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MS | Morgan Stanley s international wealth head Jesse departs spokeswoman | By Olivia Oran Reuters The head of Morgan Stanley s N MS international wealth management team James Jesse has left the firm a spokeswoman said on Friday Colbert Narcisse who led product strategy and development in Morgan Stanley s investment solutions division will replace Jesse according to a firm memo and Morgan Stanley spokeswoman Christine Jockle Narcisse joined Morgan Stanley s investment management division in 2011 as the head of alternative investments He previously worked in senior roles at Merrill Lynch across investment banking and wealth management In his new position Narcisse will report directly to Morgan Stanley wealth heads Shelley O Connor and Andy Saperstein Jesse joined Morgan Stanley in 2000 in the bank s fixed income unit He joined wealth management in 2006 |
JPM | U S bank stock gains may stall after two year rally | By Sin ad Carew Reuters After two years of sharp gains for U S bank stocks investors betting on another big boost for 2018 may be disappointed unless loan growth accelerates or regulations slacken considerably The S P 500 bank sector index beat first quarter earnings estimates by 3 1 percent and Wall Street s 2018 earnings growth consensus for the sector climbed to 32 2 percent in early May from 28 4 percent on April 1 according to Thomson Reuters data But strength in trading revenue net interest margins and lower tax rates from legislation passed by the U S Congress in December was not enough to offset investor disappointment over the growth rate in bank lending Despite better than expected profits the S P 500 bank index traded sideways in the first few weeks of earnings season which was kicked off by JPMorgan Chase NYSE JPM on April 13 As the broader market gained in early May the sector enjoyed a five day rally to show a year to date gain of 1 2 percent a far cry from the annual gains of 20 percent in both 2016 and 2017 The S P 1500 bank index of small and mid sized banks has done slightly better than the bigger banks with a 2 percent year to date increase But it too pales beside 22 percent and 17 percent gains for 2016 and 2017 respectively Investors view the bank sector as a way to profit from rising interest rates and economic growth Some are betting on more gains in the sector hoping for improving loan demand more profit growth from rising U S interest rates and regulatory relief such as looser lending trading and capital restrictions But others are skeptical banks have much more room to rise It s hard to expect there s going to be some sort of home run for the banks said Frederick Cannon director of research at Keefe Bruyette Woods Higher rates are priced in the stocks The tax bill is in the stocks The lighter regulatory touch maybe we ve already seen the benefits of that Cannon said A potential catalyst is accelerating loan growth but that s not very likely he added ATTRACTIVE VALUATIONS Lisa Welch portfolio manager at John Hancock Regional Bank Fund in Boston however is expecting more gains for bank stocks which she believes are undervalued The S P 500 bank index trades at 11 34 times earnings estimates for the next 12 months compared with the historical mean of 12 56 Welch also expects the 2010 Dodd Frank financial reform law to be amended to raise the size of banks deemed too big to fail and thus subject to tougher oversight If this happens it could result in more bank mergers and share gains It s a sector that benefits from rising rates a growing economy and a more favorable regulatory environment that s trading at attractive valuations said Welch She also pointed to indications from bank executives during quarterly results conference calls that loan growth would pick up But Michael Cronin Equity Research Analyst at Aberdeen Standard Investments in Boston believes corporate tax cuts have actually put a damper on loan growth by increasing the cash available to companies to pay down existing debt or to invest He said a pickup in the overall pace of economic growth might be needed to accelerate lending from current levels Loans at the biggest U S banks rose to 5 07 trillion in April from 5 05 trillion in March while commercial and industrial loans rose to 1 18 trillion in April from 1 16 trillion in March according to Federal Reserve data What we ll continue to see is modest loan growth I wouldn t expect a big acceleration in the back half of 2018 Cronin said I m not sure I see a catalyst out there for it Charles Peabody partner at Portales Partners in Chatham New Jersey is optimistic that loan growth will expand if U S companies continue to increase share buybacks and capital spending L1N1SE15G But he sees any stock gains from a lending expansion as short lived because accelerated lending will increase credit costs I don t expect stocks to fall out of bed tomorrow but we re putting in a top Peabody said By the end of this year when we look back we ll see the first half of this year was the peak |
JPM | Campbell Soup CEO quits company cuts forecast to review portfolio | By Nivedita Balu and Siddharth Cavale Reuters Campbell Soup Co Chief Executive Officer Denise Morrison unexpectedly stepped down on Friday as the company issued a bleak forecast for the year and said it would embark on a review of its many brands Campbell s shares slumped 12 percent in mid afternoon trading hitting a more than five year low and putting them on track for the worst one day decline since 1999 Food companies like Campbell have been pressured as consumers increasingly move away from processed food toward healthier options The shifting consumer tastes are partly to blame for four straight years of declines at Campbell s U S soup business a period that Morrison oversaw Campbell in 2015 reorganized into three divisions creating the Campbell Fresh unit after combining what was a Packaged Fresh division with soups sold to supermarket delis But Campbell Fresh struggled resulting in a two year decline in organic sales On Friday Campbell Soup posted a loss of 393 million or 1 31 per share for the fiscal third quarter ended April 29 compared with a profit a year ago mainly due to a 619 million charge related to Campbell Fresh Morrison 64 departs the company after seven years at the helm Campbell provided no reason for her departure It named board member Keith McLoughlin 61 a former CEO of vacuum maker Electrolux as interim CEO Chief Financial Officer Anthony DiSilvestro said the company would conduct a critical review of its portfolio over several months Everything is on the table There are no sacred cows he said on a conference call with analysts Campbell expects to discuss the review outcome when it reports fourth quarter results in late August DiSilvestro said in a statement The company has not yet retained financial advisers to assist with the review according to a person familiar with the matter JPMorgan NYSE JPM analyst Ken Goldman said Campbell Fresh which sells baby carrots and high end juices could be a top priority The unit had sales of 251 million in the third quarter We are all disappointed with the results of C Fresh and we acknowledge that they are unacceptable DiSilvestro said Early last month the company announced the Campbell Fresh business would be put within a new accelerator unit focused on driving long term growth and headed by Ana Dominguez Dominguez who was previously president of Campbell Canada is expected to continue in the new position the person familiar with the matter said In April the company also elevated Luca Mignini the head of the unit that makes Goldfish Crackers and Pepperidge Farm cookies to chief operating officer underscoring its shifting emphasis from soups to snacks and potentially putting him in line for the top job DiSilvestro blamed tariffs as contributing to Campbell s rising costs President Donald Trump announced sweeping tariffs on steel and aluminum to help the domestic steel industry on March 20 nL1N1S80QP The issue is primarily one of cost inflation and we re seeing and expecting an acceleration on the rate of inflation across a number of ingredient and packaging items DiSilvestro said For example we expect double digit increases on steel and aluminum A lot of that is driven or all of it s driven by the impact of anticipated tariffs Excluding one time items the company earned 70 cents per share 10 cents above analysts average estimate according to Thomson Reuters I B E S Net sales rose 15 percent to 2 13 billion Campbell said the acquisition of snacks maker Snyder s Lance which it closed just eight weeks ago would reduce adjusted earnings in fiscal year 2019
The company expects earnings per share to fall 5 percent to 6 percent compared with its earlier forecast for a rise of 2 percent to 4 percent The prior forecast did not include the impact from Snyder s Lance |
JPM | Sanctions hit Vekselberg repays 1 billion Swiss franc loans to Western banks | By Brenna Hughes Neghaiwi and Polina Ivanova ZURICH MOSCOW Reuters Sanctions hit Russian oligarch Viktor Vekselberg and his Renova Group have repaid loans amounting to over one billion Swiss francs 1 billion to banks including JPMorgan NYSE JPM Credit Suisse SIX CSGN and UBS Renova and a source familiar with the matter told Reuters on Saturday Vekselberg was placed under sanctions in a crackdown by the United States on President Vladimir Putin s inner circle as retaliation for alleged Russian interference in the 2016 U S election The banks had until June 5 to resolve the issue when U S sanctions come into effect The credit issue with the banks is finally resolved the source close to the matter said adding certain finer details remained under discussion The banks have received the money There had been worries over the possibility the loans which were taken out using large stakes in Swiss industrial groups Schmolz BickenbachS OC Oerlikon and Sulzer as collateral could lead to a broad selloff of the shares if a solution wasn t found by June 5 Were the loans not repaid the banks could declare an enforcement event allowing them to sell the shares held as collateral In the case of a mandatory prepayment event the banks would be allowed to conduct a managed sale SWISS FIRMS IN CROSSFIRE Liwet Holding the Swiss investment vehicle of Vekselberg s Renova Holding used to invest in the Swiss companies took out a syndicated loan in December 2017 for 720 million Swiss francs from banks Natixis Credit Suisse ING Deutsche Bank DE DBKGn JP Morgan and UBS documents from the Swiss Takeover Board show Another Swiss based investment vehicle for Renova Tiwel Holding took out a separate 350 million franc credit from the same banks minus UBS in July 2016 according to a separate Takeover Board filing Sources however placed the size of the repaid credit at 310 million francs While such deals are generally confidential the Swiss Takeover Board had published details of the financing agreements in documents relieving creditors from obligations to make mandatory tender offers for the respective firms 25 51 percent of voting rights in Schmolz Bickenbach and 41 35 percent of voting rights in OC Oerlikon were named as collateral on the 750 million franc loan A 21 29 percent stake in Sulzer was named as primary collateral against the 350 million franc loan while a 42 14 percent stake owed as principal collateral on a separate Sberbank loan was named as secondary collateral It is unclear how these conditions were affected by Vekselberg s stake reduction in the firm The firms in which Vekselberg holds a stake have experienced a variety of fallouts since Washington announced impending Russian sanctions including a brief trading halt and business disruption at previously Renova majority owned Sulzer board changes at Schmolz Bickenbach and inquiries from financiers Vekselberg has cut his holdings in the firms RUSSIAN ASSISTANCE In early May Renova received a credit line from Russia s Promsvyazbank to support the business after it was hit by U S sanctions Russia s finance ministry said Swiss paper Schweiz am Wochenende earlier on Saturday reported Russian banks had agreed to take on Liwet s 720 million franc loan
The Renova spokesman said the group repaid loans from its own sources |
JPM | Don t neglect to pay the middleman How Shell and Eni ended up on trial | By Libby George and Shadia Nasralla LONDON Reuters Seven years ago two middlemen launched civil lawsuits to seek payment for helping arrange a 1 3 billion oil deal in Nigeria Now nine current and former executives or contractors from Italy s Eni MI ENI and British Dutch giant Royal Dutch Shell L RDSa including ENI Chief Executive Claudio Descalzi have been accused by Italian prosecutors of paying bribes to secure the license to explore a large offshore oilfield in 2011 If found guilty the individuals on trial face possible jail terms for bribery All deny wrongdoing as do Shell and Eni The criminal trial will proceed in Milan on June 20 after a short initial hearing on May 14 Some of the key issues in the trial came to light during the two separate civil suits filed by a Nigerian Emeka Obi and a former Russian diplomat Ednan Agaev a Reuters review of court filings shows Both men said they were owed millions of dollars by a Nigerian company Malabu Oil and Gas for arranging meetings with Shell and Eni The judge in Obi s case upheld evidence that Obi arranged meetings between former Nigerian oil minister Dan Etete who was convicted of money laundering in an unrelated case in France in 2007 and representatives of Eni and that he negotiated on Etete s behalf with Shell In addition documents produced in Agaev s case showed that when Eni and Shell paid for the license they deposited more than 1 billion into a Nigerian government escrow account in London but most of the money later ended up with Malabu which was controlled by Etete the judge said The judges found that in a conflict of interests Etete had a stake in Malabu and was also oil minister when the Nigerian government awarded the company the license to explore the field in 1998 a decision that was reversed in 2001 reinstated in 2006 and later challenged by Shell These details helped Italian prosecutors put together their case industry insiders say Etete denies charges of bribery for channeling money from the deal to Nigerian politicians He and his lawyers did not respond to requests for comment by phone and email Shell said by email that if improper payments are shown to have taken place they were not made with Shell s knowledge authorization or on its behalf It said it believes the judges will find there is no case against Shell or its ex employees Eni said by email that it could not comment on the case It has previously said it concluded the deal with the Nigerian government without the involvement of intermediaries and that it had no commercial agreement with Malabu LEGAL BATTLES Eni and Shell said they were unable to confirm who owned Malabu when they acquired Oil Prospecting Licence OPL 245 But in her decision on Obi s civil case in London in July 2013 Lady Justice Elizabeth Gloster upheld Etete s control of Malabu court records show Basing her decision on testimony and documents she said Etete had a stake in Malabu when it was awarded OPL 245 in 1998 and had been the principal beneficial owner since later that year She said Obi had meetings with Shell representatives before the OPL 245 deal though she did not say how many and that he frequently met officials from Eni On one occasion Etete Descalzi Obi and Agaev sat together in a Milan restaurant at a dinner for the the main personalities to meet and assess the seriousness of their intentions she said She said Obi should be awarded at least 100 million for his work as a dealmaker the court records show Agaev launched arbitration to seek a 65 million fee from Malabu for his work as a go between and eventually reached an out of court settlement details of which were not disclosed While the arbitration was under way he asked a court in New York to freeze a Nigerian government account in London that held 74 million most of it due to be transferred to Malabu The court said it had no authority to freeze the money but reviewed documents showing Eni and Shell had deposited just over 1 billion into the account as payment for OPL 245 in May 2011 A further 208 million was released from escrow as a signature bonus for the government court records show Around 800 million was transferred to Malabu in August 2011 and the rest was frozen pending the civil cases Agaev declined to comment about his civil case or the Milan trial Obi could not be reached for comment and attorneys who have represented him declined to pass on his contact details Eni and Shell said their payments were above board as they went directly to the Nigerian government JP Morgan Chase NYSE JPM which ran the escrow account has denied negligence |
C | Ruble Fluctuates as Russia Awaits Fresh U S Sanctions on Syria | Bloomberg The ruble swung between gains and losses as investors braced for the announcement of new U S sanctions aimed at punishing the Kremlin for its backing of Syrian leader Bashar al Assad
Traders are reassessing their options after the harshest U S sanctions to data sent the ruble tumbling the most since 2015 last week While some investors are pointing to rising oil prices as a reason to buy assets of the world s biggest energy producer others warn that Russia s deteriorating relations with the West create too much uncertainty about how far U S penalties will go
The Russian financial market will remain extremely nervous and volatile with a short term focus on the scale and rhetoric of the new U S sanctions analysts at Societe Generale PA SOGN SA s Russian unit including Yury Tulinov said in a research note
UN Ambassador Nikki Haley speaking Sunday on CBS s Face the Nation said U S Treasury Secretary Steven Mnuchin will announce new sanctions against Russia Monday that go directly to any sort of companies that were dealing with equipment related to Syrian leader Bashar al Assad and his chemical weapons
The Russian currency climbed as much as 0 7 percent to 61 637 versus the dollar on Monday after earlier falling as much as 0 9 percent The yield on local currency bonds maturing in 10 years was steady at 7 51 percent Bullish bets on the ruble dropped the most since August last week according to CFTC data
Konstantin Vyshkovsky the head of the finance ministry s debt department said in an interview that Russia plans to resume its weekly bond auctions this week after panic selling caused it to cancel last week s offering for the first time since 2015
Some of the market panic dissipated late last week when U S Treasury Secretary Steven Mnuchin said he remains opposed to the so called nuclear option of sanctioning Russian sovereign debt
The mood is more optimistic today than last week said Denis Korshilov head of fixed income currency and commodities at Citigroup Inc NYSE C in Moscow The market participants think the new U S sanctions will be targeting particular companies as opposed to the entire bond market |
C | Citigroup Seeking Bitcoin Pros to Staff up AML Team | Citigroup NYSE C is looking for professionals with a background in Bitcoin to beef up their anti money laundering team
The financial services company has posted looking for a vice president and senior vice president for its anti money laundering division Among the required qualifications for the posts Citigroup lists knowledge of cryptocurrency and bitcoin monitoring in addition a Bitcoin Professional Certification BPC has been listed as a plus for both positions
BPC appears to be a rather obscure certification searches on LinkedIn only yield two results both of which are postings by Citigroup and the qualification is only offered by a small handful of organizations among them the Cryptocurrency Certification Consortium which grants Bitcoin certification to individuals who complete a two year course and take a 20 minute test
Crypto related risks are not the only thing on Citigroup s agenda As per the job ad the senior vice president will be required to support the Global Head of AML Monitoring Risk Management Emerging Risk by identifying analyzing and implementing AML transaction monitoring risk programs related to developments in cybersecurity cryptocurrency and emerging payment technologies products and methods
However while monitoring and deterring crypto related risks is just one part of the overall job responsibilities according to DASH Core CEO the requirement for a Bitcoin certification coupled with the intentionally vague tone of the ads suggests that Citigroup is either identifying risk to eliminate certain profiles or preparing to identify new opportunities in the crypto space at a later point
According to past statements Citigroup appears to have adopted a markedly negative stance on cryptocurrencies Earlier this year Citi was one of several banks that from buying cryptocurrencies with their credit cards In addition last year Citigroup CEO Michael Corbat stated that the company was in Bitcoin
However despite their apparent lack of interest in cryptocurrencies Citigroup is one among a host of banks and financial institutions which are deeply interested in blockchain technology Last year a CB Insights report that Citigroup was among the biggest investors in blockchain related companies and projects |
C | Bitcoin Rises Crypto Funds Report Losses in Q1 | Investing com Bitcoin and other virtual coins were higher on Thursday while cryptocurrency hedge funds reported massive losses in the first quarter of 2018
Bitcoin was trading at 8 250 5 rising 1 77 as of 9 00 AM ET 1 00GMT on the Bitfinex exchange
While Bitcoin was higher it was still far from its peak of 20 000 in December Hedge funds that jumped on the crypto craze have reported massive losses as the virtual currencies have fallen in price and popularity
Data provider Hedge Fund Research said its index tracking performance of fund managers investing in digital currencies posted double digit losses in the first quarter of the year
The HFR Blockchain Composite Index slumped 46 while the HFR Cryptocurrency Index lost 45 34 during the same period Meanwhile BarclayHedge s Cryptocurrency Traders Index fell 43 1 year to date
Folks have their opinions but no one really knows if it s a bubble or a correction Sol Waksman founder and president of BarclayHedge said in a press release
In other news Citigroup NYSE C is looking for bitcoin experts to join its anti money laundering group According to an ad on LinkedIn NYSE LNKD the financial services giant is looking for a vice president and senior vice president to explore the risks associated with money laundering in cryptocurrency markets
The company previously banned its clients from using its credit cards for cryptocurrency related purchases Bitcoin and other virtual currencies are often associated with money laundering because the service can often be used anonymously
Other virtual currencies were higher with rival Ethereum the world s second largest cryptocurrency by market cap rising 4 89 to 543 36 on the Bitfinex exchange Ripple the third largest virtual currency increased 4 62 to 0 72219 while Litecoin was at 141 24 an increase of 2 87 |
C | HSBC Gets Warning From Bank Of England Over Conduct Issues | HSBC Holdings LON HSBA plc NYSE C recently received a warning for the second time since the last year from the Bank of England for not being able to handle non financial risks properly The news was first reported by Bloomberg citing people with knowledge of the matter The non financial risks mentioned include financial crime staff misconduct compliance breaches and issues related to the bank s culture and not risks related to the firm s credit quality Per people familiar with the matter HSBC s top investment banker Samir Assaf informed executives on a conference call this week that he considers the Prudential LON PRU Regulation Authority s PRA warning as an emergency which needs immediate attention Assaf added that the bank s global banking and markets division would hold a summit of top executives this month to discuss the issue and come up with a solution Per a confidential survey conducted by the Banking Standards Board in the U K this year HSBC ranked last when compared with seven other investment banks in terms of maintaining appropriate work culture and ethics Notably HSBC s former CEO John Flint who stepped down as the CEO in August 2019 was working to improve the bank s culture with an initiative called the healthiest human system However now as Noel Quinn is the firm s interim CEO Flint s initiatives are not being given primary importance In fact Quinn is more interested in reshaping the business through aggressive cost cutting efforts Apart from HSBC other companies like Deutsche Bank NYSE DB Nomura Holdings Inc NYSE NMR Citigroup NYSE C and some more have also been reducing workforce amid geopolitical tensions like the US China trade war While cost cutting remains a priority for HSBC it has been adding staff in some locations In order to drive financials the company s primary focus is to strengthen performance by building operations in Asia including Hong Kong and China It aims to deliver high single digit revenue growth annually from the region Moreover in the U K the bank aims at increasing mortgage market share along with growing commercial client base Also the bank announced its plan to open 50 new retail branches across the United States While global expansion should be given equal importance HSBC s primary focus should be to improve its conduct In 2012 it had to pay 1 9 billion to settle a U S investigation into breaches of economic sanctions and helping Mexico based drug cartels launder money Shares of HSBC have lost 6 5 so far this year against the s growth of 6 2 Currently the company carries a Zacks Rank 3 Hold You can see Today s Best Stocks from ZacksWould you like to see the updated picks from our best market beating strategies From 2017 through 2018 while the S P 500 gained 15 8 five of our screens returned 38 0 61 3 61 6 68 1 and 98 3 This outperformance has not just been a recent phenomenon From 2000 2018 while the S P averaged 4 8 per year our top strategies averaged up to 56 2 per year |
C | Why Is Citigroup C Up 6 4 Since Last Earnings Report | A month has gone by since the last earnings report for Citigroup C Shares have added about 6 4 in that time frame outperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is Citigroup due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important drivers Citigroup s Q3 Earnings Top Estimates Revenues Up Y YCitigroup delivered a positive earnings surprise of 1 in third quarter 2019 backed by improved investment banking performance Adjusted earnings per share of 1 98 outpaced the Zacks Consensus Estimate of 1 96 Also earnings climbed 20 year over year Including one time gain net income was 4 9 billion or 2 07 per share compared with 4 6 billion or 1 73 per share recorded in the prior year quarter Citigroup displayed revenue strength riding on consumer banking during the reported quarter Further loan and deposit growth was a positive Also investment banking revenues jumped on strong advisory business and higher debt underwriting partly offset by lower equity underwriting fees However lower equity market revenues amid a challenging trading environment reflect reduced volumes and client activity levels Citigroup s costs of credit for the September ended quarter were up 6 year over year to 2 09 billion This upswing largely underlines elevated net credit losses of 1 9 billion and a credit reserve build of 158 million and provision for benefits and claims of 17 million Revenues Increase Expenses EscalateRevenues were up 1 year over year to 18 6 billion in the third quarter The reported figure matched with the Zacks Consensus Estimate Higher revenues from Institutional Clients Group ICG mainly led to the upside Global Consumer Banking GCB revenues increased marginally year over year to 8 7 billion Higher revenues in North and Asia GCB led to this upsurge Notably rise in card revenues was partially offset by lower Retail Banking revenues In the ICG segment revenues came in at 9 5 billion in the quarter up 3 year over year Investment banking and treasury trade solutions supported the upsurge whereas corporate lending equity market revenues and fixed income market revenues fell Corporate Other revenues came in at 402 million down 18 from the prior year quarter This fall stemmed from the winding down of legacy assets Operating expenses at Citigroup rose 1 year over year to 10 5 billion Volume driven growth and continued investments were partially offset by efficiency savings and the winding down of legacy assets Strong Balance SheetAt the end of the quarter Citigroup s end of period assets were 2 02 trillion up 1 sequentially The company s loans were almost flat sequentially at 692 billion Deposits were up 4 from the prior quarter to 1 09 trillion Credit Quality ImprovesTotal non accrual assets decreased 6 year over year to 3 8 billion The company s consumer non accrual loans declined 8 to 2 2 billion Furthermore corporate non accrual loans of 1 5 billion slipped 1 Citigroup s total allowance for loan losses was 12 5 billion at the end of the quarter or 1 82 of total loans compared with 12 3 billion or 1 84 recorded a year ago Solid Capital PositionAt the end of the July September quarter Citigroup s Common Equity Tier 1 Capital ratio was 11 6 down from the prior year quarter s 11 7 The company s supplementary leverage ratio for the quarter came in at 6 3 down from 6 5 As of Sep 30 2019 book value per share was 81 02 up 11 year over year and tangible book value per share was 69 03 up 12 Capital DeploymentDuring the third quarter the company bought back about 76 million of common stock and returned around 6 3 billion to common shareholders as common stock repurchases and dividends OutlookIn ICG markets and investment banking revenues will likely reflect the overall environment though a challenging trading environment is not expected as witnessed in fourth quarter 2018 In accrual businesses revenues are likely to benefit from continued strong client engagement and higher volumes However these revenues are expected to be partly offset by spread compression given the lower interest rate environment In consumer continued year over year revenue growth is expected in all regions driven by continued loan and deposit growth partially offset by the impact of lower deposit spreads In 2019 management expects to record modest year over year revenue growth attributed to continued growth in net interest revenue 2 3 and more stable trends in non interest revenues For the fourth quarter of 2019 management projects a pre tax loss of around 100 150 million in Corporate Other segment with continued investment in infrastructure and controls For U S Branded Cards NCL rate is anticipated in the range of 300 basis points to 325 basis points for 2019 NCL rate for Retail Services are expected in the range of 500 basis points to 525 basis points In addition on the expense side management noted that efficiency saving significantly outpaced incremental investments in the first half of 2019 realizing a net benefit to expenses of roughly 300 million This amount is likely to increase to around 500 600 million of net incremental savings in 2019 along with an additional 500 600 million of net incremental benefits in 2020 These net savings should offset volume driven expenses on ongoing investments in the business Moreover positive operating leverage the bank as a whole and for consumer and institutional businesses is anticipated in 2019 For total Citigroup expenses are expected to decline sequentially cost of credit to continue to grow modestly and solid year over year pre tax earnings growth is projected Management targets efficiency ratio in the low 50 range In addition the company s primary goal is to sustainably improve the return on shareholders equity from the roughly 11 achieved in 2018 to about 12 in the current year and more than 13 5 in 2020 Management expects a tax rate of around 22 excluding any discrete tax items During the second quarter on approval of Capital Plan 2019 from the Federal Reserve Citigroup is likely to meet the goal set at Investor Day to return at least 60 billion in capital over 3 CCAR cycles
How Have Estimates Been Moving Since Then
It turns out fresh estimates have trended downward during the past month
VGM Scores
Currently Citigroup has a poor Growth Score of F however its Momentum Score is doing a lot better with a C Charting a somewhat similar path the stock was allocated a grade of B on the value side putting it in the top 40 for this investment strategy
Overall the stock has an aggregate VGM Score of D If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift Notably Citigroup has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
MPC | U S crude breaks below 40 as oil ends down 4 percent on glut | By Barani Krishnan NEW YORK Reuters U S crude tumbled below 40 per barrel on Monday for the first time since April as oil prices settled down nearly 4 percent on heightened worries of a crude glut despite peak summer fuel demand A near 15 percent slump in U S crude prices in July the worst monthly loss in a year also triggered liquidation as trading began for August Monday s slide in crude prices also came after Marathon Petroleum NYSE MPC unexpectedly shut its lone crude unit and an associated unit at its 212 000 barrel per day refinery in Robinson Illinois at the weekend according to a source The cause and duration of the outage were not clear It s stop loss technical selling combined with sheer liquidation by those fearing we ll soon be swimming in oil again said Phil Davis trader at PSW Investments in San Diego California We ve had crude builds during the summer when we were supposed to be having runaway draws from record driving U S West Texas intermediate WTI crude plumbed 39 86 its lowest since April 20 before settling at 40 06 down 1 54 or 3 7 percent Brent crude closed down 1 39 or 3 2 percent at 42 14 a barrel after a session low of 41 87 Not all oil statistics are bearish A Reuters poll on Monday showed U S crude stockpiles may have fallen last week for the first time in 10 weeks Still market focus was on reports such as the Reuters survey on Friday which showed that output from the Organization of the Petroleum Exporting Countries likely rose in July to its highest in recent history as Saudi Arabia pumped at near optimum level Iraq raised production and Nigeria boosted crude exports Other data from last week showed the United States added 44 oil drilling rigs in July the most for a month in two years intensifying concerns that global production could again get to unmanageable levels like in 2014 2015 Crude prices remain nearly 55 percent above 12 year lows of 26 to 27 hit in the first quarter But WTI and Brent have also slipped into bear market territory since last week after losing more than 20 percent from the 2016 highs above 50 that were hit in June Hedge funds slashed their positive bets on U S crude to a five month low during the week to July 26 while holding a record net short or bearish position on gasoline data showed on Friday Barclays LON BARC noted that Brent averaged 46 50 a barrel so far into the third quarter and could fall further With the macroeconomic picture worsening and Saudi Arabia unlikely to exhibit much restraint as Iran seeks incremental market share refineries are going to find themselves in the line of fire the British bank said in a research note
Iran s oil minister concurred the market was oversupplied but said balance between supply and demand will be restored Iranian state television reported |
MPC | Icahn urges EPA to change renewable fuel credit market | Reuters Billionaire investor Carl Icahn has called on the top U S environmental regulator to make changes to a market for renewable fuel credits or else risk the mother of all short squeezes that could bankrupt refiners In a letter to Environmental Protection Agency administrators seen by Reuters on Monday Icahn said a number of refiners could go bankrupt if the playing field is not leveled to stop disfavoring independent refiners such as CVR Energy Inc N CVI in which Icahn owns an 82 percent stake Icahn expressed worries about the market for renewable identification number RIN credits which the EPA calls the currency of a renewable fuel standard program designed to reduce reliance on imported oil and the emission of greenhouse gases The RIN market is the quintessential example of a rigged market where large gas station chains big oil companies and large speculators are assured to make windfall profits at the expense of small and midsized independent refineries which have been designated the obligated parties to deliver RINs Icahn wrote As a result the RIN market has become the mother of all short squeezes he added It is not too late to fix this problem if the EPA acts quickly Spokespeople for the EPA did not immediately respond to requests for comment after business hours on Monday Icahn s August 9 letter was previously reported by Bloomberg News Oil refiners and importers are required to prove compliance with the renewable fuel mandate by either blending biofuels or buying RIN credits from companies that are in compliance But the cost of the credits has risen this year as supply fell while the EPA set more ambitious targets for blending This can hurt refiners that do not have blending or retail outlets and need to buy RINs In the first half of 2016 10 refinery owners including Marathon Petroleum Corp N MPC spent at least 1 1 billion buying RINs putting them on track to far exceed the record 1 3 billion they spent in 2013
RINs continue to be an egregious tax on our business and have become our single largest operating expense exceeding labor maintenance and energy costs CVR Refining LP N CVRR Chief Executive Jack Lipinski said last month |
MPC | Top U S investors take profits hold out hopes on energy in second quarter | By Sam Forgione NEW YORK Reuters Top U S investors such as Berkshire Hathaway NYSE BRKa and Paulson Co slashed some energy investments in the second quarter amid strong gains in crude and natural gas prices while also appearing optimistic by maintaining or placing new bets on the sector regulatory filings showed on Friday and Monday Warren Buffett s conglomerate Berkshire Hathaway cut its stake in oil exploration and production E P refining and marketing company Suncor Energy by 7 7 million shares to 22 3 million shares over the quarter filings with the Securities and Exchange Commission filing showed The company s stock price was little changed at the end of the quarter Buffett s firm maintained its stake in pipeline company Kinder Morgan NYSE KMI of 26 5 million shares however amid a nearly 5 percent gain in the company s stock price Berkshire also increased its stake in U S refining company Phillips 66 NYSE PSX by 3 2 million shares to 78 8 million shares despite a loss of 8 4 percent in the company s share price U S crude prices rose 26 percent over the quarter to 48 33 a barrel after topping 51 a barrel Prices rallied after major producers including Saudi Arabia and Russia began talking of an output freeze to ease a supply glut Although that cooperation never came about crude prices were later supported by unexpected production outages in Canada Nigeria and Libya John Paulson s hedge fund firm Paulson Co sold its entire stake of 3 2 million shares in oil exploration and production E P company Whiting Petroleum Corp in the April June quarter That liquidation came amid a 16 percent run up in the company s stock price over the quarter The firm trimmed its bets on E P companies Cobalt International Energy and Oasis Petroleum but still kept the stakes sizable at 39 1 million shares and 5 3 million shares respectively The firm largely held on to the Cobalt bet despite a 55 percent drop over the quarter while Oasis gained more than 28 percent These fund SEC disclosures are backward looking and come out 45 days after the end of each quarter Still the filings offer a glimpse into what hedge fund managers saw as investment opportunities While Paulson sold Daniel Loeb s Third Point hedge fund took a new stake in Whiting Petroleum of 8 2 million shares Barry Rosenstein s Jana Partners also showed a bullish tilt overall and jumped into Marathon Petroleum Corp NYSE MPC with a stake of 2 7 million shares Leon Cooperman s Omega Advisors took modest positions in E P companies Antero Resources Consol Energy and Pioneer Natural Resources The hedge fund cut a stake in Targa Resources Corp by 1 6 million shares however to 1 1 million shares even as the natural gas pipeline company s stock price rose more than 40 percent While some funds showed optimism David Tepper s Appaloosa Management cut stakes in natural gas master limited partnerships Williams Partners LP and Energy Transfer Partners along with Kinder Morgan It exited stakes in E P companies Southwestern Energy Co Range Resources Corp NYSE RRC and Cabot Oil and Gas Corp as the companies shares rose about 56 percent 33 percent and 13 percent respectively David Einhorn s Greenlight Capital also appeared bearish and cut his firm s bet on Consol Energy by 7 6 million shares to 22 million shares It also exited an 887 428 share bet on oilfield services company Oil States International
Greenlight also soured on renewable energy and sold its entire stake in SunEdison of about 21 million shares |
MS | Japan November exports beat expectations as yen tumbles volumes rise | By Stanley White TOKYO Reuters Japan s export performance improved strongly in November as rapid decline in the yen and a recovery in overseas demand boosted shipments from the trade sector handily beating economists expectations Ministry of Finance MOF data showed on Monday that exports fell 0 4 percent in the year to November That compares with the 2 0 percent annual decline expected by economists in a Reuters poll and follows a 10 3 percent decline in the year to October The value of exports to China Japan s largest trading partner rose an annual 4 4 percent the first increase in nine months due to higher shipments of car parts In terms of volume exports in November rose 7 4 percent from a year ago more than a 1 4 percent annual decline in the previous month in a sign that external demand is picking up The data is likely to offer encouragement to the Bank of Japan which is leaning toward upgrading its economic outlook at a meeting ending Dec 20 because officials are becoming increasingly confident that global trade is emerging from the doldrums four sources said The weak yen helped a lot but volumes show there is a genuine recovery in exports said Shuji Tonouchi a senior market economist at Mitsubishi UFJ Morgan Stanley NYSE MS Securities There could be a slight moderation in exports after the year end shopping season However the BOJ will view this data in a positive light Exports fell in November at a slower pace because the value of car and steel shipments declined less than the previous month the data showed The yen tumbled by 8 4 percent in November as expectations for U S interest rate hikes sparked a rally in the dollar which pushed up the yen value of Japan s exports The yen has fallen further this month and is now within distance of a 10 month low Exports to the United States in terms of value fell 1 8 percent year on year versus an 11 2 percent annual decline in October An increase in car exports helped slow the overall decline in U S bound exports the data showed Imports fell an annual 8 8 percent versus the median estimate of a 12 6 percent fall as imports of pharmaceuticals oil and liquefied natural gas fell
The trade balance came to a surplus 152 5 billion yen 1 29 billion versus the median estimate for a 227 4 billion yen surplus |
JPM | U S consumer spending picking up gasoline prices a threat | By Lucia Mutikani WASHINGTON Reuters U S retail sales increased marginally in April as rising gasoline prices cut into discretionary spending but consumer spending appeared on track to accelerate after slowing sharply in the first quarter The economic outlook got a boost from other data on Tuesday showing factory activity regaining momentum in May on strong orders growth While manufacturers reported paying more for raw materials they were absorbing much of the higher costs a sign inflation will probably continue to increase at a moderate pace A better pace of real consumer spending growth is taking hold in the second quarter said Scott Anderson chief economist at Bank of the West in San Francisco However rising fuel costs may be sapping gains in other spending categories The Commerce Department said retail sales rose 0 3 percent last month after surging 0 8 percent in March April s increase was in line with economists expectations Retail sales in April advanced 4 7 percent from a year ago Excluding automobiles gasoline building materials and food services retail sales rose 0 4 percent last month after increasing 0 5 percent in March These so called core retail sales correspond most closely with the consumer spending component of gross domestic product Economists estimated that consumer spending which accounts for more than two thirds of U S economic activity was growing at a 2 5 percent annualized rate early in the second quarter Consumer spending grew at a 1 1 percent pace in the January March quarter which was the slowest in nearly five years The economy expanded at a 2 3 percent rate in the first quarter Growth is expected to accelerate to a 3 0 percent pace in the April June period In a separate report the New York Federal Reserve said its Empire State current business conditions index rebounded four points to a reading of 20 1 in May The rise recouped the bulk of March s decline in the index The survey s prices paid index raced to its highest level since 2011 But a measure of prices received by manufacturers rose marginally Stronger consumer spending together with steadily rising inflation support economists expectations that the Fed will raise interest rates next month The U S central bank lifted borrowing costs in March and has forecast at least two more rate hikes for this year The U S dollar rallied to a five month high against a basket of currencies after the data Prices for U S Treasuries fell with the yield on the benchmark 10 year note rising to a seven year high Stocks on Wall Street were weaker GASOLINE PRICES A BURDEN Economists blamed the slowdown in consumer spending in the first quarter on delays in processing tax refunds They also said clean up efforts in the wake of back to back hurricanes in late 2017 had pulled forward spending into the fourth quarter Consumer spending is being supported by rising wages which are being driven by a robust labor market While lower income taxes could also provide a boost rising gasoline prices could blunt some of the stimulus Prices at the pump have increased about 31 cents to near 3 00 per gallon since January according to data from the U S Energy Information Administration Looking ahead the consumer now faces the added burden of higher gasoline prices said Michael Feroli an economist at JPMorgan NYSE JPM in New York With crude oil prices rising after President Donald Trump s decision last week to pull the United States out of an international nuclear deal with Iran and vow to put tough sanctions on Tehran gasoline prices are likely to remain elevated In April auto sales edged up 0 1 percent after accelerating 2 1 percent in March Receipts at service stations jumped 0 8 percent reflecting higher gasoline prices following a 0 3 percent gain in March Sales at restaurants and bars fell 0 3 percent the largest drop since February 2017 Americans also cut back on spending on hobbies Receipts at sporting goods and hobby stores dipped 0 1 percent last month matching March s drop Consumers also scaled back spending on personal grooming with sales at health and personal care stores falling 0 4 percent last month But households increased spending at furniture building material and clothing stores last month
They also boosted online purchases but sales at electronics and appliance stores fell |
JPM | JPMorgan Chase declares 0 56 dividend | JPMorgan Chase NYSE JPM declares 0 56 share quarterly dividend in line with previous Forward yield 1 98 Payable July 31 for shareholders of record July 6 ex div July 5 Now read |
JPM | Italian stocks slide dollar powers on to new 2018 high | By Tommy Wilkes LONDON Reuters Italian stocks slid on Wednesday after reports that the two parties seeking to form Italy s next government might seek debt forgiveness while the dollar ignored a pull back in U S bond yields and rallied to a new 2018 high Asian markets had earlier dipped after Pyongyang abruptly called off talks with Seoul throwing a U S North Korean summit into doubt but that failed to rattle European stocks Markets were also unfazed by Italian politics and the bigger focus was a rocketing dollar and rising U S borrowing costs which have spooked investors in recent weeks and intensified concern about damage to global demand squeezing emerging markets The dollar resumed its rally in European trading and reached a high for the year DXY That gain left the euro below 1 18 EUR its lowest since Dec 19 However with 10 year Treasury yields slipping back below 7 year highs reached earlier this week most European stock markets traded close to flat The exception was Italy Reports suggested the 5 Star and League parties trying to form a government after inconclusive March 4 elections had written a draft coalition deal asking for debt forgiveness from the European Central Bank ECB frightening investors in the euro zone s third largest economy The proposal is surreal Pretending the unilateral cancellation of 250 billion euros of debt bought by the ECB as part of the QE program would be absurd Anthilia Capital Partners fund manager Giuseppe Sersale said Even if unfeasible the tone of the debate bolsters expectations there will be a stormy relationship with Europe and a further relaxation of financial discipline he said Italian stocks fell more than 1 5 percent FTMIB while the pan European STOXX 600 STOXX slipped 0 12 percent Euro zone banks slid an even bigger 1 71 percent SX7E extending losses despite a League spokesman saying the request for cancellation of the debt was not in the official draft of the government program The difference in Italian 10 year government borrowing costs IT10YT RR over German DE10YT RR rose sharply to the highest since late March The MSCI world equity index MIWD00000PUS which tracks shares in 47 countries slipped into negative territory U S stock futures traded down 1 25 percent ESc1 TREASURY YIELDS PAUSE North Korea s cancellation of a June 12 summit in Singapore added to geopolitical worries for financial markets given it could see tensions on the Korean peninsula flare again and damage U S China efforts to resolve an ongoing trade dispute This will weigh on the Korean reconstruction beneficiaries that have had a strong run on peace and even reunification hopes recently JPMorgan NYSE JPM analysts wrote in a note The broader risk for the region if talks do break down is that Trump no longer feels the need to keep China on side and could escalate trade tensions again Elsewhere the 10 year yield US10YT RR slipped to 3 057 percent Strong U S retail sales and factory data on Tuesday pushed the U S 10 year yield as high as 3 095 percent its highest since July 2011 raising worries about higher borrowing costs for companies worldwide The U S currency has enjoyed a blistering rally in recent weeks as investors focus on the Federal Reserve raising interest rates while central banks elsewhere push back policy tightening Rising U S borrowing costs and a stronger dollar hit hardest in emerging markets where investors are withdrawing money particularly from countries with large deficits and big dollar funding needs Argentina and Turkey have been at the center of the sell off their weakness compounded by political frictions The Turkish lira had been testing record lows against both the dollar and the euro but clawed higher after officials from the central bank said they would be prepared to act to halt the rout President Tayyip Erdogan s comments that he plans to take greater control of the economy have hammered the lira this week The Indonesian rupiah hit a 2 1 2 year low while the Malaysian ringgit touched a four month low overnight In commodities markets gold rebounded slightly after hitting a 4 1 2 month low the previous day on a strong dollar Crude oil prices LCOc1 CLc1 declined but remained near recent highs amid concerns that U S sanctions on Iran may restrict crude exports from a major producer
For Reuters Live Markets blog on European and UK stock markets open a news window on Reuters Eikon by pressing F9 and type in Live Markets in the search bar |
JPM | Enterprise Ethereum Alliance Releases Client Specifications To Facilitate Interoperability | The Enterprise Ethereum Alliance EEA has released the Enterprise Ethereum Client Specification 1 0 today May 16 that will enable interoperability for companies that use Ethereum blockchain based solutions
The EEA which was formed in March 2017 by Santander MC SAN JPMorgan NYSE JPM and a variety of other members now numbers 500 enterprise members It focuses on improving the privacy scalability and security of Ethereum blockchain applications |
JPM | Susquehanna upgrades AMD shares 3 3 | Susquehanna upgrades AMD NASDAQ AMD from Negative to Neutral AMD shares are up 3 3 to 12 87 Previously JPMorgan NYSE JPM Buy AMD s June 13 strike call option May 14 Now read |
JPM | Bond Yields at 3 5 to Spur Stock Exit Credit Suisse Says | Bloomberg With the yield on U S 10 year Treasuries surging to their highest level in nearly seven years investors are starting to wonder what will be the threshold triggering a big rotation out of equities and into bonds Credit Suisse SIX CSGN Group AG says we re getting dangerously close to the level yet yields could stall for a while
This year s rise in the yield trading at 3 1 percent on Thursday has derailed the stock market rally in both the U S and Europe sparking worries over corporate borrowing costs and making the equity asset class less attractive than fixed income assets overall
Treasury yields at 3 5 percent would push people out of stocks and back into the Treasuries Michael O Sullivan chief investment officer for International Wealth Management at Credit Suisse in Zurich said by phone O Sullivan who helps oversee about 760 billion Swiss francs 758 billion in invested assets said the exodus from equity funds hasn t started yet but should become visible when the yield reaches 3 2 3 3 percent
Bond yields have been advancing this year lifted by robust U S economic data as well as by worries over a potential pick up in inflation and the pace of U S Federal Reserve rate increases The move has rattled equity markets in particular sectors seen as bond proxies such as telecoms and utilities
While most investors expect higher rates this year the debate has shifted to the extent of the advance with JPMorgan Chase Co NYSE JPM s Jamie Dimon and Franklin Templeton suggesting yields are heading toward 4 percent According to the latest fund manager survey from Bank of America Merrill Lynch asset managers are waiting for the yield to hit 3 6 percent to reallocate from stocks to bonds
While the yield seems unstoppable at this point Credit Suisse s O Sullivan sees a pause in the coming months as investor focus is set to shift toward risks such as the U S fiscal deficit This should limit the upside in the yield to around 3 2 percent this year while the U S dollar should fall back
Even as 10 year U S Treasury yields extended their advance on Thursday the Stoxx Europe 600 Index was little changed while Nasdaq Futures fell 0 3 percent
Updates with Thursday s markets from second paragraph |
C | Wells Fargo s Revenue Beats Estimates Despite Punishment by Fed | Bloomberg Wells Fargo NYSE WFC Co reported higher profit and a smaller drop in revenue than Wall Street expected after the Federal Reserve prohibited the scandal plagued bank from increasing assets until it fixes its missteps
First quarter revenue fell 1 4 percent from a year earlier to 21 9 billion the San Francisco based lender said Friday in a statement That beat the 21 7 billion average estimate of analysts in a Bloomberg survey The bank warned that it may need to take a charge in coming weeks to resolve a regulatory matter
We recognize that it will take time to put all of our challenges behind us Chief Executive Officer Tim Sloan said in the statement
Profit also beat Wall Street expectations climbing 5 7 percent
Shares of Wells Fargo rose 1 3 percent to 53 36 at 8 10 a m in New York The stock had dropped 13 percent this year through Thursday the worst performance in the 24 company KBW Bank Index
In February the Fed curbed Wells Fargo s progress toward recovering from a long running scandal involving misleading sales practices at its consumer bank Since then the nation s third largest lender by assets has faced more scrutiny with the U S Department of Justice and Securities and Exchange Commission examining the wealth management unit a person familiar with the probes had said
The bank said it s in ongoing discussions with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency over issues in its auto lending and mortgage units Those regulators have offered to resolve the matter for 1 billion in penalties which could force the lender to revise its latest results Wells Fargo booked a record 3 25 billion charge in the fourth quarter related to regulatory investigations sales practices and other matters
JPMorgan Chase Co NYSE JPM and Citigroup Inc NYSE C also reported first quarter results Friday with both posting strong gains in equities trading as stock market volatility exploded after several years of relative calm
Here s a summary of Wells Fargo s results
Net income applicable to common shareholders rose to 5 53 billion or 1 12 a share from 5 23 billion or 1 03 a share a year earlier That beat the average Wall Street estimate of 1 06
Non interest expense climbed to 14 2 billion from 13 8 billion a year earlier Analysts expected a decline of about 50 million
Net interest income was 12 2 billion compared with 12 3 billion in the first quarter of 2017 The average estimate of 11 analysts surveyed by Bloomberg was 12 5 billion
Net interest margin was 2 84 percent worse than the 2 88 percent estimate
The efficiency ratio a key measure of profitability improved to 64 9 percent compared with 76 2 percent at year end Sloan is targeting 60 percent to 61 percent excluding litigation costs |
C | Citigroup profit beats on strength in consumer banking equity trading | By Sweta Singh and David Henry Reuters Citigroup Inc N C reported a higher than expected quarterly profit on Friday driven by strength in its consumer banking business and a surge in equities trading Global consumer banking revenue increased 7 percent on gains in North America Mexico and Asia Equity markets revenue jumped 38 percent gaining from increased volatility in the quarter But weakness in the lender s investment banking business was a sore point for investors Citi s stock was down nearly 3 percent in afternoon trade as the bank reported a 10 percent drop in revenue from the business Larger rival JPMorgan Chase Co s N JPM quarterly profit was also dented by a 7 decline in investment banking revenue There were a lot of deals announced but there were not a lot of deals closed on a year over year basis said Art Hogan chief market strategist at B Riley FBR in New York I think that s going to impact all of those involved in investment banking Citigroup included Still Citi s net income rose 13 percent in the first quarter On a per share basis Citi earned 1 68 topping analysts average estimate of 1 61 according to Thomson Reuters I B E S Good quarter for Citi as they continue to show progress in their return of return on capital mantra Evercore analyst Glenn Schorr wrote in a note to clients The results benefited from a busy trading desk as volatility rocked global markets amid inflation fears and heightened trade tensions in contrast to a calm 2017 Total revenue rose about 3 percent to 18 87 billion while operating expenses rose 2 percent to 10 92 billion The rise in equity markets revenue offset a 7 percent drop in Citi s bigger fixed income trading business Combined the two were up 1 percent Investment banking revenue fell to 1 13 billion from 1 29 billion and Citi blamed declines in the overall market wallet and the timing of episodic deal activity Return on tangible common equity a measure of profitability reached 11 4 percent in part to the company having had to mark down its equity value in the fourth quarter because of the tax law change Citi said in January it expected return on common tangible equity at 10 5 percent for the full year
Shares of the fourth largest U S bank by assets were down 2 8 percent at 70 10 They have gained 23 percent in the last 12 months |
C | U S bank executives see delayed boost from tax overhaul | By Meredith Mazzilli NEW YORK Reuters Banks have not reaped the full benefit of U S tax cuts Wall Street executives said on Friday after a string of quarterly results with expected business growth and higher consumer spending yet to materialize Analysts and investors are still trying to work out the longer term effects of the tax rewrite signed into law in December which slashed the federal corporate rate Asked what impact Wells Fargo Co N WFC is seeing from the new tax law the bank s finance chief John Shrewsberry said not much yet Bank executives said last quarter that tax cuts and changes in capital expense deductions should stoke broad economic growth fueling expectations of higher lending and capital markets activity It has not been a big mover of our business or what you can see in the real economy Shrewsberry said though he expects that to change later this year There has been some wage growth but consumer spending has not picked up accordingly he said Wells Fargo has not had any unusual uptick in loan demand or meaningful changes to how products and services are priced he added As much as we re all eager to see the benefits I think we have to recognize that tax reform is still in the early phases JPMorgan Chase Co N JPM Chief Financial Officer Marianne Lake said on a media conference call after the bank reported first quarter results She told reporters earlier that JPMorgan expects to see benefits but with a lag While client sentiment is high in the wake of corporate tax reform and we remain hopeful that this will support higher demand later in the year we re not seeing that yet and we are maintaining pricing and credit discipline Lake said about loan demand Financial markets have already reflected investors enthusiasm about the cuts Citigroup Inc N C Chief Financial Officer John Gerspach said on a call with reporters to discuss results and the actual benefit to the U S economy will only come once investment plans are finalized A lot of corporate actions are in the planning stage People usually have nine to 12 months to plan for tax reform People had a chance to digest this right around the last three weeks of last year Gerspach said A cut in the federal corporate tax rate to 21 percent from 35 percent has helped banks boost profit but other details of the new tax code have not helped their bottom line Wells Fargo said interest income slipped 1 percent in the first quarter due in part to lower income from so called tax advantaged products in light of newly lowered tax rates Lower tax equivalent yields on municipal bonds should weigh on year over year comparisons of the lender s net interest margin by around 4 basis points for the rest of the year Shrewsberry said on an analyst call
The third largest U S bank by assets also flagged that tax changes had weighed on new debt issuance and secondary trading though strong equity trading helped boost its total trading related revenue |
C | Top 5 Things That Moved Markets This Past Week | Investing com Top 5 things that rocked U S markets this week
1 First Quarter Earnings Season Begins on Sour Note
The start of earnings season in earnest on Friday did not go according to plan as an earnings beat by major Wall Street banks failed to induce a stock market rally
JPMorgan Chase Co NYSE JPM Citigroup Inc NYSE C Wells Fargo Company NYSE WFC posted above street consensus first quarter earnings Friday but fell more than 1 dragging the broader market lower
Wells Fargo was the biggest decliner among the trio falling more than 3 as the lender warned it may significantly change its first quarter results amid a looming regulatory settlement that could set the bank back by as much as 1 billion
Geopolitical tensions and trade war fears were a constant threat to risk appetite as equities ebbed and flowed to tweets from President Trump on Syria While a WSJ report Friday suggesting the White House would continue its aggressive stance on trade and threaten to block Chinese technology investment in the United States weighed on risk appetite
Facebook NASDAQ FB was also in the spotlight this week as CEO Mark Zuckerberg made the rounds on Capitol Hill testifying in a two day congressional hearing
Zuckerberg didn t fluff his lines much to the delight of Facebook shareholders as the social media giant s shares snapped a four week losing streak to close up nearly 5 for the week
The S P 500 index closed about 2 0 higher for the week
2 Crude Oil Traders Up Bets on Fear Premium
Crude oil prices ended the week at three year highs after rallying for five straight days as concerns about rising U S oil output and supplies took a backseat amid geopolitical tensions
The oil price rally this week was supported by expectations that producers in the Middle East could suffer supply disruptions in the wake of rising geopolitical tensions adding a fear premium to oil prices according to RBC
Sentiment on oil was also bolstered by a trio of reports from the Energy Information Administration OPEC and the International Energy Agency confirming that OPEC cuts continued to lower global supplies which are predicted to reach the five year average levels later this year
Total OPEC production fell to the lowest since March 2017 according to a monthly report from OPEC
On Friday U S crude futures gained 0 48 to settle at 67 39 a barrel on Friday and notched a 8 6 gain for the week
3 Dollar Slips as Fed Minutes Fail to Boost Appetite
The dollar struggled to find its footing this week after forays higher were met with resistance as geopolitical tensions weighed while a strong rally in sterling also kept a lid on upward momentum
The weakness in the dollar came despite growing investor expectations for a June rate hike after the Federal Reserve s March meeting minutes revealed policymakers were more certain about inflation hitting the Fed s 2 target raising the need for gradual rate hikes
The dollar was knocked back by sterling s solid gains this week on expectations the Bank of England would likely raise interest rates next month
The dollar fell 0 01 to 89 48 against a basket of major currencies on Friday
4 Gold Continues to Shine as Geopolitical Tensions Flared
Gold prices notched a second straight weekly gain Friday benefitting from continued safe haven demand as traders sought refuge from geopolitical headwinds
The yellow metal enjoyed its biggest move earlier in the week following a tweet from President Trump warning Russia to get ready hinting at U S missile strikes on Syria But gold prices gave up some of their gains after Trump backed away from his aggressive stance
Dollar weakness meanwhile also supported upside momentum in the precious metal as the greenback struggled for direction amid geopolitical tensions and mixed inflation data as producer inflation topped expectations while consumer inflation fell short
Despite the bullish week for gold prices traders appeared to take some profit on recent gains as data Friday showed bullish bets on the yellow metal declined
CFTC COT data showed money managers reduced their net long positions in gold futures to 155 400 lots from 166 600 lots for the week ended April 10
5 Bitcoin What a Difference a Week Makes
Bitcoin had its best week in almost two months as an impressive rally on Thursday turned sentiment positive on both the popular digital currency and the wider crypto market
While there wasn t any specific reason behind the move some cited news that Spanish banking giant Santander MC SAN was starting a blockchain based international payment service as the catalyst for the rally which got underway Thursday
Santander rolled out its cross border payments system One Pay FX for its customers in Spain the UK Brazil and Poland on Friday One Pay was said to use distributed ledger technology developed by Ripple
The move by the Spanish bank revived battered hopes that the digital ledger technology which powers most cryptos including bitcoin has a role to play in the mainstream payments space
The turn in sentiment on cryptocurrencies was characterised by a 75 billion leap in the total cryptocurrency market cap to about 325 billion at the time of writing from about 250 billion last week
Bitcoin rose 3 03 to 7 955 2 on the Bitfinex exchange while Ethereum rose to 500 up 7 68 Ripple XRP rose to 0 66203 up 13 81 on the Poloniex exchange |
C | 4 Trade Ideas For Citigroup | Citigroup Inc NYSE C started higher off of a bottom in December It filled a gap in January and started to morph into a sideways channel It would stay on this channel for the next 9 months It comes into the week pushing through the top and making a new 52 week high The RSI is rising in the bullish zone with the MACD positive ad moving up
The Bollinger Bands have also opened to the upside There is resistance at 74 and 76 35 then 77 50 and 80 25 Above that you have to look back to before the Great Financial Crisis Support lower comes at 72 and 70 then 68 50 Short interest is low under 1 The stock pays a dividend with an annual yield of 2 79 and starts trading ex dividend November 1st The company is expected to report earnings next on January 14th
The November options chain shows biggest open interest at the 72 50 strike on the call side twice as big as that at the 70 calls and 5 times the 70 puts The December chain sees open interest spread from 60 to 72 50 on the put side biggest at 65 and from 70 to 75 on the call side and very level The January chain covering the next earnings report shows large open interest from 70 all the way down to 45 on the put side It builds from 60 to a peak at 80 on the call side
Citigroup Ticker C
4 Trade IdeasBuy the stock on a move over 73 50 with a stop at 71 50 Buy the stock on a move over 73 50 and add a November 73 70 Put Spread 1 00 while selling the November 75 Calls 50 cents Buy the November January 75 Call Calendar 1 65 and sell the November 70 Puts 55 cents Buy the January 65 75 80 Call Spread Risk Reversal 65 cents Disclaimer The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment I or my affiliates may hold positions or other interests in securities mentioned in the Blog please see my page for my full disclaimer |
C | The Zacks Analyst Blog Highlights Citigroup Novo Nordisk BP Salesforce com And TC Energy | For Immediate ReleaseChicago IL November 1 2019 Zacks com announces the list of stocks featured in the Analyst Blog Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets Stocks recently featured in the blog include Citigroup NYSE C Novo Nordisk NYSE NVO BP NYSE BP salesforce com NYSE C and TC Energy TSX TRP Here are highlights from Thursday s Analyst Blog Top Analyst Reports for Citigroup Novo Nordisk and BPThe Zacks Research Daily presents the best research output of our analyst team Today s Research Daily features new research reports on 16 major stocks including Citigroup C Novo Nordisk and BP These research reports have been hand picked from the roughly 70 reports published by our analyst team today You can see Citigroup s shares have outperformed the Zacks Major Regional Banks industry year to date 40 2 vs 24 3 The Zacks analyst believes that third quarter results reflected revenue strength along with rising loan and deposit balance Also escalated investment banking revenues and reduced volumes and client activity levels were recorded in the quarter Citigroup s streamlining efforts along with strategic investments in core business bode well for the long term Also a declining cost base will support bottom line improvement Citigroup s steady capital deployment activities are also commendable depicting a strong capital position However pending litigation issues might keep legal expenses elevated Further decline in fee income is another concern for the company You can Shares of Novo Nordisk have gained 13 3 in the past six months against the Zacks Biotech industry s rise of 4 3 The Zacks analyst believes that solid performances from Tresiba Victoza Ozempic Xultophy and Saxenda have driven the company s sales in the year so far Label expansion of Victoza continues to boost performance Ozempic the company s once weekly GLP 1 continues to gain market share The FDA recently approved semaglutide in tablet form under the brand name Rybelsus The company continues to evaluate the candidate for multiple indications However lower realized prices in the Unites States loss of exclusivity for products in hormone replacement therapy and intensifying competition within the diabetes and biopharmaceuticals markets will adversely impact sales going forward You can BP s shares have lost 1 4 over the past three months against the Zacks International Integrated Oil industry s fall of 1 9 The Zacks analyst believes that BP has been gaining from a strong portfolio of upstream projects Since 2016 BP has placed 23 key upstream developments online which will help the British energy giant boost production by 900 thousand barrel of oil equivalent per day MBOE D by 2021 In fact production from these key projects has helped the integrated energy major report better than expected earnings for the third quarter Moreover the company is strongly committed toward returning cash to its shareholders However the 2010 oil spill incident in the BP operated Macondo Prospect is still affecting the firm Although BP has cleared the huge litigation expenses related to the spill it had to divest some of its best operating properties Also the company expects refining margins in the December quarter of 2019 to drop sequentially owing to continued turnaround activities You can Other noteworthy reports we are featuring today include and TC Energy Free Zacks Single Best Stock Set to DoubleToday you are invited to download our just released Special Report that reveals 5 stocks with the most potential to gain 100 or more in 2020 From those 5 Zacks Director of Research Sheraz Mian hand picks one to have the most explosive upside of all This pioneering tech ticker had soared to all time highs and then subsided to a price that is irresistible Now a pending acquisition could super charge the company s drive past competitors in the development of true Artificial Intelligence The earlier you get in to this stock the greater your potential gain Media ContactZacks Investment Research800 767 3771 ext 9339 Past performance is no guarantee of future results Inherent in any investment is the potential for loss This material is being provided for informational purposes only and nothing herein constitutes investment legal accounting or tax advice or a recommendation to buy sell or hold a security No recommendation or advice is being given as to whether any investment is suitable for a particular investor It should not be assumed that any investments in securities companies sectors or markets identified and described were or will be profitable All information is current as of the date of herein and is subject to change without notice Any views or opinions expressed may not reflect those of the firm as a whole Zacks Investment Research does not engage in investment banking market making or asset management activities of any securities These returns are from hypothetical portfolios consisting of stocks with Zacks Rank 1 that were rebalanced monthly with zero transaction costs These are not the returns of actual portfolios of stocks The S P 500 is an unmanaged index Visit for information about the performance numbers displayed in this press release |
C | What Wall Street Rally Gold ETFs Brimming With Assets | The global investing scenario has turned tricky of late The global growth slowdown has been forcing central banks to adopt easy money policies which in turn is propelling stocks higher SPDR S P 500 ETF NYSE SPY ASX SPY has added about 4 8 in the past month as of Nov 6 2019 and has jumped 6 6 in the past three months
But that did not dissuade investors from seeking safe products The fear factor can be felt by the all time high holdings in gold backed ETFs in the third quarter Demand from US listed ETFs was particularly strong during the third quarter per the WGC as quoted on Wall Street Journal Investors should note that gold is viewed as a safe haven asset
SPDR Gold Trust P GLD TSXV GLD the world s biggest gold ETF saw net inflows of 6 05 billion in the third quarter of 2019 Though the latest month long Wall Street rally has hurt demand slightly assets in GLD are still heavy The fund has lost only 226 million in assets since October amid investors renewed interest in equities and rally in bond yields
Notably gold has been one of the best performing commodities of 2019 gaining about 18 to a six year high of above 1 500 an ounce Another prominent gold ETF iShares Gold Trust added about 2 29 billion in assets in the third quarter
Will Gold Glitter Ahead
per Citigroup Inc NYSE C and the metal is expected to hit 1 700 an ounce over the next six to 12 months Below we highlight a few factors that should keep the metal shining
Uncertainty in Trade Deal
Per the recent developments chances of postponement of the Sino US phase 1 deal signing to have increased Lack of material progress in the Sino U S trade deal is likely to leave market participants jittery and increase the appeal for safe haven assets like gold read
The U S China trade war will drag 2019 global growth down to the slowest pace since the 2008 2009 financial crisis per the International Monetary Fund The IMF sees 2019 down from 3 2 in a July forecast
Even if any deal is signed after the recent rally that the U S China partial trade deal is now priced in Any disappointment in investors expectations related to the trade deal could derail market momentum and veer investors toward gold ETFs read
Demand From PBOC
India and China are two of the biggest buyers of gold Though India saw a sharp slump of 32 in jewelry demand in the third quarter demand from China is still decent Jewelry demand in China dropped 12 in the third quarter but the People s Bank of China continued to store gold It raised in September from 62 45 million in August In tonnage terms the latest inflow totals 5 9 tons and follows the addition of about 99 8 tons over the prior nine months
Some Soft US Economic Data Points
The U S manufacturing reading for the month of October marks a contraction for three months in a row Recent data for retail sales and home sales have also been downbeat These point to a still uncertain economic backdrop
US Presidential Election in 2020
Last but not the least the U S Presidential election due in November 2020 will likely make markets edgy This in turn will keep boosting gold prices Hence prepare for a gold rush next year
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JPM | Factors The Building Blocks Of Return Streams | There is a tendency in our industry to look at alternative investments as separate and distinct from traditional strategies But at the most basic level both alternative and traditional strategies invest in the same assets equities bonds commodities and currencies Delving a bit deeper we find that all strategies invest in factors knowingly or not Factors are the basic building blocks of return streams Whether you attribute the payoff to various factors to risk or to market inefficiencies value size momentum quality volatility and carry among others they explain a great deal about investment returns
The failure to understand the factor exposures in a portfolio can quite easily lead to unwarranted disappointment Take the performance of Long Short Equity funds in 2015 for example Many of the worst performing funds in the category were those that employed a value based strategy In fact sorting funds based on Morningstar s Value Growth Score value funds were down 7 3 on average in 2015 while growth funds gained 2 5
Value as a factor experienced a difficult period in 2015 and as a result viewing the long short category monolithically could easily lead you to believe that those funds did a poor job But many of those same funds rebounded nicely in 2016 in part due to the resurgence of the value factor According to The Leuthold Group through November Value has been the only factor that has provided positive performance
Their work shows that the value spread quintile 1 less quintile 5 for the 3000 largest companies in the U S has been about 13 year to date while Momentum Size Growth Volatility Sentiment and Profitability have all posted negative return spreads
On the heels of a troubled 2015 investors in those value funds withdrew close to 300 million during the first six months of this year just before the value factor started to swing into favor And through November those value funds were up about 10 7 while growth funds were off slightly with an average return of 0 8 Short term underperformance outflows missed opportunities when performance reverts A typical pattern that seems to repeat endlessly
While these observations may not be all that eye opening they do serve as a reminder that the way in which alternative mutual funds are viewed is years behind traditional long only fare Morningstar Lipper and others provide investors with short cuts to understanding performance through the way they classify funds Size and valuation are the primary factors on which long only funds are sliced and diced and while there are many more factors to consider that basic classification goes a long way toward explaining performance
Alternative mutual funds are thus far not grouped in the same way The basic categories in use give the appearance that for example Long Short Equity funds are somewhat homogeneous when nothing could be farther from the truth Utilizing both holdings based and returns based analyses in addition to interviewing the manager as part of a thorough diligence process can triangulate the factor exposures in a portfolio which will go a long way to setting appropriate expectations and reducing unnecessary manager turnover
The Data
November performance was mixed as equity focused strategies were up while Managed Futures and Long Short Credit funds produced negative returns The post election reaction was quite extreme seeing many asset classes reverse long term trends especially within fixed income This created a difficult environment for trend following Managed Futures funds many of which saw larger losses than the category average would indicate and for Long Short Credit as they tend to run long biased
Longer term it s been difficult to get any return outside of U S equities over the last three years which has been a headwind to geographic diversification Given the certainty of changing policies under a new administration it will be interesting to see how the next 12 months play out
November saw outflows in nearly all categories derivative hedge equity being the exception with Multialternative shedding the most assets at just over 900 million It also seems that lagging performance has finally caught up with the Managed Futures category as the category saw the first monthly outflow since May of 2014
Across the board it appears investors are disappointed with low returns and are moving to riskier assets i e U S equities which if the year were to end today would mark eight consecutive years of positive returns As long as equities keep rising investors in alternative assets are less and less likely to remain patient and stay the course
Alternatives in the News
7 500 Faceless Coders Paid in Bitcoin Built a Hedge Fund s BrainThe says it all
And More Quant Headlines
Recruiters have seen an uptick in hedge fund searches and hiring in quantitative and data roles over the course of 2016 as big quant firms such as Two Sigma and Winton Capital Management continue to build out their teams and fundamental shops increasingly scout out the area Everyone has gone more towards thinking innovative looking at data science says Deepali Vyas head of the global markets and hedge fund practice at Heidrick Struggles I don t think this particular area is going away There will always be a curve the early adopters and others following suit
Michigan State University s 2 35 billion endowment is slashing its allocation to four long short hedge funds by 100 million and parking the money with computer driven quantitative vehicles The school s portfolio lost 4 3 in its last fiscal year according to an article in Bloomberg and was down 2 4 through June 30 led by a 9 drop in its hedge fund portfolio
The performance has prompted CIO Philip Zecher to explore ways to diversify the fund s strategy and style selections Approximately 50 million will be redeployed to a fund run by Jim Simons Renaissance Technologies as part of the style shift the article said while the remaining 50 million will be allocated to other to be determined quantitative funds in the near future
JPMorgan Boosts Speed Trading Veteran s 1 Billion Quant Fund
A veteran high speed trader s quantitative hedge fund raised almost 1 billion bucking an industry malaise and won the backing of JPMorgan Chase Co NYSE JPM s investment arm The firm Mana Partners will begin trading Jan 1 according to Chief Executive Officer Manoj Narang Clients of JPMorgan s alternative asset management division took a minority stake in Mana Partners and intend to invest in its first fund said Kristen Chambers a spokeswoman for the bank What s different about Mana Partners is that it will combine those high speed trading strategies with statistical arbitrage techniques At the simplest level statistical arbitrageurs track correlations between different kinds of stocks placing bets when those relationships get out of whack
NY Post
Trump Impacting Hedge Fund World SkyBridge Reportedly for Sale
SkyBridge Capital the hedge fund investment firm founded by outspoken industry defender Anthony Scaramucci is for sale according to a person familiar with the situation Scaramucci a fundraiser and adviser to President elect Donald Trump recently began an auction process for the New York based firm as he considers potential roles in the Trump administration according to the person who requested anonymity because the information is private More than a dozen potential bidders including wealth management and private equity firms have signed non disclosure agreements to review SkyBridge s financial results the person said
SkyBridge had 11 8 billion in assets under management or advisement as of Oct 31 2016 down from 12 9 billion as of Dec 31 2015 according to firm s website
Reuters
Education
Understanding Factor Exposure Long Short Equity
As noted in the introduction Morningstar has made advisors lives easy when it comes to understanding what their long only equity managers are doing If large cap value stocks are out of favor then the entire category is likely to produce poor returns Likewise if value stocks are doing great it s a tailwind for the category The style box conveys useful information that among other things helps identify when a fund has drifted outside of what should be expected
But in the long short space the categorizations aren t nearly as granular Whether a fund is healthcare focused deep value in its orientation or diversified globally it ends up in the same Long Short Equity category Given that the factor exposures across these disparate strategies vary widely investors could be forgiven for being confused about the relatively wide performance dispersion confronting them
So what can be done in the absence of more clearly defined categories What is needed is a strong understanding of a manager s processes and inherent biases This knowledge can be acquired in a number of ways As mentioned above a thorough due diligence process would include both the qualitative i e getting to know the manager s story with the quantitative that is holdings based and or factor analysis
For those with access to Morningstar s database there are some relatively simple metrics that will get you much of the way to the finish line namely the Value Growth and Size scores coupled with a quick review of the geographic and sector exposures For the more quantitatively oriented a great tool if sufficient return data is available is multi factor regression analysis Returns to many of the more prevalent factors can be obtained on the Fama French page on Dartmouth s website located here
Regressing a manager s returns against those factor sets can not only help in the understanding of a manager s strategy and risk exposures but can aid in determining if true alpha exists For those without a statistical software package Excel does have multi factor regression capabilities through its Linest function It may not be the most user friendly of functions but for those willing to spend the time required to utilize this tool the reward will be greater insight into factor exposures and their impact on performance |
MS | Japan third quarter growth slashed as capex inventories shrink | By Stanley White TOKYO Reuters Japan s economy grew much slower than initially estimated in the third quarter revised data showed as capital expenditure dried up and companies ran down inventories renewing concerns about Japan s growth prospects The Cabinet Office said on Thursday the economy grew at a 1 3 percent annualized rate in July September a severe revision from the 2 2 percent annualized growth first estimated and barely over half the median estimate for a 2 4 percent annualized expansion Capital expenditure fell 0 4 percent in the quarter versus the preliminary estimate of 0 0 percent as steel and real estate companies reduced investment On the positive side consumer spending was revised up and separate data showed services sector sentiment improved However weak capital expenditure may temper optimism that the economy could accelerate heading into next year Capex and consumer spending are the twin engines of domestic demand and I m not convinced that both will recover strongly said Norio Miyagawa senior economist at Mizuho Securities We have government stimulus and a weak yen so the economy will continue to grow but growth will be modest Inventories subtracted 0 3 percentage point from growth more than a preliminary reading of a 0 1 percentage point contraction which showed that a recent buildup in inventories was slowing and a positive sign that companies were able to sell excess goods Miyagawa said Net exports added 0 3 percentage point to growth in July September less than a 0 5 percentage point contribution in the previous quarter However economists were optimistic that exports would pick up in the future as the yen had fallen to an eight month low after Donald Trump was elected U S president Japan s government has also approved a stimulus package with 7 5 trillion yen of spending on public works which should marginally support growth next year economists say Private consumption which accounts for roughly 60 percent of the economy rose 0 3 percent versus the preliminary estimate of 0 1 percent growth as households spent more on food and beverages TV sets and domestic travel The government adopted a new base year for calculating gross domestic product which lifted nominal GDP closer to the Prime Minister Shinzo Abe s target level The new calculation method which will include research and development as capital expenditure for the first time to conform with international standards has been applied to GDP data going back to 1994 Because of this change business investment was 17 percent higher last quarter than previous data had suggested according to Marcel Thieliant senior Japan economist at Capital Economics in Singapore Cabinet Office data showed the new calculation method added 19 2 trillion yen to capital expenditure in fiscal 2015 versus an 18 5 trillion yen contribution in the previous fiscal year The changes have made the capital expenditure data more accurate said Hiroshi Miyazaki senior economist at Mitsubishi UFJ Morgan Stanley NYSE MS Securities This won t change the overall pace of growth I expect capital expenditure to bottom out in the current quarter
An index of sentiment among so called economy watcher service sector workers such as taxi drivers and restaurant staff rose to 53 5 in November the highest since March 2014 as a stock market rally and a falling yen made employees more optimistic |
MS | Poll U S economic outlook unmoved so far after Trump win | By Sumanta Dey and Anu Bararia Reuters Donald Trump s shock White House win has not altered U S economic forecasts much with economists in a Reuters poll expecting three rate rises by the end of next year based on little follow through on most of the soon to be president s protectionist campaign promises The outlook for growth and inflation in a Reuters poll also remains muted despite a Wall Street surge underscoring a wide gap between how the economy is expected to perform by analysts and what ebullient financial markets are currently pricing in The dollar and 10 year Treasury yields have surged in the month since Trump s victory on trader expectations of an inflationary boost from planned tax cuts and infrastructure spending especially with the economy close to full employment The Federal Reserve is within striking distance of its inflation and full employment mandate said Dan Silver economist at JPMorgan NYSE JPM who expects an imminent hike followed by two more in 2017 adding The risks of a faster normalization of policy however have increased If the U S administration enacts a substantial fiscal stimulus while avoiding the more protectionist measures that sometimes have been discussed the increase in growth and inflation might push the Fed to consider more than two hikes in 2017 Several Fed officials have said recently a more expansive fiscal policy would reinforce the case for quicker rate hikes cautioning that the Trump administration s economic plans should not be cast as if the economy is in crisis The Reuters poll this week of over 120 economists including all the 23 primary dealers large banks that do business directly with the Fed showed they unanimously expect the Fed to raise rates to 0 50 0 75 percent at its Dec 13 14 meeting Fed funds futures are currently pricing in a 95 percent probability of a move next week converging with the consensus in Reuters polls of a December hike that has held for half a year A follow up increase is forecast for the second quarter of 2017 and then again in the final three months of the year taking the Fed funds rate to a range of 1 00 1 25 percent similar to Fed rate setters forecasts This steady view on rates comes despite a 2 percent rally in the dollar DXY since the election to a near 14 year high which has tightened financial conditions along with a 50 basis point rise in 10 year Treasury yields A little over a third of economists said there would be a significant or very significant risk to growth from a strong dollar next year LITTLE MORE THAN THREATS For most of his campaign Trump vowed to recast U S trade and immigration policy along protectionist lines by imposing steep tariffs on Chinese imports moving manufacturing jobs back to the country while also promising hefty tax cuts But analysts aren t buying that he will actually put up significant barriers to trade About two thirds of the respondents who answered an extra question said it is unlikely Trump would follow through on most of the protectionist policies he spoke of during the campaign which may help explain why equity market analysts in a separate Reuters poll this week are so optimistic EPOLL WRAP Our baseline now assumes President elect Donald Trump delivers a fiscal boost but it does not come without a good dose of uncertainty surrounding his trade policies wrote Ellen Zentner of Morgan Stanley NYSE MS in a recent note We are assuming that trade protectionism goes little further than threats but it is enough to dampen business investment and tighten financial conditions providing a prolonged current of uncertainty in 2017 The expected burst of government spending has however not brightened prospects for growth which is likely to meander between an annualized pace of 2 1 to 2 3 percent in each quarter next year after notching 2 2 percent in the current quarter Analysts such as those at FT Advisors for example who have historically held some of the most bullish views expect growth to peak at only 3 0 percent in the second quarter The highest forecast across the poll horizon was 3 8 percent well short of the peak hit in the current cycle post the financial crisis of 5 6 percent in Oct Dec 2009 Jim O Sullivan of High Frequency Economics the most accurate U S forecaster in Reuters polls last year predicts the best pace of growth over the next year to be lower at just 2 7 percent The Fed s preferred gauge of inflation the Core PCE Price Index is also expected to lag the central bank s 2 percent target through all of next year averaging 1 8 percent in 2017 down from 1 9 percent in last month s poll Polling by Sarmista Sen and Vartika Sahu Editing by Ross Finley Jeremy Gaunt |
MS | European stocks mixed after ECB policy move DAX dips 0 01 | Investing com European stocks were mixed on Friday as markets digested the European Central Bank s latest policy decision and investors began to turn their attention to the Federal Reserve s meeting next week
During European morning trade the EURO STOXX 50 edged down 0 11 France s CAC 40 added 0 15 while Germany s DAX 30 dipped 0 01
European equities rallied on Thursday after the ECB said at its monthly policy meeting that it would extend its asset purchase program for an additional nine months
Beyond the program s scheduled end in March 2017 the central bank said net asset purchases are intended to continue at a monthly pace of 60 billion until the end of December 2017 or beyond if necessary
In addition the ECB left its benchmark interest rate unchanged at a record low of zero in line with forecasts
Financial stocks were broadly lower as French lenders BNP Paribas PA BNPP and Societe Generale PA SOGN declined 0 49 and 0 60 while Germany s Commerzbank DE CBKG and Deutsche Bank DE DBKGn tumbled 1 40 and 2 01
Among peripheral lenders Italy s Intesa Sanpaolo MI ISP and Unicredit MI CRDI lost 1 36 and 2 58 respectively while Spanish banks BBVA MC BBVA and Banco Santander MC SAN retreated 0 85 and 0 81
German insurer Allianz DE ALVG saw shares drop 0 41 after the Financial Conduct Authority FCA published Friday proposals for rules and guidance on payment protection insurance complaints PPI
On the upside Vivendi PA VIV SA rallied 2 14 after the French media group increased its ownership stake in Ubisoft Entertainment PA UBIP to 25 15 of the outstanding stock taking annother step toward a hostile takeover battle
According to French law once a buyer owns more than 30 of a company s shares they must make an attempt to purchase a controlling stake for a reasonable price
In London FTSE 100 edged up 0 15 helped by Smith Nephew LON SN whose shares surged 2 57 after analysts at Morgan Stanley NYSE MS raised their recommendation on the stock from Equal Weight to Overweight
Mining stocks were also broadly higher on the commodity heavy index Shares in Rio Tinto LON RIO rose 0 30 and Glencore LON GLEN gained 0 31 while Fresnillo LON FRES advanced 0 77 and Anglo American LON AAL jumped 0 92
Meanwhile financial stocks were broadly lower HSBC Holdings LON HSBA slipped 0 25 and the Royal Bank of Scotland LON RBS declined 0 39 while Lloyds Banking LON LLOY and Barclays LON BARC tumbled 1 37 and 1 44 respectively
Capita Plc LON CPI was one of the worst performers on the index as shares dove 9 58 after the outsourcing company announced plans to replace staff with robots in a move to reduce costs
In the U S equity markets pointed to a steady to lower open The Dow Jones Industrial Average futures pointed to a 0 03 gain S P 500 futures showed a 0 08 downtick while the Nasdaq 100 futures indicated a 0 15 fall |
MS | No sign of euro zone fiscal stimulus in 2017 borrowing estimates | By John Geddie LONDON Reuters Calls for euro zone governments to ramp up spending to bolster their economies are falling on deaf ears estimates of member states borrowing in bond markets next year suggest Commerzbank DE CBKG Morgan Stanley NYSE MS and ING expect debt sales to rise by 20 40 billion euros across the 19 member bloc in 2017 largely due to more bonds needing to be rolled over So far there is no sign of governments borrowing more to meet European Commission calls they leave austerity behind and loosen the purse strings A mountain of debt raised to weather the 2008 financial crisis continues to restrict most governments spending while Germany one of few candidates for fiscal expansion remains fixated on balancing its books It is the old problem of the euro zone ING strategist Benjamin Schroeder said Where you need the spending debt levels are really high and where you don t need the spending you have the buffers For graphics on euro zone debt and the budget deficits of the biggest member states click The only euro zone country to have sketched out 2017 borrowing plans Belgium scaled back an earlier estimate and is forecasting it will raise less than in 2016 Across the bloc ING expects a rise of 20 billion euros 21 22 billion to around 885 billion of issuance next year Morgan Stanley predicts a 27 billion hike to 876 billion and Commerzbank sees a 40 billion increase to 900 billion The bloc s two biggest economies France and Germany are expected to unveil funding plans in the coming weeks The other main economies Italy and Spain will publish plans in January The need for fiscal stimulus has arguably never been higher A large swathe of the electorate who felt they had not benefited from a modest economic recovery since the financial crisis voted Britain out of the European Union and political outsider Donald Trump into the White House this year This backlash now threatens the political establishment in Europe with France Germany the Netherlands and possibly Italy all set for elections in 2017 Meanwhile there are signs the monetary stimulus on which the euro zone has relied since 2012 may have peaked European Central Bank President Mario Draghi s has repeatedly called for governments to complement his easy policy approach INCENTIVES Morgan Stanley s head of European rates strategy Anton Heese said that even if some governments offer giveaways to try to sway voters this year the additional spending may take years to filter through or show up in the bond issuance Even if the government commits to quite a substantial fiscal expansion unless there are a lot of projects that are shovel ready the actual increase in borrowing can take place over a long period of time said Heese Heese said the main problem is that the EU only punishes countries that do not stick within tight budgetary criteria but has no way to incentivise spending Euro zone finance ministers earlier this month rejected a European Commission proposal to set a target for fiscal stimulus for the bloc next year Some banks appear more optimistic on fiscal expansion in the euro zone next year There will be a lot of emphasis in run up to the elections in Europe next year on more fiscal spend The period of fiscal austerity is over Robert McAdie global markets head of research and strategy at BNP Paribas PA BNPP said I would expect to see issuance go up BNP Paribas said they would release their estimates in late December or early January Yet unless Germany which balanced its budget for the first time in 45 years in 2014 drops its commitment to what it calls the black zero there appears little chance of stimulus elsewhere Commerzbank estimates that once the old debt that countries will need to refinance next year is deducted 90 percent of the new euro zone debt will be used to finance the budget deficits of France Italy and Spain And for may euro zone states memories of recent debt troubles may even be enough to keep spending largesse in check I doubt there is a big room for maneuver if you look at the situation from a distance former ECB head Jean Claude Trichet said at an event in London last week
It is a little bit strange we are embarking on such recommendations when we know that the crisis of 2008 came from over leveraging and we had a sovereign debt crisis |
MS | Asia stocks currencies wobble as Fed flags more hikes | By Wayne Cole and Hideyuki Sano
SYDNEY TOKYO Reuters Asian shares and currencies softened on Thursday after the Federal Reserve raised rates for the first time in a year and hinted at the risk of a faster pace of tightening than investors were positioned for
Yields on short term U S debt surged to the highest since 2009 sending the dollar to peaks not seen in almost 14 years which in turn prompted China s central bank to set the yuan at its weakest level against the greenback since 2008
The Fed s anticipated policy path and expectations U S President elect Donald Trump will set growth on a higher gear are keeping Asian policymakers on edge as capital gets sucked out from the fragile export dependent regional economies toward dollar based assets
The Fed s rate rise of 25 basis points to 0 5 0 75 percent was well flagged but investors were spooked when the dot plots of members projections showed a median of three hikes next year up from two previously
The markets were surprised by the dot plots Given that the 10 year U S bond yield has risen above the key level of 2 5 percent the sell off in bonds is likely to continue said Hiroko Iwaki senior strategist at Mizuho Securities
The change came even as the Fed s economic projections have hardly been upgraded suggesting the Fed could accelerate tightening even further if policymakers see firmer evidence of higher growth or inflation
The U S economy is already on a solid expansion but the new administration wants to do large scale spending That could surely boost inflation and U S bond yields said Norihiro Fujito senior investment strategist at Mitsubishi UFJ Morgan Stanley NYSE MS Securities
Fed fund futures 0 FF slid to imply an almost 50 percent chance that the Fed will raise rates three times with two hikes fully priced in already
For Reuters Graphic on the Fed click on
The 10 year U S Treasuries yields rose to 2 587 percent having risen more than 0 7 percentage point since Trump was elected as the next U S President
Yields on two year Treasury paper jumped more than 10 basis points to 1 28 percent the biggest daily increase since early 2015 and the highest level since August 2009 They stood at 1 267 percent in Asia
EMERGING PRESSURE
It also took the premium that U S Treasuries pay over German two year debt to its fattest since 2000
The allure of higher U S yields raises risks for emerging markets in Asia and elsewhere as funds look to take advantage of rising U S rates
The Chinese central bank set the yuan mid point at 6 9289 to the dollar its weakest since June 2008 though market players noted that the yuan has been firmer against many other currencies and rose on trade weighted basis
The yuan promptly fell to its lowest levels in more than eight years reflecting the weakening in the daily mid point
Low yielding currencies such as the Singapore dollar and Korean won came under pressure and analysts anticipate the low yielders will be on the back foot in an environment of a rising dollar higher U S yields and a depreciating yuan
The challenges confronting Asia s policymakers from capital outflows was highlighted in Thursday s South Korean central bank meeting
The Bank of Korea held its key policy rate steady at a record low of 1 25 percent and flagged growing risks for the export reliant economy that some analysts feel should be tempered through another rate cut But the BOK faces a dilemma as further easing could spark destabilising capital flows toward higher yielding U S dollar based assets forcing it to sit tight for now
The Singapore dollar fell near its January low and is on the verge of slipping to its lowest September 2009
Even high yielding currencies in Asia could return some of their recent gains if investors shy away from risk Citi analysts said in a note
The U S dollar was already up across the board hitting a near 14 year peak against a basket of currencies at 102 62
The euro dropped to as low as 1 0468 A break below its March 2015 low of 1 0457 could open the way for a test of 1 or parity against the dollar which last happened in late 2002
The dollar rose to 117 86 yen its highest level since early February though that drop in the yen cushioned Japanese stocks lifting Nikkei 0 1 percent
MSCI s broadest index of Asia Pacific shares outside Japan dropped 1 2 percent
European shares are expected to be open slightly weaker with spread betters looking to a fall of 0 2 percent in Britain s FTSE and a 0 1 percent drop in Germany s DAX
Wall Street suffered its biggest percentage decline since before the Nov 8 U S presidential election though the loss was slight compared with gains of the last month or so
The Dow ended Wednesday down 0 6 percent while the S P 500 lost 0 81 percent and the Nasdaq 0 5 percent N
Stocks have been on a tear in recent weeks on speculation the incoming Trump Administration will pursue tax cuts and increase infrastructure spending
Oil prices stabilised as a tighter market looms in 2017 due to planned output cuts led by OPEC and Russia after sharp declines earlier following the Fed s action O R
Brent crude futures traded at 53 89 per barrel erasing gains made earlier in the week that had taken it a 1 1 2 year high
Gold dropped to its lowest in more than 10 months around 1 135 1 an ounce and last stood at 1 141 9 |
JPM | World stocks head higher on hopes of thawing trade tensions | By Kit Rees LONDON Reuters Prospects of a thaw in U S China trade tensions supported global stocks on Monday as U S President Donald Trump pledged to help ZTE Corp get back into business fast after a U S ban crippled the Chinese technology company while oil prices recovered some lost ground Trump s comments on Sunday came ahead of a second round of trade talks between U S and Chinese officials this week to resolve an escalating trade dispute China had said last week its stance in the negotiations would not change The MSCI world equity index MIWD00000PUS which tracks shares in 47 countries was up 0 1 percent holding at its highest level in seven weeks and in positive territory for the year European stocks STOXX dipped 0 3 percent as financials weighed while EMini futures for the S P 500 ESc1 rose 0 2 percent There have been some very serious issues raised in terms of the trade relationship between the U S and China and then they ve had this quite sudden about turn on this particular company and it simply raises questions as to what the underlying policy is said Alastair George chief strategist at Edison Investment Research This is perhaps a little reminder which is being relatively well received by markets over the last 24 hours that with the U S administration there is a strong degree of unpredictability compared to prior regimes George added The United States has said it will lift sanctions on Pyongyang if North Korea agrees to completely dismantle its nuclear weapons program Stocks in Asia were also upbeat MSCI s broadest index of Asia Pacific shares outside Japan MIAPJ0000PUS rose 0 5 percent while Japan s Nikkei N225 also tacked on 0 5 percent Chinese shares came off the day s highs but still ended in positive territory after Trump s comments on ZTE Corp SZ 000063 HK 0763 which JPMorgan NYSE JPM analysts said was a significant positive Shanghai s SSE LON SSE Composite index SSEC rose 0 3 percent while the blue chip CSI300 rallied 0 9 percent Hong Kong s Hang Seng index HSE climbed 1 4 percent Elsewhere in Asia the Malaysian ringgit recovered losses after sliding 1 percent to a four month trough against the dollar in the first onshore trade since a shock election upset last week Malaysian stocks sank as much as 2 7 percent at one point but ended 0 2 percent higher Veteran Mahathir Mohamad 92 came out of political retirement to lead the opposition Pakatan Harapan Alliance of Hope to a stunning victory defeating prime minister Najib Razak a former protege whom he had accused of corruption Some investors were concerned that populist promises such as repealing an unpopular goods and services tax and restoring a petrol subsidy could undermine the country s finances But some analysts believe Mahathir s proposals could be positive for the economy The repeal of GST while only marginally negative for the fiscal deficit will be a boon for consumers who have been upset that they bear the burden of poor fiscal management and came out to vote against the establishment said Trinh Nguyen senior economist at Natixis OIL AND IRAN While tensions in the Korean peninsula have eased U S plans to reintroduce sanctions against Iran have stoked anxiety in the Middle East Iran pumps about 4 percent of the world s oil and the latest development has sent oil prices to near multi year highs Citi analyst Mark Schofield said rising oil prices risk causing stagflation which could create a particularly hostile environment for risk assets On Monday U S crude CLc1 traded flat at 70 71 a barrel and Brent LCOc1 was up at 77 23 clawing back previous losses after a relentless rise in U S drilling activity pointed to increased output O R The United States threatened on Sunday to impose sanctions on European companies that do business with Iran as the remaining participants in the Iran nuclear accord stiffened their resolve to keep that agreement operational In currencies the dollar DXY dipped 0 2 percent to 92 33 against a basket of major currencies and was set for its fourth straight day of losses Against the Japanese yen it ticked down to 109 49 per dollar remaining largely in a holding pattern since late last month The euro EUR rose 0 3 percent to 1 1983 following two consecutive sessions of gains as Italy s anti establishment parties looked likely to form the next government Last week the Bank of England held rates steady and New Zealand s central bank said the official cash rate will remain at historic lows of 1 75 percent for some time That leaves the Fed as the only major central bank in the world committed to rate increases although recent data showing a moderate inflation reading has cast doubt over the pace of any hikes The U S 10 year Treasury yield US10YT RR was slightly higher at 2 9841 percent Spot gold dipped 0 1 percent at 1 319 4 an ounce after eking out a small weekly gain last week |
JPM | Debt Paradox Means Russia Borrows More Despite Rally in Oil | Bloomberg Oil prices near the highest level in over three years are driving the world s biggest energy exporter deeper into debt
While Russia stands to reap a windfall from crude s recent rally with the budget now on track for its first surplus since 2011 a program of foreign currency purchases by the Finance Ministry means that it needs more rubles to conduct the operations when the exchange rate appreciates thanks to higher oil prices
Instead of quenching the government s financing needs the result is that borrowing in rubles will actually rise close to last year s record level to absorb the extra dollars in line with the so called budget rule
The budget rule made sovereign debt issuance a function of the exchange rate said Anatoliy Shal analyst at JPMorgan Chase Co NYSE JPM in Moscow Budget amendments are based on a higher oil assumption and imply a stronger ruble hence the upward revision to issuance plans
For that reason the Finance Ministry just expanded this year s target for domestic borrowing by almost 28 percent to 1 04 trillion rubles 16 9 billion according to its amended fiscal plan published on the official disclosure website That s about double the amount it s sold so far in 2018 The head of the Finance Ministry s debt department Konstantin Vyshkovsky has said that a stronger ruble than assumed in the budget may force the government to raise more capital at home
A decrease of 1 ruble in the exchange rate per dollar versus the initial assumption boosts Russia s financing needs by about 80 billion rubles in 2018 according to Shal While the original forecast used in the budget saw the ruble at 64 7 against the U S currency this year it s so far averaged just over 58 about 11 percent stronger than in the projection
Budget Rule
To insulate the ruble and the economy from oil s ups and downs and cap spending the government is absorbing all revenue earned when Russia s Urals export blend is above 40 a barrel channeling the excess income into its sovereign wealth fund Purchases of foreign currency will more than double this year to about 2 trillion rubles if prices for Russian crude average 54 55 a barrel climbing to about 2 8 trillion rubles if Urals is around 60 according to Finance Minister Anton Siluanov
Oil is on the rise as U S plans to renew sanctions on Iran and continuing tensions in the energy rich Middle East stoke concern over supply disruptions Benchmark Brent which trades at a small premium to Urals was over 77 a barrel in London on Monday
Russia experienced a similar paradox in 2011 2012 when the Finance Ministry kept up borrowing and funneling the cash into a wealth fund despite running a fiscal surplus said Olga Sterina head of fixed income research at UralSib Financial Co This year budget revenue may exceed spending by 441 billion rubles or 0 4 percent of economic output
The government is betting the U S won t toughen sanctions to target Russia s sovereign securities because that would be too damaging to American investors Foreigners owned a record 34 percent of Russia s outstanding government ruble securities known as OFZs before a rout in April sent the bonds to their worst week in more than a year
Russia now pays about 7 3 percent to borrow in rubles for 10 years near the same level as the start of 2018 according to the latest market bond pricing Oil s rally helped the rate drop below 7 percent in March for the first time in five years but the latest round of U S penalties and a surge in the dollar since pushed it higher
The latest target in 2018 for OFZs means the government will need to auction off 450 billion rubles this quarter and about 130 billion rubles in the second half compared to the 463 billion rubles raised in the first three months of the year That s feasible and raises no risk of crowding out corporate borrowers according to Sterina
Updates with Brent s performance in eighth paragraph |
JPM | The man who called The Big Short says Deutsche Bank is a problem bank | Steve Eisman Deutsche Bank DE DBKGn has real profitability issues they re probably under capitalised I think they re probably raising capital next year it has to shrink dramatically Eisman is famous for betting against the US housing market in the run up to the 2008 subprime mortgage crisis LONDON The hedge fund manager famous for betting against the United States housing market in the run up to the 2008 financial crash says Deutsche Bank is a problem bank that must shrink dramatically Steve Eisman said Deutsche Bank has real profitability issues they haven t spent money on technology in a long time they re probably under capitalised I think they re probably raising capital next year Deutsche Bank is a problem bank I think it has to shrink dramatically Deutsche Bank in February its third year of losses in a row and his replacement Christian Sewing has Eisman is famous for being the main character in The Big Short the non fiction book about the 2008 subprime mortgage bubble in the US written by Michael Lewis Eisman was played by Steve Carrell in the 2015 film adaptation of the book Eisman who is now a money manager at the Neuberger Berman Group told Bloomberg TV he thought regulators in the United States did a good job post crisis in fixing structural issues but said Europe is better but not good enough Eisman said he couldn t comment on consolidation among European banks but said I think there s definitely going to be consolidation of banks in the United States which is driven by how much companies like JPMorgan NYSE JPM are spending on technology which is 10 11 billion a year versus the much smaller regional banks NEXT UP |
JPM | Ex JPMorgan Blockchain Exec Unveils New Startup | Amber Baldet former head of blockchain initiative at JPMorgan NYSE JPM the launch of a blockchain venture called Clovyr She co founded the startup with Patrick Nielsen another former JPMorgan employee who was in charge of developing the bank s open source blockchain projects
Baldet presented the new startup on Monday at the Consensus 2018 conference in New York Clovyr will provide an online store for decentralized applications
It s a way to help people think differently about decentralized application design she
In April we that Baldet was leaving her post at JPMorgan to start her own venture Since then there has been much speculation about her plans She hinted at this announcement last week during the Ethereal Summit organized by Ethereum oriented blockchain software company ConsenSys
This really is an amazing community and we re excited to do our part to help it grow Baldet stated
At JPMorgan Baldet was responsible for supervising product development at in house blockchain solution Quorum and coming up with a blockchain strategy for the investment bank Christine Moy a senior product manager was named the new head of JPMorgan s Blockchain Center of Excellence after the departure of Baldet
Baldet has appeared on Fortune s 40 Under 40 list of the most influential young business people
The project s official website states
Clovyr brings the flexibility and ease of use of modern application development to the blockchain domain More than just a development framework Clovyr is an ecosystem of applications and services that empowers teams of all sizes to experiment iterate and grow products to production much faster than before
Given its nascent stage Clovyr is actively looking for talented individuals to fill different roles from development and design to marketing and support |
C | JPMorgan sued over fees for cryptocurrency purchases | By Dena Aubin NEW YORK Reuters JPMorgan Chase Co has been hit with a lawsuit in Manhattan federal court accusing it of charging surprise fees when it stopped letting customers buy cryptocurrency with credit cards in late January and began treating the purchases as cash advances Filed on Tuesday on behalf of a proposed nationwide class the lawsuit said Chase N JPM charged both extra fees and substantially higher interest rates on the cash advances than on the credit cards and refused to refund the charges when customers complained Chase spokeswoman Mary Jane Rogers declined to comment on the lawsuit but said the bank stopped processing credit card purchases of cryptocurrency on Feb 3 because of the credit risk involved Customers can use their Chase debit cards to buy cryptocurrency from their checking accounts without incurring cash advance charges she said Several banks in Britain and the United States including Lloyds Banking Group Plc L LLOY Virgin Money L VM and Citigroup N C banned the use of credit cards to buy cryptocurrencies earlier this year after a dramatic fall in the value of bitcoin the most popular virtual currency Bitcoin has fallen in value by more than half from a peak of almost 20 000 in December amid concerns about regulatory crackdown The named plaintiff in the lawsuit Idaho resident Brady Tucker was hit with 143 30 in fees and 20 61 in surprise interest charges by Chase for five cryptocurrency transactions between Jan 27 and Feb 2 his lawsuit said Hundreds or possibly thousands of other Chase customers were hit with the charges Tucker said Tucker called Chase s customer service line to dispute the charges but the bank refused to remove them according to the lawsuit With no advance warning Chase stuck the plaintiff with the bill after the fact of his transactions and insisted that he pay it the lawsuit said A lawyer for Tucker could not be reached for comment The lawsuit accuses Chase of violating the U S Truth in Lending Act which requires credit card issuers to notify customers in writing of any significant change in charges or terms The lawsuit is asking for actual damages and statutory damages of 1 million
The case is Brady Tucker et al v Chase Bank USA U S District Court Southern District of New York No 18 3155 |
C | Spotify puts bank IPO paydays under fund manager scrutiny | By Sinead Cruise LONDON Reuters After shaking up the music industry Spotify is now prompting investors to question the value they get from investment banks underwriting new listings with its low cost IPO The music streaming firm effectively deprived banks of hundreds of millions of dollars in fees by shunning them in its 26 5 billion New York Stock Exchange float on April 3 Banks can charge companies as much as 7 percent of the amount raised in a U S listing and fund managers in London another of the main centers for initial public offerings IPOs say Spotify s success means underwriters will now have to show more clearly what value they bring to companies and their backers Besides saving the right type of company a lot of money the real positive demonstrated by this kind of listing is the level playing field it creates Trevor Green head of institutional equities at Aviva LON AV Investors told Reuters Banks have been richly rewarded for co ordinating IPOs and ensuring companies raise the money pocketing annual fees of 33 6 billion in the U S and 14 4 billion in Europe over the last decade Thomson Reuters data shows And although tussles between investment banks and asset managers over these fees are not new evolving technology more freely available capital for privately held companies and regulatory pressures mean changes could now be on the cards But while critics claim that high costs have discouraged some firms from joining the stock market crimping their prospects and hindering the growth of the economy bankers say few are likely to be able to replicate Spotify s direct listing This was only possible because a large number of founding shareholders wanted to sell and it was not raising a large sum of capital meaning that for now the route may only be open to well known highly valued internet firms like Spotify It s a one off Suneel Hargunani Head of EMEA Equity Syndicate at Citigroup NYSE C said on Wednesday of Spotify s listing There s not a lot of companies that would tick all those boxes hence why we don t think it s going to become too common he told a Thomson Reuters IFR briefing OLD SCHOOL TIES The problem facing fund managers is that while they would like to see the companies they invest in pay less to be publicly listed they are bound by long standing ties to bankers who vet potential new fundraisers influence the allocation of new stock and manage access to company executives And many are cautious about speaking out publicly for fear of being frozen out of highly competitive new issues Banks help to make trading in newly listed shares less volatile by hand picking institutional investors who are likely to hold them over the medium to long term and by limiting the volume of stock sold to day traders keen to make a quick buck Early indications from Spotify s post listing performance are mixed with its shares are down 8 percent from its 166 opening price and trading volumes down to a trickle while the stock is vulnerable to bouts of volatility While this may not be a problem for Spotify bankers argue that where underwriters often show their value is in helping lesser known companies through their earliest days as a publicly quoted firm I would rather pay the banks their fees accept a little dilution and have the benefit of a tried and tested ecosystem with a network of sponsors that will be there to help another investment manager who declined to be named said But concerns about transparency and competition have led the Organisation for Economic Co operation and Development to call last year for a review by regulators of signs of parallel pricing which it said were said were akin to tacit collusion Others say companies under club the longer term relationship value they could offer banks when negotiating IPO fees with further paydays for credit facilities buybacks debt issues and even merger and acquisition activity later on Green said he expected banks to fight harder for the big paydays offered by blue chip names and do more to convince investors of the value they offer in a typical listing process The reason why the Ubers and Airbnbs of this world have been able to stay unlisted is because there is so much private money available to finance their growth right now he said Many of these types of well known firms could easily go public without the support of the banks and losing those fees would certainly sting Spotify s success would at the very least prompt other high profile companies to reconsider their options before rushing into costly bank led IPOs the second investment manager said adding that other alternative models were also evolving Initial Coin Offerings ICOs point to another possible route in the future to raise money with less bank sponsorship In an ICO a company attracts funding by offering investors virtual currency known as tokens If the cash raised does not meet the minimum funds as set out in its prospectus the money is returned and the ICO is deemed to be unsuccessful It is healthy for people to try different things that is progress Steven Magill head of European Value at UBS Global Asset Management told Reuters
If we see more situations like this they will enable us to gain a better perspective on the advantages and disadvantages |
C | Stocks cautious on trade Syria anxiety dollar near six week highs | By Hideyuki Sano and Swati Pandey TOKYO SYDNEY Reuters Asian stocks were cautiously higher on Friday ahead of the U S earnings season and as investors pondered the implications of geopolitical tensions in the Middle East and the prospect of a global trade war U S President Donald Trump s tendency to change his mind over key policy and political issues has fuelled wild market gyrations in recent weeks Spreadbetters pointed to a largely muted start for Europe with FTSE futures a shade higher FFIc1 and DAX futures FDXc1 up 0 2 percent E Mini futures for the S P500 ESc1 were unchanged as were Dow futures 1YMc1 Investors were also reviewing mixed data from China which showed March exports unexpectedly fell 2 7 percent from a year earlier while imports jumped more than forecast While the figures pointed to robust demand from the world s top consumer of crude copper and iron ore they left the country with a rare trade deficit of 4 98 billion for the month the first since last February MSCI s broadest index of Asia Pacific shares outside Japan MIAPJ0000PUS was up a slim 0 1 percent having risen as much as 0 5 percent in morning trading It is still up about 2 percent on the week Chinese shares took a knock with both the blue chip CSI300 index CSI300 and Shanghai s SSE LON SSE Composite SSEC falling 0 8 percent Hong Kong s Hang Seng index HSI inched lower too while Japan s Nikkei N225 gained 0 55 percent The earnings season begins in earnest on Friday with reports from JPMorgan Chase Co N JPM Citigroup Inc N C and Wells Fargo Co N WFC Analysts expect quarterly profit for S P 500 companies to rise 18 4 percent from a year ago in what would be the biggest gain in seven years according to Thomson Reuters I B E S Still investors also had reason to fret The worry list for investors remains long with another military strike on Syria after yet another chemical attack looming large and the Mueller inquiry getting even closer to Trump said Shane Oliver Sydney based chief economist at AMP Capital Markets heaved a sigh of relief over suggestions from Trump that a military strike on Syria may not be imminent However the threat of a strike remained after Washington s earlier warnings against the Syrian government for what is said was a suspected poison gas attack on its civilians TRADE WAR Trade tensions also wasn t far off the surface with analysts at Citi noting prolonged uncertainty will likely hurt open Asian economies such as Taiwan Singapore and South Korea In the most recent change of tack Trump Thursday asked his advisers to look at re joining the Trans Pacific Partnership a multinational trade pact he withdrew the United States from early last year But he later tweeted that the United States would only join the TPP if the deal were substantially better than the one offered to former President Barack Obama Markets have been pushed around by Trump said Hiroshi Watanabe economist at Sony Financial Holdings His modus operandi seems to do anything that seems to be good for his re election If protectionism doesn t work he may switch to international trade he added Markets are still not yet convinced yet if the U S is really re joining the TPP But if it does it s very positive for the global economy and stock markets will like it In the currency market the dollar gained to at 107 57 yen a level not seen since Feb 22 The euro EUR was flat at 1 2326 though on the week it has kept gains of 0 4 percent Oil prices edged lower but are still set for their biggest weekly gains since last July O R
Brent crude futures LCOc1 were off 17 cents at 71 85 a barrel not far from Wednesday s high of 73 09 U S WTI crude futures CLc1 slipped 17 cents to 66 9 |
C | Top 5 Things to Know in the Market on Friday | Investing com Here are the top five things you need to know in financial markets on Friday April 13
1 Trump trade turnaround
U S President Donald Trump appears to have shifted gears on trade policies as he told his top economic advisors to study the possibility of reentering a massive Pacific trade deal suggesting a turnaround from his prior confrontational stance
The President told chief economic advisor Larry Kudlow and U S Trade Representative Robert Lighthizer to examine a return to the Trans Pacific Partnership TPP that Trump abandoned in 2017 according to a White House spokesperson
However Trump did emphasize late Thursday that the rejoining TPP would only be an option if the U S received substantially better terms than the previous deal
Asian equities celebrated the apparent backtracking with Japan s Nikkei ending the session with gains of 0 6 China s Shanghai Composite was a notable exception closing down around 0 7 on the back of a weak reading in exports
European shares also traded mostly higher on Friday though some weak earnings reports limited gains
U S futures pointed to a mixed open on Friday Coming after the prior session s strong gains investors looked ahead to bank earnings and economic data At 5 35AM ET 9 35GMT the blue chip
Dow futures gained 28 points or 0 11 S P 500 futures advanced 2 points or 0 08 while the Nasdaq 100 futures lost 9 points or 0 13
2 Banks kick off earnings season
Banks will unofficially kick off the first quarter earnings season on Friday as major financial institutions prepare to unveil the effect of tax cuts and increasing interest rates on the bottom line
Overall expectations are for profits at S P 500 firms to grow 18 4 in what would be their biggest quarterly profit in seven years
JP Morgan NYSE JPM the first component of the Dow Jones to report this season is scheduled to release earnings at around 7 00AM ET 11 00GMT followed by Citigroup NYSE C and Wells Fargo NYSE WFC approximately one hour later
Analysts are forecasting earnings per share of 2 28 1 61 and 1 06 respectively
3 Oil heads for weekly gains of 9
Oil prices moved higher on Friday as another monthly report pointed to tightening markets
OPEC and its allies appear to have accomplished their mission of bringing global oil stocks to desired levels the International Energy Agency IEA said in its monthly report released Friday predicting that inventories should drop to their five year average a metric used by OPEC to measure the success of output cuts by as early as May
It is not for us to declare on behalf of the Vienna agreement countries that it is mission accomplished but if our outlook is accurate it certainly looks very much like it the IEA said in its monthly report
U S crude oil futures rose 0 64 to 67 50 at 5 36AM ET 9 36GMT while Brent oil traded up 0 64 at 72 48
Buoyed by geopolitical tension over Syria earlier in the week the U S benchmark was on track for weekly gains of 8 8 while Brent was up around 8 The move would be the largest weekly rise since last July
Later on Friday market participants will keep an eye on increasing U S shale production with the Baker Hughes weekly rig count data
4 Consumer confidence in focus
On Friday s economic calendar traders will focus on the preliminary reading of consumer sentiment for April to be released by the University of Michigan at 10 00AM ET 14 00GMT
The index is expected to drop to 100 6 from the 101 4 registered in March that was its highest level since 2004
Also on the economic docket the U S Labor Department will release its Job Openings and Labor Turnover Survey JOLTs at the same time
Furthermore market participants will keep an eye on appearances by Federal Reserve members Eric Rosengren at 8 00AM ET 12 00GMT James Bullard at 9 00 AM ET 13 00GMT and Robert Kaplan at 1 00PM ET as they monitor for clues on whether policymakers remain optimism on inflation and economic growth
Ahead of these references the U S dollar index which measures the greenback s strength against a trade weighted basket of six major currencies slipped 0 09 to 89 41 by 5 36AM ET 9 36GMT
5 China registers first trade deficit in a year
Trade data released Friday showed that Chinese exports unexpectedly fell in March causing the world s second largest economy to post its first trade deficit in dollar denominated terms since February 2017
Specifically China s trade deficit hit 4 98 billion in March compared to the prior month s 33 75 billion surplus That was as its exports unexpectedly declined 2 7 on the year compared to a forecast for a 10 0 gain Imports rose 14 4 beating expectations for a 10 0 advance
Despite the monthly deficit China s trade surplus with the U S surged nearly 20 in the first quarter with analysts indicating that exporters had sped up shipments in the first three months of the year to get ahead of any threatened tariffs |
C | Gold ETFs To Bet On Diwali Bonanza | Gold prices have been on a tear of late with SPDR Gold Shares NYSE GLD TSXV GLD rallying 17 4 as of Oct 24 2019 compared with the S P 500 s 2 9 gain Heightened tensions related to the U S China trade war in recent months have led to this upsurge
Thanks to renewed worries of a global growth slowdown several global central banks have lately been banking on easy money policies The Fed has cut rates twice this year and may enact a further cut in October This has subdued the strength of the U S dollar and brightened the appeal for most commodities that are priced in the U S dollar
Plus other uncertainties related to Brexit the upcoming U S presidential election volatility in oil prices and a broad based global growth slowdown added to the strength to this safe haven metal
In September Citigroup NYSE C commodity analyst Edward Morse expected gold to top an ounce over the next year or two marking a roughly 32 surge from its current price of 1 508 70 read
Diwali Bonanza
To add more shine to the gold story India s biggest festival Diwali is here India is one of the largest buyers of gold and the country s average annual demand is around 800 tons per Dhanteras the first day of the famous Indian festival Diwali is today The occasion is marked by huge gold purchases in India as it is considered auspicious
Now the question is how heavy gold buying are we going to see from Indian customers this Diwali
Due to about a higher import duty and domestic economic slowdown Indian gold imports slumped 68 in September marking a This muted sentiment may not give enough boost to sales this year Gold prices are this October from a year ago
Still jewelers in India have high expectations on Diwali for a rebound in demand and some solid sequential growth though there is an estimate that sales may
One of the country s top jewelers Senco Gold and Diamonds sees a surge in demand for jewelry ahead of Diwali and in the ongoing festive season The company is expecting sequential growth of 30 40 from the previous months Several jewelry retail chains have Analysts are of opinion that Indians might buy gold bars now to get rid of the fabrication charges
Wedding Season Ahead
Investors should note that with the wedding season in India around the corner gold prices will have another reason to run Gifting gold is a deep seated part of marriage rituals in Indian society as weddings make up about
Indian Stocks Wavering Inflation Up
Also gold is viewed as an inflation protected asset and With India s inflation rate surging to a in September Indian investors have another reason to bet on this precious metal
India s stock market has also been posting subdued performances this year with iShares India 50 ETF JK INDY losing about 1 5 in the past six months In the past month INDY is up only 1 8 This may shift some investors toward another asset class like gold
Also if U S stocks started recovering in the fourth quarter bond yields may go up boosting the price of the U S dollar This might cut back on some strength in gold prices and in turn perk up Asian demand
How to Play With ETFs
In short if you want to play Diwali you can bet on gold ETFs like GLD iShares Gold Trust and Aberdeen Standard Physical Swiss Gold Shares ETF There are leveraged gold ETFs like VelocityShares 3x Long Gold ETN TSXV GLD ProShares Ultra Gold DB Gold Double Long ETN BS DGP VelocityShares 3x Inverse Gold ETN TSXV GLD and so on see here
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JPM | Will JPMorgan s JPM Special Dividend Plan Help The Stock | JPMorgan Chase Co s NYSE JPM CEO Jamie Dimon announced that since the company s shares have been gaining so much it is planning to use the excess capital to pay a special dividend to its shareholders rather than using it to repurchase more shares Notably shares of the company have gained around 26 8 year to date compared to the Zacks categorized Major Regional Banks industry s gain of 16 5 Moreover since the presidential election on Nov 8 2016 the stock has gained about 19 5 At the conference Dimon confessed that he was surprised to see the market s reaction to the election results and was not prepared for the same Dimon is of the opinion that as long as the stock is not trading lower than its intrinsic value it would be feasible and beneficial for the company to pay out the excess capital in the form of a special dividend rather than buying back more shares from existing shareholders A special dividend is likely to further boost investor s confidence in the stock It might also help the stock to attract fresh investors Moreover according to a data by Bloomberg the payment of a special dividend will increase JPMorgan s payout ratio to around 84 from the present figure of 82 Further Dimon also mentioned that the company s market revenue in fourth quarter 2016 is expected to be more than 15 which is higher than the year ago figure Other banks like Citigroup Inc NYSE C and Bank of America Corp NYSE C however are expected to choose buybacks over special dividends as a way to return excess capital with Citigroup already making the move towards this direction
Currently JPMorgan carries a Zacks Rank 3 Hold A better ranked stock in the finance space is Carolina Financial Corp NYSE C It has witnessed upward estimate revision of 12 9 for the current year over the past 60 days Its share price is also up 55 9 year to date It currently sports a Zacks Rank 1 Strong Buy You can see Confidential from ZacksBeyond this Analyst Blog would you like to see Zacks best recommendations that are not available to the public Our Executive VP Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand |
JPM | Q4 s Booming Global Economy And Gold | The global economy is enjoying its strongest quarter so far this year What does it mean for the gold market
The JPMorgan NYSE JPM Global PMI remained unchanged in November at 53 3 extending the current spell of unbroken growth to 50 months as one can see in the chart below
The recent improvement signals the acceleration in annual global GDP growth which is on track to reach 2 5 percent in the fourth quarter possibly breaking the barrier of 2 percent It goes without saying that faster economic growth is not good for the yellow metal which usually shines during slowdowns or recessions
Moreover this boost is driven by developed countries especially the United States The U S ISM Manufacturing Index rose from 51 9 in October to 53 2 last month while the Non Manufacturing Index jumped from 54 8 to 57 2 The Markit U S Manufacturing PMI also picked up from 53 4 percent in October to 54 1 in November while the Markit U S Services declined slightly from 54 8 to 54 6 as the chart below shows
Although the latest reading was fractionally lower than in the previous month the rate of growth remained stronger than at any time in the first half of 2016 In consequence of the strong manufacturing and services performance the Markit U S Composite Index was unchanged in November at a high reading of 54 9 percent and signaled a further expansion in business activity Additionally U S factory orders jumped 2 7 percent in October the largest gain since January 2015 showing some signs of recovery after two years of weakness
The key takeaway is that the robust growth of the U S economy is negative for the gold market as it raises the prospects of more aggressive interest rate hiking by the Fed and reduces the attractiveness of the safe haven assets Although it is perhaps too early to assess whether the recent acceleration will last the current market sentiment and risk appetite are bearish for the shiny metal Surely the accelerated growth could also bring some inflation but investors should not forget that gold is the best hedge only against rapid and high inflation |
JPM | Big Banks Rig Silver Market | According to the plaintiffs records surrendered by Deutsche Bank DE DBKGn show traders and submitters coordinating trades in advance of a daily phone call manipulating the spot market for silver conspiring to fix the spread on silver offered to customers and using illegal strategies to rig prices
Plaintiffs are now able to plead with direct smoking gun evidence including secret electronic chats involving silver traders and submitters across a number of financial institutions a multi year well coordinated and wide ranging conspiracy to rig the prices the plaintiffs said in their filing The new scheme far surpasses the conspiracy alleged earlier Bloomberg com December 7 2016
Anyone who denies that gold and silver are manipulated either has not spent time examining the evidence or is financially incentivized to refute all allegations In other words they are either ignorant or willfully corrupt This includes the entire universe of politically corrupt western Central Bankers and professionally criminal Wall Street bankers But first and foremost it includes all three branches of Government
Traders discussing on recorded lines ways in which to rig the silver market Imagine that Lost in the smoke of the latest revelations about the big bank silver market manipulation is the fact that Andrew Maguire presented evidence of this at JPMorgan Chase NYSE JPM over six years ago Perhaps the most shocking aspect about the latest revelations is that JP Morgan was not cited in the Deutsche Bank court filings
Although summarily dismissed by the Commodity Futures Trading Commission and mainstream financial conspiracy JP Morgan has been the ring leader in the silver market manipulation scheme for years
The latest revelations will never be accepted as truth until CNN or CNBC reports on them to verify for the zombie masses that the big banks are indeed corrupt beyond the imagination of conspiracy theorists It will be interesting to see if this will lead to RICO prosecution which it should
RICO law refers to the prosecution and defense of individuals who engage in organized crime In 1970 Congress passed the Racketeer Influenced and Corrupt Organizations RICO Act in an effort to combat Mafia groups Since that time the law has been expanded and used to go after a variety of organizations from corrupt police departments to motorcycle gangs RICO law should not be thought of as a way to punish the commission of an isolated criminal act Rather the law establishes severe consequences for those who engage in a pattern of wrongdoing as a member of a criminal enterprise
The threat of RICO was used to pry open the truth at Drexel Burnham in order to bring down what was at the time one of the biggest if not the biggest financial market corruption schemes in U S history
The latest revelations are hard evidence that GATA has been right since 1998 when it was founded by Bill Midas Murphy and Chris Powell in order to document and expose the gold and silver market manipulation for the world to see GATA s evidence has been written off for over a decade as conspiracy theory Now it is confirmed conspiracy truth In fact Murphy was banned as a guest on CNBC after he discussed gold market manipulation
Fake news Hardly Proof is now in court documents In today s episode of the Shadow of Truth we discuss the latest court documented evidence which confirms that silver market manipulation is standard operating procedure at the big banks who are supported by the taxpayers |
MPC | Fourth day of U S refineries strike ends with new offer | By Erwin Seba HOUSTON Reuters The United Steelworkers union USW said a new contract offer was made by lead oil company negotiator Royal Dutch Shell Plc L RDSa on Wednesday night as a strike by U S refinery workers ended its fourth day The USW has received an offer and will respond after consideration of the offer tomorrow USW spokeswoman Lynne Hancock said I don t know what time they will consider it Contents of the offer will not be revealed About 4 000 workers at nine plants including seven refineries accounting for 10 percent of U S refining capacity continue to walk picket lines in California Kentucky and Texas In a text message to members seen by news media late on Wednesday the USW said minimal progress today Asked about the offer a Shell spokesman simply said the two sides had continued negotiations on Wednesday The two camps have been in a stalemate since the USW called walkouts early on Sunday saying Shell had left the negotiating table when talks broke down The talks have been tougher than in years past A drop of more than 50 percent in oil prices since June has eroded profits at major oil companies prompting executives to say they cannot afford to lift wages for workers Further walkouts may be ordered at some of the other refineries and chemical plants the USW represents if there is no progress in the talks the union has said The union represents a total of 63 refineries accounting for two thirds of national crude oil refining capacity LEAKS REPORTED Also on Wednesday two of the refineries affected by the strike Tesoro Corp s N TSO Los Angeles area refinery in Carson California and Marathon Petroleum Corp s N MPC Galveston Bay Refinery in Texas City Texas reported leaks to regulators A Marathon spokesman said emergency responders in Texas City were notified of the leak as a precaution Marathon Chief Executive Gary Heminger whose company owns two of the refineries where workers are on strike deferred to Shell as the lead negotiator regarding any comment calling the talks a delicate situation Since bargaining first started on Jan 21 the union has rejected five offers from Shell The union is seeking annual pay increases of 6 percent double the size of those in the last agreement It also wants work that has been given in the past to non union contractors to start going to USW members a tighter policy to prevent workplace fatigue and reductions in members out of pocket payments for healthcare The USW has also said the issues directly affect the safety of refinery workers While acknowledging that upstream businesses have been hurt labor leaders say independent refiners and the refining units of integrated companies have been posting big profits thanks to cheap prices for U S crudes they turn into gasoline and diesel The walkouts are in support of a nationwide pact that would cover 30 000 workers and mark the industry s first big strike since 1980 Most of the affected refineries are being run near normal by managers retirees and others from non union plants brought in to replace workers We were very well prepared Heminger said on a results call We would expect to have very strong operations One plant owned by Tesoro Corp N TSO was shutting down due to maintenance work already under way While refiners are promising little or no disruption to production wholesalers and others have snapped up supplies
The strike helped lift gasoline futures early in the week though prices were down about 6 percent on Wednesday below 1 51 a gallon |
MPC | Union rejects sixth refinery offer from Shell talks next week | By Erwin Seba HOUSTON Reuters Union leaders rejected a sixth contract offer Royal Dutch Shell Plc made to U S refinery workers and a pause in negotiations was called Thursday on the fifth day of a strike though talks are set to resume next week The United Steelworkers union USW which represents workers at 63 U S refineries had recommended that locals reject the proposal which was floated after the first big walkouts since 1980 The parties have recessed and have agreed to resume talks Ray Fisher spokesman for Shell whose U S unit leads negotiations for oil companies said after the union rejection About 4 000 workers at nine plants including seven refineries accounting for 10 percent of U S refining capacity have been on picket lines since Sunday in California Kentucky and Texas The walkouts are in support of a nationwide pact that would cover 30 000 workers Companies have called in trained non union workers to keep plants running almost as normal The USW has rejected the sixth offer from Shell a union official said The union also said talks were in recess pending an information request In a message to members late on Thursday that was seen by the news media the union said talks would resume next week Industry offer shows minimal movement the message read The union is seeking a tighter policy to prevent workplace fatigue which is tied to accidents It also wants annual pay increases of 6 percent double the size of those in the last agreement and work that has been given in the past to non union contractors to start going to USW members Reductions in members out of pocket payments for healthcare are also sought The two camps have been in a stalemate since the USW called the strikes saying Shell had left the negotiating table when talks broke down on Saturday Picket lines went up shortly after midnight on Sunday Negotiations have been tougher than in years past A drop of more than 50 percent in oil prices since June has eroded profits at major oil companies prompting executives to say they cannot afford to lift wages for workers The USW may order further walkouts at some of the other refineries and chemical plants it represents if there is no progress in the talks the union has said On Wednesday two refineries affected by the strike Tesoro Corp s Los Angeles area refinery in Carson California and Marathon Petroleum Corp s Galveston Bay Refinery in Texas City Texas reported leaks to regulators
Strikes could complicate the ability of the companies to carry out maintenance work after the upsets analysts say |
MPC | Building unions return to Kentucky refinery despite Steelworkers Picketlines | By Jarrett Renshaw NEW YORK Reuters Workers represented by the Building Trades Unions will return to Marathon Petroleum Corp s N MPC refinery in Catlettsburg Kentucky on Monday even as a strike by the United Steelworkers drags into a second week documents obtained by Reuters show The USW began a strike Feb 1 at nine refineries and chemical plants including Marathon s 240 000 barrel a day Kentucky plant Buildings Trades Unions workers will not be replacing striking workers running the plant according to the letter While the Building Trades Unions say they continue to support the USW s cause their return work comes at a sensitive time for the steelworkers as their strike enters a second week The backing of the building unions is considered crucial for a successful strike nationally a person familiar with refining said For the first week of the strike Marathon advised workers represented by the Building Trades Unions not to return to work These unions represent workers who are employed by maintenance contractors at the plant while USW workers generally operate the units The latest letter tells members to return to work Monday but not to replace USW workers who are still on strike
As a labor organization we fully respect the USW workforce the business manager of the building trades said in a letter to local unions However to avoid any possible detrimental legal proceedings it is advised that your local union direct your members to report to work Talks between the USW and Shell which is negotiating on behalf of the oil companies at a national level have been recessed The USW has rejected six contract offers so far The company declined to comment for this article |
MPC | Shell says no agreement in U S refinery strike talks | HOUSTON Reuters Lead U S oil company negotiator Shell Oil Co said face to face negotiations on Friday with the United Steelworkers union USW failed to yield an agreement to end the 20 day old U S refinery strike Workers at several refineries and chemical plants were waiting for instructions to join the more than 5 000 workers at 11 plants including nine refineries accounting for 13 percent of U S production capacity walking picket lines in the largest national refinery strike since 1980 Rumors about a tentative deal between the USW and Shell Oil which is the U S arm of Royal Dutch Shell Plc were being swapped through text messages emails and phone calls among oil industry insiders throughout the night Discussions with the United Steelworkers concluded for this evening with no agreement in place said Shell spokesman Ray Fisher The Steelworkers said in a message to members and news media including Reuters that talks were continuing A USW spokeswoman confirmed the text message but had no further information whether the talks were continuing on Friday night or some future date Shell and the union have been meeting continuously since talks resumed on Wednesday following a week long break for the company to reply to an information request and a counterproposal from the USW Union negotiators rejected the seventh contract offer from Shell on Thursday night Earlier this week the USW s lead negotiator International Vice President Gary Beevers told Reuters that safe staffing levels at refineries and chemical plants were a sticking point in the talks The strike widened on Feb 6 when workers at two refineries operated by BP Plc were told to walk off their jobs the following day In addition to the two BP operated plants workers are striking at refineries and plants owned by Lyondell Basell Marathon Petroleum Corp NYSE MPC Shell and Tesoro Corp NYSE TSO in California Kentucky Texas and Washington state Only one refinery has shut down due to the strike Tesoro Corp s 166 000 bpd plant in Martinez California was scheduled prior to the strike for a partial shutdown to perform a planned multi unit overhaul Company officials decided to idle the entire plant after the walkout began and said production would not resume for the duration of the work stoppage The USW is seeking a three year industry wide pact that would cover 30 000 workers at 63 U S refineries that together account for two thirds of domestic capacity
Companies have called on temporary replacement workers to keep plants running at nearly normal levels |
MPC | U S refinery strike widens to include nation s largest plant | By Erwin Seba HOUSTON Reuters The U S refinery strike widened on its 20th day with workers at the nation s largest refinery walking off jobs and joining picket lines on Saturday as the United Steelworkers union USW pushes for a new contract that improves wages and safety Strikes are underway or have been called at 15 plants including 12 refineries with a fifth of U S crude processing capacity The stoppages which have forced companies to rely on trained temporary workers to keep plants running close to normal are the largest in the refining sector since 1980 Shortly after talks between union and oil company representatives ended on Friday night the union notified Motiva Enterprises MOTIV UL of a strike by its members at the company s 600 250 barrel per day bpd refinery in Port Arthur Texas USW members are also scheduled to go on strike by 12 a m Sunday at Motiva s 235 000 bpd Convent Louisiana and 238 000 bpd Norco Louisiana refineries and the Shell Oil Co chemical plant in Norco the union said The industry s refusal to meaningfully address safety issues through good faith bargaining gave us no other option but to expand our work stoppage USW International President Leo Gerard said in a statement As of Saturday no new talks had been scheduled between the two sides Motiva was targeted for the strikes because it is a 50 50 joint venture of Royal Dutch Shell Plc and Saudi Aramco SDABO UL Shell s U S arm Shell Oil Co is the lead oil company negotiator in talks with the USW for a national agreement on safety pay and benefits Shell and the USW were near an agreement for a new contract on Friday night but other oil companies were unwilling to accept the bargain said sources familiar with the talks As the lead company Shell has the role to get the oil companies to come along said one of the sources The union leadership group decided Shell needed to be put on the list of targeted companies A Shell spokesman said the company was disappointed by the Port Arthur walkout and strike notices to the Louisiana plants In a letter Shell has sent to striking employees at its Deer Park Texas refinery and chemical plant a copy of which was seen by Reuters the company said the key sticking point was non union contractors who perform daily maintenance which the USW would like to see replaced with union workers The company said it needed flexibility Hiring flexibility is a proven way to protect our core Shell workforce and the long term economic viability of our workforce the letter said This strategy has served us all well as we have not had to conduct any layoffs in decades The strike that began Feb 1 was last expanded Feb 6 when workers at BP Plc operated refineries in Indiana and Ohio were told to begin a work stoppage the following day Workers were already on strike at Shell s 327 000 bpd joint venture refinery in Deer Park since the strike began on Feb 1 MOTIVA ISSUES The Motiva walkout may complicate operations at the Port Arthur refinery which has several units shut but did return its second largest crude distillation unit CDU to full production on Friday night The 195 000 bpd CDU is one of three at the refinery that do the initial refining of crude oil coming into the plant and provide feedstock for all other production units The refinery s largest CDU which has a rated capacity of 325 000 bpd is running at about 200 000 bpd the sources said because a 60 000 bpd hydrocracking unit is shut due to a malfunction The hydrocracker produces motor fuel primarily diesel which has become a lucrative export for U S refiners Motiva also shut a 92 000 bpd gasoline producing fluidic catalytic cracking unit at the refinery in early January for an overhaul It is scheduled to restart in the first half of March Shell and the union had been meeting continuously since talks resumed on Wednesday following a week long break for the company to reply to an information request and a counterproposal from the USW Union negotiators have rejected seven contract offer from Shell The USW s lead negotiator International Vice President Gary Beevers has told Reuters that safe staffing levels were a point of contention in the talks The union also wants no retrogression language which preserves agreements from previous contracts In addition to the BP plants workers are striking at ones owned by Lyondell Basell Marathon Petroleum NYSE MPC and Tesoro in California Kentucky Texas and Washington Only one refinery has shut down due to the strike Tesoro s 166 000 bpd plant in Martinez California which was previously scheduled to undergo maintenance
The USW wants a three year pact that would cover 30 000 workers at 63 U S refineries with two thirds of domestic capacity |
MPC | Workers at largest U S refinery OK deal Tesoro making progress | HOUSTON Reuters More than 700 union workers at the largest U S refinery unanimously approved a new contract in a vote at their union hall in Port Arthur Texas on Tuesday night said union officials The United Steelworkers union USW also said workers at three Tesoro Corp NYSE TSO refineries on the West Coast were making progress in finalizing contracts Return to work agreements usually the final step before ratification votes were under discussion USW members at the Motiva Enterprises MOTIV UL Port Arthur Texas refinery walked off their jobs on Feb 21 as part of the nation s largest refinery strike in 35 years Port Arthur workers are expected to return to their jobs next week This is a ton of bricks off the backs of our members said Jeffrey Wright vice chairman of the Motiva Workman s Committee in USW local 13 423 Our membership is thankful our international leadership got a good contract USW negotiators reached an industry wide agreement to settle the strike with lead U S refinery owner representative Royal Dutch Shell LONDON RDSa Plc on Thursday Shell is a co owner of Motiva USW represented workers are also expected to return to work at Motiva s refineries in Norco and Convent Louisiana next week Workers at Shell s joint venture refinery in Deer Park Texas who were among the first to go on strike when work stoppages began on Feb 1 are scheduled to vote Thursday on the new contract A Tesoro spokeswoman said the company was pleased with the progress being made to end strikes by workers at refineries in Anacortes Washington Carson and Martinez California We look forward to welcoming back our workers and resuming normal operations together said Tesoro s Tina Barbee
The USW said BP LONDON BP Plc Lyondell Basell Industries and Marathon Petroleum Corp NYSE MPC continue fights on tough local issues |
MPC | U S refiners turn to tanker trucks to avoid dumbbell crudes | By Kristen Hays HOUSTON Reuters In a pressing quest to secure the best possible crude U S refiners are increasingly going straight to the source Firms such as Marathon Petroleum Corp NYSE MPC and Delek U S Holdings are buying up tanker trucks and extending local pipeline networks in order to get more oil directly from the wellhead seeking to cut back on blended crude cocktails they say can leave a foul aftertaste While the business of hauling crude from individual oil wells to bulk storage depots or pipeline hubs has become a lucrative niche in recent years thanks to the shale oil revolution refiners are getting into the first mile game for a different reason taking control of their supply chains to secure a more predictable consistent stream of crude Phillips 66 NYSE PSX the nation s fourth largest refiner has added trucks and offloading equipment at several of its refineries to help reduce its reliance on oil coming from Cushing Oklahoma the nation s biggest crude oil crossroads and storage hub Here a growing volume of Canadian oil sands is often mixed with lighter domestic shale crude resulting in blends that can be less profitable than similar oil fresh from the field Phillips 66 executives say operations at its 200 000 barrel per day refinery in Ponca City Oklahoma only 62 miles 100 km from Cushing have improved since it began getting more of its crude directly from wells in the Mississippian Lime shale patch nearby That s really the key Phillips 66 President Tim Taylor told Reuters With Cushing you can get a blended barrel that hits the spec but it s not as consistent as you d like Others are also seeking to cut out the middleman where possible delving into an industry once dominated by independent local players and stepping up pressure on bigger midstream transport and logistics firms to meet their needs In December Delek Logistics Partners LP paid 11 5 million to buy 120 trucks and 200 trailers used to haul crude and asphalt mostly for its parent firm s East Texas and Arkansas refineries CVR Refining LP with two refineries within 120 miles 190 km of Cushing in Oklahoma and Kansas has increased the amount of crude it gathers directly by pipeline or truck by more than a fifth in the past two years In January it gathered 63 500 bpd or more than a third of its total crude slate IT S THE BLENDS DUMBBELL Shipping crude by truck though costly has become a fast growing necessity in places like the Eagle Ford in Texas and Permian Basin newly productive shale oil patches ill served by small local pipeline networks known as gathering systems As a result truck deliveries direct to U S refiners have surged to nearly 400 000 bpd nationwide in 2013 doubling since 2010 government data show Midstream companies including Blueknight Energy Partners and some private equity firms including Riverstone Holdings have also invested For refiners the investment is less about profitable logistics than quality control Many executives say that the crude oil blends being created in Cushing are often substandard approximations of West Texas Intermediate WTI the longstanding U S benchmark familiar to and favored by many refiners in the region Typical light sweet WTI crude has an API gravity of about 38 to 40 Condensate or super light crude that is abundant in most U S shale patches ranges from 45 to 60 or higher Western Canadian Select itself a blend is about 20 While the blends of these crudes may technically meet the API gravity ceiling of 42 at Cushing industry players say the mixes can be inconsistent in makeup and generate less income because the most desirable stuff is often missing The blends tend to produce a higher proportion of fuel at two ends of the spectrum light ends like gasoline demand for which has dimmed in recent years and lower value heavy products like fuel oil and asphalt What s missing are middle distillates like diesel where growing demand and profitability lies You end up with a dumbbell like material rich in front and back ends neither of which refineries find most profitable said Dennis Sutton a former chemist and retired crude quality expert with Marathon Petroleum Corp who now heads the Crude Oil Quality Association The trend extends beyond Cushing With three refineries relatively close to the Utica shale in Ohio Marathon Petroleum has added truck and barge offloading to handle crude and super light condensate as well as fuels increasing its tanker truck fleet 16 percent from a year ago to 170 according to company presentations The trucks can be used for crude or fuel Every place we can we re procuring our own crude Chief Executive Gary Heminger said in an interview Western Refining Inc will use trucks run by its logistics unit to haul more than 50 000 bpd to its plants in New Mexico and West Texas this year up 39 percent from 2014 according to its annual regulatory filing PIPES IN THE MIDDLE Oil pipeline operators who risk losing customers as more refiners source their own supply are also responding At least five new pipelines including Tallgrass Energy Partners Colorado to Cushing Pony Express line which started up in November will ship crudes in separate batches rather than throwing them together in a single stream as has been common for major crude pipelines to Cushing or Houston Traditional common stream lines where super light crudes mingle with WTI like oil also are adapting Magellan Midstream Partners Longhorn pipeline which moves West Texas Permian Basin crude to Houston raised its gravity cap last year to 44 from 42 And it recently started up its joint venture BridgeTex pipeline with a cap of 44 Common stream lines could theoretically keep raising those caps as more lights enter the flow but refiners would demand price breaks said Brian Melton of Blueknight which is part owned by global oil trading group Vitol
If I can run a 44 45 grade and source it at enough of a discount that it makes sense to run it versus a 41 or 42 even if I give up yields that s the tradeoff he said |
MPC | Striking Lyondell Houston refinery workers OK new contract union | HOUSTON Reuters Hourly workers striking against LyondellBasell Industries NV s N LYB Houston refinery voted on Thursday to ratify a new four year contract clearing a key hurdle on the way to ending a three month long strike according to a union official No date has been set for the more than 400 members of United Steelworkers Local 13 227 to return to work as an agreement for re entering the refinery has not been made with Lyondell said Kent Farr a committeeman with the local After contract ratification workers typically return to their jobs within 10 days to two weeks A Lyondell spokesman did not have an immediate comment about the vote which took place at the union s offices on Wednesday and Thursday Lyondell workers will continue to walk picket lines outside the refinery s entrances until the return to work agreement is reached This was the second contract proposal on which Lyondell workers have voted The previous proposal which the company called its last best and final offer was overwhelmingly rejected on April 14 because the company did not include a premium pay provision that was in previous contracts It allowed workers to receive multiple pay differentials when working extensive overtime The new contract does not include the premium pay provision but does include double time provisions according to the union After the April 14 rejection Lyondell put its final offer in place at the refinery and invited strikers to cross picket lines and return to work The strike at Lyondell s Houston refinery began on Feb 1 as part of the largest work stoppage by U S refinery and chemical plant workers in 35 years The strike spread to 15 plants including 12 refineries accounting for one fifth of national refining capacity In addition to Lyondell s Houston refinery strikes are continuing at three other refineries Workers at BP Plc s L BP Whiting Indiana refinery are waiting for a return to work agreement prior to voting on a new contract Talks are ongoing at Marathon Petroleum Corp s N MPC Galveston Bay Refinery in Texas City Texas and the BP Husky Energy TO HSE joint venture refinery in Toledo Ohio Lyondell has kept the 263 776 barrels per day Houston refinery in operation with temporary replacement workers
The new contract provides pay raises of 2 5 percent in the first year 3 percent in the second and third years and 3 5 percent in the final year |
MS | Oil surges on hopes OPEC deal will be shock and awe before meeting end | Investing com With the Organization of the Petroleum Exporting Countries OPEC gathered in Vienna on Wednesday to finalize a deal on limiting output markets were still betting that a shock and awe agreement would be the final outcome even as some experts warned that the meeting is not over
At 7 52 AM ET 12 52GMT oil was spiking around 7 on Wednesday after various OPEC officials gave an optimistic outlook for an agreement to be reached to cut overall production
Saudi energy minister Khalid al Falih said Wednesday that his country was prepared to accept a big hit on its own production and agree to Iran freezing output at pre sanctions levels
Falih noted that discussions were focused on reducing production to the lower range of the September Algiers accord at 32 5 million barrels per day implying a cut of more than one million barrels and added that his hopes were for Russian and other non OPEC countries to reduce by around 600 000 barrels
Reports are putting the total cut in production at around 1 4 million barrels and suggesting that the non OPEC portion of the reduction may be discussed at a gathering of major oil producers on December 8 9
Not a done deal
However the deal has yet to be set in stone with an OPEC communiqu and press conference tentatively scheduled for 10 00AM ET 15 00GMT
Even Falih himself left room for maneuvering as he stated that the big hit that Saudi Arabia would take to production was dependent on making sure that there is consensus and an agreement to meet all of the principles
He repeated earlier remarks that non OPEC production increases had reversed course and felt that most of the growth in OPEC producer output was in the past
If we can t come to an agreement then the other scenario of rolling over and waiting for the market to recover on its own is not a bad outcome Falih explained
If current reports coincide with Wednesday s eventual outcome it would be most similar to what Morgan Stanley NYSE MS had identified on Tuesday as a shock and awe outcome
A surprisingly large cut and non OPEC cooperation could potentially put the market back in balance in early 2017 and send prices into a new trading range these experts said in the prior day s report signaling it as an unlikely outcome
Most analysts had indicated that their base call was a headline agreement to announce a max quota for the entire group in order to buy more time and support prices even without a concrete plan for execution
Apparently largely missed by markets in the buying euphoria on Wednesday Reuters quoted Russian energy sources that said the requested 400 000 barrel cut for Moscow might be a bit excessive
The OPEC request for major oil producers to participate in the agreement may well be put on the backburner until the beginning of December
Venezuelan energy minister Eugenio del Pino told reporters that they were planning a meeting between the cartel and non OPEC members including Russia for December 8 9 according to news agency EFE
The participation could be a key part of the wait and see stance as Energy Intelligence Group reported that an OPEC deal will not be implemented without a non OPEC cut
Meanwhile sources told Reuters that as the meeting progressed on Wednesday OPEC members were still discussing Iraq and that the debate on output cuts was ongoing
Energy Intelligence Group advised market participants not to rule out a no deal as the meeting is not over
With regard to the pending OPEC decision analysts from Macquarie warned that a no deal could send oil prices crashing from current levels
We believe a failed effort will force prices below 40 and perhaps event to the low 30s for a short period of time they warned
At 7 55AM ET 12 55GMT U S crude futures soared 6 68 to 48 25 while Brent oil jumped 6 70 to 50 49 |
JPM | China s yuan to cling to range despite trade spat with U S poll | By Vivek Mishra BENGALURU Reuters China s yuan is forecast to move only a little in the coming months as authorities keep a tight leash on the currency until it becomes clear whether the trade spat with the United States will worsen a Reuters poll showed Despite the severity of the dispute and the potential to disrupt trade flows elsewhere the range of yuan forecasts is even tighter than it was in polls taken in April and at the start of the year reflecting that caution The move in the extremes of the range also suggests a gradual appreciation in the yuan In the meantime the resurgent U S dollar is at its strongest in over three months but is still down more than 2 percent so far in 2018 against the yuan The yuan is forecast to trade steady at 6 37 per dollar in three months according to a Reuters survey of over 60 foreign exchange analysts taken May 3 9 The currency is predicted to trade at 6 36 in a year As the U S dollar heads higher it is unlikely that the Chinese yuan will be immune to this move But we expect USD CNY to continue to range trade in the near term amid U S China trade tensions said Irene Cheung senior strategist for Asia at ANZ Chinese officials are expected to meet their U S counterparts in Washington for a second round of negotiations next week after talks last week in Beijing highlighted by a list of aggressive U S demands A slight but persistent upward bias in the USD CNY fixing and a cut in the Reserve Requirement Ratio RRR suggest that China is being cautious until the trade tensions are resolved Cheung added The People s Bank of China PBoC lowered its daily currency reference rate to its weakest since January on Wednesday That move suggests policymakers might be working to limit gains in the yuan It is unlikely that China and the U S will reach a grand deal very soon given the large gap between the list of demands and offers said Haibin Zhu chief China economist at JPMorgan NYSE JPM in a note to clients The biggest risk at this stage is that both sides have the wrong perception of the counterpart s bottom line and both sides seem to have under estimated the losses if a trade war eventually occurs The risk of a trade war between the United States and China threatens to curb the economic momentum created by years of policy stimulus a Reuters polls of over 500 economists worldwide found ECILT WRAP According to a separate Reuters poll on currency positioning taken last week bullish bets on the Chinese yuan fell to the lowest since October in the previous two weeks But the survey did not point to any sharp depreciation in the yuan ASIA FXP A majority of strategists forecast the yuan to rise That includes two respondents predicting it to strengthen sharply to 6 0 per dollar or lower a rate not seen since China unified its dual exchange rates officially devaluing the yuan overnight by 33 percent in January 1994 Recent trade related anxieties could support the greenback and restrain the yuan for now said Erik Nelson currency strategist at Wells Fargo NYSE WFC But confidence surveys point to steady and orderly growth inflation has ticked higher and China is gradually nudging interest rates up factors that should eventually see a stronger Chinese yuan versus a soft U S dollar To counter capital outflows following an interest rate hike from the U S Federal Reserve on March 21 the Chinese central bank raised its seven day rate the day after and its 14 day rate in April That is a clear signal Beijing is watching policy moves across the globe and is ready to contain capital outflow risks REBOUNDING RUPEE The Indian rupee which has lost nearly 6 percent this year hit its lowest level since February 2017 on Wednesday But the currency is predicted to recoup some of those losses against the dollar over the coming year largely supported by expectations for strong economic growth ECILT IN The latest consensus is for the rupee to trade at 66 29 per dollar by end July and at 65 83 in a year It was trading around 67 42 on Wednesday We see a firmer rupee over time Overall economic growth continues to recover while inflation softened India s central bank remains neutral for now while the committee s composition of votes remains slightly hawkish added Wells Fargo s Nelson India s relatively high interest rates and the recent announcement to increase debt quotas for foreign investors should support the rupee via capital inflows
Other stories from the global foreign exchange poll Polling by Shaloo Shrivastava and Sarmista Sen Editing by Toby Chopra |
JPM | China receives JPMorgan application to set up JV brokerage | BEIJING Reuters China s securities regulator has received an application from JPMorgan Broking Hong Kong Ltd a unit of JPMorgan Chase Co N JPM to set up a joint venture brokerage it said on Thursday The China Securities Regulatory Commission will examine the application effectively and according to the law the regulator said in a statement published on its website
JPMorgan aims to hold a 51 percent stake in the brokerage it added |
JPM | U S consumer prices rise slightly labor market tightening | By Lucia Mutikani WASHINGTON Reuters U S consumer prices rose less than expected in April suggesting that inflation was increasing at a moderate pace which could allow the Federal Reserve to continue gradually raising interest rates But with the labor market tightening and oil prices rising after President Donald Trump on Tuesday pulled the United States out of an international nuclear deal promising to restore stiff sanctions on Iran price pressures are expected to accelerate in the coming months Inflation is flirting with the U S central bank s 2 percent target Policymakers have in recent days signaled they would not be too concerned if inflation overshot the target reiterating what the Fed said in its statement last week The Labor Department said its Consumer Price Index rose 0 2 percent in April as increases in the cost of gasoline and rents were tempered by a drop in motor vehicle prices The CPI had slipped 0 1 percent in March The sources of the weakness in last month s reading do not suggest the onset of a trend shift lower said Michael Feroli an economist at JPMorgan NYSE JPM in New York Today s number would not deter the Fed from hiking interest rates again next month In the 12 months through April the CPI increased 2 5 percent the biggest gain since February 2017 That followed a 2 4 percent rise in the year to March Excluding the volatile food and energy components the CPI edged up 0 1 percent after two successive monthly increases of 0 2 percent The so called core CPI rose 2 1 percent year on year in April matching March s increase Economists had forecast the CPI rebounding 0 3 percent in April and the core CPI climbing 0 2 percent The personal consumption expenditures price index excluding food and energy which is the Fed s preferred inflation measure accelerated 1 9 percent year on year in March as last year s big declines in the price of cell phone service plans dropped out of the calculation Economists expect the core PCE price index which had increased 1 6 percent in February to breach the 2 percent target in May In their policy statement last week Fed officials said they expected annual inflation to run close to the symmetric 2 percent target over the medium term The central bank left interest rates unchanged last week The Fed hiked rates in March and has signaled at least two more increases for this year Stocks on Wall Street were trading higher while U S Treasury yields fell The dollar DXY slipped against a basket of currencies SKILLS MISMATCH In another report on Thursday the Labor Department s first time applications for state unemployment benefits were unchanged at a seasonally adjusted 211 000 for the week ended May 5 Claims dropped to 209 000 during the week ended April 21 which was the lowest level since December 1969 The labor market is considered to be near or at full employment with the unemployment rate close to a 17 1 2 year low of 3 9 percent That has led to a slowdown in job growth as employers struggle to find skilled workers A government report on Tuesday showed job openings rising to a record 6 6 million in March Competition for workers is expected to push up wage increases which have remained moderate It is not enough to say that companies continue to be reluctant to lay off workers they are becoming increasingly reluctant to do so said John Ryding chief economist at RDQ Economics in New York The only thing missing is a faster growth rate of labor compensation but we believe that this is coming Strong wage growth and higher gasoline prices could fan inflation pressures Last month gasoline prices rebounded 3 0 percent after tumbling 4 9 percent in March Crude oil prices jumped to 3 1 2 year highs on Wednesday following Trump s decision to exit the Iran deal Food prices rose 0 3 percent last month the largest increase in a year after nudging up 0 1 percent in March Owners equivalent rent of primary residence which is what a homeowner would pay to rent or receive from renting a home rose 0 3 percent last month after a similar gain in March Healthcare cost increases slowed edging up 0 1 percent after advancing 0 4 percent in March Prices for used cars and trucks tumbled 1 6 percent in April the largest drop since March 2009 The cost of recreation fell 0 4 percent last month the biggest decline since December 2009 There were also decreases in the cost of airline tickets new motor vehicles and communications The cost of motor vehicle insurance fell for the first time in a year
Apparel prices rose and costs of household furniture increased 0 5 percent last month the largest in three years |
JPM | Asian stocks near three week high eyes on upcoming U S Korea summit | By Swati Pandey SYDNEY Reuters Asian shares rallied on Friday as investors appetite for riskier assets got a boost from soft U S inflation which helped alleviate worries of faster rate hikes by the Federal Reserve Markets were also cheered by a further easing in tensions on the Korean Peninsula after U S President Donald Trump said he would meet North Korean leader Kim Jong Un in Singapore on June 12 for talks on its nuclear weapons program MSCI s broadest index of Asia Pacific shares outside Japan rose 0 7 percent to near three week highs with broad based gains across all sectors Japan s Nikkei climbed 1 2 percent But spreadbetters indicated the upbeat mood was unlikely to last with FTSE futures down a bit and E Minis for the S P500 a touch softer Most emerging Asian currencies were buoyant as the dollar eased after Thursday s slower than expected April consumer price gain The soft figures followed payrolls numbers last week which pointed to sluggish wage growth The two data sets meant inflation may be rising but not so rapidly that the Fed would have to take aggressive actions to keep the economy from overheating said James McGlew analyst at Perth based stock broker Argonaut A recent shakeout in global markets partly stoked by Sino U S trade tensions has also eased while money managers expect the relatively low global rates that have fueled a Goldilocks boom in stock markets will remain in place for some time While inflation is continuing to trend up it s only happening slowly So Goldilocks continues Shane Oliver chief investment manager at AMP said in a note Indeed a key measure of expected market swings the Cboe Volatility Index or VIX has fallen very close to levels last seen in early January when stock markets were buoyant GEOPOLITICS While North Korea has come off the boil for now geopolitical concerns still remain as the U S and China continue skirmishing over trade and tensions rise in the Middle East Trump still needs President Xi Jinping and China s support in dealing with North Korea and this will be his priority in the short term economists at JPMorgan NYSE JPM wrote in a note to clients Once the meeting is finished trade may return to the fore The United States and China have locked horns over import tariffs after Trump announced hefty duties on Chinese goods provoking a tit for tat response from Beijing It is notable that in line with this view the U S has extended hearings over China tariffs drawing out the process they added U S and Chinese officials will meet in Washington for a second round of trade talks next week after apparently making little progress in discussions in Beijing earlier this month Currency markets were largely muted during Asian trading The dollar index was up 0 2 percent after falling the most since late March on Thursday Investors trimmed their expectations for four Fed rate hikes after inflation data showed U S price pressures remained weak The Fed has already raised rates once this year and is widely expected to go two more times in 2018 The British pound inched above a four month low of 1 3457 touched on Thursday after the BoE held key borrowing costs It was last at 1 3505 The recent slowing in price growth in major economies has boosted expectations that most central banks except the Fed will continue their massive bond buying programs to keep policy stimulatory The euro was a tad lower at 1 1893 The Japanese yen gained mildly to be last at 109 29 per dollar Malaysian markets were closed Friday but its newly appointed Prime Minister Mahathir Mohamad emerged with key election pledges including repealing an unpopular goods and services tax and restoring a petrol subsidy Ratings agency Moody s said some campaign promises would be credit negative for Malaysia Such concerns pushed up the cost of insuring against a Malaysia default with the country s 5 year credit default swap price at its highest since early June 2017 at 95 090 basis points In commodities markets spot gold slipped 0 1 percent to 1 319 33 an ounce Oil prices eased but stayed near multi year peaks amid supply concerns after Trump withdrew from an Iranian nuclear deal and reinstated sanctions
U S crude futures were last down 10 cents at 71 26 a barrel Brent crude futures fell 18 cents to 77 29 a barrel after hitting 78 earlier in the day their highest since November 2014 |
JPM | Barclays CEO fined 1 5 million for trying to unmask whistleblower | By Lawrence White and Huw Jones LONDON Reuters British regulators and Barclays L BARC have fined the bank s Chief Executive Jes Staley a combined 1 1 million pounds 1 5 million after he tried to identify a whistleblower who sent letters criticizing an employee of the bank The Financial Conduct Authority FCA and the Bank of England s Prudential LON PRU Regulation Authority said on Friday they had together fined Staley 642 000 pounds That included a 30 percent discount for him agreeing at an early stage to settle Barclays imposed a 500 000 pound cut to his 2016 pay The regulatory fine is the first ever such penalty for the sitting CEO of a major bank in Britain and cast a pall over Staley s efforts to show the bank has improved its culture since the freewheeling days of before the 2007 8 financial crisis Mr Staley s actions fell short of the standard of due skill care and diligence expected of a CEO in a regulated firm the FCA said Regulators said the fine was only 10 percent of his overall pay package Staley a 61 year old American and former JPMorgan NYSE JPM banker who took the helm at Barclays in December 2015 at one stage appeared at risk of losing his job over the probe I have consistently acknowledged that my personal involvement in this matter was inappropriate and I have apologized for mistakes which I made Staley said in the bank s statement on Friday The regulatory findings will also be closely read by lawmakers keen to ensure top banking officials are held accountable for their actions at a time when there are growing calls to better protect whistleblowers The regulators stopped short of saying Staley was unfit to continue in his role after he twice attempted to find out who wrote letters raising concerns of a personal nature about an unidentified senior employee Mr Staley acted unreasonably in proceeding in this way and in doing so risked undermining confidence in Barclays whistleblowing policy and the protections it afforded to whistleblowers the FCA said VIDEO FOOTAGE Tracking down the whistleblower became a transatlantic effort the regulators report showed A copy of the envelope of the first letter was sent by Staley s office via group security to a Barclays employee in the United States who engaged with their contacts in the U S to try and identify the author These contacts provided the date time location and cost of buying postage for the first letter Group security then made a fruitless attempt to obtain video footage of the person who bought postage for the first letter the report said It was the regulators first case brought under Britain s new senior managers regime SMR a post financial crisis reform aimed at making top staff directly accountable for their actions Barclays is subject to the first ever requirements to tell regulators annually about any whistleblowing cases made against senior managers and any cases where Barclays has sought to identify anonymous whistleblowers The bank s whistleblowers champions who come under the SMR will also have to attest personally each year on the soundness of Barclays whistleblowing systems Barclays said in April last year it had reprimanded Staley and would cut his bonus as the two financial watchdogs launched a year long investigation into his actions Authorities in the United States are still investigating the case
1 0 7381 pounds |
JPM | Verizon buying back 2 5B in debt | Verizon NYSE VZ says it will repurchase some 2 5B in debt securities over the coming month It s delivered a notice of repurchase on its floating rate notes due Feb 21 2025 it expects to repurchase all outstanding amount in those notes before June 11 Shares flattened out today after some earlier gains following an upgrade from JPMorgan NYSE JPM they finished the day up 3 Now read |
JPM | Asian Equities Rise Amid Easing U S China Trade Tension | Investing com Asian equities rose in afternoon trade amid signs of easing U S China trade tension as U S President Donald Trump ordered the Commerce Department to get Chinese telecom equipment maker ZTE Corp back into business
Trump said in a tweet on Sunday that he is working with Chinese President Xi to give ZTE Corp HK 0763 a way to get back into business fast
Too many jobs in China lost Commerce Department has been instructed to get it done said Trump
The tweet came weeks after the decision to cut off the Chinese firm from its U S suppliers and accused the company of violating export restrictions by illegally shipping U S goods to Iran ZTE suspended its main operations earlier in the month while trading in the company s shares has been suspended since the ban
This suggests that Trump might see the chance for real progress on trade talks and is softening the U S position on an issue important to China JPMorgan NYSE JPM said in a note
Trump also needs China to remain on side ahead of his meeting with North Korea s Kim and this also suggests that until the 12 June meeting the signaling from the U S on trade will be more positive
Malaysian equities were another focus on Monday as the stock market reopened after a two day holiday following a surprising victory of Mahathir Mohamad in the country s general elections last week The FTSE Malaysia KLCI recovered in afternoon trade after recording early losses of more than 2
The Shanghai Composite and the Shenzhen Component both gained 0 6 by 1 00AM ET 05 00 GMT The People s Bank of China said on Friday that it would maintain its neutral monetary policy while keeping the yuan currency basically stable Some investors have previously expected the central bank to loosen its policies to support the economy amid growing fears of a trade war with the U S
Separately U S officials are set to have talks in Washington with China s top trade official Liu He to resolve an intensifying trade dispute between the two nations according to reports
Meanwhile South Korea s KOSPI slipped 0 1 The U S is ready to allow investments in North Korea once it has more confirmable evidence of its denuclearization according to reports who cited two U S top national security officials
The remarks came ahead of a historic summit between Trump and Kim in Singapore on June 12
Elsewhere Japan s Nikkei 225 climbed 0 2 while Australia s S P ASX 200 also added 0 3
Looking ahead investors attention would likely turn to the retail sales and industrial production data due from the U S and China later this week |
C | Uber agrees to buy electric cycle sharing startup JUMP Bikes | By Heather Somerville SAN FRANCISCO Reuters Ride hailing company Uber Technologies Inc UBER UL said on Monday it has agreed to buy electric bicycle service JUMP Bikes allowing Uber to offer U S passengers an alternative to cars and further consolidating the crowded bike sharing industry JUMP is a dockless electric bike service that has rolled out in San Francisco where it has 250 bikes and Washington About 100 JUMP employees will join Uber an Uber spokeswoman said Terms of the deal which the spokeswoman said is expected to close in the coming weeks were not disclosed The deal furthers Uber s goal of offering the fastest or most affordable way to get where you re going whether that s in an Uber on a bike on the subway or more said Uber Chief Executive Dara Khosrowshahi JUMP bikes in January integrated its service with Uber s smartphone app in San Francisco so that users could find one of JUMP s bright red bicycles by opening the Uber app The Uber spokeswoman said the company had no plans to withdraw the standalone JUMP app The deal signals a shift for Uber toward a wider set of transportation options in urban centers We re excited to begin our next chapter and to play a significant part in the transition of Uber to a multi modal platform and help shift millions of trips from cars to bikes said JUMP CEO Ryan Rzepecki With the addition of bicycles Uber is taking a page from the playbook of competitors such as China s Didi Chuxing Uber has at times lagged rivals in certain markets because it has been limited to private car hailing Based in New York JUMP started in 2010 as Social Bicycles evolving over the past eight years from selling bikes to operating its own fleets JUMP bikes are unlocked and locked using a smartphone app Because they are dockless they can be left at any public bike rack eliminating a lot of the infrastructure cost other bike share companies incur and their location is tracked via GPS The company has raised about 11 million from investors JUMP is part of the bike sharing craze that made its way to the United States after sweeping through China Chinese startups Mobike and Ofo have recently entered the United States competing with bike share services sponsored by Citigroup Inc N C and Ford Motor Co N F and California based startups such as LimeBike But the crowd of startups has begun to thin through acquisitions including Didi s deal with Bluegogo and China internet company Meituan Dianping s purchase of Mobike
Industry experts say more consolidation will follow in the United States particularly as bike sharing companies face regulatory limits on the number of bikes allowed in cities and difficulties getting Americans accustomed to pedaling instead of driving |
C | Tax Cuts Will Power Up First Quarter Earnings | Investing com First quarter earnings are expected to top those of the fourth quarter as companies continue to benefit from the corporate tax rate cut of last 2017 Earnings for the S P 500 are expected to grow by 17 5 in the quarter according to Factset That s up sharply from the 11 4 forecast of December and is the biggest revision since the company started tracking results 15 years ago Credit Suisse SIX CSGN estimates that the tax cut will add 6 9 to S P 500 earnings The financial and tech sectors are expected to lead with earnings growth of 24 and 23 respectively In the fourth quarter a record 77 of companies beat sales estimates Earnings rose just under 15 during the period Earnings growth for all of 2018 is forecast at 18 5 First quarter earnings kick off in mid April with Citigroup NYSE C Wells Fargo NYSE WFC and JPMorgan NYSE JPM all reporting on April 13 |
C | OPEC Political Crises Threaten to Double Its Million Barrel Cut | Bloomberg The deal OPEC struck in 2016 to clear a global glut by halting a significant chunk of oil production took almost a year of bargaining and brinkmanship By year end the group may have lost the same amount of crude unintentionally
The Organization of Petroleum Exporting Countries is already cutting daily production by much more than its pledged 1 2 million barrels Venezuela s economic crisis is battering its oil industry and pushing output to the lowest level in decades with a further decline likely If U S President Donald Trump also reimposes sanctions on Iran the cartel s unplanned losses could swell to double the targeted cut
That would pose a dilemma for Saudi Arabia and Russia the leaders of the cuts agreement Should they let the oil market get even tighter but run the risk that higher prices hurt demand or spur an even bigger wave of American shale oil Or should they fill the gap by increasing production but in the process unravel their historic agreement prematurely
When we think about the year end it s Iran in combination with Venezuela said Helima Croft head of commodity strategy at RBC Capital Markets LLC in New York We could have a snap back in U S sanctions on Iran In Venezuela it s a slow bleed the losses just keep adding up
Venezuelan Slump
Saudi Arabia and Russia for years oil market rivals assembled a coalition of 24 OPEC nations and non members to eliminate the surplus created by the U S shale boom The accord has exceeded expectations Excess inventories will be gone in two to three months according to the International Energy Agency and Brent crude prices are above 70 a barrel the highest in three years
The collapse of Venezuela s oil industry has aided the wider group s efforts The nation s daily production of 1 5 million barrels is 560 000 barrels lower than October 2016 the starting point specified in the cuts agreement That s more than five times its pledged reduction
The Latin American country s economic crisis shows no sign of abating and output may slump to 1 1 million barrels a day by the end of the year according to consultant Rapidan Energy Group in Washington The decline will be even steeper if the U S follows through on threats to impose new sanctions after elections scheduled for May Rapidan said
Iran Sanctions
The loss of that much Venezuelan crude would tighten oil markets significantly more than OPEC and its allies intended The growing tensions between the U S and Iran could make the supply deficit even more severe
Next month President Trump will review America s commitment to an international agreement that restricted Iran s nuclear activities in exchange for relief from sanctions He has been fiercely critical of the accord and recently fired top officials who were supportive of the deal replacing them with more hostile figures
There s a 70 percent likelihood that Trump will abandon the pact and reintroduce sanctions on oil sales said Mike Wittner head of oil market research at Societe Generale PA SOGN SA That would curb Iran s exports by about 500 000 barrels a day he estimates
Under the terms of the 2016 OPEC deal Iran didn t have to reduce production because it was still recovering from the last round of international sanctions So a half million barrel drop in its output combined with the loss of 900 000 barrels a day of Venezuelan crude beyond its pledged reduction would double the group s intended cut
High Risk
The situation in both countries is highly uncertain and the direst predictions may not be fulfilled America s European allies are keen to preserve the accord with Iran which could mean the impact of renewed U S restrictions on oil sales would be limited said Olivier Jakob at consultants Petromatrix GmbH in Zug Switzerland Venezuela s state oil company has so far managed to avoid defaulting on its debt although it shows no sign of having the resources required to reverse the slide in production
Still the likely outcome is that OPEC s efforts to tighten the market will go further than intended and the inventory draw will be more than the target said Ed Morse head of commodities research at Citigroup Inc NYSE C in New York
That would give Russia and Saudi Arabia the dilemma of whether to continue restraining production or restore it It s not clear which they would choose
Before OPEC and Russia agreed to extend their cuts last year Moscow voiced concerns that letting prices rise too high would only stimulate more production in the U S More recently however Energy Minister Alexander Novak echoed Saudi support for continuing the curbs until the end of 2018 as planned and spoke of the cooperation lasting indefinitely
Maintaining the cuts and allowing a significantly tighter market would align with Saudi Arabia s desire for an oil price of about 80 a barrel to support the valuation of Aramco before an initial public offering Yet it may also be inclined to boost output to take market share from regional antagonist Iran just as it did in the last round of sanctions in 2012
Saudi Arabia increased its production the last time Iran was under sanctions said Eugen Weinberg head of commodities research at Commerzbank AG DE CBKG in Frankfurt Is it going to be different this time around |
JPM | November ETF Asset Flow Report | Given how crucial November was given the U S presidential election it is warranted that we look at how the 2 47 billion ETF industry performed in the month Overall the month saw sweet surprises The Trump rally for the most part of the month on hopes of fiscal reflation can be credited to these unexpected gains
However greater U S economic growth momentum and staggering retail sales on events like Black Friday and Cyber Monday along with an OPEC output curb deal also deserve credit read
Against this backdrop let s take a look at the corners that were the hot favorites of investors and those that were casted out
U S Markets Fueled Up
A better earnings season U S economic recovery and hopes of higher fiscal spending and tax cuts kept investors charged up throughout the month As a result SPDR S P 500 ETF NYSE SPY Trust AX SPY iShares Core S P 500 and Vanguard 500 ETF grabbed about 8 37 billion 3 84 billion and 1 23 billion in assets respectively in the month read
Small Caps Get Huge Attraction
The Trump rally was mainly beneficial for small cap stocks leading the Russell 2000 to log its longest rally in A 13 year high greenback and U S economic momentum were the other factors that attracted investors to this space These stocks have less foreign exposure and are thus less perturbed by negative currency translation read
Plus Trump s plan to put America first and market speculation of higher domestic job creation went in favor of small cap stocks Small cap ETFs like iShares Russell 2000 thus stood second in the asset gatherers list having hauled in about 6 1 billion in assets iShares Core S P Small Cap also fetched about 1 44 billion in assets read
Finance Gets Traction
Since Trump is not supportive of the stringent Dodd Frank Regulatory Act especially on smaller banks his win went in favor of financial stocks A rising rate environment on increased inflationary expectations and bets on faster monetary policy tightening were added advantages As a result Financial Select Sector SPDR ETF NYSE XLF hauled in 5 5 billion in assets in the week read
TIPS Bonds Top
Increased inflationary expectations on Trump s victory boosted investors interest in TIPS bonds iShares TIPS BondETF BK TIP attracted about 2 17 billion in assets in November read
Emerging Market Loses
This segment faced the double whammy of a falling currency and Trump s controversial stance on foreign policies regarding trade immigration and outsourcing Since many emerging markets are known as solid manufacturing outsourcing hubs iShares MSCI Emerging Markets ETF NYSE EEM saw about 3 54 billion of funds gushing out Emerging market bond ETF iShares JPMorgan NYSE JPM USD Emerging Markets Bond ETF AX EMB lost about 908 5 million in assets in November
Gold Lost Its Glitter
With safe havens losing their appeal and the greenback rising gold fell out of investors favor SPDR Gold Trust V GLD and iShares Gold Trust AX IAU shed about 2 29 billion and 1 14 billion in assets respectively
Low Volatility ETFs Out of Favor
Since risky securities rallied hard in the month low volatility ETFs like iShares Edge MSCI Minimum Volatility EAFE and iShares Edge MSCI Minimum Volatility USA ETF saw about 688 6 million and 680 1 million of assets respectively leaving the funds
Consumer Funds Were Hit
First Trust Consumer Staples AlphaDEX ETF MU FXG and First Trust Consumer Discretionary AlphaDEX ETF also shed about 1 12 billion and 1 089 billion in assets Higher rates prospects of rising energy prices on an OPEC output cut deal and greater focus in other sectors like industrial and healthcare probably led investors to shun consumer stocks
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MPC | Giving thanks for big stock gains | By Ryan Vlastelica NEW YORK Reuters U S stock investors head into the Thanksgiving holiday thankful for the market s recent strength which puts major indexes on track for another year of double digit gains though the swiftness of the advance has raised eyebrows
The S P 500 SPX is up 13 3 percent from an intraday low hit on Oct 15 and the gains since then have been broad Since that bottom all but 23 S P 500 components are higher
The magnitude of the rally has some concerned Several notable fund managers at this week s Reuters Investment Outlook Summit said they don t expect stocks to do much in 2015
Citigroup on Thursday wrote that the market was on the edge of euphoria causing us to be more cautious while Goldman Sachs on Wednesday released its 2015 year end target of 2 100 just 1 8 percent above current levels
The recent stretch of solid earnings and economic figures however leaves managers puzzled over what could hurt the market going forward
It s tough for me to wrap my head around the next big move being lower said David Lebovitz global market strategist at J P Morgan Funds in New York Some people aren t comfortable with current levels but fundamentals remain strong
The market s recent gains prompted a notable commentary from the Federal Reserve Bank of San Francisco on Nov 13 that pointed out certain valuation metrics look stretched It also noted that the ratio of NYSE margin debt to GDP in September stood at an elevated level that in the past was followed by major downturns in stock prices
Jim McDonald chief investment strategist at Chicago based Northern Trust Asset Management wasn t buying it He said the level of margin debt is more or less consistent with the trend line over the past 20 plus years though a pullback was possible
The primary issue facing the market is that we ve gotten a year s return out of the S P in the past month he said Investors are more than willing to take risk off the table after such a big run
Volatility may pick up next week as many take off for Thanksgiving Markets are closed on Thursday and will close early on Friday
However December has historically been the best month of the year for the S P according to the Stock Trader s Almanac averaging a rise of 1 7 percent
Energy names have jumped sharply since the October low which could make them liable to profit taking especially going into the Organization of the Petroleum Exporting Countries Nov 27 meeting when members will consider whether to cut output to shore up prices
Chesapeake Energy N CHK Newfield Exploration N NFX CONSOL Energy N CNX and Marathon Petroleum Corp N MPC have all gained more than 20 percent since the market s October low
Editing by Nick Zieminski |
MPC | Shell and union to talk on day four of U S refineries strike | By Erwin Seba HOUSTON Reuters Negotiations will resume on Wednesday between Royal Dutch Shell Plc L RDSa and union leaders as they haggle over a new wage contract for striking U S refinery workers the company said The two camps have been in a stalemate since the United Steelworkers union USW called walkouts early on Sunday at nine plants with about 10 percent of U S refining capacity saying Shell the lead negotiator for the oil companies left the negotiating table when talks broke down The talks have been tougher than in years past A drop of more than 50 percent in oil prices since June has eroded profits of major oil companies prompting executives to say they cannot afford to lift wages for workers Talks are scheduled for today Shell spokesman Ray Fisher said The union said in a text message that talks late on Tuesday made no progress and that they would resume on Wednesday Shell called Tuesday s talks productive Further walkouts may be ordered at some of the other 63 refineries and chemical plants it represents if advances are not made the union has said Neither side has said when on Wednesday they will meet Shell has declined to detail the nature of the negotiations Marathon Petroleum Corp N MPC Chief Executive Gary Heminger whose company owns two of the refineries with workers on strike deferred to Shell as the lead negotiator regarding any comment calling the talks a delicate situation Since bargaining first started on Jan 21 the union has rejected five offers from Shell The union is seeking annual pay increases of 6 percent double the size of those in the last agreement It also wants work that has been given in the past to non union contractors to start going to USW members a tighter policy to prevent workplace fatigue and reductions in members out of pocket payments for healthcare While acknowledging that upstream businesses have been hurt labor leaders say independent refiners and the refining units of integrated companies have been posting big profits thanks to cheap prices for U S crudes they turn into gasoline and diesel The walkouts are in support of a nationwide pact that would cover 30 000 workers and mark the industry s first big strike since 1980 Most affected refineries are being run near normal by trained managers retirees and others from non union plants brought in to replace workers We were very well prepared Heminger said on a results call We would expect to have very strong operations One plant owned by Tesoro Corp N TSO was shutting down due to maintenance work already under way While refiners are promising little or no disruption to production wholesalers and others have snapped up supplies
The strike helped lift gasoline futures early in the week though prices were down about 6 percent on Wednesday below 1 51 a gallon |
MS | The final nail in the coffin may be coming for the Federal Reserve s freedom | One of the central tenets of the Federal Reserve and most central banks throughout the developed world in the modern era has been their ability to stay above the political fray
With a few notable exceptions the Fed has acted without fear of political retribution from the executive branch although the chair still has to testify to Congress and the president periodically
The assumption of independence however has come under fire in recent months After President elect Donald Trump floated the conspiracy theory that the Fed was to help President Barack Obama and Hillary Clinton a of Board Chair Janet Yellen in September and the possibility of Trump with sympathetic members it no longer is a given that the Fed will be able to maintain its freedom going forward
In fact Elga Bartsch the chief European economist at Morgan Stanley NYSE MS said in the bank s outlook for 2017 that one more financial cataclysm could be all that it takes for independence to end
Having been overburdened for a long time many central banks might just be one more economic downturn or financial crisis away from a full on political backlash said Bartsch in a note to clients Such a political backlash could call into question one of the long standing tenets of modern monetary policy making central bank independence
Post crisis central bank policies have left the financial system potentially vulnerable to a political backlash
A prolonged period of exceptionally low interest rates has weighed on financial intermediaries business models said the Morgan Stanley economist
Hence financial stability issues ranging from a credit crunch to shortfalls in pension benefits or life insurance payments to a hard landing in risk asset markets notably housing could turn out to be final nail in the coffin of central bank independence
Of note Yellen has independence as a key part of the Fed s work The two periods of excessive political pressure on the Fed since the end of World War II immediately after that war and later in the period leading up to the stagflation of the 1970s
Additionally how much central bank independence could change depends on the will of the people
Whether governments would be able to amend the institutional framework central banks operate under will largely depend on how voters would react to such a proposed change concluded Bartsch
Pew Research s found that 37 of Americans had an unfavorable view of the central bank while 47 had a favorable opinion and 16 having no opinion Interestingly opinions were also heavily partisan with 48 of Republicans having a negative view while only 28 of Democrats viewed the bank unfavorably |
MS | America Movil agrees to buy mobile spectrum from Grupo MVS | MEXICO CITY Reuters Billionaire Carlos Slim s America Movil said on Monday that its wireless subsidiary had agreed to buy spectrum for mobile devices from Mexico s Grupo MVS which would increase Mexico s dominant player s offer of high speed data services America Movil said it would buy 60 MHz of spectrum in the 2 5 GHz band It did not disclose the terms of the deal which is subject to regulatory conditions An MVS spokesperson said the company did not have a comment Jose Otero director for Latin America at telecoms trade association 5G Americas said the deal would pressure regulators to define plans to auction of 130 MHz of spectrum in the 2 5 GHz band that allows for faster download speeds Mexico s telecoms regulator in August postponed an auction of 2 5 GHz spectrum saying wanted more time to decide how many blocks it would tender and under what conditions Earlier this month Mexico declared a Chinese backed group the winner of a tender to build and run what will be a multi billion dollar wholesale mobile network that is designed to increase services offered in Latin America s No 2 economy nL1N1DI1E3
Otero said that the new wholesale operator whose top shareholders are Morgan Stanley NYSE MS Infrastructure part of Morgan Stanley and a Chinese Mexican government fund could become a bidder in any spectrum auctions |
MS | NYMEX crude quoted sharply weaker in Asia as API estimates OPEC weigh | Investing com Crude oil prices were last quoted sharply weaker heading into the Asian trading session on Wednesday as mixed industry inventory data from the U S and questions on OPEC s production plans weighed
U S crude oil on the New York Mercantile Exchange were last quoted at 45 25 a barrel down 3 89
Prices were weighed Tuesday by conflicting media comments that call into question OPEC s ability to come to agreement about a cut in production OPEC members will meet Wednesday in Vienna Austria
The American Petroleum Institute late Tuesday said crude oil inventories fell 720 000 barrels last week 120 000 barrels more than expected and which followed a draw of 1 28 million barrels the previous week
Overnight oil prices fell more than 3 on Tuesday extending early losses amid growing doubts that the Organization of the Petroleum Exporting Countries will be able to reach an agreement on a deal to curb output
Global benchmark Brent futures fell sharply and last quoted down nearly 4 to levels around 47 35 a barrel
OPEC is attempting to get its 14 member states along with non OPEC member Russia to implement coordinated production cuts aimed at reducing a global supply glut that has seen prices more than halve since 2014
Oil came under renewed selling pressure after Indonesia s energy minister said Tuesday he s not optimistic that OPEC will agree on a deal to rein in oversupply
In September the producer cartel reached an agreement that would reduce production to between 32 5 million and 33 million barrels per day
The organization is to hold a key meeting in Vienna on Wednesday where the deal was expected to be rubber stamped
But reaching a deal has proved problematic amid disagreements over which producers should cut and by how much
Technical talks between OPEC members on Monday failed to reach an agreement on output cuts with Iraq and Iran OPEC s second and third largest producers resisting pressure from Saudi Arabia to reduce production
Most analysts still believe OPEC will sign an accord to cut output but doubts remain over whether it will be enough to support the market
Morgan Stanley NYSE MS said Tuesday it still sees a deal as likely but added that the risks of failure have risen
A strong announcement from OPEC to cut meaningfully could lift oil to 50 or more over the following days particularly if supported by strong words from non OPEC before focus shifts to execution risk sustainability and any non OPEC supply response analysts at Morgan Stanley wrote |
MS | NYMEX crude rebounds in Asia after API draw OPEC key | Investing com Crude oil prices rebounded mildly in Asia on Wednesday after a draw reported in industry inventory data from the U S and as speculation swirls on OPEC s production plans ahead of a crucial meeting in Vienna
U S crude oil on the New York Mercantile Exchange traded at 45 39 a barrel up 0 35
Prices were weighed Tuesday by conflicting media comments that call into question OPEC s ability to come to agreement about a cut in production OPEC members will meet Wednesday in Vienna Austria
The American Petroleum Institute late Tuesday said crude oil inventories fell 720 000 barrels last week 120 000 barrels more than expected and which followed a draw of 1 28 million barrels the previous week
Overnight oil prices fell more than 3 on Tuesday extending early losses amid growing doubts that the Organization of the Petroleum Exporting Countries will be able to reach an agreement on a deal to curb output
Global benchmark Brent futures on London s Intercontinental Exchange were last quoted at 47 24 a barrel
OPEC is attempting to get its 14 member states along with non OPEC member Russia to implement coordinated production cuts aimed at reducing a global supply glut that has seen prices more than halve since 2014
Oil came under renewed selling pressure after Indonesia s energy minister said Tuesday he s not optimistic that OPEC will agree on a deal to rein in oversupply
In September the producer cartel reached an agreement that would reduce production to between 32 5 million and 33 million barrels per day
The organization is to hold a key meeting in Vienna on Wednesday where the deal was expected to be rubber stamped
But reaching a deal has proved problematic amid disagreements over which producers should cut and by how much
Technical talks between OPEC members on Monday failed to reach an agreement on output cuts with Iraq and Iran OPEC s second and third largest producers resisting pressure from Saudi Arabia to reduce production
Most analysts still believe OPEC will sign an accord to cut output but doubts remain over whether it will be enough to support the market
Morgan Stanley NYSE MS said Tuesday it still sees a deal as likely but added that the risks of failure have risen
A strong announcement from OPEC to cut meaningfully could lift oil to 50 or more over the following days particularly if supported by strong words from non OPEC before focus shifts to execution risk sustainability and any non OPEC supply response analysts at Morgan Stanley wrote |
JPM | Dimon Says China s Yuan May Rival Dollar s Role in 20 Years | Bloomberg China has a long list of financial reforms to tackle before the yuan can rival the global role of the dollar according to JPMorgan Chase Co NYSE JPM Chief Executive Officer Jamie Dimon
Eventually it will be comparable eventually is 20 or 30 years Dimon said when asked in an interview with Bloomberg Television s Stephen Engle whether China s yuan would rise to have a role akin to the dollar in the global financial system It s not comparable if it s not convertible
China s moves up to now such as winning official reserve currency status for the yuan at the International Monetary Fund amount to small changes according to Dimon He regarded this year s inclusion of some domestic Chinese equities into MSCI Inc international stock indexes as a nice thing it gets the world more educated about China but in terms of actual dollar amount of inflows it s not going to be Earth shattering to China or to anybody else
They re going to have to have a convertible currency for overseas investors to participate fully in China s domestic stock market Dimon said That s quite a ways away
When it comes to China s bond market now about 10 trillion Dimon listed a number of needed reforms especially for corporate securities
Transparency
Governance
Collateral rules
Rule of law
Open trading
Proper research
Proper credit agencies
They re on the way but they still have quite a way to go to create a really healthy bond market he said Until you can buy and sell securities freely if you have the U S dollar you can buy and sell securities freely then that s a big thing
Updates with list of needed reforms for the bond market in bullet point section
To contact Bloomberg News staff for this story Christopher Anstey in Tokyo at canstey bloomberg net Stephen Engle in Beijing at sengle1 bloomberg net
To contact the editors responsible for this story Christopher Anstey at canstey bloomberg net Cormac Mullen
2018 Bloomberg L P |
JPM | Oil hovers near 3 1 2 year peak Asia shares up ahead of Trump announcement | By Hideyuki Sano and Andrew Galbraith TOKYO SHANGHAI Reuters Oil prices eased slightly on Tuesday a day after hitting 3 1 2 year highs as investors braced for President Donald Trump s decision on whether to withdraw the United States from the Iran nuclear deal a move that could disrupt global oil supply European shares are seen steady to slightly firmer after Asian shares picked up helped by technology stocks as generally upbeat earnings overcame weakness in the global smartphone market and concerns about more regulation Spread betters expect Britain s FTSE to rise 0 2 percent and Germany s Dax to inch up 0 1 percent U S West Texas Intermediate WTI crude futures on Monday rose above 70 for the first time since November 2014 putting it more than 18 percent above this year s low touched in February On Tuesday some of those oil price gains were pared as traders took profit after Trump said in a tweet he would announce his decision on the nuclear deal at 1800 GMT Tuesday The oil market has priced in the high likelihood of Trump withdrawing from the nuclear deal with Iran If he is going to impose sanctions similar to those the U S had in 2012 that would likely cause a shortage in oil said Tatsufumi Okoshi senior commodity economist at Nomura Securities Adding to market pressures falls in Venezuelan oil production due to problems at the country s oil company PDVSA also added to the rally U S crude futures last traded at 70 11 per barrel down 0 9 percent from Monday s settlement price Global benchmark Brent crude futures stood at 75 64 per barrel down 0 7 percent having risen as high as 76 34 on Monday While caution on Trump s statement kept investors edgy in early trade technology firms helped to generate gains for Asian equities MSCI s broadest index of Asia Pacific shares outside Japan gained 0 6 percent with information technology shares rising 1 3 percent Japan s Nikkei was 0 2 percent higher SOARING VALUATIONS Some analysts cautioned that the rally in technology shares could face a short term correction as valuations soar Yoshinori Shigemi global market strategist at JPMorgan NYSE JPM Asset Management in Tokyo noted that technology shares have been moving higher taking up a larger share of indices as more money flows into the exchange trade funds ETF market There is currently a positive feedback loop but if some sort of unforeseen negative event takes place it may turn into a negative feedback loop he said China s blue chip CSI300 index rose 1 3 percent after the White House said on Monday that U S China trade talks would resume next week On Tuesday China reported exports and imports jumped in April beating forecasts but the news did not impact markets On Wall Street on Monday the S P 500 gained 0 35 percent boosted by Apple s sixth straight day of gains In currency markets the dollar broadly held firm on the prospect of solid U S economic growth helped partly by Trump s tax cuts and spending pointed to further rises in U S interest rates down the road That prompted investors to buy back dollars they had sold earlier this year on worries about Trump s protectionist trade policies The euro hit a four month low of 1 1897 on Monday and last stood at 1 1930 Against the yen the dollar stood little changed at 108 93 yen off its three month high of 110 05 yen The combination of higher oil prices a strong dollar and higher U S rates is risky for some emerging market assets as it could significantly worsen their trade balance and also encourage investors to shift funds to higher yielding U S assets The emerging market currencies are now playing catch up with some of the excessive losses seen in developed currencies Asian currencies have also fallen victim to the latest round of USD buying momentum Jameel Ahmad Global Head of Currency Strategy Market Research at FXTM wrote in a note JPMorgan s emerging market bond index hit its lowest level in more than a year The Indian rupee hit a 15 month low while the Indonesian rupiah hit its lowest level since December 2015 on Tuesday Dhian Karyantono fixed income analyst at Mirae Asset Sekuritas Indonesia said that the rupiah had weakened after weaker than expected first quarter growth data Indonesia s economy grew at 5 06 percent in January March down from 5 19 percent in the previous quarter
The divergence between developed and emerging markets was also visible in equity prices Brazil s Bovespa hit three month lows on Monday when Germany s Dax hit three month highs and Italian shares hit 8 1 2 year highs |
JPM | Exclusive ECB needs to consider fee hike for securities platform ECB document | By Huw Jones LONDON Reuters The European Central Bank is being forced to consider raising the fees for its flagship securities platform after trading failed to reach its projected volumes an ECB document showed Industry officials say the central bank is planning an increase a step they say would undermine capital market integration that is already being threatened by Britain s planned departure from the European Union Fees should be cut and not raised to attract more volume they said The ECB declined to comment on the future direction of fees Target 2 Securities T2S started operating in 2015 to link the patchwork of national stock and bond settlement houses the market s basic plumbing to exchange legal ownership of a security for cash The ECB intervened after the sector failed to consolidate fast enough to make Europe s cross border capital market compete better with the United States where settlement is cheaper A ECB presentation entitled 2018 T2S pricing review shows that 128 5 million transactions were settled on T2S in 2017 33 3 percent below the central bank s projection Actual volume fell 3 8 percent in 2017 when the last of 22 settlement houses hooked up to T2S Volume was 15 2 percent below ECB projections in 2015 and 26 3 percent below expectations in 2016 the presentation showed Settlement covers the bulk of T2S income meaning the ECB is forced to consider raising fees to cover outlays that were paid for with public funds an industry official said The ECB said in its 2017 annual report for T2S it would review the basic fee in 2019 if volumes remain below projected levels but industry officials say the projections were too removed from market reality The basic fee of 15 euro cents per settlement instruction two instructions per security transaction are charged was fixed until December 2018 The ECB s governing council agreed in 2010 that fees would not rise by more than 10 percent a year between 2019 and the end of the recovery period in September 2022 for developing and running T2S OLD NOKIA Volumes are not moving to T2S because of punitive accounting rules and users sticking with national settlement houses to avoid add on fees industry officials said Market participants say they have already had to implement a costly EU reform of securities markets in January They will also have to invest in new reporting requirements for the repo and securities lending market from mid 2019 T2S has already faced delays and cost overruns since its inception in 2008 when total development costs were put at 203 million euros an estimate that rose to 256 4 million euros within two years At its annual meeting in March the European Repo and Collateral Council ERCC which includes users of T2S cast doubt on its ability to cut trading costs anytime soon Considering the substantial development costs for T2S it is thus in the current circumstances not easy to see the business case for the project said Michael Manna head of fixed income financing trading for EMEA and Asia Pacific at Barclays LON BARC bank according to minutes of the meeting Nicola Danese a managing director at JPMorgan NYSE JPM compared migrating to T2S with an upgrade from an old Nokia HE NOKIA to a smartphone
The new infrastructure has a lot of potential but in order to utilize this potential additional features and applications need to be developed first Danese said |
JPM | Emerging Market Currencies Say Adios to 2018 Gain Amid Iran Risk | Bloomberg On the day that a key gauge of currencies in developing economies erased its gains for the year the voices saying it may be the start of a deeper selloff are growing louder
Risk factors such as the Iran deal have emerged on top of an already weak environment for emerging markets because of the rising dollar and U S yields said Motoko Miyano deputy general manager of the treasury in Bangkok at Sumitomo Mitsui Banking Corp Foreign investors have been selling emerging markets and that s starting to deepen the selloff in emerging market currencies
After clocking up the best start to any year since 2012 the MSCI Emerging Market Currency dropped on Wednesday by 0 3 percent wiping out its entire year to date advance repeating a feat accomplished by an index of stocks last week And if the options market is anything to go by the weakening trend has further to go Bears outnumber bulls in every emerging market currency according to three and six month risk reversals
While there have been plenty of catalysts to the retreat from concerns over a global trade war to evidence of faster U S inflation currencies extended their declines Wednesday after President Donald Trump s decision to withdraw the U S from the 2015 accord to curb Iran s nuclear program sending Treasury yields back to 3 percent level the dollar to a four month high and U S crude through 70 a barrel
The selloff is a shift for developing nation assets which enjoyed a two year rally that drove stocks and a gauge of currencies to the highest level since at least 2007 Global investors dumped emerging market bonds for a second straight week in the period ended May 2 the first time that s happened since November 2016 according to EPFR data compiled by Jefferies Hong Kong
Unquestionably emerging markets still have their champions Even Federal Reserve Chairman Jerome Powell said Tuesday the developing economies are well placed to navigate a period of rising U S interest rates
And idiosyncratic issues in Turkey and Argentina have a lot to do with the current nervousness The Argentine peso has lost 17 percent this year and the Turkish lira 11 percent as the two countries have grappled with accelerating inflation and investor skepticism about central bank policy The lira on Wednesday reversed its losses after President Recep Tayyip Erdogan was said to summon economy officials to discuss the slide the currency
Yet they re only two of five currencies that have weakened more than 5 percent this year and the Colombian peso Malaysian ringgit Chinese yuan and Thai baht are still showing gains evidence that Asia is a relative haven amid the turmoil
Read more The record low lira wrecking investment case for troubled Turkey
The MSCI Emerging Markets Currency Index declined to 1 677 27 as of 10 11 a m in London on track for its lowest close this year The measure tracking equities added 0 1 percent curbing its drop this year to 1 3 percent The Bloomberg Barclays LON BARC index of local currency government bonds slipped 0 3 percent on Tuesday trimming its 2018 gain to 0 3 percent
Below are some views from investors and analysts who are becoming less sanguine about the outlook for emerging markets
Pierre Yves Bareau JPMorgan NYSE JPM Asset Management s head of emerging market debt
We fear that EM assets may be challenged due to rising real rates in the U S in upcoming quarters Hence we highlight the importance of being selective in key EM local picks
JPMorgan Asset continues to like valuations in local debt in developing markets especially selective high yield countries where inflation still has room to move lower and external balances are robust
Jerome Nunan London based investment director at Aviva LON AV Investors
With 10 Treasuries now pushing up against three percent what does that mean There s going to be more volatility going forward and investors do need to be selective
What we expect now is investors will be a lot more selective about putting their money to work And that is going to reward good opportunities where there is an attractive risk premium But it s going to make others a bit less attractive
Eric Stein co director of global income in Boston at Eaton Vance Corp
Company which manages 434 billion has trimmed some of its wagers on emerging markets in the past few weeks as it foresees more short term volatility
There have been lots of idiosyncratic stories from Russia with the sanctions to Argentina last week volatility in Turkish FX markets for some time and election concerns in Mexico and Brazil Investors are trying to figure out if all of these really are idiosyncratic or is there something more there
Still EM assets offer good value versus most other parts of the fixed income market |
C | Economic Calendar Top Things to Watch | Investing com The NFIB s small business optimism index is released on Tuesday The producer price index for March is also due out Facebook NASDAQ FB CEO Mark Zuckerberg appears before Congress on Tuesday and Wednesday in response to the company s data scandal On Wednesday look for the consumer price index for March and the minutes of the Fed s March FOMC meeting The oil markets will be awaiting the release of the OPEC monthly report for March on Thursday BlackRock releases earnings on Thursday Citigroup NYSE C Wells Fargo NYSE WFC and JPMorgan Chase NYSE JPM all report on Friday On Friday the University of Michigan releases the preliminary reading of its consumer sentiment index in April |
C | Citigroup C Q3 Earnings Surpass Estimates | Citigroup C came out with quarterly earnings of 1 98 per share beating the Zacks Consensus Estimate of 1 96 per share This compares to earnings of 1 74 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 1 02 A quarter ago it was expected that this U S bank would post earnings of 1 78 per share when it actually produced earnings of 1 83 delivering a surprise of 2 81
Over the last four quarters the company has surpassed consensus EPS estimates four times
Citigroup which belongs to the Zacks Banks Major Regional industry posted revenues of 18 57 billion for the quarter ended September 2019 missing the Zacks Consensus Estimate by 0 12 This compares to year ago revenues of 18 39 billion The company has topped consensus revenue estimates just once over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
Citigroup shares have added about 34 9 since the beginning of the year versus the S P 500 s gain of 18 3
What s Next for Citigroup
While Citigroup has outperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for Citigroup was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 1 86 on 17 91 billion in revenues for the coming quarter and 7 62 on 74 07 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Banks Major Regional is currently in the bottom 27 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
JPM | Will This Precious Metal ETF Outshine Others In 2017 | Precious metals have had an amazing journey this year on a flight to safety amid global growth concerns as the Brexit vote and the U S presidential elections led to volatility Now that market conditions are witnessing a reversal palladium has clearly emerging as a winner in the precious metals space thanks to its industrial uses This makes it a favorite with investors looking to play the rising economy read In fact last month the only pure play on the metal ETF Securities Physical Palladium Shares clearly outperformed the rest of the precious metal ETFs in the space namely gold ETF SPDR Gold Trust V GLD platinum ETF ETFS Physical Platinum NYSE PPLT Shares and silver ETF ETFS Silver Trust KL SIVR PALL was up 17 2 in the last one month as of November 21 2016 GLD NYSE GLD PPLT and SIVR were down 4 34 up 0 3 and down 5 4 respectively read What s Driving Palladium s RallyThe majority of palladium is used in the automotive industry for manufacturing catalytic converters to clean exhaust emissions Although auto sales were disappointing in the last three consecutive quarters there is a new found optimism in the sector post U S elections President elect Donald Trump plans to introduce a burst of stimulus with tax cuts and infrastructure spending package Speculation is rife that business investments will a get a new lifeline now This could benefit automakers and the exclusive auto ETF First Trust NASDAQ Global Auto Index Fund could be in focus the days ahead read Moreover supply shortages are expected to continue into next year The palladium market is expected to post a ounces this year and another shortfall in 2017 This is primarily due to rising autocatalyst demand In a nutshell the global supply outlook appears fragile at the current level making the metal an intriguing option for investors Below we have highlighted the only pure play on the metal PALL in detail see Inside PALLFor a bullion backed approach to palladium ETF investing investors can look to ETF Securities Physical Palladium Shares or PALL The ETF holds the metal in the form of bullion or ingots The metal is safely stored in London and Z rich on behalf of the custodian JP Morgan Chase NYSE JPM Bank Investing through PALL in palladium represents a cost effective and suitable mode for investors The transaction costs for buying and selling the shares will be much lower than purchasing storing and insuring physical palladium for most investors This ETF is designed to track the spot price of Palladium bullion and has amassed about 199 8 million in assets The expense ratio of 60 basis points appears reasonable in the precious metals ETF space The fund trades in paltry volumes of less than 35 000 shares on an average daily basis The fund has a Zacks ETF Rank of 1 or Strong Buy rating Investors should also note that PALL has a positive A positive alpha indicates that these surging products can be exercised a little further read Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
JPM | 3 Top J P Morgan Mutual Funds To Buy Now | J P Morgan Asset Management is one of the world s largest investment management companies with around 1 7 trillion of assets under management The eighth largest mutual fund firm of the U S seeks to provide the best investment solutions to its clients As one of the leaders of U S equity fund flows JP Morgan offers financial services all over the world through offices in 38 countries including the U S China and India It takes pride in its innovative inflation protected municipal products Below we share with you three top rated JPMorgan NYSE JPM mutual funds Each has earned a Strong Buy and is expected to outperform its peers in the future To view the Zacks Rank and past performance of all JPMorgan mutual funds investors can JPMorgan Disciplined Equity A invests a large portion of its assets in equity securities JDEAX invests in common stocks of domestic companies having market capitalization similar to those listed on the S P 500 Index JDEAX distributes dividends and capital gains if any quarterly JPMorgan Disciplined Equity A seeks high total return and has a three year annualized return of 7 6 JDEAX has an expense ratio of 0 85 as compared to the category average of 1 03 JPMorgan Large Cap Value A seeks capital appreciation OLVAX invests a major portion of its assets in securities of large cap companies that include common stocks debt and preferred stocks that can be converted to common stocks Large cap companies are those that have market capitalization equivalent to those listed on the Russell 1000 Value Index at the time of purchase OLVAX offers dividends quarterly and capital gains annually The JPMorgan Large Cap Value A fund has a three year annualized return of 10 6 Scott Blasdell is the fund manager since 2013 JPMorgan Small Cap Value A invests a major portion of its assets in equity securities of small cap companies These companies have market capitalization equal to those companies listed on the Russell 2000 Value Index during the time of purchase In reviewing investment opportunities the fund team uses a value oriented approach PSOAX offers dividends quarterly and capital gains annually JPMorgan Small Cap Value A seeks high total return and has a three year annualized return of 6 8 PSOAX has an expense ratio of 1 25 compared to a category average of 1 33 To view the Zacks Rank and past performance of all JPMorgan mutual funds investors can Want key mutual fund info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
JPM | Oil Sees Support From API Supply Data | OPEC and Thanksgiving
OPEC is a real turkey and knows how to mess up Thanksgiving In fact it was Thanksgiving 2 years ago when OPEC failed to secure a production cut and the Saudis declared a production war that goes on until this day
Now Thanksgiving eve in the US and once again the markets are fretting about whether OPEC can firm up the Algiers agreement of limiting output to 32 5 million to 33 million barrels a day and deciding who cuts how much and whether Iraq and Iran must participate The OPEC technical meeting in Vienna was supposed answer that question but instead OPEC punted until the official OPEC meeting on November 30th
The market broke after the talks broke down It was nowhere the type of break we had at the last technical meeting of the OPEC cartel Even though the same issues of Iraq s and Iran s perception in cuts still lingers it seems that there is a sense that they are close to having an agreement The reason that they are optimistic is that both Iraq and Iran seem to be willing to cooperate in some way even if it is unclear as to how and how much
Even analysts that had steadfastly doubted that OPEC could reach an agreement are changing that view but we all know that when it comes to the cartel it is not a done deal until it is a done deal
Nomura securities are telling their clients that there is a 70 chance of a large 1 0 million barrel of day cut by the cartel Goldman Sachs also raised their price forecast basically on the increasing perception that OPEC will get the deal done
The deal is critical for many members Venezuela for example missed a bond payment Bloomberg News reported that Petroleos de Venezuela SA missed coupon payments due on its bonds per JPMorgan Chase Co NYSE JPM just a month after it persuaded investors to agree to a debt swap to help it avoid default
PDVSA has activated a 30 day grace period after not meeting the full coupon payments on its 2021 2024 and 2035 bonds that were due last week About 400 million was due on those bonds while PDVSA did pay 135 million due on its 2026 debt last week JPMorgan s Javier Zorille writes citing information from the paying agent on the bonds
The Wall Street Journal reported that on Tuesday PDVSA bonds maturing in 2035 fell 4 7 to 44 3 cents on dollar of par value down from 46 5 cents on Monday The bond currently yields 22 7 Bond prices fall when yields rise The 2024 bonds traded 2 6 lower to 37 cents
The company last week missed 404 million in coupon payments on a series of bonds per banks and agencies handling the payments That essentially left the company with a 30 day grace period to make the payments in order to avert default
In the meantime oil saw some support from the American Petroleum Institute API report that showed that oil supply fell 1 28 million barrels The excitement about the number was offset a bit by the fact that gasoline supply increased by 2 68 million barrels that Bloomberg News says is the largest weekly increase from February
The numbers in conjunction seems to suggest that refiners are coming out of maintenance and are expecting strong gasoline demand to continue Distillates on the other hand fell by 350 000 barrels Data on petroleum stocks from the Energy Information Admintation is released on Wednesday
We will also get data on natural gas report today which could show the first withdrawal of the season Of course we know that natural gas seasons have changed as we did see a historic draw in inventory last summer Still the first seasonal draw in the market is one of the reasons we saw natural gas settle at 3 week highs With winter storms starting to fester it is possible we could see the storage withdrawals surprise to the bullish side Use market weakness to put on long term bullish strategies |
JPM | Oil Shows Volatility Ahead Of OPEC | Last week crude oil price volatility showed how nervous markets are in the run up to the meeting of OPEC member nations this Wednesday November 30 While crude oil prices were up early in the week they dropped substantially during the day Friday to close out the week at 46 06 USD barrel
Among the developments influencing markets
Saudi Arabia has allegedly pulled out of discussions with certain non members of OPEC such as Russia as the countries were unable to agree on the allocation of production cuts However Iraq has indicated that the country would take part in an agreement while Russia reiterated that it is prepared to freeze its output at current levels
Many analysts believe it is highly probable that OPEC will reach an agreement JPMorgan NYSE JPM to name just one places the chance of an agreement at 60 The International Energy Agency forecasts that crude oil prices could hit 60 USD barrel in the event of an agreement
According to oilfield services firm Baker Hughes the number of wells in operation in the United States has been rising since June 2016 with 471 wells in operation at the end of the week of November 18 2016
The Canadian dollar lost value over the past week It is important to keep in mind that a declining Canadian dollar will increase fuel prices in CAD litre
We encourage our clients to contact us before the OPEC meeting to discuss hedging their fuel expenses in CAD L Have a great week |
MS | The euro is climbing after a 10 day losing streak | The euro is finally picking up
The currency is up 0 4 at 1 0635 against the dollar as of 7 42 a m ET following a ten day losing streak
Notably a Morgan Stanley NYSE MS team led by Hans W Redeker wrote in a note to clients that the euro s moves are still largely driven by the greenback
However we think EUR should remain strong on the crosses particularly EURJPY they wrote Eurozone political events are now treated as binary risks for the EUR We believe the main one to focus on is the French election
Speaking of over the weekend ex President Nicholas Sarkozy lost his bid for re election after coming behind Fran ois Fillon and Alain Juppe in a for the center right presidential candidates Fillon a social conservative and an who gained the endorsement from Sarkozy will be squaring off with Juppe next weekend in a runoff campaign
Meanwhile in Germany Chancellor Angela Merkel announced her candidacy for a fourth term in the September 2017 elections as most had been expecting
As for the rest of the world here s the scoreboard as of 7 55 a m ET
The US dollar indexis down by 0 3 at 100 93 ahead of a quite day for data The USD has rallied sharply and is technically starting to look a little overbought with the daily RSI of the broad USD index reaching levels last seen in early January of this year according to Redeker s team However while that period marked the beginning of a multi month USD pullback this time we think any retracements will be shallow and short lived We stick with our long USD positions
The Japanese yenis higher by 0 2 at 110 65 per dollar Earlier Japan reported a second consecutive trade surplus in October while exports fell by 10 3 year over year for the same month following a 6 9 drop in September Exports have been falling in year over year terms for over a year now
The Russian ruble is up by 0 8 at 64 1651 per dollar while Brent crude oil the international benchmark is higher by 2 2 at 47 90 per barrel
The British pound is stronger by 0 5 at 1 2399 against the dollar
The Australian dollar is up 0 5 at 7369 per dollar |
MS | Ex PM Fillon is favorite to win French conservative presidential ticket | By Richard Lough PARIS Reuters Former prime minister Francois Fillon is favorite to become the French center right s presidential candidate after a voting upset that puts him in pole position for a showdown with far right leader Marine Le Pen in next year s election Fillon who has said he will cut public sector jobs and rein in government spending won 44 percent of votes in Sunday s first round of voting for the center right s nomination He faces a second round vote against another former prime minister Alain Juppe who trailed him by 15 percentage points Former President Nicolas Sarkozy came third and after being eliminated endorsed Fillon for the second round vote next Sunday The outcome adds to uncertainty about the result of next year s presidential election likely to be decided in a runoff against the anti immigration eurosceptic National Front leader Le Pen in May There is though no clear evidence Fillon would fare worse against her than would Juppe The only near certainty is that the deeply divided ruling Socialist Party is headed for a drubbing Even so some senior left wingers expressed optimism that an eventual defeat for Juppe would open a space for them in the center The surprisingly big lead hands Fillon 62 a strong advantage in the runoff An admirer of late British Prime Minister Margaret Thatcher he is probably the closest thing France has to an economic liberal and social conservative Although Fillon s triumph on Sunday was a surprise opinion pollsters had said he made a late surge in campaigning and several stalwarts from the conservative Les Republicains party threw their weight behind him after his first round success I will vote for Francois Fillon because it is he who will best defend the values of the right said party president Laurent Wauquiez a close Sarkozy ally A snap poll by Opinionway after Sunday s results showed Fillon winning the head to head contest against Juppe with 56 percent of support With the French left in turmoil the opinion polls indicate that whoever becomes the center right challenger is likely to face Le Pen in May s presidential election runoff The polls have suggested Le Pen has only a remote chance of winning that runoff but the more centrist Juppe 71 had been seen as the best placed candidate to defeat her in a two horse race TARGETS FOR NATIONAL FRONT A BVA poll in September showed Fillon who drives racing cars for a hobby would beat Le Pen by 61 percent to 39 percent if they contest a presidential runoff vote But that consensus predates Donald Trump s U S election win which exposed the same popular anger against political elites as in Western European countries such as France Italy and Austria that Le Pen has tapped into It also raised questions over the accuracy of opinion polls which were under scrutiny again on Monday in France With his socially conservative and pro business policies Fillon lacks the broad appeal of the more centrist Juppe and so may increase Le Pen s chances of taking power Fillon stood down as social affairs minister after big street protests in 2003 when he championed reforms extending the age at which people are entitled to retirement pension payments We believe Fillon s lead introduces additional uncertainty when it comes to the presidential election said Raphael Brun Aguerre of JP Morgan in a research note But Juppe who served as prime minister form May 1995 until June 1997 under President Jacques Chirac would also be vulnerable to National Front barbs Either of the candidates would probably be targeted by far right National Front leader Marine Le Pen for being part of the old political guard and Juppe on this front appears relatively more vulnerable said Morgan Stanley NYSE MS in a research note Juppe was not giving up I believe more than ever that the people of France need to come together to turn the page of a disastrous five year term that has demeaned our country and to block from power the National Front which would lead us into the worst of adventures he told supporters on Sunday night OPPORTUNITY FOR LEFT Fillon and Juppe have clashed most forcefully over Fillon s proposals to slash the cost of government notably by axing 500 000 public sector jobs over five years Fillon s plans for market oriented reforms including scrapping the 35 hour working week and raising the retirement age go beyond what his challenger advocates for a country where the state remains a powerful force in the economy Born in a western region of France where the secular nation s catholic roots remain strong Fillon has said France faces a problem linked to Islam Juppe has sought a more conciliatory tone with France s large Muslim minority Any registered voter can take part in the conservative primaries and polls showed many of those that did on Sunday were from the left and extreme right The only chance for Juppe is a strong turnout in the second round including from left leaning voters His message will be we need reforms but nothing that is horribly painful said Claire Demesmay an expert on Franco German ties at the German Council on Foreign Relations The ruling Socialists and their allies will hold their own primaries in January President Francois Hollande whose popularity ratings are abysmal has yet to declare if he will stand again Some on the left hope a Fillon candidacy would provide an opportunity to win back the center ground Ultra conservative ultra liberal ultra anti social Fillon ticks all the boxes Jean Christophe Cambadelis the Socialist Party s secretary general told France Info radio Cambadelis appealed to the fragmented field on the left not to split the vote He urged former economy minister Emmanuel Macron not to run as an independent but instead join the primary contest Macron swiftly rejected the call Le Monde reported The former investment banker who quit Hollande s government in the summer launched his outsider run for the presidency last week saying that he was neither of the left or right
Although a popular politician polls indicate Macron s chances of reaching the election s second round are slim |
MS | U S says concerned over Russia blocking access to LinkedIn | By Christian Lowe and Maria Kiselyova MOSCOW Reuters The U S government said on Friday it was deeply concerned over Russia s decision to block public access to networking site LinkedIn saying it created a precedent that could be used to justify blocking other sites operating in Russia LinkedIn N LNKD which has its headquarters in the United States is the first major social network to be blocked under a new law that requires firms holding Russian citizens data to store it on servers on Russian soil Internet services analysts say other tech firms including Facebook O FB and Twitter N TWTR could also find access blocked unless they move data onto Russian based servers Maria Olson spokeswoman at the U S Embassy in Moscow said Washington urged the Russian authorities to restore access immediately to LinkedIn and said the restrictions harmed competition and the Russian people The United States is deeply concerned by Russia s decision to block access to the website LinkedIn Olson said in a statement sent to Reuters This decision is the first of its kind and sets a troubling precedent that could be used to justify shutting down any website that contains Russian user data Russian Communications Minister Nikolai Nikiforov said the decision to block LinkedIn had been made by two courts but suggested the company s problems in Russia could still be resolved We hope a constructive dialogue can solve this situation he told reporters on a visit to Ljubljana All foreign companies have to act in line with the law and there are many that have no problems with respecting the legislation On Friday anyone attempting to access the LinkedIn website via Russian telecoms operator MTS saw a message in Russian saying Access to the resource you requested is restricted Attempts to access the site via Vimpelcom another major telecoms operator were also unsuccessful Russia s government says the new requirements are designed to ensure personal data on Russian consumers is properly protected something it says can only be done if the servers are inside Russian jurisdiction Critics say the new law is part of an attack on social networks in a country which has increasingly tightened control over the Internet The Kremlin has denied it is practising online censorship In a message sent via email to its Russian users LinkedIn said it regretted the decision to block access and was seeking meetings with the telecoms regulator We are considering all possible ways to resolve this situation said the message The firm has over 6 million registered users in Russia Russian authorities started taking action after a court this month rejected an appeal lodged by LinkedIn against an earlier ruling that its site should be blocked
Matthew Hammond chief financial officer of London listed Mail ru L MAILRq which runs some of Russia s most popular Internet services said there are likely to be further actions against non compliant firms Will the Russia government enforce it more widely I don t know It seems a reasonable assumption that it probably will Hammond told investors at the Morgan Stanley NYSE MS European Tech Media and Telecom conference in Barcelona on Thursday |
JPM | JPMorgan names head of artificial intelligence research | Reuters JPMorgan Chase Co NYSE JPM named Manuela Veloso head of artificial intelligence research to help drive the bank s efforts in applying machine learning technology across its businesses Veloso currently heads the machine learning department at Carnegie Mellon University In her new role Veloso will establish an AI research capability at the bank She will also work closely with the data analytics and the quantitative research teams
Veloso will report to Chief Administrative Officer Sanoke Viswanathan |
JPM | China regulator sets bar for foreign shareholders of futures brokerages | BEIJING Reuters China s securities regulator said on Friday that overseas shareholders of futures brokerages must be reputable institutions with outstanding performance as it prepares to open up the sector to majority foreign ownership Senior managers of foreign invested futures brokerages must also be based in China while at least one third should be Chinese nationals the China Securities Regulatory Commission CSRC told a news conference in Beijing citing newly published draft rules The rules which are circulated for public consultation come after China last April said it would further deregulate its financial industry raising the foreign ownership ceiling to 51 percent in securities firms mutual fund houses life insurers as well as futures brokerages All ownership restrictions will be scrapped in three years time Currently several foreign banks including Royal Bank of Scotland Group L RBS and JPMorgan Chase Co N JPM own minority stakes in Chinese futures brokerage ventures CSRC also published draft rules on Friday to better regulate overseas expansion by Chinese brokerages and asset managers
Some companies are expanding their businesses blindly while others have complicated structures that make internal management difficult CSRC said urging them to streamline their overseas businesses |
JPM | Activist investment rising in Asia led by local players JP Morgan | By Alun David John HONG KONG Reuters Activist investing in Asia is rising steadily driven more by local players rather than headline grabbing foreign firms as the region s regulators pay greater attention to corporate governance according to research from JP Morgan N JPM Last year there were 106 activist campaigns in Asia versus 94 the previous year and just 10 in 2011 the investment bank said citing data from Activist Investor and Shark Repellent Domestic players accounted for almost two thirds of activist campaigns between 2011 and 2017 JP Morgan said In Asia as regulators look to protect the interests of minority shareholders corporate governance has risen up the agenda activist investors now have more power to push for change in the companies in which they have invested said David Hunker JP Morgan s head of shareholder activism defense In Japan Prime Minister Shinzo Abe has been a public advocate of corporate governance providing a boost to activists Earlier this year Sparx Asset Management T 8739 urged synthetic fiber maker Teikoku Sen i T 3302 to triple dividend payouts The proposal was rejected but the company separately announced a small increase in dividend for which Shuhei Abe founder and CEO of Sparx claimed some credit Similar trends are emerging in other parts of Asia Hong Kong Exchanges and Clearing HK 0388 finalised new rules recently for capital raisings by listed issuers aimed at restricting abusive practices and protecting the interests of minority shareholders South Korea s Financial Services Commission has also announced a plan to facilitate and encourage minority shareholder participation at meetings for listed companies Another factor in the rise of shareholder activism is the growing presence of large global institutional investors among Asian listed companies top shareholders Hunker said These investors have already shown a willingness to support activist investors if not in Asia then at least elsewhere in the world he said adding that such firms are certainly willing to disagree with management decisions U S activist fund Elliott Management has challenged South Korea s top two family run conglomerates most recently Hyundai Motor KS 005380 over better corporate governance and returns to shareholders
BlackRock said in its Asia Pacific investment stewardship report for the fourth quarter of last year that of the 8 390 proposals it had voted on in the three months it had voted against management recommendations on 7 percent of them |
JPM | Dollar surge bringing emerging market rate cut cycle to a halt | By Marc Jones and Karin Strohecker LONDON Reuters A resurgent dollar and higher borrowing costs are smashing through Argentina and Turkey s currencies like a wrecking ball and raising the likelihood more broadly that emerging markets three year long interest rate cutting cycle is at an end Emerging markets came into the year flying riding on the back of a healthy global economy and rising commodity prices alongside tame inflation and a weak dollar It looked more than likely that a wave of rate cuts would keep rolling allowing a bond rally to continue From Brazil and Russia to Armenia and Zambia developing countries big and small have been on a rate cutting spree With hundreds of rate cuts since Jan 2015 the average emerging market borrowing cost fell under 6 percent earlier this year from over 7 percent at the time Fund managers profits too have soared in this time with emerging local currency debt among the best performing asset classes with dollar based returns of 14 percent last year Even in the first quarter of 2018 returns were a buoyant 4 3 percent Now though almost exactly five years since the so called taper tantrum shook an emerging market rally these gains appear to be on the cusp of reversal Argentina has jacked up its interest rates to 40 percent in response to a rout in its peso currency while Turkey was also forced into a rate rise as its lira hit record lows against the dollar Indonesia after heavy interventions to stem rupiah bleeding has also said it could resort to policy tightening As emerging currencies slide almost everywhere yields on bonds denominated in emerging market currencies are back up near 6 2 percent and returns are now negative for 2018 The rate cut trade has unwound Naveen Kunam a portfolio manager at Allianz DE ALVG Global Investors said citing the increased uncertainty on monetary policy For decades a rising dollar has spelt bad news for emerging markets and despite all the progress in the developing world in recent years latest price moves show not that much has changed With the dollar on the rise emerging currencies have weakened some 3 percent in the past two weeks as measured by a JPMorgan NYSE JPM index Figures from the Institute of International Finance this week showed that the result has been a faster exodus from EM debt than at a similar stage of the 2013 taper tantrum At 5 5 billion in two weeks the IIF described it as the ghost of tantrums past RATE EXPECTATIONS It has looked as though emerging economies had the upper hand over their old enemy inflation Inflation has fallen below target to record lows in Russia slipped to five month lows in India and is projected at a below target 3 8 percent in Brazil this year Indonesian inflation in April was a 100 bps off year ago levels data last week showed But the shifts of recent weeks have prompted some analysts to reassess whether interest rate cuts can continue In Russia for instance analysts have reduced their bets on rate cuts after the central bank held rates in late April and now predict only one or two moves this year versus earlier calls for deeper cuts Sberbank CIB analysts said they did not now expect a Russian rate cut to come before September India like all energy importing emerging economies is being hit also by the oil price rise each 10 rise in oil prices adds 0 8 percent to inflation there analysts at TS Lombard calculate In the past week expectations for an interest rate hike in India over the coming 12 months have jumped markets now price more than two rate hikes compared to just over one a week ago Last year it was cutting rates The question emerging market policymakers may ask themselves has changed said Sebastien Barbe global head of EM research and strategy at Credit Agricole PA CAGR Now the question for many central banks is should they increase rates more quickly he said It is not only those that are normally vulnerable either Even in the relatively calm backwaters of eastern Europe the Czech central bank has warned it may have to raise rates again following a sudden slump in the crown All that is a huge blow to fund managers who have piled into the EM asset class in anticipation the returns would continue It may be especially painful for newcomers a raft of new funds have launched this year including one from Franklin Templeton s high profile portfolio manager Michael Hasenstab Countries such as Indonesia where foreigners own a large share of their local bond markets have consequently been among the worst hit as investors jostle to sell
If there are worries this money will get out Credit Agricole s Barbe said |
JPM | McAfee Challenges Dimon to Embrace Blockchain Revolution amid Shift in Power Structures | John McAfee founder of the company behind the popular antivirus software named after him has challenged JPMorgan NYSE JPM chief Jamie Dimon and the CEOs of other major banks to accept the tectonic changes happening in the finance space and join the blockchain cryptocurrency movement before it is not too late
McAfee published the video clip in a tweet where he
I tell JP Morgan the truth And make Jamie Dimon an offer that no man with an IQ above 12 could refuse From a video that will be shown at the World Blockchain Conference in Atlantic City on July 12 of this year I will be keynoting
McAfee has been invited to speak at the three day Blockchain World Conference which opens on July 11 in Harrah s Resort Atlantic City New Jersey It is expected to draw more than 5 000 attendees over 120 exhibitors and at least 15 speakers It will be watched live by over 25 000 blockchain and cryptocurrency enthusiasts who will pay for streaming
In the video which is also on the Blockchain World Conference website McAfee addresses JPMorgan s CEO saying Dimon doesn t have to hang himself because of the changes in power structures What he can do instead is accept them and try to embrace the blockchain revolution Apparently McAfee has some straightforward solutions for Dimon
I know a thousand ways for you to integrate yourself into this movement where you will benefit even more than you do now because the blockchain doesn t say don t have money he said in the video
However Dimon will have to give up the great power that comes with fiat money according to McAfee If JPMorgan s chief does not accept this reality there will be no JPMorgan in five years and Dimon will be on the street with a cute puppy dog and a little box saying please donate to feed my puppy McAfee predicts and urges Dimon and other CEOs to accept his invitation to discuss the transformation
It is unlikely that Dimon will respond to such a challenge JPMorgan is the largest bank in the US and the second largest one in the world by market capitalization with 2 5 trillion under management as of 2017 Last year Dimon infamousy Bitcoin a fraud but later said he regretted it
In fact JPMorgan is already implementing blockchain projects and the technology for various use cases |
C | AMC is working with Citi on potential 2 billion float of Odeon cinemas sources | By Dasha Afanasieva LONDON Reuters AMC Entertainment Holdings N AMC is working with Citi N C on an initial public offering IPO of Britain s Odeon cinemas group three sources familiar with the matter said New York listed AMC said in November it may pursue a London IPO of Odeon which now includes Nordic Cinema the largest cinema chain in the Nordic and Baltic regions by the middle of 2019 keen to take advantage of higher valuations in European markets It has not escaped our notice that even though European public markets value movie theaters at double digit EBITDA earnings before tax interest depreciation and amortization multiples we are not seeing such valuations for our European assets at these levels when they are buried within AMC AMC Chief Executive Adam Aron said on a call in November Three sources familiar with the matter said Citi was working on a London float for the chain which could value it at more than 2 billion AMC which is majority owned by China s Dalian Wanda Group has been introducing recliner seating and alcohol sales in European cinemas to help boost returns Citi which advised AMC on its 652 million Nordic Cinema acquisition in 2017 declined to comment AMC which operates around 1 000 theaters with approximately 11 000 screens globally did not respond to an emailed request for comment The adjusted EBITDA for AMC s international business grew 4 4 percent in the fourth quarter to 92 8 million and 7 8 percent to 244 8 million for the full year on a constant currency basis According to Reuters data AMC is trading at enterprise value of around 8 times EBITDA while Odeon competitor Cineworld L CINE is trading at enterprise value of 17 times EBITDA Based on these estimates Odeon could achieve a valuation of between 2 and 4 billion including debt AMC is in discussions to expand to Saudi Arabia as the kingdom lifts a 35 year ban on cinemas Saudi sovereign wealth fund Public Investment Fund a likely partner and source of capital
AMC shares closed down 0 75 percent on Wednesday at 13 5 |
C | HSBC to pay 100 million to end Libor rigging lawsuit in U S | By Jonathan Stempel NEW YORK Reuters HSBC Holdings Plc L HSBA has agreed to pay 100 million to end private U S litigation accusing it of conspiring to manipulate the Libor benchmark interest rate becoming the fourth major bank to settle The preliminary accord with over the counter investors that transacted directly with banks on a panel to determine Libor or the London Interbank Offered Rate was disclosed in filings on Thursday with the U S District Court in Manhattan Court approval is required Settlements with the OTC investors total 590 million so far and include 120 million with Barclays Plc L BARC 130 million with Citigroup Inc N C and 240 million with Deutsche Bank AG DE DBKGn HSBC denied wrongdoing but settled to avoid the risks costs and distraction of litigation court papers show A spokesman was not immediately available to comment Banks use Libor to set rates on hundreds of trillions of dollars of credit card mortgage student loan and other transactions and determine costs of borrowing from each other Investors including the city of Baltimore and Yale University in Connecticut had accused 16 banks of conspiring to manipulate Libor The private litigation began in 2011 Banks have paid roughly 9 billion to settle Libor rigging probes worldwide Last July the head of the U K Financial Conduct Authority said that regulator will phase out Libor by the end of 2021 citing a lack of data to underpin it
The case is In re Libor Based Financial Instruments Antitrust Litigation U S District Court Southern District of New York No 11 md 02262 |
C | Buy U S Steel ahead of very bullish catalyst Citi says | U S Steel NYSE X 2 6 premarket after Citigroup NYSE C upgrades shares to Buy from Neutral with a 46 price target lifted from 43 ahead of a very bullish catalyst in steel prices U S flat rolled prices are peaking and expected to gap lower although they likely will make higher lows similar to met coal and iron ore equities in 2017 Citi analyst Zlexander Hacking says Noting that shares are down 25 in recent weeks with the price of iron ore U S Steel now has good value at 10 FCF yield in 2018 19 and considerably higher in 2020 plus post asset revitalization Hacking writes The firm also raises its steel price forecasts after recent tariff announcements and downgrades Commercial Metals NYSE CMC to Neutral from Buy with a 22 price target cut from 29 as several rebar projects announced in recent months will offset the benefit of lower imports Now read |
C | Investment Corp of Dubai raises 1 2 billion loan sources | By Davide Barbuscia DUBAI Reuters Investment Corporation of Dubai ICD the Dubai government s main investment arm has raised a 1 2 billion loan needed to refinance existing debt banking sources said The loan was led by Citi N C Dubai Islamic Bank DU DISB Emirates NBD DU ENBD HSBC L HSBA ICBC SS 601398 and Standard Chartered L STAN The Dubai sovereign wealth fund whose portfolio includes stakes in companies such as Emirates Airline and Emirates NBD had assets totaling 786 8 billion dirham 214 21 billion as of June last year according to its most recent financial results ICD did not immediately respond to a request for comment on the new loan The debt facility was syndicated to a larger group of banks and the fundraising has recently been completed the sources said It partly refinances a 2 55 billion five year loan ICD raised in 2013 That loan which included an Islamic tranche saw the participation of a group of banks including Abu Dhabi Commercial Bank Abu Dhabi Islamic Bank Citigroup Commercial Bank of Dubai Emirates NBD HSBC and Standard Chartered |
C | Russia s IBS launches IPO on Moscow Exchange | MOSCOW Reuters IBS IT Services plans an initial public offering IPO on the Moscow Exchange MM MOEX it said on Wednesday as it aims to tap Russia s economic recovery and reviving domestic demand for information technology services
The shares both new and existing will be offered by the company as well as by shareholder IBS Holding owned by
Anatoly Karachinskiy and Sergey Matsotskiy
Sources told Reuters last month that the company was aiming to raise around 100 million via an IPO
IBS did not describe the targeted size of the offering in a Wednesday statement announcing its intention to float
The announcement comes a day after Russian poultry producer Cherkizovo MM GCHE said it planned to sell new and existing shares on the Moscow Exchange
A number of other Russian businesses are expected to follow suit brushing off the risk of potential fallout from a recent diplomatic spat between Moscow and the West over the poisoning of former spy Sergei Skripal as well as the prospect of further sanctions
The additional share issue is expected to be over 50 percent of the offering IBS said Citigroup N C and Renaissance Capital are acting as joint global coordinators and joint bookrunners
Following the offering the free float is expected to amount to 30 percent to 35 percent of the enlarged share capital
IBS also said it intends to use the proceeds to strengthen and expand its business through both internal development and value accretive M A
We believe that the recovery of the Russian economy as well as increased digitalisation and modernisation will provide a strong platform for further growth Svetlana Balanova IBS s chief executive said in the statement
Balanova told Reuters earlier that IBS was considering fundraising to accelerate growth as on the one hand a reviving economy was spurring demand for IT while on the other hand many businesses were seeking affordable alternatives to foreign software
The company which was founded in 1992 said it was targeting revenue growth of more than 15 percent in 2018
For the year to March 31 2017 net profit more than doubled to 1 5 billion rubles 26 million on revenue up 29 percent to 21 4 billion rubles |
JPM | Trump Rally To Wane Buy These Quality ETFs | The latest streak of gains in the key U S indices like the S P 500 and Dow Jones Industrial Average was as surprising as Trump s win in the U S election Though the tech laden Nasdaq 100 could not cherish the rally initially as Trump s immigration and foreign polices could spell trouble for tech stocks it eventually bounced back read
The S P 500 is near the record high and Dow Jones logged a session rising streak Reflecting all these gains the S P 500 based AX SPY Dow Jones based V DIA and Nasdaq 100 based were up about 4 8 5 7 and 3 3 in the last 10 days as of November 17 2016 respectively Now the million dollar question is whether the rally has legs read
What Do Market Watchers Say
While some have faith on the rally on the proposed boost in fiscal spending and tax cuts some believe that the rally will die an early death Billionaire investor believes that the stock market rally may be overdone
If this was not enough Fed Chair Janet Yellen lately triggered bets over a rate hike in the December meeting Chances of a December hike is now As a result the greenback surged to a 13 year high
The yield on the benchmark U S Treasury note jumped to 2 29 on November 17 from 2 22 recorded the day earlier So fears of gradual ceases in cheap dollar inflows may hit stocks in the near term too suggests not to be over emotional on the Trump rally or rather play timely bets like financial stocks
believe that volatility will be the only keyword in the investing world According to this group the recent surge is hope driven and has proven to be a little hasty Any market that goes down 5 and up 6 on the same news is inherently unstable as per an analyst Plus there is still uncertainty over the OPEC output curb deal likely to be clinched this month read
Add Quality to Your Portfolio
In such a scenario investors can seek safety in high quality stocks and the related ETFs Quality stocks are generally rich in value characteristics like strong return on equity low earnings variability higher free cash margins and low debt to equity
Thanks to these above average and high quality traits quality ETFs may go a long way in protecting one s portfolio in turbulent times Below we highlight four such quality ETFs that are poised to be on investors radar in the coming days
iShares Edge MSCI USA Quality Factor
The fund looks to follow large and mid cap U S stocks displaying positive fundamentals high return on equity stable year over year earnings growth and low financial leverage
FlexShares Quality Dividend Index ETF
The fund looks to provide exposure to the growth potential of U S securities while offering dividends The fund yields about 2 99 annually as of November 17 2016
WisdomTree US Quality Dividend Growth Fund
The fund gives exposure to both growth and quality factors The fund yields about 2 21 annually as of November 17 2016
VanEck Vectors Morningstar Wide Moat ETF
The fund follows an index which tracks the overall performance of the companies with sustainable competitive advantages As a result this fund also calls for quality exposure
Want key ETF info delivered straight to your inbox
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JPM | JP Morgan Secures IPO Deal With Saudi Aramco | Financial giants and stock exchanges around the world are competing to get a piece of what promises to be the world s largest initial public offering the sale of shares in Saudi Arabia s state managed oil company
Saudi Aramco has an estimated value of over 2 trillion Saudi Deputy Crown Prince Mohammad bin Salman announced in April The commission fees that a Saudi Aramco IPO would earn for financial institutions acting as arrangers are also seen to be the biggest in history
The leading oil company has 16 percent of the world s crude oil inventory or more than 310 billion barrels of oil including natural gas That is over 10 times the reserves of Exxon Mobil NYSE XOM the largest private oil provider in the United States Even though comparisons are complex the existing market capitalization of Exxon Mobil is nearly 350 billion
Saudi Aramco pumps 10 million barrels per day and still has enough room to increase output According to reports the company has the lowest production costs in the world
As political connections between Saudi Arabia and the United States have weakened investment banks in Britain now anticipate Saudi Aramco to choose to list in London instead of New York
Banks have already started estimating the benefits they would receive in the Saudi Aramco agreement Mohammad bin Salman explained that the oil company intends to sell less than 5 percent of its shares If Saudi Aramco s value is approximated at 2 trillion 5 percent of that is 100 billion Suggesting that it is four times the record 25 billion raised by Chinese online retailer Alibaba Group NYSE BABA in its 2014 IPO
During that time arrangers received a total of 300 million in commission fees Considering that it is not impossible that Saudi Aramco s IPO could achieve more than 1 billion for potential arrangers
Based on US media reports Saudi Aranco has assigned JPMorgan Chase NYSE JPM for listing arrangement and Citigroup s NYSE C Michael Klein as an adviser Major banks around the world are all pursuing an arranger role
In choosing arrangers the Saudi government is believed to take into consideration the financial institutes contribution records and to attempt to acquire conditions advantageous to the government
In its initial offshore bond sales of 17 5 billion in October the government appointed JP Morgan HSBC NYSE HSBC of Britain and Citi as lead arrangers Banks in Japan Germany France and China were also part of the arrangement process Their involvement in the bond sales slightly mirrors their ambition to have an edge in getting similar opportunities in connection with Saudi Aramco s IPO
Saudi s Stock Exchange
Another main focus of the IPO mix up is the stock exchanges Saudi Aramco CEO Amin Nasser previously said that there is an equal potential for the company to be listed on foreign stock exchanges in London New York Hong Kong and Japan
Saudi Aramco is shifting its concentration to global markets as the Saudi Arabian stock market which is also under evaluation for listing cannot absorb the massive IPO on its own
Japan is among the countries making an effort for Saudi Aramco to list on its domestic stock exchange Last month Hiroshige Seko Japan s minister of economy trade and industry met with Saudi Arabia s economy minister
I clearly conveyed our extremely strong hopes for listing on the Tokyo Stock Exchange Seko stated |
MS | New Media 2 4 on 7 5M share public offering | New Media Investment Group NYSE NEWM has slipped 2 4 after hours on news that it s launching a public offering of 7 5M shares of common stock Morgan Stanley NYSE MS the sole underwriter has a 30 day option to buy up to an additional 1 125M shares It might offer shares via NYSE transactions the OTC market or through negotiated transactions New Media plans the proceeds for general purposes which might include potential investments in and acquisitions of local media businesses and assets |
MS | Havas chief Merger with Vivendi would make sense | A merger between ad group Havas OTCPK HAVSF and media giant Vivendi PA VIV OTCPK VIVHY 3 5 is an assumption that makes sense says Havas chief Yannick Bollore It would be a development project rather than a cost saving project He says Havas isn t in any formal talks with Vivendi which is 60 owned by his father Vincent Vincent has said that the two companies should work more closely with a possible merger later meanwhile Exane BNP Paribas PA BNPP sees a merger happening as soon as Q2 2017 Big content could bring a lot to advertising and advertising could bring a lot to Vivendi s entertainment world Yannick Bollore said on the sidelines of the Morgan Stanley NYSE MS conference in Barcelona Vivendi makes up 0 05 of Havas revenues and Havas clients make up less than 1 of Vivendi s revenues Yannick says Shares of Havas are up 0 5 in Paris |
MS | Once terrified hedge fund managers warm to Trump | By Svea Herbst Bayliss and Lawrence Delevingne NEW YORK Reuters Hedge fund managers were largely united in their dislike for Donald Trump before the election Now they are optimistic that he can use his pro growth policies to improve the economy and their portfolios Investors were over weighing the negatives of his unpredictability as a potential President and they were under valuing how positive from a policy perspective him with a Republican Congress would be for the markets said Jason Karp who runs 3 8 billion Tourbillon Capital Partners It s unequivocally positive for business Research firm Preqin said this week that nearly three quarters of fund managers polled since the election expect lower corporate taxes to provide the biggest boost to the markets Almost half also see their U S based assets getting a lift Spending on infrastructure like bridges and tunnels are also seen as positive and underpinned the stock market gains Even expected interest rate hikes from the Federal Reserve after years of easy money are not seen hurting the anticipated recovery In the week since the Nov 8 election hedge funds have scrambled to buy more financial and some healthcare stocks and lighten their stakes in technology companies managers and industry analysts said Bank stocks are up 14 percent since Election Day while biotech names have gained nearly 9 percent and health insurers have risen 11 percent Calling the Republican party s sweep of the White House and Congress a regime shift Karp said the rally in financial stocks could continue once some of Trump s proposed pro business plans take effect citing tax cuts and looser regulations that could promote lending Regional banks could benefit the most if capital requirements are eased said Dawn Fitzpatrick global head of equities multi asset and the O Connor hedge fund businesses at UBS Asset Management The Dodd Frank financial overhaul law is unlikely to disappear she said but the pendulum will shift to be less extreme Steven Einhorn vice chairman of 4 billion Omega Advisors expects the Standard Poor s 500 Index to rise between 6 percent and 8 percent next year noting his forecast could even be too conservative The earnings impact of a Trump presidency will outweigh the increase in interest rates Einhorn said All of the managers were speaking at the annual Reuters Global Investment Outlook Summit in New York this week Only a few weeks ago hedge fund managers largely worried that Trump was not qualified for the nation s highest office and viewed him as a source of instability There were also widespread predictions that the stock market would decline 10 percent or more if Clinton lost Trump had unkind words for the industry calling managers paper pushers who get away with murder because of their sometimes low tax rates Now managers and investors are quickly adjusting to the new reality in part because the industry is eager for some good news after years of lackluster returns and growing criticism from investors about high fees Assets are still near a record 3 trillion but managers note their image has been hurt as some institutional investors especially public pension funds are pulling back Gains have been elusive for many funds even in the wake of the stock market s climb managers and analysts said Data from Morgan Stanley NYSE MS show the average global hedge fund s post election returns are flat U S and European funds that pick stocks have lost some money the data show Tourbillon s Karp said an end to gridlock in Washington could support a better environment for hedge fund managers where active stock pickers could benefit from both more moves up and down and companies being judged more on their earnings again Our job is to find things that are harder to figure out he said But some managers urged caution on the investment optimism around Trump Some investors feel the rally in the banks and insurers is overdone said Michael Weinberg chief investment strategist at hedge fund investment firm Prot g Partners He said one view is that earnings are not going to rebound as quickly as some think Managers also said they realize that a trade war with countries such as China or Mexico could hurt the United States and the markets they invest in Whatever the markets do one of the industry s most experienced investors urged some calm Donald is so much better for our economy long term than Hillary would have been Carl Icahn said You can t have more of the same in this country Follow Reuters Summits on Twitter Reuters Summits For other news from Reuters Global Investment Outlook Summit click on
This story corrects to remove extraneous words in paragraph 20 |
MS | Analog chipmaker Macom to buy Applied Micro for 770 million | Reuters Analog chipmaker Macom Technology Solutions Holdings Inc O MTSI said on Monday it would buy fellow chipmaker Applied Micro Circuits Corp O AMCC for about 770 million to expand its data center connectivity business
Macom s offer of 8 36 per share comprising of 3 25 of cash and 0 1089 Macom shares represents a premium of 15 percent to Applied Micro s Friday close
The deal comes at a time when the semiconductor industry has been rapidly consolidating as chipmakers seek to cut costs meet demand for cheaper chips and diversify into different product lines
Lowell Massachusetts based Macom provides chips for wireless satellite and fiber optic networks Its chips are used by telecom aerospace and defense companies
Buying Santa Clara California based Applied Micro will help Macom expand into the market for data center connectivity chips
Excluding Applied Micro s computing business Macom said it expects the deal to add to its adjusted earnings per share and adjusted gross margin in the year ending September 2017
Macom said it would sell Applied Micro s computing chip business after the deal closes
Evercore was Macom s financial adviser and Ropes Gray LLP provided legal counsel
Morgan Stanley Co LLC NYSE MS advised Applied Micro and Pillsbury Winthrop Shaw Pittman LLP was its legal adviser |
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