Miss Tweed : What story does the new Ferragamo tell us?

What story does the new Ferragamo tell us?

How long will Marco Gobbetti stay on as CEO of Ferragamo? That’s a question shareholders may start asking themselves soon. The brand’s sales have been declining every quarter until the end of September. In April and in August, Gobbetti said the drop in revenue was due to weakness in travel retail sales and to a pruning of its retail network. He also argued that the new collections by the brand’s new designer Maximilian Davis had not yet fully hit the stores. This month, the 63-year-old Italian executive also blamed the downturn in consumer spending for the 12 percent drop in nine-month net sales and against the same period in 2022.

What if the problem is deeper and has to do with the brand’s strategy and storytelling?

Ferragamo, known for its silk scarves and bow-tipped ballerinas, has been trying to reinvent itself for years. It hasn’t had much success. Gobbetti, who was previously CEO of Burberry, took the executive reins in January 2022 and Davis, a British national with Trinidadian and Jamaican roots, put his own brand on pause to join Ferragamo three months later. Together, they have been trying to build a new identity. But what is it about exactly?

The new Ferragamo is very black and red, modernist and minimalist with lots of tailoring. Davis’ shows have been getting good reviews and his point of view is stronger and much more convincing and consistent than that of his predecessor Paul Andrew, who is also British. Andrew went in all sorts of different directions in terms of style, steered by the Ferragamo family who could not decide what they wanted the brand to be.

Davis is a talented designer but that does not mean he’s figured out what it takes to make Ferragamo regain its former glory. Or what the brand is fundamentally about. His vision is sharp and edgy from a fashion point of view. His looks are clean and elegant, but there is little reference to Italy, let alone Florence, where the brand was founded in 1927. Maybe that’s the problem. When you buy Ferragamo shoes, bags or clothes, you want to buy a bit of Italy. Even the products don’t have Italian names. One of its new totes is called the Hug bag. Its design is somewhat similar to Hermès’s bags with the same emphasis on buckles.

Ferragamo offers shoes and bags in bright colors that are cosmopolitan and may appeal to young customers, but its personality has become somewhat cold and severe. Its designs do not express the lightness, ingenuity and love of life and the arts that Italy is known for.

CHOOSING THE RIGHT DESIGNER
Could it be that Gobbetti made the same mistake he did at Burberry — hiring a designer who did not really understand the brand? Designer Daniel Lee, in place for a year, is on a mission to reconnect Burberry with its British roots after years of lackluster performance under Riccardo Tisci. The Italian designer developed an urban, metrosexual and sporty identity for Burberry that did not suit the brand, fashion critics and industry experts say. Gobbetti, who worked withTiscibefore at Givenchy, was the one who chose the Italian designer for Burberry.

Gobbetti thinks highly of Davis. However, talent is not enough to woo consumers and get them to open their wallet. A designer needs to respect a brand’s heritage and master the cultural references of the country it is from. There’s no need to be a citizen of that country to achieve that. Some foreigners understand the culture of a country even better than those who hail from it. John Galliano, the British designer from Gibraltar, did a superb job at Dior and his successor Maria Grazia Chiuri, who is Italian, performed even better. She has tripled the brand’s sales in the past seven years.

According to the data company Launchmetrics, Ferragamo ranked 10th in terms of media impact value (MIV) with its last show during Milan Fashion Week. MIV is a proprietary algorithm created by Launchmetrics to measure and benchmark the impact of media placements and mentions in the fashion, luxury, and beauty industries. The MIV generated by Ferragamo’s fashion show — to which Miss Tweed was not invited — totaled $7.9 million against $49.7 million for Gucci, which topped the ranking of the Milan shows last month. Gucci was followed by Prada, Dolce & Gabbana, Versace and Fendi. During the Italian city’s Fashion Week, there were lots of wealthy Chinese flown in by Ferragamo to see the show and spend their money at its flagship on Milan’s swanky via Monte Napoleone.

“They lost the previous clientele, but they have not yet managed to conquer a new one,” summarized a former Ferragamo executive. “It’s clear to many people that the brand’s storytelling is weak but internally, managers don’t see it as a problem.” Also, Ferragamo’s strength is in bags and shoes, not in ready-to-wear. Yet, the brand wants to position itself as a fully-fledged fashion brand that also sells jewelry.

THE STORY
Miss Tweed asked Ferragamo to explain what its story was. A spokeswoman said it was about craftsmanship and heritage. She did not talk about the brand’s Italian roots or identity. Referring to Davis, she said: “He explored with linear precision that defines his expression, the silhouettes of the heritage of the brand, with a graphic purity reworked in new proportions and with new hardware. He introduced a new creative language for a new audience with a global creative vision in ready-to-wear, shoes and bags, including a contemporary take on Ferragamo’s iconic styles.” That statement does not tell us who the Ferragamo lady is and what her universe is about — things consumer usually identify with.

The company’s poor numbers, on the other hand, are easy to grasp. In the six months to June 30, Ferragamo’s profit before tax fell to €34 million, down from €88 million in the same period last year. Ferragamo’s revenues for 2023 will likely be down against 2022. CEO Gobbetti will argue the best has yet to come and ask investors for patience.

Commenting on the company’s nine-month results on Oct. 19, Gobbetti said: “The overall sales performance reflects, at this stage, the ongoing focus on quality of sales and rationalization of distribution networks, as well as the evolution of the offer and the acceleration of the transition to the new creative course, the full potential of which, will become evident in 2024.”

What is striking with Ferragamo is that you have brands such as Gucci, Dior, Louis Vuitton, Celine, Saint Laurent and Prada that have grown exponentially in the past decade, yet Ferragamo today makes less revenue than it did in 2016. Its annual sales in 2022 stood at €1.25 billion, while in 2019 they were €1.37 billion and in 2016, they had reached €1.43 billion. These numbers speak volumes about the brand’s lack of clear vision and strategy.

Ferragamo’s share price has also been on a steady decline, and not only due to the current market correction that has weighed on all luxury stocks in recent weeks. Ferragamo shares stood at €31.85 euros in 2015. When Gobbetti joined in early Jan. 2022, they were at €22.7. They closed on Friday at €11.26, valuing the company at €1.9 billion.

FREE REINS
When Gobbetti was hired by the Ferragamo family, he was seen as the savior who could give the brand a new relevance. He also obtained something no CEO of the company ever got before — free reins to run the business. Before Gobbetti, the Ferragamo family kept meddling with design, store openings and marketing. They and would never let the CEO take decisions and craft a coherent roadmap. “The family has given full powers to Marco,” one senior industry source said. His predecessor Micaela Le Divelec Lemmi struggled to get the family’s full backing and cooperation, industry sources say.

For many years, influential members of the Ferragamo family remained in key posts and would not let go of the vision they had of the brand’s golden age of the 1950s and 1960s. Back then, Salvatore Ferragamo was the “shoemaker to the stars” and personally looked after celebrities like Sophia Lauren, Audrey Hepburn and Rita Hayworth. In terms of style and image, they did not want it to stray too far away from that period. As a result, the brand looked old and customers thought it was for their grandmothers.

“The brand was dying a slow death. Inertia was not an option,” said a luxury industry expert who has worked for Ferragamo. “They needed a creative disruption. Now, their problem is rebuilding traffic because they have been irrelevant for such a long time,” he said.

Another problem is that Ferragamo has been stuck with old stock from the previous era that is not easy to get rid of. This also explains the drop in sales. The transition from one designer to another is never easy. Analysts estimate that Ferragamo makes about 15 percent of its sales from outlets, if not more, with many of them in China. Outlets are useful to turn stock into cash, but they can weaken a brand’s exclusive image.

Ferragamo is also suffering from its overexposure to the U.S. market, which performed well in 2022 but has been down this year. It has also built a big presence in China, where demand has not picked up as much as expected. This week, Ferragamo announced it was buying back the stakes it had in joint-ventures with local partners in several cities in Greater China. The companies belong to Peter Woo, who runs a big real estate portfolio in Hong Kong and mainland China and owns the retailer Lane Crawford Joyce Group.Woo has a 5.98 percent stake in Ferragamo and remains a member of the board even after the deal, the company said.

“The conclusion of the transaction will strengthen Ferragamo's presence in the Greater China area, one of the most relevant markets for the group, at a very important time for the brand's relaunch,” Gobbetti said in a statement issued on Wednesday.

NEW NAME
Some investors are growing skeptical about Gobbetti’s ability to turn around Ferragamo. The Italian executive dropped the Salvatore part of the brand’s name and replaced its traditional burgundy red with the same flashy red that luxury car maker Ferrari uses. He also threw out its trademark handwritten logo and adopted one that looks like that of several other brands, including Burberry and Balenciaga.

Before joining Burberry in 2017, Gobbetti used to run LVMH’s Celine. He was lucky to work with Phoebe Philo, whose designs were hugely popular. His track record at Burberry is more mixed. Many industry analysts think he jumped ship before completing the brand’s turnaround. Also, he hired Tisci who, it turned out, was ill-suited for Burberry. When he agreed to leave for Ferragamo in 2021, the Italian manager secured a package worth more than €8 million. It included a welcome bonus of €4.43 million and a guaranteed bonus for 2022 of €3 million. That €7.4 million was roughly equal to the company’s operating profit in the first quarter of 2021. At Burberry in 2020, Gobbetti received £2.55 million, including share awards, or nearly €3 million. He said he was going to Italy to be closer to his family.

Luckily for Gobbetti, who spent nearly 20 years abroad, he was entitled to the tax break reserved for Italians who return home. Starting in 2022 and for seven years, he became eligible to pay a flat 15 percent tax rate on his income -- a third of what he was charged in the U.K. or what most wealthy Italians pay. Overall, in 2022, Gobbetti’s total remuneration reached €9.84 million, according to the company’s annual report.

That’s a lot of money for a CEO who relies on consultancy firms such as Boston Consulting Group (BCG) to help define the company’s strategy and fine-tune its operations. Gobbetti also relied on a lot on BCG when he was at Burberry, industry sources say. It’s likely that he will go down in history not as the man who made Ferragamo into a huge success — unless he wakes up and strengthens the brand’s storytelling and image — but as the luxury CEO who was handsomely paid for outsourcing strategy to consultants.

FT : Property developer Evergrande faces winding-up petition in Hong Kong

Property developer Evergrande faces winding-up petition in Hong Kong
Case could impact restructuring efforts for indebted Chinese real estate company

Two years after its first default, the world’s most indebted property developer Evergrande faces its biggest legal test so far in its slow-motion collapse.

On Monday, a Hong Kong court will address a winding-up petition, brought by offshore investor Top Shine Global, against a company that has embodied the turmoil that has engulfed China’s property sector and whose fortunes have worsened dramatically in recent months. 

In September, the authorities said its founder and chair Hui Ka Yan was suspected of crimes, while plans to restructure its international debts were derailed by a lack of approval from the China Securities Regulatory Commission (CSRC). The wider real estate sector has also been shaken this month by a default by the developer Country Garden, adding to dozens of missed payments by its peers.

The prospect of an Evergrande liquidation, with its hundreds of projects across the mainland, gives added urgency to Beijing’s effort to address the problems of the country’s paralysed real estate sector.

“I do think the Chinese government looks at Evergrande as unique,” said one person familiar with the restructuring sector in China.

Top Shine’s winding-up lawsuit, initially brought in mid-2022 but repeatedly delayed, accuses Evergrande of failing to honour claims of HK$863mn (US$110mn) in relation to stakes Top Shine bought in the Evergrande unit Fangchebao, its online real estate and automobile marketplace platform.

The lawsuit could also be a further blow to any hopes of a restructuring deal between Evergrande, which had more than $300bn in liabilities at the time of its failure in 2021, and its international bondholders. A deal that would have seen new notes issued to replace old bonds was thrown off course at the last minute in September because of a lack of regulatory approvals.

International bondholders have yet to state a clear position on any liquidation, but earlier this month said it was “the base case” if no restructuring deal was reached. Their advisers have attended previous hearings brought by Top Shine.

Meanwhile, the fate of Hui has highlighted uncertainty over the government’s views on Evergrande, bringing with it implications for future restructuring plans or the process of liquidation.

The person familiar with the restructuring sector in China said criminal proceedings were likely to take precedence over civil cases. “We have been involved in other cases where the chair has been locked up and nothing really happens in the restructuring in that period until the dust settles,” the person said.

Beijing has so far emphasised the need to complete unfinished projects and has not openly intervened in Evergrande’s case, with local authorities in the southern province of Guangdong, where Evergrande is based, instead spearheading restructuring discussions.

International bondholder advisers Kirkland & Ellis and investment bank Moelis complained in a statement earlier this month about the company’s failure to gain regulatory approval for the restructuring plan.

The advisers noted that “despite repeated requests” from the bondholder group, Evergrande “has not provided copies of the filings made with CSRC and a detailed account of the efforts made to obtain the CSRC’s approval which led to the current situation”.

In contrast to Evergrande, another developer, Sunac, received approval for its own restructuring in recent weeks in a Hong Kong court.

FT : Investor frenzy will overvalue AI tech start-ups, says early OpenAI backer

Investor frenzy will overvalue AI tech start-ups, says early OpenAI backer
Many are ‘investing because everybody else is’ and most will lose money, claims Vinod Khosla

Artificial intelligence start-ups are overvalued and most will fail to make money, according to Vinod Khosla, an early OpenAI backer, in a warning to investors who are pouring billions into the buzzy sector.  

Since the launch of OpenAI’s ChatGPT chatbot a year ago, investors have rushed to put their money in AI start-ups, including rival chatbot makers Inflection, Anthropic and Cohere, sending valuations soaring.

“Most investments in AI today, venture investments, will lose money,” Khosla said this month at a technology conference in Laguna Beach, California.

Khosla, speaking to the Financial Times on the sidelines of the Wall Street Journal’s Tech Live event, drew a parallel between the hype around AI and last year’s frenzy of investment into cryptocurrency start-ups, including failed exchange FTX. 

Many later entrants are “investing because everybody else is investing, that is what’s happening in AI”, he said. This year, venture capitalists have invested $21.5bn into AI companies globally, compared with $5.1bn in all of 2022, according to PitchBook.

Many hope that bets on highly valued companies will pay out because others will invest later at an even greater valuation — a phenomenon known as the “greater fool theory”, Khosla told the FT. 

Khosla is confident AI will radically change the world. He believes AI has the potential to take on 80 per cent of the workload in 80 per cent of all human roles over the next two decades, and will create huge economic value.

Khosla Ventures was one of the first venture firms to bet on OpenAI, investing $50mn in the young company in early 2019 in a round valuing the start-up at $1bn, according to people with knowledge of that investment. OpenAI is now seeking a valuation of around $86bn. 

Khosla Ventures declined to comment on OpenAI’s current valuation, noting that OpenAI had not confirmed that target.

The valuations of rival AI companies have also soared this year. Anthropic was valued at $5bn in a deal earlier this year, before it raised a larger round from Amazon, while Cohere was valued at $2.1bn this summer and Inflection reportedly at $4bn. Fledgling businesses have also secured eye-catching sums. In June, French start-up Mistral AI raised €105mn in Europe’s largest ever seed round when the company was just a month old.

Khosla suggested he would sit out later-stage funding rounds where expectations risked exceeding the underlying value of the business. “We are very, very active but very selective,” he said. 

His firm’s other investments include online grocery delivery companies Instacart and DoorDash as well as financial technology companies Stripe, Block and Affirm.

“We invest in the fundamentals . . . which is different from investing in momentum, which is [what] most of the management community [does],” said Khosla. 

He also highlighted concerns that powerful AI technology could be used to undermine next year’s US presidential election. “There will be millions of bots interfering with our election next year . . . nation states — which means China mostly — influencing the election next year and attempting to make democracy dysfunctional,” he said. 

He lauded efforts by the Biden administration and Congress to staunch the flow of US capital and expertise to Chinese companies working on AI, semiconductors or quantum computing. 

President Joe Biden issued an executive order in August that would limit the ability of US venture capitalists to invest in those sectors. A congressional committee has been probing historical investments by prominent US firms that had a presence in China, including Sequoia Capital. 

The US should use all the tools at its disposal to win the AI race with China, including importing talented researchers from Russia, pulling in capital from the Middle East and creating an attractive regulatory environment, said Khosla.

Homegrown AI tools could provide free doctors or AI tutors to children around the world, he suggested. “That kind of ability to bring services to people who desperately need it will result in whether western values win . . . or China wins. I think that’s the key.”

FT : Edtech group Byju’s faces shrinking empire with creditors at the gates

Edtech group Byju’s faces shrinking empire with creditors at the gates
Online education company was once India’s most valuable start-up but now plans asset sales to settle debts

An educational technology empire rapidly assembled by Byju’s during a pandemic funding boom is now set to be dismantled, as what was once India’s most valuable start-up looks to asset disposals to settle its pressing debts.  

Byju’s had used loans and a war chest of more than $2bn, gathered from venture capital during the pandemic, to go on an acquisition spree, aiming to capitalise on the trend towards online learning and become a global edtech powerhouse.

But overexpansion and a post-pandemic contraction in its market have left it desperate for cash to pay off creditors. The principal ones hold notes for a $1.2bn dollar-denominated term loan it took out in 2021 and has defaulted on, embroiling it in lawsuits and countersuits across the US. 

In addition, it has borrowed $250mn this year from investment firm Davidson Kempner Capital Management, although two people with knowledge of the situation said under $100mn was disbursed before Byju’s defaulted on that loan too. 

A lawyer familiar with the situation said he expected “Byju’s to drive a lot of M&A in the coming months”. Its efforts to realise cash through disposals are set to begin with Epic, a California-based digital reading platform, which it acquired in 2021 for $500mn. One person familiar with the matter said term sheets had been drawn up for a deal and another said Moelis, the investment bank, was running the sales process. Moelis declined to comment.

Nirgunan Tiruchelvam, head of consumer and internet at Singapore-based Aletheia Capital, said “a battle for the spoils” was beginning, as “various parts of the business could be sold to people who are interested in buying an asset at a discount to its fair value”.

Those spoils could include Byju’s subsidiary Great Learning, which offers online higher education courses. Through legal action, Byju’s term lenders won the right to appoint financial firm Kroll to oversee the Singapore-based edtech company. Byju’s acquired Great Learning just two years ago for $600mn, but two people familiar with the matter said it was likely Great Learning would ultimately be sold to help settle debts.

Byju’s financial problems also extend to the presentation of its accounts. It is roughly one year late in filing them for its financial year that ended in March 2022 and its chief financial officer Ajay Goel is quitting the company at the end of this week. Goel is rejoining Indian conglomerate Vedanta as CFO, after only leaving it in April to join Byju’s. He told investors in June that the audit to March 2022 would be completed by September. 

The edtech company, which delayed reporting a $560mn loss in its 2020-2021 year, has suffered the resignation of its auditor Deloitte and of three board members representing its backers. One of them, Prosus, has written down its stake to give Byju’s an implied valuation of just $5bn, down from $22bn last year. 

Byju’s did not respond to a request for comment.

Le Figaro : Liban : un juge expulse Carlos Ghosn de sa résidence à Beyrouth

Liban : un juge expulse Carlos Ghosn de sa résidence à Beyrouth

L’ancien patron de Nissan et son épouse ont un mois pour quitter leur luxueuse propriété d’une valeur estimée à 19 millions de dollars, selon une source judiciaire.

Un juge a décidé d'expulser l'ancien patron de Nissan, Carlos Ghosn, de sa résidence dans la capitale libanaise, a déclaré une source judiciaire samedi, environ quatre ans après qu'une société d'investissement l'a accusé de «violation de propriété». Carlos Ghosn, qui a trouvé refuge au Liban fin 2019 après sa fuite rocambolesque du Japon où il faisait l'objet de poursuites judiciaires, a fait appel de la décision d'expulsion vendredi, selon la même source qui a requis l'anonymat.

Carlos Ghosn et son épouse devront «évacuer la propriété (...) dans un délai d'un mois», selon une copie de la décision consultée par l'AFP et datée du 16 octobre. La luxueuse demeure située dans un secteur huppé du quartier d'Achrafieh a une valeur estimée à 19 millions de dollars et est enregistrée au nom de la société libanaise Phoinos, a précisé le responsable judiciaire. Phoinos avait engagé la procédure légale en 2019 et accusé Carlos Ghosn de «violation de propriété privée et de résidence dans la propriété sans base légale», a-t-il ajouté.

«Un complot» pour Carlos Ghosn
Selon le document du tribunal, Carlos Ghosn affirmait que la société était affiliée à Nissan, que «la propriété avait été achetée (...) pour sa résidence, et qu'il existait un accord signé avec Nissan lui accordant le droit d'y habiter». Il avait occupé la propriété «conformément à une relation contractuelle liant Ghosn et Nissan» mais la fin de cette relation et le souhait du plaignant de récupérer la propriété invalident «la base légale» de son occupation, selon ce document.

Carlos Ghosn, qui possède les nationalités libanaise, française et brésilienne, a été arrêté fin 2018 au Japon où il devait être jugé pour des malversations financières présumées quand il était à la tête du groupe Renault-Nissan. Carlos Ghosn clame son innocence et dénonce un «complot» ourdi, selon lui, par Nissan avec l'appui du gouvernement japonais, pour le faire tomber et éviter ainsi une union plus étroite avec Renault.

FT : Why Rimowa decided to go shell for leather

Why Rimowa decided to go shell for leather
The aluminium-suitcase brand is ready to show its softer side

You can spot one from a mile away: the industrial-looking case, with its tell-tale grooves, gliding smoothly through the airport. Often it’s dinged up, indicative of a life well travelled, other times covered in stickers, sometimes both. 

Rimowa’s instantly recognisable suitcases have become global status symbols, synonymous with a certain class of traveller. That the German brand has managed to cultivate a luxury product out of a decidedly unluxury material – aluminium – must be one of the industry’s more unique success stories. As it marks its 125th anniversary, Rimowa is achieving record revenues and has a hard time meeting customer demand.


From 2 November, the brand is moving towards a more typical luxury domain with the launch of the leather-wrapped Distinct suitcase. “There is a big leather territory in the luxury industry, and this has not been a traditional playground for Rimowa,” says Hugues Bonnet-Masimbert, who succeeded Alexandre Arnault as CEO in 2021. “It’s less in response to customers’ demand for a leather suitcase and more from a defined request for more surprises, emotion and elevation.”

Since it was bought by LVMH in 2016, Rimowa has “surprised” its customers with various collaborations: a team-up with streetwear brand Supreme in 2018 sold out in 16 seconds; the same year, a special edition with Off-White saw the brand’s signature trunks realised in see-through polycarbonate. In 2019, Dior Men’s artistic director Kim Jones reimagined the brand’s signature wheelie case as a crossbody bag, while Fendi added leather handles and an orange logoed luggage strap. Most recently, the brand collaborated with Tiffany & Co to create three new products – a suitcase, a crossbody bag and a jewellery box.


The addition of leather to Rimowa’s range, says Bonnet-Masimbert, “opens up the opportunities of future creative work”. But it’s not a first: the brand was founded as a saddlery firm in 1898 and quickly moved into producing leather luggage in the early 20th century. The aluminium case was introduced in the 1930s as a lighter alternative, while the signature grooves were added in 1950, as a reference to the corrugated body of the world’s first all-metal commercial aircraft.

“It’s been about 100 years since Rimowa has produced leather,” says Bonnet-Masimbert, “and the journey to the new suitcase was a pretty major, difficult endeavour.” The Distinct launch has been years in the making to allow the brand’s artisans in Cologne, where its Classic suitcases are made, to learn the skills required to produce them. “There is a lot of work in the stitching, which was a new know-how for the artisans, and there is very clear innovation in the leather wrapping technique that we have used.” 

The new suitcase also comes under Rimowa’s lifetime guarantee, which the brand introduced last year for all future purchases, meaning that if a case loses a wheel or a handle goes bust, Rimowa will repair it. “There are a number of other lifetime guarantees out there that promise that if you have any problem, you can bring back your product and it will be exchanged, no questions asked,” says Bonnet-Masimbert. “But the more responsible thing to do is to make the commitment to repair the suitcase. It puts pressure on the initial quality of the product as it has to be designed for future repair.”

WSJ : Mike Pence Drops Out of 2024 Republican Presidential Race

Mike Pence Drops Out of 2024 Republican Presidential Race
‘This is not my time,’ says the former vice president, who struggled to gain traction

Former Vice President Mike Pence withdrew from the Republican presidential race Saturday, saying “this is not my time” after he struggled to gain traction in a crowded field dominated by former President Donald Trump.

“I’m leaving this campaign but let me promise you I will never leave the fight for conservative values,” Pence said during a speech before the Republican Jewish Coalition in Las Vegas.

Pence, who is 64 years old, became the highest-profile candidate to exit from the race, though he fared poorly in polls and ran low on money needed to sustain a campaign.

The former vice president pulled in just $3.4 million during the third quarter of the year and it was unclear whether he would meet the Republican National Committee’s requirements for fundraising and polling to participate in the third GOP primary debate in Miami on Nov. 8.

Additional departures are possible in the final months before the Jan. 15 Iowa caucuses, the first nomination balloting and an event likely to trigger more exits from the race. The former president has benefited from a large field that has divided up the non-Trump vote within the party.

Pence’s certification of the 2020 election results during the early morning hours of Jan. 7, 2021, in defiance of Trump and after a mob attacked the Capitol, was one of the biggest reasons his nomination bid faltered. Trump backers have never forgiven what they see as a betrayal, while anti-Trump Republicans still blame Pence for being a supplicant the previous four years.

As a result, neither wing of the GOP backed a man who spent decades courting conservatives and would have been viewed as a top Republican contender in a pre-Trump world. Reporters often asked Pence more about Trump and related legal matters than his policy proposals.

Pence’s decision comes just ahead of the expected release of an Iowa Poll on Monday morning. The survey, the most closely watched poll in the state, is led by the Des Moines Register newspaper and may show the former vice president struggling in a state where he has almost totally focused his campaign.

Pence announced his decision at the end of a speech before Jewish activists in which he rejected growing isolationism in the GOP. While Republicans are advocating strong support for Israel in its war against Hamas, they are split on continued funding for Ukraine.

The former vice president, who became a born-again Christian in college, went on to become a radio talk-show host before being elected to Congress and later Indiana’s governor.

He is a longtime promoter of limited government, an ally to social conservative groups, and has backed some of the most restrictive abortion proposals put forward by the Republican presidential field.

“We always knew this would be an uphill battle, but I have no regrets,” Pence said.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Bonds are not in a good place now.

Cover:
-Bonds are not in a good place now. Yet, rarely has the timing to buy them been better. The supposedly secure Treasuries are on track to lose money for three consecutive years, declining 42% over that period. Other bonds, whether mortgage-backed securities or high-quality corporates, have also taken a beating, leaving investors with losses from what are supposed to provide ballast in a portfolio. But the end of the bond bear market is upon us. Traders see only a 25% chance of another rate hike this year, possibly at the Fed’s meeting in December. Hedge fund manager Bill Ackman, a prominent bond bear, recently closed out his bets against Treasuries. What’s more, continued geopolitical unrest or signs of a recession could restore the core market—government-backed debt and high-grade corporate bonds—to its position as a haven, a role it had abdicated in recent years.

Interview:
-Young Americans are experiencing a surge of unhappiness, according to anecdotal evidence and social science research. Its roots aren’t clear, but the Covid pandemic may have contributed, as has social media, based on a lawsuit filed on Oct. 24 against Meta Platforms by 42 state attorneys general, who allege that Facebook and Instagram purposefully ensnared children and teens to the detriment of their long-term physical and mental health.

David Blanchflower, a British-American labor economist, has studied happiness and mental-health trends for decades, and his new academic research, conducted with Alex Bryson, a professor of quantitative social science at University College London, confirms how bleak things have become. It isn’t just that young adults feel sad or unhappy for a day or two; 12% of 23-year-old women, they found, report that every day of their lives is a bad mental health day.

Tech Trader:
-Technology stocks dropped to correction levels last week, after they posted earnings that either fell below expectations – including some of the world’s largest companies – or that failed to issue optimistic guidance factors. On Wednesday and Thursday, the NASDAQ Composite fell 4.1%, the tech-heavy index’s worst two-day stretch of the year. The index has fallen 12% since July. The most notable of these were META and Alphabet. Indeed, both companies earned well above expectations, but the results led to fresh concerns about cloud and ad spending.

The Trader:
-Chip stocks have been getting crushed recently—and ON Semiconductor Has been a notable example of this trend. ON is cheap now, and could pop if it beats earnings expectations on October 30. ON stock is down about 25% to a recent $81.16 from its record high hit this summer amid tech-sector weakness and concerns about restrictions on exporting to China. The decline was compounded by a selloff in the chip sector on Wednesday caused by Texas Instruments, which missed sales forecasts when it reported earnings after Tuesday’s close and said it saw weak demand from industrial customers.
-Bond yields are showing signs that they have peaked. If they keep dropping, it would make a host of stocks look attractive. Utilities are the ideal prospects for this dynamic. The Utilities Select Sector home to regulated utilities such as Duke Energy
and Dominion Energy is down almost 17% for the year, versus double-digit gains for the S&P 500. That puts the sector on pace for its worst annual underperformance on record, according to Dow Jones Market Data.

Features:
-Exxon Mobil said that it should be able to keep producing oil for years to come. But that prospect has been overshadowed by otherwise disappointing news. Some of Exxon’s lesser-watched businesses have been struggling. Earnings from sales of chemicals, for instance, fell sharply because supply is outpacing demand, hurting margins. And earnings have suffered even as the company is set to spend more money on capital projects than some analysts had expected. Exxon reported adjusted third-quarter earnings of $2.27/share, below expectations for $2.37. Revenue of $90.8 billion missed expectations for $93.4 billion. The stock was down 2% on Friday, while stock in Chevron, whose earnings miss was significantly worse, fell 5%. Exxon stock fell even though management is increasing the quarterly dividend to 95 cents from 91 cents, boosting the dividend yield to 3.6% at current prices.
-The Federal Reserve’s restrictive monetary policy has apparently managed to cool down inflation (based on September results) relative to a year ago. Nevertheless, American consumers are continuing to spend and this could complicate the fed’s goal of keeping inflation down. Based on the core personal-consumption expenditures price index, which excludes the more volatile food and energy sectors, the pace of inflation slowed in September to 3.7% year over year, according to the latest Bureau of Economic Analysis data, released Friday. That’s in line with forecasts and slightly below the 3.8% revised rate recorded in August. Core PCE is closely studied by the Fed.

Europe:
-The European Central Bank stopped its course its unprecedented streak of 10 consecutive interest-rate hikes since July 2022, as the Eurozone faces growth headwinds and persistent inflationary pressures. The ECB followed the lead of the Federal Reserve, which paused its campaign of rate-hikes last month and is expected to keep monetary policy unchanged next week. The backdrop in the US is starkly different, however, with lower inflation and stronger economic growth. The US economy grew strongly in the third quarter, according to Thursday’s preliminary print of gross domestic product. The ECB’s pause, on the other hand, comes after a spate of economic data that showed a weakening Eurozone and underscored the ECB’s challenge in bringing inflation back to the 2% medium-term target without causing recession.

Emerging Markets:
-Argentina’s long-suffering bonds slid another 10% after Sunday’s first-round presidential election, which saw sitting economy minister Sergio Massa leap from third place in an August primary to first with 37% of the vote. Massa now looks like the favorite going into a Nov. 19 runoff with libertarian firebrand Javier Milei. “It’s Massa’s election to lose,” says Shannon O’Neil, senior fellow for Latin American studies at the Council on Foreign Relations. Voters choosing an economy minister who is presiding over 100%- plus annual inflation and a 5% contraction in the latest quarter might seem curious, until the alternatives are considered. Argentines soured on Milei, a self-described anarcho-capitalist who scored a shock victory in the primary. They were spooked by his promises to “burn down” the central bank and replace the peso with the dollar, and past tweets describing Argentine-born Pope Francis as an imbecile and “representative of the evil one in the house of God” didn’t help his cause either. Milei finished second in the latest round with 30% of the vote. Patricia Bullrich, political successor to right-of-center President Mauricio Macri, whom Argentines chucked out four years ago, lagged behind with 24%.

Commodities:
-China is reminding us that lithium is not the main ingredient in a lithium-ion electric vehicle battery. That distinction goes to graphite, which is used to make the anode, or negative pole, of EV batteries, accounting for up to half their weight. More than 90% of anode-ready graphite is produced in China. Beijing called attention to this fact on Oct. 20, a few days after the U.S. ratcheted up controls on semiconductor exports to China. Graphite sales from China will require a license as of Dec. 1. Xi Jinping’s government slapped similar restrictions this summer on two rare earth metals common in electronics manufacturing, gallium and germanium. Gallium prices have jumped by half since then, data provider Argus reports. A graphite squeeze could have a stronger impact still, says Ross Gregory, a partner at Korea-based consultant New Electric Partners. “Rare earths was a flesh wound,” he says. “Graphite would cause some internal bleeding.”

Streetwise:
-Jack Hough urges you to beware of giant yields in Annaly Capital Management, a large mortgage investment company with more than 25 years in the business. Annaly boats a dividend yield of 17%. That’s nearly twice as high as the average return for the stock market. It’s more than four times what retirement planners say you can safely spend from a portfolio. It’s a jackpot with a ticker symbol. But can you trust this yield? Hough suggests you should not, comparing the attractive yield to the colors on a rainforest frog: “it’s nature’s way of telling you that this thing could be secreting enough toxin to kill 200 monkeys, so look but don’t lick.”

FT : Mediobanca CEO scores victory in power struggle with top investors

Mediobanca CEO scores victory in power struggle with top investors
Alberto Nagel secures new term as shareholders back directors proposed by outgoing board

Shareholders in Mediobanca have backed a slate of directors proposed by the Milanese lender’s outgoing board, marking a victory for management in its power struggle with top shareholders.

Investors handed longstanding chief executive Alberto Nagel and chair Renato Pagliaro new three-year terms at the helm of the Italian investment bank.

The vote, on Saturday, pitted candidates led by Nagel and Pagliaro against a minority list of five directors proposed by the bank’s largest shareholder, the billionaire Del Vecchio family’s holding company Delfin.

The board-endorsed slate of candidates was supported by shareholders representing 40.4 per cent of the share capital, handing them 12 seats on the board.

The Del Vecchios’ company had sought to secure as many as a third of the seats on the 15-strong board, as part of a push to shake up the management of the bank.

Delfin’s slate was backed by shareholders representing 32 per cent of the share capital. Delfin holds almost 20 per cent of the shares in Mediobanca, while building tycoon Francesco Gaetano Caltagirone, who supported the slate, holds roughly 10 per cent.

Although Delfin had the support of Caltagirone — also a top shareholder in Italy’s largest insurer, Generali, alongside Delfin and Mediobanca — proxy agencies advised shareholders to back the Mediobanca-endorsed candidates, and the minority slate ultimately secured only two seats. 

People close to Delfin said the outcome was expected and was “fine”. Insiders say its priority is to see both Nagel and Pagliaro replaced by the end of the new three-year board term.

Although Delfin has put pressure on Mediobanca to refresh its board and take a bolder approach to expanding its wealth management and investment banking businesses, Mediobanca this week unveiled record quarterly profits.

Net profits for the three months to the end of September were €351mn, boosted by performances in its wealth management and insurance units. That was a 34 per cent rise compared with the previous year.

Analysts and insiders have suggested machinations at the top of the prestigious Italian bank may be linked to a similar battle for control of Generali, which pitted Caltagirone and Delfin against Mediobanca last year.

A fragmented Mediobanca board would have helped Caltagirone, who is expected to have a second run at overhauling the management of Generali in 2025. Mediobanca is the largest shareholder in Generali.