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C | Why Is Citigroup C Down 9 1 Since Last Earnings Report | A month has gone by since the last earnings report for Citigroup C Shares have lost about 9 1 in that time frame underperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is Citigroup due for a breakout 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 Q2 Earnings Revenues Beat EstimatesCitigroup delivered a positive earnings surprise of 2 8 in second quarter 2019 backed by expense control Adjusted earnings per share of 1 83 for the quarter handily outpaced the Zacks Consensus Estimate of 1 78 Also earnings climbed 12 year over year Including one time gain net income was 4 8 billion or 1 95 per share compared with 4 5 billion or 1 63 per share recorded in the prior year quarter Citigroup displayed prudent expense management and higher revenues riding on consumer banking during the reported quarter Further loan and deposit growth were positives However fixed income revenues excluding the Tradeweb gain disappointing investment banking revenues on lower advisory business and reduced equity underwriting partly offset by higher debt underwriting fees were on the downside In addition lower equity market revenues amid challenging trading environment reflect reduced volumes and client activity levels Citigroup s costs of credit for the June end quarter were up 16 year over year to 2 1 billion This upswing largely underlines elevated net credit losses of 2 billion and a credit reserve build of 111 million and provision for benefits and claims of 19 million Expenses Drop Revenues EscalateRevenues were up 2 year over year to 18 8 billion in the second quarter The reported figure also outpaced the Zacks Consensus Estimate of 18 3 billion Higher revenues from Global Consumer Banking GCB and pre tax gain on Citigroup s investment in Tradeweb mainly led to the upside GCB revenues increased 3 year over year to 8 5 billion Higher revenues in North Latin America and Asia GCB led to this upsurge Notably both retail banking and card revenues escalated In the Institutional Clients Group ICG segment revenues came in at 9 7 billion in the quarter almost unchanged year over year Investment banking corporate lending equity market revenues and fixed income market revenues disappointed Corporate Other revenues came in at 532 million inching up 1 from the prior year quarter This upside stemmed from elevated treasury revenues and gains mostly underscored by wind down of legacy assets Operating expenses at Citigroup dipped 2 year over year to 10 5 billion Efficiency savings and the winding down of legacy assets muted the ongoing investments Strong Balance SheetAt the end of the April June quarter Citigroup s end of period assets was 1 99 trillion up 2 sequentially The company s loans inched up 1 sequentially to 689 billion Deposits were up 1 sequentially to 1 05 trillion Credit Quality ImprovesTotal non accrual assets decreased 9 year over year to 3 7 billion The company reported a drop of 7 in consumer non accrual loans to 2 2 billion Furthermore corporate non accrual loans of 1 4 billion slipped 13 from the year earlier period 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 1 billion or 1 81 recorded in the year ago period Solid Capital PositionAt the end of the April June period Citigroup s Common Equity Tier 1 Capital ratio was 11 9 down from the prior year quarter s 12 1 The company s supplementary leverage ratio for the quarter came in at 6 4 down from the year earlier quarter s 6 6 As of Jun 30 2019 book value per share was 79 40 up 10 year over year and tangible book value per share was 67 64 up 3 from the comparable period last year Capital DeploymentDuring the second quarter the company bought back about 54 million of common stock and returned around 4 6 billion to common shareholders as common stock repurchases and dividends OutlookLooking forward management expects the NIR percent to remain at the level recorded in the third quarter as management expects to maintain current mix of interest earning to non interest earning balances In ICG in the third quarter management expects continued year over year growth in accrual businesses as Citigroup continues to serve target clients globally Further performance of markets and investment banking revenues depend on the overall market environment On the consumer side in North America continued year over year revenue growth with US Branded Cards is likely to occur In Asia year over year revenue growth is expected to improve on continued growth in accrual businesses and reduced headwinds from investment revenues Further in Mexico organic growth across the rest of accrual and consumer businesses is expected and a favorable comparison in markets revenues in the fourth quarter is likely to occur even if investor client activity remains muted as witnessed year to date However gain on the sale of asset management business in Mexico in the third quarter 2018 might act as a headwind in year over year comparison of results though continued steady growth in pretax earnings is anticipated In the third quarter expenses are likely to decline sequentially and cost of credit to continue to grow modestly year over year reflecting volume growth and continued normalization in ICG In 2019 management expects to record modest year over year revenue growth attributed to continued growth in net interest revenue and more stable trends in non interest revenue Management estimate expenses in the second half of 2019 to be lower on a sequential basis On a full year basis management expects to generate at least 2 billion of growth in net interest revenue year over year Further it estimated that each 25 basis point cut in U S rates impacts revenues by roughly 50 million on a quarterly basis depending on the competitive environment for deposits and other factors Additionally total non interest revenue is expected to remain flat year over year For the remainder of 2019 management projects a modest pre tax quarterly loss in Corporate Other segment Management expects loan growth to trend higher similar to recent levels in the second half of 2019 For U S Branded Cards NCL rate is anticipated in the range of 300 to 325 basis points for 2019 NCL rate for Retail Services are expected in the range of 500 basis points to 525 basis points Full year RoTCE of 12 is targeted for 2019 and more than 13 5 for 2020 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 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 Tax rate is likely to be between 22 23 in the second half of 2019 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 upward during the past month
VGM Scores
Currently Citigroup has a subpar Growth Score of D however its Momentum Score is doing a lot better with a B Following the exact same course 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 B If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising Notably Citigroup has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
JPM | Economic Data Earnings Are Positive | Two economic reads one addressing the U S consumer and the other the U S producer were released before the bell this Friday September Retail Sales were up 0 6 and September Producer Price Index PPI up 0 3 Both of these headline numbers are basically in line perhaps a tad hotter on the PPI side
Retail sales were bolstered by monthly strength in auto sales and gas station revenues autos notched up 1 1 gas stations up 2 4 Ex autos and fuel the retail sales number for the month is 0 3 Consumer discretionary provided some pop as well with Sporting and Hobbies up 1 4 and Restaurants up 0 8 This directly relates to overall consumer confidence which has been strong in recent months
Monthly PPI was a notch higher than the 0 2 expected The ex food and energy read was in line at 0 1 and the core read was 0 3 Year over year PPI ex food and energy has reached 1 2 again a bit hotter than expected Still nothing indicating runaway inflation though if we were to see producer pricing continuing to rise over the next few reads it would begin to tell a different story Big Banks Report Q3 Earnings
Three major too big to fail banks reported Q3 earnings before the bell today as well and all three topped earnings estimates JPMorgan NYSE JPM saw the biggest positive beat posting 1 58 per share on 25 51 billion in quarterly revenues These numbers easily surpassed the 1 40 and 24 billion the Zacks consensus had been expecting and represent big year over year growth on both top and bottom lines This is the fourth straight quarterly earnings beat for JPMorgan
Citigroup posted 1 24 per share on 17 76 billion in revenues up strongly from expectations of 1 16 and 17 38 billion respectively Fixed income jumped 35 in the quarter and Citi shares are up 2 2 in the pre market erasing the 1 2 loss over the past week and then some
Finally beleaguered Wall Street major Wells Fargo NYSE WFC beat the Zacks earnings estimate of 1 02 by a penny on revenues of 22 2 billion higher than the 22 02 billion expected Net income was down in the quarter but brand new CEO Tim Sloan is putting his best face forward Wells Fargo s bogus account scandal will not be erased anytime soon but shares are bidding up nearly 0 9 in early trading |
JPM | Big Banks Q3 Earnings Roundup JPM C WFC | Q3 earnings season kicked off in a big way this week and several of the world s largest banks released their most recent reports before the market opened on Friday morning Here s a round up of the latest earnings data from Citigroup NYSE C JPMorgan Chase NYSE JPM and Wells Fargo NYSE WFC
More Good News Than Bad
While there wasn t any absolutely spectacular news from these big banks this morning we still saw some pretty solid results
JPMorgan posted the biggest positive earnings beat with EPS coming in at 1 58 versus the Zacks Consensus Estimate of 1 40 JPMorgan has now surpassed earnings expectations by an average of nearly 9 in each of the trailing four quarters
The company also posted revenues of 25 51 billion which was well ahead of our consensus estimate of 24 billion Improved fixed income and equity trading revenues higher mortgage banking fees and growth in investment banking income drove the results Further higher net interest income perhaps attributable to the rise in loan supported top line also read
Citigroup also came in ahead of expectations it posted earnings of 1 24 per share on 17 76 billion in revenue which beat our consensus estimates of 1 16 and 17 38 billion respectively Revenues from fixed income markets grew 35 and investment banking gained 15 while adjusted net income fell 8 to 3 84 billion also read
Finally controversy riddled Wells Fargo WFC also reported this morning The company posted earnings of 1 02 per share which beat the Zacks Consensus Estimate by a penny Revenues came in at 22 2 billion which was better than our consensus estimate of 22 02 billion also read
Wells Fargo s new CEO Tim Sloan will still face an uphill battle and his company s fraudulent account opening scandal is certainly not going anywhere anytime soon Nevertheless today s positive results will provide some comfort for the company and its investors
All three stocks opened higher with JPM and C gaining more than 2 and WFC up 1 but they ve been slumping back down throughout the day Today s morning gains have basically been wiped out
For more news heading into the weekend check out the latest episode of the podcast
You are invited to download the full up to the minute list of 220 Zacks Rank 1 Strong Buys free of charge Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015 with a stellar average gain of 26 per year |
JPM | US Data Fed And Earnings In Focus | Focus will very much be on the US as we see out the end of the week Recent moves in the pound and oil have overshadowed the US a little bit but today it should take centre stage once again
The US retail sales number stands out for me as being the key release today We saw a strong rebound in spending in the second quarter which set us up nicely for a good summer but US consumers just didn t deliver A couple of disappointing reports in July and August one again cast doubts over the strength of the US economy something markets have so far been willing to overlook with investors still pricing in a December rate hike Should the US make it a hat rick of poor spending numbers then investors may once again find themselves questioning December
While fluctuations in retail spending has been a cause for concern consumer confidence has remained near the highest levels since before the financial crisis With that in mind another strong number today may do little to build confidence for the months ahead yet a weaker reading especially if combined with a poor retail sales figure for September could worry investors and force them again to reassess December rate hike chances
Finally today we ll hear from Federal Reserve Chair Janet Yellen whose views are going to be crucial come the December meeting Last December Yellen managed to get unanimous support for a rate hike the first in almost a decade and one that some members may not have been convinced by Given this show of leadership almost a year ago and the fact that three of the ten voting members dissented at the last meeting I think it s clear that Yellen holds the key to when rates will rise Her views will therefore be scrutinised for any clues on the timing of the hike and given that markets have strongly priced in a hike any hint of doubt with regard to December could be seen as a sign of weakness by the markets and could result in dollar weakness and falling treasury yields We ll also hear from one of last month s dissenters Eric Rosengren today although his comments unless dovish may be overlooked as he is already expected to push for a hike at the upcoming meetings
We ll also get a number of earnings releases with particular focus on the banks as Citigroup NYSE C JPMorgan Chase NYSE JPM and Wells Fargo NYSE WFC report With all this in mind markets are likely to be quite volatile on Friday It will be interesting to see if Europe and US indices can hold onto early gains with both having had a tough week and looking on the verge of entering a broader downturn as some major technical support levels were strongly tested |
JPM | Thus Spake Yellen | DOW 39 18 138SPX 0 43 2132NAS 0 83 521410 Y 03 1 77 OIL 11 50 33GOLD 7 30 1251 50
Sales at US retail stores rebounded in September with auto dealers and gas stations racking up the biggest gains Retail sales rose 0 6 last month to snap back from a small decline in August that was the first in five months
In September receipts at auto dealers increased 1 1 Still auto dealers relied on sharply higher discounts to lure buyers as demand for new cars and trucks appears to be leveling off after a years long boom in sales Auto purchases account for about one fifth of all retail spending
Sales at gas stations climbed a seasonally adjusted 2 4 We weren t buying more gas just paying more
Department stores suffered a 0 7 percent sales decline in September part of a long term slowdown for the anchor tenants at many shopping malls that increasingly must compete with online outlets But even online sales were soft They rose a mere 0 3 percent in September compared with recent monthly gains averaging nearly 1 percent
The University of Michigan Consumer Sentiment Index dropped to 87 9 from 91 2 in early October Blame the presidential election The sub index of consumer expectations fell to 76 6 its lowest level in two years mostly from households with incomes lower than 75 000 The index of current economic conditions ticked up to 105 5 from 104 2 last month In other words people think things are pretty good now but they will surely get worse
By the way this idea that consumer sentiment is down because of the presidential election there may be something to it The American Psychological Association which is the largest psychological organization in the US conducted their annual Stress in America survey and found that tension regarding the upcoming presidential election is exceedingly high
Fifty two percent of over 3 500 adults surveyed said they felt stressed by all the politicking and campaigning leading up to the approaching election It doesn t matter if you are Democrat or Republican the election is driving us crazy
Producer prices rose again in September as wholesale inflation keeps creeping higher The producer price index advanced 0 3 last month Energy prices rose 2 5 But even if you strip out volatile food and energy costs the core rate also advanced 0 3 indicating that food costs partly offset higher energy costs and inflation is creeping into the broader economy
American businesses increased inventories by a modest 0 2 in August as they continue to work down an excessive build up last year Business sales also increased by 0 2 in the same month Companies have scaled back production in many areas such as manufacturing to bring inventories back in line and that s been a drag on the U S economy in the first half of 2016
The U S Treasury has issued final inversion amendment rules in its effort to tackle earnings stripping a tax reduction technique employed by multinationals In an inversion a U S company moves its legal address abroad in order to pay lower taxes Under earnings stripping a foreign parent company lends money to its U S operation and the interest is then deducted The rules were initially proposed in April The final regulations contain some exceptions to the initial proposal including for certain entities where the risk of earnings stripping is low
Earlier this week the Fed released minutes of the September FOMC policy meeting which we know was a split decision not to raise rates Boston Fed President Eric Rosengren one of the hawks this morning said that he expects the unemployment rate to decline to 4 5 next year an unsustainable level that may force the Fed to act
This afternoon Fed chair Janet Yellen spoke at a Boston Fed conference Yellen said she thinks it might be possible to temporarily run a high pressure economy with robust aggregate demand and a tight labor market
Yellen made no mention of when the Fed might raise rates but she did question some of the most fundamental principles of economics including the nature of inflation and the influence of financial markets Among the questions raised were whether the severe downturn could erode the skills of the nation s workforce impeding future growth
Yellen also suggested that changes in spending and behavior among some groups could have outsize effects on the health of the broader economy a nuance that current mathematical models may not capture well
Central bank officials are debating the best strategy for approaching such a slow recovery Yellen said today
If strong economic conditions can partially reverse supply side damage after it has occurred then policymakers may want to aim at being more accommodative during recoveries than would be called for under the traditional view that supply is largely independent of demand
It sounds like Yellen is a little confounded and annoyed by the sluggishness of the economy and is willing to test the dovish boundaries of monetary policy and maybe even err on the side of overshooting the recovery
Before the opening bell we saw earnings reports from JPMorgan Chase NYSE JPM Citigroup NYSE C and Wells Fargo NYSE WFC JPMorgan reported a profit of 6 2 billion or 1 58 a share That compares with a profit of 6 8 billion or 1 68 a share in the same period of 2015 Revenue rose 8 4 to 25 5 billion Analysts had expected 24 billion Earnings and revenue beat estimates The bank had record earnings in commercial banking and record loan balances in asset management
JPMorgan is conducting a deep dive into the cross selling of retail products you know the kind of stuff that landed Wells Fargo in hot water for opening bogus accounts JPMorgan s self investigation has revealed a few instances they say they can t have zero defects but claim they do not have systemic problems Quite a claim from a business that has paid more than 27 billion dollars in fines and legal costs over the past 5 years
Citigroup said third quarter profit and revenue were down but results were still better than what analysts had predicted Citi reported a profit of 3 8 billion or 1 24 a share That compares with the 4 2 billion or 1 35 a share it reported in the same period of 2015 Revenue was down to 17 7 billion from 18 6 billion a year ago Trading revenue rose 16 Investment banking revenue was up 15
Wells Fargo said its third quarter profit fell to 5 6 billion or 1 03 a share That compares with 5 8 billion or 1 05 a share in the same period of 2015 Revenue rose to 22 3 billion Both earnings and revenue topped estimates The bank faces a raft of federal and state investigations The earnings presentation addressed the fraudulent account openings in detail Compared to August consumers decided to apply for 30 fewer credit cards And compared to last September 25 fewer
Consumer checking accounts also took a big fall Year over year the bank saw 25 fewer checking accounts opened and a whopping 30 fewer in comparison to August And that s just the beginning We ll probably learn more when fourth quarter earnings are announced in January We did not learn how many customers have left the bank
Wells Fargo said it is looking into how customers credit scores may have been affected by the 565 000 unwanted credit cards and that it s working with credit bureaus to expunge the fraudulent files and restore credit or furnish the card connected to the account for the people who decided to keep their cards In addition to that the San Francisco based bank will be looking into the indirect and more costly consequences of how the new accounts impacted consumers credit scores for example the effect it might have on a loan s interest rate
It will take more than the retirement of Wells Fargo CEO John Stumpf to make California State Treasurer John Chiang change his mind about doing business with the bank again Chiang said We are beyond the point of tweaking We want to see fundamental reform of Wells Fargo before we make a decision In September the state suspended its relationship with the lender after it was accused of defrauding customers
Today Ohio jumped on the bandwagon announcing that the Ohio state government will ban all business with Wells Fargo for 12 months This will include using Wells Fargo to issue debt or bid for financial services contracts The decision applies to state agencies
Verizon says on their planned acquisition If they believe that it s not then they ll need to show us that so says Verizon general counsel Craig Silliman Verizon agreed to buy Yahoo s core assets for 4 8 billion in July but the deal has yet to close
Meanwhile Salesforce will not put in an offer for the company Salesforce was the last remaining bidder for Twitter after Disney and Google lost interest last week
AMD Dell EMC Google Mellanox Micron Nvidia and Xilinx have joined forces to give Intel a good kick in the datacenters The group has come up with an open specification dubbed OpenCAPI which can boost server performance by up to 10x Effectively they are moving away from PCIe the current industry standard to something that is both more open and vastly more powerful |
MS | Wells Fargo s wealth unit ditches cross sell measure for referred assets | By Elizabeth Dilts
NEW YORK Reuters Wells Fargo NYSE WFC Co s wealth management unit has changed the way it reports cross selling the strategy at the heart of the scandal over its aggressive sales targets and now reporting assets referred from bank employees
The wealth management business reported a gain of 1 billion in referred investment assets in the third quarter after referrals from employees in bank branches according to corporate filings The figure is in line with prior trends the bank said on Friday
Cross selling or getting customers to buy products and services from several business lines was previously reported as a figure that showed the average number of accounts held by a client household if that client also had retail bank accounts like checking or savings accounts
In August 2015 the last quarter for which it was reported the bank said the average wealth management client household had 10 52 accounts the highest average account number of any of the bank s business divisions
Meanwhile Wells Fargo said total profits dropped for the fourth straight quarter as it set aside funds for potential legal costs from a bogus account scandal that led to its chief executive officer stepping down
The wealth business reported profit jumped 16 percent over the previous quarter to 677 million on higher asset based fees and a greater percentage of brokers paychecks being deferred
Cross selling is a widespread practice at banks and brokerages but the affair at Wells Fargo s community bank raised questions about whether it is appropriate to set aggressive sales targets for employees and whether customers really need all the products offered
Massachusetts regulators recently charged Morgan Stanley NYSE MS with dishonest and unethical conduct for having pushed its brokers to sell loans to their clients
Last quarter Wells Fargo s wealth and investment management unit said it was evaluating changes in our cross sell methodology to better align our metrics with ongoing changes in WIM s business and products according to corporate filings
Wells Fargo did not immediately respond to request for comment |
MS | Morgan Stanley taps Nilton David as Brazil trading head sources | SAO PAULO Reuters Morgan Stanley NYSE MS which recently rose to become Brazil s No 2 broker by trading volume has hired Nilton David as a managing director to head trading desk activities in the country two people with knowledge of the matter said on Monday
The people who asked for anonymity because the decision has not been made public said David s appointment had been announced to employees in an internal memo David is joining Morgan Stanley from Canvas Capital a S o Paulo based hedge fund where he was a partner
A public relations executive working for Morgan Stanley s unit in S o Paulo confirmed the appointment but declined to comment further
David s hiring comes about a month after Bernardo Zerbini left as the head of Morgan Stanley s trading desk for Latin America one of the people said David also previously worked at Citigroup Inc NYSE C heading the foreign exchange volatility desk in the bank s global emerging markets division
Morgan Stanley s Brazilian brokerage was second only to UBS AG in terms of trading volumes in the first nine months of the year according to brokers with a market share of about 11 percent |
MS | Morgan Stanley s investment unit settles with FINRA for 2 2 million | Reuters Morgan Stanley NYSE MS Smith Barney LLC said it would pay a fine of 2 2 million to the Financial Industry Regulatory Authority FINRA after the regulatory body alleged that the firm submitted millions of inaccurate reports to the Options Clearing Corp violating the FINRA rules FINRA claimed that in over 13 million situations the wealth management firm sent reports on its large options positions which missed details such as tax identification numbers had wrong account type details and incomplete address fields etc FINRA typically tracks reports like those that Morgan Stanley submitted in order to identify holders of large option positions who could be in addition to other things attempting to manipulate the market New York based Morgan Stanley Smith Barney is a unit of Morgan Stanley and has been a member of FINRA for seven years |
JPM | JP Morgan s Dimon says U S economy still looks pretty good | By Svea Herbst Bayliss BOSTON Reuters JPMorgan Chase N JPM Chief Executive Jamie Dimon said on Wednesday the U S economy still looked pretty good and that there was no law that says growth cannot continue But there will be a downturn at some point Dimon told the John F Kennedy Jr Forum at Harvard University Asked to assess the chances the U S economy would dip into a recession he said that was a certainty But he could not say when that might happen He said growth for now looked robust as more jobs were being created wages were rising consumer credit was strong and the rest of the world was performing relatively well I think it should be OK through 2018 and part of 2019 Dimon said adding the economy looked pretty good Speaking at a forum about revitalizing Detroit Dimon added that good public policies including streamlining certain regulations were critical to keeping the economic engine running If you have an idea to build a bridge it takes 10 years to get the permits it is a disgrace and it needs to be fixed Dimon said Speaking just across the river from Boston Dimon said the bank planned to open branches there I said it we are coming to Boston Dimon said JPMorgan has already laid out plans to increase its branch network by roughly 8 percent and open about 400 new locations Besides Boston Dimon said the bank was eyeing Philadelphia and Washington D C Dimon said those branches would have fewer tellers but more financial advisers to help solve customers problems He said technology would certainly change the face of banking but that people still needed loans and financial advice You use technology to do a better job for clients I am not afraid at all about technology he said As head of the biggest U S bank Dimon is often seen as the face of Wall Street Lately he has turned more of his attention to advocating for public policies to boost the economy including infrastructure and job skills training
JPMorgan has committed 150 million to help revitalize Detroit and Dimon has thrown his weight behind the city s mayor Mike Duggan who also spoke at the forum The bank s investment is primarily focused on Detroit s neighborhoods rather than its downtown |
C | Bitcoin extends slide falls below 7 000 | By Gertrude Chavez Dreyfuss NEW YORK Reuters Digital currency bitcoin BTC BTSP fell more than 15 percent on Monday to a nearly three month low amid a slew of concerns ranging from a global regulatory clampdown to a ban on using credit cards to buy bitcoin by British and U S banks On the Luxembourg based Bitstamp exchange bitcoin fell as low as 6 853 53 in early afternoon trading in New York That marked a fall of more than half from a peak of almost 20 000 hit in December Bitcoin has fallen in six of the last eight trading session The currency which surged more than 1 300 percent last year has lost about half its value so far in 2018 as more governments and banks signal their intention for a regulatory crackdown Last week bitcoin suffered its worst weekly performance since 2013 We envisage this decline will continue setting the next technical level at 5 000 a coin said Miles Eakers chief market analyst at Centtrip which specializes in foreign exchange worldwide payments and treasury management Other cryptocurrencies also suffered double digit declines on Monday according to industry tracker Coinmarketcap com Ethereum the second largest virtual currency was last down nearly 19 percent at 703 40 while Ripple the third largest last traded at 71 cents down 14 1 percent British bank Lloyds Banking Group L LLOY said on Sunday it was banning customers from using credit cards to buy bitcoin It joined U S banking giants JPMorgan Chase Co N JPM and Citigroup N C which announced similar bans on concerns the lenders could be held liable when the volatile currencies plunge in value nL8N1PU10Y On Monday India said it was planning steps to make virtual currencies illegal within its payments system and to regulate the trading of crypto assets Cryptocurrencies have seriously fallen out of favor since the middle of December and constant negative news flow and speculation of increased regulation has exacerbated the move lower Craig Erlam an analyst at currency broker Oanda said The cryptocurrency sector has also attracted the spotlight after news of hacks and scams including the roughly 58 billion yen 532 9 million stolen in digital money from Tokyo based cryptocurrency exchange Coincheck two weeks ago nL8N1PP6W8 But some investors were unfazed
Bitcoin has bounced back from similar collapses before during its short but volatile history and it would hardly be a shock if those claiming the bubble has burst are surprised by yet another change in fortunes said Dennis de Jong managing director at online FX brokerage firm UFX com in Limassol Cyprus |
C | Lawsuit claiming Citigroup ran boys club dismissed by U S judge | By Jonathan Stempel NEW YORK Reuters A federal judge in Manhattan on Tuesday dismissed a lawsuit by a fired Citigroup Inc N C financial adviser who said the bank s culture of gender discrimination made it clear that the boys were in charge U S District Judge Richard Sullivan said most of Erin Daly s claims over the alleged bias and harassment she faced in her seven years at the New York based bank did not belong in federal court because she had agreed to arbitrate them He also said Daly waited too long to accuse Citigroup of firing her in retaliation for reporting her boss s alleged violations of rules to prevent insider trading by demanding nonpublic details about stock offerings that he wanted to pass to favored clients Michelle Daly a lawyer for the plaintiff had no immediate comment Citigroup spokeswoman Danielle Romero Apsilos declined to comment The lawsuit is one of many over the years accusing U S banks of favoring male bankers traders and financial advisers over their female counterparts and permitting improper conduct Erin Daly claimed that Citigroup stripped her of client contact and responsibilities because of her gender in an effort to reduce her to a glorified secretary because its boys club policies dictated that the men were doing business Sullivan agreed with Citigroup that Daly s whistleblower claim under the federal Sarbanes Oxley governance law was stale because Daly brought it two years after her December 2014 dismissal missing a 180 day deadline He also said Citigroup s having allegedly alerted a U S brokerage regulator the U S Financial Industry Regulatory Authority FINRA about shortcomings in Daly s work did not create a continuing violation that meant the 180 day limit had not run The plaintiff a resident of Manhattan s Upper West Side had sought double back pay unpaid bonuses and punitive damages
The case is Daly v Citigroup Inc et al U S District Court Southern District of New York No 16 09183 |
C | Citigroup targets rapid Middle East Africa growth in 2018 | By Tom Arnold ABU DHABI Reuters Citigroup NYSE C expects 2018 to be its best year for investment banking in the Middle East and Africa in at least a decade likely led by Saudi Arabia a senior executive at the U S bank said Nigeria Egypt and the United Arab Emirates would also be the main growth drivers as bond sales mergers and acquisitions and public share sales pick up Miguel Azevedo Citigroup s head of investment banking Middle East and Africa said The pipeline in the Middle East and Africa is as good as we have seen since the global financial crisis of 2008 he told Reuters in an interview adding that emerging markets represented a larger weight of Citi s earnings than for others GDP growth for advanced economies this year is between 2 5 and 3 percent while for emerging markets it is between 4 5 and 5 percent For investment banking the growth should maybe be even more Azevedo said In the Middle East and Africa getting deals done would depend on market stability but swings in global stocks in recent days represented a correction and were not enough to put any of these transactions off Citigroup said last month it had won formal approval from Saudi Arabia s Capital Market Authority to begin an investment banking business there enabling its return after an absence of almost 13 years SAUDI DRIVE Several international lenders are seeking to build a Saudi presence as opportunities emerge from reforms to wean the economy off a reliance on oil revenues Those include privatizations such as the planned listing up to 5 percent of Saudi Aramco IPO ARMO SE Citi was among those invited to pitch for a role in the stock market listing sources told Reuters last month and the bank has already hired former Saudi Fransi Capital executive Majed al Hassoun to head its Saudi investment banking business which it is developing with further hires There is a very significant privatization push this could create the opportunity for investors to deploy capital to develop the industrial base and infrastructure he said The bank also expects significant opportunities in Nigeria which has low debt levels and was expected to return to the bond markets in 2018 while Nigerian companies were also forecast to issue bonds and launch initial public offerings Azevedo added Nigeria issued a 3 billion two part international bond in November a deal managed by Citigroup and Standard Chartered LON STAN
Egypt s outlook was also positive after the 2016 currency devaluation and IPOs were slated in sectors such as industrial and manufacturing and financial services and consumer he said |
C | HSBC Plans To Lay Off 4 000 Employees Globally To Cut Costs | Continuing with its cost cutting efforts to enhance operating efficiency amid challenging market conditions HSBC Holdings LON HSBA plc NYSE C plans to reduce almost 4 000 jobs globally which accounts for nearly 2 of its workforce This London based bank which generates more than half of its revenues in Asia had nearly 237 685 full time workers as of Jun 30 2019 The news came in after the company s CEO John Flint announced his surprise departure from the firm Concurrent with the second quarter 2019 earnings release it was announced that Flint stepped down as the CEO of the company Flint remained CEO for nearly 1 5 years after joining HSBC in 1989 Now Noel Quinn the chief executive of global commercial banking has been asked to take on the responsibility as the company s interim CEO and join the board as an executive director However his final appointment is subject to regulatory approval Notably HSBC said that it expects severance costs in 2019 to be nearly 650 700 million The company did not mention where the cuts would take place but said that its focus would be on the more senior ranks Ewen Stevenson the company s chief financial officer stated Most areas of the bank have been involved in cutting headcount Stevenson added I m not going to give too much colour on where the job cuts are coming We want to speak to our people before we speak externally Broadly we are adding headcount where we see good growth and good returns Various parts of Asia and Hong Kong would fall into that bucket We re cutting headcount in other areas where there isn t the same growth and return dynamic Last year Flint was unable to achieve his positive jaws target as growth in revenues did not outpace rise in expenses Nonetheless while first quarter 2019 witnessed expense rise of nearly 3 2 due to increase in the number of investments for business growth programs the company was able to meet Flint s target of positive jaws Moreover the second quarter witnessed marginal decline in adjusted expenses on a year over year basis Apart from HSBC other companies have also been reducing workforce amid increasing geopolitical tensions including the US China trade war and the uncertainty related to Brexit Deutsche Bank NYSE DB is expected to cut 18 000 jobs and close its equity sales and trading business Nomura Holdings Inc NYSE NMR said that it would slash nearly 150 jobs this year while Citigroup NYSE C planned to cut at least 100 jobs in its equities business While cost cutting remains a priority for HSBC it has been adding staff in some locations It intends to increase headcount by nearly 300 in the retail wealth management division in Asia by the end of 2019 to strengthen performance and focus on building operations in the region Shares of HSBC have lost 7 6 so far this year compared with a 1 5 decline of the Currently HSBC carries a Zacks Rank 3 Hold You can see The Hottest Tech Mega Trend of AllLast year it generated 8 billion in global revenues By 2020 it s predicted to blast through the roof to 47 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
JPM | Retail Sales PPI And Big Banks All Within Reason | Friday October 14 2016Two economic reads one addressing the U S consumer and the other the U S producer were released before the bell this Friday September Retail Sales were up 0 6 and September Producer Price Index PPI up 0 3 Both of these headline numbers are basically in line perhaps a tad hotter on the PPI side Retail sales were bolstered by monthly strength in auto sales and gas station revenues autos notched up 1 1 gas stations up 2 4 Ex autos and fuel the retail sales number for the month is 0 3 Consumer discretionary provided some pop as well with Sporting and Hobbies up 1 4 and Restaurants up 0 8 This directly relates to overall consumer confidence which has been strong in recent months Monthly PPI was a notch higher than the 0 2 expected The ex food and energy read was in line at 0 1 and the core read was 0 3 Year over year PPI ex food and energy has reached 1 2 again a bit hotter than expected Still nothing indicating runaway inflation though if we were to see producer pricing continuing to rise over the next few reads it would begin to tell a different story Big Banks Report Q3 EarningsThree major too big to fail banks reported Q3 earnings before the bell today as well and all three topped earnings estimates JPMorgan NYSE JPM saw the biggest positive beat posting 1 58 per share on 25 51 billion in quarterly revenues These numbers easily surpassed the 1 40 and 24 billion the Zacks consensus had been expecting and represent big year over year growth on both top and bottom lines This is the fourth straight quarterly earnings beat for JPMorgan Citigroup NYSE C posted 1 24 per share on 17 76 billion in revenues up strongly from expectations of 1 16 and 17 38 billion respectively Fixed income jumped 35 in the quarter and Citi shares are up 2 2 in the pre market erasing the 1 2 loss over the past week and then some Finally beleaguered Wall Street major Wells Fargo NYSE WFC beat the Zacks earnings estimate of 1 02 by a penny on revenues of 22 2 billion higher than the 22 02 billion expected Net income was down in the quarter but brand new CEO Tim Sloan is putting his best face forward Wells Fargo s bogus account scandal will not be erased anytime soon but shares are bidding up nearly 0 9 in early trading Mark VickerySenior Editor |
MS | Pound under pressure peso surges on Trump trouble | By Patrick Graham LONDON Reuters Britain s pound inched lower on Monday as the dollar took back some of Friday s losses against a range of currencies while the Mexican peso surged after the damaging publication a video of Donald Trump making vulgar comments about women The Bank of England s trade weighted index which did not price during sterling s 10 percent off session crash in Asian time on Friday hit its lowest since early 2009 as worries about the impact of Britain s exit from the European Union weighed I guess that we have to prepare for further weakness said Hans Redeker head of G10 currency strategy at Morgan Stanley NYSE MS in London The course is now certainly going to lower levels and 1 20 per pound should certainly be taken into consideration After recovering following soft U S jobs numbers that weakened the dollar in U S time on Friday sterling traded 0 3 percent lower than the previous close at 1 2390 It was also down 0 1 percent at 90 16 pence per euro EURGBP That compared with the flash crash lows of respectively 1 1491 and 94 03 pence per euro The Mexican peso a sufferer since May due to Trump s promises to clamp down on immigration and rethink trade relations surged as markets trimmed the chances of a victory for the Republican nominee in next month s elections The Mexican currency rose about 2 percent to 18 91 to the U S dollar at one point in early Asian trade its highest level in nearly a month and held on to the bulk of its gains after the second presidential debate between Trump and Democrat Hillary Clinton ended It last stood at 19 018 still up around 1 5 percent The peso is unlikely to break above the trading ranges seen since June even if more position squaring takes place said Wu Mingze FX trader of global payments for financial services provider INTL FCStone in Singapore A full unwinding of the Trump Trades should only bring us to the levels between the 18 00 19 00 consolidation zone he said In a video released on Friday Trump is heard talking on an open microphone in 2005 about groping females and trying to seduce a married woman The controversy pitched Trump into the biggest crisis of his 16 month old campaign and deepened fissures between him and establishment Republicans The Canadian dollar rose around 0 2 percent to C 1 3268 to the U S dollar edging away from Friday s low of C 1 3315 its lowest level since mid March Our base case remains a Fed rate hike in December followed by another two more hikes next year said Heng Koon How senior FX investment strategist for Credit Suisse SIX CSGN
If a slight tightening of U S monetary policy is accompanied by potential fiscal stimulus it could set the stage for the dollar to strengthen next year he added |
MS | CEO of Morgan Stanley International says jobs will go if loses market access post Brexit | LONDON Reuters Banks will have to start moving staff if Britain loses access to the European single market post Brexit Rob Rooney CEO of Morgan Stanley international N MS said on Tuesday It really isn t terribly complicated If we are outside the EU and we don t have what would be a stable and long term commitment to access to the single market then a lot of the things we do today in London we d have to do inside the EU 27 he told delegates at a conference in London In the days after we lose access if that s what happens the jobs that go may be somewhat significant or they may not It will be a much more expensive model over time We would be operating a much less efficient business model we d have to see how that evolves
Many investment banks use their London hubs to run their EU operations relying on the passporting system that allows them to operate across the bloc while being regulated just in Britain The Brexit vote could threaten those arrangements if banks no longer have access to the single market |
MS | Dollar set for weekly gains investors await data and Yellen | By Anirban Nag LONDON Reuters The dollar rose on Friday ticking up with Treasury yields and on track for weekly gains as investors await U S retail sales data and remarks from Federal Reserve officials that could cement expectations of a U S interest rate hike this year The safe haven yen and the Swiss franc were under pressure after risk sentiment got a boost from Chinese data that showed producer prices rising for the first time in nearly five years That boded well for the global economy which has been battling the threat of deflation in recent months The dollar index which tracks the greenback against a basket of six major currencies added 0 4 percent to 97 874 DXY It was not far from a seven month high of 98 129 touched on Thursday and up 1 percent for the week and more than 2 percent for the month so far Retail sales data would offer some insight on the strength of U S consumption Following the data Fed Chair Janet Yellen will address an economics conference at which Boston Fed governor Eric Rosengren will also speak The minutes of the latest Fed meeting in September released on Wednesday prompted investors to raise their bets of a Fed rate increase at its December policy meeting Markets are now pricing in around a 70 percent chance that the Fed will move Markets are looking for a solid rebound in US consumer spending with the headline retail sales print likely to pick up said Viraj Patel currency strategist at ING With consumption now a key engine for growth we ve noted that dollar crosses have been more sensitive to surprises in recent U S retail sales reports So any upside in today s release could sustain the dollar s upward momentum Against the yen the dollar rose 0 5 percent to 104 25 having risen to 104 62 yen on Thursday its strongest level since late July It was up 1 2 percent for the week Traders said with dollar yen pushing steadily higher investors who have been building bets in favor of the yen in recent weeks are likely to cut those positions giving another leg up to the greenback Positioning is a concern for us Morgan Stanley NYSE MS analysts said in a note With the markets extremely long the yen currently it will only take a small rise in dollar yen for positioning to start to adjust
The euro fell 0 3 percent to 1 1024 heading back toward its Thursday s low of 1 0982 its lowest level since late July It was down 1 6 percent for the week |
MS | Wells Fargo s wealth unit ditches cross sell measure for referred assets | By Elizabeth Dilts NEW YORK Reuters Wells Fargo NYSE WFC Co s wealth management unit has changed the way it reports cross selling the strategy at the heart of the scandal over its aggressive sales targets and now reporting assets referred from bank employees The wealth management business reported a gain of 1 billion in referred investment assets in the third quarter after referrals from employees in bank branches according to corporate filings The figure is in line with prior trends the bank said on Friday Cross selling or getting customers to buy products and services from several business lines was previously reported as a figure that showed the average number of accounts held by a client household if that client also had retail bank accounts like checking or savings accounts In August 2015 the last quarter for which it was reported the bank said the average wealth management client household had 10 52 accounts the highest average account number of any of the bank s business divisions Meanwhile Wells Fargo said total profits dropped for the fourth straight quarter as it set aside funds for potential legal costs from a bogus account scandal that led to its chief executive officer stepping down The wealth business reported profit jumped 16 percent over the previous quarter to 677 million on higher asset based fees and a greater percentage of brokers paychecks being deferred Cross selling is a widespread practice at banks and brokerages but the affair at Wells Fargo s community bank raised questions about whether it is appropriate to set aggressive sales targets for employees and whether customers really need all the products offered Massachusetts regulators recently charged Morgan Stanley NYSE MS with dishonest and unethical conduct for having pushed its brokers to sell loans to their clients Last quarter Wells Fargo s wealth and investment management unit said it was evaluating changes in our cross sell methodology to better align our metrics with ongoing changes in WIM s business and products according to corporate filings
Wells Fargo did not immediately respond to request for comment |
JPM | Oil prices rise by more than 1 percent on hopes U S trade spat with China may ease | By Henning Gloystein SINGAPORE Reuters Oil markets rose by more than 1 percent on Tuesday extending strong gains from the previous session on hopes a trade dispute between the United States and China may be resolved without greater damage to the global economy Despite this prices remain within recent ranges as oil markets still face an abundance of supply that puts pressure on producers to keep their prices competitive in order not to lose market share Brent crude futures were at 69 62 per barrel at 0651 GMT up 96 cents or 1 4 percent from their last close U S West Texas Intermediate crude futures were at 64 31 a barrel up 89 cents or 1 4 percent The gains followed a more than 2 percent rally on Monday but that was a rebound from a 2 percent decline on Friday Chinese President Xi Jinping on Tuesday promised to open the country s economy further and lower import tariffs in a speech that struck a conciliatory tone on the rising trade tensions between China and the United States The crude oil price rises had come amid easing apprehensions of a trade war between the United States and China said Sukrit Vijayakar director of energy consultancy Trifecta Concerns of a prolonged trade dispute between the world s two biggest economies and uncertainty over the supply and demand balance of global oil markets have resulted in volatile recent trading Beyond the trade dispute oil markets are also concerned about the potential of renewed U S sanctions against some significant oil producers There has been a significant change in the Trump administration that has raised risks of potential sanctions on key oil exporting countries including Iran Venezuela and Russia U S bank JPMorgan NYSE JPM said Traders said weekly U S fuel inventory data would provide further market guidance The American Petroleum Institute will publish storage data later on Tuesday while official data from the U S Energy Information Administration is due on Wednesday Oil markets have been supported by healthy demand and supply cuts led by the Organization of the Petroleum Exporting Countries OPEC However soaring U S crude production which has jumped by a quarter since mid 2016 to 10 46 million barrels per day bpd is threatening to undermine OPEC s efforts to tighten the market and prop up prices The United States late last year overtook Saudi Arabia as the world s second biggest crude producer Only Russia pumps more crude at almost 11 million bpd In a sign that oil supplies remain ample China s Sinopec and several other Asian refiners plan to cut Saudi crude imports in May instead buying from alternative sources after Saudi Aramco set higher than expected official prices a company official said on Monday
JPMorgan said it expects Brent and WTI prices to average 69 50 and 65 20 per barrel in 2018 respectively while it forecasts 64 per barrel for Brent and 58 50 per barrel for WTI in 2019 |
JPM | Investors on tenterhooks ahead of Mexico Brazil elections | By Claire Milhench and Rodrigo Campos LONDON NEW YORK Reuters Mexican and Brazilian voters fed up with politics as usual could whipsaw investors this year with a leftist consolidating his favorite status in Mexico s presidential race while Brazil s front runner now sits in jail leaving its October election wide open Corruption scandals in both countries have led millions of voters to abandon traditional parties in favor of more populist candidates Bond markets are tightly priced after strong inflows making them vulnerable to upsets Mexico and Brazil Latin America s largest economies have benefited from global economic growth and investor appetite for riskier higher yielding assets over the last two years But some Mexican assets including stocks have underperformed their Brazilian counterparts despite Brazil s long running recession and ongoing political turmoil This is partly because investors fear leftist candidate Andres Manuel Lopez Obrador the front runner to win the Mexican presidential race on July 1 will roll back energy reforms and increase welfare spending Mexican hard currency bond spreads still trade wider than Brazil s on the JPMorgan NYSE JPM EMBI Global Diversified index 11EMP though Brazil is a lower rated sovereign credit The inclusion of bonds issued by Mexico s state oil company Pemex in the JPMorgan EMBI Global Diversified could be part of the reason as these can trade wider than the sovereign said Cathy Hepworth co head of the emerging markets debt team at PGIM Fixed Income Also while Brazilian equities BVSP have risen 10 percent year to date Mexico stocks MXX are down nearly 2 percent Worries about negotiations to update the North American Free Trade Agreement have also taken a toll although hopes for a deal are rising While Mexico s race seems sewn up Brazil s is wide open after the Supreme Court rejected former President Luiz Inacio Lula da Silva s plea to avoid prison while he appeals a corruption conviction likely ending his political career Lula had been leading in the polls with a third of voters still undecided You need more than a crystal ball to figure out what will happen said Thierry Larose a senior portfolio manager at Vontobel Asset Management MEXICAN WHIPSAW In Mexico investors may face increasing volatility going into the election Fears about a leftist president have weighed on sentiment although some argue Lopez Obrador may turn out to be more market friendly than anticipated He will have to moderate his views and if he wants to win he needs to reach out to the center said Raphael Marechal a portfolio manager at Nikko Asset Management in London The market is too negative with Mexico and we could have a positive surprise even if AMLO wins Marechal added referring to Lopez Obrador by the nickname he takes from his initials In early April Lopez Obrador sent an open letter to investors seeking to allay fears that he could damage the economy and promising to run a zero deficit government Ed Al Hussainy senior interest rate and currency analyst at Columbia Threadneedle said Mexico s recent fiscal rules and energy reforms which ended a decades long state monopoly would be difficult to roll back but there was still a chance investors could get spooked As the probability of AMLO getting elected increases there is the risk that local currency debt and the currency sell off more aggressively he said The peso will be the release valve for any repricing of political risk The peso has firmed almost 7 percent this year against the U S dollar to a point where some say it is too expensive given the risks A Lopez Obrador adviser told Reuters last week that his government would aim to run a federal budget that was more or less in balance and downplayed fears that the energy reform would be overturned Yet some Mexican long dated issues are trading cheap versus lower rated credits such as Jamaica 30 year bonds The market is wrong right now the risk is that the market could miss out on a rally in Mexico said Luc D Hooge head of emerging market bonds at Vontobel Asset Management MISPLACED OPTIMISM While Mexico s hard currency spreads to U S debt have tended to widen over the past two years Brazil s have tightened fueled by optimism that critical pension reforms will happen regardless of who wins the election But some say that the market is complacent Brazil s budget deficit is forecast to reach 6 2 percent of GDP for 2018 according to the Brazilian central bank partly due to the generous pension system which Vontobel s D Hooge called a time bomb We mispriced Brazilian assets going into the impeachment of President Dilma Rousseff they got too cheap and now they have tightened so much they are probably a bit too rich said Al Hussainy Right now it is impossible to predict who will emerge as front runner in place of Lula but his ability to transfer votes to another candidate is seen as limited Meanwhile market friendly candidates are trailing in the polls
At this point there is not one name for people to get excited about said Maarten Jan Bakkum a senior strategist at NN Investment Partners And some that have a chance of winning are certainly not reformists it s a bit of a wild card |
C | Saudi Arabia steps up efforts to end 22 billion debt dispute sources | By Tom Arnold and Davide Barbuscia DUBAI Reuters Saudi Arabia has accelerated steps to resolve a 22 billion debt dispute that is seen by investors as a litmus test of Crown Prince Mohammed bin Salman s commitment to reforms three sources familiar with the matter say Legal battles over the debts left by Saad Group and Ahmad Hamad al Gosaibi Bros Co AHAB have dragged on for almost a decade since the two family conglomerates collapsed in 2009 From Switzerland to the Cayman Islands the two groups have squabbled over which of them is to blame for the meltdown There has been gradual progress in AHAB s case since 2009 with the company making a settlement offer which has the support of around two thirds of investors but there has been much less movement over Saad Group s debts The Saudi authorities signaled their impatience in October when Saad Group owner Maan al Sanea was detained for unpaid debt This spurred efforts by the al Sanea family to try to resolve the debt dispute the sources said Saad Group took its first big step to engage with creditors last year by hiring a financial consultancy Reemas Group to offer a proposed settlement covering 4 billion in debt In a further sign of momentum a three judge tribunal set up in 2016 to deal with financial claims against AHAB and Saad group has approved creditor claims of about 11 5 billion riyals 3 billion against AHAB and appointed liquidators to deal with the unwinding of Saad Group s business empire one of the sources said Such steps could be vital for the government to win over investors and secure foreign funds for privatization projects under Vision 2030 the plan unveiled by Prince Mohammed in April 2016 to transform Saudi Arabia and reduce its reliance on oil This is a 20 billion plus problem for Saudi Arabia and unless it s handled well it will create a long term legacy issue for some foreign investors said one of the people familiar with the matter MOUNTAIN OF DEBT Between them AHAB and Saad Group owe money to more than 100 international banks including HSBC BNP Paribas PA BNPP and Citigroup NYSE C Saad Group is also in debt to contractors including Germany s Siemens AG DE SIEGn and thousands of staff AHAB has said al Sanea who married into the al Gosaibi family more than 30 years ago defrauded it of billions of dollars after he was put in charge of its financial businesses He strongly denies wrongdoing Saudi Arabia has no insolvency rules though a bankruptcy law is awaiting King Salman s signature AHAB declined to comment for this article citing the tribunal that is handling its case Saudi Arabia s Royal Court referred a request for comment to the government s Center for International Communication which did not respond The Ministry of Justice also did not respond to a request for comment Al Sanea s detention was not directly related to the arrests of dozens of senior officials and businessmen in a crackdown on corruption in early November but the dispute touches on similar investor concerns about graft He remains in detention while the last of the people held since early November in Riyadh s Ritz Carlton Hotel which had been used as an interrogation center have been released or moved elsewhere Al Sanea has been sentenced to five years in jail in absentia in Bahrain for convictions including breaching central bank rules The sentence has been stayed pending an appeal Al Sanea has previously denied any wrongdoing and said the charges were politically motivated In a sign that some creditors are now more optimistic there will be a positive outcome to the debt dispute Saad Group s debt has been trading up at 3 to 5 cents on the dollar in recent weeks compared to 1 to 3 cents previously bankers say But some investors remain skeptical A hedge fund trader who had been considering buying Saudi debt described the attempts by Saad s advisers to resolve the issue with creditors as a dog and pony show and said very little work had been done to reach a settlement since November Two other sources said Reemas was hoping to push forward in the coming weeks with a proposal to creditors receptive to its plans Reemas Group did not respond to a request for comment STAR ASSET The star asset in the al Sanea family s business empire was the Saad Specialist Hospital in the coastal city of Khobar one of the country s top cancer treatment facilities It in effect ceased operating in November saddled with debts and unable to pay wages or contractors sources familiar with the situation said What happens at the hospital is being watched closely by foreign investors as it could set the tone for a government plan to attract overseas investment to the healthcare sector A committee set up on the Royal Court s orders is considering options including bringing in a private company to operate the hospital under the Ministry of Health s guidance two of the sources said The Ministry of Health did not respond to a request for comment One problem to resolve is the wages owed to an estimated 5 000 former staff dating back to May 2016 It is unclear how many of the former staff if any will have jobs when the hospital reopens possibly in February There are thousands of people affected and a lot of people have families It is difficult for people to live their lives without this money wages said Talaat Habib a British pediatrician who worked at the hospital Siemens is owed money over a contract to maintain the hospital s high tech medical equipment two sources familiar with the situation said Siemens declined to comment |
C | Saudi billionaire Prince Alwaleed back at work after detention company says | RIYADH Reuters Saudi Arabian billionaire Prince Alwaleed bin Talal is back on the job as chairman of global investment firm Kingdom Holding after being released from detention in an anti corruption campaign the company said on Thursday Prince Alwaleed one of the country s top international investors was freed on Saturday nearly three months after being taken into custody along with dozens of senior officials and businessmen on the orders of Crown Prince Mohammed bin Salman Most detainees have been released after settlements secured just over 100 billion from members of the elite the attorney general has said without providing details In his first interview since being detained conducted hours before his release Prince Alwaleed told Reuters he maintained his innocence and expected to keep full control of his firm A senior Saudi official would not confirm that claim but said any settlements included an admission of guilt In the absence of more information speculation has run rampant about whether Prince Alwaleed secured his freedom by handing over part of his fortune previously estimated by Forbes magazine at 17 billion or stood up to the authorities and won He and other tycoons face a challenge to get back into the swing of running their financial empires in the uncertainty hanging over the business community since their detention Their ability to do so could make it harder for Saudi Arabia to attract foreign investors to big projects an important part of Crown Prince Mohammed s grand vision to transform the kingdom and reduce its dependence on oil Prince Alwaleed a nephew of King Salman holds stakes in major international companies including Citigroup NYSE C Twitter and ride hailing firm Lyft In the first few days after his detention Kingdom Holding s share price plunged 23 percent erasing 2 2 billion of his personal fortune on paper After a jump this week the stock has regained almost all that it lost but during his detention the overall stock market rose 10 percent Kingdom shares do not reflect that gain suggesting investors are still discounting the stock Kingdom published a photo of Prince Alwaleed reviewing documents behind a large wooden desk and still sporting the grey beard he grew in detention We are very pleased to welcome back His Royal Highness Prince Alwaleed to continue his important work as Chairman of Kingdom Holding Company Chief Executive Talal Almaimansaid said The firm s strategy is aligned with the Vision 2030 reform agenda to create strong investor appeal and a business environment in which KHC and our partners can flourish he added |
JPM | 3 Best Ranked JP Morgan Mutual Funds To Boost Your Portfolio | With around 1 7 trillion worth of assets under management JPMorgan NYSE JPM is one of the best financial management companies in the world The company has a legacy of investment management experience since 1865 It is the eighth largest mutual fund firm in the U S It also prides itself as the leader in U S equity fund flows JPMorgan offers managed accounts and retirement products The company has pioneered the introduction of innovative inflation protected municipal products Below we share with you 3 top rated JPMorgan mutual funds Each has earned a Strong Buy and we expect the fund to outperform its peers in the future To view the Zacks Rank and past performance of all JPMorgan mutual funds investors can JPMorgan Core Bond R5 seeks a high level of current income JCBRX invests a large portion of its assets in a wide range of long term and intermediate debt securities The fund normally invests in mortgage backed securities and government and corporate bonds The JPMorgan Core Bond R5 returned 4 2 over the last one year period JCBRX has an expense ratio of 0 44 as compared to the category average of 0 80 JPMorgan Intrepid Growth R5 invests the majority of its assets in equity securities of large and mid cap companies JGIRX seeks capital growth over the long run The fund generally invests in those securities which are expected to have high quality and attractive valuations The JPMorgan Intrepid Growth R5 returned 6 8 over the last one year period Jason Alonzo is one of the fund managers of JGIRX since 2005 JPMorgan US Small Company A seeks total return JTUAX invests a bulk of its assets in equity securities of small cap U S companies These small cap companies have market capitalization similar to those listed on the Russell 2000 Index during the time of purchase The JPMorgan US Small Company A fund returned 9 3 over the last one year period As of August 2016 JTUAX held 386 issues with 1 49 of its assets invested in Take Two Interactive Software Inc 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 | What s Up With The Market Sell Off | Wednesday October 12 2016A surging dollar is being blamed for increased volatility in the market lately with the greenback gaining 2 3 in value versus a group of other main currencies since the start of October This is the strongest trajectory for the dollar in the past five months This has brought a blustery headwind for U S multi national corporations that rely on business success overseas What resulted yesterday was main stock market indices down anywhere from 1 09 the Dow down 200 points to 1 54 the Nasdaq down nearly 82 points At this hour we re seeing the S P 500 down an additional 4 25 points it was down 1 25 yesterday the Dow down another 41 and the Nasdaq down 12 5 points It would appear that at this period in time think of it as a quiet before the Q3 earnings storm market participants are adjusting themselves with an eye on a sixth consecutive quarter of negative earnings results on the S P 500 The margins are definitely tightening meaning the earnings recession looks to be over sooner than later but odds are currently that this will continue as results pour in over the next month For more information on what to expect from Q3 earnings season check out Zacks Director of Research Sheraz Mian s latest Earnings Preview report Zacks Stock Strategist and Options Trader Dave Bartosiak notes that volatility has been low for a very long time Just looking at the S P it s been in an 80 handle range since July 8th he says The thing is as ranges compress the odds of a breakout in either direction actually increase Sort of like a coiled spring Yesterday we saw a good spike in volatility and we ll need that to confirm a break in either direction he continues The key for this market though is follow through in one move It simply hasn t given us that effectively capping volatility and putting constraints on the market Also the December rate hike looms large While we await Q3 earnings reports from the big banks starting tomorrow morning JPMorgan NYSE JPM Citigroup NYSE C and Wells Fargo NYSE WFC among them checking in on market trading behavior such as the above comments will have to be our guide Mark VickerySenior Editor |
JPM | Surging Dollar Is Being Blamed For Increased Volatility | A surging dollar is being blamed for increased volatility in the market lately with the greenback gaining 2 3 in value versus a group of other main currencies since the start of October This is the strongest trajectory for the dollar in the past five months
This has brought a blustery headwind for U S multi national corporations that rely on business success overseas What resulted yesterday was main stock market indices down anywhere from 1 09 the Dow down 200 points to 1 54 the Nasdaq down nearly 82 points At this hour we re seeing the S P 500 down an additional 4 25 points it was down 1 25 yesterday the Dow down another 41 and the Nasdaq down 12 5 points
It would appear that at this period in time think of it as a quiet before the Q3 earnings storm market participants are adjusting themselves with an eye on a sixth consecutive quarter of negative earnings results on the S P 500 The margins are definitely tightening meaning the earnings recession looks to be over sooner than later but odds are currently that this will continue as results pour in over the next month
For more information on what to expect from Q3 earnings season check out Zacks Director of Research Sheraz Mian s latest Earnings Preview report
Zacks Stock Strategist and Options Trader Dave Bartosiak notes that volatility has been low for a very long time Just looking at the S P it s been in an 80 handle range since July 8th he says The thing is as ranges compress the odds of a breakout in either direction actually increase Sort of like a coiled spring
Yesterday we saw a good spike in volatility and we ll need that to confirm a break in either direction he continues The key for this market though is follow through in one move It simply hasn t given us that effectively capping volatility and putting constraints on the market Also the December rate hike looms large
While we await Q3 earnings reports from the big banks starting tomorrow morning JPMorgan NYSE JPM Citigroup NYSE C and Wells Fargo NYSE WFC among them checking in on market trading behavior such as the above comments will have to be our guide |
MS | Chicago latest to sanction Wells Fargo for defrauding customers | By Karen Pierog and Dave McKinney CHICAGO Reuters The Chicago City Council on Wednesday approved a one year suspension for Wells Fargo NYSE WFC Co from city business because of its scandal over phony accounts joining the states of Illinois and California in punishing the bank The ban includes bond underwriting brokerage trustee and other services the bank has provided to the city Wells Fargo has earned 19 5 million in fees from Chicago since 2005 Wells Fargo staff opened checking savings and credit card accounts without customer approval for years to satisfy managers demand for new business according to a 190 million settlement with U S regulators and California prosecutors reached on Sept 8 The bank said it fired 5 300 employees over the issue I hope this action by the city of Chicago will echo around the nation and make it clear to other institutions this conduct is unacceptable said Alderman Edward Burke who heads the council s finance committee Illinois penalized the bank earlier this week while California announced a 12 month long sanction against Wells Fargo that state s oldest financial institution on Sept 28 California replaced Wells Fargo as a lead underwriter on two bond sales in the wake of its decision On Wednesday Wells Fargo said it would continue to serve Chicago customers and support non profit community agencies educational institutions and foundations Wells Fargo is disappointed that the Chicago City Council has chosen to suspend a relationship with one of the nation s safest and strongest financial institutions at a time when the city needs access to dependable financial partners the bank said in a statement Following the vote Chicago Mayor Rahm Emanuel told reporters The city s disappointed in Wells Fargo Illinois Governor Bruce Rauner s office which included Wells Fargo in a pool of senior underwriters for bond sales said on Sunday the state would not be using the bank for debt deals until further notice Illinois Treasurer Michael Frerichs on Monday suspended 30 billion in state investment activity with the bank Those activities include investments in Wells Fargo debt and bank broker dealer services Also on Wednesday Connecticut s state treasurer Denise Nappier told Reuters in a statement that Morgan Stanley NYSE MS was added as a co bookrunner for an October bond sale because of troubles at Wells Fargo The addition of Morgan Stanley was made in an abundance of caution to help ensure the success of the sale the statement said Wells Fargo had been assigned as the sole bookrunner prior to the recent revelations of regulatory actions against the bank
In addition to outright sanctions the states of Massachusetts and Oregon as well as the city of New York have said they will press for reforms at the bank await results of investigations while also reviewing their business relationship with the firm |
MS | Exclusive Getting into U S election spirit Jose Cuervo postpones IPO sources | By Roberto Aguilar MEXICO CITY Reuters Mexico s Jose Cuervo the world s biggest tequila producer has delayed its planned initial public offering and will wait until after the U S presidential election before going ahead three people familiar with the matter said on Wednesday Speaking on condition of anonymity the three people said concern about market volatility around the Nov 8 U S election meant that Cuervo had decided to postpone the listing which they said had been scheduled for this month Representatives for Jose Cuervo did not respond to a request for comment on the delay which appears to be the first instance of a major IPO being postponed because of concern about volatility surrounding the election which has already roiled markets in Mexico The company known officially as Becle announced the IPO slated for the Mexican bourse in a filing last week but without saying when it would take place It also plans a private placement to investors in the United States where the tequila market has increasingly been shifting toward high end 100 percent agave brands A person familiar with the matter said last week the company could seek to raise between 500 million and 1 billion Some investors in Mexico s currency and other instruments have grown apprehensive about the possibility of a win by Republican White House candidate Donald Trump who has fired off a series of verbal broadsides against Mexico and its economy Trump has vowed to build a wall on the border with Mexico that he said he would make Mexico pay for and threatened to scrap the North American Free Trade Agreement if he wins He has also berated U S firms that invest in Mexico Concern about the election has been more glancing on U S equity markets where optimism had been growing about a rebound in IPOs after occasionally choppy markets had dampened enthusiasm for new issues for much of the year Jose Cuervo made reference to the U S election in its prospectus noting that any renegotiation of trade deals after the vote could ultimately have a serious impact on business On Tuesday Agustin Carstens the head of Mexico s central bank said the bank may not follow any impending interest rate increase by the U S Federal Reserve if the outcome of the U S presidential election is favorable to Mexico Last week Carstens said a Trump victory would hit Mexico like a hurricane and that a win by Democratic nominee Hillary Clinton would yield a better outcome for the Mexican economy The company has said proceeds from the IPO due to be handled by Morgan Stanley NYSE MS JP Morgan Chase NYSE JPM Co Banco Santander MC SAN and brokerage GBM Grupo Bursatil Mexicano will be used to fund organic and external growth as well as broaden its portfolio Started by Jose Antonio de Cuervo in the late 1700s before Mexican independence from Spain Jose Cuervo says it is North America s oldest continuous producer of spirits With origins in the picturesque town of Tequila in Jalisco state the business is now controlled by the Beckmann family They will remain the majority shareholder after the IPO |
MS | Dollar at four week highs vs yen before Friday jobs report | By Patrick Graham LONDON Reuters The dollar ground higher on Thursday extending this week s four week highs against the yen before a jobs report many expect to help seal the case for a rise in U S interest rates in December Rises in U S Treasury yields over the past 10 days have been the main driver of a halt in the yen s steady progress this year pushing the Japanese currency back from 100 yen per dollar to 103 77 on Thursday The yen was also within sight of Wednesday s five week lows against the euro but in general moves across the major currencies were subdued Obviously the big focus is the U S jobs data tomorrow so the market is likely to be in wait and see mode today said Alexandre Dolci a strategist with Spanish bank BBVA MC BBVA in London If we do have this double whammy of positive headlines from the U S data tomorrow a strong NFP non farm payrolls number and a further pick up in average earnings then we may see the dollar strengthen into the end of the week The dollar index which measures its broader strength against a basket of currencies rose 0 25 percent to 96 352 Against the euro it gained just over 0 1 percent to 1 1189 Analysts from Morgan Stanley NYSE MS argued that the fall in the yen was being driven by a drop in hedging activity as U S yields rose Over the course of the past few weeks US front end rates have moved higher as the market prices in a 65 percent probability of the Fed hiking rates by December they said in a morning note This repricing has primarily driven low yielding currencies The yen has come under significant selling pressure supported further by foreigners net selling 1 89 trillion yen of Japanese money market instruments Prime Minister Theresa May gave the pound the big loser among the major currencies in the past fortnight a small bump on Wednesday by warning of the negative side effects of ultra low interest rates But signs that the government is ready to prioritise controls on immigration over membership of the European Union s single market continue to dominate minds and it sank to another 31 year low of 1 2663 soon after the start of U S trade My base case is that it is going to be extremely hard for the UK to escape recession The first two quarters of next year are going to be extremely negative said Davis Hall Head of FX and Precious Metals at wealth manager Indosuez in Geneva
Our ultra high net worth clients that have sterling at these levels we are not advising them to sell the additional downside below 1 25 is limited But we re not expecting a massive recovery either we have forecast 1 32 in six months |
MS | Brexit makes euro zone sustainability less likely JPMorgan CEO | WASHINGTON Reuters Britain s vote to leave the European Union has made it more likely that the euro zone will not be around in 10 years JPMorgan Chase Co N JPM CEO Jamie Dimon told bankers on Friday Brexit makes the chance of the euro zone not surviving 10 years from now five times higher Dimon said at the Institute of International Finance s 2016 annual membership meeting in Washington
Speaking at the same event James Gorman the chief executive of Morgan Stanley N MS said that the big winner from Brexit would be New York because business currently carried out in London would shift there |
JPM | Deutsche honing in on two candidates for the CEO job Bloomberg | Deutsche Bank NYSE DB has reached out directly to BofA s Christian Meissner and through recruiters to ex JPMorgan executive Matt Zames for the top job according to Bloomberg Meissner who runs BofA s global corporate and investment bank has not shown any interest in the job and Zames who used to be JPMorgan NYSE JPM s COO prefers to remain in the U S There is a dire need for revival at the German lender as it loses market share in its main investment banking divisions Now read |
JPM | Deutsche Bank s new CEO takes sober look at ugly investment bank | By Tom Sims FRANKFURT Reuters Deutsche Bank s DE DBKGn new chief executive faces the same strategic problem that has long preoccupied its top management whether or not to override the rainmakers and big earners at its powerful investment bank to shrink that business Christian Sewing s appointment as chief executive on Sunday and the abrupt departure of his predecessor John Cryan holds out the prospect of radical change at Germany s flagship lender which has been slower than rivals to reform after the financial crash Sewing expects to complete an initial review of Deutsche s investment bank within weeks according to a person with knowledge of the matter but any overhaul he launches is likely to take much longer They ve had to come around and painfully admit their investment banking baby is quite ugly said Octavio Marenzi CEO of consultancy Opimas That s an emotional issue for them The debate over the investment bank s future heated up over the past two weeks as Deutsche Bank Chairman Paul Achleitner intensified a search for a CEO to replace Cryan the Briton he had installed less than three years ago to clean up the bank Deutsche is already in the middle of a global review of the investment bank known internally as Project Colombo to determine the way forward as revenues shrink and clients and staff leave The appointment of Sewing with a background in retail banking auditing and risk along with the resignation of one of Deutsche s top investment bankers Marcus Schenck suggests a shift away from the investment bank analysts and investors say The 47 year old CEO warned staff on Monday of tough decisions ahead The time pressure is on and the expectations are high from all sides Sewing wrote in a letter to staff But it will be hard to reverse the investment bank s drive to compete with Wall Street that dates back to the 1990s Employees say it resulted in the creation of fiefdoms and rivalries that proved difficult for any CEO to control The investment bank debate is tricky for Sewing because he is not an investment banker He joined Deutsche out of school at age 19 at a branch in Bielefeld in north west of Germany He was crowned CEO in a hastily arranged board call late on Sunday The bank s major shareholders and top managers are also divided over how to proceed with some favoring further investment in investment banking and others retrenchment Some analysts have said that even modest exits from specific business areas could erode revenues at the investment bank which generates just over half the group s total The future of the investment bank is just one of many problems for Sewing the third head of the bank in six years He also has to tackle high costs heavy losses and stiff competition in Germany s crowded banking market Peter Nerby who analyses Deutsche for credit rating agency Moody s pointed to tough competition among numerous international banks asking whether there s enough food for everyone That view was echoed elsewhere Hendrik Leber a fund manager with Acatis said Deutsche should focus on German companies overseas Without the investment bank Deutsche Bank would be much more reliable and profitable JPMorgan NYSE JPM analysts said in a research note that Deutsche Bank should shrink its U S investment banking business to create shareholder value Schenck the investment bank co head had wanted to expand it but Achleitner in an interview with the the Frankfurter Allgemeine Zeitung on Monday said The bank didn t currently support that effort Sewing has hinted he is open to a smaller investment bank in his staff memo on Monday saying we ll have to further adapt our revenue cost and capital structure Some in Germany would welcome a return to Deutche Bank s roots it was founded during the Industrial Revolution to finance German firms expansion overseas He has a huge task ahead of him that has big significance for Germany and our export orientated industry Carsten Schneider a prominent lawmaker from Germany s governing Social Democrats told Reuters
To view a graphic on Deutsche Bank s share price click |
JPM | Rate swaps show concerns about Fed policy mistake JPMorgan | By Karen Brettell
Reuters The forward curve of swaps based on Federal Reserve rate expectations has inverted slightly indicating that market participants are concerned about the U S central bank making a policy mistake analysts at JPMorgan NYSE JPM said in a report
The forward curve of the one month overnight index swap OIS rate has inverted slightly after the first quarter of 2020 implying an expectation that the Fed will cut rates after then JPMorgan said in the report sent on Friday
An inversion at the front end of the U S curve is a significant market development not least because it occurs rather rarely It is also generally perceived as a bad omen for risky markets analysts including Nikolaos Panigirtzoglou said
The two most likely explanations for the inversion is that markets are pricing for a Fed policy mistake or for end of cycle dynamics with a central bank mistake seen as more likely based on fund flows
Flows into equity funds have turned slightly negative after a strong start to the year and interest rate sensitive sectors including real estate investment trusts REITs have seen outflows which supports the hypothesis that investors are concerned about Fed policy
Government bond exchange traded funds ETFs have also seen steady inflows while inflows into inflation linked government debt ETFs have slowed adding to the idea that there is concern about a central bank error
Concerns about Fed policy would show as fears about earlier growth weakness and be marked by weak equity flows greater flows into longer dated bond funds than shorter dated ones and weak flows in interest rate sensitive sectors
End of cycle dynamics on the other hand would be reflected as overheating and inflation fears which would boost flows into inflation linked funds shorter dated bond funds and into cyclical sectors and equity funds in general
Supporting the end of cycle thesis is that recent equity inflows have focused on cyclical sectors and outflows have been in more defensive sectors and that inflows into short term and floating rate bond ETFs have outpaced those of long term bond funds JPMorgan said |
C | Oil Jumps to Three Year High on Signs of Shrinking U S Storage | Bloomberg Oil closed at its highest since December 2014 as signs mount that dwindling U S stockpiles are contributing to a tightening global market
Futures in New York jumped 1 4 percent on Tuesday Crude inventories held in U S terminals and tanks last week probably fell for a 10th week That would be the longest stretch of declines in at least three decades if government data on Wednesday confirms it
Underpinning the price rally were also assurances from Russian and Saudi Arabian oil chiefs that a historic production accord by the world s largest producers will endure BBL Commodities LP one of the world s largest oil focused hedge funds believes Brent futures the London traded benchmark will climb to 80 this year as stockpiles drop rapidly on OPEC s curbs
You are seeing a rebalancing of the oil market Bart Melek head of global commodity strategy at TD Securities in Toronto said by telephone We ve had outsized inventory declines for the last little while
Prices are poised to reach 65 a barrel in New York and 70 in London as the Organization of Petroleum Exporting Countries and allied producers curb output for a second straight year Refiners and exporters in the U S have turned to storage to acquire supplies accelerating the reduction of the global glut
The comments from Saudi Arabia and Russia quell investors concerns about OPEC discipline deteriorating That should be welcome news Paul Crovo a Philadelphia based oil and equity analyst at PNC Capital Advisors LLC said by telephone Inventories continue to go down That s all good news
West Texas Intermediate for March advanced 90 cents to settle at 64 47 a barrel on the New York Mercantile Exchange Total volume traded was about 11 percent below the 100 day average The February WTI contract expired Monday
Brent for March settlement surged 93 cents to end the session at 69 96 on the London based ICE Futures Europe exchange The global benchmark crude traded at a premium of 5 49 to WTI
U S crude inventories probably fell by 2 million barrels last week according to a Bloomberg survey of analysts Stockpiles are sitting at the lowest level since February 2015 while oil production ticked higher in last week s government report
Inventory figures will be released by the Energy Information Administration on Wednesday while tallies from the industry funded American Petroleum Institute will be released later Tuesday
Oil market news
Libya s Sara oil fields were said to increase output to 50 000 barrels a day after resuming pumping on Sunday according to a person familiar with the situation
The International Energy Agency probably will make an upward revision to its U S production outlook and a downward shift in its Venezuelan supply forecast Executive Director Fatih Birol said in an interview in Davos
OPEC is more focused on the price of oil and short term revenues rather than curbing inventories to their five year average Citigroup NYSE C analysts wrote in a report |
C | Exclusive Detained Saudi billionaire Alwaleed confident his troubles will end soon | By Katie Paul RIYADH Reuters Saudi Arabian billionaire Prince Alwaleed bin Talal detained in the kingdom s sweeping crackdown on corruption said on Saturday that he expected to be cleared of any wrongdoing and released from custody within days with his vast assets intact Prince Alwaleed was speaking in an exclusive interview with Reuters at his suite in Riyadh s Ritz Carlton hotel transformed into a luxurious prison to hold tycoons and royals He has been confined there for more than two months along with dozens of other suspects part of Crown Prince Mohammed bin Salman s bold plan to consolidate control and reform oil superpower Saudi Arabia It was the first time the prince one of the nation s most prominent businessmen has spoken publicly since his detention Prince Alwaleed said he was continuing to maintain his innocence of any corruption in talks with authorities He said he expected to keep full control of his global investment firm Kingdom Holding Co SE 4280 without being required to give up assets to the government MISUNDERSTANDING He described his confinement as a misunderstanding and said he supports reform efforts by the crown prince known as MbS Prince Alwaleed was an early advocate of women s employment in Saudi Arabia and a lifting of the ban on women driving In September King Salman ordered that the restriction should be lifted next year There are no charges There are just some discussions between me and the government he said in the interview conducted shortly after midnight I believe we are on the verge of finishing everything within days Prince Alwaleed appeared grayer and thinner than in his last public appearance a television interview in late October and had grown a beard while in detention I have nothing to hide at all I m so comfortable I m so relaxed I shave here like at home My barber comes here I m like at home frankly speaking he said I told the government I d stay as much as they want because I want the truth to come out on all my dealings and on all things that are around me The flamboyant prince in his 60s is the face of Saudi business for many foreigners often appearing on international television covering his diverse investments and lifestyle A 30 minute interview including a tour of his suite was granted largely in order to disprove rumors of mistreatment and of being moved from the hotel to a prison TENNIS SHOES VEGETARIAN MEALS Prince Alwaleed showed off the comforts of his gold accented private office dining room and kitchen which was fully stocked with his preferred vegetarian meals In the corner of his office sat tennis shoes which he said he used regularly for exercise A television played business news programs and a mug with an image of his own face on it was perched on the desk The release of Prince Alwaleed whose net worth has been estimated by Forbes magazine at 17 billion is likely to reassure investors in his global business empire as well as in the Saudi economy broadly Directly or indirectly through Kingdom Holding he holds stakes in firms such as Twitter Inc N TWTR and Citigroup Inc N C and has invested in top hotels including the George V in Paris and the Plaza in New York Dozens of princes senior officials and top businessmen were detained when Crown Prince Mohammed launched his purge in early November shocking Saudis who never imagined the business elite or royalty could come under close scrutiny Allegations against Prince Alwaleed included money laundering bribery and extorting officials a Saudi official told Reuters at the time He is also known for his outspoken views on politics making headlines in 2015 when he called Donald Trump a disgrace on Twitter during the U S election campaign The prince said he was able to communicate with family members and executives at his business during his time in detention Asked why he ended up held in the hotel and became one of its longest serving detainees he said There s a misunderstanding and it s being cleared So I d like to stay here until this thing is over completely and get out and life goes on We have now a new leadership in Saudi Arabia and they just want to cross all the Ts and dot all the Is And I said Fine that s fine with me no problem at all Just go ahead Authorities said they aimed to reach financial settlements with most suspects and believed they could raise some 100 billion for the government this way a huge windfall for the state which has seen its finances squeezed by low oil prices In recent days there have been signs the purge is winding down Several other prominent businessmen including Waleed al Ibrahim owner of regional television network MBC have been released an official source told Reuters on Friday Terms of any settlement were not revealed Prince Alwaleed said his own case was taking longer to conclude because he was determined to clear his name completely but he believed the case was now 95 percent finished The prince said he was particularly upset by media reports that he had been sent to prison and tortured It s very unfortunate I was planning to do an interview when I got out which I think will be imminently But I decided to accelerate the process and accept this interview today because these various rumors took place They re unacceptable completely They are just a bunch of lies After freedom the prince said he plans to continue living in Saudi Arabia and getting back to the high paced and complex challenge of juggling his global interests I will not leave Saudi Arabia for sure This is my country I have my family my children my grandchildren here I have my assets here My allegiance is not on the table |
C | Saudi billionaire Prince Alwaleed released as corruption probe winds down | By Sarah Dadouch and Katie Paul RIYADH Reuters Saudi Arabian billionaire Prince Alwaleed bin Talal one of the kingdom s top international businessmen was released from detention on Saturday more than two months after he was taken into custody in a sweeping crackdown on corruption His release came hours after he told Reuters in an interview at Riyadh s opulent Ritz Carlton hotel that he expected to be cleared of any wrongdoing and be freed within days A senior Saudi official said Prince Alwaleed was freed after he reached a financial settlement with the attorney general The attorney general has approved this morning the settlement that was reached with Prince Alwaleed bin Talal and the prince returned home at 1100 a m 0800 GMT the official told Reuters without giving details of the terms The decision to free him and the release of several other well known tycoons on Friday suggested the main part of the corruption probe was winding down after it sent shockwaves through Saudi Arabia s business and political establishment In his first interview since being detained conducted hours before his release Prince Alwaleed told Reuters he maintained his innocence of any corruption in talks with the authorities He said he expected to keep full control of his global investment firm Kingdom Holding Co SE 4280 without being required to hand assets to the state He said he had been able to communicate with executives at his business while detained Prince Alwaleed who is in his early 60s described his confinement as a misunderstanding and said he supported reform efforts by Crown Prince Mohammed bin Salman There are no charges There are just some discussions between me and the government he said Prince Alwaleed had been confined at the Ritz Carlton since early November along with dozens of other senior officials and businessmen part of the crown prince s plan to reform oil superpower Saudi Arabia and consolidate his position FOREIGN INVESTOR CONCERNS When asked if the attorney general was convinced of Prince Alwaleed s innocence the senior Saudi official said I will not negate or confirm what he says Generally this falls back to those who concluded the settlement and for sure there is no settlement unless there are violations and they are not concluded without the accused admitting it in writing and promising not to repeat it The source declined to give further details but confirmed that Prince Alwaleed would remain head of Kingdom Holding A Gulf banker who deals with Saudi Arabia said the authorities appeared keen to conclude the probe partly because foreign investors were concerned their assets or local business partners could be targeted in the wide ranging crackdown Prince Alwaleed s detention was particularly worrying for foreigners because of his international prominence as an investor in top Western companies such as Twitter N TWTR and Citigroup N C and in top hotels including the George V in Paris and the Plaza in New York the banker said The government is signaling that it wants to move to a new phase now away from the crackdown and into other economic reforms the banker said Outside Prince Alwaleed s Riyadh palace dozens of cars lined the entrances as a huge Saudi flag flapped above Guards cracked jokes and drank coffee His office said the prince was out visiting family but declined to give any details The attorney general said earlier this week that 90 detainees had been released after their were charges dropped while others traded cash real estate and other assets for their freedom The authorities were still holding 95 people he said Some are expected to be put on trial NOTHING TO HIDE An official Saudi source said on Friday that several prominent businessmen had reached financial settlements with the authorities including Waleed al Ibrahim owner of regional television network MBC who was released Terms of his settlement were not revealed Saudi authorities have said they expect to raise some 100 billion for the government through such settlements a huge windfall for the state which has seen its finances squeezed by low oil prices Some private analysts think that target will be hard to hit given how many suspects have seen charges dropped Allegations against Prince Alwaleed included money laundering bribery and extorting officials a Saudi official told Reuters in November The prince s net worth has been estimated by Forbes magazine at 17 billion While declaring his innocence in the Reuters interview the prince appeared greyer and thinner than in his last public appearance a television interview in October and had grown a beard while in detention I have nothing to hide at all I m so comfortable I m so relaxed I shave here like at home My barber comes here I m like at home frankly speaking he said adding he had been able to communicate with family members while in detention He granted the 30 minute interview to Reuters including a tour of his suite partly to disprove rumors about mistreatment and that he had been moved from the hotel to a prison Prince Alwaleed showed off the comforts of his gold accented private office dining room and kitchen which was fully stocked with his preferred vegetarian meals In the corner of his office sat tennis shoes which he said he used regularly for exercise A television played business news programs and a mug with an image of his own face on it was perched on the desk After being released Prince Alwaleed said he would stay in Saudi Arabia and would return to the challenge of juggling his global business interests
I will not leave Saudi Arabia for sure This is my country |
C | Oil Prices Under Pressure Malaysian Ringgit To Benefit From Fed Rate Cut | U S markets
The market paused for thought overnight while shifting away from the recent buy all trend that was triggered by the definitively dovish tone from Chair Powell last week
U S stocks scratched out another round of records Monday as investors consumed the second quarter results from Citigroup NYSE C and awaited a swath of second quarter earnings But they remain bullishly predisposed as the central bank s cavalry led by the Federal Reserve rides in for the rescue while some thought misguided of sorts that a tsunami of China stimulus is waiting in the wings
Just a thought while cavalry charges might win a battle but without a strong commander and chief they seldom if ever win the war
Oil Markets
Weekend headlines continue to exert pressure on oil prices overnight The U S Gulf of Mexico production returned to normal quicker than expected a tempering in Gulf tensions as Iran is willing to talk if sanctions are withdrawn while U K Foreign Secretary Jeremy Hunt said a seized Iranian oil tanker might be released if Iran could guarantee the vessel would not find its way to Syria
But the more significant drag on oil markets is China s weaker consumption data which contributed only 3 4 percentage points to growth in Q2 down from 4 2percentage point in Q1 suggesting Trade war effects are taking their toll on China s consumer s spending habits
Indeed the devil is always in the detail on China s data dump
So with the only supportive headline coming from a drop in the Baker Hughes rig count and after a 7 move higher this month investors switched into profit taking mode ahead of this week s inventory data
Gold Markets
With the increased chatter around a possible currency war long Gold is the easiest way to trade a multiplex currency conflict
And even if we don t get to a full out currency war the constant stream of headlines that would suggest the Treasury and the Fed will likely cross swords in itself makes for a very compelling reason to own Gold as any signs of infighting between these two market influencing behemoths could potential destabilize global markets
And while I ve argued with my colleagues to no end that intervention will never happen at these levels I always forget to add the Trump factor whose policies are motivated more by domestic politics than economic realities If the President weaponized trade to get his way with Mexico who s to say he won t weaponize the dollar to get back at Europe
Bond markets
Bond traders are still coming to terms with last week s bond selloff and bear steepening which has presented some headaches and an uneasy market predicament ahead of the upcoming ECB and FOMC meetings Was this move little more than an unwinding of overly dovish bets and Japanisation fears or is the market coming to terms that the shift in Fed policy could be a reflationary one Let s see what lies in wait when US retail sales hit later this evening
Pboc watch
Investors breathed a sigh of relief after there were few surprises in yesterday s China dump
Pboc watchers are attributing the slowdown in GDP to weaker consumer consumption which contributed only 3 4ppts to growth in Q2 down from 4 2ppts in Q1 Which is at odds with the surprising boost in retail sales but this was attributed to a one off increase in cars sales due to inventory clearance discount However the critical industrial production data was a huge bright spot suggesting that the fiscal measures particularly the VAT tax cut have started to filter through the economy
If anything this supports the notion that China is not headed for a hard landing
Most China economists are still factoring in a full years GDP growth at 6 2 well within the government 6 6 5 growth target but with consumer consumption the principle drag we could expect a measured stimulus response from the Pboc who by their latest cautious tone suggest aggressive easing is unlikely
But what should be more concerning for regulator and before they start throwing good money after bad again they need to address the structural issues as the Pboc tremendous credit impulse and the RRR cuts are still not flowing into the targeted sectors especially with global trade slowing
Currency market
Euro
With the ECB getting ready to tee up looser monetary policy at the July 25 meeting it s neutralizing the weaker dollar pressure as the ECB attempts to out dove the Fed in an attempt to weaken the euroovertly The ECB relies on a weaker Euro to do much of the heavy lifting in times of economic despair after all there is not much left in the ECB policy bag Australian Dollar
The Fed cut in July should lend support to the carry trade and with the fed all but a lock for a pro cycle rate cut in July risk on and high beta currencies should benefit which makes the Australian dollar stand out
There is a lot of dovishness priced into the Australian rate curve perhaps more than warranted suggesting broader liquidity induced risk on trade could squeeze shorts but with domestic yields stabilizing and with a likely bounce in commodity markets from the deluge of central bank easing the Aussie looks primed to move higher in this environment
Fed rate cut will boost the AUD while the ECB is expected to take some aggressive measure soon suggesting EUR AUD lower could be a great way to express a short term bullish Aussie view
The Malaysian Ringgit
The Ringgit should benefit from the Fed pro cyclical rate cut even more if they cut 50 bp I believe there is still a strong chance this could happen given the Fed has regimen shifted to global based monetary policy outlook None the less we think the Fed cut 25 bp or 50 bp will be good for EM Asia Carry and support liquidity induced risk on environment
Provided we do not have a significant sell off on oil prices we see the USD MYR testing our July target of 4 10 and to eventually move below supported by a dovish Fed and an ECB that is set to tee up looser monetary policy both of which should boost commodity prices All around it s a win win scenario for the Ringgit in our view |
C | U S Open JP Morgan Disappoints USD Firmer Bitcoin Down | Global equities continue to maintain a cautious tone ahead of key earnings results from the banks that will paint a clearer picture of how of the strength of the US consumer So far Citigroup NYSE C and JP Morgan noted that the US consumer is healthy US futures are little changed as European stocks trade mix Germany s ZEW survey came in softer than expected and supports the argument that the ECB could act soon to mitigate the downward pressures to the eurozone s largest economy The ongoing trade dispute between the world s largest economies continues to weigh on the expectations for the German export sector
USD
The dollar rallied against most of its trading partners with the strongest gains against both the euro and pound The dollar s gains could be short lived however if we see the morning release of US retail sales and factory data continue the recent string of further deterioration While market pessimism is running high traders should not be surprised if we a slightly better performance with the morning data since yesterday s Empire manufacturing survey showed some signs of stabilization and Citigroup s earnings highlighted a strong US consumer
The dollar s gains were strongest to the British pound as some analysts see the risks of a no deal Brexit rising to a coin flip Brexit negotiations seem to firmly be deadlocked and we will likely see tough banter until we see the next Prime Minister take office next week The Irish backstop will once again be a key sticking point that the EU that will likely see either candidate Hunt or Johnson argue it needs to go or we will see a hard Brexit The UK economy is still surprising with decent data labor came in mixed while wages rose more than expected
JP
JP Morgan shares initially fell despite an earnings beat as they joined other banks in cutting their Net Interest Income outlook Just like Citigroup equities trading took a hit for JP Morgan down 12 on an annual basis slightly worse than the analysts consensus The results overall were not too and the key takeaway for the overall economy is that they see positive momentum with the US consumer and healthy confidence levels
Oil
Crude prices are stabilizing after yesterday s slide as Gulf of Mexico production begins to come back online as the first major test of Hurricane season eased US stockpiles are expected to ease for a fifth consecutive weak with stockpiles dropping nearly 3 million barrels last week The situation between the Persian Gulf remains tense as Iran continues to take the next steps in enriching uranium beyond levels specified under the 2015 nuclear deal Geopolitical risks and disruptions with US production could support crude prices in the short term
Gold
Gold prices continue a summer doldrum consolidation pattern as market participants await further clarity on how dep the Fed s rate cut path will be The four largest central banks are set to unleash fresh stimulus in the second half of the year and gold s bullish outlook remains intact with short term resistance resting at the 1 500 an ounce level
Bitcoin
Treasury Secretary Mnuchin joined the crypto skeptic club yesterday reiterating the Trump s administration concerns on privacy and security The regulatory future for Bitcoin and other digital coins is going to be a bumpy road Facebook s Libra has a dartboard on its back and eventually that could help Bitcoin
Original Post |
C | This Week In Forex Crypto And Stocks July 16 2019 | Hi investors Here s your 5 minute overview of the forex crypto and stock markets Check it out for hot stories that may have an impact on your investment strategy
Forex Market OverviewLast week the US dollar experienced a dramatic decrease in value This was followed by a confirmation of planned interest rate cuts from Fed chair Jerome Powell Powell is expected to make another major announcement which along with upcoming retail reports will result in a very exciting week
It was an up and down week for the euro which began the week with a positive upswing However it lost some of its progress following the release of minutes from the European Central Bank The Canadian dollar anchored by a statement from the Bank of Canada experienced a very similar sequence of events Meanwhile the Swiss franc remained strong for the entire week
Elsewhere we saw the pound have one of its most stable weeks since the most recent Brexit announcements With several major reports coming up this week we ll see if Sterling has finally reached a sustainable bottom
The effects of the dollar s decline were reflected in the Aussie the Kiwi and Japanese yen All of these major currencies experienced simultaneous value increases
Taking A Closer Look at CAD JPYThe CAD JPY pair the pair broke above the daily Ichimoku cloud last week and appears to be in the pullback mode at the moment If you ve read my book Ichimoku Secrets you probably know that the pullback mode is where investors with moderate risk tolerance can consider a bullish position taking profit at the next Fibonacci retracement level
CAD JPY technical analysis based on Ichimoku Fibonacci forex overview For long term investors the next resistance level is at the 50 Fibonacci retracement of 84 53 This traces CAD JPY s price from the highs of October 2018 to the lows of June 2019 The forex market has had an unusually active July so we ll be sure to keep you updated
Crypto Market OverviewIt was another shaky week for Bitcoin which after breaking the 13 000 earlier this month experienced another week of decline bringing it down to around the 10 000 mark While concerns from various governments and major market makers have created some complications many traders remain optimistic about the fact cryptocurrency is being accepted into the mainstream marketplace
Congress upcoming questioning of Facebook NASDAQ FB and their new cryptocurrency Libra will test the legislative body s views on both cryptocurrency and the power wielded by the major tech companies If Libra is able to survive congressional grilling expect most other cryptocurrencies to increase in value in response But at the same time keep in mind that Libra isn t a true cryptocurrency so its fate is irrelevant to the market in the long run
This week we ll see if trueDigital is able to successfully penetrate the Bitcoin derivatives market The digital platform will first need to gain approval from the CFTC Other American organizations are looking to reshape the crypto market including an innovative new crypto partnership between Litecoin and the Miami Dolphins
Stock Market OverviewLast week was a huge week for the stock market which witnessed nearly every major index break records For the first time ever the S P 500 is trading above the 3 000 mark after beginning last week at 2 965
While American investors are largely pleased with their 401 k s some remain skeptical about the most recent round of gains The market has not experienced any true major changes rather pessimistic views about the dollar and bond market have inspired portfolio managers to redistribute capital Below average earnings reports still have many economists predicting a recession will occur within the next 18 months
Looking at the banking industry as Deutsche Bank DE DBKGn undergoes a period of major reconstruction the bank s stock has steadily fallen Elsewhere HSBC announced it was hiring a Citigroup NYSE C veteran to handle American business causing their stock to experience a mild upward tick
The Dow also had a record breaking week climbing over the 27 000 mark for the first time in the company s extensive history While the index s gains were wide reaching changes in the healthcare market were a major cause of its progress
Elsewhere in the world AB InBev decided to cancel a multiple billion dollar IPO in Asia which would have been the largest IPO thus far in 2019 We ll see if the beer and beverage giant makes any other major changes That does it for this week s news roundup I ll be sharing my personal investment strategies for forex stocks and cryptocurrency in Invest Diva s Premium Investing Group also known as the PIG
This article was originally published on Invest Diva |
JPM | ETF Strategies For A Rising Rate Environment | The dual prospects of a Fed rate hike this year and the European Central Bank s ECB tapering talks ahead ofits planned finish in Marchlately hinted at an imminent end to the rock bottom interest rates era in the developed world As a result yield on the 10 year U S Treasury note increased 16 bps to 1 72 in the last four days as of October 5 2016
Several U S economic readings in the fields of services and manufacturing sectors consumer confidence and Q2 GDP data came in better lately Plus several FOMC members recently advocated policy tightening citing economic well being This resulted in a chance of a December hike at the current level
Given this investors must be interested in finding out all possible strategies to weather a sudden jump in the benchmark interest rates For them below we highlighted a few investing tricks that could gift investors with gains in a rising rate environment read Higher Interest Rates Are Coming How Do Investors Prepare
Tap Regional Banks
Financial stocks are the direct beneficiaries of a rise in long term bond yields This time too there is no exception Investors should note that despite the prevailing concerns about the financial health of the big banks including Deutsche Bank DE DBKGn and Wells Fargo NYSE WFC large cap financial ETF Financial Select Sector SPDR ETF NYSE XLF added over 1 6 on October 5 2016
In this regard we first choose regional bank ETFs like SPDR S P Regional Banking ETF CO KRE as these have a tilt toward smaller cap stocks and are mainly focused on the U S economy Since banks borrow money at short term rates and lend the capital at long term rates the latest spike in long term bond yields bode well for these ETFs read
Go Short with Rate Sensitive Sectors
Needless to say sectors that perform well in a low interest rate environment and offer higher yield may falter when rates rise Since real estate and utilities are such sectors it is better to go for inverse REIT or utility ETFs ProShares UltraShort Real Estate AX SRS ProShares Short Real Estate REK and ProShares UltraShort Utilities LON SDP are such inverse ETFs that could be wining bets in a rising rate environment read
Play Private Equity ETFs
As bond yields have started to rise investors now need to focus on stable bets that offer way higher than the benchmark yield For this the private equity ETF pack is an option As per private equity topped the Russell 3000 and S P 500 equity gauges in the recent past one year by 3 6 and 1 5 respectively as well as in the long term last 10 years by 3 8 and 3 7 respectively
Investors should note that this asset class is high dividend in nature PowerShares Global Listed Private Equity ETF V PSP yields about 3 66 annually Private equity has a low correlation to the broader market but might underperform severely in the global meltdown read
Still Want Bond Exposure Look at These ETFs
Floating rate notes are investment grade bonds that do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index such as LIBOR plus a variable spread depending on the credit risk of the issuers Since the coupons of these bonds are adjusted periodically they are less sensitive to an increase in rates compared to traditional bonds read
Unlike fixed coupon bonds these do not lose value when rates go up making the notes ideal for protecting investors against capital erosion in a rising rate environment iShares Floating Rate Bond is a good bet in this context read
Another option in this space is to tap bank loan ETFs like Highland iBoxx Senior Loan ETF SI SNLN Senior loans also known as leveraged loans are private debt instruments issued by a bank and syndicated by a group of banks or institutional investors These provide capital to companies that have below investment grade credit ratings In order to compensate for this high risk senior loans usually pay higher yields
Plus shorting U S treasuries is also a great option in this type of a volatile environment read
EM Bonds Dividends Good Bond Picks Too
Since emerging markets EM are quite solid at the current level as opposed to the developed world have relatively lower date to GDP ratio and offer higher yields investors can take a look at EM bond ETFs
Though local currency bond ETFs like WisdomTree Emerging Markets Local Debt ETF TO ELD have been outperforming lately investors might think about a currency hedged EM ETF at this moment given the renewed strength in dollar iShares JPMorgan NYSE JPM USD Emerg Markets Bond ETF AX EMB can be a decent pick for those who look to be invested in the currency hedged EM bond ETF pack read
Another way to play the emerging market turnaround right now is to invest in high dividend EM equities ETFs like SPDR S P Emerging Markets Dividend ETF and iShares Emerging Markets Dividend ETF that yield over 4 5 much higher than the present benchmark Treasury yields
Ex Rate Sensitive ETFs Deserves a Look
Since both presidential election and rate hike fears will cause considerable volatility in the market a low volatile and an ex rate sensitive pick like P 500 ex Rate Sensitive Low Volatility Portfolio should be an intriguing choice read
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JPM | Could Fed Start Buying Stocks | Recently we have heard noises from several different places touching on the theme of equities purchases by the Federal Reserve The first was during Fed Chair Janet Yellen s most recent testimony before Congress when Rep Mick Mulvaney asked her about the subject She responded
The Federal Reserve is not permitted to purchase equities We can only purchase U S treasuries and agency securities I did mention in a speech in Jackson Hole though where I discussed longer term issues and difficulties we could have in providing adequate monetary policy Accommodation may be somewhere in the future down the line that this is the kind of thing that Congress might consider
During a subsequent videoconference she added
The idea of expanding into areas like equities might be a good thing to think about The Fed is more restricted in which assets it can purchase than other central banks If we found I think as other countries did that they could reach the limits in terms of purchasing safe assets like longer term government bonds it could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions
Larry Summers mooted the idea during a recent lecture at a Bank of Japan conference in Tokyo suggesting that central banks should give serious consideration to the purchase of a wider range of assets on a sustained and continuing basis
And finally JPMorgan NYSE JPM strategist Nick Panigiritzoglu wrote this in a research note last week
QE need not be confined to bond instruments in our mind By limiting themselves to bonds central banks are indeed deemed to face quantitative constraints given declining government bond issuance even as spread product issuance has increased
Is it unthinkable Not for the Bank of Japan which has been buying Japanese ETFs for some time and perhaps also not for the Fed when and if the ultimate QE Blitzkrieg is deemed to be warranted
Investment implications Janet Yellen and Larry Summers have both suggested that it might under some circumstances be desirable for the Federal Reserve to start buying stocks In the U S this would probably require action by Congress but we are wary of saying that anything is impossible There could be a lot further to go than you think before central banks have exhausted their ammunition |
JPM | Parsing JP Morgan s Q4 Outlook | JP Morgan s NYSE JPM quarterly Guide to the Markets always contains plenty of interesting information for stock market participants Released at the end of each quarter the research document is packed full of interesting numbers and statistics on market themes and style performance Here is a summary of some of the data contained in the September 30 report
JP Morgan Guide To The Markets For Q4
The leading chart of JP Morgan s quarterly report is a breakdown of the current bull market Between March 9 2009 and the end of the third quarter of 2016 the S P 500 has added 220 From a low of 677 to a high of 2 168 the index has clocked the most impressive rally of the past two decades Yet even after that rally compared to the last two cycles the S P 500 does not look to be overly expensive at current levels Indeed at the peak of the last bull market in October 2007 when the index traded at 1 565 the forward P E ratio was 15 7 compared to today s 16 8 although at the peak of the March 2000 bull market the index was trading at a forward P E of 27 2 The S P 500 s current forward P E ratio of 16 8 is overvalued by a standard deviation of 0 3 compared to the index s 25 year average of 15 9
Further during both previous bull markets of the past two decades the S P 500 s average dividend yield ticked below 2 while today the index yields 2 2 an interesting phenomenon considering that today the 10 year Treasury rate is 1 6 compared to the March 2000 and October 2007 rates of 6 2 and 4 7
Value has seen a huge resurgence this year according to JP Morgan s data Year to date small cap value has returned 15 5 mid cap value has returned 13 7 and large cap value has returned 10 Meanwhile small cap growth has only returned 7 5 mid cap growth has returned 6 8 and large cap growth has returned 6
Cyclicals remain cheaper relative to defensives
Quarterly Earnings What To Expect
According to Wall Street consensus S P 500 quarterly earnings per share are expected to rise approximately 20 over the next few quarters
And the market s current valuations suggests steady returns going forward |
MS | Tequila maker Jose Cuervo files for IPO with Mexican bourse | MEXICO CITY Reuters Mexican alcoholic beverage maker Jose Cuervo the world s largest tequila producer on Tuesday filed a prospectus with the Mexican bourse to conduct its long expected initial public offering The filing provided few details about the IPO but media reports have suggested the company could seek to raise between 750 million and 1 billion The company known officially as Becle said the stock sale would be handled by the local units of Morgan Stanley N MS JP Morgan Chase Co N JPM and Banco Santander MC SAN and local brokerage GBM Grupo Bursatil Mexicano In the filing the company said it had 2015 sales of nearly 20 billion pesos 1 02 billion up from 15 2 billion pesos in 2014 In the first six months of 2016 Cuervo said it had revenue of 12 2 billion pesos Net profit in 2015 was 5 3 billion pesos Cuervo said The company said the United States and Canada represent about two thirds of its sales while Mexico generates just over a fifth of revenue Cuervo has long resisted offers to sell a stake in the company and talks with its former international distributor British spirits group Diageo ended in late 2012 At the time analysts valued the Mexican company at about 3 billion In 2015 Diageo L DGE swapped its Bushmills Irish whiskey brand for Cuervo s 50 percent stake in their Don Julio premium tequila joint venture Started by Jose Antonio de Cuervo in the late 1700s before Mexican independence from Spain Jose Cuervo claims to be the oldest continually producing spirits firm in North America With origins in the picturesque town of Tequila in Jalisco state the business is now under the control of the Beckmann family who married into the Cuervo family a century ago |
MS | Deutsche helps lift European stocks before Yellen Draghi | By Nigel Stephenson LONDON Reuters A rise in Deutsche Bank shares helped push European stocks higher on Wednesday easing concerns over Germany s financial sector that had hit equities in Asia and drove investors into safe haven government bonds and the dollar Beyond banking sector worries investors were looking ahead to U S Federal Reserve Chair Janet Yellen s appearance before a Congressional committee a speech by European Central Bank President Mario Draghi and a meeting of oil producers in Algiers Deutsche Germany s biggest lender faces big fines over claims it mis sold mortgage backed securities and like other euro zone lenders has been squeezed by the European Central Bank s low interest rates Its shares which hit record lows on Tuesday have fallen some 50 percent this year DE DBKGn However the stock rose more than 3 percent in early deals helping push the pan European STOXX 600 index STOXX up 1 2 percent led by banks SX7P Analysts said sentiment towards riskier assets was also improved by data on Tuesday showing U S consumer confidence this month hit its highest since 2007 For Reuters new Live Markets blog on European and UK stock markets see reuters realtime verb Open url German two year government bonds however held near Tuesday s record low of minus 0 711 percent Before an auction of the bonds due later on Wednesday they yielded minus 0 702 percent flat on the day Asian shares spent much of the trading session in negative territory on investor concern about the state of the European banking sector and lower oil prices MSCI s broadest index of Asia Pacific shares outside Japan MIAPJ0000PUS moved in and out of negative territory and last stood less than 0 1 percent higher on the day Japanese shares fell with the Nikkei 225 index N225 falling 1 3 percent by the close Oil prices were slightly higher partially reversing Tuesday s fall of some 3 percent on diminished expectations that oil producers meeting in Algiers this week would reach an agreement to ease a global glut of crude Members of the Organization of the Petroleum Exporting Countries OPEC are due to meet at 1400 GMT Some in the market say the Algiers talks could lay the groundwork for an agreement at OPEC s formal policy meeting in Vienna on Nov 30 said Vyanne Lai oil analyst at National Australia Bank in Melbourne I think OPEC producers realize they can t continue to expand production indefinitely OPEC producers are close to maximum capacity so there could be room for a deal in November Lai said Brent crude LCOc1 the international benchmark last traded at 46 08 a barrel up 11 cents on the day on data showing a surprise drawdown in U S inventories YELLEN SPEAKS The dollar DXY was up 0 3 percent against a basket of currencies Fed chief Yellen testifies before the House Financial Services Committee on regulation but may face questions on the interest rate outlook and the economy The Fed left rates on hold last week but strongly signaled they could rise in December ECB head Draghi speaks in Berlin The euro fell 0 2 percent to 1 1188 While we admit that near term downside risks to the euro have increased due to financial stability concerns we think that any setback into the 1 11 handle offers a buying opportunity Hans Redeker head of currency strategy at Morgan Stanley NYSE MS said
The yen weakened 0 3 percent to 100 70 per dollar and sterling dipped 0 2 percent to just below 1 30 |
MS | Euro hits two month low vs Swiss franc on Deutsche Bank jitters | By Anirban Nag LONDON Reuters The euro dropped to a two month low against the safe haven Swiss franc and lost ground broadly on Friday as concerns about the health of Deutsche Bank weighed on the single currency and undermined risk appetite across global markets The Swiss franc was also bolstered by expectations that Middle Eastern investment houses could pull out money from the United States and into alternative safe haven liquid currencies like the franc Those expectations were raised after the U S Congress voted overwhelmingly on Wednesday to approve legislation that will allow the families of those killed in the Sept 11 2001 attacks on the United States to seek damages from the Saudi government Risk appetite seems to be backtracking as European banking concerns mount said Hans Redeker head of currency strategy at Morgan Stanley NYSE MS adding that Swiss franc strength was not just a reflection of the European banking problems It could also be seen in the context of Middle Eastern accounts possibly starting to pull out of the U S he said The Swiss franc hit an eight week high against the euro at 1 08125 franc EURCHF in the London session The euro fell 0 4 percent to 1 11775 while it lost 0 6 percent against the yen to trade at 112 77 yen EURJPY The yen also seen as a safe haven currency has rebounded from Thursday s trough versus the dollar as global share prices slipped on worries about Deutsche Bank DE DBKGn under pressure from a massive fine imposed by the United States over its sales of mortgage backed securities The latest lurch came after Bloomberg reported that a number of hedge funds that clear derivatives trades with Deutsche had withdrawn some excess cash held at the lender which has dropped to fourth in overall rankings as a currency trader YEN FIRMER The Japanese yen looked set for its third straight quarter of gains It has gained about 2 percent so far this quarter on course to log its third consecutive quarter of gains as investors suspect the Bank of Japan has reached a practical limit in stimulus and has lost clout in cheapening the yen Earlier the dollar rose from around 101 15 yen to 101 80 yen in just a few minutes a move traders said appeared to be linked to month end or quarter end flows The dollar later pared some of its gains and was last trading at 100 80 yen down 0 2 percent on the day Focus will be on U S data and a better than expected personal consumption expenditure PCE deflator the Federal Reserve s favourite inflation gauge could offer support to the dollar The Fed seems more focused on employment than on inflation said Marshall Gittler head of investment research at FXPrimus
Nonetheless it could help to persuade the holdouts on the Fed that a rate hike in December currently seen as only a 58 percent probability is justified and therefore be dollar positive |
MS | Morgan Stanley charged with running unethical sales contests regulator | By Svea Herbst Bayliss BOSTON Reuters Morgan Stanley NYSE MS was charged with dishonest and unethical conduct by Massachusetts top securities regulator on Monday for having pushed its brokers to sell loans to their clients Secretary of the Commonwealth William Galvin alleges that the bank ran high pressured sales contests in Massachusetts and Rhode Island where brokers could earn thousands of dollars for selling so called securities based loans SBLs The contests designed to boost business were officially prohibited by Morgan Stanley but turned out to be lucrative for the bank with the pace of loan origination tripling and adding 24 million in new loan balances Galvin said The charges against Morgan Stanley come one month after Wells Fargo NYSE WFC was fined for fraudulently opening accounts and illustrate how large banks are facing increasing scrutiny over their sales practices Securities based loans let clients borrow against the value of their investment accounts but involve certain risks including the bank s ability to sell securities to repay the loan Morgan Stanley said the complaint has no merit and that the company plans to defend itself vigorously The securities based loan accounts were opened only after discussing the product with each client and obtaining their affirmative consent spokesman James Wiggins said in a statement But Galvin charges that Morgan Stanley executives were slow in discovering the improper sales contests failed to shut them down immediately and downplayed the risk associated with the SBLs This complaint lays bare the culture at Morgan Stanley that bred the high pressure effort to cross sell banking products to its brokerage customers without regard for the fiduciary duty owed to the investor Galvin said in a statement The practice of cross selling or getting customers to buy products and services from a range of business lines is common across the banking industry But the scandal involving Wells Fargo has raised questions about whether it is appropriate to set aggressive sales targets for employees and whether customers really need all the products they are being offered Thirty financial advisers working in five Morgan Stanley offices from Springfield Massachusetts to Providence Rhode Island joined in the contest that began in January 2014 Galvin said The incentives were 1 000 for 10 loans 3 000 for 20 loans and 5 000 for 30 loans Galvin said adding that performance was closely tracked by supervisors Four years ago the bank shifted the way its advisers are paid rewarding them for growing assets and loans Morgan Stanley s internal rules prohibited such contests Galvin said adding it took the bank s compliance and risk office until December 2014 to detect the contest and that it was not stopped until April 2015 Galvin said At Wells employees opened as many as 2 million fake accounts in customers names without their permission saying they were under intense pressure to meet internal sales quotas In the aftermath of the settlement and harsh questions from lawmakers Wells has since suspended those quotas The San Francisco based bank is now facing probes from authorities ranging from the Department of Justice to the Department of Labor as well as lawsuits from customers and former employees
This version of the story corrects spelling of regulator in first paragraph with additional reporting by Lauren Tara LaCapra Editing by Chizu Nomiyama |
MS | BOJ tankan Japan firms expect CPI to rise 0 6 percent a year from now | By Stanley White
TOKYO Reuters Japanese companies long term inflation expectations weakened in September a Bank of Japan survey showed highlighting the difficult and drawn out task the central bank faces in trying to conquer the country s deflationary mindset
The survey shows how difficult it will be to encourage inflation even after the BOJ overhauled its policy framework in September when more than three years of massive debt purchases had still failed to spark price growth
The BOJ has already acknowledged weak inflation expectations so I don t expect it to ease policy at its next meeting said Shuji Tonouchi senior market economist at Mitsubishi UFJ Morgan Stanley NYSE MS Securities
I do expect the BOJ to lower its CPI forecasts The BOJ says downside risks are coming from overseas So far these risks have not increased
Japanese companies expect consumer prices to rise an average 0 6 percent a year from now lower than their projection three months ago a central bank survey showed on Tuesday
Three months ago companies expected prices to rise 0 7 percent over the next year
Firms polled by the BOJ as part of its detailed tankan survey for September also said they expect consumer prices to rise an annual 1 0 percent three years from now and an annual 1 0 percent five years from now
The BOJ started the survey on corporate price expectations from the March 2014 tankan to gather more information on inflation expectations which are key to its current stimulus program
The central bank overhauled its policy framework last month to focus on controlling interest rates amid growing concerns that its aggressive purchases of government debt were becoming unsustainable
The BOJ will continue to buy government debt to keep monetary policy easy but its new framework offers more flexibility to reduce purchases if needed |
JPM | JPMorgan s Kolanovic Warns of Liquidity Snarls But Stays Bullish | Bloomberg A strong earnings season should bolster the rattled U S stock market but potentially not without some further turmoil according to JPMorgan Chase Co NYSE JPM s head of quantitative and derivative strategy Marko Kolanovic
Liquidity was a big problem in the market meltdown of early February and hasn t really recovered since then Kolanovic said in a March 29 interview in New York referring to the worst selloff in the S P 500 Index since August 2015 Buyers strikes could continue to plague the market as investors grapple with worries ranging from a global trade war to pressures on Facebook Inc NASDAQ FB he said
A lot of these concerns are likely overblown it s reflective of the psychology of fear driven by market volatility he said The only real problem now is low liquidity and market volatility he said And liquidity should improve when the Cboe Volatility Index falls he said
The problem is that it isn t for now the gauge surged 3 65 points on Monday when the S P 500 fell 2 2 percent At issue is the willingness of selloff scarred buyers to step into a market in times of doubt according to Kolanovic who s earned his reputation by forecasting dramatic ups and downs in markets
The structure of today s market makes it more susceptible to sharper swings he said
A host of systematic strategies have the capacity to exacerbate moves by reinforcing price trends As volatility increases selling from such strategies tends to result in one way flows in index products such as futures and ETFs
Those declines in turn cause market liquidity to dry up
There are fewer traditional players willing and able to step in to slow one way moves Value investors for instance have been hurt by more than a decade of underperformance and may have less capacity to mitigate a selloff
Kolanovic isn t the only one warning about liquidity Societe Generale PA SOGN strategists led by Kokou Agbo Bloua wrote in a note on March 30 that investors should be wary of the possibility for late cycle volatility bursts fueled by distortions in liquidity
But conditions aren t yet in place to fuel a broader bear market and bets on the big downturn may be premature according to Kolanovic
Investors should just stick to facts and fundamentals he said Earnings should alleviate many of the fears |
JPM | BOJ buys record 7 8 billion of Japanese ETFs in March to support market | By Ayai Tomisawa and Shinichi Saoshiro TOKYO Reuters The Bank Of Japan bought the largest amount of exchange traded funds ETFs on record in March as the central bank supported a market hit by a rising yen and fears of a global trade war The central bank which usually buys ETFs to support the market when shares fall in morning trade said it bought a total of 833 billion yen 7 82 billion in ETFs in March It was the largest monthly purchase since the central bank started buying ETFs in the end of 2010 as part of its quantitative and qualitative easing program aimed at pulling the economy out of deflation The BOJ bought 1 9 trillion yen in ETFs in January March about 30 percent of its annual purchase goal according to data it released on March 30 In 2016 the BOJ doubled its annual acquisition target to 6 trillion yen The yen has firmed as a sharp jump in global market volatility and escalating U S China trade tensions have prompted investors to look for less risky bets The Nikkei share average N225 dropped 2 8 percent last month and hit six month lows after falling 4 5 percent in February Market analysts expect the Nikkei to remain volatile in the coming months as worries about a trade war cloud the outlook for world growth Traders also worry that Japan Inc will have to lower their foreign exchange assumptions for the fiscal year through March 2019 which would reduce manufacturers profits made abroad In terms of high stock prices and high valuations risk premium is low now compared to the beginning of Abenomics so we can assume that the BOJ is ready for tapering But the central bank seems to have a different idea said Yoshinori Shigemi global market strategist at JPMorgan NYSE JPM Asset Management The market will likely continue seeing high volatility for the time being so the BOJ is likely to keep up with the current purchase pace for a while BOJ Governor Haruhiko Kuroda said on Tuesday it was premature to debate when and how the central bank should slow its purchases of ETFs Kuroda was reappointed for another five year term by premier Shinzo Abe who hand picked the former top currency diplomat in 2013 to deploy aggressive monetary easing as one of three arrows of his Abenomics policies to reflate growth Kuroda s second term begins on April 9 |
JPM | Two analysts downgrade Cloudera after earnings shares 33 5 | JPMorgan NYSE JPM downgrades Cloudera NYSE CLDR from Overweight to Neutral Analyst Mark Murphy cites uncertainty around the trimmed FY19 outlook He notes that the company thinks the problem is sales execution and not competitive or technological pressures More action Deutsche Bank DE DBKGn downgrades Cloudera from Buy to Hold Cloudera shares are down 33 5 premarket to 14 80 Previously Cloudera 17 after Q4 beats mixed guidance April 3 Now read |
JPM | JPMorgan s Dimon praises Trump s deregulatory efforts in annual letter | By David Henry NEW YORK Reuters JPMorgan Chase Co N JPM Chief Executive Officer Jamie Dimon complimented the administration of President Donald Trump in an annual letter to shareholders on Thursday saying tax cuts and deregulatory efforts were helping his bank make more money Dimon who runs the biggest U S bank drew a contrast between Trump s moves and those of other elected officials who he said had not struck the right balance for the economy between regulation and free commerce He praised the Trump administration for insisting that rules around cost benefit analysis be properly applied and for trying to give regulators the proper authority to use common sense Using nearly half of the 46 page letter to promote his views on public policies Dimon played to his roles as the public face of Wall Street and the chairman of the Business Roundtable a CEO lobbying group Dimon said new federal tax law and a more constructive regulatory environment adopted since the 2016 presidential election give him hope that JPMorgan will be able to invest more of its excess capital to grow the bank and expand into new markets He emphasized JPMorgan s ability in the new climate to earn a return on tangible equity of 17 percent two points higher than the target before corporate tax cuts were enacted and nearly four points greater than the company delivered in 2017 Offering bank investors a view of the company stock Dimon contended that it still made financial sense for JPMorgan to buy back shares even at or above two times tangible book value per share which was 53 56 at year end JPMorgan shares closed at 110 99 on Wednesday To show that government regulation needs to be smart Dimon included a reprint of a 1992 newspaper essay by the late liberal U S senator and Democratic Party presidential candidate George McGovern who recounted how he had learned late in life that regulations could crush businesses Dimon 62 has said in the past that he was a Democrat but in recent years he has avoided siding with a political party He said in the letter that partisanship causes bad public policy He called for improved merit based immigration particularly for those who get an advanced degree in the United States We need skilled individuals in America he wrote He also said the U S should revisit the Trans Pacific Partnership trade agreement which Trump has rejected Interviewed later on Thursday morning on Yahoo NASDAQ AABA Finance Dimon said he and other CEOs had talked to Trump about trade policy a month ago Obviously we weren t very effective Dimon said We told him what we thought and it wasn t what he thought at the time
Asked how Trump was doing as president Dimon said he chose to address specific policy actions I am not going to assess a president after a year |
C | Mid Penn Bancorp expands footprint in Southeastern Pennsylvania | Mid Penn Bancorp MPB will acquire First Priority Financial OTC FPBK in all stock tranasction where in each shareholder of First Priority Financial OTC FPBK will receive 0 3481 shares of Mid Penn Bancorp valuing acquired company at approx 82M The transaction is expected to be accretive to earnings per share with a tangible book value dilution earn back in under 3 years Now read |
JPM | Tesoro TSO Signs New Credit Agreement Worth 2 Billion | Tesoro Corporation NYSE TSO recently declared that it has signed a senior secured revolving credit accord with a group of banks headed by JPMorgan Chase Co NYSE JPM Tesoro will now replace its prior 3 billion asset based credit facility with the new 2 0 billion four year cash flow credit facility The previous facility was scheduled to mature in Nov 2019 while the new facility will mature in Sep 2020 Notably the 2 billion credit facility can be expanded up to 2 25 billion before the company achieves an investment grade rating The facility can be expanded to 3 billion after the company receives the rating The new credit facility is expected to enhance Tesoro s financial flexibility substantially and help it achieve growth objectives Tesoro added that this new facility has taken it closer to investment grade rating San Antonio TX based Tesoro is one the largest independent oil refiners in the U S A major advantage for the company is the scale and diversification benefits offered by its seven refineries We also appreciate the company s solid long term competitive position and are optimistic about its prospects in the supply constrained California market However the requirement of policies to reformulate fuel and lower emission from refinery operations make the industry a highly regulated one As a result companies like Tesoro are often forced to divert cash flows to ensure regulatory compliance which can adversely impact profitability As a result the company currently carries a Zacks Rank 3 Hold implying that it will perform in line with the broader U S equity market over the next one to three months TESORO CORP Price Some better ranked players in the energy sector include NGL Energy Partners LP NYSE NGL and Evolution Petroleum Corp NYSE EPM both sporting a Zacks Rank 1 Strong Buy You can see NGL Energy Partners expects a year over year increase of 554 in earnings for the current year Evolution Petroleum anticipates earnings to soar 218 2 year over year in the current year 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 | 3rd Quarter GDP At 4 Thanks To Soybeans | The Wall Street Journal had an amusing article a few days ago in which analysts bumped up GDP forecasts for numerous reasons including inventories exports in general and soybeans in particular Let s investigate the claims
Please consider
U S agricultural exports have surged the past two months helping cut the trade deficit and boosting the outlook for short term economic growth
One big factor Soybeans Bumper harvests at home crop shortfalls in South America and solid demand especially from China have propelled international feed sales
Soybean exports will add about 1 to third quarter GDP growth Ian Shepherdson chief economist at Pantheon Macroeconomics said in a note to clients
Mr Shepherdson is forecasting 4 annualized growth in third quarter gross domestic product a broad measure of economic output
That s a big improvement from 1 4 GDP growth in the second quarter and 0 8 in the first But it does little to alter the longer term outlook First exports are likely to return to trend while depleted crop inventories would be a drag on GDP Second the economy has averaged a modest 2 1 growth rate over the course of the expansion a trajectory that seems unlikely to change despite some noise from quarter to quarter
The soybean boost is indeed a one time thing It has no implications for trend growth and likely will reverse over the next couple quarters Mr Shepherdson said
Shifting Outlook
Following the commerce department international trade report on September 29 other analysts bumped up their forecasts as well
J P Morgan Chase revised its outlook to 3 annualized growth in the third quarter up from its earlier estimate of 2
Amherst Pierpont Securities boosted its forecast to 3 7 from 3 5
Macroeconomic Advisers raised its tracking forecast by three tenths to 3 1
Barclays inched up to 2 6 from 2 4
Is JPMorgan NYSE JPM reading Shepherdson The other way around
Regardless Shepherdson s forecast got me curious about a number of things namely soybeans and the trade deficit
Trade Deficit Shrinks More Than Exected
In I took a stab at the impact
Impact on GDP
The impact on tomorrow s Atlanta Fed GDPNow estimate and the FRBNY Nowcast estimate for 3rd quarter GDP is guesswork two ways
First I do not know what their model predicted Second I do not know how their model will react even if I did know what it predicted
Thus this seemingly good result might not turn out that way if the models predicted even better results
Nonetheless I am willing to take a stab The impact from this report will be small but slightly positive on third quarter GDP estimates 0 05 to 0 10 percentage points
GDPNow Impact
I was on the low side A check of the shows the net effect of all exports went from 0 13 to 0 13 between September 28 and September 30
The deficit shrinkage will add something like 0 26 percentage points to third quarter GDP Soybeans are only a tiny portion of exports
Balance of Trade
Balance of trade chart from
That chart is through August Is another stellar month coming up in September Based on soybeans
Price of Soybeans
At 9 63 per bushel the price of soybeans is up from a year ago but down substantially from second quarter
It s not clear why soybeans will add anything to third quarter GDP Are exports soaring
USDA Soybean Statistics
Let s investigate as of September 2016
Crop Year September 1 through August 31
If we assume soybean exports will rise by 100 million bushels from the previous year and apply all of it to third quarter GDP at a price of 9 63 soybean exports would add 963 million to GDP
The entire production increase from last year is only 2 8 billion
From first to second quarter went from 16 525 billion to 16 583 billion an increase of 58 billion seasonally adjusted annualized
Factor GDP by quarters if you like but also factor soybeans exports by quarters as well
Soybean Exports
In the report on 9 22 2016 for the period September 8 15 we find this blurb
US Soybean export sales totaled 875 724 metric tonnes all 2016 17 no 2017 18 This was under the 900 000 1 200 000 trade expectation USDA s whole year goal comes to 1 985 billion bushels a new record That would be 2 over last year and 22 over the five year average
Amusingly corn seems better
US Weekly export sales for the period from September 8 15 were released this morning Corn export sales totaled 921 903 metric tonnes all 2016 17 no 2017 18 This was just over the 700 000 900 000 trade estimate USDA s goal for the year at 2 175 billion bushels would be a record It would be 14 over last year and 36 over the five year average With only two full weeks figured of the new crop year done our total sales come to 707 million bushels 84 over last year and 43 over the five year average Due to good pre September sales we are ahead of the pace needed
In September only the incremental export increase if any from August will add to 3rd quarter GDP We had a huge jump from July to August is another huge jump coming A reversal actually seems more likely
Regardless the notion that soybeans or corn exports corn at 3 48 will add 1 to 3rd quarter GDP is ridiculous |
MS | BOJ reboots policy to target interest rates steps up inflation drive | By Leika Kihara and Stanley White
TOKYO Reuters The Bank of Japan overhauled its monetary policy framework on Wednesday switching to targeting interest rates and sidelining more than three years of massive money printing that did little to jolt the economy out of a decades long funk
But the BOJ held off on deepening negative interest rates or expanding its asset purchase target saying the modification was aimed at resetting its stimulus program for a protracted battle to hit and then keep to its 2 percent inflation goal
Japanese stocks rose and the yen fell on hopes that the BOJ s decision to reset its stimulus program would ease pressure on the country s banks and insurers although some analysts doubted whether the move would have a lasting positive impact on financial markets
The impression is that the BOJ is starting to pull back some of its troops from the battlefront said Katsutoshi Inadome senior fixed income strategist at Mitsubishi UFG Morgan Stanley NYSE MS Securities The markets could now begin testing the BOJ s commitment to its price target in the next few months
Kuroda said directly targeting interest rates could work more effectively to raise inflation expectations than focusing on base money
It s very effective in the long term perspective But in the short term there isn t a clear link between the base money target and inflation expectations Kuroda told a news conference That s why the new policy framework can respond to changes in the economy and prices more flexibly
BOND BUYING PACE UNCHANGED
At the two day rate review that ended on Wednesday the BOJ abandoned its base money target and instead adopted yield curve control under which it will buy long term government bonds to keep 10 year bond yields at current levels around zero percent
It will continue to buy long term government bonds at a pace that ensures its holdings increase by 80 trillion yen 781 billion per year and maintained the 0 1 percent negative interest rate it applies to some of the excess reserves that financial institutions park with the central bank
Under the new framework that adds yield curve control to its current quantitative and qualitative easing QQE regime the BOJ could deepen negative rates lower the long term rate target or expand base money if it were to ease again the central bank said in a statement announcing the policy decision
The BOJ will seek to lower real interest rates by controlling short term and long term interest rates which would be placed at the core of the new policy framework it said
1 102 4100 yen |
MS | Middleman in napkin insider trading ring gets one year in prison | By Jonathan Stempel Reuters A mortgage broker who was the middleman in an insider trading ring involving stock tips passed on napkins and Post its in New York s Grand Central Terminal to a Morgan Stanley NYSE MS stockbroker was sentenced to one year in prison on Wednesday Frank Tamayo 43 was sentenced by U S District Judge Michael Shipp in Trenton New Jersey two years after pleading guilty to fraud and conspiracy charges The defendant was also ordered to pay 1 06 million in restitution Tamayo was sentenced one week after Steven Metro a former managing clerk at law firm Simpson Thacher Bartlett who provided the tips was ordered to serve 46 months or nearly four years in prison Vladimir Eydelman the stockbroker who made an estimated 5 6 million on his illegal trades is scheduled to be sentenced on Sept 30 Tamayo served as a cooperating witness against Eydelman and Metro The sentencing is the last step in Mr Tamayo trying to put this behind him and move on with his life Tamayo s lawyer Ross Pearlson said in an interview As the government noted his cooperation was exceptional and helped in securing the guilty pleas of his co defendants Prosecutors said Metro would pass tips about mergers and other transactions that his firm was working on to Tamayo a friend and law school classmate who would write relevant ticker symbols on napkins or Post its Tamayo would then pass the tips to Eydelman at Grand Central s main clock and afterward chew up whatever the tips were written on prosecutors said The scheme unraveled in early 2014 after Tamayo began to secretly record the other defendants Tamayo could have been sentenced to between 46 and 57 months in prison under recommended federal guidelines The one year term reflected his cooperation prosecutors and Pearlson said Neither Morgan Stanley nor Simpson Thacher was accused of wrongdoing The case is U S v Tamayo U S District Court District of New Jersey No 14 cr 00542 |
MS | French industry confidence unexpectedly picks up in September | PARIS Reuters French industrial sentiment unexpectedly picked up in September along with broader business confidence an official survey showed raising hope of a rebound by the euro zone s second largest economy this quarter from stagnation in the spring
The improvement in France the first euro zone country to release business confidence data for September was also a good sign for growth in the bloc Morgan Stanley NYSE MS said in a note
We ll have to wait until tomorrow s PMIs and the German Ifo on Monday to have a better gauge of how euro area sentiment fared into the autumn but for now the French outcome is a modestly positive indication Morgan Stanley economist Carmen Nuzzo said
The industrial sector confidence index released by statistics office INSEE on Thursday rose to 103 from 101 in August confounding expectations from economists in a Reuters poll for a flat reading
In a positive sign for output in the coming months executives personal production expectations rose sharply to the highest in six months and returned above the long term average
Despite the security scares of the last two or three months production has picked up investment has picked up Philippe Darmayan president of the French federation of industrial groups GFI told a news conference on the sector
A positive momentum is taking hold even if it is never as much as we would like
Sentiment in the dominant service sector also improved this month with the index rising to 102 the highest since July 2011 the data showed Overall the composite business indicator rose to 102
But the broader based index remained within a range it has not escaped since November 2015 a month marked by Islamist attacks in Paris that killed 130 people The carnage dealt a serious blow to France s large hotel and restaurant sector
Although the sub index for that sector improved in September to 96 after an 11 point collapse in August following another militant attack in Nice the month before it remained below its long term average
Weakness was also prevalent among wholesalers especially in the agricultural sector where some indicators have never been worse since the survey started in 1979 INSEE said
This year s weather hit French wheat harvest could be the worst in 30 years compounding structural problems in other agricultural sectors such as the beef and milk industries
For a graphic |
MS | Germany s Lanxess to buy U S chemical firm Chemtura for 2 7 billion | By Ludwig Burger FRANKFURT Reuters Lanxess AG DE LXSG is to buy U S speciality chemical company Chemtura N CHMT for 2 4 billion euros 2 69 billion including debt in the German company s largest ever takeover moving it further away from its main synthetic rubber business Lanxess s offer of 33 50 per share is a premium of about 19 percent to the Philadelphia based company s share price close on Friday The world s largest synthetic rubber maker will use existing funds and new debt to buy Chemtura Lanxess said in a statement describing the deal as its largest ever acquisition It is part of its push to diversify away from the synthetic rubber unit which depends heavily on the car industry and is under pressure from rivals It agreed to sell a 50 percent stake in that business to Saudi Aramco for 1 2 billion euros last year Its new core business includes highly specialized substances such as ingredients for drugs and pesticides leather tanning chemicals construction pigments for concrete and roofing tiles and water treatment chemicals The Chemtura deal will help it boost its industrial lubricant additives and flame retardant additives businesses It follows the 2010 takeover of Dutch company DSM for around 310 million euros and Brazilian rubber producer Petroflex in 2008 for 280 million euros The shares rose 8 percent to their highest in more than a year on Monday and were the best performers on the European STOXX 600 index STOXX UBS analyst Patrick Rafaisz said the price represented a multiple of 10 over earnings before interest taxes depreciation and amortization EBITDA and just seven times when including targeted synergies The price paid for expanding is reasonable in our view and a refreshing discount to the early to mid teens multiples that have become more typical in M A during the last few quarters Rafaisz said The boards of both companies have unanimously approved the deal which is expected to close around mid 2017 Chemtura said in a separate statement Lanxess also said it will no longer pursue its earlier announced share buy back of around 200 million euros Morgan Stanley NYSE MS advised Chemtura on the deal |
JPM | U S consumer spending up slightly jobless claims at 45 year low | By Lucia Mutikani WASHINGTON Reuters U S consumer spending rose marginally for a second straight month in February as households boosted savings the latest indication that the economy lost momentum in the first quarter But the economy s fundamentals remain strong with other data on Thursday showing the number of Americans filing for unemployment benefits dropping to more than a 45 year low last week A tightening labor market is expected to start driving up wages by the second half of this year Consumer spending has been tepid this year despite strong consumer confidence which has been bolstered by income tax cuts Some economists said the tax cuts which came into effect in January only reflected on most workers paychecks in late February They also believed that delays in processing tax refunds had contributed to holding back spending The outlook for spending on discretionary categories is obviously more uncertain though there are some plausible reasons to expect better consumption outcomes ahead said Michael Feroli an economist at JPMorgan NYSE JPM in New York Relative to years past tax refunds were paid out slower at the start of this year The Commerce Department said consumer spending which accounts for more than two thirds of U S economic activity increased 0 2 percent last month after a similar gain in January It was supported by a rebound in spending on long lasting goods such as motor vehicles as was a rise in financial services and insurance expenditures The increase in consumer spending in February was in line with economists expectations There was also a moderation in monthly inflation readings after prices pushed higher in January The personal consumption expenditures PCE price index excluding the volatile food and energy components rose 0 2 percent last month after advancing 0 3 percent in January That lifted the year on year increase in the so called core PCE price index to 1 6 percent the biggest gain since February 2017 from 1 5 percent in January The core PCE index is the Federal Reserve s preferred inflation measure It has been below the U S central bank s 2 percent target since mid 2012 Economists believe the annual core PCE price index could accelerate to 1 9 percent in March as last year s weak readings drop out of the calculation The Fed raised interest rates last week and forecast at least two more rate hikes this year Policymakers can be confident about the inflation outlook and will likely keep with the plan to raise rates a couple more times this year said Chris Rupkey chief economist at MUFG in New York Inflation is not heating up but pressures are building The dollar was little changed against a basket of currencies while stocks on Wall Street were trading higher Prices of U S government bonds rose SLOWING GDP GROWTH The steady rise in inflation last month also helped curb consumer spending When adjusted for inflation consumer spending was unchanged in February after falling 0 2 percent in the prior month That suggests a sharp slowdown in consumer spending in the first quarter after it surged at an eye popping 4 0 percent annualized rate in the fourth quarter The tepid consumer spending added to data on trade housing and business spending on equipment that have left economists anticipating moderate economic growth in the first quarter Data forecasting firm Macroeconomic Advisers cut its first quarter GDP growth estimate by three tenths of a percentage point to a 1 5 percent rate Economists at Barclays LON BARC lowered their forecast to a 1 7 percent rate from 1 8 percent The economy grew at a 2 9 percent pace in the fourth quarter In February personal income rose 0 4 percent matching the increase of the previous two months Wages increased 0 5 percent last month after climbing 0 6 percent in January Savings increased to 497 4 billion in February the highest level since August 2017 from 471 3 billion in the prior month That lifted the saving rate to a six month high of 3 4 percent from 3 2 percent in January Income growth could pick up as the labor market tightens further which should help to support consumer spending In a separate report on Thursday the Labor Department said initial claims for state unemployment benefits dropped 12 000 to a seasonally adjusted 215 000 for the week ended March 24 the lowest level since January 1973 The labor market is considered to be near or at full employment The jobless rate is at a 17 year low of 4 1 percent not too far from the Fed s forecast of 3 8 percent by the end of this year
These data continue to flash further tightening in labor market conditions with firms unwilling to fire existing workers presumably because of the difficulty of finding replacements said John Ryding chief economist at RDQ Economics in New York |
JPM | JPMorgan Chase Sees Buying Opportunity Rally Coming | Investing com JPMorgan Chase NYSE JPM has some classic advice for investors buy the dip because a rally lies ahead In a note to clients the Wall Street firm said investors have over reacted to what it calls a series of negative narratives an inflation scare a hawkish Fed rising bond yields and rising budget deficits JPMorgan thinks the market is bound to rise on strong fundamentals and positive forces such as the tax cut package The firm reiterated its 12 month stock price target of 3 000 for the S P 500 The bull market in stocks which turned 9 years old in March just suffered its second 10 correction in less than two months Another Wall Street firm Stifel recently warned investors that a bear market will hit in the next year |
JPM | Shrinking junk bond issuance keeps U S high yield prices afloat | By Kate Duguid NEW YORK Reuters The junk bond rally may be over but investors should not expect a sharp unraveling Low supply in new high yield bond offerings has kept prices afloat despite persistent investor outflows High yield bond funds have had net outflows in 10 of 13 weekly periods this year totaling roughly 18 billion according to Lipper data as fears of rising interest rates have driven investors to other markets After a decade of declining yields and worsening covenants outflows in the junk market have returned some power to buyers We re being more selective on the new issuance side said William Smith high yield credit portfolio manager at AllianceBernstein We don t feel the need to buy the regular high yield issuers that haven t really tightened covenants or are still trying to price deals aggressively We think that being disciplined and picking your spots is the prudent way to invest in this market The spread over Treasury bonds the premium investors demand to hold the risky debt has widened and covenants improved slightly in February according to Moody s But the primary response from issuers has been to reduce supply in an effort to wait out the junk bond fund outflows Opportunistic issuers are holding back because with rates on the rise the bargaining power is not as lopsided in their favor as it was last year said Martin Fridson chief investment officer at Lehmann Livian Fridson Advisors Issues of new high yield corporate debt in March are currently at 24 billion half the issuance in the same month last year according to JPMorgan NYSE JPM New supply in the year to date is 68 3 billion 25 percent below the same period last year In the year to date high yield is only down 1 2 percent compared to 3 4 percent in investment grade A lot of that is due to the reduced supply said Michael Donoghue president of Phoenix Investment Adviser In the last Wednesday Wednesday period recorded by Lipper junk bond funds posted their largest withdrawals in over a month as investors pulled 1 2 billion on fears of rising interest rates according to Lipper data The Federal Reserve raised interest rates last week by a quarter of a percentage point to a range of 1 50 to 1 75 percent That would typically dent prices But due to the reduced supply prices on the two biggest indexes the iShares iBoxx High Yield Corporate Bond ETFand the SPDR Barclays LON BARC Capital High Yield Bond ETF fell just 0 09 percent and 0 05 percent respectively over the last period reported by Lipper Junk bond prices have been falling on the whole this year primarily because of interest rate hikes Rising interest rates drive up yields on government bonds decreasing the spread over Treasuries The yield on the 10 year Treasury bond has risen sharply year to date up 13 3 percentage points also boosted by a flight to safe haven investments amid geopolitical volatility But as long as issuers are able to withhold new supply prices are not expected to unravel dramatically in the near term
This version of the story refiles to correct spelling of firm name to Phoenix Investment Adviser not Phoenix Investment Advisors in paragraph 8 |
JPM | Blockchain executive Amber Baldet to leave JPMorgan | By Anna Irrera NEW YORK Reuters Amber Baldet a blockchain program lead at JPMorgan Chase Co N JPM is leaving the bank to launch her own venture JPMorgan said on Monday Baldet one of the best known executives focused on blockchain at a major lender led JPMorgan s Blockchain Center of Excellence and helped the bank set its strategy for the nascent technology Baldet will be replaced by Christine Moy a senior product manager in the bank s Blockchain Center of Excellence according to an internal bank memo sent on Monday and seen by Reuters The memo was sent by Umar Farooq head of channels analytics and innovation for treasury services and head of blockchain initiatives for JPMorgan s corporate and investment bank Amber is extremely talented and helped build the outstanding team we have today JPMorgan spokeswoman Jessica Francisco told Reuters in a written statement We respect her desire to start her own venture and we wish her nothing but the best Blockchain originally emerged as the technology powering cryptocurrencies such as bitcoin but banks and other large corporations have been seeking to adapt it to run some of their processes They believe that the distributed database technology can help them simplify and reduce the costs of their businesses like securities settlement and payments processing JPMorgan has been active in the space through initiatives like Quorum a type of blockchain it developed for enterprises to build business applications Reuters reported last month that the bank was considering spinning off Quorum In her role at JPMorgan Baldet led product development for Quorum and was tasked with helping set the corporate and investment bank s blockchain strategy
Moy had been leading blockchain product development for the bank s investor services and capital markets business |
JPM | Blockchain Exec Parting Ways with JPMorgan to Launch Venture | JPMorgan Chase NYSE JPM blockchain executive Amber Baldet is leaving the Wall Street behemoth to start her own venture She has been the head of JPMorgan s Blockchain Center of Excellence which carried out several pilots and mapped out the bank s blockchain strategy In an seen by Reuters the company said Christine Moy would replace Baldet
In a statement sent to media channels JPMorgan spokeswoman Jessica Francisco said
Amber is extremely talented and helped build the outstanding team we have today We respect her desire to start her own venture and we wish her nothing but the best
JPMorgan is one of the largest Wall Street banks to demonstrate interest in blockchain which is the technology underpinning Bitcoin and most cryptocurrencies The company has launched several blockchain initiatives among them Quorum a blockchain solution focused on applications and aimed at enterprises
Baldet was responsible for managing product development at Quorum and putting in place the blockchain strategy of the investment bank
In October 2017 JPMorgan a collaboration with the Royal Bank of Canada and the Australia and New Zealand Banking Group to build a blockchain based platform for global payments The Interbank Information Network IIN as the project is called is expected to support faster payments and increased security The IIN which is powered by Quorum was working as of February 2018 according to JPMorgan s CFO Marianne Lake
JPMorgan was among the first banking giant to show interest in blockchain although its CEO made disparaging comments about Bitcoin In September 2017 Jamie Dimon made headlines that Bitcoin was fraud and he would fire everyone involved with it
Moy the new head of the Blockchain Center of Excellence has been managing blockchain product development at the investor services and capital markets division of JPMorgan |
C | Citigroup Shares Extend Gains After Q4 Earnings Beat | Investing com Shares in Citigroup NYSE C extended gains in pre market trade on Tuesday after reporting fourth quarter earnings
The fourth largest U S bank by assets reported adjusted earnings per share EPS of 1 28 in the three months ended December 31
Analysts forecast pointed to earnings of 1 19 a share
The adjusted earnings per share factored out the estimated impact of recent tax reform which contributed to the bank noting a a net loss for the fourth quarter of 18 3 billion or 7 15 per share
The net loss of 18 3 billion or 7 15 per share included an estimated one time non cash charge of 22 billion or 8 43 per share recorded in the tax line within Corporate Other related to the enactment of the Tax Cuts and Jobs Act Tax Reform Citi said in the press release
Meanwhile the company s revenue increased 1 5 from the same quarter a year earlier to 17 26 billion beating the forecast for 17 22 billion
While our fourth quarter results reflected the impact of a significant non cash charge due to tax reform the impact on our regulatory capital was much less significant Citi chief executive Michael Corbat said
Tax reform does not change our capital return goals as we remain committed to returning at least 60 billion of capital in the current and next two CCAR cycles subject to regulatory approval he added
Traders will now turn their attention to the firm s conference call due to start at 10 00AM ET 15 00GMT
Following the release of the report shares NYSE C jumped 2 07 in pre market trade to 78 45 from the previous closing price of 76 84 Citi had been trading up nearly 1 at around 77 60 prior to the publication |
JPM | 4 Alternative Mutual Funds To Brave A Volatile October | Thanks to the upcoming U S elections Deutsche Bank DE DBKGn woes Fed rate hike dilemma and stretched valuations October is likely to be a highly volatile month Market volatility threatens the one thing that everybody holds dear money Hence to hedge such risks it will be prudent to invest in alternative mutual funds Volatility to Spike in OctoberWith the presidential elections just around the corner the month of October is expected to face heightened turbulence The CBOE Volatility Index VIX a gauge of near term investor anxiety has always risen from the month of September to October except for 1996 when Bill Clinton handily won the re elections More uncertainty looms large this month as Deutsche Bank s woes continue to spook investors Shares of the lender plunged more than 50 this year as investors remain worried about the institution s thin capital cushion Such a decline affected other European banks already plagued by Eurozone s weak economy and negative interest rates September jobs data is due on Oct 7 The outcome can also help shape market perception in the coming weeks A December rate hike is more likely but if the jobs data turn out to be mediocre like the August one it might indicate that the domestic economy is in a tight spot The market is already in a precarious situation as most analysts warn that stock market valuations are at elevated levels This makes the market more vulnerable to a volatile sell off read more How to Navigate this Volatility Investing in alternative mutual funds is the best way to play this volatility These funds mostly include long short equity funds market neutral funds and trading leveraged equity funds These types of funds are available to investors of all income levels and provide that extra edge brought in by diversity Let us now discuss these three types of funds in some Mutual FundsEquity long short funds seek to gain from both winning and losing stocks irrespective of the current market scenario These funds use conventional methods to identify stocks that are either undervalued or overvalued It profits from shorting the overvalued stocks and buying the undervalued stocks Weights are subject to change and are dependent on management s view regarding the market Market Neutral Mutual FundsMarket neutral funds aim to adopt a precision approach by shorting 50 of their assets and holding 50 long This approach seeks to identify pairs of assets whose price movements are related The fund goes long on the outperforming asset and shorts the underperformer A market neutral fund is designed to provide stable returns at relatively lower levels of risk regardless of market direction This is particularly relevant in today s highly volatile scenario when the objective is to protect the capital invested Trading Leveraged Equity FundsLeveraged funds use borrowed money to increase returns in a short spell of time These funds generally strive to return a certain multiple of the short term returns of an equity index Leveraged funds are primarily marked ultra bull or 2X Leveraged funds also offer benefits such as diversification These funds invest in a diversified portfolio of assets which minimize risk while escalating returns In addition to this investors enjoy the benefits of dollar cost averaging where a young investor depositing 10 000 in these funds reaps the same benefits a high net worth individual receives say by depositing 50 000 000 These funds also enjoy tax deductions 4 Best Alternative Mutual Funds for Your PortfolioAs mentioned above alternative mutual funds are such new product classes that are equipped to protect investors portfolio and provide steady returns amid market volatility Thus we have selected four such alternative mutual funds that boast a Zacks Mutual Fund Rank 1 Strong Buy or 2 Buy have positive 3 year and 5 year annualized returns minimum initial investments within 5000 and carry a low expense ratio The question here is why should investors consider mutual funds Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why investors should park their money in mutual funds read more JPMorgan NYSE JPM Multi Cap Market Neutral A attempts to neutralize exposure to general domestic market risk by investing in common stocks that the fund s adviser considers to be attractive and short selling stocks that the adviser considers to be unattractive OGNAX s 3 year and 5 year annualized returns are 0 7 and 0 4 respectively Annual expense ratio of 1 27 is below the category average of 1 58 OGNAX has a Zacks Mutual Fund Rank 2 Aberdeen Equity Long Short A invests the majority of its assets in equity securities of companies that are organized under the laws of or have their principal securities trading market in the United States The fund s 3 year and 5 year annualized returns are 1 5 and 3 8 respectively Annual expense ratio of 1 56 is below the category average of 2 MLSAX has a Zacks Mutual Fund Rank 2 Glenmede Long Short invests a major portion of its assets in long and short positions with respect to equity securities such as common stocks of U S public companies GTAPX s 3 year and 5 year annualized returns are 3 2 and 6 1 respectively Annual expense ratio of 1 16 is below the category average of 2 The fund has a Zacks Mutual Fund Rank 1 ProFunds UltraSector Health Care Investor invests in securities and derivatives that the adviser believes in combination should have similar daily return characteristics as one and one half times 1 5x the daily return of the Dow Jones U S Health CareSM Index The fund s 3 year and 5 year annualized returns are 18 2 and 28 4 respectively Annual expense ratio of 1 61 is below the category average of 1 84 HCPIX has a Zacks Mutual Fund Rank 2 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 |
MS | British funds face up to rainy day cash pot demands | By Simon Jessop LONDON Reuters Britain s fund managers face calls to hold more emergency cash potentially crimping their ability to pay dividends or expand Banks and insurers have been set tough rules aimed at making them less likely to go bust if markets collapse and regulators are now looking at the multi trillion pound asset management industry First to feel the pinch last week was Aberdeen Asset Management L ADN which was asked to raise the minimum amount of cash it holds by 140 million pounds 184 million after a review by the Financial Conduct Authority Funds can make profits in depressed markets because they collect annual fees on the assets they manage but if clients quit en masse a manager s revenue could disappear overnight While most firms are cash rich any tightening in capital rules adds further stress with investors uneasy over fund charges in view of low average returns If you re asked to hold more capital then that will constrain your opportunities elsewhere which could include returning capital to shareholders looking for new acquisitions launching new products said Julian Young senior partner in the wealth and asset management business at consultants EY The FCA s decision was driven by the removal of a capital credit for the insurance Aberdeen had put in place to cover losses and by the need for it to have more on hand for unquantifiable risks Analysts were sanguine about the impact on Aberdeen s full year dividend but noted that the demand has cut the amount of cash it holds on its balance sheet above the regulatory minimum to only 78 million pounds It may be that Aberdeen is the first to get this approach and it will be coming to the others but if it is having spoken to a few of them it s not something they have been made aware of or are necessarily expecting said Shore Capital analyst Paul McGinnis The FCA declined to comment SELF ASSESSMENT Each firm currently assesses its own risks and capital requirements under the Internal Capital Adequacy Assessment Process ICAAP at least yearly and regulators can check at any time and demand a change What the regulator is looking for is a much more dynamic process EY s Young said Part of it is looking at macro risks part of it is looking at liquidity and part of it is being very vigilant those risks could be because of geography technology or they could be due to product Young said Investment bank Morgan Stanley NYSE MS said it expects investors to focus increasingly on the amount of capital held by asset managers and it therefore has an underweight rating on Aberdeen among others Christian Edelmann who oversees banking and wealth and asset management at consultants Oliver Wyman co authored the Morgan Stanley report He said for many years capital had largely unmanaged and unmonitored This is mainly driven by the view that in contrast to banks asset managers act on a fiduciary and not on a principal risk taking basis hence capital levels vary hugely across asset managers VALUATION IMPACT Markets are now wondering who may be next Ashmore L ASHM which like Aberdeen has taken an asset hit from emerging markets declined to say if it was talking to the FCA but in its full year results it increased its regulatory capital by 5 5 million pounds to 100 million pounds and had total cash of nearly 591 million pounds Schroders L SDR Britain s biggest listed asset manager said its capital position was very strong 687 million pounds in regulatory capital against total capital of 2 9 billion pounds and the firm was not in special talks with its regulator the Prudential LON PRU Regulation Authority over capital Henderson Group L HGGH which was not required to hold a minimum capital buffer between 2009 and April 2016 as it digested several large takeovers said it was expecting the FCA to review what it should put to one side by the end of the year Ahead of that it has assessed the minimum level to be 145 million pounds under the ICAAP process and has an extra 105 million pounds above that figure A Jupiter L JUP spokeswoman said it had an estimated requirement of 39 million pounds and an indicative surplus of 103 million pounds at the half year Aside from Aberdeen s reduced dividend cover Shore Capital s McGinnis said the issue of regulatory capital was not a major concern as most firms had little debt and were well capitalized already |
MS | SunEdison s yieldcos exploring strategic options including sale | Reuters TerraForm Global Inc O GLBL and TerraForm Power Inc O TERP the yieldcos of bankrupt solar company SunEdison Inc said on Monday they were exploring strategic alternatives including a sale of their entire business TerraForm Power s shares were up 3 4 percent at 13 49 in early trading while TerraForm Global was up 7 4 percent at 3 65 The two companies said on Monday they are also considering replacing SunEdison with a new sponsor by negotiating new sponsorship arrangements or by assuming SunEdison s existing sponsorship agreements Yieldcos are publicly traded subsidiaries that hold renewable energy assets including assets bought from their parents or sponsors Some of the strategic alternatives for TerraForm Global and TerraForm Power may require stockholder approval while some may require approval of the U S Bankruptcy Court for the Southern District of New York the companies said The yieldcos were not part of SunEdison s bankruptcy in April and the companies said at the time that they had sufficient liquidity to operate and that their assets were not available to satisfy the claims of SunEdison creditors However since the bankruptcy the two companies have faced a number of problems The companies said in April that SunEdison s bankruptcy will present challenges for financing agreements for certain projects SunEdison said in July it is looking to sell its interests in TerraForm Global which holds renewable energy assets primarily outside the United States TerraForm Power adopted a shareholders rights plan in the same month to prevent the sale of any significant number of Class A shares after Brookfield Asset Management Inc and hedge fund Appaloosa announced plans to jointly bid for SunEdison s stake in it SunEdison also said last month it plans to stop making interest payments on behalf of the yieldcos due to its Chapter 11 proceedings The two yieldcos had called SunEdison s decision invalid and said they would contest the decision Both the companies are also yet to file their 2015 annual earnings report and first quarter 2016 report after they had identified material weaknesses in their internal controls over financial reporting due to SunEdison TerraForm Global and TerraForm Power on Friday provided preliminary results for the second quarter ended June 30 TerraForm Global has engaged Centerview Partners Greentech Capital Advisors and AlixPartners as financial advisers Centerview Partners Morgan Stanley NYSE MS and AlixPartners are TerraForm Power s financial advisers
Both the companies have engaged Sullivan Cromwell LLP as their legal counsel |
MS | Wall St higher as oil recovers Fed rates seen on hold | Investing com U S stocks were higher early Monday as oil futures recovered The Federal Reserve is expected to stand pat on rates at FOMC meeting The DJI was up 0 50 at 10 45 ET while the S P 500 gained 0 48 The tech heavy Nasdaq composite put on 0 37 GM was up 3 16 ay 31 95 after Morgan Stanley NYSE MS upgrade to overweight price target 37 Tech Data was up 20 9 after agreeing to buy Avnet IT business for 2 6 bn |
JPM | Yo Yo Market Shows Growing Divide on How to Trade Tariff Threats | Bloomberg Looming trade war or empty saber rattling
How investors answer that question will likely set the tone on U S equity markets in coming weeks after a steady drumbeat of headlines from the Trump administration and China sent stocks on the wildest ride in years
The conundrum was evident early Tuesday when an overnight rally in S P 500 futures gave way to a mixed open on the cash market as the latest news tested Monday s narrative that any trade war was over before it even began
At fault were reports that the Trump administration was said to be considering cracking down on Chinese takeovers while Commerce Secretary Wilbur Ross indicated Trump is planning other action on trade Two days earlier Treasury Secretary Steven Mnuchin all but signaled an armistice had been reached the S P 500 went on to post its best advance since 2015 and Trump promised that all will be happy in the end
The rapid shift in sentiment is going to be the new normal at least for a while according to Krishna Memani chief investment officer at OppenheimerFunds Inc
The bottom line is the trade issue and uncertainty related to that is not going to fade in one day because all of a sudden we started thinking that we would reach some sort of a settlement with China he said This is going to be somewhat of a long process for things to settle down
The knee jerk reactions are overwrought according to JPMorgan Chase Co NYSE JPM s Dubravko Lakos Bujas who said last week s dizzying selloff following Trump s threat to impose tariffs on 50 billion of Chinese goods was an irrational response The fundamental impact will be smaller than the market assumed and the S P 500 should continue to climb another 13 percent toward his year end price target of 3 000 he said
Viktor Shvets head of Asian strategy at Macquarie sits somewhat in the middle He argues that a trade war isn t looming but the world is inching toward a more protectionist future that will make assessing investment strategies less straight forward
There is a huge difference between an inexorable slide towards de globalization and an outright trade war he wrote in a March 27 note to clients The former is inevitable the latter is unlikely at least for a while De globalization and constraints on capital flows are now not anomalies but are an integral part of the new investment climate It implies that it is no longer possible to assess what is safe
The uncertainty is part of the reason Barclays LON BARC is advising its clients to scale back their exposure to equity risk Although trade isn t the sole reason for the firm s new mild underweight position a confluence of events has it reassessing the conviction to hold stocks over bonds
It seems to us that the most important risks on both sides sharply higher inflation and much tighter monetary policy an economic recession an economically costly trade war or geopolitical event and costly regulatory push backs in systemically significant industries like tech all pose larger threats to equities than to bond markets analysts including the firm s head of macro research Ajay Rajadhyaksha wrote in a note Tuesday |
JPM | Traders Scratching Heads as Tech Turmoil Meets Month End | Bloomberg Turmoil meet month end Month end meet turmoil
The latest bout of risk off moves in global markets has arrived just as investors prepare to close out the month and quarter That leaves many with a conundrum just how much of the current tumult is down to shifting fundamentals and how much to portfolio rebalancing that usually accompanies the quarter end
The conclusion could be key to everything from the fate of the epic bull market in stocks and the chances of a bear market in bonds to the path charted by the greenback It s particularly important to short term money market rates which had been grinding higher as the U S raises benchmark borrowing costs and the era of easy money nears its end
Markets have been volatile on alternating headlines and systematic flows in an illiquid trading environment JPMorgan Chase Co NYSE JPM strategists including Marko Kolanovic wrote in note While a number of narratives have come out to attempt to explain the recent market weakness we believe these risks shouldn t derail the larger positive fundamental forces
Indeed fewer players had the chance to exert larger than normal downward pressure as the holiday shortened week sapped the market of its usual trading activity Over the past eight years when U S stocks dropped more than 1 percent volume on the U S tape has hit 8 6 billion trades on average Tuesday s session however fell about 1 billion short of that norm data compiled by Bloomberg show
Still U S 10 year Treasury yields which had been locked above 2 8 percent for almost two months finally fell below that threshold late in U S trading on Tuesday Eurodollars advanced by five to seven basis points while expectations for more Federal Reserve hikes faded
Month end buying in fixed income did squeeze shorts into the close according to Andrew Brenner the head of international fixed income at NatAlliance Securities in New York Yet that may not be the end of declines in bond yields
Considering everything from lower trending economic data to fading rate hike expectations it s likely 10 year yields get an acceleration through to 2 65 ish percent before getting to 3 percent he wrote in a Tuesday note
One sign that rebalancing is at work The yen was falling against the dollar on Wednesday belying its usual status as a safe haven in times of trouble For Kit Juckes chief currency strategist at Societe Generale PA SOGN AG it s a reason not to over read the current moves
These markets are all sound and fury he said in a tweet Simply looking for yesterday s sell off to continue today is as silly as expecting the Monday rally to continue yesterday
Beyond the usual quarter end portfolio tinkering however fundamental issues could still weigh on sentiment Though growth remains strong the peak in corporate earnings has passed and what remains in its place is an era of uneven global expansion political uncertainty and a shift in market regime according to analysts at Sanford C Bernstein Co
As this unusually synchronized phase ends expect volatility and correlation to rise wrote the firm s global quantitative strategy team headed by Inigo Fraser Jenkins This does not make us bearish but reduces the upside from here
Meanwhile in equities Tuesday s declines would appear to be about news rather than portfolio rebalancing The S P 500 Index was higher in the middle of the day before a steady stream of negative tech stories dragged some of the biggest companies lower Even the Nasdaq 100 Index started Tuesday in the green it ended the day with the biggest drop since February s rout
U S stock futures including contracts for the Nasdaq turned positive on Wednesday as tech fears began to ease while the yen slumped The yield on 10 year Treasuries fell however hovering around 2 77 percent
Updates with Wednesday moves in last paragraph |
JPM | JPMorgan Chase Says Lock In Tech Profits As U S China Spar Over Trade | Investing com JPMorgan Chase NYSE JPM is warning investors about tech stocks as the U S and China square off over trade In a note to clients the firm said that the adverse trade impact could be material and put tech stocks under pressure Trade tensions soared last week after the Trump administration said it would impose tariffs on some 60 billion of Chinese goods a move that prompted Beijing to say it may retaliate with tariffs on more than 100 U S products China has since said it is willing to hold talks to resolve the issues JPMorgan advises investors to lock in profits after years of outperformance adding tech valuations are no longer attractive Tech stocks have surged during the nine year bull run outperforming the broader market They were also the hardest hit in last week s Wall Street selloff triggered by the U S China trade row |
JPM | U S fourth quarter growth revised up to 2 9 percent consumer spending surges | By Lucia Mutikani WASHINGTON Reuters U S economic growth slowed less than previously estimated in the fourth quarter as the biggest gain in consumer spending in three years partially offset the drag from a jump in imports Gross domestic product expanded at a 2 9 percent annual rate in the final three months of 2017 instead of the previously reported 2 5 percent the Commerce Department said in its third estimate for the quarter on Wednesday That was a slight moderation from the third quarter s brisk 3 2 percent pace The upward revision to the fourth quarter growth estimate also reflected less inventory reduction than previously reported Economists polled by Reuters had expected that fourth quarter GDP growth would be revised up to a 2 7 percent rate There are signs that economic activity slowed further in the first quarter with retail sales falling in February for a third straight month Housing data have been generally weak and the trade deficit hit a more than nine year high in January The Atlanta Federal Reserve is currently forecasting the economy growing at a 1 8 percent rate in the January March period First quarter GDP growth tends to be weak because of a seasonal quirk Still analysts believe the economy will hit the Trump administration s 3 percent annual growth target this year driven by the 1 5 trillion tax cut package and an increase in government spending That could keep the door open to slightly more aggressive interest rate increases from the Federal Reserve this year The U S central bank raised rates last week and forecast at least two more hikes for 2018 The Fed also lifted its economic growth projections for this year and 2019 Tax cuts and stronger government spending will boost average GDP growth to 2 9 percent in 2018 said Gregory Daco chief U S economist at Oxford Economics in New York We forecast this environment will lead the Fed to raise interest rates four times this year There are worries the Trump administration s adoption of protectionist trade measures could sour business sentiment and hurt spending on capital goods President Donald Trump last week signed a memorandum targeting up to 60 billion in Chinese goods with tariffs over what his administration says is misappropriation of U S intellectual property Trump also has imposed tariffs on steel and aluminum imports The economy grew 2 3 percent in 2017 an acceleration from the 1 5 percent logged in 2016 U S financial markets were little moved by Wednesday s data Stocks on Wall Street were trading mostly higher while prices of U S Treasuries edged up The dollar DXY firmed against a basket of currencies pushing further away from a five week low in the prior session SLOW INCOME GROWTH The government also reported on Wednesday that after tax corporate profits increased at a 1 7 percent rate in the fourth quarter after rising at a 5 7 percent pace in the third quarter As a result an alternate measure of growth gross domestic income rose at a 0 9 percent rate in the October December period GDI expanded at a 2 4 percent rate in the third quarter The average of GDP and GDI also referred to as gross domestic output and considered a better measure of economic activity increased at a 1 9 percent rate in the fourth quarter That followed a 2 8 percent rate of growth in the prior period Growth in consumer spending which accounts for more than two thirds of U S economic activity was revised up to a 4 0 percent rate in the fourth quarter from the 3 8 percent pace reported last month That was the quickest pace since the fourth quarter of 2014 and followed a 2 2 percent rate of growth in the July September period Imports grew at an upwardly revised 14 1 percent pace instead of the previously reported 14 0 percent rate That was the fastest pace since the third quarter of 2010 and overshadowed a rise in exports driven by weakness in the dollar The resulting trade deficit sliced off 1 16 percentage points from GDP growth last quarter the most in a year after adding 0 36 percentage point in the third quarter Trade will likely remain a drag on GDP growth in the first quarter A separate report from the Commerce Department on Wednesday showed the goods trade deficit rose 0 1 percent in February as an increase in imports slightly outpaced a jump in exports The drag from trade looks less meaningful than we had previously anticipated likely coming in around a half percentage point said Daniel Silver an economist at JPMorgan NYSE JPM in New York While robust consumer spending curbed the accumulation of inventories the slowdown in inventory investment was not as steep as previously reported Inventory investment rose at a rate of 15 6 billion in the fourth quarter instead of the previously reported 8 0 billion pace Inventories subtracted 0 53 percentage point from GDP growth after adding 0 79 percentage point in the prior period Inventories could contribute to growth in the first quarter The Commerce Department reported on Wednesday that both wholesale and retail inventories increased solidly in February
There were modest downward revisions to business and residential construction spending growth estimates in the fourth quarter Growth in government spending was raised slightly |
C | Fortress Transportation plans 7M share offering | Fortress Transportation and Infrastructure Investors NYSE FTAI is planning a public offering of 7M common shares Joint book runners are Morgan Stanley NYSE MS Citigroup NYSE C and Barclays LON BARC Underwriters have gotten a 30 day greenshoe option to buy up to 1 05M additional common shares at the offering price which Bloomberg reports as being between 18 65 and 18 95 Shares are down 1 2 after hours quoting at 19 50 they fell 1 1 during the regular session today Now read |
C | Citi to raise pay for women and minorities in U S UK Germany | Reuters Citigroup Inc N C will increase compensation for women and minorities to bridge pay gaps in the United States the United Kingdom and Germany as part of its annual pay process this year the Wall Street bank said on Monday As part of the move Citi also becomes the first big U S bank to respond to a shareholder push to analyze and disclose its gender pay gap Citi said it had conducted a survey in the three countries where it found that women and minorities are paid only slightly less than their male and non minority counterparts On average Citi found women and minorities are paid 99 percent of what men and non minorities are paid respectively Compensation would be raised based on the pay gaps identified in the survey Citi spokeswoman Jennifer Lowney said Our continuing focus on pay equity furthers our goal of being the employer of choice for employees of diverse backgrounds Citi said in a statement on its website The company also said it would adjust compensation for other individuals where the analysis determined increases were necessary Citi along with other U S banks and credit card companies has been under investor pressure to disclose how much less it pays women than men Employers in the UK will be required to publish gender pay gaps by April Banks have been among the largest offenders with median pay gaps averaging 24 percent according to a joint statement by Citi and activist investor Arjuna Capital on Monday Arjuna asked Citi s shareholders last year to vote in favor of a proposal requiring the bank to address the gender pay gap But on Monday Arjuna withdrew that proposal saying that Citi s announcement represented a major shift for U S banks and credit card companies
Citigroup is stepping into a leadership role on the gender pay gap that we have not seen from any of its U S financial peers said Arjuna Capital Managing Partner Natasha Lamb |
C | Citigroup s Wild 2019 Of Hiring Continues With Focus On Asia Middle East | In its efforts to become a top three investment bank Citigroup NYSE C told Bloomberg it is planning to go on a hiring spree for senior banking associates with a particular focus on its healthcare and technology teams
We are focused on quality not quantity Manolo Falco co head of Citigroup s investment banking group There are lots of opportunities for us to expand in China parts of the Middle East and Latin America aside from our U S expansion Our focus is on bringing in high caliber talent who are complementary to our existing business model
But job listings data reveals that the bank is already on that hiring spree nearly having doubled hiring efforts since the year began
A deeper look at where the bank is hiring gives a sense of some validation of Falco s statements about hiring in China the Middle East and Latin America
Indeed the top cities in which Citi is hiring are in China and the Middle East with the cities of Shanghai and Chennai representing the largest number of openings for Citigroup Both cities along with Pune Manila and Singapore have more openings than even New York
The current openings at Citigroup are diverse in terms of location and desired skills as the word cloud above illustrates But make no mistake Citigroup is looking for technology professionals as it continues to integrate applications and algorithms into its customer relationship and risk management practices
In fact of the 10 most common job listings 5 are application development related
Citigroup s hiring spree and its international nature is good for a banking industry that is finding its way through technology and artificial intelligence And for the US banking sector seeing this level of growth planned is a good harbinger not just for banks but for the American economy as a whole financial services sector hiring is generally accepted as a forward looking indicator for markets
But finally it is particularly notable because it comes as Deutsche Bank DE DBKGn announced it would close its equities business and cut 18 000 jobs Citigroup s job trendline is emblematic of a banking industry that may have cut hundreds of thousands of jobs since the 2008 crisis but is adding new roles in automation and technology
About the Data
Thinknum tracks companies using information they post online jobs social and web traffic product sales and app ratings and creates data sets that measure factors like hiring revenue and foot traffic Data sets may not be fully comprehensive they only account for what is available on the web but they can be used to gauge performance factors like staffing and sales |
C | Citigroup C Q2 Earnings And Revenues Surpass Estimates | Citigroup C came out with quarterly earnings of 1 83 per share beating the Zacks Consensus Estimate of 1 78 per share This compares to earnings of 1 62 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 2 81 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 87 delivering a surprise of 5 06
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 76 billion for the quarter ended June 2019 surpassing the Zacks Consensus Estimate by 2 45 This compares to year ago revenues of 18 47 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 37 9 since the beginning of the year versus the S P 500 s gain of 20 2
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 unfavorable 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 4 Sell for the stock So the shares are expected to underperform 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 96 on 18 58 billion in revenues for the coming quarter and 7 50 on 73 78 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 14 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 | Jpmorgan Global Growth Income Long Term Growth | Jpmorgan Global Growth Income PLC LON JPGI previously JPMorgan NYSE JPM Overseas IT uses a disciplined and research intensive approach to identifying 50 90 best ideas from around the world with the aim of achieving capital appreciation in excess of the MSCI AC World index It has recently adopted a new distribution policy whereby at the start of each year it will announce a dividend equivalent to at least 4 of NAV to be paid in quarterly instalments The board and management see this level of distribution which may come from capital or income returns as sustainable and the predictability of the income stream as well as the higher yield should increase the attraction of the trust from investors who seek income as well as growth potentially leading to a narrowing in the discount
Investment strategy Disciplined and research driven
JPGI has a research driven investment process with manager Jeroen Huysinga drawing on the expertise of a 70 strong analyst team Using J P Morgan Asset Management s dividend discount model approach the analysts assess stocks long term earnings growth potential Companies are ranked into valuation quintiles for each sector and the initial universe of c 2 500 stocks is narrowed down to c 500 by focusing on stocks in the cheapest two quintiles that have at least 25 profit growth potential Catalysts for revaluation should be present within the next six to 18 months The final portfolio contains 50 90 stocks from around the world
To read the entire report Please click on the pdf File Below |
MS | Oil falls more than 2 percent but set for weekly gain on deal hopes | By Catherine Ngai NEW YORK Reuters Oil prices fell more than 2 percent on Friday paring the previous session s spike as the market discounted an unexpected slump in U S crude inventories as a storm glitch Still the market was on course to gain nearly 5 percent its first weekly gain in three weeks on hopes for a global deal on stabilizing crude output after Saudi Arabia the leading oil producer inside OPEC and Russia the biggest producer outside the group agreed on Monday to cooperate in oversupplied markets Brent crude LCOc1 was down 1 35 at 48 64 a barrel by 11 52 a m ET 1552 GMT after rising above 50 for the first time in two weeks on Thursday U S crude CLc1 was down 1 16 at 46 46 Oil prices shot up on Thursday after U S government data showed the biggest weekly drop in stockpiles last week since January 1999 as Gulf Coast imports slumped to the lowest on record Traders said imports fell as ships delayed offloading cargoes in Texas and Louisiana due to Tropical Storm Hermine We re pulling back after the big run up yesterday We re expecting supplies to rise next week as production is back up after the storm in the Gulf of Mexico said Phil Flynn an analyst at Price Futures Group in Chicago People are covering their shorts now because the market ran too far too fast Greenback denominated oil was also under pressure after the dollar index DXY rose on concerns over the health of the EU economy and on remarks by Federal Reserve policymakers helped boost investor expectations of a near term increase in U S interest rates USD While the market traded fairly thin on Friday analysts and traders continued to debate how effective a deal would be to limit supply when OPEC and non OPEC producers meet informally in Algeria on Sept 26 28 Algeria s oil minister on Friday underscored that tension saying that two separate agreements could be required between OPEC and non OPEC producers highlighting the difficulties of clinching such deals The oil options market indicates investors could well be holding out for a deal further down the line and are displaying a lot more optimism as demand and supply come closer to falling into balance The International Energy Agency has said it expects oil demand to finally exceed supply in the third quarter of 2016 meaning record global crude stockpiles should start falling But analysts from Morgan Stanley NYSE MS said in a note there were risks the market might not rebalance until later Once again we see an increasing probability for several unexpected bearish developments to come together which could push off rebalancing seasonally adjusted demand exceeding supply to late 2017 or even 2018 Morgan Stanley said
The market was also watching for Baker Hughes rig count data set to be released around 1 p m EST RIG U |
MS | Global Stocks sell off bolsters yen dollar supported by Fed rate hike talk | By Anirban Nag LONDON Reuters The safe haven yen strengthened on Monday as investors sold stocks and riskier assets including commodities but the dollar outperformed higher yielding currencies on fresh talk of an interest rate hike by the Federal Reserve in the near term The focus will be on Fed Governor Lael Brainard s speech later in the day The timing of a speech by the Fed s most noted dove just before the Fed s Open Market Committee blackout period is too much of a coincidence for many in the markets with some expecting her to send a signal that further tightening is coming perhaps as early as this month The dollar was 0 6 percent weaker at 102 10 yen But it gained against the euro and rose 0 5 percent against the higher yielding Australian dollar and was firmer across the board against riskier emerging market currencies Currency investors were keeping an eye on the sell off in global bonds with perceived limits to central bank policies having taken German and Japanese sovereign bond yields to multi month highs U S Treasury yields have tracked their global peers higher underpinning the dollar Rising bond yields have the potential to put risk assets under significant selling pressure said Hans Redeker head of currency strategy at Morgan Stanley NYSE MS A risk averse trading strategy suggesting lower emerging markets and commodities and a higher dollar seems warranted The dollar may rally 3 percent from here but we think it is too early to assume a long term rally to resume from here he added While the stock market s fall was the main driver behind the yen s rise the Japanese currency got a boost earlier in the Asian day from safe haven flows in reaction to Democratic candidate Hillary Clinton falling ill at a Sept 11 memorial ceremony and being diagnosed with pneumonia Markets are mostly expecting Clinton to win the presidency in November and have not factored in the implications both economic and for national security should Republican nominee Donald Trump prevail FED SPEAKERS A spate of Fed speakers kept hopes alive for a September rate hike despite some recently disappointing economic data including only a modest rise in U S nonfarm payrolls After Boston Federal Reserve President Eric Rosengrenspoke on Friday odds on a rate hike in September rose to a 30percent probability from 24 percent before his comments Analysts said Rosengren s upbeat comments have set the stage for something similar from Brainard despite subdued data Brainard s speech will be the last scheduled appearance from a Fed policymaker ahead of the pre meeting blackout period and many market participants see this as a last opportunity to for the Fed to fine tune expectations ahead of the meeting Credit Agricole PA CAGR analysts said in a note The Fed meets on Sept 20 21
Speculators increased their bets on the U S dollar for the first time in six weeks in the week ended Sept 6 according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday IMM FX |
MS | Seven Morgan Stanley brokers who managed 2 2 billion launch independent firm | NEW YORK Reuters A team of seven financial advisers that managed 2 2 billion at Morgan Stanley NYSE MS left the Wall Street brokerage to launch their own wealth management group one of the largest number of people to break away from a big firm in recent months
The Wichita Kansas based group which was known as the Kirk Bahm Group at Morgan Stanley decamped to open 6 Meridian on Friday The move was led by Margaret Dechant now 6 Meridian s chief executive officer She is joined by her former Morgan colleagues Tom Kirk Andrew Mies Bryan Green Steve Bahm Pam Smith Sarah Hampton and six support staff
Morgan Stanley spokeswoman Christine Jockle confirmed the group left the firm but declined to comment further
At Morgan the seven broker group was one of the firm s largest discretionary portfolio management teams They handled investments for high net worth corporate executives and entrepreneurs clients they will likely try to persuade to follow them to their new business
The group went independent in part to create and launch their own investment vehicles in addition to working with third party investment managers according to the firm s statement |
MS | Hong Kong regulator fines HSBC for regulatory breaches | HONG KONG Reuters Hong Kong s securities regulator said on Wednesday it fined and reprimanded HSBC L HSBA HK 0005 for regulatory breaches and internal control failings related to its position in the futures and options contract market
HSBC was fined HK 2 5 million 322 294 for failing to put in place adequate internal controls to monitor its positions in Hong Kong Futures Exchange s futures and options contracts to ensure compliance with the prescribed limit the regulator said
The breaches happened from May 26 to Aug 1 in 2014 said the Securities and Futures Commission in an e mailed statement
The SFC probe found there was a lack of adequate knowledge within HSBC regarding the bank s position limits and its state of compliance with the relevant regulatory requirements the statement said
It however added HSBC had since taken steps to improve its internal controls on monitoring of position limits and cooperated with the Hong Kong regulator in resolving its concerns
HSBC apologizes for the breaches identified and reported to the Securities and Futures Commission in 2014 the bank said in a statement
The Bank has cooperated fully with the SFC throughout this investigation and has taken actions to improve our internal controls regarding our compliance with the prescribed position limits in Hong Kong No clients were impacted by these breaches it said
SFC has been aggressively clamping down on operational and control failures in banks trading businesses over the past year
Last month it fined the local securities unit of Morgan Stanley N MS HK 18 5 million for internal control failures related to disclosure of short selling orders and comprehensive documentation of electronic trading services
1 7 7569 Hong Kong dollars |
JPM | Japan machinery makers with China exposure take big hit amid trade war fears | By Ayai Tomisawa TOKYO Reuters Shares of Japanese machinery makers with heavy exposure to China plummeted on Friday as China and the United States moved closer to a trade war that could damage global growth Shares in machinery makers which account for 20 percent of Japan s total exports had enjoyed strong gains in the past year on the back of brisk demand for investment in electronics and semiconductors in China Japan s biggest trading partner U S President Donald Trump signed a presidential memorandum on Thursday that will target up to 60 billion in Chinese goods with tariffs to kick in after a 30 day consultation period The tariffs would target sectors including technology Responding to rising demand for tech products in China Japan s capital goods makers and machinery makers had seen strong exports so they are likely to hit hard from now said Shogo Maekawa global market strategist at JPMorgan NYSE JPM Asset Management The Tokyo machinery sector index slumped 5 6 percent helping to pull the Nikkei share average N225 down 4 5 percent Machine tool makers were hammered with Makino Milling Machine T 6135 sliding 6 1 percent Okuma Corp T 6103 nose diving 7 4 percent and DMG Mori Co T 6141 stumbling 6 0 percent Since the beginning of the year Makino has fallen 15 percent while Okuma and DMG Mori have both sunk around 20 percent The Cabinet Office last week said it expects a 3 1 percent drop in Japan s exports the first decline in a year For the Japanese economy which relies heavily on external demand amid weak domestic demand this signals an end to strong exports said Toru Suehiro a senior market economist at Mizuho Securities Friday s big losers included semiconductor equipment makers Advantest T 6857 and Tokyo Electron 8035 T dropped 4 1 percent and 5 7 percent respectively High purity silicon maker Sumco Corp T 3436 also shed 5 0 percent and silicon products maker Shin Etsu Chemical Co 4063 tumbled 6 7 percent Construction equipment maker Komatsu T 6301 tumbled 6 3 percent This story corrects paragraph 8 timeframe to a year not five quarters |
JPM | Here Comes Saga The Establishment Cryptocurrency | Investing com It s called Saga and it s meant to be everything you usually don t find in a cryptocurrency No anonymity No wild price swings No initial coin offering Saga is the idea of the Swiss foundation of the same name whose advisory board includes such luminaries as Jacob Frenkel former governor of the Bank of Israel and current chairman of JPMorgan NYSE JPM International and Noble Prize winning economist Myron Scholes The idea is to create a complimentary global currency that addresses the concerns of the financial and political establishment Instead of an ICO the foundation will issue Sagas at an initial price of 0 Investors will be entitled to a rising number of the coins as the cryptocurrency grows In order to purchase the tokens investors will be subject to identity checks and must agree to anti money laundering requirements Saga s value will be tied to a variable reserve of conventional currencies held at commercial banks The foundation plans to launch Saga in the fourth quarter of 2018 |
JPM | U S Recession May Come Just in Time for Trump s Re Election Bid | Bloomberg Here s another reason to circle the 2020 election year on the calendar It may well be the year of the next U S recession
Hefty tax cuts stepped up government spending and robust global growth should help insulate the economy against a downturn over the next two years in spite of last week s stock market swoon That would allow the expansion that began in 2009 to become America s longest ever
But after that watch out economists warn Fading fiscal stimulus higher and rising interest rates and cresting world demand could leave the economy vulnerable to a contraction just in time for the presidential campaign
2020 is a real inflection point said Mark Zandi chief economist at Moody s Analytics Inc in West Chester Pennsylvania
It s not only President Donald Trump who needs to worry after claiming his policies of deregulation deficit widening fiscal measures and trade protectionism will lift the world s largest economy out of a decade of mediocre growth Investors should fret too A recession or more accurately the anticipation of one is often the trigger for bear markets in stocks
Economy watchers admit they don t have a great track record predicting downturns Forecasting a recession in 2020 is a mug s game given all the uncertainties involved said Krishna Guha vice chairman at Evercore ISI in Washington
But what seems clear is this The fiscal sugar rush that s ginning up growth in the short run could be setting the stage for a letdown later especially if the Federal Reserve feels compelled to take away the punch bowl before inflation and asset prices like stocks get too out of hand
I m very comfortable about this year and I feel pretty good about 2019 too said Joel Prakken chief U S economist at Macroeconomic Advisers by IHS Markit After that my anxiety level starts to rise
That doesn t preclude some sort of geopolitical shock or policy misstep ending the 105 month old expansion before then of course Trump s ratcheting up of trade tensions sent stocks tumbling last week on fears it would hit the global economy even though economists don t see the latest actions leading to a recession
You can be a totally healthy person and a block falls off a building and kills you said Allen Sinai president of Decision Economics Inc in New York
Solid Shape
Barring that though the economy looks to be in solid shape for now Sinai ticked off some of the pluses financially healthy households rising corporate profits and solid global growth Interest rates are still low and financial conditions easy Then Trump and Congress threw gasoline on top of all that with tax cuts and spending increases said Timothy Adams president of the Washington based Institute of International Finance
The trouble is that some of that fuel the 300 billion boost to government expenditures is slated to burn off after two years under the budget agreement passed by Congress That s led some economists to talk of a fiscal cliff in 2020 with falling outlays dragging down the economy
The betting though is that lawmakers will act to prevent that But even if they do they re unlikely to throw more accelerant on the economy So the budgetary boost to growth will shrink from a half percentage point this year to a quarter point next year to basically a wash in 2020 said Michael Feroli chief U S economist at JPMorgan Chase Co NYSE JPM in New York
In the meantime the super charged spending raises the risk of overheating the economy by pushing unemployment further below its long run sustainable level and leading at last to a pick up in wages and inflation And that in turn increases the chances that the Fed will overreact by jacking up interest rates tipping the U S into recession
Monetary policy makers already see themselves as actively attempting to slow the economy in 2020 based on projections released last week They expect to push the interbank federal funds rate to 3 4 percent at the end of 2020 from its current range of 1 5 to 1 75 percent and above the 2 9 percent level they consider neutral for the economy based on their median forecast
Modestly Restrictive
Fed Chairman Jerome Powell last week played down the significance of the 2020 rate projections saying officials don t have the ability to see that far into the future
But he acknowledged that they showed policy turning modestly restrictive
When policy becomes restrictive that s usually the time when a recession starts to appear on the horizon said Joachim Fels global economic adviser at Pacific Investment Management Co
Evercore s Guha raised the prospect of a train wreck in 2020 as Fed efforts to prevent overheating lead to rates that are too high for an economy suffering from the end of the fiscal sugar rush and an ebbing of global growth
To be sure the expansion could be extended if Trump s tax cuts spur more corporate investment and higher productivity or the tight jobs market entices more Americans off the sidelines and into the labor force Either of those developments would lower the danger of an inflation over boil
There s also scant sign at least so far of the sort of excesses that precede a recession Consumer and corporate borrowing has risen though not to levels deemed dangerous Banks are in good shape with plenty of capital and liquidity
One potential warning flag stock and other asset prices that remain elevated even after last week s selloff As Powell himself has noted it wasn t faster inflation that led to the last two recessions It was a bursting of asset bubbles
Spurred by rising equity and property prices household net worth as a percentage of disposable personal income has topped the highs seen before the past two economic downturns
Many folks are reluctant to time a recession call said Peter Hooper chief economist for Deutsche Bank DE DBKGn Securities in New York
That said he sees growth slowing significantly over the next three years from 2 9 percent in 2018 to 2 5 percent next year to 1 5 percent in 2020 which would be the slowest since 2012
It s going to take some real good policy making and some luck to avoid a recession in 2020 Zandi said |
JPM | Cartel Traders Urge U S Judge to Toss Forex Rigging Charges | Bloomberg A trio of former British currency traders pushed a U S judge to throw out charges they conspired to fix the foreign exchange market arguing that they can t be guilty of violating U S antitrust laws because the banks for which they worked weren t always in direct competition
Attorneys for former traders Richard Usher Chris Ashton and Rohan Ramchandani on Monday said the banks that employed them weren t always buyers or sellers in the foreign exchange spot market but were often counterparties making deals like automakers who sell excess inventory to each other
This is just banks contacting each other said Michael Kendall an attorney for Usher a former JPMorgan Chase Co NYSE JPM trader The charges against the three men are the culmination of a global investigation started in 2013 into currency market manipulation that saw seven banks pay about 10 billion in fines The trio became a focus of the probes over an electronic chat room known as the Cartel where they shared information Their trial is scheduled to start Oct 1
Assistant U S Attorney Carrie Ann Syme said the traders behavior was a classic case of rivals conspiring to fix a market rather than face competition Syme said that while competitors deal with each other in every market the relevant question is whether such deals count as a restraint of trade between parties that transact in a single market
Berman didn t rule immediately on the request to have the charges dismissed
The case is U S v Usher 17 cr 00019 U S District Court Southern District of New York Manhattan |
C | Pimco Citigroup Sound Complacency Alarm for Global Economy | Bloomberg Two of the biggest hitters in financial markets are sounding warnings against complacency in the global economic outlook
After the first week of 2018 saw strong data and multiple stock market records Citigroup Inc NYSE C and Pacific Investment Management Co told clients in the last few days that there are still reasons to be worried
While both agree there are some causes for optimism they cite geopolitical factors a removal of central bank stimulus and the risk of an inflation overshoot as possible catalysts for an end to the current economic expansion and market exuberance
Investors are showing few signs of unease with global stocks at record highs and volatility measures still subdued While riskier assets have recorded further gains in the first trading week of the year Mark Schofield at Citi warned the potential payoff from such trades is diminishing
It is too early to call an end to the bull market in risk assets but the risk reward profile is deteriorating as expected returns peak and volatility begins to rise Asset allocators must weigh up where we are in the business cycle and what comes next The Goldilocks environment cannot last forever a plateau in growth would be more bearish than a pick up in inflation
Meanwhile Joachim Fels at Pimco points to signs that U S jobs growth may be peaking as a a clear sign that we are reaching the later stages of the business cycle a fact that also increases the chance of an inflation overshoot
Still the biggest risk is
Monetary overkill by central banks that seem more eager than ever to escape from bloated balance sheets and the dreaded lower bound of interest rates Led by the Fed the tide of global monetary policy is turning and when the tide goes out we will find out who is swimming naked |
C | L Brands announces proposed 500M offering of senior notes due 2028 | L Brands NYSE LB is offering to sell 500M aggregate principal amount of unsecured senior notes due 2028 in a public offering underwritten by BofA Merrill Lynch Citigroup NYSE C HSBC J P Morgan and Wells Fargo NYSE WFC Securities as joint book running managers The 2028 Notes will be guaranteed by certain of the Company s subsidiaries The Company intends to use proceeds from the offering after the payment of fees and expenses together with cash on hand for the redemption of its outstanding 8 500 senior notes due 2019 Source Press ReleaseNow read |
C | Crown Castle launches debt offering to repay tower revenue notes | Crown Castle International NYSE CCI is commencing a public offering of senior notes due 2023 and senior notes due 2028 under a shelf registration Net proceeds will be used to repay tower revenue notes issued by some of its subsidiaries as well as part of the borrowing under its revolving credit facility Joint book runners are Citigroup NYSE C Credit Agricole PA CAGR RBC Capital Markets Societe Generale PA SOGN and TD Securities Now read |
C | Citigroup C Earnings Expected To Grow Should You Buy | Citigroup C is expected to deliver a year over year increase in earnings on higher revenues when it reports results for the quarter ended June 2019 This widely known consensus outlook gives a good sense of the company s earnings picture but how the actual results compare to these estimates is a powerful factor that could impact its near term stock price
The earnings report which is expected to be released on July 15 2019 might help the stock move higher if these key numbers are better than expectations On the other hand if they miss the stock may move lower
While management s discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations it s worth having a handicapping insight into the odds of a positive EPS surprise
Zacks Consensus Estimate
This U S bank is expected to post quarterly earnings of 1 82 per share in its upcoming report which represents a year over year change of 12 4
Revenues are expected to be 18 52 billion up 0 3 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 0 25 lower over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out This insight is at the core of our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for Citigroup
For Citigroup the Most Accurate Estimate is lower than the Zacks Consensus Estimate suggesting that analysts have recently become bearish on the company s earnings prospects This has resulted in an Earnings ESP of 4 79
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that Citigroup will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
While calculating estimates for a company s future earnings analysts often consider to what extent it has been able to match past consensus estimates So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that Citigroup would post earnings of 1 78 per share when it actually produced earnings of 1 87 delivering a surprise of 5 06
Over the last four quarters the company has beaten consensus EPS estimates four times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
Citigroup doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
JPM | 4 Mutual Funds To Play As Emerging Markets Look Up | Unlike the developed markets tepid growth outlook emerging markets are poised to drive global growth Concerns about major players including China s economic growth are on the backburner while low interest rate environment in the U S attracted fixed income investors to bet on emerging markets for higher yields read more Going by valuation alone emerging markets have become more appealing compared to developed markets This renewed strength makes investing in funds exposed to the region a prudent choice Growth Prospects RosyAfter a prolonged period of discouraging returns emerging markets seem to be recuperating Emerging markets are anticipated to expand 4 1 this year better than last year s 4 growth according to the International Monetary Fund In comparison the U S economy is expected to expand 2 2 this year Emerging markets have been reeling under heightened concerns surrounding China s economy and its currency however that is a thing of the past China doesn t seem to be doing as terribly as feared When it comes to economic growth in the second quarter the nation grew 6 7 while India posted an impressive 7 9 growth read more Moreover emerging markets traditionally have always grown at a faster pace compared to developed economies This is particularly true for countries recovering from a recession such as Brazil The country has also elected a president who is likely to improve the investment scenario Reflecting this the iShares MSCI Emerging Markets Index NYSE EEM soared 18 4 on a year to date basis way above the S P 500 s gain of 6 5 Record InflowsThanks to the low interest rate environment in the U S emerging markets have improved this summer as fixed income investors sought higher yields overseas According to the Institute of International Finance IIF net inflows to emerging market portfolios have exceeded 20 billion in the last three consecutive months The IIF estimated net inflows to emerging market portfolios at 21 6 billion in June 29 8 billion in July and 24 6 billion in August read more In fact the Fed refrained from raising rates this month which should bode well for emerging markets The Fed will look for further evidence of continued progression toward its objectives for hiking rates including inflation touching the desired level read more Valuation AttractiveEven though emerging markets are growing valuations still look cheap As per BlackRock EM equities are trading at a 24 discount to global developed markets on forward earnings multiples giving further room for run read more According to analysts at Source the multi asset research platform emerging market equities are currently trading at a cyclically adjusted price to equity ratio of 12 6 which is at the lower end of its 11 year range On the other hand the U S equity market trades at an average cyclically adjusted price to earnings ratios of 25 7 higher than the global average of 17 8 Buy 4 Emerging Markets Mutual Funds for GrowthNot only did emerging markets outperform the developed ones they also enjoyed record inflows as investors desperately seek high yields Yet their valuations aren t stretched as much as the developed world which surely calls for investing in emerging markets mutual funds We have chosen four such mutual funds that possess a Zacks Mutual Fund Rank 1 Strong Buy or 2 Buy have positive 3 year and 5 year annualized returns minimum initial investments within 5000 and carry low expense ratios The question here is why should investors consider mutual funds Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why investors should park their money in mutual funds read more Fidelity New Markets Income invests the majority of its assets in securities of issuers in emerging markets and other investments that are tied economically to such a region FNMIX s 3 year and 5 year annualized returns are 6 6 and 7 1 respectively Annual expense ratio of 0 84 is below the category average of 1 13 FNMIX has a Zacks Mutual Fund Rank 2 GMO Emerging Country Debt III invests directly and indirectly a large portion of its assets in debt investments tied economically to emerging countries GMCDX s 3 year and 5 year annualized returns are 7 9 and 9 8 respectively Annual expense ratio of 0 54 is lower than the category average of 1 13 GMCDX has a Zacks Mutual Fund Rank 2 JPMorgan NYSE JPM Emerging Markets Debt R5 invests a major portion of the value of its assets in emerging market debt investments JEMRX s 3 year and 5 year annualized returns are 5 1 and 5 9 respectively Annual expense ratio of 0 74 is below the category average of 1 13 JEMRX has a Zacks Mutual Fund Rank 2 T Rowe Price Emerging Markets Bond invests the majority of its assets in debt securities of emerging market governments or companies located in emerging market countries PREMX s 3 year and 5 year annualized returns are 6 2 and 6 4 respectively Annual expense ratio of 0 93 is lower than the category average of 1 13 PREMX has a Zacks Mutual Fund Rank 1 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 |
MS | Oil prices reverse early losses but glut worries cap gains | By Osamu Tsukimori TOKYO Reuters Crude prices reversed early losses on Monday as the dollar lost its momentum but persistent concerns over a global glut despite some signs producers may try to tackle weak oil futures kept a lid on gains Oil prices fell about 1 percent earlier in the day with the dollar holding firm as disappointing U S jobs growth data did little to change investors perception that the Federal Reserve is likely to raise interest rates in coming months USD By 0653 GMT London Brent crude for November delivery LCOc1 was up 7 cents at 46 90 a barrel recovering as the dollar slipped slightly versus a basket of currencies DXY Brent settled up 1 38 on Friday U S crude for October delivery CLc1 was unchanged at 44 44 a barrel Trading is likely to be limited on Monday because of the U S Labor Day holiday Brent rallied to above 50 a barrel in late August helped by growing talk of a coordinated production freeze but prices have since fallen as few believe OPEC will cut output Russian Energy Minister Alexander Novak has said that an oil production freeze would be one of the issues discussed by crude producers later this month in Algeria Even though there will be discussions in Algeria there s no strong feeling that anything will be done so the supply remains high Tony Nunan oil risk manager at Japan s Mitsubishi Corp in Tokyo said Saudi Arabia s position hasn t changed They are open to some kind of production freeze if Iran and other major producers join Nunan added Iran OPEC s third largest producer has said it would only cooperate in talks to freeze output if fellow exporters recognized its right to fully regain market share Even if successful an OPEC freeze would likely be a short term positive but a medium term negative for oil prices Morgan Stanley NYSE MS analysts wrote in a note If a short term freeze were implemented oil prices would rise on the news but it would do little to correct the near term oversupply
Iran is ready to raise its output to 4 million barrels per day in a couple of months depending on market demand a senior official from the National Iranian Oil Company said |
MS | Morgan Stanley lifts 12 month forecasts for S P 500 | Investing com Morgan Stanley NYSE MS Tuesday raised its targets for the S P 500 It lifted its 12 month targets by 100 points for both their base and bull case to 2 300 and 2 500 Morgan Stanley noted bond yields are extremely low and appear risky It also pointed to the favourable liquidity of U S stocks U S is also only major region with potentially positive EPS growth as a base case |
MS | Dollar weaker versus yen as U S data quash rate hike bets pound drops | By Anirban Nag LONDON Reuters The dollar fell to its lowest in more than a week against the yen on Wednesday as subdued U S data made an interest rate increase this month unlikely and drove investors to cut favorable bets in the greenback In Europe sterling fell for the first time in six days against the dollar hurt by weak factory data It was 0 5 percent lower at 1 3375 with the focus on Bank of England chief Mark Carney s testimony to lawmakers His appearance comes after a slew of robust data in the past week saw fears of a recession in the near term abate The dollar was down 0 45 percent at 101 50 yen after dipping as low as 101 20 earlier its lowest since Aug 26 when Federal Reserve chair Janet Yellen gave an upbeat speech on the economy that revived bets of a rate hike in the near term Since then the dollar has been struggling to make headway and tumbled more than 1 percent against the yen on Tuesday Since the Jackson Hole speech the implied probability of Fed s rate hike for its September meeting fell from 42 percent to 24 percent and the 2 year Treasury yield dipped by around 10 basis points said Petr Krpata currency strategist at ING Clearly this is a challenging environment for the dollar The Institute for Supply Management s non manufacturing purchasing managers index fell to 51 4 last month far short of economists expectations and the largest one month drop since November 2008 The Fed s labour market conditions index also fell in August slipping back into negative territory after a positive reading in July Nonetheless San Francisco Fed President John Williams said in prepared remarks late on Thursday that the economy was in good shape and that it makes sense to get back to a pace of gradual rate increases preferably sooner rather than later Williams did not directly cite Thursday s data Despite the upbeat rhetoric from the Fed Morgan Stanley NYSE MS analysts do not expect the Fed to hike at all this year as the U S economy is expected to slow down from here For the rates market to adjust accordingly it may require the Fed to change its language which has not happened yet as Williams illustrated overnight Morgan Stanley strategists said in note adding once the Fed adjusts its communication the dollar would fall against the euro and the yen at a faster pace Also helping the yen was the Sankei newspaper s report saying Bank of Japan policymakers were divided ahead of the central bank s Sept 20 21 meeting at which BOJ Governor Haruhiko Kuroda has said the board will conduct a comprehensive assessment of its massive stimulus programme Despite the dollar s weakness the euro underperformed hurt by data that showed German industrial production post its steepest fall in nearly two years in July The European Central Bank holds its next Governing Council meeting on Thursday where it is expected to keep policy steady
Meanwhile Sweden s crown EURSEK rose to a day s high against the euro of 9 50 crowns per euro amid relief that the Riksbank stood pat on rates as expected The crown had fallen to a one year low last week after a slew of weak economic data |
MS | MORGAN STANLEY 5 ways Bill Ackman could stir things up at Chipotle | Pershing Square NYSE SQ announced on Tuesday that it bought a 9 9 stake in Chipotle and is seeking talks with the company In a regulatory sometimes used to signal an activist investor stance the hedge fund led by Bill Ackman said it thought the company s shares were undervalued Ackman who has staged activist campaigns in various companies ranging from Herbalife NYSE HLF to JC Penney clearly wants to stir things up at the fast food chain Chipotle said it welcomed the investment In April Chipotle reported its as customers remained apprehensive of the restaurant after E coli and norovirus outbreaks were linked to it In a note on Wednesday Morgan Stanley NYSE MS equity analyst John Glass and his team wrote about five changes Pershing Square and Bill Ackman could make at the company Here they are He could expand the board and make sure that compensation is better in line with performance The hedge fund could hire people in marketing cost control and IT that have a different skill set and would improve on the work of the current management team Pershing could bring a focus on margins The analysts wrote that Chipotle has been slow to adapt its cost structure to the reality of lower average unit volumes or sales per restaurant unit Chipotle could fill or kill new concepts In July the company announced it is launching a burger chain called in Ohio this fall Ackman may limit new unit expansion Glass wrote We see no quick fix to what CMG really needs a revitalization of top line and activism s traditional tools for restaurants spin offs re franchising asset sales and cost cuts don t appear to offer short term opportunities leaving few obvious quick levers to pull Glass wrote But the presence of a large and vocal investor may provide management more incentive to hasten their turnaround efforts which appear to have stalled and could cause the shorts to cover at least for now The analysts maintained their Equal Weight rating on the stock with a price target of 405 per share Chipotle shares were up 5 to 414 05 in pre market trading extending a rally that started after news of Pershing Square s stake crossed on Tuesday |
JPM | JPMorgan says it s found the perfect trade for worried Facebook investors | Facebook NASDAQ FB s stock has taken a beating in recent days as a scandal involving a political research firm has unfolded JPMorgan NYSE JPM has a trade recommendation designed to address both scandal related uncertainty and Facebook s strong underlying fundamental situation As worries mount around s ongoing some are likely at a loss for what to do The company s stock has plummeted 9 in just two days its biggest such drop in more than two years and now investors find themselves at a crucial juncture Do they bet on further turmoil for the tech juggernaut or do they position for a rebound Lucky for them the equity derivatives team at has an options strategy that they think is the ideal way to play these uncertain conditions At the root of JPMorgan s recommendation is a bullish stance on the company s underlying fundamentals Facebook s business isn t currently being impacted by the scandal and first quarter engagement trends are actually improving according to the firm s internet analyst Doug Anmuth Not to mention Facebook s current valuation which after its recent rough patch looks the most attractive it s been in months So with all of this in mind it s probably best to just get directionally bullish on Facebook and call it a day right Not so fast says JPMorgan which argues the likelihood of a full rebound will remain low until investors get more clarity on Facebook s relationship with political research company and how much liability the tech giant has Still JPMorgan has been encouraged by Facebook s willingness to present in front of a judicial committee and remains confident the company s stock can recover from its recent beating just not for a little while That s why JPMorgan s big options recommendation on Facebook is scheduled to expire in May Not to mention that timing will allow the trade to capture the company s early May earnings report Without further ado here s the derivatives team s top Facebook trade buy Facebook 185 calls and simultaneously sell 150 puts both expiring in May The trade known as a risk reversal will be profitable if the stock sees a big recovery Clarity on the Cambridge issue and FB s willingness to self regulate are likely near term catalysts that may reduce investor fears stabilize the stock and position it for a recovery into Q1 results Shawn Quigg an equity derivatives strategist at JPMorgan wrote in a client note |
JPM | Facebook breaks decline turning up 2 4 as analysts recap | Shares in Facebook NASDAQ FB have arrested a steep decline turning up to a 2 4 gain now after days of fallout from a data leak scandal at Cambridge Analytica shaved billions off its value and analysts are taking a fresh look at valuation It s trading at more than double average daily volume already Options are trading heavily JPMorgan NYSE JPM advocates buying 150 put 185 call bull risk reversals as it sees a buy opportunity At the current depressed levels shares present a compelling risk reward opportunity Jefferies says since the data issues aren t likely to hit revenues From a sentiment perspective the stock faces some 15 more of downside potential vs 65 in upside it says reiterating a Buy rating and 230 price target Pivotal reiterated a Sell rating this morning noting signs of systemic mismanagement a concern the firm hadn t contemplated until recently analyst Brian Wieser says Investors now have to consider whether or not the company will conclude that it has grown in a manner that has proven to be untenable or whether it needs to significantly improve how it is managed h t Bloomberg Wieser has a price target of 152 vs current price of 172 16 Meanwhile Fox News reports a meeting between Facebook staff and aides to the House Judiciary Committee has been postponed because of weather to 9 30 a m Thursday Previously EU proposes tax on U S tech giants Mar 21 2018 Previously WhatsApp co founder Time to delete Facebook Mar 21 2018 Previously Report Zuckerberg Sandberg skip Facebook employee meeting Mar 20 2018 Previously Facebook and social peers keep sinking on spiraling regulatory news updated Mar 20 2018 Now read |
JPM | U S weekly jobless claims up slightly leading indicator rises | By Lucia Mutikani WASHINGTON Reuters The number of Americans filing for unemployment benefits rose just marginally last week suggesting strong job growth in March that should underpin consumer spending Other data on Thursday offered an upbeat assessment of the economy echoing a similar tone struck by the Federal Reserve on Wednesday when it raised interest rates and forecast at least two more hikes for 2018 A gauge of future economic activity increased for a fifth straight month in February and a measure of factory output climbed this month to a three year high Prices of single family homes surged in January The economy appears to be well entrenched in a virtuous cycle with seemingly little risk of being derailed in the near term said Jim Baird chief investment officer at Plante Moran Financial Advisors in Kalamazoo Michigan That bodes well for employment and household spending in the coming months Initial claims for state unemployment benefits increased 3 000 to a seasonally adjusted 229 000 for the week ended March 17 the Labor Department said on Thursday Claims dropped to 210 000 during the week ended Feb 24 which was the lowest level since December 1969 Economists polled by Reuters had forecast claims dipping to 225 000 in the latest week Claims have now been below the 300 000 threshold which is associated with a strong labor market for 159 straight weeks That is the longest such stretch since 1970 when the labor market was much smaller The labor market is considered to be near or at full employment The jobless rate is at a 17 year low of 4 1 percent not too far from the Fed s forecast of 3 8 percent by the end of this year The U S central bank said on Wednesday it expected that labor market conditions will remain strong U S financial markets were little moved by the data as plans by President Donald Trump to impose tariffs on Chinese imports intensified concerns about a global trade war Stocks on Wall Street were trading lower while prices for U S Treasuries rose The dollar was little changed against a basket of currencies TIGHT LABOR MARKET The four week moving average of initial claims viewed as a better measure of labor market trends as it irons out week to week volatility rose 2 250 to 223 750 last week The claims data covered the survey period for March non farm payrolls The four week average of claims fell 1 750 between the February and March survey periods suggesting another month of solid job gains The economy created 313 000 jobs in February The message of the unemployment claims data remains that companies are holding on to the labor they have and the labor market is tight said John Ryding chief economist at RDQ Economics in New York Economists are optimistic that tightening labor market conditions will start boosting wage growth in the second half of this year That should help to support consumer spending which slowed at the start of the year Consumer spending could also get a lift from rising home prices which are helping to boost household wealth In a separate report on Thursday the Federal Housing Finance Agency FHFA said its house price index jumped a seasonally adjusted 0 8 percent in January after increasing 0 4 percent in December Home prices surged 7 3 percent in the 12 months through January House price inflation is being fueled by a chronic shortage of properties available for sale The FHFA s index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae or Freddie Mac While this may overstate the underlying trend given that it is stronger than several other related measures most measures of house prices show solid rates of appreciation continuing recently despite weakening in a variety of home sales measures over the past several months said Daniel Silver an economist at JPMorgan NYSE JPM in New York Though sluggish consumer spending could hold back economic growth in the first quarter the outlook is bright In another report the Conference Board said its Leading Economic Index increased 0 6 percent in February after advancing 0 8 percent in January
The economy s improved prospects were also underscored by a fourth report from data firm Markit showing its manufacturing sector flash PMI increased to a reading of 55 7 in March the highest level since March 2015 from 55 3 in February The survey showed an increase in factory employment this month |
JPM | Stock market principles needed in crypto world SEC official | By John McCrank NEW YORK Reuters The cryptocurrency trading marketplace could be improved by applying some of the principles from the stock market such as best execution and surveillance a senior U S Securities and Exchange Commission official said on Thursday While the cryptocurrency market is still evolving it resembles a sort of Wild West said Brett Redfearn who heads SEC s trading and markets division and the regulator has a number of concerns it would like to see addressed Key among the SEC s concerns are fraud market manipulation theft cybersecurity terrorist financing and money laundering he said at a financial technology conference in New York held by the Depository Trust Clearing Corporation SEC Chairman Jay Clayton has said he generally considers initial coin offerings or ICOs to be securities offerings subject to certain regulatory requirements There are some 1 500 cryptocurrencies trading currently and the SEC has repeatedly warned investors to exercise caution when considering getting involved in new ICOs especially as many of the online crypto trading platforms resemble highly regulated stock exchanges There are no registered exchanges there are no registered ATSs Alternative Trading Venues trading any of these products said Redfearn a former JPMorgan Chase NYSE JPM executive That is a very big concern for us he said stressing that while the SEC does not want to stifle innovation it has a duty to protect investors Redfearn also said the SEC s enforcement division is very busy looking into the slew of recent ICOs The cryptocurrency market resembles the equities market in the 1990s when electronic trading venues known as ECNs electronic trading networks began popping up with prices that were not always aligned with each other he said But rules evolved and the equities market has since become much more efficient I m not sure all of the rules would translate over but there are certainly principles that exist in that space that we have to then apply in some respect to what s happening with crypto asset trading Redfearn said of the equities market
Those principles include defining best execution and protecting against fraud market manipulation and theft he said |
JPM | JPMorgan mulls spin off of blockchain project Quorum sources | By Anna Irrera NEW YORK Reuters JPMorgan Chase Co N JPM is considering a spin off of its marquee blockchain project Quorum believing independence from the bank could increase the platform s appeal sources familiar with the matter said on Thursday Blockchain first emerged as the software underpinning cryptocurrencies but is being adapted to build a variety of business applications Quorum is already open source meaning its code is free and may be modified and redistributed Discussions were still in the early days one of the sources said The plans were first reported by the Financial Times We continue to believe distributed ledger technology will play a transformative role in business which is why we are actively building multiple blockchain solutions the bank said in a statement We re not going to comment on speculation but Quorum has become an extremely successful enterprise platform even beyond financial services and we re excited about its potential Quorum is among a swathe of initiatives by large banks on blockchain Banks have been spending millions of dollars on the technology in the hopes that it can help them slash costs and simplify some of their processes ranging from international payments to the settlement of securities trades Yet the technology is still in its early days and projects have faced some growing pains JPMorgan was among the banks that left blockchain consortium R3 last year while a partnership between Belgium based settlement provider Euroclear and U S startup Paxos to develop a blockchain based service for the London gold market was dissolved in July It remains unclear what the spin off plans would mean for the JPMorgan employees that have been working on Quorum and whether they would join the new entity one of the sources said Product development for Quorum has been led by Amber Baldet an executive director of the bank s Blockchain Center of Excellence Baldet could decide leave the firm and start a new venture join the spun off entity or stay at the bank the source said Baldet did not immediately respond to a request for comment The bank had built Quorum internally using the Ethereum network one of the most popular public blockchains The initiative was seen as a noteworthy endorsement to Ethereum the blockchain behind cryptocurrency ether
JPMorgan announced in October that it would be using Quorum to build an interbank payments platform alongside Australia and New Zealand Banking Group Ltd AX ANZ and the Royal Bank of Canada TO RY |
C | Exclusive Apollo nears deal for Fortress stake in OneMain sources | By Greg Roumeliotis Reuters Private equity firm Apollo Global Management LLC N APO is nearing a deal to acquire investment firm Fortress Investment Group LLC s stake in U S subprime lender OneMain Holdings Inc N OMF people familiar with the matter said on Wednesday The deal would come after OneMain abandoned a process to sell itself outright last year because the offers it received failed to meet its valuation expectations It allows Fortress which completed its 3 3 billion sale to SoftBank Group Corp T 9984 last week to cash out on its investment in OneMain The transaction is expected to value Fortress stake of around 44 percent in OneMain at between 1 5 billion and 2 billion and could be announced as early as Thursday assuming talks do not fall apart at the last minute the sources said asking not to be identified because the negotiations are confidential Apollo declined to comment while OneMain and Fortress did not respond to requests for comment OneMain which has provided loans and other credit products to more than 10 million customers in 44 states according to its website was Citigroup Inc s N C former consumer lending arm CitiFinancial until it was renamed in 2011 It specializes in loans to meet unexpected expenses such as medical bills or car repairs and to buy small ticket items OneMain which has a market capitalization of 3 6 billion was created in its current form in 2015 when Fortress acquired OneMain from Citigroup for 4 25 billion in cash and merged it with one of its existing portfolio companies Springleaf Holdings Inc The deal with Apollo would mark the latest exit by Fortress from a portfolio company Among Fortress recent divestments are Florida East Coast Railway and bond fund manager Logan Circle Partners
For Apollo the deal represents a way to own a big chunk of OneMain without engaging in a full leveraged buyout given that the company is already saddled with more than 14 billion in long term debt |
C | Mexican Peso Seen Being Reinvented as World Beating Currency | Bloomberg For all the concern that the U S might dump Nafta or that Mexico s next president could upend economic policy the peso is forecast to be the world s best performing major currency in the first half of 2018
True the expected gain is due in no small part to how much it sank at the end of last year The peso tumbled to a nine month low against the dollar on Dec 26 capping a four month decline fueled by worries Donald Trump will pull out of the trade agreement with Mexico and Canada and that Andres Manuel Lopez Obrador could win election in July The peso lost a third of its value during the past four years when it was the worst performer among the world s most traded currencies
Yet the forecast also reflects Mexico s growth potential stronger fiscal position and narrowing current account deficit particularly as the year wears on said Ernesto Revilla who heads Latin America economics at Citigroup Inc NYSE C His bank expects the peso to rally more than 5 percent during the next six months to a year and to reach 17 per dollar 14 percent stronger beyond a year or in the long term
There definitely has been some overshooting not explained by fundamentals but explained by overall emerging market behavior and some concerns of Nafta and the election said Revilla a former chief economist at Mexico s Finance Ministry The Mexican peso still looks cheap relative to its long term value
The peso rose 0 4 percent at 11 20 A M in New York extending a four day winning streak While the top forecasters tracked by Bloomberg universally expect the peso to strengthen some investors may hesitate to buy pesos until it s clear that risks have dissipated Alejo Czerwonko an analyst at UBS AG expects the peso to appreciate modestly to 19 per dollar by the end of June and close at that level at the year s end With the peso s high carry the interest paid to investors holding the currency that s a solid bet but he says he still wouldn t recommend the currency
There are more interesting opportunities out there in the emerging world Czerwonko said The market is currently partially but not fully pricing in a failure of Nafta or a Lopez Obrador presidency which means that if either one were to materialize we would expect a weaker trend for the peso
Analysts on average expect the peso to strengthen 1 9 percent in the first half of the year according to the median forecast of analysts surveyed by Bloomberg While that may not seem like much it s enough to be the most among 16 major currencies tracked by Bloomberg Thirteen are forecast to weaken
Citigroup s analysis includes the real effective exchange rate the purchasing power adjusted for inflation tracked by the Bank for International Settlements Revilla said Mexico s currency is among the most undervalued by that measure when compared with its long term average
The bank s peso forecast assumes macroeconomic stability and continued implementation of economic reforms Revilla said If the presidential winner takes a different policy path Citigroup could reconsider its projections
Updates to add peso s performance today in fifth paragraph |
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