The Week in Breakingviews: For whom the bell rings

BYD

09/10/2026 17:07

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Peter Thal Larsen
LONDON, Oct 10 (Reuters Breakingviews) - Welcome back! Governments across the West face rising bond yields. Will this trigger overdue tax reform and fiscal restraint, or a debt crisis? Let me know what you think. If this newsletter was forwarded to you, sign up here to get it in your inbox every weekend.
OPENING LINE
“Allison Kirkby is looking like Britain’s answer to Jamie Dimon. The BT BT.L CEO has just stepped in to buy up the carcass of indebted telecom group TalkTalk, just as the JPMorgan JPM.N boss ​is known for saving weak US banks.”
Read more: BT’s vulture M&A dials up a worthwhile connection
FIVE THINGS I LEARNED FROM BREAKINGVIEWS THIS WEEK
Hiring a tanker to transit through the Strait of Hormuz to China now costs $1.2 million a day. (Tolls look more appealing)
Discretionary government spending in Brazil accounts for less than 2% of GDP. (Little room for cuts)
South Korea’s Samsung is set to make more profit than larger rival Nvidia this year. (Valuations are very different)
The price of jet fuel is double the average for last year. (Trouble for engine specialists)
Brewing giant AB InBev has launched a protein beer in Brazil. (But “proteinmaxxing” has limits)
BURNING POINT
When writing about financial markets, as when investing in them, timing is everything. By that yardstick, the cover story published by Barron’s in March 2000 can claim to be one of the best-timed works of financial journalism ever. Under the headline “Burning Up”, the article made the simple but devastating point that many hot internet startups of the era were using their financial resources so quickly they would run out of cash before the end of the year. It appeared 10 days after what turned out to be the peak of the dotcom bubble. Equity and debt markets dried up and valuations collapsed. It would be 15 years before the tech-focused Nasdaq Composite Index surpassed its previous peak.
As the Nasdaq and S&P 500 benchmarks break records again this week, it is tempting to look at fresh cracks in the market’s foundations. There are plenty of contenders. Take Firmus Technologies, an Australian data centre operator backed by chip giant Nvidia NVDA.O and alternative asset manager Blackstone BX.N, which hoped to complete the country’s largest initial public offering in three decades. The so-called “neocloud” builds server farms and leases them to large tech companies.
As Antony Currie explained, executives touted a novel valuation measure – known as EV+1/EBIT+2 – to highlight its prospects. This unconventional ratio compares a company’s enterprise value – its market capitalisation plus net debt – in 12 months’ time to the earnings before interest and tax it expects to generate two years hence. The idea was to encourage investors to see hefty upfront investments in terms of their future payoff. It didn’t work. Firmus on Friday cancelled its $31 billion listing citing “recent market volatility and prevailing market conditions.”
Or take the news, reported by the Financial Times on Thursday, that OpenAI’s revenue was running at an annualised rate of about $50 billion in September – $20 billion less than the figure the FT and others had previously reported. The revelation is mainly a reminder that multiplying a company’s monthly revenue by 12 is a crude and unreliable way of gauging its financial health. Nevertheless, it prompted an across-the-board selloff in listed tech stocks.
These setbacks will not, on their own, prick the artificial intelligence bubble. Other data centre operators are making healthy returns on their investments in chips and energy: as Rob Cyran points out, SpaceX’s SPCX.O chief financial officer says Elon Musk’s company should earn back its initial outlay in less than a year. Meanwhile, OpenAI’s mooted trillion-dollar-plus valuation depends less on how much revenue it brought in last month than what it might be generating in two or three years’ time. Shareholders also have a habit of freaking out prematurely. Recall the brief selloff triggered by the release of Chinese startup DeepSeek’s new AI model in early 2025.
Still, investors are increasingly jittery. The yield on 10-year US government debt – the main reference point for global borrowing costs – has risen by around a percentage point since late April, changing the calculus for debt-heavy projects. Anthropic’s blockbuster IPO, which is supposed to take place before the end of November, will be a test of confidence. Only with hindsight, though, will we be able to point to the article that marked the top of the current frenzy.
CHART OF THE WEEK
When code-writing artificial intelligence bots tanked software stocks, investors dubbed it the SaaSpocalypse. Now banks are in the firing line. The arrival of digital assistants like Meta Platforms’ META.O Muse could help complacent consumers earn higher interest rates on deposits, squeezing the net interest margin (NIM) banks make on the spread with loan charges. Stephen Gandel crunched the numbers on the $3.8 trillion currently stashed in US savings accounts. Raising the rate from the current 1.9% to 4% would cost those lenders a hefty $79 billion a year in lost income. Get ready for the NIMageddon.
THE WEEK IN PODCASTS
The revelation that Manchester City benefited from sham contracts worth $1.1 billion over almost a decade has roiled English soccer. It also has far-reaching business and financial implications (See Britain’s soccer sham). Liam Proud and Jon Sindreu joined Jonathan Guilford in the Viewsroom to debate whether it’s possible to design a level playing field when the financial stakes are so high, and what the scandal means for investors rushing to buy big sports teams.
The notion that stocks and bonds follow a rational path has been widely debunked. But are idiosyncrasies becoming more visible? On The Big View I talked to Alex Edmans, the academic and author of “The Madness of Markets”, about whether the rules of investing have changed.
PARTING SHOT
Toyota rose from being a Japanese upstart to become the world’s largest carmaker. So it’s tempting to imagine whether BYD, the Chinese electric vehicle juggernaut, can follow the same route. Indeed, founder Wang Chuanfu says he aims to become the biggest manufacturer of automobiles on the planet by 2030, which would mean overtaking Toyota. Yet as Katrina Hamlin writes, the road for BYD is a lot bumpier and narrower than the one followed by its Japanese rival. The Chinese company must overcome stagnating sales, export barriers, hostile governments overseas, and cut-throat competition at home. Toyota has shown the way, but BYD will have to drive even faster to match it.
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(Editing by Liam Proud; Production by Oliver Taslic)
((For previous columns by the author, Reuters customers can click on LARSEN/peter.thal.larsen@thomsonreuters.com))