Capital Calls: Temps frayed 1 Sep 2023 Concise views on global finance: Despite adding another 187,000 jobs in August, the number of short-term workers such as event staff kept falling in the United States. It’s a sign of a weakening labor market and, history suggests, a recessionary omen.
Fortescue founder toys with reverse greenwashing 1 Sep 2023 Andrew Forrest has lost a CEO, a CFO and a top adviser this week. The tycoon says people only quit his $43 bln miner if they disagree with its zero emissions goal. Change and the energy transition can be disruptive. But his absolutist twist to climate spin homes in on a new risk.
Climate change turns US utilities grimly exciting 31 Aug 2023 Hawaii’s biggest electricity provider is at risk of bankruptcy after wildfires destroyed a town. Increased capital expenditure can mitigate, but not eliminate, damage from storms and heat. Little wonder investors are slowly waking up to the dangers posed by litigious customers.
African coups will ramp up scramble for minerals 31 Aug 2023 Gabon’s government was overthrown by a military revolt, following similar unrest in Niger. In this Viewsroom podcast, Breakingviews columnists discuss how instability in producers of key resources like manganese and uranium will lead global powers to hunt for more stable sources.
UBS cost-cut gains are a double-edged sword 31 Aug 2023 Boss Sergio Ermotti will keep Credit Suisse’s domestic unit, and hopes to slash $10 bln through the merger. His higher savings target easily offsets the hit from vanishing revenue as clients flee the acquired bank. The risk is that Swiss politicians think UBS’s deal is too sweet.
Capital Calls: Microsoft in the EU, Dollar General 31 Aug 2023 Concise views on global finance: The software giant will sell its Teams communications app separately from other software in the European Union; the discount retailer’s poor results reflect a more resilient US economy.
Revamped Pru faces up to an old problem 31 Aug 2023 CEO Anil Wadhwani boosted the insurer’s new business profit by a third in the first half and laid out new growth targets. But despite shedding its UK and US arms to focus on Asia, the $35 bln group’s valuation still lags rival AIA. A slowdown in China makes it harder to catch up.
With housing, Buffett chooses a great location 30 Aug 2023 The billionaire’s Berkshire Hathaway recently backed US homebuilders such as Lennar even as mortgage rates rose. Although Americans will pay more in interest, higher wages can make up the difference. Plus, existing home sales have ground to a halt. Builders are in prime position.
Body Shop sale may give Natura skin-deep makeover 30 Aug 2023 After offloading Aesop for top dollars, the Brazilian beauty giant may struggle to fetch the cosmetics brand’s original $1 bln price tag in a sale. The M&A spree reversal will simplify Natura’s structure. But sprucing up its surviving Avon arm and other labels looks hard.
Orsted’s issues fan way beyond the United States 30 Aug 2023 Denmark’s $27 bln wind giant saw shares plunge over 20% after it said it may need to write down $2 bln of US projects. Yet Orsted’s supply chain and subsidy problems may also upend progress in the UK. And by recently implying all was well, management has lost credibility.
African coups will exacerbate grab for resources 30 Aug 2023 Military revolts in Niger and Gabon are destabilising two resource-rich nations. That’s bad news while the continent struggles with rising interest rates, no market funding and poor governance. Uncertainty will intensify global powers’ rivalry for control of oil and minerals.
SoftBank could live with a cut-price Arm IPO 30 Aug 2023 The Japanese conglomerate wants a $60-70 bln price tag for the UK chip designer, according to reports. But it has reasons to push on even at a lower value, in part because a float would boost the parent group’s creditworthiness. That gives investors an incentive to play hardball.
China’s Big Four banks are bracing for impact 30 Aug 2023 The group, worth a combined $680 bln, will bear the brunt of the country’s property mess: state lenders are to cut mortgage interest rates and AgBank is warning on margins. Investors are attuned to banks’ policy role but even at less than half book value they’re far from cheap.
VinFast’s volatile stock has an easy, painful fix 30 Aug 2023 Vietnam’s nascent electric-car maker capped a flighty first fortnight on Nasdaq with a 44% fall on Tuesday. Blame its tiny sub-1% free float. Selling new shares would reduce trading swings and raise cash the $107 bln firm will soon need. It requires crashing its zippy valuation.
Alphabet moonshots are ready for launch 29 Aug 2023 Google’s parent lost $6 bln last year on experimental ventures, such as health-data cruncher Verily and self-driving outfit Waymo. As CFO and former tech banker Ruth Porat takes charge of the unit, it’s probably a good time to consider carving out some and refocusing on others.
UK biotech sale offers cautionary spin on US pivot 29 Aug 2023 Abcam, a Cambridge-based maker of proteins for research, is selling to Danaher for $5.7 bln. Shifting listing venues from London to New York, as the seller did recently, is in vogue. But given its US buyer has got a good price, it’s a sign that doing so is far from a panacea.
Shady export leaks suggest Russian sanctions work 29 Aug 2023 A suspicious bump in European exports to countries like Kazakhstan may be helping Moscow evade Western bans. The G7 price cap on Putin’s oil is also porous. But these cracks are marginal and help demonstrate the embargoes’ effectiveness – and why they can be tightened.
Capital Calls: 3M settles again 29 Aug 2023 Concise views on global finance: The industrial conglomerate has followed a $12.5 bln agreement over long-lasting chemicals known as PFAS with a $6 bln deal to resolve one of the largest mass torts in U.S. history. A portion of it, however, comes in stock.
UBS inherits tricky wealth legacy in Asia 29 Aug 2023 By gobbling up Credit Suisse, Sergio Ermotti is expanding his bank’s clout in serving the Asian super-rich. Yet exposures to risk-taking entrepreneurial clients used to big leverage pose a challenge. Regaining the wealth ground lost by its Swiss rival will also not come cheap.
Instacart’s mixed bag has valuation opportunities 28 Aug 2023 The food delivery firm is worth far less than its high point in 2021. The cost to get new customers is rising, too. But a push to sell ads, a sensible business, could help bring its valuation close to $17 bln. As long as Instacart is reasonable, it can get its listing, finally.
Capital Calls: Pharma’s ills 28 Aug 2023 Concise views on global finance: The Biden Administration will announce 10 drugs that face Medicare price negotiations on Tuesday. The hits to individual firms will be manageable, but new announcements every year means over a $250 billion blow to the industry.
India is warming up to a cooling China 28 Aug 2023 Narendra Modi’s meeting with Xi Jinping in South Africa signals some thawing of financial ties hamstrung since 2020 by border tensions. Investments from the People’s Republic into its neighbour shrivelled thanks to a screening policy. That now looks ripe for fine-tuning.
Fortescue’s biggest problem sits at the top 28 Aug 2023 The $41 bln Australian iron ore miner is parting ways with CEO Fiona Hick after six months. Hers is the latest in a slew of senior departures that reflect poorly on founder and chair Andrew Forrest. Shareholders can accept he’s becoming a liability, push for his removal, or sell.
US retailers lace up for battle on two fronts 25 Aug 2023 Shares in retailers like Foot Locker and Macy's have tumbled this week after unveiling dim outlooks. Price-conscious consumers are part of the problem, but others, like Dick’s Sporting Goods, are also citing theft. Both are big issues, and neither looks to be improving.
Tupperware preserves lessons for Mark Zuckerberg 25 Aug 2023 The iconic food-storage company narrowly avoided collapse after becoming a meme stock. Ironically, viral buzz, often from stay-at-home moms, has been its secret sauce, just as it is for the Facebook founder’s $780 bln empire. Fickle influencers also can spoil the party.
Rolex’s deal is ticking time bomb for retailers 25 Aug 2023 Shares of Watches of Switzerland slumped 28% after the timepiece-maker bought retail chain Bucherer. The fear is that the luxury group wants to sell directly to consumers. Building a store network won’t be quick but WoS’s business model, and its independence, are under threat.
UK leads Europe… in lack of boss pay restraint 25 Aug 2023 British CEOs at top listed groups got a 16% pay hike last year. Yet bosses’ salaries stagnated in France and fell 8% in Germany. Different growth paces partly explain the gap. But UK workers will struggle to take seriously policymakers’ calls for wage restraint to curb inflation.
Capital Calls: Better.com SPAC 25 Aug 2023 Concise views on global finance: From presidential hopefuls to a new blank-check acquisition, this week was a reminder that the speculative SPAC movement will be hard to kill.
Indian interlopers can disrupt global mining M&A 25 Aug 2023 Sajjan Jindal’s JSW Steel can afford Teck’s coal unit. A full or part bid rivalling Glencore’s $8 bln offer would secure key raw materials and reduce the risk of geopolitical supply shocks. It’s a strong motive for buyers in the fastest growing market for the alloy to do deals.
Roark scores sandwich deal better than $5 footlong 24 Aug 2023 Family-owned Subway is settling for a $10 bln price in its sale to the buyout firm. It values the chain at a lower multiple than peers and other deals, including Roark’s Dunkin’ purchase. With IPO markets opening and terms protecting buyers, there’s plenty to nibble on.