August 12, 2022
- Rogers Communications, Shaw Communications, and Quebecorhave entered into a definitive agreement for the sale of Freedom Mobile to Quebcor subsidiary Videotron, subject to regulatory approvals and closing of the merger of Shaw and Rogers, according to a statement. Companies believe transaction will address concerns raised by Canada’s Commissioner of Competition and the Minister of Innovation, Science and Industry regarding the Rogers-Shaw merger
- A major power failure in downtown Toronto left parts of the city’s financial district without electricity for hours on Thursday, affecting about 10,000 customers at its peak. The disruption began shortly before 12:30 p.m. New York time and was caused when a barge moving a crane struck high-voltage wires in the Port Lands area southeast of the downtown core. Toronto Hydro said in a tweet just before 8 p.m. that power had been restored downtown. Some office towers ran on emergency generators while others operated normally. Trading activity on the Toronto Stock Exchange was not disrupted, according to a spokesperson. Several traders who spoke to Bloomberg News said their activities were continuing as normal. But many office workers went home early or milled around near the entrances to buildings, waiting for electricity to come back.
- European stocks erased early gains as energy stocks fell with crude oil futures and investors weighed the impact of recent macroeconomic data on central bank policy. The Stoxx Europe 600 index fell 0.1% by 12:03 p.m. in London after gaining as much as 0.5% earlier. Health care giant GSK Plc was among outperformers, trimming a rout this week that was driven by worries about Zantac litigation, with some analysts suggesting the selloff may have been extreme. The region’s main stocks benchmark has risen about 10% since early July, with gains this week spurred by softer-than-expected US inflation data. Still, many investors are skeptical over the impact the report will have on monetary policy.
- US equity futures rose Friday as investors assessed whether signs of cooling inflation will enable the Federal Reserve to pivot to less aggressive interest-rate increases. S&P 500 and Nasdaq 100 contracts climbed about 0.4%, with both underlying gauges set to post their longest sequence of weekly gains since November. Alibaba Group Holding Ltd. led a premarket decline in US-listed China stocks after some of the nation’s largest state-owned companies announced plans to delist from American exchanges. Traders have pared back bets on Fed rate hikes after a report on Thursday showed US producer prices fell in July from a month earlier for the first time in over two years. That added to Wednesday’s data on slower increases in consumer prices to provide signs of cooling but still troubling inflation.
- Asian stocks rose to a two-month high as Japan lifted the region higher in a catch-up rally, with traders digesting another downside surprise in US inflation. The MSCI Asia Pacific Index rose as much as 0.7%, poised for a third day of gains. Japan’s Topix Index added 2% after traders returned from a holiday, while markets in the rest of the region were mixed. Chinese shares fluctuated in a narrow range. Some optimism has emerged across Asia this week as traders bet on slower interest-rate increases by the Fed amid easing price pressures. The regional stock benchmark headed for a fourth weekly gain, the longest streak since January 2021. Still, the gauge is down more than 15% this year, trailing other equity benchmarks in the US and Europe.
- Oil fell on Friday but was still on course for a weekly gain as traders weighed the prospects of higher demand this winter against the potential for extra supply from Iran. West Texas Intermediate traded near $93 a barrel, wiping out an earlier increase after Iran said it can accept a European Union-brokered nuclear deal if it gets certain guarantees — something the country has been seeking for much of the last year. Oil has been buffeted by a flurry of headlines in recent days and is still up more than 4% this week. Six oil and gas fields in the Gulf of Mexico were shut after a leak at a Louisiana booster station halted two pipelines, though should soon resume. The International Energy Agency boosted its forecast for global demand growth as soaring natural gas prices and heat waves spur demand.
- The UK economy shrank in the second quarter for the first time since the pandemic, driven by a decline in spending by households and on fighting the coronavirus. Gross domestic product fell 0.1% after an 0.8% gain in the first quarter, the Office for National Statistics said Friday. A decline in Covid testing and vaccinations as well as slower retail sales and the first drop in household consumption in more than a year were the biggest drivers. Manufacturing also fell. The results mark the biggest bump so far in the recovery from the pandemic. The Bank of England expects that inflation raging at a 40-year high will tip the economy into recession later this year.
- President Joe Biden is preparing to launch his re-election bid in the months after November’s midterm congressional elections, according to multiple aides and allies, setting up a potential 2024 re-match with former President Donald Trump. Biden’s resolve to mount a second White House bid is hardening even with polls showing most Democrats would prefer a candidate other than the 79-year-old president. But those close to Biden describe him as buoyed by recent legislative, economic and foreign policy victories and committed to again deny Trump a return to the Oval Office. Three congressional Democrats have recently suggested Biden make way for a younger successor, while several more have pointedly declined to endorse his re-election. Biden’s approval rating is only about 40%, according to an analysis of polls by FiveThirtyEight.
- Prada SpA is considering seeking at least $1 billion from a second listing in Milan, people familiar with the matter said, as the Italian fashion house looks to diversify its investor base away from Hong Kong. The Milanese maker of luxury clothing, fragrances and accessories is working with Goldman Sachs Group Inc. on preliminary preparations for a potential offering, according to the people, who asked not to be identified discussing confidential information. A listing would likely take place next year, they said. Prada raised $2.1 billion in 2011 by listing a 20% stake in Hong Kong at a time when large luxury brands were flocking to the Asian market to cater to their largest customer base. The company, which has a market value of HK$115.7 billion ($14.8 billion), is looking to raise funds by selling new shares in Milan, the people said.
- The cooler inflation reading for July is welcome news and may mean it’s appropriate for the Federal Reserve to slow its interest-rate increase to 50 basis points at its September meeting, but the fight against fast price growth is far from over, San Francisco Fed President Mary Daly said. The July figures are “significant in that they are saying that we’re seeing some improvement but they’re not victory,” Daly said Thursday in an interview with Kathleen Hays on Bloomberg Television. “It really behooves us to stay data dependent and not call it.” Daly reiterated that her base case is for a half-percentage point hike at the Fed’s meeting next month, following two back-to-back 75-basis-point hikes in June and July, but said she has an “open mind” about another large increase being necessary.
- Mastercard Inc. is facing pushback from retailers over a new product that allows customers to pay off their purchases in installments. The payments giant has begun telling merchants and their banks that it will charge retailers 3% of a purchase price each time a consumer opts to use the new program, according to people familiar with the matter. Retailers will be automatically enrolled for Mastercard’s new buy-now, pay-later service, though they will have a chance to opt out. The price tag came as a surprise to some of the country’s largest retailers, many of which have already negotiated separate deals with credit-card issuers and buy-now, pay-later providers that may limit them from offering competing services to their customers. Others, however, are embracing the new service, given that the 3% cost, while higher than any of Mastercard’s normal rates for accepting credit cards, is less than what most standalone buy-now, pay-later providers charge for their products.
- Apple Inc. has asked suppliers to build at least as many of its next-generation iPhones this year as in 2021, counting on an affluent clientele and dwindling competition to weather a global electronics downturn. The tech giant is telling its assemblers to make 90 million of its newest devices, on par with last year, despite deteriorating projections for the smartphone market, according to people with knowledge of the matter. The Cupertino, California-based company still expects to assemble roughly 220 million iPhones in total for 2022, also about level with last year, according to one of the people. Apple’s projections, a closely guarded secret, suggest it’s confident about weathering a slump in spending on smartphones and other devices. Mobile device makers have begun freezing orders, China’s largest chipmaker warnedon Friday. The global handset market, which slid 9% in the June quarter, is expected to shrink 3.5% in 2022, IDC has forecast.
- Former President Donald Trump said he supported the release of documents related to the FBI’s search of his Mar-a-Lago home earlier this week, including a copy of the search warrant and a receipt of items that agents took from the property. Trump made the announcement late Thursday on his social media site, Truth Social, following a Justice Department request in a Florida court to unseal the documents. Trump’s decision to agree to release the search warrant — something he has had the option of doing on his own since the search took place Monday — heads off a public showdown between the former president’s legal team and Attorney General Merrick Garland.
- Mercedes-Benz Group AG will join China’s Contemporary Amperex Technology Co. Ltd. in building a battery factory in Hungary with an investment of as much as 7.3 billion euros ($7.6 billion), with some of Europe’s leading automakers set to become customers too. The plant will have capacity of 100 gigawatt hours, enough to power more than 1 million cars, and will run on renewable energy, the world’s biggest electric-vehicle battery maker, known as CATL, said Friday. Planned to be built in Debrecen, the facility will be in close proximity to customers BMW AG, Stellantis NV and Volkswagen AG, CATL said. The Debrecen plant, which will be Hungary’s biggest investment ever, will create around 9,000 jobs, Hungary’s Deputy Foreign Minister Levente Magyar told the MTI state news service. While CATL didn’t say when production would start, Mercedes said the batteries would go into its next generation of EVs, due to go on sale from around mid-decade.
- Mondi Plc, the UK paper and packaging company, climbed the most in two and a half years after it agreed the sale of its most significant Russian asset and two affiliated entities for 95 billion rubles ($1.5 billion). The London-listed firm will sell the Mondi Syktyvkar unit to Augment Investments, majority owned by businessman Viktor Kharitonin, according to a statement on Friday. The proceeds and a cash balance of 16 billion rubles will then be distributed to Mondi’s shareholders. Mondi rose as much as 10% in London trade as of 1:02 p.m., its biggest intraday increase since March 2020.
- Chinese developers have suffered a meltdown of at least $90 billion in stocks and dollar bonds this year, with a bursting housing bubble and an intensifying debt crisis threatening to inflict even more pain. Chinese builders have lost about $55 billion in share value since 2022 began, according to a Bloomberg Intelligence stock gauge. The sector’s dollar notes have fallen more than $35 billion, show calculations based on a Bloomberg bond index, the constituents of which can change over time. The wipeouts have pushed developer stocks down to levels not seen in a decade and China’s junk dollar notes to record lows. Pessimism about the industry’s outlook has become more entrenched after Beijing signaled that homeowners, not builders, are the priority of current efforts to stabilize China’s slumping housing market. Longer term, an aging population and a policy shift that seeks to redefine real estate as a form of public goods means the sector’s boom era may have already passed.
- US-listed China stocks slid on Friday after some of the Asian nation’s largest state-owned companies announced plans to delist from American exchanges amid a spat over audits and generally worsening tensions between the world’s top two economies. Alibaba Group Holding Ltd., Pinduoduo Inc. and JD.com Inc. each fell 3% to 4%, while the Kraneshares CSI China Internet Fund ETF declined 2.8%. China Life Insurance Co., PetroChina Co. and China Petroleum & Chemical Corp. all disclosed their intentions to delist in statements published in quick succession on Friday. About 200 Chinese companies, including Alibaba and Baidu Inc., are listed in the US and are likely to face delisting threats because American regulators aren’t able to verify their financial audits. State-owned enterprises are deemed able to obtain information and data that the Chinese government may be hesitant to give foreign regulators access to, said Redmond Wong, a market strategist at Saxo Markets.
- Investors — from small-time flippers to Wall Street-backed landlords — helped propel US home prices to record levels during the pandemic boom. But now, they’re pulling back as recession risks mount, in a move that could accelerate the market’s slowdown. Institutional landlords are canceling contracts and getting more particular about purchases. The tech-powered home flippers known as iBuyers are slashing asking prices to clear inventory. Small-time property hounds are passing on homes they would have bought three months ago because higher borrowing costs make it harder to turn a profit. Fear has crept into the housing market, replacing the can’t-lose optimism that attracted mountains of capital in the years after the most recent crash. After the near-doubling of mortgage rates since the end of 2021, investors are having to navigate an increasingly complex dynamic where both borrowing costs and home values are relatively high. There’s at least one potential silver lining: A pullback could help prices settle at more affordable levels.
- When bailed-out US mortgage giant Fannie Mae wanted to sell almost $2 billion of troubled American home loans in early 2017, only one bank showed up for the auction: Credit Suisse Group AG. The Swiss seemed unlikely bidders, having been battered by US mortgages in the financial crisis. And the division pushing for the deal — known as the securitized products group, or SPG — had contributed to steep losses just months earlier that blindsided top management in Zurich. In the end, the Credit Suisse unit won not only that auction. Its bosses gave it so much leeway that it went on to buy $27 billion of loans from Fannie Mae, several times as much as its nearest banking rival, Goldman Sachs Group Inc.It sold some to investors and packaged the rest into new securities, generating hundreds of millions of dollars in revenue, according to a person involved in the deals.
- Italy’s far-right Brothers of Italy party, which is leading polls ahead of snap elections next month, is promoting a plan to take Telecom Italia SpA private and sell off the phone company’s assets in a bid to cut its debt pile by more than half, people familiar with the matter said. The shares jumped. The group would encourage a takeover bid by state lender Cassa Depositi e Prestiti, then sell about 30 million of Telecom Italia’s mobile and landline subscribers to competitors for about 13 billion euros ($13.4 billion), the people said, asking not to be identified because the plan is private. The state would also sell the phone company’s Brazilian unit for about 4 billion euros, they said. The final goal would be to retain control of the former phone monopoly’s landline network after the disposals and to use the cash to reduce its approximately 30 billion-euro debt pile. The plan is consistent with the Right-Wing Alliance’s political agenda calling for a national “digital sovereignty,” which means keeping Italian state oversight over the country’s most crucial technological infrastructure, according to a party document obtained by Bloomberg.
- It was a budding rivalry that didn’t last long before scandal brought one of them down. Two years ago, Nikola founder Trevor Milton was very clearly on Tesla CEO Elon Musk’s radar. The week after Nikola completed its merger with a special purpose acquisition company and immediately shot up in value on the Nasdaq, Musk fired off an email to employees declaring it was “time to go all out” getting Tesla’s Semi into production. But instead of fuel cells and follow-through, there were fraud charges and deferments. Milton is a month away from going to trial, having been accused of lying to investors. Nikola has only delivered a few dozenbattery-electric trucks, and the Tesla Semi is still missing. Several developments this week suggest the competition could be back on. On Sunday, the Senate passed the Inflation Reduction Act, which carves out a slice of roughly $374 billion in climate and energy spending for cleaner commercial vehicles. A few days later, Musk tweeted Tesla would start shipping a 500-mile range Semi Truck this year, and Nikola named a new chief executive officer with decades of experience in mass-producing vehicles.
“Do what is right, not what is easy nor what is popular.” —Roy T. Bennett
*All sources from Bloomberg unless otherwise specified