Grocers’ crisis defences look shaky 13 Sep 2022 Morrisons lost its top-four UK position to Aldi, while Ocado’s online sales are under pressure. Competition from discounters means supermarkets have less scope to raise prices and protect margins than in past slowdowns. The bleak outlook has yet to reach stock valuations.
Capital Calls: T-Mobile US transmits clear signal 9 Sep 2022 Concise views on global finance: The telecom carrier is planning a $14 bln buyback program as it beats rivals in shareholder return.
Europe’s sturdy banks risk becoming punch bags 8 Sep 2022 Lenders like Lloyds and Deutsche are set for a rate-hike windfall even as the region faces recession. As in the pandemic, governments may prod them to offer borrowers loan repayment holidays and cheap credit to pay their bills. But this time, banks may not get as many sweeteners.
Capital Calls: ECB rate hike 8 Sep 2022 Concise views on global finance: Europe’s central bank risks recession to combat inflation.
Trussonomics may freak out the markets 5 Sep 2022 If the UK’s new prime minister was only planning big energy subsidies, investors might not worry too much. But Liz Truss is also planning tax cuts – and may pick fights with both the Bank of England and European Union. If so, the pound could be clobbered, says Hugo Dixon.
Putin shoves Europe over the energy rubicon 5 Sep 2022 By shutting the Nord Stream 1 pipeline, the Russian president has ensured the continent faces sustained high power costs. States have so far stopped short of drastic market interventions. All are now wising up to the need to freeze prices, ration demand, and tax windfall profits.
ECB has reasons to avoid a panicky hike 2 Sep 2022 The European Central Bank looks set to jack up interest rates next week. Persistent inflation warrants some monetary tightening. But too sharp an increase would exacerbate the chances of a recession, at a time when rising debt gives governments less room to fight back.
UK tax cut drive has narrow path to avoid big mess 30 Aug 2022 Candidates to replace Prime Minister Boris Johnson are debating lowering levies by up to 30 bln pounds. Inflation may help by raising tax revenue faster than spending. But future receipts are uncertain, and a likely energy bailout will add to the burden. It’s an ill-timed gamble.
Powell’s inflationary wrong could turn out right 25 Aug 2022 The Fed chief’s upcoming speech at Jackson Hole may skew hawkish, to make up for him dismissing rising prices too readily at last year’s confab. His mistake, though, protected the U.S. economy from rate hikes that would have hurt growth. By being late, the Fed may do less harm.
Capital Calls: Food fight 23 Aug 2022 Concise views on global finance: Retailers like E-Mart are cutting food prices amid surging costs, risking a sector-wide race to the bottom.
Paris and Berlin’s windfall tax timidity is futile 19 Aug 2022 France and Germany oppose a raid on firms profiting from the energy crisis. Berlin could borrow more, and President Macron has pledged not to hike taxes. Yet given it won’t make investors see either country as way more business-friendly, the reluctance makes little sense.
Biden’s economic successes shadowed by inflation 5 Aug 2022 A $433 bln climate and healthcare bill would bring the U.S. president $1.7 trln in non-crisis spending for key projects. That’s better than predecessors. But helping the environment or fixing roads won’t solve surging prices in the short term, so he won’t get credit for wins.
Capital Calls: Amazon deal, Beyond Meat 5 Aug 2022 Concise views on global finance: Amazon’s latest purchase to buy iRobot rolls over FTC Chair Lina Khan, a critic of the company’s expansion. Meanwhile, the founder of the plant protein company envies another meat substitute, SPAM.
Capital Calls: Bank of England’s dark clouds 4 Aug 2022 Concise views on global finance: The UK central bank predicts inflation will hit 13% and the economy will slip into recession just as Boris Johnson’s successor as prime minister takes charge.
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.