Airbnb dodges inflationary roach motel 2 Aug 2022 The cost of hosting tourists – and being one – is rising. But not for Airbnb, which unlike Marriott and Hilton has managed to ensure price hikes remain other people’s problems. Meanwhile, travelers are willing to pay more, which cushions both the hosts and the company itself.
Walmart inflation alarm, Unilever’s pricey remedy 28 Jul 2022 America’s largest private employer’s market value fell $35 bln amid a profit warning. In this Viewsroom podcast, Breakingviews columnists discuss how customers shifting to low-margin food is a harbinger for rivals. Also, the Dove maker is pushing quality versus quantity sales.
UK car insurer pile-up may lure M&A rubberneckers 28 Jul 2022 Direct Line and rivals’ shares have crashed due to inflation and the soaring cost of claims. Yet waning competition may boost future returns. It’s a good time for a potential acquirer, say France’s Cóvea, to step in, especially with private equity on the sidelines.
Powell can afford to lose macro popularity contest 27 Jul 2022 The Fed’s biggest rate hikes in 41 years could push the U.S. into a recession. But unlike some previous central bank chiefs, Powell’s ample political capital gives him cover to be single-minded in fighting inflation. Fear of a future downturn is unlikely to hold him back.
McDonald’s serves nuggets of inflationary insight 26 Jul 2022 Same-store sales rose nearly 10% in the second quarter. Rising menu prices have also yet to deter customers, suggesting the Golden Arches has still managed to hang on to recession-proof qualities. If customers keep trading down, however, that balance will be harder to strike.
Unilever’s price-hike gamble pays off, for now 26 Jul 2022 The $120 bln maker of Knorr stock cubes lifted its guidance for sales growth after beating analyst forecasts. CEO Alan Jope is getting ahead on price rises. But with 2022 profitability at the bottom of his guide range and volumes falling, he can’t afford further inflation shocks.
Walmart’s pain will be problem shared widely 26 Jul 2022 The giant grocer lost about 10%, or $35 bln, of its market value after saying it would need to slash prices as customers rethink how to spend. The decline suggests more than just a fallow year. If the mighty retailer didn’t see this coming, there’s scant hope for smaller peers.
ECB plays with fire while unspooling its hose 21 Jul 2022 President Christine Lagarde hiked interest rates by 0.5%, double the amount she flagged last month, and unveiled a vague tool to control euro zone bond yields. If monetary tightening hastens an economic slowdown, the central bank will need its new powers sooner rather than later.
Scorching U.S. inflation obscures patches of shade 13 Jul 2022 The 9.1% surge in consumer prices in June is bad, but backwards-looking. Oil and gas prices have come down in recent weeks, as have some agricultural products like wheat. A chips shortage is also easing. The worry is that as prices fall in some areas, demand could rise further.
Spain’s ropey bank tax will have European copycats 13 Jul 2022 The country’s left-wing government is raiding banks for 1.5 bln euros a year. Taxing lenders based on their future benefits from rising interest rates represents shaky logic. But with inflation soaring across Europe, such populist measures will become more enticing.
What an honest British prime minister would say 11 Jul 2022 Conservative politicians who helped precipitate Boris Johnson’s downfall are now vying to replace him. Several have spoken about the need for honesty, integrity and realism. If they mean what they say, they should start with these five points, says Hugo Dixon.
Raging crisis puts Sri Lanka’s creditors on spot 11 Jul 2022 Protesters are forcing out the president after petrol pumps ran dry. It removes one obstacle to an IMF rescue. Now bondholders need to swallow big losses on Colombo’s $50 bln of foreign debt. An ugly global economy means citizens and lenders face a long, hard road to recovery.
Review: A timely warning of central bank folly 8 Jul 2022 Were 15 years of ultra-low interest rates a miracle cure for the world economy or an epochal mistake? Edward Chancellor’s “The Price of Time” makes a strong case for the latter view. As policymakers hike rates to combat resurgent inflation, fixing the error involves large risks.
Grocers’ plot to replace suppliers may backfire 8 Jul 2022 Europe’s supermarkets are clashing with food makers over price hikes. Replacing goods like Heinz baked beans, as Britain’s Tesco has done, with cheaper in-house brands helps keep margins intact. The painful flip-side is a top-line hit from selling more cut-price substitutes.
Inflation finally kills shaky U.S. trade-war logic 5 Jul 2022 President Biden is close to axing some of the levies on $350 bln in Chinese imports, partly driven by a belief they hurt consumers. A better reason would be that they never succeeded in changing China’s ways in the first place. That ought to inform fresh tariff discussions too.
Kraft has secret sauce in UK grocer food fight 4 Jul 2022 Supermarkets like Tesco are dropping the U.S. food giant’s wares after “unjustifiable” price hikes. That earns brownie points from shoppers and shunts politicians’ gaze to Kraft’s beefier margins. But less choice on the shelves may push business to cut-price rivals like Aldi.
Tight bosses are counting on a looser jobs market 1 Jul 2022 BT, British Airways and Sainsbury’s are tussling with workers over pay. Given the Bank of England thinks tight labour markets should slacken, bosses have scope to hang tough. But if the BoE is wrong, which is possible, they will have lost valuable worker goodwill for nothing.
It’s time to rediscover the importance of interest 30 Jun 2022 The cost of money is not only key to controlling prices. It also affects the value of financial assets, the allocation of capital, and the appetite for debt. Ultralow interest rates distorted these decisions, Edward Chancellor says. Little wonder financial anxiety is rising.
Capital Calls: Russian default, Inflation and debt 27 Jun 2022 Concise views on global finance: Moscow defaulted on its foreign debt for the first time in over 100 years, leaving bondholders in limbo; the Bank for International Settlements wants rates raised “quickly and decisively”, but is also worried about higher borrowing costs.
Investors need to learn to ride inflation cycle 23 Jun 2022 Bonds and shares are tumbling as prices soar, just as in the 1970s. The experience of that decade suggests value stocks, commodities and safe-haven currencies offer the best protection, says Edward Chancellor. But wild swings in inflation can still catch markets off-guard.