The politics and economics of superpower rivalries 8 Nov 2022 Are America and China heading for a showdown, and what does it mean for the world order? In this edition of the Exchange podcast Paul Tucker, former deputy governor of the Bank of England, discusses the financial and foreign policy fallout and his new book, “Global Discord”.
Fed gets credit for providing perpetual angst 8 Nov 2022 Investors in Asia are overreacting after a South Korean issuer flipflopped on a decision to exercise a call option on a $500 mln bond. Liquidity measures from Seoul eased an earlier rout but pressure from U.S. rate hikes is turning boring corners of finance into something hot.
China’s foreign customers leave at worst time 8 Nov 2022 Overseas demand finally collapsed in October, with exports shrinking 0.3% after a surprisingly long run. Trade strength had offset weak domestic consumption and real estate, so the contraction bolsters the case for easing harsh pandemic controls. It might be too late already.
IPhone plant woes are least of Apple’s problems 7 Nov 2022 The supplier of the $2.2 trillion tech giant’s devices, Foxconn, may lose up to 30% of production from a key facility following a Covid outbreak. That sounds bad, but it may only hit 1% of revenue. Waning demand and a slower transition to services affects Apple more.
Tesla success is less fleeting than AV upcharge 7 Nov 2022 Boss Elon Musk charges $15,000 a car for self-driving tech that doesn’t yet work. Ford wants to do that too, even as it ditches plans for robotaxis. Like power steering, fees for hands-free driving may disappear. Good chance Musk’s technology innovates before competitors.
Philip Morris and Rio’s poker faces need some work 7 Nov 2022 The $139 bln Marlboro maker and $95 bln miner have upped buyout offers to try and clinch strategically key deals. In both cases, hedge funds and minority investors called their bluff. The lesson is that bidders can’t play hardball if everybody knows they really need a deal.
NFTs may not get back up off the canvas 7 Nov 2022 Global non-fungible token sales have dropped over 90% since January. Enthusiasts remain hopeful that NFTs can branch into new, more durable applications that are less like trinkets. But with rate rises upending niche assets, don’t bet on it.
Capital Calls: Japan baulks at U.S. car credits 7 Nov 2022 Concise views on global finance: Tokyo warns America’s Inflation Reduction Act could discourage Japanese investment into the world’s biggest economy.
How Joe Biden can help save the planet at COP27 7 Nov 2022 “Just transition partnerships” with states like India are essential to fight climate change and advance Western interests. America needs to join up its trade, geopolitical and climate policies, says Hugo Dixon, as the U.S. president heads to the U.N. climate conference in Egypt.
Capital Calls: Starbucks waits stubbornly in China 4 Nov 2022 Concise views on global finance: The $100 billion coffee chain surprised investors with a solid quarter despite persistent sluggish results in the People’s Republic.
Conscious capitalism falls behind in the polls 4 Nov 2022 As U.S. midterms loom, companies are striving to appear neutral. For bosses of companies like BlackRock and Twitter, being disliked by both sides has become a badge of honor. It’s rational, but it’s also a shame. The opposite of so-called woke capitalism isn’t democracy but apathy.
Slim-chance grocer lawsuit is real problem for M&A 4 Nov 2022 Washington attorneys won a temporary setback for grocer Albertsons on a $25 bln sale to Kroger. Arguments over a special dividend look stretched. Still, state meddling in deals is unusual. This opening salvo is one part of an expanding toolkit competition hawks will start to use.
Lisbon tech schmooze takes baby steps to reality 4 Nov 2022 Amid 2022’s cratering valuations, venture capitalists attending the Portugal-based Web Summit are appropriately more cautious about new startups. Yet crypto crowds are still out in force. That’s despite the need for tech cash to focus more on solving problems like climate change.
Abrdn’s battered model may yet start to shine 4 Nov 2022 The British group meshes staid fund management with technology platforms for savers and wealth managers. The latter are growing and benefitting from higher interest rates. CEO Stephen Bird’s turnaround has a long way to go, but an undemanding valuation leaves plenty of upside.
Tom Ford return offers remedy for Gucci fatigue 4 Nov 2022 Kering is considering a swoop on the U.S. fashion house. Bringing back Gucci’s ex-star designer could ease the $60 bln fashion giant’s reliance on its largest brand, which needs reinvigorating. Kering’s vast retail network would also make the Tom Ford label a winner.
HSBC and StanChart give Hong Kong sport trial run 4 Nov 2022 The Rugby Sevens, sponsored by the $103 bln lender led by Noel Quinn, is back, but as a shadow of its schmoozefest self. Meanwhile the bank Bill Winters sits atop is offering cash to encourage runners at the local marathon. Both show how the city faces a long slog back to normal.
Indonesia share sale contortion is necessary evil 4 Nov 2022 SoftBank-backed GoTo wants to coordinate pre-IPO investors offloading its stock when a lockup ends. The unusual move could limit further drops to its now-$15 bln market value and pull in long-term foreign owners. The driving force is too little local liquidity in a bear market.
King Icahn’s Crown stake invites regular activism 3 Nov 2022 The activist has an 8.5% stake in the drinks-packaging firm, which had a tough last quarter that caught its CEO off guard. A campaign at Crown is different than his recent one at McDonald’s – it has real financial teeth. Plus preying on management mistakes gave Icahn his throne.
Pfizer’s heft smacks Moderna’s one-hit wonder 3 Nov 2022 Moderna warned of manufacturing woes this year and a move to a more cut-throat commercial market. Its production of the Covid vaccine is increasingly competing against Pfizer’s strengths. Regaining its gloss means success in developing new vaccines.
Credit Suisse puts “first” back into First Boston 3 Nov 2022 There’s no historical precedent for a global bank carving out and listing its underwriting and M&A unit. The spinoff’s revenue-sharing joint ventures will only partly smooth an awkward relationship with its Swiss parent. Future boss Michael Klein gets credit for novelty, though.
For your consideration: Warner-Discovery part two 3 Nov 2022 Since the companies behind “House of the Dragon” and Shark Week merged, it has trimmed its outlook, written down Batgirl and Elmo content, and lost nearly half its market value. For boss David Zaslav, big may not be big enough. A deal with Paramount or NBC would be worth a look.
Elon Musk’s $44 bln Twitter challenge begins 3 Nov 2022 The Tesla boss is now the proud owner of the social media platform. In this Viewsroom podcast, Breakingviews columnists discuss the billionaire’s plans to boost revenue, the implications for the electric carmaker’s shareholders, and what the saga tells us about mega-deals.
Capital Calls: Uniper 3 Nov 2022 Concise views on global finance: The German utility’s 40 bln euro loss for the first nine months of 2022 has turned its equity negative and implies a much larger bailout.
Monte Paschi cash gambit leaves bitter aftertaste 3 Nov 2022 The bailed-out lender secured 93% backing for its 2.5 bln euro cash call. Financially, that's a success. But investors will include bank foundations, a past source of political meddling. A conversion of junior bonds would have saved taxpayers high fees and interest payments.
BNP defies French banks’ interest-rate malaise 3 Nov 2022 The 60 bln euro lender’s top line is rising handily. That’s partly because CEO Jean-Laurent Bonnafé has tilted BNP Paribas away from Gallic retail banking, where regulations restrict its ability to earn more as rates rise. A valuation premium to local rival SocGen looks assured.
Money manager M&A mess is dismal industry advert 3 Nov 2022 A consortium including newly enlarged EQT is offering $1.1 bln to dismember Australia’s Perpetual. It’s a promising starting bid. But it comes months after the target agreed to buy a rival. The convoluted affair belies everyone's pitch of being good stewards of capital.
Wealth darling DBS channels Singapore’s success 3 Nov 2022 It wasn’t just rising interest rates that helped the $63 bln bank led by Piyush Gupta post record quarterly earnings. DBS also benefitted from the city-state’s borders reopening and boosting lending as high earners move to the finance hub. That augurs even more growth to come.
Victoria’s Secret hides in M&A small print 2 Nov 2022 The $3 bln lingerie merchant agreed to buy online rival Adore Me to enhance its tech savvy and appeal to more diverse shoppers. The $400 mln headline price doesn’t reveal all; it could jump 75%, partly based on synergy targets. Covering up the details leaves investors guessing.
If 8% inflation is worrying, 3% could be worse 2 Nov 2022 With U.S. prices rising at their fastest in 40 years, the Fed must keep raising rates. But what if inflation slows only to hover above the central bank’s 2% target? That would present two unappealing choices: Move the goalposts, or squeeze a creaking economy even tighter.
Saudi Credit Suisse deal is fair Buffett imitation 2 Nov 2022 The kingdom’s biggest lender is ponying up $1.4 bln to help the weak bank raise capital. It’s not getting the sweet terms the Sage of Omaha extracted from Goldman in 2008 but the returns are still in his ballpark. And if Credit Suisse struggles, a breakup may limit the downside.