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JPM | JPMorgan pulls ads from NBC News | Only two shows in and controversy has already hit Sunday Night with Megyn Kelly JPMorgan NYSE JPM has requested its ads be pulled from NBC News NASDAQ CMCSA programming until after her interview with Alex Jones airs WSJ reports I m repulsed that megynkelly would give a second of airtime to someone who says Sandy Hook and Aurora are hoaxes said the bank s chief marketing officer Now read |
JPM | Axovant Sciences misses by 0 02 | Axovant Sciences NYSE AXON Q4 EPS of 0 53 misses by 0 02 Press ReleaseNow read |
JPM | Brazil plea deals could affect banks loan books JPMorgan | By Guillermo Parra Bernal
SAO PAULO Reuters Brazilian banks might be unable to lower loan loss provisions as much as expected this year because of a potential wave of plea deals involving corporate borrowers as well as mounting political turmoil JPMorgan NYSE JPM Securities said on Tuesday
Analyst Natalia Corfield wrote in a client note that a still sluggish economy and weaker prospects for a proposed pension reform could delay efforts to bolster loan book quality Lenders have wrestled with record provisions since Brazil slumped into a deep recession almost three years ago
Late last month meatpacker JBS SA s SA JBSS3 controlling shareholder J F Investimentos agreed to pay a record setting 10 3 billion real 3 2 billion fine for its role in a corruption scandal that seemed to implicate Brazilian President Michel Temer
Shares of Brazil s largest banks have dropped an average of 13 percent since mid May when allegations first surfaced that Temer had endorsed the payment of hush money to silence a potential witness and took bribes from JBS
Temer has denied the allegations
Lenders could suffer from their exposure to other companies facing hefty fines as part of a fresh wave of expected plea bargains and leniency deals some investors fear
Despite the mitigating factors we maintain our view that expected asset quality improvements have become less likely given the recent political crisis New York based Corfield said in the note
Banking sector officials by contrast have argued that the events leading to the J F plea deal are unlikely to pose any serious risk for the nation s banking system
Some Brazilian banks have held preliminary consultations with prosecutors over how plea deals work the online service of Valor Econ mico newspaper reported on Tuesday
The report did not disclose the names of the banks due to concerns about how investors would react to the news ValorPRO said citing a person familiar with the matter A spokeswoman for the prosecutor general s office declined to comment
A presidential decree announced last week would allow Brazil s central bank to strike plea bargain agreements with lenders that admit breaching the law in exchange for softer fines or more lenient prison terms for their executives
An index grouping all financial shares IFNC in Sao Paulo s B3 exchange rose 0 4 percent in midafternoon Tuesday trading reversing earlier losses
PROTEIN SECTOR
Preferred shares of Banco Bradesco SA SA BBDC4 the country s No 3 listed bank shed 0 3 percent while those of Ita Unibanco Holding SA SA ITUB4 the country s biggest lender by assets added 0 9 percent
State controlled Banco do Brasil SA SA BBAS3 rose 1 1 percent while units of Banco Santander MC SAN Brasil SA SA SANB11 dropped 0 1 percent
The government may have to amend parts of the decree to include prosecutors in the structuring of plea deals along with the central bank and the securities industry watchdog Valor said
According to Corfield one aspect of concern is the banking industry s exposure to meatpackers including JBS
Overall JBS and J F appear to pose the largest risk to Brazil s banking system the note said Together they account for about two thirds of estimated bank loans to the protein sector
JPMorgan estimates J F s total bank debt at 33 6 billion reais of which 21 1 billion reais mature within the next 12 months Most of that comes from JBS the world s largest meatpacker the note said
Despite this sizeable amount an important mitigating factor is the composition of the JBS s short term debt which is largely comprised of trade finance lines Corfield wrote in the note
J F did not comment |
JPM | Credit card losses set to climb industrywide JPMorgan s Smith | By Dan Freed Reuters U S credit card losses are likely to rise at JPMorgan Chase Co N JPM and across the industry Gordon Smith head of the bank s consumer businesses said at a conference on Tuesday Smith said the largest U S bank is being surgical in determining where to tighten credit standards but he added that lenders industrywide ought to be leaning toward stricter credit card lending standards rather than looser ones JPMorgan s earnings have shown rising sales volumes as well as weakening credit trends in its credit card business consistent with other lenders A recent investor presentation by the bank said Chase Card has only modest exposure to credit card borrowers with FICO scores lower than 660 A Fitch Ratings report last month said credit card loss rates which have already been climbing are likely to rise for several more quarters as loan growth has increased driven partly by lower credit standards Smith said Tuesday rising losses should be no cause for alarm but are to be expected after an extended period of historically low loss rates
I ve called this now actually for almost two years so that nobody would be surprised he said However he added people still seem to be surprised that we are at the end of that cycle |
C | For Israeli bank American makeover means St Patrick s Day party | By Dan Freed NEW YORK Reuters Bank Leumi Le Israel BM has had its U S headquarters on Fifth Avenue overlooking the St Patrick s Day Parade for more than 40 years but this was the first year the U S unit of Israel s second largest lender had a party to celebrate Hosting festivities for a Catholic Saint is just one part of this Israeli lender s efforts at an American makeover to attract fresh U S clientele And on March 17 in Manhattan that means a nod to the Irish The first Chief Rabbi of Israel after independence was Irish said Chaim Fromowitz head of private banking at Bank Leumi USA referring to Yitzhak HaLevi Herzog The idea for Wednesday s celebration came from Shawn McGowen 37 a former Wells Fargo NYSE WFC Co and Citigroup Inc NYSE C banker who joined Bank Leumi in September as head of commercial banking McGowen said he was unsure how the bank s leadership would react to his unorthodox proposal President and CEO Avner Mendelson responded enthusiastically He didn t hesitate said McGowen He said it was a great idea Since Mendelson took over as CEO of Bank Leumi USA two and a half years ago he has worked to make it more American part of the parent company s U S centered growth strategy Leumi has more than 100 billion in assets in Israel and more than 6 billion in the U S Mendelson 41 has hired several young executives many of them not Jewish who have stronger ties to the United States than to Israel I thought What will this be like Will I go walk into a meeting and half the people will be speaking Hebrew said Peter Dawson a recently hired Irish American executive who has worked at U S units of Banco Santander MC SAN SA and HSBC Holdings LON HSBA PLC But it hasn t been like that at all Minimizing the use of Hebrew in the office has been part of the makeover under Mendelson said commercial banking relationship manager Fran Davis who has spent 28 years at Leumi The bank is considering moving to a floor without soundproofed windows for next year s St Paddy s Day party so revelers can better hear the marching band music |
C | Struggling U S oil and gas companies eye rare financing deals | By Jessica DiNapoli NEW YORK Reuters Some cash strapped U S oil and gas companies are considering creating an unusual layer of debt as a way of surviving the rout in oil and gas prices according to restructuring advisors Chesapeake Energy Corp N CHK for example is considering the strategy to swap some of its roughly 9 billion debt Severely distressed companies may issue so called 1 5 lien debt sandwiched between the first and second liens to raise new capital Investors with a stomach for risk would get a better yield than for the top debt and have a stronger claim than junior creditors if the company filed for bankruptcy Companies could also create a new middle layer of debt to swap with existing bondholders offering them the option of giving up principal to jump the queue for repayment in the event of a bankruptcy But 1 5 liens which often have longer maturities that help companies buy time to pay existing bondholders in full are a sign of desperation that would anger junior creditors restructuring experts said Only six companies have done 1 5 lien deals over the past several years according to Moody s Investors Service The swap would make sense for Chesapeake because its bonds maturing in 2017 and 2018 are trading at depressed levels analysts said This happens when the market kind of constricts said John Rogers senior vice president at Moody s You see it in deals where the company is overlevered and has a maturity coming up However some credit rating agencies view the exchange of new 1 5 lien secured notes for existing senior unsecured and 2nd lien secured notes as a distressed exchange and a limited default depending on their definition of default DIFFICULT STRATEGY About 40 companies including Samson Resources Corp which tried and failed to execute mid layer lien deals sought court protection from creditors last year Roughly one third are at a high risk of filing bankruptcy this year according to consulting firm Deloitte Chesapeake has said it has no plans to file for bankruptcy and declined to comment Chesapeake offered to swap new second liens for unsecured notes last year but few holders of its bonds maturing in 2017 and 2018 participated Chesapeake executives said on a February conference call that they were looking to reduce or remove those maturities Citigroup Inc N C said in an analyst note last week that Chesapeake may target those holders in a 1 5 lien exchange that would buy the company time until oil and gas prices recover Senior debtholders usually banks which have extended revolving credit lines to oil and gas companies often balk at 1 5 lien debt which could reduce their control over the collateral bankers and attorneys familiar with the deals said Second lien lenders may protest because the new layer of debt would come above theirs Companies considering such deals may have an uphill battle trying to convince investors that the new liens would be worth anything since oil and natural gas prices have fallen so far in the past year U S benchmark West Texas Intermediate crude oil fell 77 percent in the past 12 months before seeing some recovery in recent weeks Samson Resources Corp which is owned by private equity firm KKR N KKR proposed to raise new money by issuing 1 25 lien debt and swapping out old debt into a 1 5 lien layer before it filed for bankruptcy in September The deal was never finalized because it would have left Samson with too much debt and the continued collapse of gas prices made it impossible KKR did not immediately return requests for comment and a spokesperson for Samson declined to comment The latest announced 1 5 lien swap was completed by iron ore miner Cliffs Natural Resources Inc N CLF in February The deal cut about 300 million of debt by allowing noteholders to swap into new 1 5 lien debt for a reduction on their principal Many recent 1 5 lien deals have been done by companies in the portfolio of private equity firm Apollo Global Management N APO said John Rogers senior vice president at Moody s Large sophisticated private equity firms can negotiate more room for debt in credit documents with banks he said Apollo took Realogy Holdings Corp K RLGY a franchisor of real estate brokerages private for about 6 65 billion in 2007 right before the housing bust Until then the company had never turned a profit but in 2012 it was able to raise 1 5 lien financing and complete an initial public offering Apollo declined to comment |
C | Driving In The Slow Lane | Following the latest reports on housing starts down 6 8 m m during March and manufacturing output down 0 4 last month the Atlanta Fed s GDPNow model showed an increase of just 0 5 saar in Q1 s real GDP As I noted recently the auto industry is a major soft patch in the economy Sure enough auto output fell 3 6 during March Auto assemblies are down 7 3 over the past five months to 11 1 million units saar from last year s peak of 12 0mu The weather can be blamed for the drop in housing starts but not for the weakness in auto sales and production
There are other soft patches in the economy For example the ATA Truck Tonnage Index dipped 1 0 m m in March and is up by only 0 7 y y In other words it has stalled at a record high over the past year Sales of medium weight and heavy trucks dropped 8 0 m m in March and 19 0 y y
So it comes as no surprise that the Citigroup NYSE C Economic Surprise Index CESI has plunged from a recent high of 57 9 on March 15 to 6 6 on Tuesday These developments are likely to put pressure on the Fed to hold off on another rate hike for now and on the Trump administration to move forward with its fiscal stimulus agenda Treasury Security Steve Mnuchin said on Monday that tax reform might not happen until after the summer I think the weakness in the economy will prompt a faster response by Washington
By the way there is a reasonably good fit between the CESI and the 13 week change in the US Treasury 10 year bond yield The actual yield has dropped from a recent peak of 2 62 on March 13 to 2 17 yesterday It seems to be heading toward the bottom end of my predicted trading range of 2 00 2 50 for the first half of this year |
C | Taxation Of Municipal Bonds | Is there a threat to the municipal bond interest deduction
The new administration s focus on tax reform especially as many of us pay our federal and state taxes this week draws our attention to the taxation of interest on municipal bonds I recently heard a presentation by Steve Benjamin mayor of Columbia South Carolina and executive director of the board of Municipal Bonds for America MBFA a group that comprises state and local government officials municipal industry groups such as the American Public Power Association and Bond Dealers of America The mission of the MBFA is to educate members of Congress about the benefits of municipal bonds The organization along with the National Association of Counties NACo and many others have sent letters to Congress extolling the virtues of municipal bonds and urging Congress not to tax municipal bond interest or eliminate the federal deduction for state and local taxes Individuals and organizations can learn more about the MBFA and even sign the letter to Congress at
The letters specifically remind current members that Congress officially recognized the importance of the federal state partnership on October 3 1913 when the tax system was codified The exemption of interest on municipal bonds was one of 12 personal deductions and exclusions considered essential to the functioning of the nation The principle of reciprocal immunity by which the federal government does not tax states and local governments and vice versa was considered imperative A description of the original tax code is on the MBFA website and the NACo site has a copy of the 1862 Emergency Federal Income Tax a tax that incidentally was later determined to be unconstitutional which included deductions for state and local taxes
Tax exempt municipal bonds play an important role in our building of infrastructure we see the results every day in roads and bridges airports mass transit systems and affordable housing hospitals and universities Tax exemption results in lower interest expense for issuers thus reducing property or other taxes and fees for residents Private activity bonds not to be confused with the internationally utilized public private partnership model are a type of municipal bond that helps fund infrastructure Some of the revenue for bond repayment derives from the activities of private entities such as an airport s collecting gate fees from airlines or accrues when a private developer builds a project for example a city hall and leases it back to the municipality Private activity bonds PABs are currently subject to the alternative minimum tax AMT If the AMT were abolished it would result in lower costs and wider market access for PAB funded projects as well Federal taxation of interest on municipal bonds would drive up funding costs and make projects more expensive
To provide offsets to the proposed reduction in personal and corporate tax rates some lobbyists have suggested that everything is on the table including taxation of municipal bonds In Citibank s March 6 2017 Municipal Weekly the bank concludes that the potential revenue over 10 years from the taxation of municipal bonds would not be significant and that the political fallout from such a drastic step could be extremely negative for incumbent members of Congress A retroactive tax on outstanding municipals could cause wealth reduction of 450 500 billion as the value of the municipal bonds would erode This tax option is considered unlikely because it would be a breach of trust since the buyer was sold the bond with tax exemption and with clean legal opinions issued under then current law The option would generate 272 billion over 10 years while the option of taxing only new bonds would yield 196 billion over 10 years By comparison the House GOP tax plan estimates a revenue loss of 2 2 trillion over 10 years from the reduction in individual income and payroll taxes
Tax exemption of municipal bond interest is often seen as a boon to the wealthy and according to 2014 tax data roughly 40 of municipal interest is received by individuals with adjusted gross incomes above 200 000 while another 15 goes to those with AGI between 100 000 and 200 000 However Citi NYSE C also points out that 62 of municipal interest is received by those over 65 while another 23 is received by those aged 55 to 65
Some say municipal bonds are inefficient and have prevented the development of a healthy private system for funding our infrastructure We pause for a moment here to recognize that many P3 PPP public private partnerships deals in Europe involve the government s guaranteeing the private operator a return on investment e g a minimum level of toll revenue for a toll road project With the P3 model there can be efficiencies gained due to experience and reduced bureaucracy and certain risks become the responsibility of the operator Our infrastructure needs are so great that there is room for many financing schemes Municipal bonds have financed over 1 65 trillion of infrastructure in the last 10 years however the 2017 Report Card by the American Society of Civil Engineers once again assigned our overall infrastructure a grade of D the same as it did in 2013 the last time the infrastructure survey was conducted There was modest improvement in seven infrastructure sectors including schools rail inland waterways wastewater hazardous waste ports and levees while there were lower grades in parks and recreation solid waste and transit
Simplification of our tax code and reductions in tax rates was widely anticipated by the market and had contributed to expectations of improved economic conditions Now however the market assumes a slower realization of gains due to delays in the implementation of tax reform The fear that municipal bond interest will be taxed has been one factor contributing to the muni Treasury ratio s being higher than average Additionally Treasury bonds may have lower yields than usual due to their attractiveness in a world of low to negative interest rates They may also be benefiting from a flight to quality
The muni Treasury ratio historical average is 76 in line with taxable equivalent yield Since the end of the 2008 financial crisis the muni Treasury ratio has remained above its historical average and has at times spiked such as in 2011 when Meredith Whitney issued comments regarding municipal credit quality during the taper tantrum in 2013 and again as municipal prices were hurt post the election of President Trump
The chart below shows the ratio of the MMA 10 year municipal index to the 10 year Treasury yield from 2001 through mid April 2017
At Cumberland we have taken advantage of this disruption in the markets to buy bonds when municipal bond yields exceed their normal relationship to Treasuries a strategy that has resulted in out performance when the ratios return to more normal levels For example as the reality of the difficulty of implementing President Trump s proposed changes to healthcare and taxation has become clear the muni Treasury ratio has shifted back to a more normal level
We do not think municipal bonds will lose their tax exempt status Further if the maximum tax rate is lowered to 33 municipal bonds will still be attractive since the average tax rate for municipal buyers is 25 If certain deductions are not allowed at the personal and corporate levels municipal bonds will be one of the few tax breaks that remain However it is clear that the exemption is in play and that there are folks fighting hard for its continuation
by |
JPM | How Investors Should Think About Europe | The right way to approach macro investment themes depends upon your time frame For traders you need to find the rhythm of the current market What do the active participants expect When do they expect it The problem for investors is much different The investor should hope for wild gyrations and mispricing of asset classes That is the source of opportunity As we prepare to turn the page on the calendar everyone will focus on what is important for 2012 Everyone will write about Europe since nothing else has mattered for several months With that in mind I want to do a more comprehensive analysis I have frequently written about the European debt crisis but more often stating my current posture and conclusions Since my chosen airline does not have Internet access I have the joy of isolation during flying time This sensory deprivation is valuable and can also be achieved by turning everything off The key conclusion I reached is that for many weeks documented in my WTWA series nothing much matters except Europe Why is this It is the message of the market US economic news has been irrelevant The US economy is showing solid progress Corporate earnings have slowed but still show significant growth The volatility Wild market swings distort perceptions When the Dow has 300 point swings in a day why play for an expected annual gain of 8 or so Counter party risk contagion This is the disaster scenario for US investors What is the exposure for US banks Recession contagion Will a European recession drag down the rest of the world Earnings outlook The gloomy forecasts have already had an effect Why would any company give an upbeat outlook Why not keep the bar low by citing uncertainty What to ExpectA mainstream article from William J Watts of MarketWatch captures the current sentiment Think 2012 will be the year when investors learn once and for all whether Europe s leaders can come up with a plan to once and for all address the euro zone debt crisis Think again The volatility and market turmoil that accompanied the 2011 realization that the euro could conceivably come apart is unlikely to be fully dispelled Instead top politicians and policy makers appear likely to continue relying on the potential for imminent disaster to push through otherwise politically unpalatable changes economists said Does this make sense Regular readers know that my conclusion is that the impact on US equities is overstated As I prepared for this article thanks United Airlines for the sensory deprivation I saw the issues more clearly It is my plan to expand on each of these themes but I invite comments on which is most important Timing This will not play out quickly I have described a process of incremental compromise and adjustment Eventually everyone will agree with me Watts is among the first Economists are not the best sources I am one of the chief defenders of economists on many fronts as regular readers know Forecasting political events is not their forte Why rely on them to predict what Europe will do Doomsayers Old idea new situation So many economists and bloggers who claim credit for calling the housing crisis are going for a repeat performance These credentials should be carefully examined The Blog AgendaThere are many facets to this problem and each deserves careful consideration The problem of sources is paramount Most people writing on this topic have no special expertise We tend to look to journalists who have the skill of taking technical problems and explaining them For this translation to work the journalist must have an adequate grasp of the technical problem In the case of Europe there is a very poor grasp of the problem faced by the various leaders To summarize and to do so far too briefly the many critics suggest that the leadership is stupid ill informed and made up of people who just don t get it My perspective is quite different Any blogger who thinks that he or she knows more than Merkel or Sarkozy or Braghi or Bernanke is posturing for an audience World leaders are intelligent well informed and aware of the market implications Market pundits are wrong to underestimate their abilities As one who has moved freely in both the government leadership and trading groups I want to sharpen the focus Ask not what some pundit thinks should happen Ask instead what is most likely to happen Taking this approach will lead to a significant investment advantage over the doctrinaire and often political viewpoints of the popular market pundits Current Investment ImplicationsThere are many stocks that fit the current theme for investors but here are two favorites Oracle ORCL has been trading lower for no particular reason in front of earnings This is one of many stocks that has been slammed on Europe news Cheap on earnings next week channel checks solid JP Morgan Chase JPM is the strongest US financial stock It is not necessary to make a big statement on Europe to buy this stock You only need to understand that the exposure is limited For participants in my enhanced yield program I write calls against both positions |
JPM | Italy to Sell Bonds Consumer Sentiment Continues Upwards in US | After a couple of solid Spanish and Italian bond auctions yesterday Italy will attempt to make it two out of two today as the beleaguered country gets ready to sell EUR 3 billion 2 year bonds plus some 6 year bonds The Italian 2 year yield has plunged from a peak of 7 664 percent on November 25 2011 to 4 183 percent the lowest yield since mid October of last year The Eurozone Canada and the US will all release trade data today before we round off the week with a consumer confidence report from the latter Also we kick the earnings season off in earnest with JP Morgan Chase at 12 00 GMT more on that in Peter Garnry s Equity Update in the afternoon US Trade Balance to show widening deficit After adding 0 4 percentage points to third quarter GDP of 1 8 percent ann trade data continued the positive vibes in October as the deficit narrowed to USD 43 5 billion having averaged 45 2 bln in the third quarter Consensus looks for the improvements in trade data to come to an end in November however as a deficit of 45 bln is forecasted This would still be below the average for 3Q and suggest another addition to GDP from foreign trade before ajusting for price changes US consumers mood continues to improve The steep decline in the summer months in confidence coincided with the debt ceiling debate in Congress Since the low of just 55 7 in August the lowest level since November 2008 confidence has rebounded in line with other economic data At year end confidence had risen to 69 9 and consensus looks for another gain to 71 5 in today s preliminary January report Despite the sharp decline and subsequent improvement in confidence we are still far from levels normally associated with expansion The average expansion reading since 1980 is 89 4 while the average recessionary reading is 68 9 confirming that while things have improved in the US the despair on Main Street is still plentiful |
JPM | Corzine s Possible Crime Determination And Success The United States Energy Picture Changes And Market Volatility | Press reports from both the NY Times and Wall Street Journal indicate ex Goldman Sachs CEO and former New Jersey Governor Jon Corzine authorized the use of client money to pay back credit owed to JP Morgan Chase So we should be shocked Corzine tried to use other people s money to save his firm when their risky bets went bad Uh no What I find interesting is the hallmark of good investing is to not use debt and when there is great value apparent to load up the boat Here the opposite strategy was used Load up the firm with leverage and make big bets on questionable credits It only proves in the investment world people definately see what they want to see which is also true in all aspects of life Mitt Romney moved closer to securing the Republican nomination with his win last week in the Illinois Primary Romney will probably lose today in the Louisiana Primary but pick up more delegates What I find incredible is the reaction by the second and third place candidates Rick Santorum and Newt Gingrich to the increasingly inevitable reality that Romney will be the nominee Both Santorum and Gingrich siezed on the Etch A Sketch comment by a Romney aide that Romney has no consistency as a right wing Republican Ok great so the party should forget the guy who has the most money more than double the votes of the closest competitor and a moderate position which could unseat a vulnerable sitting President of the United States Instead Republicans should opt for a brokered convention and choose a guy who wants to put a space colony on the moon and an ex senator who lost his own state by 20 points in the last election Wake up and smell the coffee and pack it in so the party can put its resources behind someone who has a chance Will they do it Nope because self interest trumps reality almost every time Here is a great article showing why determination is so important in business It details many major successes of companies which stuck it out when it got tough and are now prospering Not an easy lesson to remember especially when you are in the forest The United States is seeing a rapid change in the energy future of the country thanks in large part to abundant natural gas and fracking technology If you did not think the stock market was crazy enough how about what took place on friday the 23 of March BATS was supposed to go public the stock opens at 15 bucks a share and then the price drops to 1 cent a share Then the stock gets halted the company says all trades during a two minute time frame are cancelled and then withdraws the IPO Prior to that shares in Apple get hammered by 50 bucks a share and the stock gets halted Mr Market is all about volatility now more than ever regardless of what the VIX index says Another interesting tidbit is the SEC is examining High Frequency Traders and their effect on the market My thought is the greatest investor ever Warren Buffett says inactivity strikes him as an intelligent when it comes to investing High Frequency Traders are all about rapid fire trading based on algorithms written by humans who make mistakes HFT trading has an effect on market making activity which effect stock prices Who says one cannot use other market participants activity against them If you forgot the Covestor Next Invest conference I hope everyone is enjoying the spring Here in Las Vegas it was 88 yesterday with not a cloud in the sky I hope you are a tad bit envious but getting equally great weather as well If you have a comment or question do post them please Have a great week Disclosure As always on any company mentioned here past performance is not a guarantee of future returns Investing involves risk of losses on invested capital One should research any investment and make sure it is suitable with your objectives risk tolerance risk profile liquidity considerations tax situation and anything else pertinent to your financial situation Also the CFA credential in no way implies investment returns will be superior for any charterholder |
MPC | MPLX Makes Final Investment Decision On Whistler Pipeline | MPLX LP NYSE MPLX WhiteWater Midstream and a joint venture between Stonepeak Infrastructure Partners and West Texas Gas recently made a final investment decision FID to move forward with the construction of Whistler Pipeline Substantial commercial commitments from the shippers provided the pipeline operators the much needed impetus to move forward with the project The 42 inch pipeline which has a transportation capacity of two billion cubic feet of natural gas per day will move the gas from Waha Hub in the Permian Basin to Agua Dulce Hub of South Texas MPLX the logistic arm of Marathon Petroleum Corporation NYSE MPC and WhiteWater expects the remaining capacity of the pipeline to be fully subscribed in the coming months Post customary and regulatory approvals the pipeline is expected to become functional in the third quarter of 2021 MPLX is well positioned to capitalize on the growing demand for fresh midstream assets like pipeline networks and processing and fractionation units in order to support increasing volumes of crude oil natural gas and NGLs in the prolific shale plays in the United States To capitalize on the pipeline bottleneck in the Permian MPLX has various pipeline projects underway which are likely to poise the firm well for strong distributable cash flows in the future As we know MPLX in partnership with other MLPs is constructing the 600 mile Permian Gulf Coast Pipeline PGP pipeline that will transport oil to the Gulf Coast from Permian and is likely to be operational by 2020 The partnership is also constructing fractionation and processing plants in Marcellus Utica shale plays wherein the partnership has already been established as the largest processor and fractionator Among several growth projects the notable ones are Sherwood 12 Processing Plant and Sherwood C2 Fractionation in the Marcellus Sherwood 12 Plant has the capacity to process natural gas at a rate of 200 million cubic feet per day MMcf D Moreover the partnership expects the Sherwood C2 Fractionation unit to start operations by third quarter 2019 By 2019 end the partnership plans to add six plants with around 800 million cubic feet per day of processing capacity and 100 000 BPD of fractionation capacity This will further boost the partnership s earnings capabilities Zacks Rank and Key PicksMPLX currently carries a Zacks Rank 3 Hold Investors interested in the same can consider better ranked players like Enbridge Inc NYSE ENB and Plains Group Holdings L P NYSE PAGP each carrying a Zacks Rank 2 Buy You can see Enbridge delivered average positive earnings surprise of 18 46 in the preceding four quarters Plains Group surpassed earnings estimates in three out of four trailing quarters with average beat of 62 68 Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
MPC | Why Is MPLX LP MPLX Up 1 1 Since Last Earnings Report | A month has gone by since the last earnings report for MPLX LP MPLX Shares have added about 1 1 in that time frame outperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is MPLX LP due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important drivers MPLX Beats Q1 Earnings Estimates Revenues MissMPLX LP reported first quarter earnings of 61 cents per unit beating the Zacks Consensus Estimate of 59 cents The figure was in line with the year ago level Revenues of 1 646 million were higher than first quarter 2018 sales of 1 420 million However the top line lagged the Zacks Consensus Estimate of 1 658 million The strong quarterly earnings were supported by contribution from dropdown transactions related to the Logistics and Supply segment s pipelines and refining logistics assets However lower than expected total pipeline throughput volumes in this segment and decreased pricing on product sales in the Gathering and Processing segment partially offset the positives Segmental HighlightsMPLX s operating income from the Logistics and Supply segment jumped 24 7 from a year ago to 480 million attributable to contribution from dropdown transactions related to pipelines and refining logistics assets Total pipeline throughput volume of 3 410 thousand barrels per day MBPD in the quarter increased 11 from the year ago level but missed the Zacks Consensus Estimate of 3 814 MBPD As a result the segment s operating income missed the Zacks Consensus Estimate of 539 million Operating income from the Gathering and Processing segment increased to 198 million from 172 million in the prior year quarter on the back of higher gathered processed and fractionated volumes partially offset by decreased pricing on product sales Costs and ExpensesTotal costs and expenses in the quarter were recorded at 968 million higher than the year ago level of 863 million Cash FlowDistributable cash flow available to limited partners in first quarter 2019 was 757 million providing 1 41x distribution coverage up from 619 million in the year ago period Distribution per unit was 65 75 cents compared with 61 75 cents in the prior year quarter This marks a 6 5 hike from the year ago period and 1 5 sequential increase representing the 25th consecutive quarterly distribution increase Cash flow from operating activities in the quarter under review increased to 618 million from 450 million recorded in the corresponding period of 2018 Balance SheetAs of Mar 31 2019 the partnership s cash and cash equivalents were 93 million Total debt amounted to 13 8 billion while debt to capitalization ratio was 66 6 Andeavor Logistics AcquisitionOn May 8 MPLX announced that it has agreed to acquire Andeavor Logistics LP through a unit for unit transaction that is expected to have a total value of 9 billion Per the deal for each Andeavor Logistics unit its unitholders will receive 1 135 common units of MPLX Notably the value of the deal which is expected to conclude in second half 2019 represents a premium of 7 Moreover the deal states that Marathon Petroleum Corporation NYSE MPC the parent organization of MPLX will get 1 0328 MPLX common units per Andeavor Logistics common unit held leading to a discount of 2 4 In addition to the synergies and increased backlogs the deal is expected to increase MPLX s footprint in the Permian Basin
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates
VGM Scores
At this time MPLX LP has a nice Growth Score of B though it is lagging a bit on the Momentum Score front with a C Following the exact same course the stock was allocated a grade of C on the value side putting it in the middle 20 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 downward for the stock and the magnitude of these revisions indicates a downward shift Notably MPLX LP has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
MS | Gold futures fall below USD1 800 spot gold extends drop | Investing com Gold futures erased gains on Monday pulling back from a four day high and spot gold prices extended their decline as increased risk appetite dampened the appeal of the precious metal On the Comex division of the New York Mercantile Exchange gold futures for October delivery traded at USD1 789 75 a troy ounce during U S morning trade shedding 0 31 It earlier fell as much as 0 65 to trade at a daily low of USD1 779 25 a troy ounce Spot gold prices meanwhile tumbled 3 14 to trade at USD1782 90 a troy ounce surrendering nearly all of the previous session s 3 2 gain The U S Bureau of Economic Analysis said earlier that consumer spending rose at its fastest pace in five months in July climbing by 0 8 Analysts had expected consumer spending which accounts for nearly 70 of U S economic activity to rise 0 5 Personal income rose by 0 3 in July short of expectations for a 0 4 gain while the core personal consumption expenditure price index rose by 0 2 broadly in line with expectations The upbeat consumer spending data overshadowed a report showing that U S pending home sales fell 1 3 in July surpassing expectations for a 1 0 decline Despite the pullback in gold prices Wall Street investment bank Morgan Stanley said that it continued to favor gold as an insurance policy against a rising probability of worsening global systemic risks The lender said in a report earlier that the recent price decline provided a buying opportunity for investors wanting to enter the market Gold futures rose as much as 1 85 earlier after Federal Reserve Chairman Ben Bernanke said Friday that the central bank remained prepared to implement fresh stimulus measures to support the U S economy Elsewhere on the Comex silver for December delivery edged 0 49 lower to trade at USD40 80 a troy ounce while copper for December delivery fell 0 47 to trade USD4 092 a pound |
MS | Gold futures rebound on bargain buying Fed minutes awaited | Investing com Gold futures regained strength on Tuesday as the previous day s sharp drop created buying opportunities for investors ahead of the release of minutes from the Federal Reserve s August policy setting meeting On the Comex division of the New York Mercantile Exchange gold futures for October delivery traded at USD1 797 45 a troy ounce during late Asian trade climbing 0 5 It earlier rose as much as 0 7 to trade at a daily high of USD1 801 05 a troy ounce On Monday gold futures fell nearly 1 8 while spot gold prices tumbled almost 2 6 as increased risk appetite dampened the appeal of the precious metal However the sharp decline triggered some bargain buying from traders reluctant to bet that prices would fall further amid ongoing concerns over the global economic outlook Wall Street investment bank Morgan Stanley said in a report Monday that the recent price decline provided a buying opportunity for investors wanting to enter the market and that it continued to favor gold as an insurance policy against a rising probability of worsening global systemic risks Increased physical demand in India also supported prices as consumers began stepping up purchases of bullion ahead of the gold buying wedding and festival season due to start in September According to Rajesh Mehta chairman of Rajesh Exports India s biggest jewelry maker gold demand in India could jump by 25 to 250 metric tons during the upcoming festival season Meanwhile markets were awaiting the release of the minutes from the Fed s August 9 meeting at which it pledged to keep its benchmark interest rate at an all time low at least through mid 2013 Speeches from Fed Open Market Committee members Charles Evans and Narayana Kocherlakota will also be closely watched for any hints regarding further easing measures after Fed Chair Ben Bernanke said Friday that there was no need for an immediate round of additional stimulus but left options open Elsewhere on the Comex silver for December delivery shed 0 6 to trade at USD40 73 a troy ounce while copper for December delivery rose 0 81 to trade USD4 147 a pound |
MS | GLOBAL MARKETS European shares seen mixed eyes on data | European shares seen opening mixed
MSCI Asia ex Japan up 0 7 pct
Nikkei up 1 2 pct clears 9 000 for 1st time in two weeks
China PMI reassures but Asia s factory activity slowed in
Aug
By Richard Pullin
MELBOURNE Sept 1 Reuters Asian stocks rose to a
one month high on Thursday but pared gains late in the session
on signals that European markets would not open firmly up on an
uncertain global growth outlook that led Brazil to unexpectedly
slash interest rates
U S stocks futures were up just 0 15 percent in late
Asian trade suggesting market caution ahead of the
manufacturing and jobs data which may give clues as to whether
the U S Federal Reserve will step in to support the economy
Global shares have risen sharply in recent days rebounding
from heavy losses in August as signs of a weakening economy have
led to speculation the Fed will introduce a new round of
monetary expansion
Asian stocks were buoyed by a series of surveys showing that
China managed modest improvement in factory activity in August
thanks to solid domestic demand despite a slump in export
activity that has hit many major Asian markets
The China PMI data gave some immediate relief to the
market but the U S data particularly the employment numbers
are still to come said Yutaka Shiraki senior equity
strategist at Mitsubishi UFJ Morgan Stanley Securities
Brazil shocked investors by cutting its key interest rate to
12 percent from 12 5 percent on Wednesday citing concern over
the global slowdown as well as weaker growth in Latin America s
largest economy
EUROPE SEEN MIXED
European shares rose on Wednesday as the pan European
FTSEurofirst 300 index of top shares closed up 2 9
percent but still fell 10 6 percent during August its worst
monthly performance since October 2008 just after the Lehman
Brothers collapse
However major European markets were seen opening mixed
according to financial spreadbetters with Britain s FTSE 100
set to open between 8 points down and 2 points up
The MSCI Asia Pacific ex Japan index was up
0 7 percent in late trade having been up 1 4 percent early in
the day
In Japan the Nikkei gained closed up 1 2 percent
clearing the key 9 000 level for the first time in two weeks
while South Korea s KOSPI also shed gains late in the
day to be up only 0 1 percent as economic data showing the
country s manufacturing sector shrank in August for the first
time in 10 months
CHINA DATA
China s official PMI offered some reassurance about the pace
of growth rising on Thursday to 50 9 in August from a 28 month
low of 50 7 in July and signalling some stabilisation in the
manufacturing sector on solid domestic demand
However the result was just below expectations and the
sub index for new export orders dipped to 48 3 from 50 4
curbing gains in mining stocks
U S economic data on Wednesday showed the economy continues
to struggle and the U S Institute for Supply Management s
national manufacturing index was due later on Thursday followed
by the U S Labour Department s employment report on Friday
Fears that the ISM index may fall below 50 have been eased
by a brighter than expected reading of manufacturing activity in
the Chicago area released on Wednesday
Also on Thursday the White House will release its delayed
midsession budget review updating projections for the U S
economy ahead of a congressional review to lower the deficit by
1 5 trillion over 10 years
Among currencies the yen fell across the board after dollar
buying by Japanese accounts lifted it above 77 yen while
the Australian dollar gained broadly as retail sales and capital
spending data beat expectations
The Swiss franc held on to gains scored the previous day
after a top government official said Switzerland would have to
live with a strong currency to stand at 0 8065 francs per
dollar
The euro last traded at 1 4373 off a two month high
at 1 4550 hit at the start of the week on worries over how the
fragmented currency bloc will deal with its debt crisis
Brent crude rose to a one month high above 115 after
China s manufacturing rebounded stoking expectations for growth
in the world s largest energy consumer
But the fall in China s export orders helped push LME copper
down 0 7 percent Spot gold was little changed at
1 8224 00 an ounce
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Editing by Richard Borsuk |
MS | GLOBAL MARKETS World stocks slide on poor Europe data | World stocks fall on poor Europe data
Wall Street set for losses
Euro slides against dollar
By Jeremy Gaunt European Investment Correspondent
LONDON Sept 1 Reuters Financial markets kicked off
September in a grim mood on Thursday with poor European economic
data prompting a regional sell off that ended a four day global
winning streak
Wall Street also looked set to open with losses and had eyes
on its own manufacturing data which is expected to show activity
declined for the first time since the recession
Euro zone manufacturing activity contracted for the first
time in almost two years in August underlining investor
concerns about a deteriorating global growth picture
MSCI s all country world stock index was
down 0 3 percent taking the year s losses to 6 4 percent
Global stocks in August fell more than 7 5 percent their
biggest monthly decline since May last year
Investors entered the month in one of the most bearish moods
in recent times Reuters asset allocation polls on Wednesday
showed leading fund companies were holding less than 50 percent
of their mixed asset portfolios in stocks
Sentiment has been battered over the summer by signs of an
ailing global economy and by the euro zone s inability to
contain its debt crisis
A raft of economic data is due over the next two days
culminating in the monthly U S jobless report on Friday that
should give investors guidance as to how far the global economy
has slipped
China saw a modest improvement in factory activity in
August according to a purchasing managers survey released on
Thursday but Europe s data was poor
In a worrying sign for policymakers the regional slowdown
appeared to be spreading German factories which have supported
growth in the bloc for some time hit the brakes in August and
France s manufacturing sector contracted for the first time
since July 2009
The global economy is clearly going through a marked
slow down in economic activity and the market is trying to
assess whether this will be just a soft patch or whether we are
heading towards a recession said Audrey Childe Freeman EMEA
head of currency strategy at JP Morgan Private Bank
The pan European FTSEurofirst 300 was down a half a
percent It lost 11 percent in August its biggest monthly
percentage drop since October 2008 after the collapse of
investment bank Lehman Brothers
Japan s Nikkei earlier closed up 1 18 percent
EURO WEAKER
The euro fell three quarters of a percent against the
dollar
The yen stayed under pressure on dollar buying by Japanese
accounts lifting the dollar to around the 77 yen level
and soothing jitters that another round of intervention by Tokyo
authorities may soon be on the way
On bond markets a weak auction of Spanish debt added to
Italy s earlier in the week fuelled gains in German debt
The Spanish auction was average and the French ones looked
pretty average too so that seems to have given us the latest leg
up with core debt equities are off too and the weak PMI s
earlier haven t helped a trader said
Additional reporting by Anriban Nag and Ana Nicolaci da Costa
Editing by Anna Willard |
MS | Nikkei up 2 pct on short term rebound on short covering | By Lisa Twaronite
TOKYO Sept 7 Reuters The Nikkei average climbed 2
percent on Wednesday on short covering after three days of
losses with market participants calling the move a short term
rebound amid fears about the sovereign debt situation in Europe
and a U S economic slowdown
A regional rally helped Tokyo extend gains in the afternoon
and analysts said that after a 5 2 percent drop in Tokyo stocks
in the past three days valuations show stocks listed on the
main board trading at an attractive average price to book ratio
of 0 92
But wariness persisted ahead of the U S Federal Reserve s
Beige Book of regional economic conditions to be released later
Wednesday which could provide fresh clues on the strength of
the U S economy
We can t call this an uptrend until we have confirmation
from other regions that there s reason to keep buying shares
other than covering short positions said Yutaka Miura senior
technical analyst at Mizuho Securities
The benchmark Nikkei rose 2 0 percent to 8 762 43
The broader Topix index added 1 8 percent to 754 26
Despite Wednesday s performance the Nikkei s March 15
intraday low of 8 227 is still in sight depending on the
performance of global markets said Norihiro Fujito a senior
investment strategist at Mitsubishi UFJ Morgan Stanley
Securities
It s a short term rebound I m rather pessimistic Fujito
said of Wednesday s gains
Volume was thin with about 1 48 million shares changing
hands on the Tokyo stock exchange s main board poised to fall
short of last week s daily average of 1 8 billion
Over the past three losing days thee Bank of Japan bought
exchange trade funds worth 66 9 billion yen 868 million which
limited losses and lifted market sentiment Japanese pension
funds also bought shares market participants said
Additional reporting by Ayai Tomisawa Editing by Edwina
Gibbs |
MS | GLOBAL MARKETS Stocks euro recover but long term fears linger | Nikkei up 1 6 percent MSCI AP ex Japan up 1 9 percent
Euro firms slightly to around 1 4030
German high court decision on Europe bailouts due from
0800 GMT
Gold stumbles suddenly in thin liquidity
Updates prices throughout
By Alex Richardson
SINGAPORE Sept 7 Reuters European stocks were poised to
follow Asian shares higher on Wednesday as investors hunted for
bargains while the euro edged up against the dollar as traders
covered some bets against the common currency following a sharp
overnight fall
The constellation of asset price action reflected risk
taking among investors who had been mostly driven for the past
few weeks by fears that still lingered about a euro zone break
up and global recession
The Australian dollar rallied 1 percent climbing above
1 06 U S Treasury yields edged higher and gold
tumbled on a sudden large sell order in thin trading conditions
The Swiss franc which had been along with gold the safe
haven of choice for investors kept to a relatively tight
trading range above 1 2000 per euro the day after
the Swiss central bank said it would buy foreign currencies in
unlimited quantities to enforce a cap on the currency versus
the euro
The stock market is rebounding after steep
declines in recent days but the situation has not changed and
volatility remains high said Korea Investment Trust Management
fund manager Kim Young il in Seoul
Uncertainty is high about the direction of the U S
economy and uncertainty is even higher in Europe as investors
are not sure whether the bloc is going in the right direction
Japan s Nikkei share average rose 2 0 percent
coming off a two and a half year closing low on Tuesday and
MSCI s broadest index of Asia Pacific shares outside Japan
gained 2 3 percent
The biggest gainers in the MSCI index were the tech and
materials sectors as electronics exporters such as South
Korea s Samsung Electronics and miners like
Australia s BHP Billiton posted strong gains
Shares of electronics makers have taken some of the worst
beatings in the global market rout of recent weaks on mounting
worries about slowing consumer and corporate demand
The Nikkei was trading at a price to book ratio of 0 95 as
of Tuesday s close That was the lowest since Aug 24 and before
that the lowest since April 1 2009 A price to book ratio below
1 0 for the Nikkei means that the market value of every stock in
the index is less than if all the companies assets were
liquidated
Value driven investors though were not returning in hordes
to scoop up bargains
It s a short term rebound I m rather pessimistic said
Norihiro Fujito a senior investment strategist at Mitsubishi
UFJ Morgan Stanley Securities
AUSTERITY DEMANDS
The euro zone s most indebted and high risk nations were
scrambling on Wednesday to convince investors and the rest of
Europe of their commitment to tackle their debt problems even
as the bloc s main paymaster Germany faced increasing opposition
to further aid
An unexpected jump in a U S services sector index however
helped stocks on Wall Street pare losses into the close and end
down less than 1 percent
S P 500 futures traded in Asia rose about 0 6 percent
on Wednesday
Investors are now focusing on a speech by U S President
Barack Obama to Congress on Thursday which CNN reported would
include plans for a 300 billion jobs package
The euro rose about 0 4 percent to around 1 4060
still not far from a two month trough plumbed on Tuesday
The dollar pressured by disappointment that the Bank of
Japan took no action at a policy meeting was down 0 6 percent
at around 77 19 yen coming off an overnight high of
77 74
Speculation had risen on Tuesday that Japan may introduce
measures to curb currency strength after Switzerland s shock
move
The Swiss franc plunged nearly 10 percent
against the euro on Tuesday its biggest daily fall ever after
the Swiss central bank jolted markets by drawing a line in the
sand on how much the currency can gain
While we would not stand in the way of the SNB move we
question whether the SNB will be fully successful in maintaining
1 20 if global risks accelerate BNP Paribas strategists wrote
in a note
In commodities markets spot gold fell further after
striking a new record above 1 920 following the Swiss National
Bank move A large sell order caught traders off guard and
triggered automatic sell orders taking the metal to as low as
1 826 18
Brent crude prices rose on Tuesday after three straight
declines as tight North Sea supplies continuing uncertainty
about Libya s oil and more tropical storms boosted prices
Brent crude was up about 0 4 percent to 113 30 a
barrel on Wednesday while U S crude gained 0 4 percent to
86 35 a barrel
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Additional reporting by Hyunjoo Jin in Seoul Antoni
Slodkowski and Ayai Tomisawa in Tokyo and Vikram Subhedar in
Hong Kong Editing by Ramya Venugopal Kim Coghill |
JPM | Regional banks may keep lagging without Washington lift | By Sinead Carew and Megan Davies NEW YORK Reuters A rough few months for most U S bank stocks has been particularly unkind to regional banks and that s not likely to change soon as hopes dim for higher long term interest rates and timely policy relief from Washington While some investors see bargains in lower valuations of regional banks shares few can point with any confidence to near term catalysts for a turnaround in their fortunes After outperforming larger banks in the wake of the Nov 8 U S Presidential election the S P 600 index of small cap banks are down 8 1 percent so far this year data through Thursday showed while the S P 500 index of the biggest U S banks is unchanged The full S P 500 SPX meanwhile is up 8 7 percent Last year investors bet heavily that smaller entirely U S focused banks would benefit most from Donald Trump s promises of tax cuts deregulation and economic stimulus But those hopes dwindled dramatically as it became clear that President Trump would have difficulty gaining enough support to deliver on any of his pro growth proposals I would expect smaller banks to continue to underperform as long as we don t get some of these policy decisions to move through said Stephen Scouten banking analyst for Sandler O Neill in Atlanta Fading hopes for an economic boost from Trump s agenda has compressed the gap between short and long term interest rates putting pressure on bank loan profit margins This is a bigger issue for regionals which have a greater dependence on lending for their profits than bigger more diversified banks Also commercial and industrial loan growth has slowed this year after climbing steadily since late 2010 The Federal Reserve s latest Senior Loan Officer Opinion Survey released May 8 showed domestic banks reporting weaker commercial and industrial loan demand from firms of all sizes in the first quarter WAITING FOR CLARITY Part of the problem is that companies are waiting for clarity on economic growth prospects and tax rates before making borrowing decisions according to investors and analysts Eventually for the smaller banks to outperform concerns about the overall economy need to dissipate Better economic growth usually leads to better lending growth and in that environment the yield curve steepens as well said Brian Kleinhanzl analyst at Keefe Bruyette Woods in New York Short selling has decreased in most regional and diversified banking sectors so far this year But short interest in both the SPDR S P Bank MX KBE Exchange Traded Fund P KBE and SPDR S P Regional Banking ETF P KRE increased as short sellers may be replacing exposure to individual banks with short bets on the sector Short interest in the S P bank ETF is up 36 percent for the year while it is up 23 percent in the regional banking ETF While tax cuts are viewed as one of the biggest boosts for regional banks of all Trump s policy proposals investors are skeptical it will come any time soon JPMorgan NYSE JPM analysts on Thursday scaled back their forecast on the size of possible U S tax cuts and pushed out the timing to the second quarter of 2018 from the third quarter of 2017 White House economic adviser Gary Cohn has said he expects U S Congress to get tax reform done this year But investors say 2018 would likely be the earliest this could happen Treasury Secretary Steven Mnuchin is expected this month to unveil plans for regulating the U S banking sector including a relaxation of regulations for community banks which have struggled with rules imposed after the 2007 to 2009 financial crisis While investors expect the administration to have trouble winning congressional support for legislative changes to regulations such as Dodd Frank some are hoping Trump will be able to appoint people to key regulatory positions If Trump can replace the Federal Reserve s head of banking supervision this might at least help slow the pace of regulation said investment managers Trump is expected to nominate Carnegie Mellon University professor Marvin Goodfriend and former Treasury Department staffer Randal Quarles to fill two of three open seats at the Fed according to a New York Times report If they do get traction and get some of these policy changes done even if they re more watered down versions of what they had proposed that s probably very good for sentiment and good for the fundamentals said Miles Lewis portfolio manager for American Century Investments Small Cap Value fund
For a graphic on regional banks running out of steam click |
JPM | Brexit forever How May s failed election gamble changes Brexit | LONDON Reuters British Prime Minister Theresa May s failed gamble on a snap election throws Brexit and the formal Brexit talks into uncharted waters Voters dealt May a devastating blow in the snap election she had called to strengthen her hand in the Brexit negotiations wiping out her parliamentary majority and throwing the country into political turmoil Following are some scenarios for Brexit BREXIT TALKS Formal Brexit talks were due to start on June 19 just under two years ahead of a British exit due in March 2019 But May has no majority and British politics is now deadlocked meaning talks could be delayed While May remains prime minister until a new government is formed she does not have a clear mandate for her interpretation of Brexit that includes limits on immigration and leaving the single market Theresa May arrogantly gambled with our Brexit and blew it said a spokesman for the Leave EU pro Brexit campaign We demand fresh leadership immediately Germany said there was no time to lose on negotiating Brexit because time was ticking France said the election result would not call into question Britain s decision to exit Labour leader Jeremy Corbyn said Brexit talks should go ahead as planned Given that Britain has already triggered the formal divorce talks it is unclear what mechanism could be used to delay the negotiations BREXIT HARD OR SOFT If May forms a minority government with support from the Northern Irish Democratic Unionist Party DUP then she would enter Brexit talks heavily dependent on one side of the divide in Northern Ireland and on the eurosceptic wing of her own party Her ability to drive Brexit reforms through parliament is sharply diminished With less room for manoeuvre she may be forced to reject compromises proposed by Brussels and drive a harder bargain The likely narrowness of the majority will give an ability for any small grouping of Conservative MPs to potentially block legislation JPMorgan NYSE JPM said She warned EU ambassadors in January that attempts to punish Britain would be an act of calamitous self harm for EU countries and repeatedly told voters during the campaign that she would be prepared to walk away from talks without a deal A disorderly Brexit with no deal would spook financial markets tarnish London s reputation as one of the world s top two financial centres and sow chaos through the economies of Britain and the EU by dislocating trading relationships The hung parliament makes both a soft Brexit staying in the Single Market and a chaotic Brexit no deal more likely than before potentially even a second referendum Citi said in a research note Still hard but smooth Brexit would remain our base case Citi said WILL BREXIT HAPPEN May has insisted that Brexit means Brexit but it is unclear how long she will remain in power or whether another British election will be called If May resigns the negotiations could be delayed by months due to the leadership contest potentially new elections and even another process to design the UK s negotiation strategy Citi said If talks are delayed for long and if British political turmoil continues then the timetable for Brexit will slip while uncertainty could undermine economic confidence Before her defeat May said she wanted to negotiate the divorce and the future trading relationship with the EU before Britain leaves in March 2019 followed by what she calls a phased implementation process to give business time to prepare for the impact of the divorce Corbyn who voted against EU membership in 1975 but said he voted for membership in 2016 told voters the issue of Brexit had been settled He wants a trade deal and a guarantee that EU worker rights be preserved as part of any Brexit agreement Whatever happens Theresa May is toast it is just a matter of time Brexit campaigner Nigel Farage said Quite frankly I don t know what s going to happen But Farage said he feared Corbyn could somehow manage to form a minority government that would allow a second Brexit referendum The Liberal Democrats whose votes in parliament could help sustain a Labour government campaigned on the position that Britons should be able to vote again on the terms of the final EU deal and stay in the bloc if the deal was rejected Scottish National Party leader Nicola Sturgeon has argued that Scotland where a majority voted to remain in the EU last year should have the right to hold an independence referendum at the end of the Brexit process
As a Brexiteer who believes in it with all his heart and soul my fear is that Corbyn forms a coalition with the SNP and a few Lib Dems and we look down the barrels of a second referendum in a few years time Farage said |
C | Citigroup markets investment banking revenue slow CFO | NEW YORK Reuters Citigroup Inc N C first quarter markets revenue is running 15 percent lower than a year earlier and its investment banking revenue is off by 25 percent Chief Financial Officer John Gerspach said on Tuesday
It has been a tough quarter Gerspach said at an investor conference
The company expects to take a 400 million charge in the quarter to resize both our infrastructure and capacity in response to the tough environment he said
Gerspach said market volatility has hurt both trading and new issuance In fixed income spread products have been under pressure while revenue from rates and currencies is being compared against good performance a year earlier
Investment banking revenue is down largely because customers issued less debt and equity he said
The slowdown has come across the company s business regions around the world he said
The company has seen no change since January in its outlook for costs for bad energy loans When this quarter ends reserves for energy loans will be about 4 5 percent of the funded amount he said
Aside from the repositioning charge core expenses for the company s Citicorp businesses will be about the same in the first quarter as the fourth quarter he said
Citigroup shares were down 2 7 percent at 41 45 in afternoon trading |
C | Exclusive Saudi Arabia seeks 6 8 billion bank loan to shore up state coffers | By Archana Narayanan DUBAI Reuters Saudi Arabia is seeking a bank loan of between 6 billion and 8 billion sources familiar with the matter told Reuters in what would be the first significant foreign borrowing by the kingdom s government for over a decade Riyadh has asked lenders to submit proposals to extend it a five year U S dollar loan of that size with an option to increase it the sources said to help plug a record budget deficit caused by low oil prices The sources declined to be named because the matter is not public Calls to the Saudi finance ministry and central bank seeking comment on Wednesday were not answered Last week Reuters reported that Saudi Arabia had asked banks to discuss the idea of an international loan but details such as the size and lifespan were not specified The kingdom s budget deficit reached nearly 100 billion last year The government is currently bridging the gap by drawing down its massive store of foreign assets and issuing domestic bonds But the assets will only last a few more years at their current rate of decline while the bond issues have started to strain liquidity in the banking system London based boutique advisory firm Verus Partners set up by former Citigroup NYSE C bankers Mark Aplin and Andrew Elliot is advising the Saudi government on the loan the sources said The firm has sent requests for proposals to a small group of banks on behalf of the Saudi Ministry of Finance the sources said They added that banks participating in the loan would have a better chance of being chosen to arrange an international bond issue that Saudi Arabia may conduct as soon as this year A spokesman for Verus Partners was not immediately available to comment RATING CUT Analysts say sovereign borrowing by the six wealthy Gulf Arab oil exporters could total 20 billion or more in 2016 a big shift from years past when the region had a surfeit of funds and was lending to the rest of the world All of the six states have either launched borrowing programs in response to low oil prices or are laying plans to do so With money becoming scarcer at home Gulf companies are also expected to borrow more from abroad In mid February Standard Poor s cut Saudi Arabia s long term sovereign credit rating by two notches to A minus The world s other two major rating agencies still have much higher assessments of Riyadh but last week Moody s Investors Service put Saudi Arabia on review for a possible downgrade Nevertheless bankers said a sovereign loan from Saudi Arabia could attract considerable demand given the kingdom s wealth its net foreign assets still total nearly 600 billion while its public debt levels that are among the world s lowest The pricing of the loan is likely to be benchmarked against international loans taken out by the governments of Qatar and Oman in the last few months according to bankers Because of banks concern about the Gulf region s ability to cope with an era of cheap oil those two loans took considerable time to arrange and the pricing was raised during that period Oman s 1 billion loan was ultimately priced at 120 basis points over the London interbank offered rate Libor while Qatar s 5 5 billion loan was priced at 110 bps over with both concluded in January
The indications are that a Saudi deal would have to price higher than that as the world has changed significantly since those deals one Middle East based banker said referring to the rating agencies actions |
C | Citi creates new group focused on serving fund clients | Reuters Senior investment bankers Zubaid Ahmad and Brad Coleman will be leading a new group at Citigroup Inc NYSE C focused on better serving clients that are private equity firms hedge funds and sovereign wealth funds according to a memo seen by Reuters on Wednesday The new Global Asset Management Group will help boost the investment banking coverage of these alternative asset managers which will also include pension funds and some family offices A Citi spokesman confirmed the contents of the memo Ahmad vice chairman of Citi s institutional clients group and Coleman global head of Citi s alternative assets group will co head this new group while maintaining their previous responsibilities Ahmad and Coleman will also review client prioritization and make sure the corporate and investment banking teams have the right structure resources and capital to serve these asset managers according to the memo This increased coverage should help the bank execute more deals for these asset managers who have previously been served by teams of bankers spread out across the bank The newly formed group will work closely with the Financial Institutions Group to bank these clients and also the markets business the memo said |
C | Deutsche Bank says first quarter challenging for entire sector | FRANKFURT Reuters Deutsche Bank DE DBKGn has warned that volatile financial markets in the first quarter normally a strong season for banks posed a challenge for the entire sector Deutsche Bank is no exception to this Nonetheless in this period of market turbulence Deutsche Bank remains very solid Chief Executive John Cryan said in the lender s annual report published on Friday Deutsche Bank s comments chime with those of other investment banks which have cautioned investors to expect lower results for the first three months as customers issued less debt and equity on fears about the state of the global economy Citigroup N C earlier this week said that its first quarter investment banking revenue is off by 25 percent compared with the strong year earlier period as both trading and new issuance have been impacted by the market rout JPMorgan N JPM last month signaled a rough first quarter with double digit declines in investment banking revenues as companies are either shying away from or unable to issue debt and equity and investors are reluctant to take on more risk After posting a record loss for 2015 Cryan in late January urged investors to be patient with his revamp of Germany s largest lender While Cryan has embarked on a mission to clean up the bank and put past scandals behind it he faces an uphill battle in light of stubbornly low interest rates plummeting oil prices pressure from regulators and a slowdown in China Despite vows to bring down costs Deutsche Bank s total compensation for employees increased 5 percent to 10 5 billion euros 11 7 billion in 2015 as the number of employees rose by 3 000 to 101 104 The lender said it hired specialists for compliance legal and audit functions as well as in areas it has identified as growth businesses However most staff faced bonus cuts Total 2015 variable compensation was down 17 percent at 2 4 billion euros while it decreased 20 percent in the investment bank Management board members bonuses were scrapped altogether Co CEO Juergen Fitschen took home a total of 3 8 million euros last year while Cryan who took the helm only in July pocketed 1 9 million euros
1 0 8997 euros |
C | 4 Reasons Why Muni Bond ETFs Are Back In Favor | It seems that the difficult days of Muni bond investing are over at least for the coming few days As we all know municipal bonds are excellent choices for investors seeking a steady stream of tax free income
But with President Trump pledging for lower personal income tax rates investors desire for a tax shelter in munis was initially quelled Paul Ryan the speaker of the House of Representatives in fact pledged to lower the top tax bracket from 43 4 to 16 5 as per
If enacted the tax cuts would simply replace the need for muni bond investing by taxable treasuries or corporate bonds Plus Trump had proposed to increase infrastructure spending If this happens munis will be forced to issue more bonds offering higher yields amid lowering demand
As a result the fervor for muni bond investing backtracked after Trump s win in November iShares National Muni Bond ETF was down about 1 6 in the last six months as of April 13 2017 In the timeframe starting from the election to the end of 2016 investors pulled out over 14 billion from their portfolio as per FPFR data read
However the space bounced back lately MUB advanced over 1 7 in the last one month as of April 13 2017 If this is not enough municipal bond funds registered 1 6 billion inflows in the week ended April 12 marking the third biggest weekly inflow on record according to flows tracked by EPFR
Below we highlight the reasons for this renewed enthusiasm in muni bond investing
Hopes of Tax Cut Fading
Trump trade seems to have lost some steam on the President s inability to pull off the Health Care bill This has raised questions on the materialization of his other promises like higher infrastructure spending deregulation and tax cuts In fact it is too early to factor in the tax cut prospects in muni ETF investing read
Decline in Treasury Yield
Notably safe haven trade like U S Treasury bond investing prevailed in the market on geopolitical concerns Investors should also note that the yield on the 10 year Treasury note has slid 38 bps to 2 24 as on April 13 2017 from this year s high of 2 62 hit in mid March The Fed s dovish guidance on policy tightening in the March meeting was also responsible for this trend read
This should perk up demand for muni bonds which are safer than corporate bonds and yield higher than treasuries According to Moody s Investors Service the 1970 through 2015 average cumulative 10 year default rate for all rated munis was only
Looming Tax Day
Americans are looking for ways to lower their tax burden ahead of Tax Day on April 18 In this vein muni bond ETF investing comes across as a lucrative bet
Historically Munis Less Sensitive to Tax Changes
also believes that historically since 1980 retail demand of munis has shown lesser sensitivity to changes in the marginal tax rate Though we may see a reduction in the marginal federal tax rate from 39 6 to 33 the average tax bracket of 25 for all individual holders of municipal bonds are less likely to change much as per
One Mon Scorecard of Muni ETFs
In the last four weeks as of April 13 2017 several muni bond ETFs were in fine fettle VanEck Vectors CEF Municipal Income ETF which yields about 5 20 added about 4 8 in last one month as of April 13 2017 against 5 5 gains iniShares 20 Year Treasury Bond ETF V TLT which yields about 2 5
VanEck Vectors AMT Free Long Municipal Index ETF V MLN tracks the overall performance of the U S dollar denominated long term tax exempt bond market with an credit quality It yields about 3 07 and added about 2 4 in the last one month
VanEck Vectors AMT Free Interm Muni ETF LON ITM whichtracks the overall performance of the U S dollar denominated intermediate term tax exempt bond advanced 2 5 in the last one month It yields about 2 22 annually
Want key ETF info delivered straight to your inbox
Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
JPM | Gold Settles 22 00 Lower 1725 20 | Today s December Gold Futures contract traded a 41 00 range as news that MF Globalfiled chapter 11 Bankruptcy protection and leaving behind over 2 Billion Dollars in debt to some of Wall Street s largest institutions including JP Morgan Chase and Deutsche Bank Bad investments linked to the European Union s financial crisis are being cited as the cause for MF Global s chapter 11 filing Equity markets and the precious metals sold off due to a weaker Euro and stronger U S Dollar December Gold traded as High as 1746 50 an as Low as 1705 50 in the combined overnight day sessions The MF Global news reflects just how much the European Union s financial fragility is effecting the overall economy of the world Volume was light in the Gold market as investors appear to be reluctant to jump into this latest fire |
JPM | The Metals Report | GOLD SETTLES 22 00 LOWER 1725 20 Today s December Gold Futures contract traded a 41 00 range as news that MF Global filed chapter 11 Bankruptcy protection and leaving behind over 2 Billion Dollars in debt to some of Wall Street s largest institutions including JP Morgan Chase and Deutsche Bank Bad investments linked to the European Union s financial crisis are being cited as the cause for MF Global s chapter 11 filing Equity markets and the precious metals sold off due to a weaker Euro and stronger U S Dollar December Gold traded as high as 1746 50 an as Low as 1705 50 in the combined overnight day sessions The MF Global news reflects just how much the European Union s financial fragility is effecting the overall economy of the world Volume was light in the Gold market as investors appear to be reluctant to jump into this latest fire |
JPM | At the Cato Institute s 29th Annual Monetary Conference VI | PANEL 4 A PROGRAM FOR MONETARY FREEDOMModerator Alan Reynolds Senior Fellow Cato InstituteStimulus money away from productive uses and toward the goverment and other unproductive bits of malinvestment like autos and homes James GrantEditor Grant s Interest Rate ObserverThe cumulative effect of historyProblem in banking not a shortage of capital but a shortage of capitalism Must allow banks to fail In old days unlimited liability made banks more cautious Deutsche Bank vs JP Morgan Chase15 capital to risk weighted assetsLeverage also identicalBut DB 42x vs JPM 13x assets equity60x vs 17x tangible assets tangible equityJPM has less callable liabilities1842 New Orleans divide bank balance sheet in two movement self liquidating loans and gold against deposits Deadweight surplus could invest anywhere Worked for a generation Clarity simplicity and eleganceKevin DowdVisiting Professor Cass School of BusinessBailouts just another profit center for banks Liquidation would have been better than the bailouts mentions MellonLow interest rates just create another bubble DM Hair of the dogConfidence only comes from strong balance sheets Quotes Jackson regarding the Second Bank of the United StatesSolution is to eliminate the FedEndgames Monetize the debt or watch interest rates rise Solutions Gold standard End Fed personal liability for bankers Constitutional settlement because governments and money don t mix Prohibit bailouts and intergenerational transfer schemes Kurt Schuler Senior Fellow Center for Financial StabilityCompetitive vs Monopoly issue of currency why the shift Easy way for the Government to make money through seniorage Four places today where parallel issuance of notes goes on today Scotland Northern Ireland Hong Kong and Macau 100 segregation of assets in reserves at the central banks generally Where might issuance of competitive notes be legal Mostly teensy places with the exception of the US Japan they aren t sure and the 4 mentioned above Q ARaising interest rates to improve matters Where to invest Gold silver TBTCurrency transfer schemes talk no questionDM There are lots of these schemes around |
MPC | Key Factors To Watch Out For Ahead Of MPLX s Q1 Earnings | MPLX LP NYSE MPLX is scheduled to release first quarter 2019 results before the opening bell on May 8 In the preceding three month period the Findlay OH based energy midstream service provider missed the Zacks Consensus Estimate by 23 5 As far as earnings surprises are concerned the oil and gas logistics operator has a mixed record having surpassed the Zacks Consensus Estimate twice in the last four reports with average positive surprise of 6 3 This is depicted in the graph below MPLX LP Price and EPS Surprise Let s see how things are shaping up for this announcement Which Way are Estimates Treading Let s take a look at estimate revisions to get a clear picture of what analysts are thinking about MPLX before the earnings release The Zacks Consensus Estimate of 59 cents for first quarter earnings has seen no upward but two downward revisions by firms in the past 30 days This figure indicates a year over year decline of 3 3 The Zacks Consensus Estimate for revenues is pegged at 1 7 billion for the to be reported quarter indicating a rise of 16 7 from the year ago reported figure Now let s delve deeper to find out the factors impacting the upcoming results Factors to ConsiderHigh demand for midstream assets is a positive for the large cap partnership which owns operates and develops midstream energy infrastructures and logistics assets mostly for its parent company Marathon Petroleum Corporation NYSE MPC The Zacks Consensus Estimate for Gathering and Processing segment s first quarter 2019 operating income is 539 million higher than year ago reported figure of 350 million The Zacks Consensus Estimate for total gathering throughput is pegged at 5 050 million cubic feet per day MMcf d higher than 4 171 MMcf d in the year ago quarter Total natural gas processed in the quarter is estimated at 7 614 MMcf d higher than the year ago level of 6 629 MMcf d However natural gas processed from Utica operations is estimated at 874 MMcf d much lower than the year ago period s 936 MMcf d In the Logistics and Storage segment total pipelines throughput is estimated at 3 814 thousand barrels per day MBPD up from the year ago level of 3 062 MBPD The Zacks Consensus Estimate for C2 NGLs fractionated from Utica operations is pegged at 40 MBPD lower than 43 MBPD in the year ago quarter In conclusion the Gathering and Processing segment is expected to get a boost from total gathering throughput in the to be reported quarter However lower natural gas processing from Utica operations can partially offset the same Although the Logistics and Storage segment will be positively impacted by total pipelines throughput in the quarter weakness in Utica operations can play a spoilsport What Our Model SaysOur proven model does not conclusively show that MPLX is likely to beat the Zacks Consensus Estimate in the quarter to be reported This is because a stock needs to have both a positive and a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold for this to happen Unfortunately this is not the case here as elaborated below You can see Earnings ESP Earnings ESP which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is 6 78 You can uncover the best stocks to buy or sell before they re reported with our Zacks Rank MPLX s Zacks Rank 4 Sell further decreases the predictive power of ESP making us less confident of an earnings surprise call As it is we caution against stocks with a Zacks Ranks 4 or 5 Strong Sell going into the earnings announcement especially when the company is seeing negative estimate revisions Energy Stocks WithFavorable CombinationThough an earnings beat looks uncertain for MPLX here are a few firms from the energy space that you may want to consider on the basis of our model These have the right combination of elements to post an earnings beat in the quarter to be reported Frisco TX based Comstock Resources Inc NYSE CRK has a Zacks Rank 2 and an Earnings ESP of 11 95 The company is scheduled to report quarterly earnings on May 9 Oklahoma City OK based Chaparral Energy Inc NYSE CHAP has a Zacks Rank 2 and an Earnings ESP of 110 00 The company is set to report first quarter earnings on May 9 Calgary Canada based Canadian Natural Resources Limited TO CNQ has a Zacks Rank 3 and an Earnings ESP of 0 85 The company is slated to report first quarter earnings on May 9 Will you retire a millionaire One out of every six people retires a multimillionaire Get smart tips you can do today to become one of them in a new Special Report 7 Things You Can Do Now to Retire a Multimillionaire |
MPC | Marathon Petroleum MPC Swings To Q1 Loss Revenues Miss | Independent oil refiner and marketer Marathon Petroleum Corporation NYSE MPC reported weak first quarter results on declining crude discounts The company reported adjusted loss per share of 9 cents The Zacks Consensus Estimate was for a profit of a penny while in the year ago period the company earned 8 cents per share Marathon Petroleum s revenues of 28 6 billion came below the Zacks Consensus Estimate of 29 1 billion but improved 50 7 year over year on growing throughput volumes Marathon Petroleum Corporation Price Consensus and EPS Surprise Segmental PerformanceRefining Marketing The Refining Marketing segment reported operating loss of 334 million compared with loss of 133 million in the year ago quarter The deterioration reflects narrower crude differentials in addition to lower gasoline margins This more than offset the impact of higher refining margins and rising throughputs following the 2018 acquisition of Andeavor Specifically refining margin of 11 17 per barrel increased versus 10 58 a year ago Total refined product sales volumes were 3 669 thousand barrels per day mbpd up from the 2 261 mbpd in the year ago quarter Moreover throughput increased from 1 905 mbpd in the year ago quarter to 3 084 mbpd following the addition of the legacy Andeavor refineries Capacity utilization during the quarter was 95 Retail Income from the Retail segment totaled 170 million up 78 9 from the year ago period Apart from strong performance at Marathon Petroleum s former Speedway unit the segment results were buoyed by contribution from the acquired retail assets of Andeavor Across the board the Retail segment benefitted from higher fuel margins and merchandise sales In particular the company s retail fuel margin rose from 15 61 cents per gallon in the first quarter of 2018 to 17 15 cents per gallon in the quarter under review Midstream This unit mainly reflects Marathon Petroleum s the general partner and majority limited partner interests in MPLX LP NYSE MPLX and Andeavor Logistics LP NYSE ANDX publicly traded master limited partnerships that own operate develop and acquire pipelines and other midstream assets Incidentally MPLX just announced an agreement to acquire Andeavor Logistics in a deal worth around 9 billion Segment profitability was 908 million up from 567 million in the first quarter of 2018 Earnings were buoyed by the addition of Andeavor Logistics results that contributed 220 million during the quarter The unit was further aided by strong overall growth from all businesses that added 121 million to segment results Total ExpensesMarathon Petroleum which spun off from Marathon Oil Corporation NYSE MRO in 2011 reported expenses of 27 9 billion in first quarter 2019 50 7 higher than the year ago quarter Capital Expenditure Balance Sheet Share RepurchaseIn the reported quarter the Zacks Rank 3 Hold Marathon Petroleum spent 1 3 billion on capital programs 62 on the Midstream segment As of Mar 31 the company had cash and cash equivalents of 877 million and total debt of 28 1 billion with a debt to capitalization ratio of 39 6 You can see During the first quarter Marathon Petroleum returned 1 2 billion of capital to shareholders including 885 million in share buybacks Breakout Biotech Stocks with Triple Digit Profit PotentialThe biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
MPC | Marathon Petroleum MPC Reports Q1 Loss Lags Revenue Estimates | Marathon Petroleum MPC came out with a quarterly loss of 0 09 per share versus the Zacks Consensus Estimate of 0 01 This compares to earnings of 0 08 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 1 000 A quarter ago it was expected that this refiner would post earnings of 1 98 per share when it actually produced earnings of 2 41 delivering a surprise of 21 72
Over the last four quarters the company has surpassed consensus EPS estimates three times
Marathon Petroleum which belongs to the Zacks Oil and Gas Refining and Marketing industry posted revenues of 28 62 billion for the quarter ended March 2019 missing the Zacks Consensus Estimate by 1 60 This compares to year ago revenues of 18 98 billion The company has topped consensus revenue estimates two times 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
Marathon Petroleum shares have added about 0 7 since the beginning of the year versus the S P 500 s gain of 15 1
What s Next for Marathon Petroleum
While Marathon Petroleum has underperformed 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 Marathon Petroleum was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 1 98 on 31 43 billion in revenues for the coming quarter and 5 38 on 113 06 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 Oil and Gas Refining and Marketing is currently in the bottom 34 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 |
MS | European shares in biggest fall since March 2009 | FTSEurofirst 300 closes 4 8 percent lower on growth
worries
German index underperforms
Automobile banks among top sector fallers
By Brian Gorman
LONDON Aug 18 Reuters European equities suffered their
biggest daily fall in two and a half years on Thursday as a
slew of downbeat U S data cast further doubt on the strength of
the recovery in the world s biggest economy
German shares fell 5 8 percent underperfoming the
wider market with traders citing the effects of a short selling
ban on financial stocks in other parts of Europe and of
intensifying worries about politicians lack of a plan to
address the euro zone sovereign debt crisis
The European banking sector exposed to the debt
crisis fell 6 7 percent and is down 29 8 percent this year
Heavyweight fallers included Barclays and Societe
Generale down 11 5 and 12 3 percent respectively
Germany s Commerzbank fell 10 5 percent
Traders also cited worries about some banks funding
The FTSEurofirst 300 index of top European shares
fell 4 8 percent to 925 19 points the biggest fall since March
2009 Trading volume was more than 24 percent higher than the
index s average for the last 90 days
The index is down more than 22 percent from a mid February
peak
Factory activity in the U S Mid Atlantic region as
measured by the Philadelphia Fed Index plummeted in August
falling to the lowest level since March 2009 while existing
home sales unexpectedly dropped in July tempering hopes for a
revival of economic recovery
The number of Americans claiming new jobless benefits rose
last week as well and consumer prices increased at the fastest
pace in four months in July
The market is beginning to price in a recession The
Philadelphia Fed number was an absolute abomination
Michael Hewson market analyst at CMC Markets said
And until we get some clear idea of how policymakers are
going to deal with euro zone sovereign debt problems it s not
going to get any better
Gold rallied to its second record high in a week Spot gold
hit a record 1 817 90 as investors sought safe havens
However base metals fell as the outlook for demand weakened
in line with economic data The Stoxx Europe 600 Basic
Resources Index fell 6 9 percent
Auto shares down 7 4 percent featured among the
worst performers on worries a slowdown in the global economy
would dent vehicle demand Fiat fell 11 9 percent
following disappointing sales news from one of its key markets
Brazil Germany s MAN and BMW fell 10 and
7 9 percent respectively
It s a bloodbath said Erik Esselink fund manager at
Invesco Perpetual which has 5 billion euros under management
From a longer term view the comments from the politicians
French president Nicolas Sarkozy and German chancellor Angela
Merkel were quite helpful but from a short term view there was
nothing you could you could hang your hat on
FRANCE MODIFIES BAN
France s market regulator AMF on Thursday modified its ban
on short selling of financial stocks and related derivatives to
let investors maintain existing short positions by buying new
options to replace expiring ones
Germany s blue chip index fell more than others on
worries that a short selling ban on financial shares and related
financial instruments in France Italy Spain and Belgium
announced last week had pushed investors towards futures and
options on the DAX excluded from the short selling ban
Traders also cited news that Austria was joining Finland in
asking Greece for collateral in exchange for emergency loans
A Morgan Stanley note saying the United States and the euro
zone are dangerously close to recession added to the gloomy
outlook for shares
Additional reporting by Blaise Robinson Editing by
Hans Juergen Peters
For rolling updates on what is moving European shares
please click on
For pan Europeanmarket data and news click on codes in
brackets
European Equities speed guide
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Reuters News at a Glance Equities
Main currency report |
MS | GLOBAL MARKETS Stocks sink gold at highs as fear sweeps market | Spot gold touches new record high on recession fears
Safe haven dollar rises as risk appetite evaporates
Global equities tumble after U S data sours investors
Oil slides as slower global growth prospects dim demand
Updates prices
By Herbert Lash
NEW YORK Aug 18 Reuters Renewed jitters over Europe s
debt crisis and a raft of weak U S economic data sparked a
rout in global equities on Thursday while driving investors to
the safety of gold and U S government bonds
Spot gold prices and the yield on the benchmark 10 year
U S Treasury note set fresh records as investors dumped
stocks and other riskier assets to rush into safe haven
investments for their perceived security
The numbers spelled mayhem although U S stocks stayed
above 2011 lows set last week and most asset prices pulled
back from the brink in afternoon trading
The market is in meltdown mode the data continues to
stink I don t know that there s much more to be said We
continue to be in a soft patch said Sal Catrini managing
director for equities at Cantor Fitzgerald Co in New York
A drop in factory activity in the U S Mid Atlantic region
to the lowest level since March 2009 particularly unnerved
investors as the data from the Philadelphia Federal Reserve
Bank is viewed as a forward looking indicator of national
manufacturing
An unexpected fall in existing U S home sales in July and
a greater than expected rise in new claims for jobless
benefits in the latest week added to growing fears that the
U S economic recovery could be derailed
Aversion to risk swept financial markets Corporate bonds
industrial commodities and higher yielding currencies slid
and assets viewed as safe havens such as gold government
bonds and the dollar gained
European equities suffered their biggest daily slide in
2 1 2 years The FTSEurofirst 300 index of leading
European shares fell 4 8 percent to close at 925 19 points
its biggest one day percentage drop since March 2009
The market is beginning to price in a recession The
Philadelphia Fed number was an absolute abomination said
Michael Hewson market analyst at CMC Markets in London
Until we get some clear idea of how policy makers are
going to deal with euro zone sovereign debt problems it s not
getting to get any better
On Wall Street the three major U S stock indexes lost 4
percent to 5 percent Global stocks as measured by MSCI s
all country world equity index tumbled 4 3
percent
WORRIES ABOUT EUROPEAN BANKS
U S stocks plummeted in sync with bank shares after The
Wall Street Journal reported that regulators were intensifying
their review of the U S units of European banks
ID nL5E7JI0Q
The sell off is rooted in the European banking system
said Jack de Gan chief investment officer at Harbor Advisory
Corp in Portsmouth New Hampshire
It reflects continued concern that sovereign debt issues
indicate we re going to have to bail out all those banks
again And if there s stress in major European banks it will
affect U S banks too
The president of the New York Federal Reserve Bank
William Dudley said the U S central bank is treating foreign
banks the same as their U S peers
U S equities as measured by the S P 500 were still 3
percent above the year s lows set early last week
The Dow Jones industrial average sank 430 38
points or 3 77 percent to 10 979 83 The Standard Poor s
500 Index dropped 52 74 points or 4 42 percent to
1 141 15 The Nasdaq Composite Index slid 121 43
points or 4 83 percent to 2 390 05
In Europe German shares lost the most with traders
citing the effects of a short selling ban on financial stocks
in other parts of Europe and intensifying worries about
politicians lack of a plan to address the euro zone sovereign
debt crisis ID nL5E7JI3UN
The European banking sector exposed to the euro zone debt
crisis fell 6 7 percent and is down 29 8 percent this year
U S Treasuries prices soared with the yield of the
benchmark 10 year note falling below 2 0 percent for the first
time as investors snapped up the government bonds on fears of
a global economic slowdown ID nN1E77H0K3
Morgan Stanley told investors that the United States and
the euro zone are dangerously close to recession even
though it said that was not its base scenario
ID nL3E7JI1LM
RISK APPETITE DISAPPEARS
The benchmark 10 year note shot up 26 32 in
price to yield 2 08 percent after slumping to a record low of
1 97 percent
Gold rallied to its second record high in a week Spot
gold hit a record 1 825 99 although it is still off
its inflation adjusted peak above 2 000 struck in 1980
Short term money markets showed further signs of bank
stress emanating from Europe s fiscal strains The benchmark
for unsecured dollar loans between banks three month Libor
rose to its highest in 4 1 2 months the latest in recent
peaks
Investors also pulled back over the last week from the
commercial paper market a key source of short term funding
for banks and businesses These strains have contributed to
the stock sell off and the rush into gold and government
bonds
The U S dollar and yen firmed as global growth anxiety
and worries about European banks drove investors to the
relative safety of both currencies ID nN1E77H0EL
The ICE Futures dollar index was up 0 9 percent to
74 298 while the euro fell 0 9 percent to 1 43050
We have much lower risk appetite today and that s why
we re seeing the dollar strengthen said Ray Attrill senior
currency strategist at BNP Paribas in New York
Crude prices tumbled on the prospect of declining demand
Brent fell 0 34 percent to 106 83 a barrel while
U S light sweet crude oil lost 5 8 percent to 82 46 a
barrel
Reporting by Rodrigo Campos Gertrude Chavez Dreyfuss and
Karen Brettell in New York Anirban Nag Atul Prakash and
Ikuko Kurahone in London Writing by Herbert Lash Editing by
Leslie Adler and Jan Paschal |
MS | GLOBAL MARKETS Gold soars stocks sink as data roils markets | Spot gold touches new record high on recession fears
Global equities tumble after U S data sours investors
Safe haven debt dollar gain as risk appetite evaporates
Oil slides as slower global growth prospects dim demand
Updates prices
By Herbert Lash
NEW YORK Aug 18 Reuters Renewed jitters over Europe s
debt crisis and a raft of weak U S economic data sparked a
rout in global equities on Thursday while driving investors to
the safety of gold and U S government bonds
Spot gold prices and the yield on benchmark U S British
and German 10 year government debt set fresh records as
investors dumped stocks and other riskier assets to rush into
safe haven investments for their perceived security
The numbers spelled mayhem stocks on Wall Street
plunged about 5 percent but they managed to stay above 2011
lows set last week and most asset prices pulled back from
session lows
For the moment it is hard to see the markets breaking
decisively the spell of uncertainty created by global growth
fears constrained monetary and fiscal policy choices and the
lingering European debt crisis said Vassili Serebriakov
currency strategist at Wells Fargo in New York
A drop in factory activity in the U S Mid Atlantic region
to the lowest level since March 2009 unnerved investors as
the data from the Philadelphia Federal Reserve Bank is viewed
as a forward looking indicator of national manufacturing
An unexpected fall in existing U S home sales in July and
a greater than expected rise in new claims for jobless
benefits in the latest week added to growing fears that the
U S economic recovery could be derailed
Aversion to risk swept financial markets Corporate bonds
industrial commodities and higher yielding currencies slid
and assets viewed as safe havens such as gold government
bonds and the dollar gained
European equities suffered their biggest daily slide in
2 1 2 years The FTSEurofirst 300 index of leading
European shares fell 4 8 percent to close at 925 19 points
its biggest one day percentage drop since March 2009
The market is beginning to price in a recession The
Philadelphia Fed number was an absolute abomination said
Michael Hewson market analyst at CMC Markets in London
Until we get some clear idea of how policy makers are
going to deal with euro zone sovereign debt problems it s not
getting to get any better
On Wall Street the three major U S stock indexes lost 4
percent to 5 percent Global stocks as measured by MSCI s
all country world equity index tumbled 4 4
percent
WORRIES ABOUT EUROPEAN BANKS
U S stocks plummeted in sync with bank shares after The
Wall Street Journal reported that regulators were intensifying
their review of the U S units of European banks
ID nL5E7JI0Q
The sell off is rooted in the European banking system
said Jack de Gan chief investment officer at Harbor Advisory
Corp in Portsmouth New Hampshire
It reflects continued concern that sovereign debt issues
indicate we re going to have to bail out all those banks
again And if there s stress in major European banks it will
affect U S banks too
The president of the New York Federal Reserve Bank
William Dudley said the U S central bank is treating foreign
banks the same as their U S peers
U S equities as measured by the S P 500 were still
above the year s lows set early last week
The Dow Jones industrial average was down 477 72
points or 4 19 percent at 10 932 49 The Standard Poor s
500 Index was down 59 03 points or 4 94 percent at
1 134 86 The Nasdaq Composite Index was down 140 27
points or 5 59 percent at 2 371 21
In Europe German shares lost the most with traders
citing the effects of a short selling ban on financial stocks
in other parts of Europe and intensifying worries about
politicians lack of a plan to address the euro zone sovereign
debt crisis ID nL5E7JI3UN
The European banking sector exposed to the euro zone debt
crisis fell 6 7 percent and is down 29 8 percent this year
U S Treasuries prices soared with the yield of the
benchmark 10 year note falling below 2 0 percent for the first
time as investors snapped up the government bonds on fears of
a global economic slowdown ID nN1E77H0K3
Morgan Stanley told investors that the United States and
the euro zone are dangerously close to recession even
though it said that was not its base scenario
ID nL3E7JI1LM
RISK APPETITE DISAPPEARS
The benchmark 10 year note shot up 23 32 in
price to yield 2 09 percent after slumping to a record low of
1 97 percent
Yields on British 10 year gilts fell to an
all time low of 2 238 percent and 10 year German debt
fell to 2 028 percent
Gold rallied to its second record high in a week Spot
gold hit a record 1 825 99 although it is still off
its inflation adjusted peak above 2 000 struck in 1980
Short term money markets showed further signs of bank
stress emanating from Europe s fiscal strains The benchmark
for unsecured dollar loans between banks three month Libor
rose to its highest in 4 1 2 months the latest in recent
peaks
Investors also pulled back over the last week from the
commercial paper market a key source of short term funding
for banks and businesses These strains have contributed to
the stock sell off and the rush into gold and government
bonds
The U S dollar and yen firmed as global growth anxiety
and worries about European banks drove investors to the
relative safety of both currencies ID nN1E77H0EL
The ICE Futures dollar index rose 0 8 percent to
74 232 while the euro fell 0 7 percent to 1 43250
We have much lower risk appetite today and that s why
we re seeing the dollar strengthen said Ray Attrill senior
currency strategist at BNP Paribas in New York
Crude prices tumbled on the prospect of declining demand
Brent crude slid 3 61 to end at 106 99 a barrel
breaking below the 200 day moving average a key technical
indicator closely watched by traders
U S crude oil tumbled 5 20 or 5 9 percent to settle at
82 38 a barrel and its discount to Brent widened to more
than 24 a barrel
Reporting by Rodrigo Campos Gertrude Chavez Dreyfuss and
Karen Brettell in New York Anirban Nag Atul Prakash and
Ikuko Kurahone in London Writing by Herbert Lash Editing by
Leslie Adler and Jan Paschal |
MS | GLOBAL MARKETS Gold soars stocks slide as data roils markets | Spot gold touches new record high on recession fears
Global equities tumble after U S data sours investors
Safe haven debt dollar gain as risk appetite evaporates
Oil slides as slower global growth prospects dim demand
Updates with close of U S markets
By Herbert Lash
NEW YORK Aug 18 Reuters Renewed jitters over Europe s
debt crisis and a raft of weak U S economic data sparked a
rout in global equities on Thursday while driving skittish
investors to the safety of gold and U S government bonds
Spot gold prices and the yield on benchmark U S British
and German 10 year government debt set fresh records as
investors dumped stocks and other riskier assets to rush into
safe haven investments for their perceived security
The numbers spelled mayhem the Dow lost more than 400
points and declining shares on the New York Stock Exchange
outpaced advancing stocks by more than 16 to 1 but major
indexes managed to stay above 2011 lows set last week
It s much of the same concerns over European banks
U S deficits weighing on economic growth and the possibility
of a global recession as the end result said Chris Jarvis
senior analyst for Caprock Risk Management in Hampton Falls
New Hampshire
These cross currents are driving wild swings for riskier
asset classes such as equities and commodities specifically
crude oil Until clarity improves we expect volatility to
remain elevated relative to historical norms
A drop in factory activity in the U S Mid Atlantic region
to the lowest level since March 2009 unnerved investors as
the data from the Philadelphia Federal Reserve Bank is viewed
as a forward looking indicator of national manufacturing
An unexpected fall in existing U S home sales in July and
a greater than expected rise in new claims for jobless
benefits in the latest week added to growing fears that the
U S economic recovery could stall and slide into recession
SHUNNING RISK
Investors reacted by avoiding risk Corporate bonds
industrial commodities and higher yielding currencies slid
and assets viewed as safe havens such as gold government
bonds and the dollar gained
European equities suffered their biggest daily slide in
2 1 2 years The FTSEurofirst 300 index of leading
European shares fell 4 8 percent to close at 925 19 points
its biggest one day percentage drop since March 2009
The market is beginning to price in a recession The
Philadelphia Fed number was an absolute abomination said
Michael Hewson market analyst at CMC Markets in London
Until we get some clear idea of how policy makers are
going to deal with euro zone sovereign debt problems it s not
getting to get any better
Global stocks as measured by MSCI s all country world
equity index tumbled 4 1 percent and emerging
market equities fell 2 8 percent
WORRIES ABOUT EUROPEAN BANKS
U S stocks plummeted in sync with bank shares after The
Wall Street Journal reported that regulators were intensifying
their review of the U S units of European banks
ID nL5E7JI0Q
The sell off is rooted in the European banking system
said Jack de Gan chief investment officer at Harbor Advisory
Corp in Portsmouth New Hampshire
It reflects continued concern that sovereign debt issues
indicate we re going to have to bail out all those banks
again And if there s stress in major European banks it will
affect U S banks too
The president of the New York Federal Reserve Bank
William Dudley said the U S central bank is treating foreign
banks the same as their U S peers
U S stocks pared losses at the market s close
The Dow Jones industrial average closed down 419 63
points or 3 68 percent at 10 990 58 The Standard Poor s
500 Index fell 53 24 points or 4 46 percent to end at
1 140 65 The Nasdaq Composite Index slid 131 05
points or 5 22 percent to finish at 2 380 43
In Europe German shares lost the most with traders
citing the effects of a short selling ban on financial stocks
in other parts of Europe and intensifying worries about the
lack of a plan to address the euro zone debt crisis
ID nL5E7JI3UN
The European banking sector widely exposed to the crisis
fell 6 7 percent and is down 29 8 percent this year
BONDS FLY
U S Treasuries prices soared with the yield of the
benchmark 10 year note falling below 2 0 percent for the first
time according to Reuters data as investors snapped up the
government bonds on fears of a slowdown ID nN1E77H0K3
Morgan Stanley told investors that the United States and
the euro zone are dangerously close to recession even
though it said that was not its base case ID nL3E7JI1LM
The benchmark 10 year note shot up 27 32 in
price to yield 2 07 percent after slumping to a record low of
1 97 percent
Yields on British 10 year gilts fell to an
all time low of 2 238 percent and 10 year German debt
fell to 2 028 percent
Gold rallied to its second record high in a week Spot
gold hit a record 1 825 99 although it is still off
its inflation adjusted peak above 2 000 struck in 1980
U S gold futures for December delivery settled up
28 20 at 1 822 an ounce
Short term money markets showed further signs of bank
stress emanating from Europe s fiscal strains The benchmark
for unsecured dollar loans between banks three month Libor
rose to its highest in 4 1 2 months the latest in recent
peaks
Investors also pulled back over the last week from the
commercial paper market a key source of short term funding
for banks and businesses These strains have contributed to
the stock sell off and the rush into gold and government
bonds
The U S dollar and yen firmed as global growth anxiety
and worries about European banks drove investors to the
relative safety of both currencies ID nN1E77H0EL
The ICE Futures dollar index rose 0 7 percent to
74 195 while the euro fell 0 6 percent to 1 43370
Crude prices tumbled on the prospect of declining demand
Brent crude slid 3 61 to end at 106 99 a barrel
breaking below the 200 day moving average a key technical
indicator closely watched by traders
U S crude oil tumbled 5 20 or 5 9 percent to settle at
82 38 a barrel and its discount to Brent widened to more
than 24 a barrel
Reporting by Ashley Lau Ellen Freilich Julie Haviv
Matthew Robinson David Sheppard and Frank Tang in New York
Writing by Herbert Lash Editing by Jan Paschal |
MS | US STOCKS Wall St rallies after four weeks of losses | Investors look ahead to Bernanke speech
Verizon unions to resume talks
Libyan rebels sweep into Tripoli Brent drops
Indexes up Dow 1 6 pct S P 1 8 pct Nasdaq 2 pct
For up to the minute market news see STXNEWS US
Updates to open
By Ryan Vlastelica
NEW YORK Aug 22 Reuters U S stocks surged more than 1
percent in early trading on Monday following four weeks of
equity losses as stocks rebounded globally
Equities have been pressured of late by growing concerns
about the economy given a string of weak economic data and the
ongoing sovereign debt crisis in Europe
European stocks gained 2 1 percent while the MSCI world
equity index rose 0 3 percent EU and MKTS GLOB
Recent data has been inconclusive about whether we re
going into recession so the market bounces back and forth
daily based on mood swings said Andrew Slimmon managing
director of global investment solutions at Morgan Stanley Smith
Barney in Chicago
However with interest rates being where they are stocks
are very cheap and that s a very powerful and positive
indicator
The Dow Jones industrial average jumped 176 15
points or 1 63 percent at 10 993 80 The Standard Poor s
500 Index was up 19 92 points or 1 77 percent at
1 143 45 The Nasdaq Composite Index advanced 47 32
points or 2 02 percent at 2 389 16
The S P has fallen more than 13 percent so far in August
with volatility driving the index down at least 4 percent for
six days over the past two weeks Some investors believe the
speed and size of the drops suggested the market could be
oversold The CBOE Volatility index sank 5 2 percent but
remained at elevated levels
Investors looked ahead to a speech by U S Federal Reserve
Chairman Ben Bernanke on Friday at the central bank s annual
meeting in Jackson Hole Wyoming
Some investors hope the Fed will announce new stimulus
after the central bank promised earlier this month to keep
interest rates near zero for at least two more years and said
it would consider further steps to help growth FED AHEAD
It s certainly possible that we could see more stimulus
but my worry is that as the week progresses expectations will
be built into the market that could lead to our having another
decline if nothing is announced Slimmon said
U S crude futures rose 2 3 percent on a rebound in
equities and helped lift the S P energy index by 1 2
percent
But Brent crude fell 1 percent on expectations Libyan oil
exports might resume after the civil war ends Libyan rebels
swept into the heart of Tripoli and met scattered resistance
For details see ID nL6E7I11CV and ID nL5E7JL0LD
Tensions in the Middle East and a spike in oil prices
contributed to equity weakness earlier this year
About 45 000 striking Verizon Communications Inc
employees were set to go back to work on Tuesday after the
company and unions agreed to resume bargaining Shares of the
Dow component rose 1 1 percent to 35 11 ID nN1E77J05H
Editing by Jeffrey Benkoe |
MS | Nikkei slips as Moody s downgrade spurs profit taking | Futures traders place sell orders above 8 800 trader
Bernanke speech awaited for U S easing clues
By Lisa Twaronite
TOKYO Aug 24 Reuters The Nikkei stock average inched
down on Wednesday as investors digested the long term
implications of Moody s Investors Service s downgrade of Japan s
sovereign debt rating erasing gains made earlier on speculation
of more U S easing
Japanese investors shrugged off the downgrade but some
foreign investors used it as an opportunity to lock in gains
in case expectations of more U S economic support measures do
not materialise said Toshiyuki Kanayama a market analyst at
Monex Inc
Stocks also largely shrugged off news of Japan s 100
billion credit line unveiled on Wednesday to facilitate
companies acquisitions of overseas firms and their procurement
of energy and resources from abroad as a step to cope with
recent yen strength
The benchmark Nikkei was down 0 2 percent at
8 714 63 in early afternoon trade after rising as high as
8 825 27 in the morning session The broader Topix shed
0 3 percent to 748 44
On Tuesday U S stocks surged 3 percent on speculation that
Fed Chairman Ben Bernanke will signal new help for the economy
when he speaks on Friday at the central bank s annual gathering
in Jackson Hole Wyoming
Traders said that while there are hopes Bernanke will hint
at some easing foreign investors were hesitant to take large
positions before the event
For the past few days futures players are thought to be
engaged in arbitrage trading They are trying to make profits
within a 100 point range and today it looks like they were
selling when the index rose above 8 800 said a trader at a
Japanese brokerage
NOT UNEXPECTED
Moody s Investors Service cut its rating on Japan s
government debt by one notch to Aa3 on Wednesday ahead of the
Tokyo open blaming large budget deficits and a buildup of debt
since the 2009 global recession
Tom Byrne Moody s senior vice president and regional credit
officer said the agency had no plans to change sovereign
ratings for Japan in the next 12 18 months adding that he saw
no change in Japan s home biased funding dynamics
Moody s had warned in May that it might downgrade Japan s
Aa2 rating due to heightened concerns about its faltering growth
prospects and a weak policy response to deal with bulging public
debt now twice the size of its 5 trillion economy
Stock market investors had somewhat expected that it could
happen because Moody s had warned it might downgrade Japan s
sovereign debt earlier said Norihiro Fujito senior investment
strategist at Mitsubishi UFJ Morgan Stanley Securities
Unpopular Prime Minister Naoto Kan confirmed on Tuesday he
would step down as head of the ruling party within the week
We have major developments on the political front and
while most people in the market believe former foreign minister
Seiji Maehara is very likely to win the ruling party
leadership election a swift policy response on debt problems
is unlikely to come out soon said Fujito
Moody s also took negative action on most Japanese banks as
it usually does after a sovereign downgrade
Some analysts also cited fears about the impact of the
Moody s move on lenders holdings of Japanese government bonds
Sumitomo Mitsui Financial Group fell 0 5 percent to
2 198 yen in heavy trading
Mitsubishi UFJ Financial Group dropped 1 8 percent
to 336 yen MUFG was also hit by news that the lender lost 1 8
billion from its common stock investment in Morgan Stanley
so far at least on paper according to a regulatory
filing on Tuesday
But oil related stocks outperformed with Inpex
rising 1 1 percent to 474 500 yen and Japan Petroleum
Exploration adding 2 3 percent to 3 070 yen Oil prices
rose on Tuesday on views that the Fed might indicate fresh
stimulus measures later this week and also drew support from
fighting in Libya and disrupted Nigerian exports
Additional reporting by Ayai Tomisawa Editing by Chris
Gallagher |
JPM | JPMorgan to purchase new debt for struggling Chicago schools | CHICAGO Reuters The Chicago Public Schools CPS said it tapped JPMorgan as the winning bidder for an up to 396 5 million note deal aimed at keeping the cash strapped district afloat The award of the notes purchase to JPMorgan Chase Co NYSE JPM is subject to final negotiation according to a CPS statement on Wednesday The Chicago Board of Education approved the debt sale last month as a way to avoid ending the current school year early and to help make a 721 million pension payment due to its teachers retirement system at the end of this month Escalating pension payments have led to drained reserves debt dependency and junk bond ratings for the nation s third largest public school system JPMorgan which CPS selected as the winning bidder for the notes has lent the school system more than 1 billion through tax anticipation notes deals over the last few years While the district pledged future property tax collections for those deals the new borrowing is secured by about 467 million of CPS delayed grant funding from the state of Illinois which is struggling through a second straight fiscal year without a complete budget The district s already shaky finances took a major hit with Republican Governor Bruce Rauner s December veto of legislation that would have funneled 215 million in state funds to CPS to help it make the fiscal 2017 pension payment |
JPM | Oramed Pharma to list shares on Tel Aviv Stock Exchange shares ahead 3 | The board of Oramed Pharmaceuticals ORMP 2 9 has authorized the company to apply for listing on the Tel Aviv Stock Exchange TASE It expects trading to commence in Q4 It current listing on Nasdaq will be unaffected Now read |
JPM | U S services data suggests upward revision to first quarter GDP | WASHINGTON Reuters The U S economy was probably not as weak in the first quarter as has been reported with data on Thursday showing modestly stronger consumer spending than previously estimated The Commerce Department s quarterly services survey or QSS showed consumption including healthcare spending increased at a faster clip than the government had assumed in its second estimate of gross domestic product published last month Economists said the data suggested first quarter consumer spending could be lifted by as much as eight tenths of a percentage point to a 1 4 percent annual rate when the government publishes its third GDP estimate on June 29 Consumer spending which accounts for more than two thirds of U S economic activity was reported last month to have grown at the start of the year at its slowest pace since the fourth quarter of 2009 This revision should be partially related to health care consumption but other spending categories will likely play a role as well said Daniel Silver an economist at JPMorgan NYSE JPM in New York The QSS data suggested first quarter GDP could be revised up to as high as a 1 5 percent annualized rate from the 1 2 percent growth pace reported in May according to economists Forecasting firm Macroeconomic Advisers said the solid services revenues implied stronger momentum for consumer spending heading into the second quarter As a result we raised our tracking forecast of second quarter GDP growth by one tenth to 3 0 percent Macroeconomic Advisers said
Economists saw little impact on the first quarter estimates for intellectual property products from the QSS data |
C | Citigroup to exit retail banking in Brazil Argentina | Reuters Citigroup Inc N C said it plans to exit its retail banking and credit card operations in Brazil Argentina and Colombia as part of efforts to aggressively cut costs and boost profitability Shares of the bank which has operated in both Argentina and Brazil for more than 100 years were nearly flat in premarket trading on Friday The U S bank built with a series of acquisitions spanning back to the 1980s has been trying to slim down since the financial crisis to be as profitable as its rivals Citi has been selling retail operations in several countries shrinking its branch network and selling non core businesses under Chief Executive Michael Corbat The Wall Street bank like its peers has had to resort to aggressive cost controls as near zero interest rates a slump in oil prices and investor cautiousness due to worries about slowing growth in China have hurt its revenue growth In the fourth quarter the bank reported a 17 percent fall in revenue from LatAm While our consumer businesses in Brazil Argentina and Colombia are of high quality we have decided to focus our efforts on opportunities with our institutional clients in these countries and throughout the wider region Corbat said in a statement on Friday The businesses being sold are a part of its consumer banking operations and will be transferred to Citi Holdings The business will report financial results as part of Citi Holdings from first quarter the bank said Citi Holdings is the division that holds all non core assets that the bank is winding down or selling
Brazil is in the second year of a severe economic recession while the Argentinian economy has been under stress due to restrictions barring it from accessing international capital markets for years |
C | Verizon to buy XO Communications fiber optic business | Reuters Verizon Communications Inc N VZ the No 1 U S wireless service provider said it would buy Carl Icahn owned XO Communications fiber optic network business for about 1 8 billion Verizon said the deal will include XO s fiber based Internet protocol and Ethernet networks that will help serve its enterprise and wholesale customers Carl Icahn the chairman and sole shareholder of XO Holdings which owns XO Communications said the deal does not represent a significant annualized return on investment but was the best achievable outcome Icahn who started buying senior debt of XO in 2001 said he helped bring the company out of bankruptcy in 2003 and has since had to inject additional capital several times to keep it operating Verizon expects more than 1 5 billion in cost savings after the deal the company said on Monday Most Americans own a mobile phone and a saturated U S wireless market has Verizon and its rivals turning to new businesses The deal is expected to close in the first half of 2017 Verizon also said it would simultaneously lease available XO wireless spectrum with an option to buy it by the end of 2018 Citigroup N C Global Markets Inc acted as financial adviser to Verizon while Evercore served as XO s financial adviser
Debevoise Plimpton LLP acted as legal adviser to Verizon and Thompson Hine LLP was XO s legal adviser |
C | Time Inc explores bid for Yahoo s core business source | By Jessica Toonkel and Sai Sachin R Reuters Time Inc N TIME the publisher of Sports Illustrated People and Time magazines has been exploring a bid to acquire the core internet business of Yahoo Inc O YHOO for several weeks a source familiar with the situation told Reuters on Tuesday Time Inc has been reaching out to bankers on pursuing a deal with Yahoo according to the source who wished to remain anonymous because they were not permitted to speak to the media It is unclear if the company has retained an investment bank as financial advisor on the potential bid Yahoo officially launched the sale of its core business which includes search mail and news sites last week Time Inc could pursue a Reverse Morris Trust transaction with Yahoo a tax free deal in which one company merges with a spun off unit Bloomberg reported earlier on Tuesday Yahoo Chief Executive Marissa Mayer would not be part of the company under such a deal Bloomberg reported citing one of its sources Time Inc has heard a presentation from Citigroup Inc N C bankers on pursuing a deal with Yahoo the Bloomberg report said adding that Citigroup had not been retained by Time Time Inc and Yahoo declined to comment on the Bloomberg report while Citigroup could not immediately be reached for comment Verizon Communications Inc N VZ which already owns Internet pioneer AOL has already publicly expressed interest in Yahoo s core business Time Inc which has seen print advertising dollars dry up in recent quarters has been trying to boost its digital presence through acquisitions of online properties Time Inc said earlier this month it would buy social networking pioneer MySpace Earlier this month the magazine publisher reported a bigger than expected drop in fourth quarter profit hobbled by a strong dollar and a drop in income from print ads and said ad revenue would likely be flat or fall in the current quarter The company also said it would buy advertising company Viant as it seeks to boost revenue from its digital properties Time Warner Inc N TWX spun off its publishing business Time Inc in 2014 to focus on its more profitable broadcasting businesses
Time Inc shares were down 2 5 percent at 13 97 in afternoon trading Yahoo shares dipped about 1 percent to 30 88 |
C | U S authorities question Citigroup about transactions in FIFA corruption probe | NEW YORK Reuters Citigroup Inc N C said it has received questions from U S federal authorities investigating the role of financial institutions in alleged corruption and money laundering involving FIFA In an annual filing with securities regulators on Friday Citigroup said it had received a subpoena from the U S Attorney for the Eastern District of New York asking about banking relationships and transactions at its Citibank unit by certain individuals said to be involved in the alleged wrongdoing
The company said it is cooperating with the investigation A spokesman declined to comment further |
C | Insight Wall Street vets battle BP in fallout over Canada refinery | By Jarrett Renshaw and Jessica Resnick Ault NEW YORK Reuters A legal battle between a team of former Wall Street oil traders and behemoth producer BP plc L BP over a remote Canadian refinery sheds rare light on the murky world of crude trading The first salvo in the previously unreported dispute was fired by BP in December The oil company demanded through arbitration 110 million from the private equity backed NARL Refining for its alleged failure to properly manage and maximize profits from the Come by Chance plant in Newfoundland NARL filed a counter arbitration claim along with two lawsuits accusing BP which is the refinery s sole supplier under a two year contract of providing varieties of crude that benefit its trading book but hurt the refinery s equipment and profits The dispute could jeopardize the ongoing operation of the 115 000 barrel per day bpd refinery It also exposes a rift in the rough and tumble global oil market where disputes often are handled quietly to avoid compromising long term relationships or revealing trading strategies Disagreements among parties in supply contracts are not uncommon but we don t typically see these conflicts out in the open said Ed Hirs an energy economist at the University of Houston That s why these contracts call for disputes to go to arbitration keeping it out of public view BP and NARL Refining declined to comment Hirs said contracts include negotiated terms that majors such as BP would prefer to keep private The allegation that BP put its interest over those of a client could also hurt business he said The refinery s operators are SilverPeak Financial Partners a group of Wall Street veterans including Neal Shear who helped build Morgan Stanley s oil trading division Kaushik Amin former chief executive officer of RBS LON RBS Sempra Commodities and global head of liquid markets for Lehman Brothers and Harsh Rameshwar from Merrill Lynch Commodities Although they re experienced trading oil they began refining it when they purchased the plant for an undisclosed price from South Korea s national oil company 18 months ago They are up against BP one of the world s largest producers which supplies its own refineries and select third party assets around the globe The high stakes feud centers on what is the best slate of crudes to run through Come by Chance and how that should be determined There are dozens of varieties of crude in the world each with its own characteristics and a refinery s profits and operations can vary widely depending on choice The dispute began quietly in December with arbitration in New York BP argued that NARL was failing to live up to the terms of the supply contract according to court records Typically arbitration filings are not public But the dispute spilled into the open when NARL went to a federal court in New York to seek to freeze the business relationship pending a resolution of the arbitration The tolling contract at issue is a routine arrangement for independent refineries that lack the trading operations and credit lines necessary to operate effectively in the global market There is no dispute that BP was to supply crude to the refinery and take back roughly 82 percent of the refined fuels such as gasoline diesel and jet fuel paying NARL a fixed toll of 9 45 per barrel on the first 90 000 barrels of oil put through each day NARL earns a higher profit on oil refined in excess of 90 000 bpd termed merchant barrels BP says in its arbitration filing The oil company alleges NARL ran the refinery at more than 90 000 bpd to capitalize on the incentive even when it was not economically advantageous to do so This came at the expense of both the Refinery s gross margin and BP s legitimate expectations for benefit under the contract BP said in court documents In a counterclaim NARL seeks to end the contract Early on NARL says in court documents it deferred to BP in managing the crude slate But as the months rolled on the new owners say in filings they began to make decisions independent of BP NARL alleges that BP made only lesser grades available resulting in significant and long term damage to refinery equipment including a vacuum tower that had to be shut down abruptly last the fall The light crudes contain higher levels of asphaltenes a tar like substance that can clog lines and pipes NARL argued As evidence NARL submitted a BP presentation that acknowledged the asphaltenes problem with U S domestic crudes calling it an industry wide issue In a second federal suit this one filed in Texas NARL alleges BP interfered with its plans to secure a hedging program costing it at least 10 million and scuppered plans to extend a vital financing deal with Citigroup NYSE C Energy Canada NARL says in court filings that BP sent several letters to Citigroup which is a party to the supply and offtake agreement falsely accusing the refinery owners of mismanaging the plant it says the correspondence was in an effort to thwart financing negotiations and impose its will on the refinery owners BP counters in filings that the supply agreement required them to notify Citigroup of their concerns about NARL s management of the refinery
Citigroup declined to comment |
C | Is Help On The Way | The odds were never good that this struggling market would reverse course on the Thursday before a three day weekend Volume has been very low and stocks continue to struggle with uncertainties here at home and overseas So the major indices were down three days in this shortened four day week and ended Thursday at session lows We talked about the fact that no traders want to be long into a long weekend with all the uncertainty out there said Jeremy in Zacks Counterstrike
The S P was down 0 68 today to nearly 2329 the Dow was off 0 67 to 20 453 3 and the NASDAQ declined 0 53 to 5805 2 All three indices dropped by 1 or more for the week S P 1 1 Dow 1 NASDAQ 1 2
The government s pro growth agenda is still weeks or months away and the geopolitical problems are completely unpredictable so the market is going to need some help soon to get back on the right track That help may come from earnings season which will be picking up steam shortly Just today we got results from three major banks JP Morgan Wells Fargo NYSE WFC and Citigroup NYSE C They had good performances but their stocks were down for the day Hopefully investors will use this long weekend to recharge their batteries and get ready for a busy season Today s Portfolio Highlights
TAZR Trader Shares of FireEye FEYE have moved lower and could dip all the way through their descending 50 day moving average at 11 57 Kevin sees this as a perfect opportunity to buy more of this cyber attack security company so he added an additional 3 5 allocation to the position Get more specifics in the complete commentary Momentum Trader It looks like the momentum has left Kronos Worldwide KRO but the profit hasn t Dave decided that now was the time to sell the stock and bank a nice 18 2 return He then turned around and added a 12 5 allocation in Micron MU which has pulled back from its post earnings highs This retracement is providing the perfect buying opportunity for us said the editor Get all the details in the full write up including a breakdown of its chart Zacks Counterstrike The portfolio added a small position in Applied Optoelectronics AAOI yesterday but the optical devices company reported a strong quarter after hours that sent the stock soaring There was a little profit taking at the open so Jeremy wasted no time in adding 10 more to the position Read all about AAOI in the complete commentary Reitmeister Trading Alert Stocks did not rebound back above the 50 day moving average on Thursday In fact they fell further below with a sharp selloff This increases momentum to the downside with a likely test of 2300 coming soon This type of event causes mixed reactions from investors Some get fearful while others get greedy The right reaction is always greed That is because if you like timing the market then get greedy in placing some short positions for more market downside Whereas if you are a long term investor then get greedy looking to buy the best stocks on the dip We are doing a bit of both We are greedily benefiting from gains in short positions And seeking to buy more attractive longs on the dip Steve Reitmeister
Have a Great Weekend
Jim GiaquintoBefore You Go
May I direct your attention to the All Trades tab at the top of this service This brand new and convenient feature lists all the positions held in the portfolios right now and allows you to sort them Want to know the best performing positions of all the services Or when your favorite portfolio added a certain stock Maybe you want to know how many stocks were added on a particular day or how many short positions the editors hold It s all there Check it out
Recommendations from Zacks Private Portfolios Believe it or not this article is not available on the Zacks com website The commentary is a partial overview of the daily activity from Zacks private recommendation services If you would like to follow our Buy and Sell signals in real time we ve made a special arrangement for readers of this website Starting today you can see all the recommendations from all of Zacks portfolios absolutely free for 7 days Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises which we ve predicted with an astonishing 80 accuracy |
MPC | Earnings Preview Marathon Petroleum MPC Q1 Earnings Expected To Decline | Wall Street expects a year over year decline in earnings on higher revenues when Marathon Petroleum MPC reports results for the quarter ended March 2019 While this widely known consensus outlook is important in gauging the company s earnings picture a powerful factor that could impact its near term stock price is how the actual results compare to these estimates
The earnings report which is expected to be released on May 8 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 refiner is expected to post quarterly earnings of 0 01 per share in its upcoming report which represents a year over year change of 87 5
Revenues are expected to be 29 08 billion up 53 2 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 4 5 higher 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 the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change
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 Our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction has this insight at its core
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 Marathon Petroleum
For Marathon Petroleum 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 87 30
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that Marathon Petroleum will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings 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 Marathon Petroleum would post earnings of 1 98 per share when it actually produced earnings of 2 41 delivering a surprise of 21 72
Over the last four quarters the company has beaten consensus EPS estimates three 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
Marathon Petroleum 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 |
MS | UPDATE 12 Brent oil drops nearly 4 as recession fears grow | Investors sell off oil commodities equities
U S crude down 14 percent so far in August
U S bans imports of Syrian oil
Fed scrutinizing European banks U S units report
Updates prices adds details
By Matthew Robinson and David Sheppard
NEW YORK Aug 18 Reuters Brent crude oil fell nearly 4
a barrel on Thursday as a raft of weak U S economic data
provided a fresh blow to shaky investor confidence while U S
crude s losses extended to 14 percent so far in August
Equities plunged volatility jumped and gold hit a fresh
record as traders said fears of a new recession were growing
again sparking another round of risk aversion reminiscent of
the violent sell offs at the start of this month
Thursday s declines follow a short lived rebound that had
seen Brent crude climb by around 9 in the previous six
sessions
It s much of the same concerns over European banks
U S deficits weighing on economic growth and the possibility
of a global recession as the end result said Chris Jarvis
senior analyst for Caprock Risk Management in Hampton Falls
New Hampshire
These cross currents are driving wild swings for riskier
asset classes such as equities and commodities specifically
crude oil Until clarity improves we expect volatility to
remain elevated relative to historical norms
Brent crude fell 3 61 to settle at 106 99 a
barrel breaking below the 200 day moving average a key
technical indicator closely watched by traders
U S crude oil settled down 5 20 or nearly 6 percent at
82 38 a barrel Selling accelerated after the settlement with
prices dropping down to 81 15 a barrel
The losses pushed U S oil below 35 on the 14 day relative
strength index approaching the 30 level which is frequently
seen as a sign of a commodity being oversold U S crude s
discount to Brent widened to near 25 a barrel but still off
the record over 26 hit earlier in August
Early pressure from disappointing U S weekly jobless
claims and July home sales reports sparked a steep sell off
mid morning Selling then intensified after a report showed
factory activity in the U S Mid Atlantic region in August
dropped to the lowest level since March 2009 ID nN1E77H0E8
U S trading volumes were relatively strong up 22 percent
over the 30 day average topping 800 000 lots shortly after the
settlement Brent trade was more subdued slightly over that
average
Implied volatility in the oil market soared with the
Chicago Board Options Exchange s Oil Volatility Index
hitting 54 23 percent its highest level in more than a week
and snapping a steady downtrend ID N1E77H0J2
SAFER HAVENS
The market is in meltdown mode the data continues to
stink I don t know that there s much more to be said We
continue to be in a soft patch said Sal Catrini managing
director for equities at Cantor Fitzgerald Co in New York
The dollar rose and gold hit a new record of 1 825 99 an
ounce as investors sought safe havens away from equities and
industrial commodities
U S stocks tumbled 4 percent and the Reuters Jefferies CRB
an index tracking 19 commodities was down 2 3 percent
in the steepest one day loss since the U S credit downgrade
earlier this month by Standard and Poor s
Analysts have revised down forecasts for fuel consumption
in recent weeks as concerns about global growth rose with
Morgan Stanley the latest bank to cut its forecast for global
gross domestic product in 2011 and 2012 ID nL3E7JI1LM
Concerned the European debt crisis might spread to U S
banks the Federal Reserve Bank of New York has asked for more
information about whether the U S units of big European
lenders have reliable access to funds needed to operate the
Wall Street Journal reported ID nL5E7JI0Q
LIBYA SYRIA
The oil market is also closely watching developments in
North Africa and the Middle East In Libya where around 1 6
million barrels per day bpd of crude production has been cut
by a six month civil war rebel forces took control of a
refinery and blocked a main highway further isolating Muammar
Gaddafi s Tripoli stronghold ID nL5E7JI049
U S President Barack Obama banned U S imports of Syrian
oil as part of a wider sanctions effort and joined the
European Union in calling for President Bashar al Assad to step
down after a five month crackdown on protesters
ID nL5E7JI2C8
Brent prices are up by almost 13 percent so far in 2011 in
part because of the Libyan outage but are almost 20 a barrel
below the post 2008 peak they hit back in April as European
refiners scrambled to find alternatives to Libyan supplies
What was announced today will have a very limited impact
as it doesn t really prevent anyone from outside the U S
dealing with Syrian oil said Greg Priddy global oil analyst
at Eurasia Group in Washington
With 95 percent of Syrian oil exports going to the EU you
might see more action there he added
Syria produces about 400 000 bpd of oil exporting most of
about 150 000 bpd to European countries including the
Netherlands Italy France and Spain
About 10 000 bpd of Syrian oil products were exported to
the United States in the first five months of 2011 out of
total imports of near 9 million bpd
Additional reporting by Gene Ramos Robert Gibbons Eileen
Moustakis and Selam Gebrekiden in New York Francis Kan in
Singapore and Ikuko Kurahone in London Editing by Marguerita
Choy Dale Hudson and Sofina Mirza Reid |
MS | GLOBAL MARKETS Growth worries hobble stocks Swiss franc falls | European stocks follow Asian markets lower
Morgan Stanley adds to growth fears cuts global GDP
forecasts
Swiss franc falls as central bank intervenes in currency
market
Flight to quality sends German Bunds to record highs
Adds detail more quotes background
By Emelia Sithole Matarise
LONDON Aug 18 Reuters World stocks fell on Thursday as
heightened worries about sluggish economic recovery prompted
investors to cut exposure to riskier assets while the Swiss
franc fell as the central bank took further steps to halt its
steady rise
European shares followed Asian markets down as worries about
the U S economy and dim prospects of a quick fix for the euro
zone s debt crisis led investors to lock in profits following
this week s rally
The retreat in riskier assets buoyed gold and safe haven
government bonds with German Bund futures hitting
record peaks and benchmark U S Treasury yields
falling to their lowest level in a week
Adding to the glum economic picture UK retail sales grew
at an unexpectedly slow pace in July
Earlier Morgan Stanley analysts became the latest to cut
forecasts for global growth citing recent policy errors in
the United States and Europe plus prospects of further fiscal
tightening in 2012
Deutsche Bank cut its projection for Chinese GDP growth to
8 9 percent for 2011 from 9 1 percent and to 8 3 percent for
2012 from 8 6 percent largely reflecting a downgrade in export
outlook due to slower growth in the United States and Europe
European stocks fell 2 percent wiping out the
previous session s gains
At the start of the week we were expecting a sell off and
it hadn t materialised with people selectively putting money
into a few stocks keeping the froth alive and so I think it is
overdue the head of institutional trading at a UK based
investment bank said
MSCI s world equity index fell 1 percent
while emerging stocks lost 1 5 percent
U S equity futures pointed to a lower open on Wall Street
after closing flat the pervious day following a gloomy sales
outlook from tech bellwether Dell which fanned fears
slow economic growth would crimp earnings in the third quarter
SWISS TUG OF WAR
The Swiss franc fell against the euro and the dollar with
traders saying the central bank was intervening in the forwards
market in its bid to curb the currency s strength
The plight of the Swiss franc is part of a larger battle
over Europe s fiscal crisis with the Swiss currency favoured by
investors seeking safety in a currency other than the euro
They the SNB have been in the fx swap market said Chris
Walker currency strategist at UBS But we think the euro Swiss
franc will still fall back towards parity
The dollar is also being preferred as there are reports of
funding stress and as a loss of risk appetite sees investors
make a scramble for the dollar
The euro last traded 0 2 percent up at 1 1422 francs
while the dollar stood 0 5 percent firmer at 0 7941
francs
The greenback also rose against commodity linked currencies
like the Australian dollar
Defying the stronger U S dollar spot gold gained
0 3 percent to 1 793 89 an ounce just 1 1 percent shy of its
all time high of 1 813 79 struck last week
In bond markets German Bund futures rose as much
as 87 ticks to a fresh year high of 134 79 as the weak economic
outlook and concerns EU policymakers were not doing enough to
tackle the region s debt crisis spurred the flight to quality
U S Treasuries advanced pushing the 10 year T note yield
about five basis points lower to a one week low of
2 118 percent
Brent crude futures fell 1 2 percent to 109 20 a
barrel as investors fretting over the euro zone s debt woes and
slower global growth tried to lock in profits from a rally in
oil prices to their highest levels in nearly two weeks
Additional reporting by David Brett and Anirban Nag Editing
by Stephen Nisbet |
MS | Global growth woes hit FTSE in choppy summer trade | FTSE 100 down 2 3 pct
Miners fall on China tightening fears
By Tricia Wright
LONDON Aug 18 Reuters Britain s top shares fell on
Thursday in choppy summer trading as concerns over the global
economic outlook heaped pressure on miners while banks dropped
as uncertainty over the euro zone debt situation undermined
investor confidence
The UK benchmark index was down 122 63 points or 2 3
percent at 5 208 97 by 1052 GMT having shed 0 5 percent on
Wednesday snapping a four session winning streak in which the
index jumped 7 percent
Trading was also volatile ahead of the expiry of monthly
futures and options on Friday
Miners lopped the most points off the blue chip
index retreating in tandem with the copper price on
anxiety over a potential interest rate hike in top consumer
China after a rise in its central bank s bill yields
Heightening concerns over the demand picture Morgan Stanley
cut its forecast for global growth citing recent policy
errors in the United States and Europe plus prospects of
further fiscal tightening in 2012
Economists at Deutsche Bank meanwhile downgraded their
2011 and 2012 growth forecasts for China
In the mining sector Xstrata led the market lower
shedding 5 5 percent
Luxury group Burberry whose sales are boosted by
Chinese shoppers love affair with luxury goods also felt the
heat off 4 4 percent
Global growth concerns appear to be driving this and
unfortunately I think we re going to be in this whip saw pattern
for a while until we get a bit of light at the end of the
tunnel Peter Dixon economist at Commerzbank said
This is probably a more typical summer day Dixon said
Volumes have dried up investors clearly don t want to
commit themselves to taking big long positions in this kind of
environment so I suspect we re seeing some opportunistic
selling having seen a reasonable rebound over the course of the
past few sessions
NEW TAX
Financials extended their falls from Wednesday when a summit
between the French President and German Chancellor failed to
calm nerves about the euro zone debt crisis and left investors
anxious about the impact of plans for a new tax on the industry
Lloyds Banking Group and Barclays were the
worst off down 5 percent and 4 7 percent respectively
Resolution bucked the weak sector trend up 0 6
percent and one of only two FTSE 100 risers as Citigroup
repeated its buy rating on the life insurer in the wake of its
first half results earlier in the week
Traders said volumes would likely remain subdued in the near
term with the latest corporate earnings season largely over
There is however a batch of U S data set for release with
the main focus on July inflation numbers at 1230 GMT
U S stock index futures pointed to a
sharply lower open on Wall Street
It s just a risk off day today There s no one story
it s low volumes futures expiries and the dog days of summer
No one wants to get involved and who can blame them one
London based trader said
Additional reporting by Jon Hopkins Editing by David Holmes
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Reporting by Tricia Wright |
MS | Gold soars to record high of USD1 818 25 ahead of U S CPI data | Investing com Gold futures extended gains on Thursday soaring to a fresh record high as increased demand for safe haven assets boosted the precious metal ahead of a flurry of key U S economic data On the Comex division of the New York Mercantile Exchange gold futures for October delivery traded at USD1 814 85 a troy ounce during European afternoon trade surging 1 35 It earlier rose as much as 1 5 to trade at USD1 818 25 a troy ounce exceeding the previous high of USD1 815 65 a troy ounce it hit on August 11 Concerns over the global economic outlook were exacerbated after Wall Street investment bank Morgan Stanley cut its outlook for global economic growth for 2012 citing an insufficient policy response to Europe s sovereign debt crisis weakened confidence and the prospect of fiscal tightening The investment bank added that the U S and Europe are dangerously close to recession Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk Meanwhile the World Gold Council said in a report earlier that investment demand in India during the second quarter soared 78 to 108 5 metric tons while jewelry demand increased 17 to 139 8 tons Gold investment demand in China jumped 44 to 53 tons in the second quarter while jewelry demand rose 16 to 102 9 tons the council said On Wednesday Venezuelan President Hugo Chavez said that he intended to move forward and repatriate as much as USD11 billion in gold reserves held in the U S and Europe in order to nationalize the country s gold holdings According to Chavez Venezuela will transfer 99 tons of gold from the Bank of England to the country s central bank In addition Venezuela holds gold at Wall Street firm JP Morgan Chase U K lenders Barclays and Standard Chartered as well as Canada based Bank of Nova Scotia Elsewhere on the Comex silver for September rose 0 12 to trade at USD40 47 a troy ounce while copper for September delivery tumbled 1 45 to trade USD3 983 a pound Later in the day the U S was to publish a flurry of economic data which will help traders gauge the strength of the U S economic recovery The country was to produce government reports on initial jobless claims consumer price inflation existing home sales manufacturing activity in Philadelphia as well as a report on natural gas stockpiles |
MS | GLOBAL MARKETS Growth worries hit stocks Swiss franc falls | European stocks fall 2 5 percent follow Asia down
Cuts in global GDP forecasts UK retail data fan growth
concerns
Swiss franc falls as central bank intervenes in currency
market
Flight to quality buoys German Bunds to record highs
Gold rises back above 1 800 oz closing in on all time
peaks
Adds fresh detail quotes graphics
By Emelia Sithole Matarise
LONDON Aug 18 Reuters World stocks fell on Thursday as
renewed unease about a sluggish economic recovery prompted
investors to cut exposure to riskier assets though the
safe haven Swiss franc also dropped amid signs of further moves
by the central bank to stem its rise
European shares shed 2 7 percent with worries about the
U S economy and vanishing prospects of a quick fix for the euro
zone s debt crisis wiping out the previous session s gains
The retreat in riskier assets sent investors scrambling for
safe havens buoying gold near record highs German Bund futures
to all time peaks and driving benchmark U S Treasury
yields to their lowest level in a week
Adding to the glum economic outlook UK retail sales grew
at an unexpectedly slow pace in July
Earlier Morgan Stanley analysts became the latest to cut
forecasts for global growth citing recent policy errors in
the United States and Europe plus prospects of further fiscal
tightening in 2012
Deutsche Bank cut its projection for Chinese GDP growth to
8 9 percent for 2011 from 9 1 percent and to 8 3 percent for
2012 from 8 6 percent largely reflecting a downgrade in export
outlook due to slower growth in the United States and Europe
In Europe shares in sectors linked to global
growth such as the automobile sector were worst hit with some
stop loss selling adding to the slide
There is an ever increasing danger of a double dip scenario
and if that happens then we are in for even a more steep
downturn in stocks said Koen de Leus a strategist at KBC
Securities in Brussels
In the United States purchasing power of people has gone
down and there is a lot of insecurity concerning jobs While in
Europe a lot of countries are running austerity
programmes
Euro zone debt crisis graphic
Global real bond yields
MSCI s world equity index fell 1 2 percent
while emerging stocks lost 1 6 percent
U S equity futures pointed to a lower open on Wall Street
after closing flat the previous day following a gloomy sales
outlook from tech bellwether Dell which fanned fears
slow economic growth would crimp earnings in the third quarter
Investors are bracing for a slew of U S economic data due
later in the session that could add to concerns the world s
biggest economy is headed for a protracted downturn The slate
includes inflation weekly jobless claims housing and
forward looking economic sentiment survey results
SWISS TUG OF WAR
The Swiss franc fell against the euro and the dollar with
traders saying the central bank was intervening in the forwards
market in its bid to clip the soaring currency s wings
The franc s sharp gains reflect a broader struggle to tame
Europe s fiscal crisis with the Swiss currency favoured by
investors seeking safety in a currency other than the euro
They the SNB have been in the FX swap market said Chris
Walker currency strategist at UBS But we think the euro Swiss
franc will still fall back towards parity
The dollar is also being preferred as there are reports of
funding stress and as a loss of risk appetite sees investors
make a scramble for it
The euro traded 0 2 percent up at 1 1415 francs
while the dollar stood 0 6 percent firmer at 0 7941 francs
The greenback also rose against commodity linked currencies
like the Australian dollar
The growing jitters about the growth outlook drove spot gold
1 1 percent up to 1 808 70 taking it to within 5 of
last week s record high
In bond markets German Bund futures jumped more than a full
point to a record high of 135 08 as the weak economic outlook
and concerns EU policymakers were not doing enough to tackle the
region s debt crisis spurred the flight to quality
U S Treasuries advanced pushing the 10 year T note yield
about five basis points lower to a one week low of
2 09 percent with sustained safe haven bids expected to send it
to all time lows around the 2 04 percent seen after Lehman
Brothers collapse in 2008
Brent crude futures fell 1 2 percent to 109 20 a
barrel as investors fretting over the euro zone s debt woes and
slower global growth tried to lock in profits from a rally in
oil prices to their highest levels in nearly two weeks
Additional reporting by Atul Prakash and Anirban Nag Editing
by Stephen Nisbet John Stonestreet |
MS | Crude oil plunges more than 4 on U S data growth fears | Investing com Crude oil futures extended sharp losses on Thursday dropping to a one week low after official data showed that U S first time jobless claims rose more than expected last week adding to ongoing fears over the global economic outlook On the New York Mercantile Exchange light sweet crude futures for delivery in October traded at USD83 94 a barrel during U S morning trade plunging 4 2 It earlier fell as much as 4 4 to trade at USD83 75 a barrel the lowest since August 11 The U S Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending August 12 rose by 9 000 to a seasonally adjusted 408 000 higher than the expected increase of 400 000 The previous week s figure was revised up to 399 000 from 395 000 Oil traders have been paying close attention to readings on U S employment levels for signs that people are returning to work thus driving more and using more energy A separate report showed that the U S core consumer price inflation rose 0 2 in July in line with market expectations while consumer prices including food and energy costs rose 0 5 last month above expectations for a 0 2 increase The higher than expected inflation reading dampened expectations the Federal Reserve would embark on a third round of quantitative easing Concerns over the global economic outlook were exacerbated after Wall Street investment bank Morgan Stanley cut its outlook for global economic growth for 2012 citing an insufficient policy response to Europe s sovereign debt crisis weakened confidence and the prospect of fiscal tightening The investment bank added that the U S and Europe are dangerously close to recession A broadly stronger U S dollar also pressured prices as the dollar index which tracks the performance of the greenback versus a basket of six other major currencies was up 0 72 to hit 74 34 Oil prices typically weaken when the U S currency strengthens as the dollar priced commodity becomes more expensive for holders of other currencies Elsewhere on the ICE Futures Exchange Brent oil futures for October delivery tumbled 2 45 to trade at USD107 97 a barrel up USD24 03 on its U S counterpart |
MS | US STOCKS Wall St tumbles on renewed bank worries | Jobless claims top view CPI rises faster than forecast
Fed worried euro zone crisis may affect US banks report
Indexes off Dow 2 8 pct S P 3 1 pct Nasdaq 3 7 pct
For up to the minute market news see STXNEWS US
Updates to early morning trading adds byline
By Rodrigo Campos
NEW YORK Aug 18 Reuters U S stocks tumbled 3 percent
in early trading on Thursday weighed down by bank shares as a
report that regulators were intensifying their review of
European banks U S units shook up investors
The KBW bank index fell 4 percent with Citigroup
Inc off 7 2 percent at 27 66 and Morgan Stanley
down 6 8 percent at 15 84 Only a handful of the S P 500
components were in positive territory
Concerned the European debt crisis might spread to the U S
banking sector the Federal Reserve Bank of New York has asked
for more information about whether the U S bank units of big
European banks have reliable access to funds needed to operate
the Wall Street Journal reported For details see
ID nL5E7JI0Q
The selloff is rooted in the European banking system
said Jack de Gan chief investment officer at Harbor Advisory
Corp in Portsmouth New Hampshire
It reflects continued concern that sovereign debt issues
indicate we re going to have to bail out all those banks again
And if there s stress in major European banks it will affect
U S banks too
The Dow Jones industrial average was down 313 90
points or 2 75 percent at 11 096 31 The Standard Poor s
500 fell 37 25 points or 3 12 percent at 1 156 64 The
Nasdaq Composite dropped 93 43 points or 3 72 percent
at 2 418 05
Investors continued to worry that European policymakers
were not doing enough to tackle the euro zone s debt crisis
European blue chips were down 4 percent with banks
down 5 5 percent EU MKTS GLOB
Separate U S government reports showed new jobless claims
rose more than expected last week while consumer prices rose
faster than expected in July ID nN1E77H0E8
Data on leading indicators and home resales as well as the
Philadelphia Fed s business activity index are due at 10 a m
EDT 1400 GMT
Reporting by Rodrigo Campos editing by Jeffrey Benkoe |
MS | European shares tumble on global growth worries | FTSEurofirst 300 falls 4 percent on growth worries
German index loses most
Automobile banks among top sector fallers
By Brian Gorman
LONDON Aug 18 Reuters European equities fell heavily on
Thursday as a bigger than expected rise in U S weekly jobless
claims added to worries about the strength of recovery in the
world s biggest economy
German shares the lost most with traders citing the effects
of a short selling ban on financial stocks in other parts of
Europe
Germany s blue chip index was down 5 4 percent on
fears that a short selling ban on financial shares and related
financial instruments in France Italy Spain and Belgium
announced last week had pushed investors towards futures and
options on the DAX excluded from the short selling ban
Traders cited investor uncertainty and confusion on whether
they can roll their Euro STOXX 50 futures hedge into
Friday s expiry and whether this constitutes a fresh short
position or not
This morning everyone is talking about a fat finger in
the DAX futures However we don t agree a trader said
We believe this was a new short position 15 000 contracts
traded over a 2 minute span this morning taking the futures down
2 9 percent
The trader also cited news that Austria was joining Finland
in asking Greece for collateral in exchange for emergency loans
Auto shares down 6 percent featured among the
worst performers on worries a slowdown in the global economy
would dent vehicle demand Fiat fell 8 9 percent
following disappointing sales news from one of its key markets
Brazil
At 1354 GMT the FTSEurofirst 300 index of top
European shares was down 4 percent at 932 87 points and had hit
a low of 930 50 The index is down more than 20 percent from a
mid February peak
The banking sector exposed to the euro zone debt crisis
was also sharply lower
The STOXX Europe 600 Banking Index fell 5 9
percent Heavyweight fallers included Barclays
and Societe Generale down 9 4 and 8 7
percent respectively Deutsche Bank was down 6
percent
Investors with a negative view on the outlook for the
European stock market can t sell futures or put options on
indexes that include banking shares covered by the short selling
ban such as the Euro STOXX 50 and the CAC
but they can do it on the DAX derivatives
A DAX hedge is the next best I suppose and it is getting
hit today a German trader says
New U S claims for unemployment benefits rose more than
expected last week according to a government report
A Morgan Stanley note saying the global economy was
dangerously close to recession added to the gloomy outlook for
shares
Citigroup analysts said GDP forecasts were in the process of
coming down to levels consistent with sluggish growth but not a
global recession
Wall Street was lower in early trade The Dow Jones
S P 500 and Nasdaq Composite were down between 3
and 4 percent
Additional reporting by Joanne Frearson Blaise Robinson and
Harro ten Wolde Editing by Erica Billingham
For rolling updates on what is moving European shares
please click on
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Main currency report |
MS | Dollar tops majors amid gloomy economic news | The U S Dollar rose against majors this morning on concerns that the economic recovery could be derailed especially after Morgan Stanley slashed its forecasts for global growth and speculation that lenders could be using insufficient policy response to tackle Europe s swelling sovereign debt crisis which all in all triggered a wave of risk aversion and increased demand for safe haven currencies
Also downbeat economic fundamentals from the U S contributed in driving investors to safe havens as we saw American consumer costs climbing above expectations besides the nubmer of peolpe filing for emplymnet benifits topping forecasts in the last week
The U S Dollar index which measures the performance of the U S dollar against a basket of currencies including the Euro the Pound and the Yen rose on daily basis to trade at 74 42 compared with the opening level at 73 88 while recording a high of 74 42 and a low of 73 73
Gold surged to currently trade at 1819 42 compared with the opening level at 1786 88 an ounce while crude oil prices dropped to trade at 83 25 compared with the opening level at 87 50 a barrel
The Euro slid against the Dollar where the EUR USD pair is trading at 1 4313 while recording a high of 1 4452 and a low of 1 4271 The pair is now trading among within the support level of 1 4205 and the resistance level of 1 4565
The British Pound fell today against the U S Dollar where the GBP USD pair is now trading at 1 6472 while the pair recorded a high of 1 6554 and a low of 1 6421 The pair is now is now trading within the key support level of 1 6225 and key resistance level of 1 6745
Furthermore the U S Dollar dropped against the Japanese Yen where the USD JPY pair is now trading at 76 51 while recording a high of 76 71 and a low of 76 45 The pair is now trading between the support level of 75 25 and resistance level of 79 55 |
JPM | Snap shares down 2 6 as JPMorgan cuts price target | JPMorgan NYSE JPM reduces Snap s NYSE SNAP price target from 20 to 18 citing concerns about the company s ability to monetize and scale its ad business and Snap s lack of profit
Other Snap concerns include competition from the likes of Facebook NASDAQ FB and the company s ability to continue adding new users
JPMorgan is conservative on the future of the smart sunglasses Spectacles dropping its original projection of 915 000 units with 119M in sales this year down to 429 000 and 56M
The analyst note also noted that a share lock up on June 29 could create volatility as 70 to 80 of shares become available for sale
Snap shares are down 2 61 premarket
Now read |
JPM | FT Bunge hires advisers in takeover defense | Bunge BG 0 3 which recently rejected overtures from Glencore LON GLEN OTCPK GLCNF OTCPK GLNCY has hired JPMorgan Chase NYSE JPM and Shearman Sterling to help it defend against takeovers Financial Times reports BG is now focused on remaining independent after being caught off guard by Glencore s unexpected approach as it had been focused on a partnership or merger with the miner s agricultural arm rather than a sale according to the report The paper notes that BG which is incorporated in Bermuda does not have a poison pill to prevent an activist investor from building a large stake and ousting its board although one could be put in place Now read |
JPM | Emerging markets debt ETF got a whopping investment on Friday | via Bloomberg s Lisa AbramowiczThe iShares JPMorgan NYSE JPM USA Emerging Markets Bond ETF NYSEARCA EMB saw a net inflow of 310 9M on Friday by a wide margin the largest inflow this year Emerging markets and their debt have been a popular spot this year EMB is ahead 5 the total return is nicely higher thanks to the near 5 yield Now read |
JPM | Exclusive Brazil orders Caixa to halt loans to J F sources | By Aluisio Alves and Lisandra Paraguassu SAO PAULO BRASILIA Reuters The Brazilian government has ordered state controlled lender Caixa Econ mica Federal to stop providing financing to a family of billionaires who accused President Michel Temer of working to obstruct a corruption probe people familiar with the decision said on Tuesday According to two of the people The Temer administration ordered management at Caixa not to refinance existing credit lines to J F Investimentos SA a holding company controlled by Brazil s Batista family Members of the Batista family offered prosecutors proof last month that Temer allegedly worked to obstruct a major corruption probe One of the unnamed sources who is a senior Temer government official said under the condition of anonymity that ordering Caixa to stop doing business with J F was in retaliation for accusations that Joesley Batista a family member and then J F s chairman made against Temer Joesley Batista secretly taped a conversation in which Temer appeared to condone bribing a potential witness J F controls JBS SA the world s No 1 meatpacker and several companies in the fashion dairy pulp and banking industries Caixa is J F s largest creditor with outstanding loans worth 9 7 billion reais 3 billion a third person said Caixa has set aside extra capital to reclassify some of the loans to J F after deeming them riskier than before the same person said The extra provisioning came after Caixa asserted control of unspecified collateral put forth by J F for a merger financing loan it took two years ago the person added The situation underscores the discretionary way in which state lenders are run in Brazil and how borrowers are exposed to retaliation if they fall out of grace with the government Caixa was used as a policy tool by Temer s predecessor Dilma Rousseff sparking heavy loan losses because of reckless lending and risk taking decisions Caixa said it made extra provisions related to J F but did not elaborate on the reasons for the move J F declined to comment Temer s office said in an emailed statement to Reuters that state banks take actions based exclusively on technical criteria noting that decisions based on other criteria than that count with no authorization from the president s office Brazil s Federal Supreme Court released plea bargain testimony on May 19 accusing Temer and his two predecessors of receiving bribes the most damaging development yet in the nation s biggest ever corruption probe SURPRISING MOVE At the core of the decision to restrict Caixa s business with J F is a 2 7 billion real loan that the Batista family took late in 2015 to buy a controlling stake in apparel and fashion branding firm Alpargatas SA SA ALPA4 the people said Losing Caixa as a key creditor means the Batistas will have to resort to other lenders or sell assets to raise cash for a heavy repayment calendar over the next year One of the people said that companies controlled by J F excluding JBS have about 14 billion reais of debt maturing over the next 12 months Analysts including JPMorgan NYSE JPM Securities s Natalia Corfield have said that recent political and economic turmoil in Brazil risks slowing Caixa s efforts to reduce defaults and provisions Caixa s surprising move also set off warning signs among other banks that are also lenders to J F one of the people said By winning control of more guarantees Caixa raced ahead of other lenders and has a smaller chance of undertaking loan losses if J F defaults the same person added In a statement J F said it does maintain long term relationships with financial institutions refraining from commenting further J F which stands for the initials of Joesley s parents Jos and Flora agreed to pay a record setting 10 3 billion real fine for engaging in bribery graft and other crimes Joesley Batista s plea deal has sent shockwaves across Brazil s political and business establishments and risks accelerating Temer s ouster from office analysts said Most of the fine J F will pay or the equivalent of 8 billion reais will be divided among Caixa Brazil s development bank BNDES BNDES UL a state controlled severance fund known as FGTS as well as two pension funds for employees of state controlled companies Reuters reported on May 22 that BNDES decided not to extend any new loans to JBS SA JBSS3 or J F Investimentos until they signed a leniency agreement with federal prosecutors Pension funds and state run banks invested in or extended loans to J F companies in return for bribes paid by the Batista brothers according to plea deal testimony Writing and additional reporting by Guillermo Parra Bernal Editing by Daniel Flynn and Andrew Hay |
C | Gold prices dip in Asia as investors book profits await Yellen | Investing com Gold prices fell in Asia Tuesday on profit taking as investors looked look ahead to views on U S interest rates this week
Investors await an appearance by Federal Reserve chair Janet Yellen before the House Financial Services Committee on Wednesday for further indications on the pace of tightening over the next several months
On the Comex division of the New York Mercantile Exchange gold for April delivery dipped 0 40 to 1 193 10 a troy ounce
Silver for March delivery fell 0 36 to 15 370 a troy ounce and copper for March delivery rose 0 12 to 2 095 a pound
Overnight gold surged more than 3 at session highs on Monday rising to its highest level since June as investors piled into the safe haven asset amid a continuing rout in major banking stocks throughout the world
A host of stocks among prominent European financial firms including Deutsche Bank DE DE DBKGn AG NA O N N DB Commerzbank DE DE CBKG HSBC Holdings L HSBA PLC N HSBC and BNP Paribas SA PA PA BNPP plummeted anywhere between 3 and 7 on Monday amid mounting concerns on the impact of negative interest rates and persistently low oil prices
Several days after soaring more than 8 last Wednesday on hopes of a dramatic reduction in OPEC and non OPEC production crude slipped back below 30 a barrel applying further pressure on banks and the high yield market
Last month JPMorgan Chase Co N N JPM Citigroup Inc N N C and Wells Fargo Company N WFC all warned that they could incur credit losses in the range of hundreds of millions in oil and gas loans later this year if oil prices continued to weaken
Gold is viewed as a safe haven asset for investors in periods of heightened financial instability
While markets in China remained closed for the Lunar New Year holiday the celebrations started off inauspiciously after the People s Bank of China reported on Monday that its foreign currency reserves declined by 99 5 billion in January falling to the lowest level since 2012
Last month the total amount of Chinese foreign reserves fell for a third consecutive month as the PBOC continued to unload large amounts of the dollar in an effort to prop up the yuan and prevent |
C | U S UK likely to charge multiple banks in Libor rigging WSJ | WASHINGTON Reuters American and British regulators are likely to charge several banks with rigging interest rates including Citigroup N C the third largest U S bank and London based HSBC Holdings L HSBA the Wall Street Journal reported on Friday The U S Commodity Futures Trading Commission and the U K Financial Conduct Authority were preparing a final round of civil charges against the banks for rate manipulation in the Libor scandal the newspaper reported citing people close to the investigation The Journal said the CFTC was still investigating J P Morgan Chase the largest American bank by assets but that may not lead to charges U K regulators said last year they dropped their probe of J P Morgan U S and British regulators are leading a seven year investigation into the manipulation of Libor or the London interbank offered rate
Libor is a short term rate financial institutions charge each other for loans that is calculated based on submissions by a panel of banks Hundreds of trillions of dollars in short term interest rates swaps and other financial products are pegged to Libor |
C | Citigroup plans to exit retail banking in Argentina Brazil Bloomberg | Reuters Citigroup Inc N C plans to exit retail banking in Argentina and Brazil Bloomberg reported citing a person familiar with the matter The plan to exit the businesses will probably be announced in coming weeks Bloomberg reported citing the source
Citigroup was not immediately available for comment |
C | Citi raises CEO Corbat s pay by 27 percent in 2015 | Reuters Citigroup Inc N C raised Chief Executive Michael Corbat s pay by an estimated 27 percent in 2015 a year in which the bank s profit more than doubled Corbat earned an estimated 16 5 million in 2015 including deferred shares worth about 4 5 million He earned 13 million in 2014 Deferred stock makes up about 30 percent of Corbat s bonus pay under Citi s executive compensation plan which was overhauled three years ago amid shareholder pressure
Citi s net income more than doubled to 17 2 billion in 2015 its highest since 2006 |
C | The Three Things You Need To Know Today | The three things you need to know before having your morning coffee
1 US Military Strike
With a weapon known as the mother of all bombs the US destroyed an Isis State base in Afghanistan on Thursday evening according to Afghan defence ministry No civilians were harmed by the insistent
2 Trump s Strong Dollar
Trump s ambiguous intentions were highlighted once again when the US president remarked that the dollar is too strong The statement is conflicting with his inflationary fiscal policies which will actually help inch up the greenback further
3 Earnings
is underway and so far financials are mixed
Wells Fargo NYSE WFC reported first quarter earnings that exceeded expectations however revenue reports were disappointing
Citigroup NYSE C beat forecasts on Thursday The bank s net income rose 17 and earnings per share came in at 1 35
JP Morgan Chase s reports also surpassed analyst s predictions Earnings per share came in at 1 65 Revenue beat forecasts at 25 856 billion |
MPC | Marathon Petroleum MPC Down 9 7 Since Last Earnings Report Can It Rebound | It has been about a month since the last earnings report for Marathon Petroleum MPC Shares have lost about 9 7 in that time frame underperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is Marathon Petroleum due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts Marathon Petroleum Beats Q4 Earnings on Andeavor ContributionMarathon Petroleum reported strong fourth quarter earnings on favorable crude differentials growing throughput volumes and higher fuel margin The company s adjusted earnings per share came in at 2 41 well ahead of the Zacks Consensus Estimate of 1 98 and the year ago period s bottom line figure of 1 05 Marathon Petroleum s revenues of 32 5 billion improved 53 year over year but came slightly below the Zacks Consensus Estimate of 33 2 billion Segmental PerformanceRefining Marketing Operating profit from the Refining Marketing segment was 923 million compared with 732 million in the year ago quarter The improvement reflects wider crude differentials in addition to rising throughputs following the 2018 acquisition of AndeavorTotal refined product sales volumes were 3 764 thousand barrels per day mbpd up from the 2 414 mbpd in the year ago quarter Moreover throughput increased from 2 024 mbpd in the year ago quarter to 3 111 mbpd Capacity utilization during the quarter was 94 Retail Income from the Retail segment totaled 613 million up more than four fold from the year ago period Apart from strong performance at Marathon Petroleum s former Speedway unit the segment results were buoyed by contribution from the acquired retail assets of Andeavor Across the board the Retail segment benefitted from higher fuel margins and merchandise sales In particular the company s retail fuel margin rose from 17 72 cents per gallon in the fourth quarter of 2017 to 32 35 cents per gallon in the quarter under review Midstream Segment profitability was 889 million up from 343 million in the fourth quarter of 2017 Earnings were buoyed by the addition of Andeavor Logistics results that contributed 230 million during the quarter The unit was further aided by the dropdown of refining logistics assets and fuels distribution services from sponsor Marathon Petroleum to MPLX Finally the unit benefited from strength in throughput volumes as well as record gathered and processed volumes Total ExpensesMarathon Petroleum reported expenses of 30 5 billion in fourth quarter 2018 52 higher than the year ago quarter Capital Expenditure Balance Sheet Share Repurchase In the reported quarter Marathon Petroleum spent 1 7 billion on capital programs 56 on the Midstream segment As of Dec 31 the company had cash and cash equivalents of 1 7 billion and total debt of 27 5 billion with a debt to capitalization ratio of 38 4 During the full year 2018 Marathon Petroleum returned 4 2 billion of capital to shareholders including 675 million in share buybacks in the fourth quarter
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates The consensus estimate has shifted 35 95 due to these changes
VGM Scores
At this time Marathon Petroleum has a great Growth Score of A though it is lagging a lot on the Momentum Score front with a C However the stock was allocated a grade of A on the value side putting it in the top quintile for this investment strategy
Overall the stock has an aggregate VGM Score of A If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift Notably Marathon Petroleum has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
MPC | Marathon Petroleum MPC Dips More Than Broader Markets What You Should Know | Marathon Petroleum MPC closed at 62 03 in the latest trading session marking a 0 08 move from the prior day This move lagged the S P 500 s daily loss of 0 01 At the same time the Dow lost 0 1 and the tech heavy Nasdaq gained 0 12
Heading into today shares of the refiner had lost 4 71 over the past month lagging the Oils Energy sector s gain of 2 08 and the S P 500 s gain of 2 24 in that time
Investors will be hoping for strength from MPC as it approaches its next earnings release In that report analysts expect MPC to post earnings of 0 58 per share This would mark year over year growth of 625 Meanwhile the Zacks Consensus Estimate for revenue is projecting net sales of 35 86 billion up 88 9 from the year ago period
MPC s full year Zacks Consensus Estimates are calling for earnings of 6 26 per share and revenue of 121 33 billion These results would represent year over year changes of 7 67 and 24 95 respectively
It is also important to note the recent changes to analyst estimates for MPC These revisions help to show the ever changing nature of near term business trends With this in mind we can consider positive estimate revisions a sign of optimism about the company s business outlook
Based on our research we believe these estimate revisions are directly related to near team stock moves We developed the Zacks Rank to capitalize on this phenomenon Our system takes these estimate changes into account and delivers a clear actionable rating model
The Zacks Rank system which ranges from 1 Strong Buy to 5 Strong Sell has an impressive outside audited track record of outperformance with 1 stocks generating an average annual return of 25 since 1988 The Zacks Consensus EPS estimate has moved 1 94 lower within the past month MPC is currently sporting a Zacks Rank of 3 Hold
Valuation is also important so investors should note that MPC has a Forward P E ratio of 9 92 right now This represents a discount compared to its industry s average Forward P E of 11 85
Also we should mention that MPC has a PEG ratio of 0 66 This metric is used similarly to the famous P E ratio but the PEG ratio also takes into account the stock s expected earnings growth rate MPC s industry had an average PEG ratio of 1 22 as of yesterday s close
The Oil and Gas Refining and Marketing industry is part of the Oils Energy sector This industry currently has a Zacks Industry Rank of 94 which puts it in the top 37 of all 250 industries
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
Be sure to follow all of these stock moving metrics and many more on Zacks com |
MS | GLOBAL MARKETS Greek deal lifts euro stocks outlook cloudy | Further euro gains may be difficult
MSCI APXJ up 1 2 pct set for fourth day of gains
Hope of a break in U S debt deadlock also boosts optimism
Precious metals slip on reduced safe haven demand
By Saikat Chatterjee
HONG KONG July 22 Reuters Asian stocks rose and the
euro climbed to a two week high on Friday after European leaders
agreed on a package to rescue debt stricken Greece and gains
will be sustained if U S policymakers also manage to cobble
together a last minute deal
European shares are set to open higher with financial
spreadbetters expecting major indices to open between 0 6 to 0 7
percent higher
Even as markets greeted the Europe rescue package
news with relief the single currency still faces considerable
headwinds in its march towards a early May peak of near 1 50 as
doubts regarding longer term effectiveness of the deal remained
For now euro sensitive plays such as Japanese stocks
including Canon and Nikon climbed benefiting
from the currency s strength which would boost their exports
Hong Kong shares were the clear outperformers in the
region for the day with HSBC Holdings which makes
up a chunky 15 percent of Hong Kong s Hang Seng index up
nearly 3 percent helping the index gain 1 7 percent
An emergency summit of leaders of the 17 nation currency
area pledged on Thursday to conduct a second bailout of Greece
with an extra 109 billion euros 157 billion of government
money plus a contribution by private sector bondholders
estimated to total as much as 50 billion euros by mid 2014
Investors who have been stricken by a series of factors
ranging from the U S and Europe debt crises to concerns about a
sharp slowdown in China used this rare bit of good news to pick
up bargains
Australian shares rose 1 percent while
Japan s Nikkei climbed 0 8 percent though a stronger yen
may check gains
The MSCI index of shares for Asia ex Japan
rose more than 1 1 percent set for a fourth consecutive day of
gains
Equity gains were also sustained by a strong close on Wall
Street with banks among the best performers after surprisingly
strong results from Morgan Stanley
In credit markets the Asia ex Japan iTraxx investment grade
index tightened by it biggest margin in over three
months pulling in by five basis points to 115 bps
Emerging markets remain a preferred investment destination
despite the uncertainty surrounding markets Both emerging
market equities and debt recorded decent inflows in the week
ended July 20 according to Thomson Reuters Lipper data
EURO GAINS SHORT LIVED
Demand for risk was also rekindled as hopes of a
breakthrough in the U S debt deadlock gathered momentum with
the White House and top lawmakers scrambling to sort through
competing options before a Aug 2 deadline
In currency markets the euro vaulted more than 1 percent to
as high as 1 4440 on trading platform EBS in early
trades the highest level since July 6 before easing slightly
to 1 4385 up more than a percent since Thursday
The single currency s way forward is strewn with technical
resistance levels in the areas of 1 4458 1 4493 and 1 4519
Barclays Capital said the latest rescue package remains
short of key details in areas like private sector involvement
and the proposed size of the euro zone s rescue fund
The dollar is broadly weighed down while the euro was
lifted mainly by short covering and it may have some more room
to climb until around 1 45 said Makoto Noji senior bond and
currency strategist at SMBC Nikko Securities
Still the market is not overly optimistic as the euro s
effective exchange rate has not come up The euro also remains
under pressure against the Swiss franc and the yen as the euro
zone debt problems linger Noji said
Elsewhere gold fell to around 1 590 an ounce about 20
below a record high of near 1 610 set on Tuesday Silver
tumbled more than 2 percent
In bond markets yields on ten year U S Treasury notes
stabilised around 3 percent after rising by more
than 12 basis points in the past three sessions
For Reuters Global Investing Blog click on
For the MacroScope Blog click on
For Hedge Fund Blog click on
Additional reporting by Reuters FX analyst Krishna Kumar
Chikafumi Hodo in TOKYO Editing by Ramya Venugopal |
MS | Gold futures rally to fresh record high on U S debt worries | Investing com Gold futures rallied to a new record high on Wednesday as a lack of progress over raising the U S debt ceiling before a looming deadline raised fears over a possible U S sovereign debt default boosting the safe haven appeal of the precious metal On the Comex division of the New York Mercantile Exchange gold futures for October delivery traded at USD1 625 35 a troy ounce during late Asian trade gaining 0 25 It earlier rose as much as 0 33 to trade at an all time high of USD1 626 75 a troy ounce eclipsing the previous high of USD1 625 05 a troy ounce it hit on Monday With time running out U S Republican leaders delayed a key vote in the House of Representatives on a plan to increase the country s USD14 3 trillion debt limit until Thursday at the earliest adding to investors nervousness over a possible sovereign debt default Democrats are seeking a combination of spending cuts and revenue increases to solve the debt crisis while Republicans have vowed that any compromise must not include higher taxes Any budget plan to raise the debt limit must pass both the Republican controlled House and the Democratic run Senate and be signed by President Obama before the August 2 deadline Ratings agencies Moody s Standard Poor s and Fitch have said they will cut the U S s top level credit rating in the event that a failure to raise the debt ceiling results in a default Meanwhile global financial service provider Morgan Stanley raised its average gold price forecast for the remainder of 2011 by 22 to USD1 624 a troy ounce The investment bank said in a report published late Tuesday that a sharp rise in inflationary pressures the growing risk of sovereign debt default in peripheral countries of the euro zone and the impending threat of technical default by the U S government were all expected to contribute to gold s strength in the next six months Elsewhere on the Comex silver for September delivery advanced 0 55 to trade at USD41 14 a troy ounce the highest price since May 4 as investors sought a cheaper alternative to gold |
MS | Crude oil futures drop amid concerns over demand outlook | Investing com Crude oil futures were down on Thursday slumping to a two day low as lingering concerns over the global economic outlook weighed on future oil demand expectations while a stronger U S dollar also weighed On the New York Mercantile Exchange light sweet crude futures for delivery in October traded at USD86 41 a barrel during European morning trade dropping 1 4 It earlier fell as much as 1 5 to trade at USD86 31 a barrel the lowest since August 16 Concerns over the economic outlook for the euro zone were underscored after European Central Bank Governing Council member Ewald Nowotny said that he was more concerned about entering a phase of slow growth and low inflation than the risks posed by high inflation Nowotny added that growth in the U S was likely to continue albeit at a more modest pace than previously expected Meanwhile global financial service providers Deutsche Bank and Morgan Stanley cut their forecast for Chinese economic growth while Morgan Stanley also lowered its outlook for global growth citing an insufficient policy response to Europe s sovereign debt crisis weakened confidence and the prospect of fiscal tightening Weekly data from the U S Energy Information Administration released Wednesday painted a mixed picture of energy demand in the world s largest oil consumer U S crude oil inventories increased by 4 2 million barrels last week confounding expectations for a 0 5 million barrel decline while motor gasoline inventories declined by 3 5 million barrels outstripping expectations for a 2 0 million barrel withdrawal Strength in the U S dollar also weighed as the dollar index which tracks the performance of the greenback versus a basket of six other major currencies was up 0 3 to hit 74 03 Dollar denominated oil futures contracts tend to rise when the dollar falls as this makes oil cheaper for buyers in other currencies Elsewhere on the ICE Futures Exchange Brent oil futures for October delivery retreated 1 3 to trade at USD109 25 a barrel up USD22 84 on its U S counterpart Later in the day the U S was to publish a flurry of economic data which will help traders gauge the strength of the U S economic recovery The country was to produce government reports on initial jobless claims consumer price inflation existing home sales manufacturing activity in Philadelphia as well as a report on natural gas stockpiles |
MS | European stocks plunge on growth fears DAX tumbles 3 5 | Investing com European stock markets were sharply lower on Thursday as lingering concerns over the euro zone s sovereign debt crisis and mounting fears over the global economic outlook prompted investors to shun riskier assets During European morning trade the EURO STOXX 50 sank 3 France s CAC 40 dropped 2 5 while Germany s DAX 30 plunged 3 5 Concerns over the economic outlook for the euro zone were underscored after European Central Bank Governing Council member Ewald Nowotny said that he was more concerned about entering a phase of slow growth and low inflation than the risks posed by high inflation Nowotny added that growth in the U S was likely to continue albeit at a more modest pace than previously expected Meanwhile global financial service providers Deutsche Bank and Morgan Stanley cut their forecast for Chinese economic growth while Morgan Stanley also lowered its outlook for global growth citing an insufficient policy response to Europe s sovereign debt crisis weakened confidence and the prospect of fiscal tightening Shares in the financial sector posted sharp losses with French banks Societe Generale and BNP Paribas tumbling 5 2 and 3 3 while German lenders Deutsche Bank and Commerzbank fell 4 1 and 4 7 apiece Peripheral lenders were also down heavily with Unicredit shares dropping 4 1 Intesa Sanpaolo down 5 15 while Spanish lender Banco Santander was down 3 2 In London the commodity heavy FTSE 100 fell 2 1 as shares in raw material producers led losses amid the uncertain global economic outlook Mining giants BHP Billiton and Rio Tinto dropped 2 65 and 4 5 respectively copper producers Xstrata and Kazakhmys saw shares tumble 5 5 and 4 7 while oil majors British Petroleum and Royal Dutch Shell retreated 1 6 each Meanwhile U K lenders tracked their European counterparts lower with Barclays tumbling 5 1 Royal Bank of Scotland dropping 4 2 while Lloyds Banking Group slumped 3 85 The outlook for U S equity markets was sharply lower ahead of earnings reports from the largest U S personal computer maker Hewlett Packard clothing retailer GAP software manufacturer Salesforce com as well as retail conglomerate Sears The Dow Jones Industrial Average futures pointed to a drop of 1 65 the S P 500 futures tumbled 2 while the Nasdaq 100 futures sank 2 25 Later in the day the U S was to publish a flurry of economic data which will help traders gauge the strength of the U S economic recovery The country was to produce government reports on initial jobless claims consumer price inflation existing home sales manufacturing activity in Philadelphia as well as a report on natural gas stockpiles |
JPM | Political turmoil prompts South African pensions to offload government debt | By Mfuneko Toyana JOHANNESBURG Reuters South African pension funds have cut their holdings in local government bonds to the lowest level in nearly 4 1 2 years because of political turbulence in the country but yield hungry foreign investors are proving less hesitant Domestic pension funds have historically been the largest investors in South African government bonds but National Treasury numbers show their share has fallen to 27 2 percent as of end April the lowest since December 2012 Conversely foreign investors have been buying according to data from the Johannesburg Stock Exchange and now hold 39 4 percent of the bonds their highest level on record The rest are held by banks and other financial companies Local funds have steadily decreased their holdings in government debt since January 2016 after President Jacob Zuma changed finance ministers twice in one week at the end of 2015 The moves led to a sharp sell off in the rand currency and bonds But the political risks were heightened even more in March this year when Zuma dismissed respected finance minister Pravin Gordhan leading to credit ratings downgrades to junk status by S P Global Ratings and Fitch Moody s whose Baa2 rating is two notches above junk put South Africa on review for a downgrade Locals are definitely more worried about the bonds and the rand because of the latest cabinet reshuffle They re more cautious about having big bond holdings Ashburton Investments portfolio manager Wayne Mccurrie said Investors fear policy steps to spur on the economy and keep debt in check are taking a backseat to corruption scandals and the jostling for positions as Zuma s ruling African National Congress ANC prepares to elect new leaders in December Indeed leaked documents released by South African media on Thursday alleging improper dealings in government contracts were seen healing more pressure on Zuma We are underweight nominal bonds and duration on South African bonds said Wikus Furstenburg portfolio manager at Futuregrowth which has about 170 billion rand 13 billion of assets under management and ranks as one of Africa s largest money managers The yield on the benchmark government bond due in 2026 rose to a 4 month high of 9 2 percent in the aftermath of Gordhan s axing and at the current 8 55 percent appears attractive to foreign investors But locals want a bit more to account for the risk It s simple the yield needs to adjust to make it more attractive for the more pessimistic managers like us to get back into the market Furstenburg said adding that low economic growth and widening capital deficit were other major negatives FUNDING FEARS With local money drying up and foreign loans becoming more expensive after the recent downgrades South Africa has moved closer to the brink of a funding problem Analysts also say inflow into government bonds from foreigners at 44 6 billion rand 3 42 billion year to date and nearly double the corresponding period in 2016 could be short lived if political tensions don t ease This is certainly a problem but not quite yet a crisis said Investec co head of fixed income Nazmeera Moola of Treasury s funding fix There is a possibility that Treasury doesn t take any hard steps and continues to borrow more that s what leads to a debt crisis and higher debt to GDP ratios Moola said South African debt has already been dropped from one the widely used global bond indexes the JPMorgan NYSE JPM Emerging Market Bond Index Global and risks being excluded from the larger Citi s World Government Bond Index if both Moody s and S P s cut the rand debt rating to junk Estimates put the cost to the country of falling from these indices at around 20 billion in investment funds An additional danger is that South Africa depends on foreign money to cover its large budget and current account deficits This huge reliance leaves it highly susceptible to global investor sentiment volatility Isabelle Mateos BlackRock s chief multi asset strategist said South African bonds offers opportunities and continue to draw the bulk of flows to emerging markets But she said this would quickly change if politics did not improve
South Africa is not one of our favourites and that has to do with political and policy uncertainty We are not actively shorting South Africa but the upside is very limited she said Graphic by Jeremy Gaunt Editing by Olivia Kumwenda Mtambo Jeremy Gaunt |
JPM | U S factory activity edges up private payrolls surge | By Lucia Mutikani WASHINGTON Reuters U S factory activity ticked up in May after slowing for two straight months and private employers stepped up hiring suggesting the economy is regaining speed after struggling at the start of the year The signs of renewed vigor in the economy and labor market tightness could encourage the Federal Reserve to raise interest rates later this month The economy is moving forward at an acceptable pace and the Fed is likely to hike rates in June but there is a cloud over the path of rates later on this year said Chris Rupkey chief economist at MUFG in New York The Institute for Supply Management ISM said its index of national factory activity ticked up to a reading of 54 9 last month from 54 8 in April The index hit a 2 1 2 year high of 57 7 in February amid optimism over President Donald Trump s pro business policy proposals It had declined for two consecutive months as concerns mounted in the business community that political scandals could derail the Trump administration s economic agenda including its push to cut corporate and individual taxes A reading above 50 in the ISM index indicates an expansion in manufacturing which accounts for about 12 percent of the U S economy The manufacturing recovery remains underpinned by the energy sector as steady increases in crude oil prices boost drilling activity fueling demand for machinery The ISM survey s new orders sub index increased to 59 5 last month from 57 5 in April A measure of factory employment jumped to a reading of 53 5 from 52 0 in April Manufacturers of food and fabricated metals products reported difficulties finding qualified workers Manufacturers continued to steadily increase inventories and still viewed their customers stocks as too low according to the survey While raw materials prices rose for a 15th straight month the pace of increase slowed sharply in May The upbeat economic data helped lift U S stocks with each of the major indexes hitting record highs The dollar rose against a basket of currencies while U S Treasury debt prices fell slightly The ADP National Employment Report showed private payrolls increased by 253 000 jobs last month beating economists expectations for a gain of 185 000 jobs Private payrolls rose by 174 000 jobs in April The ADP report is jointly developed with Moody s Analytics and was released ahead of the Labor Department s more comprehensive nonfarm payrolls report on Friday which includes both public and private sector employment The ADP report however is not a good predictor of the private payrolls component of the employment report According to a Reuters survey of economists payrolls likely increased by 185 000 jobs in May after a gain of 211 000 in April The unemployment rate is forecast to be unchanged at a 10 year low of 4 4 percent ECONOMY FIRMING Still the ADP report added to data this week showing an acceleration in consumer spending in April The economy grew at a 1 2 percent annualized rate in the first quarter The Atlanta Fed is forecasting gross domestic product increasing at a 4 0 percent pace in the second quarter Minutes of the Fed s May 2 3 policy meeting which were published last week showed that while policymakers agreed they should hold off hiking rates until there was evidence the growth slowdown was transitory most participants believed it would soon be appropriate to raise borrowing costs The U S central bank hiked rates by 25 basis points in March It is expected to do so again at its June 13 14 policy meeting In a third report on Thursday the Labor Department said initial claims for state unemployment benefits jumped 13 000 to a seasonally adjusted 248 000 for the week ended May 27 It was the 117th straight week that claims were below 300 000 a threshold associated with a healthy labor market That is the longest such stretch since 1970 when the labor market was smaller A Labor Department official said claims for California and seven other states were estimated because of the Memorial Day holiday on Monday which could have distorted the data The four week moving average of claims considered a better measure of labor market trends as it irons out week to week volatility rose only 2 500 to 238 000 last week While the claims report put a damper on what has been a pretty upbeat run for most of the recent labor market data we still have a fairly favorable view of labor market conditions said Daniel Silver an economist at JPMorgan NYSE JPM in New York The Fed said on Wednesday in its Beige Book report of anecdotal information on business activity collected from contacts nationwide that labor markets continued to tighten from early April through late May It also said most districts had cited worker shortages across a broadening range of occupations and regions
A fourth report by global outplacement consultancy Challenger Gray Christmas showed layoffs announced by U S based employers surged 41 percent to 51 692 in May Nearly 40 percent of the job cuts were announced by Ford Motor Co N F according to the report |
C | EUR USD extends gains amid massive equity bond rout on both continents | Investing com EUR USD rose considerably on Monday extending sharp gains from last week as bond yields in the euro zone fell deeper into negative territory amid continued declines in oil prices and a major sell off in financial stocks on both continents
The currency pair traded in a broad range between 1 1086 and 1 1216 before settling at 1 1202 up 0 0128 or 0 52 on the session Since plunging nearly 1 on the final session of January the euro has surged more than 3 25 versus the dollar over the first week of the month The euro opened 2016 just below 1 09 against its American counterpart after plunging nearly 10 a year earlier
EUR USD likely gained support at 1 0538 the low from December 3 and was met with resistance at 1 1496 the high from Oct 15
A host of stocks among prominent European financial firms including Deutschebank Commerzbank DE CBKG HSBC and BNB Paribas plummeted anywhere between 3 and 7 on Monday amid mounting fears on the impact of negative interest rates and persistently low oil prices Several days after soaring more than 8 last Wednesday on hopes of a dramatic reduction in OPEC and non OPEC production crude slipped back below 30 a barrel applying further pressure on banks and the high yield market Last month JPMorgan Chase Co N JPM Citigroup Inc N C and Wells Fargo Company N WFC all warned that they could incur credit losses in the hundreds of millions in oil and gas loans later this year if oil prices continued to weaken
In Europe the sell off in bank stocks dragged down the major indices as the Stoxx Europe 600 France CAC 40 and Germany Dax all fell by more than 3 on Monday pushing the overall indices to their lowest levels in 16 months It came as the cost of insuring the subordinate debt of European financial firms jumped by more than 12 on the session to its highest level since April 2013 The cost of insurance for both subordinate and senior debt for European banks has skyrocketed more than 40 in the last week
Equity markets in the euro zone have struggled over the last two months amid continued withdrawals from key markets a flattening yield curve and indications on the strong likelihood of imminent asset write downs
Yields on the Germany 10 Year fell eight basis points to 0 22 while government bond yields on the German 2 Year bunds dropped as low as negative 0 506 their lowest level on record Meanwhile bond prices in Portugal tumbled on Monday pushing Portuguese10 Year yields to 3 14 their highest level in more than a year
The U S Dollar Index which measures the strength of the greenback versus a basket of six other major currencies closed at 96 76 retreating to near three month lows from last week On Friday the U S Commodities and Futures Trading Commission CFTC reported that long positions in the dollar fell for the week ending on Jan 2 marking the sixth straight week of such declines
Investors await an appearance by Federal Reserve chair Janet Yellen before the House Financial Services Committee on Wednesday morning for further indications on the pace of the Fed s tightening over the next several months A spate of dovish comments from the Fed on the possibility of a gradual upward move has led to heightened concerns among banks of declining profits due to lower lending growth
Any rate hikes by the Fed this year are viewed as bullish for the dollar as foreign investors pile into the greenback in an effort to capitalize on higher yields |
C | Geopolitical Tensions Affect The Markets | Geopolitical tensions are what is driving the markets at the moment which started after the US attacked Syria after the chemical gas attack last week This has led to a deteriorating relationship between the US and Russia which was confirmed during the meeting yesterday between both foreign ministers
North Korea is also very much in focus as the US has sent a carrier strike group towards the Peninsula and North Korea is seen as possibly preparing for another nuclear test which would bring tensions to a boiling point and could occur as soon as this weekend
President Trump also said that he sees the USD as being too strong as that hurts the competitiveness of the US and he would like to see the interest rate as remaining low
Currencies
EUR USD was trading at the lowest level in a month after the declines over the last 2 weeks but this week it is moving up as the USD continues to weaken The EUR will remain interesting as we have the French elections coming up soon as well on the 23rd
USD JPY after breaking below the support around the 110 level which was able to hold over the last weeks we have seen a continued drop The JPY strengthens amid rising geopolitical tensions such as Syria and North Korea and uncertainty which makes the JPY very attractive as a safe haven and in addition the USD is on the backfoot as well
GBP USD had to contend with the resistance around the 1 249 level again but the comments from President Trump that he sees the USD as too strong helped to weaken the USD and led to a break of the resistance level
AUD USD has moved up sharply after the comments from President Trump about the USD and continued this after strong employment data out of Australia and also good data out of China both strengthening the AUD
USD CAD dropped sharply yesterday as the BOC kept the interest unchanged as expected and the BOC said that while they could lower the interest rate if needed that this is unlikely to be the case We can see that we broke below the support around the 1 329 level as also the comments from President Trump helped to drop further
Litecoin continues to be very volatile as the likelihood for the use of Segwit increases and this causes Litecoin to soar as well
Indices
Dollar Index President Trump s comments that the USD is too strong in his opinion and that he would like to see the interest remain low have caused the Dollar Index to drop below the 100 level again to reach the lowest level this month
S P 500 is dropping still as a lot of things are lining up for a possible steeper decline We have data out of the US that could point to slower growth earning season that kicks off now as well as the geopolitical tension
T Notes are on the rise in recent weeks as the weakness of the USD and global uncertainty makes this now a more attractive alternative as it is a safe haven which causes the yields to go down and the price therefore up Also helping is the fact that President Trump aid that he would like to see the interest rate remain low
Commodities
Gold the geopolitical tensions between the US and Russia Syria and North Korea which continue to increase and remain high have caused gold to soar to the highest level in 5 months On top of that the French elections are also approaching fast and is also causing some concern In addition to the weakening USD obviously also plays a role
Oil even though the inventories declined a bit from its record high the fact that production in the US continued to increase to the highest level in well over a year and also that the stockpiles in Cushing Oklahoma the largest storage hub increased caused oil to move down The fact that OPEC is still on track to reach its commitment under the production cut agreement did little to the price of oil as more focus is on the question if they will extend the cut or not We should know more soon as OPEC is scheduled to meet later this month to discuss this very thing What also helped oil to decline is that fact that we were trading near a resistance area around the 54 level
Stocks
Citigroup NYSE C will report its earnings today
JP Morgan will report its earnings today
Tesco LON TSCO even though it reported better than expected earnings it still dropped in trading yesterday as the company is still dealing with fines and compensation payments but it appears the company is on the right track in recent quarters |
MPC | Marathon Petroleum MPC Reports Next Week Wall Street Expects Earnings Growth | The market expects Marathon Petroleum MPC to deliver a year over year increase in earnings on higher revenues when it reports results for the quarter ended December 2018 This widely known consensus outlook is important in assessing the company s earnings picture but a powerful factor that might influence its near term stock price is how the actual results compare to these estimates
The stock might move higher if these key numbers top expectations in the upcoming earnings report which is expected to be released on February 7 On the other hand if they miss the stock may move lower
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management s discussion of business conditions on the earnings call it s worth handicapping the probability of a positive EPS surprise
Zacks Consensus Estimate
This refiner is expected to post quarterly earnings of 1 98 per share in its upcoming report which represents a year over year change of 88 6
Revenues are expected to be 33 19 billion up 56 3 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 27 78 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 the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change
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 version of the Zacks Consensus whose definition is subject to change 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 Marathon Petroleum
For Marathon Petroleum the Most Accurate Estimate is the same as the Zacks Consensus Estimate suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate This has resulted in an Earnings ESP of 0
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that Marathon Petroleum 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 Marathon Petroleum would post earnings of 1 68 per share when it actually produced earnings of 1 70 delivering a surprise of 1 19
Over the last four quarters the company has beaten consensus EPS estimates three 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
Marathon Petroleum 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 |
MPC | Murphy USA s MUSA Q4 Earnings Beat On High Retail Margins | Murphy USA Inc NYSE MUSA reported better than expected results in the fourth quarter of 2018 on the back of higher retail margins The company s adjusted net income per share came in at 2 38 topping the Zacks Consensus Estimate of 2 30 Further the bottom line improved from the year ago figure of 1 03 per share Murphy USA s operating revenues of 3 501 6 million surpassed the Zacks Consensus Estimate of 3 497 million Moreover the top line increased around 4 from the year ago figure of 3 379 5 million Revenues from petroleum product sales came in at 2 875 6 million Murphy USA Inc Price Consensus and EPS Surprise Key TakeawaysThe company s total fuel contribution was up 26 9 year over year to 218 1 million primarily driven by higher retail fuel margins Retail fuel contribution jumped around 73 year over year to 248 7 million amid higher margins which increased 65 2 from the prior year quarter Retail gallons rose 4 8 from the year ago periodto 1 088 8 billion gallons in the quarter under review Volumes on a same store sales SSS basis also rose 2 1 from the fourth quarter of 2017 Contribution from Merchandise increased 5 2 to 102 million on higher unit margins which increased to 16 6 from 16 3 a year ago On SSS basis total merchandise contribution was up 2 6 year over year in the quarter under review on the back of higher tobacco and non tobacco margins that increased 2 1 and 5 6 respectively Fuel gallons rose 2 9 and merchandise sales increased 1 5 on average per store month or APSM basis Fuel gallons per month rose 2 1 and merchandise sales increased 1 3 on SSS basis Balance Sheet As of Dec 31 Murphy USA whose peers include Delek US Holdings Inc NYSE DK HollyFrontier Corporation NYSE HFC and Marathon Petroleum Corporation NYSE MPC had cash and cash equivalents of 184 5 million and long term debt including lease obligations of 842 1 million with a debt to capitalization ratio of 51 2 Guidance Murphy USA expects 2019 capex in the band of 225 275 million versus 194 million incurred in 2018 The Zacks Rank 2 Buy company projects adjusted EBITDA of 405 million in 2019 You can see Zacks Top 10 Stocks for 2019 In addition to the stocks discussed above would you like to know about our 10 finest buy and holds for the year Who wouldn t Our annual Top 10s have beaten the market with amazing regularity In 2018 while the market dropped 5 2 the portfolio scored well into double digits overall with individual stocks rising as high as 61 5 And from 2012 2017 while the market boomed 126 3 Zacks Top 10s reached an even more sensational 181 9 |
MPC | Marathon Petroleum MPC Q4 Earnings Beat Revenues Miss | Independent oil refiner and marketer Marathon Petroleum Corporation NYSE MPC reported strong fourth quarter earnings on favorable crude differentials growing throughput volumes and higher fuel margin The company s adjusted earnings per share came in at 2 41 well ahead of the Zacks Consensus Estimate of 1 98 and the year ago period s bottom line figure of 1 05 Marathon Petroleum s revenues of 32 5 billion improved 53 year over year but came slightly below the Zacks Consensus Estimate of 33 2 billion Marathon Petroleum Corporation Price Consensus and EPS Surprise Segmental PerformanceRefining Marketing Operating profit from the Refining Marketing segment was 923 million compared with 732 million in the year ago quarter The improvement reflects wider crude differentials in addition to rising throughputs following the 2018 acquisition of AndeavorTotal refined product sales volumes were 3 764 thousand barrels per day mbpd up from the 2 414 mbpd in the year ago quarter Moreover throughput increased from 2 024 mbpd in the year ago quarter to 3 111 mbpd Capacity utilization during the quarter was 94 Retail Income from the Retail segment totaled 613 million up more than four fold from the year ago period Apart from strong performance at Marathon Petroleum s former Speedway unit the segment results were buoyed by contribution from the acquired retail assets of Andeavor Across the board the Retail segment benefitted from higher fuel margins and merchandise sales In particular the company s retail fuel margin rose from 17 72 cents per gallon in the fourth quarter of 2017 to 32 35 cents per gallon in the quarter under review Midstream This unit mainly reflects Marathon Petroleum s general partner and majority limited partner interests in MPLX LP NYSE MPLX and Andeavor Logistics LP NYSE ANDX publicly traded master limited partnerships that own operate develop and acquire pipelines and other midstream assets Segment profitability was 889 million up from 343 million in the fourth quarter of 2017 Earnings were buoyed by the addition of Andeavor Logistics results that contributed 230 million during the quarter The unit was further aided by the dropdown of refining logistics assets and fuels distribution services from sponsor Marathon Petroleum to MPLX Finally the unit benefited from strength in throughput volumes as well as record gathered and processed volumes Total ExpensesMarathon Petroleum which was spun off from Marathon Oil Corporation NYSE MRO in 2011 reported expenses of 30 5 billion in fourth quarter 2018 52 higher than the year ago quarter Capital Expenditure Balance Sheet Share RepurchaseIn the reported quarter Zacks Rank 3 Hold Marathon Petroleum spent 1 7 billion on capital programs 56 on the Midstream segment As of Dec 31 the company had cash and cash equivalents of 1 7 billion and total debt of 27 5 billion with a debt to capitalization ratio of 38 4 You can see During the full year 2018 Marathon Petroleum returned 4 2 billion of capital to shareholders including 675 million in share buybacks in the fourth quarter Zacks Top 10 Stocks for 2019In addition to the stocks discussed above wouldn t you like to know about our 10 finest buy and holds for the year From more than 4 000 companies covered by the Zacks Rank these 10 were picked by a process that consistently beats the market Even during 2018 while the market dropped 5 2 our Top 10s were up well into double digits And during bullish 2012 2017 they soared far above the market s 126 3 reaching 181 9 This year the portfolio features a player that thrives on volatility an AI comer and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs |
MPC | Marathon Petroleum MPC Q4 Earnings Top Estimates | Marathon Petroleum MPC came out with quarterly earnings of 2 41 per share beating the Zacks Consensus Estimate of 1 98 per share This compares to earnings of 1 05 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 21 72 A quarter ago it was expected that this refiner would post earnings of 1 68 per share when it actually produced earnings of 1 70 delivering a surprise of 1 19
Over the last four quarters the company has surpassed consensus EPS estimates three times
Marathon Petroleum which belongs to the Zacks Oil and Gas Refining and Marketing industry posted revenues of 32 54 billion for the quarter ended December 2018 missing the Zacks Consensus Estimate by 1 95 This compares to year ago revenues of 21 24 billion The company has topped consensus revenue estimates two times 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
Marathon Petroleum shares have added about 13 3 since the beginning of the year versus the S P 500 s gain of 9
What s Next for Marathon Petroleum
While Marathon Petroleum 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 Marathon Petroleum was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 0 91 on 35 86 billion in revenues for the coming quarter and 6 52 on 121 33 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 Oil and Gas Refining and Marketing is currently in the bottom 37 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 |
MS | European shares up on hopes of more U S stimulus | FTSEurofirst 300 turns positive up 0 7 pct
Shares gain on Bernanke s comments
Auto shares among top gainers
By Atul Prakash
LONDON July 13 Reuters European shares turned positive
in afternoon trade on Wednesday after U S Federal Reserve
Chairman Ben Bernanke said the central bank is ready to ease
monetary policy further if the economy weakens and inflation
moves lower
At 1443 GMT the FTSEurofirst 300 index of top
European shares was up 0 7 percent at 1 099 31 points after
falling to a low of 1 087 95 earlier in the session
Analysts however advised caution
I wouldn t conclude just yet that the QE3 is coming and
therefore everything is ok like we were last year It s going
to take a while to sell the idea of QE3 to Congress said
Graham Bishop equity strategist at RBS referring to
quantitative easing
Bernanke said in prepared testimony before the U S House of
Representatives Financial Services Committee that the
possibility remains that the recent economic weakness may prove
more persistent than expected and that deflationary risks might
reemerge implying a need for additional policy support
Automobile shares featured among the top gainers on
expectations that global demand for vehicle will gradually pick
up Traders said a positive Morgan Stanley note on the sector as
another factor driving share prices The auto sector index
rose 2 6 percent
Reporting by Atul Prakash Editing by Elaine Hardcastle |
MS | European stocks lower as EU summit eyed DAX down 0 75 | Investing com European stock markets were broadly lower on Thursday as investors awaited the outcome of a summit meeting of European leaders later in the day while shares in Ericsson tumbled after reporting weaker than expected earnings During European morning trade the EURO STOXX 50 edged 0 2 lower France s CAC 40 shed 0 45 while Germany s DAX 30 slumped 0 75 Stock indices added to losses after data showed that German manufacturing output fell to a 21 month low in July while manufacturing activity in the euro zone slumped to the lowest since August 2009 Meanwhile euro zone leaders were to meet in Brussels later in the day to finalize the terms of a second bailout for Greece and discuss the financial stability of the entire single currency bloc Shares in the financial sector were bolstered after the Financial Times newspaper reported that France and Germany reached a joint agreement on a Greek bailout package but no details were revealed French lender Societe Generale saw shares climb 1 5 Commerzbank shares jumped 2 while peripheral lenders Banco Santander and Intesa Sanpaolo rose 1 3 and 2 1 respectively Shares in telecom equipment company Ericsson tumbled 9 85 after it reported a lower than expected second quarter net profit of EUR340 million as restructuring charges and a strong krona weighed on results The downbeat results weighed on other shares in the sector with French based Alcatel Lucent dropping 5 5 and Germany s Siemens down 1 1 In London the commodity heavy FTSE 100 shed 0 5 as miners led losses amid concerns over a slowdown in demand from China after data showed that manufacturing activity in China fell to a 28 month low in JulyMining giant BHP Billiton saw shares drop 1 65 Rio Tinto shares fell 1 95 while copper producers Xstrata and Kazakhmys retreated 2 7 and 2 2 respectively Meanwhile the outlook for U S equity markets was modestly downbeat ahead of earnings reports from AT T Microsoft and Morgan Stanley The Dow Jones Industrial Average futures eased down 0 1 the S P 500 futures dipped 0 08 while the Nasdaq 100 futures shed 0 3 Later in the day the U S was to release a weekly government report on initial jobless claims as well as a report on manufacturing activity |
MS | European shares hit 2 wk closing high on euro zone plan | FTSEurofirst 300 closes 1 1 pct higher
Banks lead gainers Italy s Intesa SanPaolo UniCredit
soar
Ericsson slunps after profit misses forecast
By Brian Gorman
LONDON July 21 Reuters European shares closed at their
highest in nearly two weeks on Thursday on investor optimism
about a plan for a wide ranging response to the euro zone
sovereign debt crisis
Banks were the standout gainers extending a rally into a
third day and lifting the STOXX Europe 600 Banking Index
4 1 percent led by heavyweights including Intesa SanPaolo
and UniCredit up 9 5 and 10 4 percent
respectively
The Greek bank sector rose 7 7 percent and the
Thomson Reuters Peripheral Eurozone Banking Index
was up 7 7 percent
Other banks to gain included Banco Santander
Credit Suisse and Societe Generale up
between 4 4 and 6 2 percent
The European banking sector was further helped by strong
results at U S peer Morgan Stanley whose stock rose
more than 10 percent
Euro zone leaders were set to give their financial rescue
fund sweeping new powers to prevent contagion and help Greece
overcome its debt crisis according to the draft conclusions of
an emergency summit
The leaders met in Brussels after the European Central Bank
signalled in a policy reversal it was willing to let Greece
default temporarily under a crisis response that would involve a
bond buyback a debt swap but no new tax on banks
The FTSEurofirst 300 index of leading European
shares rose 1 1 percent to 1 103 12 points its highest close
since July 8 and its third straight day of gains
It seems that everything they could have put in the mix
they have done said Bernard McAlinden strategist for the
European Securities Network This can buy some time for
economies to put their house in order
The pan European index is up 3 5 percent from the 2011 low
it hit on Tuesday but is still down more than 7 percent from
the 2011 high of 1 190 51 it hit in mid February
The euro s strong correlation with stocks which often makes
it a gauge of risk on risk off trade was near a record high
The 66 day rolling correlation between the euro and the Euro
STOXX 50 index has risen to 0 921
The euro was up 1 percent against the dollar while
the Euro STOXX 50 the euro zone s blue chip index was up 2 2
percent Both reversed losses from earlier in the session
The Euro STOXX Volatility index plunged 13 6
percent reflecting the reassurance the proposals had given some
investors
THROWING MONEY
However some traders were sceptical about how effective the
proposals would be It s just the same old nonsense rehashed in
a slightly different packaging It s throwing more money at
Greece Michael Hewson market analyst at CMC Markets said
You can talk about extending the EFSF loans It doesn t
deal with the underlying issue Greece is technically insolvent
Once you drill down into the detail does it really solve the
underlying issue On the face of it no
The weaker dollar did not prevent copper falling as data
showed shrinking manufacturing activity in top consumer China
fuelling demand fears The STOXX Europe 600 Basic Resources
Index fell 0 4 percent
The latest batch of second quarter European earnings was
mixed Ericsson the world s biggest mobile network
gear maker slumped 9 7 percent after it missed earnings
forecasts due to a hefty job cut charge and forecast less
profitable business in the pipeline in Europe
Across Europe Britain s FTSE 100 rose 0 8 percent
Germany s DAX and France s CAC40 rose 1 and 1 7
percent respectively
There have been many false dawns when it comes to drawing a
line under the European debt crisis so it might be a little
ambitious to expect this current enthusiasm to continue into
Friday when traders have had a chance to reflect on today s
move said David Jones chief market strategist at IG Index
Editing by David Holmes
For rolling updates on what is moving European shares
please click on
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JPM | Brazil expected to continue reforms despite political crisis CEOs | SAO PAULO Reuters Financial markets are betting that the Brazilian government s pro business economic agenda will move ahead even if embattled President Michel Temer is ousted top banking executives said on Tuesday Investors believe the reform agenda will go forward no matter the outcome of the political crisis Jos Olympio Pereira chief executive officer of Credit Suisse SIX CSGN AG s CSAG UL Brazilian unit said at an investment conference The reform agenda belongs to the country not to a president Jos Berenguer the CEO of JPMorgan Chase Co s N JPM Brazilian unit said at the same conference |
JPM | JPMorgan second quarter market revenue down 15 percent vs year earlier CFO | NEW YORK Reuters Markets revenue at JPMorgan Chase Co N JPM has been down about 15 percent so far in the second quarter from a year earlier Chief Financial Officer Marianne Lake said on Wednesday Speaking at an investor conference Lake said the decline stemmed from lower volatility compared with a year ago when the United Kingdom was preparing to vote on Brexit
Lake added that U S economic growth this year is solid not stellar as optimism continues for pro growth policies in Washington despite the lack of significant changes in regulations and taxes |
JPM | U S pending home sales fall housing market recovery intact | By Lucia Mutikani WASHINGTON Reuters Contracts to buy previously owned U S homes fell for a second straight month in April amid a supply squeeze but the housing market recovery remains supported by a strong labor market The National Association of Realtors said on Wednesday its Pending Home Sales Index based on contracts signed last month dropped 1 3 percent to 109 8 Contracts fell in the Northeast Midwest and South but surged 5 8 percent in the West Coming on the heels of recent data showing a drop in home building and sales of both new and previously owned homes the decrease in contracts suggests a moderation in housing activity Still housing is expected to contribute to gross domestic product this year We think that the housing recovery will continue over time based on favorable fundamentals in the market but we have seen some weakening in a number of home sale measures lately said Daniel Silver an economist at JPMorgan NYSE JPM in New York For now we think the recent softening in sales is a pause in a broader upward trend Economists had forecast pending home sales which become sales after a month or two rising 0 5 percent last month They fell 3 3 percent from a year ago That is the first year on year drop since last December and the largest since June 2014 The PHLX housing index HGX was little changed amid a broadly weaker stock market The dollar fell against a basket of currencies while U S Treasury prices were trading higher Demand for housing is being driven by a tight labor market marked by a 4 4 percent unemployment rate which is generating wage increases and boosting employment opportunities for young Americans The housing market remains supported by historically low mortgage rates with the 30 year fixed mortgage rate averaging 3 95 percent the lowest level since last November Sales activity however remains constrained by tight inventories which are driving up home prices Housing inventory has dropped for 23 straight months on a year on year basis Home resales declined 2 3 percent in April and could decrease in May as another report on Wednesday showed applications for loans to buy a home fell for a third straight week last week The large declines in the Northeast and Midwest suggest seasonal factors exaggerated the recent slide in pending home sales said Mark Vitner a senior economist at Wells Fargo NYSE WFC Securities in Charlotte North Carolina Mortgage applications add a note of caution however
A third report showed manufacturing activity in the Midwest region accelerated to a 2 1 2 year high in May The Chicago Purchasing Management Index rose to a reading of 59 4 this month the highest level since November 2014 from 58 3 in April |
C | JPMorgan strikes confident tone after better than expected results | By Sweta Singh Reuters JPMorgan Chase Co N JPM the biggest U S bank by assets ended the year with a better than expected quarterly profit and expressed confidence about its businesses in 2016 despite a grim start for stocks and energy prices The bank the first big lender to report results since the Federal Reserve raised its key interest rate in mid December said on Thursday it expected net interest income to rise by about 2 billion as a result of the hike and loan growth The New York based lender forecast incremental increases in the amount of money set aside for energy related losses in the coming year but said oil prices would need to remain at current levels for an extended period for provisions to be significant The bank s shares rose as much as 3 5 percent in morning trading Other bank shares also rose as investors took JPMorgan s results and positive noises about the U S economy as indicators of the health of the sector U S banks like their global counterparts have had a tough year as falling oil prices and worries about slowing growth in China contributed to weakness in credit markets However Chief Executive Jamie Dimon told analysts that investors were adjusting to China s slowdown and said there were winners and losers in the commodity rout Hopefully this will all settle down and it s not the beginning of something really bad he said We re not forecasting a recession We think the U S economy looks pretty good at this point Legal charges and the costs of meeting stricter capital requirements have also weighed on the lenders And U S interest rates remain near historic lows even after the Fed rate hike That has meant that cost cutting the one thing banks can best control has become a main driver of profits Two of the bank s five businesses reported a rise in profit investment banking by 80 percent and consumer and community banking the largest contributor to net income by 10 percent Income from commercial banking fell 21 percent JPMorgan s total non interest expenses fell 7 4 percent to 14 26 billion in the quarter while legal expenses fell to 644 million from 1 1 billion We are very happy with our expense story for the year Chief Financial Officer Marianne Lake said on a call with reporters Total compensation expenses fell 2 4 percent to 6 69 billion as the bank s employee count fell to 234 598 from 241 359 at the end of 2014 RECORD ANNUAL EARNINGS JPMorgan s net income rose 10 2 percent to 5 43 billion boosting annual profit to a record 24 44 billion On a per share basis the bank earned 1 32 handsomely beating the average analyst estimate of 1 25 per share Total net revenue rose about 1 percent to 23 75 billion topping the average estimate of 22 89 billion Revenue from fixed income trading usually JPMorgan s most volatile business fell 3 percent to 2 57 billion The bank s balance sheet shrank 2 7 percent on a sequential basis to 2 35 trillion as of the end of December Like other big banks JPMorgan has been shedding assets to appease regulators who fear its size could pose a risk to the financial system in the event of a failure Provision for bad loans rose 49 percent to 1 25 billion JPMorgan s shares were trading at 58 33 in late morning trading The stock was the only one among the six big U S banks to finish 2015 in positive territory rising 5 5 percent But through Wednesday the shares had fallen 13 2 percent this year the second worst performer in the Dow Jones industrial average
Citigroup Inc N C and Wells Fargo N WFC Co the third and fourth biggest U S banks report on Friday |
C | Wells Fargo profit slips amid concerns about sour energy loans | By Sruthi Shankar and Richa Naidu Reuters Wells Fargo N WFC Co the biggest U S residential mortgage lender and a major lender to the energy industry reported a slight dip in quarterly profit on Friday as it set aside more money to cover bad loans to oil and gas companies Walls Fargo whose latest balance sheet showed it had replaced Citigroup Inc N C as the third largest U S bank managed to increase revenue from mortgage banking for the first time in three quarters in the three months ended Dec 31 But its exposure to energy loans meant provisions for credit losses jumped by about 346 million from a year earlier to 831 million Of the increase about 159 million was mainly for oil and gas loans In the fourth quarter alone the bank s wholesale division set aside 90 million more for bad loans than in the third quarter primarily for loans to energy companies Citigroup which also reported on Friday said it set aside about 250 million in the period to cover energy related losses Wells Fargo has one of the largest exposures to the energy sector among U S banks with loans to the industry accounting for 1 9 percent of its loan portfolio according to Barclays L BARC Still commercial and industrial lending which includes loans to oil and gas firms rose 10 3 percent in the quarter Wells Fargo s shares which lost about 1 percent in 2015 were down 3 2 percent at 49 in morning trading falling along with those of other banks amid another rout in oil prices MORTGAGE BANKING STRONG Wells Fargo s mortgage banking revenue rose 9 6 percent to 1 66 billion in the quarter compared with a year earlier and the bank made 47 billion of home loans up 7 percent U S home sales in 2015 were best since before the financial crisis while distressed sales foreclosures and short sales continued to decline according to a report issued in December by mortgage giant Freddie Mac Housing is expected to continue to perform strongly over the next two years despite rising interest rates because of years of pent up demand and a stronger labor market the report said JPMorgan Chase Co N JPM the No 2 U S residential mortgage lender reported on Thursday that its revenue from mortgage banking fell 10 4 percent in the quarter Wells Fargo s quarterly net income applicable to common shareholders slipped to 5 34 billion or 1 03 per share from 5 38 billion or 1 02 per share a year earlier Analysts on average had expected earnings of 1 02 per share according to Thomson Reuters I B E S Total revenue rose 0 66 percent to 21 59 billion while non interest expenses slipped about 2 percent to 12 40 billion Net interest income a measure of the interest received from loans after paying for funding and accounting for potential loan losses rose 0 58 percent to 10 76 billion The bank s total loans grew 6 3 percent in the quarter with the acquisition of GE s commercial lending and leasing assets alone adding about 32 billion to the bank s portfolio
Net loan charge offs in the bank s commercial and industrial business which includes lending to energy sector rose to 215 million from 122 million in the third quarter |
C | Lower legal bill boosts Citi profit but core revenue weak | By Sweta Singh and David Henry Reuters Citigroup Inc N C reported a massive jump in quarterly profit as a sharp drop in legal costs and gains from the disposal of unwanted assets masked weak revenue from its core business Shares of Citi which was displaced by Wells Fargo Co N WFC as the No 3 U S bank by assets fell as much as 7 2 percent to a near three year low of 42 11 on Friday U S banks struggled to grow their revenue last year hurt by near zero interest rates a slump in oil prices and investor cautiousness due to worries about slowing growth in China Most banks have resorted to aggressive cost controls to boost profits and Citi was no different The bank has also been exiting less profitable markets and businesses Adjusted revenue from its main Citicorp business declined 2 percent in the fourth quarter but lower costs helped the unit increase profit It is almost impossible to specify what the true operating results were Oppenheimer analyst Chris Kotowski wrote in a note The bank s legal and repositioning costs plunged to 724 million from 3 55 billion a year earlier Total expenses fell 22 8 percent to 11 13 billion Costs cuts and a smaller legal bill also helped JPMorgan Chase Co N JPM report a 10 percent rise in quarterly profit on Thursday and the largest U S bank by assets forecast incremental increases in the amount set aside for losses on loans to the energy sector this year Citi set aside about 250 million to cover losses related to its energy portfolio and the bank said its 2016 provisioning would depend on where oil prices ultimately settle Wells Fargo the biggest U S residential mortgage lender and a major lender to the energy industry reported a 0 8 percent fall in quarterly profit on Friday as it set aside more money to cover bad loans ASSETS SHRINK Citi s adjusted revenue rose 4 2 percent to 18 64 billion in the quarter ended Dec 31 but the increase came from gains on sale of assets from its Citi Holdings portfolio which shrank 43 percent We have undoubtedly become a simpler smaller safer and stronger institution We have sharpened our focus on target clients shedding over 20 consumer and institutional businesses in the process Chief Executive Michael Corbat said in a statement On Citi sliding to No 4 ranking among U S banks in terms of assets Chief Financial Officer John Gerspach said the bank was focusing on being efficient not on winning bragging rights over other banks Citicorp achieved an efficiency ratio of 57 percent for 2015 the higher end of Corbat s target of 53 57 percent Investors however worry that slowing growth in emerging markets where Citi has more assets than other U S banks may undermine its results Citi s net profit rose to 3 34 billion or 1 02 per share in the quarter from 344 million or 6 cents per share a year earlier Excluding items the bank earned 1 06 per share beating the average analyst estimate of 1 05 according to Thomson Reuters I B E S Investment banking revenue rose 6 percent to 1 13 billion while fixed income revenue rose 7 percent to 2 22 billion Citi shares have fallen about 12 percent so far this year while the broader KBW bank index BKX has declined about 10 percent
This story has been refiled to correct to insert first name and title of Chief Executive Michael Corbat in paragraph 12 |
MPC | Marathon Petroleum MPC Stock Moves 1 46 What You Should Know | In the latest trading session Marathon Petroleum MPC closed at 58 77 marking a 1 46 move from the previous day This change was narrower than the S P 500 s daily loss of 2 48 Meanwhile the Dow lost 2 83 and the Nasdaq a tech heavy index lost 3 04
Coming into today shares of the refiner had lost 5 84 in the past month In that same time the Oils Energy sector lost 8 19 while the S P 500 lost 8 82
MPC will be looking to display strength as it nears its next earnings release which is expected to be February 7 2019 The company is expected to report EPS of 1 14 up 8 57 from the prior year quarter Meanwhile the Zacks Consensus Estimate for revenue is projecting net sales of 33 19 billion up 56 28 from the year ago period
It is also important to note the recent changes to analyst estimates for MPC These recent revisions tend to reflect the evolving nature of short term business trends As a result we can interpret positive estimate revisions as a good sign for the company s business outlook
Based on our research we believe these estimate revisions are directly related to near team stock moves To benefit from this we have developed the Zacks Rank a proprietary model which takes these estimate changes into account and provides an actionable rating system
The Zacks Rank system ranges from 1 Strong Buy to 5 Strong Sell It has a remarkable outside audited track record of success with 1 stocks delivering an average annual return of 25 since 1988 Within the past 30 days our consensus EPS projection has moved 0 14 lower MPC is currently sporting a Zacks Rank of 3 Hold
Investors should also note MPC s current valuation metrics including its Forward P E ratio of 8 43 For comparison its industry has an average Forward P E of 9 34 which means MPC is trading at a discount to the group
We can also see that MPC currently has a PEG ratio of 0 53 This metric is used similarly to the famous P E ratio but the PEG ratio also takes into account the stock s expected earnings growth rate Oil and Gas Refining and Marketing stocks are on average holding a PEG ratio of 0 79 based on yesterday s closing prices
The Oil and Gas Refining and Marketing industry is part of the Oils Energy sector This industry currently has a Zacks Industry Rank of 111 which puts it in the top 43 of all 250 industries
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
Be sure to follow all of these stock moving metrics and many more on Zacks com |
MPC | Why Marathon Petroleum MPC Could Beat Earnings Estimates Again | Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report Marathon Petroleum MPC which belongs to the Zacks Oil and Gas Refining and Marketing industry could be a great candidate to consider
This refiner has an established record of topping earnings estimates especially when looking at the previous two reports The company boasts an average surprise for the past two quarters of 7 92
For the last reported quarter Marathon Petroleum came out with earnings of 1 70 per share versus the Zacks Consensus Estimate of 1 68 per share representing a surprise of 1 19 For the previous quarter the company was expected to post earnings of 1 98 per share and it actually produced earnings of 2 27 per share delivering a surprise of 14 65
Price and EPS Surprise
Thanks in part to this history there has been a favorable change in earnings estimates for Marathon Petroleum lately In fact the Zacks Earnings ESP Expected Surprise Prediction for the stock is positive which is a great indicator of an earnings beat particularly when combined with its solid Zacks Rank
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank 3 Hold or better produce a positive surprise nearly 70 of the time In other words if you have 10 stocks with this combination the number of stocks that beat the consensus estimate could be as high as seven
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change 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
Marathon Petroleum has an Earnings ESP of 17 23 at the moment suggesting that analysts have grown bullish on its near term earnings potential When you combine this positive Earnings ESP with the stock s Zacks Rank 3 Hold it shows that another beat is possibly around the corner The company s next earnings report is expected to be released on February 7 2019
When the Earnings ESP comes up negative investors should note that this will reduce the predictive power of the metric But a negative value is not indicative of a stock s earnings miss
Many companies end up beating the consensus EPS estimate though this is not the only reason why their shares gain Additionally some stocks may remain stable even if they end up missing the consensus estimate
Because of this it s really important to check a company s Earnings ESP ahead of its quarterly release to increase the odds of success Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported |
MS | US STOCKS Wall St consolidates rally more choppiness seen | Factory orders rise but miss estimate
Energy Transfer sweetens offer for Southern Union
Dow up 0 1 pct S P off 0 1 pct Nasdaq up 0 2 pct
For up to the minute market news see STXNEWS US
Updates to midday
By Edward Krudy
NEW YORK July 5 Reuters Wall Street consolidated on
Tuesday after its best week in two years with choppy
low volume trading seen during the rest of the summer
Equities had rallied for five straight days to push the
S P 500 up 5 6 percent rebounding from weakness over the past
two months But with question marks over the U S economy and
the U S debt ceiling the summer could be a rough one
I see a choppy environment ahead for this month said
Scott Marcouiller chief technical market strategist at Wells
Fargo Advisors in St Louis You are dealing with fewer
players in the market that helps increase the volatility
Volume is expected to remain low in the holiday shortened
week which could increase volatility especially with
Friday s jobs report looming large on the horizon Markets
were closed on Monday for the U S Independence Day holiday
The Dow Jones industrial average gained 6 40
points or 0 05 percent to 12 589 17 The Standard Poor s
500 Index dipped 0 77 of a point or 0 06 percent to
1 338 90 The Nasdaq Composite Index rose 4 57 points
or 0 16 percent to 2 820 60
Linda Duessel market strategist at Federated Investors in
Pittsburgh said the S P 500 would likely fall back toward
1 250 this quarter around its lows during the recent
sell off before rebounding into the end of the year
It s going to be a long quarter she said Confidence
is low The volatility index is low You have professionals
only pretty much trading the market
Duessel said she is expecting the S P 500 to face tough
resistance at 1 350 as bulls try to take the market up toward
its recovery high around 1 370
Last week moves to avert a debt crisis in Europe and
surprisingly strong regional business data helped lift some of
the gloom on Wall Street
But a rebound in factory orders did little to boost the
market after its recent run
New orders received by U S factories bounced back in May
boosted by demand for transportation equipment a government
report showed The 0 8 percent rise was slightly below
economists forecast For details see ID nN1E7640BQ
Some traders may be betting that the S P 500 Index s
recent rally is coming to an end
A substantial August put spread was transacted in the S P
500 Index on Tuesday and was followed by the purchase
of a hefty August 120 127 put spread on the SPDR S P 500
Trust said Frederic Ruffy WhatsTrading com options
strategist
Morgan Stanley s U S equity strategist Adam Parker said
lower growth and inflation worries are set to drive the S P
500 price to earnings ratio toward 10 within five years as
anxious investors keep a lid on stock prices
During the recent sell off the P E ratio or what
investors are willing to pay for a dollar of earnings fell to
12 7 from 13 5 according to Morgan Stanley s data The note
was dated July 4
In company news Southern Union Co advanced 2 6
percent to 41 40 after pipeline operator Energy Transfer
Equity LP raised its bid to buy its rival by 21
percent to about 5 billion trumping the 4 9 billion bid
offer from Williams Companies Inc ID nL3E7I51EP
Immucor Inc surged 30 3 percent to 27 after the
diagnostics firm said it agreed to be acquired by private
equity group TPG Capital for a fully diluted equity value of
1 97 billion ID nL3E7I51TL
Reporting by Edward Krudy Editing by Jan Paschal |
MS | US STOCKS Wall St ends quiet day flat Netflix boosts Nasdaq | Moody s downgrades Portugal s debt rating to junk
Netflix at all time high lifts Nasdaq
Barclays comments lift crude oil energy shares
Dow off 0 1 pct S P off 0 1 pct Nasdaq up 0 4 pct
For up to the minute market news see STXNEWS US
Updates to close
By Ryan Vlastelica
NEW YORK July 5 Reuters U S stocks ended a thinly
traded session mostly flat on Tuesday as investors paused
after last week s surge though continually light volume
suggested the market could encounter more choppy trading
The Nasdaq closed higher for its sixth straight day
helped by strength in Netflix while the Dow and the S P 500
ended five day streaks that marked the best week for equities
in two years
The S P gained 5 6 percent last week rebounding from
weakness over the past two months but concerns about economic
growth and the U S debt ceiling could temper gains in coming
days
It s no real surprise that the market is having a harder
time today getting excited given the big week we just had
said Hayes Miller the Boston based head of asset allocation
in North America at Baring Asset Management which oversees
about 50 6 billion
In another prospective headwind Moody s Investors Service
slashed Portugal s credit rating into junk territory on risks
the country will need another bailout before it can return to
capital markets It keeps the euro zone s debt woes at the
forefront even as investors were hopeful for a resolution to
Greece s fiscal crisis For details see ID nN1E764185
Equities dipped only slightly on the news which Luke
Rahbari partner at the Chicago based Stutland Volatility
Group said had been expected
This is more symbolic he said though he added that in
the short term everything will be pressured everyone
wants to get out of every asset class except cash and reassess
after we get more clarity
The Dow Jones industrial average was down 12 90
points or 0 10 percent at 12 569 87 The Standard Poor s
500 Index was down 1 79 points or 0 13 percent at
1 337 88 The Nasdaq Composite Index was up 9 74
points or 0 35 percent at 2 825 77
The day s volume was light with only 6 04 billion shares
traded on the New York Stock Exchange the American Stock
Exchange and Nasdaq below last year s daily average of 8 47
billion The trend was seen as enduring and the anemic action
could exacerbate stocks gyrations in the holiday shortened
week especially with Friday s non farm payroll report
expected to show tepid job creation in June Markets were
closed on Monday for the U S Independence Day holiday
Markets are in a highly volatile state right now making
this a difficult market to make a lot of progress in Miller
said We re going to go back and forth with strong weeks like
last week and weak ones like what we had before that
Last week moves to avert a debt crisis in Europe and
surprisingly strong regional business data helped lift some of
the gloom on Wall Street
The Nasdaq was lifted by Netflix Inc which
surged 8 1 percent to 289 63 and hit a new high at 291 23 in
intraday trading after it said it was expanding its online
video service to 43 countries in Latin America and the
Caribbean ID nN1E7640AP
New orders received by U S factories bounced back in May
boosted by demand for transportation equipment a government
report showed The 0 8 percent rise was slightly below
economists forecast ID nN1E7640BQ
Stocks were little affected by the data following last
week s move and some traders may be betting that the S P s
rally is near an end
A substantial August put spread was transacted in the S P
500 Index on Tuesday and was followed by the purchase
of a hefty August 120 127 put spread on the SPDR S P 500
Trust said Frederic Ruffy WhatsTrading com options
strategist
Morgan Stanley s U S equity strategist Adam Parker said
lower growth and inflation worries are set to drive the S P
500 price to earnings ratio toward 10 within five years as
anxious investors keep a lid on stock prices
During the recent sell off the P E ratio or what
investors are willing to pay for a dollar of earnings fell to
12 7 from 13 5 according to Morgan Stanley s data The note
was dated July 4
U S crude oil futures surged 2 percent to settle
at 96 89 a barrel after Barclays Capital raised its forecast
for the commodity in 2012 lifting the S P energy index
up 0 5 percent Marathon Oil rose 3 4 percent
to 34 07 ID nL3E7I50EG
The number or declining stocks was about even with the
number of rising stocks on both the New York Stock Exchange
and Nasdaq
Reporting by Ryan Vlastelica Editing by Jan Paschal |
MS | European shares retreat on concerns over Portugal | FTSEurofirst 300 down 0 3 percent
Portugese shares slip after Moody s downgrade
Financial shares feature among top decliners
LONDON July 6 Reuters European equities retreated on
Wednesday as banking stocks slipped after Moody s cut Portugal s
credit rating to junk and said the highly indebted country may
need more bailout funds
A 5 percent jump in the Euro STOXX 50 volatility index
one of Europe s main barometers of market sentiment
suggested a decline in investor appetite for riskier assets such
as equities
Portugal s PSI 20 was down 2 5 percent at 0846 GMT
with volumes hitting 75 percent of its 90 day daily average
while the FTSEurofirst 300 index of top European shares
was down 0 3 percent at 1 118 36
Banks were the top losers with the Thomson Reuters
Peripheral Eurozone Banks index down 3 5
percent and the European bank sector off 1 6 percent
Portuguese bank Millennium bcp declined 5 6 percent
while Italian lender Unicredit lost 4 5 percent
Certainly Moody s comment over Portugal is a concern for
the market Investors are also just trying to position
themselves ahead of Friday s U S non farm payrolls figures
said Keith Bowman equity analyst at Hargreaves Lansdown
Moody s cut Portugal s credit rating at a time when concerns
over Greece were easing Moody s move reminded investors
Europe s debt crisis extended beyond Greece and countries such
as Ireland Spain and Italy might also need support
International banks and insurers were meeting on Wednesday
to thrash out a plan for the private sector to contribute to
Greece s bailout effort as fears grow the proposal will be
derailed
The Thomson Reuters Peripheral Eurozone Countries Index
fell 2 2 percent Spain s IBEX was down
1 3 percent while Italy s FTSE MIB fell 1 7 percent
Greek banks were down 2 2 percent
Portuguese bonds led the peripheral issuers wider with
yields on its two year bonds jumping more than 1 5
percentage points to over 15 percent
In the longer run the highly indebted countries of Europe
will struggle to pay down their debt This will be a long and
uphill battle said Philippe Gijsels head of research at BNP
Paribas Fortis Global Markets in Brussels
It will not take long for the market to realise this and go
once again in more defensive mood This together with some
disappointing economic figures will make for a volatile and
nervous summer
ECONOMIC FACTORS
Investors awaited U S non farm payrolls data on Friday for
signals whether a slowdown in the U S economy was temporary
Last week s data showing U S manufacturing sector growth picked
up in June has raised hopes of a sustained economic recovery
The latest data that we got from the U S was a bit
encouraging confirming our belief that what we have here is a
soft patch and not the beginning of a severe downturn said
Klaus Wiener chief economist at Generali Investments which
manages 300 billion euros
Longer term the main theme that I see is private versus
public sector assets Given the financial strains that we have
in the public sector I would continue to expect equities to do
well
Among individual movers the world s largest advertising
group by revenue WPP shed 1 8 percent with traders
citing a downgrade from Morgan Stanley to equal weight from
overweight as a catalyst
Editing by Dan Lalor
For pan Europeanmarket data and news click on codes in
brackets
European Equities speed guide
FTSEurofirst 300 index
STOXX Europe index
Top 10 STOXX sectors
Top 10 EUROSTOXX sectors
Top 10 Eurofirst 300 sectors
Top 25 European pct gainers
Top 25 European pct losers
Main stock markets
Dow Jones Wall Street report
Nikkei 225 Tokyo report
FTSE 100 London report
Xetra DAX CAC 40
World Indices 0 INDEX
Reuters survey of world bourse outlook
Western European IPO diary
European Asset Allocation
Reuters News at a Glance Equities
Main currency report |
MS | PRECIOUS Gold rises holds near 1 530 oz ahead of U S jobs | Volume light as most players await US June jobs data
US companies hire 4 times more workers in June than May
Euro up as Trichet says ECB to help Portugal
Coming up US June nonfarm payrolls at 1230 GMT Friday
Updates prices adds comments U S jobs graphics
By Carole Vaporean and Jan Harvey
NEW YORK LONDON July 7 Reuters Gold prices firmed on
Thursday but stayed around 1 530 an ounce as most investors
held onto current positions ahead of the next day s
much anticipated U S June jobs report
Two U S labor market reports released on Thursday came in
stronger than expected but neither would necessarily translate
into bigger than forecast payrolls growth for June
Prices will stay in range ahead of payrolls Because at
this point I don t think people want to get themselves too
heavily involved in a position if they re not already in it
said Fred Schoenstein precious metals trader at Heraeus
Precious Metals Management in New York
We re going to sit tight until we see Friday s report
Spot gold was at 1 531 86 an ounce by 3 00 p m EDT
1900 GMT against 1 527 50 late in New York on Wednesday In
futures U S gold for August delivery settled at
1 530 60 a 1 40 gain
Spot gold climbed as far as 1 534 20 an ounce its highest
since June 23 though surpassing the previous high by less than
1 Still it continued to recover from two consecutive weeks
of losses
Earlier U S payrolls processor ADP reported that
private sector employment increased by 157 000 jobs in June a
rise more than double economists expectations
A drop in the number of Americans filing last week for
unemployment benefits also offered hope for the labor market
though they remained too high to signal robust growth
ID nN1E7660BF
INSTANT VIEW ID nN1E76606G
Graphic U S private payrolls
Graphic U S jobless claims year to date
Graphic U S June same store sales
For Friday s June U S employment figures economists on
average forecast 50 000 new jobs were created ECI US
An upside surprise in payrolls however would strengthen
the view that the U S economy was emerging from the doldrums
of the first half of the year undermining the safe haven bid
that had sent gold to two week highs
Similarly a weaker than forecast jobs report could push
gold further toward the upper end of the range that has held
since April en route to all time highs
If you see something that s unexpected in payrolls
we ll see it gold move in either direction I m just not sure
which way that will be Schoenstein said
Gold is also caught by other competing influences
including signs that inflation is heating up as with the
European Central Bank and Bank of China interest rate
increases and euro zone debt troubles that provide a
safe haven underpinning
Bullion prices were down for much of the day slipping
after the ECB raised interest rates again and offered to help
Portugal stay solvent The news did little to dispel concern
about the euro zone s debt problems which provided underlying
price support to the yellow metal
The ECB raised its benchmark refinancing rate by 25 basis
points to 1 50 percent as markets had widely anticipated and
President Jean Claude Trichet signaled in the post meeting news
briefing the bank would continue to tighten policy to prevent
inflation from undermining economic growth ID nECBNEWS
The rate hikes we see a slow gradual increase in the
future aren t nearly enough to drive people out of gold and
into higher yielding assets RBS analyst Daniel Major said
The euro gained against the dollar snapping two days of
declines after Trichet said the ECB would relax rules and
continue to provide liquidity to Portugal USD
Broader concerns over debt levels in some smaller euro zone
economies including Greece Portugal and Ireland were a key
factor pushing gold prices to record highs above 1 575 an
ounce in May
ECB in graphics
Euro zone debt
Bank exposure
On the supply side talks between striking Indonesian
workers at the Grasberg mine and Freeport McMoRan Copper
Gold s management have broken down leaving production
halted at the world s biggest copper and gold mine a
government official said ID nL3E7I700M
Silver was higher at 36 41 an ounce than 35 85 at
Wednesday s close
Spot platinum was higher at 1 744 50 an ounce than
1 721 60 on Wednesday and spot palladium rose to
783 72 an ounce from 762 48 previously
Prices at 3 00 p m EDT 1900 GMT
LAST NET PCT YTD
CLOSE CHG CHG CHG
US gold 1530 60 1 40 0 1 7 7
US silver 36 536 0 620 0 0 18 1
US platinum 1743 00 9 60 0 6 2 0
US palladium 786 55 13 35 1 7 2 1
Gold 1531 40 3 90 0 3 7 9
Silver 36 53 0 64 1 8 18 2
Platinum 1740 50 18 90 1 1 1 5
Palladium 784 10 20 87 2 7 2 0
Gold Fix 1527 50 1 25 0 1 8 3
Silver Fix 35 86 48 00 1 4 17 1
Platinum Fix 1734 00 10 00 0 6 0 2
Palladium Fix 779 00 9 00 1 2 1 5
Reporting by Jan Harvey and Amanda Cooper in London and
Carole Vaporean in New York Editing by William Hardy Alden
Bentley and Dale Hudson
jan harvey thomsonreuters com or
carole vaporean thomsonreuters com 1 646 223 6044 Reuters
Messaging carole vaporean reuters com reuters net
nyc commods newsroom reuters com |
MS | Brent crude falls below 118 ahead of key U S jobs report | Market eyeing key U S jobs data later on Friday
U S crude stocks fell 889 000 bbls less than expected
Coming Up U S non farm payrolls June 1230 GMT
By Francis Kan
SINGAPORE July 8 Reuters Brent crude dipped below 118
on Friday after sharp gains a day earlier as the market
awaited a U S jobs report for insight into the pace of economic
recovery of the world s biggest oil consumer
ICE Brent crude fell 61 cents to 117 98 a barrel by
0235 GMT U S crude was at 98 61 a barrel down 6
cents
Brent oil jumped on Thursday by the biggest percentage in
two months hitting a three week high as U S data on jobless
claims and retail sales came in stronger than expected
That prompted several economists to raise forecasts for the
government s non farm payrolls count due later on Friday
Traders usually turns cautious before a key data release
like non farm payrolls The market needs a consistent flow of
good news to support prices said Benson Wang an analyst with
Commodity Brokers in Sydney
There is still uncertainty over whether the IEA will
release more oil and whether China really has inflation under
control
For analyst reaction to China rate rise
For ANALYSIS No hard landing for China
For a 24 hour technical outlook on WTI
For a 24 hour technical outlook on Brent
Oil prices have rebounded about 10 percent after plunging
to four month lows following the International Energy Agency s
IEA shock announcement on June 23 that member nations would
release 60 million barrels of oil reserves
The IEA said it would consider later this month whether or
not to release more reserves but does not see the program
extending for longer than a month or two
China this week raised interest rates on for the third time
this year in an attempt to tame rising inflation raising hopes
that the government s monetary tightening cycle may be nearing
its end
The country s annual inflation in June is expected to hit a
near three year peak of 6 3 percent according to a Reuters poll
of 28 economists
U S INVENTORIES
U S crude and oil product stocks posted modest declines
last week as a boost in refinery utilization was offset by a
rise in crude imports U S Energy Information Administration
data showed Thursday
Crude inventories fell 889 000 barrels to 358 6 million
barrels in the week to July 1 below average forecasts of a 2 3
million barrel drawdown
Gasoline stocks unexpectedly fell 634 000 barrels to 212 5
million barrels versus analyst projections for a 100 000 barrel
build
Distillates which include heating oil and diesel likewise
posted a surprise 191 000 barrel fall to 142 05 million barrels
compared with a forecast rise of 700 000 barrels
BULLISH FORECASTS
JP Morgan became the latest bank to raise its oil price
forecasts citing the impact of the IEA decision to release
strategic crude stocks together with shifts in Middle East Gulf
crude oil exports
Politics aside the main reason we can see for the precise
timing of the IEA stock release was that it coincided with clear
indications from tanker traffic data that OPEC output would fall
short of prior pledges the bank said in a report dated
Thursday
As such it is difficult to conclude anything except that
there is little or no spare capacity in the oil market
Investment banks Goldman Sachs Morgan Stanley
and Barclays Capital had also this week published upbeat
forecasts on the outlook for oil fundamentals this week with
similar warnings of shrinking spare capacity
In the short term U S crude s bullish target of 99 68
remains intact while Brent oil is expected to rise to 121 47
according to Reuters technical analyst Wang Tao
The spread between the two benchmarks widened by 3 to top
20 a barrel on Thursday the widest since June 20
as production problems plagued North Sea oil supplies It was
trading at 19 41 a barrel by 0233 GMT up 34 cents
Editing by Ed Lane |
MS | UPDATE 2 Brent crude falls ahead of U S jobs data | Market eyeing key U S jobs data later on Friday
U S crude stocks fell 889 000 bbls less than expected
Coming Up U S non farm payrolls June 1230 GMT
Updates prices adds PBOC governor comments
By Francis Kan
SINGAPORE July 8 Reuters Brent crude fell on Friday
after sharp gains a day earlier prompted investors to book
profits ahead of a key U S jobs report that will provide
insight into the pace of economic recovery of the world s
biggest oil consumer
ICE Brent crude was down 35 cents at 118 24 a
barrel by 0629 GMT after falling as low as 117 62 earlier
U S crude was at 98 67 a barrel down 1 cent Oil
prices are headed for their second straight weekly gain with
Brent poised to rise more than 5 percent this week
Brent jumped on Thursday by the biggest percentage in two
months hitting a three week high as U S data on jobless claims
and retail sales came in stronger than expected
That prompted several economists to raise forecasts for the
government s non farm payrolls count due later on Friday
Traders usually turn cautious before a key data release
like non farm payrolls The market needs a consistent flow of
good news to support prices said Benson Wang an analyst with
Commodity Brokers in Sydney
There is still uncertainty over whether the IEA will
release more oil and whether China really has inflation under
control
Analyst reaction to China rate rise
ANALYSIS No hard landing for China
24 hour technical outlook on WTI
24 hour technical outlook on Brent
Oil prices have rebounded about 10 percent after plunging to
four month lows following the International Energy Agency s
IEA shock announcement on June 23 that member nations would
release 60 million barrels of oil reserves
The IEA said it would consider later this month whether to
release more reserves but does not see the program extending
for longer than a month or two
China this week raised interest rates for the third time
this year in a bid to tame rising inflation raising hopes the
government s monetary tightening cycle may be nearing its end
The country s annual inflation in June is expected to hit a
near three year peak of 6 3 percent according to a Reuters poll
of 28 economists
China s central bank governor Zhou Xiaochuan said on Friday
the country s monetary policy needed to support economic growth
and keep inflation under control
In separate comments published on Friday a senior Chinese
banking regulator said the government s monetary policy tools
needed innovation as the market had become immune to the
standard moves taken by the central bank to curb excess
credit
U S INVENTORIES
Government data showing a smaller than expected decline in
U S crude stocks also weighed on prices
Crude inventories fell 889 000 barrels to 358 6 million
barrels in the week to July 1 below average forecasts of a 2 3
million barrel drawdown U S Energy Information Administration
data showed Thursday
Gasoline stocks unexpectedly fell 634 000 barrels to 212 5
million barrels versus analyst projections for a 100 000 barrel
build
Distillates which include heating oil and diesel likewise
posted a surprise 191 000 barrel fall to 142 05 million barrels
compared with a forecast rise of 700 000 barrels
BULLISH FORECASTS
JP Morgan became the latest bank to raise its oil price
forecasts citing the impact of the IEA decision to release
strategic crude stocks together with shifts in Middle East Gulf
crude oil exports
Politics aside the main reason we can see for the precise
timing of the IEA stock release was that it coincided with clear
indications from tanker traffic data that OPEC output would fall
short of prior pledges the bank said in a report on Thursday
As such it is difficult to conclude anything except that
there is little or no spare capacity in the oil market
Investment banks Goldman Sachs Morgan Stanley
and Barclays Capital had also this week published upbeat
forecasts on the outlook for oil fundamentals with similar
warnings of shrinking spare capacity
In the short term U S crude s bullish target of 99 68
remains intact while Brent oil is expected to rise to 121 47
according to Reuters technical analyst Wang Tao
The spread between the two benchmarks widened by 3 to top
20 a barrel on Thursday the widest since June 20
as production problems plagued North Sea oil supplies It was
trading at 19 49 a barrel by 0621 GMT up 22 cents
Editing by Clarence Fernandez |
MS | UPDATE 11 Oil dips on jobs data Brent US spread at 22 | U S June jobs report disappoints weighs on oil
North Sea supply worry limits Brent losses
Brent premium to U S crude above 22 barrel intraday
Coming up API oil stocks data 4 30 p m EDT Tuesday
Recasts updates prices market activity to Brent
settlement
By Robert Gibbons
NEW YORK July 8 Reuters Oil ended a strong week on a
downbeat note on Friday as a dismal U S jobs report cast a
pall on the economic outlook
Benchmark Brent crude pared losses by mid afternoon
closing near flat on the day as news of reduced North Sea
production helped drive prices up nearly 6 percent this week
Brent s premium to U S crude pushed above 22 a
barrel within 1 of its all time record three weeks ago
Trading was volatile while volume picked up from recent
weak levels with raw materials faring better than stock
markets after news that U S jobs growth ground to a near halt
in June Nonfarm payrolls rose only 18 000 the weakest reading
since September and well below expectations ID nN1E7670C0
The employment data has weighed mightily on oil prices
Employment trends are key to future demand and this is now two
months of poor data said John Kilduff partner at hedge fund
Again Capital LLC in New York
The market s only supportive feature is further declines
in North Sea loadings These outages coupled with Libya and
Nigeria issues are increasingly meaningful he said
Brent futures for August fell 26 cents to settle at
118 33 a barrel off their 119 87 peak reached ahead of the
U S jobs report but well above the 116 88 low Brent posted a
second straight weekly gain rising 5 87 percent after gaining
6 33 percent the previous week
A second week of strong gains has pushed prices well above
the level prior to the release of global emergency stockpiles
as traders bet the extra 60 million barrels of oil would be
insufficient to stop markets tightening later this year
U S crude fell 2 47 to settle at 96 20 a barrel
below front month crude s 30 day moving average of 96 84 but
off its 95 60 intraday low For the week U S crude rose 1 33
percent also a second straight weekly gain
Money managers raised their net long U S crude futures and
options positions in the week to Tuesday the Commodity Futures
Trading Commision said on Friday ID nEMS1CU1T5
After lagging early U S crude trading volumes outpaced
Brent s though Brent surpassed its 30 day average while U S
volumes were on track to fall just short
Brent seems to have more speculative interest in it along
with the North Sea problems and missing African barrels and
the demand in Asia for similar barrels said Gene McGillian
analyst at Tradition Energy in Stamford Connecticut
24 hour technical outlook on WTI
24 hour technical outlook on Brent
TIGHT GLOBAL SUPPLY
Output from the North Sea Forties oil stream will slip to a
two year low in August further reducing supply of the crude
that helps to set the Brent benchmark ID nL6E7I80WI
Brent s strength indicates the need for sweet crude like
Libya s even though an expected increase in U S Gulf Coast
supply should theoretically reroute some African light sweet
crude toward the higher priced European market Jim
Ritterbusch president of Ritterbusch Associates said in a
research note
Thursday s government inventory report showed U S crude
and refined product stocks fell last week EIA S
Oil prices have rebounded from four month lows following
the International Energy Agency s IEA surprise announcement
on June 23 that member nations would release 60 million barrels
of oil reserves The IEA said it would consider later this
month whether to release more reserves ID nN1E75S11T
JP Morgan said in a report the timing of the IEA release
threw a spotlight on tightness in global oil supply
Politics aside the main reason we can see for the precise
timing of the IEA stock release was that it coincided with
clear indications from tanker traffic data that OPEC output
would fall short of prior pledges the bank said in a report
on Thursday
As such it is difficult to conclude anything except that
there is little or no spare capacity in the oil market
Additional reporting by Gene Ramos in New York Simon Falush
and Stephen Mangan in London and Francis Kan in Singapore
Editing by Dale Hudson and David Gregorio |
JPM | Bunge shares touch 22 month high as consolidation talk swirls | By Karl Plume CHICAGO Reuters Shares of Bunge Ltd scaled to a 22 month peak on Wednesday after merger overtures by Glencore LON GLEN Plc s agriculture unit whetted investors appetite for consolidation in the commodities sector But Bunge s lukewarm response to a possible consensual business combination suggests a two pronged M A approach for agribusinesses may be in the offing analysts said on Wednesday Grain trading veterans like Bunge Archer Daniels Midland Co and Cargill Inc CARG UL which already have a sizable U S presence are aiming up the supply chain with specialty higher margin products The companies along with Louis Dreyfus Co LOUDR UL are known in the business as the ABCDs of global grains trading Meanwhile foreign players like Glencore and China s Cofco Group CNCOF UL are eager to gain a foothold in the United States the world s top agricultural products exporter and other key production areas in South America where Bunge dominates If you want to be an ABCD you have to buy one said Kansas State University agricultural economist Jay O Neil You cannot go out and recreate these kinds of international trading operations organically Merger expectations have swirled around large grain traders for months following a string of poor earnings results as low crop prices and a global glut of grains have squeezed core commodity trading operations News that Glencore Agriculture Ltd jointly owned by Glencore and two Canadian pension funds approached Bunge sparked the U S agribusiness sharpest rally in more than eight years on Tuesday Bunge the world s largest oilseed processor later said it was not in talks with Glencore and remained committed to its growth strategy of expanding into higher margin products such as natural food ingredients and specialty edible oils Bunge shares closed at 82 54 on Wednesday after earlier touching a peak of 82 96 their highest since July 2015 Glencore shares slipped 0 1 percent to 291 972 pence SUPPLY CHAIN EYED JPMorgan NYSE JPM analyst Ann Duignan said she was surprised that Bunge struck a relatively dismissive tone on the Glencore deal as its core businesses remain under pressure with agribusiness margins weighed down by burdensome supplies of crops in all producer regions Glencore CEO Ivan Glasenberg said on Wednesday the company wants to expand its agriculture business but has no plans to move into any commodities it does not already trade There is a push to get more into the supply chain without going all the way to being branded food products Chris Johnson lead agribusiness credit analyst at Standard Poor s Bunge with a nearly 11 5 billion market cap could sell for a 10 times multiple which would imply a transaction value of about 90 per share said Morningstar analyst Seth Goldstein Glencore Agri is one of the world s largest suppliers of sugar wheat and pulses such as peas and lentils It also trades cotton corn barley soybeans and other crops A deal with Bunge could transform Glencore into a major force in the U S agriculture sector and would make the Swiss company s Canadian joint venture the latest foreign entity to own of a piece of the U S food chain In 2015 Brazil based JBS SA bought Cargill s U S hogs business Two years earlier Shuanghui International Holdings Ltd struck a deal for Virginia based Smithfield Foods the world s largest pork producer Hong Kong based WH Group now owns Smithfield Germany s Bayer AG DE BAYGN plans to acquire U S based Monsanto NYSE MON Co the world s biggest seed maker as part of a wave of consolidation in the seed and agrochemical industry that could shrink six large companies into four The shakeup among grains traders however may look entirely different
It s a large disparate industry and it took economies of scale to get these companies to where they are But how much further can it go I don t see it working like it has in ag chemicals said Gary Blumenthal president of World Perspectives Inc |
JPM | JPMorgan upgrades UK stocks cuts view on European autos | LONDON Reuters JPMorgan NYSE JPM global equity strategists said on Tuesday they expect UK stocks to claw back some of their underperformance against euro zone and global peers and recommended investors buy into bluechip dividend paying exporters that stand to benefit the most from a weak sterling A broad UK index the FTSE 350 FTLC is up about 6 percent this year compared to the 10 percent rise for euro zone stocks STOXXE We think UK is becoming interesting in the regional allocation again JPMorgan s strategists led by Mislav Matejka said in a note to clients adding that signs that investors have turned less risk averse since early May also bodes well for London listed stocks The UK is a defensive market with high dividend yield It should perform better in the backdrop of potential softening in activity indicators lower inflation prints and continued range bound bond yields JPMorgan said The U S broker expects sterling s appreciation against the dollar to halt British voters go to the polls next week While the Conservative Party led by Prime Minister Theresa May is expected to win comfortably on June 8 her party s lead in opinion polls has narrowed sharply in the last week calling into question her decision to call the unscheduled election seeking a strong endorsement of her Brexit strategy A Labour win would be challenging for many domestic plays JPMorgan said adding that any sterling weakness on the back of this outcome would again boost exporters Elsewhere the strategists turned more cautious on their view on the outlook for equities They cut their rating on autos to neutral and added they now favor defensive sectors such as utilities and telecoms which have significantly lagged in the reflation trade underway since last summer
Globally JPMorgan continued to trim their allocation to Japanese equities saying a strengthening yen was a drag on corporate profits which were already showing signs of weakening momentum |
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