Credit Suisse Mozambique mess is shameful at best 4 Jan 2019 Three of the Swiss lender’s former bankers have been arrested on charges of facilitating kickbacks on $2 bln of loans for the African country. Credit Suisse blames deceptive employees and says it has tightened controls. Even if the fallout ends there, it’s highly embarrassing.
Buyout lenders will enter a new world of pain 4 Jan 2019 Rising bond yields and volatile markets mean the leveraged finance boom is over. The lenders which financed it have taken more risk than ever, and given away the ability to control struggling companies. When deals do go bad, they will get back much less than they are used to.
U.S. will find a way to make Danske Bank suffer 4 Jan 2019 Congress has made banks’ anti-money laundering a key concern. That bodes ill for Danske Bank, embroiled in a 200 billion euro suspicious funds scandal. The Danish lender is hardly a household name in the U.S. That gives politicians who wish to make an example of it free reign.
iPhones are unreliable Chinese shopping indicators 4 Jan 2019 Apple’s warning about China iPhone sales has freaked out markets. Yet foreign luxury brands – such as thousand dollar smartphones - make shallow indicators of broader trends. Chinese demand is indeed cooling, but unevenly. Investors need not panic just yet.
Airbnb will succeed where U.S. peers failed: China 4 Jan 2019 Unlike Google or Facebook, the home-sharing app’s model dovetails with Beijing’s view that property be used for living, not speculating; and its rating system helps with social credit scoring. Domestic rivalry will be fierce, but Airbnb’s global network gives it one advantage.
Morgan Stanley’s virtual mega-bank model pays off 3 Jan 2019 The Wall Street firm is funding a whopping $33.5 bln loan for Bristol-Myers’ purchase of Celgene through its decade-old alliance with Japan’s MUFG. Acting like one bank gives Morgan Stanley bragging rights and a chance to play alongside rivals with much bigger balance sheets.
Airlines’ nosedive hints at wider turbulence ahead 3 Jan 2019 Delta sent sector stocks plunging by warning of slightly slower revenue growth even as it affirmed earnings guidance. With high fixed costs, the industry is vulnerable to any slowdown. Investors’ outsized reaction suggests fear about the economy has the upper hand over greed.
Viewsroom: Who will be 2019’s free-trade champion? 3 Jan 2019 Big economies are throwing up tariffs, but East Africa’s common market could swell to 250 mln people if Ethiopia joins the club. Breakingviews columnists also predict this year will bring the end of easy money for Chinese startups, and a challenge to Tesla from Lyft and Uber.
Brazil’s new president starts with the easy part 3 Jan 2019 Ex-army captain Jair Bolsonaro has fired a salvo of temporary decrees, favoring farmers over indigenous people and crimping NGOs. He may do the same to ease gun controls and start vital pension reform. But conquering Congress, which is needed for lasting change, will prove harder.
Cannabis will take China tech’s path to propriety 3 Jan 2019 A subversive industry feared by the establishment, with investors reliant on legal loopholes: American pot companies are starting out much like Chinese tech giants did. In the same fashion, as this shadowy industry creates jobs and wealth, appetite for reining it in will wane.
Lyft, Uber IPOs will drain Tesla’s scarcity value 3 Jan 2019 Electric vehicles check boxes for sustainability-minded investors. But the ride-hailing firms’ ubiquity and self-driving ambitions will give U.S. public shareholders new options beyond Elon Musk’s carmaker. Lyft’s growth and ESG credentials could make it the most desirable ride.
Bristol-Myers takes $74 bln bet against the market 3 Jan 2019 There are good reasons to buy rival oncology giant Celgene. But cost cuts don’t cover the 54 pct premium and the target’s owners get the financial benefit. Bristol is hoping for luck in the courts and multiple regulatory approvals that Celgene’s shareholders were skeptical of.
Apple suppliers have few tools to defy gravity 3 Jan 2019 The iPhone maker’s profit warning has hurt shares in European chipmakers like AMS. Apple can appease investors with buybacks or extra software revenue. But suppliers are in a bind. Any attempt to diversify means they will have plough cash into new ventures that may easily flop.
FX flash crash has ominous overtones 3 Jan 2019 A range of currencies slumped against the yen. There have been other short sharp shocks in the past in a market where daily turnover tops $5 trillion. But this time the gyrations were more widespread. Changes to the way banks behave mean sudden lurches will be more frequent.
Starbucks will start brewing a venti Chinese deal 3 Jan 2019 The $80 bln coffee chain is targeting big mainland expansion, with some 6,000 stores by 2022. Such bold plans will run up against stiffer competition and trade-war-related pressure on U.S. companies. Starbucks would be smart to find local backers the way McDonald’s and Yum did.
Apple sales warning is a Chinese joint venture 2 Jan 2019 Investors may not always believe China’s official data, but Apple’s warning that iPhone sales rapidly decelerated in the country sends an alarming message about the main engine of global growth. Still, in some ways the U.S. tech giant may be at the sharp end of the slowdown.
Investors’ J.C. Penney discount is familiar spiral 2 Jan 2019 The outfitter’s stock, like Sears’, has fallen below $1. With debt mounting and sales dwindling, its decline follows a familiar pattern. From Bill Ackman to Eddie Lampert to KKR, ailing retailers have drained many a deep pocket. What looks like a bargain is rarely the case.
Firearms will test the mettle of woke financiers 2 Jan 2019 Wall Street dealt gunmakers a blow in 2018 for their part in facilitating gun violence. Yet the wounds were glancing. Investors like BlackRock aren’t especially suited to social activism. Banks, though, have a bigger bully pulpit, and 2019 will bring more reasons to use it.
A century on, bet on a new Black Sox-like scandal 2 Jan 2019 Legalized U.S. sports wagering is set to soar after a court cleared the way. Bringing some of the $150 bln gambling market out of the shadows has merit, but also raises the stakes – and temptations. Odds are improving for an incident like the baseball-fixing disgrace of 1919.
Three key indicators to watch like a hawk in 2019 2 Jan 2019 Want to know whether there’s going to be a U.S. recession, a trade-war flare-up, or corporate implosions? You could obsess over news and social media – or skim a few proxy indicators like the price of soybeans, the Treasury yield curve, and the number of stocks in bear territory.