FT : Life insurer LV faces growing backlash over sale to private equity group Ba

Life insurer LV faces growing backlash over sale to private equity group Bain
Some members and politicians voice concerns over £100 pay-off and loss of mutual status

The planned sale of LV, one of the UK’s oldest mutually owned life insurers, is under mounting pressure from members and politicians firmly opposed to the group being taken over by a private equity group.

LV announced last week that members would receive £100 each to approve the takeover by US group Bain, with more for those holding eligible with-profits policies.

The deal’s supporters have until December 10 to convince three-quarters of those voting to accept the sale and a related change in scheme rules.

But some members are vehemently opposed to the sale. “We can have a shopping delivery from Sainsbury’s, and that can be for £100, just for our food for the week,” 74-year-old Clarissa Johnson, an LV member who does not have with-profits benefits told the Financial Times. Another, 72-year-old Duncan McGibbon from Bath, said the offer was a “bit of an insult”.

They are part of a vocal group of pro-mutual members who plan to vote against the £530m sale to the US private equity firm, which was chosen last year over other bids including that from fellow mutual Royal London. They lament that their policies will no longer be administered by a mutual, operating for the benefit of its members.

As the deadline nears, Royal London has recently approached LV again, proposing alternative three-way talks with Bain about splitting up the mutual, according to a person familiar with the matter.

In a statement on the approach, which was first reported by the Mail on Sunday, Royal London said it was “ready to explore any option that delivers a better member outcome.” LV did not respond to a request for comment.

Members’ concerns over the Bain takeover are increasingly being shared by senior UK politicians. “LV should not be demutualised,” MP Angela Eagle, a former shadow business secretary, told the FT.

Limits on what mutuals can do are being used as an excuse for groups to demutualise, she added. The process “rewards senior managers very handsomely” and allows investors “to plunder assets accumulated carefully over many years”.

A member of the Treasury select committee, Eagle is pushing for the body to hold a hearing on this issue, and wants demutualisation to be made much harder.

Tory peer Michael Heseltine this week said in the Daily Mail that Bain’s offer represented “30 pieces of silver”, while Labour’s shadow business secretary Ed Miliband also raised concerns. More than 700 people have signed a petition calling on regulators to block the sale.

LV’s chief executive Mark Hartigan has defended the Bain offer, telling the BBC this week that it would safeguard jobs and the LV brand, and boost investment in the company.

But critics have questioned why Royal London’s bid last year was not management’s chosen option. Two people briefed on the matter confirmed the rival bidder had offered £540m.

The Royal London bid did not, however, offer a “clean exit” for LV’s with-profits members, the people said, and left them with some liabilities relating to long-term insurance policies. The Bain offer took away those risks, said the people.

MP Gareth Thomas, a staunch opponent of the deal as the chair of the All-Party Parliamentary Group for Mutuals, called for an “honest debate about the virtue of both bids”.

He criticised the “lack of transparency” from LV during the process, including not publishing the full details of the Royal London bid.

Royal London declined to comment on the terms of the original deal. LV earlier this week said it could not comment on a confidential process. Bain declined to comment.

The Financial Conduct Authority has given the green light for the deal to go to a vote, but said it would “continue to consider the responses of LV’s policyholders and members” ahead of final regulatory signoffs on the sale.

FT : Airbus wins large order from veteran low-cost airline investor Franke

Airbus wins large order from veteran low-cost airline investor Franke
Deal for 255 jets underlines forecast demand — particularly from short-haul airlines — will rebound

Airbus has secured a multibillion-dollar order for 255 single-aisle jets from veteran airline investor Bill Franke, a deal that underlines the plane-maker’s forecast that the industry is poised to rebound strongly from the pandemic.

The deal sealed at the Dubai Airshow on Sunday packages together A321neo aircraft for delivery across a stable of ultra-low-cost airlines backed by Franke’s Indigo Partners, including Europe’s Wizz Air and Frontier in the US. 

The order is a sign that low-cost, short-haul airlines are rapidly rebounding from the impact of the pandemic, and comes as Franke is positioning his airlines to capitalise on the industry-wide disruption.

“This order reaffirms our portfolio airlines’ commitment to consistent growth through the next decade,” he said.

The US private equity executive is considered to be one of the most successful aviation investors in history. He has bought stakes in a clutch of low-cost airlines and spurred growth by cutting costs and focusing on expanding markets such as eastern Europe.

Wizz Air, which will receive 102 aircraft, has promised to use the pandemic to expand across Europe and beyond. It made an unsuccessful bid for British rival easyJet this year.

Rival low-cost carrier Ryanair signalled its own ambitions with an order from Boeing during the depths of the aviation crisis last December, and is expecting delivery of more than 200 aircraft in the coming years.

The Wizz order includes 27 A321XLR, longer-range aircraft capable of reaching the Middle East from western Europe, following Wizz’s launch of an Abu Dhabi-based joint venture earlier this year.

Frontier will receive 91 new aircraft, while Latin American carriers Volaris and JetSmart will get 39 and 23 planes respectively.

Neither Airbus nor Indigo released details on pricing.

Airbus this weekend said it expected industry growth to be driven by a combination of airlines upgrading older, inefficient aircraft and the soaring demand for air cargo.

The European plane maker forecast demand for 39,000 new-build passenger and freighter aircraft, 15,250 of these as replacements for ageing planes, by 2040.

Airbus’ forecast is less than 1 per cent lower than its previous one issued in 2019 before the pandemic, underlining its optimism that the industry is back on track.

As the aviation industry struggles to find a quick way to decarbonise, newer aircraft offer a way to reduce carbon emissions on a per passenger basis.

“The world is expecting more sustainable flying and this will be made possible in the short-term by the introduction of most modern aeroplanes,” said Christian Scherer, chief commercial officer at Airbus.

“As economies and air transport mature, we see demand increasingly driven by replacement rather than growth,” he said.

FTY : US nuclear arms shift could raise risk of inadvertent conflict

US nuclear arms shift could raise risk of inadvertent conflict
Policies on ‘sole purpose’ or ‘no first use’ sound appealing but would weaken security guarantees

As Mikhail Gorbachev and Ronald Reagan declared in 1985, “a nuclear war cannot be won and must never be fought”. Alongside climate change and pandemic disease, nuclear weapons represent a risk to humankind’s continued existence on our planet. But President Joe Biden’s upcoming review of US nuclear posture — which is expected to clarify the circumstances in which its weapons might be used — could bring inadvertent and unwanted consequences.

Biden has already hinted that he is considering a “sole purpose” policy, a pledge that the US would use nuclear weapons only in a narrowly prescribed set of circumstances. “I believe that the sole purpose of the US nuclear arsenal should be deterring — and, if necessary, retaliating against — a nuclear attack,” he wrote in March 2020. “As president, I will work to put that belief into practice.” A number of other influential voices are now encouraging a move in this direction, or even a shift to a policy of “no first use” of nuclear weapons. For the sake of Nato unity, these ideas must be resisted.

“No first use” sounds appealing, and its advocates argue that the US can set an example to other nuclear powers that would, in time, reduce the threat of nuclear conflict. They are wrong. There are three reasons why both this and “sole purpose” would undermine deterrence, divide Nato and increase the risk of conflict.

First, a US declaration would be treated with scepticism by potential adversaries — because authoritarian regimes are likely to judge others by their own standards — and could even encourage them towards military aggression if the threat of nuclear reprisals is lifted. Paradoxically, changing the present definition of nuclear deterrence would increase the risk of a major conventional conflict that could return us to the era of mass civilian casualties last seen in the 20th century.

Second, Nato as a nuclear alliance is deliberately ambiguous about the circumstances in which it might authorise the deployment of nuclear weapons to deter attacks on the territory or interests of its members. In the aftermath of the cold war, when there was no credible conventional threat to Nato’s European allies, the alliance reduced its emphasis on nuclear deterrence. But Russia’s invasions of Georgia in 2008 and Ukraine in 2014, and the massive boost to Moscow’s conventional and nuclear capabilities in the past few years, have necessarily raised the profile of nuclear weapons in Nato’s defence posture.

While nuclear ambiguity may be uncomfortable, it is necessary in order to reduce the temptation for adversaries to “game” our deterrence strategy by taking actions that will fall just short of provoking a military response.

Third, at a time of heightened tension due to Russia and China’s growing military power and threatening behaviour, a US declaration of “sole purpose” or “no first use” would unsettle Washington’s allies in Europe and the Asia-Pacific. By casting doubt on its security guarantees, the US would run the risk of making its allies and friends more susceptible to coercion, or of driving them to develop nuclear weapons of their own as a form of insurance. And that would potentially kickstart further nuclear proliferation and add to the risk of pre-emptive actions by Russia and China.

Advocates of change are right to say that progress on nuclear disarmament is painfully slow. But it will be achieved only by skilful diplomatic management of the conflicting ambitions and interests of the major powers. Painstaking efforts are needed to revive bilateral and, in time, multilateral steps towards verifiable nuclear disarmament and the prevention of proliferation. Eye-catching gestures from the US such as declarations of “sole purpose” or ‘no first use’ would undermine the Nato alliance and lead only to greater instability and insecurity.

FT : Satellite groups face race to scale up or become space junk

Satellite groups face race to scale up or become space junk
Billionaire enthusiasts and new technology have brought valuations down to earth in a fragmented market

A $7.3bn offer for UK satellite business Inmarsat earlier this month sent tremors through the industry: after years of talk about consolidation, a deal, maybe the first of many, had finally been done.

If completed, the takeover by US group Viasat would be the largest for the global satellite sector and will create its biggest player. It also leaves rivals including SES, Eutelsat, Intelsat and EchoStar considering how to scale up in a fragmented market or face becoming corporate space junk.

These companies — established businesses that operate large, powerful geostationary, or GEO, satellites that sit 35,000 kilometres above the Equator — have dominated the space communications sector for decades.

But their values have slumped in recent years as sources of cash flow — from satellite TV transmission, expensive satellite phones and rural internet connectivity — have started to dry up and terrestrial telecoms networks have expanded and improved.


That has coincided with the rise of low-earth orbit satellites, or LEOS, such as Elon Musk’s Starlink, Amazon’s Project Kuiper and the UK government-backed OneWeb.

This new generation of companies have launched thousands of low-cost satellites capable of delivering broadband, transforming the space economy in the process.

Space Capital, which has tracked the rise in activity, reported $231bn of equity investment in 1,654 companies over the past decade. The US and China account for more than two-thirds of the spending and just last year the Chinese government filed applications with the International Telecommunications Union for two LEO constellations with almost 13,000 satellites.

None of this has helped improve investor sentiment towards the older generation GEO satellite businesses.

SES, which is part owned by the Luxembourg government, trades at a fifth of its 2015 market capitalisation, while Eutelsat, 20 per cent owned by the French government, has lost almost two-thirds of its value over the same period. Debt-laden US group Intelsat has yet to exit the bankruptcy process it entered in May 2020 while EchoStar, billionaire Charlie Ergen’s satellite business, has lost half its value since 2017.

The industry has long flirted with consolidation but mergers have proved difficult to land, often for political reasons — satellite companies are seen as strategic assets — or on valuation grounds. The sector is littered with bankruptcies and debt levels are high because of the cost of launching satellites. Consolidation has been held back by what industry analyst Chris Quilty calls “shallow pockets”.

As a result, some 55 companies are still in the market. That fragmentation and lack of scale has now attracted the attention of outside investors. Inmarsat was taken private last year, and earlier this year Eutelsat turned down an unsolicited takeover offer from billionaire Patrick Drahi.

That has helped to focus minds after years of near misses on the consolidation front. Rajeev Suri, the former Nokia chief executive who was appointed this year to run Inmarsat, told the Financial Times: “The industry structure will change. It is long overdue. It’s a question of when not if.” The industry will boil down to a “handful” of players over the next five to seven years, he predicted. “For the health of the sector, we need consolidation.”

Mark Dankberg, executive chair of Viasat, argued that the outside interest in satellites shows the industry’s potential. “The one thing that Drahi’s proposal did was that it highlighted the value in satellites. What people will see value coming from is growth in the market,” he said.

Inmarsat’s owners accelerated plans to sell the company because of the effect of the pandemic on its business providing communication services to aviation and shipping. SES had also held talks over a deal for Inmarsat, said two people with direct knowledge of the negotiations. SES declined to comment.

The combined Viasat-Inmarsat would have 19 satellites — with 10 to be launched over the coming three years — and 20 per cent of satellite industry revenues. Suri described it as a “scale and scope” deal that will strength its growth prospects in markets including maritime, aviation and government.


The combined company will still be GEO-only but the deal could trigger others to consider their plans, especially those looking to build “mega-constellations” offering services from giant GEOs to tiny LEOs.

Others are less convinced there will be a mad scramble among Viasat’s rivals. Quilty said: “It remains unclear whether other satellite operators will choose to emulate Viasat’s path or aggressively target Viasat’s customers while the company endures a year-long, challenging regulatory approval process.”

Another chief executive in the satellite sector argued there is a more fundamental shift occurring and that billionaires such as Musk, Jeff Bezos and Richard Branson are “distorting the real economics of space” with projects that may never turn a profit.

“They buy platforms for unsustainable business reasons but get to play out their childhood passions about being involved in space,” the executive said. “There is a lot of value destruction coming, but it’s probably still a few years away so the party continues for now.”

>>> Barron’s Weekend Summary: Mall and retail stocks are back.

Barron’s Weekend Summary: Mall and retail stocks are back.

Cover Story:
-Mall and retail stocks are back. Brands that merged their bricks-and-mortar operations with digital strategies are seeing sales soar and stock prices rise, lifted by a strong market and consumers champing at the bit to spend their pandemic savings. The stock prices of many major mall-based retailers have soared, including Macy’s, Nordstrom, Famous Footwear parent Caleres, and Signet Jewelers, which all gained at least 100% in the past 12 months.

Interview:
-Barron’s interviews David Heikkinen, a managing director at the Houston-based asset manager Pickering Energy Partners. He has been advising investors about oil and gas companies for decades, after working as an engineer at Royal Dutch Shell early in his career. Heikkinen thinks oil and gas companies are at a turning point as the energy transition takes place, and he expects current trends to be profitable for companies focusing on both old and new forms of energy. He spoke with Barron’s recently about where to find opportunities. An edited version of the conversation follows.

Tech Trader:
-Software for running call centers provides the next big opportunity for investors. NICE might be the largest tech company you’ve never heard of. After an 80% gain over the past 18 months, the company has a stock market value of roughly $20 billion. Five9 posted revenue growth of 38% in its September quarter, bashing Wall Street estimates, just like NICE. Five9’s results were driven by 51% growth in the company’s enterprise business. The company has since picked up a couple of new Buy ratings from the Street. Another option is RingCentral (RNG), a Covid-era darling whose shares are down 27% this year. The company competes in both call-center and cloud-based telephony. This past week, RingCentral reported 47% sales growth in its latest quarter.

The Trader:
-Johnson & Johnson said it would separate its consumer health division into a new company, leaving behind a pharmaceutical and medical-device business that it said would still be the largest healthcare company in the world. History suggests that investors shouldn’t be hasty to buy into the split.
-“Rising prices got much of the blame for the stock market’s bad week. On the surface, that seems like a reasonable stance. The S&P 500 index declined 0.3% this past week, while the Dow Jones Industrial Average fell 0.6% and the Nasdaq Composite dropped 0.7%.
Most of the damage came on Wednesday, when the Labor Department released October’s consumer inflation report. It showed the consumer price index jumping 6.2% from the previous year. Strip away volatile food and energy prices, and the core CPI still climbed 4.6%. Both numbers were up from September, and both were more than economists had predicted.”

Features:
-“As the shape and contents of the proposed Democratic bill strengthening the social safety net come into focus, so is the size of the tax bill that rich people are poised to receive. But are they going to be the only ones bound for more taxes?
New estimates from the Tax Policy Center are projecting that the top 1%—households making at least $885,000 a year—could pay an extra $55,000 in taxes next year if the Build Back Better bill passes in its current form.”
-‘A record 4.4 million Americans, or 3% of the workforce, voluntarily left their jobs in September, the Bureau of Labor Statistics announced Friday, accelerating the so-called Great Resignation. The total eclipsed the prior record of 4.27 million Americans who quit their jobs in August.
Covid-19 has led workers to re-evaluate what’s important to them and what they want out of life. Many have concluded that work no longer fits into that picture, according to Northwestern Mutual’s 2021 Planning and Progress Study.”
- China has long been seen by investors as a valuable asset for U.S. multinationals. It’s now at risk of becoming a liability. Yahoo! is exiting China amid tighter data privacy laws. Las Vegas Sands shares tumbled in September on signs Beijing would increase scrutiny of casino operations. Qualcomm’s market share in China’s smartphone chip market slid earlier this year as the U.S. restricted sales to Huawei Technologies. Nike went viral on Chinese social media—not in a good way—as it faced backlash over a company statement related to forced labor in the Xinjiang province of China. Caterpillar is grappling with fierce local competition, while Starbucks’ sales have suffered amid China’s zero-tolerance Covid policy.

Europe:
-AstraZeneca had previously indicated that it would provide the vaccine at cost, but only during the pandemic for developed countries, following the terms of its agreement with Oxford University, the vaccine developer. It will continue to make no profit on vaccines sent to developing nations.
The group said revenue increased by 47% in the quarter ended in September on a constant exchange rate basis, to $9.7B. Pandemic vaccine revenue amounted to $1.05B

Emerging Markets:
-“The passage of Xi’s “historical resolution” at the gathering of the party’s Central Committee confirms that he will break with precedent and pursue a third term in 2022. It also formalized approval of the way political, economic, and military affairs have been handled under the 68-year-old-leader—all of which have grown in controversy globally under Xi.’
-India’s Prime Minister Narendra Modi “provided one of the bright spots of the COP26 climate summit—setting India’s first net-zero carbon target, 2070, and promising 50% of power from renewable sources by 2030. Meeting that shorter-term goal would mean quintupling the country’s solar generation to 500 gigawatts, nearly matching China’s pace of new installations for the rest of this decade. India, the No. 3 carbon emitter, currently gets three-quarters of its electricity from coal. Conglomerates like Reliance Power and Tata Power are leading the green charge, committing tens of billions of dollars to renewable energy. Industrial consumers from JSW Steel to IT powerhouse Infosys have ambitious plans to decarbonize on the demand side.

Commodities:
Wheat prices surpassed $8 a bushel for the first time in nearly nine years, with demand for the commodity going strong and supplies expected to end the 2021-22 marketing year at their lowest in more than a decade.
“Global demand remains robust, at record or near-record levels, with foreign buyers aggressively purchasing wheat supplies during the past several weeks,” says Sal Gilbertie, president and chief investment officer at Teucrium Trading. Meanwhile, the US Department of Agriculture estimates that US wheat ending stocks for 2021-22 will be 583 million bushels, the lowest since the 2007-2008 marketing year.

Streetwise:
-Jack Hough discusses the rehabilitation of the Barbie doll and the renaissance of Mattel: “Barbie’s image has been rehabilitated, and sales are bouncing back smartly for Mattel. Also, Qualcomm is quickly scooping up business that makes it less dependent on smartphones, and in particular, Apple. I recently caught up with the fairly new CEOs of both, and they’re fixing things that have held the shares back.”

>>> Weekly Market Update:

Weekly Market Update: Big firms announce breakups, while others post disappointing quarterly results; Inflation continues to run hot


The US stock market finally saw its five-week winning streak come to an end this week. Equity markets encountered some resistance after US CPI data showed inflation rose to a three-decade high in October and broadened to impact a wide array of goods and services. Initially the US Treasury curve flattened and the US dollar firmed up. Signs that the flare-up in inflation will last longer than central bankers had forecast prompted traders to placer further bets the Federal Reserve would raise borrowing costs by next summer. The Biden administration further vented its frustration with stubbornly high oil prices calling on OPEC producers to help bring prices down. Government officials and central bankers on both sides of the pond continued to assert that much of the current upward pressure on prices will ultimately prove to be transitory.

Stocks found support on Friday despite the November University of Michigan sentiment reading falling to a 10-year low. September JOLTS jobs openings remained very strong while the quits rate pushed up to the highest level on record, suggesting the employment market will remain tight. US natural gas prices remained below $5 holding near a 3-month low while WTI crude drifted back towards $80/bbl providing some hope that the worst of the inflation spike may have passed. For the week, the S&P lost 0.3%, the DJIA was off 0.6%, and the Nasdaq slipped 0.7%.

In corporate news this week, breakups were in the air: Johnson & Johnson announced it plans to split into two companies, spinning off its consumer and pharmaceutical/medical device divisions into separate entities. GE also said it would break up, forming three public companies: GE Aviation; GE Healthcare; and the combined GE Renewable Energy, GE Power, and GE Digital businesses. Toshiba confirmed it too planned to separate into three standalone companies.

On the earnings front, Disney shares plummeted after reporting across-the-board misses and seeing decelerated streaming growth. PayPal missed on its top line and cut its FY outlook, sending the stock lower despite announcing a new partnership with Amazon. Beyond Meat posted a much wider loss than anticipated and analysts worried its Q4 forecast show that faux meat products could be reaching market saturation faster than expected. Rivian Automotive launched its IPO with great fanfare and earned a market cap greater than GM, while Tesla shares took a breather as Elon Musk sold some shares to pay his tax obligations.


SUN 11/7
BRK.A Reports Q3 EPS (Class A) $6,882 v $18,994 y/y, Rev $70.6B v $63.0B y/y
(US) House passes bipartisan $1.2T infrastructure bill, clearing the way for President Biden's signature

MON 11/8
(IE) Ireland Foreign Min Coveney: Evidence suggests UK govt is preparing to trigger Article 16 of the Northern Ireland Protocol; Sees this very severe and something the EU would want to prevent
(CN) China to issue more than a dozen licenses for companies to conduct after school tutoring - press
(DE) German Social Democrats (SPD) official Walter-Borjans: Every chance govt will be in place in early Dec; SPD-led coalition talks making good progress
CRS Increases base prices by 6-8% on specialty alloy portfolio; Effective on new orders placed after Nov 8
(US) Fed Vice Chair Clarida: Sees interest rate liftoff test met by end of 2022; We are clearly a ways away from considering raising rates
RBLX Reports Q3 -$0.13 v -$0.26 y/y, Rev $509.3M v $251.9M y/y; Based on our October results, we appear to be having a great start to Q4
PYPL Reports Q3 $1.11 v $1.07e, Rev $6.18B v $6.21Be; Venmo users in the US will be able to pay with Venmo on Amazon.com starting in 2022
(CN) Follow Up: More cities in China [including Tianjin, Shijiazhuang, Suzhou and Jiangsu] have tightened the use of proceeds from property pre-sales - Chinese press

TUES 11/9
7201.JP Reports H1 Net +¥54.1B v -¥16.7Be, Op +¥63.5B v -¥1.7Be; Rev ¥3.95T v ¥3.09T y/y; Cuts FY21 Rev outlook on lower deliveries. but raises profit outlook
TSLA Reportedly "likely" to open second factory in Shanghai, China - DigiTimes
*(DE) GERMANY NOV ZEW CURRENT SITUATION SURVEY: 12.5 V 18.3E; EXPECTATIONS SURVEY: 31.7 V 20.0E
(EU) EU said to ban payment for order flow as part of Mifid review to stem a practice helping meme-stocks - press
TSM Confirms to build $7B chip plant in Japan with Sony Semiconductor Solutions as minority shareholder; Sony to make $0.5B investment; Construction to begin in 2022 with production planned by end-2024 (as speculated)
GE Plans to form 3 public companies, GE Aviation, GE Healthcare, and the combined GE Renewable Energy, GE Power, and GE Digital businesses; Plans to execute tax-free spin-offs of Healthcare in early 2023, Renewable Energy and Power company in early 2024
DHI Reports Q4 $3.70 v $3.40e, Rev $8.11B v $7.88Be
SYY Reports Q1 $0.83 v $0.85e, Rev $16.5B v $15.8Be; Product cost inflation +13.4% in U.S.
*(US) OCT PPI FINAL DEMAND M/M: 0.6% V 0.6%E; Y/Y: 8.6% V 8.6%E
CLX CEO: Higher costs have been more pervasive than our earlier expectations; Supply chain situation is 'starting to ease' - press interview
COIN Reports Q3 $1.62 v $1.79e, Rev $1.31B v $1.56Be

WEDS 11/10
ADS.DE Reports Q3 Op €672M v €680Me, Rev €5.75B v €5.80Be; Cuts FY21 gross margin outlook
ALO.FR Reports H1 Adj Net €172M v €168M y/y, Rev €7.44B v €3.52B y/y
700.HK Reports Q3 (CNY) Net 39.5B v 38.5B y/y, Rev 142.4B v 125.5B y/y
ADS.DE CFO: Expects flattish Q4; Have developed action plan to address weakness in China - post earnings comments
VOW3.DE CEO: it is evident Volkswagen must break up certain structures and find new ways of working; It is not about job cuts, but new ways of thinking
3333.HK Reportedly some USD offshore bond holders of Evergrande have not received coupon payments by the end of 30-day grace periods on Wed, Nov 10th; Non-payment would trigger default condition - financial press
*(US) OCT CPI M/M: 0.9% V 0.6%E; Y/Y: 6.2% V 5.9%E (highest annual pace since Nov 1990)
*(US) INITIAL JOBLESS CLAIMS: 267K V 260KE; CONTINUING CLAIMS: 2.16M V 2.05ME (both post pandemic lows)
BAS.DE To raise prices by up to 35% on home care, industrial and institutional cleaning, and industrial formulators portfolio in Europe - press
*(US) DOE CRUDE: +1.0M V +1.5ME; GASOLINE: -1.6M V -0.5ME; DISTILLATE: -2.6M V -1ME
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 8.2% from 8.5%
RIVN IPO opens for trade at $106.75
*(US) TREASURY $25B 30-YEAR BOND AUCTION DRAWS 1.940%; BID TO COVER 2.20 V 2.21 PRIOR AND 2.22 OVER LAST 6 AUCTIONS
*(US) OCT MONTHLY BUDGET STATEMENT: -$165B V -$179.0BE
DIS Reports Q4 $0.37 v $0.52e, Rev $18.5B v $18.8Be

THURS 11/11
SIE.DE Reports Q4 Net €1.33B v €1.23Be, Industrial Business EBITA €2.27B v €2.45Be, Rev €17.4B v €16.7Be
SIE.DE Sees complex environment remains, easing challenges from Covid-19 & supply chain constraints during FY22 - earnings slides
*(UK) Q3 PRELIMINARY GDP Q/Q: 1.3% V 1.5%E; Y/Y: 6.6% V 6.8%E
(RU) Russia Parliament (Duma) said to be discussing legalizing crypto assets - financial press
(RU) US has privately warned Europe that Russian troops could plan an invasion of Ukraine - press
OPFI Reports Q3 Adj $0.21 v $0.16e, Adj Rev $92.0M v $62.8M y/y; Net Charge-Offs up to 36%
MOS Reports Oct Phosphates Rev $437M,+49% y/y; Volumes shipped 569K tonnes, -20% y/y
7203.JP Planning 800K vehicle production in Dec (vs ~760K y/y); Affirms FY21/22 production plan of 9.0M units

FRI 11/12
2317.TW Reports Q3 (NT$) Net 37B v 30.8B y/y; Op 36.2B v 32.4B y/y; Expects component shortage to last into H2 2022
6502.JP Reports H1 Net ¥59.8B v ¥3.5B y/y, Pretax ¥82.1B v ¥20.0B y/y, Op ¥45.0B v ¥3.1B y/y, Rev ¥1.55T v ¥1.37T y/y; Confirms Board approved to split into 3 companies focused on Infrastructure Service, Devices, Kioxia and Toshiba TEC
2317.TW Chairman: Has a cautious outlook for FY22 Rev; expects component shortage to last into H2 2022 - post earnings comments
(RU) Russia govt spokesperson Peskov: talk of possible Russia invasion of Ukraine unfounded; To supply gas to Europe regardless of Belarus
JNJ Confirms plans to separate consumer health business; Separation expected to complete in 18-24 months
6502.JP Confirms strategic reorganization to separate into three standalone companies to enhance shareholder value
*(US) SEPT JOLTS JOB OPENINGS: 10.44M V 10.30ME
(EU) EU's Sefcovic: The EU is committed to finding practical solutions; Nothing has changed with regard to our position on ECJ; We must make serious headway by end of next week

FT : Why top athletes are turning to investing

Why top athletes are turning to investing
Plus, the NFT gold rush, Kretinsky buys into West Ham, and more.

Over recent weeks, I’ve spent time talking to top athletes about how they manage their finances. The consequences of those decisions are huge when investing millions, compounded by the pressure to maximise earnings during a short career that can be cut shorter still by unexpected injury or being replaced by the next young star.

That has led to resourcefulness by some, such as former National Football League player Adewale Ogunleye, who retrained and now works as a financial adviser at Swiss bank UBS. It’s to his advantage to be proficient at finance and sport, so better able to make gains on and off the pitch.

We explore that theme in this week’s Scoreboard, followed by an interview with Roham Gharegozlou, the chief executive of Dapper Labs, the makers of “non-fungible tokens”, who insists sports groups can make a killing if they invest in this new digital trend. Do read on — Samuel Agini, Sports business reporter

How top athletes invest millions — and avoid becoming fraud victims

At the highest level, professional athletes are becoming savvy investors.

Basketball star LeBron James is a shareholder in Fenway Sports Group, the owner of English Premier League football club Liverpool and the Boston Red Sox baseball team.

David Beckham negotiated an option to buy a Major League Soccer franchise while he was still a footballer.

Television money is fuelling multimillion-dollar salaries across the world’s top sports leagues, giving athletes the financial might to make money not just by lending their names to endorsing products, but also through investing.

But it’s hard enough to protect your capital, never mind grow it. Athletes alleged more than $600m in fraud-related losses between 2004 and 2018, according to EY, the consultancy. They are targets in an industry rife with horror stories about unscrupulous financial advisers, scams and surprise tax bills.

Little wonder former England footballer Sol Campbell told the FT’s Claer Barrett, host of the Money Clinic podcast, that property is his favoured investment, as the asset is real and can more or less always generate rental income. Listen to part one and part two of the podcast.

The main problem is one of trust. Athletes can earn millions before they’re out of their teens and seldom have the experience to manage their newfound wealth.

They are only as smart as the people around them. Thomas Hal Robson-Kanu, the Welsh footballer, says he can count on Babatunde Soyoye, the co-founder of private equity firm Helios Investment Partners, for advice.

The goal should be to create wealth that endures for generations according to Jason Katz, managing director and private wealth adviser at UBS. “What I’ve witnessed more in the last year than I ever have in my whole career is that athletes are building these teams of financial professionals around them,” said Katz.

Even as athletes become more financially sophisticated, there’s no substitute for a second opinion from a scrupulous relative who can bring some real world perspective: is this investment proposal too good to be true?

“You always need second eyes . . . separate, independent eyes on it,” says Campbell.

Sports NFTs: how long will the party last?

Thousands of cryptocurrency enthusiasts, sports merchandise collectors and venture capitalists descended on New York last week to attend NFT. NYC, an annual conference to discuss “non-fungible tokens.” These are digital items, encrypted on the blockchain, making them unique and tradable.

Film-maker Quentin Tarantino announced to an overflow crowd at Neuehouse that he would mint a handful of “secret” scenes from Pulp Fiction into NFTs. Later at Cipriani 25, comedian Hannibal Buress proffered an NFT of his own — a half-minute clip of himself singing off-key — raising $20,000.

The latter event was co-sponsored by Dapper Labs, the NFT start-up now worth $7.6bn on the back of its tie-ups with the National Basketball Association and La Liga, Spain’s top football league, to provide licensed encrypted sport memorabilia.

Dapper Labs founder and chief executive Roham Gharegozlou told Scoreboard that watching products like NBA Top Shot take off, years after launching other niche NFT collectibles “just feels like this year is when the race started”.


Sports helped to launch NFTs into social discourse. But NFTs are also redefining athletes’ stakes in merchandise sales. “For the players, it’s about creating a new revenue line. That’s not just money today, but it’s securing their legacy forever”, Gharegozlou said.

“Each time a Top Shot changes hands, there’s a royalty back to the athlete — even after a player passes away, their likeness will create value for their estate . . . which is something they don’t necessarily get every time a physical trading card gets resold”.

That component explains in part why some athletes like Kevin Durant and Andy Murray have launched individual NFT deals of their own.

Beyond sports, Gharegozlou said NFTs have shown blockchain technology can go mainstream, potentially hastening a shift away from “traditional” social media, such as Facebook and Twitter, with their regard to privacy protections.

“The whole point of blockchain is it gives you, the owner of the information, the ability to control who sees it, what they do with it. And then you can revoke that permission at any time”.

Still, many involved in NFTs simply spot a new gold rush and want to get rich.

Revellers at the Dapper Labs party nibbled on risotto as Patrice Rushen‘s “Forget Me Nots” thumped over the sound system, eager for a piece of the new internet landscape.

One attendee identified himself as the chief technology officer of a stealth-mode NFT start-up, before revealing his day job as an engineer at Facebook. Is the idea to ride the NFT wave, and leave the social networking company behind?

“Absolutely”, he said. “That’s the dream”. 

FT : Car industry divided on road to zero emissions after climate deal snubbed

Car industry divided on road to zero emissions after climate deal snubbed
VW, Toyota and Stellantis among manufacturers wary of committing to targets outside their control

Volkswagen chief executive Herbert Diess could not have been clearer.

“Climate change will be the greatest challenge for humanity in the coming decades,” he declared at the Munich motor show in September, as charts of rising emissions flashed on a vast screen behind him.

Yet, as global car leaders gathered on stage in Glasgow at the COP26 summit to pledge to end the sale of polluting cars anywhere in the world by 2040, VW was absent.

It was not alone. Toyota, Stellantis and Hyundai were among the leading manufacturers to shun the Glasgow deal, which commits carmakers to sell only zero emission new vehicles by 2035 in the biggest markets and 2040 in others.

In the end only six — Ford, General Motors, Daimler, BYD, Volvo Cars and Jaguar Land Rover — signed, a far cry from the hoped-for parade of car giants.

“What a failure . . . what an embarrassment. I almost have no words for it,” said Thomas Ingenlath, boss of Polestar, the electric brand owned by Volvo, referring to the groups that refused to sign.

The split between signatories and non-signatories highlights the tensions within the industry. Some car executives think clear targets are vital to help transform the sector, and worry the groups refusing to sign have been shown up as greenwashing hypocrites.

Volvo Car boss Hakan Samuelsson, the only chief executive from a leading carmaker on stage at the pledge’s unveiling, backs clear, formal targets, saying they are needed to halt the development of combustion engines.

“It doesn’t matter if it’s 2032 or 2035 or whenever, no one wants to work on a product that has an end date,” he told the Financial Times.

Climate action groups were withering in their condemnation of the non-signatories, too.

Helen Clarkson from the Climate Group, a non-profit organisation, said the industry holdouts were “on the wrong side of history”.

But for the holdouts, binding emissions targets outside their control leave them exposed to pledges they may not be able to deliver.

Despite some saying privately they will probably hit the COP26 targets, they warn the infrastructure, such as charging stations, must be put in place if they are to achieve the declaration’s goals.

They also stress governments and industry have already made big commitments to cutting emissions.

VW, for example, has pledged to spend €35bn in its transition to electric cars, while emissions rules in Europe and China are forcing manufacturers to switch from internal combustion engine models.

“We have the same goals, but there’s a large chunk of reputation behind [signing] it,” said Ralf Pfitzner, head of sustainability at VW.

He said that “rebuilding trust” after the 2015 diesel scandal, where VW was found to have deceived consumers and regulators about pollution levels, meant the company felt it could not commit to the goals.

“If today we cannot credibly sign something, then let’s not do it. But at the end of the day we are executing, we are bringing out EVs to the streets.”

Groups with British investments, including Toyota, Nissan, Stellantis, BMW and Honda, could not be brought to the table despite intense pressure from UK officials.

Even a suggestion by UK officials that delegates from non-signees would be barred from the “blue zone” — the security-screened area of COP26 that played host to world leaders and journalists — failed to win them round.

Late concessions, such as offering opt-outs for some markets or a deal to make 90 per cent of cars emissions-free, did nothing to help, according to two people who witnessed the negotiations.

Yet big carmakers were not the only notable absentees from the COP26 declaration.

China, the world’s largest car market, the US, the second biggest, and Germany refused to sign the commitment to eliminating new car emissions by 2040.

However, several large cities and regions across the world backed the deal with climate scientists and carmakers pointing to their key role in making the switch to electric.

In the US, California, New York and Washington as well as Dallas, Charleston, Atlanta and Seattle signed the agreement.

Johan Rockstrom, director of the Potsdam Institute for Climate Impact Research, said: “Countries that have a really strong state [or regional] level of governance will play a really important role in pushing towards social tipping points.”

Daimler boss Ola Kallenius, a signatory who attended the summit, added that commitments by governments and cities to the green transition are key, expressing confidence carmakers would deliver in terms of product development.

“The product [manufacturing electric cars] is the thing I am least worried about,” he told the Financial Times.

Yet even among the backers of the deal, there is agreement that much more has to be done by governments to ease the switch to electric with charging stations and the necessary infrastructure to support a zero emissions industry.

Ford’s sustainability boss Cynthia Williams, asked on stage at the Glasgow gathering what was needed, replied: “Infrastructure, infrastructure, infrastructure.”