Home court advantage

MARKETS

  • U.S. markets: Peep year-to-date performance .
  • Europe elections: The EU's centrist coalition lost its majority in parliamentary elections that saw the highest voter turnout in two decades. Far-right populist and liberal pro-EU parties gained ground-meaning Brussels could get even more complicated.
  • Trade: While in Japan, President Trump said the U.S. is "not ready to make a deal" with China. The cherry on top? Tariffs could go up "very, very substantially, very easily," Trump said.

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AUTO

Some People Are Hard to Say Renault to

Picture
We don't get a ton of earthquakes here on the East Coast, but we're pretty sure this is what they feel like. Italian-American automaker Fiat Chrysler Automobiles (FCA) has proposed an almost $40 billion megamerger with French rival Renault, a deal that would represent a tectonic shift in automaking and create the world's third-biggest carmaker.

That's because it would give FCA and Renault leverage in the expensive, fiercely competitive transition toward electric and driverless cars currently upending generations of combustion engine scaling.

The fine print

Together, FCA and Renault made roughly 8.7 million vehicles last year, which puts them behind only Volkswagen and Toyota in terms of output.

  • Tack on Renault's existing alliance with Nissan and Mitsubishi, and the group could make over 15 million/year altogether.
  • Speaking of which...FCA called it a "friendly proposal" and Renault's comrades overseas are reportedly being kept in the email chain.

FCA said ownership of the combined automaker would be split 50/50 between its shareholders and Renault's. The new entity would be based in the tax-friendly Netherlands.

So will it happen? Like your parents when you asked about going to the post-prom party, Renault said, "We'll think about it." Unlike your parents, it might not give FCA a hard time.

  • Renault needs FCA for better access to the U.S. market, where French cars haven't taken off like brie or bobs.
  • And FCA needs Renault, which was (along with Nissan) among the first automakers to build electric models for the masses.

Looking ahead...

Neither FCA nor Renault is on the brink of collapse, but car sales are slowing. What's growing are the costs of developing new tech to meet both changing demands and stricter emissions regulations.

If a deal does get done, two pro-consolidation auto industry titans, FCA's Sergio Marchionne and Renault's Carlos Ghosn, won't have played a role. Marchionne died last July and Ghosn's been arrested over charges of financial misconduct.

PHARMA

Pharma on Trial in Oklahoma

Q: Can drugmakers be considered legally responsible for the opioid crisis?

A: We'll find out soon in Norman, Oklahoma.

In a trial starting today, lawyers in Oklahoma will argue that Johnson & Johnson should be held accountable for furthering the deadly opioid crisis that at its peak killed 15.5 people per 100,000 in Oklahoma.

It's the first case to go to trial of around 2,000 lawsuits brought by states, cities, and Native American tribes. That means the outcome of this trial could set a precedent for the rest of those who've filed suit and the companies they're hoping will settle. Already…

  • Purdue Pharma, maker of OxyContin, agreed to pay $270 million to settle claims in March.
  • And Teva settled Sunday for $85 million without admitting wrongdoing. Both drugmakers were expected to take part in Oklahoma's proceedings pre-settling.

In the possibly two-month trial, the state will argue J&J is a "kingpin." The drug juggernaut will argue Oklahoma ignored "basic facts" of a heavily regulated business. We'll be paying close attention.

MARKETS

For Alibaba, There's No Place Like Closer to Home

Alibaba is considering another public listing-this time in Hong Kong and with a goal to raise $20 billion, reports Bloomberg.

The backstory: The Chinese e-commerce company made a splash in NYC in 2014, when it raised $25 billion in a record-breaking IPO. But you might be surprised to know, proud New Yorkers, that your city wasn't its first choice.

  • Alibaba originally wanted to list in Hong Kong, but it couldn't get the exchange to budge on allowing dual-share classes (which divide shares into different categories with different voting rights).
  • Well, it's since budged and Alibaba wants back in.

This is about home court advantage. Listing publicly in Hong Kong will give Alibaba access to investors in its home country who know the ins and outs of the company. Plus, Chinese tech firms aren't enjoying a warm reception in the U.S. these days due to the ongoing conflict that rhymes with "grade yore."

Looking ahead…sources tell Bloomberg Alibaba could file confidentially as early as the second half of this year.

TOURISM

Traffic Jams Blamed for Everest Deaths

his spring has been one of the deadliest climbing seasons in years for Mount Everest, the world's highest summit. At least 11 people have died, and from reports out of Nepal this week, it looks like at least some of those deaths were avoidable.

What's going on? The normal risks like blizzards or avalanches aren't to blame this season-it could be overcrowding that's taking lives. Photo evidence from one climber who summited Everest last week:
Picture
Zoom out: Tourism is essential for Nepal, one of Asia's poorest countries. And the government, which largely oversees Everest expeditions, is hungry for the big bucks people spend on the adventure. A single experience can cost $70,000, per the NYT.

  • Nepalese officials have drawn criticism for issuing a record 381 permits this season.
  • But they've blamed the weather along with lower-cost trekking companies for shuttling less experienced climbers to the top.

Bottom line: Nepal is struggling to balance the allure of tourism $$$ with safety measures for its premier attraction.

CALENDAR

The (Shorter) Week Ahead

Prepare to be confused about what day it is.

Monday: That was yesterday

Tuesday: Today; consumer confidence

Wednesday: Earnings (Abercrombie & Fitch, Canada Goose, Dick's Sporting Goods)

Thursday: GDP data; earnings (Uber, Costco, Dell, Dollar General, Dollar Tree, Gap Inc., Ulta); Spelling Bee finals; Game 1 of the NBA Finals

Friday: PCE inflation data; China releases manufacturing PMI data; Star Wars: Galaxy's Edge opens at Disneyland Resort

WHAT ELSE IS BREWING

  • Meredith Corp. will sell the intellectual property of Sports Illustrated to Authentic Brands Group, a licensing company, for $110 million. Meredith will still run the editorial ops of SI for at least two years.
  • Disney's Aladdin remake took the top spot in box offices over the long weekend. We're expecting a...whole new world...of live action remakes.
  • A judge temporarily barred Bud Light from suggesting in its ads that Coors Light and Miller Lite use corn syrup.
  • Uber's first employee, Ryan Graves, has left the company's board.
  • Google is spending about $670 million to build a data center in southern Finland. Google has 58 data centers around the world.

BREAKROOM

This Is Jeopardy
With champ James Holzhauer showing no signs of slowing down, we've been watching a ton of Jeopardy recently. And the question writers rewarded us with a stock ticker category. See if you can go 5/5 on these...but remember, you must phrase your answer in the form of a question.

  1. For its stock symbol, this company whose brands include Tide & Bounty gets a PG rating.
  2. For all of your in-house repairs, this company comes to you in HD.
  3. We're wild about this 3-letter stock symbol for Harley-Davidson that's also a nickname for their bikes.
  4. HLT is Hilton; H by itself is this hotels corporation.
  5. Appropriately, the stock symbol for Sotheby's auction house is this 3-letter verb.

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Breakroom Answers


This Is Jeopardy
1. What is Procter & Gamble?
2. What is Home Depot?
3. What is HOG?
4. What is Hyatt?
5. What is BID?

Comments (1)

May 28, 2019 - 7:21am
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