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MS | REFILE UPDATE 1 MUFG and Morgan Stanley Japan JV to post 1 7 bln loss sources | Corrects spelling of Morgan Stanley in headline
Losses are mainly due to bond trading sources
Japan s regulator to order report on risk
management sources
JV to raise 363 million in capital from MUFG unit source
Add more information and company comments
By Taiga Uranaka
TOKYO April 20 Reuters A Japanese securities joint
venture between Mitsubishi UFJ Financial 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
It is one of two securities ventures formed between MUFG and
Morgan Stanley after Japan s largest lender acquired a 21
percent stake in the Wall Street firm for 9 billion in 2008
The venture is planning to shore up its capital by
raising 30 billion yen from Mitsubishi UFJ Securities a unit of
MUFG one source said
Morgan Stanley declined to comment
A MUFG spokesman said media reports on the losses were not
based on information provided by the bank
1 82 580 Japanese Yen
Reporting by Taiga Uranaka and Noriyuki Hirata additonal
reporting by Lauren Tara LaCapra in NEW YORK Editing by Nathan
Layne |
MS | UPDATE 2 Morgan Stanley MUFG JV to book 1 7 bln loss hit by bad market bet | JV did not have sufficient detailed supervision of
losses exec
Trades were made by Mitsubishi UFJ traders
To raise 30 bln yen through capital injection
Recasts adds details and quotes
By Taiga Uranaka and Emi Emoto
TOKYO April 21 Reuters A Morgan Stanley
securities joint venture in Japan with Mitsubishi UFJ Financial
Group MUFG said 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 60 percent owned
by Japan s MUFG and 40 percent by the Wall Street firm said on
Wednesday it would post a net loss of 145 billion yen 1 7
billion for the year ended March due to the trades
It will also raise 30 billion yen through a capital
injection from its parent Mitsubishi UFJ Securities Holdings
The company said on Thursday it had been holding the trading
positions which resulted in the loss at what was formerly
Mitsubishi UFJ Securities prior to its merger with Morgan
Stanley
Both banks had discussed these positions as part of its due
diligence and had agreed to keep it within a certain limit
But the losses kept growing bit by bit Managing Director
Fumio Yoshimatsu told reporters We did not have sufficiently
detailed supervision of such things he said
He declined to give further details on what type of
financial instruments were traded but said they were incurred
in January March and did not result from the March 11 magnitude
9 0 earthquake in northern Japan
The company said the trades were made by Mitsubishi UFJ
traders
The unit is one of two securities ventures formed between
MUFG and Morgan Stanley after Japan s largest lender acquired a
21 percent stake in the Wall Street firm for 9 billion in 2008
It has been shedding staff since its start in May 2010 and
said it will have lost 750 people by the end of this financial
year
Though the company did not say immediately whether heads
will roll as a result of this loss Yoshimatsu said any such
decisions would be communicated when it reports earnings on
April 28 It will however drastically cut back on proprietary
trading in fixed income markets executives said
They also said that since its inception in May last year
the venture would have cut its headcount by 750 in the financial
year started in April including some who have already accepted
early retirement The venture had about 7 000 employees at the
time of the start
Yoshimatsu said the company will improve its risk management
skills by learning from Morgan Stanley
Another venture Morgan Stanley MUFG Securities MSMS is
made up of Morgan Stanley s sales trading and capital markets
divisions
MUFG has 60 percent of economic interest and Morgan Stanley
has 40 percent in MSMS
1 82 465 Japanese Yen
Writing by Abi Sekimitsu Editing by Anshuman Daga |
MS | FTSE pushes higher as banks commodity stocks rise | FTSE 100 index gains 0 2 percent in moderate volumes
Banks up led by Barclays ahead of results
Vodafone weak on read across from Dutch peer KPN s results
LONDON April 21 Reuters Strength in banks and commodity
stocks lifted Britain s top share index on Thursday
consolidating a recent rally ahead of the long holiday weekend
At 1052 GMT the FTSE 100 index was up 13 97 points or 0 2
percent at 6 036 23 having jumped 2 1 percent on Wednesday to
close back above the 6 000 level for the first time since the
start of March
Midsession volumes however were moderate at just over 30
percent of the 90 day moving average
With four bank holidays coming in the next seven work days
one can expect volumes to remain thin in the near term and this
may cloud true market sentiment somewhat said Giles Watts
head of equities at City Index
Banks provided the main strength for the FTSE 100 index led
by Barclays up 2 1 percent as investors looked ahead to the
lender s first quarter results due next week and with earnings
scheduled from U S peer Morgan Stanley
Gains by miners also provided the blue chip index with fuel
as metal prices moved higher mainly thanks to a weaker dollar
with Eurasian Natural Resources up 2 3 percent
And energy issues moved higher as crude prices rose with BG
Group up 0 8 percent and BP 0 5 percent
On Wednesday BP launched a series of lawsuits against its
partners in the Deepwater Horizon rig including the owner
Transocean and Halliburton the company that cemented the
blown out well that caused last year s Gulf of Mexico oil spill
VODAFONE WEIGHS
Weakness in mobile telecoms heavyweight Vodafone was the
biggest drag on the blue chips down 2 6 percent and taking over
8 5 points off the FTSE 100 with traders citing a read across
from weakness in Dutch peer KPN s results and forecasts
Downbeat newsflow from its peers in the United States and
Europe also weighed on hotel operator InterContinental Hotels
down 2 1 percent
Shore Capital highlighted concerns over the slowing pace of
earnings momentum in U S hotel stocks with decreasing scope
for material upgrades and repeated its sell stance
But travel firm TUI Travel was the top FTSE 100 riser up
2 8 percent with traders citing the impact of an upgrade in
rating by Deutsche Bank to buy from hold
On the high street clothing retailer Next gained 1 5
percent as UBS raised its target price for the firm Traders
said Morgan Stanley had named the stock as its top pick in a
more upbeat review of general retailers
British retail sales rose unexpectedly in March helped by
stronger food sales on the month while public sector borrowing
for the fiscal year ended in March came in below the
government s target official data showed on Thursday
Editing by Will Waterman |
JPM | JPMorgan beats Madoff customers appeal | By Jonathan Stempel NEW YORK Reuters JPMorgan Chase Co N JPM is not liable to a group of former customers of Bernard Madoff who blamed the bank for being actively involved in his Ponzi scheme and ignoring red flags of fraud a federal appeals court ruled on Wednesday The 2nd U S Circuit Court of Appeals in Manhattan said the customers failed to show that JPMorgan had enough control over Madoff s fraud to justify liability under federal securities laws JPMorgan had been sued by roughly 2 500 so called net winners who withdrew more money from their accounts at Bernard L Madoff Investment Securities LLC than they invested Lance Gotthoffer a lawyer for the customers said his clients will review their legal options Wednesday s decision upheld a May 2016 ruling by U S District Judge John Koeltl in Manhattan nL2N18F1GG Koeltel said the allegations suggested that JPMorgan was at most negligent in dealing with Madoff once a major client Many net winners believe their claims were undervalued in the liquidation of Madoff s firm and sued other individuals and companies that dealt with the swindler Madoff has served roughly eight years of a 150 year prison term He turns 79 on Saturday JPMorgan agreed in 2014 to pay 2 6 billion to settle other Madoff litigation and in a settlement with the U S government acknowledged responsibility for failing to stop Madoff
The case is Friedman et al v JPMorgan Chase Co et al 2nd U S Circuit Court of Appeals No 16 1913 |
JPM | China money market fund becomes world s largest | A Chinese money market fund set up as a repository for leftover cash from online spending has emerged as the world s biggest with 165 6B under management Alibaba s NYSE BABA four year old Yu e Bao fund which means leftover treasure has overtaken JPMorgan NYSE JPM s U S Government Money Market Fund MUTF MJGXX which has 150B Yu e Bao pays 3 93 Now read Alibaba Bumps Bid A Rangeley Capital Discussion |
JPM | Trump tax cut caution ECB meeting cools risk rally | By Marc Jones LONDON Reuters A record setting rally in world stocks ran out of steam on Thursday with unconvincing U S tax cut plans cooling investors spirits and caution setting in as the European Central Bank met Europe s main bourses were as much as 0 7 percent lower as traders pulled back after six days of unbroken gains fueled by relief at the outcome of the first round of France s presidential election and encouraging earnings and economic data EU Asia felt groggy too The Bank of Japan offered its most upbeat economic assessment in nine years but Asia Pacific shares ended flat a day after hitting their highest in almost two years A surprise move by Sweden to expand its stimulus program pushed the crown down sharply and the Canadian dollar and Mexican peso jumped as the U S said it would not scrap the North American Free Trade Agreement But the focus was turning to the ECB and what its head Mario Draghi and his colleagues have made of the recent improvement in euro zone economic data The bank is not expected to make any changes to its record low interest rates or mass stimulus program so market reaction to this meeting may hinge on just a few crucial words It is possible that the ECB will remove the language stating that the risks to the economy remain tilted to the downside said Mike Bell Global Market Strategist JPMorgan NYSE JPM Asset Management Euro zone government bond yields nudged up along with the euro which was at 1 0913 having been as high as 1 0950 this week after pro EU centrist Emmanuel Macron topped the first round vote in France Disappointment lingered after U S President Donald Trump s plans to slash company tax rates to 15 percent from the current 35 percent and 39 6 percent for small firms offered no details on how they would be paid for Billed beforehand as the biggest tax cut in history it amounted to little more than a one page plan and fueled the suspicion that it could run into opposition from U S lawmakers worried about increasing the country s debt levels There was virtually no new information just as expected He was essentially repeating his campaign promises said Tomoaki Shishido senior fixed income strategist at Nomura Securities DEUTSCHE DOWN The dip in European shares saw them retreat from 20 month highs with financials and commodity related stocks the main drag although gains in other cyclical industrials on the back of strong earnings kept losses down EU Deutsche Bank DE DBKGn shares fell as much as 3 5 percent even as its first quarter net profit more than doubled following a rebound in bond trading It shares have nearly doubled though after worries about its future late last year Elsewhere upbeat results from the likes of SKF Bayer DE BAYGN and Subsea 7 companies closely geared to economic growth were cheered as more investors piled into the European recovery story Wall Street futures pointed to a flat start for New York The S P 500 ended down fractionally on Wednesday as the questions left by Trump s tax plans overshadowed more upbeat earnings Overall profits of S P 500 companies are estimated to have risen 11 8 percent in the first quarter the most since 2011 according to Thomson Reuters I B E S China s growth accelerated at the fastest pace since mid 2015 in the January March quarter while South Korea on Thursday also reported stronger than expected first quarter growth fueled by improving global demand Among commodities industrial metals steadied though oil prices dipped again on concerns about globally bloated markets O R Brent futures dropped to 51 60 per barrel down 22 cents or 0 42 percent from their last close Brent is almost 9 percent below its April peak
The dollar meanwhile slipped to 111 23 yen from near a one month high of 111 78 yen scored earlier on Wednesday |
C | Citigroup CFO expects 5 percent decline in third quarter markets revenue | NEW YORK Reuters Citigroup Inc N C expects its third quarter markets revenue to fall by about 5 percent from a year earlier Chief Financial Officer John Gerspach said on Wednesday The decline largely stems from a strong comparable performance in September 2014 in its interest rates and currency business Gerspach said at an investor conference Citigroup traders navigated the market volatility of the last half of August well and had strong client activity across the franchise he said The volatility however had a greater impact on underwriting Gerspach said without quantifying the possible hit
Gerspach also said the bank would probably record higher costs in the third quarter to provide for possible future losses on energy loans |
C | Hedge fund manager says he didn t trade on hacked press releases | By Karen Freifeld NEW YORK Reuters A hedge fund manager in Moscow claims he never possessed or traded on inside information from an alleged scheme to hack into networks that distribute corporate news releases according to a court filing late Wednesday David Amaryan 35 was among more than 30 defendants charged by U S authorities last month over the alleged theft of more than 150 000 press releases from Business Wire Marketwired and PR Newswire before the news became public The U S Securities and Exchange Commission said the scheme allegedly resulted in more than 100 million of illegal profit over a roughly five year period I have never possessed or traded on material nonpublic information obtained through illicit or unlawful means Amaryan said in court papers filed in New Jersey federal court Nor have I ever directed anyone working for me to obtain or to trade on such information Amaryan runs Moscow and London based investment management firms Copperstone Alpha Fund Copperstone Capital and Ocean Prime Inc and Intertrade Pacific SA He is seeking dismissal of the civil charges against him and his companies and for the court to free up millions of dollars of frozen assets The companies trades were based on sophisticated hedge fund analysis at times ahead of earnings announcements and at times losing money the court papers say A native Armenian who lives in Moscow Amaryan graduated from Miami University in Oxford Ohio according to his court filing He worked in the United States at AllianceBernstein L P before moving to Russia in 2003 and working for Citigroup NYSE C for two years He is currently on a leave of absence from the MBA program at the University of Chicago Booth School of Business Two other defendants Jaspen Capital Partners Ltd and Chief Executive Andriy Supranonok both from Kiev Ukraine agreed to pay 30 million to settle the SEC charges against them the regulator said on Monday Authorities said traders would give hackers shopping lists of press releases they wanted to see in advance and then make trades based on them Business Wire is a unit of Warren Buffett s Berkshire Hathaway NYSE BRKa Inc and PR Newswire is a unit of Britain s UBM Plc
The case is SEC v Dubovoy et al U S District Court District of New Jersey No 15 06076 |
MS | GLOBAL MARKETS U S bonds dollar gain on deficit cutting plan | Wall Street struggles drags on global stock markets
Yen slips as Japan downgrades economic outlook
Oil rebounds from recent losses gold rises
Recasts lead updates market action
By Richard Leong
NEW YORK April 13 Reuters U S bonds and the dollar
rose on Wednesday on hopes that President Barack Obama s 4
trillion deficit reduction plan would shore up the United
States creditworthiness and the dollar s reserve status
The yield of benchmark U S 10 year government debt fell to
its lowest level in a week while the dollar was up 0 2 percent
against the yen and 0 4 percent higher versus the euro
Obama set a time frame of 12 years or less to reach the
goal of 4 trillion in deficit reduction as he warned that
steadily rising debt could cost jobs and harm the economy and
force the country to borrow more from other countries such as
China ID nN12216395
It s a positive from a credit and currency perspective
It s positive in the sense that the U S can better meet its
obligations said James Caron global head of rates research
at Morgan Stanley in New York
As government leaders wrestle over how to tackle United
States long term fiscal predicament investors were reticient
to commit to stocks and other risky assets on uncertainties
over the durability of global economic and profit growth
Wall Street struggled on doubts over corporate profits
curbing a rebound in global stocks while commodity prices
clung to gains after a steep two day sell off
An initial rise in U S stocks fizzled despite strong
profit growth from JPMorgan Chase Co the No 2 U S
bank Analysts questioned whether the results from JPMorgan
the first major Wall Street bank to report this quarter were a
one time win or would translate to others performance
People are getting the sense that no matter what these
companies say the easy money has already been made so it will
be tough to see further upward movement said Rick Fier vice
president at Conifer Securities in New York which has about 7
billion in assets under administration
The Dow Jones industrial average was down 0 17
percent at 12 243 33 while the Standard Poor s 500 Index
was down 0 22 percent at 1 311 30 The Nasdaq Composite
Index was up 0 19 percent at 2 750 02
World stocks as measured by MSCI were up
0 1 percent
Earlier the FTSEurofirst 300 the index of
Europe s top shares closed up 0 7 percent a day after posting
its biggest one day fall in a month Bank shares rose boosted
by the JPMorgan results
Japan s Nikkei index rose 0 9 percent on the day in
thin volume
COMMODITIES STAGE LATE BOUNCE
Commodity markets had a roller coaster session
The price of Brent crude oil was up nearly 2 near
123 a barrel after a two day sell off caused by worries that
high prices would crimp demand U S oil prices were on
track to end higher at 107 07 erasing mid afternoon losses
Gold rose 3 to end at 1 457 an ounce after rising as
high 1 462 on a weaker dollar earlier
The dollar rebounded against the yen after the Japanese
government lowered its economic outlook to reflect last month s
devastating earthquake and tsunami its first downgrade in six
months The dollar was up 0 3 percent at 83 83 yen a
day after the greenback recorded its biggest one day percentage
drop in four months ID nL3E7FD0DS
The euro was down 0 3 percent at 1 4437 after
earlier hitting a 15 month peak of 1 4521 on EBS trading
platform
Overall sentiment toward the greenback however remains
largely bearish given expectations the U S Federal Reserve
will significantly lag global central banks in raising interest
rates
In bond trading U S government debt prices rose erasing
earlier losses despite weaker than expected results at a 21
billion auction of 10 year notes For more see US
The benchmark 10 year Treasury yield hit a
one week low at 3 48 percent For more see US
Additional reporting by Ryan Vlastelica Gertrude
Chavez Dreyfus and Gene Ramos in New York Jeremy Gaunt and Jan
Harvey in London Editing by Leslie Adler |
MS | GLOBAL MARKETS Deficit cutting plan boosts U S bonds dollar | White House budget scheme stokes bond dollar bets
Wall Street stages late bounce JP Morgan weighs
Oil rebounds on big gasoline stock decline gold rises
Yen slips as Japan downgrades economic outlook
Updates markets with closing Wall Street levels
By Richard Leong
NEW YORK April 13 Reuters U S bonds and the dollar
rose on Wednesday on hopes that President Barack Obama s 4
trillion deficit reduction plan would shore up the United
States credit worthiness and the dollar s reserve status
Oil jumped 1 5 percent recovering from two days of losses
after data showed the biggest weekly decline in gasoline
inventory since October 1998 For more see ID nLDE73C0V1
Obama set a time frame of 12 years or less to reach the
goal of 4 trillion in U S deficit reduction as he warned that
steadily rising debt could cost jobs harm the economy and
force Washington to borrow more from other countries such as
China ID nN12216395
It s a positive from a credit and currency perspective
It s positive in the sense that the U S can better meet its
obligations said James Caron global head of rates research
at Morgan Stanley in New York
The yield on benchmark U S 10 year government debt fell to
the lowest level in a week while the dollar posted gains
versus the yen and euro
As government leaders wrestle over how to tackle United
States long term fiscal predicament investors were reticent to commit to stocks and other risky assets on uncertainties
over the durability of global economic and profit growth
Wall Street ended flat to slightly higher after struggling
much of the session on doubts over corporate profits An
initial rise in U S stocks fizzled despite strong profit
growth from JPMorgan Chase Co the No 2 U S bank
Analysts questioned whether the results from JPMorgan the
first major Wall Street bank to report this quarter were a
one time win or a harbinger of others performance For more
see N
The view reined in a rebound in global stocks
People are getting the sense that no matter what these
companies say the easy money has already been made so it will
be tough to see further upward movement said Rick Fier vice
president at Conifer Securities in New York which has about 7
billion in assets under administration
The Dow Jones industrial average closed up 0 06
percent at 12 270 99 while the Standard Poor s 500 Index
was up 0 02 percent at 1 314 41 The Nasdaq Composite
Index rose 0 61 percent to 2 761 52
World stocks as measured by MSCI were up
0 3 percent
Earlier the FTSEurofirst 300 the index of
Europe s top shares closed up 0 7 percent a day after posting
its biggest one day fall in a month Bank shares rose boosted
by the JPMorgan results
Japan s Nikkei index rose 0 9 percent on the day on
thin volume
COMMODITIES STAGE LATE BOUNCE
Like stocks commodities had a roller coaster session
The price of Brent crude oil ended up more than
1 50 at 122 61 a barrel after a two day sell off caused by
worries that high prices would crimp demand
U S oil prices closed up 0 7 percent at 106 96
erasing mid afternoon losses
Gold closed up about 3 at 1 456 74 an ounce after
earlier rising as high 1 462 on a weaker dollar
The dollar rebounded against the yen after the Japanese
government lowered its economic outlook to reflect last month s
devastating earthquake and tsunami its first downgrade in six
months The dollar was up 0 3 percent at 83 83 yen a
day after the greenback recorded its biggest one day percentage
drop in four months ID nL3E7FD0DS
The euro was down 0 3 percent at 1 4437 after
earlier hitting a 15 month peak of 1 4521 on the EBS trading
platform
Overall sentiment toward the greenback however remains
largely bearish given expectations the U S Federal Reserve
will significantly lag global central banks in raising interest
rates
In bond trading U S government debt prices rose erasing
earlier losses despite weaker than expected results at a 21
billion auction of 10 year notes For more see US
The benchmark 10 year Treasury yield hit a
one week low at 3 48 percent For more see US
Additional reporting by Ryan Vlastelica Julie Haviv Carol
Vaporean and Gene Ramos Editing by Dan Grebler |
MS | UPDATE 10 Glencore seeks up to 12 1 bln in IPO names chair | Glencore aims to raise 9 11 bln plus 10 percent
greenshoe
Base to raise up to 8 8 bln in London 2 2 bln in HK
Price range set May 4 conditional share trading May 19
Appoints legionnaire Murray as chairman
Adds Murray interview Standard Life
By Elzio Barreto and Clara Ferreira Marques
HONG KONG LONDON April 14 Reuters Top commodity trader
Glencore aims to raise up to 12 1 billion with a dual listing
that will boost firepower for deals at the height of a resources
boom and make paper fortunes for its publicity shy partners
The long awaited details of the offer set to be the largest
ever in London were outlined in an intention to float document
that confirmed an earlier Reuters story It did not include the
appointment of a non executive chairman
Eight hours later however Glencore announced it had picked
Hong Kong businessman Simon Murray 71 a polar explorer former
Vodafone board member and old Asia hand for the role
Some potential investors were unimpressed by the wait for
the chairman s name
Good succession planning is a hallmark of good governance
a spokesman at top fund Standard Life Investments said Too
often the boards of companies seeking to achieve an IPO cobble
their boards together at the eleventh hour The shares
ultimately get the governance discount they deserve
Another prospective investor a top 20 shareholder in
long term Glencore bid target Xstrata said They really should
have had sorted this out before the announcement We ve seen
this coming since 2008 so there s no excuse
A strong chairman will be critical for Glencore in its bid
to reassure would be investors to back a company still steered
by an executive team used to running a tight knit partnership
with little outside influence
Murray who told Reuters earlier this week that he was being
considered for the role was managing director of Hong Kong
billionaire Li Ka Shing s Hutchison Whampoa and serves on boards
including Richemont and Essar Energy
My first priority is to have a really good understanding of
where CEO Ivan Glasenberg wants to take the business
Murray told Reuters from a hotel in Tokyo loud jazz music
playing in the background
Five non executive director positions were announced with
Thursday s statement but at least one of the directors Peter
Coates has previous direct links with the group He was
chairman until earlier this week of Minara Resources a nickel
producer majority owned by Glencore
Former BP Chief Executive Tony Hayward who was ousted over
his handling of the Gulf of Mexico oil spill will be the senior
independent director
Glencore the world s largest diversified commodities
trader joins the dots of the global economy mining producing
and shipping raw materials across the globe to carmakers oil
companies utilities steelmakers and food giants
Founded in 1974 by trading sensation and U S fugitive Marc
Rich Glencore has until now held on to a fiercely prized
tradition of public discretion but its May listing will propel
the group and its top management it into the limelight
The sale which has generated a buzz akin to Goldman Sachs
listing in 1999 will generate millions of dollars in paper
windfalls for Glencore s executives not least Glasenberg
himself said to own a 15 percent stake in the firm But all
have been blocked from selling for up to five years
Glasenberg has always declined to comment on his ownership
though his stake will be made public in the prospectus
All partners are invested for the long term No one is
taking money off the table Glasenberg told Reuters in a
telephone interview on Thursday
STRONG DEMAND
Many potential investors were cautious on Thursday
There are not too many people that have made money out of
dealing with Glasenberg and the market is going to do a deal
with him analyst Damien Hackett at Canaccord Genuity said
Adding to uncertainty long term commodity bull Goldman
Sachs warned clients earlier this week to lock in trading
profits before oil and other markets reverse making waves
across commodity markets
However other analysts and fund managers said the deal would
find demand despite ongoing volatility in the markets and
nervousness around new issues Many recent IPOs have been pulled
or sold at the low end of their ranges
People want a different way to play the cycle and the
business as a whole of mining trading and selling commodities
so this will definitely be a welcome addition in terms of a
broader access to commodity markets said Rob Edwards managing
director of metals and mining research at Renaissance Capital
Glencore is targeting an offer size of between 9 billion to
11 billion The London part of the offer should raise up to
8 8 billion while the Hong Kong leg of the deal could raise up
to 2 2 billion After the IPO the free float is expected to be
between 15 20 percent
If a 10 percent over allotment option is exercised the
total IPO proceeds rise to 12 1 billion
Glencore plans to use 5 billion of the IPO proceeds for
capital expenditure over the next three years while another
2 2 billion will be used to increase its stake in miner
Kazzinc Glencore already owns 50 7 percent of Kazzinc along
with a 34 5 percent stake in miner Xstrata
It plans to set the price range on May 4 and conditional
trading of shares is set for May 19 the term sheet showed
Glencore is expected to sign up cornerstone shareholders
to its IPO but these may be made public only when it publishes
its prospectus next month Glencore officials have met in the
past weeks with sovereign wealth funds in Asia and the Middle
East and high net worth investors to garner support
It is also holding talks with investors in its convertible
bond some of whom have already signalled they will increase
their share according to sources close to the matter Strategic
investors in the bond are expected to almost double their money
in just 17 months according to analysts
Standard Poor s which rates Glencore just one notch above
junk said it could raise the group s ratings as a result of a
listing which will help strengthen liquidity provide funds for
growth and underpin transparency and disclosure practices
Citigroup Credit Suisse and Morgan Stanley are the joint
global coordinators for the offer
The bumper listing sees Goldman Sachs overtaken in Europe
after it missed out and JPMorgan will likely drop outside the
top five equity and IPO rankings for Europe the Middle East and
Africa two tables it topped this time last year
Additional reporting by Denny Thomas Nishant Kumar and
Alison Leung in Hong Kong Miranda Maxwell in Melbourne Sonali
Paul in Sydney and Sinead Cruise Quentin Webb and Julie Crust
in London Editing by Lincoln Feast Dean Yates and Sophie
Walker |
MS | WRAPUP 1 Singapore tightens policy as GDP shows Asia remains robust | S pore Q1 GDP grew 8 5 pct y y vs consensus of 6 pct
Better than forecast Q1 GDP follows strong China trade
Singapore tightens monetary policy ups inflation view
Singapore dollar jumps to fresh record high
Recasts to lead with GDP
By Kevin Lim
SINGAPORE April 14 Reuters Singapore tightened monetary
policy on Thursday as it reported a stellar first quarter for
the economy another sign of strength in a region that is
driving global growth while also stepping up the fight against
inflation
The Singapore dollar shot to a record high after the
Southeast Asian city state reported growth of 8 5 percent
year on year in the first three months of 2011 far above the
forecasts of 10 economists polled by Reuters ID nL3E7F70EQ
On a seasonally adjusted quarter on quarter annualised
basis the economy grew a breakneck 23 5 percent the fastest
pace since April June 2010 Singapore s Ministry of Trade and
Industry said
GDP growth was stronger than our expectations largely
because of stronger manufacturing growth of 13 9 percent
against January February growth of 7 7 percent said Bank of
America Merrill Lynch economist Chua Hak Bin
This suggests manufacturing surged in March despite
Japan s earthquake he added
The MAS said tighter policy would continue to restrain
prices but added that inflation this year will likely remain
elevated and come in at the upper half of its 3 4 percent
forecast range
Singapore s speedy growth should be a bellwether for other
emerging economies in the region and comes on the back of strong
economic data from China
China said on Thursday that March power consumption rose
13 4 percent from a year ago while first quarter trade numbers
out recently showed a sharp jump in exports and imports by the
world s second largest economy ID nL3E7FE054 ID nL3E7FA00N
In stark contrast Japanese corporate confidence plunged by
a record in April and is seen worsening further after last
month s earthquake and tsunami devastated Japan s northeast and
triggered a nuclear crisis a Reuters poll showed
ID nL3E7FD3IS
Business sentiment deteriorated sharply as expected as
manufacturing activities in not only the quake hit region but
other areas completely stopped after the quake said Tatsushi
Shikano senior economist at Mitsubishi UFJ Morgan Stanley
Securities
Although some production has resumed the level of capacity
utilisation remains low suggesting companies will remain
pessimistic for some time
The resilience of Asia outside Japan should also help offset
any drag from the United States where recent disappointing data
has seen forecasts for first quarter growth nudged lower
TIGHTENS POLICY
Singapore modestly tightened monetary policy by sanctioning
an immediate rise in the value of its dollar to record highs
becoming just the latest Asian nation to use currency strength
to fight commodity driven inflation
The Singapore dollar the world s 12th most
actively traded currency rose to an all time high of S 1 2452
against the U S dollar on the news It was trading around
S 1 2555 before the central bank released its half year monetary
policy statement
The authority re centered its exchange rate policy band
upwards although to below the prevailing nominal effective
exchange rate It also left the slope and width of the band
unchanged
They have raised the inflation forecast for this year so
the tweaking of monetary policy is appropriate given that it
looks that the economy may perform better than expected and
therefore exert stronger pressure on the inflation front said
Song Seng Wun a senior economist at CIMB
The Monetary Authority of Singapore MAS conducts policy by
managing the value of the local dollar against a basket of other
currencies which it deems as more effective than setting
interest rates given the city state s high level of imports
The Singapore dollar had already gained close to 2 percent
against the dollar so far this year prior to Thursday s policy
statement hitting a series of record highs as MAS and many
other Asian central banks allow their currencies to appreciate
to contain imported inflation
Singapore s annual inflation spiked up to 5 5 percent in
January far higher than analysts expectations but moderated
somewhat to 5 0 percent in February
MAS s policy surprised some economists who had expected a
re centering at the currency s current level which would have
been more aggressive Yet analysts still expected further gains
in the local dollar from here
At this juncture we will still be keeping our year end
dollar sing forecast at 1 22 said Emmanuel Ng fx strategist
at Oversea Chinese Banking Corp
MAS said its policy adjustment took into account the tighter
policy stance adopted in April and October last year which will
continue to have a restraining effect on the economy and prices
Nine of 12 economists polled by Reuters before the meeting
had predicted Singapore would tighten policy in some way at the
review ID nL3E7F11KT
Asia s central banks are grappling with rising inflation
even as high oil prices threaten to slow global economic growth
South Korea s central bank revised its 2011 inflation
forecast upward on Wednesday a day after keeping interest rates
steady while Indonesia on Tuesday said it was letting the
rupiah rise as part of efforts to contain inflationary
pressures ID nL3E7FC36I ID nL3E7FC14S
Market watchers were divided on whether Singapore will
tighten policy further in October but most said other Asian
countries will likely have to raise interest rates further in
coming months
MAS and Malaysia s central bank were early starters when it
came to tightening monetary policy in 2010 Most other Asian
central banks started later and they still have got more work
to do throughout 2011 said Endre Pedersen managing director
for Asia fixed income at Manulife Asset Management in Hong Kong
Additional reporting by Jongwoo Cheon and Singapore bureau
Editing by Raju Gopalakrishnan |
MS | Australia s OM Holdings faces opposition to Hong Kong listing | MELBOURNE April 14 Reuters Manganese producer and
trader OM Holdings has run into opposition to a planned
dual listing on the Hong Kong stock exchange from its top
shareholder Ukrainian billionaire Gennady Bogolyubov s
Consolidated Minerals
Consolidated Minerals which owns 11 4 percent of OM
Holdings said it planned to vote against the share issue worth
up to A 498 million 522 million and go to court to stop the
Hong Kong listing which it said would heavily dilute existing
shareholders
We have had enough of the poor corporate governance and
apparent lack of transparency and you can expect us to commence
legal action against the Hong Kong listing and then take steps
to remove the current directors Bogolyubov said in a
statement
OM Holdings declined to comment on Consolidated Minerals
protest
Shareholders are due to vote on April 20 on an issue of up
to 345 million new shares to be listed in Hong Kong at up to a
20 percent discount
Combined with employee options the Hong Kong listing could
more than double the group s share base Consolidated Minerals
said
Make no mistake as we see it OMH is run by the board and
for the board and we are not going to watch minority
shareholders be significantly disadvantaged yet again
Bogolyubov said
Consolidated Minerals called it a major move which
shareholders had had too little time to evaluate OM Holdings
spelt out the plan on March 28 in its notice of annual meeting
In principal they may not be opposed to the Hong Kong
listing but ConsMin are certainly opposed to the way the
company is going about doing it said Peter Brooke a spokesman
for Consolidated Minerals
OM Holdings is looking to list in Hong Kong to expand its
shareholder base and give it better access to capital in Asia
In addition being strategically positioned in this well
established and highly liquid market will be of significant
benefit to the company should it contemplate future
international acquisitions and or growth opportunities it said
in its notice to shareholders
CITIC Securities International and Morgan Stanley
have been appointed as joint global coordinators for the Hong
Kong share offer which OM Holdings aims to complete by the end
of September
1 0 953 Australian Dollars
Reporting by Sonali Paul Editing by Mark Bendeich |
JPM | Macron must win big now to have a chance of fulfilling pledges | By Michel Rose PARIS Reuters Emmanuel Macron s camp should perhaps keep the champagne on ice a little longer The young independent centrist s qualification on Sunday for the runoff of France s presidential election in two weeks time will certainly bring a sigh of relief in European capitals and financial markets opinion polls suggest he will beat his far right rival Marine Le Pen with ease But to have a real chance of implementing the reform of France s economy and politics that he wants he needs a victory big enough to enlist popular figures from established parties in the parliamentary election that follows in June According to an almost complete count Macron beat Le Pen by around 24 percent to 22 percent It may have been a huge triumph for a 39 year old never elected to public office who was virtually unknown in France before becoming economy minister three years ago and only founded his political movement last year But it was also in a packed field the lowest score of any first round winner since 2002 Then it was Jacques Chirac who scored only 20 percent but benefited from a joint effort by all mainstream parties to block his National Front challenger Le Pen s father Jean Marie to secure a crushing win in the runoff by 82 percent to 18 This time the mainstream conservatives and Socialists also quickly urged their supporters to vote to block Marine Le Pen He s going to adopt a rallying posture just like former president Jacques Chirac did in 2002 said Francois Kraus of pollsters Ifop But in 2017 the endorsements of conservatives and Socialists combined accounted for only 26 percent of votes Analysts say that if Macron fails to win more than 60 percent in the second round he may find it hard to reassure a divided country that he has what it takes to reform the euro zone s second largest economy which is only starting to pick up speed after five years of anemic growth Then in turn he might struggle to turn his promise to transcend traditional party divides into a working majority for his En Marche Onwards movement in June s parliamentary election six weeks later MOMENTUM Macron addressed that head on in his victory speech saying that the power of the momentum behind me will be the key to my ability to lead and govern Two surveys conducted on Sunday put him on 64 and 62 percent respectively for the second round But in Le Pen the former Rothschild investment banker faces a formidable rival It s more complicated than it looks a new campaign is starting said Francois Miquet Marty of pollster Viavoice Marine Le Pen is going to frame this as a face off between Emmanuel Macron the candidate of the globalized elite and herself as the people s candidate he said She has a line of attack that can hit the bullseye And endorsements from mainstream parties could also work against Macron in a country where the divide between haves and have nots has been pushing up support year after year for Le Pen s message that only she can defend French workers jobs and rights On Sunday night Le Pen and her allies dismissed Macron as the candidate of a dying establishment Change is obviously not going to come from the heir of outgoing president Francois Hollande and his disastrous mandate of failures she told supporters Miquet Marty said Macron would need a more offensive approach and to distill the message that a Macron presidency would be more peaceful than a Le Pen one Again Macron hinted at this when he told supporters The challenge from tonight is not to go and vote against whoever it might be the challenge is to decide to break completely with a system that has been incapable of dealing with our country s problems for more than 30 years ECONOMIC COMPETENCE In his favor analysts say is the fact that 35 percent of voters thought Macron was the best candidate to put the French economy on the right track against only 20 percent for Le Pen according to a recent Odoxa poll Meanwhile Le Pen s anti euro stance which is rejected by many of her own supporters as well as a majority of voters offers him a promising line of attack Many analysts are now turning their attention beyond his expected victory in the second round to ask whether he can gather the political muscle to enact his program Macron says his party will field candidates in all 577 constituencies but he has also made clear that he will welcome those from other parties who share his views Some 50 Socialist legislators have already signed up to his movement including some heavyweights but the bigger his second round score the more attractive it will be for others to follow suit He might have to make do with a coalition government To many analysts and investors the question is whether Macron s government of whatever shape can push through policies such as relaxing some labor laws that are likely to run into public resistance and have defeated previous seemingly stronger admistrations His parliamentary majority could be extremely fragmented We could find ourselves in a situation similar to what happened under the Fourth Republic with an unstable majority said political analysts Philippe Cossalter of Sarre University Raphael Brun Aguerre of JPMorgan Chase NYSE JPM Bank said it would be very difficult for Macron to secure a majority in the lower house adding We thus expect him to try to form a cross party coalition around a narrow set of reforms Macron s answer is that he has spent the last year proving the pundits wrong and will do so again
They re taking the French for idiots he said at a recent rally The French are consistent That s why six weeks later they will give us a majority to govern and legislate |
C | Citi sells Hungary consumer banking business to Erste Group | Reuters Citigroup Inc N C agreed to sell its consumer banking business in Hungary to Austria s Erste Group Bank AG VI ERST as the third biggest U S bank by assets continues to divest non core operating businesses The sale includes Citi s retail banking consumer loans and cards businesses and the transfer of consumer banking employees the U S bank said on Wednesday Citi did not disclose the financial terms of the deal but said the sale was not material Reuters reported in June that Erste Group was on track to buy Citigroup s Hungarian retail portfolio
Citi has pared back internationally in recent years pulling out of retail banking in long established markets such as Japan |
C | Tesco sells South Korean arm to private equity group for 6 1 billion | By James Davey and Joyce Lee LONDON SEOUL Reuters Tesco LONDON TSCO is selling its South Korean arm to a group led by private equity firm MBK Partners for 6 1 billion it said on Monday as the British supermarket retreats from foreign markets to focus on reviving its troubled domestic business The sale of Homeplus its largest overseas asset represents the first large divestment by Tesco boss Dave Lewis who wants to slash debt and rid the firm of its junk credit rating after its profits were battered by market share losses to discounters Aldi and Lidl in Britain and by an accounting scandal It follows Tesco s costly exits from Japan and the United States as well as a reduction of its exposure to China under previous management and highlights the difficulty Western retailers have had away from their home markets Tesco has agreed to sell Homeplus to investors led by MBK and including the Canada Pension Plan Investment Board Public Sector Pension Investment Board and Temasek Holdings This sale realizes material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet said Lewis a former Unilever LONDON ULVR executive who was hired last September to lead Tesco s turnaround Under the terms of the largest ever private equity transaction in Asia Tesco will receive 4 billion pounds 6 1 billion in cash After adjustments for tax and transaction costs the net cash proceeds to be received in a combination of U S dollars and Korean won will be around 3 35 billion pounds Tesco said the Homeplus disposal would reduce its total indebtedness which stood at 21 7 billion pounds as of end February 2015 by 4 225 billion pounds However the deal will remove a business that contributed around 150 million pounds to annual earnings The price looks OK said one major Tesco shareholder I suspect that despite the earnings dilution the market will take a positive view of the deal as it strengthens the balance sheet INVESTMENT GRADE Shares in Tesco down 19 percent over the last year slipped 0 3 percent by 0951 GMT after an initial rise of up to 2 percent Tesco will use the proceeds to redeem upcoming bond and commercial paper maturities over the next 18 months It will also consider the purchase of some UK leasehold stores The sale comes after the 96 year old group announced in April one of the biggest losses in British corporate history hit by a 7 billion pounds write down Bernstein analyst Bruno Monteyne a former senior Tesco supply chain executive said the deal should allay fears the firm will need to ask shareholders for cash to secure its balance sheet He said it would only have a small impact on the net debt to core earnings ratio moving it from 6 2 times to 6 0 times for the 2015 16 financial year But he said it would enable Tesco to get below the 4 5 times ratio needed by ratings agency Moody s for an investment grade credit rating in 2017 18 Completion of the disposal which requires the approval of Tesco shareholders and regulators is expected during the fourth quarter of 2015 Lewis will now turn his attention to the sale of Tesco s customer data business Dunnhumby which he put on the block in January Reuters had previously reported that MBK was the preferred bidder for Homeplus which has 140 hypermarkets 375 supermarkets and 327 convenience stores The MBK consortium said it planned to invest 1 trillion Korean won 831 million in Homeplus over the next two years to boost its competitiveness HSBC Bank acted as Tesco s lead financial adviser and Barclays LONDON BARC Bank as financial adviser and sponsor Deutsche and CitiGroup advised MBK |
C | Citi shared central bank info with clients ex trader | By Jamie McGeever LONDON Reuters Citigroup NYSE C sent details of its central bank customers trading activity to another client and handed out details of its foreign exchange order book to customers in electronic chatrooms a former foreign exchange trader said in a witness statement to a London court on Thursday Perry Stimpson a former Citigroup currency trader who is claiming unfair dismissal said the practices which breached client confidentiality were well known by senior managers Our Investor Desk would comply with a weekly request from a client for details of Central Bank activity that Citi had transacted Stimpson said in his witness statement to an employment tribunal in London Stimpson did not specify which central banks he was referring to He said Jeff Feig who was Citi s global head of trading at the time called a halt to sending round the central bank survey as Stimpson said it was referred to in mid 2013 because he decided it was wrong He did not elaborate Feig was not immediately available for comment Another common practice on the Investor Desk was to cut and paste details of Citibank s order book on to Bloomberg chats at the request of customers Stimpson said in his statement A Citi spokesman said All of the allegations of wrongdoing being made by Mr Stimpson have been investigated and were found to be without merit Citi has said Stimpson was dismissed for serious breaches of contract alleging he shared confidential client information with traders at other banks via electronic chatrooms He was dismissed last November in the wake of an industry scandal that resulted in banks paying more than 10 billion in fines for failing to stop traders attempting to manipulate the 5 trillion a day forex market Stimpson who described himself as moderately successful at his job and quite anti social was strongly encouraged to gather and share more market information with colleagues and traders at other banks he claimed in order to have a broader understanding of market conditions to help the bank in its trading Maintaining contacts to gather information became one of his annual goals that would help dictate his year end bonuses Dude get yourself on a chat his then line manager Bob de Groot told him in 2009 according to Stimpson s statement Perry has made a good effort to talk to other participants in the market he could give a little more effort in sharing information and ideas across the business is what de Groot wrote in his 2009 year end review Stimpson claimed in his statement De Groot left Citi in early 2010 De Groot was not immediately available to comment STIR IT UP In his testimony Stimpson said Citigroup staff breached confidentiality around some clients and that some senior staff used inside information to trade in contravention of the bank s own code of conduct In his witness statement Stimpson said Michael Plavnik then head of the short term interest rate trading desk looked to profit from trading euros around that day s fixing the daily process of setting what are effectively benchmark exchange rates used by many funds companies and central banks around the world Plavnik had heard Citi s spot FX desk had a large order to buy euros at the fix Armed with that knowledge he bought 200 million euros before the fix to sell them back into the market at the fixing rate Stimpson claimed in his statement Plavnik has not been found to have committed any misconduct a Citi spokesman told Reuters Plavnik who has since been promoted to global head of short term interest rate trading did not immediately respond to an email requesting comment Earlier this week Stimpson told the tribunal that senior Citi staff traded on insider information ahead of a major merger and acquisition deal five years ago which netted the bank 35 million Citigroup s lawyer Diya Sen Gupta told the court on Thursday The allegations were investigated and are not and were not substantiated Stimpson who is representing himself admitted that he had signed Citi codes of conduct which covered a wide range of issues from ethics to client confidentiality but barely paid any attention to their content
The hearing will extend into next week and Stimpson is expected to testify again and bring his own witnesses on Friday |
C | Ex Citi trader points finger at bosses for culture that allowed breaches | By Steve Slater LONDON Reuters A former foreign exchange trader claiming he was unfairly dismissed by Citigroup N C said the sharing of client information looks wrong now it has come under scrutiny from regulators but was condoned by senior management at the time Perry Stimpson a forex trader at the banking group until he was fired last November is claiming unfair dismissal at a London employee tribunal Citi says he was dismissed for serious breaches of contract alleging he shared confidential client information with traders at other banks via electronic chatrooms Now in the glare of scrutiny from regulators these activities look wrong But at the time they were market convention Stimpson said under cross examination on Friday Citigroup is one of seven banks to be fined more than 10 billion for failing to stop traders manipulating the forex market Stimpson said he saw senior forex staff sharing information about client activities and even more senior staff effectively condoning this activity as they were aware of it but took no action If you look at any organization surely you look to senior management Stimpson said The culture in any organization is set by senior management down If you see senior management do something it implies to you it s OK WITHOUT MERIT Citigroup said in a statement Mr Stimpson is making these allegations to deflect attention from his own misconduct All of the allegations of wrongdoing being made by Mr Stimpson have been investigated and were found to be without merit Its lawyer told the tribunal the investigations had been conducted internally and by its external counsel Stimpson admitted he shared information about a central bank client in a chatroom But he said whether client information could be shared was a bit of a gray area Citi staff knew details of some client activities were strictly confidential but the actions of central banks were widely shared he said It was implicitly understood that central banks were OK to talk about It was standard market practice that went on for years he said Citigroup told the tribunal it had concerns that Stimpson breached client confidentiality on at least 12 occasions in chatroom conversations which broke its code of conduct The dates of the breaches have not been disclosed but they include conversations in 2010 Citigroup said its code of conduct made no exceptions for central banks or any clients Stimpson agreed but said the bank did not provide guidelines on what was allowed in chatrooms until January 2013 Citi s lawyer Diya Sen Gupta said because other traders shared information in chatrooms did not allow Stimpson to do so Just because other people are doing something wrong doesn t mean you are excused from your own behavior
The hearing will extend into next week Employment tribunal Judge Alison Russell is expected to give her decision by early October |
MPC | When It Rains It Pours Mnuchin Mania | The US Dollar bids were far and few between thanks to Treasury Secretary Mnuchin s outward endorsement for weak USD policy While we already knew the administration previously favored a weaker dollar his comments caught the dollar prone and defenseless opening floodgates to a massive wave of dollar selling
His comments have turned into a bit of a fiasco and will end up going down in market folklore for marking the first time since the early 90s that a US Treasury Secretary endorsed a weaker US dollar The bond market took an immediate and predictable defensive posture as US 10 Year yields soared topping out at 2 66 as memories of savage bear markets resonated from when then Treasury Secretary James A Baker III threw down the gauntlet and endorsed a weaker dollar in the early 90s But we are far from the fractures and turbulent world economy of the late 80s or early 90s so the Munchin fallout is unlikely to trigger the tsunami of global risk aversion that occurred in yesteryear Nonetheless the aftershocks are still reverberating in the early APAC session Oil Markets
Oil markets too were at the epicenter of volatility with WTI breaking the 65 00 per barrel and marking the highest close since Dec 2014 Oil prices pivoted higher after the U S Energy Information Administration EIA reported a 10th straight drop in US crude inventories The report solidifies the view that OPEC production caps are working
But let s not lose sight of the US dollar follies which are underpropping oil markets and providing the bounce to all commodity markets Since we may only be in the early stages of the US dollars demise and when aggregated with the oil markets OPEC induced positive developments the market could press significantly higher from increasing sensitivity and stronger correlations to the US dollar alone
Structurally the dollar can push much lower as signs are developing that we may be in the early stages of a multi year secular bear market
Gold Markets
Gold hit an 18 month high as investors were more than willing to pay hefty insurance premiums as a hedge against the inflationary impacts from a hapless dollar US Treasury Secretary Steven Mnuchin opened the floodgates to dollar sales but with traders best case scenario to sell the dollar at all costs gold prices should remain well supported on dips and could be poised to move even higher on the next US dollar wobble
G 10
The EUR
Decision day for the ECB and the traders are jointly overseeing price action which usually sends a convincing signal to reduce risk as it s typical to reduce longs ahead of the ordinarily dovish Draghi
Given the extended EUR position we should expect the EUR to give way some points on dovish Draghi But with the primary macro theme in FX markets being USD weakness it s unlikely those euro offers will hang around too long especially after dollar red flags raised when BoJ Kuroda erred as dovish as could be and the market still bought JPY
The Japanese Yen
They Yen has been tracking the general dollar weakness overnight but traders are waiting for the BoJ next move USD JPY is too high to sound the intervention alarm bells leading me to believe a swift shift in policy may be in the offing The Australian Dollar
AUD has recovered all of Iron Ore inspired losses as the free falling greenback has supported the commodity block of currencies en masse
But the next catalyst may come from a build up of RBA rate hike fever that seems to be making the rounds these days While the market base case is for the RBA to remain neutral any bullish shift higher in a measly price in May hike probability could push the Aussie to 82 level
Traders are starting to take notice of the recent string of economic data which has been particularly boisterous led by strong employment print supported by an uptick in consumer sentiment
However with the Aussie dollar soaring these days there s a higher likelihood the RBA will remain faithful to current expectations as opposed to moving in front of them The Chinese Yuan
The market has come a long way in a few days primarily driven on the heels of the broader USD malaise as fast money speculators have piled into both sides of the ledger However there is chatter circulating of some sizable stops that are cluttering the landscape near the 6 34 level that could prove an attractive target and test the PBoC s resolve Either way recent price discovery is telling us heaps about the PBoC s current currency policy which appears much more investor friendly than ever before
The Malaysian Ringgit
Overnight price action was more a reflection of a struggling US dollar rather than pre Marathon Petroleum Corporation NYSE MPC market positioning
Nonetheless the Ringgit was supported by surging crude prices and the sagging dollar But today is the day of reckoning for Riggit bulls and the BNM could make or break many of our top line views
Pre BNM banter
Straw polls suggest that 65 of the market has long Malaysian exposure in either short USD MYR or long short dated Malaysia Bonds
But the massive lifting will be left to Bank Negara to express a strong currency bias by raising interest rates at today s meeting
Our base case scenario is for slightly more aggressive action from Bank Negara Malaysia BNM than the market s consensus of one hike and done So if the BNM signal one additional rate hike for 2018 this would trigger an immediate downside test of 3 70 whereas if the BNM signals only one single rate hike for 2018 the market will test 3 80
The most unlikely scenario if the BNM take a dovish tack suggesting no imminent rate hike then USD MYR could gap above 4 00 USD MYR in a heartbeat
As far as yesterday CPI data While coming in at 3 5 for Dec 3 7 for the full year 2017 and within the central bank s 3 4 inflation target The BNM is still expected to hike interest rates later today since firmer oil prices will translate into high headline inflation in 2018 |
MS | European stocks rise ahead of ECB rate decision DAX up 0 1 | Investing com European stock markets advanced on Thursday led higher by financials after Portugal announced it would seek a bailout and ahead of an expected euro zone interest rate hike while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 climbed 0 25 France s CAC 40 gained 0 2 while Germany s DAX 30 edged 0 1 higher Portugal became the third euro zone member to seek a bailout from the European Union on Wednesday with the size of the package expected to be as much as EUR80 billion Portuguese banks Banco Espirito Santo and Banco Comercial Portugues rallied 5 3 and 4 9 respectively in wake of the aid request Across the sector Europe s largest banking group BNP Paribas saw shares climb 2 25 Deutsche Bank rose 2 while Banco Santander added 2 2 as markets awaited an interest rate announcement by the European Central Bank later in the day The ECB was widely expected to raise its key lending rate to 1 25 from a record low of 1 0 Meanwhile shares in German automaker BMW slumped 1 8 after Morgan Stanley recommended selling the share citing a slowdown in earnings growth Shares in rival Audi dropped 1 1 while Porsche slipped 1 35 Also Thursday shares in German construction group Hochtief tumbled 6 5 after it said that it expected significant adverse effects on its 2011 earnings outlook resulting from losses in its Australian subsidiary Leighton Holdings In London the FTSE 100 eased up 0 1 ahead of the Bank of England s interest rate announcement Banks were among the top gainers with Royal Bank of Scotland jumping 2 6 Barclays rising 1 5 and HSBC Holdings up 1 6 Shares of soft drinks manufacturer Britvic dropped 4 2 after Goldman Sachs downgraded the stock to sell citing a slowdown in revenue resulting from a challenging sales environment in the U K and Ireland The outlook for U S equity markets meanwhile was upbeat The Dow Jones Industrial Average futures pointed to a modest gain of 0 05 S P 500 futures indicated a rise of 0 1 while the Nasdaq 100 futures edged 0 03 higher Later in the day the U S was to publish a weekly report on initial jobless claims as well as data on consumer credit |
MS | German gambling proposals delay Perform s UK debut | Sports media firm delays London market debut to Friday
Short medium term contract revenues unaffected source
Aims to raise around 200 million pounds
By Kylie MacLellan
LONDON April 7 Reuters Digital sports media firm
Perform Group delayed its London market debut on Thursday after
Germany proposed changing gambling and taxation rules three
sources close to the deal said
The firm which wanted time to explain to investors the
impact of the changes now expects to begin trading on Friday
Final pricing on the around 200 million pound 326 million
initial public offering IPO which had been due first thing on
Thursday would now be announced either after the market closes
or on Friday morning the sources said
Germany s proposals set out on Wednesday include plans to
tax sports betting from next year at 16 67 percent of turnover
and ban in game wagers In addition television advertising for
online sports betting sites might be outlawed
Perform s activities include providing live video of sports
events to online bookmakers and exchanges It also provides
sports news and runs the websites of the Premier League and
Chelsea Football Club
The world s biggest listed online gaming company Bwin party
digital on Thursday said the proposed changes would make it
impossible for it to compete in Germany
But Perform does not expect the changes to impact its
short to medium term contract revenues one of the sources said
The firm may also benefit from the decision by Germany s
states to award seven nationwide concessions for sports betting
companies starting in 2012 which could open the market further
A spokesman for Perform declined to comment
On Wednesday the company narrowed the price range on its
offering to 260 to 280 pence per share from earlier guidance of
255 to 325 pence
Perform s management and employees own 40 percent of the
company Access Industries a privately held U S based
industrial group owned by Len Blavatnik has a 58 percent stake
Up to 131 million pounds of existing shares will be sold in
the IPO including an overallotment option as both Access and
management reduce their holdings pro rata
The listing will also include 70 million pounds of new
shares to fund organic growth and acquisitions
Perform which last year streamed more than 25 000 sporting
events live generated revenues of 67 4 million pounds in 2010
up from 28 3 million in 2008
The offering is being run by Credit Suisse Morgan Stanley
and UBS
Perform s planned listing was reported first by Reuters in
November when sources said Access was considering a 2011
listing of the business
1 6137 Pound
Editing by Jon Loades Carter |
MS | SNAP ANALYSIS ECB signals determined to act on inflation | Inflation risks on upside averting spiral is priority
Tone on inflation a little calmer than remarks in March
Deposit rate rise shows ECB wants to control market rates
Trichet appears relaxed about euro strength exports
No word on how when unlimited loans to be phased out
By Sakari Suoninen
FRANKFURT April 7 Reuters By declaring it is
essential to avoid broad based pressure for inflation and
raising its overnight deposit rate as well as its key refi rate
the European Central Bank signalled it will act aggressively if
necessary this year to head off an extended rise of inflation
At his news conference after the ECB hiked the refinancing
rate by 25 basis points from a record low level of 1 00 percent
on Thursday President Jean Claude Trichet had the opportunity
to dampen market expectations for more rate rises this year
He did say the ECB had not decided its hike would be the
first in a series an assurance to nervous markets that the
central bank would weigh each month s rate decision carefully
But the Governing Council meeting was in any case very unlikely
to agree in advance on a string of hikes
By stressing the importance of avoiding an inflationary
spiral saying the medium term risks were for higher inflation
and attributing inflation pressure to strong growth in emerging
economies as well as high oil prices Trichet made clear where
the ECB s priorities will lie this year
We will continue to monitor very closely all developments
with respect to upside risks to price stability he said This
was slightly less hawkish in tone than Trichet s remark last
month that he would adopt strong vigilance against inflation
which markets saw as indicating an imminent rate hike but the
inclusion of the word very showed continued concern
So markets will continue to view Thursday s hike the first
since July 2008 as the beginning of a series of rate rises
extending at last through the end of this year
Portugal s decision on Wednesday night to seek an
international bailout has probably made it easier for the ECB to
tighten policy in coming months since the bailout will give
Lisbon relatively low cost financing as market rates rise
Before Thursday s rate hike EONIA overnight rates implied a
rise in the refi rate to 1 75 percent by the end of this year
After the decision they were barely changed
For a package of graphics on the ECB click
DEPOSIT RATE
Also important was the ECB s decision on Thursday to raise
the overnight deposit rate which acts as a floor for short term
market rates by 25 basis points to 0 50 percent
About half of economists surveyed by Reuters had expected
the ECB to leave the deposit rate at 0 25 percent widening the
corridor between it and the refi rate back to its traditional
pre crisis size of 1 percentage point
The central bank s hike of the deposit rate suggests it is
not willing to sit back and wait for market rates to return to
normal levels above the refi rate as commercial banks gradually
reduce their intake of ECB loans Instead the ECB wants to
reassert some control over market rates and dictate the pace at
which they rebound from ultra low levels
However Trichet did not reveal when or how the ECB would
take a key step towards returning market rates to normal levels
phasing out its offers of unlimited loans to banks in money
market operations The loans were introduced as an emergency
step but have now become a liability putting massive downward
pressure on rates
Last month euro zone official sources told Reuters that the
ECB was close to creating a new liquidity facility that would
support weak banks in Ireland and elsewhere helping it
eventually to phase out unlimited loans
But disagreements within the ECB s Governing Council over
how much aid the central bank should provide to countries have
caused that plan to be suspended The ECB may have to resolve
the dispute and put the new facility in place before it can say
anything explicit about ending unlimited loans
CURRENCY GROWTH AND INFLATION
The fact that Trichet did not express concern about the
strong euro which has been hitting 14 month highs against the
dollar was also striking
He said one of the upside risks for economic growth was
exports implying he felt they could withstand euro strength
and did not list currency appreciation as one of the downside
risks to economic expansion
Although 1 40 has been seen by some euro zone officials as
a pain level for manufacturers the strong euro helps curb
commodity price inflation which probably accounts for Trichet s
acceptance of currency levels This suggests the euro might have
to rise considerably further perhaps to 1 50 before the ECB
became concerned about it
Movements in other currencies and the euro zone s
increasing dependence on trade with Asia rather than the United
States may also reduce the impact on growth of euro
appreciation against the dollar The euro has risen about 7
percent against the dollar this year but on a trade weighted
basis it is up a little over 3 percent
The lack of criticism by euro zone government officials and
politicians ahead of the ECB s rate decision which was
telegraphed well in advance suggests Trichet succeeded in
convincing them of the central bank s argument that it needs to
be seen to acting against inflation to avoid an upward spiral in
wages and prices
Euro zone inflation accelerated to 2 6 percent last month
well above the ECB s medium term target of just below 2 0
percent and record oil prices mean upward pressure may persist
An inflation fuelled surge in bond market yields would hurt the
finances of governments around the region
From the point of view of growth weak states Greece
Ireland Portugal and Spain would ideally face lower interest
rates to ease pressure on their banks and mortgage holders
But a 25 bp interest rate hike in itself will have little
impact especially since market rates already rose in
anticipation of Thursday s decision meaning they may have
little room to climb further for now
Berenberg Bank estimated the annual impact on the Spanish
economy of a 0 5 percentage point rise in ECB rates at between
0 1 and 0 2 percentage point of gross domestic product
However the ECB s series of rate hikes will become a
significant drag on the region s growth over time especially if
the euro stays firm In a report issued before the ECB decision
Morgan Stanley raised its 2011 estimate for euro zone growth
this year from 1 5 percent to 1 7 percent
But predicting the refi rate would be hiked a total of 100
bps by next spring it said tighter monetary policy and a strong
euro would cut next year s growth to 1 2 percent from the 1 7
percent which Morgan Stanley previously forecast
Editing by Andrew Torchia |
MS | ANALYSIS Indian pharma in tough battle for generic riches | 100 bln worth of drugs coming off patent in next 2 yrs
Indian companies face competition lawsuits stricter
regulator
Mylan lawsuit over Lipitor a sign of more to come
Indian firms violations of manufacturing rules could
crimp FDA approvals
Indian pharma index down 9 pct this year
By Bharghavi Nagaraju
BANGALORE April 12 Reuters Indian makers of generic
drugs have a fight on their hands as they scramble for access to
the 100 billion worth of drugs coming off patent over the next
two years
Fierce competition and lawsuits from rival generic firms a
stricter U S health regulator and compliance issues are some
hurdles Indian pharmaceutical firms face in their race to grab
the opportunity
In a sign of what lies ahead U S generic drug firm Mylan
last month sued the U S Food and Drug Administration in
an effort to block Ranbaxy Laboratories from
getting a six month head start on marketing a generic version of
the world s largest selling drug Pfizer s Lipitor
ID nN21120116
Though this litigation will turn on its own merits a
number of others can be anticipated to follow given the sheer
size of the market that will be vacated by the erstwhile
patent protected products as the patents expire said Hitesh
Gajaria executive director with KPMG
Some manufacturers from India and elsewhere have also run
afoul of U S regulators over manufacturing standards and
processes potentially crimping their ability to win approvals
Sun Pharmaceutical Industries for example has
three sites under FDA investigation and has said it is working
on remedial measures for compliance
Managing Director Dilip Shanghvi said in February that
compliance issues meant Sun was likely to file for 20 to 22 drug
approvals in the year ended in March down from its earlier
target of 30
The companies will have to tighten the norms and make sure
they are in compliance with all the norms all the time said
analyst Ranjit Kapadia at HDFC Securities
It is a part of business but a major concern
Another worry is the longer time taken for generic drug
approvals as the FDA deals with a backlog fuelled by competition
and becomes more stringent on quality analysts said
It now takes the FDA more than 30 months to approve a
generic drug where as a year ago it took 25 to 30 months
which is likely to hurt the margins of drug makers PINC
Research s Sushant Dalmia said
BIG OPPORTUNITY
Indian drug firms which account for about a third of U S
applications for approval to sell generics could add 2 billion
to 2 5 billion in U S sales in the next five years doubling
their revenue from the country according to Morgan Stanley
But that opportunity will not be easily won and investor
sentiment is reflected in the decline in share prices
The Indian pharmaceutical index is down more than 9
percent this year versus a near 6 percent fall in the broader
market
The broad pharma sector has not come up from a market
perspective because of the underlying fear of possible
litigations said Rakesh Rawal CEO of private wealth
management at Anand Rathi Financial Services
BLOCKBUSTERS UP FOR GRABS
Drugs worth more than 140 billion are likely to go off
patent in the next five years analysts said and the right to
sell blockbusters such as Lipitor will be especially
contentious
In the next few years Ranbaxy Sun and Dr Reddy s
will compete for a host of big ticket drugs losing patent
protection including Forest s Alzheimer s drug Namenda
and anti depressant Lexapro and blood clot drug Plavix sold
jointly by Bristol Myers Squibb Co and Sanofi Aventis
Generics are poised to increase their market dominance in
the next few years in the United States driven by the wave of
patent expirations rising from 77 percent of prescriptions in
the first half of 2010 to as much as 85 percent by 2014
according to a forecast by IMS Health Inc
Health insurers pharmaceutical benefit managers and other
healthcare payers also push consumers to use generics to help
control spending after the U S government enacted a broad
healthcare reform law last year
The next two to three years is going to be good
Lots of Indian companies are well geared for exploiting this
market Turnover will zoom profits will zoom said Ramesh
Swaminathan Lupin s president for finance and
planning
However there will be lots of lawsuits It is going to be
extremely competitive Ramesh said The FDA will be a lot more
diligent
At the end of December Lupin had 137 applications filed
with the FDA with 47 approvals won to date
LAWSUIT TROUBLE
With so much at stake rival generic drug makers such as
Israel s Teva and Mylan as well as the
patent holding companies are expected to leave no stone
unturned
In its lawsuit Mylan contends that Ranbaxy controlled by
Japan s Daiichi Sankyo should be forced to forfeit its
exclusivity period to sell Lipitor because it violated the FDA s
application integrity policy A victory for Mylan could cost
Ranbaxy 500 million to 600 million in revenue
In 2009 the FDA accused Ranbaxy of falsifying test results
and data in drug applications and halted reviews of products
from the firm s Paonta Sahib plant in northern India
The FDA has asked for a dismissal of Mylan s lawsuit
according to media reports
Analysts expect Ranbaxy whose shares have lost 23 percent
so far this year to launch generic Lipitor in November given
U S approval of its generic version of Pfizer s Alzheimer s
drug Aricept and its plans to move the manufacturing of generic
Lipitor to New Jersey from Paonta Sahib
While that may placate regulators moving manufacturing to
the United States also undermines the cost advantage of
producing in India
There is plenty of opportunity for
generics said Sujay Shetty leader India pharmaceutical and
life sciences at PricewaterhouseCoopers
But unfortunately competition is very fierce both from big
pharma and incumbent generics
Editing by Tony Munroe and Vinu Pilakkott |
MS | PREVIEW Price rises and cost cuts help European food firms | European food groups look to pricing for growth
Pricing cost cuts to offset high input costs
Three big European food groups to report Q1 results
Danone April 14 Nestle April 15 Unilever April 28
By Dominique Vidalon and Silke Koltrowitz
PARIS ZURICH April 12 Reuters Price rises pushed
through by Europe s biggest food groups will have helped to
offset higher commodity costs and tough mature markets to see
their sales growth momentum continuing into the first quarter
Nestle Unilever and Danone all report sales figures this
month for the first three months of 2011 and the timing of
their price rises will be critical in offsetting the effect of
higher input costs
All three say price rises and internal cost savings in 2011
should offset the increased costs of commodities such as grain
milk cocoa and crude oil to drive sales growth close to 2010
levels and maintain profit margins or even nudge them up
On balance we expect good sets of figures across the board
for Q1 sales but the outlook is likely to remain cautious
said analyst Sara Welford at brokers Citi
Michael Steib at Morgan Stanley says growth is increasingly
driven by higher prices and he anticipates the peak impact of
input cost inflation only by mid 2011
France s Danone kicks off the reporting season on April 14
with analysts expecting underlying first quarter sales growth of
6 8 percent including its Unimilk deal according to both a
Reuters poll of 14 analysts and a company compiled consensus
CEO Franck Riboud told analysts late last month the
first quarter had started in the same positive stance that the
group finished 2010 when the fourth quarter grew 6 9 percent
The world s largest yoghurt maker with brands like Actimel
and Activia is expected to confirm its targets for underlying
sales growth of 6 8 percent in 2011 and operating margins up 0 2
percent at 15 4 percent
Analysts say the company has guided that input cost
increases will be at the top of its previous 6 9 percent range
with the group heavily dependent on fresh milk prices which
accounts for a third of its raw material and packaging costs
Danone completed its dairy products merger with Russia s
Unimilk at end November to create the nation s top dairy product
group and make Russia its largest market Danone owns 58 percent
of the new entity and privately owned Unimilk 42 percent
NESTLE UNILEVER
The world s largest food group Nestle is set to show
first quarter underlying sales up 5 7 percent on April 15
according to both a Reuters poll of six analysts and a company
compiled consensus compared to 6 percent in 2010 and 5 7
percent calculated by analysts for the fourth quarter
The Swiss maker of Nescafe coffee and KitKat chocolate bars
has warned input costs would rise 8 10 percent on its cost base
of 30 billion Swiss francs in 2011 and analysts will look for
confirmation it can price and cut costs to protect profits
They expect Nestle to confirm its target for 5 6 percent
growth in 2011 and an improvement in operating margins and will
look for comments on share buybacks as the group has said it
aimed to conclude its current 10 billion Swiss franc buyback in
the first half of 2011 and then decide on a new one
Anglo Dutch Unilever is expected to report underlying
first quarter sales growth of 4 2 percent in a poll of six
analysts by Reuters when it reports on April 28 following 5 1
percent growth in the fourth quarter and 4 1 percent for 2010
The Knorr soup and Ben Jerry s ice cream group has warned
that commodity costs are expected to rise by 4 percent of its
turnover in 2011 or nearly 1 8 billion euros which
analysts calculate as a rise of 12 percent but the group is
confident pricing and cost cuts will offset this effect
The group is seen likely to reiterate its target for
profitable volume growth ahead of its market and for margin
improvement in 2011 and has said it should be able to grow
underlying sales annually at some 4 6 percent
Additional reporting by David Jones in London and Noelle
Mennella and Michel Pires Brito in Paris Editing by Mark
Potter |
MS | European stocks rise as Alcatel Lucent jumps DAX up 0 6 | Investing com European stock markets advanced on Wednesday rebounding from the previous session s broad sell off as shares in Alcatel Lucent surged after a broker upgrade while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 climbed 0 35 France s CAC 40 rose 0 4 while Germany s DAX 30 added 0 6 Shares in French telecom service provider Alcatel Lucent jumped 5 3 after Morgan Stanley upgraded the stock to overweight and raised its price target by 20 to EUR5 per share Shares in French engineering group Schneider Electric climbed 1 1 after it denied that it was in takeover talks with Tyco International However shares in Nokia dropped 3 3 after Morgan Stanley downgraded the stock and cut its price target by 6 to EUR6 per share The investment bank said it saw a 10 risk to Nokia s 2011 profit expectations owing to a lack of high end product launches and increased sales slowdown in feature phones In earnings news ASML Holdings which produces semiconductor lithography equipment saw shares slump 1 5 after it said first quarter revenue totaled EUR1 45 billion short of expectations for revenue of EUR1 49 billion In London the commodity heavy FTSE 100 climbed 0 7 as shares in miners recouped some losses from the previous day s sell off helped by a recovery in metal prices The world s largest mining group BHP Billiton saw shares climb 1 copper producer Xstrata saw shares rise 1 35 while precious metal producer Fresnillo jumped 2 after it said that gold production rose by 13 in the first quarter However shares in travel group Thomas Cook dropped 2 after Goldman Sachs downgraded the stock to sell citing cost inflation political unrest in destination markets and weak consumer confidence in Britain The outlook for U S equity markets meanwhile was upbeat ahead of an earnings report from the second largest U S bank JP Morgan Chase The Dow Jones Industrial Average futures pointed to a gain of 0 2 S P 500 futures indicated a rise of 0 35 while the Nasdaq 100 futures added 0 3 Later in the day the U S was to publish government data on retail sales while the Federal Reserve was to publish its Beige Book |
JPM | Investors see bias as Russian statistics agency revises figures | By Andrey Ostroukh and Alexander Winning MOSCOW Reuters Surprisingly optimistic figures from Russia s statistics agency have alarmed some investors who say data on the Russian economy appears to have become less accurate and more biased toward good news during the country s long recession Some say the problem could now get worse after President Vladimir Putin shifted oversight of statistics agency Rosstat to the economy ministry which is charged with delivering 2 percent growth this year after two years of contraction Rosstat surprised economists by recording a gross domestic product GDP contraction of just 0 2 percent last year much shallower than expected and by revising the previous year s contraction to just 2 8 percent from an initial 3 7 percent It has also delayed many data releases since the start of the year twice reporting industrial output on the weekend after switching to a new methodology In late March Economy Minister Maxim Oreshkin called the switch to the new methodology extremely unsuccessful and said Rosstat s data for January and February might have to be significantly revised Putin who is expected to seek a fourth term in the Kremlin next year responded by transferring responsibility for Rosstat to Oreshkin s ministry Previously it reported to the government as a whole not to a specific ministry a status intended to safeguard its independence from political influence Rosstat s head Alexander Surinov said the connection with the economy ministry gave the agency the resources and clout to improve its data collection and would reduce the need for revisions The ministry is a powerful player therefore it s possible that with its help we will solve our problems Surinov told a news conference earlier this month But one of his predecessors as Rosstat boss has said in the past that placing it under control of the economy ministry would expose it to greater risk of political interference The entity which is the main user of our data which compiles reports and forecasts sees a very big temptation to steer statistics in the desired direction former Rosstat head Vladimir Sokolin told Itogi magazine in an interview in 2009 when he left the agency after 11 years in charge One of Oreshkin s predecessors as economy minister also said earlier this month that the decision to change Rosstat s reporting line was likely to alter the results it publishes The growth figure will depend on who Rosstat reports to German Gref who served as economy minister from 2000 2007 and is now chief executive of Russia s largest bank Sberbank MM SBER told a conference in Moscow this month This is the only thing that can seriously influence economic growth numbers as the rest is predetermined to a great extent FEW ALTERNATIVES Alexey Krivoshapko a Moscow based fund manager at Prosperity Capital Management said Rosstat s data seemed to have become less reliable during the recession which began after oil prices fell and Western countries imposed sanctions over Russia s interference in Ukraine in 2014 Our experience working with Rosstat data shows that as long as the economy is in growth mode the numbers seem to add up as there is a lot of extrapolation in the system he said However in tricky years such as 2015 and 2016 we clearly saw a mismatch in some of the data like nominal wages and retail sales It s not entirely clear if this is driven by methodological issues or by some political desire to make things look a bit better than they actually are He said the agency should use more data from reliable third parties like the tax service state owned banks modern food retailers and use them in addition to surveys and company statistics to improve understanding of the economic situation Russia is far from the only country where investors contend with a statistics agency that some of them may regard with suspicion investors in China India and elsewhere have long relied on alternative measures such as freight shipment data or power generation to develop their own assessments of growth But in Russia little such alternative data is commonly available making it difficult for investors to obtain an independent picture if they lose trust in Rosstat If you doubt too much the quality of numbers that are being produced how can you make a sensible investment decision The simple rule is if you don t believe the numbers don t invest said Zsolt Papp a portfolio manager at JPMorgan NYSE JPM Asset Management in London STEERING STATISTICS Surinov Rosstat s head said the independence of Rosstat is guaranteed by law But he also acknowledged once receiving a request from an unidentified big boss to massage the figures He quoted the official as saying It would be better if inflation was slightly lower than last year Could you not give your bosses a present before New Year Financial bodies like the International Monetary Fund have complained in the past that Rosstat is under staffed and that some of its methods are out of date That view was shared by several economists and former officials who spoke to Reuters The inability of Russian statisticians to adequately monitor the dynamics of even the most basic indicators has long been talked about said Sergey Aleksashenko a former deputy central bank governor Rosstat tracks prices of more than 500 items in its consumer basket of goods and services But these include some that seem out of date like the cost of sending a 15 word telegram For many goods no producer or brand is specified allowing room for creativity in collecting the prices said Olga Molyarenko a lecturer at Moscow s Higher School of Economics One former economy ministry official told Reuters that in the late 2000s Rosstat used to measure cheese prices based on the output of a single factory When Rosstat reported zero inflation for cheese at a time when inflation was high in the rest of the economy the official asked the statistics agency for an explanation It turned out the factory was shut for renovation and had produced no cheese that month Rosstat reported that prices were flat This is a vivid example of what s going on at Rosstat said the official who asked that his name not be published
For a graphic on recent Russian GDP revisions click |
C | Citigroup to return 4 5 million more in fee overcharges | By Karen Freifeld NEW YORK Reuters Citigroup Global Markets Inc CGMI a unit of Citigroup Inc NYSE C has agreed with the New York attorney general to return 4 5 million in account management fees charged on some 15 000 frozen accounts As a result of the agreement a total of more than 20 million will be refunded to Citi customers for overcharges in an investigation initiated by New York Attorney General Eric Schneiderman In October CGMI agreed return some 16 million to more than 31 000 customers who paid higher advisory fees than they had negotiated The latest overcharges are set to be announced on Wednesday We are pleased to work with the New York Attorney General on this matter a Citigroup spokesman said in an email We deeply regret the inconvenience to our clients who will be reimbursed with interest Customers did not receive fee rebates they were entitled to when their accounts were frozen according to the attorney general s office Accounts can be frozen for a variety of reasons the office said and in some cases customers should not have been charged fees CGMI sometimes rebated the fees when requested an internal review found and procedures weren t in place to determine when they were appropriate As part of the October agreement CGMI agreed to conduct an internal review of other types of accounts which is how the bank identified the overcharges related to periods of inactivity
The New York attorney general began his investigation of CGMI in 2012 after a complaint from a customer in Westchester New York who had negotiated a 1 2 percent fee but was charged 1 5 percent costing her more than 3 000 over three years |
C | Citi Sells Hedge Fund and Private Equity Business for 425 Million | By Avi Mizrahi
Citigroup NYSE C today announced that it has reached a definitive agreement to sell its Alternative Investor Services business which comprises Hedge Fund Services and Private Equity Fund Services to SS C Technologies Holdings Inc for 425 million
Citi says that this transaction is a positive outcome for the Alternative Investor Services including its employees and clients As a result of this deal Alternative Investor Services will become part of a known leader in financial services with a demonstrated track record of delivering high quality products and services to its clients
Founded in 1986 SS C Nasdaq SSNC is a global provider of investment software enabled services and software focused on the global financial services industry It is one of the leading American fund administrators for both onshore and offshore hedge funds fund of funds and private equity funds
This acquisition is solidly in line with SS C s strategy of combining organic growth with select high quality acquisitions Citi Alternative Investor Services clients can be assured of SS C s commitment to continue to serve them with world class people process and technology We are excited about adding these talented employees and look forward to the ideas and passion they will bring to our organization commented Bill Stone Chairman and Chief Executive Officer SS C Technologies
The transaction is subject to approvals by relevant regulatory authorities and is expected to close in the first quarter of 2016 The entire operations of this business including approximately 1 500 employees will be transferred to SS C upon closing
In May 2015 Citigroup sold its 30 billion a month margin FX trading client book from CitiFX Pro to two online brokers FXCM and Saxo Bank |
C | Citigroup to pay 15 million to settle U S compliance charges | By Sarah N Lynch WASHINGTON Reuters A unit of Citigroup Inc N C will pay 15 million to settle civil charges alleging it failed to enforce policies designed to prevent and detect insider trading U S regulators said Wednesday s settlement with the Securities and Exchange Commission marks the second time this week that Citigroup has been dinged for regulatory failures Earlier this week two units of the bank also agreed to pay another 180 million to settle charges it defrauded hedge fund investors during the financial crisis A Citigroup spokeswoman said the company is pleased to have the matter resolved In the latest enforcement case the SEC said on Wednesday that Citigroup failed to review thousands of trades executed by its trading desks during a 10 year period Federal securities laws require brokers to take reasonable steps to ensure that traders are not misusing material non public information when executing transactions In addition the SEC said that Citigroup also improperly routed 467 000 transactions on behalf of certain advisory clients to an affiliated market making firm for execution Under the settlement the bank volunteered to pay the 2 5 million in its profits from these principal trades back to the affected clients the SEC said It also must hire a consultant to review its trade surveillance system Citigroup settled the case without admitting or denying the charges |
C | Weekly Energy | OPEC members were unable to reach an agreement on output quotas at their meeting on October 28 29 Oil prices declined by 2 USD barrel over the past week
Among the news items that caught our attention
Last Wednesday crude oil inventory data from the U S Energy Information Administration surprised markets showing an increase of 14 420 000 barrels rather than the expected rise of only 1 581 000 barrels
According to Adam Sieminski administrator of the U S Energy Information Administration U S crude oil output will decline by 800 000 barrels a day next year This may have a positive effect on crude oil prices
The next OPEC meeting will take place on November 30 2016 According to Citigroup NYSE C OPEC member nations and Russia will most likely reach an agreement to implement production quotas
Last Sunday an earthquake of magnitude five struck near one of the biggest oil hubs in the US located in Oklahoma This event forced certain companies to close their pipelines as a preventative measure As we await the outcome of the U S elections we recommend that our clients place orders for their fuel hedges in CAD L |
C | 4 Strong Buy Invesco Mutual Funds For Your Portfolio | With more than 770 billion of assets under management Invesco Ltd offers financial solutions through a diverse set of investment vehicles across major equity fixed income and alternative asset classes This leading global investment management company caters to a wide range of mutual funds including both equity and fixed income funds and domestic and international funds With nearly more than 6 500 investment professional and employees the company offers financial services worldwide through offices in 20 countries Below we share with you four top rated Invesco mutual funds Each has earned a Strong Buy and is expected to outperform its peers in the future Investors can their Zacks Rank and past performance Invesco Corporate Bond Y seeks current income through preservation of capital ACCHX invests a large share of its assets in bonds issued by corporate issuers The fund is expected to invest a minimum of 65 of its assets in securities that are rated investment grade Invesco Corporate Bond Y has returned 10 2 over the year to date frame ACCHX has an expense ratio of 0 65 as compared to the category average of 0 77 Invesco Income Allocation A invests in both U S and non U S companies fixed income instruments and REITs ALAAX seeks growth of income and capital It allocates 60 70 of its assets in fixed income instruments and 30 40 in equities Invesco Income Allocation A fund has returned 7 4 over the year to date frame Duy Nguyen is the portfolio manager of ALAAX since 2014 Invesco High Yield Municipal A seeks current income exempted from federal tax ACTHX invests the majority of its assets in municipal securities The fund invests a minimum 75 of its assets in higher yielding municipal securities while it invests a maximum 25 of its assets in industrial development revenue bonds that are issued for companies in the same industry Invesco High Yield Municipal A fund has returned 5 9 over the year to date frame ACTHX has an expense ratio of 0 86 as compared to the category average of 0 96 Invesco Growth and Income A generally invests in income generating common stocks and convertible securities ACGIX seeks return through appreciation of capital and income The fund invests in equity securities of companies from different market caps with considerable focus on large cap companies The fund also invests nearly one fourth of its assets in foreign companies Invesco Growth and Income A fund has returned 6 3 over the year to date frame As of September 2016 ACGIX held 86 issues with 7 83 of its assets invested in Citigroup Inc NYSE C To view the Zacks Rank and past performance of all Invesco mutual funds investors can Want key mutual fund info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
C | 7 Inverse Leveraged ETFs To Buy As Markets Make Way For Trump | After a close contest Republican Donald Trump shockingly won the race to the White House And as he readies himself as the 45th President of the United States the markets will try to adjust to his ways read The majority of Wall Street analysts believe that the S P 500 will see a big sell off on Trump s victory Macroeconomic Advisers warned that a Trump win would wipe out 7 of the S P 500 s market value eroding more than 1 trillion of wealth Strategists at Citigroup NYSE C and JP Morgan expect a sell off in the range of 3 5 while the S P 500 index may nosedive as much as 13 a per Barclays LON BARC The chief investment officer at BMO Private Bank in Chicago forecast that U S stocks could drop as much as 10 over the next 10 sessions if Trump is elected This is because Trump s unpredictable nature and anti trade policies could result in complete chaos in the global economy discouraging the Federal Reserve from raising interest rates in December He has threatened to renegotiate or terminate the North American Free Trade Agreement the free trade deal between Canada Mexico and America and has pledged to crack down on immigration Further Trump seeks to impose barriers in the United States on imports from countries such as Mexico and China which could reduce trade flows and hurt global growth Market ImpactTrump s victory rattled the global stock market triggering a broad sell off The S P 500 Dow Jones and Nasdaq 100 futures plunged as much as 5 hitting safety breakers This suggests that the stock market could suffer its biggest ever plunge when Wednesday s trading session begins and could see its biggest percentage decline since August 2011 when a 5 5 plunge stemmed from the country s credit rating downgrade news However the U S futures recovered to a certain extent read The U S dollar also suffered plunging 2 6 against the yen and 1 65 against the Swiss franc The Asian stock market plummeted in the day s trading with Japan s Nikkei dropping 5 5 and the Hong Kong s Hang Seng index declining around 3 Emerging markets and currencies were also shaken with Mexican peso tumbling around 13 to an all time low This currency may in fact see its worst day since 1994 Turkish lira sank to an all time low and the South African rand fell the most in four weeks Meanwhile gold enjoyed its biggest daily rally since the Brexit vote rising nearly 4 to above 1320 per ounce while Treasury bonds rallied with the 10 year yield moving down to 1 74 from 1 89 indicating investors flight to safety read How to Play Given this investors are seeking to make big gains in a short span resulting in huge demand for inverse and leveraged ETFs Below we have highlighted seven of these that could benefit investors in a big way though these involve a great deal of risk when compared to traditional products ProShares UltraPro Short S P500 The fund provides three times 3x inverse exposure to the S P 500 index and charges 90 bps in fees per year Direxion Daily S P 500 Bear 3x Shares Like SPXU this product also provides three times inverse exposure to the S P 500 index but comes with 5 bps higher fees ProShares UltraPro Short Dow30 This fund provides three times inverse exposure to the Dow Jones Industrial Average and charges 95 bps in fees per year ProShares UltraPro Short QQQ This ETF provides three times inverse exposure to the Nasdaq 100 Index and charges 95 bps per year ProShares UltraShort MSCI Mexico Capped IMI LON IMI ETF BK SMK This fund targets the Mexican stock market and offers two times 2x the inverse of the daily performance of the MSCI Mexico IMI 25 50 Index It charges 95 bps in annual fees read VelocityShares 3x Long Gold ETN This product provides three times exposure to the daily performance of the S P GSCI Gold Index Excess Return plus returns from U S T bills net of fees and expenses The ETN charges a higher fee of 1 35 annually Direxion Daily 20 Year Treasury Bull 3x Shares This fund seeks to deliver three times exposure to the ICE U S Treasury 20 Year Bond Index It charges 95 bps in fees Bottom LineAs a caveat investors should note that these products are extremely volatile and suitable only for short term traders Additionally the daily rebalancing when combined with leverage may force these products to deviate significantly from the expected long term performance figures see Still these products could be intriguing for those with high risk tolerance and a belief that the trend is the friend in the specific corner of the investing world 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 |
C | Why Is Citigroup C Up 8 99 Since The Last Earnings Report | It has been about a month since the last earnings report for Citigroup Inc NYSE C Shares have added about 8 99 in the past month
Will the recent positive trend continue leading up to their next earnings release or is the stock due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts
Recent EarningsDriven by decline in operating expenses Citigroup delivered a positive earnings surprise of nearly 8 in third quarter 2016 The company s earnings from continuing operations per share of 1 25 for the quarter outpaced the Zacks Consensus Estimate of 1 16 However earnings compared unfavorably with the year ago figure Income from continuing operations was 3 89 billion down 10 from the prior year quarter Though profitability was hit by decline in overall revenues the company recorded higher fixed income markets revenues supported by an improved trading environment Both rates and currencies and spread products improved Also investment banking revenues were up owing to increased industry wide debt underwriting activity during the reported quarter Further Citigroup s costs of credit for the third quarter were down 5 year over year to 1 74 billion mainly due to reduced provision for benefits and claims and a decline in net credit losses However the quarter recorded net loan loss reserve build mostly tied with North America cards against a net loan loss reserve release in the prior year period
How have estimates been moving since then
Following the release and in the last month investors have witnessed an upward trend for fresh estimates There have been three revisions higher for the current quarter
VGM Scores
At this time Citigroup s C stock has an average Growth score of C however its momentum is doing a bit better with a B Following the exact same course the stock was allocated a grade of B on the value side putting it in the top two quintiles for this investment strategy The company has a good historical EPS growth level of about 8 89 From a momentum outlook it is worth noting that the stock has good earnings estimate momentum which includes rising estimates
Based on our scores the stock is equally suitable for value and momentum investors while growth investors may want to look elsewhere
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising Surprisingly shares of the company only have a Zacks Rank 3 hold
So although Citigroup C definitely has some nice catalysts going forward we think its just a hold right now Citgorup C could be considered a decent choice for value investors
Want the latest recommendations from Zacks Investment Research Today you can download 7 Best Stocks for the Next 30 days |
MPC | Why Marathon Petroleum MPC Stock Might Be A Great Pick | One stock that might be an intriguing choice for investors right now is Marathon Petroleum Corporation NYSE MPC This is because this security in the Oil and Gas Refining and Marketing space is seeing solid earnings estimate revision activity and is in great company from a Zacks Industry Rank perspective This is important because often times a rising tide will lift all boats in an industry as there can be broad trends taking place in a segment that are boosting securities across the board This is arguably taking place in the Oil and Gas Refining and Marketing space as it currently has a Zacks Industry Rank of 51 out of more than 250 industries suggesting it is well positioned from this perspective especially when compared to other segments out there Meanwhile Marathon Petroleum is actually looking pretty good on its own too The firm has seen solid earnings estimate revision activity over the past month suggesting analysts are becoming a bit more bullish on the firm s prospects in both the short and long term Marathon Petroleum Corporation Price and Consensus In fact over the past month current quarter estimates have risen from 95 cents per share to 1 04 per share while current year estimates have risen from 3 72 per share to 3 83 per share The company currently carries a Zacks Rank 3 Hold which is also a favorable signal You can see So if you are looking for a decent pick in a strong industry consider Marathon Petroleum Not only is its industry currently in the top third but it is seeing solid estimate revisions as of late suggesting it could be a very interesting choice for investors seeking a name in this great industry segment 5 Medical Stocks to Buy NowZacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia AIDS muscular dystrophy hemophilia and other conditions New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline Early investors could realize exceptional profits |
MPC | New Strong Buy Stocks For January 16th | Here are 5 stocks added to the Zacks Rank 1 Strong Buy List for Tuesday
Hudbay Minerals Inc HBM This integrated mining company has witnessed the Zacks Consensus Estimate for its current year earnings increasing 4 2 over the last 30 days HudBay Minerals Inc Price and Consensus
Lions Gate Entertainment Corporation LGF A This entertainment company has witnessed the Zacks Consensus Estimate for its current year earnings increasing 7 9 over the last 30 days Lions Gate Entertainment Corporation Price and Consensus
Marathon Petroleum Corporation NYSE MPC MPC This company that engages in refining marketing retailing and transporting petroleum products has witnessed the Zacks Consensus Estimate for its current year earnings increasing 1 1 over the last 30 days Marathon Petroleum Corporation Price and Consensus
On Assignment Inc ASGN This company that provides professionals for contract contract to hire and direct hire assignments has witnessed the Zacks Consensus Estimate for its current year earnings increasing 4 4 over the last 30 days On Assignment Inc Price and Consensus
SkyWest Inc SKYW This company that operates a regional airline has witnessed the Zacks Consensus Estimate for its current year earnings increasing 0 3 over the last 30 days SkyWest Inc Price and Consensus
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MS | US STOCKS Wall St ends a strong quarter optimistic on payrolls | S P gains 5 4 percent in first quarter
Volume tops weekly average but remains light
Berkshire class B shares fall after Sokol s resignation
Dow off 0 25 pct S P down 0 18 pct Nasdaq up 0 15 pct
For up to the minute market news see STXNEWS US
Updates to close changes byline
By Rodrigo Campos
NEW YORK March 31 Reuters U S stocks ended a solid
quarter with the barest of moves on Thursday as investors
looked ahead to Friday s U S jobs report to provide a
catalyst to push indexes to new highs for the year
After gaining 5 4 percent in the first quarter the
benchmark S P 500 hovered near 1 330 a level the index has
been unable to break despite several attempts in the past
month A strong payrolls number may tip it over and technical
momentum could kick in lifting stocks further
The market has stalled around this area before said Jim
Paulsen chief investment officer at Wells Capital Management
in Minneapolis Unless we get a bad number tomorrow this
market is going to make a run at the year highs
Stocks were resilient through the first quarter hanging
tough despite Japan s earthquake and nuclear crisis and a
series of uprisings in North Africa and the Middle East
Friday s jobs report would confirm investor optimism that a
strong U S recovery can overcome the global trouble spots
In March the Dow industrials outperformed both the S P
500 and Nasdaq indicating preference for stronger companies
as overseas concerns lingered
Initial claims for unemployment benefits last week showed
the trend of labor market improvement remains intact but at a
slow pace
The data precedes Friday s closely watched employment
report from the Labor Department which is expected to show
the U S economy added 190 000 jobs in March For details see
ID nN31253973
Daily volume was light again continuing the week s
pattern About 6 9 billion shares traded on the New York Stock
Exchange NYSE Amex and Nasdaq below last year s estimated
daily average of 8 47 billion
The Dow Jones industrial average dropped 30 88
points or 0 25 percent to 12 319 73 The Standard Poor s
500 dipped 2 43 points or 0 18 percent to 1 325 83
The Nasdaq Composite edged up 4 28 points or 0 15
percent to 2 781 07
For the month the Dow edged up 0 76 percent the S P shed
0 1 percent and Nasdaq dipped 0 04 percent
That trend also proved true for the entire first quarter
with the Dow rising 6 4 percent compared with the S P s gain
of 5 4 percent and the Nasdaq s advance of 4 8 percent
Berkshire Hathaway s class B shares fell 2 1
percent to 83 63 a day after the resignation of David Sokol
the man widely seen as the leading successor to Warren Buffett
to run Berkshire Sokol resigned after Buffett revealed that
Sokol had bought shares in chemical company Lubrizol Corp
before pushing Buffett to acquire it
In an interview on CNBC Sokol said he did nothing wrong
in buying the shares ID nN30189928 ID nN31227596
Retailers ranked among the worst performers dragged lower
by Carmax Inc which lost 7 2 percent to 32 10 after
posting fourth quarter earnings The S P Retail index
lost 0 76 percent while the Morgan Stanley retail index
dropped 1 1 percent ID nL3E7EV27F
Advancing stocks outnumbered declining ones on the NYSE by
1 746 to 1 241 while on the Nasdaq about four stocks rose
for every three that fell
Reporting by Rodrigo Campos additional reporting by Chuck
Mikolajczak Editing by Jan Paschal |
MS | Nikkei eases after hitting 2 wk high but helped by yen oil | Nikkei meets resistance near 200 day MA after 2 week high
Weaker yen higher commodities prices help Nikkei
Market awaits U S payrolls data
By Chikafumi Hodo and Antoni Slodkowski
TOKYO April 1 Reuters Japan s Nikkei average fell
slightly on Friday running out of steam after advancing to a
two week high with investors keen to lighten recently built
positions ahead of the weekend and before the release of U S
payrolls data later in the day
But Japanese shares were supported by a weaker yen and gains
in energy related shares such as Japan s biggest oil and gas
developer Inpex Corp due to strong rallies in
commodities prices the previous day
The benchmark Nikkei climbed as high as 9 805 93
its highest since March 14 on follow through buying spurred
by a weaker yen after posting solid gains over the last two
sessions
But the market ran out of steam as it approached closely
watched technical resistance at the 200 day moving average
around 9 820
Investors were also cautious about holding onto big long
positions over the weekend as uncertainty lingered over the
aftermath of the March 11 earthquake and tsunami and what looks
likely to be a prolonged nuclear crisis
The Nikkei has been pretty volatile recently But now the
market s focus is on U S jobs data tonight before deciding what
to do next said Shoji Yoshigoe deputy general manager at
Mitsubishi UFJ Morgan Stanley Securities
The Nikkei is supported by shares related to commodities
and resources Yoshigoe said
The Nikkei closed the morning session down 0 1 percent or
10 76 points at 9 744 34
The broader Topix was down 0 2 percent or 1 77
points at 867 61
The Nikkei had advanced strongly over the past two sessions
as market participants tried to lift the value of share prices
for domestic financial year end book closings the previous day
The market lacked energy as there were fewer participants
trying to push up prices on Friday
Still Japanese stocks drew support after the yen slipped to
a fresh three week low against the dollar The Japanese currency
traded at 83 65 yen to the dollar on Friday morning
Considering that today is the start of the new financial
year we saw some solid buying at the beginning but the market
turned careful about extending purchases said Kazuhiro
Takahashi general manager at Daiwa Securities
Recent bullishness in U S stocks is encouraging but at
the same time a strong economic recovery in the United States
would mean it may have to consider ending its current monetary
policy which will be negative for shares
OIL RELATED SHARES TEPCO
Shares in Japan s biggest oil and gas developer Inpex Corp
and other oil related companies extended solid gains
made after the earthquake as the price of oil hit a 2 1 2 year
high on Thursday on ongoing supply threats due to turmoil in
Libya and the Middle East
Inpex jumped 4 3 percent to 658 000 yen in heavy trade It
has surged nearly 20 percent since the quake while the
benchmark Nikkei has lost more than 7 percent in the same
period as the disaster spurred demand for oil and gas products
amid a shortage of energy supplies
The Reuters Jefferies CRB index a measure of 19
mostly U S commodity futures finished the first quarter with a
strong 8 0 percent gain as global economic improvement began to
take hold
The CRB s rally on Thursday up 1 6 percent on the day was
sparked by strong gains in oil and energy futures cotton
silver copper and grains Earlier in March the index reached
its highest level since September 2008 ID nN31561963
Shares of Tokyo Electric Power Co TEPCO plunged
9 7 percent to 421 yen after climbing shortly after the opening
The Mainichi newspaper quoting an unnamed government
official said on Friday the Japanese government was planning to
inject funds into the utility but was unlikely to take more than
a 50 percent stake in it ID nL3E7EV46V
Traders said TEPCO shares are mainly driven by short term
speculators trying to take advantage of massive volatility in
the shares since the earthquake
TEPCO is not a normal share anymore The fate of TEPCO on
whether it will be nationalised or not is important said a
trader at a Japanese brokerage house
But more than fundamental factors speculators are simply
flocking into TEPCO shares and trading them aggressively taking
advantage of extremely heavy volatility he said
Additional reporting by Hideyuki Sano Editing by Michael
Watson
Reuters Terminal users can see other related news and rates by
double clicking on
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Yen dollar |
MS | Nikkei marks new year with 2 wk high U S jobs eyed | Nikkei flirts with 200 day MA after 2 week high backs off
Weaker yen higher commodities prices bolster Nikkei
Property shares jump on Goldman Sachs upgrades
Market awaits U S payrolls data
By Chikafumi Hodo and Antoni Slodkowski
TOKYO April 1 Reuters Japan s Nikkei average began a
new financial year with a small gain on Friday running out of
steam after hitting a key technical resistance level with
investors piling back into property shares seen as oversold
Portfolio managers said gains were limited as investors
wanted to lighten recently built positions ahead of the weekend
and before the release of U S payrolls data later in the day
Japan s stock market took heart from a softer yen and
strength in shares of trading houses and oil companies such as
Japan s biggest oil and gas developer Inpex Corp due
to rallies in commodities prices the previous day
In afternoon trade the benchmark Nikkei climbed as
high as 9 822 06 hitting its 200 day moving average and the
highest level since a panic sell off on March 14 when trade
resumed after the earthquake and tsunami
The Nikkei was supported by follow through buying on a
weaker yen after posting solid gains over the last two
sessions
It backed off to 9 775 27 up 0 2 percent from Thursday s
close while the broader Topix was little changed at
869 32
The Nikkei has been pretty volatile recently But now the
market s focus is on U S jobs data tonight before deciding what
to do next said Shoji Yoshigoe deputy general manager at
Mitsubishi UFJ Morgan Stanley Securities
The Nikkei is supported by shares related to commodities
and resources Yoshigoe said
Still Japanese stocks drew support after the yen slipped to
a fresh three week low against the dollar The dollar traded at
around 83 60 yen
Considering that today is the start of the new financial
year we saw some solid buying at the beginning but the market
turned careful about extending purchases said Kazuhiro
Takahashi general manager at Daiwa Securities
PARTICULARLY BULLISH
Shares in Japan s two biggest publicly traded property
firms Mitsubishi Estate Co and Mitsui Fudosan Co
jumped over 3 percent after Goldman Sachs said in a
report that property shares were oversold on post quake
concerns
The brokerage reinstated its buy rating for Mitsubishi
Estate adding it to its conviction list and upgraded Mitsui
Fudosan to buy from neutral
Despite the rebound Mitsubishi Estate and Mitsui Fudosan
are still 11 12 percent below pre quake levels after being sold
on worries over rent declines planned outages and delays in
handovers of condominiums
We are particularly bullish on Mitsubishi Estate and Mitsui
Fudosan which we see as undervalued said Analyst Sachiko
Okada adding that quake affected areas account for very little
of the firms profit
OIL SHARES TRADERS TEPCO
Shares in Japan s biggest oil and gas developer Inpex Corp
and other oil related companies extended solid gains
made after the earthquake as the price of oil hit a 2 1 2 year
high on Thursday on ongoing supply threats due to turmoil in
Libya and the Middle East
Inpex jumped 4 3 percent to 658 000 yen in heavy trade It
has surged nearly 20 percent since the quake while the
benchmark Nikkei has lost more than 7 percent in the same
period as the disaster spurred demand for oil and gas products
amid a shortage of energy supplies
Trading houses advanced after the Reuters Jefferies CRB
index a measure of 19 mostly U S commodity futures
finished the first quarter with a strong 8 0 percent gain as
global economic improvement began to take hold ID nN31561963
Marubeni Japan s No 5 trader rose 2 5 percent to
614 yen while second ranked Mitsui Co Ltd climbed 1 7
percent to 1 516 yen in heavy trade
Shares of Tokyo Electric Power Co TEPCO plunged
7 3 percent to 421 yen and closer to the all time low of 393 yen
after advancing shortly after the opening
The Mainichi newspaper quoting an unnamed government
official said on Friday the Japanese government was planning to
inject funds into the utility but was unlikely to take more than
a 50 percent stake in it ID nL3E7EV46V
Traders said TEPCO shares are mainly driven by short term
speculators trying to take advantage of massive volatility in
the shares since the earthquake
TEPCO is not a normal share any more said a trader at a
Japanese brokerage house
But more than fundamental factors speculators are simply
flocking into TEPCO shares and trading them aggressively taking
advantage of extremely heavy volatility he said
Additional reporting by Hideyuki Sano Editing by Michael
Watson |
MS | UPDATE 1 Mitsubishi UFJ unit likely to post 600 mln net loss Nikkei | Unit hit by losses in bond business
Recasts adds detail
TOKYO April 1 Reuters A brokerage unit of Mitsubishi
UFJ Financial Group is likely to post a net loss of 50 billion
yen 600 million for the year ended in March dragged down by
losses in its bond business the Nikkei daily reported on its
website on Friday
Mitsubishi UFJ Securities Holdings is expected to suffer the
loss as profits in some areas are negated by 80 billion in
impairment losses at the bond operations of its Mitsubishi UFJ
Morgan Stanley Co subsidiary the Nikkei said
Mitsubishi UFJ Morgan Stanley is one of the securities
joint ventures formed between MUFG and Morgan Stanley
after Japan s largest lender acquired a 21 percent stake in the
Wall Street firm for 9 billion in 2008
To help shore up its financial base Mitsubishi UFJ Morgan
Stanley is also considering raising funds by issuing new shares
to its parent Mitsubishi UFJ Securities Holdings the paper
said without citing sources
Hiroaki Konishi a spokesman for Mitsubishi UFJ Morgan
Stanley declined to comment adding that the company was still
working on the numbers for the business year just ended
For the year ended in March MUFG has forecast a net profit
of 500 billion yen
1 83 160 Japanese Yen
Reporting by Mariko Katsumura and Junko Fujita Editing by
Edmund Klamann and Joseph Radford |
MS | European shares edge up boosted by MA | FTSEurofirst 300 up 0 2 percent
Rhodia jumps 48 percent after Solvay bid
Time to buy volatility derivatives Nomura says
By Brian Gorman
LONDON April 4 Reuters European shares edged up to a
three week high on Monday with telecoms heavyweight Vodafone
rising after a major disposal though strategists said an
expected euro zone interest rate rise could cap further gains in
the months ahead
At 1108 GMT the FTSEurofirst 300 index of top European
shares was up 0 2 percent at 1 143 49 points after gaining 1 5
percent on Friday
The index is up more than 7 percent from its 2011 low of
mid February as recovery hopes boosted by strong U S labour
data more than offset worries about Japan s nuclear crisis and
hostilities in the Middle East
Vodafone rose 0 9 percent after selling its 44 percent stake
in France s second biggest mobile telecoms operator SFR to
Vivendi for a total of 7 95 billion euros 11 3 billion
M A and fund flows into equity markets are providing
support to the asset class said Graham Secker European equity
strategist at Morgan Stanley
But he added that an expected hike in interest rates by the
European Central Bank on Thursday would be a negative
development that s going to weigh on equities over the next
few months Equities don t tend to discount this news in
advance And leading economic indicators are rolling over
Secker said Morgan Stanley was overweight equities but
added Over the next three to six months the market will go
sideways and there will be a bit of a rotation out of cyclicals
and into defensives
Chemical group Rhodia soared 48 percent after Solvay
launched a 3 4 billion euro agreed bid for its French rival
Solvay rose 1 5 percent
Miners were among the other gainers as the price of copper
and other metals rose on optimism about the outlook for demand
Kazakhmys Rio Tinto and Xstrata rose between 1 2 and 1 5
percent
Minmetals Resources China s biggest metals trading firm
offered 6 5 billion to buy Equinox Minerals chasing the target
company s copper assets in Zambia and Saudi Arabia China which
accounts for 40 percent of world copper demand is on a buying
spree for miners as prices for the metal hover near record
highs
Interactive graphic on M A
DIXONS FALLS
On the downside Dixons Britain s biggest 1 electricals
retailer fell a further 8 9 percent extending falls last week
when it issued a profit warning and gloomy forecast for 2011 12
However despite a brisk three week rally European stock
valuation levels remain comparatively low with Europe s broad
STOXX 600 index pricing forecast earnings at 10 5 times well
below its 10 year average price earnings ratio of 13 6
Investors seeking protection for their equity portfolios
should start buying volatility derivatives again as the main
volatility indexes fall back toward their long term averages
following a recent spike triggered by violence in Libya and
Japan s nuclear crisis said Frederic Cezard executive director
at Nomura in Paris
We re back to good entry levels The market is getting used
to the negative newsflow coming from the Fukushima nuclear plant
At these levels we see the return of inflows into volatility
derivatives he said
1 7031 euros
Additional reporting by Blaise Robinson Editing by Greg
Mahlich |
MS | UPDATE 3 Pfizer selling Capsugel to KKR for 2 38 bln | Pfizer sees more share buybacks as result of deal
Drugmaker said in October it was exploring sale
Pfizer shares rise 1 1 pct in premarket trading
Adds analyst comment details on KKR financing byline
By Lewis Krauskopf
NEW YORK April 4 Reuters Pfizer Inc said it struck a
deal to sell its Capsugel unit the world s largest maker of
hard capsules to private equity firm KKR Co for nearly 2 38
billion
Pfizer which said in October it was exploring the sale of
Capsugel said it expects to make additional share repurchases
this year as a result of the deal beyond its previous plans
for 5 billion in buybacks for 2011
Pfizer shares rose 22 cents or 1 1 percent to 20 60 in
premarket trading on Monday
The deal with KKR comes as the world s largest drugmaker
has indicated it is reviewing possible further divestitures
under Ian Read its new chief executive officer Pfizer s
initial decision to explore options for Capsugel came a few
months before Read was named CEO
They re looking at ways to make the company smaller said
Jon LeCroy an analyst with Hapoalim Securities The key for
any company obviously is getting back to growth and Pfizer is
so big it s almost impossible for them to do that
Pfizer faces the loss later this year of exclusive rights
to its huge selling Lipitor cholesterol drug which stands to
hurt the company s sales and profits
Capsugel had about 750 million in revenue last year and
manufactured more than 180 billion hard capsules
At 3 2 times sales the deal price amounted to a
reasonable multiple for a stable low growth business
according to JP Morgan pharmaceuticals analyst Chris Schott
Financing for the deal is being led by UBS Barclays and
Deutsche Bank said a source familiar with the situation It
was not immediately clear how much of the purchase price is
being funded by debt and how much by equity
In addition to hard gelatin capsules Capsugel s business
includes liquid softgel non animal and fish gelatin capsules
for use in pharmaceutical products and dietary supplements
Capsugel whose global headquarters will remain in New
Jersey was created in the early 1960s by drugmaker
Parke Davis which was part of Warner Lambert when Pfizer
acquired it in 2000 in a blockbuster deal
Its customers have included Pfizer as well as outside
companies in the pharmaceutical consumer medicine and health
and nutrition industries
As a result of the sale which is expected to be completed
in the third quarter Pfizer slightly lowered its revenue
targets for this year and next year
For 2011 it now projects revenue of 65 2 billion to 67 2
billion down from 66 billion to 68 0 billion previously It
expects 2012 revenue of 62 2 billion to 64 7 billion down
from 63 0 billion to 65 5 billion previously It maintained
its other financial forecasts for 2011 and 2012
Pfizer s financial advisers on the deal were Morgan Stanley
Co and Guggenheim Securities
Reporting by Lewis Krauskopf additional reporting by Megan
Davies editing by John Wallace and Maureen Bavdek |
MS | European stocks tick higher chemical shares support | FTSEurofirst 300 up 0 04 percent to 3 week closing high
Merger news global economic outlook support market
Rhodia shares up 48 percent after Solvay launches bid
By Atul Prakash
LONDON April 4 Reuters European equities edged up to a
three week closing high on Monday supported by merger news with
Rhodia leading chemical stocks after Solvay s 3 4 billion euro
4 8 billion bid
Signs of an improving economic outlook also helped the
FTSEurofirst 300 index of top European shares end 0 04 percent
firmer at 1 141 86 points the highest close since March 9
albeit with volumes at 82 percent of the 90 day average
Headwinds such as Japan s nuclear problem unrest in the
Arab world and the euro zone s debt crisis were in the
background as investors focused on issues such as a likely rate
hike by the European Central bank on Thursday and an improvement
in the U S labour market reported last Friday
Positive sentiment is coming from mergers We will see more
mergers and acquisitions and it is one of the reasons why the
stock market is still trading at these higher levels a
London based equity trader said
Some long only institutions are going underweight retailers
as some stores have been complaining about dwindling sales I
would imagine people will continue to be underweight the sector
We have seen some good buying in construction stocks
Chemical shares featured among the top gainers with the
STOXX Europe 600 chemical index rising 1 2 percent Rhodia
jumped 48 percent after Solvay launched a bid
In other M A news Vodafone sold its 44 percent stake in
French mobile operator SFR to Vivendi for 7 95 billion euros
Vodafone ended 0 1 percent lower while the sector index rose 0 3
percent
M A and fund flows into equity markets are providing
support to the asset class said Graham Secker European equity
strategist at Morgan Stanley
Analysts said equities remained attractive on valuation
grounds and by comparison with other asset classes Europe s
STOXX 600 index carries a forward price to earnings P E ratio
of 10 5 below its 10 year average of 13 6
FINANCIALS SUFFER
Financials topped the fallers list with the STOXX Europe
banking index down 0 7 percent and the insurance sector index
falling 1 1 percent on persistent concerns about the euro zone
debt situation
Morgan Stanley said investors were positive on European
banks but three factors were holding them back funding a need
for more clarity on capital and funding rules and greater
policy support to peripheral countries
Investors waited for this week s rate decision by the
European Central Bank ECB A rate hike of 25 basis points from
a record low in reaction to rising inflationary pressures was
already priced in analysts said
To me it is not a negative The ECB is ready to hike rates
which is also a vote of confidence in the strength of the
upswing In terms of the macroeconomic impact a 25 basis point
hike is really marginal said Klaus Wiener chief economist at
Generali Investments which manages 465 billion
There is a risk to the oil price there is Japan but in
the end what matters is the strength of the global upswing and
all these risk factors will not derail it
J P Morgan Cazenove saw technology shares leveraged to
economic upswing and said they remained attractively priced It
was particularly bullish on semiconductors and software
companies and was underweight on defensives such as
pharmaceuticals
Additional reporting by Brian Gorman in London and Blaise
Robinson in Paris Editing by Dan Lalor
1 0 7031 euro |
MS | Nikkei eases as rebound loses steam TEPCO hits record low | Tokyo Electric falls to all time low
Post quake rebound has run its course analyst
Chipmakers lower in line with U S peers
By Chikafumi Hodo and Antoni Slodkowski
TOKYO April 5 Reuters Japan s Nikkei average slipped on
Tuesday with the mood soured by Tokyo Electric Power s fall to
an all time low but was set to stick to a tight range for a
third day as a post quake rebound looks to have run its course
The Nikkei s climb over the previous two sessions brought it
close to its 200 day moving average at 9 822 but that level and
the 9 800 line proved to be stiff resistance for a market still
troubled by uncertainty over the exact impact of the massive
earthquake on March 11
Blurring the picture further shares of Tokyo Electric Power
fell more than 14 percent to 380 yen and below their
all time low of 393 yen hit in 1951 due to worries over a
prolonged safety crisis at its stricken Fukushima Daiichi
nuclear power plant
There was a sharp drop in the Nikkei and we ve seen a swift
rebound That s normal But from now on people will start
pricing in fundamentals and that will push the market gradually
lower so we ll see more moves like today in the coming weeks
said Norihiro Fujito senior investment strategist at Mitsubishi
UFJ Morgan Stanley Securities
Fujito said that foreign investors are turning away from
Japan to emerging markets such as India Indonesia or Korea
Foreign investors bought nearly 3 trillion yen 35 7
billion of Japan shares from November to March including
buying during dips after the panic post quake sell off but are
now looking to lighten their holdings especially in
domestic demand related sectors such as real estate and
department stores analysts said
Japan s Yomiuri Shimbun newspaper said on Tuesday that Tokyo
Electric planned to start paying compensation to those who had
to evacuate or suffered other losses due to the nuclear power
crisis before damages have been assessed although the utility
said nothing had been decided on compensation payouts
ID nL3E7F434Q
If we think about all the people and businesses affected by
the nuclear accident and the compensation that would have to
be paid there s no way shareholders could be fully protected
said Fujito
Although the Nikkei has recovered more than two thirds of
the ground lost during its steep tumble in the aftermath of the
March 11 quake and tsunami the Nikkei remains more than 7
percent below its pre quake levels and market players say the
rapid rebound has likely run its course
Chipmakers such as Elpida Memory Inc slipped after
the Philadelphia semiconductor index fell 0 9 percent and
Nomura Securities maintained a neutral view on semiconductor
stocks citing weakened demand peak gross margins and higher
capital spending in the sector
Elpida fell 4 5 percent to 1 065 yen
1 84 040 Japanese Yen
Reporting by Antoni Slodkowski Editing by Edmund Klamann |
JPM | Wells Fargo s profit flat as costs mortgages weigh | By Nikhil Subba and Dan Freed Reuters Wells Fargo NYSE WFC Co posted flat quarterly earnings on Thursday and warned its costs would remain elevated as the fallout from a sales practices scandal continues to impact the third largest U S bank Higher personnel costs and legal fees as well as lower mortgage banking revenues kept Wells Fargo s first quarter net income broadly flat at 5 5 billion and the San Francisco based bank said expenses as a share of revenues would remain high Wells Fargo is trying to put a scandal over the opening of unauthorized accounts behind it and earlier this week said it would claw back an additional 75 million of compensation from the two former executives it blamed most for the debacle Known for consistently growing revenues and earnings in the post crisis era Wells Fargo has been thrown off course by the sales controversy and in recent quarters has also been disadvantaged by its smaller trading footprint Wall Street rivals have bounced back as bond and currency markets roared back to life last year with JPMorgan NYSE JPM and Citi each reporting a 17 percent increase in quarterly profit on Thursday beating analyst expectations and boosting their shares Wells Fargo s revenues fell about 1 percent to 22 billion and missed the average estimate of 22 32 billion On a per share basis profit rose to 1 00 from 99 cents a year earlier beating the average analyst estimate of 97 cents Chief Executive Tim Sloan told analysts he expected new account and credit card openings to recover in the third quarter after a steady decline since the sales scandal broke in September but the bank said costs associated with the controversy which were 80 million in the first quarter would remain around 70 million to 80 million for an unspecified period I think it will be at least a few more quarters Chief Financial Officer John Shrewsberry said in an interview with Reuters The bank s efficiency ratio a closely watched number reflecting non interest expenses as a percentage of revenue was 62 7 percent compared with 58 7 percent a year ago and Sloan said it would be a challenge to get back to a preferred 55 to 59 percent level I want to make it very clear that operating at this level is not acceptable he said Sloan added that the bank will unveil at its investor day in May additional cost savings initiatives beyond the annual 2 billion in savings they are targeting starting in 2018 The bank also plans to reduce headcount in businesses such as mortgage if as expected business gets slower Sloan faces a rocky shareholder meeting on April 25 after influential proxy adviser Institutional Shareholder Services called on investors to vote against 12 out of 15 directors including Chairman Stephen Sanger The bank s stock was down 2 5 percent at mid afternoon on Thursday the worst performer in the S P 500 Financials Index After the close on Wednesday Berkshire Hathaway NYSE BRKa Inc Wells Fargo s largest shareholder said it withdrew an application to the Federal Reserve to boost its ownership stake above 10 percent and is instead selling 9 million shares to keep it below that threshold MORTGAGES AND COSTS The Federal Reserve s decision to hike interest rates in March for the second time in three months has been welcomed by banks which earn more from lending out their deposits when rates rise Higher rates helped Wells Fargo earn more from lending with a 5 percent rise to 12 3 billion in its net interest income But higher rates can also put off borrowers and Wells had a decline in total loans to 958 billion from nearly 968 billion in the prior quarter with a near 8 billion drop in consumer loans in that period Wells Fargo s mortgage business the largest in the United States by volume saw a 23 percent drop in fee income to 1 23 billion as customers shied away from refinancing their home loans Mortgage borrowing was likewise a dark spot in JPMorgan s results with mortgage fees and loan servicing revenue tumbling 39 percent to 406 million from 667 million Wells consumer business is also feeling the impact from its unauthorized accounts scandal with a steady decline in the number of consumers opening checking and credit card accounts Overall net profit at its retail bank its biggest profit center fell 9 percent due to a drop in fee income Wells wholesale banking division which provides loans and other services to corporate clients reported a 10 percent increase in net profit from a year ago
Costs at Wells Fargo rose 6 percent compared to the year ago period as the bank shelled out more for salaries as well as the legal costs related to the scandal |
JPM | Top BlackRock portfolio manager turning to safe haven assets | By Trevor Hunnicutt NEW YORK Reuters One of the portfolio managers behind BlackRock Inc s largest mutual fund says his team has been buying safe haven assets such as gold and Treasuries to protect from known unknowns in global politics There is a little political risk creeping back into investors awareness and that s probably appropriate because there are some things out there that can go wrong Russ Koesterich a manager of the 40 billion BlackRock Global Allocation Fund told Reuters on Thursday We ve been raising our allocation to U S duration and we ve been raising our allocation to gold Despite what he said was a good year for markets and a low likelihood of recession Koesterich said there is less conviction in the reflation trade the belief that markets are poised to profit from a coming global growth wave Koesterich and other investors saw that reflation narrative driving stocks strong performance since Donald Trump s election last November as U S president Against the dry tinder of firming prices we now have a potential match a rare combination of fiscal stimulus and tax cuts Koesterich wrote in November Welcome to the new world The match has not yet been struck and the unpredictability of conflict involving the Korean peninsula is dragging on markets Koesterich said Reclusive North Korea could soon conduct its sixth nuclear test or more missile launches in defiance of U N sanctions and warnings from the United States that a policy of patience is over I don t think anybody is going to predict what happens in North Korea said Koesterich That s one of those known unknowns Gold and bonds are traditionally used to curtail risk But the U S dollar is more likely to trade within a tight range rather than rocket higher Koesterich said especially after Trump told the Wall Street Journal this week that the greenback is getting too strong The Global Allocation Fund trimmed its quarter billion dollar stake in JPMorgan Chase Co NYSE JPM in March according to new disclosures showing the bank was no longer one of the fund s top 10 holdings at the end of the month JPMorgan and other bank stocks faced selling pressure on Thursday after their earnings reports showed slower loan growth and other comments by Trump on Wednesday endorsing low interest rates Low interest rates dampen a bank s ability to make money from lending
The latest disclosures did not clarify how much of the JPMorgan stake has been sold and Koesterich declined to comment on individual stocks |
JPM | U S business inventories increase but retail stocks revised lower | WASHINGTON Reuters U S business inventories increased in February but retail stocks excluding motor vehicles were unchanged for a second straight month suggesting that inventory investment could weigh on first quarter economic growth The Commerce Department said on Friday business inventories rose 0 3 percent after a similar gain in January Inventories are a key component of gross domestic product Retail inventories climbed 0 3 percent in February instead of the 0 4 percent increase reported in an advance report published last month Retail inventories jumped 0 9 percent in January Motor vehicle inventories advanced 1 0 percent after surging 2 5 percent the prior month amid declining sales Retail inventories excluding autos which go into the calculation of GDP were unchanged for a second consecutive month as reported in March Inventory investment added one percentage point to the economy s 2 1 percent annualized growth rate in the fourth quarter That was the second straight quarterly contribution to GDP growth after a drag that lasted more than a year The Atlanta Federal Reserve is estimating GDP increasing at a 0 6 percent rate in the first quarter JPMorgan NYSE JPM is forecasting inventories subtracting about a full percentage point from first quarter growth Business sales rose 0 2 percent in February after increasing 0 3 percent in January At February s sales pace it would take 1 35 months for businesses to clear shelves unchanged from January |
C | Crude futures continue extended slide in spite of U S supply draw | Investing com Crude futures pared earlier gains on Wednesday reversing territory in U S afternoon trading amid an expected draw in U S stockpiles last week along with continuing gains in Saudi Arabian supply
On the New York Mercantile Exchange WTI crude for September delivery wavered between 44 85 and 46 69 on a choppy day of trading before closing near session lows at 45 03 down 0 71 or 1 54 for the day Earlier this week Texas Long Sweet futures plunged 4 in Monday s session to around 45 a barrel dipping to its lowest level since mid March Over the last month U S crude futures have fallen sharply by more than 20
On the Intercontinental Exchange ICE brent crude for September delivery traded between 49 03 and 50 98 a barrel before settling at 49 49 down 0 50 or 1 00 The spread between the international and U S benchmarks of crude stood at 4 46 up from Tuesday s level of 4 25 at the close
In its Weekly Petroleum Status Report released on Wednesday the U S Energy Information Administration EIA said U S crude inventories decreased by 4 4 million barrels for the week ending on July 31 extending a mild draw from a week earlier At 455 3 million barrels U S crude oil inventories remain near levels not seen for this time of year in at least the last 80 years Total motor gasoline inventories meanwhile increased by 0 8 million barrels for the week to remain near the middle of the average range
As the summer driving season nears its conclusion refineries operated at 96 1 of their operable capacity last week as gasoline production increased last week to an average of 10 0 million barrels per day U S crude futures extended gains from earlier in the morning session immediately after the release before falling sharply soon after as investors locked into profits
Energy traders also reacted to the latest build in Saudi Arabian oil as the kingdom ramped up crude output in July by 70 000 to 10 57 bpd If Saudi Arabia continues to increase output at its current level analysts from Citigroup NYSE C believe the Gulf state could produce an average of 11 million bpd for the second half of 2015
In addition Saudi Aramco the nation s state owned energy company announced that it is raising the official selling price for its Arab Light crude to Asia at a premium of 0 40 a barrel above the average price The move comes as Asian refiners face heavy pressure to increase profit margins amid increased competition in the crude markets throughout the continent
Elsewhere U S president Barack Obama continued his push for a long term nuclear accord with Iran during a defiant speech at American University in Washington Drawing parallels with a speech former U S president John F Kennedy delivered on nuclear disarmament in 1963 on the same campus Obama described the deal as the most consequential foreign policy debate for the U S since the Iraqi War 12 years ago Iran reportedly holds 30 million barrels of crude oil in reserves ready for export in the first few months after a deal is finalized
Any deal is viewed as bearish for crude as an outflow of Iranian oil could depress prices in a global market already saturated by a glut of oversupply
The U S Dollar Index which measures the strength of the greenback against a basket of six other major currencies jumped to an intraday high of 98 33 shortly after the release its highest level since April 23 In U S afternoon trading the index fell back considerably to 97 99 down 0 05 on the session
Dollar denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates |
C | NYMEX crude stages early rebound in Asia with focus on oversupply | Investing com Crude oil staged a mild rebound in early Asia on Thursday with investors focused on continued market oversupply
On the New York Mercantile Exchange WTI crude for September delivery rose 0 20 to 45 19 a barrel Earlier this week Texas Long Sweet futures plunged 4 in Monday s session to around 45 a barrel dipping to its lowest level since mid March Over the last month U S crude futures have fallen sharply by more than 20
Overnight crude futures pared earlier gains on Wednesday reversing territory in U S afternoon trading amid an expected draw in U S stockpiles last week along with continuing gains in Saudi Arabian supply
On the Intercontinental Exchange ICE Brent crude for September delivery traded between 49 03 and 50 98 a barrel before settling at 49 49 down 0 50 or 1 00 The spread between the international and U S benchmarks of crude stood at 4 46 up from Tuesday s level of 4 25 at the close
In its Weekly Petroleum Status Report released on Wednesday the U S Energy Information Administration EIA said U S crude inventories decreased by 4 4 million barrels for the week ending on July 31 extending a mild draw from a week earlier At 455 3 million barrels U S crude oil inventories remain near levels not seen for this time of year in at least the last 80 years Total motor gasoline inventories meanwhile increased by 0 8 million barrels for the week to remain near the middle of the average range
As the summer driving season nears its conclusion refineries operated at 96 1 of their operable capacity last week as gasoline production increased last week to an average of 10 0 million barrels per day U S crude futures extended gains from earlier in the morning session immediately after the release before falling sharply soon after as investors locked into profits
Energy traders also reacted to the latest build in Saudi Arabian oil as the kingdom ramped up crude output in July by 70 000 to 10 57 bpd If Saudi Arabia continues to increase output at its current level analysts from Citigroup NYSE NYSE C believe the Gulf state could produce an average of 11 million bpd for the second half of 2015
In addition Saudi Aramco the nation s state owned energy company announced that it is raising the official selling price for its Arab Light crude to Asia at a premium of 0 40 a barrel above the average price The move comes as Asian refiners face heavy pressure to increase profit margins amid increased competition in the crude markets throughout the continent
Elsewhere U S president Barack Obama continued his push for a long term nuclear accord with Iran during a defiant speech at American University in Washington Drawing parallels with a speech former U S president John F Kennedy delivered on nuclear disarmament in 1963 on the same campus Obama described the deal as the most consequential foreign policy debate for the U S since the Iraqi War 12 years ago Iran reportedly holds 30 million barrels of crude oil in reserves ready for export in the first few months after a deal is finalized
Any deal is viewed as bearish for crude as an outflow of Iranian oil could depress prices in a global market already saturated by a glut of oversupply |
C | Exclusive Noble Group mulls raising funds from strategic investor source | By Anshuman Daga SINGAPORE Reuters Noble Group SI NOBG is considering issuing a convertible note to a strategic investor one of several steps the commodities trader is assessing to revive investor confidence after a damaging accounting dispute a person with direct knowledge of the situation told Reuters The source who spoke on condition of anonymity because of the sensitivity of the matter said Noble s shareholders and partners have urged the Singapore listed company to make a deal that would strengthen its ties with a credible partner a move that could possibly bring in new business A spokeswoman for Noble declined to comment on the matter Noble has been approached by investors interested in its commodities contracts valued at 4 1 billion and it does not rule out the option of going private the source added By issuing a convertible security rather than tapping shareholders for additional equity Noble would secure funding avoid near term dilution and offer the partner a cheap entry into the company which has lost about 50 percent of its market value since its contract assumptions came under attack in February A convertible sends a strong message to the market It makes sure that Noble does not do something that is dilutive to equity at a time when the company does not need additional equity the source said but stressed that there is no certainty that a deal will take place Asia s biggest commodity trader already under pressure in a weak commodities market hit the spotlight in February when blogger Iceberg Research alleged the company was inflating its assets by billions of dollars by not fairly representing the value of its commodity contracts Noble has rejected the claims and board appointed consultant PricewaterhouseCoopers found no wrongdoing in a report published on Monday Noble s shares rallied on Tuesday but ended the session 2 percent lower The source did not name the partner Noble was looking at Bankers say China Investment Corp CIC Noble s second largest shareholder which owns a stake of about 9 percent is a likely candidate Noble s top shareholder is chairman and founder Richard Elman who owns about a fifth of its shares The Chinese sovereign wealth fund had cut its stake in Noble in September 2014 and has not made any public comment on the company since the accounting problems CIC was not available for comment Rival commodity trader Olam SI OLAM was rescued by Singapore state investor Temasek Holdings in late 2012 through a bonds with warrants issue helping to draw a line under attacks from short seller Muddy Waters over its finances The source said that Noble was exploring all options including the possibility of going private Nothing is off the table at this point the source said Another source familiar with the situation said that Noble had hired former Citigroup NYSE C banker Michael Klein to advise it Klein had helped broker merger talks between Glencore LONDON GLEN and Xstrata A call to Klein s office was not returned The first source said Noble had been approached by investors to sell part of its commodity contracts that make up the majority of its balance sheet That is definitely one of the options On the back of the PwC review Noble is in a much stronger negotiating position the source said
Given the heightened scrutiny Noble is under it is time for Noble to liquidate some of its 2 4 billion inventory balance or 4 1 billion contract book in order to show positive operating cash flow CreditSights analysts said in a report on Monday |
C | USD Spiked To The Descending Wedge Trendline USB Retests The Trendline | CBOE Volatility Index closed above its Long term support resistance at 16 15 confirming its buy signal The next important milestones are the trendline at 22 50 and Cycle Top resistance at 24 15 where a long term breakout of the Bullish Flag may occur and the Cyclical uptrend may resume in earnest
ZeroHedge While VIX remains subdued at bull market narrative confirming levels there are extreme concerns being exhibited in VIX options There are currently almost 7 times more call options bets on a higher VIX than put options outstanding on the Fear index the highest since August 2015 just days before China devalued and the US equity market crashed
SPX declines to key support
SPX bounced early this week but closed beneath its Intermediate term support resistance at 2158 49 confirming the sell signal In addition weekly Short term support resistance has made a bearish cross of the intermediate term support resistance However the more important target may be that of the Orthodox Broadening Top with its lower trendline at 2120 00 where a break may trigger that formation Should that support be broken a panic may follow
RealInvestmentAdvice The problem with going nowhere is that it makes managing money much more difficult With the market having broken the bullish trend line from the February lows as shown below along with remaining overbought with a sell signal in place the risk to the downside outweighs the potential for a further advance currently With downtrend resistance from the previous highs pushing prices lower the risk of a break below 2125 is elevated Being a bit more cautious given the current technical backdrop will likely be prudent
While there are many simply suggesting just to buy into passive indexes and hold them the brutal reality to such strategies have destroyed the ability for many to ever actually reach their investment goals However despite the weight of evidence suggesting the markets are currently in a third bubble since the turn of the century the commentary to ignore the outcomes related to such asset inflations is actually quite astonishing Such is the result of a market seemingly immune to declines due to continued support or at least belief thereof from Central Banks
NDX makes a new high closes beneath Short term support
In a surprising turnabout NDX made a new high on Monday then declined and closed beneath short term support at 4818 16 leaving it on a sell signal at the end of the week This behavior is leaving investors uncertain what to expect next However a decline beneath Intermediate term support at 4768 59 confirms the sell signal It may be imprudent to be long beyond that point
WSJ U S stocks fell Friday ending a week dominated by quarterly earnings reports
The S P 500 and the Nasdaq Composite fell this past week while the Dow Jones Industrial Average posted a slight gain The losses coincided with a selloff in government bonds that pushed yields to their highest levels in five months
The Dow Jones Industrials fell 8 49 points or less than 0 1 to 18161 19 on Friday and the NASDAQ Composite lost 25 87 points or 0 5 to 5190 10
Government bonds stabilized after two days of sharp price declines The yield on 10 Year U S Treasury note edged higher Friday to 1 847 its highest yield since May 27
Stocks pulled back from earlier gains after the Federal Bureau of Investigation said it was reviewing new evidence in connection with its investigation of Democratic presidential candidate Hillary Clinton s email server
Dow Jones High Yield Select 10 consolidates
The High Yield Bond Index bounced early in the week but eased back down leaving a small gain for the week The Cycles Model suggests more selling ahead
BusinessInsider The fate of the bond market lies with a handful of giant investors
The top five investment companies hold 264 billion in US high yield bonds according to a big report from Stephen Caprio and Matthew Mish at UBS That s equivalent to 20 of the market
The top 20 hold 605 billion equivalent to 46 of the US high yield market and mutual funds and separately managed accounts hold 70 of the market
That could be a problem according to Caprio and Mish
In their report the analysts explore what is called concentration risk and argue that having a high level of mutual fund ownership in the high yield market could lead to wild swings in prices
USB retests the trendline
The Long Bond has unequivocally broken beneath its trendline leaving both time and space to fill before reaching its low The Cycles Model suggests there is still time for the decline possibly to mid November The space to fill may be the breach between the current price and the mid Cycle support at 157 59 However a panic may propel USB to its 35 year trendline at 142 50
WSJ The weeks long selloff in global government bonds gained momentum on Thursday sending the yield on the benchmark 10 year U S Treasury note to its highest in nearly five months
The yield on the 10 year Treasury note settled at 1 843 up from 1 79 on Wednesday Yields rise as bond prices fall Some traders say the yield could retest the 2 mark again if the higher yield momentum intensifies The most recent time the yield traded above 2 was in March Some investors say yields around 2 would be appealing to buy as they don t expect yields to rise sharply in a soft growth world
The Euro retests the neckline
The Euro appears to be retesting its Head Shoulders neckline at 110 00 after which it may decline to its Head Shoulders target in short order The breakdown brought more bad news in the form of an inverted Cup with Handle formation which indicates a further probable longer term decline beneath its March and December 2015 lows
ExchangeRates Earlier on investors were eagerly anticipating the US Q3 GDP growth rate result which ultimately rose above forecasts from 1 4 to 2 9 This failed to boost the US Dollar against the Euro however as the US personal consumption figure showing consumer spending fell dramatically from 4 3 to 2 1
At the time of writing the Euro was strong against the US Dollar printing at 1 09 Although French GDP fell short of forecast in the third quarter this didn t prevent the Euro to Dollar exchange rate from making further gains on Friday morning
An unexpected uptick in Eurozone economic confidence encouraged investors to continue favouring the Euro over its rival particularly with expectations positive for the afternoon s German CPI results
Euro Stoxx 50 makes a new 6 month high
The Euro Stoxx 50 Index rallied to a new 6 month high on Monday in a Cycle inversion but was repulsed at the lower trendline of a Bearish Flag formation on Tuesday The wide swings suggest a return of volatility that may influence price to the downside as the Bearish Flag suggests The Head Shoulders formation may also come into play as Stoxx decline
CNBC European markets closed slightly lower Friday as the earnings season continues amid heightened expectations that the U S Federal Reserve will raise rates in the near term
The pan European STOXX 600 was off its session lows but nonetheless provisionally closed down 0 32 percent The FTSE 100 ended the day up 0 15 percent while the German DAX was off 0 24 percent In France the CAC 40 up by 0 24 percent
The Yen extends its low
The Yen appears to have extended its Master Cycle low by another week These extended Cycles appear to be happening across the board delaying a potential rally in the Yen Once the Cycle decline is finished a new period of strength may emerge possibly lasting through the election A breakout above the high at 100 46 confirms the next move may be dramatically higher
Bloomberg The yen is set for its biggest monthly loss since May amid speculation the Bank of Japan will maintain monetary stimulus as the Federal Reserve prepares to raise interest rates for the first time since December
Japan s currency has weakened against eight of its 10 major peers since Sept 30 as Governor Haruhiko Kuroda and his colleagues prepare to set policy on Nov 1 Economists anticipate U S gross domestic product data on Friday will show an improvement paving the way for a rate hike The market based chance of a December increase by the Federal Reserve rose to 73 percent from 68 percent at the end of last week
The Nikkei 225 extended its retracement
The Cycles in the Nikkei have also inverted making a Cycle high this week instead of a low But it has reached the technical limit of its retracement Inversions have a tendency to retrace themselves either partially or fully in a very short time period following the inversion period Should the Head Shoulders neckline be broken a panic decline may ensue
Japan Times The Nikkei average rewrote its six month high Friday buoyed by purchases on the back of the yen s weakening versus the dollar
The 225 issue Nikkei average climbed 109 99 points or 0 63 percent to end at 17 446 41 on the Tokyo Stock Exchange its best finish since April 22 On Thursday the key market gauge retreated 55 42 points
The Topix index of all first section issues grew 10 40 points or 0 75 percent to 1 392 41 after falling 0 69 point the previous day
U S Dollar reverses from the upper Descending Wedge trendline
USD spiked to the Descending Wedge trendline but began a reversal on Tuesday in yet another Cycle inversion The reversal implies a complete retracement of the rally The next two weeks may unhinge the Dollar bulls since all the traders are on one side of the boat The unwinding of those trades may cause a rapid move from bullish to bearish and may challenge mid cycle support at 94 99 in the next move
Reuters Speculators increased favorable bets on the U S dollar for a fifth straight week with net longs touching their highest since late January according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday
The value of the dollar s net long position rose to 18 81 billion in the week ended Oct 25 from 18 44 billion the previous week U S dollar net longs have exceeded 10 billion for four consecutive weeks
The dollar continues to be underpinned by a widely expected interest rate hike by the Federal Reserve at the December policy meeting Friday s data showing that U S gross domestic product for the third quarter rose 2 9 percent the fastest pace in two years supported rate hike expectations So far this month the dollar index has risen 3 percent
Gold struggles to stay above Long term support resistance
Gold continues to struggle to stay above its Long term support at 1265 86 ending three weeks of retracement The Cycles Model suggests that the gold Cycle is also inverting making a high instead of a low so it is probable that the decline may resume imminently The next two weeks may be show a dramatic decline
Reuters Gold rose 1 percent to the highest level in nearly four weeks on Friday extending gains late in the session after the FBI said it will further investigate Democratic presidential candidate Hillary Clinton s use of a private email system
Just 11 days ahead of the U S presidential election the news shook up the campaign in which Clinton is the front runner in opinion polls
Spot gold was up 0 8 percent at 1 278 38 an ounce by 2 54 p m EDT 1854 GMT after rising 1 3 percent to 1 284 14 the highest since Oct 4 It is on track to close the week up 0 9 percent
U S gold futures settled up 0 6 percent at 1 276 80
Crude reverses from mid Cycle resistance
Crude reversed from its challenge of mid Cycle resistance at 50 48 There is now the probability of an imminent decline that may test the February low After 6 months of being range bound traders are sanguine about the outlook for crude
EIA Short positions in West Texas Intermediate WTI crude oil futures contracts held by producers or merchants totaled more than 540 000 contracts as of October 11 2016 the most since 2007 according to data from the U S Commodity Futures Trading Commission CFTC Banks have tightened lending standards for some energy companies as crude oil prices declined throughout 2014 and 2015 and some banks require producers to hedge against future price risk as a condition for lending
Initiating a short position or selling a futures contract allows the holder to lock in a future price for a commodity today which oil producers and end users can use as a way to hedge or mitigate price risk Increased short positions may indicate that current futures prices are seen as sufficient to generate positive returns from drilling projects
Shanghai Composite fails to break out
The Shanghai Index ended its attempt at a new high on Monday without a breakout It is in the window for a strong decline possibly a panic The fractal Model suggests the Shanghai is due for another 1 000 point drop possibly starting next week The next Master Cycle low may be due by mid November
Bloomberg China s central bank is conducting a trial monitoring of banks off balance sheet wealth management products under its macro prudential assessment system according to people familiar with the matter
The WMPs will be included in calculating broad based credit the people said asking not to be identified discussing non public information Currently the products aren t included in the assessment framework and it s not clear when or if the People s Bank of China will add them the people said
Citigroup Inc NYSE C estimated that 13 trillion yuan 1 9 trillion of the products which are a key building block in China s shadow banking system could be covered
The Banking Index throws over its Pennant trendline
BKX threw over the upper trendline of its Bearish Pennant suggesting a reversal may be at hand The break point of the Pennant is at the weekly Short term support at 71 98 Once broken we may expect to see a very sharp panic decline
In what may or may not be a coincidence just hours after Bloomberg reported that DB launched a probe into whether it misstated derivatives moments ago the FT reported that the Bank of England is seeking details from large British banks on their current exposure to Deutsche Bank and some of the biggest Italian banks including Monte dei Paschi amid mounting market jitters over the health of Europe s financial sector
The FT notes that the request was made in recent weeks by the BoE s Prudential LON PRU Regulation Authority as investors sold off Deutsche and Monte dei Paschi both of which have been the subject of scrutiny over their capital levels Supervisors worldwide have attempted to curtail the links between large institutions since the 2008 banking crisis when the collapse of Lehman Brothers and other big groups threatened to drag down the entire global financial system
Following the end of each fiscal quarter SEC registered corporations release their financial statements Typically investors and the media place a lot of importance on these results Consequently stock prices tend to rise or fall based on how the financial results compare to a consensus of estimates made by Wall Street analysts
Since the beginning of the current quarter 10 1 2016 76 of the 113 S P 500 companies that have released earnings results have exceeded expectations Like so many quarters before many investors and media pundits are supporting the na ve conclusion that earnings are better than expected Unfortunately few investors are paying attention to the measurement tool expected earnings to gauge its usefulness as a measure of earnings quality In this article we uncover the crafty game that Wall Street and corporate investor relations departments play to put a positive spin on earnings releases and at the same time give the impression that stock prices are cheap based on forward looking earnings expectations
After serving much drama to its shareholders and global markets over the past couple of months when its stock tumbled to all time lows following the news of the bank s 14 billion DOJ settlement ask Deutsche Bank provided some relief when earlier this morning it reported a modest unexpected profit of 256 million for the third quarter on lower litigation and restructuring costs beating consensus estimates of a 394 million loss and a far better number than the 6 billion loss reported one year ago Revenues were also a modest improvement to consensus expectations of 7 19BN coming in at 7 49BN as a result of a 14 jump in fixed income trading revenues
ZeroHedge One month ago when we showed that while Deutsche Bank is seriously undercapitalized it still has access to copious amounts of liquidity which at June 30 stood at 223 billion but according to today s Q3 report has since dropped by some 10 to 200 billion we pointed out one way that DB s currently safe liquidity position could turn precarious it has deposits and thus there is an all too real threat depositors may get nervous and start pulling them out To wit
This is where Deutsche Bank is very different from Lehman and far riskier because if the institutional panic spreads to the depositor base which as the table below shows amounts to some 566 billion in total and 307 billion in retail deposits
ValueWalk Moody s Capital Markets Research issued a damning verdict on Deutsche Bank earlier this week In a research report put together by the credit agency s Analytics research division Moody s analysts write that Deutsche Bank AG DE DBKGn NYSE DB expected default frequency remains at one of the highest levels in the banking industry despite the bank s efforts to shore up its capital position |
MPC | Is Marathon Petroleum MPC A Strong Value Stock | While growth investing is always a popular strategy you should not discount the benefits that come with focusing on value metrics Value investing allows investors to discover stocks with low price to earnings ratios solid outlooks and decent dividends
Today we have identified a good candidate that offers impressive value Marathon Petroleum Corp NYSE MPC
Marathon in Focus
Headquartered in Findlay Ohio Marathon is the third largest U S refiner based on crude oil refining capacity operating an integrated oil refining system concentrated primarily in the Midwest Shares have gained over 23 so far this year compared to its year to date return of 9 6
MPC could be an interesting play for a number of reasons The company s forward P E of 17 18 P S ratio of 0 42 and dividend yield of 2 59 suggest that Marathon is a pretty good value pick since investors have to pay a relatively low level for each dollar of earnings MPC also has decent revenue metrics to back up its bottom line
But before you think that Marathon is just a pure value play it s important to note that the company has been witnessing solid estimate revision activity For the current year earnings are expected to grow nearly 68 with sales increasing 14 5 in the same time frame nine analysts have shifted their estimate higher in the last 30 days compared to none lower Marathon Petroleum Corporation Price Consensus and EPS Surprise This overall estimate strength has been enough to push MPC to a Zacks Rank 2 Buy suggesting the company is poised to outperform Marathon is looking great from a number of different angles from its low value ratios and to its strong Zacks Rank which means that this oil giant could be a solid pick for value investors at this time
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 | Oil Gas Stock Roundup Keystone XL s Approval BP s Buyback More | It was a week where both oil and gas prices lost ground
On the news front sponsor TransCanada TO TRP won approval to build its controversial Keystone XL Pipeline through the state of Nebraska while BP LON BP Plc NYSE BP became the first European oil major to resume share repurchase since the 2014 oil slump
Overall it was a dismal week for the sector West Texas Intermediate WTI crude futures edged down 0 3 to close at 56 55 per barrel while natural gas prices slumped 3 6 to 3 097 per million Btu MMBtu See the last Oil Gas Stock Roundup here
The U S oil benchmark fell after the U S Energy Department s inventory release showed that crude stockpiles recorded an unexpected weekly build The report further revealed that gasoline inventories increased slightly from previous week
However the talking point from the data sets was the steady trend of rising domestic oil production that continues to be the biggest headwind for the market Specifically U S output rose by 25 000 barrels per day last reported week to more than 9 6 million barrels per day the most since the EIA started maintaining weekly data in 1983
Meanwhile natural gas futures logged a big decline despite a larger than expected decrease in supplies the season s first withdrawal Unfavorable weather forecasts and strength in the commodity s production fueled the downside
Recap of the Week s Most Important Stories1 TransCanada Corporation s Keystone XL Pipeline has finally received a regulatory approval from Nebraska commissioners after a prolonged period of delay The decision marks a partial victory for TransCanada since the regulators have approved the project on an alternative route rather than the company s proposed route The 8 billion Keystone XL pipeline with 830 000 barrels capacity was designed to improve oil extraction from Alberta s oil sands and the Bakken region in the U S refineries The initial phase of the pipeline project was finished in 2011 A proposal was made to add another 1179 miles to the 2100 mile long pipeline The project already approved by Canada Montana and South Dakota had been eagerly awaiting a federal ruling from the Nebraska state Nebraska commissioners recent verdict granting approval to the project on an alternate route created new problems Per the company the originally proposed route was most efficient The alternate route will likely balloon costs and delay the disputed pipeline project further TransCanada announced that it is set to begin the review of Nebraska s decision to examine the economics of the project The company will thereby take an official call regarding construction and completion of the pipeline after carefully reevaluating the project s viability and schedule Read more 2 BP Plc recently commenced a share buyback program keeping with the plans announced along with the third quarter 2017 earnings report This makes BP the first leading energy player in Europe to recommence buybacks after 2014 when repurchases were stalled as crude price started falling on supply glut woes As per the program BP will repurchase no more than 1 96 billion shares between Nov 15 and the company s annual general meeting in 2018 The company s strong financials primarily supported by crude price recovery are backing this decision During the third quarter BP reported adjusted earnings of 57 cents per American Depositary Share ADS on a replacement cost basis excluding non operating items The bottom line not only surpassed the Zacks Consensus Estimate of 50 cents but was way higher than the year ago 30 cents Moreover the improving financial position shows that the firm has come a long way since the 2010 oil spill incident in the Macondo Prospect Investors should know that with the buyback BP will be able to overcome the dilution problem under its scrip dividend plan that entitles the investors options for choosing stocks as payout instead of cash Read more 3 Oil refining and marketing giant Marathon Petroleum Corp NYSE MPC recently announced that it will sell its fuel distribution services and refining and logistics assets to its midstream subsidiary MPLX LP NYSE MPLX for 8 1 billion The deal is expected to be over by Feb 1 2018 Of the 8 1 billion Marathon Petroleum will receive 4 1 billion in cash The remaining 4 billion will be in the form of equity of MPLX comprising 111 6 million common Limited Partner units of MPLX along with 2 3 million general partner units including incentive distribution rights This will enable Zacks Rank 2 Buy Marathon Petroleum to keep 2 general partner interest in its subsidiary You can see While the deal is expected to enrich MPLX s earnings by diversifying it with fee based stable revenue streams and strengthening the partnership s distributable cash flow base Marathon Petroleum is following its strategy of enhancing shareholder value by accelerating dropdowns to MPLX The increased equity participation in the subsidiary will also help Marathon Petroleum to receive a steady and growing revenue stream Read 4 Oil and natural gas company SandRidge Energy Inc NYSE SD recently agreed to acquire its rival Bonanza Creek Energy Inc NYSE BCEI a Denver based company for a total consideration of 746 million including cash and stock The cash and stock deal will require SandRidge to buy all the outstanding shares of debt free Bonanza at 36 00 per share This marks a premium of 17 4 to Bonanza Creek s Nov 14 closing price For every share of Bonanza Creek SandRidge will pay 19 20 in cash and 16 80 in its own shares Per SandRidge the deal is expected to be over by the first quarter of 2018 The deal will enable SandRidge to increase its presence in Colorado s Denver Julesburg Basin by attaching an enriched inventory of drill ready locations which will complement its current portfolio The deal includes 67 000 net acres adjacent to SandRidge s Niobrara Shale acreage Cost and operational synergies from the deal will aid SandRidge which recovered from bankruptcy at the end of 2016 while Bonanza Creek came out of bankruptcy in early 2017 The acquisition will help the combined entity to yield risk adjusted returns in the coming years Read more 5 Cheniere Energy Inc NYSE LNG reported wider than expected third quarter 2017 loss which stemmed from increased costs Overall costs and expenses soared 145 8 to 1 106 million from the same quarter last year The increase is mainly attributed to the higher cost of sales which jumped to 824 million compared with 253 million in the prior year quarter Operating and maintenance expenses rose to 114 million in the quarter reflecting an increase of 87 from the prior year figure Depreciation and amortization expenses also increased from 49 million a year ago to 92 million in the reported quarter Higher SG A costs and inclusion of impairment charges further led to increased costs in the quarter under review During the quarter the company shipped 44 cargoes from Sabine Pass liquefied natural gas terminal in Louisiana Total volumes lifted in the reported quarter were 160 trillion British thermal units Cheniere Energy updated its guidance for full year 2017 despite the wider than expected loss The raised guidance reflects the management s confidence in its construction projects which are much ahead of the schedule The adjusted EBITDA is expected to be between 1 8 billion and 1 9 billion 8 8 higher than the prior guidance Distributable cash flow is likely to be between 600 million and 700 million compared with the prior guidance level of 500 700 million Read more
Price Performance
The following table shows the price movement of some the major oil and gas players over the past week and during the last 6 months Reflecting the week s bearish oil market sentiment the Energy Select Sector SPDR a popular way to track energy companies generated a 3 7 return last week The worst performer was offshore drilling rig operator Transocean Ltd NYSE RIG whose stock slumped 10 2
Longer term over 6 months the sector tracker is down 1 2 Oilfield services behemoth Schlumberger Ltd was the major loser during this period experiencing a 14 price depreciation
What s Next in the Energy World
With the 2017 Q3 earnings season essentially over market participants will get back to closely tracking the regular releases i e the U S government statistics on oil and natural gas one of the few solid indicators that comes out regularly Energy traders will also be focusing on the Baker Hughes data on rig count
Zacks Hidden Trades
While we share many recommendations and ideas with the public certain moves are hidden from everyone but selected members of our portfolio services Would you like to peek behind the curtain today and view them
Starting now for the next month I invite you to follow all Zacks private buys and sells in real time from value to momentum from stocks under 10 to ETF to option movers from insider trades to companies that are about to report positive earnings surprises we ve called them with 80 accuracy You can even look inside portfolios so exclusive that they are normally closed to new investors |
MPC | DOJ To Penalize Activists For Damaging Energy Infrastructure | The U S Department of Justice DOJ recently vowed to take legal action against protesters and activists who damage oil pipelines and other energy infrastructure The verdict came in response to the letter sent by more than 80 U S representatives inquiring whether the activists who damaged energy infrastructure in October 2016 could be charged under the domestic terrorism law The letter which was sent to Attorney General Jeff Sessions is still under review In support of the question raised by the representatives DOJ stated that the damage done by activists could disrupt services and consequently affect people s lives The damages can also burden taxpayers and even put lives at risk The damaged pipelines can also hurt the environment The DOJ s decision can increase the persisting tension between climate activists and the administrative board Although the DOJ s legal actions will lead lawmakers to distinguish between lawful and unlawful protests the department is yet to shed light on last year s events where activists protested in four states The protestors twisted shut valves on a few pipelines which were responsible for crude oil imports from Canada The Climate Direct Action group said that the action was in favor of the Standing Rock Sioux Tribe The tribe has been vocal about the Dakota Access Pipeline operated by Energy Transfer Partners LP NYSE ETP as it can cause damage to the tribe s burial ground and pollute its waters The controversial pipeline has witnessed protests since the time it of its planning Energy Transfer started construction of the pipeline in June 2016 with oil and gas companies like Phillips 66 NYSE PSX Enbridge Inc NYSE ENB and Marathon Petroleum Corporation NYSE MPC as minor partners There are cases where activists have been recognized and penalized for their actions A protestor was sentenced for 32 days for illegally tampering with a Kinder Morgan NYSE KMI pipeline in Washington The construction of the Atlantic Sunrise Pipeline by Williams Partners L P NYSE WPZ through Lancaster County also faced protests Recently five protesters were arrested in Martic Township for creating obstacles at the construction site What Lies Ahead Instances of damage to energy infrastructure are expected to go down following the decision taken by the DOJ The actions will also assure oil and gas companies of the safety of their assets However the decision may ignite another controversy regarding protests against climate changes Today s Stocks from Zacks Hottest Strategies It s hard to believe even for us at Zacks But while the market gained 18 8 from 2016 Q1 2017 our top stock picking screens have returned 157 0 128 0 97 8 94 7 and 90 2 respectively And this outperformance has not just been a recent phenomenon Over the years it has been remarkably consistent From 2000 Q1 2017 the composite yearly average gain for these strategies has beaten the market more than 11X over Maybe even more remarkable is the fact that we re willing to share their latest stocks with you without cost or obligation |
MPC | Should Value Investors Pick Marathon Petroleum MPC Stock | Value investing is easily one of the most popular ways to find great stocks in any market environment After all who wouldn t want to find stocks that are either flying under the radar and are compelling buys or offer up tantalizing discounts when compared to fair value One way to find these companies is by looking at several key metrics and financial ratios many of which are crucial in the value stock selection process Let s put Marathon Petroleum Corporation NYSE MPC stock into this equation and find out if it is a good choice for value oriented investors right now or if investors subscribing to this methodology should look elsewhere for top picks PE RatioA key metric that value investors always look at is the Price to Earnings Ratio or PE for short This shows us how much investors are willing to pay for each dollar of earnings in a given stock and is easily one of the most popular financial ratios in the world The best use of the PE ratio is to compare the stock s current PE ratio with a where this ratio has been in the past b how it compares to the average for the industry sector and c how it compares to the market as a whole On this front Marathon Petroleum has a trailing twelve months PE ratio of 19 1 as you can see in the chart below This level actually compares pretty favorably with the market at large as the PE for the S P 500 compares in at about 21 1 If we focus on the stock s long term PE trend the current level puts Marathon Petroleum s current PE ratio noticeably above its midpoint which is 10 8 over the past five years Further the stock s PE also compares favorably with the industry s trailing twelve months PE ratio which stands at 23 4 At the very least this indicates that the stock is relatively undervalued right now compared to its peers We should also point out that Marathon Petroleum has a forward PE ratio price relative to this year s earnings of just 17 1 so it is fair to say that a slightly more value oriented path may be ahead for Marathon Petroleum s stock in the near term too P S RatioAnother key metric to note is the Price Sales ratio This approach compares a given stock s price to its total sales where a lower reading is generally considered better Some people like this metric more than other value focused ones because it looks at sales something that is far harder to manipulate with accounting tricks than earnings Right now Marathon Petroleum has a P S ratio of about 0 5 This is substantially lower than the S P 500 average which comes in at 3 4 right now Also as we can see in the chart below this is equivalent to the highs for this stock in particular over the past few years MPC is actually in the higher zone of its trading range in the time period per the P S metric which suggests that the company s stock price has already appreciated to some degree relative to its sales Broad Value OutlookIn aggregate Marathon Petroleum currently has a Value Style Score of A putting it into the top 20 of all stocks we cover from this look This makes MPC a solid choice for value investors and some of its other key metrics make this pretty clear too For example the PEG ratio for Marathon Petroleum is just 1 6 a level that is marginally lower than the industry average of 2 0 The PEG ratio is a modified PE ratio that takes into account the stock s earnings growth rate Additionally its P CF ratio another great indicator of value comes in at 10 4 which is slightly better than the industry average of 10 9 Clearly MPC is a solid choice on the value front from multiple angles What About the Stock Overall Though Marathon Petroleum might be a good choice for value investors there are plenty of other factors to consider before investing in this name In particular it is worth noting that the company has a Growth grade of A and a Momentum score of A This gives MPC a VGM score or its overarching fundamental grade of A You can read more about the Zacks Style Scores Meanwhile the company s recent earnings estimates have been encouraging The current quarter has seen five estimates go higher in the past sixty days compared to none lower while the full year estimate has seen six upward and no downward revisions in the same time period This has had a favorable impact on the consensus estimate as the current quarter consensus estimate has surged about 42 5 in the past two months while the full year estimate has climbed nearly 23 You can see the consensus estimate trend and recent price action for the stock in the chart below Marathon Petroleum Corporation Price and Consensus The stock holds a Zacks Rank 3 Hold which indicates expectations of in line performance from the company in the near term However Marathon Petroleum is enjoying bullish analyst sentiment as indicated by the positive estimate revisions and this works in the company s favor Bottom LineMarathon Petroleum is an inspired choice for value investors as it is hard to beat its incredible lineup of statistics on this front Moreover a decent industry rank top 43 out of more than 250 industries further supports the growth potential of the stock However with a Zacks Rank 3 it is hard to get too excited about this company overall In fact over the past one year the sector has clearly underperformed the broader market as you can see below Despite positive estimate revision activity investors should wait for industry trends to turn around first When it does this stock could be a compelling value pick Zacks Best Private Investment Ideas While we are happy to share many articles like this on the website our best recommendations and most in depth research are not available to the public Starting today for the next month you can follow all Zacks private buys and sells in real time Our experts cover all kinds of trades from value to momentum from stocks under 10 to ETF and option moves from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises You can even look inside exclusive portfolios that are normally closed to new investors |
MS | Banks miners push FTSE up for 6th session | FTSE 100 up 0 6 percent longest winning streak since
August
Miners banks positive
Retailers hit by Dixons results
By Simon Falush
LONDON March 30 Reuters Banks and miners pushed
Britain s FTSE 100 higher on Wednesday with investors focussing
on an improving outlook for company earnings and with technical
indicators pointing to further gains
By 0915 GMT the FTSE 100 was 36 16 points or 0 6 percent
higher at 5 968 33 after rising 0 5 percent on Tuesday
The index is up for six consecutive sessions its longest
winning streak since August It is up 1 1 percent for the year
Cyclical miners and banks which tend to perform well when
appetite for risk increases provided the bulk of the gains
Vedanta Resources added 4 1 percent the top FTSE 100
gainer with traders citing a note from Morgan Stanley which
said the India focused miner has a 64 percent upside
Global miner Rio Tinto gained 1 5 percent while Europe s
largest bank HSBC put on 0 6 percent
Randgold Resources however bucked the trend slipping 0 9
percent after Societe Generale started coverage of the precious
metals miner with a sell rating
The FTSE 100 saw a sharp rebound last week from falls
earlier in the month prompted by worries over the euro zone debt
crisis political turmoil in the Arab world and the aftermath of
the earthquake in Japan
People are more nervous than they were because of the
Middle East oil prices and Japan but corporate momentum is
sufficiently strong to sustain the economy and there s a view
that the issues are transitory John Haynes head of research
at Rensburg Sheppards said
Of course if Saudia Arabia goes pop all bets are off but
for now people are taking the view that these things will pass
and there s no need for companies to redraw plans
IMI rose 2 4 percent among the top performers after RBC
Capital Markets in a broader upbeat note on UK industrials
selects the engineering firm as its top pick in the sector
6 000 LEVEL EYED
Technical analysts said that the index looks set to retest
the 6 000 level with Michael Hewson saying that the March high
of around 6 040 could be reached soon as long as the index
closes above its 55 day moving average at 5 945
The index is above its 50 day moving average for the first
time since March 8
However reminding investors that companies exposed to the
domestic economy face tough times ahead midcap electronics
chain Dixons Retail slid 11 percent Blue chip retailers Next
and Marks Spencer both fell around 1 percent
Investors will look to glean more of an insight into the
outlook for retailers from March s CBI distributive trades
report due at 1000 GMT
With the market focused on Friday s U S March nonfarm
payrolls report March s Challenger Layoffs numbers and ADP
National Employment survey due at 1130 GMT and 1215 GMT
respectively will give an idea of the jobs situation across the
Atlantic
Ex dividend factors knocked 4 4 points off the FTSE 100
index with Anglo American British Land British Sky
Broadcasting Eurasian Natural Resources Prudential and Smiths
Group all trading without their payout attractions
Editing by Hans Peters |
MS | European stocks broadly higher on automakers DAX rallies 1 5 | Investing com European stock markets were broadly higher on Wednesday as automakers led gains amid hopes the global economic recovery was gathering pace while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 gained 0 65 France s CAC 40 climbed 0 8 while Germany s DAX 30 rallied 1 5 European automakers performed strongly after Japanese automakers began resuming production at domestic factories following the March 11 earthquake Shares in Volkswagen jumped 2 2 BMW saw shares climb 2 while French automakers Renault and Peugeot saw shares gain 1 35 and 1 8 respectively Meanwhile shares in Europe s largest paper maker Stora Enso rose 2 7 after Morgan Stanley upgraded the stock to overweight In London the commodity heavy FTSE 100 climbed 0 45 as shares in miners led gains amid hopes that the global economic recovery would boost demand for raw materials The world s largest mining group BHP Billiton saw shares jump 2 7 rival Rio Tinto rose 2 1 while copper producer Xstrata saw shares add 1 25 Also Wednesday gold producer African Barrick Gold saw shares increase 2 25 after Societe Generale recommended buying the stock while copper producer Vedanta Resources rallied 4 5 after Morgan Stanley said the shares have the potential to gain as much as 64 The outlook for U S equity markets meanwhile was upbeat The Dow Jones Industrial Average futures pointed to a rise of 0 34 S P 500 futures indicated a gain of 0 38 while the Nasdaq 100 futures added 0 54 Later in the day the U S was to publish data on private sector payrolls compiled by payroll processing firm ADP as well as a report on crude oil stockpiles |
MS | Corporate optimism lifts FTSE up for sixth session | FTSE 100 up 0 5 percent
Set for longest winning streak since August
Miners banks positive
Retailers hit by Dixons results
By Simon Falush
LONDON March 30 Reuters Banks and miners pushed
Britain s FTSE 100 higher on Wednesday with investors focusing
on an improving outlook for company earnings and with technical
indicators pointing to further gains
The FTSE 100 was 29 24 points or 0 5 percent higher at
5 961 41 by 1102 GMT The index which rose 0 5 percent on
Tuesday was up for its sixth consecutive session its longest
winning streak since August
Miners and banks which tend to perform well when appetite
for risk increases provided the bulk of the gains
Vedanta Resources added 5 3 percent the top gainer with
traders citing a note from Morgan Stanley saying the
India focused miner has a 64 percent upside
Global miner Rio Tinto gained 1 9 percent while HSBC
Europe s largest bank added 0 7 percent
Randgold Resources bucked the trend slipping 0 4 percent
after Societe Generale started coverage of the precious metals
miner with a sell rating
The FTSE 100 saw a sharp rebound last week from falls
earlier in the month prompted by worries over the euro zone debt
crisis political turmoil in the Arab world and the earthquake
in Japan
The updates companies have been giving investors since the
oil price picked up have indicated that prices can be passed on
and that demand is holding up Colin McLean managing director
at the 650 million pound 1 04 billion Scottish Value
Management in Edinburgh
He said industrials tech stocks and chemicals producers all
look well placed
IMI rose 2 4 percent among the top performers after RBC
Capital Markets in a broader upbeat note on industrials
selected the engineer as its top pick
BID TALK
Centrica was among the top gainers up 2 9 percent on strong
volume with traders citing talk that Spanish peer Iberdola was
set to make a bid
Traders also cited talk of bid interest in fashion group
Burberry which added 2 6 percent
Technical analysts said the index looked set to retest the
6 000 level with CMC Markets analyst Michael Hewson saying the
March high of around 6 040 could be reached soon as long as the
index closed above its 55 day moving average at 5 945
The index is above its 50 day moving average for the first
time since March 8
However reminding investors that companies exposed to the
domestic economy faced tough times ahead midcap electronics
chain Dixons Retail slid 11 percent Marks Spencer slid 2 7
percent
British retail sales growth picked up unexpectedly in March
but the underlying trend for sales remained weak a
Confederation of British Industry survey found With the
market focused on Friday s U S March non farm payrolls report
March s Challenger Layoffs numbers and ADP National Employment
survey due at 1130 GMT and 1215 GMT respectively will give an
idea of the jobs situation across the Atlantic
Ex dividend factors knocked 4 4 points off the FTSE 100
index with Anglo American British Land British Sky
Broadcasting Eurasian Natural Resources Prudential and Smiths
Group all trading without their payout attractions
Editing by Dan Lalor
1 0 6225 pound |
MS | Miners lead Europe shares higher ahead of US data | FTSEurofirst 300 index gains 0 9 percent
Miners gain Vedanta up on bullish broker note
Dixons slumps after profit warning
For up to the minute market news click on
By Brian Gorman
LONDON March 30 Reuters European shares extended recent
gains on Wednesday led by miners with equity strategists
looking for a key labour market report to confirm that the U S
economy is continuing to recover
At 1104 GMT the pan European FTSEurofirst 300 index of top
shares was up 0 9 percent at 1 135 62 points and had hit its
highest in three weeks
Investors will closely watch the U S ADP private sector
employment report at 1215 GMT showing the number of jobs
created and giving clues about the all important nonfarm
payroll data on Friday
What we want to see is companies shifting from temporary to
permanent hiring that will tell us the recovery is ongoing
We re expecting a number of about 200 000 said Philip
Isherwood European equities strategist at Evolution Securities
He said the possible early withdrawal of the Federal
Reserve s stimulus measures was a sign that the U S recovery
was strong and durable and added that the global recovery was
also intact though Japan is an air pocket
Among rising European shares miners gained after Jiangxi
Copper Co Ltd said the metal s top consmer China is expected
to use 10 12 percent more copper in 2011 and that prices for the
metal could reach new highs during the year
Vedanta rose 5 3 percent with traders citing a bullish note
from Morgan Stanley as the catalyst in which the broker says
the miner s industry leading growth is not recognised by the
market
BHP Billiton and Rio Tinto rose 2 9 and 1 9 percent
respectively
Inflation continued to be a key concern for markets and was
driving sector stances said analysts
The further you are from the consumer the easier it is to
pass price increases on said Isherwood who is overweight on
the mining sector but underweight on sectors such as retailers
Across Europe Britain s FTSE 100 rose 0 5 percent
Germany s DAX rose 1 6 percent and France s CAC40 rose 1
percent
Technicals showed an upward trend The French CAC 40 traded
above its 50 day moving average for the first time since March 9
and Britain s FTSE 100 was above its for the first time since
March 8
The PSI20 Lisbon stock index underperformed down 0 3
percent The index is suffering from higher Portuguese
sovereign debt yields that are at new record levels and the
financial sector is the most hard hit said Nuno Milheiro a
trader at DiF brokerage in Lisbon
BCP fell 2 2 percent
DIXONS FALLS
Dixons Britain s No 1 electricals retailer plunged 18
percent after it served up a profit warning and gloomy forecast
for 2011 12 adding to evidence cash strapped British shoppers
are cutting back massively on non essential spending
Also on the downside hearing aid maker Sonova fell 8
percent after its chairman chief executive and chief financial
officer resigned following an insider trading probe
Bancassurer Irish Life Permanent suspended trading of its
shares in London and Dublin after media reports that bank stress
tests might force it into state control
Analysts cited the strength of Asian markets as another
reason for the market s rise on Wednesday
Japan s benchmark Nikkei rose 2 6 percent with the Bank of
Japan s purchases of exchange traded funds lending support
The situation in Japan has not got any worse said Andrea
Williams who manages 1 3 billion pounds 2 08 billion in
assets for Royal London Asset Management
Additional reporting by Joanne Frearson and Andrei Khalip
Editing by Hans Peters |
MS | Industrials power FTSE to best streak in 7 months | FTSE up 0 3 pct sixth day of gains best run since August
Miners industrials higher as investors buy into growth
Retailers fall on gloomy outlook Dixons sounds alarm
By David Brett
LONDON March 30 Reuters The FTSE 100 closed higher for
a sixth consecutive session on Wednesday its best run since
August 2010 as investors ditched retailers over earnings
worries in favour of growth sectors such as industrials and
mining
Dixons issued a profit warning and gloomy outlook as a
survey from the Confederation of British Industry showed the
underlying trend for retail sales remained weak
Dixons Britain s No 1 electricals retailer fell 18 3
percent while the country s biggest pizza delivery firm
Domino s Pizza UK IRL Plc fell 4 2 percent as it reported a
slowdown in sales growth
Next shed 2 6 percent and Marks Spencer dropped 3 percent
as MF Global initiated its coverage on the latter with a sell
rating arguing it has a history of boom and bust while Oriel
cut its earnings forecasts
Traders said banks weighed on gains ahead of Irish banking
stress test results on Thursday
Barclays potentially dealt UK Plc a blow It was reported to
be considering moving its headquarters to the United States due
to the UK threat of higher capital requirements
Despite the retail gloom London s blue chip index closed up
16 13 points or 0 3 percent at 5 948 30
The index has risen 6 percent since its year low of 5 591 59
on March 15 rebounding from sharp falls after Japan s
earthquake political trouble in the Arab world and European
debt worries
Miners which now trade above their 20 and 50 day moving
average led the gains as investors refocused on stocks that
provide hopes for earnings growth
Vedanta Resources added 3 4 percent with traders citing a
bullish note from Morgan Stanley in which the broker says the
miner s industry leading growth is not recognised by the market
as the catalyst
INDUSTRIAL SUPPORT
Rolls Royce gained 1 7 percent after HSBC upgraded the
aerospace and defence firm to overweight citing growth
prospects and shrugging off concerns over the impact of high oil
prices
Rolls Royce shares are flat on the year but trade just above
their 50 day moving average of around 619 pence on a forward
price earnings ratio of 13 8 times compared with a sector
average of 10 4 Thomson Reuters data showed
The updates companies have been giving investors since the
oil price picked up have indicated that price can be passed on
and that demand is holding up Colin McLean managing director
at the 650 million pound 1 04 billion Scottish Value
Management in Edinburgh said
He said industrials tech stocks and chemicals producers
look well placed
Industrials such as IMI and Weir Group up 1 9 and 1 2
percent respectively benefitted from an upbeat note on the
sector from RBC Capital Markets
IMI was RBC s top pick but it said Invensys and Smiths Group down 2 3 and 1 1 percent respectively may underperform UK
peers
Smiths Anglo American British Land British Sky
Broadcasting Eurasian Natural Resources and Prudential all
traded without their dividend attractions
Traders said bid talk boosted Centrica up 2 5 percent on
strong volume with traders citing talk that Spanish peer
Iberdrola was set to make a bid
Traders also cited talk of bid interest in fashion group
Burberry which added 2 percent
Technical analysts said the index looked set to retest the
6 000 level with CMC Markets analyst Michael Hewson saying the
March high of around 6 040 could be reached as the index closed
above its 55 day moving average at 5 945
In the U S the number of planned layoffs at firms fell in
March providing optimism ahead of Friday s non farm payrolls
Editing by David Hulmes |
MS | Economy optimism lift European shares to 3 wk high | FTSEurofirst 300 index up 0 8 pct at 3 wk closing high
ADP report reinforces confidence ahead of nonfarm payrolls
Miners gain Vedanta up on bullish broker note
By Harpreet Bhal
LONDON March 30 Reuters European shares hit a
three week closing high on Wednesday after a U S labour report
revived confidence in a recovery in the world s largest economy
The ADP employment report showed an addition of 201 000
private sector jobs in March giving investors hope for a
similarly upbeat reading for Friday s government compiled
non farm payrolls data which analysts said could help lift
equities from their recent ranges ID nN30275708
The pan European FTSEurofirst 300 index of top
shares ended up 0 8 percent at 1 134 63 points its highest
closing level since March 9
Heavyweight mining shares were among the big gainers
supported by confidence in the recovery of the economy The
STOXX Europe 600 basic resources index rose 0 8 percent
Within the sector Vedanta rose 3 4 percent as
traders cited a bullish note from Morgan Stanley in which the
broker said the market had not recognised the miner s
industry leading growth
Carmakers were also buoyed by improved economic prospects
with the STOXX Europe 600 autos index up 1 7 percent
bouncing back from falls triggered by concerns about disruption
to global supply chains in the aftermath of the earthquake and
tsunami in Japan
Defence firm Rolls Royce added 1 7 percent after
broker HSBC upgraded its investment recommendation and lifted
its earnings forecast
Technical indicators also showed the market had scope to
push higher before being reaching the 70 overbought level with
the 14 day relative strength index RSI on the Euro STOXX 50
hitting 53 on Wednesday easing from oversold
territory of below 30 earlier in March
We have worked through the oversold conditions and
technically the markets are in a very strong and favourable
condition to respond to good newsflow If we do get good
non farm payrolls the market will do very very well said
Mike Lenhoff chief strategist at Brewin Dolphin
The time has come for some positive surprises on the
non farm payrolls because business confidence is very high and
the employment component of the ISM surveys indicate that
companies are predisposed to creating jobs
A revival of the U S labour market and an easing of the
high unemployment rate are seen as crucial elements in the path
to economic recovery with non farm payrolls expected to show
the economy created 190 000 jobs in March while the private
payrolls component is forecast to rise by 200 000
DOWNSIDE
On the downside hearing aid maker Sonova fell
11 7 percent after its chairman chief executive and chief
financial officer resigned following an insider trading probe
Bancassurer Irish Life Permanent suspended trading
of its shares in London and Dublin after media reports that bank
stress tests might force it into state control Bank of Ireland
fell 9 3 percent
Ireland is scheduled to release results of its latest stress
tests on Thursday at 1530 GMT hoping that the results will put
a final figure on the cost of dealing with its banking crisis
ID nLDE72T086
Tomorrow s Irish bank stress tests are expected to see a
further drain in the bailout contingency fund and this will in
all likelihood lead to another ratings downgrade said Michael
Hewson market analyst at CMC Markets
Other fallers included Dixons which shed 18 3
percent after its profit warning and downbeat forecast added to
the view that cash strapped shoppers were cutting back on
spending
Dixon s troubles had a read across to fellow retailer Marks
and Spencer which fell 3 percent on fears the firm
could release a gloomy outlook in its fourth quarter update due
next week
Reporting by Harpreet Bhal Editing by Will Waterman |
MS | US STOCKS Wall St flat toward quarter end payrolls eyed | Jobless claims fall views upbeat for Friday s payrolls
Volume likely to be low on quarter s last day
Berkshire Class B shares fall after Sokol s resignation
Dow up 0 04 pct S P up 0 01 pct Nasdaq off 0 04 pct
Updates to midday changes byline
By Chuck Mikolajczak
NEW YORK March 31 Reuters U S stocks were little
changed on Thursday as a middling reading on jobless claims
failed to dent expectations about Friday s U S payrolls
report for March as the quarter quietly draws to a close
Initial claims for unemployment benefits slipped to
388 000 last week compared with the 380 000 that economists
had expected But the government s data showed the trend of
labor market improvement is intact
The data comes a day after an encouraging ADP
private sector jobs report and precedes Friday s closely
watched monthly employment report from the U S Labor
Department Economists polled by Thomson Reuters estimate that
non farm payrolls added 190 000 jobs in March
Non farm payrolls tomorrow is big 200 000 to 205 000
is probably the level that is being priced in right now said
Max Bublitz chief investment strategist at SCM Advisors in
San Francisco
We all freak out over the first number and kind of ignore
the revisions but the fact is it is a very noisy number and
it s a little bit of a crapshoot
The week has been marked by some of the year s lowest
volumes as traders opt to ride the quarter s gainers pushing
the S P 500 up 5 5 percent in the quarter
But the benchmark S P has been unable to hold gains around
1 330 a level that the index has been unable to break through
despite several attempts in the past month
We are bouncing off that 1 332 level which was kind of a
double off the March 2009 lows We ve struggled with it at
times and it s been kind of a grind here Bublitz said
The Dow Jones industrial average rose 5 34 points or 0 04
percent to 12 355 95 The Standard Poor s 500 Index inched
up 0 18 of a point or 0 01 percent to 1 328 45 The Nasdaq
Composite Index shed 1 22 points or 0 04 percent to
2 775 57
Berkshire Hathaway s Class B shares fell 1 9 percent to
83 84 a day after the resignation of David Sokol the man
widely seen as the leading successor to Warren Buffett to run
Berkshire Sokol resigned after Buffett revealed that Sokol
had bought shares in chemical company Lubrizol Corp before
pushing Buffett to acquire it
In an interview on CNBC Sokol said he did nothing wrong
in buying the shares
Retailers ranked among the worst performers dragged lower
by Carmax Inc which lost 7 4 percent to 32 02 after posting
fourth quarter earnings The S P Retail Index lost almost 1
percent while the Morgan Stanley retail index dropped 1 2
percent
The Institute for Supply Management Chicago said its index
of Midwest business activity fell in March to 70 6 from 71 2
in February The reading was near economists expectations and
stocks reacted little
Reporting by Chuck Mikolajczak Editing by Jan Paschal |
MS | US STOCKS Wall St flat as Friday payrolls data eyed | Jobless claims fall views upbeat for Friday s payrolls
Volume likely to be low on quarter s last day
Berkshire Class B shares fall after Sokol s resignation
Dow up 0 03 pct S P up 0 1 pct Nasdaq up 0 1 pct
Updates to afternoon
By Chuck Mikolajczak
NEW YORK March 31 Reuters U S stocks edged higher on
Thursday as a modest reading on jobless claims failed to
topple upbeat expectations about Friday s U S payrolls report
for March as the quarter quietly draws to a close
Initial claims for unemployment benefits last week showed
the trend of labor market improvement remains intact but at a
slow pace The data precedes Friday s closely watched monthly
employment report from the U S Labor Department a large
deviation in either direction from the estimate of 190 000
jobs added to March non farm payrolls is likely to have a
strong effect on markets
Non farm payrolls tomorrow is big 200 000 to 205 000
is probably the level that is being priced in right now said
Max Bublitz chief investment strategist at SCM Advisors in
San Francisco
We all freak out over the first number and kind of ignore
the revisions but the fact is it is a very noisy number and
it s a little bit of a crapshoot
Volume was light again on Thursday continuing a pattern
for the week as traders opt to ride the quarter s gainers
pushing the S P 500 up 5 7 percent in the quarter Only 4
billion shares had traded on the New York Stock Exchange NYSE
Amex and Nasdaq heading into the session s final hours
But the benchmark S P has been unable to hold gains around
1 330 a level that the index has been unable to break through
despite several attempts in the past month
We are bouncing off that 1 332 level which was kind of a
double off the March 2009 lows We ve struggled with it at
times and it s been kind of a grind here Bublitz said
The Dow Jones industrial average rose 4 20 points or 0 03
percent to 12 354 81 The Standard Poor s 500 Index added
just 0 87 of a point or 0 07 percent to 1 329 13 The Nasdaq
Composite Index gained 2 98 points or 0 11 percent to
2 779 77
Berkshire Hathaway s Class B shares fell 2 3
percent to 83 53 a day after the resignation of David Sokol
the man widely seen as the leading successor to Warren Buffett
to run Berkshire Sokol resigned after Buffett revealed that
Sokol had bought shares in chemical company Lubrizol Corp
before pushing Buffett to acquire it
In an interview on CNBC Sokol said he did nothing wrong
in buying the shares
Retailers ranked among the worst performers dragged lower
by Carmax Inc which lost 6 percent to 32 52 after posting
fourth quarter earnings The S P Retail index lost 0 7
percent while the Morgan Stanley retail index dropped 1 1
percent
Reporting by Chuck Mikolajczak Editing by Jan Paschal |
JPM | JPMorgan Q1 earnings beat forecasts | Investing com NYSE JPMorgan s first quarter earnings beat estimates The U S bank reported a rise in Q1 EPS of 1 65 vs estimate of 1 51 and 1 35 a year earlier Revenues came in at 25 59 bn vs estimate of 24 75 bn JPMorgan shares were 0 91 at 86 18 in pre market trade |
C | France s Faurecia explores sale of bumpers business Bloomberg | Reuters France s Faurecia SA PA EPED is set to explore a sale of its bumpers business which may be worth about 450 million Bloomberg reported on Monday citing sources The car parts maker is in talks with private equity firms and automotive suppliers to measure interest Bloomberg said The company majority owned by PSA Peugeot Citroen PA PEUP has also hired Citigroup Inc N C to work on a potential dispute Bloomberg reported on its website Faurecia which has been considering a sale for about quite some time may work to find to a buyer ready to pay a sufficient price or may decide against a sale Bloomberg said The company which tried to sell its front end modules unit for more than a year recently dropped plans of the sale Faurecia PSA Peugeot Citroen and Citigroup could not be reached immediately for comment outside regular business hours |
C | U S consumer electronics firm Vizio files for IPO | Reuters Consumer electronics company Vizio Inc filed with U S regulators on Friday to raise up to 172 5 million in an initial public offering of Class A common stock BofA Merrill Lynch Deutsche Bank XETRA DBKGn Securities and Citigroup NYSE C are among the underwriters of the IPO Vizio told the U S Securities and Exchange Commission in a preliminary prospectus The Irvine California based company makes affordable flat screen televisions and audio video equipment such as high definition surround sound systems LCD monitors and HDTV accessories The filing did not reveal how many shares the company planned to sell or their expected price The company intends to list its Class A common stock under the symbol VZIO The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees The final size of the IPO could be different |
MPC | Is Marathon Petroleum MPC Stock A Solid Choice Right Now | One stock that might be an intriguing choice for investors right now is Marathon Petroleum Corporation NYSE MPC This is because this security in the Oil and Gas Refining and Marketing space is seeing solid earnings estimate revision activity and is in great company from a Zacks Industry Rank perspective This is important because often times a rising tide will lift all boats in an industry as there can be broad trends taking place in a segment that are boosting securities across the board This is arguably taking place in the Oil and Gas Refining and Marketing space as it currently has a Zacks Industry Rank of 11 out of more than 250 industries suggesting it is well positioned from this perspective especially when compared to other segments out there Meanwhile Marathon Petroleum is actually looking pretty good on its own too The firm has seen solid earnings estimate revision activity over the past month suggesting analysts are becoming a bit more bullish on the firm s prospects in both the short and long term Marathon Petroleum Corporation Price and Consensus In fact over the past month current quarter estimates have risen from 1 25 per share to 1 31 per share while current year estimates have risen from 3 02 per share to 3 08 per share This has helped MPC to earn a Zacks Rank 2 Buy further underscoring the company s solid position You can see So if you are looking for a decent pick in a strong industry consider Marathon Petroleum Not only is its industry currently in the top third but it is seeing solid estimate revisions as of late suggesting it could be a very interesting choice for investors seeking a name in this great industry segment 5 Trades Could Profit Big League from Trump PoliciesIf the stocks above spark your interest wait until you look into companies primed to make substantial gains from Washington s changing course Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals tariffs lower taxes higher interest rates and spending surges in defense and infrastructure |
MPC | Marathon MPC To Test Shipper Interest On Reversed Capline | Leading independent refiner Marathon Petroleum Corporation NYSE MPC announced the commencement of the non binding open season for the Capline Pipeline It is to be noted that Marathon Pipe Line LLC is the operator of the pipeline having capacity to carry crude at a rate of 1 2 million barrel a day Notably Marathon Pipe Line LLC is an affiliate of MPLX LP NYSE MPLX a master limited partnership The open season will gauge the interest of shippers in the reversal of the pipeline Presently the Capline Pipeline carries oil to Patoka IL from St James LA Recently oil transportation through the pipeline has reduced considerably as shippers are shifting to other leading U S pipelines It is to be noted that a few years back Capline was the largest pipeline in the United Sates In the Capline Pipeline Marathon Petroleum has 33 stake Plains All American Pipeline NYSE PAA and BP Plc NYSE BP have 54 and 13 interest respectively Findlay OH based Marathon Petroleum is a leading independent refiner transporter and marketer of petroleum products Investors should know that Marathon Petroleum is the third largest domestic refiner with a combined crude oil processing capacity of approximately 1 8 million barrels per day through a portfolio of seven refineries A major advantage for the company is its proprietary access to pipelines which inhibits lower cost competitors from supplying to its key markets However we are concerned about the company s rising long term debt since 2017 Also Marathon Petroleum s debt to capitalization ratio of 39 2 is significantly higher than 28 5 of the Today s Stocks from Zacks Hottest StrategiesIt s hard to believe even for us at Zacks But while the market gained 18 8 from 2016 Q1 2017 our top stock picking screens have returned 157 0 128 0 97 8 94 7 and 90 2 respectively And this outperformance has not just been a recent phenomenon Over the years it has been remarkably consistent From 2000 Q1 2017 the composite yearly average gain for these strategies has beaten the market more than 11X over Maybe even more remarkable is the fact that we re willing to share their latest stocks with you without cost or obligation |
MPC | Marathon Petroleum MPC Q3 Earnings Revenue Beat Estimate | Have you been eager to see how Marathon Petroleum NYSE MPC a leading downstream operator performed in Q3 in comparison with the market expectations Let s quickly scan through the key facts from this Findlay OH based company s earnings release this morning About Marathon Petroleum Marathon Petroleum is a leading independent refiner transporter and marketer of petroleum products The company operates in three segments Refining and Marketing Speedway Retail and Midstream Zacks Rank Surprise History Currently Marathon Petroleum has a Zacks Rank 3 Hold but that could change following its third quarter 2017 earnings report which has just released You can see Coming to earnings surprise history the company has a mixed record it s gone past estimates in two of the last four quarters resulting in an average positive surprise of 186 35 Marathon Petroleum Corporation Price and EPS Surprise We have highlighted some of the key details from the just released announcement below Earnings Beat Estimate Earnings per share came in at 1 77 ahead of the Zacks Consensus Estimate of 1 45 Higher margins led to the outperformance Revenue Came in Higher than Expected Marathon Petroleum posted revenues of 19 386 million beating the Zacks Consensus Estimate of 17 808 million Total Costs Total costs and expenses came in at 17 810 million up 11 1 year over year Key Stats Operating income from the Refining Marketing segment which is the main contributor to Marathon Petroleum earnings was 1 097 million compared with 252 million in the year ago quarter The jump reflects wider gross margin Total refined product sales volumes were 2 357 thousand barrels per day mbpd up from the 2 316 mbpd in the year ago quarter Moreover throughput improved from 1 926 mbpd in the year ago quarter to 2 017 mbpd Income from the Speedway retail stations totaled 209 million same as the year ago period Contributions from a new joint agreement with Pilot Flying J and lower operating costs were offset by lower volumes decrease in light product margin and fall in merchandise profitability Finally Midstream segment profitability was 355 million up from 310 million in the third quarter of 2016 Earnings were buoyed by strength in volumes gathered processed and fractionated Share Performance Shares of Marathon Petroleum have gained 8 during the third quarter underperforming the 11 5 increase Check back later for our full write up on this Marathon Petroleum earnings report later 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 mixed on Chinese data DAX down 0 11 | Investing com European stock markets were mixed on Thursday following the release of Chinese data that prompted speculation the country would further tighten monetary policy while U S futures indexes pointed to a lower open on Wall Street During European morning trade the EURO STOXX 50 climbed 0 38 France s CAC 40 added 0 03 while Germany s DAX was down 0 11 Earlier in the day official data showed that China s gross domestic product rose more than expected in the fourth quarter A separate report showed that inflation rose slightly less than expected in December fuelling speculation the country would do more to combat inflation and cool its economy Shares in automakers were broadly lower amid concerns that sales in China would decline Europe s largest automaker Volkswagen saw shares tumble 3 12 shares in rival BMW dropped 2 28 while French automaker Renault saw shares slump 2 29 But shares in the financial sector performed strongly as Italy s largest lender Unicredit saw shares jump 3 37 Shares in rival Intesa Sanpaolo surged 3 93 while Spain s biggest bank Banco Santander saw shares gain 1 40 Meanwhile shares in pharmaceutical giant GlaxoSmithKline fell 2 16 after the stock was downgraded by Morgan Stanley In London the FTSE 100 slumped 0 75 as shares in low cost air carrier easyJet plummeted 13 84 after the company said a difficult economic outlook for Europe and higher fuel prices would weigh on earnings Shares in rival RyanAir plunged 4 39 while British Airways saw shares drop 2 71 Elsewhere shares in the mining sector performed poorly following the release of the Chinese data Shares in the world s largest mining group BHP Billiton dropped 1 76 rival Rio Tinto saw shares tumble 1 84 while shares in copper producer Xstrata plunged 2 19 The outlook for U S equity markets meanwhile was downbeat ahead of earnings reports from global financial service provider Morgan Stanley and from the world s biggest copper producer Freeport McMoran Copper Gold The Dow Jones Industrial Average futures pointed to a loss of 0 13 S P 500 futures indicated a drop of 0 09 while the Nasdaq 100 futures pointed to a decline of 0 07 Later in the day the U S was to publish a weekly report on jobless claims as well as official data on existing home sales and a report on manufacturing activity in Philadelphia |
MS | Europe stocks mixed ahead of ECB rate decision DAX up 0 12 | Investing com European stock markets were mixed on Thursday ahead of a European Central Bank policy board meeting while U S futures indexes pointed to a mixed open on Wall Street During European morning trade the EURO STOXX 50 shed 0 34 France s CAC 40 dropped 0 91 while Germany s DAX added 0 12 Shares in the financial sector were mixed after Spain s largest lender Banco Santander said that fourth quarter profit dropped by 4 6 to EUR2 1 billion However revenue for the quarter rose by 7 5 to EUR7 33 billion beating expectations for revenue of EUR7 25 billion Following the news the lender saw shares dip 0 59 while shares in rival BBVA slumped 1 55 France s second biggest bank Societe Generale saw shares shed 1 37 while shares in Italy s largest lender Unicredit jumped 1 38 and German banking giant Deutsche Bank saw shares add 1 35 Meanwhile shares in French utility company Suez Environnement sank 1 46 after Morgan Stanley downgraded the stock In London the commodity heavy FTSE 100 was down 0 13 as shares in oil giant Royal Dutch Shell tumbled 3 35 after releasing its fourth quarter earnings report The oil major said that earnings in the quarter totaled GBP2 53 billion falling short of market expectations for earnings of GBP2 93 billion Chief Executive Peter Voser said that earnings were impacted by weak refining margins pressure on certain regional natural gas prices and volatility in marketing margins as a result of rising oil prices Elsewhere shares in Europe s second largest oil producer British Petroleum slumped 1 18 while natural gas producer BG Group dropped 2 02 The outlook for U S equity markets meanwhile was mixed ahead of earnings reports from credit card giant MasterCard and from media conglomerate Viacom The Dow Jones Industrial Average futures pointed to a gain of 0 08 S P 500 futures indicated a rise of 0 03 while the Nasdaq 100 futures pointed to loss of 0 03 Later in the day the European Central Bank was to announce its minimum bid rate and give its closely watched monthly press conference Meanwhile the U S was to publish its weekly report on initial jobless claims as well as data on labor costs productivity and factory orders In addition the Institute of Supply Management was to publish its non manufacturing PMI |
MS | Range bound FTSE climbs Europe gloom hits banks | FTSE up 0 5 percent remains below 50 day moving average
Wolseley boosted by results growth prospects
Banks wane as S P cuts ratings on Greece Portugal
By David Brett
LONDON March 29 Reuters The FTSE 100 rose moderately in
light trade on Tuesday with support from miners and upbeat
results from Wolseley outpacing falls in banks on European debt
worries
The FTSE 100 climbed 27 68 points or 0 5 percent at
5 932 17 The index regained more than 3 percent the previous
week following losses sparked by the earthquake in Japan
The fact that the FTSE has remained at these levels showing
little signs of weakness when there is so much negative news out
there shows just how much underlying strength there is in the
market Angus Campbell head of sales at Capital Spreads said
Trading volumes were 77 percent of the index s average
90 day volume as investors approached the end of a tumultuous
month cautiously hoping jobs data from the United States on
Friday will provide a catalyst for the index s next move
It s a big data week with the U S non farm payrolls on
Friday and that could see us get more positive momentum Steven
Bell director at the 600 million GLC hedge fund said
The FTSE remains in a range near its 50 day moving average
of around 5 933 and above its 20 day moving average of around
5 791 The index has traded below its 50 day moving average
since March 4
Investors bought into growth stocks as Wolseley the world s
largest plumbers and builders merchant gained 2 1 percent after
posting a 64 percent rise in half year trading profit and
reinstating its dividend
Wolseley s shares trade at a price around 17 times the
company s prospective earnings per share compared to the sector
average of around 12 times according to Thomson Reuters data
Analysts saw more upside potential
Wolseley has plenty of recovery potential in terms of both
earnings and for further deleveraging of the balance sheet
Charles Stanley s analyst Tony Shepard said
MINERS HIGHER
Miners were firmer after a weak showing on Monday Vedanta
was up 2 9 percent with traders citing recent upbeat broker
comment surrounding its pending purchase of Cairn India which
they say could be 30 percent earnings accretive
Hedge fund firm Man Group rose 0 7 percent after it said it
expects 700 million of net inflows in the three months to
March
Clothing retailer Next added 1 9 percent with traders
citing a bullish note from Morgan Stanley
Intercontinental Hotels rebounded 4 percent along with hotel
operator Marriott International after the U S firm gave a
disappointing update on its revenue outlook on Monday
On the downside the previous session s tog gainers the
banks were lower after Italy s UBI Banca surprised markets by
announcing a 1 billion euros 1 4 billion capital hike to help
repay a government bond
Analysts said UBI Banca had reignited worries over Europe s
debt crisis and there were concerns other Italian banks could
follow suit
Ratings agency Standard Poor s downgraded Greece s debt
deeper into junk status and cut its credit rating on Portugal by
one notch
BP down 2 2 percent took 8 points off London s blue chip
index with traders citing a downgrade to sell by Collins
Stewart and a media report that the company s managers may face
manslaughter charges following the Gulf of Mexico oil spill
BP s shares are 58 percent higher than a trough reached in
June last year in the wake of the spill
Phil Roberts chief European technical strategist at
Barclays Capital said the fact the FTSE had closed above its
100 day moving average for two consecutive days provided grounds
for optimism that it could break through resistance
There is potential to move if we manage to close above the
two thirds retracement of the fall from February to March of
5 934 the same level the market collapsed from we could
move back to 6 052 and the highs for the year around 6 100
Editing by Elaine Hardcastle |
MS | UPDATE 7 Tokyo Electric says 24 bln loans not enough chief in hospital | 2 trln yen loan not enough to meet costs TEPCO chairman
CEO Shimizu suffering from high blood pressure dizziness
Tokyo Electric shares sink further 18 pct on
nationalisation prospects
Bank insurer shares also hit by concerns about TEPCO
future
Three year CDS spreads jump to record bonds steady IFR
Edits adds background
By Taiga Uranaka
TOKYO March 30 Reuters Tokyo Electric Power
warned on Wednesday that a 24 billion bank loan was not enough
to keep it afloat and pay for Japan s worst nuclear disaster
adding to expectations the government will step in to bail out
the stricken company
Asia s largest utility whose share price has crashed nearly
80 percent since the March 11 earthquake and tsunami that
sparked the crisis said its president had been hospitalised and
Chairman Tsunehisa Katsumata will take over his
responsibilities
The prime minister and other lawmakers have lambasted Tokyo
Electric known as TEPCO for its handling of the disaster The
utility has sown anxiety among the public by giving confusing
radiation readings as it raced against time to prevent reactors
from overheating and many Japanese say they don t trust what its
officials say
Katsumata told a news conference that TEPCO had not had time
to estimate the financial impact of the disaster at its
Fukushima nuclear plant but expected it to be very severe
The company had secured 2 trillion yen 24 billion in
loans from lenders led by Sumitomo Mitsui Financial Group
but that was not enough given fuel and other costs
TEPCO would discuss with the government how to ensure it had
adequate funding he said to get through a disaster that has
caused radiation leaks rolling power blackouts and the
evacuation of tens of thousands of people
There are lots of discussion about nationalisation but I
will do my best to ensure TEPCO remains as a private company
Katsumata said
Analysts see scant chance the company which provides
electricity to a third of the Japanese population can survive
in its current form
TEPCO will have to pay enormous reparations counted in
trillions of yen so the government obviously has to do
something about the firm said Norihiro Fujito senior
investment strategist at Mitsubishi UFJ Morgan Stanley
Securities
But people wouldn t let the government keep pouring tax
money into this company when it s like a bucket with holes in
it
BONDS VS SHARES
Although likened by some to the Gulf of Mexico oil spill
that hammered oil company BP TEPCO s financial standing
and rapid deterioration in its share price may present Japan s
government with a systemic problem more similar to the collapse
of Lehman Brothers in 2008 and force it to act sooner to bolster
the company than anticipated
It s not just about the nationalisation of TEPCO You have
to look at all the banks that are lending to the company it s
obvious that investors are going to look at their situation with
a huge dose of scepticism Fujito said
Shares in TEPCO which closed at their lowest level in
nearly five decades on Tuesday dropped another 17 7 percent to
466 yen on Wednesday and were later untraded after the company
said President Masataka Shimizu had been taken to hospital for
high blood pressure and dizziness
Shimizu has not been seen in public since a March 13 press
briefing and speculation had swirled about his leadership His
chairman said he had shown no intention to resign and was
expected to be back at work soon
TEPCO has been roundly criticised for its preparedness and
response to the disaster
As the company struggled to communicate what was happening
at the site Prime Minister Naoto Kan reportedly demanded at one
stage that company executives tell him What the hell is going
on
Experts have also questioned why so much spent fuel was kept
at the plant and whether officials ignored concerns raised about
its vulnerability to such a natural disaster
The president of the company and four other senior officials
were forced to resign in 2002 to take responsibility for
suspected falsification of safety records
Some investors see worse to come for the company
We believe the stock could go to zero an executive at a
hedge fund with 1 billion invested in Asia told Reuters on
condition he wasn t identified His fund he said has been buying
TEPCO debt because we think the Japanese government will
guarantee or nationalise it
What we have been doing is that we have been looking at
senior secured debt We have been buying basically
TEPCO has around 91 billion in debt which excludes the
latest loan but includes some 64 billion in bonds The cost of
insuring against default has jumped by as much 10 times since
the quake although that eased slightly after reports the
government may step in to nationalise the company
The spread on TEPCO s domestic bonds stayed at 200 basis
points with no buyers or sellers according to a Wednesday
report in IFR a Thomson Reuters publication
TEPCO s three year CDS blew out to their widest level on
record at 510 basis points bps meaning it costs 510 000 to
insure 10 million of debt against default IFR reported
However quotes on five year protection narrowed
significantly to a range of 380 bps to 420 bps from Monday s 450
bps Before the disaster five year protection cost about 40
bps
A de facto government guarantee on its debt that any
nationalisation would infer will shore up bondholder confidence
but by then shareholders may see their equity wiped out
CASHFLOW HIT
Compensation and rebuilding claims are expected to be
substantial The government has evacuated 70 000 people from
around the plant and is considering expanding that to include
another 130 000 people
The government has banned the sale of spinach from four
prefectures around the plant and raw milk from the Fukushima
prefecture
TEPCO s cashflow is also under pressure as it pays more for
alternative fuels and struggles to rebuild generation capacity
Nomura Holdings analyst Shigeki Matsumoto said
this month that TEPCO will have pay more than 1 billion every
month on oil and gas to make up for lost capacity With reactors
likely to be off line for a long time that expense will mount
It was inevitable TEPCO would have to scrap four of its six
reactors at the Fukushima Daiichi plant Chairman Katsumata told
the news conference
A government official told Reuters that TEPCO s annual
revenue of around 5 trillion yen and assets of 12 trillion yen
would be enough to keep the company going
Other options to help TEPCO would be allowing it to raise
electricity rates or for the government to pick some or all of
the compensation claims
But the prospect of a nationalisation caused ripples with
TEPCO shareholders
Shares in TEPCO s main bank SMFG which is also a large
shareholder with a 2 7 percent holding fell 1 8 percent as the
benchmark Nikkei average rallied 2 6 percent
Dai ichi Life Insurance which is the
second largest shareholder in TEPCO with 4 1 percent stake rose
3 6 percent after Deutsche Securities said the impact of TEPCO
stock price fall is limited on its embedded value a measure of
an insurer s worth that includes the present value of future
earnings from life insurance contracts
Since the temblor struck however Dai ichi shares have
fallen about 16 percent compared with a decline of around 5
percent in the benchmark Nikkei 225 index
1 82 480 Japanese Yen
Additional reporting by Antoni Slodkowski Tim Kelly and
Nishant Kumar Writing by Lincoln Feast Editing by Chris
Gallagher and Neil Fullick |
JPM | European regulators offer Brexit sweeteners to investment banks | By Huw Jones Rachel Armstrong and Jes s Aguado LONDON MADRID Reuters A gap in EU financial rules is allowing member countries to compete to host the trading operations of London based investment banks after Brexit by offering looser regulatory standards The European Central Bank is the euro zone s banking supervisor but under EU law does not have direct responsibility for the divisions of banks that conduct most of their market trading broker dealers even though they are some of the most complex and riskiest parts of their businesses This is largely because when the ECB became responsible for euro zone supervision in 2014 the bulk of broker dealers were in London and therefore not under its purview This means banks now looking to relocate these operations to continue to trade continental securities after Britain leaves the EU will have businesses approved and supervised by the national markets regulator of whichever country they move to Countries hoping to lure banks to their financial centers after Brexit are offering differing regulatory standards raising fears at the ECB that they could be subject to light touch supervision and undermining its aim of making financial regulation consistent across the bloc Such inconsistencies mean broker dealers trading the same markets in Europe could be subject to different regulatory requirements and raise the prospect that some would take on more risks than other regulators would deem appropriate Regardless of balance sheet size it s currently the national regulators who will have the authority to approve and regulate the broker dealers That is raising concerns of inconsistencies emerging said Vishal Vedi a partner at Deloitte who is advising banks on how they will need to reorganize as a result of Brexit Across the euro zone the likes of Frankfurt Dublin Luxembourg and Madrid are vying to lure banks hoping to benefit from the tax revenues and jobs they would bring Regulation is one way to differentiate themselves One area in focus is the extent to which national regulators will allow broker dealers to conduct back to back trading This is where a bank would conduct trades for example buying European securities out of its EU base but process and risk manage the transactions at its London office This would minimize the and number of people a bank would have to move to Europe after Brexit as much of the trading and risk could continue to be overseen in London But it would mean regulators in that country and the wider euro zone would not have supervisory control over the people and units that are conducting the trading and managing the risks with minimal amounts of capital held locally at the EU unit SPAIN GERMANY Spain s markets regulator CNMV has said it wants to make Madrid the most appealing option for investment firms considering a move from the UK to another EU country According to people advising investment banks on where to move CNMV has said it would consider allowing broker dealers to back to back 100 percent of their trades Other regulators have also said they would allow some back to back trading although will require a portion of the trades to be managed locally those people said We can look into it but we will see how this plays out and what the regulatory framework will look like in two years time a CNMV spokesman said when asked whether it would allow 100 percent back to back trading CNMV said in December that while it wanted to be the most welcoming place in Europe for UK financial firms it would not accept totally empty shells or breaches to EU securities rules Germany s regulator Bafin has meanwhile said it would consider the limited and temporary use of back back arrangements according to an official there but has indicated that it would expect banks to eventually establish a substantial operation in the country The approach by some regulators to Brexit has created resentment among some countries Last month Ireland complained to the European Commission that it was being undercut by rival cities competing to host financial firms looking for a European Union base outside London after Brexit The EU s European Securities and Markets Authority ESMA has been studying ways to limit unfair competition among the bloc s national securities regulators It declined to comment for this article So far banks are showing no signs of flocking to Madrid citing other factors such as Spain s relatively low sovereign credit rating as a reason not to go there Countries are also diverging in how banks risk models for their broker dealers would be assessed with some saying they would be approved immediately if they were to use the same model to the one they use in Britain Regulators differ in their approach to risk models particularly around the level of reliance that they will be prepared to place on models which have already been approved in the existing UK entity and the amount of pre assessment they will do themselves said Deloitte s Vedi BANKS WARY Most banks publicly at least have yet to make a final decision on where they plan to set up their broker dealers after Brexit and executives say they are skeptical about whether they will be allowed to use workarounds like back to back in the long term We do suspect that following Brexit there will be constant pressure by the EU not to outsource services to the United Kingdom but to continue to move people and capabilities into EU subsidiaries JPMorgan NYSE JPM Chief Executive Jamie Dimon said in his annual letter to shareholders on Tuesday The ECB has warned banks that if they try to cut corners by asking for back to back deals they will be disappointed But currently it does not have the legal authority to oversee broker dealers though sources say it is quietly trying to put pressure on countries they think are offering lower standards The ECB declined to comment on Spain or back to back arrangements more broadly but instead pointed to previous comments by its officials Sabine Lautenschlaeger an ECB executive board member expressed her concerns on the issue in March when she said there could be changes to EU laws to bring broker dealers under the ECB s supervision Needless to say that I would certainly not accept banks booking all exposures with the euro area entity while having their risk management and internal control systems outside the euro area she said Regulators like CNMV are currently free to cut deals as long as they don t breach EU securities rules but the bloc s regulatory landscape could change within a year or two and cast a shadow over any deals on regulation agreed now The EU s executive European Commission has proposed that non EU banking firms with banking and broker dealer operations with total assets of more than 30 billion euros in the EU should set up an intermediate holding company inside the bloc
An intermediate holding company would come under direct ECB supervision in euro zone countries |
JPM | Barclays reprimands chief executive for trying to identify whistleblower | By Lawrence White and Carolyn Cohn LONDON Reuters British bank Barclays L BARC has reprimanded Chief Executive Jes Staley and will cut his bonus heavily after he tried to uncover the identity of an internal company whistleblower in a case being investigated on both sides of the Atlantic In a statement on Monday Britain s second biggest bank disclosed that British authorities were investigating American Staley s attempts to find out who wrote a letter that revealed concerns of a personal nature about an unnamed senior employee New York s Department of Financial Services is also investigating a person familiar with the matter said A legal investigation ordered by the bank found that Staley s efforts involved a U S law enforcement agency and contradicted the company s own policy Barclays grants whistleblowers anonymity to prevent any retribution for their actions in keeping with normal UK practice I have apologized to the Barclays board and accepted its conclusion that my personal actions in this matter were errors on my part former JPMorgan NYSE JPM banker Staley said in a statement Barclays said its board would back Staley s reappointment at the company s annual shareholder meeting on May 10 Analysts said that Staley s position as CEO could come under pressure if regulators reports on the case expected to take a matter of months were especially critical of his conduct Staley who took the role in Dec 2015 stands to lose a chunk of the 1 3 million pound 1 6 million bonus he was awarded this year but the final amount to be docked is yet to be decided a separate source said Staley said in a memo to Barclays staff on Monday that he had been attempting to protect a colleague from an unfair personal attack In my desire to protect our colleague however I got too personally involved in this matter Staley wrote in the memo seen by Reuters The investigations are the latest in a series of regulatory problems for the bank which is still dealing with investigations into employees manipulation of Libor benchmark interest rates The whistleblower probe is particularly embarrassing for Barclays since it relates to recent wrongdoing rather than being a legacy of financial crisis era misconduct and because Staley himself has made much of the bank s efforts to clean up its act I am personally very disappointed and apologetic that this situation has occurred particularly as we strive to operate to the highest possible ethical standards Barclays Chairman John McFarlane said in the company s statement Barclays shares fell as much as 0 7 percent on Monday but were trading 0 65 percent higher by 1340 GMT HONEST MISTAKE Barclays board first heard of Staley s attempt to identify the author of the letter in early 2017 after the issue was raised by an employee Barclays said The board instructed law firm Simmons Simmons to carry out an investigation led by Gerry Grimstone the bank s deputy chairman and also notified the regulators The investigation found and the board has concluded that Mr Staley honestly but mistakenly believed that it was permissible to identify the author of the letter the bank said The lawyers report also said that Staley had requested the bank s internal security team contact U S enforcement officers to help identify the whistleblower and that such assistance was received albeit without discovering the identity of the person The board will issue a formal written reprimand to Staley and make a very significant adjustment to his variable compensation award The board will also look into the position of other employees involved in the incident Staley 60 has embarked on a sweeping revamp of the lender s strategy since taking over Barclays slashing its business in Asia and Africa in favor of a new transatlantic focus on the U S and Britain A career investment banker who spent 34 years at JPMorgan Staley is popular among staff in Barclays investment bank for bringing back some of its risk taking swagger after the hairshirt regime of predecessor Antony Jenkins The attempts to uncover the whistleblower took place despite the bank s appointment of a whistleblower champion Mike Ashley the chairman of its Board Audit Committee
In 2016 Ashley emailed all Barclays employees with a video spelling out the bank s policy on protecting whistleblowers according to the lender s annual report |
C | Citi ordered to pay Mercuria 14 million in China metals financing suit report | NEW YORK Reuters Citigroup Inc N C has been ordered to pay Swiss based commodities merchant Mercuria almost 14 million as part of prolonged legal wrangling over Chinese metals financing deals hit by suspected fraud a report on Wednesday said Justice Stephen Phillips of London s High Court ordered Citi to pay Mercuria 13 6 million plus interest for damages related to a transaction in which the bank failed to deliver metal paid for by Mercuria last year according to a Wall Street Journal report citing a court order The judge also ordered Citi to pay half of Mercuria s legal fees including an immediate payment of roughly 500 000 the report said The news comes after Citi in May lost its legal challenge in London to force Mercuria to pay about 270 million in potential losses for the metals financing deals in China The lawsuit centers on a probe launched in May last year by Chinese authorities of suspected fraud at China s Qingdao port the world s seventh busiest and nearby Penglai Neither Citigroup nor Mercuria Energy Trading Ltd are accused of fraud but have been caught in the fallout from the probe The alleged fraud is estimated to have stung Western banks and trading houses as well as local Asian banks for more than 3 billion in total
China has been investigating whether private metals trading firm Decheng Mining and its related companies used fake warehouse receipts to obtain multiple loans secured against a single cargo of metal |
C | Citigroup shares rise 2 4 on upbeat Q2 earnings | Investing com Banking conglomerate Citigroup NYSE C reported better than expected second quarter earnings on Thursday sending its shares higher in pre market trade
Citigroup said adjusted earnings per share came in at 1 45 in the three months ended June 30 above expectations for earnings of 1 34 per share and up from 1 24 in the year ago period
The bank s second quarter revenue totaled 19 5 billion beating forecasts for revenue of 19 17 billion and compared to revenue of 19 4 billion for the second quarter 2014
Second quarter 2014 results also included the impact of a 3 8 billion charge 3 7 billion after tax to settle legacy RMBS and CDO related claims
Michael Corbat Chief Executive Officer of Citigroup said Our results for the quarter show very balanced performance across our business lines
Immediately after the earnings announcement Citigroup shares rose 2 41 in trading prior to the opening bell to hit 57 85 from a closing price of 56 49 on Wednesday
Meanwhile U S stock futures pointed to a modestly higher open The Dow futures pointed to a gain of 0 35 the S P 500 futures tacked on 0 4 while the Nasdaq 100 futures advanced 0 45 |
C | Citi posts highest profit since financial crisis shares rise | By Neha Dimri and David Henry Reuters Citigroup Inc NYSE C the third biggest U S bank by assets reported its highest quarterly profit since the financial crisis as Chief Executive Michael Corbat s restructuring and cost cutting efforts paid off and the bank s legal expenses plunged Under Corbat who replaced Vikram Pandit as CEO in 2012 Citi has been selling retail operations in several countries shrinking its U S branch network and disposing of non core businesses The bank s shares rose 3 percent to a six and a half year high of 58 18 on Thursday after its adjusted earnings handily beat analysts estimates Operating expenses in Citicorp which holds the bank s core businesses fell 6 percent to 9 8 billion in the second quarter Citi shrank the assets of Citi Holdings which houses businesses it plans to sell by 22 percent compared with 19 percent in the first quarter The unit posted earnings of 157 million Through active expense and balance sheet discipline we are on track to reach our financial targets for the year Corbat said in a statement Corbat set out two years ago to increase Citi s return on assets and make it more efficient He also aimed to raise the bank s return on equity but faced hurdles when the U S Federal Reserve rejected his capital return plan The Fed finally approved the bank s new buyback plan in March and allowed it to raise dividend for the first time since 2008 Citi s return on average assets was 1 06 percent in the quarter ended June 30 higher than Corbat s target of at least 0 9 percent for the year Efficiency ratio in the Citicorp unit was 55 percent the midpoint of Corbat s target of 53 57 percent Revenue from Citi s fixed income business fell 1 percent to 3 06 billion a much smaller decline than that reported by other Wall Street banks Goldman Sachs Group Inc which reported a steep fall in profit earlier on Thursday said net revenue from fixed income currency and commodity trading plunged 28 percent Bank of America Corp s fixed income revenue fell 9 3 percent while JPMorgan Chase Co NYSE JPM posted a 10 percent drop Citi s net income rose to 4 85 billion or 1 51 per share from 181 million or 3 cents per share a year earlier when the bank was hit by a 3 8 billion legal charge Adjusting for legal costs and some accounting items earnings rose 18 percent to 4 65 billion or 1 45 per share beating the average analyst estimate of 1 34 per share according to Thomson Reuters I B E S
Total adjusted revenue fell 1 5 percent to 19 16 billion coming slightly above analysts expectations of 19 11 billion |
C | U S jobless claims housing data point to firming economy | By Lucia Mutikani WASHINGTON Reuters The number of Americans filing new applications for unemployment benefits fell more than expected last week and confidence among homebuilders held at a more than 9 1 2 year high in July indicating underlying momentum in the economy The solid labor market and firming housing sector underscored by Thursday s reports suggest the economy likely is strong enough to support an interest rate hike this year Manufacturing however continues to struggle Overall the economy continues to move in the right direction We look for the Federal Reserve to hike rates twice before the end of the year beginning in September said John Ryding chief economist at RDQ Economics in New York Fed Chair Janet Yellen told lawmakers on Wednesday that the U S central bank remained on course to tighten monetary policy at some point this year Initial claims for state unemployment benefits fell 15 000 to a seasonally adjusted 281 000 for the week ended July 11 the Labor Department reported The decline reversed the prior week s rise and ended three straight weeks of increases Economists had forecast claims falling to 285 000 last week While claims tend to be volatile during the summer when automakers normally shut assembly plants for annual retooling a Labor Department official said there was nothing unusual in the state level data Some automakers keep production running which can throw off a model the government uses to smooth the data for seasonal fluctuations The four week moving average of claims considered a better measure of labor market trends as it irons out week to week volatility increased 3 250 to 282 500 last week It was the 16th straight week that the four week moving average of claims held below 300 000 a threshold normally associated with a firming labor market The dollar rose against a basket of currencies while prices for short dated U S government debt fell Stocks on Wall Street were higher after Greece s Parliament voted to approve a new bailout program and Citigroup N C reported its highest quarterly profit in eight years MANUFACTURING LAGS The U S labor market is tightening the unemployment rate has dropped 4 7 percentage points from its peak in late 2009 to the current 5 3 percent near the range that most Fed officials consider consistent with full employment Thursday s jobless claims report short showed the number of people still receiving benefits after an initial week of aid declined 112 000 to 2 22 million in the week ended July 4 suggesting some long term unemployed were finding work The strong labor market is helping to prop up the housing market A separate report showed the NAHB Wells Fargo Housing Market index stood at 60 this month the highest since November 2005 That was unchanged from June s upwardly revised level which was originally reported at 59 Readings above 50 indicate more builders view market conditions as favorable than poor The index has not been below that level since June 2014 Builders this month maintained their optimism about current and future sales though a measure on prospective buyer traffic slipped from a five month peak This is more evidence that housing is strengthening said Jim O Sullivan chief U S economist at High Frequency Economics in Valhalla New York But manufacturing continues to lag In a third report the Philadelphia Fed said its business activity index fell to 5 7 this month from a reading of 15 2 in June A reading above zero indicates manufacturing expansion in the region which covers eastern Pennsylvania southern New Jersey and Delaware Manufacturing has been slammed by a stronger dollar and lower oil prices The dollar has eroded the profits of multinational corporations while cheaper oil has undercut oil drilling activity reducing investment spending in the energy sector It adds to the disconcerting trend seen in other manufacturing sector indicators that have been consistently pointing to a lingering stagnation in U S manufacturing sector activity said Millan Mulraine deputy chief economist at TD Securities in New York While we believe that the dissipation of the various headwinds buffeting this sector should result in a meaningful rebound later this year the timing of this seems farther into the horizon
A gauge of new orders in the Philadelphia Fed survey fell sharply this month as did shipments Inventories contracted and a measure of factory employment in the region was negative for the first time since January |
MPC | MLPX s Binding Open Season For Pipeline Expansion Successful | Energy pipeline partnership MPLX LP NYSE MPLX a subsidiary of Marathon Petroleum Corporation NYSE MPC recently finished a binding open season for the Wood River to Patoka pipeline expansion Per MPLX the open season was successfully conducted by its unit Marathon Pipe Line LLC The open season lasted for the whole of August 2017 Project DetailsThe partnership plans to increase transportation capacity to Midwest markets via the oil storage hub of Patoka IL by 130 000 barrels per day The pipeline presently has a transportation capacity of 215 000 barrels per day which the company plans to increase by boosting horsepower and adding drag reducing agents The expansion project has seen strong interest from potential shippers The shippers will receive priority transportation service on the pipeline Expansion RationaleMPLX expects the expansion project to increase its revenue opportunities and augment its distributable cash flow in the long term The project is expected to be completed by the second quarter of 2018 About MPLXMPLX is a fee based limited partnership formed to own operate develop and acquire crude oil refined product and other hydrocarbon based product pipelines and other midstream assets The partnership s assets consist of a network of common carrier crude oil and product pipeline systems and associated storage assets in the Midwest and Gulf Coast regions of the United States MPLX LP is based in Findlay OH Price PerformanceMPLX has gained 1 6 year to date compared with 3 4 growth of its Zacks Rank and Stocks to ConsiderMPLX has a Zacks Rank 3 Hold Some better ranked stocks in the oil and energy sector are Lonestar Resources US Inc NASDAQ LONE and Subsea 7 SA OTC SUBCY each sporting a Zacks Rank 1 Strong Buy You can see Lonestar Resources sales for 2017 are expected to surge 60 2 year over year The company delivered a positive earnings surprise of 62 5 in the second quarter of 2017 Subsea s sales for 2017 are expected to increase 11 6 year over year The company delivered an average positive earnings surprise of 83 8 in the last four quarters 4 Promising Stock Picks to Keep an Eye On With news stories about computer hacking and identity theft becoming increasingly commonplace the cybersecurity industry looks like a promising investment opportunity But which stocks should you buy Zacks just released Cybersecurity An Investor s Guide to Locking Down Profits to help answer this question This new Special Report gives you the information you need to make well informed investment choices in this space More importantly it also highlights 4 cybersecurity picks with strong profit potential |
MPC | Surging Earnings Estimates Signal Good News For Marathon Petroleum MPC | Marathon Petroleum Corporation NYSE MPC is engaged in refining transporting and marketing of petroleum products that could be an interesting play for investors That is because not only does the stock have decent short term momentum but it is seeing solid activity on the earnings estimate revision front as well These positive earnings estimate revisions suggest that analysts are becoming more optimistic on MPC s earnings for the coming quarter and year In fact consensus estimates have moved sharply higher for both of these time frames over the past four weeks suggesting that Marathon Petroleum could be a solid choice for investors Current Quarter Estimates for MPCIn the past 30 days seven estimates have gone higher for Marathon Petroleum while one have gone lower in the same time period The trend has been pretty favorable too with estimates increasing from 1 08 a share 30 days ago to 1 24 today a move of 14 8 Current Year Estimates for MPCMeanwhile Marathon Petroleum s current year figures are also looking quite promising with seven estimates moving higher in the past month compared to one lower The consensus estimate trend has also seen a boost for this time frame increasing from 2 74 per share 30 days ago to 3 08 per share today an increase of 12 4 Marathon Petroleum Corporation Price and Consensus Bottom LineThe stock has also started to move higher lately adding 8 5 over the past four weeks suggesting that investors are starting to take note of this impressive story So investors may definitely want to consider this Zacks Rank 3 Hold stock to profit in the near future You can see 5 Trades Could Profit Big League from Trump PoliciesIf the stocks above spark your interest wait until you look into companies primed to make substantial gains from Washington s changing course Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals tariffs lower taxes higher interest rates and spending surges in defense and infrastructure |
MPC | Surging Earnings Estimates Signal Good News For Jones Energy JONE | Jones Energy Inc NYSE JONE that is a renowned oil and gas company could be an interesting play for investors That is because not only does the stock have decent short term momentum but it is seeing solid activity on the earnings estimate revision front as well These positive earnings estimate revisions suggest that analysts are becoming more optimistic on JONE s earnings for the coming quarter and year In fact consensus estimates have moved sharply higher for both of these time frames over the past four weeks suggesting that Marathon Petroleum NYSE MPC could be a solid choice for investors Current Quarter Estimates for JONEIn the past 30 days only one estimate has gone higher for Jones Energy while none have gone lower in the same time period The trend has been pretty favorable too with estimates narrowing from a loss of 15 cents a share 30 days ago to a loss of 14 cents today a move of 7 Current Year Estimates for JONEMeanwhile Jones Energy s current year figures are also looking quite promising with one estimates moving higher in the past month compared to one lower The consensus estimate trend has also seen a boost for this time frame narrowing from a loss of 22 cents a share 30 days ago to a loss of 13 cents today a move of 32 Jones Energy Inc Price and Consensus Bottom LineThe stock has also started to move higher lately adding 65 3 over the past four weeks suggesting that investors are starting to take note of this impressive story So investors may definitely want to consider this Zacks Rank 3 Hold stock to profit in the near future You can see 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 | Asia stocks mixed as euro zone worries weigh Nikkei up 0 01 | Investing com Asian stocks were mostly lower on Thursday as ongoing concerns over the euro zone s debt crisis weighed on market sentiment while shares in Japanese banks advanced after the nation s banking industry received a broker upgrade During late Asian trade Hong Kong s Hang Seng Index tumbled 1 26 South Korea s Kospi Composite shed 0 41 while Japan s Nikkei 225 Index eased up 0 01 Shares in the commodity sector performed poorly after metal and crude oil prices retreated Shares in Japan s largest commodity broker Mitsui Co tumbled 1 18 oil driller Japan Petroleum Exploration Company saw shares slump 0 42 while metal producer Mitsui Mining Smelting saw shares drop 0 47 Meanwhile shares in the financial sector were broadly higher after Nomura Holdings maintained a buy rating on Japanese banks citing their low valuations Shares in the nation s largest lender Mitsubishi UFJ Financial Group jumped 1 40 rivals Sumitomo Mitsui Financial Group saw shares rally 2 22 while shares in Japan s third biggest bank Mizuho Financial Group surged 2 74 Elsewhere shares in the world s largest tiremaker Bridgestone tumbled 1 64 after Morgan Stanley downgraded the stock to equal weight Meanwhile shares in DeNA a maker of game software for handsets soared 9 90 after it said it won a contract to supply Samsung Electronics with its social gaming platform Meanwhile Australia s S P ASX 200 Index gained 0 34 as shares in the nation s second largest airliner Virgin Blue jumped 5 88 after Australia s competition watchdog granted conditional approval to the carrier s proposed merger with Air New Zealand The outlook for European equity markets meanwhile was modestly downbeat The EURO STOXX 50 futures pointed to a drop of 0 02 France s CAC 40 futures indicated a loss of 0 03 the FTSE 100 futures pointed to a decrease of 0 06 while Germany s DAX futures were down 0 03 Later in the day EU leaders were to meet in Brussels for a 2 day summit to discuss the next step in dealing with the euro zone s debt crisis Meanwhile the U S was to publish a key weekly report on initial jobless claims as well as data on building permits housing starts and manufacturing activity in Philadelphia |
MS | European stocks rise ahead of EcoFin meeting DAX up 0 75 | Investing com European stock markets were broadly higher on Tuesday ahead of a meeting of euro zone finance ministers in Brussels while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 jumped 0 94 France s CAC 40 advanced 0 68 while Germany s DAX was up 0 75 Shares in the financial sector performed strongly ahead of a meeting of finance ministers from all 27 euro zone nations due to be held later on Tuesday Shares in France s second largest lender Societe Generale climbed 2 34 Spain s biggest bank Banco Santander saw shares rally 3 35 while shares in rival BBVA surged 3 63 Elsewhere shares in European chipmakers were broadly higher tracking gains by their Asian counterparts and after Goldman Sachs upgraded the sector Shares in Europe s largest chipmaker STMicroelectronics surged 2 02 rival Infineon Technologies jumped 3 68 while U K based ARM Holdings gained 1 46 Meanwhile shares in the world s fifth largest automaker Daimler soared 3 33 after Morgan Stanley upgraded the stock to overweight Rival BMW saw shares rise 1 20 In London the commodity heavy FTSE 100 jumped 1 15 as crude oil and metal prices advanced Shares in the world s largest mining group BHP Billiton added 1 88 oil and gas giant British Petroleum saw shares gain 1 51 while shares in copper producer Xstrata surged 2 30 Meanwhile shares in luxury goods retailer Burberry rallied 3 68 after it reported third quarter revenue jumped by 27 from a year earlier to GBP480 million beating analysts expectations for revenue of GBP434 million The outlook for U S equity markets meanwhile was upbeat ahead of earnings reports from technology giant Apple and from the world s biggest provider of computer services International Business Machines The Dow Jones Industrial Average futures pointed to a gain of 0 29 S P 500 futures indicated a rise of 0 37 and Nasdaq 100 futures pointed to an increase of 0 47 Later in the day the U S was to publish official data on manufacturing activity in New York State as well as a report on the balance of domestic and foreign investment |
MS | U S stocks mixed as Apple Citigroup tumble Dow Jones up 0 12 | Investing com U S stocks were mixed after the open on Tuesday as market sentiment was weighed by disappointing corporate earnings results and as Apple dragged down shares in the technology sector During early U S trade the Dow Jones Industrial Average climbed 0 12 the S P 500 index was down 0 20 while the Nasdaq Composite index slumped 0 56 Shares in technology giant Apple plunged 4 06 after chief executive Steve Jobs said Monday that he was taking an indefinite medical leave of absence for the third time since 2004 reviving fears over the long term future of the iPhone and iPad maker According to the announcement Mr Jobs would remain as CEO and involved in the strategic decisions of the company but has appointed Tim Cook Apple s current COO to be responsible for day to day operations The company was to release quarterly earnings results after markets close today Meanwhile shares in iPhone carrier Sprint Nextel dropped 2 70 while Verizon Communications saw shares slide 1 41 Meanwhile shares in search engine giant Yahoo slumped 1 90 after the stock was downgraded by Morgan Stanley citing deteriorating fundamentals at the company Elsewhere shares in the third largest U S lender Citigroup tumbled 4 19 after it said that revenue in the fourth quarter totaled USD18 4 billion falling short of analysts expectations for revenue of USD20 4 billion The bank said that fourth quarter net earnings rose to USD1 3 billion compared to a loss of USD7 6 billion a year earlier Shares in Comerica Bank plummeted 6 60 after it agreed to acquire Sterling Bancshares which controls Sterling Bank for approximately USD1 billion Shares in Sterling soared 17 92 following the news Also Tuesday shares in the world s largest airline Delta Airlines dropped 2 59 after it reported that revenue rose less than expected in the fourth quarter as weather impacted results heavily in December Shares in rival Southwest Airlines which is to release its quarterly earnings results on Thursday shed 0 89 Elsewhere shares in the world s largest aircraft manufacturer Boeing surged 2 28 after the company announced that it expected delivery of the first 787 Dreamliner in the third quarter of this year Across the Atlantic European stock markets were broadly higher The EURO STOXX 50 rallied 1 20 France s CAC 40 jumped 0 85 Germany s DAX surged 0 91 while Britain s FTSE 100 was up 1 04 Earlier in the day official data showed that the New York Federal Reserve s index of manufacturing conditions rose less than expected in January while a separate report said that U S Treasury International Capital purchases rose significantly more than expected in November |
JPM | U S wholesale inventories rebound in February | WASHINGTON Reuters U S wholesale inventories increased as previously estimated in February but the pace of inventory accumulation appears to have slowed relative to the fourth quarter
The Commerce Department said on Friday wholesale inventories rose 0 4 percent after falling 0 2 percent in January The department reported last month that wholesale inventories increased 0 4 percent in February
The component of wholesale inventories that goes into the calculation of gross domestic product wholesale stocks excluding autos also increased 0 4 percent in February
A report this week showed inventories at factories increased 0 2 percent in February Retail inventory data will be released next week JPMorgan NYSE JPM believes that inventories will subtract a full percentage point from first quarter GDP
Inventory investment added one percentage point to the economy s 2 1 percent annualized growth rate in the fourth quarter That was the second straight quarterly contribution to GDP growth after a drag that lasted more than a year
The Atlanta Federal Reserve is forecasting GDP increasing at a 1 2 percent rate in the first quarter
Sales at wholesalers increased 0 6 percent in February after rising 0 3 percent in January At February s sales pace it would take wholesalers 1 28 months to clear shelves unchanged from January The ratio has declined from 1 36 months in January and February last year which was the highest since January 2009
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C | Citigroup s FX deals might have made only 1 million but cost 2 5 billion | NEW YORK Reuters Employee misconduct in foreign exchange trading that cost Citigroup Inc NYSE C 2 5 billion in fines and penalties might have made only 1 million for the bank an executive said on Wednesday Speaking at an investor conference James Forese president of Citigroup and head of its investment bank described the episode as hugely painful and said the bank is spending more time than ever to reduce conduct risk by employees Forese also said the investment bank will need to increase revenue to continue to improve efficiency as the benefits of cost cutting taper off
Trading revenue so far in the second quarter is a lot like the previous year s quarter Forese also said |
C | Exclusive Citigroup to shift European retail banking base to Dublin | By Tom Bergin and Simon Robinson LONDON Reuters Citigroup N C is planning to shift the head office of its European retail banking operation to Dublin from London to benefit from lower costs and capital requirements This week the bank wrote to clients to say the UK based business Citibank International Limited which operates a small number of branches across some 20 European countries would be taken over by Dublin based Citibank Europe Plc From a strategic perspective for Citi moving to a single pan European bank is expected to reduce operational and regulatory complexity capital requirements and cost the company told clients Analysts said UK rules that require banks to hold a higher level of cash in reserve than other European countries do was likely to be a factor behind the move but that they did not expect to see a stream of other banks moving their headquarters from the UK A spokeswoman for the bank said the change in the retail bank s legal domicile and principal regulatory base would not involve job cuts and that the leadership of the European retail operation would continue to be based in London The primary reason for the move is simplification mirroring Citi s strategy of creating a simpler safer stronger institution she said Citigroup has been scaling back its retail operations in recent years and remains a small player in Europe Citibank International Ltd employed 4 600 people at the end of last year filings show Citibank Europe Plc employed 4 300 and currently focuses on providing transaction services to financial services and corporate clients The spokeswoman denied that the decision to rebase in Dublin was influenced by the possibility of the UK leaving the European Union following the referendum on EU membership which is due to be held in the next two years Also although Ireland has become a magnet for international financial institutions thanks to its low tax rate the spokeswoman said the restructuring was not tax driven REGULATORY CAPITAL Since the financial crisis regulators have increased the amount of cash and government bonds banks must keep in reserve in case of financial storms Higher capital requirements mean less money to lend out or invest and consequently lower returns for a bank European Union countries apply the same international rules on capital requirements However on top of the basic reserve requirements regulators require some banks to hold additional capital as a buffer The amount depends on the regulator s perception of the bank s systemic or business risks The UK s banking industry is much larger in terms of its assets as a percentage of national GDP than that of other countries in Europe which means bank failures could cause bigger economic ripples than elsewhere This has led the UK regulator to require banks to set aside more money than other European countries demand analysts said The UK regulator has typically been at the conservative end in terms of capital requirements said Gary Greenwood banks analyst at Shore Capital In future Citigroup will have to set aside the same percentage of its UK assets as it currently does However it may no longer be required to set aside a similar percentage of total European assets if the Irish regulator takes a more lenient approach to its UK counterpart The Citigroup spokeswoman declined to say how much any reduction in capital requirements might save the bank
Greenwood said that since most UK headquartered retail banks are focused on the UK market they would be unlikely to benefit much from shifting their principal regulatory base to Ireland |
C | JPMorgan builds up apartment loan leader from WaMu rubble | By David Henry NEW YORK Reuters In September 2008 JPMorgan Chase Co NYSE JPM executives sifted through the rubble of Washington Mutual the failed home loan bank that they had just won in a U S government auction They found something unexpectedly good about 30 billion of mortgages on apartment buildings which earned strong returns whether the economy was performing well or not It was an unexpected bonus JPMorgan Chief Executive Jamie Dimon told Reuters in an interview adding that the apartment lending business is the single most valuable asset that JPMorgan acquired in the auction Washington Mutual s apartment lending business was the biggest of its kind in the United States and Dimon has made it even bigger JPMorgan now holds some 20 percent of the U S bank loans on apartment buildings Before the crisis the bank ranked closer to 20th JPMorgan now has 52 billion of these loans outstanding giving it a stronghold in a market that is increasingly important in the United States after the housing crisis brought down the homeownership rate Within JPMorgan apartment lending is a relatively small business accounting for less than 2 percent of its 2 6 trillion of assets But the unit is seen as a model for how JPMorgan wants to run its lending business overall make smart lending decisions in good times like now so that it can be strong enough to buy distressed assets on the cheap during bad times That s how JPMorgan s apartment lending business grew so much during the crisis the bank bought assets from Washington Mutual and Citigroup Inc NYSE C at low prices which are generating solid income now The bank is plowing income from crisis assets back into its business to make it more efficient and better prepare it for the next downturn For example JPMorgan is building systems that will allow it to approve loans in 15 to 20 days half its current time which is already fast by industry standards The bank believes that when it can make loans faster than rivals it will win more business without having to lower its credit standards Lending fast is critical for the niche that JPMorgan focuses on small apartment building owners who are served by fewer lenders than big building owners and will therefore generally pay banks slightly higher rates around 3 625 percent instead of the 3 5 percent charged for loans of more than 3 million The bank s apartment business could be tested in at least two ways in coming years As the Federal Reserve raises interest rates the value of apartment buildings which are bond like assets could decline making it harder for some landlords to refinance their loans Also in some metro areas developers have built many new apartment buildings which could cut into the value of the collateral backing JPMorgan s loans But the bank is working to reduce its risk by taking steps like avoiding markets where building is happening at a torrid pace CHERRY PICKING JPMorgan s business is headed by former Washington Mutual executive Al Brooks 58 He had been with JPMorgan for barely a year and the economy was still fragile when Dimon asked him what apartment lending assets he wanted to buy Brooks said that he had heard Citigroup wanted to sell its apartment loans as part of its plan to shrink the company after having been bailed out by the government Within days JPMorgan was negotiating to buy 3 5 billion of loans from Citi which was willing to let him and his team choose loans one by one he recalled in an interview with Reuters We cherry picked them Brooks said There were great customers in there These were 100 percent performing loans with long repayment histories We felt really fortunate A Citigroup spokesman declined to comment Those loans helped boost JPMorgan s apartment lending earnings which reached 600 million in 2014 Expenses in the unit which include the costs of processing loan applications and running offices were only 22 percent of net interest income low in an industry where 35 percent is considered good Brooks said Low expenses boost a key measure of profitability for JPMorgan its return on equity from the business is about 17 percent Brooks said That is at least two percentage points better than the return reported by New York Community Bancorp Inc whose portfolio of apartment loans accounts for almost half of its assets and according to data from SNL Financial is the second biggest of any bank To make smaller loans profitable Brooks automates as much of the loan process as possible which JPMorgan tries to do with other high volume businesses such as issuing credit cards and mortgages on houses Brooks is now upgrading his systems to allow loan work to be done by different people at the same time instead of following a rigid assembly line sequence that can be held up by a single person They have built a great business there said Mark Myers head of commercial real estate lending at Wells Fargo NYSE WFC Co It is a model that is hard to replicate They have executed it very effectively That performance could face increasing challenges For one Brooks said he anticipates more competition from other lenders as their confidence in the economy builds Brooks is competing with banks which in total own some 250 billion of apartment loans and also with bond investors insurance companies government agencies and others who according to the Mortgage Bankers Association own another 700 billion or so of debt backed by apartments JPMorgan is also managing risk in the sector by lending relatively low sums of money compared with the values of the buildings The bank s average loan is less than 60 percent of the value of the building The most the bank will lend is 75 percent of the value The bank bases its building valuations primarily on the rents they earn not sales prices of comparable buildings which can be inflated during booms Brooks is focusing lending on places with local government limits on development such as coastal California He also likes older rent regulated buildings in New York City San Francisco and Los Angeles Those buildings rarely have vacancies because tenants want to keep their inexpensive leases JPMorgan s loans are expensive to make because they are small averaging 2 5 million about one third the size of the average loan made by Wells Fargo Making a smaller loan can take just as much work as making a bigger loan which is why so many other banks try to focus on larger deals Brooks also pushes lending teams to decide which loans the bank really wants to make and for how much and at what price before an application is completed Someone from the bank goes inside every building to make sure it is being kept up before accepting an application The goal No time wasted with weak applications brought in by overly optimistic salesmen When it comes down to controlling your costs not working on stuff that won t pay off is essential Brooks said No fishing expeditions |
C | Citibank seeks go ahead to boost Vietnam presence | HANOI Reuters Citibank NA a unit of Citigroup Inc N C said it will get the go ahead soon from Vietnam s central bank to set up a subsidiary in the country which would make it the seventh wholly foreign owned lender to operate in Vietnam The U S lender said the State Bank of Vietnam SBV governor would grant it a letter of acceptance in principle in Washington on Wednesday witnessed by Communist Party chief Nguyen Phu Trong who is on a landmark visit to the United States The bank added that it will request the required approvals from regulators in the United States to create the subsidiary Citibank currently has two branches in the Southeast Asian nation By setting up a fully owned bank in Vietnam the company could help strengthen Vietnam s banking sector and support local and foreign clients Citi Vietnam s country officer Natasha Ansell said in a statement Fully foreign owned banks in Vietnam currently include HSBC Holdings L HSBA Standard Chartered L STAN Australia and New Zealand Banking Group AX ANZ South Korea s Shinhan Bank KS 055550 and Malaysia s Hong Leong Bank Bhd KL HLBB
In March the SBV also allowed Malaysia s Public Bank Bhd KL PUBM to turn its Vietnam based venture with local lender BIDV HM BID into a fully foreign owned bank |
C | Citi C Beats On Q3 Earnings Estimates Revenues Down | Have you been eager to see how Citigroup Inc NYSE C performed in Q3 in comparison with the market expectations Let s quickly scan through the key facts from this New York based money center bank s earnings release this morning An Earnings BeatCitigroup came out with earnings from continuing operations per share of 1 25 handily beating the Zacks Consensus Estimate of 1 16 Results were primarily aided by lower expenses partially offset by reduced revenues How Was the Estimate Revision Trend You should note that the earnings estimate for Citigroup depicted neutral stance prior to the earnings release The Zacks Consensus Estimate remained unchanged at 1 16 over the last 7days However Citigroup has a decent earnings surprise history Before posting earnings beat in Q3 the company also delivered positive surprises in the prior four quarters CITIGROUP INC Price and EPS Surprise
Overall the company surpassed the Zacks Consensus Estimate by an average of 6 2 in the trailing four quarters
Revenue Came in Higher Than ExpectedCitigroup s adjusted revenues of 17 76 billion outpaced the Zacks Consensus Estimate of 17 38 billion However revenues declined 4 year over year Key TakeawayAdjusted Net Income stood at 3 84 billion down 8 from the prior year quarter Operating expenses declined 2 year over year to 10 4 billion Revenues from fixed income markets and investment banking increased 35 and 15 on a year over year basis respectively Net interest margin fell 8 basis points from the prior year quarter to 2 86 What Zacks Rank SaysThe estimate revisions that we discussed earlier have driven a Zacks Rank 3 Hold for Citigroup However since the latest earnings performance is yet to be reflected in the estimate revisions the rank is subject to change Now it all depends on what sense the just released report makes to the analysts You can see Check back later for our full write up on this Citigroup earnings report Confidential from ZacksBeyond this Tale of the Tape would you like to see Zacks best recommendations that are not available to the public Our Executive VP Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand |
MPC | Marathon Petroleum MPC Q2 Earnings Revenue Miss Estimate | Have you been eager to see how Marathon Petroleum NYSE MPC a leading downstream operator performed in Q2 in comparison with the market expectations Let s quickly scan through the key facts from this Findlay OH based company s earnings release this morning About Marathon Petroleum Marathon Petroleum is a leading independent refiner transporter and marketer of petroleum products The company operates in three segments Refining and Marketing Speedway Retail and Pipeline Transportation Zacks Rank Surprise History Currently Marathon Petroleum has a Zacks Rank 3 Hold but that could change following its second quarter 2017 earnings report which has just released You can see Coming to earnings surprise history the company has a good record it s gone past estimates in 3 of the last four quarters resulting in an average positive surprise of 189 75 Marathon Petroleum Corporation Price and EPS Surprise We have highlighted some of the key details from the just released announcement below Earnings Miss Estimate Earnings per share adjusted for special items came in at 1 03 missing the Zacks Consensus Estimate of 1 04 Lower margins and increased costs led to the underperformance Revenue Came in Lower than Expected Marathon Petroleum posted revenues of 18 354 million missing the Zacks Consensus Estimate of 19 361 million However revenues rose 9 year over year Total Costs Total costs and expenses came in at 17 326 million up 12 year over year Key Stats Operating income from the Refining Marketing segment which is the main contributor to Marathon Petroleum earnings was 562 million compared with 1 025 million in the year ago quarter The deterioration reflects narrower gross margin Total refined product sales volumes were 2 370 thousand barrels per day mbpd up 1 from the 2 348 mbpd in the year ago quarter Moreover throughput improved from 1 889 mbpd in the year ago quarter to 2 023 mbpd Income from the Speedway retail stations totaled 239 million 24 higher than the 193 million earned in the year ago period Rise in merchandise margins lower operating costs and increased light product margin benefited the results Finally Midstream segment profitability was 332 million up from 253 million in the second quarter of 2016 Earnings were buoyed by contributions from the recently acquired Oklahoma to Illinois Ozark pipeline system better returns from pipeline equity investments as well as increased NGL processing and fractionation activity Share Performance Shares of Marathon Petroleum have gained 3 5 during the second quarter underperforming the 4 7 increase Check back later for our full write up on this Marathon Petroleum earnings report later More Stock News Tech Opportunity Worth 386 Billion in 2017From driverless cars to artificial intelligence we ve seen an unsurpassed growth of high tech products in recent months Yesterday s science fiction is becoming today s reality Despite all the innovation there is a single component no tech company can survive without Demand for this critical device will reach 387 billion this year alone and it s likely to grow even faster in the future Zacks has released a brand new Special Report to help you take advantage of this exciting investment opportunity Most importantly it reveals 4 stocks with massive profit potential |
MPC | The Energy Report Dunkirk In Houston | Dunkirk In Houston
Watching the widespread devastations in Houston due to what was Hurricane Harvey has been gut wrenching and now that this storm has regenerated and made a second landfall in Louisiana just west of the town of Cameron its impact on lives and property is just starting to be measured Ordinary citizens in Houston have been heroically rescuing their neighbors with their own boats reminds me of the beach rescue in Dunkirk when ordinary citizens with their boats saved the British army and changed the course of history Despite the challenges and devastation in Houston and the pain this will prove to be their finest hours
The impact on energy and the economy is also just beginning to be felt as the fall out from the storm damage is just beginning to be measured Right now the market focus is the impact on US refineries and the shutting down of transportation pipelines Yet they will also have to deal with the very real possibility of considerable damage to oil and natural gas producing infrastructure as well as damage caused to Eagle Ford Shale fields
Gasoline RBOB Futures are on the rise for the seventh day in a row as it has been confirmed that the Colonial Pipeline is running at reduced rates raising the real possibility of gas and diesel and even jet fuel shortages Colonial Pipeline Co said Tropical Storm Harvey affected its Houston origin which includes Pasadena Houston and Cedar Bayou Service from those locations was interrupted during the storm and its aftermath although the company is working to restore service and minimize the impact Still reports that flow was down by as much as 60 is feeding into that gas and diesel rally
The Wall Street Journal says that the
Colonial is the biggest fuel pipeline in the U S stretching 5 500 miles through 12 states
Analysts have likened it to a Mississippi River of fuel It can transport up to 2 5 million barrels a day of gasoline diesel and jet fuel and is directly connected to several airports including Nashville Charlotte and Dulles International Airport in Washington D C The pipeline which was built in 1963 is a main source of fuel for the Southeast including offshoots to parts of northern Florida It ends in New Jersey and is also a massive supplier of fuel to the greater New York City metro area
The Wall Street Journal also reported that the nation s largest refinery in Port Arthur Texas curbed fuel output to 40 Tuesday due to severe weather That 600 000 barrel a day plant was taking on water in some areas its primary problem wasn t getting all the oil it needed to make fuel because of port and pipeline closures according to its owner the Saudi Arabian Oil Company
Other refineries are shut not due to damage but because they cannot get crude Bloomberg News reports that Marathon Petroleum Corp NYSE MPC s Galveston Bay refinery in Texas City with a capacity of 451 000 barrels a day may be forced to halt production within several days because it is running out of crude a person familiar with operations said on Monday Its oil comes via Magellan Midstream Partners LP which suspended use of its pipeline in the area on Sunday That pipeline is one reason gas prices in the Midwest are already spiking
Shale oil producers can t mover crude but there are also issues as to whether they can raise production to previous levels in the Eagle Ford after the storm may have changed the liquid make up of some of the reservoirs
The Wall Street Journal writes
The storm s widespread devastation has come into focus several analysts say that much if not most of the 1 4 million barrels of oil produced daily in the Eagle Ford shale of South Texas has been cut off and may not return for weeks The Eagle Ford which is on the doorstep of Corpus Christi where the storm made landfall is second in output in the state only to the Permian Basin of West Texas
The shipping traffic in Houston Corpus Christi and other ports may not be fully restored for two weeks That and other infrastructure limitations will have a domino effect back to production said Tony Sanchez III chief executive of Eagle Ford operator Sanchez Energy Corp Restarting wells may not guarantee that they resume flowing at the same rate he said On a technical level he fears that shale wells once shut off could lose pressure Most of his company s production wasn t shut in as it lies in areas west of the storm s path
He said
It s not just a matter of flipping a switch There is significant risk in those wells not coming back to previous levels
The Journal says that the market may be underestimating Harvey s impact because nothing like this flood has ever happened to the shale industry before said Giovanni Satnav a commodities analyst at UBS Wealth Management
At this point the focus is on products Yet we could have production issues on gas and oil that could be a big deal when we start to run crude Refining margins are surging and we should continue to see the speed from Brent to WTI widen Yet in a few weeks it could reverse
The American Petroleum Institute API reported crude draw 5 78 mm Gasoline 0 476 mm 19 1 Distillate 0 486 mm Cushing 0 582 mm
The BSEE Hurricane Response Team continues to monitor Gulf of Mexico oil and gas activities Based on data from offshore operator reports submitted as of 11 30 CDT testerday personnel have been evacuated from a total of 102 production platforms 13 84 percent of the 737 manned platforms in the Gulf of Mexico Production platforms are the structures located offshore from which oil and natural gas are produced Unlike drilling rigs which typically move from location to location production facilities remain in the same location throughout a project s duration Personnel have been evacuated from five rigs non dynamically positioned DP rig equivalent to 50 percent of the 10 rigs of this type currently operating in the Gulf Rigs can include several types of offshore drilling facilities including jackup rigs platform rigs all submersibles and moored semisubmersibles
From operator reports it is estimated that approximately 18 26 percent of the current oil production of 1 750 000 barrels of oil per day in the Gulf of Mexico has been shut in which equates to 319 523 barrels of oil per day It is also estimated that approximately 19 1 percent of the natural gas production of 3 220 million cubic feet per day or 615 09 million cubic feet per day in the Gulf of Mexico has been shut in The production percentages are calculated using information submitted by offshore operators in daily reports therefore are estimates which BSEE compares to historical production reports to ensure the estimates follow a logical pattern |
MPC | Marathon Petroleum MPC Vends 1 05 Billion Assets To MPLX | Oil refining and marketing giant Marathon Petroleum Corporation NYSE MPC recently divested some of its pipelines and storage assets to MPLX LP NYSE MPLX The move helped Marathon Petroleum to garner proceeds of 1 05 billion from its master limited partnership which it had spun off in 2012 Marathon Petroleum has offloaded its entire stake in four jointly owned properties including Explorer Pipeline Co Lincoln Pipeline LLC MPL Louisiana Holdings LLC and LOCAP LLC In each of these properties the company carries 24 51 35 40 7 and 58 52 interests respectively These assets are expected to generate 138 million of adjusted EBITDA in 2018 The proceeds of the sale will consist of 630 million in stock and 420 million in cash The equity portion of the deal will see Marathon Petroleum receive common units of MPLX and general partner units This will enable Marathon Petroleum to maintain its 2 general partner interest in its master limited partnership The cash portion of the payment will be drawn from MPLX s 2 25 billion revolving credit facility The divesture is in sync with Marathon Petroleum s strategic objectives To accelerate value accretion for shareholders and boost growth Marathon Petroleum is actively engaged in drop down transactions lately In March the company divested of some of its terminal pipeline and storage assets to MPLX for 2 02 billion The company also plans to streamline portfolio and enhance core competencies For the same it is soon to a take a final call regarding the spinoff of its retail network unit Speedway LLC Marathon Petroleum intends to disintegrate into three standalone businesses retailing midstream and refining thereby optimizing shareholder s value and improve focus in each individually unit The acquisition of assets is also likely to enhance MPLX s scale and diversity and increase its distributable cash flow per unit Zacks Rank and Key PicksFindlay OH based Marathon Petroleum is a leading independent refiner transporter and marketer of petroleum products Shares of Marathon Petroleum have gained 8 year to date significantly outperforming the s 5 decline The company currently carries a Zacks Rank 3 Hold Some better ranked players in the same industry are Galp Energia SGPS S A OTC GLPEY and Par Pacific Holdings Inc NYSE PARR Both the companies carry a Zacks Rank 2 Buy You can see Galp Energia expects year over year growth of 191 67 in earnings in 2017 Par Pacific Holdings recorded positive earnings surprises in three of the last four quarters with an average beat of 195 26 Zacks 10 Minute Stock Picking SecretSince 1988 the Zacks system has more than doubled the S P 500 with an average gain of 25 per year With compounding rebalancing and exclusive of fees it can turn thousands into millions of dollars But here s something even more remarkable You can master this proven system without going to a single class or seminar And then you can apply it to your portfolio in as little as 10 minutes a month |
MS | Europe stocks advance on banks miners DAX rises 0 89 | Investing com European stocks recorded sharp gains on Wednesday as financials and commodity linked shares led markets higher meanwhile U S futures indexes pointed to a higher open on Wall Street ahead of the release of key data on ADP non farm payrolls During European morning trade the EURO STOXX 50 was up 0 90 France s CAC 40 increased 0 97 while Germany s DAX rose 0 89 Earlier in the day official data showed that the euro zone s economy grew in line with expectations in the second quarter of 2010 In Germany shares in engineering conglomerate Siemens AG jumped 2 40 and auto maker Volkswagen VZ climbed 2 55 after official data showed that German factory orders rose more than expected in August Elsewhere financial sector stocks outperformed with banks leading gains Shares in French lender Societe Generale increased 2 72 Deutsche Bank saw its stock rise 2 58 and Spanish bank Banco Santander added 1 53 In London the commodity heavy FTSE 100 was up 0 88 as commodity linked shares led gains amid rising metal prices Shares in the world s largest miner BHP Billiton soared 3 19 Rio Tinto gained 2 53 and Anglo American stocks jumped 4 22 Meanwhile miners Xstrata and Kazakhmys saw its shares climb 3 43 and 3 36 respectively after Morgan Stanley upgraded their stocks The outlook for U S equity markets meanwhile was upbeat Dow Jones Industrial Average futures indicated a gain of 0 34 S P 500 futures pointed to an increase of 0 30 and Nasdaq 100 futures indicated a rise of 0 20 Later in the day the U S was to release ADP non farm payrolls data |
MS | Europe stocks surge to record sharp gains DAX soars 2 08 | Investing com European stocks ended higher on Wednesday with markets surging to record sharp gains as financial sector stocks and commodity linked shares led gains At the close of European trade the EURO STOXX 50 jumped 2 39 France s CAC 40 climbed 2 03 while Germany s DAX soared 2 08 Financial sector shares jumped with banks leading gains Stocks in German lender Deutsche Bank soared 4 28 Banco Santander surged 3 39 and French bank BNP Paribas rose 0 93 Elsewhere within the sector shares in French based financial service provider AXA climbed 3 52 Dutch insurers ING Groep rose 3 39 and Lloyd s Banking Group increased 0 98 However Standard Chartered Plc fell 1 73 after the English financial firm said it planned to raise GBP 3 3 billion through a rights offering to raise its capital adequacy ratio Rivals Barclays declined 0 68 amid concerns they would have to raise further capital to meet new banking regulations In London the commodity heavy FTSE 100 surged 1 54 as miners advanced amid rising metal prices Shares in the world s largest mining company BHP Billiton surged 4 00 rivals Rio Tinto jumped 4 37 while Vedanta Resources saw its shares soar 4 50 after it agreed to purchase a 49 stake in India based Bharat Aluminium Company for an undisclosed fee Elsewhere energy sector stocks gained as crude oil prices surged Shares in oil giant British Petroleum climbed 1 89 German power and gas company E On rose 2 46 while oil and gas producer Petrofac Limited saw its shares soar 4 03 after its stocks were upgraded to overweight from equal weight by investment bank Morgan Stanley Across the Atlantic U S markets were up the Dow Jones Industrial Average rose 0 98 the S P 500 index gained 0 93 while the Nasdaq Composite index climbed 0 94 Later in the day Federal Reserve Chairman Ben Bernanke was to speak at an engagement in Pittsburgh |
MS | European stocks mixed after the open DAX up 0 08 | Investing com European stocks were mixed after the open on Wednesday as earnings reports continued to feature heavily meanwhile U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 was down 0 06 France s CAC 40 shed 0 10 while Germany s DAX gained 0 08 In earnings news Swedish defense and aerospace group Saab saw its shares plunge 6 05 after cutting its outlook for the fourth quarter despite reporting better than expected third quarter earnings Meanwhile Dutch satellite navigation equipment maker TomTom saw its shares fall 1 09 after it said third quarter net income fell more than expected Earnings in the third quarter fell to EUR 19 million down from EUR 31 million from a year earlier But shares in French automaker PSA Peugeot Citroen rose 0 73 after it said third quarter revenue rose by 10 3 beating analysts expectations The company also lifted its 2010 forecasts citing improved visibility and recent performance Elsewhere in the auto sector shares in German automakers Daimler jumped 1 35 while Renault SA saw its shares climb 1 30 and shares in BMW rose 0 83 In London the commodity heavy FTSE 100 added 0 10 as miners led gains after metal prices rebounded Shares in BHP Billiton the world s largest mining group rose 1 11 rivals Rio Tinto jumped 1 27 while Anglo American saw its shares climb 1 04 The outlook for U S equity markets meanwhile was upbeat ahead of earnings reports from investment banks Morgan Stanley and Wells Fargo and from eBay Dow Jones Industrial Average futures indicated an increase of 0 18 S P 500 futures pointed to a rise of 0 32 and Nasdaq 100 futures indicated a gain of 0 44 Later in the day the U S Federal Reserve was to release its Beige Book a summary of the data the bank examines before setting the benchmark interest rate |
MS | European stocks rally ahead of Irish budget vote DAX up 1 14 | Investing com European stocks were sharply higher on Tuesday amid hopes that Ireland s parliament would pass an austerity budget later in the day while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 jumped 1 66 France s CAC 40 soared 1 95 while Germany s DAX gained 1 14 Shares in the financial sector were mixed ahead of a crucial vote in Ireland s parliament on the country s budget The world s largest banking group BNP Paribas saw shares jump 2 83 shares in the Royal Bank of Scotland surged 2 14 while shares in the Bank of Ireland rallied 3 85 However shares in Spain s largest lender Banco Santander tumbled 1 28 while rivals BBVA saw shares drop 1 61 after European finance ministers ruled out immediate aid for Portugal and Spain or an increase in the EUR 750 billion bailout fund on Monday Meanwhile shares in French power engineering and train company Alstom SA surged 4 84 after it said it signed a cooperation agreement with China s Ministry of Railway to jointly develop rail markets in China and abroad Shares in consumer goods giant Unilever jumped 3 82 after the stock was upgraded two notches to overweight from underweight by Morgan Stanley Elsewhere in London the commodity heavy FTSE 100 climbed 1 10 as metal and crude oil prices advanced Shares in the world s largest mining group BHP Billiton soared 2 20 copper producer Xstrata saw shares jump 3 27 while shares in oil and gas giant British Petroleum surged 2 13 Meanwhile shares in Britain s largest supplier of building materials Wolseley rallied 4 15 after the company said fiscal first quarter net earnings jumped by 39 to GBP 159 million compared to GBP 114 million a year earlier The outlook for U S equity markets meanwhile was upbeat The Dow Jones Industrial Average futures pointed to a gain of 0 73 S P 500 futures indicated a rise of 0 88 and Nasdaq 100 futures pointed to an increase of 0 85 Later in the day the U S was to publish data on economic optimism and consumer credit |
JPM | JPMorgan CEO calls for regulatory changes in shareholder letter | By David Henry and Dan Burns NEW YORK Reuters JPMorgan Chase Co N JPM Chief Executive Jamie Dimon devoted one third of his annual shareholder letter to arguments for changing regulations particularly those on bank capital and liquidity as well as home mortgage loan financing Current regulations are inconsistent and have left banks with too much capital some of which could be used to finance the economy without sacrificing safety Dimon said in the 17 349 word letter released on Tuesday He also warned that anti trade policies could be disruptive and geopolitical risks are in a heightened state Dimon 61 has entered his twelfth year as CEO He considers the annual letter to be among his most important public statements about JPMorgan as well as public policy It is widely read because the bank is one of the most profitable and came out of the financial crisis stronger than competitors This year Dimon argued that the idea of banks being too big to fail and therefore requiring bailouts during times of stress is a problem that has been solved He said taxpayers will not pay if a bank fails because of measures enacted since the crisis nearly a decade ago Dimon s comments on bank regulation come at a time of possible flux in rules and laws under a new White House and Congress In addition the U S Federal Reserve governor who has been overseeing regulation including bank capital stress tests is leaving his post on Wednesday and a replacement has yet to be proposed by President Donald Trump The way the Fed conducts stress tests should be clearer and more consistent Dimon said He also said home mortgage rules imposed since the crisis have raised costs for consumers and made it less likely that those with weak credit histories will get loans While some of the rules are beneficial many were hastily developed he wrote Dimon said the geopolitical risk environment is in a heightened state with the United Kingdom s pending withdrawal from the European Union and a growing anti globalization sentiment He said he hopes Britain s exit will prompt the EU to fix issues it has with immigration bureaucracy and restrictive labor laws Our fear however is that it could instead result in political unrest that would force the EU to split apart which he wrote could have devastating economic and political effects
Dimon also warned that poorly conceived trade policies could be very disruptive especially with regard to two key trading partners Mexico and China |
JPM | SEC s foreign corruption unit chief to leave by month s end | By Sarah N Lynch
WASHINGTON Reuters Kara Novaco Brockmeyer the attorney at the U S Securities and Exchange Commission who oversees the unit that polices foreign bribery laws plans to depart the SEC later this month the regulator announced Tuesday
Brockmeyer a 17 year veteran of the SEC has led the Foreign Corrupt Practices Act FCPA unit since 2011
The unit was one of five specialty areas created in 2010 in an effort to bolster the SEC s enforcement program following revelations over the agency s repeated failures to detect Bernard Madoff s massive Ponzi scheme
Brockmeyer oversaw a wide array of FCPA cases including charges against hedge fund Och Ziff Capital Management Group LLC and its chief executive Daniel Och over bribery in Africa charges against JPMorgan Chase Co NYSE JPM following the so called princeling investigation into hiring practices in China in order to win business and charges against Brazilian aircraft maker Embraer SA over bribes paid in a variety of countries
The SEC said that after Brockmeyer departs the unit s current deputy chief Charles Cain will serve as acting chief until a permanent replacement is named
The SEC s enforcement of the FCPA is an area that is being actively watched by the defense bar after President Donald Trump previously made disparaging remarks about the law and called for it to be changed
Trump s pick to lead the SEC Wall Street attorney Jay Clayton also previously chaired a committee at the New York City Bar Association which drafted a paper that was somewhat critical of how the law was being enforced
Clayton whose nomination was approved by the Senate Banking Committee earlier on Tuesday is still awaiting confirmation by the full Senate
Democrats on the Senate Banking Committee have previously raised concerns about whether he will actively pursue FCPA cases
In written responses to questions from the panel s top Democrat Sherrod Brown following his confirmation hearing Clayton said he believes the law can be a powerful and effective means to combating corruption
He added however that it is more effective when international authorities are also willing to coordinate and take enforcement actions against bribery as opposed to having the United States go at it alone |
JPM | JPMorgan softens tone on Brexit jobs warning | LONDON Reuters The head of U S bank JPMorgan Chase N JPM said on Tuesday the bank is not planning to move many jobs out of Britain in the next two years in a softening of tone on the likely impact from Brexit
Jamie Dimon had said in a previous speech to employees in Bournemouth last year that as many as 4 000 of the bank s 16 000 jobs based in Britain may have to move
Even though his stance appears to have moderated Dimon said on Tuesday the bank is preparing for a so called hard Brexit in which Britain loses access to EU s single market disrupting access to its main trading partner
This does not entail moving many people in the next two years he said in a letter to the US bank s shareholders
Dimon also said the likelihood that the EU could break up has increased which he warned could have a devastating economic and political impact
He said that he hoped that Britain s decision to leave the EU would have force the bloc to focus on fixing its issues such as immigration bureaucracy and rigid labor rules
Our fear however is that it could instead result in political unrest that would force the EU to split apart he said We will keep a close eye on the situation in Europe over the next several years |
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