 Concise views on global finance: The $109 bln streaming service reversed its subscriber losing streak and reminded rivals of its first-mover advantage.
Europe’s energy crisis nears winter of discontent 18 Oct 2022 Germany, Italy and others have scrambled to replace Russian gas and pipeline attacks have become a concern. The Oxford Institute for Energy Studies’ Jack Sharples tells The Exchange podcast Europe must learn to live with less power. Next year may be even more challenging.
Time for Britain to try technocratic government 18 Oct 2022 Liz Truss’s authority has shrivelled and her government is under intense scrutiny from investors. In similar crises, Italy and Greece turned to non-political leaders to restore calm. After four prime ministers in just over six years, Britain should consider the same approach.
China GDP delay amplifies economic distress signal 18 Oct 2022 Beijing postponed releasing its most-watched quarterly data at the 11th hour amid a Party Congress already putting politics above all else. It was unnecessary: investors have probably priced in slowing growth. And the lack of communication does more harm than ugly numbers.
Prada homecoming would set a financial fashion 18 Oct 2022 A decade after its Hong Kong IPO, the $12 bln maker of Galleria bags is seeking to trade also in Milan. That will help it into European indices and create a hedge against Western decoupling from China. It would also make sole listings in the Asian hub less desirable.
Subsidies lure BP to join U.S. green gold rush 17 Oct 2022 The UK energy giant is paying a 54% premium for Archaea, which extracts gas from landfill. Government support helps explain why BP thinks it can more than quadruple its target’s EBITDA by 2030, earning a double-digit return on its $4 bln investment. Others are bound to follow.
Goldman rejig shows its strengths and imbalances 17 Oct 2022 The $102 bln Wall Street firm is putting investment banking and trading in a single unit while breaking up its consumer activities. The result will be one huge, one medium-sized and one tiny division. If that makes Goldman clearer, it also emphasizes its lopsidedness.
Rupert Murdoch’s odd reunion simplifies succession 17 Oct 2022 The 91-year-old mogul wants to put Fox and News Corp back together after a decade apart. Though there are few obvious synergies between TV and publishing, tidying up assets may save on overheads and leadership. And it leaves only one company for his children to fight over.
Capital Calls: Ye makes a social media frenemy 17 Oct 2022 Concise views on global finance: The singer formerly known as Kanye West has bought social media firm Parler, which is going after the same users as the former U.S. president’s Truth Social. If Elon Musk ends up owning Twitter, both will be losers.
Massive fiscal U-turn leaves UK in political funk 17 Oct 2022 New finance minister Jeremy Hunt soothed investors by reversing most of Prime Minister Liz Truss’s “growth plan” and cutting short her generous energy subsidies. But he still needs extra tax hikes or spending cuts. Persuading parliament to support the switch will be a challenge.
Credit Suisse legal tab is wildcard for investors 17 Oct 2022 The bank settled an old mortgage case without having to set more money aside. But the bill for future litigation, up to $1.6 bln on its own estimates, will erode earnings. The risk for investors in a looming rights issue is that further nasties bog down the bank’s restructuring.