Philippa Kaur

For a public demonstration of the importance of ritual, the coronation of King Charles III on May 6th will be hard to beat. The ceremony will take place at Westminster Abbey, where monarchs have been crowned since William the Conqueror in 1066. There will be anointing, homage-paying, oath-taking and all manner of processing. In any other circumstances this kind of behaviour would warrant a medical diagnosis. But the alchemy of tradition means that it will instead call forth a sense of continuity and the idea of shared history. Listen to this story. Enjoy more audio and podcasts on More

BEFORE CARL ICAHN was an activist investor, he was an arbitrageur. Although it was swashbuckling corporate raids during the 1980s that made him infamous, some of Mr Icahn’s earliest campaigns involved investing in closed-end funds, a type of investment company which often trades at a discount to the value of its assets. Closing this gap, perhaps by agitating for the fund to liquidate its holdings, yields a profit.Mr Icahn’s own investment holding company, Icahn Enterprises, suffered no such discount. Until this week the firm had a market capitalisation of around $18bn, more than triple the reported net value of its assets. These include majority ownership of energy and car companies, in addition to an activist-investment portfolio. On May 2nd Hindenburg Research, a short-selling outfit founded in 2017 by Nathan Anderson, accused Icahn Enterprises of operating a “Ponzi-like” structure. Icahn Enterprises has shed more than a third of its market value since Hindenburg released its report. It has become the latest of Hindenburg’s targets to hit the skids—and the headlines. Mr Anderson’s firm has previously taken aim at Nikola, a maker of electric lorries, the Adani Group, one of India’s mightiest conglomerates, and Block, an American fintech giant (see chart).Hindenburg’s latest report alleges that Icahn Enterprises has inflated the value of its assets and funded its dividend with proceeds from selling shares to unwitting investors. It also calls on Mr Icahn to disclose the terms of personal loans secured against his majority holding in Icahn Enterprises. And it scolds Jefferies, Mr Icahn’s long-time investment bankers and the only big bank whose research analysts cover Icahn Enterprises, for allegedly turning a blind eye to the firm’s risks. Mr Icahn, Hindenburg argues, “has made a classic mistake of taking on too much leverage in the face of sustained losses”. Bill Ackman, another famed activist investor who once locked horns with Mr Icahn over an investment in Herbalife, an American supplement firm, gloated on Twitter that there was a “karmic quality” to the report. Short-sellers’ targets can be hamstrung in their immediate defences—share prices can tank quickly but detailed rebuttals take time. Even so, Mr Icahn’s first response looks muted compared with that of Hindenburg’s recent victims. In March Block described Hindenburg’s report as “factually inaccurate” and threatened litigation. In January the Adani Group accused the short-seller of “selective misinformation”. After stating that Hindenburg’s report is “self-serving”, Mr Icahn said on May 2nd merely that his firm’s performance would “speak for itself”. Jefferies has not commented on Hindenburg’s claims. Quite how messy this activist showdown becomes remains to be seen. Hindenburg’s report pitches a doyen of classic shareholder activism, which involves trying to drive a target’s share price up, against a newly prominent practitioner of short-selling, which aims to send it through the floor. The stakes are higher for Mr Icahn. His brand of activism requires investors to take him more seriously than they do the bad managers that, in his “anti-Darwinian” view, American commerce seems to promote. Icahn Enterprises must now prove that the same thing is not true of its own boardroom. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

AS CHRISTOPHER WAS preparing to board a flight from New York to Singapore in February 2019, he was pulled aside by local authorities and told to stay put. An Interpol “red notice”, a request for local law enforcement to make an arrest on behalf of another government, had been issued on his name, he would soon learn. The executive, who has asked that his real name not be used because his case is ongoing, was the founder of an international advertising group that a few years earlier had got into big trouble in China over data security. Listen to this story. Enjoy more audio and podcasts on More

A sensational scoop was tweeted last month by America’s National Public Radio: Elon Musk’s “massive space sex rocket” had exploded on launch. Alas, it turned out to be an automated mistranscription of SpaceX, the billionaire’s rocketry firm. The error may be a taste of what is to come as artificial intelligence (AI) plays a bigger role in newsrooms.Listen to this story. Enjoy more audio and podcasts on More

Two work laptops, two work calendars, two bosses and two pay-cheques. So far, neither of Matt’s employers is any the wiser. The tech worker (who, for obvious reasons, asked The Economist not to use his real name) meets deadlines and does what is requested, though not more. He is not the only one.People working several jobs is nothing new. Low earners have long had to juggle shifts to make ends meet. At the other end of the pay scale, directors often sit on a few corporate boards. According to America’s Bureau of Labour Statistics, at any given point in the past 30 years, between 4% and 6.5% of the American workforce was working more than one job. Estimates from the Census Bureau put that share even higher, going from 6.8% in 1996 to 7.8% in 2018. What is novel, as Matt’s example illustrates, is the rise of the job-juggling white-collar type, especially in the technology industry. Thank—or blame—remote work. Despite efforts by bosses to lure or coerce people back to their desks, the share of techies working fully remotely remains 60% higher than in other sectors (see chart). Without managers physically looking over their shoulders, some of them are two-timing their employers. Mid-career software engineers report applying for more junior positions so that they can “underpromise and overdeliver”, with minimal effort. Matt took a second job, or “J2” as he calls it, for two main reasons: boredom and concerns over job security. The tasks required by his first job, working remotely as a data scientist for a medium-sized tech firm, were not particularly challenging, taking him only eight hours a week. He had no inclination to “play office politics and move up the corporate ladder”. He did, though, covet cash. He reckoned he could take on a second job, double his pay and gain a safety-net were he to be laid off.After interviewing for a few weeks, Matt found a promising J2: data engineering at a startup. He suspected that demands on his time would be as low as they were at his first job. He was mostly right, though striking a balance required some footwork. In his first week a rare J1 meeting was scheduled at the same time as one of his J2 “onboarding” sessions. Some fellow members of an online forum for the overemployed on Reddit, a social-media site, claim to have taken two meetings at once, with video off. If called on to speak at the same time, they feign connectivity problems or play a pre-recorded audio clip of a dog barking. Matt decided to tune in to the J1 call and reschedule his onboarding, blaming a doctor’s appointment.The rise of generative artificial intelligence like ChatGPT may in time make double-jobbing harder by replacing some menial tech tasks. Until then, coasters can themselves use clever chatbots to help structure computer code, write documents and even conduct preliminary research. ChatGPT cannot replace the work of a software engineer, says one overemployee, but it gets you 90% of the way there. The employee-employer relationship has historically favoured the employers, who wield more clout because they can typically choose from more workers than workers can among companies. Matt thinks of his ruse as taking back some control. Two decently paying jobs afford him flexibility. And, he says, flexibility is power. If he were to get laid off, or if one job were to become unreasonably demanding, he could go and find another. For now, he thinks he is safe. So safe, in fact, that he is starting his search for a third job. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

IN MARCH AMAZON announced it would fire 9,000 workers—bringing to 27,000 the total number it has laid off this year. The e-commerce giant’s share price is down by a third since 2021. Other online-shopping darlings, from Shopify in Canada to Coupang in South Korea and Grab in South-East Asia, have suffered a similar fate (see chart). With one exception. At $64bn, the market value of MercadoLibre, an Argentine firm listed in New York with operations across Latin America, has been rising lately and is back roughly to where it was at the start of 2022—and twice that before covid-19. In April, as the world’s tech firms were sacking workers en masse, it said it would hire 13,000, mainly in Brazil and Mexico, raising its workforce by a third. MercadoLibre needs more workers. On May 3rd it reported that revenues grew by 35% in the first quarter of 2023, to $3bn. Last year goods worth $35bn changed hands on its platform, helping generate $1bn in pre-tax profits. How is it flourishing as similar firms elsewhere struggle?Its success is a mix of good management and good fortune. Early on it expanded from connecting buyers and sellers into payments, initially to allay users’ fear of fraud. Its payments system, MercadoPago, is now widely trusted and used beyond its platform; more than $100bn flowed through it in 2022. The company has also built its own logistics network to deliver packages quickly in a region where infrastructure can be patchy. In ten years it has gone from not touching parcels, all of which were handled by third-party shippers, to having a hand in ferrying 93% of its e-commerce packages. More recently it added a fast-growing advertising business. Unlike Amazon, which regularly receives complaints about working conditions, employees rank MercadoLibre among the best Latin American firms to work for. MercadoLibre also benefits from a deep understanding of local shopping habits, notes Ricardo Tapia of the University of Anáhuac in Mexico City. For instance, by accumulating points for purchases, its shoppers can gain benefits such as free delivery. What may seem gimmicky to Western shoppers, for whom a big benefit of buying online is that it saves time, is a big draw for game-loving Latin Americans. The resulting strength has allowed the firm to take advantage of fortuitous circumstances. As everywhere in the world, the pandemic accelerated the growth of e-commerce in its region. In Mexico, MercadoLibre’s third-biggest market after Brazil and Argentina, 63m people bought something online in 2022, up from 37m in 2018. In contrast to more mature markets such as Britain, the number of Latin Americans buying online did not drop back down after an initial boom in 2020. The region’s brick-and-mortar retailers, which are rapidly improving their own digital offerings, and online giants such as Amazon have cottoned on to this trend. To keep growing, MercadoLibre may need to boost penetration in less online countries such as Colombia, where Amazon is weaker, and perhaps move into new segments, such as groceries. But it does at least enjoy another advantage over foreign rivals, for which Latin America is a peripheral market—focus. Failure in its home region is simply not an option, says Agustin Gutierrez of McKinsey, a consultancy. Nothing concentrates the mind like survival. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

When Schumpeter recently visited New York, it was at its springtime best. There were cherry blossoms in Central Park, birdsong in the bushes, and—to drown out any false sense of serenity—the usual cacophony of car horns and jackhammers in the streets. Whoosh up in elevators to the salons of Wall Street’s gilded elite, and it only gets better. The views are breathtaking, the preferences revealing—CDs lining the shelves of one legal beagle, a handkerchief in the top pocket of another. Yet if you thought such veterans had seen it all, think again. “It’s a shitload more complicated than it’s ever been,” says the boss of one bank.The hierarchy of concerns changes depending on whom you talk to. But the components are the same. An interest-rate shock not seen for more than a generation. The difficulty of doing deals when money is no longer cheap. A maverick approach to antitrust from the sheriffs in Washington, DC. The rhetorical—if not yet real—decoupling between America and China, which business is afraid to speak out against, however much it stands to lose. So it was serendipitous that one of the New York companies your columnist visited was Pfizer, at its new headquarters in Hudson Yards. The pharma giant, worth $220bn, is rare among American firms in shrugging off many of the sources of uncertainty. Its covid-related partnership with BioNTech, a German vaccine developer, has given it a strong enough balance-sheet to take higher interest rates in its stride. It is a dealmaking machine, uncowed by the trustbusters. And it remains proud of its business in China. It may be sticking its neck out. But if that helps stick a needle into the skittish rump of corporate America, all the better. You can tell Pfizer is flush with cash by visiting its new digs. The main meeting room is a futuristic “purpose circle”. The shimmering executive suites look like they belong on the starship Enterprise. A spiffy newish double-helix logo emphasises its devotion to science. The first topic of conversation is mergers and acquisitions. In little over a year it has splashed out $70bn. That includes the $43bn takeover of Seagen, a maker of cancer medicines, announced in March. It is the biggest pharma deal since 2019.Pfizer can do M&A because unlike most firms, it is not paralysed by the short-term economic outlook. Instead it is galvanised by the certainty that its covid-related bonanza is tapering off. Though sales of pandemic-related vaccines and antivirals beat Wall Street’s expectations in its first-quarter results on May 2nd, they still contributed to a 26% drop in overall revenues compared with the same period in 2022—and will fall further this year. It also faces a looming patent cliff from 2025 onwards, affecting non-covid blockbusters such as Eliquis, an anticoagulant, and Ibrance and Xtandi, two cancer drugs. To offset both of these forces, Pfizer is buying and developing a pipeline of new drugs that it hopes will boost revenues by $30bn in 2030. Like the rest of big pharma, it benefits from the fact that smaller, cash-strapped biotech firms are struggling in the high-interest-rate environment. That makes them relatively receptive to takeovers.In doing such deals, Pfizer is unintimidated by the trustbusters, who are having a chilling effect on dealmaking in other industries. Jeff Haxer of Bain & Company, a consultancy, notes that America’s Federal Trade Commission and Department of Justice are likelier to sue to stop deals taking place than tackle M&A-related competition concerns through remedies such as divestments. So far they have failed to block many transactions, but the timeline for doing deals has lengthened. That affects the cost of financing for the buyer, and raises risks that the seller could be left stranded. Pfizer has taken steps to head off the trustbusters, such as playing down cost-cutting (ie, job-threatening) “synergies”, and playing up its commitment to cancer innovation. It insists the Seagen acquisition will close by early 2024.Unlike many other American firms, Pfizer also remains unusually bullish about its business in China. It employs 7,000 people in the country, which helped bolster covid-related revenues in the first quarter. Its CEO, Albert Bourla, was one of a few bosses of well-known American firms to attend the China Development Forum in Beijing in March (Apple’s Tim Cook was another). Reuters reported that last month Pfizer signed an agreement with Sinopharm, a Chinese drugmaker, to market a dozen innovative drugs in China. It may make sense for a company with a promising business there to double down on its operations. But in a tense geopolitical climate in which many American businessmen fear a backlash if they raise their voices in defence of the trade relationship, it is bold nonetheless. So far Wall Street has given Pfizer little credit for its purposefulness. Its share price has fallen by almost a quarter this year. Critics argue that it may be overpaying for Seagen, and that the acquired drugs may not generate enough revenues to move the needle at Pfizer. They worry that pressures on drug pricing in America may end up destroying some of the economic rationale for its acquisitions. Pfizer still has its work cut out convincing investors its post-covid future is a bright one. As Mr Bourla put it: “It’s not enough to save the world. We need to increase the stock price.”Seeing the vial as half-full Other industries might argue that big pharma, with some of the juiciest margins outside the tech industry, is unrepresentative of corporate America, and offers few lessons in how to cope with the current wave of uncertainty. Yet it is worth remembering that it is often in the depths of M&A squeamishness that companies with strong balance-sheets strike the best deals. An investment banker notes that in 2009, during the global financial crisis, Pfizer paid $68bn for Wyeth, a vaccine-maker, despite misgivings on Wall Street. As luck would have it, more than a decade later that underappreciated business helped Pfizer rescue the world during the covid crisis. It can pay to be bold—even in mysterious ways. ■ More

After a four-year spruce up Tiffany & Co, an upmarket American jeweller, reopened the doors of its flagship store on New York’s Fifth Avenue to the public on April 28th. At first glance the grand unveiling seems conspicuously ill-timed. Hours earlier the Bureau of Economic Analysis had reported that nominal consumer spending in America barely grew in March, amid stubbornly high inflation and a slowing job market.Yet the throng of well-heeled New Yorkers who queued up on opening day to enter what Tiffany has modestly rechristened “The Landmark” hints at a more nuanced story. Hard economic times have, as in the past, pushed consumers of middling means to trade down to budget-friendly stores and products, boosting the performance of those businesses. Wealthy households, however, remain flush with cash, leaving businesses that cater to the affluent surprisingly buoyant. That has raised awkward questions for firms that offer their customers neither frugality nor luxury, but something in between.It has been a rollercoaster three years for America’s consumers—and the businesses that cater to them. The onset of the covid-19 pandemic in early 2020 brought on a sharp contraction in spending that was followed by an orgy of indulgence (see chart 1). Even lower-income households partook in the revelry, spurred on by juicy stimulus cheques and an uptick in wages for less skilled workers as businesses raced to rehire waiters, shop clerks and the like.Then, around 12 months ago, surging inflation led consumers to start tightening their belts, albeit with significant variation across the income distribution. A sharp spike in food and fuel prices triggered by Russia’s invasion of Ukraine coupled with a jump in rental prices hit households further down the income ladder particularly hard, given the higher share of spending they allot to such essentials. Over the course of 2022 the inflation rate for households in the bottom income quintile was one-fifth higher than that for the top quintile, according to Goldman Sachs, a bank, offsetting faster wage growth among low-earners (see chart 2).While annual consumer-price inflation in America has begun to ease, falling from an average of 6.5% last year to 5.0% in March, elevated price levels are weighing heavily on the less affluent, notes Gregory Daco of EY, a consultancy. Extra household savings amassed during the pandemic have dwindled from a peak of nearly $2.5trn in the middle of 2021 to roughly $1.5trn, with the bulk now held mostly by high-income households, according to Joseph Briggs of Goldman Sachs. Wallets at the top of the income distribution have also been fattened by a surge in asset prices in recent years, notes Paul Lejuez of Citigroup, another bank. Although markets have fallen from their frothy peaks, the S&P 500 index of large companies is still up by 26% compared with January 2020. House prices have risen by 38%.This unevenness in the financial health of consumers has had two effects. First is that businesses at the wallet-sparing end of the price spectrum have scored new customers. While the poorest households have cut back on all but essential spending, those of middling means—with larger shopping carts—have been shifting to cheaper stores and brands, says Sarah Wolfe of Morgan Stanley, one more bank.Analysts reckon that sales at Burlington, a discount department store, grew by 13.2% year on year in the first quarter of this year, compared with a decline of 4.2% for Macy’s, a middle-class stalwart. Growth at Walmart, a big-box retailer favoured by the thrifty, is expected to clock in at a respectable 4.9% for America last quarter, while Albertsons and Kroger, two mid-range supermarkets, are forecast to eke out a meagre 2.5% and 1.3%, respectively. A similar pattern is on display within retailers: in-house brands at Walmart are snatching sales away from branded goods from suppliers like Procter & Gamble and Unilever, which have jacked up prices to protect margins. Consumers are bargain-hunting beyond supermarkets and department stores. On April 25th McDonald’s, a purveyor of cheap calories, announced an expectations-beating 12.6% sales growth in America for the first quarter, compared with the previous year. On April 20th IKEA, a Swedish maker of cheap furniture and homeware, said it was investing $2.2bn to expand its presence in America—days before Bed Bath & Beyond, an assuredly middle-class rival, declared bankruptcy.The second upshot of the uneven health of consumers is that, as wealthy shoppers keep splurging on the finer things in life, businesses at the wallet-emptying end of the price spectrum continue to thrive. Last year the market for luxury goods in America grew by a handsome 8.7%, well above inflation, according to Euromonitor, a market-research firm (see chart 3). On April 12th LVMH, the world’s largest luxury conglomerate and owner of Tiffany & Co, reported first quarter sales growth of 8%, year on year, in America—down from 15% in 2022 but still bubbly. Hermès, a maker of eye-wateringly expensive handbags, saw no slowdown in sales in America in the first quarter. The pattern extends well beyond designer wear. Luxury-car sales have been on a two-year tear, hitting a record 19.6% of the total market in January, according to data from Kelley Blue Book, another market researcher.The resilience of the luxury business has been helped by a shift in focus since the financial crisis from the merely rich to the positively loaded, notes Claudia D’Arpizio of Bain, a consultancy. The penthouse floor of “The Landmark” is dedicated entirely to such ultra-high-net-worth shoppers. Whereas aspirational buyers may in good times splash out on a pair of Gucci sneakers, those at the tippy-top of the income distribution are reliable patrons even when the economy looks shaky. That has made luxury a less cyclical business than it once was.The centre doesn’t holdWith consumer spending shifting to the two extremes of the price spectrum, some companies have already begun to reposition themselves. One strategy is to beef up pricier ranges. On April 3rd L’Oréal, a beauty giant whose brands range from the moderately priced Garnier to the luxuriously expensive Lancôme, said it would spend $2.5bn buying Aesop, a maker of $40 hand soaps. Other businesses are reducing exposure to the shaky middle. On April 14th Walmart announced it was selling Bonobos, a mid-range menswear brand, for a mere $75m, well below the $310m it paid to acquire it in 2017. A third strategy is to invest in offerings for the budget-conscious. Video-streamers from Netflix to Disney have launched ad-supported tiers to mop up customers who balk at rising subscription prices.Investors would do well to take note. Conventional market wisdom dictates steering clear of businesses in “discretionary” spending categories (cars, clothes and other non-essentials) in favour of “staples” (necessities such as groceries) in tough economic times. The new logic of consumption suggests that the pedlars of the most essential fare can expect to do well as the economy sours. But so can sellers of the exceedingly discretionary. ■ More