🇫🇷 In a stunning market reversal, investors now consider some of France's top companies a safer bet than the French government itself.
Why it matters: Borrowing costs for corporate giants like L'Oréal, Airbus, and LVMH have dipped below those of French government bonds.
This inversion shatters the normal financial order, where a major government's debt is the ultimate "risk-free" asset.
This signals a profound loss of faith in Paris's ability to manage its finances, driven by a political crisis and a massive, growing debt pile.
Driving the news: The market jitters aren't happening in a vacuum. France's political scene is in turmoil, directly impacting its financial credibility.
Two prime ministers have resigned in less than a year trying to fix the budget.
Fitch Ratings recently downgraded France's credit, pointing to "increased fragmentation and polarisation of domestic politics".
Last year's budget deficit hit 5.8% of GDP, the highest in the entire Eurozone.
❝"This is an old story... the French demand more help and protection from the state, yet also demand less tax. It's incoherent."
François Ecalle
By the Numbers 📊
📉 110%: France's government debt as a percentage of GDP.
💸 57%: Public spending as a share of GDP in 2023, the highest of any country in the OECD.
🏢 10: The number of French companies whose bonds recently traded at lower yields than the government's—the most since at least 2006.
✂️💰The backstory: President Emmanuel Macron's fiscal predicament stems from two core factors:
a calculated gamble on tax cuts
and a series of massive, expensive crises.
The Macron bet: He entered office in 2017 promising to shrink the state and boost growth by slashing taxes on wealth, capital, and corporations.
The idea was that pro-business policies would spark growth, boosting tax receipts to narrow the deficit.
But:
A series of emergencies—from the gilets jaunes protests to the COVID pandemic and the energy shock—led Macron to repeatedly open the state's checkbook.
His "whatever it takes" approach kept aid flowing longer than in other countries.
The result: Half of the debt increase since 2017 is attributed to the permanent tax cuts, with the other half coming from crisis support.
📜The country hasn't balanced a budget since the 1970s. For decades, this was seen as an acceptable political choice, as healthy growth helped prevent debt from spiraling out of control.
That era appears to be over. The current market reaction, where corporate bonds are seen as safer than sovereign ones, is reminiscent of the turmoil seen during the Eurozone debt crisis over a decade ago.
The bottom line: There is no easy way out. France likely can't grow or tax its way out of this fiscal hole. Meaningful spending cuts are needed, but the deep political divisions make consensus look impossible until the 2027 presidential election.
Elisson (Larry & David), Musk
Larry Ellison, 81, is the new richest person on the planet, and his family is wasting no time leveraging that financial firepower to redraw the maps in tech and Hollywood, aided by a new, softer regulatory touch in Washington.
Why it matters: The staggering, record-breaking surge in Larry Ellison's wealth isn't just sitting on a balance sheet.
It’s the backdrop for his son David's audacious bid to consolidate Hollywood — a move that looks more plausible amid a significant deregulatory shift under the Trump administration.
Driving the news: Oracle chairman Larry Ellison’s net worth skyrocketed last week after the company posted a growth forecast that stunned investors.
🚀 Ellison's new net worth is $393 billion as of Wednesday morning, pushing him past Elon Musk's $385 billion.
🤯 An incredible $101 billion — the single biggest one-day wealth increase in the history of the Bloomberg Billionaires Index.
📈 Oracle stock exploded, jumping 40% to $338 on Wednesday morning. Ellison owns about 1.16 billion shares.
📉 Musk’s fortune has fallen by nearly $49 billion as of last week Tuesday, with Tesla stock — the main source of his wealth — down 12.3% this year.
🎬 State of play: Just as his father hit his financial peak, David Ellison, 42, is making an aggressive play to buy Warner Bros Discovery.
This comes just weeks after his company, Skydance, closed its hard-won, $8 billion acquisition of Paramount on August 7.
The strategy: The younger Ellison plans to combine Paramount and Warner Bros to create a media giant with the scale to compete head-to-head with Netflix.
An analyst noted the potential combination of Paramount+ and HBO Max would create an "extremely formidable competitor in streaming".
The tech-centric plan is to integrate both legacy studios on a single technology stack, saving money and boosting the customer experience.
This move would preempt Warner's plan to spin off its cable division in 2026.
Instead, Ellison would use assets like CNN and sports rights on TNT to feed content to Paramount's streaming services, similar to Disney's strategy with Hulu.
The new Washington playbook 🏛️ A Paramount-Warner merger would face major regulatory questions, especially by combining CNN and CBS News under one roof. But the environment for such a deal is rapidly changing.
The big picture: Republican regulators are adopting a more business-friendly stance and rolling back tough enforcement programs from the Biden era.
The prime example: The new SEC chair appointed by President Trump, Paul Atkins, is scrapping the "aggressive enforcement agenda" of his predecessor.
Atkins is promising a softer approach, vowing to give businesses notice of "technical violations" before "bashing down their door". While the SEC will still go after "crooks", Atkins has condemned the billions in fines levied by the prior administration.
This shift is already visible on crypto. After years of crackdowns, the SEC has dropped cases against crypto platforms, and Atkins aims to fulfill Trump's promise to make the U.S. "the crypto capital of the world".
The bottom line: For David Ellison, this regulatory thaw could be crucial. The Trump administration may focus more on a commitment to keep CNN "politically neutral" rather than on structural antitrust issues.
Ellison's recent appointment of a conservative think-tank leader as CBS News ombudsman and his talks with "anti-woke" media founder Bari Weiss suggest he is already adapting to this new reality.
China's market regulator announced Monday that U.S. chip giant Nvidia violated the country's antitrust law.
The finding is the latest sign of escalating tech and trade tensions between Washington and Beijing.
Why it matters: Timing is everything.
The announcement dropped as U.S. and Chinese negotiators were meeting in Madrid to try and de-escalate those same trade tensions.
The backstory: This decision stems from an investigation China launched against Nvidia last December.
The issue centers on Nvidia's 2020 acquisition of Mellanox Technologies.
Beijing alleges Nvidia violated commitments it made during that deal to ensure fair competition and maintain supplies to China.
The ability to do business with China is "crucial to the company's efforts" to maintain its position as the world's leading maker of A.I. chips.
The market reacted quickly: Nvidia's stock fell more than 2 percent in premarket trading following the news.
The big picture: This is another move in an escalating tit-for-tat struggle.
🇺🇸 U.S. move: The White House recently added 23 Chinese firms to a trade blacklist, banning them from buying American tech over national security concerns.
🇨🇳 China's move: Beijing, in turn, is investigating American suppliers of some integrated circuits.
Lessons from the past: The dynamic is a reminder of the U.S.-Japan semiconductor wars of the 1980s, where fears over economic dominance and technological supremacy led to a spiral of tariffs and accusations of anti-competitive practices.
What to watch: The investigation isn't over. Chinese authorities confirmed they will continue the probe.