Category Archives: Business

The latest news of the International economy, economies of Europe, Asia, US. Business News, World Market News, World Business, Global Business Trade

Europe continued to conflict with Apple

The European authorities continued to “fight” with Apple in court, appealing the previous decision of the EU Supreme Court, which sided with the corporation and allowed it not to pay Brussels 13 billion euros, writes Reuters.

The head of the EU antitrust authority Margrethe Vestager announced the filing of the complaint, who called the proceedings important in terms of attempts to force multinational corporations to pay taxes on an equal basis with everyone.

The essence of the original lawsuit was an attempt to recover from Apple the amount of income tax allegedly underpaid to the Irish budget. According to the European Commission, Dublin has provided unreasonable benefits to Apple for several years, lowering the rate even compared to the current 12.5 percent tax on trade income.

As a result, the effective rate for Apple and other digital companies that receive revenue from the sale of content was 9.5 percent, compared with 23 percent of the average tax that most European companies pay.

Ireland often serves as a place of registration for digital companies due to the fact that the rate in force in this country is one of the lowest in Europe. Such companies have the opportunity to pay income tax at the place of registration since the sale of products is not tied to a specific territory.

This approach raises claims from the EU and US authorities, which are competing for the right to levy taxes from leading digital companies. In some European countries, taxes on digital companies have been introduced since 2019, the basis for which is not profit, but the proceeds received at the expense of residents of a particular state.

“Sinking” companies around the world have found their last salvation

“Sinking companies around the world that need to raise new funds have found their last salvation in the face of sovereign funds from different countries, writes Bloomberg. However, this approach still carries risks as it can put pressure on stock prices.

The publication cites the example of three major British companies actively seeking investors: car manufacturer Rolls-Royce, the operator of shopping centers Unibail-Rodamco-Westfield, and IAG, the main owner of British Airways. All of them faced serious financial problems because of the coronavirus pandemic and had to enter the capital markets.

Due to the sharp decline of the stock market in different countries, any announcement by companies to attract new investors and place an additional share issue on the stock exchange played into the hands of hedge funds, which benefited from lower quotes. They take advantage of the negative news background around the company and buy out its shares in the market to return the securities previously borrowed by brokers.

Thus, raising additional funds often turns into new problems. The way out may be to sell a new share issue to sovereign funds, which governments of different countries use to invest budget revenues.

IAG has already sold a 25 percent stake in its shares for 2.7 billion euros to the sovereign fund of Qatar. Among the applicants for the additional issue of Rolls-Royce is a Singapore fund GIC.

However, even in this case, the share price is unlikely to rise significantly, as the same factor plays a significant role — the negative news background around the company. Because of this factor, many investors are actively selling securities from their portfolios, which is not hampered by underwriting banks (the organizers of the issue). It is in their interest to buy the issue from the issuer at the lowest possible price and resell it more expensive in the secondary market after the recovery in demand.

American welfare reaches historic high

The net worth of American families and US non-profit groups hit an all-time high in the second quarter of 2020. This is evident from the data of the Federal Reserve System.

The welfare indicator jumped 6.8 percent to $118.96 trillion. This is $380 billion more than at the end of 2019. Analysts say the economy is recovering faster than expected. However, the federal government’s debt rose by a record of 58.9 percent (to $22.58 trillion).

Household debt increased by 0.5 percent and mortgage liabilities by three percent. Business debt rose 14 percent in the second quarter of this year.

By 2050, the US national debt will double, from 98 percent of GDP in 2020 to 195 percent. This is stated in the report of the US Congressional Budget Office.

The US stock market is unstable…

The US stock market is going through a period of unprecedented instability, analysts surveyed by CNBC say. At the moment, the main indices are showing a decline, but in the near future, it may be replaced by a new round of growth in quotations.

The trading session on September 21 was marked by a drop in the market by almost 20 percent. The exception was the stocks of some technology companies, including Apple, which managed to stabilize. The decline was triggered by a massive sell-off amid investor fears that the economy would fall further due to the coronavirus. Uncertainty is exacerbated by news of a sharp rise in the number of infected in Europe, the presidential campaign in the United States, and the confrontation between Democrats and Republicans after the death of Supreme Court Justice Ruth Ginsburg.

The largest decline was noted in the so-called cyclical sector — among companies whose activities are highly dependent on the general state of the economy and the phase of the cycle in which it is located. These include transport companies as well as entertainment companies. In addition, the quotes of energy and processing companies declined.

Analysts are already comparing the current downturn with the one that took place in early and mid-September. The main hit back then were tech companies, which are now showing resilience to shocks.

At the same time, financiers are already predicting a quick recovery of the market, which will be associated, among other things, with the end of September, traditionally considered one of the worst months of the year for investors. Many of them by the end of the quarter will revise the composition of their portfolios, creating demand for certain securities.

Elon Musk spoke about the problems of Tesla

Tesla CEO Elon Musk warned of the difficulty of ramping up production as the auto giant’s reliance on large aluminum parts could create new manufacturing problems. Writes about it Reuters.

Musk previously talked about plans to create an automatic factory, he calls it “the machine that builds the machine.” However, the entrepreneur notes the complexity of the new technology. Car bodies have traditionally been made by assembling multiple metal panels, but Musk has charted a new course.

In its new Model Y, Tesla plans to replace 70 components with one module made with the world’s largest aluminum die-casting machine. Such technology can reduce the number of assembly steps, experts say.

Earlier, the head of Tesla called on mining companies to produce more nickel, which is a key component in the production of batteries for electric cars.