Philippa Kaur

SICKNESS AND shipping have a long shared history. The word quarantine is derived from the 14th-century Venetian practice of isolating ships at anchor for 40 days if plague was suspected on board. The latest ailment is a global pandemic that has killed at least 1m people and put the world economy, and global commerce, full steam reverse. This might have been expected to becalm an industry which carries 90% of traded goods—11.9bn tonnes last year, or 1.6 tonnes for every human—and where profits have often been elusive. The last time trade volume declined, in the aftermath of the financial crisis of 2007-09, maritime shipping suffered. Clarksons, a shipbroker, expects volumes to fall by 4.4% in 2020.
Still, Neptune seems to have smiled on shipping companies. Oil tankers and dry-bulk vessels that transport iron ore, coal and grain will turn a profit in 2020. Operators of ships ferrying containers, packed with consumer goods or components, are set fair for a banner year. Shipping is a business where, in the words of Martin Stopford of Clarksons, firms “make a living and occasionally make a killing”. This year, it appears, belongs to the second category. What is going on?

One answer is that the carnage wrought by the coronavirus has not been as bad as anticipated. The World Trade Organisation initially expected trade volume to shrink by as much as 30% in 2020. Drewry, a consultancy, had reckoned worldwide port visits by ships in the second quarter might decline by 16%. In fact they fell by 8%.
The industry has been able to take advantage of the swifter-than-expected recovery thanks to big underlying changes in its structure over the past decade, towards greater concentration. Container shipping, like tankers and dry bulk, seems finally to have learned a lesson from the debilitating overcapacity created as companies battled for market share.
In the decade before the financial crisis demand grew by around 10% a year. The order book swelled to the equivalent of 60% of the entire fleet when Lehman Brothers collapsed in 2008. An armada of new ships, which take at least two years from order to launch, arrived just as growth slowed. In the 2010s the fleet expanded by 100% while demand grew by just 50%, points out Peter Sand of BIMCO, a shipowners’ association.
The excess capacity ruined returns for years afterwards. McKinsey, a consultancy, reckons that between 2012 and 2016 container-shipping destroyed $84bn of shareholder value. Over the past five years, notes David Kerstens of Jefferies, an investment bank, the industry in aggregate has done a bit better, just about breaking even.

Now, though, efforts to cut costs and win market power are finally paying off. After years of consolidation the top seven firms now claim three-quarters of the global fleet, up from 55% in 2016, according to Jefferies. On top of that, 2017 saw the birth of three global alliances that now control 85% of capacity across the Pacific and almost all capacity between Asia and Europe.
Increased co-ordination has allowed the companies to respond to slowing trade. “Blank sailings”, industry jargon for cancelled voyages, came thick and fast. In May a record-breaking 12% of the global container fleet was idled, according to one estimate. Even as capacity has been reinstated—the share of the fleet that is idle has fallen to around 3%—freight rates have rocketed to cope with an unexpectedly vigorous recovery. Now, says Lars Jensen of SeaIntelligence, a consultancy, the container industry is on course for record profits of $12bn-15bn this year. Maersk, the world’s biggest container-shipping firm with 17% of the market, expects profits of $6bn-7bn, up from a pre-pandemic estimate of $5.5bn.
Rates have shot up most dramatically on trans-Pacific routes (see map). Spot prices for sending a container from China to America’s West Coast have risen by 127% since last year, to record highs. The port of Long Beach in California reported its busiest August ever; Los Angeles saw business that month up by 12% year on year.

Can firms continue to manage capacity and resist the urge to order ships? Possibly, thinks Mr Kerstens. Maersk and Hapag-Lloyd, another big firm, have eschewed chasing volume and market share in favour of profitability. Maersk is investing heavily in integration with more lucrative links in the chain, such as lorries and warehouses.
The thin order book (see chart)—now equal to just 7% of the fleet—is not entirely down to newfound sobriety. Stricter environmental rules play a part, says Mark Jackson of the Baltic Exchange, a data provider. The International Maritime Organisation, the UN’s shipping agency, wants to halve the industry’s carbon emissions by 2050, relative to 2008. As long as the pathway to meet the target remains sketchy, and the requisite technology nascent, companies are reluctant to order vessels with a lifespan of 25 years or more.

Shifting trade patterns are another factor. Supply chains are being reconfigured by the pandemic and the Sino-American economic war. As manufacturing shifts from China to other parts of Asia—Cambodia has rapidly replaced it as the predominant source of America’s Christmas-tree lights, for example—smaller ships will be required. These can ferry goods directly from minor Asian ports to Europe or, because vast existing vessels plying the route between China and Europe have plenty of life left, to trans-ship smaller loads to Asian mega-hubs for onward dispatch. All that means building ever-mightier ships offer diminishing returns to scale. Today’s leviathans—such as the Hong Kong, owned by OOCL, a firm based in the Chinese territory—can carry well over twice as many containers as the largest ships in 2005.
Tankers and dry-bulk carriers face rougher conditions. Both segments are far more fragmented than container shipping, and so unable to cut capacity as easily. The biggest specialist tanker operator, Teekay of Canada, wholly owns around 60 vessels totalling nearly 7m deadweight tonnes out of a global fleet of 623m in 2019. The average number of ships per firm is around 5.5.
Even so, tanker-owners were “having a party in the first half of the year”, says Mr Sand of BIMCO, thanks to sinking oil prices. Average annual earnings over the past decade were above break-even only half the time for the largest crude-oil tankers. But the collapse of an agreement between the Organisation of the Petroleum Exporting Countries and Russia sent oil prices tumbling just as covid-19 sapped demand for crude. Traders with nowhere to stash unwanted oil turned to tankers. At one point this spring more than a tenth of the world’s fleet was chartered as storage. Rates for the largest craft soared from $6,500 a day to $240,000, ten times the break-even level. Rates have now slipped below break-even but that bonanza will tide tanker-owners over to an annual profit.
Bulking up
Dry-bulk vessels, by contrast, had a terrible start to the year. But they have since been helped by China’s swift recovery. The country accounts for 40% of the global dry-bulk trade, mostly because it imports 70% of the world’s iron ore (see Schumpeter). Stimulus measures have led to record production and iron-ore imports hit all-time highs in the first seven months of the year. That has offset lower activity in the rest of the world, says Bimco. All sizes of ships are now making money.

One risk for commercially minded companies is that big rivals with different motivations might undermine capacity cuts. Governments in China, South Korea and Taiwan regard their state-controlled shipping giants, four of which are in the world’s top ten, not so much as profit motors but as a way to preserve their place in the global trading system. HMM, the eighth-largest firm, is the only big shipper not to trim capacity. There are hints that China’s government does not approve of the high prices to shift Chinese-made goods. It has reportedly asked its carriers to reinstate capacity to America. COSCO and OOCL, which are state-controlled, will refrain from raising rates.
It is a similar story with ports. Maersk’s port division, APM, has clear financial imperatives. But HMM and Evergreen Marine, a Taiwanese company, probably regard their ports as a cost to bear for the sake of their shipping businesses. China Merchants and COSCO, which also runs big ports, are owned by a state keen to use trade to spread Chinese influence around the globe. Dubai’s DP World, which delisted in February, and PSA, a Singaporean operator, are both commercially driven but ultimately in state hands, too. Hong Kong’s Hutchison, one of the world’s biggest port operators, saw profits dip by 15% in the first half of the year. Often the interests of shareholders do not completely align with the role of enabling trade, says Eleanor Hadland of Drewry.
Another doubt is whether governments will allow their shipbuilders to fall into desuetude. China, Japan and South Korea now control 90% of global shipbuilding. They have incentives to keep shipyards in business, even if some could soon be out of work; reopening mothballed yards is a long and expensive process.
Keeping the world’s goods flowing is, then, a complex business—just ask the seamen trapped on board for months as lockdowns and travel restrictions have prevented regular changeovers. But their employers are moving into the nascent global economic recovery with wind in their sails. That is good news for world trade. ■
Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub
Correction (October 13th 2020): An earlier version of this piece misstated the size-ranking of HMM, and incorrectly referred to the company by its previous name. This has been updated.
This article appeared in the Business section of the print edition under the headline “It’s an ill wind that blows no one any good” More

CHINA DOES not like to feel jealous of Japan. But in the case of iron ore it has plenty to envy. Back in the 1960s, when Japan was building up its steel industry, the world’s supply of the stuff was so fragmented that Japan could play off producers in Australia and Brazil against each other. China, now the world’s biggest steelmaker, does not have that luxury. Though it imports 70% of the world’s iron ore, most of this comes from three companies that in the intervening six decades have become titans. They are Rio Tinto and BHP, two Anglo-Australian firms, and Vale, a Brazilian one. They have brought about consolidation in the industry. They benefit from high barriers to entry. None is keen to undercut the other two. That puts them in a far stronger position vis à vis Chinese customers than their predecessors were with the Japanese.
China wants to change that. It is in the odd position of having world-leading technology companies but barely a toehold in one of the most basic industries of all, iron-mining, at a time when prices above $100 a tonne are throttling its steel mills. It has long hoped to alter the balance of power by backing the development of a vast iron-ore deposit in Guinea called Simandou, in which Rio Tinto has a joint venture with Chinalco, China’s state-owned aluminium producer (and Rio’s biggest shareholder). For years, Rio has subtly thwarted China’s ambitions by keeping the west African project on the back burner. But since last year a China-backed consortium in Guinea has upped the ante by pledging to push ahead with its own $14bn project to develop Simandou’s two northern blocks. Rio and Chinalco control the southern ones.

That creates a conundrum: should Rio double down on Simandou, sell out, or somehow continue to play a waiting game without offending either its Chinese customers or the Guinean government? It will fall to whoever replaces Jean-Sébastien Jacques, the outgoing boss of Rio whose departure was announced last month in the wake of the disastrous destruction of a 46,000-year-old Aboriginal site in Western Australia, to grapple with it.
Simandou, a forested mountain in inland Guinea, comes with 2bn tonnes of some of the world’s highest-grade iron ore—and a ton of trouble. In the decade since Rio forged its joint venture with a unit of Chinalco, the pair have been stripped of half of their concession, Rio tried and failed in 2016-18 to sell its share of the project to Chinalco, and the legal quagmire surrounding the whole Simandou saga has been so deep that Paul Gait of Azvalor, a fund-management firm, likens it to a John Grisham corporate thriller.
Adding to the drama, SMB-Winning, Guinea’s biggest bauxite exporter, which counts Shandong Weiqiao, a Chinese aluminium producer, as an investor, in June won Guinean government approval to develop the northern part of Simandou. It is also to build a 650km (400-mile) railway from the mine and a deepwater port. It clearly hopes that Rio and Chinalco will share the burden. This coincides with a geopolitical spat between China and Australia that has put Rio in an uncomfortable position. Though it still has power in the iron-ore market, its tune is changing. It now says that if Simandou is going ahead anyway, it may as well join in. But that is oversimplifying what should be a very careful calculation.
Start with the economics. Rio once estimated that the cost of developing Simandou, including building the railway and port, could be more than $20bn. That could now be partially split with SMB-Winning. However, if that were the case, Rio would lack full control of its freight costs, a critical factor in the iron-ore business. Erik Hedborg of CRU, a commodity consultancy, says that bringing both northern and southern blocks into production would add about 150m tonnes a year to the 2bn-tonne seaborne iron-ore market, which could push prices down by up to $10 a tonne. That would hurt Rio. If, however, only the smaller northern block were developed, the price impact would be far shallower.

As it is, many analysts expect prices to fall with or without Simandou. They have been artificially inflated in the past two years as a result of disaster-related outages in Brazil. China’s demand for iron ore is also considered close to peaking, especially given the mounting pile of scrap steel the country can recycle. The world hardly needs a new gusher of supply.
Then there are the environmental and social complexities. The deposit sits among rainforests rich in tropical species. The railway would traverse unforgiving hills and valleys, could require the relocation of local communities, and will raise the prospect of heightened scrutiny from investors already alarmed by Rio’s governance failures during the Aboriginal-site debacle. Not to mention the risks of dicey politics, corruption probes and social unrest that have hitherto plagued Simandou.
But what if SMB-Winning decides to forge ahead regardless? Rio has no easy options. Throwing all its weight behind the consortium would be reckless, especially if it would clobber prices that are already likely to fall. There are far safer ways to allocate capital. They include further iron-ore development in the Pilbara in Western Australia, which is so cheap and well served by infrastructure that Paul Gray of Wood Mackenzie, a consultancy, says producers could make money even if iron-ore prices fall as low as $40 a tonne. It could also try to develop copper, lithium, nickel and other minerals vital for clean-energy infrastructure, for instance.
Nerves of steel needed
Alternatively, it could try to sell its stake in the southern block. But after failing to do so to Chinalco, it is not clear who else would be a willing buyer. The best way for it to preserve its interests may be to sit tight on the southern block, advising everyone else how to make progress, but avoiding sinking lots of capital into producing its own ore. Whether the other firms want to proceed will be up to them. For all Rio’s ups and downs at Simandou, the policy of strategic inaction has worked so far. Whoever becomes Rio’s next boss would be unwise to abandon it. ■
This article appeared in the Business section of the print edition under the headline “Battle for the iron throne” More

Source: Business – economist.com More

IT IS TURNING out to be a long intermission. Cinemas across the West closed in March and, despite attempts to reopen in the summer, the box office has not recovered. From October 9th Cineworld, the world’s second-largest chain, will temporarily shut its 536 Regal theatres in America and its 127 British outlets. AMC, the biggest, will cut the opening hours at some Odeon cinemas in Britain.
Early in the pandemic the problem was audiences. In March Disney’s “Onward” flopped as people refused to breathe recirculated air with a crowd of strangers. Business got harder when governments ordered theatres to shut, or imposed profit-crushing closures of refreshment counters and caps on capacity.

As countries have eased restrictions and audiences prepared to return, cinemas are finding little to show them. In China, where covid-19 seems under control, studios have resumed pumping out hits. But Hollywood will not risk premiering costly blockbusters while many markets, including New York and California, remain closed, and cinema-goers wary. Most big titles have been postponed (see chart). The last straw for Cineworld was the decision on October 2nd by MGM and Universal Pictures to delay “No Time to Die”, James Bond’s latest caper, from November until April 2021. No big release is planned until Christmas Day, when Warner Bros’ “Wonder Woman 1984” will ride to the rescue.

She may be too late. Attendance was declining before covid-19. To distinguish a night at the movies from a night with Netflix, cinemas built snazzy multiplexes with waiters ferrying burgers to viewers lolling in reclining seats. This helped rack up debt: AMC’s $10bn-worth was more than six times last year’s gross operating profit. Cineworld’s ratio was almost as high.
Nine months without revenues from big releases would be disastrous. America’s National Association of Theatre Owners predicts that seven out of ten small or medium-sized cinema companies will go bust without a bail-out, which it has urged Congress to grant. Both AMC and Cineworld are likely to default or file for bankruptcy, believes Moody’s, a ratings agency;AMC could run out of cash by January. Share prices of Western operators have slumped this year, and are now worth a fifth as much as five years ago. (Chinese ones have done better.)

Cinema bosses have urged studios to keep the films coming. Eric Wold of B. Riley, an investment bank, says Hollywood may need to “take a hit to feed the industry” and keep it from “completely falling apart”. Warner Bros took one by releasing “Tenet” in the summer; with takings of just $45m at the American box office, the sci-fi thriller may not break even. And studios cannot afford charity. Disney recently laid off 28,000 workers from its covid-hit theme parks.
One day the blockbusters will return. Even then, cinemas will have to defer investments, raise prices and close branches to shore up their balance-sheets—just as viewers have more reasons than ever to stay home. The average American household subscribes to four streaming services, reckons Deloitte, a consultancy. Film studios are bargaining down how long films are shown exclusively in theatres; AMC recently let Universal put future releases online after just three weekends in cinemas, in return for a share of the takings. Even if covid-19 doesn’t smash it entirely, the big screen is likely to get a lot smaller.■
Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub
This article appeared in the Business section of the print edition under the headline “Curtains” More

WHEN BARTLEBY reflects on life’s lessons, he always remembers his grandfather’s last words: “A truck!” Bartleby’s uncle also suffered an early demise, falling into a vat of polish at the furniture factory. It was a terrible end but a lovely finish.
Whether you find such stories amusing will depend on taste and whether you have heard them before. But a sense of humour is, by and large, a useful thing to have in life. A study of undergraduates found that those with a strong sense of humour experienced less stress and anxiety than those without it.

Humour can be a particular source of comfort at work, where sometimes it can be the only healthy reaction to setbacks or irrational commands from the boss. Classic examples can be found in both the British and American versions of the TV sitcom “The Office”, where workers have to deal with eccentric, egotistical managers, played respectively by Ricky Gervais and Steve Carell. The comedy stems, in part, from the way that the office hierarchy requires the employees to put up with the appalling behaviour of the manager.
And those programmes also illustrate the double-edged nature of workplace humour. When the bosses try to make a joke, they are often crass and insensitive, making the situation excruciating for everyone else (these are shows best watched through the fingers). The healthiest kind of workplace humour stems from the bottom up, not from the top down. Often the most popular employees at work are those who can lighten the mood with a joke or two.
Of course, humour can be used, even by non-managers, in a cruel or condescending way. What one man may mean as a laddish joke comes across to women as a disrespectful put-down. A better source of humour are the shared gripes that most workers face. Everyone can appreciate a quip about the cramped commuter trains, the officious security guard, the sluggish lifts or the dodgy canteen food. In that sense, workers can feel they are all (bar the security guard) “in it together”. This helps create team spirit and relieve stress.
Both soldiers and schoolchildren tend to create “in jokes” as a way of subtly subverting the hierarchy of their organisations. In the first world war, British soldiers published a newspaper called the Wipers Times. A typical poem began: “Realising men must laugh/Some wise man devised the staff.” Troops in the trenches dubbed themselves the PBI (poor bloody infantry). The TV comedies “Sergeant Bilko” and “Blackadder Goes Forth” both relied on wily soldiers finding ways of subverting the orders of their clueless, or callous, commanding officers. Schoolchildren, for their part, give their teachers nicknames which are only used out of earshot; at Bartleby’s school, Mr Canard was known as “Quack” because his surname was the French word for duck.

A downside of remote working is that moments of shared humour are harder to create. Many a long meeting at The Economist has been enlivened by a subversive quip from a participant. These jokes only work when they are spontaneous and well-timed. Trying to make a joke during a Zoom conference call is virtually impossible; by the time one has found the “raise hand” button and been recognised by the host, the moment has inevitably passed. This is a shame, as most of us could do with a laugh now and again to get through the pandemic.
Work is a serious matter but it cannot be taken seriously all the time. Sometimes things happen at work that are inherently ridiculous. Perhaps the technology breaks down just as the boss is in mid-oration, or a customer makes an absurd request. (Remember the probably apocryphal story of a person who rang the equipment manufacturer and asked them to fax through some more paper when the machine ran out?)
There is also something deeply silly about management jargon. Most people will have sat through presentations by executives who insist on calling a spade a “manual horticultural implement”. Too many managers use long words to disguise the fact they have no coherent message to impart. Such language is ripe for satire or at the very least a collective game of “buzzword bingo”.
But satire should not just be applied to other people. Perhaps the most important thing is not to take one’s own work too seriously. As the late, great gag-writer and comic Bob Monkhouse recalled at the height of his career, “They laughed when I said I wanted to be a comedian. Well, they’re not laughing now.”
This article appeared in the Business section of the print edition under the headline “Why we need to laugh at work” More

NOWHERE IS CORPORATE do-goodery more on show than in a firm’s sustainability report. Today 58% of companies in America’s S&P 500 index publish one, up from 37% in 2011, according to Datamaran, a software provider. Among the photos of blooming flowers and smiling children, firms sneak in environmental, social and governance (ESG) data, such as their carbon footprint or the share of women on boards. But the information differs wildly from firm to firm.
The Reporting Exchange, a website that helps corporations disclose sustainability data, tracks various ESG-related guidelines, such as regulations and standards. Across the world the number grew from around 700 in 2009 to more than 1,700 in 2019. That includes more than 360 different ESG accounting standards.

Some observers, then, may have rolled their eyes on September 22nd when the World Economic Forum (WEF) announced—with the backing of the big four accounting firms, Deloitte, EY, KPMG and PwC—a new set of ESG metrics for firms to report. Those involved are at pains to stress that this is not yet another new standard, but instead a collection of useful measures picked from other standards. The intention, they claim, is to simplify ESG reporting, not to add to the confusion.
Simplification is sorely needed. Investors complain that the proliferation of standards hinders comparability. Environmental activists note that it lets companies cherry-pick flattering results. And corporate bosses moan that they do not know what to disclose and that the array of options is confusing. Many want an ESG equivalent to the Generally Accepted Accounting Principles used in financial reporting. But these took years to agree on. Today, says the boss of a big pension fund with a large ESG portfolio, “there is greater urgency” to coalesce around a set of common standards. Even so, this is expected to take at least five to ten years, slowed by competing interests and disagreements about what to measure.
Four standards dominate ESG’s alphabet soup. The Global Reporting Initiative (GRI) focuses on metrics that show the impact of firms on society and the planet. By contrast, the Sustainability Accounting Standards Board (SASB) includes only ESG factors that have a material effect on a firm’s performance. The Task Force on Climate-related Financial Disclosures (TCFD) and the Carbon Disclosure Project (CDP) are chiefly concerned with climate change—specifically companies’ exposure to its physical effects and to potential regulations to curb carbon emissions.
GRI is the most popular of these, in part because it is the oldest, founded in 1997. It has been embraced by perhaps 6,000 firms worldwide. According to Datamaran, 40% of S&P 500 companies cite GRI in their sustainability reports. But SASB is gaining ground in America. One in four members of the S&P 500 makes reference to it, up from one in 20 two years ago. TCFD has experienced a similar uptick. It is backed by the Financial Stability Board, a global group of regulators. Both SASB and TCFD have risen partly thanks to support from large asset managers, including BlackRock and State Street.

Further simplification may be afoot. In September five big standard-setters announced that they would try to co-operate more and harmonise some measures. But few observers expect the end result to be a single standard. Among the five are SASB and GRI, each of which claims that it could coexist with the other.
How long such coexistence can last is unclear. As well as the WEF, other global bodies are taking an interest. The International Financial Reporting Standards Foundation, a global financial-accounting standard-setter, is considering its own ESG standard. Moreover, the EU is planning rules that will force big companies to disclose more ESG information; it is still thinking about which measures to use. If the ESG standard-setters cannot decide which metrics matter most, others may decide for them. ■
This article appeared in the Business section of the print edition under the headline “In the soup” More

THE MOST ardent romances result in the most acrimonious divorces. In the case of Tiffany and LVMH, rancour preceded the nuptials. In the amorous phase the French luxury giant behind Louis Vuitton had described the American purveyor of engagement rings as a corporate jewel, agreeing to a $17bn takeover ten months ago. It used an altogether less romantic tone in a Delaware court filing this week as it tried to break the match. Investors, meanwhile, are betting on a happy ending.
Rumours had swirled since the start of the covid-19 pandemic in March that Bernard Arnault, boss of LVMH, wanted to renegotiate the punchy price tag agreed on in November. On September 9th LVMH announced it could not go ahead with the deal, for an unexpected reason: a letter from the French minister of foreign affairs, Jean-Yves Le Drian, had asked it to defer the planned takeover of its American target to January 2021, beyond the agreed closing date. The delay would apparently give France more cards in a festering transatlantic trade spat.

Tiffany accused LVMH of engineering the supposed block from the foreign ministry—which soon insisted its letter was merely a polite recommendation, not an order. LVMH vehemently denied asking the authorities to intervene. Unhelpfully, on September 22nd Mr Le Drian told the French parliament he had indeed stepped in only after LVMH had come to him.
The American jeweller has thus sued LVMH to pony up. On September 28th LVMH countersued, saying that Tiffany was no longer worth buying. It called Tiffany’s performance since covid-19 broke out “catastrophic”. This, LVMH claimed, had left the jeweller with “dismal” prospects. The pandemic, it added, amounted to a “material adverse effect” that gave the putative buyer grounds for termination.
Tiffany is having none of it. It responded that LVMH was still legally committed to walk down the corporate aisle. Though covid-19 has indeed dented profits, things are already perking up, Tiffany says, whatever its erstwhile admirer may claim. LVMH was dragging its feet before the foreign ministry’s intervention, for example by delaying notifying antitrust authorities.
Delaware courts usually take a dim view of buyer’s remorse. Only once before have they agreed to a deal being broken off on grounds of material adverse effect. That might explain Tiffany’s buoyant share price. At around $116, it is well down on the $135 LVMH agreed to pay, but comfortably above the $90 at which it traded before Mr Arnault came along.

The premium suggests Tiffany remains a takeover target. Indeed, the most likely suitor is still thought to be LVMH. Most investors think the two sides will kiss and make up before a trial planned in January, perhaps arriving at a slightly lower price. There are few obvious rival buyers for the jeweller, whose brand could use some of Mr Arnault’s marketing nous. The luxury tycoon still craves legendary marques to add to the LVMH harem. Once the lawyers exhaust themselves, expect love—not least of profits—to find a way. ■
This article appeared in the Business section of the print edition under the headline “Letting go lightly” More

TO CALL 2020 tough for shalemen is to call a monsoon a mist. Covid-19 has halved the value of fracking firms this year. Rig counts are down (see chart). A perfect time for consolidation, then. Yet besides Chevron’s $5bn bid for Noble Energy in July, deals have been sparse. Buyers fret that investors will punish them for overpaying. Targets fear selling amid sinking oil prices. Many bosses’ yearly pay exceeds rewards from a sale, notes Devin McDermott of Morgan Stanley, a bank. So all eyes are on Devon Energy’s $2.6bn offer to buy WPX Energy, a smaller rival, announced this week.

The merged entity will have 400,000 acres in the Delaware basin and, it is hoped, $575m in annual savings. Andrew Dittmar of Enverus, an analytics firm, says Devon will rely less on wells on federal land, where Joe Biden wants to curb drilling if he becomes president. Devon’s share price jumped by 11% on the news. Fellow frackers will take note.

This article appeared in the Business section of the print edition under the headline “Shelling out on shale’s sale” More