China Vs. Everybody; Saudi Aramco IPO Update; Dyson Gives Up EV Hopes

by 1 week ago

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THE HEADLINES

 

BAND IN CHINA

“F*ck the Chinese government.” – Randy Marsh (South Park), and at least a handful of US CEOs dealing with PR nightmares related to Uncle Sam’s Asian frenemy

Despite a busy schedule that includes restricting civil liberties (… anddd we’re banned in China), the People’s Republic has found time to publicly spar with the NBA regarding a GM’s tweet and ban a TV show whose 300th episode focuses on a Towel that sells weed. You can’t make this sh*t up, folks.

The NBA still played a scheduled pre-season game in China on Thursday, but the game was overshadowed by media bans and a mass exodus of the League’s Chinese sponsors. Oh, and Xi Jinping’s government scrubbed South Park from China’s internet.

When you combine all of this to an ongoing trade war with the US the butthurt regime has a lot on its plate. But Xi and Co. are nothing if not persistent, and have found time to micromanage the internet like a stay at home mom who just caught her teenage son looking at “adult content” …

What now?

At the urging of Chinese officials,  Apple removed an app from its app store that was tracking police activity, allowing protesters to gather and plot their movements in Hong Kong. The app HKmap.live was deemed “toxic software” on Tuesday by the Chinese-run People’s Daily newspaper.

Google soon followed suit, removing an app that allowed players to role-play as a Hong Kong protestor. “The Revolution of Our Times,” was removed for violating Google’s “sensitive events” rule. Can’t the kids just stick to Fortnite anymore?

The bottom line …

Protests in Hong Kong, along with trade war-related issues seem to have made the relationship between US enterprises and the land of poorly made goods even more contentious.

And the Chinese government isn’t the only challenge US companies face. Proprietors are walking on eggshells, making sure not to bend to China’s will and upset the American populous.

 

I DON’T GET PAID ENOUGH FOR THIS …

Nervous about that big presentation today? Worried your client is “literally going to kill you?”

Well, just know this: somebody has it much worse than you. And that isn’t just a figure of speech.

Investment bankers from JPMorgan, Morgan Stanley and Goldman Sachs have to get in a room today and convince Mohammad bin Salman, Saudi Arabia’s Crown Prince (and recent guest on ‘60 Minutes‘), that state-run oil company is worth $500B less than what he expects.

You heard that right …

Saudi Arabia is planning a partial IPO of Aramco, which will be the largest public offering in the history of the world. Sucks to suck, Alibaba. The only catch? Mohammad bin Salman was seeking a $2T valuation for the oil giant … but investors don’t agree.

And today, a bunch of not-so-big-swinging-d*cks needs to tell a guy who once had a journalist chopped up that his Excel model is wrong.

Luckily for the Patrick Batemans last time MbS wasn’t pleased with the numbers (a 2018 IPO was valued at between $1.3B and $1.7B), he simply canceled the public offering.

I don’t get paid enough for this sh*t …

Despite Aramco looking to list roughly 5% of the company in what will be the world’s largest IPO, banks are taking a haircut on the work. The average US or European IPO pulls in between 2.5% and 7% in fees …

The Aramco IPO may yield less than 1%. But there is a silver lining. Getting in with Saudi Arabia isn’t just good for your well-being … it’s good for business as the Kingdom rolls out a massive economic diversification plan.

The bottom line …

Shares of Aramco could list as soon as next month on Saudi Arabia’s Tadawul exchange with additional foreign listings to follow. We can expect to see a prospectus by the end of this month and a roadshow soon after.

With recent IPO’s sky-high valuations and piss poor performance (we see you, Uber) fresh in their heads, you can bet that banks will tread carefully when finalizing Aramco’s offering.


IN OTHER NEWS

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  • Fidelity for f(r)ee. Fidelity is joining Chuck Schwab and the E-trade baby in the $0 fee club. Fidelity will eliminate its $4.95 charge on ETF and options transactions and, starting November 4th, cut investment adviser commissions to zero.

 

  • This thing sucks. Dyson (yes, the company that makes the Lamborghini of vacuums) has scrapped its plans to build an electric vehicle, citing that “it can no longer see a way to make it commercially viable.” That doesn’t seem to matter to Elon. CEO James Dyson and the board decided to pull the plug on the $2.7B project after pushing it back from 2020 to 2021 … and failing to find a buyer. While it’s unclear what the 523 people dedicated to the project should do with their new free time, the funds originally intended for the EV project will be reallocated to develop other products coming to a Sharper Image near you.

 

  • Roll it back. The Fed is reversing several significant post-crisis bank rules that will change the way large banks are hit with regulations. One new rule, which may lower regulatory costs for regional lenders with less than $700B in assets, would divide large US banks into 4 categories based on size and other risk factors and could potentially make them free from certain capital or liquidity requirements. Another would change the frequency that the largest banks, such as JP and Bank of America, complete a ‘living will’ (WTF is this?), from annually to once every four years.

 

  • Maybe there’s hope. Stock futures are up for Friday’s open after Donny Politics told reporters that talks between the two countries are going ‘really well’. The DOW, S&P, and NASDAQ all imply a gain of 0.2% to start the day. There’s speculation that a partial deal could be made, as Trump will meet with Chinese Vice Premier Friday, potentially discussing the currency pact that was in the news Wednesday evening. If you’re wondering how many times markets are going to fall for this, the answer is “every.”

 

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