When will the next downturn hit?
Anne Richards, chief investment officer of Aberdeen Asset Management, told our Most Powerful Women confab in London this morning that the global economic picture appears to be “quite benign …for the next twelve months.” But she warned that risk has been priced out of a number of credit markets. “I can’t say what the right price is, but I’m reasonably certain that a lot of markets are now priced wrongly.”
Such mis-priced markets should be taken as early warning signs. Growing concern about the market for “unicorns” – start-ups valued at more than one billion dollars – is another. And recent wild fluctuations around China’s Hanergy, which makes thin-filmed solar power panels and saw its share price plummet nearly 50% last month, are yet another. (The latest on Hanergy here.) I’m not making a prediction here. But the business cycle hasn’t been repealed, despite the best efforts of free-spending central banks, and it’s probably time to start looking for the next turn.
Meanwhile, if the rat race is getting tedious, you might take inspiration from Roz Savage, now on stage in London. She left her management consulting job a decade ago to spend five months rowing across the Atlantic Ocean in a 23-foot rowboat. She subsequently rowed across the Pacific and the Indian Oceans as well. How did she make it? “It’s very difficult to quit in the middle of the ocean,” she says. “You can’t just take a bus home.”
Enjoy the day.
• Health insurers seek pair of mega-deals
Aetna’s stock jumped late-Monday following reports that the company had been approached about a potential takeover by UnitedHealth Group worth well above $40 billion. The two companies together would boast a combined market value greater than $150 billion. Those rumored deal talks represent the latest in a flurry of merger talks that could lead to major consolidation in the health care industry. Earlier on Monday, Cigna rejected a $45 billion takeover offer from Anthem, the country’s second-largest health insurer behind UnitedHealth.
The Wall Street Journal (subscription required)
• Goldman Sachs: From Wall Street to Main Street
Goldman Sachs plans to start offering consumer lending services online in a move that would see the Wall Street titan, with more than $850 billion in assets, doing business with everyday Americans seeking loans of a few thousand dollars a pop. The business would have Goldman competing directly with smaller, Main Street banks as well as online services such as Lending Club. The new Goldman effort is being led by Harit Talwar, the former executive at credit card company Discover who joined the investment bank last month.
The New York Times
• Gap will close 175 North American stores
Gap is closing 175 of its namesake stores as part of the troubled retailer’s latest attempt to turnaround its fortunes amid slumping sales. Gap, which will also cut 250 jobs at its San Francisco headquarters, has struggled to generate sales growth even as sister chain Old Navy has fared considerably better. When CEO Art Peck took control of Gap earlier this year, he called righting the ship for the company’s namesake brand his “No. 1 priority.”
• Former Australian PM offers Hillary Clinton some advice
Speaking at Fortune’s Most Powerful Women International Summit in London, Julia Gillard had some advice for Hillary Clinton on what it’s like to be the first woman leader of a country. The former Australian prime minister said she had incorrectly assumed that the longer she was on the job, the more any gender-based criticism of her performance would fade away. Gillard, who made a now-famous speech against misogyny less than a year before her run as prime minister ended, suggested that the 2016 Democratic presidential candidate not wait too long to address any issues of sexism should she be elected.
Around the Water Cooler
• Did the AIG ruling just kill bailouts?
Monday’s decision by a federal judge to side with former American Insurance Group CEO Maurice “Hank” Greenberg, in a ruling calling the U.S. government’s 2008 rescue of the large insurer “draconian,” could make a federal bailout of failing institution less likely in a future financial crisis. Greenberg, who has to live with a moral victory that includes none of the $40 billion in damages he sought, had sued the government on behalf of AIG shareholders in a lawsuit that claimed the insurer’s bailout, which resulted in a $20 billion profit for U.S. taxpayers, was illegal and unfair. Despite the lack of damages awarded, Monday’s ruling represented a rebuke of the government’s handling of the AIG bailout.
The New York Times
• How both sides win in the Target-CVS Health deal
Target’s $1.9 billion sale of its money-bleeding pharmacy business to CVS Health adds nearly 1,700 pharmacies to the CVS portfolio. But, while CVS is beefing up its brand, Target will look to benefit from the deal by removing the distraction of another underperforming business. Much like with the $5 billion write-down the retailer took earlier this year when it shuttered its Canadian division, Monday’s sale shows Target is willing to sacrifice certain some revenue in order to focus more on the company’s more important core retail and e-commerce businesses.
• VMware’s mobile push
Nearly a decade ago, VMware became a darling of Wall Street and Silicon Valley with a blockbuster IPO. Now, after watching its stock hover around $85 per share for a few years, the cloud and virtualization software firm is looking to spark a new stage of growth by trying dominate the so-called business mobility market. VMware unveiled a new initiative that looks to help businesses’ employees work on their mobile devices outside of the office, with the company selling products that would make it easier for employers to manage their offsite workers.
• Can Uber disrupt delivery?
Uber made its meteoric rise to a $50 billion valuation by rapidly expanding its popular ride-sharing service to more than 3oo cities around the world. So, why is the startup’s ambitious same-day delivery program struggling to gain momentum? Uber has so far brought on only about half a dozen partners in its delivery gambit and the company has struck out with a number of major retailers. But despite the slow start, and a host of potential rivals in the on-demand delivery market, Uber has a massive roster of drivers and an extensive logistics network in place that has investors betting that the company can successfully add delivery to its existing infrastructure.
WSJ (subscription required)
5 Things to Know Today
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