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JPM | European shares fall for fourth day banks under pressure | By Danilo Masoni MILAN Reuters European shares fell slightly on Tuesday with banks leading the decline on fresh political jitters and following a downgrade by a top global broker The pan European STOXX 600 index STOXX was down 0 2 percent by 0855 GMT following three straight days of losses Euro zone blue chips STOXX50E declined 0 5 percent while Britain s FTSE FTSE dropped 0 4 percent as it reopened following a long weekend Euro zone banks SX7E fell 2 percent to its lowest level in nearly two weeks after Deutsche Bank strategists downgraded regional banking stocks rating by one notch to underweight In a note to clients they said the sector was among the most sensitive to swings in euro area growth which they expected to fade and that prices were no longer compelling There is no particular valuation support they said Italian banking shares hit in the past two sessions by worries over early elections were among the losers again on Tuesday with UniCredit MI CRDI down 0 9 percent Among other euro zone bank heavyweights Deutsche Bank DE DBKGn fell 1 6 percent and Spain s Caixabank MC CABK dropped 1 4 percent Barclays LON BARC said it still expected Italy to hold elections next year even though chances of a snap vote had risen substantially with non negligible risks that anti establishment parties could win We expect volatility in Italian and periphery assets to increase in coming weeks and to remain driven by electoral polls they said in a note In spite of weakness seen over the past sessions the STOXX benchmark is set to end May in positive territory near two year highs and scoring its fourth straight month of gains Yet as the recent run loses momentum investors have started to reshuffle their portfolios seeking fresh catalysts as a surprisingly strong earnings season draws to an end While Deutsche Bank has cut banks recommending that investors buy sectors such as energy and construction JPMorgan NYSE JPM strategists downgraded autos to neutral saying they now favored defensive sectors such as utilities and telecoms Among the biggest movers Swiss food group Aryzta S ARYN fell 2 8 percent after reporting flat revenues and saying it could not provide any forward guidance Shares in paint maker Akzo AS AKZO fell 1 5 percent as chances of a takeover by US rival PPG slimmed after a court rejected a request by dissident investors to take action against the Dutch group over its rejection of the takeover In the UK shares of British Airways owner IAG L ICAG fell 2 8 percent on the first day of trading following massive weekend disruption to flights due to an IT outage
Elsewhere among airlines Ryanair I RYA edged up 0 3 percent after Europe s biggest carrier by passengers reported a record annual profit that was in line with market expectations |
C | China suspends forex business for some foreign banks sources | SHANGHAI Reuters China s central bank has suspended at least three foreign banks from conducting some foreign exchange business until the end of March three sources who had seen the suspension notices told Reuters on Wednesday Included among the suspended services are liquidation of spot positions for clients and some other activities related to cross border onshore and offshore businesses the sources said The sources speaking on condition that the banks were not named said the notices sent to the affected foreign banks by the People s Bank of China PBOC gave no reason for the suspension The PBOC did not immediately respond to a request for comment The measure follows a slew of steps taken by the Chinese government to keep the yuan stable since it devalued the currency in August The spread between the onshore and offshore markets for the yuan or renminbi has been growing since the devaluation making it increasingly difficult for the central bank to manage its currency and stem an outflow of capital from an economy that is facing its slowest growth in 25 years The sources told Reuters that authorities had warned the banks that if they engaged in lucrative carry trade taking advantage of the different exchange rates the central bank would move to further block arbitrage channels This is part of the PBOC s expedient means to stabilize the yuan s exchange rate said an executive at a foreign bank contacted separately The sources said the banks might have been targeted due to the large scale of their cross border forex businesses An economist at a top government think tank said the measure was a temporary bid to curb demand for dollars that has been strengthening toward the end of the year as the gap between the onshore and offshore yuan exchange rates widens They hope to ease foreign exchange buying pressure and ease depreciation pressure on the yuan said the economist who declined to be identified by name But I don t think the authorities will take very strong capital control measures they are likely to reinforce the existing measures The move could also ease pressure on the PBOC for direct intervention in offshore markets to support the yuan which has contributed to a fall of more than 400 billion in China s foreign exchange reserves this year UNDER SCRUTINY In common with forex markets worldwide there are no official data on which banks are the most active in trading foreign exchange in China A 2015 Asiamoney survey asking market participants which brokers they used named Deutsche Bank DE DBKGn as the top foreign forex provider in China followed by Australia and New Zealand Banking Group HSBC Citigroup N C and BNP Paribas PA BNPP Asked if they had received the central bank s suspension notice Citi Deutsche Bank HSBC and BNP Paribas declined to comment There was no immediate response from ANZ Standard Chartered L STAN and DBS which also conduct trading in foreign exchange in China did not respond to requests for comment The latest move comes just three months since the PBOC ordered banks to closely scrutinize clients foreign exchange transactions to prevent illicit cross border currency arbitrage between the offshore and onshore yuan On Wednesday the country s foreign exchange regulator also said it would improve its reserve position and contingency plans to curb risks from abnormal cross border capital flows The yuan has come under renewed pressure since late November amid speculation that Beijing would permit more depreciation after the International Monetary Fund announced the currency s admission into the fund s basket of reserve currencies The onshore yuan traded in Shanghai has lost 1 44 percent of its value since the end of November and has repeatedly hit 4 1 2 year lows
The offshore market has traced a similar pattern The Hong Kong traded offshore yuan hit an intraday low of 6 5965 on Wednesday morning its weakest since late September 2011 |
C | Chicago sets 500 million bond sale amid pension uncertainty | CHICAGO Reuters Chicago will head to the municipal bond market next week with a 500 million bond issue amid uncertain pension funding requirements and political turmoil The general obligation refunding bonds are scheduled to be priced through Citigroup N C on Jan 12 according to bond sale documents released late on Tuesday The sale comes as state legislative fixes to address Chicago s 20 billion unfunded pension liability remain up in the air and Mayor Rahm Emanuel struggles with political fallout from controversial police shootings including calls for his resignation Chicago s current budget relies on a bill passed by the Illinois House and Senate that would reduce city payments to its pension funds covering police and fire fighters The bill has not been sent to Governor Bruce Rauner who has been critical of the measure A record 543 million phased in property tax increase approved by the city council in October exclusively for public safety worker pensions would still leave Chicago with a funding gap of about 200 million if that bill is not enacted Standard Poor s warned last week that Chicago s BBB plus bond rating could fall multiple notches if the city fails to successfully implement contingency plans in a timely manner to fully meet its pension obligations with an identifiable and reliable revenue source The city s bond rating with Moody s Investors Service is already in the junk level In a presale presentation Chicago finance officials said the city has about 510 million remaining from a new 750 million credit line with three banks to meet unforeseen financial obligations Meanwhile a 2014 Illinois law mandating higher city contributions and lower benefits for its municipal and laborers retirement funds is before the Illinois Supreme Court which is expected to rule soon on the law s constitutionality
The bond sale will continue the practice which the city is phasing out of restructuring debt service payments on outstanding bonds to free up revenue The sale will be followed by a 480 million GO bond offering on Jan 14 by Illinois which is also mired in a financial crisis Chicago pays a heftier penalty in the bond market than the state The city s so called credit spread over Municipal Market Data s benchmark triple A scale hovered around 250 basis points for 20 year bonds while the spread for Illinois bonds was 171 basis points |
C | Banco do Brasil Bradesco in Citigroup venture talks source | SAO PAULO Reuters Brazilian lenders Banco Bradesco SA BBDC4 and Banco do Brasil SA BBAS3 are in talks to buy Citigroup s N C stake in a credit card processing joint venture with Elavon Inc a source with knowledge of the negotiations said on Saturday
The acquisition could be closed next month by Bradesco and Banco do Brasil s holding company Elo Participa es the source said asking not to be named because the discussions are confidential
Representatives for Bradesco Banco do Brasil and Citigroup declined to comment on the talks which were first reported in Saturday s edition of Estado de S Paulo The newspaper did not say how it got the information
Reuters reported in November that Citigroup had put the stake up for sale after Brazil s central bank said the joint venture needed more cash and the U S bank declined to come up with any additional funds
Citigroup owns 49 9 percent of the Elavon do Brasil venture which had negative equity of 195 million reais 49 million as of June according to Citigroup s Brazilian financial statements meaning the bank could lose money if it tried to sell the stake
Bradesco and Banco do Brasil are controlling shareholders of Cielo SA SA CIEL3 Brazil s No 1 card payment processor |
C | Iran central bank takes Beirut bombing case to U S Supreme Court | By Lawrence Hurley WASHINGTON Reuters The Republican led Congress and President Barack Obama s administration often at odds over Iran policy are urging the U S Supreme Court to let the families of Americans killed in the 1983 bombing of a U S Marine Corps barracks in Beirut and other attacks collect nearly 2 billion in frozen Iranian funds The Supreme Court on Wednesday will hear arguments in an appeal by the Iranian central bank Bank Markazi to reverse a 2014 lower court ruling that said the money should be handed over to plaintiffs representing hundreds of Americans killed or injured in attacks blamed on Iran They won a 2 65 billion judgment against Iran in U S federal court in 2007 The money is currently held in New York in a trust account at Citibank part of Citigroup Inc N C At issue before the justices is whether Congress violated the separation of powers principle enshrined in the U S Constitution by passing a 2012 law that specified the funds held in the trust account go toward paying off the judgment Bank Markazi contends the legislative branch of the U S government improperly sought to dictate the outcome of a specific case handled by the judiciary branch The families accused Iran of providing material support to Hezbollah the Iran backed Shi ite Islamist political and military group responsible for the 1983 truck bomb attack at the Marine compound in Beirut that killed 241 U S servicemen They are also seeking compensation on behalf those killed or injured in other attacks they linked to Iran including the 1996 Khobar Towers truck bombing in Saudi Arabia that killed 19 U S service members The lead plaintiff in the case is Deborah Peterson who originally sued in 2001 on behalf of the estate of her brother Marine Lance Corporal James Knipple who was killed at age 20 in the Beirut bombing The high court s action comes at a delicate time in U S Iranian relations The United States and five other world powers reached a deal with Iran last July to lift certain American European Union and U N sanctions in exchange for Iran accepting limits on its nuclear program Congressional Republicans strongly opposed the nuclear agreement championed by Obama In the Supreme Court case the Obama administration the Senate and a legal group representing leaders of the House of Representatives all filed court papers backing the plaintiffs The unity shown by the White House and Congress might normally carry significant weight with the justices said Erwin Chemerinsky dean of the University of California Irvine School of Law But because the case raises a question of the relationship between Congress and the courts it could have less effect than in other contexts he said A ruling is due by the end of June |
C | What Could Happen If Le Pen Wins ETFs In Focus | A recent poll conducted among 995 voters on April 5 2017 indicated that there could be a tie between Emmanuel Macron and Marine Le Pen in the first run off to the French presidential election on April 23 2017 They are expected to get 23 5 of votes each
In the past two weeks Macron has slipped 2 and Le Pen 0 5 with Francois Fillon having his best month with 19 support predicted Though the decline in support for Macron is concerning the Elabe poll predicts that Le Pen is likely to lag Macron in the second run off
A potential Le Pen victory is a concern for investors given her promise to hold a Frexit referendum Citigroup Inc NYSE C stated that French banks could lose up to 25 in market cap in case Le Pen wins
Even though the polls say that Macron will beat Le Pen 63 37 in the second run off if they face each other on May 7 we know from history that these polls cannot be blindly trusted Therefore it will be unwise to not price in the probability of a Le Pen victory as well Analysts predict that her victory could shake up European equities and currency read
French bond yields are likely to rise sharply to price in the risks of devaluation as Le Pen promises to take euro out and bring in franc This could lead to major troubles for the French economy in the short term as investors do not like destabilization read
There is however some positive news for investors The preliminary Purchasing Managers Index PMI reached 56 7 in March the highest since April 2011 and up from February s 55 5 Moreover the Economic Sentiment Indicator posted a score of 107 9 in the Eurozone and 109 1 in the European Union way above its 26 year long term average of 100
Therefore after weighing all the odds we believe that despite the risks the current scenario presents a strong case for investing in the Euro region see all
WisdomTree Europe Hedged Equity Fund
This fund is appropriate for investors looking to gain diversified exposure to European equities without betting on the euro
HEDJ has AUM of 9 27 billion and charges 58 basis points in fees per year Industrials Consumer Discretionary and Consumer Staples comprise more than 52 of the fund holdings The fund has a 25 64 allocation to Germany 24 43 to France and 19 05 to Spain as of April 4 2017 It returned 8 62 in the year to date time frame and 24 43 in the past one year as of April 5 2017
iShares Currency Hedged MSCI Eurozone ETF
This ETF is a play on exporters and local European companies and is an appropriate bet for investors looking for exposure to this region
The fund manages AUM of 1 34 billion and charges 51 bps in fees per year The top three sector holdings of this fund are Financials Industrials and Consumer Discretionary with 19 38 14 95 and 13 69 allocation respectively It has a 31 9 allocation to France 29 53 to Germany and 10 81 to the Netherlands as of April 4 2017 This fund returned 6 88 in the year to date time frame and 21 6 in the past one year as of April 5 2017
SPDR EURO STOXX 50 Currency Hedged NYSE HFEZ ETF
This ETF is a play on European companies and seeks to replicate the EURO STOXX 50 Hedged USD Index
The fund manages AUM of 23 04 million and charges 32 bps in fees per year The top three sector holdings of this fund are Financials Industrials and Consumer Discretionary with 21 79 14 44 and 11 21 allocation respectively It has a 35 62 allocation to France 33 87 to Germany and 10 64 to Spain as of April 4 2017 This fund returned 6 80 in the year to date time frame and 23 7 in the past one year as of April 5 2017 read
To Conclude
With better than expected economic results in the region and extremely low chances of a Le Pen victory we believe the environment is prudent for investing in the Euro region without exposure to the single currency
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 |
MPC | The Energy Report For December 7 | American Exporter
While there is so much focus on the drama in the OPEC cartel the real historic news that went unnoticed was that the United States last week exported more crude oil and fuel than it imported for the first time on record Reuters news reported that when adding in all imports and exports of crude and refined products the U S exported a net 211 000 barrels per day for the week through Nov 30 the first time that has happened according to U S Energy Department figures dating to 1973 That was on the back of a jump in crude exports to a weekly record of more than 3 2 million bpd So now the US can join the community of exporting nations as opposed to consuming nations at least this week That was only one of the bullish factors that was largely ignored with the markets OPEC plus one meeting obsession
The Energy Information Administration EIA also brought sanity back to the oil inventory world by reporting that US oil supplies fell by 7 323 million barrels even after a one million barrel release from the US Strategic Petroleum Reserve SPR and another big 1 729 million barrel build in the Cushing Oklahoma Delivery point The reason for the big drop is a game changing record US exports to a world that despite talk to the contrary is hungry for crude oil
That strong demand is one reason Russia is reluctant to cut production with OPEC as they feel that the market may balance on its own without a production cut Russian oil companies do not want to go to all the trouble to cut production which from a logistics viewpoint is difficult in winter only to have to ramp up production in the future Saudi Arabia on the other hand are less sure as they are feeling the hurt of the price drop and can t afford to be optimistic Russian Energy Minister Alexander Novak flew back to Russia to meet with Russian President Vladimir Putin to see if he could get approval for a cut that would please the Saudis and close the deal at today s meeting The number that Novak reportedly came back with was 200 000 barrels a day which if OPEC agrees to its 1 million would put the cut at a respectable 1 2 million barrels a day
Yet Can OPEC commit to a million The bulk of the cartel want the Saudis to carry a bigger percentage of the cut The other thorny issue in the OPEC meeting is whether to grant an exemption to Iran still hampered by US sanctions a situation that should get even more challenging in the coming months And if you grant Iran an exemption than you might have to give Libya and Nigeria one too Saudi Energy Minister Khalid al Falih said he was not confident a deal could be reached Oh what a tangled web we weave when first we practice to thieve
Oil products did see an increase The EIA reported that gasoline supply increased by 1 699 mb vs est 1 750mb distillates 3 811mb
Reuters reports retail gasoline prices in the United States should average 2 25 a gallon in 2019 Marathon Petroleum NYSE MPC CEO Gary Heminger said at an industry conference in New York on Thursday Heminger added that he expects crude oil prices to stay in a range of 60 70 a barrel As long as crude oil prices stay within that range we ll probably average 2 25 a gallon for the year he said at the S P Global Platts Global Energy Outlook Forum
Mr Heminger also told Maria Bartiromo on Mornings with Maria on the Fox Business Network that US Shale operators are going to have a hard time Heminger said when you look at the price decline it is already threatening U S shale production If you look at the Canadian producers when you re looking at the wide spreads of the Western Canadian Select versus WTI you look at some of the real cost to get some of the crude out of the Bakken because the pipelines are full I think we are going to start seeing a slowdown in drilling if they don t see some prices turn around Heminger told FOX Business Maria Bartiromo on Wednesday |
MPC | Marathon Petroleum MPC Stock Moves 1 72 What You Should Know | In the latest trading session Marathon Petroleum MPC closed at 58 84 marking a 1 72 move from the previous day This move was narrower than the S P 500 s daily loss of 2 08 At the same time the Dow lost 2 11 and the tech heavy Nasdaq lost 2 27
Coming into today shares of the refiner had lost 8 4 in the past month In that same time the Oils Energy sector lost 5 16 while the S P 500 lost 3 6
Investors will be hoping for strength from MPC as it approaches 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
MPC s full year Zacks Consensus Estimates are calling for earnings of 5 13 per share and revenue of 92 94 billion These results would represent year over year changes of 35 and 23 32 respectively
Investors might also notice recent changes to analyst estimates for MPC These revisions typically reflect the latest short term business trends which can change frequently As such positive estimate revisions reflect analyst optimism about the company s business and profitability
Our research shows that these estimate changes are directly correlated with near term stock prices Investors can capitalize on this by using the Zacks Rank This model considers these estimate changes and provides a simple 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 68 lower MPC is holding a Zacks Rank of 3 Hold right now
Digging into valuation MPC currently has a Forward P E ratio of 11 68 Its industry sports an average Forward P E of 11 82 so we one might conclude that MPC is trading at a discount comparatively
Investors should also note that MPC has a PEG ratio of 0 73 right now 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 88 based on yesterday s closing prices
The Oil and Gas Refining and Marketing industry is part of the Oils Energy sector This group has a Zacks Industry Rank of 161 putting it in the bottom 37 of all 250 industries
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups 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 | Marathon Petroleum MPC Outpaces Stock Market Gains What You Should Know | Marathon Petroleum MPC closed at 59 10 in the latest trading session marking a 1 29 move from the prior day The stock outpaced the S P 500 s daily gain of 0 86 Elsewhere the Dow gained 1 14 while the tech heavy Nasdaq added 0 38
Coming into today shares of the refiner had lost 10 62 in the past month In that same time the Oils Energy sector lost 9 09 while the S P 500 lost 7 55
MPC will be looking to display strength as it nears its next earnings release which is expected to be February 7 2019 On that day MPC is projected to report earnings of 1 14 per share which would represent year over year growth of 8 57 Our most recent consensus estimate is calling for quarterly revenue of 33 19 billion up 56 28 from the year ago period
For the full year our Zacks Consensus Estimates are projecting earnings of 5 13 per share and revenue of 92 94 billion which would represent changes of 35 and 23 32 respectively from the prior year
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 With this in mind we can consider positive estimate revisions a sign of optimism about the company s business outlook
Our research shows that these estimate changes are directly correlated with near term stock prices 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
Ranging from 1 Strong Buy to 5 Strong Sell the Zacks Rank system has a proven outside audited track record of outperformance with 1 stocks returning an average of 25 annually since 1988 Within the past 30 days our consensus EPS projection has moved 1 23 lower MPC is currently sporting a Zacks Rank of 3 Hold
Looking at its valuation MPC is holding a Forward P E ratio of 11 38 For comparison its industry has an average Forward P E of 11 84 which means MPC is trading at a discount to the group
We can also see that MPC currently has a PEG ratio of 0 71 This popular metric is similar to the widely known P E ratio with the difference being that the PEG ratio also takes into account the company s expected earnings growth rate Oil and Gas Refining and Marketing stocks are on average holding a PEG ratio of 0 95 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 108 which puts it in the top 42 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
Make sure to utilize Zacks Com to follow all of these stock moving metrics and more in the coming trading sessions |
MPC | Oil Plunge Winter Threaten North Dakota s Record Production | As per North Dakota s oil regulator the state s daily crude output rose 2 4 in October after increasing 5 2 in the previous month The North Dakota Department of Mineral Resources DMR latest data said that oil production in October averaged a record 1 391 877 barrels a day up 32 595 barrels a day from September Like crude natural gas output also hit its highest level ever The state churned out 2 562 465 thousand cubic feet per day in October up from September s 2 527 434 thousand cubic feet per day Meanwhile North Dakota s total number of producing wells tallied 15 344 at the end of October the highest on record The newest numbers which showed that daily crude output remained above one million barrels for the 21st month further confirms the status of North Dakota centered on the Bakken formation as one of the hottest shale plays in the United States Oil Price Plunge Winter Might Slow Production GrowthThere is increasing evidence that a fundamental change is occurring in the oil market WTI crude the American benchmark popped above 76 a barrel and was trading at multiyear highs in early October A looming shortage of the commodity on Iran sanctions helped in driving oil prices higher Now in a reversal oil is facing a two pronged attack rising supply from major producers and fear that an economic slowdown will dampen the outlook for demand Oil s troubles helped send the index into a tailspin leading to a 40 drop from recent highs Even the OPEC led supply cuts look unlikely to end the market surplus With weaker oil prices denting producer profits oil volume in North Dakota is expected to experience muted growth Winter weather and road restrictions in the coming months will also put brakes on the region s breakneck activity Dakota Access Pipeline Stretched to the BrinkApart from the robustness in oil prices there is another factor that helped to speed up Bakken output growth the 1 170 mile long Dakota Access Pipeline Energy Transfer L P s NYSE ET mega project has a capacity to carry about 520 000 barrels of oil per day or more than 50 of North Dakota s output The conduit has successfully bridged the gap between Bakken players and producers in other U S oil producing areas like the Williston and Permian basins The geographically constrained Bakken Shale s crude has now better access to Gulf and East Coast refineries and also reaches international markets The pipeline where energy majors like Phillips 66 NYSE PSX Enbridge Inc NYSE ENB and Marathon Petroleum NYSE MPC have invested has helped to improve the region s drilling economics by lowering transportation costs for operators Moreover the pipeline s service has bolstered the revival of Bakken output with large operators like Oasis Petroleum Inc NYSE OAS counting on the Dakota Access Pipeline to send a major portion of their products to market But with the pipeline s spare capacity vanishing rapidly amid high demand there is a need for infrastructure that can allow for the movement of more oil A potential expansion of the Dakota Access Pipeline and the proposed Liberty Pipeline which will provide opportunity to shippers to secure transportation service from the Bakken production areas to Corpus Christi TX are touted as solutions While the Dakota Access expansion is likely to augment the pipeline s capacity by 50 000 barrels per day the Liberty pipeline will have an initial throughput capacity of 350 000 barrels per day and is expected to start operations in another two years Two Stocks to FocusWhile the crude price collapse and winter weather could stall North Dakota oil growth engine for the time being production is nevertheless expected to remain robust Though a number of companies have built sizeable acreage positions in North Dakota we have shortlisted two of them Whiting Petroleum Corporation NYSE WLL and Continental Resources Inc NYSE CLR that might warrant attention Both carry Zacks Rank 3 Hold You can see Whiting Petroleum is a top tier operator in North Dakota s Williston Basin The company has 410 000 net acres in the region giving it drilling inventory of more than 20 years The 2018 Zacks Consensus Estimate for this Denver CO based company is 3 10 representing some 336 6 earnings per share growth over 2017 Next year s average forecast is 3 19 pointing to another 2 8 growth Continental Resources also holds a premium position in the prolific Bakken Shale formation The company has a working interest in 1 576 net oil producing wells in the region which comprises almost 48 of the energy explorer s proved reserves The 2018 Zacks Consensus Estimate for this Oklahoma City OK based company is 3 10 representing some 507 8 earnings per share growth over 2017 Next year s average forecast is 3 27 pointing to another 5 8 growth Will You Make a Fortune on the Shift to Electric Cars Here s another stock idea to consider Much like petroleum 150 years ago lithium power may soon shake the world creating millionaires and reshaping geo politics Soon electric vehicles EVs may be cheaper than gas guzzlers Some are already reaching 265 miles on a single charge With battery prices plummeting and charging stations set to multiply one company stands out as the 1 stock to buy according to Zacks research It s not the one you think |
MS | European stocks broadly higher as lenders gain DAX up 0 7 | Investing com European stock markets were broadly higher on Tuesday rebounding from a ten week low as shares in the financial sector led gains while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 rose 0 5 France s CAC 40 gained 0 45 while Germany s DAX 30 climbed 0 7 Concerns over Greek sovereign debt eased after European Central Bank President Jean Claude Trichet indicated his willingness to sanction bond rollovers in Greece Meanwhile German Chancellor Angela Merkel told U S President Barack Obama that the euro zone will emerge strengthened from the crisis when the two leaders met on Monday Lenders many of which have exposure to Greek debt were broadly higher Societe Generale saw shares climb 1 3 Deutsche Bank gained 1 while Italian banking giant Unicredit saw shares rise 1 2 France s third largest bank Credit Agricole saw shares jump 1 6 after Nomura Holdings raised its rating on the stock to buy saying worries over the bank s capital and sovereign debt exposure have left it oversold Shares in Norwegian solar energy wafer manufacturer Renewable Energy Corporation surged 6 5 after Morgan Stanley upgraded the stock to overweight The lender said the reaction to the recent profit warning and weakness in wafer pricing has been excessively negative In other broker news French telecommunications firm Eutelsat Communications rose 2 4 while Sky Deutschland rallied 4 2 after Goldman Sachs added the stocks to their Conviction Buy list In London the FTSE 100 was up 0 3 as shares in life insurance group Resolution jumped 2 65 after it announced plans to repurchase shares worth up to GBP500 million Shares in miners also gained as metal prices advanced boosted by weakness in the U S dollar Copper producer Xstrata climbed 1 5 BHP Billiton was up 1 while Rio Tinto added 0 9 The outlook for U S equity markets meanwhile was upbeat The Dow Jones Industrial Average futures pointed to a gain of 0 45 S P 500 futures indicated an increase of 0 5 while the Nasdaq 100 futures advanced 0 45 Later in the day Federal Reserve Chairman Ben Bernanke was to speak His comments would be closely watched for his views on the U S economic recovery |
MS | European stocks edge higher ahead of ECB DAX up 0 15 | Investing com European stock markets were up on Thursday rebounding from a ten week low ahead of a key policy setting meeting by the European Central Bank while U S futures indexes pointed to a slightly higher open on Wall Street During European morning trade the EURO STOXX 50 rose 0 13 France s CAC 40 added 0 15 while Germany s DAX 30 edged 0 2 higher The ECB was not expected to increase its benchmark interest rate later in the day but President Jean Claude Trichet was widely expected to signal that the bank would raise its minimum bid rate in July Meanwhile French utility provider Suez Environnement saw shares jump 2 2 after JP Morgan raised its rating on the stock to overweight from neutral citing attractive earnings growth and lower risk versus the utilities sector Shares in the world s second largest maker of radiation treatment equipment Elekta rallied 3 2 after it said fourth quarter net income rose 11 5 to USD86 million surpassing expectations for income of USD84 3 million On the downside shares in the financial sector retreated amid ongoing concerns over Greek sovereign debt Deutsche Bank saw shares decline 1 1 Italy s largest lender Unicredit slumped 1 3 while shares in BNP Paribas shed 0 9 Semiconductor manufacturer Infineon Technologies slumped 1 9 after Morgan Stanley downgraded the stock saying margins may flatten out at around 20 in the second half of 2011 In London the commodity heavy FTSE 100 eased up 0 1 as raw material producers advanced after oil and metal prices gained Gold producer African Barrick Gold was up 1 3 copper producer Anglo American saw shares climb 1 1 while oil major BP saw shares advance 0 7 Meanwhile shares in Home Retail Group plunged 11 3 after it reported comparable sales at its Argos unit fell 9 6 in the 13 weeks to May 28 owing to a big slowdown in consumer electronics The Bank of England was expected to keep rates on hold at 0 50 when it announced its rate decision later Thursday The outlook for U S equity markets was upbeat The Dow Jones Industrial Average futures pointed to a gain of 0 2 S P 500 futures indicated an increase of 0 21 while the Nasdaq 100 futures advanced 0 15 Later in the day the U S was to publish official data on its trade balance as well as a weekly government report on initial jobless claims |
MS | US STOCKS Wall Street rebounds in oversold market | U S retail sales fall but less than forecast
Oversold conditions lead to broad rally
Indexes up Dow 1 pct S P 1 3 pct Nasdaq 1 5 pct
For up to the minute market news see STXNEWS US
Updates to close changes byline
By Chuck Mikolajczak
NEW YORK June 14 Reuters U S stocks posted their
biggest gains in nearly two months on Tuesday as retail sales
figures allayed fears over the economy that had driven a
six week slump in the market
Many analysts said the rally was likely a one day wonder
Though still weak the retail sales data was not as bad as most
had expected which provided an excuse to buy after the market
had neared its most oversold conditions in a year
It s the long term trend which is still disturbing said
Alan Valdes director of floor operations at DME Securities in
New York If you look at the S P 500 they ve lost over 1
trillion in value since the beginning of May that is
telling
We were so oversold you had to see a plus day
Many headwinds remain including concerns over debt
problems in Europe and the United States along with the
expiration at the end of this month of the U S Federal
Reserve s bond buying program which has been a key source of
liquidity for markets
U S retail sales declined for the first time in 11 months
in May but the fall was less than forecast For details see
ID nN14189765 China data also helped to ease worries about
global growth
Gains were spread across the board with the Morgan Stanley
retail index up 2 8 percent among the best performers
Energy also outperformed with the S P energy sector up
2 percent as oil prices rose
J C Penney Co Inc jumped 17 5 percent to 35 37
after the department store chain named Ron Johnson Apple Inc s
senior vice president of retail as its new chief
executive ID nN14207519
The Dow Jones industrial average gained 123 14
points or 1 03 percent to 12 076 11 The Standard Poor s
500 Index rose 16 04 points or 1 26 percent to
1 287 87 The Nasdaq Composite Index advanced 39 03
points or 1 48 percent to 2 678 72
Expectations for further selling this summer hovered in the
background even as the market rallied
Many investors are eyeing a possible retreat in the S P 500
to its March low near the 1 250 level The index closed flat on
Monday after falling to near a three month low last Friday
That level could be seen as a near term bottom and attract
additional buyers analysts have said
The S P 500 is down about 5 4 percent from its high in
early May as recent weak data sparked worries about the
sustainability of an economic recovery
In a sign that individual investors may be losing
confidence in the stock market customer trading slowed
substantially last month with more clients money moving into
cash and out of stocks and other areas according to brokerage
Charles Schwab Corp ID nN14191935
In China inflation was still a concern after consumer
prices rose at their fastest pace in almost three years in May
but industrial output grew from a year ago in line with
forecasts China s central bank increased the reserve
requirement ratio for commercial lenders by 50 basis points
ID nL3E7HE05P
People that were saying hard landing for China so far
the numbers don t show that said Jeffrey Saut chief
investment strategist for Raymond James Financial in St
Petersburg Florida
Options expiration this week also could generate more
volume and amplify stock moves as traders adjust their hedges
Such dynamics can lead to pinning where a stock or index closes
at or around its corresponding at the money option strike
Volume was light with about 6 45 billion shares traded on
the New York Stock Exchange NYSE Amex and Nasdaq below the
daily average of 7 58 billion
Advancing stocks outnumbered declining ones on the NYSE by
2 511 to 503 while on the Nasdaq advancers beat decliners
2 034 to 592
Reporting by Chuck Mikolajczak Editing by Leslie Adler |
MS | Nikkei rises on receding worries on Greece U S economy | Nikkei may stay near 200 day moving average analysts
BOJ tankan impact limited analysts
By Ayai Tomisawa
TOKYO July 1 Reuters The Nikkei share average rose 0 5
percent on Friday climbing above its closely watched 200 day
moving average helped by positive U S economic data and relief
that Greece will avert imminent default
Analysts said that the Bank of Japan s tankan survey of
corporate sentiment had a limited impact on the market but
investors were relieved that recovery is expected in the coming
quarter
The headline index measuring big manufacturers sentiment
clocked in at a worse than expected minus 9 in June but is
expected to improve to plus 2 over the next three months the
survey showed just before the opening bell
The market had been focusing on the outlook so as long as
that is improving I think we can say that the data is already
priced into the stock market said Yumi Nishimura a senior
market analyst at Daiwa Securities
The survey also showed big firms plan to raise their capital
spending by 4 2 percent in the financial year to March 2012
more than the market s median forecast for a 2 2 percent rise
Expectations for companies to increase their capital
spending will likely lift the market from July Nishimura
added
The benchmark Nikkei was up 0 5 percent at 9 862 85
at the midday break after rising above its 200 day moving
average of 9 866 86 The broader Topix rose 0 4 percent
to 852 81
Investors said the Nikkei is expected to stay near its
200 day moving average on Friday
In the U S Midwest business activity showed surprising
strength this month lifted by a jump in new orders the
Institute for Supply Management Chicago said
In Europe Greece s parliament approved measures to
implement budget cuts and assets sales making the country
eligible for financial aid to avoid a debt default
Mitsubishi UFJ Financial Group rose 1 5
percent to 396 yen after the Nikkei business daily reported that
the bank raised its stake in Morgan Stanley to 22 4
percent by converting its preferred shares into common stock
The deal will result in more than 200 billion yen 2 48
billion in profit in the April June quarter for MUFG the
Nikkei said
Condiment maker Kewpie rose 2 4 percent
to 1 047 yen climbing back to pre quake levels after the
manufacturer of mayonnaise and salad dressings said it would buy
up to 2 million of its own shares equivalent to up to 1 3
percent of shares outstanding It also said it would retire
about 2 46 million in treasury stock
Noritz rose 5 8 percent to 1 563 yen
after hitting an intraday high of 1 577 yen its highest in nine
months after the manufacturer of water heaters revised its
operating profit forecast for the year to December to 10 billion
yen from 8 billion yen
Additional reporting by Hideyuki Sano Editing by Joseph
Radford |
MS | Wheat futures rebound from 11 month low on bargain buying | Investing com Wheat futures were up on Tuesday bouncing off an 11 month low as last week s steep decline created bargain buying opportunities for investors and importers On the Chicago Mercantile Exchange wheat futures for September delivery traded at USD6 3288 a bushel during European morning trade surging 3 55 It earlier rose as much as 4 2 to hit a daily high of USD6 3625 a bushel Wheat prices plummeted nearly 8 5 last week to hit USD5 6200 a bushel the lowest price since July 15 2010 after the U S Department of Agriculture upwardly revised their estimates on total U S wheat stockpiles According to the data total U S wheat inventories as of June 1 stood at 861 million bushels 4 6 higher than initially projected U S farmers planted 13 627 million acres of wheat in the 2011 12 season 2 6 more than previously estimated The higher than expected inventory figures prompted Goldman Sachs to lower its six month forecast for wheat prices by 28 to USD6 00 a bushel compared to a previous estimate of USD8 35 a bushel However the steep decline triggered some bargain buying from traders reluctant to bet that prices would fall further amid speculation of strengthening demand from grain importers in Asia South Korea s largest feedmaker Nonghyup Feed said earlier that it was seeking as much as 190 000 tonnes of U S wheat for feed Meanwhile global financial service provider Morgan Stanley said in a report over the weekend that it remained particularly skeptical of the stocks report which indicated the smallest implied March to May feed and residual demand in over 30 years The comments reiterated the belief of agribusiness financial service provider Rabobank which said that the USDA may lower its estimates on U S acreage and stockpiles in its next release on August 11 Elsewhere corn for September delivery jumped 3 to trade at USD6 2450 a bushel while soybeans for August delivery advanced 0 9 to trade at USD13 2663 a bushel during European morning trade |
JPM | Intesa set for more Russia deals after winning Putin s favor over Rosneft | By Alexander Winning and Katya Golubkova
MOSCOW Reuters Italian lender Intesa Sanpaolo MI ISP took on a deal rival banks had turned down when it advised on the sale of a stake in sanctioned Russian oil major Rosneft MM ROSN last year and by pulling off the sale it won favor from the Kremlin
Now it stands to gain from its loyalty to Russia by winning a greater share of the hundreds of millions of dollars that banks earn each year in Russia from organizing loans share sales and mergers and acquisitions Moscow based bankers said
Intesa a minnow in global investment banking has emerged as an important part of the close business relationship between Russia and Italy a relationship that has endured despite the West imposing sanctions on Moscow over the Ukraine conflict in 2014
Italian Prime Minister Paolo Gentiloni met Russian President Vladimir Putin on Wednesday in the Black Sea resort of Sochi to cement ties between the two countries Rosneft and Italian energy firm Eni MI ENI signed a cooperation deal during Gentiloni s visit
Intesa acted as consultant for the 10 5 billion euro 11 7 billion deal to sell a fifth of Rosneft to a Qatari fund and commodities trader Glencore L GLEN in December also providing 5 2 billion euros of loans to the buyers
When it was done Putin invited executives including Intesa head Carlo Messina to the Kremlin to thank them for their role in the deal and awarded them with Russian state orders
Messina told Putin in the Kremlin s Oval Hall that Intesa wanted to expand its business in Russia
Many Western banks had given Russia s privatization program a wide berth because of sanctions risks so Intesa had stuck out its neck by taking a role on the deal
Intesa would expect to be rewarded for doing the Rosneft deal said Tom Adshead at Moscow based consultancy Macro Advisory The Russians have been very conscious of the foreign banks that have shown themselves to be loyal during the crisis Intesa has done this in spades
The head of Intesa s Russian operation Antonio Fallico in January told Russia s Izvestia newspaper that Intesa was interested in organizing more Russian privatizations
Asked what sort of deals Intesa could now win a Russian banker who worked with Intesa on a recent deal said You name it Intesa deserves it It is the only bank which wasn t afraid of sanctions
Intesa Sanpaolo declined comment Its Russian operation said it was not authorized to comment and would not arrange an interview with Fallico
PROMINENT LOANS
Intesa had until recently focused on servicing Russian Italian trade ties and lending to small and medium sized businesses in Russia
It had not been the lender of choice for Russia s top energy firms which had longstanding relationships with the likes of Deutsche Bank DE DBKGn and JP Morgan N JPM Nor had it been on many large Russian M A deals
But since the introduction of sanctions it has launched a charm offensive that has seen it make several prominent loans
In January 2015 Intesa lent Gazprom MCX GAZP which is not under European sanctions 350 million euros In December 2016 it lent 750 million euros to the Yamal liquefied natural gas project controlled by Novatek MM NVTK which is sanctioned
Gazprom did not respond to a request for comment Rosneft and Novatek declined to comment
Intesa ranked 15th among investment banks for fees in Russia last year earning around 5 million data compiled by Thomson Reuters show
It earned 3 8 million in 2015 and 0 5 million in 2014 It is yet to arrange a large deal in Russia in 2017
Bankers and analysts said Intesa was unlikely to mount a serious challenge to the large U S banks for bond and share placements by private Russian firms But it could win more business from the government or state owned firms they said
It s very easy for the government to call the relevant board member of a state company and suggest Intesa gets on an upcoming deal if sanctions allow Adshead at Macro Advisory said
CLOSE CONNECTIONS
In its efforts to win big ticket deals Intesa has been helped by the close connections its Russia head Fallico has developed with the Russian business elite
A source at Intesa said Fallico had good relations with influential Rosneft boss Igor Sechin Fallico is also a friend of Andrei Akimov chairman of Gazprombank and a Rosneft board member according to a former Russian government official
Fallico is one of the organizers of an annual Russian Italian business forum in Verona which Sechin and Akimov both attended last year He has received Russian state awards
Oleg Khokhlov a lawyer at Goltsblat BLP said the Rosneft deal represented a reputational risk for Intesa rather than a sanctions risk since Intesa had not lent money directly to Rosneft but rather to investors who bought the Rosneft stake
A banker in Milan said Western banks other than Intesa had been offered advisory roles for the Rosneft sale but they had refused
The deal was complex and very good and their man in Moscow knows all the right people the banker in Milan said But it was risky |
JPM | Brazil markets plunge as Temer scandal threatens reforms | By Bruno Federowski and Dion Rabouin SAO PAULO NEW YORK Reuters Brazilian markets plummeted on Thursday as allegations that President Michel Temer condoned bribes to silence a key witness deflated investor optimism about the prospects for his ambitious pension and labor reform agenda Brazil s benchmark Bovespa stock index BVSP closed 8 8 percent lower its biggest daily decline since the 2008 financial crisis Trading had been halted for an hour after a 10 percent drop triggered a circuit breaker mechanism Blue chip stocks such as lender Ita Unibanco Holding SA SA ITUB4 and state controlled oil company Petr leo Brasileiro SA SA PETR4 dragged the index lower The declines slashed 26 billion reais 7 7 billion off the market values of Ita and Petrobras The Sao Paulo stock exchange saw 3 1 million transactions breaking a previous record set in October 2014 the day former President Dilma Rousseff won a narrow runoff election according to exchange operator B3 Bolsa Balc o Brasil SA SA BVMF3 Temer was caught on tape encouraging a prominent executive to pay a monthly fee to keep jailed former House Speaker Eduardo Cunha silent in the country s biggest ever graft probe sources said on Wednesday confirming a report in newspaper O Globo Brazilian stocks and assets and their currency have rallied very strongly up until really today It s a big pullback and it at least brings the risk up to the surface again Alliance Bernstein Managing Director of Equity Product Management Eric Sprow said The report threatened to torpedo a two year rally in Brazilian assets as traders quickly reassessed the chances of success for efforts to streamline the country s social security system and reform labor regulations As a result policymakers attempts to curtail the growth of public debt and foster economic growth may also be in doubt Strategists at JPMorgan NYSE JPM Securities and UBS Securities downgraded their recommendations on Brazilian equities to neutral citing increased risks to the implementation of structural reforms Trader Thiago Castellan at S o Paulo based Renascen a brokerage said For the market it s not a question of whether Temer will be ousted or not The question is whether it will be quick and for how long reforms will be delayed Temer denied the allegations on Thursday saying he will not resign His remarks disappointed traders who had hoped for a swift resolution to the political crisis putting renewed pressure on Brazilian stocks and currencies going into the close POLICYMAKERS SPRING TO ACTION The Brazilian real BRBY slumped 8 percent to 3 38 reais per U S dollar the biggest percentage drop since the currency was devalued in 1999 wiping out its gains in 2017 while bond prices tumbled Strategists at Credit Suisse SIX CSGN Securities revised forecasts for the Brazilian real saying the reform agenda was likely to be put on hold They expect the currency to weaken to 3 50 in three months and 3 70 in 12 months compared to 3 20 and 3 50 previously The sharp moves drove the market operator B3 to widen the limits on trading of several derivatives and put policymakers on alert The central bank sold 4 billion worth of new traditional currency swaps increasing the stock of outstanding swaps by nearly a fourth from the current 17 7 billion Over the last two years the bank has acted to reduce the amount of swaps which function like future dollar sales to investors from more than 100 billion by late 2015 to cut taxpayers exposure to currency moves and limit market imbalances The National Treasury also swept to action calling off an auction of fixed rate and floating rate bonds scheduled for Thursday and offering to buy or sell local notes in three extraordinary auctions in coming days Yields paid on Brazilian interest rate futures 0 2DIJ spiked as traders bet the central bank would be forced to cut rates at a slower pace as the reforms outlook dimmed
Rate futures prices indicated traders saw a 79 percent chance that the central bank would cut the benchmark Selic rate by 50 basis points this month and a 21 percent chance of a 75 basis point reduction On Wednesday most bets pointed to a cut of 125 basis points |
C | Fed Chief Confident In US Economy | By
In testimony before Congress Thursday Federal Reserve Chair Janet Yellen expressed confidence that the economy has healed sufficiently to raise benchmark interest rates at the Fed s next rate setting meeting later this month The U S economy has recovered substantially since the Great Recession she said citing a decline in headline unemployment to 5 percent today from a 2010 peak of 10 percent
Raising near zero interest rates was a live option Yellen added
Largely repeating recent comments that markets saw as friendly to a December liftoff Yellen underlined that the decision will still rely on incoming data including employment numbers due at the end of the week We will be looking of course carefully at tomorrow s jobs report Yellen said Much of it is transitory but we will be looking at data
A rate hike this year would be the first since 2008 when the Fed dropped the benchmark federal funds rate to its lower bound amid a full scale financial crisis The rate setting committee has held firm ever since as the U S economy has crawled back to decent health The Fed is charged with maximizing employment while keeping a lid on inflation
Yellen said the labor market had improved appreciably and predicted that transient factors that have dampened prices will dissipate in 2016 bringing inflation back to the Fed s desired 2 percent threshold a level that has proved elusive for more than 40 straight months
Those drags include slow growth in Europe and Asia along with a strengthening dollar which weighs on U S exports Yellen told lawmakers that the rate setting committee had a close eye on the global economic situation It s highly relevant to our decisions she said
Asked about a recent estimate from Citigroup N C economists that said there s a 65 percent risk of the economy falling into recession in 2016 Yellen reiterated her optimism in the durability of U S growth I can t put a number on a risk of a recession but I absolutely wouldn t see it as anything close to 65 percent she said
A few lawmakers used the occasion to challenge Federal Reserve s policy and economic outlooks The most dramatic criticism came from Sen Ted Cruz R Tex a presidential hopeful who mistakenly suggested the Fed tightened monetary policy in 2008 At the time then chair Ben Bernanke was fighting off criticism in his efforts to loosen policy
Yellen had her own words for Congress particularly members of the House of Representatives which recently passed legislation challenging the independence of the Fed Part of that bill would require the Fed to tether interest rates to a single formula a proposal Yellen has said deeply troubled her
Yellen also assailed measures in the recently agreed upon highway bill which would skim funds from the Fed s surplus accounts to pay for infrastructure spending Repurposing the Federal Reserve s capital surplus does not actually create any new money for the federal government Yellen said The maneuver will yield 19 billion |
C | Saudi Prince Alwaleed calls Trump a disgrace | DUBAI Reuters Saudi billionaire Prince Alwaleed bin Talal has called Donald Trump a disgrace to the United States following his call for a ban on Muslims entering the country and demanded the Republican front runner withdraw from the U S presidential race Trump triggered an international uproar when he made his comments in response to last week s deadly shootings in California by two Muslims who authorities said were radicalized You are a disgrace not only to the GOP but to all America Prince Alwaleed the chairman of Kingdom Holding SE 4280 said on his Twitter N TWTR account addressing Trump and referring to the Republican Party Withdraw from the U S presidential race as you will never win the prince added Within hours Trump s response came back also on Twitter Dopey Prince Alwaleed Talal wants to control our U S politicians with daddy s money he said Can t do it when I get elected Trump s comments have already cost him business in the Middle East with a major chain of department stores halting sales of his glitzy Trump Home line of lamps mirrors and jewellery boxes On Thursday Dubai real estate firm Damac which is building a 6 billion golf complex with Trump stripped the property of his name and image
Prince Alwaleed a nephew of Saudi Arabia s King Salman has holdings in a number of international companies including Twitter and Citigroup N C In July he said he will donate 32 billion to charity in coming years via Alwaleed Philanthropies |
C | Citi to cut 2 000 jobs starting next month Bloomberg | Reuters Citigroup Inc N C plans to cut at least 2 000 jobs starting next month as the lender restructures its businesses Bloomberg reported A substantial portion of the layoffs will be in middle or back office positions Bloomberg reported citing a person briefed on the matter Citigroup said this month it would take a 300 million repositioning charge in the fourth quarter to resize infrastructure and capacity throughout its businesses
Citigroup due to report fourth quarter earnings on Jan 15 could not be immediately reached for comment |
C | Misunderstanding Role In Monetary System Leads To Repeated Mistakes | November 2008 was an extremely busy month for authorities in the U S The financial markets had just undergone panic the month before but rather than dissipate there were lingering indications that all was not yet over On November 23 2008 the Treasury Department the FDIC and the Federal Reserve issued a joint statement on Citigroup NYSE C The first two had agreed to issue protection against losses on 306 billion of various MBS and mortgage loans structures with the Fed agreeing to a liquidity backstop of residual risk all in exchange for an investment in the struggling bank
Just eleven days before that bailout Treasury Secretary Hank Paulson had announced that TARP would be repurposed to a general bailout fund rather than the bad bank model many in Congress and the public envisioned during the process of its passage Six days after the highly controversial decision the Secretary along with FDIC Chairman Sheila Bair and Federal Reserve Chairman Ben Bernanke faced Congressional ire expressed in the charge of bait and switch Paulson told angry Members
When the facts changed and the circumstances changed we changed the strategy We didn t implement a flawed strategy We implemented a strategy that worked
Five days later Citi received its salvation No more institutions would fail after Lehman but saving individual firms from liquidation is not anywhere close to the same as saving the system from the same tendency The Fed in particular had become hyper active from the middle of September 2008 on but like the Treasury Department it shifted dramatically in early November 2008 too From the timing and coincidence of both we can only conclude that all the relevant agencies were in agreement that what was being done before wasn t working in other words stating the obvious
The major change in monetary policy was in how it would absorb so much additional liquidity The Fed through various acronymed programs was rapidly expanding its balance sheet to try to get money into disparate parts of a financial system starved of liquidity capacity Yet that condition would only continue even though the Fed was engaged well into hundreds of billions of dollars The asset side of its balance sheet swelled as it did those things leaving the level of bank reserves on the other side to do similarly
The Fed tells us even to this day that the result of so much added reserves was the federal funds rate coming in far below target The Federal Reserve Bank of New York declared it had
encountered difficulty achieving the operating target for the federal funds rate set by the FOMC because the expansion of the Federal Reserve s various liquidity facilities has caused a large increase in excess balances The expansion of excess reserves in turn has placed extraordinary downward pressure on the overnight federal funds rate
To address this major deficiency it had before November attempted to absorb as many of those reserves as it could FRBNY was instructed to engage in reverse repos transactions which are today more familiar in their role within an exit strategy already seemingly at odds with those times Primarily however this absorption technique was to fall on the Supplementary Financing Program SFP In the middle of September 2008 the Treasury Department had agreed to sell short term debt securities and place the funds in a special account with the Federal Reserve The Fed explained
When the Treasury increases the balance it holds in this account the effect is to drain deposits from accounts of depository institutions at the Federal Reserve In the event the implementation of the SFP thus helped offset somewhat the rapid rise in balances that resulted from the creation and expansion of Federal Reserve liquidity facilities
There does seem to be a basis for this contention as the federal funds rate did fall far below target as the balance of excess reserves rose sharply
But is that causation or mere correlation The Fed has either implied or as above stated outright causation of reserve balances for the irregularity of the federal funds market This is indeed strange as it is a blanket contradiction that nobody seems willing to challenge If the effect of the SFP was to drain deposits from accounts of depository institutions at the Federal Reserve since bank reserves are treated as base money another way of saying that is the Fed was in concert with the Treasury Department draining base money from the banking system during a monetary panic Since the federal funds rate was drastically below the target rate supposedly as a result we can rewrite that statement to say U S monetary officials were heavily in action because there was far too much money during a monetary panic
The ineffectiveness of its absorbing techniques had become so severe that by early November 2008 the U S central bank as the U S Treasury Department decided to change its operative elements Rather than rely on reverse repos or the SFP the Fed would turn instead to IOER pegged right at the federal funds target But as that didn t work above either
We are therefore left challenging the Fed s conclusions about all of it starting with the contradiction In other words the Fed assumed that the low federal funds rate was a product of its increasing base money in the form of reserves What if instead the low federal funds rate had much less to do with if not have been unrelated to the level of reserves excess or required at all
As I point out all far too frequently still September December 2008 was not the first period in which the federal funds rate had fallen below target in serious fashion for an extended length of time The very first instance was August 10 2007 which in many ways was a complete precursor of all these systemic discrepancies
Since it obviously was not the quantity of bank reserves that could have caused this highly irregular circumstance we are forced in 2007 to look for other ways in which federal funds might be favored over alternate forms of funding arrangements The primary arbitrage had been between federal funds and LIBOR meaning domestic U S markets versus offshore dollars
So where you could in the late summer of 2007 borrow all you wanted in federal funds domestic and pocket a large spread by then lending those dollars in eurodollar markets at various LIBOR points very few appeared willing to do that
In fact this lack of arbitrage only worsened even during the middle of 2008 when relatively calm conditions after Bear Stearns convinced a great many experts and all the policymakers that the worst risks were behind rather than still ahead
In other words the quantity of bank reserves in the dollar system were irrelevant to the condition where federal funds tended toward shallowness as well as the related and opposite condition of LIBOR illiquidity The degree to which the federal funds rate would fall and stay below the target is therefore established by the intensity of those liquidity preferences and in the weeks and months following Lehman there were innumerable reasons including the clear lack of monetary competence on the part of any authority as to why they would intensify as compared to 2007 or any other times It would seem then that something big and purposeful is missing from the explanation
The Fed s own balance sheet statistics provide a clue as to what it was In the weeks immediately after Lehman one of the primary asset side sources to generate the rapid expansion in bank reserves was dollar swaps with foreign central banks
From this view we can better understand what the Fed was actually doing even if it didn t either know it or would ever admit it It was attempting to drain reserves from the U S domestic system first by the SFP and then by IOER while at the same time redistributing them to foreign locations primarily in Europe and Japan That is in fact what both the federal funds rate below target as well as LIBOR at huge premiums to it says too much money but only in NYC and not nearly enough in offshore markets where the panic was centered
It was the banking system that had always provided the means by which redistribution had always taken place which was captured in far far more than just federal funds vs LIBOR Offshore vs onshore was a very real divide only it hadn t up to August 2007 appeared to be any risk at all Rather than realize the significance of that fact established in all sorts of ways ideology there is only the dollar with the Fed at its center and bank reserves its base prevailed and continues to prevail today
The difference is of course that orthodox treatment claims federal funds as a result of the increase in bank reserves which by the whole history of the crisis we know as false the idea that there was too much money during a panic is as absurd as it sounds Instead the level of bank reserves only tells us what the Fed was doing The correlation between the federal funds rate and that level was mere coincidence in that liquidity preferences caused market participants to reduce their offshore exposures regardless of the level of bank reserves at most you can make the argument that the level of reserves increased the intensity of those liquidity preferences but not that they caused them and therefore forcing the Fed to do something in response That the something was bank reserves is unsurprising as is the failure of using that method
This is an enormously important distinction one that applies and the rest of the recovery period as in 2007 or 2008 There were and are any number of technical factors which would validate this view Submissions to the RRP for example take place between 12 45 pm and 1 15 pm ET and are returned next day between 3 30 pm and 5 15 pm Federal funds by contrast can be open to 6 30 pm ET It is not difficult to imagine situations where financial participants would be worried about late day liquidity an unexpected margin or collateral call to where they would eschew RRP or IOER paying higher rates in order to keep open all options paying essentially an intraday liquidity premium for federal funds This is in fact exactly the kind of scenario which John Maynard Keynes envisioned when he wrote about liquidity preferences for consumers in The General Theory
As the hierarchy and potential arbitrage broke down in these forms it also did so in others including contemporarily swap spreads The interest rate swap in the 30 year maturity didn t turn all the way negative until late October 2008 just as it was becoming clear to authorities their initial panic response was itself panicked and ineffective Where were the arbitrageurs Governed by the market prices of the UST 30s somebody should have been furiously writing IRS so as to take the fixed side but there wasn t anybody
Nor was this ineffectiveness limited to just U S dollar conditions as ruptures of this kind appeared all over Europe and the rest of the world
All these breakdowns in hierarchy point to a single cause or parameter bank balance sheets From that view bank reserves are just one form of bank liability and not even an important one Thus the quantity of bank reserves would be at best a small consideration for establishing global dollar conditions From this view a great deal of 2008 as well as thereafter actually makes perfect sense
Economists however continue to hold to the view that bank reserves are base money Because of that they can never reconcile what happened in 2008 nor what failed to materialize after it recovery Even though it makes no sense to claim that there was too much money during a monetary panic because the view remains uncritically accepted by the media that adheres to editorial standards of credentials rather than logic we are stuck on Step 1 after it was fully apparent central banks had no idea what they were doing That operative condition just rolled on through QE1 2 3 and 4 simply proving that still further how bank reserves were never what they were supposed to be
After having squandered a full decade now bank reserves remain as firmly in place of orthodox monetary treatment as they were in leading to failure after failure after failure Because bank reserves are treated inappropriately economists are left with Baby Boomers and drug addicts to try to explain why the QE s failed to achieve any recovery Which is more likely that trillions upon trillions of currency and money printing all over the world failed to make even the slightest economic dent because especially Americans suddenly grew lazy and addicted to government welfare as well as heroin or that monetary authorities just don t know what they are doing starting with bank reserves and their role in the global monetary system
There is a great deal of evidence only for the latter and not just after August 2007 The quantity of bank reserves only tell us what the Fed is doing the failure of the economy tells us what banks are doing Only one of them is actually meaningful |
C | Why Commodities Could Be On The Verge Of A Massive Surge | After finishing 2016 commodities are getting another boost from bullish investors Investment bank Citigroup forecasts commodity prices will increase this year on strengthening demand in China and mounting inflation inspired by President Donald Trump s America First policies Commodity assets under management globally stood at 391 billion in January up 50 percent from the same time the previous year according to Citigroup NYSE C
Meanwhile hedge fund managers significantly raised their bets that copper and oil prices have much further to climb Bloomberg reported with net long positions in the Comex and Nymex markets surging to all time highs
In addition global manufacturing activity has expanded for the past six straight months a good sign for commodities demand going forward As I shared with you earlier in the week the global purchasing managers index PMI advanced to a with strong showings from the U S and eurozone Asia Looking for 26 Trillion Asian Development Bank As for China and the rest of Asia a recent special report from the Asian Development Bank ADB calculates the cost to modernize the region s infrastructure at between from 2016 to 2030
This comes out to about 1 7 trillion a year in global investment that s required to maintain Asia s growth momentum deliver power and safe drinking water to millions connect towns and cities improve sanitation and more
As you can see in the chart the bulk of the infrastructure need is in East Asia which is seeking more than 16 trillion between now and 2030
Governments have devoted funds to support only some of the projects Currently 25 economies in the region are spending a combined 881 billion annually on such projects leaving a substantial spending gap for global investors to fill This is an unprecedentedly huge opportunity for commodity and materials investors
To make investment more attractive however regulatory and institutional reforms will need to be made in the region
China for instance announced plans to curb aluminum steel and coal production in an effort to combat air pollution According to the Financial Times as many as 30 northern Chinese cities are expected to cut aluminum capacity by more than 30 percent a move that s seen as very favorable to the rally that s already helped the base metal gain over 11 percent so far in 2017
In the past five trading days shares in leading aluminum producer Oceasoft SAS PA ALOCA have surged on the news jumping as much as 9 8 percent on March 1 alone Since the November election in fact the company has gained more than 44 percent on optimism over President Trump s pledge to spend 1 trillion on U S infrastructure
3 9 Trillion Still Needed in the U S One trillion dollars sounds like a lot but it falls remarkably short of the 3 9 trillion the U S needs by 2025 to rebuild its own aging infrastructure That s the estimate of the American Society of Civil Engineers ASCE which gave the nation s overall infrastructure a D in 2013 with poor scores given to levees roads inland waterways drinking water and more
One of the most urgent areas for investment is the nation s crumbling dams According to energy news outlet E E about 70 percent of America s 90 000 dams will be at least 50 years old by 2025 putting them near the end of their engineering lifespans An estimated 15 500 American dams are now considered high hazard meaning their failure could cause fatalities
The cost of repairing and upgrading these structures is estimated to be around 54 billion
According to E E 80 dams failed in South Carolina in the past two years alone causing millions of dollars worth of property damage And just last month in a high profile case more than 188 000 Californians had to be evacuated to avoid the collapse of the Oroville Dam the nation s tallest dam
Like the ADB s Asian infrastructure estimate this has massive market potential More than 80 percent of U S infrastructure from schools to streets to sanitation is in either private or municipal ownership This means commodity and municipal bond investors will need to pick up where federal dollars leave off
All opinions expressed and data provided are subject to change without notice Some of these opinions may not be appropriate to every investor By clicking the link s above you will be directed to a third party website s U S Global Investors does not endorse all information supplied by this these website s and is not responsible for its their content The J P Morgan Global Purchasing Manager s Index is an indicator of the economic health of the global manufacturing sector The PMI index is based on five major indicators new orders inventory levels production supplier deliveries and the employment environment Holdings may change daily Holdings are reported as of the most recent quarter end None of the securities mentioned in the article were held by any accounts managed by U S Global Investors as of 12 31 2016 U S Global Investors Inc is an investment adviser registered with the Securities and Exchange Commission SEC This does not mean that we are sponsored recommended or approved by the SEC or that our abilities or qualifications in any respect have been passed upon by the SEC or any officer of the SEC This commentary should not be considered a solicitation or offering of any investment product Certain materials in this commentary may contain dated information The information provided was current at the time of publication |
C | Trader Alert Citigroup Puts In Topping Tail | Shares of Citigroup Inc NYSE C surged early on Wednesday jumping on bullish comments from hedge fund manager David Tepper and hopes for three or maybe even four rate hikes in 2017 However this surge was short lived Big sellers took advantage of the hype and sold heavily The stock reversed and closed near the lows of the day This reversal put in a technical analysis candle formation known as a topping tail Because it formed at the 52 week highs on Citigroup Inc it is an extremely bearish signals and tells investors to sell and short |
C | Copper Price Forecast New Mine Opening Just In Time | The newly opened Cobre Panama mine in Central America could begin copper production as early as 2018 and reach full throttle by the end of 2019 which would be a much needed supply boost for a copper market that is set for its first deficit in six years and could be in shortage through 2020
According to a recent post from Bloomberg mine disruptions led to copper prices growing roughly 25 over the past six months Demand in China and a boost in U S infrastructure have made copper the biggest gainer in Bloomberg s Commodity Index
Good copper projects are scarce at these prices First Quantum President Clive Newall told Bloomberg in a phone interview Monday from London There is an incentive price to build new greenfield sites which is significantly above the current price
A Citigroup NYSE C report added that copper prices need to rise another 15 to about 6 700 a ton before mining companies commit to new greenfield projects which translates to the industry not likely boosting capital spending until 2019
Copper Prices Drop this Week
Hit by a supply overload multiple sources are reporting that copper prices fell to a two month low this week
Wrote Leia Toovey for the Economic Calendar
Factors adding pressure to copper include a higher U S dollar disappointing import data from China and a pile up of LME tracked inventories Also on Thursday BHP Billiton LON BLT said it was considering bringing in temporary workers to bring some copper production back online that has been impacted by the strike at its Escondida copper mine
How will copper and base metals fare in 2017 You can find a more in depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report For a short and long term buying strategy with specific price thresholds |
MPC | Should Invesco Russell 1000 Equal Weight ETF EQAL Be On Your Investing Radar | Looking for broad exposure to the Large Cap Blend segment of the US equity market You should consider the Invesco Russell 1000 Equal Weight ETF EQAL a passively managed exchange traded fund launched on 12 23 2014
The fund is sponsored by Invesco It has amassed assets over 451 43 M making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market
Why Large Cap Blend
Companies that fall in the large cap category tend to have a market capitalization above 10 billion They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies
Blend ETFs are aptly named since they tend to hold a mix of growth and value stocks as well as show characteristics of both kinds of equities
Costs
Expense ratios are an important factor in the return of an ETF and in the long term cheaper funds can significantly outperform their more expensive counterparts other things remaining the same
Annual operating expenses for this ETF are 0 20 putting it on par with most peer products in the space
It has a 12 month trailing dividend yield of 1 50
Sector Exposure and Top Holdings
While ETFs offer diversified exposure which minimizes single stock risk a deep look into a fund s holdings is a valuable exercise And most ETFs are very transparent products that disclose their holdings on a daily basis
This ETF has heaviest allocation to the Industrials sector about 12 20 of the portfolio Information Technology and Consumer Staples round out the top three
Looking at individual holdings Conagra Brands Inc CAG accounts for about 0 34 of total assets followed by Marathon Petroleum Corp MPC and Lamb Weston Holdings Inc LW
The top 10 holdings account for about 2 98 of total assets under management
Performance and Risk
EQAL seeks to match the performance of the Russell 1000 Equal Weight Index before fees and expenses The Russell 1000 Equal Weight Index is composed of securities in the Russell 1000 Index and is equally weighted across nine sector groups with each security within the sector receiving equal weight
The ETF has added about 0 17 so far this year and is up about 5 17 in the last one year as of 11 05 2018 In the past 52 week period it has traded between 29 43 and 33 62
The ETF has a beta of 1 03 and standard deviation of 12 85 for the trailing three year period making it a medium risk choice in the space With about 969 holdings it effectively diversifies company specific risk
Alternatives
Invesco Russell 1000 Equal Weight ETF carries a Zacks ETF Rank of 3 Hold which is based on expected asset class return expense ratio and momentum among other factors Thus EQAL is a reasonable option for those seeking exposure to the Large Cap ETFs area of the market Investors might also want to consider some other ETF options in the space
The iShares Core S P 500 ETF IVV and the SPDR S P 500 ETF NYSE SPY track a similar index While iShares Core S P 500 ETF has 159 B in assets SPDR S P 500 ETF has 259 20 B IVV has an expense ratio of 0 04 and SPY charges 0 09
Bottom Line
An increasingly popular option among retail and institutional investors passively managed ETFs offer low costs transparency flexibility and tax efficiency they are also excellent vehicles for long term investors
To learn more about this product and other ETFs screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe please visit Zacks ETF Center |
MPC | Murphy USA MUSA Q3 Earnings Lag On Lower Retail Margins | Murphy USA Inc NYSE MUSA reported weaker than expected results in the third quarter of 2018 on lower retail margins The company s adjusted net income per share came in at 1 38 lagging the Zacks Consensus Estimate of 1 49 Further the bottom line deteriorated from the year ago figure of 1 90 per share Murphy USA s operating revenues of 3 788 million lagged the Zacks Consensus Estimate of 3 826 million However the top line increased around 17 from the year ago figure of 3 211 1 million Revenues from petroleum product sales came in at 3 151 5 million Murphy USA Inc Price Consensus and EPS Surprise Key TakeawaysThe company s total fuel contribution was down 18 2 year over year to 172 7 million Retail fuel contribution declined 4 7 year over year to 151 4 million amid lower margins which decreased 8 3 from the prior year quarter The results were partly offset by a rise in retail gallons which increased 3 5 to 1 064 billion gallons in the quarter under review Along with increased total retail gallons sold volumes on a same store sales SSS basis also rose 0 9 from the third quarter of 2017 Contribution from Merchandise increased 7 to stand at 104 5 million on higher unit margins which increased to 16 8 from 16 1 a year ago On SSS basis total merchandise contribution was up 5 6 year over year in the quarter under review on the back of active promotions and higher tobacco non tobacco margins Tobacco and non tobacco contributions increased 6 7 and 4 respectively Fuel gallons rose 1 3 and merchandise sales increased 0 9 on an average per store month or APSM basis However fuel gallons per month declined 1 5 and merchandise sales decreased 0 7 on SSS basis Balance Sheet As of Sep 30 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 75 4 million and long term debt including lease obligations of 846 6 million with a debt to capitalization ratio of 53 7 Will You Make a Fortune on the Shift to Electric Cars Here s another stock idea to consider Much like petroleum 150 years ago lithium power may soon shake the world creating millionaires and reshaping geo politics Soon electric vehicles EVs may be cheaper than gas guzzlers Some are already reaching 265 miles on a single charge With battery prices plummeting and charging stations set to multiply one company stands out as the 1 stock to buy according to Zacks research It s not the one you think |
MPC | Ormat Technologies ORA Q3 Earnings Miss Revenues Up Y Y | Ormat Technologies Inc s NYSE ORA third quarter 2018 adjusted earnings per share EPS came in at 31 cents which missed the Zacks Consensus Estimate of 44 cents by 29 6 Earnings also declined 39 2 from the prior year quarter Barring one time items the company s GAAP earnings were 21 cents per share compared with 47 cents in the year ago quarter RevenuesIn the quarter under review Ormat Technologies generated revenues of 166 5 million which missed the Zacks Consensus Estimate of 176 million by 5 4 However the top line improved 5 9 on a year over year basis Segment RevenuesElectricity Segment Revenues increased 5 4 year over year to 116 9 million from 110 9 million The increase was primarily attributable to the Platanares Tungsten Mountain and Olkaria III expansion projects along with the U S Geothermal acquisition Product Segment Segment revenues increased 7 9 year over year to 48 4 million from 44 9 million Other Segment Revenues for this division stood at 1 1 million compared with 1 4 million in the prior year quarter Operational UpdateIn the reported quarter Ormat Technologies total operating expenses were 22 89 million up 50 4 year over year The company s total cost of revenues was 117 7 million up 20 year over year Interest expenses were 18 7 million up approximately 60 on a year over year basis Ormat Technologies Inc Price Consensus and EPS Surprise Highlights of the QuarterIn the quarter Ormat completed the closing of the first tranche under the previously announced finance agreement totaling 124 7 million for the 35 MW Platanares geothermal power plant in Honduras The company also opted out of the Galena 2 PPA with NV Energy Inc and reported a one time 5 million termination fee recorded in selling and marketing expenses Financial ConditionOrmat Technologies had cash and cash equivalents of 72 million as of Sep 30 2018 compared with 47 8 million as of Dec 31 2017 Total long term debt was 959 6 million as of Sep 30 2018 compared with 804 3 million as of Dec 31 2017 GuidanceOrmat Technologies has reaffirmed its 2018 guidance for revenues of 698 722 million Segment wise also the company has reiterated its guidance for the Electricity segment revenues between 500 million and 510 million in 2018 Likewise the guidance for its Product segment revenues also remains unchanged at 190 200 million The company has also reaffirmed its adjusted EBITDA view of 370 380 million for 2018 Zacks RankOrmat Technologies currently carries a Zacks Rank 4 Sell Recent Oils Energy ReleasesCovanta Holding Corporation NYSE CVA incurred third quarter 2018 loss of 4 cents per share missing the Zacks Consensus Estimate for earnings of 7 cents by 157 1 You can see Matador Resources Company NYSE MTDR reported third quarter 2018 adjusted earnings of 48 cents per share beating the Zacks Consensus Estimate of 37 cents Marathon Petroleum Corporation NYSE MPC reported earnings per share of 1 62 in the third quarter of 2018 missing the Zacks Consensus Estimate of 1 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 | Marathon Petroleum MPC Stock Moves 0 75 What You Should Know | In the latest trading session Marathon Petroleum MPC closed at 67 19 marking a 0 75 move from the previous day This change was narrower than the S P 500 s 0 92 loss on the day Elsewhere the Dow lost 0 77 while the tech heavy Nasdaq lost 1 65
Coming into today shares of the refiner had lost 14 01 in the past month In that same time the Oils Energy sector lost 9 while the S P 500 lost 2 56
Investors will be hoping for strength from MPC as it approaches its next earnings release which is expected to be February 7 2019 In that report analysts expect MPC to post earnings of 1 30 per share This would mark year over year growth of 23 81 Meanwhile the Zacks Consensus Estimate for revenue is projecting net sales of 29 19 billion up 37 46 from the year ago period
MPC s full year Zacks Consensus Estimates are calling for earnings of 5 16 per share and revenue of 90 49 billion These results would represent year over year changes of 35 79 and 20 07 respectively
It is also important to note the recent changes to analyst estimates for MPC Recent revisions tend to reflect the latest 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 Investors can capitalize on this by using the Zacks Rank This model considers these estimate changes and provides a simple 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 38 lower MPC currently has a Zacks Rank of 3 Hold
Investors should also note MPC s current valuation metrics including its Forward P E ratio of 13 11 For comparison its industry has an average Forward P E of 14 31 which means MPC is trading at a discount to the group
We can also see that MPC currently has a PEG ratio of 0 92 This popular metric is similar to the widely known P E ratio with the difference being that the PEG ratio also takes into account the company s expected earnings growth rate MPC s industry had an average PEG ratio of 1 09 as of yesterday s close
The Oil and Gas Refining and Marketing industry is part of the Oils Energy sector This group has a Zacks Industry Rank of 113 putting it in the top 44 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
Make sure to utilize Zacks Com to follow all of these stock moving metrics and more in the coming trading sessions |
MPC | Marathon Petroleum MPC Gains But Lags Market What You Should Know | In the latest trading session Marathon Petroleum MPC closed at 65 45 marking a 0 14 move from the previous day The stock lagged the S P 500 s daily gain of 0 22 At the same time the Dow added 0 49 and the tech heavy Nasdaq lost 0 15
Heading into today shares of the refiner had lost 17 08 over the past month lagging the Oils Energy sector s loss of 7 66 and the S P 500 s loss of 0 57 in that time
Wall Street will be looking for positivity from MPC as it approaches its next earnings report date This is expected to be February 7 2019 In that report analysts expect MPC to post earnings of 1 30 per share This would mark year over year growth of 23 81 Meanwhile our latest consensus estimate is calling for revenue of 29 19 billion up 37 46 from the prior year quarter
For the full year our Zacks Consensus Estimates are projecting earnings of 5 16 per share and revenue of 90 49 billion which would represent changes of 35 79 and 20 07 respectively from the prior year
Investors should also note any recent changes to analyst estimates for MPC These revisions typically reflect the latest short term business trends which can change frequently As such positive estimate revisions reflect analyst optimism about the company s business and profitability
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 Within the past 30 days our consensus EPS projection has moved 0 51 higher MPC is holding a Zacks Rank of 3 Hold right now
Valuation is also important so investors should note that MPC has a Forward P E ratio of 12 66 right now This represents a discount compared to its industry s average Forward P E of 13 53
It is also worth noting that MPC currently has a PEG ratio of 0 89 This popular metric is similar to the widely known P E ratio with the difference being that the PEG ratio also takes into account the company s expected earnings growth rate Oil and Gas Refining and Marketing stocks are on average holding a PEG ratio of 1 05 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 113 which puts it in the top 44 of all 250 industries
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups 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 | Marathon Petroleum MPC Stock Sinks As Market Gains What You Should Know | In the latest trading session Marathon Petroleum MPC closed at 63 74 marking a 0 69 move from the previous day This change lagged the S P 500 s 0 33 gain on the day Elsewhere the Dow gained 0 44 while the tech heavy Nasdaq added 0 01
Coming into today shares of the refiner had lost 4 54 in the past month In that same time the Oils Energy sector lost 4 35 while the S P 500 gained 0 89
Investors will be hoping for strength from MPC as it approaches its next earnings release which is expected to be February 7 2019 On that day MPC is projected to report earnings of 1 18 per share which would represent year over year growth of 12 38 Our most recent consensus estimate is calling for quarterly revenue of 29 23 billion up 37 63 from the year ago period
MPC s full year Zacks Consensus Estimates are calling for earnings of 5 06 per share and revenue of 90 40 billion These results would represent year over year changes of 33 16 and 19 94 respectively
Investors might also notice recent changes to analyst estimates for MPC These revisions help to show the ever changing nature of near term business trends As a result we can interpret positive estimate revisions as a good sign for the company s business outlook
Research indicates that these estimate revisions are directly correlated with near term share price momentum 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 The Zacks Consensus EPS estimate has moved 0 42 lower within the past month MPC is currently a Zacks Rank 3 Hold
In terms of valuation MPC is currently trading at a Forward P E ratio of 12 68 Its industry sports an average Forward P E of 12 87 so we one might conclude that MPC is trading at a discount comparatively
We can also see that MPC currently has a PEG ratio of 0 89 This popular metric is similar to the widely known P E ratio with the difference being that the PEG ratio also takes into account the company s expected earnings growth rate Oil and Gas Refining and Marketing stocks are on average holding a PEG ratio of 0 98 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 177 which puts it in the bottom 31 of all 250 industries
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
You can find more information on all of these metrics and much more on Zacks com |
MS | European stocks drop on lingering debt fears DAX down 0 4 | Investing com European stock markets were broadly lower on Wednesday as lingering fears over Greece s finances and the euro zone s spreading debt crisis weighed while U S futures pointed to lower open on Wall Street During European morning trade the EURO STOXX 50 slumped 0 35 France s CAC 40 declined 0 38 while Germany s DAX 30 dropped 0 4 Greek newspapers reported on Wednesday that the government was considering organizing a referendum on additional austerity measures after it failed to reach consensus with the opposition Rumors that Greek Prime Minister George Papandreou could resign leading to a snap election also weighed on sentiment Meanwhile shares in the technology sector performed poorly after Applied Materials the world s largest producer of chip making equipment forecast full year earnings that missed market expectations Infineon Technologies Europe s second largest chipmaker declined 2 15 shares of STMicroelectronics shed 1 while U K based ARM Holdings slumped 1 7 in London In London the FTSE 100 edged 0 25 lower as shares of telecom company Cable Wireless Communications plunged 7 3 after reporting annual profits The telecom firm reported a jump in fiscal year net profit but it also said business in the Caribbean has been more difficult than we anticipated at the time of the demerger and that the company continues to face weak or declining economies across the region Shares in rival Vodafone declined 1 after Nomura Holdings downgraded the stock to neutral Vodafone has the highest exposure to European mobile coverage and thus we recommend that investors reduce overweight positions the broker said On the upside copper miner Antofagasta climbed 1 5 after Morgan Stanley upgraded the stock to equal weight from underweight saying it now trades in line with the sector Earlier in the day official data showed that U K gross domestic product grew by 0 5 in the first quarter in line with preliminary estimates The outlook for U S equity markets meanwhile was downbeat The Dow Jones Industrial Average futures pointed to a decline of 0 24 S P 500 futures indicated a drop of 0 2 while the Nasdaq 100 futures slipped 0 25 Later in the day the U S was to publish official data on durable goods orders as well as a government report on crude oil stockpiles |
MS | FTSE 100 pares losses on UK GDP relief | FTSE 100 down 0 1 percent
UK banks higher on bargain hunting
Antofagasta lifted by broker upgrade
By Tricia Wright
LONDON May 25 Reuters Britain s top share index pared
its losses on Wednesday on investor relief that there was no
deterioration in UK gross domestic product GDP figures having
earlier flirted with a key technical level in a bearish sign for
the index
By 1125 GMT the FTSE 100 was off 3 04 points or
0 1 percent at 5 855 37 well clear of its session low of
5 810 46 after the Office for National Statistics left its
preliminary growth estimates for first quarter UK GDP unrevised
at 0 5 percent ID nLDE74O0RV
If we close above 5 800 the 200 day moving average I
think we re okay if we close below it then it could well mean
that we re going to test the next level of support really
around 5 650 Japan crisis levels Ed Woolfitt head of
trading at Galvan Research said
I think the main weight on this market at the moment and
what s creating a bit of skittish trading is obviously the euro
debt uncertainty and also a lot of uncertainty surrounding the
state backed UK banks RBS and Lloyds
UK banks came under pressure on Tuesday after credit rating
agency Moody s said it might cut its rating on 14 British
financial groups including Royal Bank of Scotland and
Lloyds Banking Group
But the sector staged a recovery led by a 1 4 percent
advance from Barclays while RBS and Lloyds climbed 0 7
percent and 0 6 percent respectively
MINERS SUPPORT
Gains were seen among the miners as copper
rose supported by positive comment on the metal from Goldman
Sachs on Tuesday
Antofagasta was the star blue chip performer up 2
percent with traders citing the impact of an upgrade in rating
of the Chilean copper miner by Morgan Stanley to equal weight
from underweight on valuation grounds
Commodities trader Glencore fell 0 7 percent as the
recently floated firm made its debut in the FTSE 100 index on
Wednesday following the start of unconditional trading in the
stock on Tuesday to replace Invensys
Oil was the worst performing blue chip sector as the crude
price slipped 0 1 percent hurt by a firmer dollar
Among individual movers Vodafone shed 0 2 percent
after Nomura cut its rating on the mobile telecoms firm to
neutral
Private equity firm 3i Group was helped 1 5 percent
higher as Evolution Securities lifted its rating for the stock
to buy while Rexam firmed 1 5 percent after Credit
Suisse hiked its target price for the drinks can maker
Ex dividend factors accounted for the top three FTSE 100
fallers with Next International Power and Amec
all losing their payout attractions
U S stock index futures pointed to a
slightly lower opening on Wall Street on Wednesday ahead of
April U S durable goods orders due at 1230 GMT
You ve got a battle taking place On one side you ve got
the big macro uncertainties that are out there the European
sovereign debt crisis the threat of inflation potentially
and the high oil price Henk Potts market strategist at
Barclays Wealth said
That s kind of overshadowing the strong corporate reporting
season But long term fundamentals still look very positive
Additional reporting by Jon Hopkins Editing by Louise
Heavens |
MS | Brent rises above 115 on weak dollar US distillates draw | US oil rises to as high as 101 90 Brent hits 115 47
Euro rebounds but euro zone risks remain
Surprise U S distillates draw supports prices
Coming Up U S Q1 GDP 1230 GMT
By Francis Kan
SINGAPORE May 26 Reuters Brent crude futures rose above
115 a barrel on Thursday supported by a weaker dollar and an
unexpected drop in U S distillate stocks that overshadowed
gains in gasoline and crude inventories last week
The dollar retreated against the euro and edged down
against a basket of currencies making commodities priced
in the greenback more attractive to consumers using other
currencies
Euro dollar is the main factor driving prices today for oil
and other commodities and will continue to do so until there is
some clear direction on where the dollar is headed said Ken
Hasegawa a commodity derivatives manager at Newedge Brokerage
in Tokyo
Despite euro s rebound the risks surrounding the single
currency remain with Greece fighting to avoid a debt
restructuring that could spread to other European economies
struggling with gaping fiscal deficits ID nLDE74O1MZ
Brent crude for July rose 45 cents to 115 38 a
barrel by 0231 GMT U S crude was up 48 cents at
101 80 Both benchmarks rose around 2 percent on Wednesday to
close at their highest level since May 10
U S distillate inventories fell 2 04 million barrel to 141
million barrels its lowest level in April 2009 and well below
projections for a 100 000 barrel build data from the Energy
Information Administration showed on Wednesday
The data trumped a larger than expected 3 79 million barrel
build in gasoline stocks and an unexpected modest gain of
616 000 barrels in crude stocks
According to technical charts Brent is expected to extend
its gain to 118 43 subject to a break above a resistance at
116 28 while U S oil is expected to rise to 104 60 per
barrel said Reuters market analyst Wang Tao ID nL3E7GQ029
ID nL3E7GQ01P
Analysts were divided over the longer term direction of oil
as upward revisions of price forecasts by Wall Street banks
Goldman Sachs and Morgan Stanley earlier this week deepened the
divide between the bulls and the bears to levels unseen since
oil prices peaked in 2008 ID nL9E7EA00K
While bears cited weak demand and ebbing geopolitical risk
premiums as reasons for oil to plunge to 75 per barrel bulls
saw it soaring to 140 due to supply shortages and the limited
ability of OPEC to cushion any new disruption
The market will also be closely watching U S gross domestic
product numbers out later on Thursday for further signs of
recovery in world s biggest energy consumer
The government is expected to report on Thursday that the
economy grew at a 2 1 percent annual rate in the first quarter
according to a Reuters survey rather than the 1 8 percent pace
it estimated last month ID nN25110127
MENA RISK REMAINS
The risk of supply disruptions due to unrest in North Africa
and the Middle East was back in focus as violence flared in
Libya and Yemen overnight
Heavy explosions rocked the Yemeni capital Sanaa in the
small hours of Thursday as fighting to topple the veteran
president Ali Abdullah Saleh threatened to descend into a
civil war ID nLDE74O2C5
In Libya NATO forces struck at targets in the capital
Tripoli on Wednesday night Libyan television and a Dubai based
television station said
The MENA unrest may be a little quiet recently but the
same concerns are there everyday and will continue to impact
prices said Hasegawa
South African President Jacob Zuma will visit Tripoli next
week for talks with Libyan leader Muammar Gaddafi and is
optimistic that the meeting could help find a lasting solution
to the Libyan crisis ID nLDE74O2D7 ID nLDE74O070
Analysts said the ongoing tensions in the region have added
a 10 20 security premium to oil prices
Editing by Himani Sarkar |
MS | UPDATE 2 Brent crude rises above 115 on weaker dollar US stocks | U S oil rises as high as 101 90 Brent hits 115 47
Euro rebounds but euro zone risks remain
Surprise U S distillates draw supports prices
Coming Up U S Q1 GDP 1230 GMT
Updates prices
By Francis Kan
SINGAPORE May 26 Reuters Brent crude rose above 115 a
barrel on Thursday due to a softer dollar and as an unexpected
drop in U S distillate stocks overshadowed gains in gasoline
and crude inventories
The dollar retreated against the euro and edged down
against a basket of currencies making commodities priced
in the greenback more attractive to consumers using other
currencies
The surprise distillates drawdown last week helped ease
concerns the rise in gasoline inventories ahead of the Summer
driving season that begins this weekend is a sign of waning
demand Also supporting the market was fresh violence in Libya
and Yemen raising the spectre once again of further supply
disruptions in the region
The euro dollar is the main factor driving prices today for
oil and other commodities and will continue to do so until
there is some clear direction on where the dollar is headed
said Ken Hasegawa a commodity derivatives manager at Newedge
Brokerage in Tokyo
Brent crude for July rose 32 cents to 115 25 a
barrel by 0638 GMT after rising as much as 54 cents U S crude
gained 27 cents at 101 62 Both benchmarks rose around 2
percent on Wednesday to close at their highest since May 10
The euro was boosted by a report that China and other Asian
investors are expected to buy a strong proportion of
Portuguese bailout bonds when the eurozone s rescue fund starts
auctioning them next month
But the risks surrounding the single currency remain with
Greece fighting to avoid a debt restructuring that could spread
to other European economies struggling with gaping fiscal
deficits ID nLDE74O1MZ
U S distillate inventories fell 2 04 million barrels to 141
million barrels its lowest level in April 2009 and well below
projections for a 100 000 barrel build data from the Energy
Information Administration showed on Wednesday
Gasoline stocks rose by 3 79 million barrels while crude
stocks showed a modest gain of 616 000 barrels
According to technical charts Brent is expected to extend
gains to 118 43 subject to a break above a resistance at
116 28 while U S oil is expected to rise to 104 60 per
barrel said Reuters market analyst Wang Tao ID nL3E7GQ029
ID nL3E7GQ01P
Analysts were divided over the longer term direction of oil
as upward revisions of price forecasts by Wall Street banks
Goldman Sachs and Morgan Stanley earlier this week deepened the
divide between the bulls and the bears to levels unseen since
oil prices peaked in 2008 ID nL9E7EA00K
While bears cited weak demand and ebbing geopolitical risk
premiums as reasons for oil to plunge to 75 per barrel bulls
saw it soaring to 140 due to supply shortages and the limited
ability of OPEC to cushion any new disruption
The market will also be closely watching U S gross domestic
product numbers out later on Thursday for further signs of
recovery in world s biggest energy consumer
The government is expected to report that the economy grew
at a 2 1 percent annual rate in the first quarter according to
a Reuters survey rather than the 1 8 percent pace it estimated
last month ID nN25110127
MENA RISK REMAINS
The risk of supply disruptions due to unrest in North Africa
and the Middle East was back in focus as violence flared in
Libya and Yemen overnight
Heavy explosions rocked the Yemeni capital Sanaa in the
small hours of Thursday as fighting to topple the veteran
president Ali Abdullah Saleh threatened to descend into a
civil war ID nLDE74O2C5
In Libya NATO forces struck at targets in the capital
Tripoli on Wednesday night Libyan television and a Dubai based
television station said
The MENA unrest may be a little quiet recently but the
same concerns are there everyday and will continue to impact
prices said Hasegawa
South African President Jacob Zuma will visit Tripoli next
week for talks with Libyan leader Muammar Gaddafi and is
optimistic that the meeting could help find a lasting solution
to the Libyan crisis ID nLDE74O2D7 ID nLDE74O070
Analysts said the ongoing tensions in the region have added
a 10 20 security premium to oil prices
Editing by Manash Goswami |
MS | European stocks broadly higher on financials DAX up 0 2 | Investing com European stock markets were broadly higher on Thursday as shares in the financial and raw material sectors led gains while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 rose 0 22 France s CAC 40 gained 0 35 while Germany s DAX 30 edged 0 18 higher The Financial Times reported earlier that European Financial Stability Facility Chief Executive Officer Klaus Regling said China was clearly interested in buying Portuguese bailout bonds when the EFSF sells them in June Meanwhile Fitch Ratings said that the exposure of German banks to Greece was manageable boosting lenders across the region Commerzbank and Deutsche Bank saw shares jump 2 35 and 1 2 respectively Shares in Spanish banking giant Banco Santander advanced 1 9 while Europe s largest financial group BNP Paribas added 1 4 Shares in Swiss dental implant maker Nobel Biocare soared 7 35 after Morgan Stanley upgraded the stock two notches to overweight from underweight French tire maker Michelin saw shares gain 1 3 after JP Morgan upgraded the company saying a 20 drop in natural rubber prices makes tire producers the best medium term prospects in the automotive sector In London the commodity heavy FTSE 100 rose 0 4 as commodity producers led gains after Deutsche Bank upgraded the raw material sector saying it expected stocks in the sector to deliver a 20 return on equity this year Shares in BHP Billiton climbed 1 1 while copper producer Xstrata gained 1 3 after Deutsche Bank named them as its top choices in the sector On the downside luxury retailer Burberry saw shares drop 2 5 after it reported full year earnings that were broadly in line with market expectations The company said annual earnings rose 39 to GBP297 9 million however the company failed to upgrade its earnings outlook for the current fiscal year disappointing investors The outlook for U S equity markets meanwhile was upbeat The Dow Jones Industrial Average futures pointed to a gain of 0 3 S P 500 futures indicated a rise of 0 32 while the Nasdaq 100 futures added 0 15 Later in the day the U S was to publish revised government data on first quarter economic growth as well as a weekly report on initial jobless claims |
MS | UPDATE 5 Oil slips as economic data disappoints | WTI crude futures down 25 cents
Yemen violence weak dollar support prices
EIA data showed crude stocks rise
U S GDP corporate profits data disappoints
Updates prices adds quotes U S data
By Simon Falush
LONDON May 26 Reuters Oil retreated on Thursday
pressured by gloomy U S economic data but dollar weakness and
supply concerns sparked by renewed violence in the Middle East
helped limit losses
Unrevised first quarter U S GDP data disappointed investors
who had been expecting an upward revision while corporate
profits unexpectedly contracted and jobless claims rose
However crude remained in a tight range close to 100
barrel where it has been for three weeks and analysts saw
longer term appetite for energy as robust
It s very range bound it s been pressured by European debt
concerns and poor data said David Jones chief market
strategist at IG Index
But there s massive appetite for oil and whenever we have
bad data usually some better news comes soon after so we see
U S crude trading at 110 in coming months
As of 1319 GMT U S crude for July was down 25 cents
to 101 07 Brent crude for July was down 14 cents to
114 79 per barrel
Crude oil had gained sharply on Wednesday as traders
initially focused on an unexpected drop in U S distillate
stocks EIA S
However the figures from the Energy Information
Administration showed domestic crude stocks rising countering
expectations of a fall which underlined the gloomy outlook for
demand ID nN25126927
The net result was that there was a build in inventories
so I think the move was a bit overdone yesterday Simon
Wardell oil analyst at Global Insight said
Both benchmarks rose around 2 percent on Wednesday to close
at their highest since May 10
Fears of spreading turmoil in the Middle East were rekindled
by a brewing civil war in Yemen as dozens were killed in
overnight gun battles ID nLDE74O2C5
Analysts said the tensions in the region have added a
10 20 security premium to oil prices as investors focus on
risks to supply
The dollar retreated against the euro and slipped
against a basket of currencies making commodities priced
in the greenback more attractive to consumers using other
currencies and preventing sharper losses USD
Analysts were divided over the longer term direction of oil
prices as upward revisions of price forecasts by Wall Street
banks Goldman Sachs and Morgan Stanley earlier this week
deepened the divide between the bulls and the bears to levels
unseen since oil prices peaked in 2008 ID nL9E7EA00K
Additional reporting by Francis Kan in Singapore editing
by Jason Neely |
MS | FTSE edges back up as miners oils banks gain | FTSE 100 index adds 0 4 percent
Oils miners banks in demand as recent jitters fade
U S Q1 GDP awaited due at 1230 GMT
By Jon Hopkins
LONDON May 26 Reuters Britain s leading share index
pushed higher at midday lifted by gains in heavyweight mining
oils and banking stocks as recent concerns over the global
economy receded while investors awaited U S GDP data
At 1050 GMT the FTSE 100 was up 25 30 points or
0 4 percent at 5 895 44 dipping back just below the
psychologically important 5 900 level breached earlier
Integrated oils and specialty mining were the two best
performing blue chip sectors with Antofagasta a top
mining gainer up 3 1 percent supported by a Morgan Stanley
upgrade from Wednesday
Banks also pushed higher led by Lloyds Banking Group
ahead 1 8 percent as Virgin Money VA UL stepped up
its bid interest in 600 retail branches which the British bank
has been ordered to sell by regulators
Richard Branson whose parent company runs the Virgin Money
brand told the Financial Times that he was planning to make a
formal bid for the 600 Lloyds branches in July ID nLDE74P056
Investors were awaiting U S preliminary first quarter GDP
due at 1230 GMT for fresh direction with expectations being
that the U S economy grew at an albeit still sluggish 2 1
percent annual rate in the first quarter according to a Reuters
survey rather than the 1 8 percent pace estimated last month
Expectations are for the figure to be upwardly revised
which would certainly help to quell some of the negative
sentiment that has been dogging the markets this week said Ben
Critchley sales trader at IG Index
Investors will be hoping that this along with a sustained
rise in commodity prices can help kick start another rally in
equities though with the European debt crisis far from
resolved any perceived weakness could see the bears pile back
in Critchley added
U S weekly jobless claims are also due at 1230 GMT
MAN ALIVE
Man Group was the top blue chip gainer up 4 0
percent as the hedge fund group s full year results beat
expectations with its assets up 3 percent to 71 billion over
the past two months ID nLDE74O0KF
Engineer Weir Group gained 2 8 percent as RBS
raised its target price after upgrading its forecasts to reflect
the firm s recent bullish interim management statement and its
positive outlook on the group
RBS repeated its buy recommendation on Weir and raised
its target price to 2 125 pence up from 1 935 pence
But on the downside Burberry Group shed 3 8
percent retreating after a strong recent run in the share
price after posting full year results ID nLDE74O1N1
Although the results for YE 31 March were largely in line
with expectations with tightened margins likely to hurt
profitability going forward and the risk of continued slowdown
amid fiscal tightening in Asia H2O Markets believe a period of
consolidation is long overdue says Eku Kobayashi economist at
H2O Markets which has a short term sell stance on Burberry
Meanwhile Shire shed 1 6 percent and adding to falls
in the previous session after the firm said more rivals planned
a generic version of its Vyvanse drug ID nPreEDD9e
Editing by Greg Mahlich |
MS | European stocks slide on recovery concerns DAX sheds 0 2 | Investing com European stock markets were down on Wednesday amid a combination of concerns over the pace of the global economic recovery and uncertainty over Greek sovereign debt while U S futures indexes pointed to a lower open on Wall Street During European morning trade the EURO STOXX 50 shed 0 25 France s CAC 40 slipped 0 2 while Germany s DAX 30 was down 0 2 Revised data released earlier showed that manufacturing activity in the euro zone fell to a seven month low in May while U K manufacturing activity slumped to the lowest level since September 2009 The data came after a report showing that China s purchasing managers index declined to a 10 month low last month Meanwhile fears over a Greek default continued after German media outlets reported it is now certain that the International Monetary Fund will not pay its share of a fifth tranche of aid to Greece at the end of June Meanwhile shares in Nokia tumbled 6 9 after the company warned on Tuesday that second quarter revenue could fall short of previous estimates due to declining prices and sales volumes The news weighed on other shares in the sector with France Telecom slumping 1 1 and U K based Vodafone dropping 2 9 On the upside shares in financial service provider AXA jumped 2 9 after it published its strategic five year plan saying it was seeking average annual growth in underlying earnings per share of 10 to 2015 In London the FTSE 100 was down 0 2 as shares in building materials company Wolseley fell 1 5 in the wake of its third quarter earnings results The company said revenue in the quarter rose 1 to GBP3 27 billion falling short of expectations for revenue of GBP3 33 billion Shares in real estate group Hammerson gained 1 3 after Morgan Stanley upgraded the stock to overweight from equal weight The outlook for U S equity markets meanwhile was downbeat The Dow Jones Industrial Average futures pointed to a decline of 0 15 S P 500 futures indicated a drop of 0 1 while the Nasdaq 100 futures shed 0 3 Later in the day U S payroll processing firm ADP was to publish its report on non farm payrolls Elsewhere the Institute of Supply Management was to publish data on manufacturing activity |
JPM | JPMorgan buys Dublin building with room for 1 000 staff | By Conor Humphries DUBLIN Reuters JPMorgan Chase N JPM has agreed to buy a Dublin building with room for 1 000 staff in the first sign of a financial services company expanding significantly in Ireland since the government began a major campaign to attract firms in the wake of Brexit The U S investment bank will acquire a 130 000 square foot 12 000 square meter building at the Capital Dock development in Dublin s docklands the building s developer Kennedy Wilson L KWE said in a statement The bank which currently employs around 500 people in Dublin did not say how many jobs would be created or whether any positions would be moved from the United Kingdom JPMorgan plans to hire a significant number of people in Dublin in its expanding custody and funds services businesses over the next three years JPMorgan s head of investor services James Kenny told the Financial Times at the weekend The bank has indicated it will use its existing European Union banks in Dublin Frankfurt and Luxembourg to anchor its European Union operations after Brexit This new building gives us room to grow and some flexibility within the European Union senior country officer for JP Morgan in Ireland Carin Bryans said in the statement Ireland has engaged on a major lobbying campaign during the past year to try to convince companies with large bases in the United Kingdom to consider moving some of their staff to Ireland to maintain access to the European Union s single market Hubertus Vaeth the head of Frankfurt s campaign to promote the city to banks since Britain voted to leave the EU told Reuters earlier this month he expected the five largest U S investment banks to move staff to more than one EU location with around 1 000 going to Frankfurt and possibly more to Dublin Rivalry between the different EU cities has become acrimonious at times with Ireland complaining to the European Commission that it is being undercut by predatory behavior by other centers
Ireland s financial services minister Eoghan Murphy said in a statement on Monday that JPMorgan s announcement was a welcome vote of confidence in the strength of Ireland s offering and Dublin s status as a major financial center |
JPM | JPMorgan s Dimon defends Trump advisory role deregulation | By Dan Freed NEW YORK Reuters JPMorgan Chase Co N JPM Chief Executive Jamie Dimon on Tuesday responded to criticism from angry shareholders of his role advising President Donald Trump on economic matters saying he would help any president in office At the bank s annual meeting in Wilmington Delaware several attendees demanded answers from Dimon about his role on a White House business council and JPMorgan s involvement with financial deregulation efforts in Washington I would try to help any president of the United States because I m a patriot Dimon said That does not mean we agree with all the policies that an administration comes up with Asked whether he would step down from Trump s Strategic and Policy Forum which includes over a dozen leaders of major corporations Dimon said simply No Like annual shareholder meetings held by other big U S banks this year JPMorgan s was dominated by activists concerned about Trump s positions on immigration minorities human rights and the environment The actual business of the meeting was less controversial voting shareholders sided with management on all major resolutions including the election of directors and executive compensation Activists proposals were rejected though a proposal to allow investors with 10 percent of the total shares outstanding to call a special meeting received more than 42 percent support of shares voted according to the bank s preliminary tally In discussing Trump Dimon repeated a metaphor he has used several times about the president being a pilot and the United States an airplane
He also defended JPMorgan s track record with issues shareholders raised including its support for free and fair trade with Mexico and argued that efforts to reduce Wall Street regulations will help the economy |
JPM | JPMorgan Chase declares 0 50 dividend | JPMorgan Chase NYSE JPM declares 0 50 share quarterly dividend in line with previous Forward yield 2 28 Payable July 31 for shareholders of record July 6 ex div July 4 Now read |
C | Jailed Libor trader Tom Hayes appeals 14 year sentence conviction | By Kirstin Ridley LONDON Reuters Tom Hayes the first trader convicted by a jury of manipulating Libor benchmark interest rates on Tuesday begins a two day appeal against his conviction and a 14 year jail sentence one of the toughest to date for white collar crime The London case is being heard by Lord Chief Justice John Thomas the head of the judiciary in England and Wales Brian Leveson a senior judge who chaired a public inquiry into the ethics of the British media in 2012 and Elizabeth Gloster Hayes a 36 year old former UBS and Citigroup N C trader was in August found unanimously guilty of eight charges of conspiracy to defraud for rigging Libor the London interbank offered rate that underpins around 450 trillion of financial contracts and consumer loans worldwide Cast as the ringleader in one of the rate rigging scams that has cost banks billions in regulatory fines Hayes was found guilty of conspiring to rig Libor for profit But his legal team is arguing that High Court Judge Jeremy Cooke made legal errors in the way he handled the trial and that the sentence is wrong in principle and excessive Much of the initial argument is expected to focus on what evidence was deemed relevant or admissible during the trial lawyers say The arguments about sentence length are likely to rest in part on whether Cooke was right to jail Hayes for consecutive rather than concurrent fraud offences Richard Cornthwaite Hayes s lawyer at law firm Cartwright King said he expected a ruling this week but added that this was a matter for the court CONSECUTIVE SENTENCES Hayes who has Asperger s Syndrome denied dishonesty during his trial arguing he had been open about practices that were endorsed by senior staff and common in the industry at the time Hayes s defense was hampered by his earlier admissions of dishonesty in interviews with investigators in 2013 Hayes told the jury he initially cooperated with the Serious Fraud Office only to avoid extradition to the United States where he faced similar charges But he later decided to fight the charges In his sentencing remarks on Aug 3 Cooke said there was no separate standard of dishonesty for any group of society that Hayes had appreciated at the time he had acted dishonestly and that it was irrelevant that others had done the same or that managers condoned embraced or even encouraged it He said there was no doubt the sums involved ran into millions of dollars and that the conduct in the case must be marked out as dishonest and wrong and a message sent to the world of banking accordingly Hayes was sentenced consecutively for the conspiracies he was found guilty of while at UBS and those while at Citigroup between 2006 and 2010 Had the market rigging been seen as one offence Hayes would have faced a maximum 10 year sentence The sentence shows how the UK judiciary is toughening its stance on white collar crime lawyers say
Should the Court of Appeal side with Hayes it could order a retrial But both Hayes s team and the Serious Fraud Office which is now pursuing confiscation proceedings against Hayes to claw back property deemed to be proceeds of crime could yet take the case to the Supreme Court if they fail at this stage |
C | Citigroup Inc Shares Slightly Lower After Revenue Falls | Citigroup Inc NYSE C
Citigroup Earnings Results
On Thursday morning before the market opened Citigroup C announced fourth quarter earnings that came up short of expectations and sent shares slightly lower The company announced 1 14 earnings per share on 17 billion in revenue while analysts were looking for 1 12 earnings per share on 17 3 billion in revenue This is compared to 1 02 EPS for the same period ending last year Currently analysts have an average price target of 64 36
C Technicals
Looking at the daily chart above you will notice that shares were in a fairly strong uptrend dating back to the election date in early November However recent price action has broken the trend as prices dip below the 20 day and 50 day moving averages Shares are beginning to become oversold on the daily chart so we could see a bounce back to test the 20 day moving average
We should see support at 56 with stronger support at 50 and the 200 day moving average currently at 48 57 Look for resistance at the moving averages and at 60 Shares will likely be more volatile than normal and could present some great trading opportunities today Check out these links for more information on and the penny stock trading strategies we implement in their
CEO Comments
Citi CEO Michael Corbat said We had a strong finish to 2016 bringing momentum into this year We drove revenue growth in our businesses and demonstrated strong expense discipline across the firm We achieved a full year Citicorp efficiency ratio of 58 as we had targeted while again increasing our loans and deposits Our core businesses are beginning to produce the returns our investors expect and deserve In 2016 we returned nearly 11 billion in capital to our shareholders Even with this capital return we ended the year with a Common Equity Tier 1 Capital ratio of 12 5 40 basis points higher than when we started the year showing the capability of this franchise to consistently generate and return significant amounts of capital
Company Profile
Citigroup Inc is a global financial services holding company specializes in banking and financial solutions It offers a range of products and services among individuals corporations governments and institutions such as savings checking online banking individual retirements accounts credit cards personal student and commercial real estate loans cash management services home equity and bill consolidation as well as online banking services cash management transactions trade securities and fund services It operates through the following segments Global Consumer Banking Institutional Clients Group and Corporate Other
The Global Consumer Banking segment consists of four geographical consumer banking businesses that provide traditional banking services to retail customers through retail banking including commercial banking and Citi branded cards and Citi retail services The Institutional Clients Group segment offers corporate institutional public sector and high net worth clients around the world with a full range of wholesale banking products and services including fixed income and equity sales and trading foreign exchange prime brokerage derivative services equity and fixed income research corporate lending investment banking and advisory services private banking cash management trade finance and securities services The Corporate Other segment refers to administrative functions including finance risk human resources legal and compliance and others The company was founded on October 8 1998 and is headquartered in New York NY |
C | Riddle Me This Buy Hold Or Sell | In this past weekend s newsletter I discussed my remembrances of the Riddler in the original Batman series and how he would pose riddles to the dynamic duo as they faced the certain demise In that vein I posed the following question
IF investment success is achieved by buying when others are fearful and selling when others are greedy then what should you be doing now
This is the most difficult question for investors who are caught up in the Greed Fear Cycle As I noted yesterday this is a key point made by the legendary Howard Marks
It s the swings of psychology that get people into the biggest trouble especially since investors emotions invariably swing in the wrong direction at the wrong time When things are going well people become greedy and enthusiastic and when times are troubled people become fearful and reticent That s just the wrong thing to do It s important to control fear and greed
We need to remember to buy more when attitudes toward the market are cool and less when they re heated Too little skepticism and too much eagerness in an up market just like too much resistance and pessimism in a down market can be very bad for investment results
Warren Buffett once said
The less prudence with which others conduct their affairs the greater the prudence with which we must conduct our own affairs
The fundamental building block of investment theory is the assumption that investors are risk averse But in reality they are sometimes very risk averse and miss a lot of buying opportunities and sometimes very risk tolerant and buy when they shouldn t Risk aversion isn t constant or dependable That s what Buffett means when he says that when other people apply less you should apply more
This is the subject of today s chart review but first a quick bit of history
In 2013 I posted an article discussing the ability of the market to be driven higher to 2300 by Bernanke Yellen s continued injections of liquidity through QE programs To wit
That s right despite all of the recent bubble talk it is entirely possible that stocks could rise 30 higher from here However it is not because valuations are cheap because as I discussed in my recent analysis of Q3 earnings stocks are trading near 19x trailing earnings
The use of forward operating estimates is only beneficial to Wall Street analysts who need to create a valuation story when none really exists Overly optimistic assumptions about the future spurs faulty analysis in the present as sliding earnings leads to sharp valuation increases
Then last year I penned 2400 or Bust stating
The reality is that a breakout and advance to 2400 is actually quite possible given the confluence of Central Bank actions increased leverage and the embedded belief There Is No Alternative TINA It would be quite naive to suggest otherwise
Given the technical dynamics of the market going back to the 1920 s it would be equally naive to suggest that This Time Is Different TTID and this bull market has entered a new bull phase
While the Fed has stopped expanding its balance sheet investor sentiment has finally kicked into drive asset prices higher This is what the famed Richard Russell described as the mania phase
The third or speculative phase of a bull market is characterized by a wild and wooly and ever increasing entrance by the retail public This phase is characterized by hot tips hype and pure greed
I point out this previous remarks because I am often considered to be a perma bear simply because I point out the risks posed to investor capital versus the hope that prices continue to rise This point was made clear in a Twitter discussion this weekend
Whether it is Howard Marks Richard Russell or even Warren Buffett the time to invest in the markets is when others are fearful The time to sell is when everyone else is greedy
I have accumulated the following series of charts to let you decide your own personal level of skepticism and eagerness as markets hit all time highs
Fundamental Views
With markets hitting all time highs it is not surprising that valuations are pushing the second highest level in history as well
Not surprisingly when valuations are above 20x earnings forward 10 year returns have declined
This is also shown in the record levels of Enterprise Value Gross Value Added GVA
On an inflation adjusted basis the market capitalization rate of the S P 500 as a percentage of GDP is now at the second highest level on record
Which not surprisingly given the record amount of financial engineering being used to boost bottom line earnings is weighing on corporate return on equity
However given the complete disregard for fundamentals which has been typical near major bull market peaks let s take a look at some of the technical views
Then there is Ed Yardeni s Boom Bust indicator as discussed this past weekend
The Boom Bust Barometer made famous by Dr Ed Yardeni is a simple but effective way of avoiding large drawdowns in the stock market As you can see in the charts below the indicator is currently making all time highs
Technical Views
The 6 year rate of change in the inflation adjusted S P 500 index is now falling back towards zero It is the decline in the rate of return of the index that has preceded major market reversions The reversions are where the negative ROC occurs
As I have discussed previously market prices are like a rubber band that can only be stretched so far before they ultimately snap back At 3 standard deviations roughly 99 of historical price movement which is a very rare occurrence the price of the market has risen to levels that have historically denoted peaks rather than beginnings
One of the big concerns as of late is the extremely high level of complacency in the market currently An extremely complacent market combined with extreme overbought conditions should elicit some concern about excessive market risk currently
The ratio of the CBOE Skew VIX index also suggests that investors should have a higher level of caution than normal Look for the indicator to turn down and begin to deteriorate as an early warning indicator of a market correction
Of course the extremely low level of fear in the market currently has led to a maddening chase for junk bonds in the market As shown below the S P 500 High Yield Bond ratio is pushing its highest level on record This will end badly for those who unwittingly undertake the risk believing high yield bonds are a safe alternative to stocks They aren t
Lastly the deviation of the market from its 3 year moving average combined with a 3 standard deviation push above the 3 year average and a concurrent sell signal should be some type of warning
On a very short term basis the current uptrend is tightening into a very tight wedge A break to the downside of this wedge the most likely probability should lead to an initial retest of 2200ish A break below that level will likely lead to a retest of 2075
Answering The Riddle
Some time ago I wrote a discussion on Asymmetrical Bubbles and George Soros theory of reflexivity
I have developed a rudimentary theory of bubbles along these lines Every bubble has two components an underlying trend that prevails in reality and a misconception relating to that trend When a positive feedback develops between the trend and the misconception a boom bust process is set in motion The process is liable to be tested by negative feedback along the way and if it is strong enough to survive these tests both the trend and the misconception will be reinforced Eventually market expectations become so far removed from reality that people are forced to recognize that a misconception is involved A twilight period ensues during which doubts grow and more and more people lose faith but the prevailing trend is sustained by inertia As Chuck Prince former head of Citigroup NYSE C said As long as the music is playing you ve got to get up and dance We are still dancing Eventually a tipping point is reached when the trend is reversed it then becomes self reinforcing in the opposite direction
Typically bubbles have an asymmetric shape The boom is long and slow to start It accelerates gradually until it flattens out again during the twilight period The bust is short and steep because it involves the forced liquidation of unsound positions
There is currently much debate about the health of financial markets Have we indeed found the Goldilocks economy Can prices can remain detached from the fundamental underpinnings long enough for an economy earnings slowdown to catch back up with investor expectations
The speculative appetite for yield which has been fostered by the Fed s ongoing interventions and suppressed interest rates remains a powerful force in the short term Furthermore investors have now been successfully trained by the markets to stay invested for fear of missing out
The increase in speculative risks combined with excess leverage leave the markets vulnerable to a sizable correction at some point in the future The only missing ingredient for such a correction currently is simply a catalyst to put fear into an overly complacent marketplace
In the long term it will ultimately be the fundamentals that drive the markets It is all reminiscent of the market peak of 1929 when Dr Irving Fisher uttered his now famous words Stocks have now reached a permanently high plateau The clamoring of voices proclaiming the bull market still has plenty of room to run is telling much the same story History is replete with market crashes that occurred just as the mainstream belief made heretics out of anyone who dared to contradict the bullish bias
It is critically important to remain as theoretically sound as possible The problem for most investors is their portfolios are based on a foundation of false ideologies which is only discovered when reality collides with them
So Batman if our job is to Sell High so we can Buy Low then what are you doing now
Riddle me that |
MPC | The Energy Report 08 07 18 | Trade at your Own Risk
Oil prices are on the rise as President Trump warns the world that anyone trading with Iran will not be trading with the USA That pronouncement is directed at the EU who yesterday said that We deeply regret the re imposition of sanctions by the U S due to the latter s withdrawal from the Joint Comprehensive Plan of Action JCPOA the statement issued in Brussels said Yet the tough talk may have changed some minds a bit after Iranian President Hassan Rouhani said he would welcome talks with the U S right now I don t have preconditions If the U S government is willing let s start right now
Yet at the same time Rouhani said that If you re an enemy and you stab the other person with a knife and then you say you want negotiations then the first thing you have to do is remove the knife He also wants the U S to apologize for past actions against the Iranian people I think if he is waiting for President Trump to apologize he had better just wait for hell to freeze over
China has turned to Iran to replace U S crude but what is Iran to profit if they gain China and lose India Reuters is reporting that U S crude oil producers appear to have found an alternative buyer for cargoes no longer heading to China with India on track to import record volumes in August
India has booked a total of 9 94 million barrels of crude about 319 000 barrels per day bpd to arrive from the United States this month according to vessel tracking and port data compiled by Thomson Reuters Oil Research and Forecasts This would be almost triple the 119 000 bpd India imported from the United States in July and well above the 190 000 bpd for November last year the previous record for a month
Oil bears have received a reality check Shale oil output is slowing and pipelines are full Saudi oil production fell raising concerns about their ability to replace Iranian oil The oil super cycle that we told you was born in 2014 and 2015 is on full display Normal seasonal weakness is overshadowing on what will turn out to be one of the tightest winter markets we have seen in over a decade This as the oil market gets prepared for what should be a very bullish American Petroleum Institute API report
Last week we saw a surprise increase in oil supply as U S oil exports tanked This week we are looking for a big increase in U S oil exports In fact we mat hit a record as we may get two weeks of exports for the price of one Data from Genscape put Cushing Storage at 24 445 733 million barrels That is down 1 255 176 million barrels from July 27th and down 125 680 from last Tuesday That along with an increase in oil exports should give us at least a 3 3 million barrel supply
U S refiners are racking up the profits In today s Wall Street Journal it is being reported that American fuel makers are posting their best second quarter profits in years thanks to soaring domestic oil production and regional pipeline bottlenecks that are allowing them to buy crude on the cheap
Refining companies typically suffer as oil prices rise because drivers scale back their travel reducing demand for gasoline and diesel But record U S production coupled with insufficient pipeline capacity in Canada and West Texas has depressed the cost of oil in many parts of the country even as oil prices have been rising in general That has boosted margins for many stand alone refiners propelling some including Phillips 66 NYSE PSX and Marathon Petroleum Corp NYSE MPC to their highest second quarter profits on record Phillips 66 the largest independent refiner earned an average of 12 28 per refined barrel during the second quarter up from 8 44 for the same period last year The company reported profits of 1 3 billion up 143 from 2017 s second quarter Marathon Petroleum earned 15 40 per refined barrel compared with 11 32 a barrel in the year earlier period Its second quarter profit rose 118 to 1 1 billion Both companies seized on the favorable economics by operating their facilities at full capacity A must read in the Journal |
MPC | Why Marathon Petroleum MPC Is A Top Dividend Stock For Your Portfolio | All investors love getting big returns from their portfolio whether it s through stocks bonds ETFs or other types of securities But for income investors generating consistent cash flow from each of your liquid investments is your primary focus
Cash flow can come from bond interest interest from other types of investments and of course dividends A dividend is that coveted distribution of a company s earnings paid out to shareholders and investors often view it by its dividend yield a metric that measures the dividend as a percent of the current stock price Many academic studies show that dividends make up large portions of long term returns and in many cases dividend contributions surpass one third of total returns
Marathon Petroleum in Focus
Headquartered in Findlay Marathon Petroleum MPC is an Oils Energy stock that has seen a price change of 4 27 so far this year The refiner is currently shelling out a dividend of 0 46 per share with a dividend yield of 2 67 This compares to the Oil and Gas Refining and Marketing industry s yield of 2 18 and the S P 500 s yield of 1 96
Looking at dividend growth the company s current annualized dividend of 1 84 is up 21 1 from last year In the past five year period Marathon Petroleum has increased its dividend 5 times on a year over year basis for an average annual increase of 19 07 Any future dividend growth will depend on both earnings growth and the company s payout ratio a payout ratio is the proportion of a firm s annual earnings per share that it pays out as a dividend Right now Marathon Petroleum s payout ratio is 36 which means it paid out 36 of its trailing 12 month EPS as dividend
MPC is expecting earnings to expand this fiscal year as well The Zacks Consensus Estimate for 2018 is 5 08 per share with earnings expected to increase 33 68 from the year ago period
Bottom Line
Investors like dividends for a variety of different reasons from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits But not every company offers a quarterly payout
For instance it s a rare occurrence when a tech start up or big growth business offers their shareholders a dividend It s more common to see larger companies with more established profits give out dividends Income investors have to be mindful of the fact that high yielding stocks tend to struggle during periods of rising interest rates With that in mind MPC is a compelling investment opportunity Not only is it a strong dividend play but the stock currently sits at a Zacks Rank of 3 Hold |
MPC | Marathon Petroleum MPC Q3 Earnings And Revenues Beat Estimates | Marathon Petroleum MPC came out with quarterly earnings of 1 70 per share beating the Zacks Consensus Estimate of 1 68 per share This compares to earnings of 1 77 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 1 19 A quarter ago it was expected that this refiner would post earnings of 1 98 per share when it actually produced earnings of 2 27 delivering a surprise of 14 65
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 23 13 billion for the quarter ended September 2018 surpassing the Zacks Consensus Estimate by 1 10 This compares to year ago revenues of 19 39 billion The company has topped consensus revenue estimates three 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 6 8 since the beginning of the year versus the S P 500 s gain of 1 4
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 1 07 on 29 25 billion in revenues for the coming quarter and 5 08 on 88 57 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 31 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 | PRECIOUS Gold seesaws between euro worries dollar gains | Euro slides to 6 week low after IMF chief arrest
Gold gains from euro zone worries but tempered by dollar
Coming up Johnson Matthey Platinum 2011 report 1200 GMT
By Amanda Cooper
LONDON May 16 Reuters Gold steadied on Monday as the
twin forces of deepening concern about the euro zone debt crisis
and the growing strength of the dollar offset each other while
investors kept silver pinned near last week s 2 1 2 month lows
The euro slid to a seven week low against the dollar after
IMF Chief Dominique Strauss Kahn a key voice in euro zone debt
talks was charged with sexual assault increasing uncertainty
on aid for Greece and other indebted euro zone countries
The dollar index a measure of the greenback s
strength against a basket of currencies advanced to its highest
since early April USD ID nN15215355
Spot gold was little changed at 1 494 49 an ounce by
0838 GMT after ending flat in the previous week Prices had
fallen by about 5 percent from the lifetime high of 1 575 79
hit on May 2
U S gold was nearly unchanged at to 1 494 50
The dollar is coming into some safe haven bids with all
the uncertainties and the turmoil and there s maybe a
reassessment that we ll see the dollar aggressively firm said
Credit Agricole analyst Robin Bhar
So it s dollar strength and possibly euro zone jitters
MIXED BLESSING
Gold in euros did not get much of a lift from the
renewed concern Greece will have to restructure its debt without
further EU support and euro zone finance ministers were not
expected to make much progress tackling Athens financial
crisis
Euro priced gold rose 0 1 percent to 1 057 56 euros an
ounce having fallen by 0 2 percent so far this year as the euro
has gained ground against the dollar
It is a bit of a double edged sword because in theory any
debt any currency woes should play into gold s strength But on
the other hand if the euro is pummelled and the dollar
strengthens they offset each other Bhar said
Euro zone finance ministers are likely to back a bailout
package for Portugal in a meeting on Monday ID nLDE74E0N7
Technical outlook on gold ID nL4E7GG02I
IMF chief charged with sex assault ID nLDE74E04O
Spot silver fell nearly 3 percent to 34 23 earlier
before regaining some lost ground to show a 1 9 percent drop on
the day to 34 59
U S silver fell by 1 2 percent to 34 61
Market participants are awaiting a speech by U S Federal
Reserve chairman Ben Bernanke later in the day in which he was
expected to repeat the stance that the Fed is in no rush to
raise interest rates
The Shanghai Gold Exchange China s main precious metals
bourse said it will lower the margin requirement on silver
forward contracts to 15 percent on Monday s settlement from 18
percent after market volatility ebbed
A decline in the prices of precious metals in recent weeks
fuelled an exodus of investment interest in exchange traded
funds as well as in futures and options markets
Global holdings of gold in exchange traded funds staged a
second weekly net decline last week falling by nearly half a
million ounces to their lowest this year
Holdings in the SPDR Gold Trust the world s largest
gold ETF declined to a one year low of 1 192 253 tonnes on
Friday GOL ETF
Managed money sharply scaled back their bullish bets in
COMEX silver futures and options to the lowest level since
January as prices tumbled as much as 30 percent from a record
high near 50 an ounce U S regulator data showed on Friday
ID nN13278663
Rising global inflation uncertainties in euro zone fiscal
conditions and ongoing unrest in the Middle East and North
Africa will likely to continue to drive nervous investors to
precious metals especially gold analysts said
With the outlook for PGMs platinum group metals blemished
by the disruption in the global auto sector supply chain and
silver continuing to trade in extremely volatile conditions we
expect investors will look increasingly toward gold to hedge
systemic financial risk said Morgan Stanley in a research
note
Platinum was last down 0 2 percent at 1 753 00 an
ounce while palladium was flat at 706 22 ahead of a
key industry report from refiner Johnson Matthey at
1200 GMT
Additional reporting by Rujun Shen in Singapore editing by
Keiron Henderson |
MS | Brent crude rises on prospect of lower stocks | U S crude reverses earlier losses
Morgan Stanley ups 2011 Brent forecast to 120
Strong demand to put a strain on OPEC capacity analysts
Coming Up Weekly U S API petroleum stocks 2030 GMT
By Francis Kan
SINGAPORE May 24 Reuters Brent crude futures rose on
Tuesday rebounding from the previous day s sharp fall as the
prospect of strong oil demand trimming inventories overrode
concerns about Europe s debt crisis
Brent crude for July was up 59 cents at 110 69 a
barrel by 0309 GMT U S crude for July gained 60 cents
to 98 28 a barrel Both benchmarks had fallen by over 2 on
Monday to end below their 100 day moving averages
Sovereign debt problems in the euro zone coupled with data
pointing to a slowing Chinese economy had pushed investors to
sell riskier assets like oil and the euro in favour of gold and
the dollar
Spot gold hit an intraday high at 1 517 74 an ounce
its strongest since May 11 while the dollar extended its gains
to hit an eight week high against the pound and edged closer to
a 10 week high versus the euro
What we re seeing is some short covering or value buying
after significant losses yesterday but in the short term there
are still risks from Europe s debt issues and softening economic
data said Ben Le Brun market analyst with CMC markets in
Sydney
But analysts expect oil prices to head higher after the
current correction as strong demand from emerging economies
draws down on global inventories and puts a strain on OPEC s
spare capacity
While near term downside risk remains we believe that the
market will continue to tighten to critical levels by 2012
pushing oil prices substantially higher to restrain demand
said U S investment bank Goldman Sachs in a research note on
Monday
The influential Wall Street bank which in April had
predicted the major correction in oil prices earlier this month
said on May 7 that oil could surpass its recent highs by 2012
Echoing this view was Morgan Stanley who raised their 2011
Brent crude forecast to 120 a barrel from 100 previously
while it has upped its 2012 target to 130 from 105
The loss of some 1 5 million barrels per day of Libyan
production and firm demand from emerging economies will lead
to tighter inventories in the second half of the year the
bank s analysts said in a report
It is very likely that OPEC will respond to tightening
inventories by lifting their production in response we see
flat prices moving higher as spare capacity continues its fall
to untenable levels the report said ID nL3E7GO054
The Organization of the Petroleum Exporting Countries are
scheduled to meet next on June 8 in Vienna
An expected fall in U S crude stocks last week could also
support prices analysts said A drop in imports and increased
refinery use are forecast to have pushed crude oil inventories
lower according to a Reuters survey of analysts on Monday
ID nN23182962
CHINA TO DRIVE DEMAND
Strong Chinese oil demand is expected to be the key driver
of oil prices for the rest of this year despite data pointing
to a slowing economy analysts said
A purchasing managers index on Monday showed China s
factories expanding at their slowest pace in 10 months in May
ID nL3E7GN06N
However this news was tempered by data showing no let up in
Chinese oil imports last month which grew 9 6 percent
year on year its third highest level ever
The softer manufacturing data is a good sign that
tightening measures are starting to take effect and the
government may be less inclined to tighten further said CMC s
Le Brun
The conflict in Libya escalated with at least 12 heavy
explosions heard in Tripoli early on Tuesday and a column of
smoke was seen rising from the area of leader Muammar Gaddafi s
compound a Reuters correspondent said ID nLDE74M257
Uncertainty over pan Arab protests and Libya s conflict
pushed Brent to a 32 month peak last month before a sharp
correction in early May resulted in prices registering their
largest ever weekly decline of more than 16 a barrel
Editing by Michael Urquhart |
MS | UPDATE 10 Oil rises 2 pct as Goldman boosts price forecast | Goldman Sachs boosts Brent price forecast
Euro edges up dollar dips after German data boosts oil
Coming up EIA oil data at 10 30 a m EDT Wednesday
Updates with APIs trade volumes paragraphs 7 18 22
By Robert Gibbons
NEW YORK May 24 Reuters Oil rose 2 percent on Tuesday
in choppy trading after Goldman Sachs raised its price
forecasts for Brent crude saying demand from economic growth
will eat into stockpiles and OPEC spare capacity
Goldman raised its Brent price forecast to 115 120 and
130 a barrel on a three six and 12 month horizon and
boosted its year end target for Brent to 120 per barrel from
105 and its 2012 forecast to 140 from 120 ID nL3E7GO153
A weaker dollar also supported oil prices which had
declined 2 percent the previous session USD
The euro edged up from a two year low against the dollar on
German data that was better than expected though nagging fears
about Europe s debt crisis were expected to check euro gains
Brent crude for July delivery rose 2 43 to settle
at 112 53 a barrel having swung between 109 50 and 112 65
U S July crude rose 1 89 to settle at 99 59 a
barrel having pushed intraday as high as 100 09 and ending
above its 100 day moving average of 98 80
Crude futures trading volumes remained tepid with total
U S volumes 23 percent below and Brent volumes 18 percent
under their 30 day averages according to Reuters data
Data showing U S home sales rose in April was supportive
to the market in addition to the buying encouragement prompted
by the Goldman Sachs forecast for higher Brent crude prices
said Joe Posillico broker at MF Global in New York
New U S single family home sales rose a second straight
month in April but an overhang of previously owned homes was
expected to limit any market recovery ID nN24237107
The view that the U S economy is mired in a soft patch was
reinforced by a Richmond Federal Reserve survey showing central
Atlantic region manufacturing activity stalled in May
Oil prices showed little immediate reaction to news the
United States announced new sanctions on OPEC member
Venezuela s state oil company PDVSA and six other smaller oil
and shipping companies for trading with Iran ID nN24277213
The sanctions are narrowly targeted and will not affect
PDVSA s sales of oil to the United States or the activities of
its subsidiaries including U S based CITGO
U S front month June gasoline and heating oil
futures helped lead the complex up early and posted
higher settlements though gains were pared when trade sources
said a gasoline making unit at Irving Oil s Canadian refinery
had restarted ID nN24255462
Also curbing gasoline gains was a report that U S retail
gasoline demand fell last week against both the previous week
and the year ago period even as fuel prices began to recede
according to a MasterCard report ID nN24275452
GOLDMAN PRICE TARGET SHIFTS
Goldman Sachs in April predicted a sharp oil price
correction that materialized the first week of May then issued
a note in early May saying oil could surpass recent highs by
2012 before issuing raised targets for Brent on Tuesday
Morgan Stanley on Tuesday also raised its Brent crude price
forecast for 2011 and 2012
Citing improved demand coupled with production lost to
Libya s conflict Morgan Stanley raised its 2011 Brent crude
price forecast to 120 per barrel from 100 a barrel and its
2012 forecast to 130 from 105 ID nL3E7GO054
24 hour technical outlook on Brent
24 hour technical outlook on WTI
U S OIL INVENTORIES
U S crude oil inventories fell 860 000 barrels last week
according to the weekly report from the industry group American
Petroleum Institute released late on Tuesday API S
Crude stocks increased slightly at the key Cushing
Oklahoma hub but gasoline stocks rose 2 4 million barrels and
distillate stockpiles fell 846 000 barrels the API said
Oil prices pared gains slightly after the report in
post settlement trading
Ahead of the report a Reuters poll of analysts yielded a
forecast for U S crude stocks to have fallen 1 3 million
barrels Distillate stocks were expected to be near flat up
only 100 000 barrels while gasoline stockpiles were estimated
to be up by 300 000 barrels ID nN24284821 EIA S
The weekly inventory report from the U S Energy
Information Administration will follow on Wednesday at 10 30
a m EDT 1430 GMT
Additional reporting by Gene Ramos in New York and Simon
Falush and Christopher Johnson in London Editing by Marguerita
Choy |
MS | Crude oil futures rebound on weaker dollar Goldman upgrade | Investing com Crude oil futures were up on Tuesday rebounding from the previous day s sharp drop as the U S dollar weakened while influential Wall Street banks Goldman Sachs and Morgan Stanley raised their oil price forecast On the New York Mercantile Exchange light sweet crude futures for delivery in July traded at USD98 78 a barrel during European morning trade jumping 1 3 It earlier rose by as much as 1 4 to a daily high of USD98 92 a barrel The U S dollar came under pressure after St Louis Federal Reserve President James Bullard said Monday that the Fed was likely to keep policy rates on hold after the second round of quantitative easing ends in late June The dollar index which tracks the performance of the greenback versus a basket of six other major currencies was down 0 15 to hit 76 16 retreating from a seven week high Dollar denominated oil futures contracts tend to rise when the dollar falls as this makes oil cheaper for buyers in other currencies Meanwhile Goldman Sachs raised its 12 month oil price forecast as the loss of approximately 1 5 million barrels per day of Libyan production and firm demand from emerging economies will lead to tighter inventories in the second half of the year The investment bank now expected oil prices to average USD130 a barrel compared to a previous estimate of USD105 a barrel It is only a matter of time until inventories and OPEC spare capacity will become effectively exhausted requiring higher oil prices to restrain demand keeping it in line with available supplies the Wall Street bank said in a report late Monday Elsewhere on the ICE Futures Exchange Brent oil futures for July delivery climbed 1 32 to trade at USD111 38 a barrel up USD12 60 on its U S counterpart Global financial service provider Morgan Stanley raised its 2011 Brent crude forecast to USD120 a barrel up 20 from a previous estimate It is very likely that OPEC will respond to tightening inventories by lifting their production in response we see flat prices moving higher as spare capacity continues its fall to untenable levels Morgan Stanley analysts said in a report |
MS | Crude oil futures extend gains after Goldman upgrade | Investing com Crude oil futures extended gains on Tuesday recouping nearly all of Monday s losses after Goldman Sachs raised its oil price forecast and recommended buying the commodity while a weaker U S dollar also lent support On the New York Mercantile Exchange light sweet crude futures for delivery in July traded at USD99 47 a barrel during U S morning trade rallying 2 It earlier rose by as much as 2 35 to a daily high of USD99 81 a barrel Influential Wall Street investment bank Goldman Sachs raised its 2011 and 2012 oil price forecast saying the continued absence of Libyan crude exports and disappointing production from nations outside the Organization of Petroleum Exporting Countries will tighten inventories and exhaust spare OPEC capacity We believe that the market will continue to tighten to critical levels by 2012 pushing oil prices substantially higher to restrain demand Goldman said in a report late Monday The investment bank projected oil prices would average USD130 a barrel in 2012 up from a previous estimate of USD105 a barrel The bank added that the recent pullback in oil markets provided a good entry point for long positions in crude oil Meanwhile weakness in the dollar had also contributed to oil s strength The dollar index was down 0 28 to hit 76 08 retreating from a seven week high Dollar denominated oil futures contracts tend to rise when the dollar falls as this makes oil cheaper for buyers in other currencies Markets were also awaiting fresh information on U S stockpiles of crude and refined products The American Petroleum Institute will release its inventories report later in the day while Wednesday s government report could show stockpiles declined by 1 6 million barrels last week Elsewhere on the ICE Futures Exchange Brent oil futures for July delivery jumped 2 12 to trade at USD112 25 a barrel up USD12 78 on its U S counterpart Global financial service provider Morgan Stanley raised its 2011 Brent crude forecast to USD120 a barrel up 20 from a previous estimate |
MS | Brent falls below 112 on small U S crude draw firmer dollar | U S oil dips below 99
U S crude stocks 440 000 barrels above forecast
Gasoline stocks 2 1 million barrels above forecast
Coming Up Weekly U S EIA petroleum stocks 1430 GMT
By Francis Kan
SINGAPORE May 25 Reuters Brent crude futures slipped
below 112 a barrel on Wednesday after industry data showed U S
crude inventories fell less than anticipated last week and the
dollar rebounded against the euro
The American Petroleum Institute API said crude
inventories fell 860 000 barrels for the week ended May 20
compared with analysts expectations for a 1 3 million barrel
draw
Gasoline stocks rose 2 4 million barrels a week before the
Memorial Day weekend the official start of the summer driving
season Analysts had only expected a 300 000 barrel build
The inventory numbers are driving prices lower The rise in
gasoline stocks is significant coming just before Memorial Day
If the EIA numbers show a rise as well that will put more
pressure on prices said Michel Lo a Hong Kong based analyst
with Nomura International
As the U S driving season approaches traders have been
closely eyeing the steady drawdown of gasoline stockpiles
Separate data from the U S Energy Information
Administration EIA showing 11 successive weekly draws in the
motor fuel up to early May had helped to boost oil prices The
EIA will issue its latest data later on Wednesday
Brent crude for July fell 65 cents to 111 88 a
barrel by 0220 GMT U S crude was down 64 cents at
98 94
A stronger dollar was also depressing prices as the
greenback bounced back against the euro and ticked up
versus a basket of currencies amid fears about Greece s
finances and Europe s spreading debt crisis
Euro zone debt concerns drove oil prices down more than 2
percent on Monday before rebounding strongly a day later after
Goldman Sachs and Morgan Stanley raised their forecasts for
Brent crude ID nL3E7GO153
Europe s policy options to avert a Greek default are
narrowing fast after the ECB and ratings agencies warned against
even voluntary debt rescheduling and Athens highlighted its
urgent need for more EU cash ID nLDE74N0JZ
END OF QE2
Commodity markets have also been preparing for the end of
the U S Federal Reserve s 600 billion bond buying program in
June which was designed to stimulate the economy and has helped
prop up prices
Although prices have already been declining in anticipation
the end of quantitative easing initiative or QE2 will likely
leave markets more vulnerable to issues that investors have
overlooked as long as the Fed was printing money at a record
pace analysts say
But the Fed would likely not change its policy immediately
after the end of QE2 but would stay on hold for a couple of
meetings James Bullard president of the St Louis Fed said
on Tuesday ID nN24227650
Elsewhere the conflict in Libya that has helped put a floor
on oil prices showed no signs of letting up as NATO warplanes
hammered Muammar Gaddafi s compound with their heaviest air
strikes yet on Tuesday after the United States said the Libyan
leader would inevitably be forced from power ID nLDE74N2D3
ID nLDE74N00B
Editing by Manolo Serapio Jr |
MS | UPDATE 9 Oil hits 2 week high on US distillate draw dollar | Surprise U S distillate stock draw lifts crude
U S gasoline stocks soar crude stocks up a bit
Clashes in Yemen NATO bombing supporting Brent
Recasts updates market activity and prices to
settlement
By Gene Ramos
NEW YORK May 25 Reuters Oil prices rose 2 percent on
Wednesday climbing to two week highs as an unexpected drop in
U S distillate inventories trumped a sharp rise in gasoline
stocks and as a softer dollar supported fresh commodities
buying
Inventory data from the U S Energy Information
Administration showed distillate stocks which include heating
oil and diesel fuel fell 2 04 million barrels to 141 million
barrels last week the lowest since April 2009 EIA S
The data overshadowed a larger than expected 3 79 million
barrel build in gasoline stocks and an unexpected modest gain
of 616 000 barrels in crude stocks
U S crude for July delivery settled 1 73 higher
or 1 74 percent at 101 32 a barrel the highest close since
May 10
In London ICE Brent for July closed up 2 40 or
2 1 percent at 114 93 also the highest settlement since May
10
Prices had been lower in the early going on concerns about
weak gasoline demand ahead of the U S driving season that
kicks off on the U S Memorial Day holiday on May 30
The main component in today s rise in crude futures is the
supportive drawdown in distillate stocks said Rich Ilczyszyn
senior market strategist at Lind Waldock in Chicago
We re also seeing a weaker dollar and higher prices in
gold silver and copper as supportive he added
The 19 commodity Reuters Jefferies CRB index a
global commodities benchmark rose 1 6 percent gaining the
most in a week and extending Tuesday s rise of 0 7 percent
Oil trading volumes were moderate with U S crude down 18
percent from the 30 day average with about an hour to go
before the end of the day s trade Brent crude volume was down
about 8 percent from the 30 day average
U S June heating oil finished up 7 06 cents or 2 43
percent at 2 9803 a gallon also the highest since May 10
Earlier Brent rose on concerns about unrest in the Middle
East and North Africa after violence escalated in Yemen while
uncertainty over Libya s future festered as NATO strikes
intensified
South African President Jacob Zuma said he would visit
Tripoli next week to discuss an exit strategy for Libyan leader
Muammar Gaddafi in cooperation with the Turkish government
ID nLDE74O070
SCHISM WIDENS ON MARKET S COURSE
Sharp upward revisions of oil price forecasts by Wall
Street giants Goldman Sachs and Morgan Stanley have deepened
the schism between oil bears and bulls to levels unseen since
oil prices peaked in 2008 a Reuters monthly poll showed
ID nL9E7EA00K
While bears cited weak demand and ebbing geopolitical risk
premiums as reasons for oil to plunge to 75 per barrel bulls
saw it soaring to 140 due to supply shortages and the limited
ability of OPEC to cushion any new disruption
Further signs of weaker economic demand in the U S appears
to buttress bearish views about the future course of oil
prices
Data on Wednesday showed a larger than expected drop in new
orders for long lasting U S manufactured goods in April the
largest decline in six months ID nCAT005443
The weak durable goods report could embolden economists to
moderate their forecasts for the U S second quarter growth
analysts said
U S dependence on imported oil fell below 50 percent of
total oil demand in 2010 for the first time in more than a
decade due to the weak economy and the increasing number of
fuel efficient vehicles a report from the U S Energy
Department showed on Wednesday ID n25148640
In other news global oil trading firm Arcadia Energy
rejected claims by the U S Commodity Futures Trading
Commission the futures market regulator of crude oil price
manipulation by its traders in 2008 and said it would fight
the futures market regulator in court ID nN25151262
Additional reporting by Robert Gibbons in New York Jessica
Donati in London and Francis Kan in Singapore Editing by
Marguerita Choy |
JPM | Detroit revival spurs JPMorgan to make fresh 50 million pledge | By David Henry and David Shepardson NEW YORK WASHINGTON Reuters JPMorgan Chase Co N JPM is investing another 50 million in Detroit amid what city officials and bank executives describe as encouraging signs for urban renewal through public private partnerships JPMorgan s latest investment which it plans to announce on Wednesday comes on top of a 100 million five year commitment the largest U S bank made to Detroit in 2014 At the time the city was bankrupt due to the near collapse of the U S auto industry and six decades of economic decline and population exodus The bank has put up 107 million so far funding blight removal commercial and residential redevelopment job skills training and loans to small businesses Now it plans to reinvest 13 million from early loan repayments and commit an additional 30 million Peter Scher the bank s head of corporate responsibility said in an interview There s been a much more vibrant comeback in the small business sector in Detroit than anyone expected he said The 150 million commitment is tiny compared with the bank s 2 5 trillion balance sheet but JPMorgan is the biggest bank in Detroit aligning its interests with the city s Chief Executive Jamie Dimon has made it a personal mission to improve Detroit visiting at least six times to check on the initiative Dimon has met with contractors who needed working capital to repair homes and with food entrepreneurs who needed shared commercial kitchens for bread baking and sausage making The bank has worked with Detroit Mayor Mike Duggan to focus its efforts on neighborhoods with the most promise and city support Detroit s resurgence is a model for what can be accomplished when leaders work together to create economic growth and opportunity Dimon said in a statement provided to Reuters JPMorgan has followed other private investors Billionaire Dan Gilbert founder of Quicken Loans Inc and his companies control more than 90 properties downtown in a redevelopment push Detroit was once the fifth largest U S city with 1 85 million people It now ranks below the top 20 and has its smallest population since 1850 But in July 2015 by the most recent Census Bureau estimate Detroit s 677 116 residents were just 0 5 percent fewer than the year before the smallest drop in decades The bureau will release 2016 figures later this month Local officials hope to see gains It will validate all the work that is going on here said Carmine Palombo deputy executive director of the Southeast Michigan Council of Governments
Still the city s unemployment rate was 10 9 percent in 2016 the highest among the 50 largest U S cities Nearly 40 percent of residents live in poverty and Detroit had the second highest violent crime rate in 2016 among major U S cities |
JPM | Zayo Group 7 JPMorgan Raymond James cut to Neutral | Zayo Group NYSE ZAYO is 7 lower after missing on revenues yesterday after the close results that have prompted a pair of downgrades as analysts take off their buy signs JPMorgan NYSE JPM has gone from Overweight on the stock to Neutral though the firm took the chance to raise its price target to 36 from 35 ZAYO had closed yesterday at 35 02 and is at 32 58 today The firm s Philip Cusick says the company needs to show faster growing revenue vs about 6 normalized in its latest results to justify high capital spending Meanwhile Raymond James cut the stock to Market Perform from a previous Strong Buy Now read |
JPM | Exclusive Barclays rejigs global investment banking team seeks new hires | By Anjuli Davies and Lawrence White LONDON Reuters Barclays L BARC reshuffled its senior global investment bank management on Thursday and is seeking to hire between 50 to 100 people to boost the division under new chief Tim Throsby according to sources with direct knowledge of the plans Throsby will become interim head of the bank s markets division while Joe Corcoran who previously held the role will move to the newly created position of vice chairman of markets the sources said as the bank looks to take on Wall Street rivals Joe McGrath will be the new global head of banking at Barclays and John Miller will become the head of global industry coverage banking reporting to McGrath A spokesman for Barclays confirmed the changes CEO Jes Staley has stressed that investment banking is a key pillar of the bank s growth strategy and in September appointed former JPMorgan N JPM colleague Throsby to head the international division that houses Barclays investment bank The British bank worried investors in April when first quarter results showed a weak performance at its markets business missing out on a bond trading boom enjoyed by Wall Street rivals in the first three months of 2017 Staley attributed the poor showing to weakness in the bank s U S rates business and a tough comparison with the previous year saying it would be wrong to start questioning the business based on one quarter s performance Since taking up his role in January 50 year old Australian Throsby has stressed that the investment bank is trying to shift the business from survival mode to flourish mode according to a person familiar with the matter As part of Throsby s bid to beef up the investment bank he is looking to hire between 50 and 100 people globally and will focus on key areas such as rates trading foreign exchange and also equities according to the same source who spoke on condition of anonymity In Barclays trading division income from its markets business fell 4 percent to 1 35 billion pounds 1 75 billion in the first three months of the year as macro income fell 14 percent due to a weaker performance by its U S rates business in particular Barclays fared better in advisory and underwriting reporting its best ever performance in debt capital markets in terms of market share Banking fees jumped 51 percent to 726 million pounds its best performance in three years outperforming an average 33 percent rise across the U S banks The bank which hopes to turn a chapter on its restructuring plans in June with the closure of its non core business is hoping to compete with Wall Street rivals and in order to do so is looking for senior level hires particularly in sales and trading on a case by case basis One such position immediately up for grabs is head of Europe and Middle East banking for which McGrath will recruit both internally and externally one of the sources said
Jean Francois Astier will head the bank s global capital markets business Sam Dean head of corporate finance for Europe will retire from the firm as part of the changes according to the sources |
JPM | Whole Foods board overhaul fails to satisfy activist Jana source | By Michael Flaherty NEW YORK Reuters The board overhaul announced by Whole Foods Markets Inc O WFM on Wednesday has failed to satisfy Jana Partners according to a person familiar with the matter signaling that the month long battle between the organic grocer and activist hedge fund is no nearer to a conclusion Jana which owns 8 3 percent of the company is worried about the lack of grocery experience among the five new directors the company appointed on Wednesday the person said as well as their arrival after rather than before the company s introduction of a new operational plan Whole Foods new directors include the former chief executive of sports retailer Foot Locker NYSE FL the former CFO of electronics chain Best Buy and the founder of Panera Bread NASDAQ PNRA The company did not appoint any directors that Jana proposed last month While the hedge fund appreciates the board overhaul and the operating experience of the new directors Jana wants more directors on the board with grocery industry experience like that of current board member Walter Robb according to the person familiar with the matter Jana declined to comment on the new Whole Foods board and operational plan Whole Foods new board chair Gabrielle Sulzberger praised the operating and retail experience of the new directors during the company s earnings call on Wednesday Sulzberger noted that the new board now has four women and nine former CEOs or CFOs These new directors are value creators and recognized leaders in their respective areas of expertise Sulzberger said Whole Foods shares were up 2 6 percent at 37 21 in afternoon trading In an analyst note Credit Suisse SIX CSGN said We see the moves as a step in the right direction but were disappointed by the lack of food retail experience among the new board members Credit Suisse rates the stock an outperform JPMorgan NYSE JPM which has a neutral weighting on the stock noted the company s new set of ambitious goals and said the key will be whether Whole Foods can accomplish them Whole Foods made numerous intelligent moves yesterday the key now will be execution the bank said in a research note Corporate battles with activists often end in a settlement where the company works with the investor to add new blood to the board in exchange for the hedge fund keeping quiet for at least a year That was not the case with Whole Foods announcement meaning Jana can still pressure the company openly and can nominate its four previously identified director candidates at next year s annual meeting Whole Foods said on its Wednesday call that it offered to appoint two of Jana s nominees for the board but the hedge fund balked at the offer
Presumably one option involves agitating for a sale if the company s value enhancement plan shows even a hint of sputtering said Don Bilson head of event driven research at Gordon Haskett |
JPM | Wells Fargo eyes return to mortgage deals shunned since crisis | By Dan Freed Reuters Wells Fargo Co N WFC the largest U S mortgage lender is hoping this year to sell bonds backed by mortgages without government guarantees for the first time since the 2008 financial crisis the head of the bank s consumer lending division said on Thursday More than 1 trillion worth of mortgages were packaged into such securities each year in 2005 and 2006 But investors lost their appetite after large volumes of risky subprime mortgages backing such securities went bad nearly bringing down the global financial system There s been many many years since Wells Fargo has participated in any kind of private label market Franklin Codel who runs Wells Fargo s consumer lending division told investors in a presentation Offerings of private label bonds backed by new mortgages without government backing have totaled less than 60 billion since 2009 according to Inside Mortgage Finance a trade publication This year one of our aspirations is to come back to the market with a couple of deals and we re taking a look at making sure we can structure those properly to try to test the market and see what we can do there to help bring confidence back Codel said Since the financial crisis mortgages that do not conform to standards set by the government or by quasi government entities Fannie Mae PK FNMA and Freddie Mac PK FMCC have been held in portfolio by banks like Wells Fargo Usually these are so called jumbo mortgages exceeding 427 000 in most parts of the United States Because banks take all the risk when they hold mortgages on their balance sheet borrowers typically pay a higher interest rate than if the loans could be pooled and sold to investors
Lenders that have done private label deals in recent years include JPMorgan Chase Co N JPM and Redwood Trust Inc N RWT |
JPM | Dubai government secures 3 billion financing for airports expansion | DUBAI Reuters The Dubai government said on Sunday that it had secured 3 billion in long term financing for the expansion of its airports The expansion is one of three multi billion dollar infrastructure projects that the emirate is planning to fund through debt together with the building of Dubai s World Expo 2020 exhibition site and an extension of Dubai s Metro system The funding will be used for the expansion and development of Dubai International Airport and Al Maktoum International Airport the emirate s new airport being developed on the edge of Dubai it said The facility signifies the first stage of a larger funding plan which will transform Al Maktoum International into the primary airport for Dubai serving up to 146 million passengers by 2025 it said The deal for which HSBC acted as financial adviser included a 1 63 billion seven year conventional loan and a 1 48 billion equivalent seven year ijara facility denominated in dirhams Ijara is a common lease based structure used in Islamic finance Twelve international and local banks acted as joint mandated lead arrangers and joint bookrunners They included Abu Dhabi Commercial Bank Abu Dhabi Islamic Bank Bank of China Citibank Dubai Islamic Bank First Abu Dhabi Bank HSBC Industrial and Commercial Bank of China Intesa Sanpaolo MI ISP JPMorgan NYSE JPM Noor Bank and Standard Chartered LON STAN Al Maktoum International is planned to become the main airport for Dubai as well as the home to Emirates Airline starting in 2025 The financing was raised by a consortium of Dubai state entities comprising the Department of Finance state owned fund Investment Corporation of Dubai and the Dubai Aviation City Corporation Dubai ruler Sheikh Mohammed bin Rashid al Maktoum in September 2014 approved a 32 billion investment to expand the emirate s new airport with the aim of handling up to 120 million passengers a year by 2022
Citing a source close to the situation Reuters reported in February that the facility carried a margin of 200 basis points across both the international and local tranches |
C | Former Rabobank traders convicted in U S over Libor rigging | By Nate Raymond and Brendan Pierson NEW YORK Reuters A federal jury found two former traders at Rabobank RABO UL guilty of fraud on Thursday in the first U S trial arising from a global investigation into manipulation of Libor the leading benchmark for pricing financial transactions around the world Anthony Allen Rabobank s former global head of liquidity and finance and Anthony Conti a former senior trader were convicted in district court in Manhattan on every count of conspiracy and wire fraud they faced The verdict marked a victory for the U S Justice Department which brought charges against the British citizens a year after the Netherlands based bank in October 2013 reached a 1 billion deal resolving related U S and European probes Today s verdicts illustrate the department s successful efforts to hold accountable bank executives responsible for this global fraud scheme Leslie Caldwell head of the Justice Department s criminal division said in a statement Allen 44 slumped over a table in court as the jury foreman read the verdict while Conti 46 held his head up Lawyers for both men said they planned to appeal This is just round one Michael Schachter Allen s lawyer said Tony Allen looks forward to pursuing all available options He is disappointed with the verdict GLOBAL INVESTIGATION Libor or the London interbank offered rate 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 The case was the first by the Justice Department to go to trial following global investigations into whether banks submitted artificial rate estimates to bolster profits on trading derivatives tied to Libor Those investigations resulted in charges against 22 people in the United States and United Kingdom and around 9 billion in regulatory settlements with financial institutions Their trial follows an earlier one in London involving yen Libor manipulation that led to the conviction of Tom Hayes a former UBS AG and Citigroup Inc N C trader who was sentenced in August to 14 years in prison Another trial is meanwhile ongoing in London for six former brokers accused of manipulating yen Libor rates They have pleaded not guilty Among the 13 people charged by the Justice Department were seven former Rabobank traders including Allen and Conti who earlier this year waived their right to extradition to fight the charges Prosecutors said Allen 44 and Conti 46 participated in a five year conspiracy at Rabobank to rig U S dollar and yen Libor rates in order to gain an unfair advantage trading derivatives linked to the rate Prosecutors relied on testimony by three former Rabobank traders who pleaded guilty as part of cooperation deals as well as emails and instant messages they sent at the time Libor was supposed to be an impartial market tool Paul Robson one of the traders testified But we were biasing submissions or shading it to help the traders he said Lawyers for Allen and Conti countered that while others at the bank may have been trying to rig Libor their clients had submitted honest rate estimates They argued prosecutors took documents out of context and that cooperating witnesses lied about their clients role in the scheme in hopes of getting lenient sentences Allen opted to testify in his own defense telling jurors he rarely was involved personally in submitting numbers used to calculate Libor and that he in those few instances ignored traders requests to bias the rate CAN T BE TOO OBVIOUS The jury of six men and six women included an architect a nurse practitioner and a T Mobile sales representative and delivered its verdict on the second full day of deliberations in the fourth week of trial Howard Wasserfall a retired letter carrier on the jury from Manhattan said jurors concluded the evidence showed they attempted to discreetly manipulate Libor If you have a scheme the only way the scheme can work is that it can t be too obvious he told reporters outside of court Post verdict Robson s testimony is expected to be the basis of a hearing before U S District Judge Jed Rakoff over whether the case should be dismissed on the grounds that the defendants rights against self incrimination were violated The defendants contend the case was tainted as Robson had before agreeing to cooperate with U S investigators reviewed Allen and Conti s compelled 2013 testimony to the U K s Financial Conduct Authority in a related probe As a result any information Robson provided U S authorities may have been influenced by reviewing Allen and Conti s testimony their lawyers contend The Justice Department rejects that contention Beyond Allen Conti and the three cooperators U S prosecutors have also brought charges against two other Rabobank traders including Paul Thompson who is facing extradition after being arrested earlier this month in Australia
The case is U S v Allen U S District Court Southern District of New York No 14 cr 272 |
C | ECB Fed ready for market jolts as they head on opposite policy paths | By Balazs Koranyi FRANKFURT Reuters The world s top two central banks accept they will face periodic market jolts as they move in opposite policy directions senior officials say with such risks inevitable given the hugely differing fortunes of the U S and European economies The European Central Bank and U S Federal Reserve which appear poised respectively to ease and tighten monetary policy talk to each other regularly but do not coordinate policy or try to guess what the other may do next the central bankers say The banks strategy is to factor in financial market moves that may result from their divergent paths without trying to counter them through monetary policy they say The ECB surprised markets last month by raising the prospect of easing as soon as December By contrast with the U S economy in a buoyant state the Fed delivered an unexpectedly hawkish message boosting the chance that it will raise rates next month after keeping them near zero for almost seven years Together these signals sent the euro down by more than 5 percent against the dollar in a matter of weeks and this is unlikely to be last sharp market move as a number of leading central banks act A Fed increase is likely to be followed by the Bank of England sometime next year as the British recovery gathers strength But growth is anemic in the euro zone and slowing sharply in China where the People s Bank of China is already easing policy The Bank of Japan and the Reserve Bank of Australia have also both flagged the potential for more easing Now we are going to enter a period of divergence an ECB Governing Council member said We re going into this with our eyes open It reflects the different stages in the cycle on different continents ECB Governing Council member Ardo Hansson also argues that such divergences are a fact of life The monetary policy of other jurisdictions is an external factor that we can t influence It s like the weather we factor it in but it s a given Hansson said It of course matters it s like the exchange rate it has an impact as a policy variable so you factor it into the outlook Another Governing Council member who asked not to be named said the euro s exchange rate had not been widely discussed at previous ECB policy meetings and there had been no attempt to manage currency rates Citigroup N C estimates markets have priced in 115 basis points of Fed rate increases between January 2016 and January 2018 Anything more than this very gradual course could cause some upset The risk is if the Fed lift off is quicker than now expected that could significantly increase market volatility and make it difficult for us to shrug off the Fed a third Governing Council member said YELLEN S COMMITTEE STYLE Sources close to the Fed said U S central bankers are reluctant to discuss policy with others because its upcoming decisions are far less certain under Fed chief Janet Yellen s committee style of decision making Officials also fear the consequences of making or discussing policy behind closed doors with foreign counterparts the sources said The Fed also factors exchange rate movements into its decisions However most U S foreign trade is invoiced in dollars so the currency s impact on the real economy is much less direct than in the euro zone and complaints from U S exporters about the dollar s strength have been muted Nevertheless Fed Governor Lael Brainard said the economy was feeling the dollar effect which has already tightened monetary conditions somewhat We have seen about 15 percent broad real appreciation in the exchange rate over the past year which is a drag on prices and exports she said We ve already seen by that measure some material tightening in the United States Brainard said on a recent visit to Frankfurt Germany s financial capital and home to the ECB Still the United States is approaching full employment a factor that warrants a rate increase regardless of what the ECB does Also the Fed has long prepared markets for the move so hesitation would be more damaging than acting If you wait too long you might end up having to raise rates at a faster pace than you want said a Bank of Japan policymaker who asked not to be named That may be more disruptive for markets than kicking off the rate hike circle early Fed and ECB officials talk regularly on the sidelines of Bank of International Settlements and G30 meetings but mostly to explain and discuss what is already public information sources said The conversations are often held by Fed Vice Chairman Stanley Fischer and ECB Board member Benoit Coeure central banking sources said ECB President Mario Draghi is also known to have a personal relationship with Fischer his professor at the Massachusetts Institute of Technology in the 1970s Reserve Bank of India Governor Raghuram Rajan says central banks should be talking to each other a lot more than they do now Often their policies are counterproductive especially when too many banks are easing at the same time and trying to reduce the value of their currencies he says You may try to depreciate your currency but what if somebody else is also depreciating their currency he said We can t all depreciate against each other therefore the net effect will be limited
The price of inaction can also be high If you stop doing it your exchange rate appreciates significantly and you get burnt on the way up if it gets really strong he said We may need more global not so much coordination but collective action |
MPC | Marathon Petroleum MPC Down 7 2 Since Earnings Report Can It Rebound | A month has gone by since the last earnings report for Marathon Petroleum Corporation NYSE MPC Shares have lost about 7 2 in that time frame
Will the recent negative trend continue leading up to its next earnings release or is MPC 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 drivers First Quarter 2018 ResultsMarathon Petroleum reported weaker than expected first quarter results on lower fuel margin and declining income from its retail division The company s earnings per share came in at 8 cents well below the Zacks Consensus Estimate of 14 cents Specifically refining margin of 10 58 per barrel decreased versus 11 65 a year ago However earnings improved from the year ago period s bottom line figure of 6 cents on the back of strength in Marathon Petroleum s midstream segment Marathon Petroleum s revenues of 18 984 million came below the Zacks Consensus Estimate of 22 390 million but improved 15 8 year over year Segmental PerformanceRefining Marketing Operating loss from the Refining Marketing segment was 133 million compared with 70 million in the year ago quarter The wider loss reflects assets dropdowns to its midstream subsidiary Total refined product sales volumes were 2 275 thousand barrels per day mbpd up from the 2 085 mbpd in the year ago quarter Moreover throughput improved from 1 708 mbpd in the year ago quarter to 1 905 mbpd Capacity utilization at 93 was up from 83 in the first quarter of 2017 Speedway Income from the Speedway retail stations totaled 95 million down 29 6 from the year ago period The segment results were impacted by decline in light product margins higher operating expense accelerated depreciation and reduced footfall at the stores due to multiple storms in the Northeast and Midwest markets Midstream This unit includes Marathon Petroleum s 100 interest in MPLX L P MPLX Research Report a publicly traded master limited partnership that owns operates develops and acquires pipelines and other midstream assets Segment profitability was 567 million up from 309 million in the first quarter of 2017 Earnings were buoyed by strength in volumes gathered processed and fractionated The unit was further aided by the addition of refining logistics assets and fuels distribution services from sponsor Marathon Petroleum Total ExpensesMarathon Petroleum reported expenses of 18 544 million in first quarter 2018 15 2 higher than the year ago quarter Capital Expenditure Balance Sheet Share RepurchaseIn the reported quarter Marathon Petroleum spent 748 million on capital programs 64 on the Midstream segment As of Mar 31 the company had cash and cash equivalents of 4 653 million and total debt of 17 258 million with a debt to capitalization ratio of 46 During the quarter under review Marathon Petroleum returned 1 550 million of capital to shareholders including 1 330 million in share repurchases
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates There have been two revisions higher for the current quarter compared to three lower Marathon Petroleum Corporation Price and Consensus VGM Scores
At this time MPC has a poor Growth Score of F Its Momentum is doing a lot better with an A The stock was allocated a grade of B on the value side putting it in the top 40 for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Our style scores indicate that the stock is more suitable for momentum investors than value investors
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions looks promising Notably MPC has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
MPC | Andeavor To Expand Presence In Mexico Aims Cost Reduction | Andeavor NYSE ANDV recently announced its intention of constructing a new terminal for the refined products at the Mexican state run electric utility Comisi n Federal de Electricidad s CFE Rosarito storage facility located in the Baja California state Per the terms of Andeavor s deal with CFE s subsidiary CFEnerg a the former will take lease of the site for a long term where it plans to build the facility
Andeavor expects to invest 100 million in the project which will enable the company to reduce its import expenses With the completion of the project Andeavor will bring fuel directly in the Baja California state from its West Coast refineries
Moreover the facility is expected to support the growth of its ARCO branded stations Notably the company forayed into the Mexican market last year and currently has around 67 stations in the states of Baja California and Sonora This move is line with the company s organic growth strategy
The San Antonio TX based downstream company expects the move to increase its hold in the growing market of Mexico It complements the company s strong processing capacity of 1 2 million barrels a day through its 10 refineries Andeavor which is set to be by Marathon Petroleum NYSE MPC in a 23 3 billion deal anticipates the project to take almost two years to complete once it receives the mandatory permits
Price Performance
Andeavor has gained 61 9 in the past years compared with 13 9 rise of its
Zacks Rank and Stocks to Consider
Currently Andeavor carries a Zacks Rank 3 Hold
Investors interested in the Energy sector can opt for some better ranked stocks in the same space like Delek US Holdings Inc NYSE DK and HollyFrontier Corp NYSE HFC each sporting a Zacks Rank 1 Strong Buy You can see
Brentwood TN based Delek is an energy company The company s top line for 2018 is anticipated to improve 39 2 year over year while its bottom line is expected to increase 230 2
Dallas TX based HollyFrontier is an independent refining company For 2018 its bottom line is likely to be up 145 3 In the last four reported quarters the company delivered an average positive earnings surprise of 41 3
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 |
MS | European stocks fall as automakers weigh DAX sheds 0 45 | Investing com European stock markets were broadly lower on Tuesday as shares in automakers led declines while U S futures indexes pointed to a lower open on Wall Street During European morning trade the EURO STOXX 50 slipped 0 35 France s CAC 40 shed 0 3 while Germany s DAX 30 slumped 0 45 Shares in European automakers performed poorly amid concerns lagging recoveries in many developed economies would weigh on sales and earnings Europe s largest automaker Volkswagen tumbled 3 2 rival Daimler saw shares drop 1 65 while BMW slumped 2 3 French automakers Renault and Peugeot declined 0 9 and 1 respectively Shares of German supermarket operator Metro fell 2 5 after it said its first quarter net loss narrowed while sales were flat On the upside shares in semiconductor manufacturer Infineon Technologies climbed 2 7 after it said second quarter net income soared 86 from a year earlier to EUR572 million Revenue in the quarter rose 27 to EUR994 million In London the FTSE 100 returned to action after a long holiday weekend edging 0 2 higher as shares in hedge fund manager Man Group jumped 3 2 The group announced the successful launch of an open ended fund in Japan which has raised USD1 5 billion thus far Meanwhile shares in cigarette maker Imperial Tobacco added 2 1 after Morgan Stanley recommended buying the stock calling it the cheapest stock in global tobacco However shares in raw material producers were broadly lower after oil and metal prices retreated from multi year highs Mining giant BHP Billiton saw shares slip 1 05 silver producer Fresnillo sank 1 while gold producer Randgold Resources slumped 2 9 The outlook for U S equity markets meanwhile was downbeat ahead of earnings reports from credit card giant Mastercard and media group CBS Pharmaceutical major Pfizer was also due to release earnings later in the day The Dow Jones Industrial Average futures pointed to a decline of 0 21 S P 500 futures indicated a drop of 0 25 while the Nasdaq 100 futures dipped 0 2 Later in the day the U S was to release government data on factory orders |
MS | CORRECTED EXCLUSIVE UPDATE 2 Glencore sets IPO price range to raise 10 bln sources | Corrects to clarify 10 bln figure is based on mid point of
price range Removes reference to earlier guidance in first
paragraph
Glencore sets IPO price range at 480 580 pence per share
Offering could raise 10 bln at mid point excluding
greenshoe
Cornerstone investors to buy 3 1 bln of deal
Conditional share trading debut set for May 19
Adds detail background byline
By Elzio Barreto
HONG KONG May 4 Reuters Glencore International AG
has set the price range for its London and Hong Kong
IPO as the company looks to raise 10 billion at the mid point
of the range three sources told Reuters on Wednesday
The world s largest diversified commodities trader set a
price range of 480 to 580 pence per share for the IPO which
would value Glencore at 48 58 billion before the proceeds of
the IPO were included said the sources with direct knowledge of
the plan
They declined to be identified because the terms were not
yet public
Switzerland s Glencore seeking to boost its firepower for
deals amid a boom in commodity prices is due to release a
prospectus for the offering with indicative price range and
other details later on Wednesday Company officials declined to
comment ahead of the publication of the prospectus
Research from two banks underwriting the commodity trader s
IPO last month said it is already worth as much as 69 billion
with its earnings set to double in two years ID nLDE73F092
The long awaited listing which could be London s largest to
date will push Glencore into the public eye and will turn
publicity shy executives including chief executive Ivan
Glasenberg a former coal trader into paper billionaires
CORNERSTONE S LINE UP
The company could raise up to 8 billion from the sale of
new shares in a primary offering while its partners planned to
raise about 2 billion in a secondary sale the sources said
That would value Glencore at about 8 to 10 times estimated 2011
earnings based on the average forecast of the three banks
underwriting the IPO
The base offer excludes a 15 percent or 1 5 billion
over allotment option Including that greenshoe over allotment
option Glencore had been aiming to raise up to 12 1 billion
according to its intention to float document release last month
ID nL3E7FE03M
Twelve cornerstone investors had agreed to buy 3 1 billion
worth of Glencore stock just above 30 percent of the total one
source said Such investors back many Asian listings committing
to take large guaranteed stakes and hold them for a minimum
period of time
Abu Dhabi s International Petroleum Investment Co IPIC
will be the biggest cornerstone investor with Government of
Singapore Investment Corp GIC U S fund manager
BlackRock Inc and Credit Suisse Group AG and
UBS AG private banks also taking part of the group
Glencore has also signed up hedge funds Och Ziff Capital
Management Group Eton Park and York Capital
Founded in 1974 by trading sensation and later U S fugitive
Marc Rich Glencore has until now held on to a fiercely prized
tradition of public discretion so investors will be poring over
its prospectus for details on the company from its existing
investors to its risks and details on its trading
Glasenberg has never disclosed exactly how much of the firm
he owns though he is expected to be shown in the prospectus to
be the top shareholder Reports have put Glasenberg s stake as
high as 15 percent It will also become clear whether former
Chairman Willy Strothotte retains a major stake or not
Investors polled by Reuters said Glencore may pay a high
price for its privacy with its low profile as corporate
governance fears damage its ability to achieve a top price for
its stock ID nLDE73J1CG
The prospectus is also expected to include details of
Glencore s trading in the first three months of the year along
with details of gross fees paid to its advisers the first
indication of how much the commodities giant will pay its
bankers in one of the biggest paydays for the sector this year
Citigroup Credit Suisse and Morgan Stanley are
the joint global coordinators for the offer
Conditional trading of shares is set to begin on May 19
according to a term sheet seen by Reuters last month
Glencore is expected to be fast tracked into the FTSE 100
bluechip index at close of business on the first day of
trading given its size and share of the FTSE all share index
It will be the first company in 25 years to make the leap and
only the third ever after BT and BG
1 0 599 British Pounds
Additional reporting by Denny Thomas and Fiona Lau in HONG
KONG and Clara Ferreira Marques in LONDON Editing by Chris
Lewis and Lincoln Feast |
MS | UPDATE 8 Glencore 11 bln IPO to make billionaires of bosses | Glencore sets IPO price range at 480 580 pence per share
Glencore targets gross proceeds of 10 bln pre greenshoe
Cornerstone investors to buy 31 percent of total offer
Conditional share trading debut set for May 19
Updates with details from full prospectus
By Kylie MacLellan and Elzio Barreto
LONDON HONG KONG May 4 Reuters Glencore Chief Executive
Ivan Glasenberg could be worth 10 billion after the commodities
trader makes its debut later this month in a record public
offering valuing the commodities group at some 60 billion
Glasenberg a publicity shy former coal trader was known to
hold the largest slice of Glencore but his precise holding and
corresponding paper wealth was unclear until Wednesday s bumper
1 637 page prospectus detailed his stake of 18 1 percent
The 54 year old s stake will drop to 15 8 percent after the
IPO but he will remain the largest holder with a paper fortune
that will propel him into the ranks of the world s richest
Other top shareholders include Daniel Mate 47 and Telis
Mistakidis 49 the co directors responsible for zinc copper
and lead They each own 6 9 percent before the IPO falling to 6
percent after the offering
Glencore the world s largest diversified commodities
trader is seeking a strong debut for the share offering
capping planned proceeds at 11 billion and placing a third of
that with key investors led by Abu Dhabi it said on Wednesday
Glencore set a 480 to 580 pence per share price range for
the London initial public offering IPO That values it at 36 5
billion pounds 60 billion at the mid point which is below
the price some analysts say the company is worth and was seen
as an attempt to leave something on the table
It s smart for investment bankers to be conservative in
their pricing so as not to disappoint too many people John
McGloin at Collins Stewart said
But institutional investors may take some convincing
The key thing Glencore needs to bear in mind is yes they
have an interesting model but not everyone has bought into the
idea of how the business is run a portfolio manager at a UK
investment company said
To be pricing Glencore over 55 billion is way out of line
I would not buy that
Another UK equities investment manager added the IPO was
priced to go This is a very strong commercial operation
there s no question about that the only question is the timing
in the cycle which is uncertain Nobody knows
PREPARING FOR DEALS
Glencore which is planning a dual London and Hong Kong
listing said on Wednesday it was looking to raise gross
proceeds before fees and other costs of around 10
billion That is before a 10 percent greenshoe or
over allotment option which can be sold if there is demand
The listing will boost Glencore s firepower for deals amid a
boom in commodity prices but will also push it into the public
eye after 37 years as a discreet private company
Glencore which has pursued an opportunistic but lucrative
acquisition strategy said in the prospectus it would continue
to seek deals to strengthen its core physical marketing
activities and also detailed talks to buy a stake in an alumina
refinery and manganese mining operations
But it made no mention in the document of plans for Swiss
miner Xstrata in which it has a 34 percent stake and with which
it is widely expected to merge That would put a deal at least
months away
Glencore s estimate of its future market capitalisation puts
the company just above the mid point of a wide 45 to 73
billion value implied in its intention to float last month The
mid point of analyst research was around 60 billion though
that excludes proceeds from the offering
We could have gone out with a much higher price range
Glencore knows a sensible price range is needed a source
close to the deal said
Glencore said it had struck agreements with cornerstone
investors who will take up around 31 percent of the total
offer one of the largest cornerstone books to date A separate
term sheet reveals Abu Dhabi s IPIC Aabar will be the largest
cornerstone investor committing 850 million to the IPO
Singapore has agreed to invest 400 million and BlackRock
Inc 360 million while other investors include Credit Suisse
Private Bank and Och Ziff have each agreed to buy 175 million
worth of shares
The source close to the deal said the cornerstones were
oversubscribed with not every early investor getting the full
allocation they had requested
Holders of Glencore s 2009 convertible bond including the
Government of Singapore BlackRock and China s Zijin Mining
will hold 5 5 percent of the post IPO firm They will have made
a total profit of more than 1 billion in under two years
BANK PAYDAY
Glencore confirmed it is looking to raise around 7 9
billion by selling new shares while its partners plan to raise
about 2 1 billion to pay off a tax bill linked to the IPO
That would value Glencore at about 8 to 10 times estimated
2011 earnings based on the average forecast of the three banks
underwriting the IPO
Founded in 1974 by trading sensation Marc Rich Glencore has
until now held on to a fiercely prized tradition of discretion
As a result investors will scour the prospectus for details
ranging from its existing investors to risks and trading
Remuneration has also been a closely guarded secret
Wednesday s prospectus shows Glasenberg will be paid 925 000
pounds a year and will be entitled to a bonus of up to twice
that amount Simon Murray will be one of the best paid FTSE
non executive chairmen with annual fees of 675 000 pounds
The prospectus also showed the commodities giant s banks
will share a potential fee pool of 275 million the biggest in
at least a decade for a European listing
Citigroup Credit Suisse and Morgan Stanley are the joint
global coordinators for the offer
In its release on Wednesday Glencore said it had appointed
an extra 14 banks to lower ranking roles boosting the syndicate
disclosed last month and taking the total to 23 institutions
Conditional trading is set to begin on May 19
Additional reporting by Quentin Webb Sarah Young Julie
Crust and Chris Vellacott in London Elzio Barreto Denny Thomas
and Fiona Lau in Hong Kong Editing by Alexander Smith and Mike
Nesbit
1 6072 Pounds |
MS | UPDATE 2 UK regulator approves Baltic ship futures screen | Screen still to gain support from majority of brokers
Swiss Singapore regulators give provisional approval
Updates with further comment detail background
By Jonathan Saul
LONDON May 4 Reuters The Baltic Exchange has won UK
regulatory approval to run a platform for centralised electronic
trading of dry freight derivatives which will go live shortly
with support from some brokers the exchange said
Freight forward agreements FFAs which allow a buyer to
take a position on freight rates at a point in the future are
not currently traded on an exchange
The Baltic said on Wednesday the Financial Services
Authority FSA had authorised subsidiary Baltic Exchange
Derivatives Trading Ltd BEDT to run a multilateral trading
facility for the screen service called Baltex
We are pleased to have finally received the FSA s approval
and Baltex will be opening for business very soon Baltic
Exchange Chief Executive Jeremy Penn said in a statement
Of eight brokers that now trade dry freight derivatives
three have signed up for Baltex a market source said
I believe FFA brokers will join this initiative based on
preparatory work and agreements being put in place between
brokers and principals the source said Some brokers are more
proactive than others
Plans for central electronic trading have been held up as
FFA brokers fearing a loss of commission business in this niche
market have objected to an FSA regulatory requirement that
would take away fees that brokers had received in every trade
We are optimistic of support at the start from at least
some of the brokers Penn told Reuters It is very
disappointing to the extent that we have not been able to build
a real consensus of support yet amongst the brokers We do think
it will change over time
Janet Sykes chair of the dry FFABA an association which
represents the views of freight derivatives brokers said it was
aware of the basis that the FSA had granted approval for Baltex
We continue to have a dialogue with the Baltic in the hope
that we can find a way forward in the future that is
satisfactory to everyone she told Reuters
Sykes who is also head of marketing at Clarksons Securities
Ltd one of the biggest freight derivatives brokers said it had
not signed up yet for the screen
TRANSPARENCY
The FFA market which began in 1985 grew to an estimated
value of 130 150 billion in 2008 before the financial crisis
The value of dry transactions fell to around 27 billion last
year and a lower value is expected this year in a weaker
market
The advisory Freight Market Information Users Group
FMIUG whose members include Cargill Morgan Stanley and BHP
Billiton said in February Baltex was moving too slowly and that
rivals could launch a platform
I welcome today s announcement In view of the changing
regulatory environment and the increasing needs for transparency
in the financial realm Baltex can help the freight community in
living up to these challenges FMIUG dry bulk chairman Stefan
Albertijn told Reuters
By launching Baltex the shipping community also makes sure
that it retains ownership of this market he added
Penn said the screen would go live in a matter of weeks We
are optimistic that we can build liquidity pretty quickly
The screen will provide live FFA prices and will support
straight through processing to international clearing houses
CME LCH NOS and SGX The transaction s clearing status will be
displayed in real time the Baltic Exchange said
Baltex also has provisional approval from the Swiss
Financial Market Supervisory Authority and Monetary Authority of
Singapore subject to receipt of letters to them from the FSA
said Paul Over chairman of the BEDT subsidiary and
authorisation from other jurisdictions is expected in the coming
months
Editing by Jane Baird |
MS | GSK CEO says no short term plan to divest HIV unit | No immediate spin off on horizon for ViiV Healthcare
Joint company established with Pfizer in 2009
By Ben Hirschler
LONDON May 5 Reuters GlaxoSmithKline has no immediate
plans to spin off an HIV drug company created in 2009 with
Pfizer though it is open minded about the unit s long term
position GSK s chief executive said on Thursday
There s nothing in the short term that we ve got planned
We re very happy with what we ve got at the moment and we re
focused on making it work Andrew Witty told reporters after
the company s annual shareholder meeting
Speculation that the two drugmakers might launch an initial
public offering IPO for their ViiV Healthcare business
which is 85 percent owned by GSK has increased recently as
new Pfizer boss Ian Read considers divesting some operations
Read said on May 3 he would provide rough outlines by the
year s end on what Pfizer might sell or spin off
The creation of ViiV in November 2009 marked an unusual drug
industry collaboration because of the way in which it pooled GSK
and Pfizer s HIV AIDS operations into a new business
The current structure however could easily form a
stepping stone to a fully independent business which some
analysts believe might be better placed to take on Gilead
Sciences the market leader in HIV medicine
Analysts at Morgan Stanley said in a research note last
month they saw strong operational and valuation benefits if GSK
were to accelerate the potential demerger or IPO of ViiV
calculating such a move would enhance earnings growth at GSK
Witty said he was receptive to rethinking ViiV s role within
the group in the long term even though it was currently making
good progress
Let s see where we go in the future in terms of long term
corporate structure Obviously we ve got all sorts of options
he said As we ve demonstrated all over the place since I ve
taken over we re prepared to do what creates the best value for
shareholders we re very open minded
Editing by Jon Loades Carter |
MS | European stocks edge higher on earnings DAX up 0 5 | Investing com European stock markets were up on Wednesday as strong corporate earnings results and brokerage upgrades boosted market sentiment while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 climbed 0 3 France s CAC 40 added 0 15 while Germany s DAX 30 gained 0 5 Italian luxury goods producer Bulgari saw shares climb 0 8 after it swung to a first quarter profit and said it was optimistic about its growth prospects LVMH Moet Hennessy Louis Vuitton which acquired the company in early March saw shares rise 2 75 Shares in German automaker Porsche jumped 3 after Morgan Stanley upgraded the stock to overweight Across the sector Volkswagen saw shares gain 1 while French automaker Peugeot rose 1 5 Meanwhile uncertainty over Greece s debt situation continued to play on investors minds with an anti austerity strike planned Wednesday French Finance Minister Christine Lagarde told Le Figaro newspaper it is hard to see Greece returning to debt markets in 2012 and Europe would have to keep financing countries in difficulty to avoid a costly restructuring Shares in Societe Generale slumped 0 9 Spanish lender Banco Santander declined 1 while Italy s largest bank Unicredit fell 0 8 In London the FTSE 100 edged 0 15 lower as markets awaited the Bank of England s quarterly inflation report later in the day Meanwhile shares in HSBC Holdings slumped 1 1 after it announced plans to reduce costs by GBP1 5 billion to GBP2 1 billion by 2013 as part of a restructuring strategy On the upside retailer Marks and Spencer saw shares jump 3 1 after JP Morgan raised its rating on the stock to overweight and lifted its price target by 32 The outlook for U S equity markets meanwhile was upbeat ahead of earnings reports from Cisco Systems and department store operator Macy s The Dow Jones Industrial Average futures pointed to a modest gain of 0 06 S P 500 futures indicated an increase of 0 1 while the Nasdaq 100 futures added 0 12 Later in the day the U S was to publish official data on its trade balance |
MS | FTSE slides as growth concerns thump commodities | FTSE 100 falls 1 3 percent
Weaker commodity prices dent miners energy stocks
Technical indicators point to further weakness
By Simon Falush
LONDON May 12 Reuters A rout in commodity prices
triggered by a gloomy view of global economic growth pummelled
mining and energy stocks on Thursday which led a broad based
fall in Britain s top share index
Oil fell to below 111 per barrel after dropping
more than 5 percent on Wednesday Base and precious metals also
slid and equities followed suit as worries about the global
growth outlook intensified ID nLDE68E0P8
Growth indicators have been disappointing it looks like
there will be tighter monetary policy and QE 2 a second round
of quantitative easing is coming off which has led to a
rotation into defensive stocks from more cyclical stocks Ronan
Carr European analyst at Morgan Stanley said
By 1127 GMT the FTSE 100 was down 75 63 points or 1 3
percent at 5 900 37 after it fell 0 7 percent to close at
5 976 00 on Wednesday
The index is down 2 8 percent in May its sharpest monthly
fall since last July
Silver miner Fresnillo was the top faller off 5 2
percent hurt by a sharply lower silver price Miners
were the biggest drag on the index
Energy stocks were down reflecting the sharp falls in crude
overnight BP fell 1 percent
But the fall in oil prices supported airlines International
Consolidated Airlines Group added 1 percent
Emphasising the tough times ahead for the domestic economy
British industrial output rose much less than expected in March
which hurt sterling and bolstered gilt futures
though the internationally focused FTSE showed little reaction
to the data
3I group was the standout gainer jumping 5 8
percent after private the equity firm said asset value rose some
6 percent in the six months to 351 pence
DEFENSIVES OUTPERFORM
AstraZeneca was also a strong performer as UBS
lifted its rating on the drug maker to buy ahead of a ruling
on its heart drug Brilinta by U S health regulators
Other defensive stocks such as utilities were also buoyant
and analysts said their outperformance would be likely to last
In the recent bond market rally defensives have
outperformed Shore Capital said in a note
We suggest that this is likely to continue in the next few
months as we expect economic data to continue to indicate
slightly lower rates of growth than enjoyed in the 2010 as a
result of higher oil prices and monetary tightening especially
in the US
ICAP was a heavy faller off 4 8 percent after its
rival Tullett Prebon reported shrinking revenue
growth Tullett Prebon fell 6 percent
Technical indicators also painted a fairly bleak picture
The index had dropped below a 23 6 percent Fibonacci
retracement of its November low to the April high and below its
50 day moving average Recent price action suggests support
levels will be tested analysts said
Even though the move through last week s low at 5871 57
failed to trigger an acceleration to the downside it did weaken
support suggesting that traders will eventually pressure the
market through this price level said Enis Mehmet analyst at
Autochartist
Based on the short term range of 5509 00 to 6103 73
expectations are for the market to eventually test the
retracement zone of this range at 5806 36 to 5736 19
Additional reporting by Tricia Wright Editing by Jane
Merriman |
MS | PRECIOUS Gold steady silver falters under firm dollar | Euro slides to 6 week low after IMF chief arrest
Gold may retreat to 1 456 oz technicals
ID nL4E7GG02I
Coming up Euro zone finance ministers meeting
Add Shanghai exchange margin decrease updates prices
By Rujun Shen
SINGAPORE May 16 Reuters Gold held steady and silver
slid on Monday pressured by a firm dollar as fears about the
euro zone debt crisis deepened ahead of a meeting of the bloc s
finance ministers
The euro slid to a seven week low against the dollar after
IMF Chief Dominique Strauss Kahn a key voice in euro zone debt
talks was charged with sexual assault increasing uncertainty
on aid for Greece and other indebted euro zone countries
The dollar index a measure of the greenback s
strength against a basket of currencies advanced to its
highest since early April USD ID nN15215355 Spot gold
was little changed at 1 493 09 an ounce by 0625 GMT
after ending flat in the previous week Prices had fallen by
about 5 percent from the lifetime high of 1 575 79 hit on May
2
U S gold was nearly unchanged at to 1 493 10
Gold could reverse recent falls and stand above the
support level of 1 500 over the next week as safe haven
buying could resume on re ignited euro zone sovereign debt
concerns said Natalie Robertson commodities strategist at
ANZ
Euro zone finance ministers are likely to back a bailout
package for Portugal in a meeting later on
Monday ID nLDE74E0N7
Technical outlook on gold ID nL4E7GG02I
IMF chief charged with sex assault ID nLDE74E04O
Spot silver fell nearly 3 percent to 34 23 before
regaining some lost ground to 34 54 in thin and volatile
trade
U S silver fell by 1 3 percent to 34 58
The market is very quiet and waiting for fresh interest
said a Singapore based trader People are cautious and don t
want to put on a position and see the market move in the other
direction
Market participants are awaiting a speech by the U S
Federal Reserve chief Ben Bernanke later in the day in which
he was expected to repeat the stance that the Fed is in no rush
to raise interest rates
Gasoline and food prices pushed U S inflation to a
2 1 2 year high in April but there was little sign of a
broader pick up in consumer prices that would trouble the Fed
ID nN13177993
The Shanghai Gold Exchange China s main precious metals
bourse said it will lower the margin requirement on silver
forward contracts T D to 15 percent on Monday s settlement
from 18 percent after market volatility ebbed
Shanghai silver fell as much as 5 percent and
was trading at 7 575 yuan per kilogram
A decline in the prices of precious metals in recent weeks
fueled an exodus of investment interest in exchange traded
funds as well as in futures and options markets
Holdings in the SPDR Gold Trust the world s largest
gold ETF declined to a one year low of 1 192 253 tonnes on
Friday GOL ETF
Managed money sharply scaled back their bullish bets in
COMEX silver futures and options to the lowest level since
January as prices tumbled as much as 30 percent from a record
high near 50 an ounce U S regulator data showed on Friday
ID nN13278663 Rising global inflation uncertainties in
euro zone s fiscal conditions and ongoing unrest in the Middle
East and North Africa will likely to continue to drive nervous
investors to precious metals especially gold analysts said
With the outlook for PGMs platinum group metals
blemished by the disruption in the global auto sector supply
chain and silver continuing to trade in extremely volatile
conditions we expect investors will look increasingly toward
gold to hedge systemic financial risk said Morgan Stanley in
a research note Precious metals prices 0625 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1493 09 0 16 0 01 5 19
Spot Silver 34 54 0 74 2 10 11 92
Spot Platinum 1753 99 2 06 0 12 0 76
Spot Palladium 703 72 1 98 0 28 11 98
TOCOM Gold 3896 00 28 00 0 71 4 48 54313
TOCOM Platinum 4612 00 20 00 0 43 1 79 11609
TOCOM Silver 89 80 1 60 1 75 10 86 4576
TOCOM Palladium 1847 00 23 00 1 23 11 92 154
COMEX GOLD JUN1 1493 10 0 50 0 03 5 04 12508
COMEX SILVER JUL1 34 58 0 44 1 25 11 75 9543
Euro Dollar 1 4101
Dollar Yen 80 92
TOCOM prices in yen per gram Spot prices in per ounce
COMEX gold and silver contracts show the most active months
Editing by Ed Lane |
JPM | Slowing economy likely to ruffle Bank of England hawks feathers | By Andy Bruce LONDON Reuters Not yet is likely to be the main message this week from Bank of England officials pondering when to start signaling an interest rate hike after a sharp slowdown rekindling doubt about Britain s economy ahead of Brexit Most BoE rate setters who were wrong footed by the resilience of Britain s consumers in 2016 following the European Union referendum shock want more time to see how the economy copes before considering a change in record low rates All economists taking part in a Reuters poll predicted there will be no deepening of the split within the ranks of the Monetary Policy Committee when it announces its interest rate decision on Thursday Increasing inflation fueled by rising energy costs and the pound s post Brexit vote plunge has strained the BoE consensus recently and prompted some investors to speculate that a first rate hike in nearly a decade might come sooner than expected Michael Saunders who left Citi to join the Monetary Policy Committee in August hinted in April he might side with U S academic Kristin Forbes so far the sole supporter on the MPC for raising rates from their current level of 0 25 percent That was before official data showed Britain s economy lost a lot of its momentum in the first three months of 2017 when it expanded at a quarterly pace of 0 3 percent half the BoE s forecast Household spending the economy s main driver is starting to wilt as inflation pushes past the BoE s 2 percent target And while there are tentative signs that growth in exports might pick up some of the slack opinions differ over how much The Reuters poll however suggests Forbes will remain in her minority of one resulting in a 7 1 vote in favor of keeping rates at their record low The MPC is temporarily down to eight members following the resignation of Charlotte Hogg as BoE deputy governor after claims she overlooked a conflict of interest Economists also say the BoE is likely to trim its forecast for economic growth of 2 0 percent this year after the weak start to the year even if some private sector surveys have suggested a bit of a recovery in April TWISTS AND TURNS Governor Mark Carney s words will be scrutinized for any shift in his views In February he said Britain s economy faced twists and turns on its road to Brexit suggesting he remained in no hurry to consider higher interest rates He will probably strike a similar tone this week The key message is likely to be that all options are open The Bank retains an implicit bias to hike but is not in a great hurry to deliver said Alan Clarke head of European fixed income strategy at Scotiabank Sterling s recent appreciation which ought to help reduce inflation pressures in future has probably made it easier for Carney to push this view The pound has climbed above 1 29 since Prime Minister Theresa May called a national election for June 8 although foreign exchange strategists polled by Reuters expect it will slide back again toward 1 25 in the coming months GBP The election itself will have little bearing on the BoE s new forecasts and Carney is likely to remind investors and the British public that the next move in rates is likely to be up Since February Carney and his deputy Ben Broadbent have both highlighted the fact that the BoE s forecasts are based on a gradual increase in interest rates over the next few years something that is not yet reflected in financial markets Carney could draw attention to this if the MPC has become uneasy about market expectations for interest rates said JPMorgan NYSE JPM economist Allan Monks If there were a surprise next week it could come along these lines For example the MPC might instead indicate more clearly that most members agreed that a tightening in policy would be appropriate over the forecast horizon he said
This version of the story has been refiled to clarify lead to show slowdown is reason for BoE staying course |
JPM | Sinclair Broadcast to buy Tribune Media for about 3 9 billion | By Liana B Baker and Rishika Sadam Reuters Sinclair Broadcast Group Inc O SBGI said on Monday it would buy Tribune Media Co N TRCO one of the largest U S television station operators for about 3 9 billion giving Sinclair a greater foothold in big broadcast markets like New York and Chicago Shares of Tribune which operates 42 U S television stations rose 5 2 percent to 42 42 Sinclair shares fell about 3 percent to 35 90 A recent U S Federal Communications Commission vote to reverse a 2016 decision limiting the number of television stations some broadcasters can buy helped pave the way for the deal Sinclair may still have to sell certain stations such as St Louis and Salt Lake City in order to comply with FCC regulations Chief Executive Chris Ripley said on a conference call The sale will mark the end of a long road for Tribune whose name was long intertwined with the city of Chicago where the Chicago Tribune newspaper was founded more than 150 years ago The company once owned the Chicago Cubs baseball team The sale comes after a decade of turmoil for the company which was acquired by real estate mogul Sam Zell and then by private equity firms It emerged from bankruptcy in late 2012 and completed a spinoff of its newspaper assets in 2014 into a company now known as Tronc Inc O TRNC Wells Fargo NYSE WFC analyst Marci Ryvicker said the deal s biggest cost savings will come from retransmission fees which are the payments station groups like Sinclair make to broadcasters such as Fox CBS and NBC to carry their programming Tribune s portfolio would help expand Sinclair s already vast network of 173 stations in 81 U S markets and marks the largest acquisition for the Baltimore based company Sinclair also gets cable network WGN America and a stake in the Food Network a joint venture between Tribune and Scripps Network Interactive Inc O SNI In addition to Sinclair Twenty First Century Fox Inc O FOXA and Nexstar Media Group Inc O NXST had considered an acquisition of Tribune Reuters has reported The combined company could have more leverage in negotiations with Fox since it will own a large chunk of Fox broadcast affiliates around the country The 43 50 per share offer represents a 26 percent premium over Tribune s closing price on Feb 28 a day before Reuters broke the news that Sinclair had approached Tribune about an acquisition Tribune stockholders will receive 35 in cash and 0 23 share of Sinclair stock for each Tribune share Sinclair will assume about 2 7 billion in debt in the deal which is expected to close in the fourth quarter
J P Morgan N JPM advised Sinclair while Moelis Co N MC and Guggenheim Securities advised Tribune |
C | Citi to set up unit to design mobile banking solution | Reuters Citigroup N C Inc s consumer banking unit said it would set up a unit Citi FinTech for designing a radically simple connected mobile banking solution Stephen Bird chief executive of the bank s global consumer banking unit said Heather Cox would head Citi FinTech
Cox was previously the chief client experience digital and marketing officer of the global consumer banking unit |
C | Rates Are Rising Because Of China Not Inflation | There has been a lot of angst in the markets as of late as interest rates have risen back to the levels last seen oh my gosh all the way back to last year Okay a bit of sarcasm I know But from all of the teeth gnashing and rhetoric of the recent rise in rates you would have thought the world just ended The chart below puts the recent rise in rates into some perspective You have to kind of squint to see it
While the bump in rates has been fastened to the recent election of Donald Trump due to hopes of a deficit expansion program read more debt and infrastructure spending which should foster economic growth and inflation it doesn t explain the global selling of U S Treasuries
For that answer we only need to look at one country China
It is important to understand that foreign countries sanitize transactions with the U S by buying treasuries to keep currency exchange rates stable As of late China has been dumping U S Treasuries and converting the proceeds back into yuan in an attempt to stop the current decline The stronger dollar and weaker yuan increase the costs of imports into China from the U S which negatively impacts their economy This relationship between the currency exchange rate and U S Treasuries is shown below The exchange rate is inverted for illustrative purposes
The selling of Treasuries by China has been the primary culprit in the spike in interest rates in recent months and is likely quickly approaching its nadir As I will discuss in a moment with respect to the trade deficit there is little evidence of a sustainable rise in inflationary pressures The current push has come from a temporary restocking cycle following a very weak first half of the year economically speaking and pressures from higher oil health care and rental prices
As noted by Horseman Capital in their recent note to investors
Asia is the source of most global demand for commodities while also a huge supplier of goods into the US Asian currencies have followed US bond yields higher and lower since the 1990s as well as followed commodity prices higher and lower over that time There has been one time when this relationship has broken down In 2007 and 2008
Today we are seeing the reverse I believe The Chinese financial system is showing signs of stress Corporate bond yields are rising the Chinese Yuan is weakening and outflows are continuing In my view the Trump election has made a large Chinese devaluation more likely Mainland Chinese investors are desperately trying to get out of the Yuan and the People s Bank of China is trying to defend the value of the Yuan They are doing this by selling treasuries
This is shown the annual rate of change in U S bond holdings by China is rapidly approaching historical lows axis is inverted
The problem with this is that the more treasuries the PBOC sells the more yields are likely to rise putting more pressure on the yuan It seems to me that the PBOC is stuck in a doom loop But as I noted in my market view the PBOC is running out of options
In my view the macro model that I have been using to think about markets still looks valid despite recent moves The model indicates that it is impossible for countries that have engaged in QE to then normalize interest rates without causing financial crises with their trade partners Since 2013 we have had the taper tantrum devaluations in India Russia and Brazil which all helped to drive long dated treasuries to new lows Now the market is thinking the US will normalize rates and the second biggest economy in the world is struggling A rerun of 2007 8 is looking likely to me Russell Clark Horseman Global
Then there is simple issue that when virtually everyone is on the same side of trade in this case short Treasuries reversions tend to be rather abrupt As
Jamie McGeever over at Reuters posted a chart from Citigroup NYSE C that is very important Citi research shows speculators aggregate net short position in US Treasuries now at 5 standard deviations above normal meaning everyone is now on the same side of the trade short US Treasuries
With everyone piled into a short position on safe assets all we need is one crisis trigger to create the mother of all short covering rallies back into safe assets not just in the US but globally
But what kind of crisis might that be Well considering the plunge in the yuan and the pressures on China you might want to pay attention to the Shanghai index
Investors seem to have once again managed to fool themselves that geopolitics won t matter Be very careful with this one Not every problem can be solved with monetary policy And the response to every tweet won t always be an editorial Richard Breslow
Trade Doesn t Suggest Strong Levels Of Inflation Or Growth
I mentioned above that I wanted to discuss the trade deficit and the expectations of rising inflationary pressures While there are indeed EXPECTATIONS that inflation will be a problem in the future there is currently no evidence supporting those expectations currently
While there has been a small bump in prices of imports and exports which coincides with the bump in oil energy prices the trend of pricing power is still sorely negative
Importantly declines in import export prices to such a degree have been indicative of recessions in the past With the dollar rising which puts pressure on exports the recent bounce in pricing power is likely temporary and will push toward lower levels putting downward pressure on corporate earnings and economic growth
It is not just import export prices that are trending weaker but we are seeing the same weakness prevail in industrial production and capacity utilization While year over year rates have improved recently following an extremely weak 4th quarter last year the negative trend in production and utilization suggests little about a resurgence of economic activity which would foster a demand push inflationary rise
Just from an anecdotal view declines of this magnitude and duration have previously been more coincident with the onset of a recession than not
Inflation can be both good and bad Inflationary pressures can be representative of expanding economic strength if it is reflected in the stronger pricing of both imports and exports Such increases in prices would suggest stronger consumptive demand which is 2 3rds of economic growth and increases in wages allowing for absorption of higher prices That would be the good but unfortunately it is not the case
The dichotomy between expectations of inflation and its ultimate reality will likely soon be recognized
Rate Hike A Vote Of Confidence Really
So the Fed finally after more than a year of jawboning hiked interest rates But it was not the rate hike that was important but the commentary that went along with it According to Ms Yellen
YELLEN EXPECT ECONOMY WILL CONTINUE TO PERFORM WELL
YELLEN CURRENT FFR ONLY MODESTLY BELOW NEUTRAL RATE
YELLEN ECON OUTLOOK IS HIGHLY UNCERTAIN
YELLEN UNEMPL RATE TOUCH LOWER THAN SEEN IN PROJECTIONS
YELLEN RATE HIKE IS A VOTE OF CONFIDENCE IN THE ECONOMY
Really The rate hike was a vote of confidence in the economy This is irony considering the direction of growth since 2011 has been consistently BELOW expectations set by the Fed as shown by the median of their own forecasts versus reality
Of course one of the key comments was her outlook on employment when she stated
YELLEN LABOR MKT LOOKS LIKE IT DID BEFORE RECESSION
She is right it does This according to the Fed s own Labor Market Conditions Index
Historically speaking peaks in the 12 month average of the LMCI index have been coincident with declines in employment and the onset of weaker economic growth
While the Fed raised it s longer term interest rate forecast and projected three more hikes to the Fed Funds Rate in 2017 there is a strong probability this is the same wishful thinking they have had over the last two years
As shown in all the data above and the EOCI index below a broad composite of manufacturing service and leading indicators the current economic bounce is likely another in a series of temporary restocking cycles These cycles have been repeatedly witnessed after cyclical slowdowns in economic growth Furthermore as shown below with the broader economy operating at levels more normally associated with recessions than expansions there is little suggesting an ability to support substantially higher rates or generate inflationary pressures above 2
Which is why interest rates on the 10 year treasury have likely seen their peak currently and will be lower in 2017 as overly exuberant expectations are dragged lower by economic realities |
MPC | Crude Oil And Rig Counts 4 30 18 | Step Back
Oil prices are taking a step back on Monday as an increase in rig counts and a drop in supply in Cushing Oklahoma and a perceived drop in Geo political risk premium are causing traders to take a step back The U S oil rig count increased by 5 rigs last week as U S producers are responding to higher prices and demand but the real reason for weakness in oil may have been the fact that refinery maintenance is slowing the ravenous U S appetite for crude oil temporarily Private forecasters are calling for a sizable 700 000 barrel plus increase in Cushing oil supply this week even as overall crude gas and diesel supply should fall
The other reason is potential progress with North Korea The New York Times reported that Kim Jong un said he would abandon his nuclear weapons if the U S promised not to invade North Korea a South Korean official said While there is much skepticism a peace deal with North Korea would be a major historic turning point in world history
France and Iran are trying to work on an agreement to save some type of nuclear deal even if the U S decides to back away from the Iranian nuke agreement The fact that Iran is talking could ease the fear premium of what happens after the U S pulls out of the deal
Yet despite Monday s weakness oil is still in very good shape Global demand is rising and U S demand is strong against a backdrop of uncertain production issues While U S shale output continues to rise production outside of the U S falters Venezuela is collapsing and now there is plunging output in Angola as well Bloomberg reports that Angola once Africa s biggest crude producer is suffering sharp declines at underinvested offshore fields with output dropping almost three times as much as the nation pledged in an accord with fellow OPEC members With the losses set to accelerate a shipping program seen by Bloomberg News shows crude exports will fall in June to the lowest since at least 2008 the cartel risks tightening supply too much
Corn is king China trade war fears are easing and that is a good thing for farmers that saw a big pop in grain prices as well as surging demand for their products That includes U S ethanol the subsidized built market The Energy Information Administration reports that the United States exported nearly 1 4 billion gallons of fuel ethanol in 2017 surpassing the previous record of 1 2 billion gallons set in 2011 U S imports of ethanol in 2017 increased compared with 2016 but remained relatively small at 77 million gallons resulting in the United States being a net exporter of ethanol for the eighth consecutive year
The United States has seen continued growth in fuel ethanol exports over the past eight years as increases in both corn production and ethanol production capacity have outpaced domestic fuel ethanol consumption U S fuel ethanol was exported to 35 countries in 2017 but more than half of all exported fuel ethanol went to Brazil and Canada
Refiner madness It is a great time to be a refiner and that means big deals The Wall Street Journal reports that Marathon Petroleum NYSE MPC to buy Andeavor for More than 20 billion The Journal writes that the cash and stock deal which values Andeavor at about 150 a share is expected to be announced Monday That would be a roughly 23 premium over Andeavor s closing price Friday after the stock surged about 50 in the past year Marathon based in Findlay Ohio is the second largest refiner in the U S according to its website Marathon branded gasoline is sold in 20 states and its Speedway unit owns the nation s second largest convenience store chain It also owns a midstream master limited partnership with about 11 000 miles of crude oil and light product pipelines Andeavor based in San Antonio and formerly known as Tesoro operates 10 refineries in the western U S with total capacity of more than 1 2 million barrels a day Part of the rationale of the deal centers on the companies complementary footprints with Marathon in the East and Andeavor in the West regulatory approval could be easier to win The deal is expected to produce 1 billion of synergies people familiar with the matter said
Natural gas has fought off cold but is there a spring in our future Andrew Weissman of ECB Analytics says that this has been the coldest April in 35 years adding more than 175 Bcf of demand for natural gas Notably however despite record demand the June contract never closed above 2 821 MMBtu and relinquished all its gains for the month late last week This weak performance is a sign of the strength of bearish sentiment Over the next three weeks weather driven demand will fall to its lowest point of the year potentially leading to record injections As this occurs the June gas contract is likely to drop to 2 61 2 68 if not lower With colder than normal weather firmly in the rearview mirror falling springtime power demand across the Midwest and Northeast is likely to exert considerable downward pressure on regional day ahead electricity prices this week |
MPC | Merger Of Two Independents To Create Largest U S Refiner | An April 30 2018 research note issued by Raymond James indicated that Marathon Petroleum Corp NYSE MPC has agreed to merge with Andeavor NYSE ANDV
The combined entity will possess 3 plus million barrels per day of refining capacity making it the largest domestic refiner with a diverse and expansive footprint wrote analyst Justin Jenkins Marathon s management estimates about 1 billion 1B worth of run rate synergies will be achieved within three years of the transaction s closing slated for H2 18
Under the agreement terms Andeavor shareholders will receive either 1 87 shares of Marathon for each Andeavor share or 152 27 per share subject to a maximum 15 cash component 3 5B explained Jenkins
Raymond James views the proposed merger as positive Strategically we believe the deal makes sense by adding geographic diversity and importantly adding growth and return enhancement opportunities in the key retail and midstream segments Jenkins noted We project accretion from today s deal in 2019 of nearly 9
Marathon has a history of creating value by improving refining returns growing the higher value Speedway segment and unlocking value at MPLX its master limited partnership Jenkins said We think this only continues with the addition of Andeavor s asset base
Also in the research note Jenkins reviewed Marathon s Q1 18 numbers which were a miss but inconsequential to the Andeavor deal Earnings per share was 0 08 below Raymond James and consensus estimate of 0 15 The shortfall was mostly due to underperformance in the refining segment which posted a 133 million 133M operating loss versus an expected 44M
Raymond James remains bullish on its thesis for Marathon For 2018 and beyond Marathon is set to benefit from synergy upside a strengthened refining suite that sits well positioned for IMO 2020 and robust opportunities in both the higher value Speedway and midstream segments Jenkins purported
He reiterated his firm s Strong Buy rating and 90 per share target price on Marathon The refiner s stock is currently trading at around 76 50 per share
Disclosure
1 Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor She or members of her household own securities of the following companies mentioned in the article None She or members of her household are paid by the following companies mentioned in this article None
See full legal |
MS | UPDATE 1 MUFG to gain Y200 bln converting M Stanley shares | Adds detail
TOKYO April 22 Reuters Mitsubishi UFJ Financial Group
will post a gain of about 200 billion yen 2 4
billion from converting preferred shares in Morgan Stanley
to ordinary shares a senior company executive said
Friday
The conversion will not take place until at least July MUFG
Deputy President Nobuyuki Hirano said
The Japanese bank said Thursday said it had agreed to
convert its 7 8 billion preferred stake in Morgan Stanley
into 385 million shares of common stock It will give
MUFG a 22 4 percent ownership stake in the U S financial
company
Morgan Stanley s joint venture in Japan with MUFG also said
Thursday it will lose nearly 2 billion after its fixed income
traders took market positions which were larger than its
financial fitness and then made wrong bets
Mitsubishi UFJ Morgan Stanley Securities which is 60
percent owned by Japan s MUFG and 40 percent by the Wall Street
firm will as a result post a net loss of 145 billion yen for
the year ended March ID nL3E7FL0AX
1 81 845 Japanese
Yen
Reporting by Isabel Reynolds Editing by Chris Gallagher |
MS | UBS client flows seen up focus on investment bank | Q1 net profit seen sliding 21 percent to 1 742 bln Sfr
Q1 wealth management net new money seen at 7 9 bln Sfr
Due to report Q1 earnings at 0445 GMT
By Emma Thomasson
ZURICH April 26 Reuters UBS is set
to report on Tuesday it attracted the most client money for its
wealth management arm since the financial crisis began but its
investment bank might still disappoint
Switzerland s biggest bank should see inflows of 3 9 billion
Swiss francs 4 39 billion at its core wealth management unit
in the quarter after they were flat the previous three months
and following continued big outflows in the first half of 2010
Clients pulled nearly 400 billion francs from the world s
second largest wealth manager in recent years after UBS was
bailed out following huge writedowns on toxic assets and was hit
by U S charges that it helped wealthy Americans dodge tax
The Americas business is expected to attract around 4
billion francs of new money up from 3 4 billion francs in the
previous quarter as it rebuilds client trust after the tax
dispute forced it to hand account data to U S authorities
The bank has also been winning client cash in Asia and among
the ultra wealthy and Swiss customers but has continued to
bleed assets in Europe where neighbouring countries have chased
tax evaders hiding behind Swiss bank secrecy
Meanwhile UBS faces increasing scrutiny of its investment
bank turnaround plan after an exodus of top bankers and an
admission by Chief Executive Oswald Gruebel he underestimated
the challenge of reviving fixed income
European investment bank income in the first quarter is set
to rebound from a grim six months although a trading slump
sparked by the market turmoil in March will keep it far below
the stellar start seen last year
Revenues in fixed income currencies and commodities FICC
which accounts for over half investment banking income among
top tier players could decline by 5 percent in Europe in
2011 Morgan Stanley analysts predicted
We believe therestructuring is proceeding more slowly than
previously expected leading to slower growth in FICC trading
revenues and expect UBS has squeezed the cost base in order to
improve its cost income ratio Vontobel analysts said
At U S rival Morgan Stanley investment banking was the
biggest reason for a steep earnings decline in the first
quarter with fixed income trading the main source of that drop
UBS said in February it expected client inflows to
strengthen noticeably in 2011 but cautioned it did not expect
the investment bank to match a seasonally strong fourth quarter
result even though it expects some improvement in trading
Some analysts have said Gruebel will have to revise his
target for a pretax profit of 15 billion Swiss francs from 2012
but he said last month he would only review the figures once
there was more clarity on new capital rules
Gruebel has said stiff Swiss standards which the
government sent to parliament last week and could be approved
this year could force UBS to move units abroad
UBS is not paying a dividend for 2010 or for some time to
come as it retains earnings to meet the tough new requirements
UBS was forced to cut risky but potentially very profitable
proprietary trading in favour of client flow business after it
took huge losses in the financial crisis pushing it to take a
bailout from the Swiss government in 2008
1 8876 Swiss Franc
Editing by Jon Loades Carter |
MS | UPDATE 5 UBS sees money pour back as rebuilds trust | Q1 net profit 1 8 bln Swiss francs vs 1 74 bln forecast
Q1 wealth management net new money 11 1 bln francs
Analysts forecast inflows of just 3 9 bln francs
Shares up 5 7 percent
Adds CFO comment updates shares
By Emma Thomasson
ZURICH April 26 Reuters UBS looked to put the financial
crisis behind it on Tuesday with money pouring into its core
wealth management arm in the first quarter and its struggling
investment bank doing better than expected
Inflows of 11 1 billion Swiss francs 12 6 billion the
highest since the end of 2007 and outstripping forecasts
showed client trust was returning the Swiss bank said
Clients had withdrawn nearly 400 billion francs from the
world s second largest wealth manager in recent years after it
was bailed out following huge writedowns on toxic assets and was
hit by U S charges that it helped wealthy Americans dodge tax
UBS said it had had strong inflows in the Asia Pacific
region and emerging markets as well as from the ultra wealthy
although it continued to see outflows in Europe where countries
have been chasing tax evaders using secret Swiss accounts
Vontobel analyst Dirk Becker said the biggest positive was
the wealth management inflows This shows that UBS has now
left the crisis behind even in this division where client trust
and confidence were shattered
UBS expected sustainable inflows from now on outgoing chief
financial officer John Cryan told an analyst conference call
UBS shares were up 5 7 percent to 17 53 francs by 1045 GMT
while rival Credit Suisse which reports quarterly earnings on
Wednesday rose 2 1 percent to 39 66 francs compared to a 0 7
percent firmer European banking index
FIXED INCOME IN FOCUS
UBS reported a pretax profit of 835 million francs at its
investment bank up from 100 million the previous quarter
performing well versus its peers in fixed income where U S
rivals have struggled and in equities trading
But the bank did slip up in equity capital raisings
traditionally one of its strongest businesses after the
division was among the worst hit by departures including that
of global capital markets head Matthew Koder
Chief executive Oswald Gruebel s plans to turn around the
investment bank which made the massive losses that almost
felled UBS are under scrutiny after an exodus of top bankers
It was a decent result in investment banking which should
reassure after the headcount turbulence of the last few months
said Matthew Clark analyst at Keefe Bruyette Woods
UBS said it expected to see some improvement in parts of the
investment bank despite constraints imposed on some of the
fixed income currencies and commodities FICC businesses by a
focus on controlling risk It also noted the competition for
staff and base salary increases will increase costs
U S bank results showed fixed income profits falling from
an unusually strong first quarter of 2010 while Goldman Sachs
warned of layoffs if trading volumes do not pick up and said
investors are holding their money close
UBS said the disaster in Japan unrest in North Africa and
the Middle East and the ongoing euro zone debt crisis had
dampened usually strong first quarter client activity
The bank said it expected second quarter equity market
trading volumes to stay around the levels seen in the first
quarter which should support transaction based income in wealth
management and flow trading in the investment bank
It expects short term interest rates in the West including
Switzerland to remain low continuing to constrain interest
margins although wealth management s gross margin on invested
assets rose by 6 basis points to 98 basis points in the quarter
Florian Esterer of Swisscanto which holds more than 9
million UBS shares said the bank should benefit more than peers
from the shift from offshore to lower margin onshore business
Longer term we expect the margin headwind to be more of an
issue for Credit Suisse than UBS he said
REGULATORY PRESSURE ON TARGETS
Gruebel said the quarterly result was satisfactory but still
fell short of our overall ambitions
Sarasin analyst Rainer Skierka said the figures might
counter recent doubts in the market about Gruebel s mid term
target for a pretax profit of 15 billion francs including 6
billion from the investment bank
However even after a rebounding first quarter there is
still a long way to go especially in investment banking where a
high compensation ratio remains a hot topic Skierka said
CFO Cryan said UBS was not deviating from those targets
today but said the bank was carefully assessing the impact of
new regulation most notably on the capital intensive FICC
business although it was too early to say what it might do
Gruebel has said stiff Swiss capital standards which the
government sent to parliament last week and could be approved
this year could force UBS to move units abroad
UBS said it was monitoring the effect of new rules in
Switzerland Britain the United States and elsewhere on the
corporate structure and would take action when needed
UBS is not paying a dividend for 2010 or for some time to
come as it retains earnings to meet the tough new requirements
Additional reporting by Martin de Sa Pinto in Zurich Edward
Taylor in Frankfurt and Sarah White in London editing by
Alexander Smith
1 0 8843 Swiss franc |
MS | UPDATE 9 J J to buy Synthes for 21 6 billion | J J agrees to buy Synthes for 159 Swiss francs per share
Deal J J s largest buy to boost orthopaedics business
19 bln Swiss franc cash stock deal to close H1 2012
Has support of both boards
Synthes shares trade near flat J J shares fall 0 9 percent
Recasts lead adds details from conference call J J shares
By Katie Reid and Ransdell Pierson
ZURICH NEW YORK April 27 Reuters Johnson Johnson is
buying Synthes Inc the Swiss maker of screws and plates to fix
broken bones for 19 billion Swiss francs 21 67 billion
boosting its orthopaedic business in a major realignment of the
medical device sector
The U S healthcare group will pay 159 Swiss francs in cash
and stock for each Synthes share in a deal moving past a tide of
consumer product recalls and loss of patent protection for key
pharmaceutical products
J J s biggest ever acquisition is at a premium of 21 7
percent over Synthes s closing share price of 130 60 Swiss
francs on April 14 This was before takeover talk boosted the
Swiss group s share price
The acquisition which is expected to close in the first
half of 2012 but could be sealed earlier is backed by both
boards Synthes said on April 18 it was in talks with J J
Synthes which also makes artificial spine discs and has
benefited from ageing populations posted sales of 3 7 billion
in 2010
Orthopaedics is a large and growing 37 billion global
market and represents an important growth driver for Johnson
Johnson said Bill Weldon J J s chairman and chief executive
The deal is expected to have a modestly dilutive impact on
J J s adjusted earnings per share for 2012
Many analysts had expected a buy would instead lift profits
next year thanks to synergies and this disappointment weighed on
J J s stock
J J executives said there was little overlap between the two
companies and there would be few job cuts
Crucially the acquisition has the backing of Hansjoerg
Wyss who holds 40 percent of Synthes directly and another 8
percent through family trusts
CASH AND STOCK
Under the deal each Synthes share will be exchanged for
55 65 Swiss francs 63 48 in cash with the remaining 65
percent of the deal being paid for in J J stock
Shareholders will get up to 1 9672 J J shares for each
Synthes share but the ultimate value of the deal could
fluctuate depending on J J s share price and the exchange rate
of the dollar versus the franc
It is surprising the deal has been struck between cash and
shares The market consensus and our view was it would be all
cash so the quality of the take out is slightly lower than we
anticipated said Morgan Stanley analyst Michael Jungling
The take out valuation doesn t seem particularly demanding
It s a scarce asset and the acquisition makes J J the number
one in the world in orthopaedics Jungling said
At 1503 GMT Synthes shares were trading near flat at 146 40
francs 12 60 francs below the price J J is offering reflecting
the fact the deal is unlikely to close until next year there
could be anti trust issues and the value of the deal could fall
if J J stock weakens J J stock traded 0 8 percent weaker at
64 42
Kepler Capital Markets analyst Florian Gaiser also said he
felt the premium was not very high
The premium reflects the challenges to hand over
Synthes to a new owner who needs to fully respect the Synthes
culture and the tight relationship to the AO Foundation These
elements will limit the chances of the new owner to influence
the business and exploit synergies he said
J J will preserve Synthes s ties with the AO Foundation a
nonprofit Swiss group whose technology and surgeon training have
been a key part of the company s success
COUNTER BID UNLIKELY
The medical device sector has been consolidating as
companies seek economies of scale and new business areas but
analysts doubt anyone will want to take on J J with a
counter bid for Synthes
Matthew O Brien analyst at William Blair said J J may have
to divest some trauma assets to get regulatory clearance for the
deal but he said it was unlikely the group would sell to rivals
Stryker and Zimmer
J J said it did not believe it would need to divest products
to clear antitrust hurdles
There had previously been speculation J J which had cash
and short term investments of 27 7 billion at the end of 2010
was interested in buying British orthopaedics company Smith
Nephew Plc
Smith Nephew shares were trading 2 percent lower on the
news
Medical devices and diagnostics accounted for 40 percent of
J J s 61 6 billion in 2010 sales but the business has been hit
by competition and recalls in its hip and knee replacement unit
Goldman Sachs advised J J in connection with this deal
while Credit Suisse is advising Synthes
Additional reporting by Martin de Sa Pinto in Zurich Lewis
Krauskopf in New York and Jessica Hall in Philadelphia Editing
by David Cowell
1 8766 Swiss Franc |
MS | Coutts names new head of international arm | Chief exec retires as unit rebranded with Coutts name
Aim to expand internationally away from core UK market
LONDON April 27 Reuters The international arm of Royal
Bank of Scotland s Coutts private bank has recruited a new head
to replace Chief Executive Gerhard Mueller who is retiring
Alex Classen a former head of private wealth for Europe and
the Middle East at Morgan Stanley starts in his new role as
head of the international business at Coutts on May 2 a
spokeswoman said
In his new role he will report to the head of RBS s wealth
division Rory Tapner who joined the bank from UBS in August
Tapner recently embarked on a shakeup of the wealth
business seeking to make it less UK focused double in size and
use the historic Coutts brand for the international arm
The Zurich based international private bank is currently
called RBS Coutts and Mueller will join the board of directors
after stepping aside
Under the new order the bank is set to target a significant
expansion of client numbers in the Middle East eastern Europe
and Asia Tapner said in an interview last month
The bank plans to rebalance its mix of customers away from
the home British market of Coutts whose account holders include
Queen Elizabeth reducing the proportion of clients from about
60 percent British to about 40 percent
Reporting by Chris Vellacott Editing by Jon Loades Carter |
MS | UPDATE 2 Russian search engine Yandex seeks 1 bln Nasdaq IPO | Offering to consist of new and existing shares
To channel proceeds into technology infrastructure
May also fund deals for technologies teams or businesses
Adds further details
By Maria Kiselyova and Anastasia Teterevleva
MOSCOW April 28 Reuters Yandex Russia s most popular
internet search engine plans to raise up to 1 billion in an
initial public offering on Nasdaq it said on Thursday
The company said a portion of the shares will be issued by
its parent company Yandex N V and a portion will be sold by
existing shareholders
The IPO organised by Deutsche Bank Morgan Stanley and
Goldman Sachs comes just six months after a 1 billion London
float by rival Russian internet investing company Mail ru Group
Yandex intends to use the IPO proceeds for investments in
technology infrastructure particularly new servers and data
centers it said in a filing with the U S Securities and
Exchange Commission on Thursday
The company which generated 64 percent of all search
traffic in Russia in 2010 has yet to determine the number of
shares to be offered and the price range for the offering
Three financial market sources told Reuters earlier on
Thursday Yandex would begin pre marketing the IPO early next
week
Yandex s biggest shareholders are Baring Vostok Private
Equity Funds with a 23 89 percent stake and founders Arkady
Volozh and Ilya Segalovich with stakes of 19 77 percent and
4 14 percent respectively Roth Advisors with 6 42 percent and
International Finance Corporation with a 6 12 percent stake
The company made a net profit of 134 3 million in 2010 on
revenue of 439 7 million while operating costs and expenses
amounted to 270 million
Net income in the first quarter of 2011 was 28 8 million
it said and in March its yandex ru website attracted 38 3
million unique visits
Additional reporting by Olga Popova in Moscow and Jochelle
Mendonca in Bangalore Editing by Greg Mahlich |
MS | UPDATE 1 Macquarie H2 falls 3 pct flags better 2012 | H2 profit A 553 mln vs A 541 mln expected by analysts
Dividend 100 cents
Says expects higher 2012 earnings subject to market
conditions
Securities business profit contribution falls 70 pct on
year
Adds details of results quotes
SYDNEY April 29 Reuters Macquarie Group
Australia s largest investment bank reported a 3 2 percent fall
in second half net profit on Friday that slightly topped
expectations as market conditions improved and tipped a higher
result this year
Macquarie which used to be called the Millionaire s
Factory for its generous banker pay said subdued equity market
conditions continued to impact its securities business while the
value of deals completed in its investment banking business
rose
Overall we expect an improved FY12 result on FY11
However the FY12 result will be dependent upon market
conditions particularly for Macquarie Securities and Macquarie
Capital which are assuming better market conditions than FY11
Macquarie chief executive Nicholas Moore said in a statement
Macquarie which warned in February that its full year
profit may miss market expectations reported a net profit of
A 553 million in the second half versus A 571 million a year
ago
That compared with the Thomson Reuters I B E S estimate of
A 541 million
Profits were hit primarily by the equity trading driven
securities business Net profit contribution from the business
fell 70 percent over the year it said
Macquarie s earnings announcement follows sharp earnings
declines for bigger global rivals such as Goldman Sachs
and Morgan Stanley which were also roiled by falling
trading revenue ID nN21242223
The challenge for Macquarie s Chief Executive Moore is to
lift return on equity which is at a 10 year low by reallocating
capital to productive business and fend off calls for job cuts
as some investors feel the bank bulked up prematurely
The profit drop marks the fourth fall in five half year
reporting periods as global volatility and a transition from a
managed listed funds model to traditional investment banking
takes a toll
Full year net profit was A 956 million down 9 percent on a
year earlier Thomson Reuters I B E S estimates
Macquarie to report a net profit of A 1 25 billion in 2012
Amid volatile markets Macquarie has remained focused on
building its fixed income currencies and commodities business
into Asia as well as fund management and corporate asset
business that spans equipment to aircraft leasing
But with slipping profits the group is also facing calls to
trim its workforce to ensure top talent gets better pay The
group said it had 15 556 employees at the end of March up from
12 716 two years ago
The firm which runs an employee profit sharing plan that
pays more as earnings rise risks falling well behind main
rivals on pay hurting its capacity to compete Nomura said in a
report
Macquarie pays bankers an average of A 300 000 327 825 a
year or about 40 percent lower than global rivals the Nomura
report said adding the it would need to cut less efficient
staff to retain key talent
Macquarie said employment expenses rose a quarter during the
year and it expected to maintain the employee compensation
ratio
Its Marquee investment bank which has for years topped the
Australian investment bank league tables is slipping as top
deal makers retire or quit in an indication that lower than
expected bonuses are irking bankers
Thomson Reuters data shows it stands at No 4 in the
Australia M A league table so far in 2011 down one spot In
Asia it is in 10th position 5 notches below where it ended
2010
And that is reflecting on its stock Macquarie shares which
have seen only four annual falls in the past 14 years are down
5 7 percent so far this year compared to a 2 7 percent rise for
the broader index
1 0 915 Australian Dollars
Reporting by Narayanan Somasundaram Editing by Muralikumar
Anantharaman and Ed Davies |
MS | UPDATE 4 Macquarie eyes Europe buys flags 2012 profit rise | H2 profit A 553 mln vs A 541 mln expected by analysts
Signals worst may be over Dividend 100 cents
Says to eye buying businesses being sold by big Europe
banks
Shares rise as much as 2 pct
Says expects higher 2012 earnings subject to market
conditions
Adds comments from CFO interview updates shares
By Narayanan Somasundaram
SYDNEY April 29 Reuters Macquarie Group
Australia s largest investment bank forecast profit growth for
2012 and said it may look at buying trading and investment
banking businesses in Europe in a move to further cut its
reliance on the home market
An acquisition spree in the United States has lifted
contributions from that market to 30 percent of Macquarie s
revenues and cut Australia s contribution to 40 percent but the
European business has lagged with a 14 percent share
Macquarie which has A 3 billion 3 3 billion in surplus
capital that gives it room for acquisitions will eye buying
trading and investment banking businesses that may be hived off
by big banks in Europe its Chief Financial Officer told
Reuters ID nL3E7FT0XX
The bank on Friday unveiled its second
annual profit fall in three years but said it would not cut
staff an optimistic sign as it emerges from the worst downturn
in its trading history
Still the challenge for CEO Nicholas Moore is to lift the
return on equity now at a 10 year low by reallocating capital
to productive businesses while fending off calls for job cuts
with some investors feeling the bank bulked up prematurely
The bank said its equity trading driven securities business
that saw a 70 percent fall in annual profits and marquee
investment bank will perform better this year as markets revive
That initially boosted Macquarie shares as much as 2 percent
before they trimmed gains to end 0 7 percent higher at A35 16
amid some investor caution
I wouldn t yet ring the bell and say they have hit the
bottom said Paul Biddle at Celeste Funds
Management The results say if you are an
investor you sit but it still doesn t spur one to go and buy
The other divisions of lending asset finance funds and
fixed income and commodities would be up or broadly in line with
2011 it said Thomson Reuters I B E S estimates a net profit of
A 1 25 billion in 2012 versus A 956 million in 2011
Citigroup analyst Wes Nason said consensus estimates
appeared a touch optimistic for 2012 given first quarter M A
and equity underwriting activity in key markets
Consensus estimates assume notably faster growth rates for
Macquarie than for international peers he said
Macquarie s results follow sharp earnings declines for
bigger rivals such as Goldman Sachs and Morgan Stanley
which were also roiled by falling trading revenue
Macquarie shares which have seen only four annual falls in
the past 14 years rose as high as A 35 60 after the bank
delivered a higher than expected dividend and upbeat outlook
MOMENTUM PICKING UP
Macquarie said net profit in the second half fell 3 2
percent to A 553 million which compared with a Thomson Reuters
I B E S estimate of A 541 million
Improving market conditions helped achieve the beat and
Macquarie said business momentum was picking up and could lead
to a better result this year
The securities business saw its profits contribution fall 70
percent to A 175 million
Macquarie which used to be called the Millionaire s
Factory for its generous banker pay said subdued equity market
conditions were showing signs of improvement and the deal
pipeline in its investment bank was promising
The pipeline is definitely better than this time last year
We have signed more mandates than last year Chief Financial
Officer Greg Ward told reporters
Macquarie s investment bank which has for years topped the
Australian investment bank league tables is slipping as top
dealmakers retire or quit in an indication that lower than
expected bonuses are irking bankers
Thomson Reuters data shows Macquarie stands at No 5 in the
Australia M A league table so far in 2011 down two spots and
behind Deutsche Bank Barclays JPMorgan
and Goldman Sachs In Asia it is in 10th
position five notches below where it ended 2010
Macquarie seeking to transition from a managed
listed funds model to a traditional investment bank warned in
February that its full year profit may miss market expectations
It said the risk appetite of clients was improving though there
was quite a long way to go before normalcy returned
With slipping profits the group is facing calls to trim its
workforce to ensure top talent gets better pay The group said
it had 15 556 employees at the end of March up from 12 716 two
years ago
Macquarie pays bankers an average of A 300 000 a year or
about 40 percent lower than global rivals a Nomura report said
adding the it would need to cut less efficient staff to retain
key talent
1 0 915 Australian Dollars
Editing by Dhara Ranasinghe and Muralikumar Anantharaman |
JPM | JPMorgan to move hundreds out of London post Brexit | We are going to use the three banks we already have in Europe as the anchors for our operations says JPMorgan s NYSE JPM Daniel Pinto who heads investment banking We will have to move hundreds of people in the short term to be ready for day one when negotiations finish and then we will look at the longer term numbers The bankers will be move to offices in Dublin Frankfurt and Luxembourg in order to assure continued easy access to the EU Jamie Dimon has previously said the number to be moved out of the U K could eventually rise to 4K Now read Buy JPMorgan For Income |
JPM | Portugal breaks ranks as star euro zone bond performer | By Dhara Ranasinghe
LONDON Reuters In a major turnaround Portugal has emerged as the year s best performing euro zone bond market outside little traded Greece helped by its improving economy and shrinking budget deficit and by the fading threat of a break up of the bloc
Benchmark 10 year Portuguese bonds have returned just over 4 percent so far this year while returns on almost all their euro zone peers are negative according to Thomson Reuters data Chart
Only Greek government debt the best performing euro zone bond investment last year but an illiquid market held by few investors has provided a higher return this year
For Portugal the outperformance marks a departure from the southern European borrowers with which it usually moves
It is also a sea change from late 2016 when Portuguese debt was battered by worries about a ratings downgrade that could have triggered the country s expulsion from the European Central Bank s bond buying stimulus scheme
I have been surprised about how well Portuguese bonds have performed this year said Patrick O Donnell an investment manager at Aberdeen Asset Management
Portugal and Italy ended last year with the biggest annual rise in their borrowing costs since the 2011 euro debt crisis when Portugal was bailed out by the European Union and the International Monetary Fund
But this year Portuguese bonds have broken ranks Ten year yields are down 30 basis points so far in 2017 while Italian and Spanish peers are up 45 bps and 22 bps respectively
A number of factors lie behind that outperformance
First the Portuguese economy is improving and the budget deficit shrinking
Portugal s minority Socialist government has succeeded in lowering the deficit which fell last year to 2 1 percent of economic output below a target agreed with Brussels from 4 4 percent in 2015
The European Commission has expressed optimism that Portugal can soon exit an EU excessive deficit procedure imposed after it breached the bloc s budget rules
Analysts say the sale of Novo Banco carved out of collapsed Banco Espirito Santo in 2014 should help lower the deficit further
There have been some positive signs of improving economic conditions most notably the lowest budget deficit in more than 40 years said ABN AMRO AS ABNd senior fixed income strategist Kim Liu
This could provide hope that the country will be able to leave the so called excessive deficit procedure by the EU later this year Also brighter prospects could lead to an improved rating from the credit rating agencies
Ratings agency DBRS said last month that Portugal faces significant challenges such as high levels of public debt but notably it confirmed Portugal s BBB rating and stable outlook
The investment grade rating is the last Portugal holds with a major agency and without it the country would be ejected from the ECB s bond buying scheme that has helped anchor borrowing costs
Concerns about a DBRS downgrade rattled investors last year but last month s review barely registered
POLITICS
Easing euro zone political risks after the first round of France s presidential election on April 23 have also helped
Centrist Emmanuel Macron won that vote and is expected to beat rival anti euro Marine Le Pen in Sunday s run off vote
That has reduced concern about a breakup of the euro boosting lower rated peripheral markets viewed as most vulnerable to any such fracturing
Portugal has done very well recently and it has been a combination of two factors It was the relief rally after the French first round election result and the fact it offers a pretty decent yield compared to anywhere else in Europe said Iain Stealey a portfolio manager at JPMorgan NYSE JPM Asset Management who holds Portuguese debt
It could well be the best performing bond this year
Portugal s 10 year yield hit its lowest almost six months on Thursday at 3 45 percent while the gap with top rated German yields is 309 bps around its tightest since November
That is wider than levels around 280 bps seen in August but tighter than highs around 390 bps hit early this year as investors fretted over the French election
Where Portuguese yields go from here will be driven around political risks in Europe and ECB tapering said Richard Casey head of government bonds at Pioneer Investments citing Italian political uncertainty as one factor that could come into play
Analysts add though that most holders of Portuguese debt tend to be long term investors who are likely to ride out any turbulence unless there is a big negative shock
What would change that is if there were to be a large negative news story but right now what you have is a group of happy longs enjoying the carry said Padhraic Garvey head of investment grade bond strategy at ING |
JPM | City of London s Brexit job losses limited to low thousands new policy chief | By Huw Jones and Andrew MacAskill LONDON Reuters A shift in banking jobs from Britain to continental Europe because of Brexit is likely be in the low thousands the City of London s new policy chief said on Thursday and warned that a turbulent few months lay ahead Catherine McGuinness 58 was elected on Thursday as the chairman of the City of London s policy and resources committee making her the political face of the ancient Square NYSE SQ Mile financial district A trained financial lawyer and veteran of many financial institutions she served as deputy chairman of the committee she said London would remain the world s top financial center This week Standard Chartered L STAN and JPMorgan N JPM were the latest to ensure they can continue to service its continental customers after Brexit in 2019 All the signals that we are seeing is that people are just making plans for the minimum necessary to ensure continuity We are not seeing a great move in the signals McGuinness told Reuters The signals that we are seeing would be in the low thousands Indeed at the moment just a couple of thousand Britain s finance minister Philip Hammond warned on Thursday that attempts by the EU to make a grab for the clearing of euro denominated securities an activity London dominates could disrupt growth and weaken financial stability It was the latest in a battle of words between London and Brussels as formal Article 50 EU divorce proceedings get underway I think one would expect the next few months to be slightly turbulent as people enter into the spirit of the negotiations For us it will be a question of carrying on with business as normal in the background McGuinness said the financial sector s priority is to get as much access as possible to the European market with a system of mutual recognition whereby the EU and Britain accept each other s systems of regulation probably the best solution Mutual recognition is a work in progress There are elements within our recommendations that need further work and development There is no guarantee the EU would agree to such a system which has never been done before in financial services on the scale envisaged by the City McGuinness said although ensuring there is a so called transitional arrangement to stagger Britain s departure is a priority an announcement of any deal is likely months away because of European elections in France and Germany
The earlier the better But I have every confidence that it is in everyone s interest to have some sort of clarity before the Article 50 period runs out |
C | Citigroup shares rise 2 5 on upbeat Q3 earnings | Investing com Banking conglomerate Citigroup N C reported better than expected third quarter earnings on Thursday sending its shares higher in pre market trade
Citigroup said adjusted earnings per share came in at 1 31 in the three months ended September 30 above expectations for earnings of 1 27 per share and up from 95 cents in the year ago period
The bank s third quarter revenue totaled 18 7 billion beating forecasts for revenue of 18 58 billion and compared to revenue of 19 7 billion for the third quarter 2014
Michael Corbat Chief Executive Officer of Citigroup said The quarter had more than its fair share of volatility and our results speak to the resilience of our franchise globally
Immediately after the earnings announcement Citigroup shares rose 2 52 or 1 33 in trading prior to the opening bell to hit 52 05 from a closing price of 50 72 on Wednesday
Meanwhile U S stock futures pointed to a higher open The Dow futures rose 78 points or 0 47 the S P 500 futures tacked on 15 points or 0 72 while the Nasdaq 100 futures advanced 36 points or 0 83 |
MPC | Oil s Trouble With Tech | Oil ran into tech trouble as the U S tech sector is under fire leading to a sell off in stocks against a backdrop of rising oil inventory The Data breach scandal at Facebook NASDAQ FB is only one of many quick rising problems for the many tech firms and I am sure somewhere the Winklevoss twins are smiling As the whisper number suggested oil inventories increased by a whopping 5 32 million according to the American Petroleum Institute API barrels This was led by an increase in U S imports a 1 66 million barrel build in Cushing Oklahoma and a 7 million barrel sale from the U S Strategic Petroleum Reserve to feed our oil hungry refineries
The U S sale from the reserve was expected at some point but the timing of the purchase shows that refiners need supply now because even with the increase in supplies this week oil supply are below the average range for this time of year Platts reported that the sale was made to at least five different companies rumored to be Atlantic Trading Marketing Phillips 66 NYSE PSX Marathon Petroleum NYSE MPC Motiva and Trafigura according to sources Phillips 66 was sold the largest amount of crude according to Platts sources While we are seeing great increases in U S shale oil production the truth is that many U S refiners have more lighter condensate then they need for heavy crude to ramp up
The sharp increase in U S supply may temper prices The fear that the tech sector sell offs may bleed into the overall economy may hurt prices Yet we feel that those fears are over played While the technicals on oil look weak in the short run it does not change the bullish outlook in the long run
While a slowdown in tech is a potential threat to the economy the reality is that Facebook and Twitter don t run on oil The oil sector of the economy was more concerned with a trade war and if that is averted we will raise our oil demand expectations A deal with China to potentially open their economy is very bullish for oil demand expectations as well as global economic growth
Refiners are buyers as they must rebuild gasoline supply ahead of summer The API reported that gasoline fell by 5 80 million barrels last week as strong demand and the drawdown of winter fuel blends led to the decline U S gasoline demand is at a record and even with a drop in consumer confidence in part caused by an uptick in gas prices the outlook for demand is still increasing for this summer
The API also reported that U S distillate supply fell by 2 24 million barrels Demand for distillate is going to stay strong as this stupid winter weather hangs on and farmers start to get their tiller planters and tractors filled up as they prepare to plant our nations crop
Global supply may be tighter than we think as well In Fact on Morning with Maria on the Fox Business Network the Saudi Finance Minister Mohamed al JADAAN said several countries will be running out of supply probably due to underinvestment On top of that Saudi Crown Prince Mohammed bin Salman told Reuters that Riyadh and Moscow were considering greatly extending a short term alliance on oil curbs that began in January 2017 after a crash in crude prices with a partnership to manage supplies potentially growing to a 10 to 20 year agreement The Crown Prince wants to build on its recent success of winning back its influence of global oil prices As I said before anyone who doubted OPEC s resolve to reduce oversupply should not underestimate them now |
MS | Earnings propel European shares higher | European stock markets will be closed for Easter on Friday and Monday
Coverage will resume on Tuesday
FTSEurofirst 300 index closes 0 4 percent higher
AkzoNobel up as profit rises
Miners up as metals prices rise with gold at record
By Brian Gorman
LONDON April 21 Reuters European shares closed at their highest in more
than a week on Thursday as earnings from the likes of AkzoNobel and U S tech
bellwether Apple helped eclipse economic worries
The pan European FTSEurofirst 300 index of top shares rose 0 4 percent to
1 142 56 points the highest close since April 11 Over the shortened week the
index gained 1 percent recovering from a fall on Monday when Standard Poor s
lowered its outlook for U S debt to negative
Paints and chemicals group AkzoNobel NV gained 4 percent after first quarter
core profit rose 10 percent and it pledged more price rises to offset higher
costs
There s some strength in the earnings coming through While we have some
macro stresses and strains notably what is going on in the euro zone
peripherals the earnings season is keeping the markets reasonably stable said
Richard Batty strategist at Standard Life Investments part of the Standard
Life Group which administers 324 billion of assets
Of the 100 S P 500 companies that have reported first quarter earnings so
far 78 percent of them have either beaten or met market expectations with the
remainder below forecasts data from Thomson Reuters StarMine showed
Shares of Apple Inc jumped 4 percent on roaring iPhone sales and a backlog
of demand for its iPad tablets
The heavyweight banking sector gained 1 5 percent helped by
better than expected results at U S peer Morgan Stanley Italian banks were the
standout risers with Intesa SanPaolo and UniCredit up 4 2 and 4 5 percent
respectively
Investment bank Macquarie reiterated its outperform rating on Intesa
describing it as a solid well capitalised bank a safe dividend and a
payout above 40 percent
But it added We stay cautious on Italian banks due to their poor
profitability and due to possible stock overhang following the announced 10
billion euros capital raisings
Worries over Greek debt restructuring continues to be a threat for banks
They are also expected to keep pressure on rattled peripheral bond markets
into next week resulting in yields already at euro lifetime highs
continuing to push higher
SCHNEIDER RISES
Among other companies French electronic engineering company Schneider
Electric rose 2 7 percent after posting a 27 percent rise in first quarter sales
on Tuesday helped by emerging markets and confirmed its sales and
profitability targets for the full year
But telecoms were left out of Thursday s rally Dutch firm KPN dropped 8 3
percent after it scaled back its 2011 profit forecast
This contributed to weakness elsewhere in the sector pulling heavyweight
Vodafone down 4 3 percent
Gold prices hit record highs for a fifth session on Thursday and silver
rallied to its strongest since 1980 as the dollar slid to a three year low
against a basket of major currencies
Base metals prices also rose Miners to gain included Fresnillo and
Kazakhmys up 2 2 and 2 1 percent
Across Europe Britain s FTSE 100 fell 0 1 percent Germany s DAX and
France s CAC40 rose 0 6 and 0 4 percent respectively
One thing I worry about is that corporate operating margins are at or close
to all time highs said Jacob de Tusch Lec manager of the 32 million pound
Artemis Global Income fund
I m not one of those fund managers who say it s great because margins are
so high I actually think it can only get worse from here
Additional reporting by Simon Jessop Editing by Will Waterman |
JPM | JPMorgan s Dimon says biggest fear is bad public policy | By Michael Flaherty LOS ANGELES Reuters Jamie Dimon the chief executive officer and chairman of JPMorgan Chase Co N JPM on Monday railed against what he called excessive U S regulations and called on Washington to come together to build a more business friendly economy that supports workers The real issue I m worried about is bad public policy Dimon said speaking at the annual Milken Institute Global Conference We re leaving a lot of people behind As a member of the White House s new Strategic and Policy Forum Dimon is part of the group of business leaders tasked with finding a way to create more jobs in the United States Dimon joined the task force despite not supporting President Donald Trump in his campaign a move he attributed to the need to support the pilot flying the airplane Dimon stressed that technology advancements are not the enemy of job creation You d be living in tents hunting buffalo and dying at 35 were it not for developments in tech he said Mankind will adjust and find other things to do as robots take their place If it technological developments goes too fast then we can create policies that make up for it Dimon who has led the bank as CEO since December 2005 shrugged off any aspirations for running for office when asked on stage He said it was too late for him to live as a civil servant and that he does not want to be a mayor a senator or governor You ve got to start early President Obama wrote two books about himself before he did anything Dimon said a line that prompted laughter and applause from the hundreds of business leaders financiers and government officials packed into the Beverly Hills Hilton ballroom Dimon said the government needs to spend more money on programs that provide education and work opportunities for people particularly those in poor economically depressed urban neighborhoods
I think there are legitimate complaints about what we didn t do to help the problems of these folks Dimon said It s a terrible thing those inner city kids who may be a Colin Powell a Barack Obama Albert Einstein and we ll never know because we didn t give them the opportunity that most of us had |
C | Barclays Closes Sale Of Singapore Hong Kong Wealth Unit | In sync with its efforts to simplify operations Barclays LON BARC PLC NYSE C completed the sale of its Wealth and Investment Management WIM business in Singapore and Hong Kong The unit has been sold to Bank of Singapore Limited the wholly owned private banking subsidiary of Oversea Chinese Banking Corporation Limited OCBC The sale value of 225 million represented 1 75 premium to Barclays WIM Singapore and Hong Kong s assets under management AUM at closure However this is below the price of 325 million which was announced at the time of signing the deal in April Further the pro forma decrease in risk weighted assets RWAs will be roughly 0 8 billion This is also below the previously estimated decline in RWAs of approximately 0 9 billion So these were perhaps the reasons for price fall since the announcement of completion of the deal Barclays shares declined nearly 2 6 on Nov 28 to close at 10 38 per share Notably in the last three months the company shares have surged more than 16 outpacing the gain of 3 1 for Zacks categorized Foreign Banks industry BARCLAY PLC ADR Price
The completion of the deal takes Barclays a step closer to its target to lower RWAs to 23 billion by 2017 Nonetheless the company will continue to operate the corporate and investment banking businesses in Singapore and Hong Kong Jes Staley Barclays Group CEO said I would like to thank those skilled and dedicated colleagues in Hong Kong and Singapore who have moved to become part of Bank of Singapore for their hard work for both Barclays and our Wealth clients in the region I wish them great success in the future Asia remains a crucial component of the Barclays business plan and we continue to actively serve our clients across the region from our offices in Singapore Hong Kong China India and Japan Barclays efforts to right size operations and vend off non core businesses will lead to improved efficiency and profitability overtime The company has been disposing off its non core units across the globe with an aim to lower expenses Nonetheless Barclays is not alone There are many large banks including Deutsche Bank AG NYSE DB HSBC Holdings plc NYSE C and Citigroup Inc NYSE C that have been divesting non core unprofitable businesses globally Currently Barclays carries a Zacks rank 3 Hold You can see The Best Place to Start Your Stock SearchToday you are invited to download the full list of 220 Zacks Rank 1 Strong Buy stocks absolutely free of charge Since 1988 Zacks Rank 1 stocks have nearly tripled the market with average gains of 26 per year Plus you can access the list of portfolio killing Zacks Rank 5 Strong Sells and other private research |
MPC | HollyFrontier HFC Q4 Earnings Lag Sales Profit Up Y Y | HollyFrontier Corporation NYSE HFC reported fourth quarter 2017 net income per share excluding special items of 70 cents below the Zacks Consensus Estimate of 82 cents The weaker than anticipated results can be attributed to lower than expected refining margins Notably the refining margins in the quarter stood at 12 54 a barrel against the Zacks Consensus Estimate of 13 15 a barrel
However the bottom line turned around from the year ago period s loss of 6 cents Robust year over year results were driven by higher sales volume and stronger contribution across all segments
Revenues of 3 992 7 million missed the Zacks Consensus Estimate of 4 310 million However the top line surged 35 1 from the fourth quarter 2016 sales of 2 955 1 million HollyFrontier Corporation Price Consensus and EPS Surprise
Segmental Information
Refining Net income from the Refining segment which is the main contributor to HollyFrontier s earnings was 282 3 million surging a whopping 475 5 from the year ago income of 49 million The improvement reflects wider gross margins which jumped 85 2 to 12 54 per barrel
Total refined product sales volume averaged 482 860 barrels per day bpd up 3 5 from 464 160 bpd in the year ago quarter Moreover throughput increased from 497 450 bpd in the prior year quarter to 466 640 bpd Capacity utilization was 100 9 up from 94 5 in fourth quarter 2016
Lubricants and Specialty Products Income from the segment totaled 29 3 million up from 20 6 million reported in the year ago quarter Product sales averaged 29 670 bpd significantly above the prior year level of 11 230 bpd Throughput came in at 20 990 bpd in the reported quarter
HEP This unit includes HollyFrontier s 36 interest in Holly Energy Partners L P NYSE HEP a publicly traded master limited partnership that owns operates develops and acquires pipelines and other midstream assets
Segment profitability was 67 6 million up from 54 9 million in fourth quarter 2016 Earnings were buoyed by higher segment sales
Balance Sheet
As of Dec 31 2017 HollyFrontier had approximately 630 8 million in cash and cash equivalents and 2 498 9 million in net long term debt representing a debt to capitalization ratio of 29 8
Zacks Rank Other Key Picks
Headquartered in Texas HollyFrontier carries a Zacks Rank 2 Buy
Meanwhile investors interested in the same sector may also consider Marathon Petroleum Corp NYSE MPC and Murphy USA Inc NYSE MUSA While Marathon Petroleum sports a Zacks Rank 1 Strong Buy Murphy USA carries a Zacks Rank 2 You can see
Marathon Petroleum delivered an average positive earnings surprise of 182 62 in the trailing four quarters
Murphy USA delivered an average positive earnings surprise of 20 65 in the trailing four quarters
Will You Make a Fortune on the Shift to Electric Cars
Here s another stock idea to consider Much like petroleum 150 years ago lithium power may soon shake the world creating millionaires and reshaping geo politics Soon electric vehicles EVs may be cheaper than gas guzzlers Some are already reaching 265 miles on a single charge
With battery prices plummeting and charging stations set to multiply one company stands out as the 1 stock to buy according to Zacks research
It s not the one you think |
MS | FTSE retreats as China inflation concerns resurface | FTSE falls 0 5 percent
Miners retreat ahead of China data on Friday
Reckitt slips as CEO retires
By David Brett
LONDON April 14 Reuters Britain s top share index swung
lower on Thursday as concerns over Chinese inflation moved back
into focus and Reckitt Benckiser fell sharply as it announced
the shock retirement of its star chief executive
British consumer goods group Reckitt Benckiser fell 7 7
percent after the firm said Chief Executive Bart Becht is to
retire six months after the departure of its chief financial
officer
It was one of the most highly regarded management teams I
would have said in the FTSE Martin Dolan an analyst at
Espirito Santo says
The fact that they ve both gone now I think is basically
going to cause some people to reassess the situation
By 0910 GMT the FTSE 100 was down 30 46 points or 0 5
percent at 5 979 98 having closed 0 8 percent higher at
6 010 44 in the previous session
Miners fell along with base metal prices as investors shied
away from riskier assets Analysts cited concerns over Chinese
inflation
Chinese inflation might well be a focus Overnight the
Asian markets were tangibly cut and we saw interest rate policy
in likes of Singapore increase which may have add a little to
nerves as we wait for those Chinese inflation and GDP figures
on Friday said Keith Bowman analyst at Hargreaves Lansdown
Chinese inflation in March accelerated to 5 4 percent from a
year earlier Hong Kong media said on Thursday which will add
weight to the government s vow to rein in price rises
Economists polled by Reuters had expected annual inflation
in March to be 5 2 percent up from February s 4 9 percent
For the coming months we expect increasing volatilities in
cyclical sectors with a more selective and less steady
performance trend analysts at Unicredit said in an equity
strategy note citing the impact of China s inflation and growth
concerns
In the resources sector commodities trading giant Glencore
published details of long awaited plans to raise up to 12 1
billion in a London and Hong Kong offering
BANKS RETREAT
Banks Wednesday s top performers after JP Morgan results
helped boost confidence retreated as investors locked in
profits on a sector still dogged by regulatory uncertainty
Lloyds Banking Group shed 1 1 percent as Barclays Capital
cut its target price and kept its underweight rating on the
bank saying the UK s Independent Commission on Banking s stance
on Lloyds will further dilute returns
On the upside Intercontinental Hotels rose 1 2 percent with
traders citing a bullish note from Morgan Stanley
Oil services firms AMEC Wood Group and Petrofac rose up to
0 6 percent as Unicredit initiated coverage on all three
companies with buy ratings
Unilever climbed 0 7 percent as French peer Danone released
a strong first quarter update
Retailer Marks Spencer rose 0 7 percent as the beleagured
retail sector got a shot in the arm after broadly upbeat updates
from WH Smith Debenhams and Ideal Shopping Direct
Additional reporting by Brenda Goh and Tricia Wright
Editing by Jane Merriman |
MS | UPDATE 2 Chinese Facebook Renren shoots for U S IPO | Adds details on Renren Chinese market
April 15 Reuters China s largest social network
Renren filed for a U S initial public offering to raise up to
573 1 million the first of a clutch of Facebook clones hoping
to boost their profile with an American listing
Renren owned by Oak Pacific Interactive hopes to tap
strong appetite for Chinese tech stocks Online video company
Youku com Inc known as China s YouTube surged 161
percent on its debut late last year locking in the best
first day returns of an IPO in five years ID nN08142271
China s Internet sector the world s largest by users
is red hot because it is difficult for outside competitors to
overcome the political and cultural barriers to operate there
but some analysts warn of a bubble forming
Renren s website sporting some 117 million registered
users is similar to Facebook s as it allows users to share
locations with friends like something and post updates
Sources have said that rival social network Kaixin001 also
plans to list but has not gone through the process of
selecting banks
Social networking sites have grown in popularity in China
in recent years gaining most of their revenue from online
advertising They benefit from an ecosystem closed to major
foreign competition with Facebook and Twitter banned in the
world s second largest economy
But the market is getting increasingly competitive with
more than 100 social networking sites operating
Two social networking sites shut in 2010 due to cash flow
issues local media reported The industry is also fraught with
regulatory and legal risks as China seeks to control the flow
of information online
Renren and some of its shareholders are offering about 52 1
million American Depository Shares ADS The company expects
the IPO to be priced at between 9 and 11 per ADS
It intends to list on the New York Stock Exchange under the
symbol RENN Underwriters for the IPO include Morgan Stanley
Deutsche Bank Securities and Credit Suisse
In the filing Renren said its website had about 117
million activated users as of March 31 2011
Oak Pacific also owns Nuomi a website featuring daily
deals similar to the popular U S website Groupon
In 2010 Renren had revenue of about 76 5 million and a
net loss from continuing operations of 61 2 million including
some charges
Reporting by A Ananthalakshmi in Bangalore Editing by Don
Sebastian and Tim Dobbyn |
MS | European stocks surge on upbeat earnings DAX jumps 2 | Investing com European stock markets posted sharp gains on Wednesday as market sentiment was lifted amid a flurry of upbeat earnings reports while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 climbed 1 55 France s CAC 40 rose 1 7 while Germany s DAX 30 jumped 2 Europe s second largest automaker Peugeot climbed 3 8 after it said first quarter revenue rose 10 to EUR15 4 billion topping expectations for revenue of EUR14 9 billion The company reaffirmed its outlook for the year despite supply chain disruptions following the earthquake and tsunami in Japan The upbeat results boosted other automakers with Volkswagen jumping 3 Daimler shares gained 2 7 while Renault was up 1 5 Shares in the technology sector performed strongly as chip giant Intel reported better than expected first quarter earnings after U S markets closed on Tuesday Europe s largest semiconductor manufacturer STMicroelectronics saw shares rally 5 35 Infineon Technologies jumped 3 45 while U K based ARM Holdings surged 4 2 Meanwhile the world s largest cosmetics maker L Oreal advanced 2 8 after it reported a 9 3 increase in first quarter revenue as higher sales in its luxury division helped offset a weak consumer environment in Western Europe In London the commodity heavy FTSE 100 surged 1 8 as shares in miners rallied after metal prices advanced The world s largest mining group BHP Billiton saw shares climb 2 4 shares in copper producer Xstrata rose 3 1 while African Barrick Gold jumped 1 8 after gold prices breached the psychologically important USD1 500 level for the first time Meanwhile shares in Europe s largest banking group HSBC Holdings added 1 85 after Morgan Stanley upgraded the stock to overweight The outlook for U S equity markets meanwhile was upbeat ahead of earnings reports AT T and from the fourth largest U S bank Wells Fargo The Dow Jones Industrial Average futures pointed to a gain of 0 6 S P 500 futures indicated a rise of 0 92 while the Nasdaq 100 futures added 0 9 Later in the day the U S was to publish industry data on existing home sales as well as a government report on crude oil stockpiles |
MS | UPDATE 2 Banks hit back in dark pool trading war of words | Banks say stock exchanges exaggerate dark pool volumes
Say only 16 pct of Europe trade takes place in dark pools
Regulators looking to tighten dark pool rules
Dark pools on the rise through electronic trading
Adds data on European trading
By Luke Jeffs
LONDON April 20 Reuters Investment banks launched a
fresh defence of dark pool share trading saying the practice
is not nearly as widespread as suggested by Europe s stock
exchanges and should therefore pose few regulatory concerns
Only 16 percent of European trading takes place in secretive
dark pools which enable market parties to trade shares
without being seen by others a trade body said well below
the 40 percent that has been quoted by stock exchanges
The current reporting requirements cause confusion and can
result in misleading claims as our research shows the
investment banks Association of Financial Markets in Europe
AFME said in a statement on Wednesday
This is of concern as it suggests that policy decisions are
driven by misinformation or misunderstanding
European share trading totalled just over 1 trillion euros
1 440 billion in March Thomson Reuters data show meaning
160 billion euros ran over bank dark pools even under their own
lower estimate generating solid fee income
The AFME s opponent the Federation of European Securities
Exchanges FESE is urging the European Commission to adopt
tighter rules on trading that takes place away from exchanges
including in bank owned dark pools
The timing of the spat is crucial as the European Union
weighs up new restrictions on bank dark pools and rewrites its
2007 Markets in Financial Instruments Directive Mifid which
opened up trading markets for competition
Regulators have not been outspoken about what changes they
plan sparking heeavy lobbying from both sides
Banks such as Citigroup Goldman Sachs Morgan Stanley
Nomura and UBS have always traded away from exchanges for fear
of offering rivals crucial clues as to their investment
strategies
Fund managers and banks increasingly use dark pools for
their largest market sensitive orders because the explosion of
electronic trading on exchanges has made these markets more
sensitive to large or block orders
Yet exchanges believe bank dark pools are dangerous because
they lack transparency meaning clients don t know whether they
are getting the best price or if they are being picked off by
predatory proprietary traders
The exchanges insist trading on their transparent public
markets is safer because all participants can see prices and the
exchanges monitor trading by their members to guard against
improper practices
But the banks counter that their dark pools or broker
crossing networks are important tools for clients because they
allow firms to trade without causing ripples
The European Commission is keen to pass new rules to update
its landmark Mifid act that broke European exchanges monopolies
on share trading by allowing alternatives venues known as
multi lateral trading facilities
Editing by Douwe Miedema David Holmes and Mark Potter |
MS | MUFG and Morgan Stanely Japan JV to post 1 7 bln loss sources | TOKYO April 20 Reuters A Japanese securities joint
venture between Mitsubishi UFJ Finacial Group MUFG
and Morgan Stanley will book a net loss of about 140
billion yen 1 7 billion for the year ended in March due
mainly to massive bond trading losses sources familiar with the
matter said on Wednesday
Japan s financial regulator the Financial Services Agency
is expected to order the venture to submit a report on the loss
and its risk management structure said the sources who were
not authorised to discuss the matter publicly
The venture Mitsubishi UFJ Morgan Stanley Securities is 60
percent owned by MUFG and 40 percent owned by Morgan Stanley
1 82 580 Japanese Yen
Reporting by Taiga Uranaka and Noriyuki Hirata Editing by
Nathan Layne |
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