Power Sheet: Viacom Suffers Yet Another Blow

-Back to the future? The latest sign that the deep dissatisfaction behind the U.K.’s Brexit majority is powerful also in the U.S. comes in the form of a one-word bumper sticker spotted recently in Texas: “Texit.” Could they be serious? Maybe it’s time to remember what no Texan ever forgets, that Texas is the only U.S. state that used to be a nation.

-Does anyone believe China’s official growth numbers? And if not – which seems to be the case – then shouldn’t we stop paying attention to them? China will announce second-quarter GDP growth on Friday, and most of the media would have you believe that investors worldwide are on the edges of their seats. But I have yet to encounter anyone who, when asked, admits to believing the numbers. Morgan Stanley money manager Ruchir Sharma said it out loud in an interview in Hong Kong last week. “You don’t get an economy of China’s size with zero volatility with the number every quarter to reach the target,” he said. It’s like a company managing earnings to come in a penny above the Street’s consensus EPS estimate every single quarter, except that in China the mandatory number is the government’s own growth target of 6.5% to 7%. “To get to 6% to 7% is impossible,” Sharma says. He figures the real rate is 4% to 5%, which is no better than, say, Malaysia’s 4.7% or Ireland’s 4.8% growth last year. Sharma’s new book is immodestly titled The Rise and Fall of Nations. Time calls it “a vital guide to the new economic order.”

-Just what Philippe Dauman didn’t need. The Viacom CEO is busy trying to avoid getting fired by his majority shareholder, Sumner Redstone, which is not that easy to do. And then yesterday Wells Fargo analyst Marci Ryvicker downgrades the stock from “market perform” to “underperform.” She explains in a new report, “We don’t see how anyone can come in and successfully turn this company around over the next 12 months.”

The stock is up this year, apparently on expectations that Dauman will be replaced. But Ryvicker says the company is such a disaster that even that may not be enough. Dauman insists he has set the stage for great performance, but you have to wonder how much longer he can survive as this high-profile drama wears on.

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