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Italian Banks Get Bailout
Italian officials have given their approval for the plan to bailout their banks, in particular, Monte Dei Paschi di Siena (MPS), in a €20bn package.
Editor’s Remarks: The private sector has failed to rescue MPS, and the government will now have to step in. MPS’ shares plummeted to its lowest level since 1999 after the news was announced. Despite all of the hard work put in by regulators to prevent banks from being “too big to fail,” MPS is considered exactly that. The reports that the bailout will cost Italians over €800 per person will not go down well. It will be interesting to see which party uses this information the most.
What to watch: Monte Dei Paschi, JP Morgan, EUR/USD, Banca Popolare, Banca Carige
Coca-Cola Takes Back Ownership
AB InBev’s 54.5% stake in Coca-Cola Beverages Africa is being bought out for $3.15bn by Coca-Cola.
Editor’s Remarks: Coca-Cola has no intention of owning these shares as it does not fit their market franchising model. It will hold it temporarily as AB InBev prepares itself for the merger with SABMiller. The other major Coca-Cola bottlers around the world will most likely take ownership of Coca-Cola Beverages Africa. There is no question that Africa is an appealing market to potential buyers with a growing middle class and it should sell quickly.
What to watch: Coca-Cola European Partners, Coca-Cola Hellenic, Coca-Cola Icecek, AB InBev, Coca-Cola Company
Rogue One Takes Disney To The Top
Rogue One has performed significantly better than expected at $300m in its opening weekend to take Walt Disney Studios over $7bn for 2016.
Editor’s Remarks: Walt Disney Studios has become the first studios to break $7bn in one year with its purchases of Star Wars and Marvel reaping the rewards. Disney dominates the highest earners for the year with a combination of using old series, new stories and movie remakes. Rogue One is a combination of the first two and shows the value in taking some of the same but adding something new. The success of Rogue One may cause other similar storylines to be continued by other studios but along different tracks. Most importantly, Disney tried to tick every audience box in their films, and it worked.
What to watch: Walt Disney, 21st Century Fox, Universal, Warner Bros.
Spanish Banks Face Big Hit
A ruling by the European Court of Justice has overturned a Spanish Supreme Court decision and will force a series of Spanish banks to pay out over €4bn to customers.
Editor’s Remarks: Banks such as Banco Popular and BBVA were initially only liable to pay around €5bn to clients who were incorrectly charged due to a hidden clause. The mortgages enforced a rate that could not fall below a particular value despite interest rates falling. The ruling has already caused banks to see their shares fall and will hurt their earnings for this year significantly. The EU banking sector looks like it will not start 2017 on solid ground with either its clients or its investors.
What to watch: BBVA, Caixabank, Banco Popular, Liberbank, Banco Sabadell
Google In Dutch Sandwich
Recent reports indicate that Google avoided paying $3.6bn in taxes in 2015.
Editor’s Remarks: Through a combination of shifting money through Google Netherlands Holdings and a “mailbox” location in Bermuda, Google moved around significantly more cash than it did in previous years. The company also utilises subsidiaries in Ireland and Singapore to help it keep up with Apple and Microsoft in their offshore holdings. Donald Trump will surely have something to tweet regarding this offshore stockpiling. Despite the recent meeting over keeping jobs in the US with tech CEOs, Trump will likely impose a tax rate on foreign profits at a single high rate. The battle over tax avoidance is about to begin.
What to watch: Alphabet, Apple, Microsoft, Donald Trump, FATCA