195.62 +0.05 (0.03%)
After hours: 7:59PM EDT
|Bid||195.70 x 800|
|Ask||195.75 x 900|
|Day's Range||195.29 - 199.26|
|52 Week Range||142.00 - 233.47|
|Beta (3Y Monthly)||1.03|
|PE Ratio (TTM)||16.45|
|Earnings Date||Jul 29, 2019 - Aug 2, 2019|
|Forward Dividend & Yield||3.08 (1.55%)|
|1y Target Est||210.89|
Streaming services are driving growth in the music industry as questions persist about whether artists and songwriters are getting their fair share of the pie.
Bankers punch transactions into tablet computers, spiffed up ATMs handle most everything else—these are the hallmarks of a new flagship JP Morgan Chase bank branch, in Midtown Manhattan, unveiled by the company on Tuesday.
(Bloomberg Opinion) -- Ten months ago, I warned that storm clouds were brewing over the global technology industry. The situation today is much worse.Back then, a U.S.-China trade war was more risk than reality, Apple Inc.’s pending iPhone update held promise, and central banks were still in tightening mode. Yet inventories at the end of June 2018 had climbed to the highest since the financial crisis a decade earlier and a sector-wide slowdown was looming.At the time, the Pollyannas were louder than the Chicken Littles. The next iPhone had yet to launch and Christmas shopping season was coming, argued the optimists.Since then, global technology companies have issued loud warnings about lost sales due to U.S. actions against Huawei Technologies Inc. In short, because the U.S. is restricting what can be sold to the Chinese giant, the company and its suppliers are cutting orders. This is causing a ripple effect from semiconductor materials supplier IQE Plc to chip designer Broadcom Inc.But there’s something you need to know about the Huawei effect: It isn’t the cause of this technology recession. If anything, the company is the reason why the situation didn’t worsen earlier. The U.S. war on Huawei propped up the tech sector, notably semiconductors, over the past year.Let me explain. Immediately after the Trump administration in May blacklisted Huawei from buying U.S. components, Bloomberg News reported that the maker of telecommunications equipment and smartphones had been been stockpiling components in anticipation of some kind of action. Chairman Ren Zhengfei saw his own storm brewing and started saving for the rainy day that came on May 17.This tells us that some proportion of global component demand over the past year wasn’t led by end-product sales, but merely by shelf-stocking. More significantly, what revenue component makers did see was probably a false signal, pointing to demand that didn’t exist.These suspicions were confirmed earlier this month when Mark Liu, chairman of made-to-order chipmaker Taiwan Semiconductor Manufacturing Co., told me that he wasn’t sure how much of his company's recent revenue had gone to supplying Huawei’s end-product demand versus building the Chinese company’s inventory. Almost every technology company is a client of TSMC. If Liu, who has the broadest and deepest picture of the global tech sector, can’t make out the difference between demand and inventory build, then you can be sure he’s not alone.There’s also solid data to show the scale of Huawei’s stockpiling. Total inventories climbed 33% last year. Its stash of components – measured as raw materials and works in progress – jumped 76%. At even its most optimistic, there’s no way that Huawei expected 76% revenue growth this year.Which brings us back to the sector as a whole.Here’s an update of the numbers compiled 10 months ago, based on nine leading technology hardware companies and charted by my colleague Elaine He. The results aren’t heartening:With few exceptions, inventories – measured in dollar terms or days outstanding – climbed since June 30, 2018, and were unequivocally higher than two years ago. The revenue slowdowns that have affected every corner of the hardware sector this year make this buildup ominous. Of even greater concern are data pointing to prolonged cash conversion cycles, a measure of how long companies take to turn manufactured goods into money. The only firm to see a solid dip is Apple, and that’s because it tends to generate revenue from customers before having to pay suppliers. Both TSMC and iPhone assembler Hon Hai Precision Industry Co. (aka Foxconn) have said they hold inventory on their books for their key client. Were it not for that fact, Apple’s rising inventory days outstanding would probably be even higher.A major reason for Hon Hai posting weak earnings in the first quarter was inventory provisions. Those can be reversed if products sitting on shelves get sold to consumers, Hon Hai CFO David Huang told me this month. But shipping an already-made device to meet demand means you don’t need to manufacture a new phone, which in turn means no need to buy components from suppliers, and so forth.That’s the situation we’re in now: plenty of inventory, false signals from the Huawei effect, and a pending global economic slowdown that’s likely to suppress demand. If that doesn’t make make you worry about the state of global technology hardware, then I applaud your optimism. To contact the author of this story: Tim Culpan at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Roku Inc. shares fell on Tuesday, with the stock retreating further from record levels in what analysts said was a reaction to the company’s massive year-to-date advance.The stock dropped as much as 6.6% in what was on track to be its fourth straight decline, its longest losing streak since a six-day decline in April. Roku, a platform for video-streaming services, has lost about 12% over the four-day slump.Even with the recent losses, the stock is up nearly 250% from a December low, and it hit record levels last week.“There are plenty of examples of high-growth companies that are well positioned in popular sectors, where investors get ahead of themselves,” said Tom Forte, an analyst at D.A. Davidson who has a buy rating on the stock.“Roku is in a very favorable position, where it can exploit the large investments being made by participants in the video category -- not just Netflix, but also Amazon, Apple and Disney,” he told Bloomberg in a phone interview. “As video ad revenue gravitates to where the eyeballs are, to [over-the-top] services and away from legacy, linear television, I think it has the ability to grow into its valuation.”Roku’s stock has long been in a tug-of-war between its high levels of growth and a valuation that analysts often see as excessive. The stock can be extremely volatile, moving more than 20% following each of its past four quarterly results.Roku’s second-quarter results are estimated to come out on August 7, according to data compiled by Bloomberg. Currently, analysts expect it to report revenue growth of more than 40%, a pace that’s expected to continue in the subsequent quarter, and then stay above 30% for the next two quarters.This growth is seen as fueled by the company’s continued popularity with consumers at a time when streaming video has become a dominant part of the entertainment landscape. According to a Citi analysis of over-the-top services, the Roku Channel was the seventh most popular channel in May, up from ninth place in April.“The market clearly believes Roku has nearly unlimited growth potential,” wrote Wedbush analyst Michael Pachter in a report dated June 24.He added that while the company had built “an exceptional platform” and “has positioned itself as best in class for OTT advertising,” these factors were “fully priced in” the share price.Wedbush has a neutral rating on Roku, but on Monday boosted its price target to $105 from $65.To contact the reporter on this story: Ryan Vlastelica in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Steven FrommFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- How can investors use inexpensive index strategies yet still generate returns that outperform the markets? The solution to that particular challenge is the combination of fundamental and factor investing, according to Chris Brightman, chief investment officer and partner at Research Affiliates LL, and this week's guest on Masters in Business.Brightman notes that so-called smart beta allows for simple, transparent and inexpensive index strategies that are not market-cap weighted. He calls this a “simple, elegant way to pursue a contrarian approach” that is more akin to cap-weighted indexes than expensive active stock selection. It also has the benefit of keeping emotions out of the process of selecting and rebalancing individual equites. Bad behavior leads to an average annual underperformance of 200 basis points versus the broad indexes. By using a systematic approach to indexing, investors avoid this performance penalty. In our conversation, we discuss the lagging performance of value stocks, and why they tend to be so cyclical. Every long-term study that looked at the value-versus-growth question historically has confirmed value eventually will outperform growth around the world. The issue is that long time line, which eventually leads investors to becoming bored and shift away from value. Brightman adds that value’s outperformance comes from some assumption of additional risk, as well as investor’s behavior.Brightman was a member of the Investment Fund for Foundations, the Virginia Retirement System, the University of Virginia Investment Management Company, and Strategic Investment Group. Previously, Brightman managed money for the University of Virginia endowment.His favorite books are here; a transcript of our conversation is here.You can stream/download the full conversation, including the podcast extras on Apple iTunes, Bloomberg, Spotify, Google Podcasts, Overcast, and Stitcher. All of our earlier podcasts on your favorite hosts can be found here.To contact the author of this story: Barry Ritholtz at email@example.comTo contact the editor responsible for this story: James Greiff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
On June 25, the soft economic data isn't an isolated case. We have been getting a flurry of dismal data points. The US economy added only 75,000 non-farm jobs in May.
Investing.com – Roku slumped Tuesday on fears the streaming device company is set to face stiff competition from Amazon after the e-commerce giant launched new smart TVs.
On June 24, CNBC reported that UBS believes that the global economy could be headed for a recession if the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping in Japan fails to make any headway.
Tech giants like Amazon (AMZN), Apple (AAPL), Square (SQ) and others are providing financial flexibility to the underbanked customers with the help of their offerings.
Trade-war is taking a toll on technology stocks' financial performance as the companies lose out on significant business opportunities.
Facebook's (FB) strategy to use Libra as an alternative to the U.S. dollar is a major headwind for banks and financial institutions worldwide.
Today, Bloomberg reported that India is planning incentives such as a tax holiday and lower tax rates for companies moving out of China while the US and China are embroiled in their bitter trade war. But emulating China’s manufacturing prowess and ecosystem might not be easy.
Grand View Research expects the global streaming market to reach $124.6 billion in 2025, up from $36.6 billion in 2018. Apple (AAPL) now has its eye on the competition in this segment.
(Bloomberg) -- Gone are the days of air mattresses on the floor. Airbnb Inc. is now catering to the mega-wealthy with a new tier of luxury rentals.Airbnb Luxe went live Tuesday morning after long being teased, with 2,000 new listings on Airbnb’s website offering guests the chance to stay in some of the world’s most extravagant homes. Everything from entire islands to medieval castles and mansions decked out with water slides, dinosaur skulls, and archery ranges are up for rent.The average luxury listing has an asking price of $14,000 a week—but can go as high as $1 million a week for a private atoll near Tahiti that comprises 21 bungalows and a staff of 50.Luxury travelers have been eyeing high-quality home-rentals for a while, says Nick Guezen, Airbnb’s global director of portfolio strategy. But the market hasn’t offered enough security to high-profile and mega-rich clients who seek privacy, he says. “I think that's something that was missing—the idea of ‘I want to travel to a luxury home, but I’m not sure where to find it or who to trust.’”Which is not entirely the case, considering Accor SA-owned Onefinestay, the second-home rental platform ThirdHome, and apartment-rental company Paris Perfect are all established competitors in the space. And Airbnb Luxe itself is essentially a re-branding of Luxury Retreats, a Canadian company that specializes in high-quality listings and was acquired by Airbnb in 2017 for around $300 million. None of the listings on Luxe are new to market, they just now sit under the Airbnb umbrella.The company is betting on the strength of its brand to give it the competitive edge. “People are growing up with Airbnb,” said Eshan Ponnadurai, global marketing director of luxury for Airbnb. “Someone that started in their early 20s renting a room at $100 a night and is now growing in affluence may want a room at $1,000 a night.”Because Airbnb has become part of the cultural dialogue, renting out your home to a stranger has become legitimized in a sociological sense as well—even to the super-rich, says New York University Professor Arun Sundararajan, an expert on the sharing economy. In the past, those who own multimillion dollar properties might have been reticent to share them with strangers, but today most people know someone who has stayed in an Aribnb, he says. “It feels like a more normal activity and that lowers the barriers to rent out a more expensive home.”In 2017, only 36 percent of affluent travelers (those with an income over $100,000) surveyed by Skift Research reported to staying in alternative accommodation or home rentals. This year that number has mushroomed to 59 percent. Luxury LegitimacySince its founding in 2008, Airbnb has upended the travel industry, challenging the big hotel chains and travel sites like Booking Holdings Inc. while also attracting the ire of cities around the world that are seeking to crack down on illegal listings and grappling with rising rents. Conquering the luxury rental market will allow Airbnb to sell itself as a company that can not only comply with official rules, but also cater to the world’s richest—and most demanding— travelers. “This is a way for a luxury traveler to book a home without any worries or hassle,” Guezen says. “We can give them something that is vetted and can be trusted.”In April, it took over 10 floors of New York’s 75 Rockefeller Plaza with plans to convert them into 200 overnight apartment-style suites. In May, Airbnb added high-profile luxury retail executive Angela Ahrendts to its board of directors. Ahrendts, 58, spent five years overhauling Apple Inc.’s retail operations and, prior to that, transformed Burberry into a global luxury brand. This new luxury tier represents a lucrative revenue source as well, even if Luxe’s 2,000 listings pale in proportion to the more than 6 million listings available on the general site. The company takes a percentage of the cost of each booking it arranges, so more-expensive inventory generates higher margins and helps justify the privately held company’s $31 billion valuation. Under Airbnb Luxe, the entire fee is coming from the host and the percentage depends on the market and the type of partnership arranged with homeowners, Guezen says, but declines to give any specifics as the fees vary too much between properties. The global luxury travel market is worth more than $200 billion, and analysts expect it to continue growing.Trip DesignersThe biggest difference booking under Luxe vs. Airbnb’s regular or higher-tier Plus listings is free access to a trip designer, who arranges check-in logistics, local bespoke experiences, and services from childcare to private chefs or in-house massage therapists. (While novel for Airbnb, this sort of high-touch service, similar to that provided by Onefinestay’s dedicated concierges, is standard in super-high-end home rentals.)Airbnb’s 20 trip designers will be available to guests around-the-clock for VIP support. Some have already handled bizarre requests during Luxe’s pilot phase, such as building a temporary basketball court in Los Cabos, Mexico, for an NBA player or cordoning off a section of a jungle in Tulum for a high-profile family to cave dive in private. Homeowners or their representatives must apply to be part of Luxe. Each property is reviewed by an internal team that runs through a 300-point check list scrutinizing everything from the home’s design qualities and architecture to the quality of its linen and the water pressure in its showers. Listings include the Fleming Villa in Jamaica where Ian Fleming penned his James Bond novels and a medieval castle in the Tuscan countryside with nearly 100 acres of land for hiking and harvesting local produce. Many of the homes are owned by megawealthy families, including billionaires and celebrities, Guezen says. Some own multiple properties around the world and rent up to half a dozen through the site, he says. In order to protect the host’s privacy, guests are never told who owns the property and each home is stripped of anything that could personally identify them, like a bedside photograph or snail mail. Staff are advised not to disclose the identity of hosts or guests and each property is insured by Airbnb’s standard $1 million guarantee to cover any damages. Guezen says these super-rich hosts rent out their vacation retreats not only to monetize their assets, but also to ensure that the properties are well-oiled for their own stays. The move into luxury rentals is the next step in Airbnb’s plan to diversify its business ahead of an initial public offering likely next year. The company has been working toward becoming an end-to-end travel platform that can one day help travelers book flights through the site. Earlier this month it expanded its Experiences platform to include adventure tourism, offering travelers the chance to search for UFOs in Arizona or track lions on foot with Samburu guides in Kenya.Airbnb says the launch of Luxe helps meet increasing demand for luxury properties. In 2018, the number of Airbnb bookings for listings worth at least $1,000 a night increased by more than 60 percent, according to the company. “Today’s luxury traveler is craving more than just high-end accommodations,” Airbnb Chief Executive Officer Brian Chesky said in a statement. “They seek transformation and experiences that leave them feeling more connected to each other and to their destination.” Example Luxe ListingsCaribbean Literary HavenYou can book a stay at the Fleming Villa in Orcabessa, Jamaica, where Ian Fleming found inspiration for his James Bond novels. In addition to five bedrooms, there’s a private swimming pool and access to the Caribbean, along with the use of amenities at the nearby GoldenEye Resort, such as tennis, yoga and a spa. The open-plan bungalow layout features bamboo furnishings, high ceilings, and large windows. $4,455 per night; three-night minimumCote d’Azur VillaThis nine-bedroom, 18-bath property gives you access to Cannes, France, the Mediterranean, and nearby mountains. There’s a wine cellar, library, infinity pool with pool bar, and a terrace. The interiors have a serene tone with neutral colors and white sofas, and an included private chef and housekeepers ensure that you don’t have to lift a finger while on vacation. $13,265 per night; 30-night minimumMexican Beach EscapeThis hacienda-style villa in San Jose Del Cabo, Mexico, has six bedrooms and eight and a half baths for up to 15 guests. It has a waterslide descending into a curving infinity pool as well as an ocean-view terrace and and on-call, in-house masseuse. $3,200 per night; four-night minimum Entire Island ResortNukutepipi, a private island in French Polynesia, features multiple houses and bungalows surrounded by palm forests and white-sand beaches. The staff includes a chef, captain, doctor, massage therapist, and activity coordinators. There’s a master villa and 15 guest houses with a total of 21 bedroom suites, making it perfect for weddings or group retreats. $146,183 per night; seven-night minimumTo contact the authors of this story: Olivia Carville in New York at email@example.comClaire Ballentine in New York at firstname.lastname@example.orgTo contact the editor responsible for this story: Justin Ocean at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- At a meeting last week of Alphabet Inc. stockholders, a man lobbed a simple query at the company’s chairman: Where is the CEO? Good question.He was told that Larry Page, the head of Google’s parent company and its co-founder, wasn’t able to to come to the annual session with shareholders, who asked tricky questions about the company’s approach to artificial intelligence ethics, treatment of its contract workers and its impact on Bay Area home prices. Page wasn’t at last year’s annual meeting, either. The stockholder sessions aren’t Page’s only glaring absence. It was news when Page and the company’s other founder, Sergey Brin, recently broke an unusually long attendance lapse at the traditional weekly Q&A for employees. U.S. lawmakers last year criticized Page for declining to appear at a hearing about exploitation of internet platforms. The senators’ outrage was a stunt, but they weren’t wrong to ask the same question as the Alphabet shareholder: Where is Larry Page?Page has always been an idiosyncratic executive. Both before and after he became CEO eight years ago, Page tended to focus on product strategy and ceded policy matters, budget-setting, shareholder outreach and many day-to-day functions to others. That role was formalized with the 2015 creation of the Alphabet structure and the installation of operating CEOs under Page — principally Google leader Sundar Pichai.The arrangement might have been a good idea at the time. But a storm is raging in Silicon Valley, and technology superpowers require accountable, visible and empowered leaders to advocate for their companies and assess the wider impact of their products. Instead, Alphabet has both a functional CEO in Pichai and a figurehead CEO who busies himself with far-off technology and is otherwise increasingly a ghost inside and outside of the company.Pichai is a capable leader of Alphabet’s only relevant business segment. But as long as the status quo continues, there will always be that niggling question: What does Larry think? Where is he? Page tended to shun the executive tasks he didn’t like, but he wasn’t always so hands-off. In early 2011, Page retook the CEO post he had given up in Google’s early years to Eric Schmidt, the hired hand and “adult supervision” for the young Page and Brin. For a while, Page was an active CEO, meeting with underlings and openly discussing efforts to slim bureaucracy and make Google operate more like a startup.Over time and particularly after the 2015 debut of Alphabet, Page’s official duties seem to have narrowed to a pinprick. Maybe it was a conscious decision to give Pichai more authority. Maybe Page was limited by his voice — vocal cord damage had reduced the volume of his speaking voice. Maybe Page grew reliant on Schmidt, who until he stepped down as executive chairman in early 2018 handled policy issues and other public duties. Whatever the reason, Page has been less actively involved as the personal and professional demands have increased for the other CEOs of U.S. technology superpowers. Facebook Inc.’s Mark Zuckerberg has become extremely practiced at apologizing. Jeff Bezos, the chief executive officer of Amazon.com Inc., had his personal life splashed in tabloid pages. Apple Inc.’s Tim Cook is at the White House so often he should have a West Wing frequent visitor card. Pichai is not the titular boss but has to do all the duties of one.(1) This is probably not what any of them imagined the job would be.I’m sure Page continues to do what needs to be done. John Hennessy, the Alphabet chairman, said at the stockholder gathering that Page attends every board meeting and meets frequently with him and other directors. At an event last fall, Pichai said that Page is very involved and that the Alphabet structure of a big-picture CEO with operating executives has worked as intended.Page’s role is to ponder future technologies, someone who pushes Alphabet to make big bets and scout promising talent. That’s essential to keep a technology company relevant. But does Page need to be the CEO of the world's fourth-largest public company to play this role? And Page seems to want to have it both ways. He wants the power of a CEO to be able to award on his own a $150 million stock payout to an executive under investigation for sexual harassment, according to a lawsuit, but he doesn’t want the responsibility of a CEO to show up in front of sometimes unhappy employees at regular meetings, to face questions from annoyed shareholders or to absorb verbal blows from members of Congress. (Alphabet has disputed the lawsuit’s characterization of Page’s role in the stock award.) As the technology industry faces growing government scrutiny, this may not be the time for a visionary, chimerical CEO. Everyone would like to do only the interesting parts of a job and skip the unpleasant or dull tasks. That’s not how adult life works, and that isn't how a public company should work, either. (1) It's a pop psychology explanation, but I wonder if the structure unwittingly removes some authority from Pichai. At the stockholder meeting last week, Pichai sat oddly silent for more than 20 minutes while others tackled sometimes angry questions about matters such as Google's driverless car project, the company's approach to ethics in artificial intelligence and compensation for the company's army of contract workers. Pichai may not have the temperament to graciously interact with irked shareholders and employees, or pal around with Washington power brokers as Schmidt did. Or maybe Pichai has a little less swagger because he is ultimately not the boss.To contact the author of this story: Shira Ovide at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shira Ovide is a Bloomberg Opinion columnist covering technology. She previously was a reporter for the Wall Street Journal.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Subscribe to Decrypted on Apple Podcasts Subscribe to Decrypted on Pocket Casts(Bloomberg) -- When police officer David Gomez was first stationed at a school in rural Idaho, he thought he’d spend his time breaking up fights in bathrooms and scanning the hallways for weed. Instead, he found that almost every problem was either happening on social media or started there. This week on Decrypted, reporter Shelly Banjo explores how age-old dangers like drugs, child predators and school shooters have shifted onto new platforms, and how one school has tried to adapt.Want to hear more? Subscribe on Apple Podcasts and Pocket Casts for new episodes every week. Decrypted is a podcast that uncovers the hidden projects, quiet rivalries and uncomfortable truths in the global technology industry.To contact the authors of this story: Shelly Banjo in Hong Kong at firstname.lastname@example.orgPia Gadkari in New York at email@example.comTo contact the editor responsible for this story: Anne VanderMey at firstname.lastname@example.org, Lindsey KratochwillFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- It was dubbed “Project After”: A secret emergency plan for the U.K.’s Conservative government to pull all of the economic levers at its disposal if Britain crashed out of the European Union without a deal. The ingredients included slashing taxes to woo multinationals, cutting trade tariffs, and boosting investment. The FT’s report of its existence in February didn’t come as a huge shock, given the U.K.’s public ambition to have the lowest business tax rate in the G20. But it was a sign of what Europe would have to contend with in the worst-case scenario: A race to the bottom on corporate tax with its neighbor.It now looks like the Tories’ Brexit Doomsday plan is becoming the official policy of the two contenders to replace Theresa May as prime minister. Boris Johnson and Jeremy Hunt both dangled tax cuts at the weekend as they prepared the country for life after the EU, whether through a negotiated withdrawal or a no-deal Brexit. Hunt called for a reduction in British corporation tax to “Irish levels” (12.5% currently) to land an “economic jumbo jet on Europe’s doorstep.” Johnson, deflecting questions about his turbulent private life, said he would “turbocharge” the economy with cuts to business and income taxes.This may of course just be cheap talk on the campaign trail. Tax cuts would be financially and politically difficult. The Resolution Foundation’s Torsten Bell estimates Hunt’s plan would cost the exchequer in the region of 13 billion pounds ($16.6 billion), while Johnson’s would cost about 10 billion pounds. The idea that the shortfall would be more than made up by companies and wealthy investors flocking to the U.K., especially in a no-deal scenario where the trading relationship with the EU is unresolved, looks very confident indeed. That longed-for jumbo jet might end up looking more like a single-propeller Cessna.Still, the increasingly reckless political climate in Britain means Europe will be paying careful attention. Nigel Farage’s Brexit Party is open to closer ties with the Conservatives to ensure a no-deal Brexit, an eventuality that is winning increasing support from Brits. The “Singapore-on-Thames” low-tax, low-regulation model still seems to be very much on the table: Even Britain’s Financial Conduct Authority is hinting at deregulation.The problem for the EU isn’t so much the overall corporate tax rate itself, but what else might accompany any cut. What if the U.K. engages in the kind of individual sweetheart deals that the EU doesn’t usually allow? Brussels has already accused Britain of offering some multinationals an “unjustified exemption” from anti-tax avoidance rules. Imagine a supercharged version of this, like the effective tax rate of 0.005% enjoyed by Apple Inc. in Ireland in 2014 (slapped down as illegal by the EU).A buccaneering Britain would certainly create new tensions within the EU about how best to respond. A 2018 Ifo Institute working paper, modeling the effects of a country moving from harmonized taxes to competing with its neighbors, predicted that the pressure wouldn’t be felt equally. Low-tax jurisdictions would suffer more than high-tax jurisdictions from tax competition. It’s easy to see how Ireland’s economy, where foreign-owned companies pay more than three-quarters of total corporation tax, would be vulnerable to a Britain trying to grab some of those corporate headquarters.Whether it’s Johnson or Hunt who becomes prime minister and launches the inevitable whistle-stop tour of Europe’s capitals to push for fresh Brexit concessions, the U.K.’s commitment to fair taxation and fighting fraud should be part of the negotiations. Britain’s foot-dragging on transparency at its Crown Dependencies is one reason to be worried. Trust will be a big part of any future trade relationship, and Brussels should insist that the “jumbo jet” stays in the hangar.To contact the author of this story: Lionel Laurent at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.