Americas

Net zero arbitrage is large, but no one-way bet

14 Jun 2024

There’s a big gap between the rich world’s ambitions to reduce carbon emissions and the ability of governments to achieve that goal. Investors can try to exploit that disconnect. However, economic, technological and geopolitical constraints can quickly change in unexpected ways.

Barbarians at Southwest gate overdo upgrade plea

13 Jun 2024

The $17 bln airline’s slow response to weak performance made it an easy target for pushy investor Elliott. Boss Bob Jordan may struggle to keep his job, let alone reshape the business model. Yet his new dissident is too facile about jettisoning defining parts of the culture.

Carlos Slim’s BT stake may just be a prelude

13 Jun 2024

The Mexican billionaire has taken 3% of the $17 bln UK telco. Nationalism, and Slim’s failed 2012 tilt at Dutch peer KPN, imply he won’t launch a full bid. But BT investors Patrick Drahi and Deutsche Telekom may sell their shares if he gets even keener on the group’s turnaround.

Stock handouts might help save the US ruling class

13 Jun 2024

The top 0.1% Americans own a quarter of the $40 trln in share-based wealth while the bottom half has just $400 bln. It’s therefore encouraging to see GE, Walmart and Blackstone-backed firms giving workers equity. Less inequality will better align the interests of poor and rich.

Paramount’s Redstones fall short of the Murdochs

12 Jun 2024

For media’s founding families, the issue of messy generational succession looms large. Just look at the ‘Mission: Impossible’ studio, where Shari Redstone has now killed an $8 bln deal at the eleventh hour. Unlike the Murdochs, Paramount’s dynasty failed to clean up its empire.

Musk expects more from shareholders than himself

12 Jun 2024

A vote on the Tesla boss’s court-nixed $56 bln payday has become a hostage negotiation, the implicit threat Musk could walk justified by saying 'a deal is a deal.' That didn’t stop Musk trying to kill a deal for Twitter. After recent dismal displays, investors should do likewise.

McKinsey powers through its many missteps

11 Jun 2024

Despite scandals from South Africa to Big Oil, the secretive consultancy charms Ivy League recruits and blue-chip clients. In this Exchange podcast, investigative reporter Michael Forsythe explores the mystique and whether opioids advice threatens the firm’s $16 bln of revenue.

Jerome Powell goes from astrophysics to stargazing

11 Jun 2024

Price pressures and a strong job market complicate the US central bank’s job. But it’s getting harder to delay interest-rate cuts after telegraphing them last year. Forecasts due Wednesday are pivotal. Muddled data ahead of the November election may sideline the Fed chairman.

New Pharma will crowd out Big Pharma

11 Jun 2024

For decades the likes of Pfizer have ruled the industry, gobbling up tech-driven players. But former upstarts are no longer bite-sized, as Vertex Pharmaceuticals’ $125 bln market cap proves. Their new strength will create more M&A competition and undermine established leaders.

Price cuts will lift US vibes only so much

11 Jun 2024

Since 2019, poorer Americans have received bigger pay hikes than their rich counterparts. Higher costs for basics like food and rent also mean inflation hit them harder. Fresh discounts from Target, McDonald’s and Amazon help, but offer limited relief for tight household budgets.

Apple aims to be tech’s AI sniper

10 Jun 2024

The $3 trln giant is making its assistant Siri more effective, stitching together and using personal information on users’ phones. Partnering with OpenAI is a smart hedge on its relationship with Alphabet too. Success depends on patience and picking the right targets.

Disney Bob Iger sequel slated for HBO owner

10 Jun 2024

The Magic Kingdom’s boss beat back pushy activists including Nelson Peltz. But Warner Bros Discovery has similar issues and a boss, David Zaslav, that is grossly overpaid. With dying cable networks and a struggling streaming service, WBD is ripe for an activist – and a breakup.

Intel sketches promising factory blueprints

10 Jun 2024

The chipmaker struck an $11 bln deal with investment shop Apollo to help offset the expense of building a facility in Ireland. By 2040, the cost of such cutting-edge plants could quadruple to $100 bln. Given the solid investment return profile, similar partnerships will abound.

Autonomy’s legal endgame leaves few real winners

7 Jun 2024

A US court has cleared Mike Lynch of fraud connected to a $12 bln sale of the group he founded to Hewlett-Packard in 2011. It only heightens the sense that HP’s due diligence was lamentable. But the snail-pace of justice also cost Lynch over a decade of his career.

Texas Instruments: don’t mess with Elliott

7 Jun 2024

The $175 bln chipmaker is in a sensible expansion mode, but the pushy hedge fund raises reasonable concerns about cash flow. Even after generous US subsidies, it will take big uplifts in customer orders and market share to justify the investment. There’s scope to scale back.

Suburban sprawl gives insurers the blues

7 Jun 2024

Losses from natural disasters are rising and have exceeded $100 bln for four years in a row. Climate change has made losses from hurricanes grow. But the bigger risk for insurers is severe storms hitting rapidly expanding cities in the sunbelt, like Dallas-Fort Worth.

Japan has ways to avoid a sovereign debt crunch

7 Jun 2024

As interest rates rise, investors are fretting about the sustainability of government debt in the developed world. Japan’s gross debt of more than 250% of GDP and heavy debt-servicing burden makes it look vulnerable to a loss of confidence. But appearances are deceptive.

Trustbusters loom larger for Microsoft than Nvidia

6 Jun 2024

Tech is full of natural monopolies, and artificial intelligence may be no different. Regulators prefer to act quickly to stop abusive actions snuffing out competition. The $3 trln chipmaker’s dominance will be hard to dislodge. The software giant’s AI deals appear more fragile.

Five reasons financial disasters are hard to avoid

6 Jun 2024

A decade and a half after the last big crisis, dangers still lurk. Regulation has shifted financial risks to different areas, while old vulnerabilities remain unfixed. Meanwhile, a growing number of voters benefit from bailouts. It’s a recipe for more turbulence in future.

Oaktree can still score a skilful goal with Inter

6 Jun 2024

The US fund ended up owning the loss-making Italian club after the previous owner missed a payment. Fetching valuations similar to what Elliott secured for rival AC Milan looks tricky. Yet American interest in soccer and on-field success point to a sale price exceeding $1 bln.