Walmart's Flipkart Deal: Embracing Its Inner Amazon
Walmart's Flipkart Deal: Embracing Its Inner Amazon
(Bloomberg) -- Welcome to Bloomberg Opinion Today, an afternoon roundup of our opinions on business, politics, markets, technology and more. New subscribers can sign up here.
ICYMI
Stocks rose, as Korean detente topped Middle East tension. California mandated solar panels on most new homes. Apple plans to sell video subscriptions through its TV app.
Walmart’s Amazon Act
To survive Amazon, Walmart Inc. has to be a little more like Amazon.com Inc.
Investors spent Wednesday being deeply disappointed with Walmart over its $16 billion purchase of a controlling stake in Indian online retailer Flipkart Group. Its stock price fell 3 percent, shaving $4 billion from the Walton family’s net worth, which is now a mere $142 billion. S&P Global Ratings cut its outlook on the world’s biggest retailer to “negative” from “stable.”
Even the deal’s unveiling was a wet bottle rocket: Masayoshi Son, CEO of SoftBank Group Corp., which owns a Flipkart stake, prematurely spilled the beans on an earnings call. When told it was supposed to be a secret, he explained: “Oops.”
Everybody needs to chill out, though, writes Sarah Halzack. Yes, the deal, Walmart’s biggest ever, will hammer its earnings for a couple of years. But you know who else is throwing cash bundles in the furnace on its quest for global dominance? Amazon, that’s who. In fact, Amazon had made a competing bid that Flipkart rejected.
Both companies can afford to play the long game. Amazon investors expect it by now. Walmart’s may take more conditioning. But the pride of Bentonville can’t afford not to play this game, if it’s to keep Amazon from devouring the retail universe, Sarah writes: “It needs to act early and it needs to be aggressive, and buying Flipkart is just such a move.”
The Bloomberg View
President Donald Trump made a big mistake leaving the Iran nuclear accord, Bloomberg’s editors write. Now he and everybody involved need to quickly deal with the consequences.
Swamp Things
There are still many questions about the money various companies and a financial manager connected to a Russian oligarch poured into the Michael Cohen shell company that paid off Stormy Daniels. But Tim O’Brien has a couple of key takeaways:
- First, “in Trump’s swamp, you pay to play.”
- Second, the revelations “put financial clothing on relationships between Russian interests and one of Trump’s close advisers.”
Also: “sometimes witch hunts turn up witches.”
One key legal question here is where all that money went, exactly. If any passed through to Trump, then it would sure “look as if Trump’s fixer set up a shell company to accept bribes on the president’s behalf,” writes Noah Feldman. Even if it didn’t, that won’t be the end of the legal and political risks to Cohen and Trump.
For more context, Leonid Bershidsky has a helpful primer on what it really means to be “an oligarch with close ties to Putin.” (Hint: You’re not doing a lot of shirtless fishing with Russia’s president.)
Iran Nuclear Fallout
Financial markets have barely reacted to Trump’s decision to leave the Iran nuclear deal. Oil prices, though, may be getting the implications, jumping 3 percent today. Liam Denning looks far out on the futures curve, all the way to 2022, and sees prices have moved significantly higher there, too. This is:
- More good news for Saudi Arabia.
- Good news for U.S. oil producers looking to hedge future production.
- A sign geopolitical risk is becoming more important to the market.
Other markets may eventually figure point 3 out, too.
Some other Iran-deal responses:
- Bankers were leery of doing business with Iran even before Tuesday – Lionel Laurent
- China, not Iran, is where the real action in oil is – David Fickling
- Trump’s decision might seem politically savvy, but actually hurts his influence – Jonathan Bernstein
Chart Attack
Behold Wisconsin’s amazing pension system, says Justin Fox.
Maybe Papa John’s International Inc. has more problems than the NFL, suggests Sarah Halzack.
Speed Round
Democrats should get an inflation response ready for 2020 – Conor Sen
Admit it: You don’t really care that much about online privacy – Michael Strain
The middle class is doing … fine – Noah Smith
The stock market has corporate earnings all wrong – Charles Lieberman
The Kicker
The milky blue blood of the horseshoe crab saves human lives. But extracting it kills tens of thousands of crabs per year. Now scientists have finally figured out a synthetic substitute so we can leave these poor crabs to go about their 450 million-year-old business. (h/t Tara Lachapelle)
Note: Please send blue blood, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net.
To contact the editor responsible for this story: Timothy L. O'Brien at tobrien46@bloomberg.net.
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