The Exchange: Big Weed’s big year 11 Jan 2019 Bruce Linton runs the world's biggest cannabis producer, Canopy Growth. He visited Breakingviews to discuss what's coming down the pipe in 2019, why a $100 bln weed company is still some way off, and why he doesn't actually partake - yet.
Bond markets shrug off Danske dirty-money risks 11 Jan 2019 The bank at the centre of a money-laundering scandal saw its cost of issuing risky debt more than double. Still, its yields are far below those of Italy’s UniCredit. The troubles at the Danish lender may have further to run, and are harder to predict, than Rome’s political drama.
Holding: U.S. watchdog is in denial about denials 11 Jan 2019 As a condition of settling cases, the SEC typically bars alleged wrongdoers from later claiming innocence. This arguably violates free-speech protections. If a lawsuit challenging it succeeds, the financial regulator may finally have to start – gasp! – proving its charges.
U.S. shutdown’s market casualties pile up 10 Jan 2019 The SEC is operating on a skeleton staff. Would-be public companies like Uber face delayed IPOs. Seasoned firms have to make more guesses about how to comply with laws. And all but the most pressing fraud gets a pass. All three could quickly store up trouble for later.
Italy’s radicals bow to bank bailout temptation 8 Jan 2019 The government has passed measures to prop up Banca Carige, despite pledges by some of its members not to rescue lenders. Carige is too small to undermine Italy’s financial sector. But even supposedly anti-establishment parties won’t stomach the political cost of a bank failure.
French squeeze-out plans may tempt Arnault on Dior 7 Jan 2019 Paris wants to ease buyouts by cutting to 90 pct the bar for forcing out minorities. The new rules, along with a dip in luxury stocks, can revive the magnate’s interest in taking Christian Dior private. There’s no urgency for a leaner structure. But the bill may rise.
Review: Saving capitalism from itself 4 Jan 2019 From France's "gilets jaunes" protests to the election of Donald Trump, faith in the system is weak. Two new polemics, "The Curse of Bigness" and "The Myth of Capitalism" blame a lack of competition. Updated antitrust rules can help fix that. It's a plausible aim.
ECB starts new year with Italian bank hangover 2 Jan 2019 Regulators in Frankfurt have appointed temporary administrators at troubled Banca Carige. The unprecedented move looks a last-ditch attempt to push through a 400 million euro cash call opposed by the bank’s top investor. Barring a sale, the next step could be resolution.
Truce brakes Evergrande’s bad bet on Tesla wannabe 2 Jan 2019 The Hong Kong-listed conglomerate has ended a legal spat with electric-vehicle developer Faraday Future over a soured $2 bln investment. It seems unlikely that Evergrande's stake in the troubled Chinese carmaker will ever pay off, but this deal at least limits the downside.
A plucky local upstart will take on Macau’s moguls 31 Dec 2018 Regulators in the world’s largest gambling hub could allow new players onto the casino floor when licenses expire in 2020. With frayed U.S.-China relations dealing American giants Sands and Wynn a weak hand, homegrown names like Suncity and Golden Dragon will try their luck.
EU investment banks face the regulatory microscope 28 Dec 2018 With the region’s bad-debt crisis on the wane, supervisors will shift their focus to probing lenders’ risk models and 132 billion euros of hard-to-value assets. For banks which had previously relied on their own guesstimates, that could mean higher capital charges.
Drones prove disruptive capacity – in a bad way 20 Dec 2018 Rogue devices forced London's Gatwick airport to close, grounding flights and stranding thousands of passengers the week before Christmas. Even known risks with new technology - already highlighted by UK aviation authorities - can be hard to manage.
Altria’s $12.8 bln vaping punt tastes funky 20 Dec 2018 The Marlboro maker is paying a whopping multiple for 35 pct of Juul Labs - and cutting jobs and up to $600 mln of expenses just to cover interest costs. Meanwhile Juul is handing much of the cash to current owners and staff. It’s a risky bet that rapid growth won’t start to drag.
U.S. Oleg Deripaska deal tougher than it looks 20 Dec 2018 Washington’s decision to lift sanctions on En+ and allow the Russian oligarch to keep a 45 pct stake sounds lenient. Yet it looks difficult for Deripaska to sell his stake for cash or exercise decisive influence. After a messy beginning, the U.S. raid seems a qualified success.
Facebook headed for Big Tobacco-style backlash 20 Dec 2018 A number of U.S. states may follow the District of Columbia in suing the $380 bln social network for misusing customer data. It’d be reminiscent of the 1990s fight against cigarette makers. A similar outcome would leave Facebook paying huge fines and bound by tighter rules.
City is even less diverse than RBS makes it look 19 Dec 2018 The UK bank’s hire of a female CFO and potentially a female CEO too is unusual. But 50 FTSE-350 companies have no women on their executive boards at all. With firms often restricting them to non-P&L roles like HR, female CEOs will remain depressingly scarce.
Renault-Nissan: Only merging makes financial sense 19 Dec 2018 The French and Japanese carmakers' lopsided stakes in each other are a poor use of capital. A full-blown marriage could boost their value by about 30 percent. That’s less likely after Carlos Ghosn’s ouster as Nissan chairman; the auto alliance is driving in the wrong direction.
India’s richest banker bets against the house 19 Dec 2018 Uday Kotak is challenging a requirement to cut his stake in the $32 bln Kotak Bank to 20 pct. The lender can absorb penalties imposed on others, and the rule may be misplaced. Yet the standoff endangers Kotak’s governance reputation – and could leave a cloud over the shares, too.
Mnuchin pins market volatility on wrong president 18 Dec 2018 The Treasury secretary partly blames the Obama-era Volcker Rule for big swings in stocks. But prices aren’t as choppy as 2009, before the prop-trading ban was adopted. And the rule barely affected equities trading. It’s the policies of Mnuchin’s volatile boss fanning the flames.
UK audit reform leaves unfinished business 18 Dec 2018 Britain wants companies to use two auditors and stricter Chinese walls between consulting and book-keeping. The moves should help competition, but they won’t be as effective as radical options like breaking up groups and market-share caps, nor prevent failures like Carillion.