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JPM | UK economy probably slowing after strong end to 2016 PMI | By Andy Bruce
LONDON Reuters Britain s economy has probably slowed from its strong growth of late last year and a cooling jobs market and hefty price increases will become increasingly apparent as Brexit gets underway according to a survey published on Wednesday
The Markit CIPS Services Purchasing Managers Index PMI a closely watched gauge of Britain s services industry rose to a three month high of 55 0 in March from 53 3 in February
That topped all forecasts in a Reuters poll of economists whose median forecast was for a reading of 53 5 pushing sterling almost half a cent higher against the dollar GBP
But there were some warning signals as Britain begins the two year process of leaving the European Union
Services companies raised their selling prices at the fastest pace since 2008 a sign that inflation may rise more than the 3 percent expected by many forecasters this year Businesses hired people at the slowest pace in seven months
Taken together the PMIs for manufacturing construction and services published this week suggest economic growth will slow to around 0 4 percent in the first quarter from 0 7 percent in the fourth quarter of 2016 data firm IHS Markit said
Growth of 0 4 percent would be in line with the most recent Reuters poll of economists but slower than the 0 6 percent predicted by the Bank of England
The PMI does not cover the retail sector and hence may be overestimating growth somewhat given the concentrated hit in that area JPMorgan NYSE JPM economist Allan Monks said
But conditions outside Britain had clearly improved and there was uncertainty about how quickly consumers will respond to higher prices he said in a note to clients
The BoE is widely expected to keep interest rates at their record low throughout this year and possibly until 2019 as it steers the British economy through the uncertainty linked to the exit from the EU
However one rate setter voted last month for a rate increase and others said they might follow suit soon if there were signs that economy was maintaining its momentum of 2016
Despite the stronger than expected headline growth figure in Wednesday s PMI the survey also suggested consumers were cutting back on luxuries Hotels and restaurants gyms and hairdressers ranked among the worst performing services in the first three months of 2017
Much of the disappointment in growth so far this year has been evident in consumer oriented sectors in part linked to spending and incomes being squeezed by higher prices said Chris Williamson chief business economist at IHS Markit
Official data on Wednesday showed modest improvement for one of Britain s most persistent economic headaches weak productivity
Output per hour grew at the fastest pace in more than a year in the final three months of 2016 but remained well below the average rate seen before the financial crisis
The figures did little to challenge expectations that 2017 will be a tough one for many Britons
Nearly half of British households plan to cut spending as worries about inflation escalate according to a separate survey on Wednesday from pension provider Scottish Friendly and the think tank Social Market Foundation
Official data last week showed real household disposable income a measure of spending power in the fourth quarter of 2016 saw its biggest quarter on quarter decline in nearly three years
Industry figures for new car registrations bucked other signs of weakening consumer demand with sales rising 8 4 percent last month But the surge in part reflected customers bringing forward purchases to beat a tax rise which may bode for a weak April the Society of Motor Manufacturers and Traders said
The all sector PMI covering manufacturing construction and services rose a full point to 54 7 in March |
JPM | Junk rated debt could cost South Africa more than 10 billion in lost funds | By Karin Strohecker LONDON Reuters If South Africa loses two of its prized investment grade credit ratings for foreign and local currency borrowing in the turmoil triggered by the sacking of the finance minister the country could lose more than 10 billion in investment funds S P Global has already struck In an unscheduled review on Monday that prompted a selloff in South African assets it cut the sovereign rating for external debt to BB one notch below investment grade or junk status in market parlance It cited the impact of the divisions in government that led to Pravin Gordhan s removal Moody s later placed South Africa on review for downgrade A third major international ratings firm Fitch warned that President Jacob Zuma s shake up intensified political risk and signaled policy changes that could undermine its credit score Being downgraded to junk by at least two agencies will see South Africa drop out of some widely used global bond indexes that rely on investment grades only and force international funds who track these or who are prohibited from holding sub investment grade securities to sell The problem has just started in South Africa there was a lot of complacency on the ratings shift said Salman Ahmed chief global strategist at Lombard Odier The prospect of such a demotion is more imminent for hard currency debt where Fitch s standing rating is just one notch above junk The Moody s rating is two rungs above But a bigger impact on the country s access to funds could come if two of the three agencies also denominate the rand denominated government debt as sub investment grade S P s local currency rating is just one level above junk as well with Moody s two notches above So far only one of the six ratings three for sovereign debt and three for local from the major international ratings agencies has slipped into junk JPMorgan NYSE JPM which compiles some of the most widely used emerging market debt indexes estimates that a junk rating for South Africa s mostly dollar denominated foreign currency Eurobonds could see forced selling of up to 2 4 billion Roughly half the total would come from funds dedicated to investment grade emerging market debt the other half from global investment grade bond funds JPMorgan said adding this was much less than the forced selling risk the bank had ascribed in recent years to Brazil at 6 billion or Turkey at 7 billion The more modest figure for South Africa is explained by the smaller bond stock and therefore smaller weights particularly in widely used global bond indexes coupled with an underweight positioning by investors the bank said LOCAL DANGER Yet South Africa s outstanding 14 6 billion hard currency debt is just a 10th of total public government debt with local sovereign bonds tallying up to 1 722 trillion rand 125 billion according to data from the National Treasury For UBS the real danger lies in local bond markets In a note this week UBS estimated some 10 billion of South African bond holdings are indexed to Citi s World Government Bond Index WGBI tracked by 3 trillion worldwide JPMorgan which compiles the GBI EM IG only index said it estimated that a downgrade of local currency debt could lead to total index related selling of as much as 8 5 billion Inclusion in both indexes hinges on investment grade ratings on local debt from both Moody s and S P Global While a formal index exclusion could take up to a year many funds would likely exit the debt in advance Partially offsetting that hit is the fact that countries which find themselves downgraded to junk so called fallen angels often draw in a different investor base seeking higher yields and more speculative investments said Nafez Zouk senior economist at Oxford Economics In other words these fallen credits become bigger fish in smaller ponds Some dedicated emerging market fund managers are waiting for those opportunities South Africa s trajectory is quite negative and is likely to continue to be negative until we see renewal in South African politics which could be a few years from now said Jan Dehn at emerging market fund manager Ashmore Investment Management Even in a gradually deteriorating credit like South Africa asset prices can move into oversold territory relative to the risk If prices fall enough that the credit has been oversold relative to how risky it is then clearly that s a buying opportunity |
JPM | California pension fund is latest to scrap some active managers | By Trevor Hunnicutt NEW YORK Reuters A California pension fund has fired Franklin Templeton Investments JPMorgan Chase Co NYSE JPM and Pacific Investment Management Co from some portfolio management responsibilities in a shakeup that puts more of its assets in lower fee index tracking investments the fund said The Orange County Employees Retirement System OCERS is the latest institutional investor to scrap some of its active managers stemming from a consultant s recommendation to avoid high fees and subpar performance in its 14 1 billion investment portfolio according to a notice posted online this week Last year active mutual funds lost 343 billion to withdrawals Billionaire investor Warren Buffett earlier this year said most investors are better off buying index funds The retirement system based in Santa Ana California decided to move more than 1 billion of assets from the managers late in March the notice said Parts of the portfolio managed by Grantham Mayo Van Otterloo CO LLC and Standard Life LON SL PLC are also being liquidated Franklin Templeton and Standard Life did not respond to requests for comment while the other fund companies declined to comment The changes were reported earlier Wednesday by FundFire an industry news service Half a trillion dollars moved into index funds last year according to Morningstar Inc the seventh straight year they have outpaced counterparts whose managers try to pick winners and losers in the market Those figures do not include privately managed institutional accounts The California retirement system s investment consultant Meketa Investment Group Inc told the pension plan it could save at least 9 million a year excluding performance fees by cutting some managers and transferring some of the funds to index tracking investments Meketa advised cutting equity strategies run by Franklin GMO and JPMorgan for historical underperformance and expected performance challenges relative to passive exposure going forward And it said cutting funds such as the Pimco All Asset All Authority Fund and the Standard Life Investments Global Absolute Return Fund could also help save fees Marc Seidner Pimco s chief investment officer for Non traditional Strategies and Robert Arnott who manages the All Asset fund are slated to speak to an OCERS committee on Thursday according to an agenda posted online The pension fund has cut hedge funds as a separate investment category but has kept some hedge funds in its portfolio including products run by Pimco D E Shaw Co LP and Bridgewater Associates LP |
JPM | Financial institutions risk 24 percent revenue loss from fintech PwC | By Anna Irrera NEW YORK Reuters Large financial institutions across the world could lose 24 percent of their revenues to financial technology companies over the next three to five years according to a new study by PricewaterhouseCoopers Of the more than 1300 financial industry executives polled by the professional services firm 88 percent said they feared their business was at risk to standalone financial technology companies in areas such as payments money transfers and personal finance the study found In banking specifically consumer services such as personal loans were seen as most at risk according to PwC s annual Global FinTech Report published on Wednesday The report came as banks and other large financial firms face growing competition from a young cohort of companies that take advantage of new technologies to offer better digital services to customers in areas ranging from financial advice to life insurance To counter the threat financial institutions expected to increase their collaboration with fintech companies with 82 percent of respondents saying partnerships with tech savvy firms would increase over the next three to five years the PwC report found To improve their digital offering and remain competitive large firms have been looking to work more closely with young technology companies through a number of initiatives such as corporate venture arms and innovation centers In his annual shareholder letter published on Tuesday JPMorgan Chase Co NYSE JPM chief executive Jamie Dimon highlighted some of the bank s most recent collaborations with fintech companies in areas including mortgages small business lending and payments While collaboration is on the rise entrepreneurs and executives often note that several hurdles are hindering more effective cooperation IT security regulatory uncertainty and differences in management and culture were cited by respondents to PwC s report as major challenges hindering partnerships In particular data privacy rules as well as anti money laundering and know your customer rules were seen as the biggest regulatory barriers to developing more innovative services The report also highlighted how interest in record keeping technology blockchain continues to grow in finance with investments in blockchain companies growing 79 percent year over year in 2016 to 450 million
While adoption of the nascent technology is not expected to happen quickly the survey found 55 percent of respondents planned to adopt it by next year and 77 percent by 2020 |
C | Saudi Arabia s Kingdom Holding has no plans to invest in Snapchat source | DUBAI Reuters Saudi Arabia s Kingdom Holding the investment firm owned by billionaire Prince Alwaleed bin Talal has no plans to invest in Snapchat a source familiar with the matter told Reuters on Thursday Senior management at Snapchat the social media platform that allows more than 100 million users to send messages that disappear after a few seconds held talks with Alwaleed on March 8 The meeting in which Snapchat Chief Executive Evan Spiegel and chief strategy officer Imran Khan were present triggered speculation that Alwaleed may take part in Snapchat s new funding round that has already seen Alibaba NYSE BABA Group Holding invest 200 million giving the Los Angeles based firm a valuation of around 15 billion Kingdom took part in talks over a potential investment in Snapchat but decided not to invest in the application the source said The source declined to reveal the reason for the decision and refused to be named due to the sensitivity of the matter Kingdom Holding and Snapchat respectively did not respond to requests for comment
Kingdom Holding owns a sizable stake in microblogging site Twitter NYSE TWTR in addition to a wide range of investments that includes Citigroup NYSE C Euro Disney and London s Savoy Hotel |
C | Citigroup seen shutting Banamex USA unit WSJ | NEW YORK Reuters Citigroup Inc NYSE C is expected to close its Banamex USA unit after government authorities began probes of possible violations of anti money laundering laws the Wall Street Journal said on its website on Sunday The bank has suggested the shutting the unit with regulators as a part of talks to settle the probes into Banamex USA s anti money laundering controls the paper said citing people familiar with the matter Regulators are not seeking such a move from Citigroup but they want the unit to pay more than 100 million to settle the allegations according to those people Discussions between Banamex USA the Federal Deposit Insurance Corp and the California Department of Business Oversight have been going on for more than a month and the expected settlement is still likely weeks away the Wall Street Journal said
Citigroup in 2001 bought Banamex USA from Banamex Mexico s second biggest bank It mainly focuses on consumers who routinely need to move money across the border such as U S citizens living in Mexico |
C | AquaVenture WAAS Up On IPO Water as a Service Is A Thing | Shares of AquaVenture Holdings NYSE WAAS opened at 21 after the Water as a Service company priced its IPO at 18 the low end of its expected 18 20 per share range
AquaVenture offered 6 5 million shares at its IPO price today and it will also grant its underwriters a 30 day option to purchase up to 975 000 additional shares at the IPO price Citigroup NYSE C Deutsche Bank NYSE DB and RBC Capital are acting as joint book runners for the offering
Despite its clever name Water as a Service has nothing to do with the popular SaaS cloud technology tools AquaVenture and its WaaS solutions provide customers with reliable and cost effective drinking and process water
The company operates two subsidiaries Quench and Seven Seas Water Quench is a Point of Use provider that develops filtered water solutions for about 40 000 institutional customers Seven Seas Water is a desalination and wastewater treatment company that develops about 7 billion gallons of drinkable water to a wide range of customers
AquaVenture was not the only IPO on Thursday and investors also seemed interested in the debut of NYSE C which soared over 100 in morning trading
For more coverage on IPOs check out the team s exclusive interview with Kathleen Smith co founder of IPO based research firm Renaissances Capital
Want the latest recommendations from Zacks Investment Research Today you can download 7 Best Stocks for the Next 30 Days |
MPC | Marathon Petroleum MPC To Buy Back Shares Worth Up To 3B | Oil refining and marketing giant Marathon Petroleum Corporation NYSE MPC recently announced that its board has authorized an additional buyback program of shares worth 3 billion The company still has approximately 2 14 billion remaining from its previous authorization Marathon Petroleum plans to fund the buyback program with cash proceeds from dropdowns and limited partner distributions The decision falls in line with the company s value creation strategy of increasing capital return to the shareholders The company had 518 74 million shares outstanding as of now The timing of the buyback will depend on market and business conditions The company can discontinue the process if the conditions are not suitable The repurchase of a total of 5 14 billion worth shares has no expiration date Marathon Petroleum has various options to commence the buyback program including accelerated share repurchases negotiated block transactions and open market repurchases Since the company became independent it has returned approximately 11 billon to its shareholders through the buyback programs To date Marathon Petroleum has repurchased 30 of its outstanding common shares We would like to remind investors that in the first quarter of 2017 the company returned 420 million capital to its shareholders in the form of repurchases In total Marathon Petroleum has returned 610 million capital to its stockholders during this time period About the CompanyFindlay OH based Marathon Petroleum is a leading independent refiner transporter and marketer of petroleum products The company in its current form came into existence following the 2011 spin off of Houston TX based Marathon Oil Corporation s NYSE MRO refining sales business into a separate independent and publicly traded entity Marathon Petroleum operates through three segments Refining and Marketing Speedway Retail and Pipeline Transportation Price PerformanceIn the last one month Marathon Petroleum s shares gained 1 21 outperforming the Zacks categorized industry s loss of 1 57 Zacks Rank and Stocks to ConsiderMarathon Petroleum presently has a Zacks Rank 3 Hold Some better ranked stocks in the oil and energy sector are Delek US Holdings Inc NYSE DK and Canadian Natural Resources Limited TO CNQ All of these stocks flaunt a Zacks Rank 1 Strong Buy You can see Delek US Holdings sales for 2017 are expected to increase 37 46 year over year The company has a four quarter average positive earnings surprise of 60 68 Canadian Natural Resources sales for 2017 are expected to increase 46 81 year over year The company came up with a positive earnings surprise of 30 77 in the first quarter of 2017 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 | Marathon Petroleum MPC Q2 Earnings Miss As Cost Increases | Ohio based independent oil refiner and marketer Marathon Petroleum Corp NYSE MPC reported marginally weaker than expected second quarter earnings on lower gross margins and elevated costs The company s earnings per share adjusted for special items came in at 1 03 a penny below the Zacks Consensus Estimate Moreover Marathon Petroleum s revenues of 18 354 million missed the Zacks Consensus Estimate of 19 361 million Segmental PerformanceRefining Marketing 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 Capacity utilization at 103 was up from 96 in the second quarter of 2016 Speedway 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 Midstream This unit includes Marathon Petroleum s 100 interest in MPLX L P NYSE MPLX a publicly traded master limited partnership that owns operates develops and acquires pipelines and other midstream assets 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 Marathon Petroleum Corporation Price Consensus and EPS Surprise Total ExpensesMarathon Petroleum which spun off from Marathon Oil Corp NYSE MRO in 2011 reported expenses of 17 326 million in second quarter 2017 12 higher than 15 475 million in the year ago quarter Capital Expenditure Balance Sheet Share RepurchaseIn the reported quarter Marathon Petroleum spent 784 million on capital programs 63 on the Midstream segment As of Jun 30 2017 the company had cash and cash equivalents of 1 450 million and total debt of 12 606 million with a debt to capitalization ratio of 38 During the quarter under review Marathon Petroleum returned 936 million of capital to shareholders including 750 million of share repurchases Dividend HikePrior to the earnings release Marathon Petroleum also announced that its board of directors declared a quarterly cash dividend of 40 cents a share an 11 increase over the current quarterly dividend of 36 cents a share The dividend will be paid to stockholders of record on Sep 11 and paid on Aug 16 Share PerformanceShares of Marathon Petroleum have gained 3 5 during the second quarter underperforming the 4 7 increase Zacks Rank Stock PicksMarathon Petroleum carries a Zacks Rank 3 Hold Meanwhile one can look at better ranked energy players like Range Resources Corp NYSE RRC Fort Worth TX based independent oil and gas producer sporting a Zacks Rank 1 Strong Buy has a good earnings surprise history beating estimates in 3 of the last four quarters You can see 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 |
MS | U S stocks down after TIC report Dow Jones slips 0 04 | Investing com U S stock markets slid on Monday after official data showed there were fewer than forecast foreign purchases of long term U S securities in January offsetting a number of more upbeat U S economic reports During early U S trade the Dow Jones Industrial Average was down 0 04 the S P 500 index slid 0 19 and the Nasdaq Composite Index was down 0 29 Earlier in the day the U S Treasury Department said in its Treasury International Capital report known as TIC that USD 19 1 billion in long term U S securities were purchased in January down from USD 63 3 billion the previous month But also on Monday a report showed that a measure of the manufacturing sector in New York state fell by less than forecast in March and better than expected U S data was released on industrial production and production capacity utilization Meanwhile stock markets in Europe also sank France s CAC 40 was down 0 31 Germany s DAX shed 0 06 Britain s FTSE 100 was down 0 26 and the EURO STOXX 50 slid 0 28 Global markets were also hurt by fears over new monetary tightening measures from Beijing Earlier in the day Bloomberg quoted economists from Morgan Stanley as saying they expected multiple increases in China s bank reserve ratio requirements with the next one imminent China s interest rates may be raised as early as April the economists were quoted as writing in a report Also Monday euro zone finance ministers were set to discuss an aid package to help Greece combat its gaping budget deficit |
MS | Europe stocks slip lower CAC 40 down 0 84 | Investing com European stock markets slipped lower on Monday following mixed U S economic data and a warning by Moody s that the U S Germany and other top economies had moved substantially closer to losing their top credit ratings During European afternoon trade the EURO STOXX 50 was down 0 87 Germany s DAX shed 0 64 and France s CAC 40 was down 0 84 Britain s FTSE 100 slipped 0 57 after two new polls pointed to an indecisive result in the upcoming U K election Mining stocks were among the worst performers with Xstrata shedding 3 23 and Kazakhmys dropping 2 37 Earlier in the day official data showed there were far fewer than forecast foreign purchases of long term U S securities in January But a report on Monday also showed that manufacturing activity in New York state had slowed by less than forecast in March and better than expected data was released on U S industrial production and production capacity utilization Meanwhile U S stock markets also slid The Dow Jones Industrial Average was down 0 41 the S P 500 index slid 0 64 and the Nasdaq Composite Index was down 0 79 Global markets were also hurt on Monday by fears over new monetary tightening measures from Beijing Earlier in the day Bloomberg quoted economists from Morgan Stanley as saying they expected multiple increases in China s bank reserve ratio requirements with the next one imminent China s interest rates may be raised as early as April the economists were quoted as writing in a report |
MS | U S stocks rise on corporate earnings Dow Jones up 0 18 | Investing com U S stock markets were up on Wednesday extending recent gains in the wake of better than expected earnings reports from Apple and Morgan Stanley During early U S trade the Dow Jones Industrial Average was up 0 18 the S P 500 index rose 0 14 and the Nasdaq Composite index was up 0 2 Late Tuesday Apple said sales this quarter would be as high as USD 13 4 billion beating analysts forecasts The electronics giant later advanced 6 3 on Wednesday Morgan Stanley said on Wednesday meanwhile that its first quarter profit surged to USD 1 41 billion on strong results from its trading operations The investment bank rose 3 91 in the wake of the report However most stock markets in Europe were down amid persisting fears over Greece s debt crisis France s CAC 40 was down 0 59 Germany s DAX slipped 0 01 Britain s FTSE 100 was down 0 69 and the EURO STOXX 50 shed 0 52 Earlier in the day Greece began crucial talks with the International Monetary Fund the European Central Bank and the European Commission on an emergency aid mechanism for the debt ridden country Later Wednesday U S Federal Reserve Chairman Ben Bernanke was set to speak at an event in Washington D C Traders were likely to scrutinize his comments for clues to future shifts in monetary policy |
MS | Europe stocks rise on deals earnings reports DAX up 1 04 | Investing com European stocks were up on Wednesday after U K household products company Reckitt Benckise agreed to buy SSL International and Italian car maker Fiat returned to second quarter profit During European afternoon trade the EURO STOXX 50 was up 1 28 France s CAC 40 rose 1 59 and Germany s DAX climbed 1 04 Reckitt Benckise stocks gained 2 54 after the company agreed to buy SSL International in a deal worth in excess of USD 3 8 billion that will add the Scholl and Durex brands to its portfolio Meanwhile shares in Fiat surged 6 after the company reported better than expected trading earnings and said it may raise its full year outlook in the next quarter In London the FTSE 100 gained 1 58 as BP shares rose 2 after the company announced it was to sell USD 7 billion of assets The outlook for U S equity markets meanwhile was optimistic as investors eyed quarterly earnings reports from Morgan Stanley and GlaxoSmithKline Dow Jones Industrial Average futures indicated an increase of 0 11 S P 500 futures pointed to a gain of 0 22 and Nasdaq 100 futures indicated a rise of 0 66 E Bay and Starbucks were among some of the companies who were due to report after markets closed Later in the day U S Federal Reserve Chairman Ben Bernanke was to give his semi annual report on the economy to the Senate Banking Committee |
MS | U S stocks mixed on earning reports Dow Jones up 0 13 | Investing com U S stock markets were mixed Wednesday after Morgan Stanley the world s largest brokerage reported stronger than expected second quarter earnings but search engine Yahoo posted a disappointing earnings report During early U S trade the Dow Jones Industrial Average was up 0 13 the S P 500 index gained 0 03 and the Nasdaq Composite index fell 0 11 Earlier in the day New York based Morgan Stanley stocks jumped 8 45 after the company said net income rose to USD 1 96 billion in the second quarter surpassing all five of the company s larger competitors including Goldman Sach s Goldman Sachs reported below expected earnings on Tuesday after trading revenue fell 36 from the first quarter Shares in Yahoo tumbled 8 8 after the company posted below expected second quarter earnings However strong earnings reports were posted by beverage giants Coca Cola whose stocks advanced 1 63 after quarterly profit rose 16 and United Technologies which climbed 0 93 after its second quarter net profit rose 14 E Bay and Starbucks were among some of the companies who were due to report after markets closed Also Wednesday U S Federal Reserve chairman Ben Bernanke was to give his closely watched semi annual report on the economy to the Senate Banking Committee Across the Atlantic European stock markets were up France s CAC 40 rose 1 42 Germany s DAX gained 0 88 Britain s FTSE 100 advanced 1 83 and the EURO STOXX 50 rose 1 17 Earlier Wednesday Portugal s borrowing costs escalated as the country auctioned government bonds The securities were issued at an average yield of 2 4 compared to a yield of 1 0 at an earlier auction in March |
MS | Europe stocks slide as pharmaceuticals fall DAX down 0 40 | Investing com European stocks were lower in Wednesday as pharmaceutical shares fell but declines were limited as auto makers rallied meanwhile U S futures indexes pointed to a lower open on Wall Street During European afternoon trade the EURO STOXX 50 fell 0 66 France s CAC 40 shed 0 61 and Germany s DAX lost 0 40 Shares in drug makers AstraZeneca fell 1 40 after news that the U S Food and Drug Administration delayed approval for its heart drug Brilinta by 3 months Meanwhile shares in pharmaceutical giant GlaxoSmithKline fell 0 23 after the company s stock was downgraded by Jefferies International while shares in Germany s Merck fell 1 51 Automakers rallied boosted by Japan s intervention in currency markets Shares in Renault which is part owned by Japan s Nissan jumped 3 27 Elsewhere in the sector shares in Peugeot Citroen advanced 4 15 after Morgan Stanley upgraded the company s stock In the financial sector shares in Deutsche Bank fell 1 60 and shares in Deutsch Post fell 1 48 after Deutsche Bank announced that it intended to submit a takeover offer for the lender on Monday In London the commodity heavy FTSE 100 was down as miners underperformed Shares in Rio Tinto fell 0 90 while shares in Xstrata tumbled 1 41 The outlook for U S equity markets meanwhile was downbeat Dow Jones Industrial Average futures indicated a dip of 0 15 S P 500 futures pointed to a slide of 0 26 and Nasdaq 100 futures indicated a drop of 0 21 Later in the day the U S was to release official data on manufacturing and industrial production |
MS | Europe shares end lower amid growth fears DAX down 0 18 | Investing com European stocks ended lower on Thursday amid fears over the fragile global economic recovery after U S jobless claims showed only a narrow decline and after weak U K retail sales data At the close of European trade the EURO STOXX 50 was down 0 36 France s CAC 40 was off 0 48 and Germany s DAX slipped 0 18 The U S Department of Labor said in its weekly report that initial jobless claims fell by 3 000 to hit a seasonally adjusted 450K last week compared with a forecast for a rise to 460K Separate data showed that U S producer prices rose more than expected in August but the Philadelphia Fed s manufacturing index rose less than expected remaining negative for the second consecutive month Earlier in the day official data showed that retail sales in the U K fell more than expected hitting their lowest level in 7 months Shares in U K retailers fell following the data with shares in Marks Spenser s down 0 76 Next slipping 0 18 and Home Retail shares falling 0 33 In London the FTSE 100 ended down 0 26 with shares in British Telecom tumbling 3 19 after the company s shares were downgraded by Morgan Stanley due to concern over its pension liabilities and exposure to government contracts Across the Atlantic U S markets moved higher the Dow Jones Industrial Average was down 0 16 the S P 500 index fell 0 42 and the Nasdaq Composite index shed 0 40 Earlier in the day a successful Spanish bond auction raised EUR 4 billion and eased fears over the euro zone s sovereign debt crisis |
MS | Asia stocks mixed amid low trade volume Nikkei closed for holiday | Investing com Asian stocks were mixed on Monday amid low trading volume as investors remained cautious ahead of Tuesday s U S Federal Reserve rate decision while markets in Japan were closed due to a bank holiday Hong Kong s Hang Seng Index was down 0 10 South Korea s Kospi Composite gained 0 29 while Japan s Nikkei 225 Index was closed for Respect for the Aged Day In Hong Kong shares in the banking sector led declines amid lingering concerns that China could introduce tougher banking regulations Shares in HSBC Holdings fell 0 87 Bank of China stocks shed 0 49 while Chinese insurers Ping An declined 0 31 Elsewehere China s Shanghai Composite Index shed 0 38 as fresh fears were sparked over a slowdown in the nation s economic growth after global financial firm Morgan Stanley said in a report that China s potential economic growth is set to slow Following the report shares in wire manufacturer Jiangxi Xinxin Industrial Co tumbled 1 51 while Beijing based property developer Poly Real Estate Group slid 1 91 Meanwhile Australia s S P ASX 200 Index was down 0 16 as miners led declines Shares in the world s largest miners BHP Billiton declined 0 31 Rio Tinto shed 0 73 while stocks in Newcrest Mining fell 0 27 In Europe equity markets opened higher The EURO STOXX 50 was up 0 48 France s CAC 40 rose 0 63 the FTSE 100 increased 0 70 and Germany s DAX gained 0 32 Later in the day the U S was to publish industry data on home sales |
JPM | Japan output jump low jobless rate yet to spark inflation | By Leika Kihara and Stanley White TOKYO Reuters Japanese factory output rose at the fastest pace in eight months and the jobless rate hit a two decade low in February a sign a rebound in overseas demand continued to brighten prospects for the country s export reliant economy But household spending remained soft and consumer inflation was flat when stripping away the effect of rising energy costs underscoring the challenges the Bank of Japan faces in generating sustained price rises backed by steady wage growth The data may reinforce market expectations that while the BOJ s next policy move could be to withdraw its massive stimulus the timing would be some time away analysts said We can tell that Japan s economy is benefiting from a cyclical pickup in the global economy said Masamichi Adachi senior Japan economist at JPMorgan NYSE JPM Securities But corporates are reluctant to raise prices because consumption is weak The simple answer for the government and the BOJ is to wait and see Industrial output rose 2 0 percent in February from the previous month beating market forecasts for a 1 2 percent gain to mark the biggest increase since June last year as automakers ramped up production of new models data showed on Friday Separate figures showed Japan s jobless rate hit a 22 year low of 2 8 percent in February down 0 2 percentage point from the previous month But household spending fell 3 8 percent in February from a year earlier a bigger decline than market forecasts for a 1 7 percent drop suggesting a tightening labor market has yet to drive up wages enough to boost consumption ECONOMY GOOD PRICES WEAK A rebound in energy costs pushed core consumer inflation to 0 2 percent in February matching a median market forecast and marking the fastest annual pace in nearly two years But a separate consumer price index that excludes the effect of volatile fresh food and energy costs rose just 0 1 percent in February suggesting that weak consumption was preventing companies from raising prices of non energy items Tokyo core consumer prices which are less influenced by gasoline costs and released a month ahead of nationwide figures fell 0 4 percent in March from a year earlier That was bigger than a 0 3 percent drop in February While we still think price growth will continue to pick up it s true the underlying trend isn t that strong said Yoshiki Shinke chief economist at Dai ichi Life Research Institute Depending on oil and yen moves it may take longer than expected for inflation to approach 1 percent he said Japan s long stagnant economy has shown signs of life in recent months with exports and factory output benefiting from a recovery in global demand Analysts expect consumer inflation to accelerate near 1 percent later this year as the base effect of last year s oil price falls dissipates That has led to a dramatic shift in market expectations with a majority of analysts polled by Reuters predicting the BOJ s next move would be to start scaling back its stimulus With inflation far from his 2 percent target however BOJ Governor Haruhiko Kuroda has stressed that he sees no reason to dial back the bank s massive stimulus program anytime soon
BOJ officials have stressed that they would look at various data not just the core consumer price figures in determining whether underlying trend inflation is accelerating backed by solid economic growth They argue that wage rises must accompany price gains for inflation to sustainably hit 2 percent |
JPM | U S factory activity cools slightly trend remains bullish | By Lucia Mutikani WASHINGTON Reuters A measure of U S manufacturing activity retreated from a 2 1 2 year high in March amid a decline in production and an inventory drawdown but a surge in factory jobs indicated that the sector s energy led recovery was gaining momentum Other data on Monday showed construction spending rising to a near 11 year high in February lifted by a jump in home building investment The reports pointed to strong fundamentals despite signs of weak economic growth in the first quarter The U S economic expansion remains on solid footing even taking into a account what is likely to be a pretty lackluster first quarter growth profile said Tom Porcelli chief U S economist at RBC Markets in New York The Institute for Supply Management ISM said its index of national factory activity fell to a reading of 57 2 last month from 57 7 in February which was the highest since August 2014 A reading above 50 indicates an expansion in manufacturing which accounts for about 12 percent of the U S economy Seventeen of the 18 manufacturing industries reported growth and no industry reported a contraction Comments from factories were mostly upbeat with machinery manufacturers saying that business was up 10 percent to 15 percent Transport equipment manufacturers however described the industry s outlook as relatively flat The manufacturing recovery is being driven by the energy sector as steady increases in crude oil prices boost drilling activity A report from energy services firm Baker Hughes on Friday showed U S drillers added 137 rigs in the first quarter the most since the second quarter of 2011 That has fueled demand for machinery resulting in business spending on equipment rising in the fourth quarter for the first time in a year Manufacturing is also benefiting from a surge in business sentiment following President Donald Trump s pledge to pursue business friendly policies including cutting corporate taxes and deregulation But after last month s failed attempt by Republicans in the U S House of Representatives to repeal the Obama administration s 2010 healthcare law economists warn that Trump might struggle to implement his agenda The dollar rose to a two week high against a basket of currencies while U S stocks fell after New York and other states challenged the Trump administration on grounds of illegally blocking energy efficiency standards U S Treasuries rose HIRING PROSPECTS BRIGHTEN Last month the ISM survey s production sub index decreased 5 3 percentage points to 57 6 A gauge of manufacturing inventories contracted While that weighed on the ISM index it bodes well for future manufacturing activity Though a measure of new orders fell last month it remained near a more than three year high A gauge of factory employment jumped to its highest reading since June 2011 That would suggest another strong month of factory job gains in March But sentiment indicators such as the ISM have been painting a more robust picture than the so called hard data which has suggested that the economy grew around a 1 percent annualized rate in the first quarter Gross domestic product increased at a 2 1 percent pace in the fourth quarter If manufacturers hire as many workers as the survey says they are planning to do the nonfarm payroll jobs number on Friday could be a blowout said Chris Rupkey chief economist at MUFG Union Bank in New York Manufacturers reported paying more for raw materials further evidence that inflation pressures are building up A report on Friday showed a key consumer inflation measure in February recorded its biggest annual gain in nearly five years The ISM s prices index rose 2 5 percentage points in February to 70 5 the highest reading since May 2011 indicating higher raw materials prices for the 13th straight month A separate report from the Commerce Department on Monday showed construction spending increased 0 8 percent to 1 19 trillion in February the highest level since April 2006 after dropping 0 4 percent in January Construction spending was boosted by outlays on private residential construction which surged 1 8 percent to the highest level since July 2007 Spending on private nonresidential structures fell 0 3 percent
The trend in nonresidential construction spending has softened lately said Daniel Silver an economist at JPMorgan NYSE JPM in New York Despite this weakening in the data we still look for a strong increase in overall private nonresidential investment in the first quarter because of large gains in separate data related to activity in the energy sector |
C | JPMorgan Expects To Plead Guilty Over Forex | By
JPMorgan NYSE JPM is preparing to plead guilty over antitrust charges related to foreign exchange rate rigging the bank said in a regulatory filing Thursday The revelation comes as JPMorgan and four other big banks reportedly enter final preparations for settlements with U S regulators over a widespread currency manipulation scheme involving dozens of bankers The other banks reportedly girding themselves for guilty pleas include Citigroup NYSE C Royal Bank of Scotland LONDON RBS and Barclays LONDON BARC UBS meanwhile will see its 2012 non prosecution agreement with the Department of Justice over the Libor scandal torn up as it settles the currency rigging charges Bloomberg reports The Justice Department has lately emphasized its determination to push banks accused of felonies into pleading guilty a practice the agency has largely shied away from in recent years Banks that plead guilty to felony charges face a raft of potential regulatory burdens including bans on overseeing mutual funds and offering securities The New York Times reported Wednesday that the banks expecting guilty pleas have been engaged in a flurry of talks with regulators including the Securities and Exchange Commission in order to arrange waivers that would allow them to continue doing business as usual JPMorgan announced in the filing that negotiations over foreign exchange sales are nearing conclusion and that the bank understands that any resolution acceptable to DOJ would require that the Firm plead guilty to an antitrust charge The Justice Department is expected to announce charges sometime next week |
C | Argentine court bars Citibank from exiting custody of disputed bonds | BUENOS AIRES Reuters An Argentine court on Monday ordered Citibank Argentina not to take any further steps toward quitting its role as custodian of some Argentine sovereign bonds while a row with U S creditors over unpaid debt rages on the government said President Cristina Fernandez s government announced last month it was suing the local subsidiary of Citigroup Inc N C for striking an illegal deal with a group of New York based hedge funds fighting for full payment on defaulted debt Citigroup has portrayed itself as an innocent party sucked in the center of Argentina s bitter legal battle with the funds forced to choose between processing interest payments in defiance of a U S court or not processing payments and putting its ability to do business in Argentina at risk The bank the 12th biggest in Argentina based on deposits denies violating that country s law In a statement the Argentine economy ministry said the court ordered Citibank Argentina refrain from taking decisions toward abandoning its custody of exchanged Argentine bonds The court s order raises the specter of further punitive measures against the bank should it continue seeking a way out of its local custodial business Argentina has already suspended the bank from capital market operations and stripped its chief executive officer of his authority The case stems from a lengthy legal feud between Fernandez s government and the funds led by billionaire Paul Singer s NML Capital over the payment terms offered in bond swaps that followed Argentina s record 2002 default U S District Judge Thomas Griesa awarded the funds full payment on their defaulted bonds and barred Argentina from servicing its restructured securities until it settled with the creditors After Griesa ruled on March 12 that there would be no exemption for local law bonds Citibank Argentina announced it planned to quit its local custody business because of a threat from the government to strip it of its banking license if it obeyed Griesa s order
It then reached a deal with the funds which was approved by Griesa not to appeal the U S judge s order if it was allowed to process two one off transfers in March and June while it exited its custodian role |
C | Five big banks face criminal charges and 5 billion bill over FX rigging | LONDON NEW YORK Reuters Five of the world s biggest banks are expected to be hit with a combined bill of more than 5 billion and criminal charges on Wednesday in a settlement with U S and British authorities over rigging of currency markets It will mark another dark day for an industry trying to put past sins behind it and brings the total in penalties some big banks will pay for their traders allegedly manipulating the 5 trillion a day foreign exchange market to about 10 billion U S banks JPMorgan NYSE JPM and Citigroup NYSE C and Britain s Barclays LONDON BARC and Royal Bank of Scotland LONDON RBS are expected to plead guilty to criminal charges with the U S Department of Justice related to forex manipulation people familiar with the matter said It would be unprecedented for the parent companies or main banking arms of so many major banks to plead guilty to criminal charges in a coordinated action JPMorgan and Citigroup would be the first major U S banks to plead guilty to criminal charges in decades Swiss bank UBS is expected to avoid a criminal charge after getting immunity for alerting authorities to a possible problem But it faces a criminal charge over the rigging of benchmark Libor interest rates two people familiar with the matter said That stems from an agreement with the DoJ in its December 2012 Libor settlement not to commit more offences It will also pay a 200 million fine the two sources said Barclays is also expected to reach settlements with other British and U S regulators which means its penalties could be significantly higher than the other banks and top 2 billion Barclays has set aside 3 2 billion to cover any forex fines and other banks also have provisions for settlements Individuals at Barclays could also be held accountable if there is evidence of bad conduct New York s banking regulator Benjamin Lawsky told Reuters on Tuesday echoing a warning he made last week Britain s Financial Conduct Authority and some U S authorities fined a group of six banks 4 3 billion in November for forex manipulation but Barclays did not join that deal due to complications with its regulator in New York The impact of guilty pleas by the parent companies or main banking arms of major banks is uncertain and could jeopardize their U S operations The banks are seeking assurances from U S regulators they will not be barred from certain businesses if they plead guilty several sources familiar with situation said The DoJ has been negotiating with the banks for months over how to resolve the forex allegations Transcripts of online chat rooms made public in November showed how traders shared confidential information about client orders and otherwise conspired to benefit their own transactions The timing of a settlement could still slip if there is a last minute hitch
Some authorities will continue to look at whether computer programs used in trading platforms could have rigged forex prices which is likely to be excluded from Wednesday s deal By Reuters reporters in London Zurich New York and Washington D C Editing by Jane Merriman |
C | Senator Warren calls for public hearings on bank waivers FT | NEW YORK Reuters U S Senator Elizabeth Warren is calling for U S Department of Labor hearings on whether banks accused of rigging foreign exchange markets should be allowed to manage retirement accounts the Financial Times reported on Sunday When banks plead guilty to a crime federal agencies must do more than look the other way Warren told the Financial Times The SEC has already granted waivers to each of these banks without any detailed explanation but it is not too late for the Department of Labor to hold a public hearing before it decides that such brazen lawbreakers can be trusted managing workers retirement accounts Five of the world s largest banks including JPMorgan Chase Co NYSE JPM and Citigroup Inc NYSE C were fined some 5 7 billion and four of them pleaded guilty to U S criminal charges over manipulation of foreign exchange rates authorities said on May 20 UBS AG the fifth bank will plead guilty to rigging benchmark interest rates the U S Justice Department said The Securities and Exchange Commission gave the banks a series of waivers to let them continue their usual securities business shortly after they agreed to plead guilty to the criminal charges The banks are expected to separately apply to the U S Department of Labor for exemptions to deal with pension and retirement savings plans The banks can continue to work for them while their applications are reviewed which could take months A Labor Department spokesman has said the department so far had received applications from JPMorgan and Citigroup The Financial Times report on Sunday said that the Labor Department had also received an application from Barclays LONDON BARC bar citing people familiar with the requests Granting waivers to big banks that break the law has become a flash point at the SEC where Commissioner Kara Stein a Democrat in particular has openly criticized the agency for rubber stamping banks requests Credit Suisse SIX CSGN quietly withdrew a request for a waiver to raise capital more easily after U S Securities and Exchange Commission staffers told the bank it would not win approval people familiar with the matter told Reuters earlier this month
The bank agreed last year to pay 2 5 billion to resolve criminal charges that it helped wealthy Americans evade U S taxes |
C | Deutsche Bank The Most Important Bank In Europe Is Facing Collapse | The largest and most important bank in the largest and most important economy in Europe is imploding right in front of our eyes Deutsche Bank DE DBKGn is the 11th biggest bank on the entire planet and due to the enormous exposure to derivatives that it has it has been called the world s most dangerous bank Over the past year I have repeatedly warned that Deutsche Bank is heading for disaster and is a likely candidate to be the next Lehman Brothers On September 16th the Wall Street Journal reported that the U S Department of Justice wanted 14 billion dollars from Deutsche Bank to settle a case related to the mis handling of mortgage backed securities during the last financial crisis As a result of that announcement confidence in the bank has been greatly shaken the stock price has fallen to record lows and analysts are warning that Deutsche Bank may be facing a liquidity event unlike anything that we have seen since the collapse of Lehman Brothers back in 2008
At one point on Friday Deutsche Bank stock fell below the 10 euro mark for the first time ever before bouncing back a bit A completely unverified rumor that was spreading on Twitter that claimed that Deutsche Bank would settle with the Department of Justice for only 5 4 billion dollars was the reason for the bounce
But the size of the fine is not really the issue now Shares of Deutsche Bank have fallen by more than half so far in 2016 and this latest episode seems to have been the final straw for the deeply troubled financial institution Old sources of liquidity are being cut off and nobody wants to be the idiot that offers Deutsche Bank a new source of liquidity at this point
As a result Deutsche Bank is potentially facing a liquidity event on a scale that we have not seen since the financial crisis of 2008 The following comes
It is not solvency or the lack of capital a vague synthetic and usually quite arbitrary concept determined by regulators that kills a bank it is as Dick Fuld will tell anyone who bothers to listen the loss of access to liquidity cold hard fungible something Jon Corzine knew all too well when he commingled and was caught cash that pushes a bank into its grave usually quite rapidly recall that it took Lehman just a few days for its stock to plunge from the high double digits to zero
It is also liquidity or rather concerns about it that sent Deutsche Bank stock crashing to new all time lows earlier today after all the investing world already knew for nearly two weeks that its capitalization is insufficient As we reported earlier this week it was a report by Citigroup NYSE C among many other that found how badly undercapitalized the German lender is noting that DB s leverage ratio at 3 4 looks even worse relative to the 4 5 company target by 2018 and calculated that while he only models 2 9bn in litigation charges over 2H16 2017 far less than the 14 billion settlement figure proposed by the DOJ and includes a successful disposal of a 70 stake in Postbank at end 2017 for 0 4x book he still only reaches a CET 1 ratio of 11 6 by end 2018 meaning the bank would have a Tier 1 capital 3bn shortfall to the company target of 12 5 and a leverage ratio of 3 9 resulting in an 8bn shortfall to the target of 4 5
The more the stock price drops the faster other financial institutions investors and regular banking clients are going to want to pull their money out of Deutsche Bank And every time there is news about people pulling money out of the bank that is just going to drive the stock price even lower
In other words Deutsche Bank may be entering a death spiral that may be impossible to stop without a government bailout and the German government has already stated that there will be no bailout for Deutsche Bank
Banking customers have a total of approximately 566 billion euros deposited with the bank and even if a small fraction of those clients start demanding their money back it is going to cause a major major crunch
Deutsche Bank CEO John Cryan attempted to calm nerves on Friday by releasing a memo to employees that blamed speculators
Instead of doing what many have correctly suggested he should be doing namely focusing on ways to raise more capital for the undercapitalized Deutsche Bank in order to stem the slow at first liquidity leak first thing this morning CEO John Cryan issued another morale boosting note to employees of Deustche Bank who have been watching their stock price crash to another record low dipping under 10 in early trading for the first time ever In the memo the embattled CEO worryingly did what Dick Fuld and other chief executives did when they felt the situation slipping out of control namely blaming evil rumor spreading shorts saying our bank has become subject to speculation Ongoing rumours are causing significant swings in our stock price Trust is the foundation of banking Some forces in the markets are currently trying to damage this trust
Just as important Cryan confirms the Bloomberg report that a few of our hedge fund clients have reduced some activities with us That is causing unjustified concerns As we explained last night the concerns are very much justified if they spread to the biggest risk factor for the German bank its depositors which collectively hold over 550 billion in liquidity providing instruments
One of the reasons why Deutsche Bank is considered to be so systemically dangerous is because it has 42 trillion euros worth of exposure to derivatives That is an amount of money that is 14 times larger than the GDP of the entire nation of Germany
Some firms that were derivatives clients of the bank have already gotten spooked and have moved their business to other institutions It was that really helped drive down the stock price of Deutsche Bank earlier this week
The funds a small subset of the more than 800 clients in the bank s hedge fund business have shifted part of their listed derivatives holdings to other firms this week according to an internal bank document seen by Bloomberg News Among them are Izzy Englander s 34 billion Millennium Partners Chris Rokos s 4 billion Rokos Capital Management and the 14 billion Capula Investment Management said a person with knowledge of the situation who declined to be identified talking about confidential client matters
The issue here is now one of confidence said Chris Wheeler a financial analyst with Atlantic Equities LLP in London
So what comes next
Monday is a banking holiday for Germany so we may not see anything major happen until Tuesday
An announcement of a major reduction in the Department of Justice fine may buy Deutsche Bank some time but any reprieve would likely only be temporary
What appears to be more likely is the scenario that Jeffrey Gundlach is suggesting
But Jeffrey Gundlach chief executive of DoubleLine Capital said investors betting that Berlin would not rescue Deutsche could find themselves nursing big losses
The market is going to push down Deutsche Bank until there is some recognition of support They will get assistance if need be said Gundlach who oversees more than 100 billion at Los Angeles based DoubleLine
It will be very interesting to see how desperate things become before the German government finally gives in to the pressure
The complete and total collapse of Deutsche Bank would be an event many times more significant for the global financial system than the collapse of Lehman Brothers was Global leaders simply cannot afford for such a thing to happen but without serious intervention it appears that is precisely where we are heading
Personally I don t know exactly what will happen next but it will be fascinating to watch |
C | Barclays To Sell Its Egypt Business To Attijariwafa Bank | As part of its restructuring initiatives Barclays LON BARC PLC NYSE C has agreed to sell its Retail and Corporate Banking business in Egypt to Attijariwafa Bank S A the biggest bank of Morocco in terms of revenue The completion of the deal is subject to regulatory approvals and is anticipated to occur by the end of this year Notably the deal value was not disclosed Barclays is thus ending its 150 years of history in Egypt where it has around 56 branches and 1 500 employees The divestiture is expected to result in a benefit of 10 basis points in the bank s Common Equity Tier 1 CET1 ratio as of Jun 30 2016 Further the deal is expected to reduce the bank s risk weighted assets RWAs by approximately 2 billion 2 55 billion The divestiture is in line with Barclays decision to focus on its U K and U S operations while selling or minimizing its activities in Africa continental Europe and Asia Further the restructuring is in view with the bank s aim to simplify its structure and seek higher shareholder returns Barclays Group s CEO Jes Staley said I am pleased to announce a further reduction in our Non Core business Today s announcement demonstrates our continued focus on improving the Group s returns and our ability to execute our strategy quickly Moreover this move is in sync with Barclays plan to offload its Egyptian and Zimbabwean operations since it decided to drastically cut back its African presence earlier this year In May the bank successfully sold a 12 stake in Barclays Africa Group Read more However further attempts to sell the bigger share of its holdings in Barclays Africa Group face various difficulties including the disparate nature of the local units Nonetheless the bank plans to keep a stake of around 10 20 in its African business In addition Barclays is in talks to sell its French division to a private equity group Hence Barclays remains on track to lower its non core RWAs to nearly 20 billion by 2017 Also the bank plans to merge its non core division with the rest of the group within the same time frame Notably Barclays is not the only bank focusing on restructuring initiatives with a view to enhance its profitability Global banks like Deutsche Bank AG NYSE DB HSBC Holdings plc NYSE C and Citigroup Inc NYSE C have also been carrying out many restructuring activities with a view to focus more on their core businesses and divesting operations that are not strategic and less profitable Currently Barclays carries a Zacks Rank 3 Hold You can see Confidential from Zacks Beyond this Analyst Blog would you like to see Zacks best recommendations that are not available to the public Our Executive VP Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand |
MPC | Dakota Access Pipeline Fails To Receive Construction Permit | Last week the Obama administration denied a permit for the construction of a key section of the 1 172 mile Dakota Access Pipeline DAPL This announcement jointly made by the U S Department of Justice the Department of the Interior and the Department of the Army came shortly after a federal judge ruled in favor of construction of this 3 7 billion project in spite of protests by Native American tribes
Why the Protest
Environmental and indigenous activists have been protesting against the construction of the oil pipeline due to the possibility of the pipeline contaminating drinking water In particular the Standing Rock Sioux a tribe living close to the proposed pipeline and other activists argued that the pipeline crossing under the Missouri River threatens their primary source of drinking water alongside passing over their ancestral lands
Tribal leaders are skeptical that an accident or a spill could potentially contaminate farmland and drinking water for millions The tribes and their representatives believe that they were not adequately consulted on these issues and hence filed a federal lawsuit in July against the U S Army Corps of Engineers
Current Situation
The decision by the Obama Administration to disapprove the permit for construction is undoubtedly a significant victory for the protesters This implies that sponsors of the controversial Dakota Pipeline would have to halt operations along the 40 mile stretch in North Dakota However activity on other sections of the pipeline could proceed as planned
However the long struggle to block the project is far from over Given that the federal government has not rejected the project plan and has suggested further review on the matter it remains to be seen how the events unfold once Donald Trump takes office
About the Pipeline
Primarily owned by Dallas based pipeline operator Energy Transfer Partners L P NYSE ETP the Dakota Access Pipeline has a capacity to transport over 470 000 barrels of crude daily from North Dakota s prolific Bakken formation through South Dakota and Iowa to an existing pipeline in Patoka IL
Bakken Holdings formed by Energy Transfer Partners and another pipeline operator Sunoco Logistics Partners L P NYSE SXL owns 75 of the pipeline Downstream operator Phillips 66 NYSE PSX controls the remaining 25
Per a deal announced last month Enbridge Energy Partners L P NYSE EEP and Marathon Petroleum Corp NYSE MPC are also likely to own a minority interest in the pipeline
Bottom Line
This issue is unlikely to be resolved any time soon and a protracted legal battle is in the offing Nonetheless Braskem S A BAK is an energy stock that warrants a look by virtue of its favorable Zacks Rank 1 Strong Buy and might be a suitable investment option You can see
Confidential Zacks Best Investment Ideas
Would you like to see a hand picked all star selection of investment ideas from the man who heads up Zacks trading and investing services Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand |
MPC | Marathon Petroleum MPC Earnings Surprise In Q1 Sales Lag | Ohio based independent oil refiner and marketer Marathon Petroleum Corp NYSE MPC reported strong first quarter earnings on higher gross margins and solid operational performance from its Midstream unit The company s earnings per share came in at 6 cents contrary to the Zacks Consensus Estimate for a loss of a penny However Marathon Petroleum s revenues of 16 393 million missed the Zacks Consensus Estimate of 19 030 9 million amid lower throughput volumes though they were up 28 year over year Segmental PerformanceRefining Marketing Operating loss from the Refining Marketing segment was 70 million compared with a loss of 86 million in the year ago quarter The narrower loss reflects higher gross margin which rose 18 to 11 65 a barrel Total refined product sales volumes were 2 085 thousand barrels per day mbpd down 3 from the 2 158 mbpd in the year ago quarter Moreover throughput deteriorated from 1 774 mbpd in the year ago quarter to 1 708 mbpd Capacity utilization at 83 was down from 89 in the first quarter of 2016 Speedway Income from the Speedway retail stations totaled 135 million 19 lower than the 167 million earned in the year ago period Fall in merchandise margins hampered the results Midstream This unit includes Marathon Petroleum s 100 interest in MPLX L P NYSE MPLX a publicly traded master limited partnership that owns operates develops and acquires pipelines and other midstream assets Segment profitability was 309 million up significantly from 189 million in the first quarter of 2016 Earnings were buoyed by new pipeline and marine equity investments as well as increased processing and fractionation activity Total ExpensesMarathon Petroleum reported expenses of 16 101 million in first quarter 2017 26 higher than 12 755 million in the year ago quarter Capital Expenditure Balance Sheet Share RepurchaseIn the reported quarter Marathon Petroleum spent 1 325 million on capital programs 81 on the Midstream segment As of Mar 31 2017 the company had cash and cash equivalents of 2 167 million and total debt of 12 598 million with a debt to capitalization ratio of 38 During the quarter under review Marathon Petroleum returned 610 million of capital to shareholders including 420 million of share repurchases Marathon Petroleum Corporation Price Consensus and EPS Surprise Share PerformanceMarathon Petroleum shares have risen 16 over the past 6 months while the Zacks categorized industry has gained just 1 Zacks Rank Stock PicksMarathon Petroleum holds a Zacks Rank 3 Hold Meanwhile one can look at better ranked energy players like Diamond Offshore Drilling Inc NYSE DO and Cenovus Energy Inc TO CVE Diamond Offshore is a Zacks Rank 1 Strong Buy stock while Cenovus Energy carries a Zacks Rank 2 Buy You can see Incorporated in 1989 Houston TX based Diamond Offshore is a major contract driller providing comprehensive offshore drilling services to the global energy industry The company has an excellent track of having outperformed estimates in each of the last four quarters Calgary based Cenovus Energy is a large integrated oil company with a focus on the Canadian Oil Sands It also produces oil and natural gas while also being involved in the transportation and refining of crude oil The 2017 Zacks Consensus Estimate for this company is 40 cents representing some 221 earnings per share growth over 2016 Next year s average forecast is 46 cents pointing to another 15 growth The Best Worst of ZacksToday you are invited to download the full up to the minute list of 220 Zacks Rank 1 Strong Buys free of charge From 1988 through 2015 this list has averaged a stellar gain of 25 per year Plus you may download 220 Zacks Rank 5 Strong Sells Even though this list holds many stocks that seem to be solid it has historically performed 6X worse than the market |
MS | GLOBAL MARKETS US stocks fall in late sell off oil surges | Stocks turn negative on financials sell off
Oil prices above 81 on U S gasoline inventories
Dollar weakens on interest rate anxiety
Recasts updates with closing prices
By Manuela Badawy
NEW YORK Oct 21 Reuters U S stocks closed weaker on
Wednesday after an influential bank analyst recommended selling
Wells Fargo while the euro broke above 1 50 for the first
time in 14 months on expectations U S interest rates will stay
low
The Dow Jones industrial average closed 0 92 percent
lower at 9 948 83 after Rochdale Research analyst Richard Bove
cut his rating on Wells Fargo s stock saying loan
losses were mounting The KBW bank index dropped 2 4
percent Shares of Wells Fargo slid 5 1 percent to 28 90
It just shows you how susceptible we are to bad news right
now said Stephen Massocca managing director at Wedbush
Morgan in San Francisco We ve got such an extended stock
market that a feather of news is enough to cascade it down 100
points
The San Francisco based bank had reported a 60 percent jump
in third quarter profits earlier in the day
A wider than expected loss from Boeing also
disappointed investors
Morgan Stanley also reported better than expected
quarterly profit earlier in the day citing strong fixed income
sales and trading revenue and improved investment banking
underwriting results sending its shares up 6 9 percent For
more see ID nN21432907
MSCI s world stock index fell 0 24 percent
in tandem with the U S market
The FTSEurofirst 300 index of top European shares
rose 0 45 percent recouping almost all Tuesday s losses and
taking it near its highest close since Oct 3 2008
Oil prices rose more than 3 percent above 81 a
barrel the highest in a year after U S government data showed
gasoline stockpiles fell a lot more than expected last week
This supported energy stocks and emerging economies which are
set to recover at a faster speed than some developed markets
China s voracious appetite for commodities and continued
growth has helped countries such as Brazil where heavyweight
companies such as energy company Petrobras and miner
Vale are tied to the trade in raw materials
MSCI s Latin American stock index rose 0 89
percent easing from a 2 5 percent gain earlier in the day
INTEREST RATE ANXIETY
U S Treasury debt prices fell with the benchmark 10 year
U S Treasury note down 12 32 to yield 3 38
percent
Treasuries also tracked European bond markets lower after
comments from the Bank of England triggered a fresh round of
anxiety about the eventual withdrawal of monetary stimulus and
even interest rate hikes ID nLL64535
The dollar fell 0 75 percent against a basket of other
major currencies hitting a fresh 14 month low of 74 94
reaching its 10th loss in 15 sessions this month
Whether the euro the biggest component of the basket
pushes higher depends to some extent on U S stocks and crude
oil futures
The dollar and commodities are often inversely correlated
with gold and oil priced in dollars and seen as an alternative
currency and hard asset themselves
Sentiment towards the dollar continues to be hurt by the
prospect of benchmark U S interest rates staying at
exceptionally low levels Low rates make the dollar less
attractive to investors than higher yielding currencies more
closely correlated with economic recovery
The British pound gained 1 25 percent against the U S
dollar to 1 6591 and heavy dollar selling helped push
the euro to 1 5007 up 0 45 percent
In China the State Council said economic recovery had been
consolidated a shift in rhetoric some analysts say may be a
first hint that officials are at least thinking about how to
normalize loose monetary and fiscal polices ID nPEK213103
Additional reporting by Ellis Mnyandu Editing by Kenneth
Barry |
MS | FTSE slips as bank gains offset by weaker energy | FTSE 100 down 0 3 percent
Energy weak Royal Dutch Shell Q3 results disappoint
Banks rally Lloyds up on capital raising hopes
National Express slumps as merger plans dropped
By Simon Falush
LONDON Oct 29 Reuters Weakness in energy stocks pulled
lower by downbeat results from Royal Dutch Shell offset gains
from banks and miners leaving Britain s FTSE 100 off 0 3 percent
by midsession on Thursday
Investors were cautious ahead of U S GDP data which will
be closely eyed for clues on the timing and pace of a recovery
in the global economy
At 1139 GMT the FTSE 100 index was 13 26 points lower at
5 067 16 having closed down 120 55 points or 2 3 percent at
5 080 42 on Wednesday its biggest one day percentage fall since
July 2
There s been a bit of a pullback as there s been a pause in
positive corporate and economic newsflow said Graham Secker
UK equity strategist at Morgan Stanley
But that s not necessarily a bad thing as it means that
authorities won t be too hasty in retreating from their stimulus
policies
Oil giant Royal Dutch Shell was the biggest blue chip
faller down 4 4 percent after it said third quarter net profits
fell 73 percent hit by falling oil and gas prices and refining
margins and Chief Executive Peter Voser warned of a slow
recovery
Shell s numbers ended a mixed batch of third quarter results
for the energy majors with BP beating forecasts on Tuesday but
BG Group missing output forecasts on Wednesday
BG Group shares shed 2 2 percent while BP fell 0 2 percent
and oil explorer Cairn Energy lost 0 6 percent with its latest
interim management statement failing to excite
U S third quarter GDP numbers due at 1230 GMT will give
investors a further idea as to the durability of the perceived
recovery after a shock fall in UK Q3 GDP on Friday
According to a Reuters poll of 77 economists the U S
economy is expected to have grown 3 3 percent at an annualised
rate in the third quarter after shrinking 0 7 percent in the
second
BANKS BOUNCE BACK
Banks were the biggest blue chip gainers bouncing back
after sharp falls earlier this week on concerns over possible
break up calls from the European Commission following a move by
Dutch peer ING to split in two
Lloyds Banking Group gained 8 6 percent as it confirmed it
is considering raising capital via a rights issue and debt swap
as an alternative to a costly government scheme to insure it
against credit losses
The bank 43 percent state owned after receiving a 17
billion pound 27 95 billion bailout last year said it was in
advanced discussions with the British government and
regulators over its potential capital raising
Part nationalised peer Royal Bank of Scotland also thought
to be looking at plans to reduce its exposure to the
government s asset protection scheme was the top FTSE 100
riser up 11 percent while Barclays gained 3 3 percent and HSBC
added 0 5 percent
Asia focused bank Standard Chartered added 0 8 percent after
it said it said it was benefiting from growth across its
franchises but cautioned the economic outlook remains fragile
Miners were also stronger as metal prices held steady Rio
Tinto Xstrata Lonmin and Anglo American added 0 3 3 3 percent
Drugmaker AstraZeneca gained 0 8 percent after it reported
Q3 earnings per share and sales well above market expectations
Other pharmaceuticals were weaker however GlaxoSmithKline
which reported slightly disappointing figures on Wednesday shed
1 1 percent and Shire which reports on Friday fell 0 1
percent
Among the mid caps National Express was the biggest faller
down 9 6 percent after bus and rail peer Stagecoach said
National Express has decided not to pursue proposals for a
merger
Stagecoach shares gained 2 4 percent
U S jobless claims for the week ending Oct 24 will come
under scrutiny later in the session
Additional reporting by Jon Hopkins Editing by Jon
Loades Carter |
MS | UPDATE 3 Flu helps AstraZeneca lift outlook but market wary | 2009 EPS now seen 6 20 6 40 vs 5 70 6 00 previously
Q3 core earnings of 1 68 beat 1 38 consensus
One offs flatter results analysts worry over Brilinta
Shares down 1 4 percent
Adds latest shares detail on Brilinta
By Ben Hirschler
LONDON Oct 29 Reuters AstraZeneca increased its
full year outlook for the second quarter in a row on Thursday as
earnings jumped 28 percent beating forecasts helped by
earlier than expected revenues from its swine flu vaccine
But the one off nature of the gain from flu and other
factors diluted the strong results and investors fretted over
prospects for new blood thinner Brilinta pushing shares in the
Anglo Swedish drugmaker lower
AstraZeneca has been helped this year by the resilience of
the pharmaceutical sales and delays in cheap generic versions of
heart drug Toprol XL and cancer treatment Casodex though both
have now been launched in the United States
The sale of H1N1 swine flu vaccine to the U S government by
the group s MedImmune unit has been an added bonus contributing
152 million to sales in the third quarter a lot more than
the nominal 25 million or so many analysts had forecast
Overall the business has performed more strongly on the
top line than we had anticipated and we haven t experienced
quite the extent of the headwind that we had anticipated at the
beginning of the year said finance chief Simon Lowth
Long term concerns remain however given the threat of
generic competition to AstraZeneca s top selling medicines such
as heartburn drug Nexium Seroquel for schizophrenia and
further off cholesterol drug Crestor
Morgan Stanley analyst Andrew Baum said the outlook for the
company gets much tougher from here
Lowth acknowledged one offs had helped in the quarter but
said key drivers including Crestor were doing well
Even if we strip out a couple of the unanticipated upsides
such as Toprol and H1N1 we ve still maintained strong
growth of the business of 5 percent or so he told reporters
AstraZeneca s core pretax profit rose 28 percent to 3 4
billion in the third quarter equivalent to core earnings per
share EPS of 1 68 on sales up 5 percent at 8 2 billion
The mean consensus forecast had been for core earnings
which exclude certain restructuring costs and charges of 1 38
and sales of 7 9 billion according to Thomson Reuters I B E S
AstraZeneca now predicts full year EPS of 6 20 6 40 versus
5 70 6 00 previously forecast
NOT SO BRILLIANT
AstraZeneca has seen an improvement in its pipeline
prospects this year but things are not going all its way
On Wednesday it pulled regulatory submissions for its
experimental lung cancer drug Zactima and on Thursday investors
were unnerved by suggestions its key experimental heart drug
Brilinta did not work so well when patients also got a high dose
of aspirin
The firm also said it had reached an agreement in principle
with U S attorney s office in Philadelphia to resolve an
investigation related to its schizophrenia drug Seroquel sales
and marketing practices
The settlement accounts for 520 million of the 538 million
provisions taken in the first nine months of the year it said
Other major drugmakers in Europe and the United States have
also reported solid results this quarter helped by an
industry wide cost cutting drive that has softened the impact of
generic competition to many products
Those companies with vaccine capacity also stand to book
exceptional profits from the sale of H1N1 swine flu vaccine in
the fourth quarter as highlighted by GlaxoSmithKline on
Wednesday
Swine flu will also be a focus when Sanofi Aventis the
world s biggest flu vaccine manufacturer wraps up the Big
Pharma reporting season on Friday
AstraZeneca is a relatively small player in the flu market
but it has a 453 million contract with the U S government to
supply around 40 million doses of a nasal spray form of H1N1
vaccine
Shares in AstraZeneca which were off 1 4 percent by 1515
GMT underperforming a 0 6 percent decline in the European drugs
sector trade at around 7 7 times forecast 2010 earnings a
discount to British based rival Glaxo reflecting concerns about
upcoming generic competition
Additional reporting by Kate Kelland Editing by Rupert
Winchester and Jon Loades Carter |
MS | UPDATE 2 NYSE Q3 beats consensus sells Liffe U S stake | Q3 net earnings at 125 million or 0 48 per diluted share
Compares to I B E S consensus of 119 8 million
Sells a significant equity stake in NYSE Liffe U S
Adds details
By Daisy Ku
LONDON Oct 30 Reuters NYSE Euronext said on Friday it
is selling a significant equity interest in its derivatives
exchange NYSE Liffe U S as it posted a 28 percent drop in
third quarter earnings
The bourse will remain the biggest shareholder of the U S
part of NYSE Liffe it said
NYSE Euronext s third quarter net income at 125 million
outperformed market expectations despite lower overall trading
volumes thanks to NYSE Liffe Clearing revenues and a 10 percent
drop in fixed operating expenses
Underlying fixed operating expenses excluding the impact of
mergers and acquisitions foreign exchange fluctuations and
investments in new businesses were down 121 million
A Thomson Reuters I B E S consensus estimate was for a
profit of 119 8 million The year ago number was 174 million
Chief Executive Officer Duncan Niederauer said the bourse
continued to see stabilization in its core businesses
NYSE Euronext said it was selling the stake in NYSE Liffe
U S to Goldman Sachs Morgan Stanley UBS Citadel Securities
and GETCO to accelerate the growth of its U S futures
exchange
Reporting by Daisy Ku Editing by Rupert Winchester |
JPM | New home sales hit seven month high jobless claims rise | By Lucia Mutikani WASHINGTON Reuters New U S single family home sales jumped to a seven month high in February suggesting the housing market recovery was gaining momentum despite higher prices and rising mortgage rates Other data on Thursday showed an unexpected increase in the number of Americans filing for unemployment benefits last week Still the labor market continues to tighten which together with the strength in housing should underpin economic growth New home sales are the secret sauce that helps make the economy grow said Chris Rupkey chief economist at MUFG Union Bank in New York This will put some backbone in investment spending and make this economic expansion more sustainable The Commerce Department said new home sales increased 6 1 percent to a seasonally adjusted annual rate of 592 000 units last month the highest level since July 2016 Sales have now more than recouped the sharp drop suffered in December Economists had forecast new home sales which account for about 9 7 percent of the overall market rising 0 7 percent to a rate of 565 000 units in February Sales were up 12 8 percent compared to a year ago showing the housing market s resilience despite reduced affordability The 30 year fixed mortgage rate is around 4 30 percent House prices increased 5 7 percent in January from a year ago according a government report published on Wednesday Last month s new home sales were likely partially buoyed by unseasonably warm weather Most economists see a limited impact on housing from higher mortgage rates because a tightening labor market is improving job opportunities for young adults Rising mortgage rates don t appear to have been much of an impediment to increasing housing demand in February as solid job gains faster wage growth and stronger household formations offset the drop in affordability said David Berson chief economist at Nationwide in Columbus Ohio In a separate report the Labor Department said initial claims for state unemployment benefits increased 15 000 to a seasonally adjusted 258 000 for the week ended March 18 Claims have now been below 300 000 a threshold associated with a healthy labor market for 80 straight weeks That is the longest stretch since 1970 when the labor market was smaller The job market is currently near full employment The four week moving average of claims considered a better measure of labor market trends as it irons out week to week volatility rose only 1 000 to 240 000 last week U S financial markets were little moved by the data as investors focused on whether the House of Representatives would pass a Republican sponsored bill to begin dismantling Obamacare which is seen as the first significant policy test for President Donald Trump Stocks on Wall Street were trading higher with the PHLX housing index HGX gaining 0 7 percent U S government bond prices fell while the dollar DXY rose slightly against a basket of currencies LABOR MARKET FIRMING The claims data covered the period during which the government surveyed employers for March s nonfarm payrolls report The four week average of claims fell 7 750 between the February and March survey weeks suggesting another month of strong job gains Job growth has averaged 209 000 per month over the past three months and the unemployment rate is at 4 7 percent close to the nine year low of 4 6 percent hit last November Tightening labor market conditions and rising inflation enabled the Federal Reserve to raise interest rates last week The claims data do not suggest a clear shift in labor market conditions between the reference periods for the February and March reports said Daniel Silver an economist at JPMorgan NYSE JPM in New York The market for new houses is benefiting from a shortage of properties for sale A report on Wednesday showed a 3 7 percent drop in sales of existing homes in February Last month new single family homes sales surged 30 9 percent to their highest level since November 2007 in the Midwest and increased 3 6 percent in the South They jumped 7 5 percent in the West but slumped 21 4 percent in the Northeast The inventory of new homes on the market increased 1 5 percent to 266 000 units last month still less than half of its peak during the housing boom in 2006
At February s sales pace it would take 5 4 months to clear the supply of houses on the market down from 5 6 months in January A six month supply is viewed as a healthy balance between supply and demand |
C | Citigroup says could plead guilty to settle forex probe | NEW YORK Reuters Citigroup Inc NYSE C said it could plead guilty to an antitrust charge to resolve a U S Department of Justice investigation of its dealings in foreign exchange markets In a regulatory filing on Monday the company also said the Justice Department had advised that it did not intend to prosecute the bank in a separate investigation into the setting of interest rates between banks Citigroup is one of six major banks that have been under investigation over the past year by global authorities including the DOJ for trying to manipulate rates in the 5 trillion a day foreign exchange market The banks have been accused of sharing confidential information about client orders and coordinating trades from 2008 until October 2013 to boost their own profits Bloomberg citing sources reported last month that the DOJ had been pressing Citigroup s main unit to plead guilty to criminal charges It said Citigroup had countered with an offer that the plea come from a subsidiary that is smaller than the Citibank NA unit Bloomberg said the related fine would likely not exceed 1 billion
Citigroup left its estimate of potential unreserved litigation costs unchanged from year end at 4 billion |
C | Bank parents or main units seen pleading guilty over FX sources | By Karen Freifeld NEW YORK Reuters The parent companies or main banking units of as many as five major banks rather than their smaller subsidiaries are expected to plead guilty to U S criminal charges over manipulation of foreign exchange rates people familiar with the matter said A handful of banks will likely resolve forex rigging investigations by the U S Justice Department as soon as this week JPMorgan Chase Co NYSE JPM Citigroup NYSE C British banks Royal Bank of Scotland LONDON RBS and Barclays LONDON BARC and Swiss bank UBS It would be unprecedented for parent companies or main banking units rather than smaller subsidiaries of so many major banks to plead guilty to criminal charges in a coordinated action the people said Peter Carr a spokesman for the U S Justice Department declined comment Spokespeople for Citi JPMorgan RBS UBS and Barclays all declined to comment If parent companies of U S based JPMorgan and Citigroup plead guilty it would be the first time in decades that a major American financial institution has done so Last year when Swiss bank Credit Suisse SIX CSGN AG pleaded guilty in the United States to helping wealthy Americans evade taxes it became largest institution in over 20 years to plead to criminal wrongdoing It was soon followed by French banking giant BNP Paribas PARIS BNPP U S authorities fearing unintended reverberations such as the layoffs of innocent employees have rarely sought criminal convictions against major global financial institutions and instead have allowed their smaller foreign subsidiaries to take the bullet Guilty pleas trigger a cascade of consequences Banks may have to negotiate regulatory exemptions to avoid serious disruptions of business It has been called the Arthur Andersen effect after the demise of the big 5 accounting firm after its indictment in 2002 over charges related to Enron Corp s accounting scandal Some 28 000 employees at the firm lost their jobs The guilty pleas with the U S Department of Justice which will likely be to antitrust charges for colluding by traders to rig foreign currency rates could take place as soon as Wednesday people familiar with the matter have said The banks also are expected to pay penalties of some 1 billion or more and the collective settlement is expected to exceed the 4 3 billion in fines paid by a half dozen banks to global regulators last November We need to look carefully at the actual terms of the plea deals to assess just how well these banks are being held accountable but guilty pleas by major banks at the parent company level will send a message that even the largest U S financial institutions can be convicted of crimes said University of Virginia law school professor Brandon Garrett author of the book Too Big to Fail How Prosecutors Compromise with Corporations It would help chase away the ghost of Arthur Anderson and the fear that criminal prosecutions should be brought only with great caution against major corporations Garrett said The Justice Department has been negotiating with the banks for months over how to resolve allegations that traders colluded to rig rates in the largely unregulated 5 3 trillion a day currency market All except Barclays reached agreements in November with the UK s Financial Conduct Authority and the U S Commodity Futures Trading Commission Regulators also made public transcripts of online chat rooms that show how traders shared confidential information about client orders and otherwise conspired to manipulate rates to benefit their own transactions Authorities now may seek to limit the fallout from guilty pleas with assurances from various regulators that banking licenses will not be automatically revoked Institutions also may obtain waivers if the pleas would otherwise prohibit them from business activities such as participating in certain private offerings or trading billions of dollars in government securities Granting waivers to big banks that break the law has become a flash point at the Securities and Exchange Commission and other U S regulators Democrats have questioned whether the agencies were simply rubber stamping those requests and being too soft on repeat offenders BNP Paribas was recently granted an exemption by the U S Labor Department that allows it to continue to manage retirement plans despite pleading guilty last year to violating U S sanctions against Iran Sudan and Cuba Credit Suisse which was sentenced in November also received certain waivers and a temporary exemption from the Labor Department On the other hand fear of collateral consequences may have helped British bank HSBC avoid a criminal plea in 2012 over allowing the laundering of hundreds of billions of money for Mexican drug cartels among other problems In 2014 JPMorgan avoided a conviction for failure to tell authorities about its suspicions about Bernard Madoff enabling the Ponzi schemer to launder billions through accounts at the bank Instead HSBC and JPMorgan entered into deferred prosecution agreements which avoid the risk of a bank s automatically losing its charter or license to operate in the United States Over the past decade deferred prosecution agreements and nonprosecution agreements have become a common way for the U S Justice Department to resolve corporate misconduct
The last major financial institution to enter a comparable guilty plea in the United States is Drexel Burnham Lambert in 1989 Garrett said Bankers Trust pleaded guilty in 1999 |
C | Credit cards bolster Citigroup in UAE Bahrain and Poland | By Tom Arnold DUBAI Reuters The United Arab Emirates Bahrain and Poland have emerged as Citigroup s N C top consumer markets in the Europe Middle East and Africa EMEA region a senior executive told Reuters as the bank focuses on growth areas Citigroup one of the world s largest credit card issuers has experienced growth in credit card acquisitions in the UAE of 2 5 times over the past year the bank said In Bahrain and Poland the bank s credit card business has increased on average by about a third over the last two years it said UAE Bahrain and Poland are our high performers We have very good positions in regard to our credit card business in UAE Bahrain and Poland said Anil Wadhwani chief executive of consumer and commercial banking for Citigroup in EMEA Lending to consumers in Europe the Middle East and Africa rose by 10 percent to 6 7 billion during the first quarter the fastest growth by region globally according to the bank s latest earnings presentation Economic growth in the UAE is forecast by the IMF to reach 3 2 percent in 2015 with Bahrain s growth estimated by the fund at 2 7 percent Poland s economy has outshone most others in the European Union by growing through the global financial crisis Those markets are in contrast to Russia where the bank has been reducing its exposure in recent months as sanctions bite against the economy In Britain where the bank does not have a credit card business its debit card business was doing reasonably well said Wadhwani It is in the process of exiting its three other consumer markets in the region Egypt Czech Republic and Hungary moves that should be completed this year More than half of the bank s consumer lending globally during the first quarter was in North America with EMEA representing only 2 4 percent of the total according to the bank s latest earnings presentation Like many other banks Citigroup has been focusing on growing its wealth management business for high net worth individuals particularly as tight net interest margins pressure revenue from lending across much of the region The UAE and Bahrain offer particularly fertile ground for that with both countries featuring in the top 12 of a 2013 Boston Consulting Group index of countries with the highest density of millionaire households in the world It s growing at a very fast pace particularly those with assets over 100 000 up to 25 million said Wadhwani |
C | Citigroup C Negotiating Sale Of Latin America Units | In line with its strategy to trim international business Citigroup Inc NYSE C took a step ahead by entering into a negotiation with Brazilian lender Ita Unibanco Holding S A NYSE ITUB to offload its retail banking operations in Brazil The news was first reported by a Brazilian newspaper Valor Economico Itau Unibanco had outbid Spain based Banco Santander MC SAN S A NYSE SAN In Aug 2016 some sources with the knowledge of the matter stated that the deal value is likely to be around 350 450 million Nevertheless there is no official confirmation about the on going negotiations Further the Brazilian newspaper reported that Banco Santander is in negotiation to buy Citigroup s Argentinean retail banking unit while Canada based Bank of Nova Scotia TO BNS is likely negotiating on the company s Colombian unit The news of the Argentinean unit s sale was first declared by the Argentinean newspaper La Nacion early this month Why the Move Since the economic downturn in 2008 Citigroup has been focusing on growth in core businesses through restructuring shrinking all the loss making and non core business units and streamlining its international business Additionally recent regulatory pressure over the company s global operations and concerns of weak returns contributed to the reasons In Oct 2014 Citigroup announced its plan to exit its consumer businesses in 11 markets including Costa Rica El Salvador Guatemala Nicaragua Panama and Peru Japan Guam and its consumer finance business in Korea and the Czech Republic Egypt and Hungary Effective Jan 2015 these businesses are being reported as part of Citi Holdings In Feb 2016 Citigroup had announced plans to reduce its footprint in Brazil Argentina and Colombia with an aim to cut costs and improve profitability across its international operations Road AheadCitigroup and other banking players have been under pressure to curb costs and streamline their business owing to increased regulatory oversight and changing economic conditions However with adoption of thoughtful strategies like the ones implemented by Citigroup over the past few years the company can combat the headwinds and focus more on boosting its capital position and operational efficiencies The deal announcement of Brazilian and Argentinean retail banking unit is expected to be made later this month Citigroup s stock gained around 1 in the last trading session to close at 46 90 Citigroup Inc currently carries a Zacks Rank 3 Hold You can see Confidential from ZacksBeyond this Analyst Blog would you like to see Zacks best recommendations that are not available to the public Our Executive VP Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand |
MPC | The Zacks Analyst Blog Highlights Energy Transfer Partners Sunoco Logistics Partners Phillips 66 Enbridge Energy Partners And Marathon Petroleum | For Immediate Release
Chicago IL September 13 2016 Zacks com announces the list of stocks featured in the Analyst Blog Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets Stocks recently featured in the blog include Energy Transfer Partners L P Sunoco Logistics Partners L P Phillips 66 NYSE PSX Enbridge Energy Partners L P and Marathon Petroleum Corp NYSE MPC
Today Zacks is promoting its Buy stock recommendations
Here are highlights from Monday s Analyst Blog
Dakota Access Pipeline Work Halted Is It the Next Keystone
On Friday the Obama administration temporarily stopped work on the 1 172 mile Dakota Access Pipeline DAPL The joint announcement by three federal agencies the U S Department of Justice the Department of the Interior and the Department of the Army came shortly after a federal judge denied the Native American tribes efforts to block the pipeline and ruled in favor of construction for the 3 7 billion project to continue
Dakota Access Pipeline
Primarily owned by Dallas based pipeline operator Energy Transfer Partners L P the project has been designed to shuttle over 470 000 barrels of crude daily from North Dakota s prolific Bakken formation through South Dakota and Iowa to an existing pipeline in Patoka Illinois From there shippers could access markets and refineries across the Midwest and Gulf Coast
Announced in 2014 DAPL was originally expected to start up later this year The developer claimed that the project would contribute an estimated 156 million in sales and income taxes to state and local governments apart from providing employment to 8 000 12 000 construction workers
As of now the conduit is 75 owned by a venture called Bakken Holdings formed by Energy Transfer Partners and another pipeline operator Sunoco Logistics Partners L P Downstream operator Phillips 66 controls the remaining 25
As per a deal announced last month Enbridge Energy Partners L P and Marathon Petroleum Corp would also go on to own a minority interest in DAPL
Protests from Indigenous Activists
All along a group of indigenous people climate activists and landowners have been protesting the oil pipeline
In particular the Standing Rock Sioux a tribe living close to the proposed pipeline and environmentalists have argued that the project could pose a threat to the local water supply The DAPL route crosses under a section of the nearby Missouri River which is the major source of natural water supply for the tribe Tribal leaders are skeptical that an accident or a spill could potentially contaminate farmland and drinking water for millions They say the project would also destroy a sacred burial site
The tribes and their representatives believe that they weren t adequately consulted on these issues and filed a federal lawsuit in July against the U S Army Corps of Engineers
Current Status
Friday s twin developments a federal court rejection for an injunction and then the U S government s decision to stop work means that sponsors of the controversial DAPL would have to halt operations along a 40 mile stretch in North Dakota though activity on other sections of the pipeline could proceed
DAPL Another Keystone
While Friday s move by federal agencies does not put an end to the pipeline s progress it does pose a major question mark over its future In fact some environmental activists believe that the DAPL is going the way of doomed Keystone XL pipeline
Late last year pipeline operator TransCanada s contentious Canada to U S Keystone XL pipeline was rejected by the U S Senate amid another oil versus environment debate The 5 4 billion project would have connected the oil sands of Alberta to the U S Gulf It was slated to run up to 1 179 miles and carry up to 830 000 barrels of oil per day
What Next for DAPL
Units of Energy Transfer Partners closed down around 4 in Friday s trading session after federal government s order to halt construction on a particular stretch It s unclear as to what the Zacks Rank 3 Hold operator would do to move the project forward if building on the current route is not allowed
One option is to change the path of the pipeline but that entails huge cost overrun and difficulty Moreover such a move would require fresh applications approvals and can peg back the development by years
The most affected by the turmoil would be the shippers particularly those that already purchased crude which they expected to move via the DAPL Until a way out is found shippers will have to be contend with costly railroads or with the crowded existing pipelines This in turn will hit oil producers
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Today Zacks is promoting its Buy stock recommendations
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Past performance is no guarantee of future results Inherent in any investment is the potential for loss This material is being provided for informational purposes only and nothing herein constitutes investment legal accounting or tax advice or a recommendation to buy sell or hold a security No recommendation or advice is being given as to whether any investment is suitable for a particular investor It should not be assumed that any investments in securities companies sectors or markets identified and described were or will be profitable All information is current as of the date of herein and is subject to change without notice Any views or opinions expressed may not reflect those of the firm as a whole Zacks Investment Research does not engage in investment banking market making or asset management activities of any securities These returns are from hypothetical portfolios consisting of stocks with Zacks Rank 1 that were rebalanced monthly with zero transaction costs These are not the returns of actual portfolios of stocks The S P 500 is an unmanaged index Visit for information about the performance numbers displayed in this press release |
MPC | Peek Into Oil Refining Q3 Earnings On Oct 27 MPC INT ALJ | We are entering the heart of the Q3 earnings season with more than 170 S P 500 members coming out with results this week Picture Emerging Thus FarWe now have Q3 results from 116 S P 500 members that combined account for account for 30 of the index s total market capitalization Total earnings for these companies are up 3 3 from the same period last year on 1 8 higher revenues with 80 2 positive earnings surprises and 62 9 beating revenue estimates Data from the report dated Oct 21 2016 Energy A Drag but Not as Bad as ThoughtExpectedly the Energy sector has been a big drag on the aggregate growth picture For the few sector components on the S P 500 index that have reported Q3 results total earnings are down 54 6 on 20 6 lower revenues But the Energy sector s results are so far better than expected with 80 0 of companies beating earnings estimates though undoubtedly aided by low expectations Oil Refining Marketing Operating Environment Remain DepressedTill recently the downstream operators oil refiners and marketers benefited from crude s collapse This is because the companies use oil as an input from which they derive refined petroleum products like gasoline the prime transportation fuel in the U S Hence lower the oil price higher will be their profits However this also led to overproduction and stock build up that now threatens to bite the refiners The companies have been struggling this year with the existing stocks of refined product inventories gasoline and distillate remaining at their maximum seasonal levels in at least 20 years despite healthy demand Consequently margins have narrowed forcing some of the operators to announce production cuts postpone capital spending and retrench employees In fact as per from British oil major BP plc NYSE BP refining margin the income from converting crude into gasoline and diesel is set to drop 42 year over year to 11 60 per barrel Therefore notwithstanding oil s still relatively low levels the earnings picture for refiners look rather uncertain Stocks to Watch for Earnings on Oct 27Let s see what s in store for three such companies expected to come up with third quarter numbers on Thursday Oct 27 Let s take a look at how things are shaping up at their end One of the largest domestic refiner with a combined crude oil processing capacity of approximately 1 7 million barrels per day through its portfolio of seven refineries Marathon Petroleum Corp NYSE MPC is expected to report third quarter 2016 results before the opening bell In the preceding three month period the Findlay OH based downstream operator delivered a positive earnings surprise of 12 63 owing to improved merchandise margins and contribution from new and existing pipeline But an earnings beat is uncertain for Marathon Petroleum this time around This is because as per our proven model a stock needs to have both a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold and a positive to beat on earnings Please check our that enables you to find stocks that are expected to come out with earnings surprises For the quarter to be reported Marathon Petroleum has an Earnings ESP of 0 00 while it carries a Zacks Rank 3 Read more Simultaneously we caution against stocks with a Zacks Rank 4 or 5 Sell rated going into the earnings announcement especially when the company is seeing negative estimate revisions MARATHON PETROL Price and EPS Surprise World Fuel Services Corp NYSE INT is another oil refining company to report third quarter results tomorrow this time after the market closes Headquartered in Miami FL World Fuel Services engages in marketing sale and distribution of fuel products and associated services globally The company reported better than expected numbers in the second quarter on the back of successful cost reduction efforts Moreover World Fuel Services has an excellent track of earnings surprises having beaten estimates in each of the last four quarters at an average rate of 16 47 However our proven model shows that an earnings beat is uncertain for World Fuel Services in the to be reported quarter as it has an earnings ESP of 0 00 and Zacks Rank 3 You can see WORLD FUEL SVCS Price and EPS Surprise Finally we have independent refiner and petroleum products marketer Alon USA Energy Inc NYSE ALJ coming up with third quarter numbers tomorrow after market close The company is on a bit of a slippery surface though having missed the Zacks Consensus Estimate in each of the last three reports Our model indicates that Alon USA is unlikely to beat on earnings this time also This is because it is a Zacks Rank 3 stock and has an Earnings ESP of 0 00 ALON USA ENERGY Price and EPS Surprise Zacks Best Investment Ideas for Long Term ProfitToday you can gain access to long term trades with double and triple digit profit potential rarely available to the public Starting now you can look inside our stocks under 10 home run and value stock portfolios plus more Want a 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MPC | Lower Margins Pull Down Marathon Petroleum MPC Q3 Earnings | Ohio based independent oil refiner and marketer Marathon Petroleum Corp NYSE MPC reported weaker than expected third quarter earnings due to lower margins The company reported earnings per share excluding charges associated with the Sandpiper Pipeline project of 58 cents lower than the Zacks Consensus Estimate of 78 cents
The bottom line also slumped from the year ago period profit of 1 76
Marathon Petroleum posted revenues of 16 460 million missing the Zacks Consensus Estimate of 16 876 6 million Moreover revenues fell 12 on a year over year basis
Segmental Performance
Refining Marketing The unit which is the main contributor to Marathon Petroleum earnings earned just 306 million compared with 1 434 million in the year ago quarter The deterioration reflects lower gross margin on the back of narrower crack spreads
Total refined product sales volumes were 2 316 thousand barrels per day mbpd lower than 2 359 mbpd in the year ago quarter However throughput improved from 1 912 mbpd in the year ago quarter to 1 926 mbpd
Speedway Income from the Speedway retail stations totaled 209 million 14 lower the 243 million earned in the year ago period Declining margins from light products in addition to higher depreciation hampered the results These were partly offset by higher
merchandise margin and light product sales volume
Midstream This unit includes Marathon Petroleum s interest in MPLX L P NYSE MPLX a publicly traded master limited partnership that owns operates develops and acquires pipelines and other midstream assets
Segment profitability was 258 million up significantly from 93 million in the third quarter of 2015 Earnings were buoyed by operating results from the acquisition of natural gas processor and distributor MarkWest Energy Partners L P late last year Contributions from new and existing pipelines and marine equity investments provided further support MARATHON PETROL Price Consensus and EPS Surprise
Total Expenses
Marathon Petroleum reported expenses of 16 025 million in third quarter 2016 7 lower than 17 209 million in the year ago quarter
Capital Expenditure Balance Sheet Share Repurchase
In the reported quarter Marathon Petroleum spent 761 million on capital programs 35 on Refining Marketing segment and 52 on Midstream As of Sep 30 2016 the company had cash and cash equivalents of 709 million and total debt of 10 566 million with a debt to capitalization ratio of 34 Marathon Petroleum returned 241 million in the third quarter through dividends and share repurchase programs
Strategic Actions
Concurrent with the earnings release Marathon Petroleum also announced its plan to dropdown certain assets to its midstream partnership MPLX These properties are expected to result in annual savings of 350 million by the end of next year
Zacks Rank Stock Picks
Marathon Petroleum holds a Zacks Rank 3 Hold
Meanwhile one can look at better ranked energy players like McDermott International Inc NYSE MDR and Precision Drilling Corp NYSE PDS Both carry Zacks Rank 1 Strong Buy You can see
Incorporated in 1959 Houston TX based McDermott International is an engineering and construction company solely focused on the offshore oil and gas business The company s expected EPS growth rate for 3 to 5 years is currently 15 50 in contrast to the industry growth rate of 1 80
Headquartered in Calgary Alberta Precision Drilling supplies its customers in the oil and gas industry with drilling completion and production services It surpassed estimates in each of the last four quarters at an average rate of 41 51
Confidential from Zacks
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MPC | Marathon Oil MRO Posts Narrower than Expected Q3 Loss | Houston TX basedleading upstream energy firm Marathon Oil Corp NYSE MRO posted third quarter adjusted loss of 11 cents per share narrower than the Zacks Consensus Estimate of a loss of 19 cents Also the bottom line narrowed from the year ago adjusted loss of 20 cents Lower total expenses led to the improvement Contribution from Equatorial Guinea and Oklahoma Resource Basins also supported the results However the positives were partially offset by lower commodity prices Quarterly revenues of 1 229 million beat the Zacks Consensus Estimate of 1 091 million but decreased from the prior year quarter level of 1 323 million Segmental PerformanceNorth America E P Marathon Oil s North American upstream segment incurred a loss of 59 million narrower than the loss of 61 million a year ago Contribution from Equatorial Oklahoma Resource Basins supported the results Marathon Oil reported production available for sale of 216 000 oil equivalent barrels per day BOE d compared with 263 000 BOE d in the third quarter of 2015 The deterioration was mainly due to reduced contribution from Bakken and Eagle Ford resources The company realized liquids crude oil condensate and natural gas liquids price of 34 00 per barrel as against the year earlier quarter level of 35 75 per barrel Natural gas realizations decreased 2 9 year over year to 2 67 per thousand cubic feet Mcf International E P The segment s income soared 103 4 year over year to 59 million Substantially higher sales drove the profits Marathon Oil which spun off its refining sales business into a separate independent and publicly traded company Marathon Petroleum Corp NYSE MPC in 2011 reported production available for sale excluding Libya of 128 000 BOE d compared with the 114 000 BOE d in the third quarter of 2015 Contribution from Equatorial Guinea led to the improvement The company realized liquids price of 30 40 per barrel down 15 3 from the year earlier quarter level of 35 88 per barrel Moreover natural gas realizations plunged 22 year over year to 46 cents per Mcf Oil Sands Mining Marathon s Oil Sands Mining segment recorded income of 15 million which compared favorably with a loss of 11 million in the year ago quarter Record mining production helped the segment turn around in the quarter Synthetic crude oil sales volumes in the oil sands business was 65 000 barrels per day flat with the prior year quarter level Costs ExpensesMARATHON OIL CP Price Consensus and EPS Surprise The company s exploration expenses for the quarter of 83 million were significantly lower than 585 million in the year earlier quarter However Marathon Oil s total quarterly cost and expenses fell 40 2 to 1 432 million GuidanceMarathon Oil expects fourth quarter 2016 North America Exploration and Production E P output available for sale in the range of 205 000 215 000 BOE d International E P excluding Libya output in the range of 120 000 130 000 BOE d and Oil Sands Mining output of 40 000 45 000 BOE d Zacks Rank Stocks to ConsiderMarathon Oil currently carries a Zacks Rank 3 Hold Some better ranked players from the broader energy sector include North Atlantic Drilling Limited NYSE NADL and Ultra Petroleum Corp OTC UPLMQ Both these stocks sport a Zacks Rank 1 Strong Buy You can see In the last four quarters North Atlantic Drilling posted an average positive earnings surprise of 148 4 Ultra Petroleum on the other hand posted an average positive earnings surprise of 65 91 in the last four quarters Confidential from ZacksBeyond this Analyst Blog would you like to see Zacks best recommendations that are not available to the public Our Executive VP Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand |
MS | European shares close higher oils gain | LONDON Oct 21 Reuters European shares closed higher on
Wednesday with oils gaining as crude rose to more than 80 a
barrel and as U S companies continued to beat forecasts for
third quarter earnings
The FTSEurofirst 300 index of top European shares rose 0 5
percent to a provisional close of 1 026 09 points recouping
almost all of the losses from the previous session and taking
it to near its highest close since Oct 3 2008
The index is up 59 percent from its lifetime low of March 9
as investors have become more confident on the prospects of
economic recovery
The general theme continues to be that the significant
improvement we have seen in economic indicators also shows up in
Q3 earnings said Tammo Greetfeld equity strategist at
UniCredit Group
All the fundamental factors in the equity market are still
intact and the upward strength will continue though a breather
is overdue
Crude oil prices soared above 80 a barrel to trade at
one year highs after U S government data showed that
inventories rose less than expected The oil price was also
supported by the dollar weakening to trade at more than 1 50
against the euro
ENI BP Royal Dutch Shell and Repsol rose between 0 8 and
1 2 percent
Morgan Stanley reported better than expected quarterly
profit on strong fixed income sales and trading revenue and
improved investment banking underwriting results sending its
shares up 6 9 percent Reporting by Brian Gorman |
MS | GLOBAL MARKETS Stocks rise on firm earnings oil | Stocks boosted by strong U S corporate earnings
Oil prices above 81 on gasoline supply draw
Dollar weakens on interest rate anxiety
Updates with U S markets changes byline dateline previous
LONDON
By Manuela Badawy
NEW YORK Oct 21 Reuters Unexpectedly strong U S
corporate earnings and higher oil prices boosted stocks
worldwide on Wednesday while the euro broke above 1 50 for the
first time in 14 months on expectations U S interest rates
will stay low
Wall Street led the rise in stocks as results from banks
including Morgan Stanley and Wells Fargo topped expectations
while a rise in oil drove energy shares higher
Morgan Stanley Capital International s world stock index
was up 0 56 percent while the Dow Jones
industrial average gained 0 4 percent to 10 088
We ve rallied out of the idea that the banks are not
going out of business and now it becomes more how are you
running your business said John Canally investment
strategist and economist for LPL Financial in Boston
Morgan Stanley reported better than expected
quarterly profit on strong fixed income sales and trading
revenue and improved investment banking underwriting results
sending its shares up 6 9 percent For more see
ID nN21432907
The FTSEurofirst 300 index of top European shares
rose 0 45 percent recouping almost all Tuesday s losses and
taking it close to its highest close since Oct 3 2008
Oil prices rose more than 3 percent above 81 a
barrel the highest in a year after U S government data showed
gasoline stockpiles fell a lot more than expected last week
This supported energy stocks and emerging economies which are
set to recover at a faster speed than some developed markets
China s voracious appetite for commodities and continued
growth has helped countries such as Brazil where heavyweight
companies such as energy company Petrobras and miner
Vale are tied to the trade in raw materials
MSCI s Latin American stock index rose more
than 2 5 percent fueled by investors betting potential growth
in Brazilian companies outweighed the disadvantage of a new
foreign investment tax
INTEREST RATE ANXIETY
U S Treasury debt prices fell with the benchmark 10 year
U S Treasury note down 17 32 to yield 3 41 percent
as the upbeat equities market undermined the safe haven appeal
of government debt
Treasuries also tracked European bond markets lower after
less than dovish comments from the Bank of England triggered a
fresh anxiety over eventual interest rate hikes ID nLL64535
The dollar fell 0 75 percent against a basket of other
major currencies heading for its 10th loss in 15
sessions this month The index has been in the red for seven of
the past eight months
Sentiment towards the currency continues to be hurt by the
prospect of benchmark U S interest rates staying at
exceptionally low levels Low rates make the dollar less
attractive to investors than higher yielding currencies more
closely correlated with economic recovery
The British pound gained 1 4 percent against the U S
dollar to 1 6614 and heavy dollar selling helped push
the euro to 1 5003 before it eased to 1 4982 up 0 3
percent
In China the State Council said economic recovery had been
consolidated a shift in rhetoric some analysts say may be a
first hint that officials are at least thinking about how to
normalize loose monetary and fiscal polices ID nPEK213103
Additional reporting by Leah Schnurr Chris Reese and Steve
C Johnson in New York Jeremy Gaunt in London and Luciana
Lopez in Sao Paulo Editing by James Dalgleish |
JPM | Wall Street should avoid cutting foreign bank ties U S regulator | By Patrick Rucker and Brett Wolf WASHINGTON ST LOUIS Reuters U S banks should not cut ties with foreign clients over money laundering worries unless officials have concrete cause for concern a leading U S regulator is telling staff and lenders The message has come through phone calls speeches and an uncommon notice from the Office of the Comptroller of the Currency the top regulator for national banks banking and regulatory sources said A four page memorandum sent to bank examiners last month said foreign lenders and their customers are hurt when Wall Street turns its back Customers that cannot make alternative banking arrangements elsewhere may effectively be cut off from the regulated financial system altogether according to the supervision tips memo obtained by Reuters The OCC typically issues only a few such memos each year to help examiners navigate complex banking issues Policymakers have become increasingly concerned that banks are ejecting broad swaths of customers from the financial system out of fear of being penalized over money laundering violations For example customers with ties to Yemen or Syria have a harder time maintaining accounts and banks have ended such relationships according to a senior compliance officer at a major U S bank To steer clear of violations JPMorgan Chase Co NYSE JPM stopped doing business with 18 000 customers in 2015 and pulled back from 500 foreign partner banks CEO Jamie Dimon told investors in a letter last year Regulators want to prevent terrorists from swapping cash through U S banks or their foreign partners Banks must file a suspicious activity report when they encounter a transaction that could be criminal like a series of small dollar transfers But the rules can hamper ordinary money transfers or charitable giving U S firms have warned that they cannot vouch for the customers of their foreign partner banks That is one reason fewer banks will handle transfers of funds Somalis living in the United States want to send to relatives at home More Somalis live in Minnesota than anywhere else in the United States and Rep Keith Ellison of Minneapolis is among leading Democrats who have called for easing banking rules The know your customer standard expects banks to understand their clients business But there are limits There is no general requirement to know your customers customer Thomas Curry the OCC chief said in September The OCC conveyed that message to examiners in a January conference call as well as the tips memo On the call we were told we would no longer be asking for customer lists for foreign correspondent banking relationships for the banks we oversee said one official who was on the call but not authorized to speak to the media Foreign firms that partner with U S lenders are known as correspondent banks A spokesman for the OCC declined to comment on the examiner phone call or the supervision tips sheet Banks waste billions of dollars each year satisfying money laundering rules a leading Wall Street trade group said last month asking for a complete overhaul of the know your customer rules The number of special activity reports rose to almost a million last year from 669 000 three years earlier according to the U S Treasury s Financial Crimes Enforcement Network which collects such data
This version of the story corrects to add dropped word suspicious in paragraph 9 |
JPM | Kabbage looks to raise money for acquisitions sources | By David French and Anna Irrera Reuters Small U S business online lender Kabbage Inc is in talks to raise a new round of equity funding that could be used for potential acquisitions at a time when many of its peers face funding challenges people familiar with the matter said The move comes as online lenders are increasingly encroaching on the turf of traditional banks However growth in the industry has slowed as some online lenders have struggled to offload loans many institutional investors view as risky Privately held Kabbage is holding talks with investment firms about raising a few hundred million dollars in the new round the sources said this week Kabbage based in Atlanta could not immediately be reached for comment One of the acquisition targets under consideration by Kabbage is rival On Deck Capital Inc which has market capitalization of 321 million according to one of the sources The sources cautioned that no decisions have been taken and asked not to be identified because the deliberations are confidential New York based On Deck Capital declined to comment Kabbage runs a platform that provides loans to small businesses in minutes Its existing investors include Reverence Capital Partners SoftBank Capital Thomvest Ventures Mohr Davidow Ventures BlueRun Ventures the UPS Strategic Enterprise Fund ING Santander InnoVentures Scotiabank and TCW Craton Banco Santander MC SAN SA partnered with Kabbage last year to provide loans to small businesses in Britain while JPMorgan Chase Co NYSE JPM works with On Deck On Deck shares have fallen more than 80 percent since it went public in December 2014 On Deck posted its fifth consecutive quarterly loss last month and said it had to set aside more money for future losses after determining its calculations in its internal models were off As a private company Kabbage does not report earnings publicly Earlier this month it said it priced the largest asset backed securitization of small business loans in the online lending industry packaging and selling 525 million worth of loans to investors Kabbage said this would allow its volume of lending to exceed 2 7 billion On Deck said earlier on Wednesday that it had amended its asset backed revolving credit facility with Deutsche Bank DE DBKGn to extend its maturity date to March 2019 and to increase its borrowing capacity by 52 million to a total of up to 214 million |
C | Fed may allow banks to use muni bonds to meet liquidity rules WSJ | Reuters The U S Federal Reserve may allow big banks to use some municipal bonds to meet new liquidity rules that ensure they have enough cash during a credit crunch the Wall Street Journal reported citing people familiar with the matter The Fed had excluded debt issued by cities and states when it approved liquidity rules for large banks in September part of a global effort to make banks such as JPMorgan Chase NYSE JPM and Citigroup NYSE C more resilient in a financial crisis Fed officials had at that time said they did not think the rule would have significant implications for the 3 7 trillion municipal bond market The Fed had also said it planned to propose allowing certain high liquid municipal securities to count as a sellable asset at a later date after further review U S cities and states have been urging the Fed the Federal Deposit Insurance Corporation FDIC and the Office of the Comptroller of the Currency OCC to classify muni bonds as highly liquid if they are investment grade and have demonstrated reliable liquidity during times of economic stress However the plan under discussion falls short of including all investment grade municipal bonds the Journal said The exact criteria for the kind of municipal bonds that would count under the rule has not been set but a key focus will be the ability of a bank to sell the bonds in a fairly short time frame the newspaper said The other regulators the OCC and the FDIC do not plan to follow the Fed the newspaper said Reuters could not immediately reach the regulators for comment outside regular U S business hours
The U S municipal bond market grew to 3 652 trillion during the fourth quarter with banks picking up 41 1 billion up from the prior quarter s 34 5 billion according to data released by the Fed in March |
C | Citigroup must face South Korean bank s lawsuit over failed CDO | By Jonathan Stempel NEW YORK Reuters A U S appeals court on Wednesday revived a lawsuit in which South Korea s Woori Bank accused Citigroup Inc NYSE C of defrauding it into buying risky mortgage securities that Citigroup was betting against prior to the financial crisis The 2nd U S Circuit Court of Appeals in New York said a lower court judge erred in finding that Woori waited too long to sue over its 25 million investment in 2007 in Armitage ABS CDO Ltd a collateralized debt obligation that Citigroup sold Citigroup declined to comment Woori was the South Korean financial sector s biggest victim of the U S subprime mortgage crisis and wrote off much of a 1 5 billion stake in CDOs and credit default swaps It later sued a few banks in the United States to recoup some losses According to court papers Woori invested in Armitage in March 2007 only to see the CDO default that December Woori said it shed its worthless stake in Armitage in August 2008 But the Seoul based bank did not sue until May 15 2012 which Citigroup argued was too late under a three year statute of limitations prescribed under South Korean law Woori countered that it had lacked practical and specific awareness of its claims which under South Korean law would start the clock until 2011 In that year the U S Financial Crisis Inquiry Commission issued its report on the 2008 crisis and Citigroup settled U S Securities and Exchange Commission charges including that it had shorted a CDO that was a component of the Armitage CDO Last August U S District Judge Katherine Forrest in New York said 69 publicly available news articles press releases lawsuits and other documents that predated May 15 2009 should have alerted Woori to its potential claims But the 2nd Circuit said that apart from the lawsuits there was nothing specific about Citigroup to let Woori properly plead fraud It said that based on these and other documents including pitch books that Citigroup had provided about Armitage Woori has plausibly alleged claims that are not time barred The 2nd Circuit returned the case to Forrest for further proceedings
The case is Woori Bank v Citigroup Global Markets Inc 2nd U S Circuit Court of Appeals No 14 3329 |
C | HSBC JPMorgan C Agricole to fight EU charges at June hearing sources | By Foo Yun Chee BRUSSELS Reuters HSBC Holdings L HSBA JPMorgan N JPM and Credit Agricole PA CAGR will seek to fight European Union charges of rigging financial benchmarks at a closed door hearing in June two people familiar with the matter said on Friday The European Commission accused the three banks in May last year of manipulating the Euribor interbank offered rate after they refused to settle a case five months earlier unlike six other banks In December 2013 a record 1 7 billion euro fine was imposed on six banks including Deutsche Bank DE DBKGn Royal Bank of Scotland L RBS and Citigroup N C for alleged benchmark rigging The banks settled these charges and received a 10 percent cut in the fines The hearing will be from 15 to 17 June the people said Commission spokesman Ricardo Cardoso declined to comment HSBC and JPMorgan declined to comment In these hearings companies typically take the opportunity to press their case in front of an audience of experts from the EU executive and national regulators JPMorgan said last year the EU charges were without merit while HSBC said it would defend itself vigorously Credit Agricole last month got a boost when the European Ombudsman backed its claim of Commission bias during the investigation The Commission usually takes several months to come to a decision after such a hearing HSBC Europe s biggest bank U S bank JP Morgan and French peer Credit Agricole could face fines up to 10 percent of their global revenues if found guilty
Regulators have slapped total fines of around 8 5 billion on some of the world s largest banks for market rigging and collusion in the last seven years |
C | Citigroup leaders win shareholder support as stock lags | NEW YORK Reuters Citigroup Inc N C shareholders re elected directors and overwhelmingly sided with the board on proposals at their annual meeting on Tuesday even as their stock traded for less than the company thinks it is worth A resolution endorsing the company s executive pay for this past year won 84 percent support according to a preliminary tally the company said Shareholders turned down proposals that were opposed by the company and that had called for more disclosure of spending for lobbying government officials and more reporting on stock vesting for employees who leave for government posts CEO Mike Corbat in response to a question from stock analyst Mike Mayo said the company wanted to continue repurchasing its stock while it was trading below tangible book value but would not be hasty in selling additional assets and drawing down capital Corbat said the company had the right sense of urgency about the buybacks while meeting capital requirements from regulators In March the Federal Reserve said it would allow the company to buy back 7 8 billion of stock after it stress tested the company s capital plan The decision was a boost to Corbat after the regulator last year rejected the company s buyback plan Citigroup has pegged its tangible book value per share a measure of its net worth at 57 66 as of the end of March The stock traded at 52 72 early Tuesday afternoon
Corbat said the shares would rise as the company met his goal of producing better profits more consistently He said his performance on the goal so far is mixed |
MPC | Marathon Oil MRO Posts Narrower than Expected Q2 Loss | Houston TX based Marathon Oil Corp NYSE MRO a leading upstream energy firm posted second quarter adjusted loss of 23 cents per share narrower than the Zacks Consensus Estimate of a loss of 24 cents The bottom line remained unchanged year over year Lower total expenses led to the improvement Contribution from Equatorial Guinea along with the restart of output from Brae Alpha in the U K also supported the results The positives were offset partially by lower commodity prices and temporary production shutdown during the Canadian wild fire Quarterly revenues of 1 302 million beat the Zacks Consensus Estimate of 1 187 million but fell from the prior year quarter level of 1 531 million Segmental PerformanceNorth America E P Marathon Oil s North American upstream segment reported a loss of 70 million wider than the loss of 45 million a year ago Lower commodity prices hurt the results Marathon Oil reported production available for sale of 224 000 oil equivalent barrels per day BOE d down from 274 000 BOE d in the second quarter of 2015 The deterioration was mainly due to reduced contribution from Eagle Ford resources The company realized liquids crude oil condensate and natural gas liquids price of 35 07 per barrel significantly lower than the year earlier quarter level of 45 96 per barrel Natural gas realizations decreased 29 year over year to 1 96 per thousand cubic feet Mcf International E P The segment s income improved 34 2 year over year to 55 million Substantially higher sales pulled up the profits Marathon Oil which spun off its refining sales business into a separate independent and publicly traded company Marathon Petroleum Corp NYSE MPC in 2011 reported production available for sale excluding Libya of 120 000 BOE d up from the 108 000 BOE d in the second quarter of 2015 Contribution from Equatorial Guinea along with the restart of output from Brae Alpha in the U K led to the improvement The company realized liquids price of 32 11 per barrel reflecting a 28 drop from the year earlier quarter level of 44 70 per barrel Moreover natural gas realizations fell 32 year over year to 53 cents per Mcf Oil Sands Mining Marathon s Oil Sands Mining segment recorded a loss of 38 million compared with a loss of 77 million in the year ago quarter Record mining production in June led to the outperformance This was negated partially by temporary operation suspension owing to the wildfire Synthetic crude oil sales volumes in the oil sands business was 49 000 barrels per day higher than the prior year quarter level of 29 000 barrels per day Costs ExpensesThe company s exploration expenses for the quarter came in at 189 million significantly higher than 111 million in the year earlier quarter However Marathon Oil s total quarterly cost and expenses fell 22 to 1 454 million GuidanceMarathon Oil expects third quarter 2016 North America E P output available for sale in the range of 200 000 210 000 BOE d International E P excluding Libya output in the range of 125 000 135 000 BOE d and Oil Sands Mining output of 45 000 50 000 BOE d MARATHON OIL CP Price Consensus and EPS Surprise Zacks Rank Stocks to ConsiderMarathon Oil currently carries a Zacks Rank 2 Buy Some other energy players worth considering include North Atlantic Drilling Limited NYSE NADL Independence Contract Drilling Inc NYSE ICD and Antero Resources Corporation NYSE AR Each of these stocks sports a Zacks Rank 1 Strong Buy |
MPC | Energy Transfer ETP Misses On Q2 Earnings And Revenues | Natural gas pipeline operator Energy Transfer Partners LP NYSE ETP reported second quarter 2016 earnings of 10 cents per limited partner unit which missed the Zacks Consensus Estimate of 19 cents The bottom line also decreased from the year ago quarter profit of 67 cents Quarterly revenues plunged more than 54 year over year to 5 289 million and missed the Zacks Consensus Estimate of 5 520 million Lower contribution from midstream businesses along with the deconsolidation of retail marketing primarily led to the underperformance Quarterly Cash DistributionLast month Energy Transfer Partners announced second quarter distribution of 1 055 per unit 4 22 per unit annualized representing a year over year hike of 1 9 EBITDA Operating IncomeAdjusted earnings before interest taxes depreciation and amortization EBITDA for the quarter were 1 370 million down from 1 488 million a year ago The partnership reported operating income of 715 million lower than 888 million in second quarter 2015 Total ExpenseEnergy Transfer Partners reported total expenses of 4 574 million for second quarter 2016 reflecting a year over year decline of 57 Distributable Cash FlowEnergy Transfer Partners distributable cash flow came in at 774 million significantly lower than the prior year quarter level of 957 million Capital ExpenditureMaintenance capital expenditure totaled 78 million compared with 100 million in the second quarter of 2015 Balance SheetAs of Jun 30 2016 Energy Transfer Partners had long term debt less current maturities of 27 950 million Debt to capitalization ratio was about 51 1
ENERGY TRAN PTR Price Consensus and EPS Surprise Other NewsOn Aug 2 Energy Transfer Partners and Sunoco Logistics Partners LP NYSE SXL signed an accord to divest 36 75 of the Bakken Pipeline project to MarEn Bakken Company LLC for a total consideration of 2 billion cash It is to be noted that MarEn Bakken is jointly owned by Enbridge Energy Partners LP NYSE EEP and Marathon Petroleum Corporation NYSE MPC Zacks Rank Other StocksEnergy Transfer Partners currently carries a Zacks Rank 5 Strong Sell |
MPC | Sunoco Logistics SXL Swings To Q2 Loss In A Tough Market | Energy pipelines and terminals operator Sunoco Logistics Partners L P NYSE SXL reported disappointing second quarter 2016 earnings Weak results from the partnership s Crude Oil and Natural gas liquids operating segments led to the underperformance Sunoco Logistics which together with Energy Transfer Partners L P NYSE ETP recently agreed to a 2 billion cash sale of a minority stake in the Bakken Pipeline Project to an entity jointly owned by Enbridge Energy Partners L P NYSE EEP and Marathon Petroleum Corp NYSE MPC reported adjusted loss per unit of 10 cents contrary to the Zacks Consensus Estimate for a profit of 19 cents and the year ago quarter earnings of 43 cents In more bad news Sunoco Logistics quarterly distributable cash flow DCF fell 34 year over year to 173 million Quarterly revenues of 2 268 million were down 29 from second quarter 2015 but managed to edge past the Zacks Consensus Estimate of 2 241 million amid stronger than expected contribution from the Refined Products unit Quarterly DistributionLast month Sunoco Logistics raised its quarterly distribution by 2 sequentially and 14 year over year to 50 cents per unit or 2 00 per unit annualized Segmental PerformanceCrude Oil Adjusted earnings before interest taxes depreciation and amortization EBITDA for the segment were down 30 to 114 million from the year earlier level of 163 million Apart from lower margins associated with the partnership s crude oil acquisition and marketing activities the segment was pulled down by lower fees emanating from reduced volumes and a sharp dip in crude oil differentials These factors were partly offset by healthier contributions from joint venture interests positive results from crude oil pipelines spurred by the July 2015 start up of the Permian Express 2 project and bigger contribution from Sunoco Logistics crude oil terminals related to its Nederland facility Natural Gas Liquids Adjusted EBITDA for this segment came in at 78 million a 40 decline from the second quarter 2015 level Decreased volumes and margins related to NGL acquisition and marketing activities contributed to the deterioration To some extent these factors were offset by higher volumes and fee based earnings from the Mariner natural gas liquids NGL projects Refined Products This segment s EBITDA was 53 million a 56 increase from the year ago period earnings of 34 million Strong growth in Sunoco Logistics pipeline and marketing terminals businesses primarily led to the upside In particular Allegheny Access pipeline saw higher volumes during 2016 second quarter while the partnership also saw good contributions at its Eagle Point Marcus Hook and other product terminal facilities SUNOCO LOGISTIC Price Consensus and EPS Surprise Costs ExpensesCosts and expenses totaled 2 029 million against 2 895 million in the prior year quarter Capital Expenditure Balance SheetFor the three months ended Jun 30 2016 Sunoco Logistics maintenance capital expenditure and expansion capital expenditure were 14 million and 391 million respectively As of the end of the second quarter Sunoco Logistics had 36 million in cash and cash equivalents The Zacks Rank 3 Hold partnership had 6 112 million in total debt consisting of 1 263 million of borrowing under the partnership s revolving credit facility representing a debt to capitalization ratio of approximately 43 0 |
MPC | New Strong Sell Stocks For August 8th | Here are 5 stocks added to the Zacks Rank 5 Strong Sell List today
Euronav NV NYSE EURN owns operates and manages a fleet of vessels for the transportation and storage of crude oil and petroleum products The Zacks Consensus Estimate for its current year earnings has been revised 11 3 downward over the last 30 days
The Buckle Inc NYSE BKE markets a wide selection of mostly brand name casual apparel including denims other casual bottoms tops sportswear outerwear accessories and footwear The Zacks Consensus Estimate for its current year earnings has declined 3 2 over the last 30 days
Marathon Petroleum Corporation NYSE MPC is engaged in refining transporting and marketing of petroleum products It has seen the Zacks Consensus Estimate for its current year earnings being revised 28 5 downward over the last 30 days
NV5 Global Inc NASDAQ NVEE offers professional technical consulting and certification solutions for public and private sector The Zacks Consensus Estimate revision for its current year earnings was a negative of 1 2 over the last 30 days
FirstService Corporation NASDAQ FSV offers property services to commercial institutional and residential customers primarily in North America and internationally The Zacks Consensus Estimate for its current year earnings has moved 4 5 lower over the last 30 days
View the entire |
MPC | Enbridge Energy EEP Puts Oil Pipeline Project On Hold | Enbridge Energy Partners L P NYSE EEP has announced plans to put the construction of the Sandpiper crude oil pipeline on hold until market conditions are conducive Enbridge has a partnership with Marathon Petroleum Corporation NYSE MPC for the pipeline Details of the AnnouncementEnbridge announced that it intends to withdraw pending regulatory applications with the Minnesota Public Utilities Commission for the 2 6 billion Sandpiper pipeline The pipeline was supposed to transport crude oil from North Dakota to Wisconsin According to the company s management oil production in North Dakota will not reach levels high enough to support the pipeline s capacity within the next five years In fact North Dakota crude production has plummeted to its lowest in the last two years due to the dramatic decline in crude prices following the global supply glut This was the primary reason behind the company s decision to defer construction of the project Sandpiper has been caught up in regulatory troubles due to environmental activists concerns that the pipeline could threaten ecologically sensitive areas leading to the delay in its approval process ENBRIDGE EGY PT Price The Bakken ProjectIn August Enbridge announced the creation of a joint venture MarEn Bakken Company LLC with Marathon Petroleum to acquire a 37 stake in the Bakken Pipeline System from Energy Transfer Partners L P NYSE ETP and Sunoco Logistics Partners L P NYSE SXL The purchase agreement is worth 2 billion Enbridge is entitled to a 75 stake in the joint venture The acquisition price of its effective 27 8 interest in the pipeline is 1 5 billion The Bakken Pipeline project consisting of the Dakota Access Pipeline and the Energy Transfer Crude Oil Pipeline would transport crude oil from North Dakota to Texas via the Midwest Enbridge believes that this project will accelerate cash flow from its Bakken Assets Zacks RankEnbridge Energy carries a Zacks Rank 3 Hold Confidential from ZacksBeyond this Analyst Blog would you like to see Zacks best recommendations that are not available to the public Our Executive VP Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand |
MPC | Dakota Access Pipeline Work Halted Is It The Next Keystone | On Friday the Obama administration temporarily stopped work on the 1 172 mile Dakota Access Pipeline DAPL The joint announcement by three federal agencies the U S Department of Justice the Department of the Interior and the Department of the Army came shortly after a federal judge denied the Native American tribes efforts to block the pipeline and ruled in favor of construction for the 3 7 billion project to continue Dakota Access PipelinePrimarily owned by Dallas based pipeline operator Energy Transfer Partners L P NYSE ETP the project has been designed to shuttle over 470 000 barrels of crude daily from North Dakota s prolific Bakken formation through South Dakota and Iowa to an existing pipeline in Patoka Illinois From there shippers could access markets and refineries across the Midwest and Gulf Coast Announced in 2014 DAPL was originally expected to start up later this year The developer claimed that the project would contribute an estimated 156 million in sales and income taxes to state and local governments apart from providing employment to 8 000 12 000 construction workers As of now the conduit is 75 owned by a venture called Bakken Holdings formed by Energy Transfer Partners and another pipeline operator Sunoco Logistics Partners L P NYSE SXL Downstream operator Phillips 66 NYSE PSX controls the remaining 25 As per a deal announced last month Enbridge Energy Partners L P NYSE EEP and Marathon Petroleum Corp NYSE MPC would also go on to own a minority interest in DAPL Sector Price Index
Protests from Indigenous ActivistsAll along a group of indigenous people climate activists and landowners have been protesting the oil pipeline In particular the Standing Rock Sioux a tribe living close to the proposed pipeline and environmentalists have argued that the project could pose a threat to the local water supply The DAPL route crosses under a section of the nearby Missouri River which is the major source of natural water supply for the tribe Tribal leaders are skeptical that an accident or a spill could potentially contaminate farmland and drinking water for millions They say the project would also destroy a sacred burial site The tribes and their representatives believe that they weren t adequately consulted on these issues and filed a federal lawsuit in July against the U S Army Corps of Engineers Current StatusFriday s twin developments a federal court rejection for an injunction and then the U S government s decision to stop work means that sponsors of the controversial DAPL would have to halt operations along a 40 mile stretch in North Dakota though activity on other sections of the pipeline could proceed DAPL Another Keystone While Friday s move by federal agencies does not put an end to the pipeline s progress it does pose a major question mark over its future In fact some environmental activists believe that the DAPL is going the way of doomed Keystone XL pipeline Late last year pipeline operator TransCanada Corp s TO TRP contentious Canada to U S Keystone XL pipeline was rejected by the U S Senate amid another oil versus environment debate The 5 4 billion project would have connected the oil sands of Alberta to the U S Gulf It was slated to run up to 1 179 miles and carry up to 830 000 barrels of oil per day What Next for DAPL Units of Energy Transfer Partners closed down around 4 in Friday s trading session after federal government s order to halt construction on a particular stretch It s unclear as to what the Zacks Rank 3 Hold operator would do to move the project forward if building on the current route is not allowed One option is to change the path of the pipeline but that entails huge cost overrun and difficulty Moreover such a move would require fresh applications approvals and can peg back the development by years The most affected by the turmoil would be the shippers particularly those that already purchased crude which they expected to move via the DAPL Until a way out is found shippers will have to be contend with costly railroads or with the crowded existing pipelines This in turn will hit oil producers In ConclusionThis issue isn t likely to get resolved any time soon with a protracted legal battle in the offing In the meantime you could focus on other companies instead of Energy Transfer Partners that have favorable Zacks ranks and are therefore worth a look An energy stock worth investing in right now is Murphy USA Inc NYSE MUSA It has a Zacks Rank 1 Strong Buy You can see Now See Our Private Investment IdeasWhile the above ideas are being shared with the public other trades are hidden from everyone but selected members Would you like to peek behind the curtain and view them Starting today for the next month you can follow all Zacks private buys and sells in real time from value to momentum from stocks under 10 to ETF and option moves 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 |
MS | UPDATE 2 Peugeot sales decline slows but Q3 disappoints | Q3 group sales down 7 7 pct at 11 782 bln euros
Decline smaller than in previous quarters
Q3 total assembled vehicle unit sales up 4 7 pct
Auto revenue down 4 1 pct at 9 256 bln euros
Shares fall 7 2 pct in early trade
Adds share price analyst comment
By Helen Massy Beresford
PARIS Oct 21 Reuters French carmaker PSA Peugeot
Citroen said third quarter revenues slowed less sharply than in
previous quarters as it boosted market share in Europe where
governments launched car buying incentives
Peugeot Citroen shares fell over 7 percent in early trading
as the revenues fell short of analyst expectations buoyed by
forecast beating earnings from German rival Daimler on Monday
European car makers have cut production and reduced costs
after auto sales dropped by their biggest fall for 15 years in
2008 and government incentive schemes have helped attracting
clients to showrooms again and order new cars
This has especialy boosted smaller models such as a large
part of the Peugeot and Citroen line up but not the bigger cars
such as the C6 or Peugeot 607
What we have today is a revenue disappointment and no
obvious sign of the large production re ramp that many have
anticipated Morgan Stanley analysts wrote
We would expect a dose of profit taking today
Third quarter revenue at the group fell 7 7 percent
compared with a 24 9 percent year on year fall in the first
quarter and an 18 9 percent drop in the second Peugeot said in
a statement on Wednesday
The carmaker said it felt the benefit of scrapping schemes
whereby drivers get a discount on new models when they scrap
their old vehicle This applied in France Italy and the UK but
especially in Germany Europe s biggest car market
European markets were mixed in the third quarter however
with a negative impact from central and eastern European
markets the company said
The overall European car market decreased just 0 3 percent
in the third quarter compared with a 14 4 percent decline in
the first six months of the year Peugeot said
Chief Executive Philippe Varin said last month he expected
the European market to be down around 10 percent this year
Peugeot increased overall market share in Europe to 13 4
percent compared with 12 9 percent a year earlier
The market for light commercial vehicles remained very
weak in the quarter Peugeot said adding that it increased
market share to 22 1 percent from 19 2 percent in this segment
Inventories of unsold vehicles a major cash concern for
carmakers when the crisis hit last year decreased by 36
percent to 400 000 vehicles compared with 628 000 at the start
of the year the company said
SHARES DROP
Shares in Peugeot were 5 65 percent lower at 22 85 euros by
0904 GMT making them the biggest fallers on a 1 77 percent
weaker DJ Stoxx European autos index They also led declines on
the French blue chip CAC 40 index
The factors behind our view that 2010 can see positive
surprises remain intact we see nothing incremental
today to improve the case the Morgan Stanley analysts added
Daimler on Monday posted a fall in third quarter earnings
before interest and tax to 470 million euros that beat the
Thomson Reuters I B E S consensus estimate of 141 million It
said it expected free cash flow to be positive for the year
On Tuesday French car parts makers Faurecia 70 percent
owned by Peugeot and Valeo made upbeat statements about the
rest of the year
Valeo said it was increasing its second half production
forecast after a third quarter profit and Faurecia raised its
outlook for second half sales
PSA s domestic rival Renault is due to report
third quarter sales on Oct 29 Italian auto maker Fiat SpA is
due to post results later on Wednesday
Reporting by Helen Massy Beresford Editing by James
Regan Marcel Michelson |
MS | European shares rise to trade near 1 year highs | LONDON Oct 21 Reuters European shares drifted higher on
Wednesday to trade near one year highs boosted by banks and
oils with investors awaiting more corporate results from
companies such as Morgan Stanley and Boeing
The FTSEurofirst 300 index of top European shares rose 0 2
percent to 1 023 59 points by 0710 GMT after dropping 0 5
percent in the previous session
The benchmark index which hit an intra day one year high on
Tuesday is up 23 percent so far this year and has surged 59
percent since hitting a record low in early March
Analysts said investors remained cautious following the
market s inability to post convincing gains in the past days
The index has fallen in 5 of the previous 10 sessions
We are entering an intense period whilst over the longer
term the bulls have clearly taken the lead the short term
appears to be a little more cloudy said John Murphy analyst
at ODL Securities
Banks were among the top gainers with Standard Chartered
HSBC Barclays BNP Paribas and Societe Generale rising 0 5 to 1
percent
Deutsche Bank said it expected a net profit of 1 4 billion
euros 2 1 billion for the third quarter boosted by tax
credits But its shares were down 0 8 percent
Bank of England Governor Mervyn King said on Tuesday that a
fundamental rethink of how the banking sector is structured and
regulated is needed to prevent a recurrence of the financial
crisis
Energy shares were higher as crude prices traded near 79 a
barrel BP Royal Dutch Shell BG Group Repsol Total and
StatoilHydro added 0 1 to 0 6 percent
Britain s Cadbury rose 1 percent after it beat sales
forecasts and raised targets in a bumper third quarter trading
report surprising investors and pressuring suitor Kraft to come
up with a much bigger bid to win its takeover battle
Reporting by Atul Prakash |
MS | FOREX Dollar resumes fall on low rates view kiwi shines | Dollar resumes falls after brief recovery
Equity gains support riskier currencies weigh on dollar
Kiwi up on RBNZ Bollard s comments sterling up before BoE
mins
updates pricew adds quotes changes byline dateline pvs
TOKYO
By Jessica Mortimer
LONDON Oct 21 Reuters The dollar edged lower against
the euro and higher yielding currencies on Wednesday as a brief
recovery from a 14 month low versus a currency basket fizzled
out helped by equity market gains which encouraged risk taking
The greenback had earlier stabilised as investors booked
profits on recent sharp gains in higher yielding and perceived
higher risk currencies Failure by the euro to test the key
1 50 level also buoyed the U S currency
The dollar s recovery was unconvincing however with
sentiment towards it still downbeat on the prospect of U S
interest rates staying at exceptionally low levels for longer
than most other major countries
The New Zealand dollar shone after New Zealand s central
bank chief Alan Bollard said a strong currency was not
necessarily an obstacle to raising the cash rate
The dollar s carry disadvantage is working to prevent any
significant dollar recovery said Ulrich Leuchtmann head of
foreign exchange research at Commerzbank in Frankfurt
Euro dollar failed to break through 1 50 yesterday but
the downside in the pair is limited and we cannot rule out
another attempt at that level
He added however that there were concerns the dollar s
falls were starting to look a little overstretched given that
it has dropped to multi month lows against a range of currencies
recently
At 0741 GMT the euro was up 0 1 percent against the dollar
compared with late New York trade at 1 4957 having hit a
14 month high of 1 4994 the day before
The dollar index fell 0 3 percent from late New York levels
TO 75 338 though it stayed above a 14 month low of 75 103 hit
on Tuesday
Among higher yielding currencies the Australian dollar rose
0 4 percent to 0 9273 while the New Zealand dollar jumped
nearly 1 percent to 0 7561 in the wake of the the Reserve Bank
chief Bollard s comments
Investor appetite for buying perceived riskier currencies
was lifted as European share rose 0 3 percent close to one year
highs as investors more corporate results from companies such
as Morgan Stanley and Boeing
This helped lift sterling to a one month high above 1 65
against the dollar ahead of the release of the Bank of England
minutes of its latest policy meeting at 0830 GMT
Investors will be looking for clues on whether or not the
bank will extend quantitative easing Hints of an extension
could pressure sterling
Jitters remained however that policymakers outside the
United States may increasingly express disquiet about the
strength of their currencies against the sliding U S dollar
On Tuesday the Bank of Canada killed talk of an early rate
hike warning that favourable economic developments were being
undermined by the Canadian dollar s strength and sending the
currency down sharply
France expressed concern about euro strength on Tuesday
Despite calls at the G20 level for greater FX flexibility
one risk is for countries to become impatient over the strength
of their own currencies ING currency strategists said in a
note
San Francisco Federal Reserve President Janet Yellen
however added weight to the view that U S rates will stay low
for some time saying on Tuesday the time for tightening in the
United States was still several months away Reporting by
Jessica Mortimer editing by Nigel Stephenson |
MS | European shares edge lower financials weigh | FTSEurofirst 300 falls 0 1 percent
Financials drugmakers among top decliners
Telecom shares advance
For up to the minute market news click on
By Atul Prakash
LONDON Oct 21 Reuters European shares drifted further
away from one year highs on Wednesday pressured by financial
stocks after Bank of England Governor Mervyn King added his
voice to calls for root and branch reforms of the sector
King said on Tuesday in Edinburgh that a fundamental rethink
of how the banking sector is structured and regulated is needed
to prevent a recurrence of the financial crisis
The FTSEurofirst 300 index of top European shares fell 0 1
percent to 1 019 94 points by 0845 GMT after dropping 0 5
percent in the previous session The index which hit a
one year high on Tuesday before falling is up 23 percent this
year and has surged 58 percent since hitting a record low in
March
Analysts said investors were cautious following the market s
inability to post convincing gains in recent days The index had
fallen in five of the previous 10 sessions
Morgan Stanley and Boeing are due to report results later in
the day
Markets have taken a breather Nothing moves in a straight
line so market timing is becoming more and more acute said
John Murphy analyst at ODL Securities
We are entering an intense period Whilst over the longer
term the bulls have clearly taken the lead the short term
appears to be a little more cloudy
Banks were among the top losers with Standard Chartered
Lloyds Royal Bank of Scotland BNP Paribas Societe Generale
Credit Agricole and Natixis down 0 1 to 1 3 percent
Deutsche Bank fell 3 1 percent after the bank said tax
credits had flattered net profit in the third quarter
Drugmakers also came under pressure AstraZeneca
GlaxoSmithKline Merck Novartis Novo Nordisk and Roche Holding
fell 0 1 to 0 9 percent
Across Europe Britain s FTSE 100 index Germany s DAX and
France s CAC 40 fell 0 1 0 3 percent
TELECOMS SUPPORT
On the positive side telecom shares were in demand
Deutsche Telecom Vodafone France Telecom BT Group and
Mobistar rose 0 6 to 1 7 percent
Britain s Cadbury rose 0 2 percent after it beat sales
forecasts and raised targets in a bumper third quarter trading
report surprising investors and pressuring suitor Kraft to come
up with a much bigger bid to win its takeover battle
Overall Cadbury management has successfully laid out its
hand showing how attractive Cadbury is said Andrew Wood
senior research analyst at Sanford C Bernstein
And this trading update should put further pressure on
Kraft to increase its bid
Spanish infrastructure company Grupo Ferrovial SA which has
a majority stake in airports operator BAA fell 4 5 percent BAA
agreed to sell Gatwick Airport for 1 5 billion pounds 2 46
billion hoping to bolster its appeal against a competition
ruling that it must offload three airports in total
The sale price is less than the airport s 1 6 billion pound
Regulated Asset Base value
BHP Billiton was down 0 4 percent The miner confirmed a
month long outage at the world s No 4 copper mine and reported
near flat quarterly output of iron ore
Top European computer chip maker STMicroelectronics fell 3 1
percent after it posted its seventh consecutive quarterly loss
but its revenue and outlook topped expectations and bolstered
hopes the semiconductor industry is on the rebound
editing by John Stonestreet |
MS | European shares led lower by financials D Bank Q3 | FTSEurofirst 300 down 0 7 percent
Deutsche Bank shares fall after Q3 results
Fiat Peugeout drop telcos gain
For up to the minute market news click on
By Christoph Steitz
FRANKFURT Oct 21 Reuters European shares fell for a
second day on Wednesday with financial stocks taking most
points off the leading index after Deutsche Bank unexpectedly
released quarterly figures that knocked its stock
By 1032 GMT The FTSEurofirst 300 index of top European
shares was down 0 7 percent at 1 013 75 points after falling 0 5
percent in the previous session
The index which hit a one year high on Tuesday before
falling has gained 22 percent this year
Deutsche Bank dropped 4 percent after Germany s biggest bank
said tax credits had flattered net profit in the third quarter
It is difficult to link the falling share price to the news
that have been clearly positive I would rather assume the
falling share price is due to investors selling on good news as
bank shares have soared over the past months said Heinz Gerd
Sonnenschein equity strategist at Postbank
Banks took most points off the index with Standard
Chartered Lloyds Royal Bank of Scotland BNP Paribas Societe
Generale and Credit Agricole down 1 2 3 3 percent
Three sources close to the situation said Britain s
regulator were moving closer to approving a plan by Lloyds to
escape a costly government backed scheme for bad debt
Across Europe Britain s FTSE 100 index Germany s DAX and
France s CAC 40 fell 0 7 1 2 percent
It seems that while we may be heading out of a recession
the pace of recovery may be sluggish at best and we could well
see more profit taking on the horizon said Tim Hughes head of
sales trading at IG Index in London
FIAT DROPS TELCOS GAIN
The DJ STOXX European Auto Index was the biggest sectoral
decliner down 2 2 percent
Peugeot said third quarter revenue slowed less sharply than
in previous quarters but analysts at Morgan Stanley analysts
said sales were still disappointing Shares in the company fell
5 9 percent
What we have today is a revenue disappointment and no
obvious sign of the large production re ramp that many have
anticipated Morgan Stanley analysts said
Fiat also dropped down 3 5 percent after the company
reported a better than expected third quarter trading profit but
said it might write off past investments
European computer chip maker STMicroelectronics fell 4 6
percent after it posted its seventh consecutive quarterly loss
but its revenue and outlook topped expectations and bolstered
hopes the semiconductor industry was on the rebound
On the positive side telecom shares rose with the DJ Stoxx
European Telcom Index the second biggest sectoral gainer up 0 4
percent Deutsche Telecom Vodafone and Telefonica rose 0 1 1 4
percent
Later in the day investors will focus on results expected
frm Morgan Stanley and Boeing
Additional reporting by Atul Prakash in London and Helen
Massy Beresford in Paris Editing by Dan Lalor
1 0 6697 euro |
MS | FOREX Dollar index dips as sterling jumps on BoE minutes | Dollar dips vs FX basket weighed by sterling gains
Sterling jumps on BoE mins Kiwi up on RBNZ chief comments
Dlr steady vs euro edges up vs Aussie as equities drop
Updates prices adds quotes
By Jessica Mortimer
LONDON Oct 21 Reuters Sterling was the focus in the
foreign exchanges on Wednesday its rise to one month s highs
against the dollar and euro after Bank of England minutes
helping push the greenback lower against a basket of currencies
Sterling jumped after the minutes of the BoE s latest policy
meeting dampened expectations of an extension to quantitative
easing
The dollar was steady against the euro and higher against
currencies such as the Australian dollar however as lower
equities and oil prices discouraged investors from buying
currencies seen as riskier
The BoE minutes showed policymakers voted unanimously to
leave its quantitative easing programme under which the bank
buys assets to pump cash into the economy unchanged last
month
Today is mostly about certain currencies moving on specific
stories said Lee Hardman currency strategist at Bank of
Tokyo Mitsubishi UFJ
The Bank of England minutes shifted the balance of risks in
favour of a pause in asset purchases in November which the
pound has reacted to he said
The New Zealand dollar was the other major gainer after the
country s central bank chief Alan Bollard said a strong currency
was not necessarily an obstacle to raising the cash rate
At 1112 GMT sterling was up 1 1 percent at 1 6560 while
the euro was down 1 1 percent against the pound to 90 14 pence
The New Zealand dollar was 0 4 percent higher at 0 7526
Against a basket of currencies the dollar fell 0 1 percent
to 75 474 close to a 14 month low of 75 103 hit on Tuesday The
euro was steady at 1 4930
Traders said the euro s steep falls against the pound were a
major factor preventing gains in euro dollar while the single
currency remained anchored below the psychologically key 1 50
level which it has so far failed to breach
Investors were concerned there may be little scope for
further falls in the dollar after its recent drop to more than
one year lows against a range of currencies
The broader environment is still one that favours dollar
weakness but selling the dollar is becoming a trade of
diminishing returns BTMU s Hardman said
Ebbing risk appetite with European shares down 0 8 percent
and oil prices falling more than 1 percent also helped the
dollar against some currencies
The higher yielding Australian dollar fell 0 2 percent to
0 9215 erasing earlier gains while the U S dollar rose 0 2
percent versus the yen to 90 88 yen
Meanwhile investors awaited earnings results from U S
companies such as Morgan Stanley and Boeing
DOLLAR SENTIMENT STILL NEGATIVE
Many analysts were unconvinced the dollar would sustain any
recovery with sentiment towards it still downbeat on the
prospect of U S interest rates staying at exceptionally low
levels for longer than those of most other major countries
San Francisco Federal Reserve President Janet Yellen added
weight to this view saying on Tuesday the time for monetary
tightening in the United States was still several months away
The dollar s carry disadvantage is working to prevent any
significant dollar recovery said Ulrich Leuchtmann head of
foreign exchange research at Commerzbank in Frankfurt
Euro dollar failed to break through 1 50 yesterday but
the downside in the pair is limited and we cannot rule out
another attempt at that level
Jitters remained however that policymakers outside the
United States may increasingly express disquiet about the
strength of their currencies against the sliding U S dollar
On Tuesday the Bank of Canada killed talk of an early rate
hike warning that favourable economic developments were being
undermined by the Canadian dollar s strength and sending the
currency down sharply
Reporting by Jessica Mortimer editing by Nigel Stephenson |
JPM | BOJ seen holding fire as protectionism overshadows signs of recovery | By Leika Kihara TOKYO Reuters The Bank of Japan is expected to keep monetary policy steady on Thursday as rising global protectionist sentiment and an expected series of U S interest rate hikes overshadow budding signs of recovery in the trade reliant economy While a rebound in fuel costs is set to accelerate price growth in coming months BOJ Governor Haruhiko Kuroda is likely to stress that no immediate rate hike is on the horizon with inflation still nowhere near his ambitious 2 percent target But he may leave open the chance of raising the BOJ s target for the 10 year bond yield if the economic recovery gathers enough momentum to push prices steadily higher analysts say I see no change in policy but the key is Kuroda s message at the press conference If asked I think Kuroda will say that if the situation merits he is willing to adjust the 10 year yield target in the future I think he will be flexible said Masamichi Adachi senior economist at JPMorgan NYSE JPM Securities I think the BOJ will raise the 10 year yield target in October because inflation would be around 1 percent by then At the two day rate review ending on Thursday the BOJ is widely expected to maintain its short term interest rate target of minus 0 1 and a pledge to guide the 10 year government bond yield JP10YT RR at around zero percent via aggressive asset purchases Analysts also expect the BOJ to keep intact a loose pledge to maintain the pace of its annual increase in Japanese government bond JGBs holdings which is 80 trillion yen 696 62 billion Kuroda who will attend this week s Group of 20 finance leaders meeting in Germany may also shed light on how the BOJ will defend its ultra loose policy from any U S criticism it is exploiting a weak yen to gain a competitive trade advantage Japan s long stagnant economy has shown signs of life in recent months with exports and factory output benefiting from a recovery in global demand Core consumer prices rose for the first time in over a year in January and many analysts expect inflation to accelerate toward 1 percent later this year due largely to a rebound in energy costs and rising import prices from a weak yen That has led to a dramatic shift in market expectations with a majority of analysts polled by Reuters predicting the BOJ s next move would be to start scaling back its ultra easy policy Some analysts say the BOJ may be forced to raise its yield target to avoid ramping up bond purchases if Japanese long term interest rates track global bond yield rises which are being driven by expectations of higher U S interest rates The BOJ hopes to dispel such speculation and stress it won t raise its yield target unless the economy strengthens enough to accelerate inflation stably toward 2 percent say sources familiar with its thinking Many BOJ officials say while they are more confident about prospects for Japan s economic recovery they see more to fret about on inflation due to slow wage growth which is holding back consumer spending A rising global tide of protectionism is adding to concerns for Japanese policymakers given the economy s heavy reliance on exports and free trade A draft communique of the G20 finance leaders meeting appeared to accommodate U S President Donald Trump s protectionist views on trade by watering down a commitment to reject all forms of protectionism Trump also criticized Japan for using money supply to weaken the yen and gain an unfair trade advantage Japanese policymakers have argued that they were playing by G20 rules to use monetary policy only for domestic purposes
Kuroda may offer clues on how Japan will defend its policies and how strongly it would push back against attempts to water down the G20 commitment on free trade analysts say |
JPM | U S housing factory data underscore economy s resilience | By Lucia Mutikani WASHINGTON Reuters U S homebuilding jumped in February as unseasonably warm weather boosted the construction of single family houses to near a 9 1 2 year high suggesting the economy remained on solid ground despite an apparent slowdown in the first quarter The economy s fundamentals were further strengthened by other data on Thursday showing a drop in the number of Americans filing for unemployment benefits last week amid a tightening labor market Though factory activity in the mid Atlantic region cooled this month manufacturers reported growth in new orders and difficulties finding qualified workers The data came a day after the Federal Reserve raised interest rates for the third time since the 2008 financial crisis Fed Chair Janet Yellen told reporters that the U S central bank was sending a message that we have confidence in the robustness of the economy and its resilience to shocks The reports painted a mostly upbeat picture of the economy said Daniel Silver an economist at JPMorgan NYSE JPM in New York Housing starts increased 3 0 percent to a seasonally adjusted annualized rate of 1 29 million units last month the Commerce Department said Homebuilding was up 6 2 percent compared to February 2016 suggesting housing would contribute to growth this year Single family homebuilding which accounts for the largest share of the residential housing market surged 6 5 percent to a 872 000 unit pace the highest level since October 2007 Single family starts in the Midwest soared 20 percent to their highest level since October 2007 Groundbreaking activity jumped more than 16 percent in the West and Northeast but fell 2 6 percent in the South Single family homebuilding usually goes dormant throughout much of these regions during the winter months but has held up better this year due to up until recently much milder winter weather said Mark Vitner a senior economist at Wells Fargo NYSE WFC Securities in Charlotte North Carolina Starts for the volatile multi family housing segment fell 3 7 percent to a 416 000 unit pace A robust labor market is supporting the housing market helping it to buck weakness in other parts of the economy Further gains in single family construction are likely as building permits increased 3 1 percent last month A survey on Wednesday showed homebuilders confidence jumped in March to its highest level since June 2005 The surge in confidence is however unlikely to translate into a homebuilding boom as builders continued to complain about rising material prices higher mortgage rates and shortages of lots and labor U S financial markets were little moved by the data as investors digested the Fed s decision on Wednesday to raise its overnight benchmark interest rate by 25 basis points to a range of 0 75 percent to 1 00 percent The U S central bank also forecast two more rate hikes this year The dollar DXY dropped to a one month low against a basket of currencies Prices for U S Treasuries fell as did stocks on Wall Street LABOR MARKET TIGHTENING In a separate report on Thursday the Labor Department said initial claims for state unemployment benefits dropped 2 000 to a seasonally adjusted 241 000 for the week ended March 11 It was the 106th straight week that claims remained below 300 000 a threshold associated with a healthy labor market That is the longest stretch since 1970 when the labor market was much smaller The labor market is near full employment with job growth averaging 209 000 per month over the past three months and the unemployment rate is at 4 7 percent close to the nine year low of 4 6 percent hit last November A third report from the Philadelphia Fed showed its manufacturing activity index fell to a reading of 32 8 this month from 43 3 in February However the survey s new orders gauge hit its highest level since December 1987 A measure of prices paid by factories for inputs raced to its highest level since May 2011 Factories also reported increasing prices for their goods supporting the view that inflation pressures were building More than 60 percent of the firms in the mid Atlantic said they were experiencing labor shortages and 68 percent reported skills mismatch between job openings and available labor These percentages were higher compared to the last time companies were asked the same questions in May 2014 Labor market strength and improvement in manufacturing are in stark contrast with a recent softening in consumer construction and business spending
The Atlanta Fed is forecasting gross domestic product increasing at a 0 9 percent rate in the first quarter The economy grew at a 1 9 percent rate in the fourth quarter |
JPM | New Jersey pastor Florida programer convicted of bitcoin exchange scheme | By Brendan Pierson Reuters A New Jersey pastor and a Florida software engineer were convicted on Friday of scheming to help an illegal bitcoin exchange avoid having banks and regulators look into its activities The bitcoin exchange Coin mx was linked to an investigation of a data breach at JPMorgan Chase Co NYSE JPM revealed in 2014 that exposed more than 83 million accounts Pastor Trevon Gross 47 and programer Yuri Lebedev 39 were convicted of conspiracy and bribery charges by a jury in Manhattan federal court after a week of deliberations according to a spokesman for federal prosecutors Lebedev was also convicted of wire fraud and bank fraud Henry Klingeman Gross s attorney said in an email that he would seek an order overturning the verdict and if and when the time comes a fair and lenient sentence Eric Creizman a lawyer for Lebedev had no immediate comment Prosecutors charged that Lebedev helped arrange bribes to Gross including 150 000 in donations to his church In exchange they say Gross helped the operator of Coin mx Anthony Murgio take over a small credit union Gross ran from his church Murgio used the credit union to evade scrutiny of banks wary of processing payments involving the virtual currency prosecutors say Lebedev was accused of working for Coin mx through a front called Collectables Club Over the course of a four week trial lawyers for Lebedev and Gross tried to paint a different picture saying their clients did not know that Murgio was running an illegal operation and never acted with corrupt intent The trial followed a probe rooted in the JPMorgan data breach which lead to charges against nine people Gross Lebedev and Murgio were not accused of hacking But prosecutors said Coin mx was owned by an Israeli who was behind the breach Gery Shalon Prosecutors say Shalon together with Maryland born Joshua Samuel Aaron orchestrated cyber attacks that resulted in the theft of information from more than 100 million people Prosecutors said they carried out the hacks to further other schemes with another Israeli Ziv Orenstein including pumping up stock prices with promotional emails Shalon Aaron and Orenstein have pleaded not guilty Murgio pleaded guilty to charges related to Coin mx in January He is scheduled to be sentenced on June 16 |
JPM | Billionaire philanthropist David Rockefeller dies at age 101 in New York | NEW YORK Reuters Billionaire philanthropist David Rockefeller former head of Chase Manhattan Corp and patriarch of one of the most famous and influential American families died on Monday a family spokesman said He was 101 Rockefeller who reportedly gave away nearly 2 billion in his lifetime died in his sleep of congestive heart failure at his home in Pocantico Hills New York spokesman Fraser Seitel said in a statement One of the few remaining links to the U S gilded era of robber barons he was the son of John D Rockefeller Jr who developed New York s Rockefeller Center and was the last living grandson of oil tycoon John D Rockefeller founder of Standard Oil and the family dynasty He also embodied an era when globe trotting bank chiefs worked with the world s most powerful politicians During his time as head of Chase from 1969 to 1981 Rockefeller forged such a network of close relationships with governments and multinational corporations that observers said the bank had its own foreign policy The Rockefeller name came to symbolize unpopular U S banking policies in debtor countries and Rockefeller was scorned on the left for working with Chile s Augusto Pinochet and the shah of Iran He also was viewed with anger on the right for pushing to open trade with China and the Soviet Union during the Cold War The Trilateral Commission a group Rockefeller founded in 1973 to foster relations between North America Japan and Western Europe came to be a regular target of the far right and conspiracy theorists who said it was trying to create a one world government Rockefeller became embroiled in an international incident when in 1979 he and long time friend Henry Kissinger helped persuade President Jimmy Carter to admit the shah of Iran to the United States for treatment of lymphoma helping precipitate the Iran hostage crisis Born in Manhattan as the youngest of six siblings Rockefeller spent his childhood in New York City and at the family s estates and recalled meeting such luminaries as Charles Lindbergh Admiral Richard Byrd and Sigmund Freud His ties to the internationally famous continued throughout his adulthood symbolized by his famed 100 000 card Rolodex housed in its own room next to his office in Manhattan s Rockefeller Center The site of the nine story mansion where he was born then New York s largest residence is now part of the Museum of Modern Art which his mother Abby helped found in 1929 Rockefeller collected beetles as a lifelong hobby and also acquired art a Mark Rothko painting he bought in 1960 for less than 10 000 was auctioned for more than 72 million in May 2007 His fortune investments in real estate share of family trusts and other holdings were estimated at 3 3 billion in March 2017 by Forbes magazine Seitel said Rockefeller had donated nearly 2 billion in his lifetime to organizations including the Museum of Modern Art in New York and Rockefeller University In May 2015 he made a rare public appearance in Maine to mark his approaching 100th birthday by donating 1 000 acres 405 hectares for preservation on exclusive Mount Desert Island Rockefeller established several international and philanthropic associations the Americas Society the weighty Trilateral Commission to promote cooperation between North America Europe and Japan and the New York City Partnership to help the city s poor Chase Manhattan grew from a 4 8 billion institution in 1946 when he joined to a bank with 76 2 billion in assets when he stepped down in April 1981 But it slipped from its standing then as No 3 in the world and was purchased by Chemical Bank of New York in 1996 Today it is part of JPMorgan Chase Co NYSE JPM He published his autobiography Memoirs in 2002 and continued going to work every day into his 90s He remained a lifelong member of the moderate Rockefeller Republicans wing of that party including his 2006 co founding of Republicans Who Care to support the party s moderates Rockefeller earned a degree from Harvard University in 1936 and did graduate work at the London School of Economics where he met future President John F Kennedy and dated his sister Kathleen He was awarded a Ph D in economics from the University of Chicago in 1940 From 1940 to 1941 he was secretary to New York Mayor Fiorello LaGuardia and in 1942 he enlisted in the U S Army serving in military intelligence in North Africa and France Rockefeller was awarded the French Legion of Honor
Rockefeller s wife Peggy died in 1996 They had six children and 10 grandchildren |
C | Citigroup s head of franchise risk Brian Leach retiring | NEW YORK Reuters Brian Leach head of franchise risk and strategy for Citigroup Inc N C said on Thursday that he is retiring and does not know what he will do next Leach s departure was announced to employees in memos from him and from CEO Mike Corbat Leach joined Citigroup during the financial crisis in 2008 and worked under previous CEO Vikram Pandit
Corbat noted that when he became CEO he asked Leach to stay on and lead all control functions at the company Members of Leach s team will have new reporting lines beginning May 1 Corbat said |
C | Citi seeking to sell retail FX arm source | By Patrick Graham LONDON Reuters Citigroup Inc N C is seeking a buyer for its retail forex brokerage CitiFX Pro as part of efforts to streamline the banking world s biggest currency trading operation a source familiar with the situation told Reuters on Tuesday Citi has cut staffing and computerized many elements of its currency business in recent years Market sources say it has aggressively rationalized its institutional client base in the prime broking sector since the start of this year But the sale would come at a time when other banks are beginning to think about reinvesting in currency trading drawn by an improvement in volumes and returns over the past year CitiFX Pro is the bank s easily accessible online forex trading service offering professional individual traders and smaller institutional players access to 130 plus currency pairs on several platforms backed up by Citi infrastructure It is part of a sub sector of the forex market whose reputation has taken a hammering since the collapse of a handful of businesses and hefty losses for others after the Swiss franc s surge in January New York based Citi has pared back internationally in recent years pulling out of retail banking in markets such as Japan Industry surveys continue to rank it as the single biggest banking player in the 5 trillion a day forex market THREATENED MODELS It has been a tumultuous few years for banks currency trading businesses hit by a raft of scandals and regulatory inquiries which has seen dozens of the market s most senior traders leave their jobs or be suspended Changes in the regulatory environment and capital requirements have also made it more costly to run trading operations like FX that provide huge leverage and conduits for trade to hedge funds and other big financial institutions But there has been a growing sense in recent months that banks are feeling their way to new business models that factor in all of the new rules and conditions they face At the same time everyday market volatility which drives up volumes of trade and the amount bank dealing desks can make from trading has surged threefold on major currencies You will see banks investing again in FX now It has been one of the best performing segments over the past year and that has drawn attention said the head of one London based brokerage previously a head of trading with one major European bank speaking on condition of anonymity
Like most parts of the business the model does not quite work but it is very close to giving banks the return on equity they need So the way to do that is to invest while continuing to automate aggressively |
C | New York man gets seven and a half years in prison for cyber crime scheme | NEW YORK Reuters A New York man was sentenced to 7 1 2 years in prison on Tuesday for his role in a cyber crime and identity theft scheme that hacked into accounts at banks brokerages and government agencies in a bid to steal more than 15 million authorities said Oleg Pidtergerya 50 of Brooklyn had previously pleaded guilty to wire fraud conspiracy identity theft and conspiracy to commit so called access device fraud in federal court in New Jersey A co defendant Robert Dubuc pleaded guilty to the same charges but received only 21 months in prison when he was sentenced in October Prosecutors said the pair were members of a cyber crime ring led by Oleksiy Sharapka and Leonid Yanovitsky of Kiev Ukraine who have also been indicted but remain at large The group hacked into accounts in 2012 and 2013 at global banks and other institutions including Citigroup Inc NYSE C JPMorgan Chase Co NYSE JPM the U S Department of Defense PayPal and others and diverted funds into accounts and debit cards they controlled prosecutors said The group then used cash out crews to tap the stolen funds by withdrawing cash from ATMS and making fraudulent purchases according to prosecutors Dubuc operated a crew out of Massachusetts while Pidtergerya led one in New York the government said |
C | Citigroup shares rise 1 7 on upbeat Q1 earnings | Investing com Banking conglomerate Citigroup NYSE C reported better than expected first quarter earnings on Thursday sending its shares higher in pre market trade
Citigroup said adjusted earnings per share came in at 1 52 in the three months ended March 31 above expectations for earnings of 1 39 per share and up from 1 23 in the year ago period
The bank s first quarter revenue totaled 19 8 billion slightly below forecasts for revenue of 19 83 billion and compared to revenue of 20 2 billion for the first quarter 2014
First quarter 2014 results also included a 210 million tax charge
Michael Corbat Chief Executive Officer of Citigroup said We had a strong quarter overall particularly in executing against our top strategic priorities
Immediately after the earnings announcement Citigroup shares rose 1 71 in trading prior to the opening bell to hit 54 13 from a closing price of 53 21 on Wednesday
Meanwhile U S stock futures pointed to a modestly lower open The Dow futures pointed to a decline of 0 35 the S P 500 futures shed 0 4 while the Nasdaq 100 futures shed 0 45 |
C | The Zacks Analyst Blog Highlights AT T Citigroup T Mobile US Live Nation Entertainment And AMC Entertainment | For Immediate Release
Chicago IL August 26 2016 Zacks com announces the list of stocks featured in the Analyst Blog Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets Stocks recently featured in the blog include AT T Inc NYSE T Citigroup Inc NYSE C T Mobile US Live Nation Entertainment Inc and AMC Entertainment Holdings Inc
Today Zacks is promoting its Buy stock recommendations
Here are highlights from Thursday s Analyst Blog
AT T Citigroup Bury the Hatchet Over ThankYou
AT T Inc and Citigroup Inc have finally decided to settle the legal battle on the usage of the word thanks in relation to their promotional campaigns Basically AT T s AT T thanks plan to reward customers collided with Citigroup s thankyou campaign which the company has been using since 2004 This led to a bitter legal spat between the companies over trademark and monopoly rights
AT T thanks Campaign
AT T thanks is a loyalty program launched on Jul 1 2016 which offers customers buy one get one free movie tickets special content for DirecTV subscribers and pre sale ticket offers from Live Nation The plan was introduced close on the heels of the launch of the Get Thanked program by rival T Mobile US Additionally AT T collaborated with Live Nation Entertainment Inc for tickets to exclusive concerts before they are made available to the general public The telecom giant also teamed up with AMC Entertainment Holdings Inc and Regal Entertainment Group for the Ticket Tuesdays plan for wireless postpaid customers
The Clash
Citigroup filed a case against AT T claiming that the latter s AT T thanks campaign is in violation to Citigroup s trademarked thankyou program Citigroup says that such similar usage of words would certainly confound consumers leading to irreparable damage to the goodwill reputation and popularity of its own thankyou branding In response to this AT T filed a return case implying that Citigroup has no monopolistic right over the word thanks
Settlement
The promotional offers AT T thanks and thankyou are similar only in the use of the lower case letters As per the Judge s statement inspite of the similarity in the names the campaigns use different words but with the same purpose of thanking and rewarding customers Hence no one has the right to own the concept of gratitude Moreover the campaigns target different markets and use different logos and colors Hence AT T was allowed by the court to continue to use AT T thanks for its loyalty program discarding Citigroup s appeal
The negotiation should help restore the business relationship between Citigroup and AT T since 1998 including 1 7 million U S customers with co branded credit cards Both the parties have stated that they look forward to continue to work with each other and have also agreed to pay their own attorney s fees
Both AT T and Citigroup currently have a Zacks Rank 3 Hold
Today Zacks is promoting its Buy stock recommendations
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C | Vetr Inc Lowers Citigroup Inc To Sell | Citigroup Inc NYSE C was downgraded by research analysts at from a hold rating to a sell rating in a research note issued to investors on Monday reports They currently have a 45 69 target price on the financial services provider s stock Vetr s target price points to a potential downside of 3 01 from the stock s current price
Other analysts also recently issued reports about the stock Drexel Hamilton reissued a buy rating and set a 65 00 target price on shares of Citigroup in a research note on Monday July 18th TheStreet raised shares of Citigroup from a hold rating to a buy rating in a research note on Tuesday August 23rd Nomura reissued a buy rating and set a 57 00 target price down from 62 00 on shares of Citigroup in a research note on Monday July 18th Sanford C Bernstein reissued an outperform rating on shares of Citigroup in a research note on Tuesday August 16th Finally Credit Suisse Group AG reissued a buy rating on shares of Citigroup in a research note on Saturday July 9th Two research analysts have rated the stock with a sell rating nine have issued a hold rating and seventeen have assigned a buy rating to the company s stock The stock currently has an average rating of Buy and an average target price of 55 46
In other news insider Joseph Michael Murray sold 8 122 shares of the company s stock in a transaction dated Wednesday July 20th The shares were sold at an average price of 44 35 for a total transaction of 360 210 70 Following the completion of the transaction the insider now owns 35 042 shares of the company s stock valued at 1 554 112 70 The sale was disclosed in a document filed with the Securities Exchange Commission which can be accessed through
Shares of Citigroup NYSE C opened at 47 11 on Monday MarketBeat com reports The firm s 50 day moving average price is 44 91 and its 200 day moving average price is 43 43 Citigroup has a one year low of 34 52 and a one year high of 56 46 The firm has a market cap of 136 87 billion and a PE ratio of 9 97
Citigroup NYSE C last posted its quarterly earnings results on Friday July 15th The financial services provider reported 1 24 earnings per share EPS for the quarter beating the Thomson Reuters consensus estimate of 1 10 by 0 14 During the same period in the prior year the company posted 1 45 EPS The company earned 17 55 billion during the quarter compared to the consensus estimate of 17 47 billion Citigroup s quarterly revenue was down 9 9 on a year over year basis Equities research analysts expect that Citigroup will post 4 63 earnings per share for the current fiscal year
The company also recently declared a quarterly dividend which was paid on Friday August 26th Shareholders of record on Monday August 1st were issued a dividend of 0 16 per share This represents a 0 64 dividend on an annualized basis and a yield of 1 36 The ex dividend date was Thursday July 28th This is a boost from Citigroup s previous quarterly dividend of 0 05
A number of hedge funds and institutional investors have bought and sold shares of C Legal General Group Plc raised its position in Citigroup by 2 1 in the first quarter Legal General Group Plc now owns 14 126 657 shares of the financial services provider s stock valued at 589 847 000 after buying an additional 289 283 shares during the period Orbis Allan Gray Ltd acquired a new position in Citigroup during the first quarter valued at about 181 532 000 Samlyn Capital LLC acquired a new position in Citigroup during the first quarter valued at about 39 195 000 Eachwin Capital LP acquired a new position in Citigroup during the first quarter valued at about 384 000 Finally Sii Investments Inc WI raised its position in Citigroup by 15 5 in the first quarter Sii Investments Inc WI now owns 9 543 shares of the financial services provider s stock valued at 400 000 after buying an additional 1 282 shares during the period
Citigroup Inc Citi is a financial services holding company The Company s businesses provide consumers corporations governments and institutions with a range of financial products and services including consumer banking and credit corporate and investment banking securities brokerage trade and securities services and wealth management |
MPC | Marathon Petroleum To Cut Air Pollution Fed Fines 334 6M | Leading independent refiner transporter and marketer of petroleum products Marathon Petroleum Corporation NYSE MPC has agreed to spend 334 6 million to settle a dispute over refinery pollution across five U S states The company will also pay a 326 000 civil penalty
According to the U S Justice Department and Environmental Protection Agency the Ohio based energy company will spend 319 million to install ultra modern flare gas recovery systems at its refineries in Illinois Kentucky Louisiana Michigan and Ohio These recovery systems will help recycle gasses that are currently sent to combustion devices
The company will also be spending over 15 million on projects to reduce air pollution at three facilities This will be inclusive of expenditure worth 6 million to shut down a flare at the fence line of its Detroit refinery and 9 55 million on projects to reduce nitrogen oxide emissions at its refineries in Canton OH and Garyville LA Per the federal authorities this agreement will help in reducing emissions of volatile organic compounds sulfur dioxides and nitrogen oxides by about 1 037 tons per year
Marathon Petroleum estimates that the investments which began in late 2013 will be effectively completed by the end of 2018 About 238 million of the projected investments will have been made by the end of 2016
MARATHON PETROL Price
Headquartered in Findlay OH Marathon Petroleum is the nation s fourth largest refiner with crude oil refining capacity of approximately 1 8 million barrels per calendar day in its seven refinery system The company in its current form came into existence following the 2011 spin off of the Houston TX based Marathon Oil Corp s NYSE MRO refining sales business into a separate independent and publicly traded entity
Marathon Petroleum currently carries a Zacks Rank 3 Hold implying that the stock will perform in line with the broader U S equity market over the next one to three months
Some better ranked players in the energy sector include PetroChina Co Ltd NYSE PTR and McDermott International Inc NYSE MDR Both these stocks sport a Zacks Rank 1 Strong Buy |
MPC | Marathon Petroleum Slips To Strong Sell On Estimate Revision | On Jul 13 Zacks Investment Research downgraded Marathon Petroleum Corporation NYSE MPC a leading independent refiner to a Zacks Rank 5 Strong Sell Why the Downgrade Over the last 30 days the Zacks Consensus Estimate for Marathon Petroleum for the second quarter of this year saw a downfall of more than 28 from 1 35 per share to 97 cents as all the estimates has been revised downward Moreover for full year 2016 the company s Zacks Consensus Estimate decreased to 3 08 per share from 3 82 Additionally the refining player could not manage to surpass the Zacks Consensus Estimate in three of the last four quarters and posted an average miss of 16 05 It is also to be considered that oil has recovered significantly after a long weakness and is now walking on the bullish path Data wise in mid February West Texas Intermediate WTI crude fell to a 12 year low mark of 26 05 per barrel From there the commodity improved almost 80 and closed yesterday at 46 80 per barrel Since refiners are buyers of crude this improvement on the crude front is not in favor of Marathon Petroleum as reflected in the already mentioned downward estimate revisions Investors should also note that the requirement of policies to reformulate fuel and lower emission from refinery operations makes the industry a highly regulated one As a result companies like Marathon Petroleum are often forced to divert cash flows to ensure regulatory compliance which can adversely impact profitability MARATHON PETROL Price and Consensus Stocks to ConsiderBetter ranked players in the oil refining and marketing sector include Murphy USA Inc NYSE MUSA World Fuel Services Corp NYSE INT and Galp Energia SGPS S A OTC GLPEY Murphy USA and World Fuel Services sport a Zacks Rank 1 Strong Buy while Galp Energia carries a Zacks Rank 2 Buy |
MPC | Marathon Petroleum MPC Beats On Q2 Earnings Falls Y Y | Ohio based independent oil refiner and marketer Marathon Petroleum Corp NYSE MPC reported better than expected second quarter 2016 results owing to improved merchandise margins and contribution from new and existing pipeline The positives were offset partially by decreased crack spread in the Gulf Coast The company reported earnings per share excluding onetime items of 1 07 which surpassed the Zacks Consensus Estimate of 95 cents The bottom line however fell from the year ago period adjusted profit of 1 51 Quarterly revenues of 16 790 million beat the Zacks Consensus Estimate of 15 845 million The top line however fell from the year ago figure of 20 581 million Segmental PerformanceRefining Marketing The unit reported profits of 1 080 million in the reported quarter down from 1 181 million in the year ago comparable quarter Decreased crack spread in the Gulf Coast led to the underperformance Total refined product sales volumes were 2 348 thousand barrels per day mbpd slightly up from 2 341 mbpd in the year ago quarter Throughput fell from 1 951 mbpd in the year ago quarter to 1 889 mbpd Speedway Income from the Speedway retail stations was 193 million up from 127 million in the year ago comparable quarter Improved margins from merchandise drove the improvement Midstream Segment profitability was 201 million significantly up from 103 million in the second quarter of 2015 Earnings were propped up by the completion of the MarkWest acquisition on Dec 4 2015 Contribution from new and existing pipeline also aided the result Total ExpensesMarathon Petroleum reported expenses of 15 5 billion in second quarter 2016 lower than 19 3 billion in the year ago quarter Capital Expenditure Balance Sheet Share RepurchaseIn the reported quarter Marathon Petroleum spent 787 million on capital programs 51 2 on the Midstream segment As of Jun 30 2016 the company had cash and cash equivalents of 1 754 million and total debt of 11 059 million with a debt to capitalization ratio of 36 Dividend HikeThe company has announced a dividend of 36 cents per share representing a hike of 12 5 from second quarter 2016 MARATHON PETROL Price Consensus and EPS Surprise
Zacks Rank Marathon Petroleum currently carries a Zacks Rank 5 Strong Sell implying that it will significantly underperform the broader U S equity market over the next one to three months Some better ranked players in the energy sector are Murphy USA Inc NYSE MUSA World Fuel Services Corp NYSE INT and North Atlantic Drilling Ltd NYSE NADL Each of these stocks sports a Zacks Rank 1 Strong Buy Want the latest recommendations from Zacks Investment Research Today you can download 7 Best Stocks for the Next 30 Days |
MS | UPDATE 4 AIG to sell Taiwan unit for 2 2 bln more deals seen | Primus Financial China Strategic win auction for Nan
Shan
Sale marks AIG s biggest disposal of a unit since bailout
AIG now looks to spin off or sell two other units in Asia
Little known Primus China Strategic seek loans for deal
Adds details
By Faith Hung and Michael Flaherty
TAIPEI HONG KONG Oct 13 Reuters American International
Group has struck a deal to sell its Taiwan life insurance unit
for 2 15 billion marking its largest disposal of a unit since
a government bailout saved it from collapse last year
The deal is a key step for AIG in it s effort to repay U S
taxpayers after the government injected 80 billion in
taxpayers money into the firm but the insurer faces two more
major sales processes in Asia and others across the globe
The Nan Shan sale involves two little known buyers one a
start up financial group run by a former Citigroup banker and
the other an obscure publicly traded Hong Kong holding company
with a market value of 111 million
Still the agreement is likely to bring a sigh of relief to
the AIG camp as at one point it looked liked the Nan Shan
process would not succeed
On Tuesday Primus Financial the firm founded by Citi s
former Asia investment banking head together with China
Strategic Holdings agreed to buy AIG s Nan Shan Life ending a
five month auction that involved private equity firms and local
financial groups
Nan Shan a top 3 Taiwan insurer has assets of 46 4
billion and employs 36 000 sales agents in Taiwan and has a
market share of 10 percent with its 4 million customers
Primus will own around 20 percent of the business and China
Strategic 80 percent according to the companies
The sale of Nan Shan allows AIG to check one business off
its list of units to sell in its fund raising efforts
Hong Kong based life insurer AIA is seeking a more than 2
billion initial public offering and sources said American Life
Insurance Co which generates half its revenue in Japan is
could fetch 5 billion in an IPO
Both companies have also attracted acquisition interest
though nothing has materialised yet
China Strategic whose major businesses include battery
production and securities investments had said it planned to
raise about HK 7 8 billion 1 01 billion to fund a possible
joint acquisition
The deal priced Nan Shan at about 1 time price to book
which is fair when you compare 1 9 times for Cathay Financial
and Fubon Financial and 1 time for smaller rival Shin Kong
Financial said Dexter Hsu an analyst at JP Morgan in Taiwan
on Tuesday
An executive from Deutsche Bank which is Primus financial
advisor told Reuters that Primus would be using bank loans to
pay up to 35 percent of the 2 15 billion The remainder will
be paid for using Primus and China Strategic s equity said
the executive who asked not to be named due to the sensitivity
of the issue
First Commercial Bank and Taiwan Cooperative Commercial
Bank in Taiwan are arranging a NT 20 billion around 588
million loan for Primus to back its purchase of Nan Shan
according to Thomson Reuters LPC
FCB and Taiwan Cooperative are expected to each prefund
NT 10 billion around 294 million of the loan before Primus
settling the Nan Shan transaction
EXPANSION PLANS
Earlier this year Primus co chief executive Wing fai Ng
said in an interview with Reuters that Primus plans to use Nan
Shan as a base to expand to Hong Kong Malaysia and Japan
Morse and Ng will be co CEOs of Primus Nan Shan
Some analysts and bankers involved in the deal said putting
a valuation on the AIG s Taiwan life insurance unit was
difficult
The pricing is tricky If you just look at the book value
of Nan Shan then the acquisition price is at a 30 percent
discount said Pandora Lee an analyst with UBS
The agreement marks the end of an auction that spanned
several months and involved multiple bidders including private
equity firms such as the Carlyle Group Primus had been
competing in the end with Chinatrust Financial
Morgan Stanley advised AIG on the process
Additional reporting by Rachel Lee and Chyen Yee Lee in
TAIPEI and Parvathy Ullatil in HONG KONG Editing by Valerie
Lee |
MS | EARNINGS POLL Actelion Q3 profit seen falling 3 pct | Actelion Q3 results
Tuesday Oct 20 0500 GMT
Q3 net profit seen falling 3 percent to 109 million Sfr 107 million
ZURICH Oct 14 Reuters Following is a breakdown of analysts forecasts
for Actelion Europe s largest biotech company is due to report figures on Oct
20
Figures in million Swiss francs EPS in francs
Q3
Mean Median High Low No Yr ago Change Prev Q
Total revenue 451 454 465 428 11 394 14 5 450
Revenue Tracleer 391 392 399 376 11 341 14 7 387
Operating profit 126 129 139 112 11 138 8 7 121
Pretax profit 121 123 132 108 11 121 0 0 129
Net income 109 112 120 97 11 112 2 7 116
EPS 0 90 0 90 1 01 0 79 11 0 95 5 3 0 98
9 Months
Mean Median High Low No Yr ago Change
Total revenue 1 307 1 309 1 320 1 283 11 1 070 22 1
Revenue Tracleer 1 130 1 131 1 138 1 115 11 946 19 5
Operating profit 369 372 382 354 11 275 34 2
Pretax profit 363 365 374 349 11 260 39 6
Net income 328 330 338 316 11 239 37 2
EPS 2 75 2 75 2 86 2 64 11 2 02 36 1
FY2009
Mean Median High Low No Yr ago Change
Total revenue 1 754 1 773 1 807 1 658 11 1 474 19 0
Revenue Tracleer 1 517 1 520 1 542 1 481 11 1 294 17 2
Operating profit 442 448 466 404 11 371 19 1
Pretax profit 432 436 456 392 11 353 22 4
Net income 390 393 411 354 11 322 21 1
EPS 3 24 3 24 3 49 2 87 11 2 60 24 6
FY2010
Mean Median High Low No
Total revenue 1 902 1 919 2 004 1 711 11
Revenue Tracleer 1 648 1 661 1 755 1 466 11
Operating profit 508 489 628 440 11
Pretax profit 501 479 625 429 11
Net income 447 431 550 373 11
EPS 3 71 3 64 4 64 3 00 11
Data provided by Inquiry Financial Europe AB
Estimates were obtained from the following banks
Bank of America Merrill Lynch Citi Exane BNP Paribas Helvea JP Morgan
Kepler Capital Markets Morgan Stanley Nomura Securities Piper Jaffrey
Raymond James ZKB
1 1 019 Swiss Franc
Editing by Jon Loades Carter |
MS | UPDATE 2 Alpha Bank joins cashcall move to repay state | To raise 986 million euros via 3 for 10 rights issue
Issue priced at 8 0 eur 33 percent discount
Will buy back preferred shares issued to the state
To resume dividend payments
Adds analyst comment share reaction background
By George Georgiopoulos
ATHENS Oct 19 Reuters Alpha Bank Greece s third
largest lender will issue new shares and repay almost 1 billion
euros 1 49 billion of state support in a move to cut ties
with government and resume paying dividends
A 3 for 10 rights issue will raise 986 million euros to
redeem 940 million euros of preferred shares the bank sold the
government earlier this year The deal is expected to be
completed before May 2010
Alpha joins a raft of other lenders raising cash to repay
state aid taken on at the height of the financial crisis
France s BNP Paribas Societe Generale and Credit Agricole
have announced cash calls for a combined 12 billion euros to
repay state support
Austria s Erste Group Bank is planning to raise at least 1
billion euros in early November sources have said but that
will be used mainly to boost capital
Italy s UniCredit and Intesa Sanpaolo last month snubbed
government help and Britain s Lloyds and Royal Bank of Scotland
are expected to raise billions to limit the state s
shareholding
Banks around the world are trying to cut loose from
government aid fearful of more state interference on
compensation or lending policies
OTHER GREEK BANKS TO FOLLOW
Alpha s cash call at 8 0 euros a share a 32 9 percent
discount to the theoretical ex rights price on Oct 16 is
expected to be completed by early December
The bank s shares had almost erased early trade losses on
Monday changing hands 0 69 percent lower at 13 01 euros at 0934
GMT They are up 95 percent so far this year outperforming the
58 percent gain in the Athens bourse s general index
Analysts expect other Greek lenders which have yet to
recapitalise to tap the market at a later date
After the completion of the rights issue we anticipate that
Eurobank with preference shares to the state of 950 million
euros will follow suit with a similar transaction probably in
the first quarter next year said Manos Giakoumis head of
research at Euroxx Securities
Alpha Bank received the capital injection by selling
preferred shares to the previous conservative government as part
of a 28 billion euro state support scheme to keep Greece s
economy adequately funded during the global credit crunch
All major Greek lenders including National Bank EFG
Eurobank and Piraeus Bank took part in the scheme which was a
combination of capital injections and bank debt guarantees
Piraeus Bank however which received a 370 million euro
capital boost said on Monday it was not contemplating a similar
move as its capital adequacy remains sound
Alpha s cash call will enable it to resume its consistent
dividend policy and exit the provisioning cycle earlier than its
peers it said
For the first time since 1948 the bank did not pay a
dividend in 2009 due to restrictions on payouts for banks
accepting government support
The rights issue will be underwritten by a syndicate of
investment banks with JP Morgan the global coordinator and joint
bookrunner joined by BofA Merrill Lynch Morgan Stanley
Deutsche Bank Citi Nomura and UBS
Alpha said it expects the issue to boost its core Tier 1
ratio which stood at 9 1 percent at end June by 200 basis
points
Editing by David Cowell |
JPM | Defiant U S prosecutor fired by Trump administration | By Andy Sullivan and Mark Hosenball WASHINGTON Reuters A prominent U S prosecutor said the Trump administration fired him on Saturday after he refused to step down adding a discordant note to what is normally a routine changing of top attorneys when a new president takes office New York U S Attorney Preet Bharara s defiant exit first announced on Twitter raised questions about President Donald Trump s ability to fill top jobs throughout his government Trump has yet to put forward any candidates to serve as the nation s 93 district attorneys even as his Justice Department asked the 46 who have not yet quit to hand in their resignations on Friday Key positions at agencies like the State Department and the Defense Department also remain unfilled As the federal prosecutor for Manhattan and surrounding areas since 2009 Bharara secured insider trading settlements from Wall Street firms and won criminal convictions in high profile corruption and terrorism cases He told reporters in November that Trump had asked him to stay in his post and he refused to resign when asked to do so by the Justice Department on Friday He said he was fired on Saturday afternoon Serving my country as U S Attorney here for the past seven years will forever be the greatest honor of my professional life no matter what else I do or how long I live Bharara said in a press statement The Justice Department confirmed that Bharara was no longer serving in the position and declined further comment Like all U S attorneys Bharara is a political appointee who can be replaced when a new president takes office Previous presidents have often asked outgoing U S attorneys to stay on the job until their replacements win confirmation in the U S Senate The Washington Post citing two people close to Trump said the president s adviser Stephen Bannon and Attorney General Jeff Sessions wanted a clean slate of federal prosecutors to assert the administration s power But the decision to replace so many sitting attorneys at once has raised questions about whether the Trump administration s ability to enforce the nation s laws would be hindered President Trump s abrupt and unexplained decision to summarily remove over 40 U S attorneys has once again caused chaos in the federal government New York Attorney General Eric Schneiderman a Democrat said Senator Patrick Leahy a Democrat on the Senate Judiciary Committee said the firings showed the independence of the Justice Department is at risk under this administration and that lawmakers had to carefully evaluate Trump s replacements Career attorneys will carry on that work until new U S attorneys are put in place the Justice Department said Bharara said his deputy Joon Kim will serve as his temporary replacement Marc Mukasey a defense lawyer whose father served as attorney general under Republican President George W Bush has been mentioned as a possible replacement He did not respond to a request for comment HIGH PROFILE OFFICE Bharara s office handles some of the most critical business and criminal cases passing through the federal judicial system He has been overseeing a probe into New York City Mayor Bill de Blasio s fundraising Bharara has successfully prosecuted state and local politicians for corruption including former New York Assembly Speaker Sheldon Silver He won a lifetime sentence against the Times Square NYSE SQ bomber Faisal Shahzad and a 25 year sentence for international arms dealer Viktor Bout He won a 1 8 billion insider trading settlement against SAC Capital Advisors the largest in history which forced the hedge fund to shut down and he forced JPMorgan Chase NYSE JPM to pay 1 7 billion to settle charges related to its role in the Bernie Madoff Ponzi scheme His firing so early in President Trump s tenure is somewhat unexpected but if you had asked me a few months ago whether I expected Preet to still be in that job in March I would have said no said Matthew Schwartz a former prosecutor under Bharara Trump has asked two U S prosecutors to remain on the job according to the Justice Department
U S Attorney Rod Rosenstein of Maryland has been asked to stay on as the Senate considers his nomination to serve as the No 2 Justice Department official and U S Attorney Dana Boente of Virginia who is temporarily serving in that position has also been asked to remain |
JPM | JP Morgan prepares wealth clients for change in IRAs | NEW YORK Reuters JPMorgan Chase Co NYSE JPM has sent some wealth management customers letters this month notifying them that they could be moved to the firm s self directed platform soon ahead of a pending Labor Department retirement regulation the bank said on Monday While implementation of the U S Labor Department s fiduciary rule may ultimately be delayed the letters went out as part of a plan the bank announced in November to end retirement accounts that pay financial advisers commissions Clients of Chase Wealth Management Private Bank and J P Morgan Securities who had individual retirement accounts were given the option to either choose to pay a financial adviser a flat fee based on how much money they have invested or an online platform to manage their retirement account themselves The move only affected a small portion of J P Morgan s clients because only 5 percent of the 1 1 trillion in client assets managed at J P Morgan Wealth Management Investment Solutions are in retirement accounts However some clients had not yet responded with an answer as to which option they wanted Clients who had not chosen one received the letters in early March notifying them that by April 7 they may be moved to the self directed platform unless they respond with another preference The letter also included a condition that if the Labor Department rule is delayed the bank may not move all of these accounts We wanted to make sure we gave clients ample opportunity to decide which option they preferred said JPMorgan Chase spokesman Darin Oduyoye adding that the bank has invested in building out its online self directed services Last September the bank announced it had bought a stake in InvestCloud a software company that it will use to customize its website and mobile apps for its wide ranging client base The fiduciary rule aims to put the interests of retirement investors first by eliminating potential conflicts of interest for advisers such as investments that pay different levels of commissions
As a result JPMorgan Bank of America s Merrill Lynch and Commonwealth Financial Network among others have chosen to gradually phase out retirement accounts that pay commissions |
JPM | Goodbye deflation hello inflation investors position for turnaround | By Dhara Ranasinghe and Abhinav Ramnarayan LONDON Reuters The demons of deflation are being consigned to the past by a pick up in price pressures globally prompting investors to seek protection in inflation protected bonds New Zealand sold its first inflation linked bond in over two years earlier this month and in a sign of nascent demand Italy last week seized the opportunity to sell 3 billion euros of so called linkers via a syndicate of banks Since the beginning of the year demand for linkers has increased a lot we have really turned a corner said one banker who worked on the deal asking not to be named The climate for inflation linked debt has changed completely he said Just a year ago it was deflation falling prices that restrain consumer spending and economic growth that plagued investors and central banks keeping in place the ultra easy monetary policy that has pushed government borrowing costs in much of the developed world below zero percent Market pricing still points to subdued long term inflation but evidence that price pressures are rising coupled with talk of a sizeable U S fiscal boost means investors have backed away from the most bearish inflation bets placed after last year s vote in Britain to leave the European Union The benchmark Barclays LON BARC World Government Inflation Linked Index is up almost 2 percent from a nine month low hit in December albeit well below peaks hit last year The difference between the yield on an inflation protected bond and a nominal bond of the same maturity the breakeven rate meanwhile has widened in Europe and the United States over the past six months reflecting rising inflation expectations Breakeven rates in the United States are around 2 percent for 10 year debt having hit their highest levels since September 2014 in January That compares with around 1 5 percent last July when investors bet the Fed would miss its 2 percent inflation target over a 10 year period German 10 year breakevens the euro zone benchmark stand at 1 41 percent below the European Central Bank s inflation target of close to but below 2 percent but up from less than 1 percent last year If inflation on average is higher than the breakeven rate linkers will outperform their fixed rate peers We re buying inflation linked notes right now said Bob Michele global head of fixed income at JPMorgan NYSE JPM Asset Management We think that inflation is undervalued whether it s the U S or Europe or Japan we see inflation picking up in all of those markets The U S Federal Reserve s favored inflation measure the core PCE price index notched up its biggest monthly rise in January and was up 1 7 percent year on year The Fed is expected to raise rates on Wednesday a move viewed as unlikely just a few weeks ago Euro zone inflation hit a four year high of 2 percent in February above the ECB s target rate while Swiss inflation rose into positive territory in January for the first time in more than two years In Japan which has battled deflation for years core consumer prices rose 0 1 percent in January from a year earlier the first year on year rise since December 2015 FOR REAL Analysts say scepticism about a sustained recovery in inflation after years of weak economic growth explains why investors are creeping rather than piling back into linkers Thirty year breakeven rates in the euro zone for instance at 1 60 percent suggest long term inflation expectations remain subdued but are up from record lows just above 1 percent seen in July last year The ECB said last week that it no longer sees a risk of deflation in the single currency bloc fanning talk it may start to scale back its monetary stimulus this year Europe is the most interesting place right now said Jon Day a global bond portfolio manager at Newton Investment Management Political risks are keeping inflation expectations low but we expect focus to return to inflation when those risks pass he said adding that he has been buying Spanish inflation linked bonds as inflation protection in the euro zone For some investors fears that far right anti euro French presidential candidate Marine Le Pen tipped to contest a final run off round of voting in May is a reason to buy French inflation protection since a new French currency would fall and inflation rise if France were to leave the euro Other market gauges such as the five year five year forward inflation rates also point to a rise in investors inflation expectations although those rates have slipped in recent weeks reflecting a general move into safe haven assets related to French election jitters We think that actually growth and inflation news will continue to surprise on the upside and the market is too bearish on economic prospects said Cosimo Marasciulo head of European fixed income at Pioneer Investments
For a Graphic on Gimme shelter German U S linker breakeven rates and inflation expectations click Graphic by Nigel Stephenson Editing by Jeremy Gaunt |
C | Argentine central bank to send regulators to local Citibank HQ media | BUENOS AIRES Reuters Argentina s central bank will send regulators to the headquarters of Citibank Argentina on Monday the head of the monetary authority has said the latest move between the bank and the state over defaulted debt The regulators will perform an integral inspection to guarantee normal functioning of Citibank Argentina central bank chief Alejandro Vanoli said in a story published on Sunday in local newspaper Tiempo Argentina four days after stripping authority from the bank s CEO Last month Argentina s securities regulator said Citibank Argentina had violated local laws in striking a deal with litigating U S hedge funds and suspended the bank from conducting capital market operations Under the accord Citibank agreed not to appeal a U S court ruling that interest payments on restructured bonds subject to Argentine law could not be processed if the bank was allowed to make two one off payments to help it exit its local custody business On April 1 the central bank said Citibank Argentina head Gabriel Ribisich could no longer represent the bank because he ignored Argentina s legal framework regarding sovereign debt restructuring A spokesperson for Citibank Argentina s parent group Citigroup NYSE C could not be immediately reached for comment Citibank Argentina sees itself as an innocent party caught up in a years long court battle between the Argentine government and the New York based funds after they were awarded full payment on their defaulted debt by a U S judge
The judge barred Argentina from servicing its performing debt until it settled with the creditors but Argentina insisted Citibank keep processing payments |
C | Supreme Court seeks Obama administration views on Iran bank judgment | By Lawrence Hurley WASHINGTON Reuters The U S Supreme Court on Monday asked President Barack Obama s administration to weigh in on an appeal over whether Iran s central bank must pay 1 75 billion to relatives of American troops killed in the 1983 Marine Corps barracks bombing in Lebanon The court said it wants the U S Justice Department s views on whether the nine justices should hear the appeal filed by Bank Markazi If the justices ultimately decline to hear Bank Markazi s appeal the money currently held in a trust account would have to be turned over to families of the victims It would go toward paying off a 2 65 billion U S court judgment the families won against Iran in 2007 The families accused Iran of providing material support to Hezbollah the Iran backed Shi ite militant group responsible for the October 1983 truck bomb attack at the Marine compound in Beirut that killed 241 U S servicemen The high court s action comes at a delicate time for American Iranian relations with the United States and other world powers last week reaching a framework agreement intended to curb Iran s nuclear program in exchange for lifting economic sanctions The legal question is whether a 2012 law passed by the U S Congress that specifically addressed the funds at issue in the dispute violates the U S Constitution by dictating the outcome of a court case The bank also says the appeals court ruling violates a 1955 U S Iran treaty The Supreme Court regularly asks the government for views on whether to hear cases when an issue directly affects U S interests Traditionally the court gives considerable weight to what the government says although it varies from case to case The court did not set a deadline for the administration to respond The 2010 lawsuit was filed after the U S Treasury Department uncovered the funds at Citibank part of Citigroup Inc N C The Iranian central bank is appealing a July 2014 ruling by the New York based 2nd U S Circuit Court of Appeals that the money held by Citibank in New York should be handed over President Ronald Reagan dispatched U S Marines in 1982 to Lebanon on a peacekeeping mission to try to stabilize the war torn nation following an Israeli invasion In the immediate aftermath of the attack and a near simultaneous bombing that killed French paratroopers Reagan vowed to keep the Marines in Lebanon but pulled them out just months later
The case is Bank Markazi v Peterson U S Supreme Court No 14 770 |
C | Argentina sues Citibank over deal with holdout creditors | By Richard Lough BUENOS AIRES Reuters Argentina is suing Citibank Argentina in local courts for striking an illegal deal with a group of U S creditors fighting the government over unpaid debt its economy minister said on Wednesday The South American country s legal action marks a fresh low in its deteriorating relations with the local subsidiary of Citigroup Inc NYSE C which has portrayed itself as an innocent party in Argentina s bitter debt battle with the funds Citigroup denied violating Argentine laws and said it was disappointed by Argentina s judicial steps It did not detail what action it would take in response Economy Minister Axel Kicillof said last month s agreement involved Citibank which had acted as custodian of some Argentine law sovereign bonds agreeing to handover the details of client accounts and fund movements to the hedge funds Kicillof said the deal violated and interfered with regulations governing our public debt Citibank Argentina found itself caught in the eye of Argentina s debt storm after the government demanded it process coupon payments on exchanged debt in defiance of U S court orders The case stems from a lengthy legal feud between President Cristina Fernandez s government and the funds led by billionaire Paul Singer s NML Capital over the payment terms offered in bond swaps that followed Argentina s record 2002 default U S District Judge Thomas Griesa awarded the funds full payment on their defaulted bonds and barred Argentina from servicing its restructured securities until it settled with the creditors After Griesa ruled on March 12 that there would be no exemption for local law bonds Citibank Argentina announced it planned to quit its local custody business because of a threat from the government to strip it of its banking license It then reached a deal with the funds which was approved by Griesa not to appeal the court s order if it was allowed to process two one off transfers in March and June while it exited its role as custodian This was not a decision taken lightly Citigroup said in a statement Citibank has acted in accordance with all applicable laws Kicillof lampooned Citibank Argentina for signing a deal with the devil and said the government had asked the Argentine courts to nullify the pact
Argentina has suspended the bank from capital market operations and stripped its chief executive of his authority The central bank on Monday sent regulators into the bank s headquarters to monitor its operations |
C | Stocks Rally On More Than Just Central Banks | Stocks Never Move Based On One Input
Are central banks the only reason stocks have not collapsed in 2016 The Citigroup NYSE C Economic Surprise Index says no From a Wall Street Journal article dated July 12
Economic data is finally beating expectations The Citi U S Economic Surprise Index which gauges how data compare with economists forecasts is at its highest since January 2015 Meanwhile it s positive for the first time since November meaning data are topping expectations rather than missing
The S P 500 Before The Data Started To Improve
On Monday June 27 the Citigroup Economic Surprise Index was still in an indecisive range and the market was concerned about the economic impact of the recent Brexit referendum
The S P 500 After The Data Started To Improve
Central banks have played a big role in helping stocks get off the deck in 2016 However the stock market has also responded to improving economic data
Post Brexit Economic Data
Not only has the economic data in the U S improved but data in the wake of Brexit in the United Kingdom is also coming in better than expected From CNBC
U K retail sales posted a strong beat on Thursday adding to a positive picture for the country s economy following the decision to leave the European Union July retail sales an indicator of post Brexit vote sentiment posted a monthly rise of 1 4 percent versus consensus expectations of a 0 2 percent increase The yearly figure saw a rise of 5 9 percent according to official data by the Office for National Statistics
Investment Implications The Weight Of The Evidence
As outlined in detail on August 17 the hard technical data has improved significantly since June 27 The Citigroup Economic Surprise Index tells us the economic data has also improved since June 27 The odds of success in economically sensitive assets such as stocks and commodities improve when the technicals and fundamentals are singing from the same hymnal The wisdom of the market wizards also reminds us to keep an open mind about the whys behind the recent push higher in equity prices
The second item is something that Ed Seykota taught me When a market makes a historic high it is telling you something No matter how many people tell you why the market shouldn t be that high or why nothing has changed the mere fact that the price is at a new high tells you something has changed
Larry Hite Market Wizards |
C | Fed Or Trump Who Will Decide The Fate Of Gold ETFs | Gold the star performer of this year is presently sitting on the fence with possibilities and perils carving out its future run
A rush to seek safety for the most part of 1H16 triggered by global growth issues and a major event like Brexit at the end of the second quarter bolstered demand for safe haven assets like gold this year Plus a subdued greenback amid no fresh Fed rate hike so far this year has given a boost to this precious metal Gold bullion ETF SPDR Gold Shares NYSE GLD LAGOS GLD is up about 26 so far this year as of August 22 2016
What Lies Ahead
Now the rest of 2016 is quite eventful with two major occurrences lurking one is the presidential election in November and the other is the possible Fed rate hike
Fed Tightening Scenario A Negative for Gold
A Fed rate hike is not a favorable for gold bugs as the move means dollar strength which in turn will weigh on commodity prices including gold This is because these commodities are priced in the greenback This is truer giventhat Fed Vice Chairman Stanley Fischer recently gave hints of an imminent Fed rate hike echoing a few other members
Fischer suggested the Fed is approaching its goals of maximum sustainable employment and This very comment clearly indicates that he is in favor of further interest rate hikes this year In fact following Fischer s comments dollar ETF PowerShares DB US Dollar Bullish Fund gained while GLD reacted negatively GLD was down about 0 2 on August 22 and it shed about 0 1 after hours read
But Can Trump s Win Brighten Gold Further
As per an article published in Financial Times Citi s strategists believe that historically U S elections do not impact gold prices much But this time it is a different case as Democrat candidate Clinton and Republican candidate Trump share way dissimilar views over the economy
Though as per Clinton has higher chances of winning with 46 9 votes and Trump with 39 6 the investing case needs to discussed if Trump wins And so far most of Trump s delivered speeches are as per ABN Amro As per the research organization Trump s policies may hinder U S growth and thus may cause an upheaval in the U S market pushing the safe resort gold to as high as 1 850 read
Citigroup NYSE C sees gold prices touching 1 400 levels while the metal will likely slide to the 1 250 level if Clinton makes it to the White House Citigroup believes that Trump s protectionist ideas on external trade and immigration if realized suggest a US recession sooner rather than later The idea of building Mexico Wall or his on Muslim entry may upset the U S economy and risky securities and thus drive a safe haven rally read
Moreover Trump is a Concerned about the U S economy s 19 trillion of debt Trump wants to keep the interest rate low ahead so that the country does not have to end up paying a much higher interest payment
Nomura has also joined the Trump Boosting Gold group as it believes a Trump presidency could well trigger higher macro risks globally with investors further allocating assets to gold
As per UBS the Fed may hike rates in December and thus the latest dip can be used as a buying opportunity as a September move is less likely The research house also believes that the Fed s ability to raise rates is more constrained relative to previous cycles going by the article published in Financial Times
Not to Fear Fed Chest Thumping Go for Gold
All in all gold is likely to win ahead with rock bottom interest rates prevailing in most of the corners of the developed world Even if the Fed hikes rates ahead it would not likely be more than 0 25 which can be digested by the market The recent dip in prices also steers clear of overvaluation concerns in gold giving it a fresh way to run read
If this was not enough the annualized return of the Dow Jones Industrial Average Index was 7 in the Democratic rule and 3 in the Republican rule It means that Democrats are good for stocks and Republicans are less beneficial for the risky stock market It also means that safe havens like gold should shine more under Republican presidency read
Gold ETFs in Focus
Investors may thus keep a watch on gold ETFs like GLD iShares Gold Trust ETF AX IAU ETRACS CMCI Gold Total Return ETN Van Eck Merk Gold Trust ETF ETFS Physical Swiss Gold Shares ETF and PowerShares DB Gold Fund HN DGL
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 | Citigroup C Ends Legal Battle Over ThankYou Trademark | Citigroup Inc NYSE C and AT T Inc NYSE T have put an end to the legal tussle over a trademark infringement Per a filing on Monday with a Manhattan federal court the companies have dropped allegations against each other with prejudice which means that the charges cannot be brought again Citigroup had alleged that AT T s use of the trademarks thanks and AT T thanks infringes upon the former s trademarks including ThankYou and Citi ThankYou According to the lawsuit filed in June AT T announced its new appreciation program AT T thanks for its customers on Jun 2 despite being aware of Citigroup s use of related trademarks The banking giant has been using ThankYou trademark since 2004 in a customer loyalty program with approximately 15 million members in the country The bank claimed For many years Citigroup has used trademarks consisting of and or containing the term THANKYOU including THANKYOU CITI THANKYOU CITIBUSINESS THANKYOU THANKYOU FROM CITI and THANKYOU YOUR WAY in connection with a variety of customer loyalty reward incentive and redemption programs collectively the THANKYOU Marks Citigroup also stated that it has a co branded credit card with AT T the AT T Universal Card that gives ThankYou reward points to its users based on the amount spent Moreover AT T s trademark designs have similar fonts and word placements So AT T s new program is bound to confuse costumers Hence Citigroup wanted the court order to stop AT T from using the terms Apart from this order Citigroup also sought unspecified damages AT T countered Citigroup s allegations The company spokesperson Fletcher Cook had stated in an email This may come as a surprise to Citigroup but the law does not allow one company to own the word thanks We re going to continue to say thanks to our customers Notably this case was dismissed after a U S Federal judge earlier this month rejected Citigroup s request to block AT T from using AT T thanks for its customer loyalty program Judge Katherine Forrest in Manhattan mentioned that though both the companies use similar words that express a message of gratitude Citigroup has failed to show that customers would be confused or the bank would suffer irreparable harm if AT T kept using the phrase AT T thanks The termination of this suit certainly helps in maintaining the business relationship between the two companies While Citigroup spokeswoman Jennifer Bombardier said in a statement We have decided not to pursue this matter any further and look forward to continuing to work with AT T AT T spokesman Fletcher Cook stated We consider the matter closed Currently both Citigroup and AT T carry a Zacks Rank 3 Hold A couple of better ranked finance stocks include Enterprise Financial Services Corp NYSE C and Credit Acceptance Corp NYSE C each sporting a Zacks Rank 1 Strong Buy Want the latest recommendations from Zacks Investment Research Today you can download 7 Best Stocks for the Next 30 Days |
MPC | Swing Trading Watch List AER LYV DK MPC SFL | Here s Your Swing Trading Watch List
Long AerCap Holdings NV NYSE AER
Long Live Nation Entertainment NYSE LYV
Long Delek US Holdings Inc NYSE DK
Short Marathon Petroleum NYSE MPC
Short Ship Finance International NYSE SFL |
MPC | What s Ahead For Marathon Oil MRO This Earnings Season | Marathon Oil Corporation NYSE MRO a leading energy firm with a large and geographically diverse reserve base and solid project pipeline is set to release first quarter 2016 financial results after the closing bell on May 4 Last quarter the company posted a positive average surprise of 4 00 Moreover the oil and natural gas exploration and production E P firm posted an average positive surprise of 22 69 for the trailing four quarters Let s see how things are shaping up for this announcement Factors to Consider this Quarter Marathon Oil expects production from its North America E P unit one of the major contributing segments of around 230 000 240 000 barrels of oil equivalent per day BOE d This is lower than both the sequential and the year ago quarter output On top of that upstream firms like Marathon Oil are likely to have been hit hard by weak crude prices during the January March quarter Price realization is an important component of margin for such E P firms Moreover the absence of the downstream segment as Marathon Oil spun off its refining business in 2011 with the formation of Marathon Petroleum Corp NYSE MPC not only reduces its asset diversification but also increases its risk profile especially in this weak pricing scenario Earnings Whispers Our proven model does not conclusively show that Marathon Oil is likely to beat estimates this quarter That is because a stock needs to have both a positive and a Zacks Rank 1 2 or 3 for this to happen That is not the case here as you will see below Zacks ESP Marathon Oil currently has an Earnings ESP of 0 00 This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 47 cents per share Zacks Rank Marathon Oil carries a Zacks Rank 3 Hold While this is favors our prediction a 0 00 ESP leaves our forecast inconclusive We caution against stocks with a Zacks Rank 4 or 5 Sell rated going into the earnings announcement especially when the company is seeing negative estimate revisions Stocks to ConsiderHere are some companies that according to our model have the right combination of elements to post an earnings beat this quarter Enable Midstream Partners LP NYSE ENBL with an Earnings ESP of 21 05 and a Zacks Rank 2 Buy Hercules Offshore Inc NASDAQ HERO has an Earnings ESP of 15 24 and a Zacks Rank 2 DCP Midstream Partners LP NYSE DPM with an Earnings ESP of 9 52 and a Zacks Rank 2 |
MS | FOREX US Dollar falls on rate outlook Aussie jumps | U S dollar down across the board on rate view
Aussie dollar hits 14 mth high after RBA raises rates
UK Independent reports talk to replace US in oil trade
Oil states say no talks on replacing dollar
Adds comment details updates prices
By Wanfeng Zhou
NEW YORK Oct 6 Reuters The U S dollar fell across the
board on Tuesday after an interest rate hike in Australia
reinforced expectations the Federal Reserve will lag other
central banks in ending its loose monetary policy
Adding to pressure on the dollar was a British newspaper
report that Gulf Arab states were in secret talks with Russia
China Japan and France to replace the U S dollar with a
basket of currencies in trading oil Big oil producing
countries denied the report For details see ID nSYD421795
The Australian dollar advanced to a 14 month high against
its U S counterpart after the Reserve Bank of Australia RBA
raised its key cash rate by 25 basis points to 3 25 percent
becoming the first major central bank to hike as the global
financial crisis eases See ID nSYD520296
Expectations for prolonged low U S interest rates due to
tepid economic recovery in the United States mean investors
are less enthusiastic to hold dollar denominated assets
The RBA decision made clear that the interest rate and
growth differentials are moving against the U S dollar right
now said Sophia Drossos co head of global currency strategy
at Morgan Stanley in New York
There s going to be a divergence between the U S rate
outlook and the rate outlook in other economies she added
It s very clear the Fed is going to lag other central banks
because the recovery in the United States is not going to be as
strong That s the key reason the dollar is going to remain on
the defensive
In midday trading the ICE Futures U S dollar index which
tracks the greenback versus a basket of six major currencies
fell 0 6 percent to 76 201 inching back towards a
13 month low of 75 827 hit in late September
Stock markets worldwide rallied following the RBA move as
optimism grew the global economy was recovering putting
further pressure on the dollar as safe haven demand dwindled
On the margin the RBA hike is a net positive for risk
sentiment said Omer Esiner senior market analyst at Travelex
Global Business Payments in Washington It s the latest sign
that the global recession is abating albeit at a slow pace
The euro rose 0 7 percent to 1 4745 and the dollar
fell 0 8 percent to 88 75 yen near a recent eight month
low of 88 23 yen hit on electronic trading platform EBS
AUSSIE SURGES
The Australian dollar rallied as high as US 0 8919
according to Reuters data and last traded up 1 6 percent at
US 0 8910 The New Zealand dollar also hit a 14 month
high and was last at US 0 7363 up 0 7 percent
For a graphic comparing central bank rates click here
Some traders said the Australian dollar would push higher
on expectations of further monetary tightening But others said
more rate increases were already factored in and the Aussie s
upside would probably be limited around US 0 90
Mitul Kotecha head of global foreign exchange strategy at
Calyon said while the RBA has set the tone for other central
banks most will likely wait for several months
The widening yield advantage at a time when the search for
yield is intensifying points to further appreciation of the
Australian dollar especially as the RBA unlike other central
banks does not seem to be particularly concerned about
currency strength Kotecha wrote in a research note
The U S dollar has sold off recently on talk the Federal
Reserve will keep rates low for some time and the dollar has
become a funding currency for carry trades In such trades
investors borrow in low yielding currencies and use the funds
to invest in assets with greater returns
Greg Salvaggio vice president of trading at Tempus
Consulting in Washington expected the dollar to recover once
the Fed starts tightening
We think the Fed will hike very very early in the first
quarter of 2010 That ll ultimately start to lead to some
dollar strength he said
Editing by Andrew Hay |
MS | FTSE flat strong miners offset weak oils | FTSE 100 flat after strong gains Tuesday
Energy stocks fall as profit takers move in
Investors await start of U S Q3 earnings season
By Tricia Wright
LONDON Oct 7 Reuters Britain s top share index was flat
early on Wednesday as investors paused for breath after the
previous session s sharp rise with gains in miners offsetting
weak energy stocks and ahead of the U S third quarter earnings
season
By 0807 GMT the FTSE 100 was up 0 74 points at 5 138 72
having closed 2 3 percent higher on Tuesday on growing
confidence over the outlook for the global economy
Certainly in terms of the heady couple of days we ve just
come out of it does seem we re having a slight pause for breath
today said Richard Hunter head of UK equities at Hargreaves
Lansdown
We are now slowly walking into the third quarter reporting
season next week in particular will get busy in the U S
and that s the crossroads we find ourselves at he said
Energy stocks took the most points off the index as profit
takers cashed in some of Tuesday s gains though oil prices rose
for a third day topping 71 a barrel
BP BG Group and Royal Dutch Shell fell 0 9 to 1 5 percent
Weakness was also seen among banks after the previous
session s rally with Barclays Lloyds Banking Group and
Standard Chartered down 0 1 to 0 8 percent
Heavyweight HSBC however put on 0 9 percent
Europe s largest bank said it would be forced to delay
raising its dividend if new capital rules were applied too
heavily or quickly the Times reported the bank s head of
investment bank as saying
Food retailers were lower as J Sainsbury released its
second quarter trading update
Britain s third biggest supermarket group met forecasts with
a slight slowdown in quarterly sales growth and said industry
growth will moderate further as food price inflation eases
Peer WM Morrison dropped 1 percent while Tesco which posted
its first half results on Tuesday shed 0 9 percent
Kingfisher was among the top blue chip risers up 3 3
percent after UBS upgraded its recommendation on Europe s
largest home improvement retailer to buy from neutral
Morgan Stanley also upped its stance on the stock to
equal weight from underweight
It has strong margin momentum operational focus and cash
flow analysts at UBS said in a note
Kingfisher was among FTSE 100 stocks trading ex dividend on
Wednesday alongside Admiral Group and WPP Group with the three
knocking 0 66 points off the blue chip index
British Airways shed 0 6 percent The airline said it would
cut the equivalent of 1 700 staff in the United Kingdom and was
planning a two year freeze on basic pay for cabin crew
MINERS CONTINUE CLIMB
Miners built on gains made the previous session against a
backdrop of broadly higher metals prices
Anglo American Eurasian Natural Resources Kazakhmys and
Rio Tinto rose 0 6 to 0 9 percent
Gold eased from record highs on Wednesday as investors took
profits but sentiment remained bullish and a fresh record was
within sight as the dollar s weakness and inflation concerns
reinforced bullion s appeal as a hedge
Randgold Resources put on 0 5 percent
There were signs of domestic economic recovery as British
consumer morale rose to its highest in 17 months in September
with the Nationwide Consumer Confidence Index rising to 71 from
an upwardly revised 65 in August
And permanent job placements in Britain continued to grow in
September and rose at their fastest pace in 18 months a survey
by the Recruitment and Employment Confederation and accountany
firm KPMG showed
Editing by Hans Peters |
MS | Russia Magnit to roadshow share sale end Oct sources | MOSCOW Oct 7 Reuters Russian grocery chain Magnit will
meet investors ahead of a planned secondary share placement on
Oct 27 28 and may decide on pricing by the end of the month
sources close to the deal said on Wednesday
One source said the company did not plan to pre market the
placement and had yet to decide whether to announce a price
range for the sale
Industry sources earlier told Reuters Magnit had hired VTB
Capital and Morgan Stanley for a potential secondary share
offering which could raise around 800 million at current prices
if it places the full volume
Reporting by Olga Popova and Maria Plis writing by Maria
Kiselyova editing by Melissa Akin |
MS | RPT POLL China Sept money supply loan growth seen stable | For more stories on the Chinese economy click ID nECONCN
What China Sept money supply loan data Q3 FX reserves
When No fixed time but Oct 15 at latest
M2 lending to mark time FX reserves may hit 2 25 trln
Repeats story sent late on Friday
BEIJING Oct 9 Reuters China s money supply and lending
growth maintained a high tempo last month as Beijing kept with
its accommodative monetary stance for fear that economic
recovery is not yet on a solid footing according to a Reuters
poll
The median forecast of 22 economists is for annual growth
of 28 4 percent in the broad M2 measure of money supply in
September slightly slower than August s 28 5 percent pace
We expect M2 will stay relatively stable for the rest of
this year while M1 will keep accelerating as enterprises are
going to be more active as the economy picks up said Zhu
Jianfang chief macroeconomic analyst at CITIC Securities in
Beijing
Economists also projected that yuan lending growth probably
increased by 34 0 percent in September from a year earlier
just a touch slower than August s 34 1 percent pace
Liu Mingkang chairman of the China Banking Regulatory
Commission said on Monday that banks issued 300 billion to 400
billion yuan in new loans in September compared with 410 4
billion yuan in August ID nFCD000074
The loans total however is a net figure and so does not
reflect the fact that large volumes of short term discounted
trade bills are being converted into medium term loans as they
mature
We believe that September money and credit data should
help ease recent concerns in the market that policy makers in
China might have started tightening policies heavy handedly
economists at Goldman Sachs said in a preview of the data
The People s Bank of China will also publish figures on the
country s foreign exchange reserves
The median forecast of nine of the economists polled is
that the stockpile the world s largest grew to 2 25 trillion
at the end of the third quarter from 2 13 trillion at the end
of June
China s foreign exchange reserves are unlikely to see a
big surge in future because both trade and foreign direct
investment will recover gradually said Zhou Xi an analyst at
Bohai Securities in Tianjin
Forecasts M2 and yuan loans are percent change from a year
earlier forex reserves in trillions of dollars
M2 Yuan loans FX
reserves
Action Economics 29 5 34 0
2 300
Bank of China 26 0 30 0
2 200
Bank of Communications 29 3 34 3
2 312
Bank of East Asia 28 8
Bohai Securities 28 5 34 5
2 250
China Construction Bank 28 5 35 1
2 180
CICC 28 4 34 0
CITIC Securities 28 3 33 7
Daiwa Research Institute 28 1
Essence Securities 28 0 34 4
Fortune Trust 28 4 33 9
2 250
Goldman Sachs 28 9 34 3
Guotai Junan Securities 28 5 33 0
Hang Seng Bank 28 0 33 8
Industrial Bank 28 3 33 8
2 320
Industrial Securities 28 8 34 4
2 300
ING 28 9
Merrill Lynch 28 5 33 7
Morgan Stanley 28 2 33 7
Northeast Securities 28 0 34 0
Qilu Securities 28 3 34 0
2 150
Royal Bank of Scotland 28 0 31 5
MEDIAN 28 4 34 0 2 250
Previous month 28 5 34 1 2 132
Year earlier 15 3 14 5
1 906
Not available
August for M2 and yuan loans end June for FX reserves
For the China indicators fixed page click on
For historical data click on CN DATA
1 6 825 Yuan
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JPM | U S consumer spending slows inflation pressures firming | By Lucia Mutikani WASHINGTON Reuters U S consumer spending cooled in January as demand for automobiles and utilities fell but inflation recorded its biggest monthly increase in four years raising the probability of an interest rate hike from the Federal Reserve this month The tepid gain in consumer spending added to weak housing starts equipment spending and construction data in suggesting economic growth remained moderate early in the first quarter after slowing in the final three months of 2016 Despite the softness on the demand side of the economy the manufacturing sector recovery is gaining steam Factory activity hit a 2 1 2 year high in February other data showed on Wednesday A weak start to the year for consumers suggests a downside risk to first quarter growth prospects though it likely won t quell recent chatter about a March Fed rate hike said Sal Guatieri a senior economist at BMO Capital Markets in Toronto The Commerce Department said consumer spending which accounts for more than two thirds of U S economic activity increased 0 2 percent after rising 0 5 percent in December Consumer spending is likely to remain supported amid promises by the Trump administration of sweeping tax cuts and increased infrastructure spending In a speech to Congress on Tuesday night President Donald Trump said his economic team was working on a historic tax reform that would slash corporate taxes Trump promised massive tax cuts for the middle class but offered no further details Consumer confidence has surged following Trump s Nov 8 election victory hitting a 15 1 2 year high in February In January the personal consumption expenditures PCE price index increased 0 4 percent the largest gain since February 2013 after rising 0 2 percent in December In the 12 months through January the PCE price index jumped 1 9 percent That was the biggest year on year gain since October 2012 and followed a 1 6 percent increase in December Excluding food and energy the so called core PCE price index rose 0 3 percent in January That was the biggest increase since January 2012 and followed a 0 1 percent gain in December The core PCE price index increased 1 7 percent year on year after a similar gain in December The core PCE is the Fed s preferred inflation measure While still below the U S central bank s 2 percent target inflation is now in the upper end of the range that Fed officials in December estimated would be reached this year COMPELLING CASE FOR RATE HIKE The strong inflation readings come a day after New York Fed President William Dudley said the case for further monetary policy tightening had become a lot more compelling Prices for U S Treasuries fell with the yield on the interest rate sensitive 2 year note US2YT RR hitting its highest level since August 2009 Fed funds futures were pricing in about a 65 percent chance of a rate hike at the Fed s March 14 15 policy meeting The dollar touched a seven week high against a basket of currencies Stocks on Wall Street rose with the Dow Jones Industrial Average DJI breaching the 21 000 mark for the first time ever as investors focused on Trump s comments The U S central bank has forecast three rate increases this year The Fed hiked its overnight interest rate last December In a separate report on Wednesday the Institute for Supply Management said its index of national factory activity increased to a reading of 57 7 last month the highest since August 2014 from 56 0 in January A reading above 50 indicates an expansion in manufacturing which accounts for about 12 percent of the U S economy Some of the increase likely reflects a surge in business confidence following Trump s election But that has not been matched by a strong increase in business spending on capital goods Business spending on equipment rose moderately in the fourth quarter and appeared to weaken in January data showed this week For now businesses and households appear confident but have yet to act on that confidence said Michael Feroli an economist at JPMorgan NYSE JPM in New York When it comes to calculating GDP it is the hard data that matters and so far the hard activity data for the first quarter has been disappointing Rising inflation is eroding consumer spending When adjusted for inflation consumer spending fell 0 3 percent in January the first drop since August and the biggest in three years It increased 0 3 percent in December and January s drop implies consumer spending will probably not provide a big boost to GDP in the first quarter Consumer spending increased at a 3 0 percent annualized rate in the fourth quarter helping to blunt some of the impact on the economy from a wider trade deficit The economy grew at a 1 9 percent rate in the fourth quarter and the Atlanta Fed is forecasting GDP rising at a 1 8 percent pace this quarter Another report from the Commerce Department on Wednesday showed construction spending declined 1 0 percent in January
Personal income rose 0 4 percent in January after gaining 0 3 percent in December Income at the disposal of households after accounting for inflation fell 0 2 percent the first decline since October 2013 |
JPM | Research undercuts Fed s two favorite U S inflation tools | By Jonathan Spicer NEW YORK Reuters Two tools that the Federal Reserve heavily relies upon to predict U S inflation in fact provide little practical help and the Fed would be wise to only modestly overshoot its 2 percent price target concludes a high profile paper published on Friday The research presented by five top economists to a small gathering of Fed officials and others in New York focused on inflation s slow moving mean since 1984 a period of relatively stable prices and what is seen as mostly effective monetary policy With prices now edging higher the findings could inform how aggressively the Fed hikes interest rates this year The paper takes aim at two of the Fed s favorite gauges to predict price swings inflation expectations which are derived from markets and surveys and labor market slack or the amount of workers actively looking for employment and attempts to undercut their mystique Both contribute very little to our ability to predict movements in inflation write the authors We are not claiming that slack and expectations are irrelevant instead we are suggesting that in the current low inflation environment they do not warrant any special status and should at least be augmented by a wider array of indicators The Fed s preferred inflation gauge has drifted below the target since 2008 and has moved relatively little in that time even while unemployment has fallen to less than half of its crisis era high of 10 percent a shift that has squeezed most or all of the slack from the labor market With inflation edging close to 2 percent Fed officials aim to nudge rates higher this year so prices don t overshoot Fed Vice Chair Stanley Fischer and regional Fed presidents Charles Evans Jeffrey Lacker and Robert Kaplan were among those at the forum on Friday with some offering critiques The paper noted the Fed should aim for no more than a modest inflation overshoot likely only a fraction of a percentage point over one or two years
The authors were Peter Hooper of Deutsche Bank DE DBKGn and Michael Feroli of JPMorgan NYSE JPM as well as professors Anil Kashyap of University of Chicago Booth School of Business Stephen Cecchetti of Brandeis International Business School and Kermit Schoenholtz of New York University Stern School of Business |
JPM | Wall St mixed as rate odds jump on jobs data | Investing com U S stocks were mixed Wednesday as industry data showed a surge in U S job creation The DJI was off 0 04 at 10 45 ET after closing lower overnight The S P 500 rose 0 10 The tech heavy Nasdaq composite added 0 33 ADP nonfarm data showed U S economy create 298 000 jobs the most in 11 years The forecast was for an increase of 190 000 last month Official nonfarm payrolls due Friday forecast to show rise of 193 000 The odds of a rate hike at next week s FOMC meeting hit 90 8 The dollar index moved above 102 after the data Oil pared losses after mixed EIA inventories Crude stocks rose more than expected at 8 209 mn barrels gasoline stocks fell more than forecast Banks benefited as Treasury yields rose NYSE JPMorgan added 0 48 to 91 86 NYSE Snap rose 1 21 to 21 70 after heavy losses the previous two sessions |
C | Citigroup CEO Corbat earned 10 percent less in 2014 | Reuters Citigroup Inc N C cut its chief executive Michael Corbat s annual compensation by 10 3 percent in 2014 citing high legal expenses and the company s failure to win regulatory approval for its capital plan in last year s stress tests Corbat s earned a total of 13 million for 2014 down from 14 5 million a year earlier according to the compensation approved by Citi s board The board s compensation committee said its the company s proxy statement that it had also cut compensation or held back raises for Citigroup s chief financial officer the chief executive of its institutional business the chief executive of it consumer bank and its head of franchise risk and strategy His pay package includes deferred stock of about 3 5 million under Citi s compensation plan which was overhauled two years ago amid shareholder pressure Corbat was paid 14 5 million in 2014 down from 17 6 million the year before under a disclosure format prescribed by the U S Securities and Exchange Commission Citi like other big banks has turned to cost cuts to boost profit as low interest rates and new regulations have crimped revenue growth But the efforts have been overshadowed by fines and higher costs for technology and compliance The board said its scores for paying executives were lowered by high costs last year to reposition Citigroup businesses The bank raised its quarterly dividend and announced plans to buy back 7 8 billion of stock over five quarters after it cleared the Federal Reserve s annual stress test last week Citi failed the stress tests in 2012 and 2014 Chief Financial Officer John Gerspach s total compensation for 2014 was unchanged at 7 5 million according to the filing Manuel Medina Mora who heads Citi s global consumer banking arm but will retire in June received 9 5 million for 2014 The board faulted Gerspach for the 2014 stress test failure and cited Medina Mora for control issues at Banamex the company s unit in Mexico that last year lost more than 500 million to fraud involving a borrower James Forese chief executive of the Institutional Clients Group was paid 13 5 million which was down by 500 000 or 4 percent from a year earlier The board cited legal and regulatory issues with the foreign exchange business under his supervision
Risk and strategy chief Brian Leach was paid 8 1 million down 900 000 or 10 percent the proxy said Leach was cited for his responsibility for the failed capital plan in 2014 year |
C | U S court authorizes Citigroup to process Argentine bond payments | BUENOS AIRES Reuters Citigroup Inc NYSE C said it has been authorized by a U S judge to process two Argentine debt payments the bank said which could ease tensions between the bank and the default hit nation The U S bank which acts as custodian of some Argentine bonds has been embroiled in a court battle between the South American country and a group of New York based hedge funds seeking full payment on their defaulted sovereign bonds A potential resolution may have moved closer after a ruling by the U S District Court for the Southern District of New York on Friday The court has stipulated that it will not restrict Citi from meeting its payment processing obligations relating to dollar denominated Argentine bond payments under local law due on March 31 and June 30 the bank said in a statement The court also said it will not impede the bank from exiting the Argentine custody business as it has said it wants to do Leftist President Cristina Fernandez s government had threatened to cancel Citibank Argentina s operating license if it refused to process payments to other bond holders U S District Judge Thomas Griesa in New York ruled that Argentina must settle with the hedge funds seeking full payment on their defaulted sovereign bonds before it continues paying interest to the large majority of investors who accepted significant writedowns on the debt holdings after the country s record default on 100 billion in 2002 Most investors holding Argentina bonds exchanged them for bonds worth much less but a group of bondholders rejected the swaps These holdouts including billionaire Paul Singer s Elliott Management LP hedge fund and its NML Capital affiliate as well as the Aurelius Capital Management hedge fund have insisted they be paid in full if holders of exchanged bonds are paid Commenting on the agreement a spokesman for NML said NML and other creditors reached an agreement with Citibank according to which Citibank agreed not to appeal the court s determination that the pari passu injunction covers all of Argentina s exchange bonds
The spokesman added that Griesa had approved the agreement that was specifically tailored to address the unique circumstances facing Citi Argentina after Citibank announced it was exiting the custody business in Argentina |
C | Moneysupermarket com founder to sell 6 4 percent stake in firm | LONDON Reuters The founder of financial services price comparison firm Moneysupermarket com intends to sell up to 6 4 percent of the company s issued share capital reducing his stake to about 10 percent The sale of around 35 million shares in a placing could earn Simon Nixon who founded the company in 1993 about 100 million pounds 148 74 million based on Moneysupermarket s closing share price of 286 pence on Tuesday Citigroup NYSE C said it would carry out the sale via an accelerated bookbuild Following completion of the placing Nixon will be subject to a lock up of 180 days in respect of his remaining shareholding in the company Last year Nixon cashed in to the tune of 130 million pounds after selling 70 million shares at 185 pence |
C | Moneysupermarket founder cancels 6 4 percent stake sale | LONDON Reuters The founder of British price comparison company Moneysupermarket com Simon Nixon on Wednesday scrapped a plan to sell a stake of up to 6 4 percent in the company less than a day after announcing it Citigroup NYSE C acting for Nixon said in a statement that the share sale which could have earned the company s founder as much as 100 million pounds 149 million had been canceled A source had earlier told Reuters that Nixon was reducing offer to 4 percent of the company s share capital 22 million shares from the 35 million shares previously targeted with a price range of between 268 pence and 270 pence News of the cancellation sent shares in Moneysupermarket down 6 3 percent to 268 5 pence by 0850 GMT 1 0 6725 pounds |
C | Argentina sees a scam in Citigroup debt deal | By Sarah Marsh and Richard Lough BUENOS AIRES Reuters A deal between Citigroup Inc N C and a U S judge allowing the banking giant to process two Argentine debt payments and exit its custodian business in Argentina may violate the country s laws Economy Minister Axel Kicillof said on Wednesday Argentina is concerned Citigroup s departure may further hamper the chances of debt interest payments on local law debt restructured after its record 2002 default reaching bondholders The bank which acts as custodian of some Argentine bonds had originally echoed Argentina s stance that the local law bonds should not be wrapped up in a U S court ruling barring Buenos Aires from meeting its restructured external debt dues When District Judge Thomas Griesa this month held firm that local debt payments were also blocked Citigroup frustrated at finding itself front and center of Argentina s debt battle said it wanted out of its Argentina custody business The subsequent deal with Griesa to process two payments this month and in June makes this easier Reading the fine print of the deal what we find is a trap possibly aimed at scamming the bondholders Kicillof told a news conference In a further blow to Argentina s hopes of completing payments to local law investors Griesa on Wednesday barred Belgium based clearing house Euroclear from passing on funds to bondholders pending any further ruling from his court If some payments are allowed by the judge at a later date Euroclear will have to provide the litigating hedge funds with details on who will receive the coupon payments and when the ruling stated The move is likely to strengthen Argentina s view that the deal with Citigroup is designed to smooth the bank s exit from its Argentine custody business something the leftist government has said it will not allow It also means other international financial intermediaries which handle Argentine debt and have a U S footprint are unlikely to process payments for fear of running foul of the court s order Argentina has long accused Griesa of working hand in hand with the funds which President Cristina Fernandez and her ministers disparage as vultures Fernandez s government had threatened to cancel Citibank Argentina s operating license if it refused to process the bond payments It is not clear if its deal with U S courts will have legal consequences for its retail banking business
Griesa ruled that Argentina must settle with the funds seeking full payment on their defaulted sovereign bonds before it continues paying interest to the large majority of investors who accepted significant writedowns on the debt holdings after the country s 2002 default |
MPC | Oil Refiners Take It On The Chin | The important oil refinery sector is coming under selling pressure today Leading oil refinery stocks such as Tesoro Corporation NYSE TSO Phillips 66 NYSE PSX Marathon Petroleum Corporation NYSE MPC and Western Refining NYSE WNR have all declined since the start of the trading session Day traders should watch Tesoro s stock around the 63 15 level which is an area where the stock should stage an intra day bounce |
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