Predictions 2019

Busy activists navigate tricky currents

22 Jan 2019

They are rattling the cages of new targets like Pernod Ricard and Campbell Soup. But regular investors are more demanding, and private equity may muscle in, panellists told Breakingviews Predictions events this month. The test is whether active shareholders produce better returns.

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.

Viewsroom: High anxiety hits SoftBank’s vision

10 Jan 2019

Rising rates, lower oil prices, wobbly markets and the backlash against Saudi Arabia could put Masa Son’s $97 bln fund on the spot this year. Elsewhere, some Indian tech startups may take the world by storm. Plus, Breakingviews picks three indicators to monitor the world economy.

Hapless oil bets will drive airline M&A

4 Jan 2019

Air operators are divided into two camps on fuel prices. Ryanair and Lufthansa are prepared for a hike after locking in hedges. Smaller carriers are hoping for a fall. If their bet goes wrong, they could be gobbled up.

A graying Facebook will require a different leader

4 Jan 2019

Mark Zuckerberg’s social network is losing the trust of users and regulators because of fake news and privacy worries just as its valuation looks over the hill. Surmounting the crisis will involve a new model. The founder’s priority is finding someone up to the task.

Buyout lenders will enter a new world of pain

4 Jan 2019

Rising bond yields and volatile markets mean the leveraged finance boom is over. The lenders which financed it have taken more risk than ever, and given away the ability to control struggling companies. When deals do go bad, they will get back much less than they are used to.

U.S. will find a way to make Danske Bank suffer

4 Jan 2019

Congress has made banks’ anti-money laundering a key concern. That bodes ill for Danske Bank, embroiled in a 200 billion euro suspicious funds scandal. The Danish lender is hardly a household name in the U.S. That gives politicians who wish to make an example of it free reign.

Saudi oil will grease China’s currency ambitions

4 Jan 2019

Shanghai’s crude contract is nibbling at dollar benchmarks: a win for Beijing, which wants to increase the yuan’s global clout. Riyadh can help it along by pricing more oil in the currency, as Russia moves in the same direction. The benefits for both sides outweigh the risks.

Airbnb will succeed where U.S. peers failed: China

4 Jan 2019

Unlike Google or Facebook, the home-sharing app’s model dovetails with Beijing’s view that property be used for living, not speculating; and its rating system helps with social credit scoring. Domestic rivalry will be fierce, but Airbnb’s global network gives it one advantage.

Viewsroom: Who will be 2019’s free-trade champion?

3 Jan 2019

Big economies are throwing up tariffs, but East Africa’s common market could swell to 250 mln people if Ethiopia joins the club. Breakingviews columnists also predict this year will bring the end of easy money for Chinese startups, and a challenge to Tesla from Lyft and Uber.

Cannabis will take China tech’s path to propriety

3 Jan 2019

A subversive industry feared by the establishment, with investors reliant on legal loopholes: American pot companies are starting out much like Chinese tech giants did. In the same fashion, as this shadowy industry creates jobs and wealth, appetite for reining it in will wane.

Lyft, Uber IPOs will drain Tesla’s scarcity value

3 Jan 2019

Electric vehicles check boxes for sustainability-minded investors. But the ride-hailing firms’ ubiquity and self-driving ambitions will give U.S. public shareholders new options beyond Elon Musk’s carmaker. Lyft’s growth and ESG credentials could make it the most desirable ride.

Next ECB boss will matter less than his sidekick

3 Jan 2019

Most of those vying to replace Mario Draghi at the European Central Bank lack his creativity. Others will have more scope to sway debates. Ireland’s freethinking Philip Lane is favourite to be chief economist. He would have outsized influence, especially in the next downturn.

Keep an eye on Seoul for Asia’s next big buyer

3 Jan 2019

Japan’s Takeda and China’s CIC have been among the regional leaders in overseas M&A in recent years. South Korean conglomerate SK Group may be next. It is tech-hungry, hampered at home and flush with cash from chipmaking. Bankers should put boss Chey Tae-won on speed dial.

Starbucks will start brewing a venti Chinese deal

3 Jan 2019

The $80 bln coffee chain is targeting big mainland expansion, with some 6,000 stores by 2022. Such bold plans will run up against stiffer competition and trade-war-related pressure on U.S. companies. Starbucks would be smart to find local backers the way McDonald’s and Yum did.

Firearms will test the mettle of woke financiers

2 Jan 2019

Wall Street dealt gunmakers a blow in 2018 for their part in facilitating gun violence. Yet the wounds were glancing. Investors like BlackRock aren’t especially suited to social activism. Banks, though, have a bigger bully pulpit, and 2019 will bring more reasons to use it.

A century on, bet on a new Black Sox-like scandal

2 Jan 2019

Legalized U.S. sports wagering is set to soar after a court cleared the way. Bringing some of the $150 bln gambling market out of the shadows has merit, but also raises the stakes – and temptations. Odds are improving for an incident like the baseball-fixing disgrace of 1919.

Three key indicators to watch like a hawk in 2019

2 Jan 2019

Want to know whether there’s going to be a U.S. recession, a trade-war flare-up, or corporate implosions? You could obsess over news and social media – or skim a few proxy indicators like the price of soybeans, the Treasury yield curve, and the number of stocks in bear territory.

Tech to disrupt supply chains more than trade wars

2 Jan 2019

U.S. President Donald Trump’s tariffs give global companies an incentive to manufacture locally. But the shift was already underway because of new technologies like automation. Carmakers and pharma groups will localise more production in 2019 even if tensions over commerce abate.

EU rebels will lay siege to Brussels

2 Jan 2019

The global anti-elite backlash will reach the European Parliament in May. Nationalist parties will gain a bigger voice in the assembly, making decision-making messy. Sceptical voices could even infiltrate the European Commission. It’s another test for the European project.