Good Monday morning. The stock market is having a lousy day in Europe and Asia, despite the weekend promise of the G20 to use “all policy tools – monetary, fiscal and structural” to boost the economy. The promise fell flat.
But despite short-term woes, Warren Buffett declared his faith in the U.S. economy’s long-term prospects. In his annual letter to shareholders released Saturday, the Omaha investor said: “It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve.) As a result of this negative drumbeat, many Americans believe that their children will not live as well as they themselves do. That view is dead wrong. The babies being born in America today are the luckiest crop in history.”
Buffett also was also optimistic about his big investment in IBM, which has lost $2.6 billion since he made it. “We expect that the fair value of our investment in IBM common stock will recover and ultimately exceed our cost,” he said.
Meanwhile, HPE CEO Meg Whitman blasted Chris Christie, after having been his finance co-chairman. Christie’s endorsement of Donald Trump, she said, “is an astonishing display of political opportunism. Donald Trump is unfit to be president.”
Polls suggest Whitman’s view is not shared by Republicans likely to vote in tomorrow’s primaries.
More news below.
• Valeant CEO back from medical leave
Valeant Pharmaceuticals International on Sunday said Chief Executive Officer Michael Pearson would return from medical leave effective immediately, and it postponed the release of fourth-quarter results planned for Monday. The company has been under pressure for its drug price increases when it said in late December that Pearson had been hospitalized for severe pneumonia. Investors have been divided on Pearson’s return, and shares fell last week, reflecting concern about the company’s future.
• Fidelity cuts more startup valuations
Fidelity Investments has again broken out the red pen for many of its privately-held portfolio companies, according to a Fortune analysis of new valuation reports for three of its mutual funds. Among the firms that Fidelity marked down: tweet-analysis firm Dataminr, meal-delivery provider Blue Apron, and human-resources startup Zenefits. The monthly markdowns do not necessarily correspond to how Fidelity is faring on its investments.
• U.S.-E.U. Privacy Shield Deal details unveiled
The U.S. and E.U. have published the final text of their new Privacy Shield deal, which is supposed to ensure Europeans have adequate data-protection rights when U.S. companies import their personal data. The deal places major new obligations on those companies, which range from tech firms to many other kinds of multinationals. The pact – which still needs to win official approval – would also require companies to resolve complaints within 45 days.
• Nissan surges on buyback news
Nissan shares rose the most in almost seven years as the Japanese automaker plans its biggest share buyback ever and first in more than four years to help counter a recent slump for the stock. Nissan is responding to a 24% drop for the company’s shares this year through Friday, a performance that is trailing peer Toyota and benchmark indexes. Japan’s exporters have been hit hard by the yen strengthening against the U.S. dollar, which has cut into the value of profits brought home from overseas operations.
• $40 is the new $70 for U.S. shale
Less than a year ago major shale firms were saying they needed oil above $60 a barrel to produce more; now some say they will settle for far less in deciding whether to crank up output after the worst oil price crash in a generation. The latest comments highlight the industry’s resilience, but also serve as a warning to rivals and traders: a retreat in U.S. oil production that would help ease global oversupply and let prices recover may prove shorter than some may have expected. Nimble shale drillers are now helping mitigate the nearly 70-percent slide crude price rout by cutting back output, but may also limit any rally by quickly turning up the spigots once prices start recovering from current levels just above $30.
Around the Water Cooler
• Intel tax dispute could benefit Google
Alphabet, Google’s parent company, could gain at least $3.5 billion in new tax benefits if Intel succeeds in its international tax dispute with the Internal Revenue Service. That amount, The Wall Street Journal reports, exceeds Google’s entire 2015 tax cost. The case, which the IRS appealed last week, is being closely watched and at least 20 firms have said they’re monitoring the outcome involving share-based compensation. The Intel dispute has been brewing since 2003, part of a long battle between the IRS and firms over what are known as cost-sharing arrangements between U.S. companies and their low-taxed foreign subsidiaries.
The Wall Street Journal (subscription required)
• Starbucks prepares to dip into Italy
Starbucks announced on Sunday that it will open its first ever store in Italy next year, in Milan, with plans for other locations in the market to follow. The move to Italy is likely particularly meaningful for CEO Howard Schultz. During a business trip in 1983 to Milan and Verona, he discovered the Italian art of preparing coffee. That inspired his vision for Starbucks. “Everything that we’ve done sits on the foundation of those wonderful experiences that many of us have had in Italy,” Schultz said.