German budget crisis will haunt economy for years 24 Nov 2023 Berlin will suspend its "debt brake" this year, after a court decision cancelling 60 bln euros of spending. Yet the crisis will leave Germans even warier of much-needed public investment. That will hit long-term growth, and worsen the ailing economy’s short-term woes.
Britain is case study in death-duty dysfunction 24 Nov 2023 UK politicians have been mulling inheritance tax tweaks. Death duties are good policy, but the British version is beset with exemptions that favour wealthy landowners and pensioners. Given the problem may worsen, there’s logic in cherry-picking from better approaches overseas.
Capital Calls: China and iron ore 24 Nov 2023 Concise views on global finance: A warning from Chinese regulators for traders not to hype up prices has done little to dampen the bullish mood. The rally could extend if Beijing unleashes property market reforms.
The future of interest rates is more surprises 24 Nov 2023 The return of inflation surprised central banks which until recently predicted rates would remain “lower for longer.” Economists and investors struggle to agree on what has changed or what will happen next. Those who assume current interest rates are normal may be in for a shock.
Dutch shock points to tremors in Europe’s core 23 Nov 2023 Geert Wilders’ anti-immigrant, anti-EU Freedom Party came first in Netherlands elections. That means long coalition talks leading to an unstable, unpredictable government. His ascent hurts European policymaking and boosts chances of once fringe parties in states like France.
Media buyout would crown Bolloré’s empire-building 23 Nov 2023 The tycoon’s purchase of Hachette owner Lagardère is a smarter bet than his Italian foray. It offers good returns and will keep buyer Vivendi flush with cash. Using the funds to take the 9 bln euro media group private would square Vincent Bolloré’s M&A circle.
OpenAI’s boardroom drama is far from over 23 Nov 2023 Sam Altman will return to the helm of the artificial intelligence firm after a torrid week of resignations. In this Viewsroom podcast, Breakingviews columnists explain how the saga has raised concerns about governance, the future of AI and an alarming cult of the CEO.
Every country needs an Inflation Reduction Act 23 Nov 2023 The US's $370 bln in green subsidies left allies fearing they’d be at a disadvantage. Now they’re realising that adapting the blueprint can unlock private capital, boost economies and speed up the energy transition. Funding remains a challenge, but not an insurmountable one.
OpenAI calls time on alt-governance experiment 22 Nov 2023 Sam Altman’s return as CEO cements the failure of the ChatGPT owner’s attempt at shareholder-second capitalism. The board’s mandate to protect humanity was no match for the will of its biggest backer Microsoft. OpenAI is now more like a regular company – for better or worse.
White House needs to talk turkey about inflation 22 Nov 2023 The Biden Administration has encouraged Americans to “be thankful” for falling prices this year. But cherry-picking some items that have edged down from recent peaks won’t counter the fact that US citizens feel glum about the economy. A bit of empathy might go a long way.
UK’s overdue business-friendly budget has a catch 22 Nov 2023 Premier Rishi Sunak slashed taxes for workers and businesses at an annual cost of 20 bln pounds. It’s a partial antidote to the damage of Brexit, inflation and Britain’s dismal growth. Yet his party’s erratic policies, and poor chances at next year’s poll, will dent its impact.
Adevinta $13 bln bid puts minorities in a corner 22 Nov 2023 Permira and Blackstone are seeking to take the Norwegian classifieds group private. The offer price isn’t overly generous but the chance of activist investors stalling the deal is low. With top shareholders already supporting the bid, minority investors don’t have alternatives.
EU holiday-home rules lead shady bookings to light 22 Nov 2023 Cities looking to rein in short-term rental platforms like Airbnb will get a boost from an EU plan to track bookings data. Patchy reporting has hampered stay limits and tax oversight. Clearer figures will help local authorities to balance the needs of travellers and residents.
Branding’s corporate titans face moment of truth 22 Nov 2023 Sales volumes at consumer goods giants are falling for the first time this century. Branded goods sell well when quality is tangibly higher and price premiums slim. With neither now the case, the valuation of $296 bln Nestlé, and rivals, may shrink in line with its KitKats.
Capital Calls: Carlyle, Panasonic 22 Nov 2023 Concise views on global finance: The US private equity firm is making a decent return selling its stake in McDonald’s China back to the burger chain. The $25 bln Japanese conglomerate is offloading a chunk of its low-margin automotive unit and will consider a listing, too.
Moutai price hike comes with bigger responsibility 22 Nov 2023 The Chinese booze giant has raised the wholesale price of its fiery liquor for the first time since 2018, lifting the spirits of investors in the $310 bln group. But it may have to share the windfall with its home province, which is grappling with a $380 bln debt hangover.
Nvidia’s AI boom outpaces China limits 21 Nov 2023 The $1 trln semiconductor company tripled revenue, despite a crackdown on exports to the giant market. Unlike Apple, which also faces risks in China, there’s no substitute for Nvidia’s chips for fueling AI. Right now, the only limit on growth is how quickly it can meet demand.
Binance mega-fine fits go-big-or-go-home vibe 21 Nov 2023 The cryptocurrency exchange will pay $4.3 bln for violating US laws, and its founder will stand down. It’s more than HSBC and Goldman Sachs paid for big financial transgressions, and racked up in a fraction of the time. Crypto is precocious in its lows as well as its highs.
Choice Hotels takes a vacation from reality 21 Nov 2023 The Comfort Suites operator has taken another stab at its unsolicited and unwelcome $9.8 bln offer for rival Wyndham. The part-shares deal is easy to rebuff in a wobbly market where cash is king. But switching it to cash could leave Choice with hefty debt and unhappy customers.
GM’s driverless ride heads into a ditch 21 Nov 2023 The carmaker’s robo-taxi unit is on pause after an accident; its two co-founders have left. As OpenAI’s drama shows, losing visionary leaders is a big problem. The silver lining: In GM’s case, investors never seemed to take the cash-guzzling Cruise division seriously anyway.
Eli Lilly’s M&A trial prints lose-lose outcome 21 Nov 2023 The pharma giant has offered $1.4 bln for Point Biopharma, but if the target’s latest drug comes good it could be worth much more. No wonder Point investors are sitting on their hands. Had Lilly offered them a share of future profit, it could have saved itself the embarrassment.
Telegraph M&A twist hinges on Gulf leniency 21 Nov 2023 A vehicle backed by Abu Dhabi and a US buyout firm may take control of the newspaper by paying off the debts of its longtime Barclay family owners. Lender Lloyds would win. Yet it all hangs on potentially risky Gulf loans to the Barclays, whose main business is hardly thriving.
How the West can win the green metals race 21 Nov 2023 China dominates the processing of stuff essential to the energy transition. Rich countries can shift the balance if they accept more mining at home. Most of all, Europe needs to be better at recycling, critical materials expert Gavin Harper explains in the Exchange podcast.
EU fiscal pact ignores green elephant in the room 21 Nov 2023 The bloc’s budget goals failed to keep national debts in check. On average, they are now 83% of GDP, well above target. A revamp is a step forward. Yet with the climate challenge set to strain state finances, new rules alone will do little without more jointly funded investments.
Capital Calls: Monte dei Paschi 21 Nov 2023 Concise views on global finance: The Italian Treasury raised 920 mln euros by selling a 25% stake in the bank on the open market. So far, it looks like a better outcome for taxpayers than submitting to the onerous sale conditions offered by UniCredit in 2021.
Geely unit IPO will test geopolitical speed limit 21 Nov 2023 EV maker Zeekr, owned by China’s largest auto group, may raise almost $500 mln by going public in New York. Sales of cars, batteries and research are zooming at home, but plans to list and expand abroad look ambitious unless Beijing’s tensions with Washington and Brussels abate.
“Ex-Japan” title may take a final bow with Goldman 21 Nov 2023 The retirement of Japan President Masanori Mochida gives the US firm the option to follow its rivals and have his successor report into the Asia CEO. After a long lull, Japan’s markets are hot. But shape-shifting foreign banks may opt to bring the country into the regional fold.
Microsoft will struggle to clean up ugly AI mess 20 Nov 2023 The software giant hired ousted OpenAI boss Sam Altman to run a new in-house artificial intelligence hub. It creates fresh confusion about strategy and brainpower, as CEO Satya Nadella scrambles to preserve his company’s $13 bln investment. There’s probably more upheaval to come.
Julius Baer hit undermines private-banking premium 20 Nov 2023 The pure-play Swiss wealth manager fell 12% after a profit warning, prompted partly by sharp losses against its credit portfolio. Investors didn’t sign up for that kind of risk. The private bank’s top-tier valuation may have to shrink.
Bayer drug fail is symptom of growing breakup pain 20 Nov 2023 Shares in the 33 bln euro group fell 20% after it aborted a late-stage trial. Given drugs regularly fail, that’s excessive. Instead, investors’ main concern could be that a grim pharma outlook and litigation risk in Bayer's seeds unit mean a planned split may release less value.