Breakingviews predicts a frothy, frustrated year 5 Jan 2018 Money is cheap, the global economy is motoring, and tech is reshaping the world. Populism is still driving discord and uncertainty, but markets are ebullient. From elections to electric cars, we offer a series of insights into what 2018 has in store for companies and economies.
Fortress gives Apollo tough subprime bar to hurdle 4 Jan 2018 At $1.4 bln, Leon Black’s outfit is buying a stake in consumer lender OneMain at half its value two years ago. Yet the SoftBank-owned investment shop still bags more than a 10-fold return from the sale thanks to buying at the bottom. Apollo will have to be content with much less.
Elon Musk plays chicken with his own investors 4 Jan 2018 Tesla is missing output targets for its mass-market Model 3 yet again. Repeated delays risk denting the electric-vehicle brand and guzzling cash faster than expected. The combination could test shareholders’ loyalty just when Musk needs more capital for trucks and other projects.
Brookfield bets on nuclear plants aging gracefully 4 Jan 2018 Cost overruns building expensive, controversial nuclear plants got Westinghouse into trouble. Servicing, fueling and decommissioning them, however, is a more predictable business. That makes the $4.6 bln Brookfield is paying for the bankrupt Toshiba unit look realistic.
Viewsroom: Debt markets set for wild ride 4 Jan 2018 More government borrowing and less central bank buying will force bondholders to fend for themselves, Breakingviews predicts. Plus, passive funds will force out a CEO, electric vehicles give gasoline cars a run for their money and soccer clubs’ spending splurge will intensify.
Canada will export its pension model to U.S. 4 Jan 2018 Canada’s retirement funds are well funded and governed, run most of their money in-house, shun rosy assumptions and post good returns. As the need to lift returns increases, expect struggling U.S. public pensions to adopt at least some of their northern neighbors’ approach.
Debt markets will call time on equity rally 4 Jan 2018 U.S. stocks are rallying in tandem with bond yields. In the past 30 years, that has never happened for more than four consecutive quarters. If the pattern holds, one or the other will slide within six months. It’s more likely to be equities.
Intel flaws hint at tech “too big to fail” risk 4 Jan 2018 Researchers revealed bugs in the firm’s processors, as well as those of AMD and ARM, potentially making most computing devices vulnerable to hacks. Chipmakers need massive scale to justify huge investments, but a concentrated market means problems can become systemic.
Verizon will be one of 2018’s few mega-dealmakers 4 Jan 2018 As the ground shakes more strongly under the media and telecom industries, the U.S. wireless titan has only reacted tentatively. Owning Yahoo hardly qualifies as pivotal. Buying Dish, however, could make a difference. Big mergers are on the wane, but Verizon will buck the trend.
Oil bulls look to Trump rather than Iran protests 4 Jan 2018 A tightening global balance of supply and demand for crude means geopolitical shocks could push up prices. Anti-government protests in Iran seem unlikely to disrupt production. A looming U.S. decision on whether to revisit sanctions could have a bigger impact.
Clothing retailers will struggle to resize 3 Jan 2018 E-commerce isn’t the only thing plaguing outfits like Macy’s. U.S. apparel inventories have risen sharply since the financial crisis while prices and sales have fallen. Ripping the pattern requires slimming down and cutting back on discounts, but deal-seeking consumers may balk.
Voice-tech shouting match could end with a whisper 3 Jan 2018 The market for voice-controlled assistants and smart speakers is getting more competitive as Apple and others prepare to roll out gadgets or cut prices on those already available. Each is chasing a different kind of promised land. The reality may disappoint.
M&A frenzy sets scene for epic tug-of-war 3 Jan 2018 The $3.6 trln of mergers announced in 2017, including huge deals from Disney and Broadcom, sets up some chunky targets for cost cuts. That means job losses, even if buyers say not. Yet given the political climate, shareholders can’t count on the extra profit being theirs to keep.
Dominion finds value in Scana’s nuclear meltdown 3 Jan 2018 The Richmond-based energy outfit is acquiring the South Carolina utility in a $7.9 bln stock swap. Cleaning up the financial waste of Scana’s abandoned atomic plant will stretch Dominion’s debt, but gaining customers hungry for its natural gas should compensate.
Tech salad will come with a side of SLAW in 2018 3 Jan 2018 Spotify, Lyft, Airbnb and WeWork are all potentially going public in the coming year. None of them may ever match the scale of a FAANG or BAT. But each is disruptive in its own way, and offers investors a unique play on the future of cities, mobility, work and play. Bon appetit!
Hadas: Albanian mania is cautionary crypto tale 28 Dec 2017 Back in 1996, the Balkan state went wild for investment funds offering 30 percent monthly returns. The final cost was 2,000 lives and five years of lost GDP growth. Bitcoin’s 24 percent monthly gains in 2017 show similar foolishness, but a quick collapse could limit the harm.
Ant’s U.S. march may require China-like steps 3 Jan 2018 Jack Ma's payments business will have to rethink its global strategy after its MoneyGram deal was vetoed. Even an alliance is at risk if rival Euronet bids anew. Instead, just as U.S. companies have bought small stakes in China, Ant could do the same with Western Union or PayPal.
Ant’s MoneyGram fail becomes America First symbol 2 Jan 2018 Jack Ma’s financial offshoot has scrapped its $1.2 bln purchase of the U.S. cash-transfer company. The Alibaba boss made nice with Donald Trump early on, but his pledge to spark 1 mln American jobs wasn’t enough to get the deal past a new, and bipartisan, prickliness with China.
Deals a better bet for drug giants than R&D 2 Jan 2018 Last year, U.S. regulators approved the most new therapies since 1996. Yet the return on research outlays for big firms, barely topping 3 pct according to Deloitte, is inadequate and falling. More focused, smaller firms are winning scientifically – and their owners financially.
Predictions 2018 2 Jan 2018 From elections to electric cars, we offer a series of insights into what 2018 has in store for companies and economies. Read our predictions online or download the book