Blog Profile / Reuters Breakingviews Blog

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Blog Post Archive

Worst CEO job in America for 2016? P&G

David Taylor will struggle to make his mark on the lumbering $200 bln giant. His predecessor-turned-Chairman A.G. Lafley already axed weaker brands, leaving Taylor to sort out growth. He may be forced to break up the Tide-to-Pampers icon or spend the year fighting calls to do so.

Arab sovereign wealth fund exodus just beginning

Oil-dependent Gulf sheikhdoms need money to shore up their budgets. They’ll hold on to trophy assets like stakes in VW or Barclays for as long as possible. But if the price of crude keeps sliding to $20, the region’s rulers might need to liquidate their rainy-day funds by 2020.

China index: Economy suffers winter blues

Our index climbed a little higher in November, but underlying data gave little cause for cheer. Exports and rail freight volumes tumbled, investment in residential property suffered the steepest fall since Breakingviews records began in 2008, and pollution hit a 13-month high.

Japan’s outbound M&A wave will sweep up minnows

A growing number of companies are trying to buy their way out of a shrinking home market. While blue-chips like Canon, Nippon Life and Mitsubishi UFJ are still shopping abroad, smaller companies are getting bolder. Watch for less familiar names venturing overseas in 2016.

Freeport chairman exit eases credibility problem

James “Jim Bob” Moffett is leaving the $9 bln mining group he helped found amid pressure from activist investor Carl Icahn. It’s a needed step to restore confidence after faux pas including an ill-timed, cozy-looking 2012 oil deal. His replacement, though, has his work cut out.

Valeant’s latest fix reinforces its challenges

The $38 bln drug company is handing the reins to three execs while CEO Mike Pearson is on medical leave. And three directors will “oversee and support” them. The double triumvirate shows how reliant on one man Valeant now is as debt, R&D and strategy issues take center stage.

Clinton White House run clouded by home economics

The Democrat who could become America’s first female commander-in-chief in November is ahead in early polls and at the bookies. Growth is up and unemployment down under Obama, too. It might not be enough, though: traditionally, voters only reward bigger economic dividends.

London’s bankers should retrain as builders

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.

Balance sheets will get more unbalanced in 2016

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.

Cheap batteries will give utilities electric shock

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.

Capital drought will spark unicorn M&A orgy

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.

Banks’ low UK tax bill hands ammo to EU exit camp

Seven big investment banks paid just $31 mln of UK corporation tax on profit of $5.3 bln in 2014, Reuters has found. Historic losses reduced the bills, and taxes paid by employees remain chunky. But the revelations will help those agitating for Britain to quit the European Union.

Gulf states are on a collision course with tax

Wealthy populations in Arab sheikhdoms have mostly been spared taxation. Falling oil prices make that untenable. Laws are being drafted in the UAE for new levies on companies and consumers to offset falling revenue. Other countries in the region will follow.

Global smartphone brands face mass extinction

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

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

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

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.

Theranos’ wounded credibility hobbles all unicorns

The blood-analysis company faces new charges of finagling with its herpes test, a product essential to its success. Unless the firm wins vindication from independent experts, the damage may be too serious to fix. That harms similar startups, whose survival depends on trust.

Argentina and Elliott give peace a chance in 2016

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.

Spanish election is vote for malaise

The ruling conservatives won the general election but fell short of outright victory. Other than a difficult grand coalition, there is no obvious alliance that would add up to a majority in Parliament. The uncertainty bodes ill for Spanish regulated stocks.

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