🗞️Europe: It’s now more acceptable

Oat milk took off

Welcome back to a new week! One way to beat or avoid the dreaded Monday Blues - start the week out with an “attitude of gratitude.” Try to take time to recognize and appreciate the things that you enjoy about work. 😃

Morning Wrap your weekend:

  1. The 1Q has been harsh for WeWork.  
  2. The US government made a compromise - it proposed a new global minimum corporate tax.
  3. Investors extended a warm welcome to Oatly on its debut day.


US stocks ended mostly lower Friday ending a volatile week. Financials led sector gains while tech and semiconductors led losses.

  • After the global service sectors reported spectacular growth on Friday, all eyes will be on US personal consumption and inflation figures this week.

European stocks rose on Friday with cautious optimism, as Eurozone business growth accelerated at its fastest pace in over three years in May. Swiss luxury goods maker Richemont jumped.

Asia: China shares fell on Friday dragged down by financials and consumer firms, while a sharp drop in Tencent despite an expectation-beating profit jump weighed on Hong Kong’s benchmark index. HK stocks edged higher as gains in the consumer sector offset Tencent losses.

Bitcoin shed 13% on Sunday alone, but advanced to about USD 35,500 in early trading. Commodities remain a focus as China tries to temper the prices.


WeWork Didn’t Work Well

Source: Wework, Morning Wrap

WeWork’s first quarter is just… harsh. The co-working space operator’s first-quarter losses were USD 2.1 bln, almost 4 times higher than last year.

Sounds terrible..😱 what to blame?

It’s the pandemic… WeWork’s contracts with clients are mostly flexible. When work-from-home makes an office not compulsory, companies would barely keep their office contracts alive. 

  • During the past year, WeWork hemorrhaged 30% of its client base and 50% of its revenue.

It also incurred more expenses: WeWork recorded a huge restructuring cost in exiting some of its non-profitable locations, plus half a bln settlement cost with its ousted co-founder Adam Neumann.

Hum...I’m a bit worried. Will WeWork make money? 🤔

WeWork said yes. ✅ “Encouraging signs of recovery” are showing up across its 800 locations globally. In China where the pandemic is largely under control, membership visit has rebounded to the pre-pandemic level, as per the company.

So they are planning a SPAC listing ahead: WeWork is now preparing for a go-public, by merging with the public shell BowX. The deal would value WeWork at USD 9 bln, while raising USD 1.3 bln. BlackRock, Fidelity, and Starwood are all in.


Meet In the Middle

Source: Morning Wrap

The US government made a compromise - it proposed a global minimum corporate tax of at least 15%, significantly lower than the 21% rate it has proposed for the overseas earnings of US businesses. 


A global minimum tax means..?

Corporations around the world should pay at least a 15% tax on their earnings...though the US Treasury Department said the final rate could go higher as 15% is a “floor” and discussions should continue to be ambitious.


Why is the US pushing for a higher global minimum corporate tax?

Biden is spending a lot… Tax hike is a major pillar to fund his infrastructure and social spending plans - including the proposal of increasing the US corporate tax rate to 28% from 21%. 


If implemented, it’s natural for businesses to flee to countries with lower tax rates. 💸

  • Without a global minimum, US would have higher rates than a number of other major economies.
  • 🆚 Peer comparison: UK (19%), China (25%), France (28%), Germany (30%), Italy (24%), Singapore (17%), Hong Kong (16.5%), Ireland (12.5%) etc.

So Janet Yellen called on other countries to join US and set a global minimum corporate tax in April.


I see, but how come US made a compromise? 

Because many European countries think 21% could be too high for them... 🤦


But the 15% rate is welcomed by big European states this time. 

  • France, Germany and Italy said on Friday that it was a good basis for sealing an international deal by July. Probably because their current rates 👆are already higher than this. 
  • The UK’s opposition Labour Party has also called on the government to back US proposals.


What To Watch This Week

🏙 GDP: German GDP (Tue); US GDP (Thu); French GDP (Fri)


💼 Employment: Russia Unemployment Rate (Tue); US Initial Jobless Claims (Thu);  Japan Jobs/application ratio (Fri)


📈 Japan Recovery: Bank of Japan Governor and board member will give their speeches on the pandemic recovery on Monday and Wednesday. And Tokyo CPI data will be announced on Friday.


🏠 Housing: US New Home Sales (Tue); US Pending Home Sales (Thu)


Other notable data: US CB Consumer Confidence(Tue); German Ifo Business Climate Index (Tue); US Crude Oil Inventories (Wed); New Zealand RBNZ Rate Statement (Wed)


Oat Milk Took Off

Source: CodePen, Morning Wrap

Investors extended a warm welcome to Oatly, the oat milk producer, on its debut day last Thursday - Its share price once jumped 30%.

I love oat milk 😋, but when did Oatly come out?

It was founded in 1994 in Sweden, with no one actually knowing the brand. In 2012, Oatly’s new CEO rebranded the company completely and boom… Oatly has emerged as one of the largest plant-based milk companies. 💥

  • It became more famous after announcing its nationwide partnership with Starbucks 2 months ago in both China and the US.

Go beyond oat milk… In addition to the well-known oat milk, Oatly is also expanding into plant-based ice cream and yogurt. Yet, oat milk is still its main focus. 🥛

  • It sells well! In 2020, Oatly’s revenue more than doubled due to increasing brand marketing and the penetration into new markets.

I see… why did investors like Oatly?

The plant-based concept is just doing well… covering meat, milk, fish, etc. Oatly is the market leader in its fast-growing oat milk area - “I don’t see anyone else taking that leadership position the way we are”, per Oatly CEO Toni Petersson. 😎

  • Celebrities like Oprah Winfrey and Natalie Portman are Oatly investors… Maybe this also helped.

On to the debut: Oatly was valued at USD 10 bln while raising USD 1.4 bln… well above the market cap of its peer Beyond Meat.

Or… these investors are also oat milk lovers?


What’s Moving in the Business World?

⚔️ Musk chose a side: Elon Musk tweeted that he supports crypto in its battle with fiat currency. Bitcoin price rose to over USD 38,000 after Musk’s post. (more


💸 We need to cut the budget. White House had pared down the infrastructure bill to USD 1.7 tln from USD 2.25 tln. But Republicans think the changes are still insufficient for a deal. (more)


💉 Double vaccine shot works! English health officials said a double dose of COVID-19 vaccines is almost as effective against the India variant as it is against Britain’s dominant strain. (more)


👠 A step to equality: Deutsche Bank will need to appoint women to about 50% of vacant senior management position to meet its new 2025 gender target. (more)


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