United States of America

Robinhood at $0 would start to look cheap

27 Jun 2022

At its recent stock price lows, Robinhood is a pile of cash with a digital brokerage thrown in virtually for free. Users might drift, and regulators may blunt Robinhood’s arrows, but assuming the most valuable customers stick around, it makes sense for acquirers to be circling.

CEOs will look past abortion bans, too

27 Jun 2022

Individual U.S. states will now decide how to regulate access to abortion; some have already outlawed it. That makes navigating the system’s impact on employees more complicated for companies. They’ve done this before – in emerging markets, from China to Saudi Arabia.

Airlines M&A plays regulator roulette

27 Jun 2022

Budget carrier Frontier raised its offer for peer Spirit to $2.6 bln. That’s just enough to compete with rival JetBlue’s bid. Now shareholders have to weigh merger-skeptical regulators. It’s not just a calculation of who can win, but what the buyer will give up for it to happen.

American shipping law doesn’t sail

27 Jun 2022

A U.S. act passed in 1920 requires ships traveling between U.S. ports to be American made and operated. But that has doubled the cost of transporting gas from Houston to New York, among other things. Eliminating the old rule would ease pressures on shortages – and rising prices.

Job losses add turbulence to Fed’s softish landing

24 Jun 2022

The central bank reckons taming inflation means doubling interest rates and unemployment rising to 4.1% in 2024. Yet it expects GDP to keep growing despite the loss of about 1 mln jobs. Even if the Fed is right, the risk is that cooling consumer confidence squashes growth.

Zendesk’s sad exit shows tech bubble madness

24 Jun 2022

The customer service software firm agreed to a $10 bln offer – 40% lower than the one it nixed in February. Yet the private equity buyers aren’t getting an obvious bargain either, at over 50 times estimated EBITDA. Readjusting to reality can take a while.

Peter Thiel-tied fund fights China fire with fire

24 Jun 2022

A nonprofit fund backed by Silicon Valley bigwigs wants to invest in tech that serves national interests. It raises conflicts, security issues, and takes a page from Beijing's playbook. But given China’s market meddling, it’s not a horrible solution.

Lithium landgrab sparks new electric-car risk

24 Jun 2022

Tesla, Stellantis and others want to lock in long-term supplies of the battery component. Elon Musk might even try mining it. Such steps are enticing after the metal’s price rose tenfold in two years. But deals struck under duress can be a shock to the system down the road.

Buffett puffs heavily on oil cigar butts

23 Jun 2022

Berkshire keeps upping its energy bets, now owning a quarter of $52 bln shale driller Occidental, counting warrants. That’s a change from his past commodity producer skepticism, reinforced by oily slips. Waning prospects, and lower investment, make it more of a Buffett business.

Too bad Netflix isn’t on the block

23 Jun 2022

Boss Ted Sarandos is exploring an advertising partnership to supplement the $80 bln firm’s subscription service. Yet media alliances – Netflix, Hulu, others – have turned ugly. Netflix’s valuation has fallen steeply, and it needs deep cash coffers. A better idea would be a sale.

Private equity’s short-termism has a rising cost

23 Jun 2022

Volatile markets mean firms like Blackstone and KKR will increasingly have to sell assets to each other and themselves before funds expire. Such deals layer on extra costs and can have iffy governance. Investment vehicles with longer lives is one solution for the $3 trln sector.

Altria begins to look like tobacco’s bad bank

22 Jun 2022

The Marlboro-maker’s value fell by around $7 billion over a U.S. crackdown on nicotine and potential ban for e-cigarette partner Juul. Altria is starting to look like the riskiest parts of the tobacco industry, rolled up into a single bundle.

Gas tax holiday accomplishes little, costs a lot

22 Jun 2022

Joe Biden’s call to suspend U.S. federal gas taxes will shave some cents off costs at the pump. But it's regressive, works against long-term goals to reduce fossil fuel use and could even stoke inflation. That’s a high price to pay for a pre-election popularity bump.

Sam Bankman-Fried bailouts flag crypto’s fragility

22 Jun 2022

The wunderkind’s businesses coughed up $750 mln to help ailing brokers Voyager Digital and BlockFi. The rescues suggest the sector cannot easily withstand the failure of just a few players. And winners like Bankman-Fried may not save the $900 bln industry if prices tank again.

Veteran Nelson Peltz makes rookie mistake

21 Jun 2022

The activist investor is facing a shareholder revolt at his London-listed fund. He joins other high-profile peers like Dan Loeb to get embroiled in messy spats. Whatever the appeal of raising long-term capital in public markets, sometimes it’s easier to stick to your knitting.

CEO’s exit puts $30 bln cancer specialist in play

21 Jun 2022

Founder Clay Siegall quit U.S. oncology biotech Seagen after a domestic-abuse charge. Merck has already spied an opening into a hot area of cancer treatment. Rivals Roche, Pfizer and Novartis may also want to get involved. But Seagen’s size will create regulatory problems.

China slowdown prompts healthy luxury rethink

21 Jun 2022

Brands like Gucci and Louis Vuitton have made a killing in China's $63 bln market. Yet Beijing's Covid-19 policies and rising nationalism among young shoppers show the perils of being overdependent on one consumer group. A pivot into the United States and the Gulf offers a hedge.

Western bankers’ long wait for Gulf gold pays off

20 Jun 2022

Not long ago, U.S. and European lenders’ Middle East jobs meant low-paid work and no play. Now, oil-funded deal flow in Riyadh and Dubai is robust even as it falls elsewhere. That’s a boon for the likes of JPMorgan and Citi, who stuck it out and are now boosting their teams.

Bankman-Fried derivatives plan too clever by half

17 Jun 2022

Crypto wunderkind Sam Bankman-Fried wants to disrupt how derivatives are cleared. The plan relies on tech rather than human discretion to manage risk. While it’s innovative and could bring in retail traders, large customers aren’t excited. It’s a solution in search of a problem.

Biden meddling ups ante on protectionism

17 Jun 2022

Tariffs, including ones imposed by predecessor Donald Trump, have now created big U.S. bottlenecks. To fix the problem, including to boost production of solar panels, Biden is invoking a 1950s law meant for national emergencies. Two government overreaches don’t make a right.