Finance

The Plaza Hotel has New York glamour in spades. Sitting at a corner of Central Park, it was the setting for “Home Alone 2”, a film that came out in 1992 in which a child finds himself lost in the metropolis. He takes up residence in one of the hotel’s suites, thanks to his father’s credit card, and briefly lives a life of luxury. Donald Trump, the hotel’s owner at the time, has a walk-on part, which was the outcome of a hard bargain. According to the film’s director, he demanded to appear as a condition for giving the filmmakers access to the hotel. This was not the first deal in which the venue had played a part. Seven years earlier it hosted negotiators for the Plaza Accord, which was agreed on by America, Britain, France, Japan and West Germany, and aimed for a depreciation of the dollar against the yen and the Deutschmark.Echoes of the period can be heard today. In the mid-1980s America was booming. Ronald Reagan’s tax cuts had led to a wide fiscal deficit and the Federal Reserve had raised interest rates to bring inflation to heel. As a consequence, the dollar soared. American policymakers worried about a loss of competitiveness to an up-and-coming Asian economy (Japan then, China today). The Plaza Accord was designed to address what officials saw as the persistent mispricing of the dollar. Robert Lighthizer, Mr Trump’s trade adviser, has mulled a repeat. The accord set a precedent for “significant negotiation between America’s allies to address unfair global practices”, he wrote in “No Trade is Free”, a book published last year. Mr Trump’s team is reportedly considering options to devalue the dollar if the former president returns to office. More

Working on a trading desk is perhaps the closest an office job can get to a sport. Focus and reflexes matter. On the other side of every trill of the phone or ding from a computer is a client who wants to trade. If ignored, they will hang up and call a competitor. Everyone is sweating, owing to the heat wafting up from stacks of computers whirring at capacity. On a busy day, it is impossible to leave the desk—making the job a feat of endurance. Just as sports teams use code to communicate their tactics, so do traders: “cable, a yard, mine, Geneva,” translates to “Brevan Howard, a hedge fund, is buying £1bn and selling dollars.” Mistakes cause swearing, shouting and sometimes the smashing of equipment.Or at least that is how it was a couple of decades ago, in the good old days. Following the global financial crisis of 2007-09, life sapped from the trading floor. Stringent new rules curbed profits. High-frequency traders ate banks’ lunches, especially in stockmarkets. For its part, the global economy was in a stupor, having been tranquillised by low interest rates. Markets moved linearly, with equities drifting up and bond yields slipping down. There were fireworks—the Brexit vote or the election of Donald Trump—but they were rare. This placid world provided investors with little reason to trade in and out of positions. Revenues were slim; returns sagged. Drama on trading floors featured lay-offs, rather than market moves. More

In 2020, when BBVA and Sabadell abandoned merger discussions, it was difficult to find investors with anything positive to say about European banks. A decade of near-zero interest rates, stiff regulation and anaemic economic growth had made them unprofitable and unattractive. The two Spanish lenders were no exception. BBVA had a market value of €26bn ($32bn), less than 40% of its 2007 peak. At €2bn, Sabadell was worth only a fifth of the accounting (“book”) value of its equity.Chart: The Economist More

BARRY CALLEBAUT, the world’s largest maker of bulk chocolate, is full of beans. Its share price has jumped by 20% since April, when it reported higher sales volumes despite a steep rise in the cost of cocoa. Peter Feld, its boss, told investors not to worry about expensive ingredients: “What goes up fast comes down fast.”Chart: The Economist More

The EU is no stranger to overcapacity. Its economic landscape once featured butter mountains, milk lakes and other landmarks of excess production—the surreal results of its common agricultural policy, which guaranteed high prices to dairy farmers. Thus the president of the European Commission, Ursula von der Leyen, knew what she was talking about when she warned Xi Jinping, China’s ruler, about his country’s “structural overcapacities” at a recent meeting in Paris.Her concern was not farming but manufacturing. Europe is worried about a flood of electric vehicles and steel from China, which could displace cherished industries and jobs in the union. China’s steel exports, measured in tonnes, increased by more than 28% in the first three months of this year, compared with a year earlier. Its exports of new-energy vehicles increased by almost 24%. In response, the EU is considering “countervailing” tariffs to offset the subsidies that have assisted the growth of China’s industry. More

On a regular Tuesday morning, a large crowd has gathered outside a grocery store in Xuchang, a city of 4m people. Visit Pangdonglai at the weekend and things are even busier. Thousands, some having travelled hundreds of kilometres, arrive before dawn to take their place in a queue that snakes back and forth in front of the store’s entrance. At a time when China’s ritziest shopping centres are often desolate, and the country’s economy is struggling, the success of Pangdonglai’s 13 outlets is captivating executives who want to understand consumer sentiment.The latest economic data make the queues still more intriguing. Retail spending grew by just 3.1% in March year on year—well below expectations. In the same month, listed retail firms revised down their expected earnings by an average of 7%. In Shanghai, where per-person consumer spending is three times higher than in Pangdonglai’s home province, high-end grocers are closing down. One such chain, CityShop, announced in April that it would shut its doors for good after 29 years. Pangdonglai’s success contains lessons about both what may be needed to revive China’s economy and the shape that such a revival might take. More

A key is seen in front of a computer screen displaying the Airbnb logo in Ankara, Turkey, on Nov. 22, 2023.
Dilara Irem Sancar | Anadolu | Getty Images

Check out the companies making headlines in extended trading:
Airbnb — The hoteling company issued disappointing forward guidance, dragging shares down 8%. Airbnb said second-quarter revenue would range between $2.68 billion and $2.74 billion, but analysts were calling for $2.74 billion, per LSEG. The company beat on the top and bottom lines for the first quarter.

Robinhood — The retail investing company jumped about 6% after the company’s first-quarter report surpassed Wall Street estimates. Robinhood reported earnings of 18 cents per share on revenue of $618 million, while analysts polled by LSEG expected 6 cents in earnings per share and $549 million in revenue.
Klaviyo — Shares climbed 7% after the marketing automation company issued promising revenue guidance for the second quarter. Klaviyo expects revenue in the current quarter of $211 million to $213 million, while analysts polled by LSEG expected $210 million.
Arm Holdings — Shares pulled back 6%. The chip company posted full-year revenue guidance of $3.8 billion to $4.1 billion, while Wall Street called for $3.99 billion in revenue, per LSEG.
Equinix — The data center real estate investment trust climbed more than 11%. Equinix posted adjusted earnings before interest, taxes, depreciation and amortization of $992 million for the first quarter. Analysts polled by FactSet called for $981.3 million.
AppLovin — The mobile tech company surged 10%. First-quarter earnings for AppLovin came in at 67 cents per share, while revenue was $1.06 billion. Analysts called for earnings of 57 cents a share and revenue of $974 million.
SolarEdge — The solar energy company slid nearly 7%. SolarEdge posted a wider-than-expected loss for the first quarter, coming in at $1.90 a share, while analysts polled by LSEG anticipated a loss of $1.57 per share. Second-quarter revenue guidance was also weak, ranging between $250 million and $280 million, versus analysts’ estimates for $306 million. More

Robinhood shares rose after the retail brokerage announced stronger-than-expected first-quarter results.
Net income rose to $157 million, or 18 cents per share, on record revenue of $618 million.
Cryptocurrency transactions accounted for $126 million in revenue in the quarter, the company said.

Spencer Platt | Getty Images

Shares of Robinhood rose in extended trading Wednesday afternoon after the retail brokerage announced stronger-than-expected first-quarter results.
Robinhood reported net income of $157 million, or 18 cents per share, for the first quarter. That is a positive swing from the same period last year, when the company had a net loss of $511 million, or 57 cents per share.

Here is how Robinhood’s results compared to Wall Street estimates, according to analysts surveyed by LSEG:

Earnings per share: 18 cents vs. 6 cents expected
Revenue: $618 million vs. $549 million expected

The company said the earnings per share and revenue numbers were both records for the firm. The stock jumped more than 5% in after-hours trading.
Robinhood surged in popularity during the Covid-19 pandemic in 2020 and 2021, but has since seen user activity and revenue that mirrors action in the broader market. Stocks and cryptocurrencies rose during the first quarter, which likely helped the company’s results.
Cryptocurrency transactions accounted for $126 million in revenue in the quarter, the company said. Regulatory uncertainty has clouded the future of that business. Robinhood disclosed on Monday that the U.S. Securities and Exchange Commission had issued a Wells Notice to the company, signaling potential legal enforcement action over the company’s cryptocurrency business.
Dan Gallagher, Robinhood’s chief legal, compliance and corporate affairs officer, said in a blog post that the company was “disappointed” in the SEC’s decision and still believes that the crypto assets on its platform are not legally securities.

Robinhood said its number of funded customers rose by 810,000 year over year to 23.9 million. Assets under custody rose 65% year over year to $129.6 billion, according to the press release.
Shares of Robinhood were up nearly 40% year to date before Wednesday’s earnings announcement.
Read the full earnings release here.
Correction: A previous version of the story misstated the date of Robinhood’s quarterly report. More