United States of America

Boeing needs MAX insurance more than a dividend

22 January 2020

The $175 bln aircraft giant’s new CEO, David Calhoun, says he won’t cut its $4.6 bln a year dividend. Yet Boeing will burn cash as long as the 737 MAX remains grounded. Borrowing more can paper over problems, but cutting the payout would be prudent in case of further delays.

GM’s investors school Tesla’s on self-driving hype

22 January 2020

Shares in Mary Barra’s $50 bln carmaker barely budged after it unveiled its autonomous vehicle, yet the potential of similar technology helped Elon Musk’s outfit to top $100 bln in market value. Considering true self-driving remains a long way off, GM’s owners are more realistic.

Billionaires’ cash wins over critics in U.S. race

22 January 2020

Mike Bloomberg and Tom Steyer boosted their presidential poll ratings after doling out a total of $380 mln for political ads. That’s more than twice the outlay of all other contenders combined. But Bernie Sanders’ small-donor approach may well prove more potent in the end.

Xerox’s HP bid walks, quacks like Carl Icahn

22 January 2020

The printer maker may try to oust most of HP’s directors to win support for its $33 bln merger proposal. HP’s intransigence isn’t constructive, but its board is stronger. A proxy fight could leave Xerox activist Icahn in control, with only a small share of the company.

Banks feel the heat of global warming in Davos

22 January 2020

Climate change is the hot topic at this year’s Swiss mountain gathering and financial institutions are in the spotlight. Large investors like BlackRock can force some changes. But regulatory pressure on lenders to manage the risks of a warmer planet may prove more effective.

How Jamie Dimon can grab Larry Fink’s green halo

21 January 2020

Now that the BlackRock boss has got serious about climate change, the focus is on his JPMorgan peer. As CEO of the biggest U.S. bank, Dimon’s sway over corporate debt gives him more power than any equity activist. Deploying it would turn his bank from laggard to leader.

Netflix investors risk ruing streaming-stock binge

21 January 2020

Reed Hastings’ firm has little if any need for TV ratings, box-office sales or ads, unlike rivals. Shareholders focus on subscriber and revenue growth, fueling its stock-market success. But a slowdown in new users and an excessive, if declining, cash burn put that under threat.

Democratizing U.S. data access has drawbacks

21 January 2020

Plans to change how journalists handle some releases, including the crucial jobs report, aim to ensure traders and the public get them at the same time. But markets may become jumpier. And those with big bucks will still contrive to get the data a few microseconds sooner.

Donald Trump wins most insufferable title at Davos

21 January 2020

It’s a high bar, but the U.S. president is in an acutely braggadocious mood. He signed a China trade deal, stocks are at record highs and Iran’s top general is dead. Impeachment aside, the global elite will be even more annoyed by him because he has real things to brag about.

Inequality extends to hedge fund elite

20 January 2020

The top 20 managers like Ray Dalio and George Soros have made over $550 bln for investors over time. In part that’s longevity, but the group also raked in a third of industry gains in 2019 on under a fifth of assets. Most hedgies are still struggling to outrun cheap index funds.

Microsoft puts climate grandstanders in the shade

17 January 2020

The $1.3 trln software firm’s plan to remove all carbon it has ever produced raises the bar for rivals seeking to appear green. Funding tech to remove atmospheric CO2 adds a multiplier effect. The only way Microsoft could improve on this would be to ditch its dirtier customers.

Huawei can afford to hang up on America

17 January 2020

The Chinese telecoms firm is fighting to keep its rural-carrier customers amid D.C. pressure. It’s a losing battle and makes little sense given the tiny contribution to Huawei’s top line. Quitting the U.S. would get rid of a headache and leave more energy for bigger conflicts.

Exxon is climate activism’s great white whale

16 January 2020

The $292 bln oil producer is too big to push around, even though it’s at odds with green priorities of investors like BlackRock. Boss Darren Woods almost never shows up for earnings calls. Still, shareholders could land a blow by aiming anew at Woods’ dual chair-and-CEO role.

Trump’s trade war chases its own tail

16 January 2020

The U.S. president is hailing his agreement with China as a boost to farmers and manufacturing workers. It is, but only because they were the losers from trade conflict. Obama showed that following the rules doesn’t work; Trump has only shown that ripping them up doesn’t either.

Holding: EU may spoil FBI bid to hack Apple phones

16 January 2020

A deal allowing U.S. firms like Facebook to move data from Europe is already fragile. It might break if the iPhone maker bows to criticism from Donald Trump and others and unlocks a mass shooter’s devices. Law enforcement matters, but privacy shouldn’t be so easily breached.

Morgan Stanley puts decent cap on forgettable year

16 January 2020

The Wall Street firm’s 2019 revenue hit $41 bln, partly thanks to lumpy private equity gains. Overall, strong wealth management was offset by relatively weak trading. More worryingly for 2020, costs outpaced revenue. At least James Gorman isn’t the only CEO with room to improve.

China’s reform camp high-fives Wall Street

16 January 2020

The most substantive part of Beijing’s trade deal is the commitment to open its financial sector. Combined with other liberalisations, local institutions face real U.S. competition. That should reduce the credit misallocation that irks trade partners and warps economic growth.

China trade deal gives Trump a campaign win

15 January 2020

Beijing pledged to buy more U.S. goods and enforce intellectual-property rights. It has fallen short on similar promises in the past, and anyway the conflict was partly whipped up by the U.S. president. Still, he can tout the new “phase one” agreement as he seeks re-election.

Climate push matters to BlackRock’s earnings, too

15 January 2020

Investors want sustainability built into portfolios so Larry Fink, CEO of the $7.4 trln asset manager, sees an opportunity. That makes efforts to prod the corporate world more sustainable, and adds market-wide pressure to one-off campaigns by firms like Jeff Ubben’s ValueAct.

Wannabe bank Goldman should take its own advice

15 January 2020

Its vaunted consumer bank still makes less than $1 bln, and building it is a grind. If it were a client, Goldman would be preparing a pitchbook of acquisition targets by now. America has plenty of bite-sized banks, and the political environment may be as friendly as it gets.