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☆ Workers Keep Getting Big Raises. That’s a Problem for the Fed.
▼ + stars: | 2023-10-31 | by ( Gwynn Guilford | ) www.wsj.com time to read: 1 min

Compensation increases vary depending on where one lives and the industry in which one works. Gains at restaurants, bars and retailers, for example, have slowed after peaking in early 2022. Photo: Al Drago/Bloomberg NewsAmerican workers are still commanding beefy pay raises. That is good news for workers but something that could complicate the Federal Reserve’s inflation fight. Fed officials are likely to hold interest rates steady at this week’s policy meeting Tuesday and Wednesday, but signs of stalled progress in slowing wage and price increases could open the door to another rate increase in the coming months.

Persons: Al Drago Organizations: Bloomberg News

☆ Workers Keep Getting Big Raises, Just Not as Much as Last Year
▼ + stars: | 2023-10-31 | by ( Gwynn Guilford | Nick Timiraos | ) www.wsj.com time to read: 1 min

WSJ’s Dion Rabouin unpacks the latest GDP report and explains what it says about the state of the economy. Photo: Li Jianguo/Zuma PressAmerican workers are still commanding big pay raises, though not quite as beefy as last year. That is good news for workers but a potential complication for the Federal Reserve’s fight to lower inflation. Employers spent 1.1% more on wages and benefits in July through September than in the prior three months, according to the Labor Department’s employment-cost index, released Tuesday. That was slightly better than the 1% gain in the second quarter and a sign that wage pressures remained strong as economic growth accelerated.

Persons: WSJ’s Dion Rabouin, Li Jianguo Organizations: Zuma Press American, Federal, Employers, Labor

☆ McDonald’s menu stocks up on global variations
▼ + stars: | 2023-10-30 | by ( ) www.reuters.com time to read: +2 min

TORONTO, Oct 30 (Reuters Breakingviews) - McDonald’s (MCD.N) status as the world’s go-to meal means it’s competing with an uneven global economy as much as any rivals. The ubiquitous $190 billion fast-food purveyor on Monday touted a 9% year-over-year increase in worldwide same-store sales for the third quarter. In places like the U.S., that was helped by menu price increases. But the Big Mac seller also talked up the release of smaller, more affordable meals in markets facing worse economic fortunes, like China and Germany. In the latter, its McSmart menu of smaller meals helped drive the 10th quarter of double-digit sales growth.

Persons: Christopher Kempczinski, outpacing, Kempczinski, Sharon Lam, Jonathan Guilford, Aditya Sriwatsav Organizations: TORONTO, Reuters, Bureau of Labor Statistics, X, Vodafone, Thomson Locations: U.S, China, Germany, Europe, Spain

U.S. President Joe Biden speaks about his administration's commitment to seizing the opportunities and managing the risks of Artificial Intelligence, in San Francisco, California, U.S., June 20, 2023. On Monday, U.S. President Joe Biden signed an executive order establishing regulatory guardrails for the technology that looks set to upend humanity. The announcement closes some of the rulemaking gap between the United States and its international counterparts. But now, because of the lack of clarity, some firms are considering ditching the United States. If important technologies do move outside of the United States, the country effectively loses its chance to steer development.

Persons: Joe Biden, Kevin Lamarque, Sam Altman, Andreessen Horowitz, Forrester, Ben Winck, Lauren Silva Laughlin, Sharon Lam Organizations: Artificial Intelligence, REUTERS, Reuters, European Union, Cyberspace Administration, OpenAI, Securities, Exchange Commission, Venture, country’s, Thomson Locations: San Francisco , California, U.S, United States, London

☆ Intel’s reverse bullwhip is strong
▼ + stars: | 2023-10-27 | by ( ) www.reuters.com time to read: +2 min

The $150 billion chip giant has weathered a post-Covid maelstrom as an initial work-from-home-driven boost to PC sales slammed into reverse, denting sales and the company’s chunky gross profit margin. Growth isn’t back, but results released on Thursday show the decline is slowing and a new division has promise. At least one pandemic bullwhip might be close to having run its course. Reuters GraphicsBetter yet, Intel’s foundry business - Gelsinger’s push to start making chips designed by others - is narrowing its losses while growing revenue and scaling up. Though many customers are signing up on the condition that Intel’s manufacturing tech reaches certain milestones, that unit is its future.

Persons: Pat Gelsinger, Jonathan Guilford, Lauren Silva Laughlin, Sharon Lam Organizations: Reuters, Intel, Taiwan Semiconductor Manufacturing, X, Thomson

☆ U.S. Economy Grew a Strong 4.9%, Driven by Consumer Spree That May Not Last
▼ + stars: | 2023-10-26 | by ( Amara Omeokwe | Gwynn Guilford | ) www.wsj.com time to read: 1 min

WSJ’s Dion Rabouin unpacks the latest GDP report and explains what it says about the state of the economy. Photo: Li Jianguo/Zuma PressU.S. economic growth surged this summer at the fastest pace since 2021, as consumers spent at a blockbuster rate that will be difficult to sustain. Gross domestic product expanded at a 4.9% seasonally- and inflation-adjusted annual rate in the third quarter—more than double the second quarter pace—the Commerce Department reported Thursday. The acceleration won’t change the Federal Reserve’s plans to hold rates steady at their meeting next week.

Persons: WSJ’s Dion Rabouin, Li Jianguo Organizations: Zuma Press U.S, Gross, Commerce Department

☆ Ford’s electric drive is going the wrong way
▼ + stars: | 2023-10-26 | by ( ) www.reuters.com time to read: +2 min

REUTERS/Rebecca Cook Acquire Licensing RightsNEW YORK, Oct 26 (Reuters Breakingviews) - Ford Motor (F.N) may have dealt with its labor problem. While the ebb and flow of fossil-fueled fortunes is nothing new, Ford’s electric-car pivot is printing more red ink than ever. But Ford is trying to scale to profitable sales and right now, things are going the wrong way. The company’s electric division recorded a nearly $37,000 operating loss per battery-powered ride sold this quarter, 51% worse than last year. With once sky-high electric prices now free-falling, Ford faces the brass-tacks problem of simply grinding down costs.

Persons: Jim Farley, Rebecca Cook, can’t, nix, Ford, Jonathan Guilford, Lauren Silva Laughlin, Aditya Sriwatsav Organizations: Ford Motor, North American, REUTERS, Reuters, Ford, General Motors, Cox, X, Unilever, Thomson Locations: Detroit , Michigan, U.S, Detroit

☆ Real big energy: Exxon and Chevron swim upstream: podcast
▼ + stars: | 2023-10-26 | by ( Jonathan Guilford | ) www.reuters.com time to read: 1 min

NEW YORK, Oct 26 (Reuters Breakingviews) - The two US oil titans unveiled acquisitions worth more than $100 bln combined within weeks of each other. In this Viewsroom podcast, Breakingviews columnists discuss what’s powering the renewed consolidation push, as well as the threats posed to the industry by a greener market. Listen to the podcastFollow @JMAGuilford on XSubscribe to Breakingviews’ podcasts, Viewsroom and The Exchange. Editing by Oliver TaslicOur Standards: The Thomson Reuters Trust Principles. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Persons: Oliver Taslic Organizations: Reuters, Thomson

☆ GM earnings give its restive workers an inch
▼ + stars: | 2023-10-24 | by ( Jonathan Guilford | ) www.reuters.com time to read: +4 min

On Tuesday, GM reported strong earnings that will embolden staff who have walked out at all three of the big Detroit firms. GM beat analysts’ expectations for third-quarter profit despite a $200 million hit from the strikes that started in September. That said, the firm run by Mary Barra also ditched its official forecast as it wrestles with the $200 million weekly costs from labor disruptions. Fortunately for GM, talks with its union seem to have narrowed in from earlier demands that would have vaporized the industry’s operating profit. Ongoing strikes by the United Auto Workers union, which represents GM employees, cost the company $200 million in the third quarter.

Persons: walkouts, Mary Barra, Shawn Fain, Tesla, Elon, Fain, John Foley, Sharon Lam Organizations: General Motors Company, Reuters, United Auto Workers, General Motors, Ford Motor, GM, Cox Automotive, UAW, Elon Musk’s, United Auto Workers union, Detroit, Thomson Locations: Queens , New York, U.S, Detroit, Wells, GM’s Arlington

☆ Roche's $7 bln deal is pricey and partial cure
▼ + stars: | 2023-10-23 | by ( ) www.reuters.com time to read: +2 min

Roche tablets are seen positioned in front of a displayed Roche logo in this photo illustration shot January 22, 2016. REUTERS/Dado Ruvic/Illustration Acquire Licensing RightsNEW YORK, Oct 23 (Reuters Breakingviews) - Roche (ROG.S) has taken a small step towards curing its drug pipeline problem. JPMorgan analysts estimate that the drug’s U.S. sales could peak at 2.4 billion Swiss francs ($2.7 billion), but will take until 2037 to get there, assuming a 2028 launch. Analysts expect Roche’s pharmaceutical division to generate revenue of almost 45 billion Swiss francs this year, according to estimates compiled by LSEG. With expected free cash flow of around 16 billion Swiss francs this year and next, Roche can afford to buy a little more diversification.

Persons: Roche, Dado Ruvic, Thomas Schinecker, Peter Thal Larsen, Jean, Pierre Mustier, Atos, Jonathan Guilford, Aditya Sriwatsav Organizations: REUTERS, Reuters, Pfizer, U.S, New, JPMorgan, Merck, Prometheus Biosciences, Analysts, LSEG, X, News Corp, Thomson Locations: Swiss, U.S

☆ Risky biotech M&A therapy will heal more fractures
▼ + stars: | 2023-10-19 | by ( Jonathan Guilford | ) www.reuters.com time to read: +8 min

NEW YORK, Oct 19 (Reuters Breakingviews) - How can a suitor offering $1 billion see eye-to-eye with a seller asking for $2 billion? Such contingent value rights, or CVRs, are a way to get around the inherent uncertainty of an unproven drug. Its $74 billion takeover of Celgene in 2019 included a $6.4 billion payout dependent on a trio of drug approvals. There have been only 27 biotech market debuts this year, raising $2.2 billion, according to LSEG data. Given the nagging fissures in valuation perspectives, however, more dealmakers are apt to try this risky M&A therapy.

Persons: Schulman, Sidley, Bristol Myers, Myers, CVRs, Andrew Weisenfeld, IPOs, ”, Dan Lepanto, biopharma, Eli Lilly’s, Bristol Myers Squibb, Jeffrey Goldfarb, Sharon Lam, Streisand Neto Organizations: Reuters, Dow, Marion Laboratories, LyondellBasell Industries, Mirati Therapeutics, JPMorgan, Sanofi, Health Partners, Nasdaq Biotechnology, Reuters Graphics Reuters, Reuters Graphics, Leerink Partners, Therapeutics, Public, Bristol Myers, U.S . Food, Drug Administration, Thomson Locations: Celgene, Genzyme, U.S

☆ Tesla downshifts out of ludicrous mode
▼ + stars: | 2023-10-19 | by ( Jonathan Guilford | ) www.reuters.com time to read: +3 min

The Model Y maker’s gross and operating profit margins were once the envy of the entire American automotive industry. As Tesla began rolling more vehicles off the production line than it could sell, however, Musk repeatedly offered discounts to rev demand. Even setting aside tough financial comparisons because of the factory shutdowns needed to retool its best-selling vehicles, progress has been sluggish. Tesla’s gross margin at its core automotive business, adjusting for regulatory credits, has fallen nearly in half, to 16.3%, according to the latest quarterly results released on Wednesday. Tesla sold just a hair under half of all U.S. battery-powered rides in the third quarter, according to Cox Automotive, down from 75% in early 2022.

Persons: BYD, Elon Musk, Tesla, Musk, they’re, Jeffrey Goldfarb, Sharon Lam Organizations: Reuters, U.S, HK, General Motors, Ford, Cox Automotive, Reuters Graphics, Thomson Locations: Detroit, United States, China, Shanghai

☆ Israel-Hamas war fuels debate and nationalist sentiment on Chinese social media
▼ + stars: | 2023-10-19 | by ( Chris Lau | ) edition.cnn.com time to read: +9 min

“The lack of condemnation of Hamas by Chinese officials gives it support,” she said. As an increasing number of China watchers and Israeli scholars pointed out the rise in antisemitic sentiment in China, some Chinese diplomats appeared to have taken note. The Israeli diplomatic outpost has been active on Chinese social media, Lavi, from the Diane & Guilford Glazer Israel-China Policy Center told CNN. China bans foreign social media platforms and censors comments deemed marginally sensitive by the Chinese Communist Party. “Many comments also highlight China’s peace-making efforts and draw parallels between the suffering of the Palestinian people and China’s own historical experiences with colonization.”

Persons: Hong Kong CNN —, Yuval Waks, ” Waks, Waks, “, Beijing’s, Wang Yi, Israel, Antonio Guterres, Israel “, Adolf Hitler, Xiao Qiang, ”, Xiao, Lavi, Diane, Guilford Glazer, Hua Chunying, ’ “, Mohammed Al, Masri, Noa Argamani, ” Wendy Zhou, Mao, Zhou Organizations: Hong Kong CNN, Palestinian, Hamas, Weibo, Embassy, United Nations, UN, School of Information, University of California, China Policy Center, Israeli Embassy, Diane, CNN, Shifa, Ahli Baptist Hospital, Reuters, Georgia State University, Chinese Communist Party, Israel, Palestine, Palestinian Authority Locations: China, Hong Kong, Israel, Gaza, Beijing, Israeli, Weibo, United States, University of California Berkeley, Guilford Glazer Israel, Shanghai, Al, Ahli, Gaza City

☆ David Solomon’s Goldman remix is audibly off-key
▼ + stars: | 2023-10-17 | by ( John Foley | ) www.reuters.com time to read: +4 min

NEW YORK, Oct 17 (Reuters Breakingviews) - Having given up a side-gig in DJ-ing, Goldman Sachs (GS.N) boss David Solomon has one less distraction. Goldman reported a one-third year-on-year drop in earnings on Tuesday, in a quarter riddled with one-off charges. Those included a hit related to buy-now-pay-later lender GreenSky, which Goldman bought only two years ago, and is selling. Absent all that, Goldman would have made a return on equity of just over 10%. Goldman made a 7.1% return on equity in the quarter, on an annualized basis, which would have been 10.2% without one-off charges.

Persons: Goldman Sachs, David Solomon, Goldman, GreenSky, Morgan Stanley, Solomon, Marc Nachmann, Nachmann, Jonathan Guilford, Sharon Lam Organizations: Reuters, JPMorgan, Thomson Locations: tomorrow’s, Basel, GreenSky

☆ BlackRock’s Larry Fink squares off with Uncle Sam
▼ + stars: | 2023-10-13 | by ( ) www.reuters.com time to read: +2 min

Laurence Fink, founder and chief executive officer of BlackRock, Inc. speaks during the Reuters Global Investment Outlook Summit in New York, U.S., November 13, 2017. REUTERS/Lucas Jackson Acquire Licensing RightsNEW YORK, Oct 13 (Reuters Breakingviews) - BlackRock (BLK.N) calls every dollar it manages a “unit of trust” expressed by clients. The trouble for the investing behemoth led by Larry Fink is that there’s an increasingly reliable custodian of such assets these days: Uncle Sam. Even so, $644 billion has crowded into retail money-market funds this year, crimping BlackRock’s all-important stock portfolios. Fink has been bulking up in infrastructure, credit and other investments that are harder to trade, but which also generate higher fees.

Persons: Laurence Fink, Lucas Jackson, ”, Larry Fink, Uncle Sam, Fink, crimping, Jonathan Guilford, Jeffrey Goldfarb, Sharon Lam Organizations: Inc, Reuters Global Investment, REUTERS, Reuters, BlackRock, Graphics, Treasury, X, Infosys, Thomson Locations: BlackRock, New York, U.S, Europe

☆ Dollar General bets on old boss’s old magic
▼ + stars: | 2023-10-13 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, Oct 13 (Reuters Breakingviews) - Dollar General (DG.N) is reaching back to happier days. In that time, shares plummeted 60%, compared to rival Dollar Tree’s (DLTR.O) gentler decline of roughly a fifth. Meanwhile, Dollar General has repeatedly missed analyst expectations as net profit margin fell from nearly 7% to estimates of 3% for this quarter, according to LSEG. Under his previous stint from 2015 until 2022, shares returned an annualized 19%, beating Dollar Tree, Walmart (WMT.N) and Big Lots (BIG.N). Dollar General faces plenty of challenges shared by all retailers, from rising wages to shifting consumer spending.

Persons: Todd Vasos, Jeff Owen, Vasos, Walt Disney, Bob Iger, Howard Schultz, outperforming, doesn’t, Jennifer Saba, Larry Fink, Uncle Sam, Jonathan Guilford, Sharon Lam Organizations: Reuters, Walmart, Walt, Starbucks, X, Infosys, Thomson Locations: Europe

Private credit players like HPS Investment Partners and Blue Owl Capital (OWL.N) have a workaround, but it could prompt a painful hangover. Cashed-up private credit funds offered sums previously unseen outside of traditional bank financing on riskier deals. Private credit assets swelled 460% to over $1.4 trillion between 2010 and the end of 2022, Preqin says. Reuters GraphicsThe attraction of “mezz” and similar exotic lending isn’t just that it helps private credit source new deals. In 2021, that dynamic meant private loans briefly became cheaper than liquid, tradable loans – flying in the face of financial orthodoxy.

Persons: –, Zendesk, Preqin, LSEG, HPS, Goldman, Blackstone, Angelo Gordon, dealmaking, George Hay, Oliver Taslic Organizations: Reuters, HPS Investment Partners, Owl, Blackstone, Apollo, Treasury, Private, Management, Partners, Reuters Graphics Reuters, Sabre, Companies, Wolf, ADC Therapeutics, Equity, Thomson Locations: EBITDA

☆ One $16 bln deal travels lonely dual track
▼ + stars: | 2023-10-09 | by ( Jonathan Guilford | ) www.reuters.com time to read: +3 min

NEW YORK, Oct 9 (Reuters Breakingviews) - When courting buyers, sellers like to make it seem as if there are plenty of options. So it is with buyout firms GTCR and Apax Partners as they explore ways to cash in on AssuredPartners, the insurance broker they own together. This parallel process, colloquially called a dual track, can build competitive tension to wheedle a higher price, but it’s too soon for the idea to pose a plausible threat. For example, cybersecurity provider AppDynamics was planning an IPO that would have valued it at around $2 billion in late 2016. Reuters Graphics Reuters GraphicsHigher interest rates have made it harder to borrow and for buyers and sellers to agree on valuations.

Persons: it’s, AppDynamics, Apax, AssuredPartners, GTCR, Jeffrey Goldfarb, Sharon Lam, Aditya Sriwatsav Organizations: Reuters, Apax Partners, Cisco Systems, Bloomberg, Reuters Graphics, Cisco, SoftBank, Thomson Locations: AssuredPartners

☆ The U.S. Economy’s Secret Weapon: Seniors With Money to Spend
▼ + stars: | 2023-10-08 | by ( Gwynn Guilford | ) www.wsj.com time to read: 1 min

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Persons: Dow Jones

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. https://www.wsj.com/economy/jobs/jobs-report-september-economy-unemployment-d9409b8b

Persons: Dow Jones

☆ Is The Economy Cooling or Revving Up? The September Jobs Report Will Offer Clues
▼ + stars: | 2023-10-06 | by ( Gwynn Guilford | ) www.wsj.com time to read: 1 min

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. https://www.wsj.com/economy/jobs/jobs-report-september-economy-unemployment-d9409b8b

Persons: Dow Jones

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. https://www.wsj.com/economy/jobs/jobs-report-september-economy-unemployment-d9409b8b

Persons: Dow Jones

☆ Elon Musk’s X is a black hole of value
▼ + stars: | 2023-10-03 | by ( Jennifer Saba | ) www.reuters.com time to read: +3 min

NEW YORK, Oct 3 (Reuters Breakingviews) - X is still worth something, but not for the people running it. loadingDespite Musk’s big pronouncements about pushing into subscriptions, X has historically relied on advertising, which contributed over 90% of revenue when it was a public company. Put it all together, and X isn’t just worth less than Musk paid for it, but likely less than its debt. Put that on the same enterprise-value-to-sales multiple as Snap, which is down to a mere 3 times, and X is worth around $8 billion. Like a financial black hole, X threatens to consume most of whatever value it once had.

Persons: Boss Linda Yaccarino, Morgan Stanley, Musk’s, Musk, ByteDance, X, Linda Yaccarino, Elon Musk, Jonathan Guilford, Sharon Lam Organizations: Reuters, Financial Times, Elon Musk’s, Comcast, Linda, Thomson

☆ Fixing Intel ends with taking it apart
▼ + stars: | 2023-09-29 | by ( Robert Cyran | ) www.reuters.com time to read: +4 min

A man walks past an Intel wall at the 2009 Computex trade show in Taipei June 3, 2009. REUTERS/Pichi Chuang Acquire Licensing RightsNEW YORK, Sept 29 (Reuters Breakingviews) - Intel (INTC.O) will have to get out of its own way. But now that its manufacturing technology has fallen behind, it’s dragging down both sides of the business. Snag is, Intel’s manufacturing arm will always have a reason to prioritize its own chips to support its design business. CONTEXT NEWSIntel announced on Sept. 29 the start of high volume manufacturing using its Intel 4 process technology at a plant in Leixlip, Ireland.

Persons: Pichi Chuang, Boss Pat Gelsinger, Intel’s, Gelsinger, Jonathan Guilford, Sharon Lam Organizations: Intel, Electronics, Reuters, Thomson Locations: Taipei, Taiwan, Arizona, Leixlip, Ireland

☆ Apollo’s divergent path outshines Blackstone
▼ + stars: | 2023-09-28 | by ( Jonathan Guilford | ) www.reuters.com time to read: +7 min

NEW YORK, Sept 28 (Reuters Breakingviews) - Apollo Global Management (APO.N) and Blackstone (BX.N) both emerged from private equity’s primordial swamp. That spread comprised nearly three-quarters of Apollo’s $3.1 billion in profit available to be doled out to shareholders in 2022. That turbo-charged the fees Blackstone reaps from managing funds, which contributed 59% of $6.6 billion in profit available to shareholders last year. Apollo’s earnings from its insurance business are awarded an even more meager 10 times. This doesn’t form the closed loop like that between Athene, Apollo and its various specialist lenders.

Persons: Marc Rowan, haven’t, dealmaking, Rowan, Blackstone, Steve Schwarzman, Athene, BREIT, Rich, reckons Bain, Schwarzman, Dealmaking, hasn’t, Lauren Silva Laughlin, Oliver Taslic Organizations: Reuters, Apollo Global Management, Blackstone, Apollo, Reuters Graphics Reuters, Barclays, Schwarzman, U.S . Federal, Industry, Life Insurance, Research Association, Thomson Locations: freefall, BREIT, Blackstone

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