Sainsbury’s non-food foray smacks of desperation 5 Jan 2016 The UK supermarket has disclosed an approach for underperforming Home Retail Group. At around 1.1 bln stg it might prove a bargain acquisition, and Sainsbury’s grocery business faces acute price pressure. But homewares and electricals could just add trolley-loads of risk.
Sweden ignores Swiss lesson on FX intervention 5 Jan 2016 The Swedish central bank is talking about intervening to curb the inflation-dampening strength of the crown. Its own history and the experience of Switzerland, which spectacularly abandoned attempts to cap its currency almost exactly a year ago, augur failure.
VW’s U.S. lawsuit shows reboot is only half done 5 Jan 2016 A strongly worded government complaint has undermined Volkswagen’s progress in tackling its emissions scandal. U.S. laws are tougher than in Europe, and the German carmaker’s lobbying clout there is smaller. VW needs drastic steps to win goodwill.
Next’s best shopping days could be behind it 5 Jan 2016 Shares of Next have almost doubled since 2013 as the UK clothes shop has grown sales and refused to join the price-cutting game. Pre-Christmas sales rose just 0.4 pct, partly because of the warm winter. Yet things are set to get tougher for Next even if the weather returns to normal.
French telcos’ next call: sweet-talking consumers 5 Jan 2016 Orange and Bouygues are eyeing a tie-up that would give the French telecoms operators half the market. The state’s 23 pct stake in Orange makes the deal more likely to succeed, unless the EU intervenes. The key may be convincing customers of the long-term benefits.
Rail feud could set Italy on good governance track 4 Jan 2016 Minority shareholders in STS think Hitachi is offering them less than it effectively paid for a 40 pct stake from Finmeccanica. A decision from regulator Consob could shed light. A vote in favour of small investors would suggest Italian governance is changing for the better.
Saudi-Iran standoff magnifies upside risk for oil 4 Jan 2016 The kingdom has cut off diplomatic relations with Iran, suggesting it will continue a strategy of pursuing low oil prices to cripple the weak Iranian economy. An escalation, though, could threaten the one-fifth of world oil supplies that travels through the Strait of Hormuz.
China’s new year market volatility is overdue 4 Jan 2016 Falling shares triggered new “circuit breakers” on their first day of operation. The yuan is at its weakest since April 2011. Growing signs of an economic slowdown are feeding the jitters. But the turmoil is also a delayed reaction to previous flawed efforts to prop up markets.
Dixon: EU enters brave new world of bank bail-ins 4 Jan 2016 Europe has wasted too much taxpayers’ money rescuing failing lenders. So it is right to try to get investors to help foot the bill in future. But the tough new regime carries political risks which could make the rumpus caused by recent bail-ins in Italy and Portugal look minor.
Review: Making Big Data visible and tangible 31 Dec 2015 Projecting selfies onto a screen in real time shows both the value and vulnerability of today’s flood of ones and zeros. A London exhibition explores the good, the bad and the infrastructure of data from inventive angles. It makes a vital unseen world visible – and scary.
Volkswagen top brass will be up for the chop 31 Dec 2015 The German carmaker’s chairman and CEO are both new to their roles. But in 2016, huge emissions-cheating fines and a scathing external report on VW’s governance will shine a spotlight on leaving long-term insiders in charge. Chairman Hans Dieter Poetsch looks particularly exposed.
European populism poised for troubling second wave 31 Dec 2015 Southern Europe’s high debts and unemployment made it ripe for populism, but movements like Podemos have been held in check partly by economic recovery. They may now gather steam in other European countries, feeding on growing anti-immigration and eurosceptic sentiment.
Oil will blow past $80 a barrel in 2016 30 Dec 2015 Low-cost OPEC producers will win the hydrocarbon price war because they can fight harder for longer. For now, OPEC is flooding the market with cheap crude. But it is building power over prices by making rival output uneconomic. The next big move in the oil price will be up.
Portugal finds bad solution for BES good bank 30 Dec 2015 Lisbon has recapitalised lender Novo Banco by moving bonds back to failed Banco Espirito Santo, from which it was carved out. The move clears the way for Novo’s privatisation, but highlights the unpredictability of bank resolutions, and does nothing for Portugal’s investibility.
Giants of central banking will be cut down to size 30 Dec 2015 The limited power of the Draghis and Yellens of the world is evident. They can’t conjure up inflation and the market impact of unorthodox monetary policies has waned. Rate-setters did their bit to support the global economy. It’s time fiscal and wage policies did more work.
Luxury groups could shrink their way to riches 30 Dec 2015 Labels like Prada and LVMH have spent a decade expanding like crazy to meet emerging market demand. Burberry has tripled its store base. It’s time to go the other way. While cutting back will be painful, it could spur higher luxury valuations. Hermes is one that has it right.
Arab sovereign wealth fund exodus just beginning 29 Dec 2015 Oil-dependent Gulf sheikhdoms need money to shore up their budgets. They’ll hold on to trophy assets like stakes in VW or Barclays for as long as possible. But if the price of crude keeps sliding to $20, the region’s rulers might need to liquidate their rainy-day funds by 2020.
Balance sheets will get more unbalanced in 2016 28 Dec 2015 The lesson that too much debt is dangerous has sunk in, again. Amid volatile prices and currencies, dwindling cashflows can quickly make healthy firms turn sick. Miners, Brazil and buyback junkies are among those facing a reckoning. Cash-rich acquirers may have a field day.
London’s bankers should retrain as builders 28 Dec 2015 The City’s banks are sacking thousands of staff. Meanwhile, the construction sector needs 120,000 new pairs of hands to boost UK housing supply to a level that eases house-price inflation. For bankers smarting from accusations of social uselessness, it might make a decent change.
Host Brazil may challenge for 2016 Olympics glory 24 Dec 2015 The mighty U.S. will be hard to dislodge from the top spot. But a prediction based on population, GDP, the cost of Nikes and past willingness to dope suggests Brazil could break into the top five by medals. Like Team GB in 2012, that will require capitalising on home advantage.