The Economist - USA (2022-02-12)

6 TheEconomistFebruary12th 2022
The world this week Business

SoftBanksaid it would seek to

list Arm, a British chip design­

er that it bought in 2016, on the

stockmarket, after a proposed

sale of the business to Nvidia

collapsed. Valued at as much

as $60bn, the deal would have

been the biggest ever in the

semiconductor industry, but it

ran into regulatory hurdles

from the outset when antitrust

concerns were raised in Amer­

ica, Britain and the eu. Compa­

nies that use Arm’s chip

designs, including Microsoft

and Qualcomm, had argued

the acquisition would give too

much market power to Nvidia,

which is based in California. 

Toshiba, another Japanese

conglomerate under pressure

to increase shareholder

returns, ditched a plan to split

into three companies and said

it now proposed spinning off

just its devices business,

which includes semiconduc­

tors. The original plan was

criticised by foreign investors.

The new restructuring will

avoid a complex vote among

shareholders, making it easier

for management to try to win

over the naysayers. 

bpmade an annual headline

profit of $12.8bn in 2021, its

biggest in eight years. Similar

to other energy giants, bpwas

boosted by soaring prices for

oil and gas. Coming on the

back of huge profits at Chev­

ron, ExxonMobil and Shell,

there are some calls in Britain

and on the European continent

to impose a windfall tax on

energy companies. 

Revenues at tui, Europe’s

largest tourism company, were

five times higher in the last

three months of 2021 than in

the same quarter of 2020, but

still well below those of 2019.

Now that many travel restric­

tions have eased, tuiexpects

bookings this summer to come

close to pre­pandemic levels. 

In another sign of returning

confidence in travel, Frontier,

a low­cost airline in America,

agreed to buy Spirit, a rival.

The $6.6bn takeover is the

biggest in the industry since

the start of the pandemic. 

Stockmarketsclawedback

mostoftheirlossesfromthe

worsttradingdayina year,

triggeredbyMeta’swarning

aboutslowerrevenuegrowth.

ThesharepriceofFacebook’s

parentcompanytumbledby

26%onFebruary3rd,wiping

$230bnoffitsmarketvalue.

Buttheroutintechstockswas

notevenlyspread.Amazon’s

sharepricereboundedonthe

backofsolidearnings.Disney

alsoprovideda fillipto

investorsbyreportinga big

riseinsubscriberstoits

Disney+channel,allaying

fearsthatthestreamingrevo­

lutionhasrunoutofsteam.

Howtoeaseeasymoney

Christine Lagarde, the presi­

dent of the European Central

Bank, tried to reassure mar­

kets that any tightening of

monetary policy in the euro

zone would not be rushed. Ms

Lagarde triggered a sell­off in

eurobondsrecentlywhenshe

signalleda shifttoa more

hawkishpositionattheecbby

refusingtoruleoutan

interest­raterisethisyear.

Persistentlyhighinflationis

forcingcentralbankstothink

hardaboutquickeningthe

paceofraterises.TheBankof

Englandrecentlyliftedits

benchmarkrateto0.5%having

raisedit to0.25%inDecember.

America’s total household

debtrose by $1trn during 

to reach $15.6trn at year’s end,

the biggest annual increase

since 2007. Car loans were a

big factor; the loosening of

covid restrictions has

unleashed a pent­up demand

for vehicles. Credit­card bal­

ances increased in the fourth

quarter by the largest amount

since record’s began. 

America said it would remove

the extra tariffs on Japanese

steel importsimposed during

the Trump administration (the

levy on aluminium still

applies). In a deal similar to

the one struck with the eulast

year, America and Japan

pledged to work together to

reduce overcapacity in steel

manufacturing. To avoid

tariffs, steel from Japan must

be made entirely in that coun­

try to avoid Chinese elements

sneaking into the production. 

AsAmerica’seconomy

reboundedlastyearit sucked

inmoreimports,pushingthe

overalltradedeficitforgoods

andservicesto$859.1bn,a

record.Thetradedeficitwith

Chinagrewby14.5%overthe

year,to$355.3bn.

A marriedcouplewerearrest­

edinNewYorkforallegedly

conspiringtolaundercrypto-

currencythatwasstolen

during a hack of Bitfinex, a

virtual­currency exchange, in

2016. The Justice Department
said that $3.6bn in bitcoin
related to the hack has been
seized so far, proving that law
enforcement “can follow mon­
ey through the blockchain”.

Atoughbusinesscycle

Pelotonreplaced its chief

executive and said it would cut

2,800 jobs, after it reported

another quarterly loss and

lowered its sale forecast. The

maker of internet­connected

exercise bikes and workout

programmes was one of the

pandemic’s big winners, as

svelte office­workers tried to

stay lean and mean at home.

Once they returned to gyms

and parks, demand for Pelo­

ton’s pricey products dropped.

The company’s stock has ped­

alled back from $163 a share in

December 2020 to $40 today. 

Share prices

September 1st 2021=

Source:Bloomberg

125

100

75

50

202 2022

Apple

Amazon

Meta