Bank of England inflation fight easier than Fed’s 24 Nov 2022 An OECD study shows supply shocks are pushing up American prices, while strong demand is a bigger factor in the UK. That makes BoE Governor Andrew Bailey’s task more straightforward than Fed Chair Jerome Powell’s. For Britain, though, price stability will deepen economic woes.
Capital Calls: Fuzzy Fedspeak, Dr. Martens 24 Nov 2022 Concise views on global finance: The U.S. central bank has left traders guessing the meaning of the word “various”; shares in the recently listed British bootmaker fell 20% after sales missed expectations, and a warning that its investment needs will hurt profitability.
Ackman’s Hong Kong short is logical, not likely 24 Nov 2022 The hedge fund boss is wagering the local currency’s dollar peg will snap. The economic case is stronger than during his last try in 2011: the peg is forcing rate hikes even as the highly-leveraged city’s economy contracts. But the risks of alternatives might stay Beijing’s hand.
Bloated Thanksgiving will dispirit Xmas shoppers 23 Nov 2022 Thursday’s turkey and cranberry feast is set to cost 20% more than last year’s. Supermarket sticker shock may leave consumers thriftier when seeking stocking stuffers. And even if retail spending hits a record $960 bln, the season will be less merry once adjusted for inflation.
Stablecoins fall few cents short of respectability 23 Nov 2022 FTX’s collapse highlighted what happens when funds supposed to be in one place turn up in another, or nowhere at all. That will reignite the debate on how to regulate digital assets. Out in front are stablecoins, which have a way to go if they’re to live up to their name.
UK and EU’s new goodwill could be significant 23 Nov 2022 British PM Rishi Sunak wants to improve trade relations with the EU. Progress will only be piecemeal and slow, even if the two sides agree on how to implement their 2019 deal on Ireland. In the meantime small deals are possible, and they could normalise the path to closer ties.
Manchester United buyer will need love and money 23 Nov 2022 The Glazer family may sell the $2.5 bln soccer club after 17 years. It’s a good time to get out: valuations are rich and commercial revenue has held up well. A weak economy will challenge future growth, though. A new owner will have to be motivated by more than financial goals.
Credit Suisse rot infects wealth-management core 23 Nov 2022 The prized division lost 10% of its assets in six weeks, though the outflows have slowed. That undermines CEO Ulrich Körner’s narrative that the group’s problems are all in investment banking. Clients don’t make that distinction, and it’s easier to lose money than win it back.
EU gas cap is indirect signal to cut power demand 23 Nov 2022 The bloc’s proposed brake on natural gas prices at 275 euros per megawatt hour is a fig leaf. The ceiling is so high and with such stringent conditions that it may never be activated. Its main use may be to remind EU states their best option is to use energy more efficiently.
China’s tech giants will have to keep on giving 23 Nov 2022 Authorities may finally fine fintech player Ant, while JD Chair Richard Liu is cutting executive salaries and donating some of his cash to aid lower-paid workers. Investors may hope they’re one-offs. But Beijing’s fiscal woes and common prosperity push make such firms handy ATMs.
Nickel IPO puts Jakarta at centre of China EV boom 23 Nov 2022 China’s Lygend Resources, a trader-turned-producer of critical battery ingredients, is eyeing a $600 mln Hong Kong listing. A huge presence in Indonesia gives it an edge over rivals at home, where supply is scarce. That should help the company navigate a bumpy stock market.
Baby EVs’ existential crises bad news for giants 22 Nov 2022 Electric-car maker Faraday warned it may go out of business. A shrinking order book is the latest sign of flagging demand. Established rivals like Tesla or GM can better weather a downturn. But fewer smaller rivals doesn’t help, and dwindling interest is a bad sign for everyone.
U.S. housing faces longer descent to basement 22 Nov 2022 With mortgages near 7%, homebuyers are staying on the sidelines. Higher interest rates will be around for a while, though. Incentives from builders such as D.R. Horton help, but it will take significant price declines from the $471,000 median before the market picks up again.
SocGen’s BNP envy carries a cost 22 Nov 2022 Future CEO Slawomir Krupa is merging his stock research and trading unit with U.S. peer AllianceBernstein, aping his French rival’s capital markets drive. But the $20 bln bank will lack the scale of U.S. rivals, and growing in low-return businesses won’t help a lagging valuation.
Debt woes will restrain Enel’s global ambitions 22 Nov 2022 CEO Francesco Starace vowed to cut the 52 bln euro utility’s net debt by 21 bln euros, amid spiralling gas costs. Focusing on fewer regions looks sensible and may shield investments and dividends. But it will hinder Enel’s efforts to stay one of the top energy transition winners.
Energy crises speed up the green transition 22 Nov 2022 In 2022, war and power shortages have led to more fossil fuel use. But they also act as a catalyst for the rollout of renewable energy. In this edition of The Exchange podcast, ex-Snam boss Marco Alverà tells George Hay how Europe’s leaders can capitalise on this dynamic.
Hong Kong’s crypto push sets up race to bottom 22 Nov 2022 The Asian city reiterated its plan to allow retail access to regulated virtual assets, despite FTX’s blow-up and a sweeping ban in China. It’s not a big departure from what’s offered in the U.S. and Europe but a rivalry with Singapore to lure capital and talent could make things messy.
Economic smoke chokes spinoff’s appeal 22 Nov 2022 The $5 bln Australian explosives and fertiliser maker Incitec Pivot is delaying its breakup to buy back stock. AGL Energy is still burning from its failed split, while deals from Woolworths to $190 bln Danaher disappointed. With markets roiling, the urge to demerge is resistible.
Coinbase’s problems more than contagion 21 Nov 2022 The crypto exchange’s boss Brian Armstrong wants to reassure investors that digital currencies are safe. That makes sense: Bitcoin and other coins are its lifeblood. But the industry collapse is only one problem. Coinbase took on debt before its business model had been proven.
Disney offers an Iger solution to an Iger problem 21 Nov 2022 The media giant tapped its former boss to, among other things, find a successor. Shareholders seem relieved. But Iger failed to cultivate a replacement in his 15-year tenure, and left the $180 bln firm laden with debt. His legacy hinges on a refreshed board, boss, and company.
Clunky salvage-car deal skids into M&A snarls 21 Nov 2022 Scrap-vehicle marketplace IAA’s market cap fell 40% in a classic post-pandemic comedown. A $7.3 bln sale to peer Ritchie Bros suits the times, but investors in both companies are displeased. It’s clear buyers and sellers need more time to see eye to eye on deal valuations.
Hybrid working is wild card in office slump 21 Nov 2022 Workspace landlords like British Land and France’s Gecina are facing a storm. Higher interest rates are cutting property values, just as a weak economy pushes up vacancy rates. And, with UK workers spending half their week at home, employers have plenty of scope to cull space.
The world can harness trade to save the planet 21 Nov 2022 Trade is a major cause of global warming. The solution is to tax commerce in carbon-intensive goods and remove tariffs on clean ones, to support low-carbon technologies, and to do all this fairly. It’s a priority for next year’s COP28 conference in Dubai, says Hugo Dixon.
Capital Calls: ABB, Italian budget 21 Nov 2022 Concise views on global finance: The $57 bln Swiss engineering group is selling a minority stake in its car charging unit, as a fallback to volatile IPO markets; premier Giorgia Meloni’s hard-right government targets a budget deficit of 4.5% of GDP in 2023.
COP27 deal is a blessing in a very good disguise 21 Nov 2022 The premier forum for fighting climate change ended in Egypt with a largely inadequate agreement to reduce global greenhouse gas emissions. But it did feature a small show of goodwill by rich countries. That might incentivise the big emitters of tomorrow to up their game.
Big Tech layoffs are dystopian job-market fiction 18 Nov 2022 Twitter, Amazon and Meta Platforms are driving the largest wave of U.S. layoffs since early 2020. Yet tech firms were also quick to hire; other industries are still playing catch-up. With inflation cooling off, the chances of widespread job losses are dwindling fast.
FTX flop evokes history’s great financial swindles 18 Nov 2022 Investment bubbles are generally accompanied by fraud. The collapse of Sam Bankman-Fried’s cryptocurrency exchange has elements of past scandals, from Dutch tulip mania to Bernie Madoff. Unusually, the 30-year-old seems to have previewed his own downfall, says Edward Chancellor.
Indonesia’s green step not yet a leap for mankind 18 Nov 2022 Jakarta will get $20 bln of overseas public and private cash to help it decarbonise. The deal struck at the COP27 summit paves the way to channel capital to poor countries at the required scale. But big foreign transfers are fraught. Lenders have plenty of reason to hesitate.
Capital Calls: Ticketmaster and Taylor Swift 18 Nov 2022 Concise views on global finance: A meltdown involving the pop star’s upcoming “Eras” concert tour is attracting an audience on Capitol Hill and risks an unwanted corporate fight with the artist herself.
Investors ignore China Covid spike at their peril 18 Nov 2022 Shares have rallied on signs President Xi Jinping is embracing pragmatism and easing up on crackdowns in real estate and tech. Shaking hands with U.S. President Joe Biden helped, too. However, Beijing might also be losing control of the virus. Policy relaxations may be moot.