Balance sheets will get more unbalanced in 2016 28 Dec 2015 The lesson that too much debt is dangerous has sunk in, again. Amid volatile prices and currencies, dwindling cashflows can quickly make healthy firms turn sick. Miners, Brazil and buyback junkies are among those facing a reckoning. Cash-rich acquirers may have a field day.
London’s bankers should retrain as builders 28 Dec 2015 The City’s banks are sacking thousands of staff. Meanwhile, the construction sector needs 120,000 new pairs of hands to boost UK housing supply to a level that eases house-price inflation. For bankers smarting from accusations of social uselessness, it might make a decent change.
Cheap batteries will give utilities electric shock 28 Dec 2015 Local power suppliers have long enjoyed a natural monopoly. But the arrival of low-cost home energy storage from the likes of Tesla makes consumers less dependent on electricity networks. Batteries may even let some developing countries skip the grid altogether.
Host Brazil may challenge for 2016 Olympics glory 24 Dec 2015 The mighty U.S. will be hard to dislodge from the top spot. But a prediction based on population, GDP, the cost of Nikes and past willingness to dope suggests Brazil could break into the top five by medals. Like Team GB in 2012, that will require capitalising on home advantage.
Britain’s exit from Europe: 28 days later 24 Dec 2015 Sometime in the future, some notes are found. Purportedly written by an adviser to David Cameron, they chronicle events in the month after the UK voted to leave the European Union. It’s a vision of banker exoduses, surprising new investors and mountains of unsold pork pies.
Virtual reality will spring to life 24 Dec 2015 Headsets from Facebook, HTC, Sony and others will help turn VR into reality in 2016. The market could generate $10 bln or more in sales within five years, provided coders create games and apps with wide appeal. Software houses, hardware makers and tech giants should all benefit.
Capital drought will spark unicorn M&A orgy 23 Dec 2015 Plentiful money has detached valuations on many hot private tech firms from reality. About a third of the 144 private startups worth at least $1 bln are valued at precisely that much. As capital dries up, selling to bigger rivals or mating with other unicorns becomes appealing.
Global smartphone brands face mass extinction 23 Dec 2015 The industry’s growth has slipped below 10 pct for the first time. Apple and Samsung’s high-end phones are taking most of the spoils while upstarts like China’s Xiaomi pick up first-time buyers. Loss-making brands like HTC and Sony may be forced to conclude the game is over.
Netflix will be recast from ally to villain 22 Dec 2015 Once derided as the “Albanian army” by Time Warner boss Jeff Bewkes, the video-streaming service is now valued at about the same $55 bln as his company. With some 69 mln subscribers globally, it may be too late for media bosses to do anything about this beast they helped create.
Big Oil morphs into Big Gas 22 Dec 2015 Energy giants like Total are already pumping more gas than oil. Companies are making a virtue out of a necessity, since gas supplies are more accessible than oil. Demand is also growing. But returns are dogged by high capital spending and cost overruns.
China will stop ignoring Facebook’s friend request 22 Dec 2015 The People’s Republic has blocked access to the $300 bln social network since 2009. Boss Mark Zuckerberg is eager to leap the Great Firewall. LinkedIn and Apple have shown China’s censors that foreign groups can play by local rules. Finding a local partner should seal the deal.
Argentina and Elliott give peace a chance in 2016 21 Dec 2015 There may never be a better time for Latin America’s No. 3 economy and the hedge fund to end a 14-year spat over defaulted bonds. New President Macri needs access to global debt markets; another defiant Peronist could succeed him if he fails. Stalemate is looking pointless.
U.S., Chinese unicorns will bolt in opposite ways 21 Dec 2015 Silicon Valley firms worth $1 bln-plus in private markets have taken hits in the public eye of late: think payments firm Square or messaging app Snapchat. The PRC’s unicorns also face scepticism. Yet as U.S. startups shy away from IPOs, the Chinese species may run for them.
Top trades of 2016: Clinton, Mayer, Isis and Uber 18 Dec 2015 A survey of Breakingviews readers suggests that a year from now, the U.S. will have its first female president and Yahoo’s CEO may be free to give her a hand. Uber’s valuation will stall, as worries about Islamic State accelerate. In other news, Twitter hasn’t made us any happier.
China’s catch-all financial slogan: Belt and Road 18 Dec 2015 What do investments in engineering companies, banks and bananas have in common? They’re all justified by China’s “One Belt, One Road” plan to boost trade and spread soft power. Yet early signs are the scheme is another excuse to shuffle money and favours between state companies.
Global corporate profit is under serious threat 17 Dec 2015 U.S. companies are earning close to the most in five decades as measured against national income. It’s a worldwide trend, with bottom lines far larger as a share of GDP than in 1980. Competition, disruption and tax policy – along with weaker growth – are set to change all that.
The Fed may be cutting rates again within a year 17 Dec 2015 With official U.S. money finally costing something, there’s a risk that market overreaction saps funding in emerging markets and hurts exports as global demand softens. While a swift retreat might be insignificant on paper, it would harm the central bank’s credibility.
Safe havens scarce in brewing high-yield storm 17 Dec 2015 Junk bond investors were battered by problems in energy, commodities and the collapse of a Third Avenue fund in 2015. Losses are likely to spread as the Fed raises rates and risk-averse investors rein in lending. Bets that Europe will be able to provide shelter look wrong-headed.
Global economy depends on more than India in 2016 17 Dec 2015 The subcontinent’s expanding GDP is one of next year’s few economic bright spots. But the sluggish United States and decelerating China will still account for nearly half of global growth. Any negative shocks from the two sputtering engines will reverberate widely.
A (fake) bank CEO memo on plans to leave London 16 Dec 2015 After the referendum passed on Britain leaving the EU, we will be migrating some operations to centers of excellence in Madrid, Frankfurt and Gdynia. We’ve spent $50 mln preparing for this go-forward possibility. The message to clients: business continues as normal.