OPEC’s oil cut is less surprising than it looks 3 Apr 2023 The producer group’s shock call to slash output by another 1 mln daily barrels will annoy Joe Biden and spur inflation fears. But de facto leader Saudi Arabia had already shown it would ignore US wishes. And Chinese demand is sufficiently uncertain to justify pre-emptive action.
Capital Calls: Illumina’s odd bedfellows 3 Apr 2023 Concise views on global finance: The FTC’s order that Illumina unwind its Grail acquisition puts head commissioner Lina Khan on the same side as Carl Icahn. Khan opposes the deal because Illumina can raise prices, while the activist thinks the deal doesn't make sense.
Israel hits tech sector cash cow while it’s down 3 Apr 2023 Prime Minister Benjamin Netanyahu has delayed a controversial plan giving the state power to override court decisions. Foreign investors in Israel’s key tech sector, which accounts for half its exports, were already getting stingier. They’ll get even more so if the idea returns.
Trump charges could leave important fish unfried 31 Mar 2023 While unprecedented, the indictment of a former US president won’t directly affect America’s economic standing. But lawmakers have more urgent things to focus on, like the looming debt ceiling, and fixing flawed bank rules. Squabbling could push them to the back burner.
Swiss anger will sour UBS’s deal of the century 31 Mar 2023 Politicians and citizens are unhappy about job cuts and future risks arising from the bank’s $3 bln state-backed Credit Suisse rescue. Parliament fury may force returning CEO Sergio Ermotti to tweak the deal. Either way, an unsavory domestic whiff could hang over UBS for years.
US corporates and China hug awkwardly in Beijing 27 Mar 2023 Executives from Apple, Visa and others showed up at the country’s flagship investment summit to network with top officials. Both sides hope China’s reopening will reassure American investors. A consumption revival would help, but politics is making decoupling the default thesis.
Even a half-empty glass would satisfy dealmakers 24 Mar 2023 Despite efforts to put on brave faces, M&A advisers gathered in New Orleans betrayed uncharacteristic pessimism. Just as clients were coming to grips with tougher financing, regulatory and valuation considerations, banks started collapsing. Confidence is in ever-shorter supply.
Capital Calls: Microsoft/Activision, Subscriptions 24 Mar 2023 Concise views on global finance: The software giant convinced UK regulators to drop one of two major concerns about its $69 bln deal. Meanwhile, the U.S. Federal Trade Commission has picked an easier — and less controversial — fight than its antitrust crackdown.
Capital Calls: Bank of England, Wonder drugs 23 Mar 2023 Concise views on global finance: The UK central bank has joined peers in raising rates, but there’s not much room to keep hiking. Meanwhile, a drug that might help smokers’ lung is could be good for makers Regeneron and Sanofi, but even better for society.
Swiss CoCo litigation may have a broader payoff 23 Mar 2023 Holders of Credit Suisse’s $17 bln contingent convertible bonds think authorities were wrong to wipe them out. A legal challenge will take years. Still, Bern might decide to placate angry investors. And a fight will discourage countries considering following the Swiss example.
Credit Suisse rescue sends shockwaves far and wide 23 Mar 2023 The ailing Swiss lender was saved by UBS with a $3 bln takeover. In this Viewsroom podcast, Breakingviews columnists debate why the deal pushes up bank funding costs, how the new mega-lender affects Switzerland’s financial system, and why bank deposits are becoming less reliable.
China sanctions red line has shifted westward 21 Mar 2023 President Xi Jinping’s visit to Moscow has rekindled concerns Beijing could get too cosy with Vladimir Putin. Arming Russia would likely trigger a joint Western diplomatic response even in the absence of a Chinese invasion of Taiwan. Beijing is walking a thinning tightrope.
Economic asphyxiation puts Russia in China’s orbit 20 Mar 2023 Moscow needs up to $90 bln to fund its budget deficit this year. As sanctions keep biting, financing the shortfall will slowly add to the economy’s woes. Russia’s need to use the yuan for trade and payments will also increase Vladimir Putin’s dependence on Beijing.
UBS salvages most value from Credit Suisse wreck 19 Mar 2023 The Swiss bank is scooping up its ailing arch-rival for just $3.2 bln in a state-arranged rescue. In return for shoring up confidence it gets a balance sheet backstop, a competition waiver, big savings and a giant capital boost. It also becomes bigger and more systemic than ever.
China-Swiss stock link has flimsy foundations 17 Mar 2023 Beijing is halting mainland firms from listing shares in Zurich. Concerns that Chinese investors are buying overseas to make a quick profit at home are valid. Yet in the absence of interest from foreign institutions, such cross-border stock schemes serve little purpose.
EU and US green arms race misses bigger picture 16 Mar 2023 The European Union’s response to Joe Biden’s Inflation Reduction Act gives member states leeway to push back with their own green subsidies. Yet plans for production targets are misguided. To decarbonise while managing China risks, it’s better to seek common ground with the US.
Capital Calls: BlackRock and ESG, UK pensions 15 Mar 2023 Concise views on global finance: Bank ructions and inflation give Larry Fink, boss of the $8 trln asset manager, cover to talk about something other than climate change in his annual letter; Britain’s abolition of a retirement tax threshold is an expensive way to help the rich.
UK fiscal austerity may not survive next election 15 Mar 2023 Finance minister Jeremy Hunt used 24 bln pounds of budget headroom to boost investment and incentives to work. He also set a trap for the opposition: accept spending cuts after 2024 or be tagged as a high-tax party. Labour Party leader Keir Starmer doesn’t have to take the bait.
SVB proves even smaller banks are too big to fail 15 Mar 2023 It’s 15 years since Bear Stearns showed large-scale failure is contagious. Yet US regulators still struggled with the collapse of a group half its size. If buyers cannot come to the rescue and depositors won’t bear any risk, then even lesser groups will need more protection.
Starbucks’ union brouhaha risks Schultz’s legacy 14 Mar 2023 Employees have organized and U.S. courts found that the $115 bln latte maker broke labor laws. But operating costs may go up by just $23 mln, or 0.2%, as a result of the current unions. What’s more at risk is Howard Schultz’s legacy and the company’s worker-friendly reputation.