Five Things to Know in World Business – August 20, 2018

PepsiCo to buy SodaStream for $3.2 billion, Venezuela  devalues currency by 95 percent, and Tesla turmoil rumbles on. Here are some of the things people in markets are talking about today.

Bubbles

PepsiCo Inc. agreed to buy SodaStream International Ltd. for $3.2 billion, in what is likely to be CEO Indra Nooyi’s last major deal before she steps down in October. The price of $144 per share in cash is 11 percent higher than the Israeli company’s Friday closing price, and 10 times higher than where the shares were trading less than three years ago. The move comes as PepsiCo continues to try to shift away from sugary drinks, which are proving less popular with consumers these days.

Pop

Venezuela will get a new currency today called the sovereign bolivar that will be based on the Petro – a kind of cryptocurrency backed by the country’s oil reserves. The net effect of the move is a 95 percent plunge in the official rate of the bolivar, which will fall from about 285,000 per dollar to 6 million. The real world effect on the ground in Venezuela seems to mostly be confusion, with many shops closing over the weekend. Other measures announced include increases in VAT rates and the end to some gasoline subsidies.

Sleepless

Elon Musk showed his determination to maintain his relentless pace as head of Tesla Inc. In a tweet sent at 2:30 a.m. on Sunday, he wrote that he’d just got home from the factory and slowing down is not an option. Investors are becoming increasingly concerned with the fate of the electric car maker, with shares priced under $300 in pre-market trading this morning, far below the $420 price for taking the company private Musk tweeted about two weeks ago.

Markets

Overnight, the MSCI Asia Pacific Index rose 0.4 percent while Japan’s Topix index closed 0.3 percent lower as the yen held most of Friday’s gains against the dollar. In Europe, the Stoxx 600 Index was 0.6 percent higher at 5:45 a.m. Eastern Time as cyclicals and miners bounced back amid optimism over U.S.-China trade talks. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.859 percent and gold was higher.

Zzzzzzzzzzzzz

It’s the third week of August, so needless to say things are very quiet on the economic front today. However, there is the annual Jackson Hole conference coming up at the end of the week where policy makers from around the world will meet to discuss “changing market structure and implications for monetary policy.” Federal Reserve Chairman Jerome Powell will address the annual symposium at 10:00 a.m. on Aug. 24.