TheChek News Flow

The Department of Energy (DOE) appears to be on a loan-approval spree in the lead-up to President-Elect Donald Trump’s inauguration, and the winners are all companies manufacturing clean energy solutions on U.S. soil.

Trump has promised to cancel any unspent federal dollars under President Joe Biden’s Inflation Reduction Act, a bipartisan climate law that allocated billions to building a domestic supply chain for clean energy. The IRA spurred a flurry of private investment as well. In particular, automakers and battery manufacturers have collectively invested or promised to invest around $112 billion in building domestic cell and module manufacturing plants for electric vehicles. Those factories have largely benefited Republican-led communities.

The fresh loans come from two DOE loan programs — the Advanced Technology Vehicles Manufacturing (ATVM) loan program and the Title 17 Clean Energy Financing Program — that the IRA revived and expanded, respectively.

The ATVM program in particular, which went dormant under Trump’s first administration, once provided a much-needed $465 million loan to Tesla in 2009, helping to save the EV maker from one of several near-death experiences. It dwindled under Trump’s administration.

A joint venture between General Motors and LG Energy Solution was the first to receive a $2.5 billion loan under the ATVM program in 2022 under Biden’s administration.

A condition of these loans is that the borrowers “meaningfully engage with community and labor stakeholders to create good-paying jobs and improve the well-being of the local community and workers.”

Over the past week, the DOE approved or conditionally approved four loans totaling roughly $14.7 billion. We’re keeping track of where the Biden administration’s DOE loan money is going. Here are some of the biggest recent recipients.

The deal will enable it to integrate more AI capabilities into its predictive tools for luxury, fashion and beauty brands.

PARIS — Luxurynsight has acquired fellow French data analysis firm Heuritech as it works to integrate more artificial intelligence capabilities into its predictive tools for luxury, fashion and beauty brands.

Heuritech, which uses AI to help the fashion industry detect trends online and assist e-tailers in pushing the correct product on their sites, won the inaugural Innovation Award offered by LVMH Moët Hennessy Louis Vuitton in 2017 and now works with clients including Nike, Prada and Decathlon.

“The addition of Heuritech AI-powered product recognition and trend forecasting strengthens our ability to provide a full 360-degree view of market dynamics and consumer behaviors, enhancing our clients’ competitive edge,” Jonathan Siboni, chief executive officer and founder of Luxurynsight, said in a statement.

The company did not disclose the financial details of the deal, which marks its first major acquisition. It said venture capital funds Elaia and Serena, who were shareholders in Heuritech, had agreed to sell their stake on the condition that they invest the proceedings in Luxurynsight.

Its historic shareholders include a cadre of experienced executives such as Christian Blanckaert, former director of international affairs at Hermès; Pierre Denis, previously CEO of Jimmy Choo, and Stanislas de Quercize, former CEO of Cartier.

Luxurynsight uses data-driven analytics to help companies optimize decision-making in fields including competitive intelligence and marketing, pricing, retail and investment. It works with more than 50 clients, among them LVMH, Chanel, Kering, Compagnie Financière Richemont, L’Oréal, Dior, Bulgari and Balenciaga.

The company, which employs 45 people in Paris, will integrate Heuritech’s team of 25, including many PhD’s in AI and machine learning.

Over the past few years, fashion and beauty have raised the level of their tech experience, jumping on trends, testing new tech and implementing new learnings. According to McKinsey, generative AI will add from $150 billion to $275 billion to fashion’s operating profits by 2030, with marketing being one of the top drivers.

After technology and finance, fashion is the "third biggest wealth-producing industry," with LVMH's Bernard Arnault and Inditex's Amancio Ortega in a two-horse race to be fashion's richest, a new analysis shows.

While LVMH Moët Hennessy Louis Vuitton‘s Bernard Arnault remains fashion’s richest billionaire by far, Inditex founder Amancio Ortega is closing the gap.

“The dynamics among the richest are an impressively precise allegory for the polarization the fashion industry has been going through for years,” management consultant Achim Berg writes in a new report analyzing Forbes’ rich lists between 2000 and 2024. “Luxury and value players are dominating in terms of numbers of billionaires and the net worth they are generating, while the premium and midmarket segment is squeezed.”

Indeed, as shares of LVMH falter amid a global slump in the luxury sector, Ortega has gained $20 billion in wealth over the past six months as Inditex and its flagship Zara brand go from strength to strength.

Berg, who recently wound up a 24-year career at McKinsey & Company to become an independent luxury adviser, found that the net worth of fashion billionaires grew from a 4 percent share in 2000 to 10 percent in 2024, considering the overall wealth of the top 200.

His analysis ranks fashion as the “third biggest wealth-creating industry” after technology, and finance and investment. Fashion billionaires boasted an average worth of $44 billion this year, compared to $31.8 billion for other industries.

Indeed, the number of fashion billionaires among the top 200 increased to 14 people with a total net worth of $617 billion in the 2024 ranking, versus nine people with a total net worth of $51 billion in 2000.

Arnault’s worth stood at $233 billion last March, Ortega’s at $103 billion, with Fast Retailing’s Tadashi Yanai in a distant third at $43 billion euros. (However, as of October, Arnault’s net worth fell to $155 billion, while Ortega’s rose to $123 billion, Berg’s analysis shows.)

Other fashion billionaires who have seen their net worth rise “fairly consistently since 2000” include Nike cofounder and chairman emeritus Phil Knight; Alain and Gérard Wertheimer, majority shareholders of Chanel; François Pinault, founder of luxury group Kering, and Stefan Persson, whose father founded H&M and who remains the Swedish company’s largest shareholder.

Berg noted that Europe’s fashion billionaires represent 81 percent of accumulated net worth this year, with Asia and North America each accounting for only 9 percent.

Notable Asian billionaires include Sky Xu, founder of Shein, who was new to the 2024 top 200 list, while North America’s richest included Michael Rubin, founder and CEO of Fanatics.

Citing HSBC data, Berg noted that in the luxury space, outsized profits were strongly driven by “bizarre price hikes” since just the COVID-19 pandemic, increasing on average 52 percent since 2019.

Meanwhile, an innovative business model at Inditex allowed the Spanish retailer to create “a group of thriving brands,” which also includes Massimo Dutti, Bershka and Pull & Bear.

In an interview, Berg elaborated on the study and his industry outlook:

WWD: Steep price increases in luxury, what HSBC calls “greedflation,” have shrunk the customer base by about 50 million, according to Bain & Co. estimates. Do you think the extreme wealth accumulated by today’s fashion titans could be another turnoff for customers already lukewarm on fashion?

Achim Berg: In the last decade, the luxury industry has grown massively in size. It has become a part of normality, and as a consequence, I think it’s broadly accepted that the families behind those businesses in luxury have done quite well.

I think we hear much more about the tech billionaires, who are more in the limelight. It’s probably because the personal lifestyle of many of the [fashion] billionaires on the list are not very public, or considered particularly extravagant or flamboyant. Nobody knows what Mr. Ortega is doing, for example.

WWD: The staggering value and wealth created since 2000 came despite multiple global crises. In your view, how resilient are the various levels of fashion: luxury, midlevel and mass?

A.B.: Value creation happens in all different segments, but there is an over-proportionate share in luxury and in sports. The midmarket was a very difficult place for many, but obviously not for Inditex.

Even 10, 15 years ago, Inditex had a business model with shorter lead times, less stock, and a more innovative way of allocating stock. And it seems that this competitive advantage is still true today.

You could argue that Shein has a kind of next-level innovation which is reflected in the very fast growth of the business and also the reported profitability. It’s a business innovation where you directly connect manufacturers to customers and ship directly from the production countries.

I think it’s also fair to say that among the luxury players, LVMH Group and other investments from the Arnault family have brought massive value creation. They have built a model of more than 75 different brands that seem to reinforce themselves in the way they go to market, in the way they develop management talent, but also in the way they successfully acquire and develop brands.

WWD: How do you account for Europe — which has far smaller economies than the U.S. and China — producing the lion’s share of today’s fashion billionaires?

A.B.: If we talk about top-end luxury, that only exists in France and Italy, it’s not even a broader European phenomenon.

I discussed that recently with a luxury executive, and he told me that it’s the combination of the royal court and the love for arts and a flamboyant lifestyle that have created that culture for luxury. And while other European nations had courts, the Germans were too Prussian to really indulge in luxury and I think for the Scandinavians, it’s a similar story. That probably explains why the luxury wealth creation is mainly a French and Italian phenomenon.

WWD: One of the old adages in American fashion was that if you dress the people who take a limousine to work, you’ll take the subway, whereas if you dress the people who take the subway to work, you’ll be chauffeured in a limousine. Is this no longer true?

A.B.: I think you can generate outstanding wealth in any price segment and in any product category. But what we see from the study is that luxury is a fully established industry that is benefiting from the growth of the middle class, and a certain excitement for hedonism. In today’s world, also through social media, I think achievements get celebrated with a lot of luxury goods and a luxury lifestyle.

WWD: Do you detect any common threads among fashion’s top billionaires?

A.B.: There’s definitely something around innovation of the business model… It’s not just amazing execution.

Most of the businesses are dominated by families, and in that sense, they have a more long-term view. In luxury, you need to take a long-term view, because you need very high investments. You need to build the brand, and you have high capex needs for stores, and for your own production.

WWD: Are you at all surprised the digital and e-commerce revolutions did not produce more billionaires — or is this reflected in the rankings?

A..B: I’m not. With the rise of inflation and the increase in interest rates in 2022, we had a massive re-evaluation of the industry and the share prices for many of the very highly valued digital players dropped by 80 to 90 percent and they have only partially recovered from that.

Many of these digital businesses were targeting growth and market share and not bottom line. And that has changed since August 2022 because now a lot of those businesses need to be profitable in order to to get a higher valuation.

WWD: Any predictions for how wealth creation in fashion and the rankings might evolve in 2025?

A.B.: We’ve seen significant resilience in the last 24 years, which makes me believe that those businesses will continue to be resilient with whatever challenges we will have in the next years. And if we compare [fashion billionaires] to the performance of tech investors or tech entrepreneurs, we’ve seen that they even outperformed them on some of the KPIs and the scale.

People will continue to get dressed. Luxury has a reckoning at the moment, which in my view is not only cyclical, but also partially structural. But the long-term outlook for luxury is very positive because middle classes will continue to grow, and rewarding oneself or loved ones for achievements will continue. Therefore I cannot see that luxury would go out of fashion.

Gifts for the risk takers and rainmakers

If there is one thing that bankers like, it’s giving themselves titles that make them sound more of a baller than they actually are.  So Goldman Sachs has “Partners” who aren’t members of any partnership, while every other investment bank has “Managing Directors” who aren’t on the board of a company and in many cases don’t manage anything.  A bank’s “Vice Presidents” are considerably further than a heartbeat from the presidency.  I once worked for a brokerage where the highest rank was “Board Director”, seemingly in order to remind all of us ordinary Directors that we weren’t fooling anybody.

Weirdly, regulators play along with these status games.  The EU has rules for identifying “Material Risk Takers”, who are subject to more strict regulation of their compensation arrangements.  But they’re quite widely drawn – basically, if you earn more than €500,000 then you are deemed to be one unless your employer can demonstrate otherwise.  Most banks can’t be bothered making the effort, so the industry is full of twentysomething “Material Risk Takers” whose actual ability to take risks with the bank’s capital probably maxes out at clicking on a phishing link.

And now, the Bank of England is trying to reverse this title inflation; under its proposed new rules, only the top 0.3 per cent of earners at any firm will be deemed material risk takers, and even then, a bank will be able to exclude the ones who don’t really take risks at their own discretion rather than needing prior approval.  It’s coupled with some warnings that this isn’t just meant to include high-rolling traders – the person who designs your risk management models is a risk taker, even if they don’t see themselves that way.  But the main effect will be to drop a lot of little leaguers out of the category subject to the most draconian rules on bonus deferrals and clawbacks.  And the proposed rule changes go further than this — even for genuine Material Risk Takers, the Bank of England now thinks that seven year deferral periods are a bit excessive, and has reduced them to something closer to global norms.

That’s good news for the bankers, but less so for the banks.  (I have a bit of history here; at a very young age, I was involved in the earliest stages of bonus regulation, something for which I have apologised in the past and hereby do so again).  The bonus deferral rules are one of the many financial regulations where the side effects are more important than the stated purpose.  

The stated purpose is to align bankers’ incentives with the long term financial stability of the bank.  It probably achieves this, but it’s not all that important a purpose.  Bankers’ incentives are pretty well aligned anyway, as nobody really benefits from having an imploded employer on their CV.  And incentives to risk taking aren’t really that important.  It’s very rare for a bank to be blown up because someone took a load of risk intentionally; usually, they blow up because someone did a lot of business that they thought was safe when it wasn’t.

The acknowledged side effect of the deferral rules is that they give the bank a captive source of capital.  When a financial disaster strikes, clawing back the deferred bonus pool is equivalent to a guaranteed rights issue, and depending on the business model this could be quite significant.  This is unfortunately less of a support in practice than in theory – by the time things have got so bad that management are genuinely considering it as an option, they are probably too bad to be saved anyway.

But the really important side effect is that aggressive deferral and clawbacks act as sand in the gears of the labour market for bankers.  If someone has five years’ worth of bonuses held up, they are that much more difficult and expensive to poach.  This is bad news for banks that want to hire or grow rapidly, but great news for incumbents.  It also tends, probably, to reduce price tension for banker salaries, particularly in bull markets.

Historically, London has been particularly draconian by global standards when it comes to deferral requirements.  So loosening them is likely to make it a relatively more attractive labour market for employees, at the price of making it a bit more expensive for employers.  The PRA consultation seems to recognise this — toward the end, during its cost/benefit analysis, they say that loosening the rules “will facilitate the movement of senior staff to the UK given that previous industry engagement identified this requirement as a significant deterrent to senior talent acquisition”.  

Which might be true, but it’s an interesting view of the balance of power between labour and capital; one in which rainmakers are able to refuse to make job moves which might disadvantage them personally.  The Bank of England appears to be making a bet that its competitiveness agenda is better satisfied by doing nice things for bankers than doing nice things for banks.

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The Caixin services purchasing managers index came in at 51.5 in November, edging down from 52.0 in October

A private gauge of China’s services activity suggests that the sector has continued to expand, with firms’ optimism at a seven-month high as Beijing’s policy support boosted market confidence.

The Caixin services purchasing managers index came in at 51.5 in November, edging down from 52.0 in October but continuing to signal growth for a 23rd consecutive month, said Caixin Media Co. and S&P Global on Wednesday.

The index has remained above the 50 mark that separates contraction from expansion since January 2023.

Both supply and demand in the sector continued to grow, but at a marginally slower pace, according to Caixin. Business activity and total new orders followed suit, while overseas demand growth decelerated for a second straight month, the data indicated.

Employment in the services sector grew for a third consecutive month in November, but was limited despite continued increases in total new orders.

As Beijing’s more aggressive stimulus efforts start to kick in, sentiment among service providers has improved markedly, with the gauge for future expectations rising for a second month.

“Service providers generally expressed confidence in market improvement amid policy support, although some were concerned about the future trade environment,” said Wang Zhe, senior economist at Caixin Insight Group.

Possible tariff hikes from the U.S. under a second Trump administration have worried corporate China, fueling hopes of more policy support from Beijing next year as domestic challenges including a protracted property-market slump continue to weigh on economic growth.

“The structural and cyclical pressures facing the economy are expected to continue, coupled with the likelihood of continued accumulation of external uncertainties, which requires sufficient policy buffers,” said Wang.

Wednesday’s readings are in line with the official gauge released previously. China’s official nonmanufacturing PMI, which covers both service and construction activity, fell to 50.0 in November from 50.2 in October. The subindex tracking service activity stayed unchanged at 50.1, suggesting continued expansion.

Both the official and Caixin PMI readings for the manufacturing sector came in stronger in November, pointing to a solid burst of activity, which may have been aided in part by the front-loading of shipments ahead of potential U.S. tariffs.

Overall, the surveys suggest that the Chinese economy continued to regain momentum in November, Capital Economics said in a note.

Its average of the official and Caixin composite PMIs touched a five-month high for November, consistent with its expectation for an acceleration in on-quarter gross domestic product growth this quarter, economist Gabriel Ng said.

However, the boost from policy support is likely to be short-lived, Ng said, expecting foreign protectionism and domestic structural problems to weigh on growth over the coming years.