Today - Thursday, February 11, 2016
- Shares of Tata Motors (NYSE:TTM) are at their lowest level in Bombay trading since 2013 after the company reported a drop in profit for Q4. Net income fell 2% to 35.1B rupees ($515M).
- A 10% decrease in Jaguar Land Rover sales in China stood out as a particular point of concern during the quarter.
- Volume growth was strong in the M&HCV segment.
- TTM -6.70% premarket to $20.90.
- U.S. stock index futures are lower by more than 2%, with most of the damage being done since Europe opened for business a few hours ago.
- As for the Continent, it's more than reversed yesterday's big gains, with the Stoxx 50 (NYSEARCA:FEZ) plunging 3.7%, led by Italy's (NYSEARCA:EWI) 5.2% fall. Germany (NYSEARCA:EWG) is off 2.7%, France (NYSEARCA:EWQ) 3.8%, Spain (EWI) 4.3%. The U.K. (NYSEARCA:EWU) is down 2.2%.
- Hong Kong fell 3.8% as it returned from a multi-day vacation. China remains closed, and the Nikkei was off overnight as well
- There's major money flowing into U.S., U.K., and German government paper (and out of places like Spain and Italy), with the 10-year U.S. Treasury yield lower by nine basis points to 1.58% - its lowest level since 2013.
- An argument can be made that Janet Yellen stubbornly clinging to her rosy economic outlook and forecast for more rate hikes as triggering the renewed rout. Will she change her tune later in day 2 of testimony?
- Crude oil is lower by 4.3% to $26.27 per barrel, and gold is higher by 3.5% to $1,236 per ounce.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, SPXU, PSQ, TQQQ, SPXL, RSP, SPXS, QID, SQQQ, QLD, DOG, DXD, UDOW, RWL, EPS, SDOW, VFINX, DDM, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, LLSP, UDPIX, OTPIX, RYARX
- Weren't low crude prices meant to stimulate growth for oil importers? Well it turns out there's been no overall positive effect as the world economy continues to lack impetus.
- Ifo's Index for the global economy dropped from 89.6 points to 87.8 points this quarter, drifting further from its long-term average (96.1 points).
- While assessments of the current economic situation brightened marginally, expectations were less positive than last quarter.
- Crude futures -3.6% to $26.46/bbl
- Fresh tremors are hitting global markets as a cautious tone from the Federal Reserve and another fall in crude prices fuel anxiety about the world economy.
- "Financial conditions in the United States have recently become less supportive of growth," Fed Chair Janet Yellen said Wednesday, highlighting risks that could delay the central bank's plans for raising rates.
- So what's happening out there? Investors are piling into safe havens such as gold and government bonds, while dumping U.S. dollars and selling off equities.
- Yellen also returns to Capitol Hill this morning for a second day of testimony.
- Gold +2% to $1218 an ounce; 10-year treasury yield -8 bps to 1.62%
- Asia: Japan closed. Hong Kong -3.9%. China closed. India -3.6%
- Europe: London -2.6%. Paris -3.7%. Frankfurt -2.9%.
- U.S. futures: Dow -1.8%. S&P -1.8%. Nasdaq -2.1%.
- Sweden's central bank has lowered its key interest rate even further below zero, saying it's prepared to use its full toolbox of measures as it battles to revive inflation and keep the krona from appreciating.
- "Uncertainty regarding global developments is still high, with low inflation and several central banks pursuing more expansionary monetary policy," the Riksbank said.
- The repo rate was reduced from -0.35% to -0.50%, while government bond purchases will continue as planned for the first six months of 2016.
- ETFs: EWD, FXS
- Dozens of South Korean trucks have returned across the North Korean border, laden with equipment and goods from the Kaesong Industrial Complex, after Seoul suspended operations there as punishment for the North's weekend rocket launch.
- Pyongyang called the South's decision regarding the park, where 124 South Korean companies employed about 55K North Koreans, a "declaration of war."
- Meanwhile, the U.S. Senate on Wednesday unanimously passed tough new sanctions on companies and individuals (including Chinese firms) involved in North Korea’s nuclear-weapons and cyberwarfare programs.
- Stocks in Hong Kong fell sharply today, catching up with deep regional selloffs, as the market reopened after an extended Lunar New Year holiday.
- The Hang Seng index tumbled over 4% to levels not seen since mid-2012, adding to a 12% plunge since the beginning of the year amid concerns about capital outflows, a slumping property market and China's economic slowdown.
- ETFs: EWH, EWHS, FCHI, FHK
Wednesday, February 10, 2016
2:07 PM| 2:07 PM
- Digital Realty Trust (DLR +1.3%) has named Ted Higase to lead its Asia Pacific operations as managing director.
- Higase will be based in Singapore and had the role effective Feb. 1.
- He was most recently president and CEO of regional data-center and cloud company KVH, which was founded by Fidelity Investments. He also served as an executive with Global Crossing, Dell and AT&T.
- Telefonica (TEF +2.3%) is the latest telecom to separate its network assets, spinning them off into a company called Telxius.
- The new firm will initially hold about 15,000 towers in Spain and elsewhere, and a fiber network reaching to 31,000 km. Telefonica might incorporate third-party assets in the company as well.
- It could lead to a sale or market listing for Telxius, and in the coming months other newly created companies will be gradually integrated into the spinoff. The new company will be run by Alberto Horcajo, named CEO.
- Most assume central bank benchmark deposit rates can't get that far below zero before lenders find it cheaper to actually hoard physical cash rather than depositing it. A Bank of England study, for instance, suggests a floor of about minus 0.5%.
- A new report from JPMorgan, however, says England could go to negative 2.5%, the EU -4.5%, Japan -3.45%, and the U.S. -1.3%.
- It's good news for banks, whose earnings (and balance sheet strength) are thought to be at risk as policy rates head into negative territory.
- ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
- Shares of Anheuser-Busch (NYSE:BUD) are higher in early trading after a deal was struck to sell the European-based Peroni and Grolsch labels. The transaction will help advance the SABMiller merger track.
- Strong results from Heineken may also be seen as a positive for A-B due to the read on pricing and demand.
- BUD +2.37% premarket to $118.91.
- AP Moller-Maersk (OTCPK:AMKAF, OTCPK:AMKBY) CEO Nils Anderson warns that conditions for global trade are even worse than at the height of the 2008 financial crisis.
- "It is worse than in 2008," Anderson says. "The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn't look like going up soon. Freight rates are lower. The external conditions are much worse."
- CEO Nils Andersen made the remarks in a Financial Times interview after the world's biggest shipping company issued "a perfect storm" of FY 2015 results amid falling freight rates and sluggish trade growth: The company booked an 82% fall in its profits during 2015, to $925M (£638M) from more than $5B (£3.45B) in 2014, including a ~$2.5B writedown on Maersk's oil-based assets in the U.K., Brazil and other markets.
- “Maersk has been hit by the perfect storm, with the low energy prices dealing a serious blow to the oil unit and minimal benefits for the container business, with any cost savings from the lower fuel bill being largely passed to cargo owners,” says Lars Jensen, chief executive of Copenhagen-based Sea Intelligence Consulting.
- The general theme of the team's picks was a benign environment - the dollar to rise vs. the euro and yen on divergent monetary policies; peripheral EU bonds to outperform German; U.S. banks to outperform the broader market (a particular stinker).
- "Markets have started out this week by aggressively de-risking, apparently owing to fears that the recent slowdown in global growth could descend into recession," says the bank's Charles Himmelberg. "Financial credit spreads are spiking, especially in Europe, possibly signaling a reactivation of systemic risk concerns.”
- Goldman's one trade working this year is a recommendation to a buy a basket of 48 non-commodity exporting companies vs. a basket of 50 emerging-market bank stocks.
- Volkswagen (OTCPK:VLKAY) recalls 680K cars in the U.S. due to defective Takata airbags.
- Sales in the U.S. have fallen sharply for the German automaker over the last several months.
- European finance ministers will call on the world's biggest economies at the end of February to boost global economic growth at a time when slowdown fears are reverberating throughout the financial markets.
- G20 finance ministers are scheduled to meet at the end of the month in Shanghai, which holds the rotating presidency of the group.
- In January, the IMF cut its world economic growth forecast for 2016 and 2017, citing the slowdown and rebalancing of the Chinese economy, lower commodity prices and strains in some large emerging market economies.
- Japanese stocks extended a heavy selloff today, closing in the red for six of the past seven sessions, despite a festive atmosphere across East Asia for the Lunar New Year holiday.
- With many now questioning the Bank of Japan's recent move into negative interest rates, Japanese Prime Minister Shinzo Abe defended BOJ Governor Haruhiko Kuroda's handling of economy, and said it was up to the central bank to decide what policy instruments to use.
- Nikkei -2.3% to 15,713
- ETFs: DXJ, EWJ, DFJ, DBJP, NKY, JOF, JPNL, EZJ, DXJS, JEQ, EWV, HEWJ, SCJ, JSC, JPP, JHDG, QJPN, DXJH, DXJT, DXJF, FJP, JPMV, DXJR, DXJC, JDG, JPN, FXJP, JPXN, JPNH, HGJP, HEGJ, HFXJ
Tuesday, February 9, 2016
- America Movil (AMX -3.4%) posted a net profit that jumped fivefold Y/Y, thanks to exchange rates, but EBITDA fell 5.1% (down 2.9% in constant currency) and missed expectations in its Q4.
- Profit margins dropped to its lowest ever, and margin in its biggest market (Mexico) dropped to 36.7%, the first time below 40%, Itau BBA says.
- Access lines were down 0.3% Y/Y to 367M, due to mobile disconnections: 286M wireless, 35M landlines, 24M broadband accesses and 22M pay TV. The firm added 1.5M postpaid wireless subs (base increased 5.9% Y/Y).
- Capex was 164B pesos for the full year, while shareholder distributions came to 71B pesos (including dividends, buybacks and an extraordinary dividend in September).
- Shares are flat in after-hours U.S. trading.
- Conference call to come tomorrow at 10 a.m. ET.
- Company release
- Turkcell (TKC -1.5%) is going forward with an effort to buy out partner TeliaSonera (OTCPK:TLSNY +1.3%) in their Fintur Eurasian joint venture, its CEO says.
- The company has a non-binding bid in and will follow with a another offer after it completes due diligence, says CEO Kaan Terzioglu. TeliaSonera owns the other 58.55% of the venture, which owns operators in Azerbaijan, Georgia, Kazakhstan and Moldova.
- Meanwhile, despite tough timing on the sale, TeliaSonera says "Several parties are interested in our holdings in Fintur and one of them is Turkcell."
- As much as TeliaSonera is interested in getting out of the region, Turkcell has been pursuing more cross-border expansion after the end of a long boardroom deadlock broken by regulators.
- Previously: TeliaSonera facing tough economic timing on Eurasian sale (Jan. 29 2016)
- Previously: RenCap: Turkey may be best bet for emerging telecom growth, dividends (Jan. 04 2016)
- Argentina bonds outperformed on Monday after two of six holdout investors agreed to accept a government offer to pay a total of $6.5B to them (a 25% haircut).
- Daniel Pollack, the special master presiding over the negotiations, said Dart Management and Montreaux Equity Partners "stood solidly behind the deal," praising President Macri for addressing the "long-festering problem."
- Previously: Argentina debt negotiations pick up pace (Feb. 08 2016)
- ETFs: ARGT
- German industrial production unexpectedly fell for a second month in December, in a sign that Europe's largest economy ended 2015 on weaker footing.
- Output, adjusted for seasonal swings and inflation, fell 1.2% from November, when it declined by a revised 0.1%.
- The pullback comes at a time when record-low unemployment and low fuel costs bolster consumer spending, but a slowdown in major export markets counteract these positive trends to rein in production.
- ETFs: EWG, GF, DAX, DXGE, HEWG, DBGR, EWGS, FGM, QDEU
- With most other markets in Asia closed for the Lunar New Year, today's broad market selloff weighed heavily on Japanese shares, sending the Nikkei down 5.4% and yen soaring to a 15-month peak.
- Yields on Japan's benchmark 10-year government bonds also touched minus 0.01%, marking the first time a G7 nation's 10-year yields have turned negative (although German bunds have come relatively close).
- Previously: Global equity selloff intensifies (Feb. 09 2016)
- ETFs: DXJ, EWJ, FXY, YCS, JGBS, DFJ, JGBD, DBJP, NKY, JYN, JOF, JPNL, EZJ, DXJS, JEQ, EWV, HEWJ, YCL, SCJ, JSC, JPP, JGBL, JGBT, JHDG, JGBB, QJPN, DXJH, DXJF, DXJT, JPMV, FJP, DXJR, DXJC, JDG, JPN, HGJP, HEGJ, JPXN, FXJP, JPNH, HFXJ
- It's another ugly day for world shares. Investors are concerned that a protracted period of slowing global growth, plunging oil prices and rock-bottom interest rates will combine to inflict pain on the world's largest financial institutions, while the lofty valuations of tech stocks further weigh on sentiment.
- The 'fear factor' in the markets is also being magnified by Fed Chair Janet Yellen's testimony this week, sending traders stampeding into only the safest of safe-haven assets.
- U.S. 10 Year Treasury Yield -4 bps to 1.69% (a more than one-year low)
- Asia: Japan -5.4%. Hong Kong closed. China closed. India -1.2%
- Europe: London -0.6%. Paris -1.7%. Frankfurt -1.3%.
- U.S. futures: Dow -0.4%. S&P -0.4%. Nasdaq -0.4%.
Monday, February 8, 2016
- Chinese markets are closed for the week with the Lunar New Year, but Japan is taking its Tuesday cues from Monday's markets in Europe and the U.S.
- The Nikkei is down 680 points (about 4%) in early trading. The Nikkei 225 had reversed a four-day slide on Monday but has resumed its downtrend in the face of global trading weakness in energy and financials.
- The dollar is down 0.3% against the yen.
- Markets closed for Tuesday: China, Taiwan, Malaysia, Vietnam, Hong Kong, South Korea, and Singapore.
- ETFs: DXJ, EWJ, DFJ, DBJP, NKY, JOF, JPNL, EZJ, DXJS, JEQ, EWV, HEWJ, SCJ, JSC, JPP, JHDG, QJPN, DXJH, DXJT, DXJF, FJP, JPMV, DXJR, DXJC, JDG, JPN, FXJP, JPXN, JPNH, HGJP, HEGJ, HFXJ
- Activision Blizzard (ATVI -5.9%) says in an 8-K that it's satisfied another of the terms related to its takeover of King Digital Entertainment (NYSE:KING) with clearance from South Korean regulators.
- The Fair Trade Commission of the Republic of Korea has given the OK to the $5.9B deal, leaving just a few steps left.
- The company must satisfy an EU Merger Regulation condition, and get sanction from the High Court of Ireland (where King is based) at a hearing set for Feb. 18. Activision says the scheme of arrangement is expected to take effect Feb. 23.
- Activision shares are up 0.5% after hours.
- Chipmakers NXP (NXPI -9.3%) and STMicroelectronics (STM -5.6%), CPU/GPU core developer ARM (ARMH -5.5%), and ad tech firm Criteo (CRTO -9%) are down sharply after European indices closed with big losses. France's CAC-40 fell 3.4%, Germany's DAX 3.3%, and the Euro Stoxx 50 3.3%. The Nasdaq is down 2.1%, and the S&P 1.8%.
- NXP has more than given back the Thursday gains seen after the company posted a Q4 beat and issued in-line Q1 guidance. Today's losses come in spite of an OTR Global note stating NXP could gain NFC chip share with Samsung's Galaxy S7 relative to the S6; the S6 heavily relied on Samsung NFC radios.
- STMicro is two weeks removed from announcing (with its Q4 report) job cuts and plans to discontinue set-top/home gateway chip R&D. ARM and Criteo report on Wednesday morning.
- Most global stock markets are posting big losses as traders fret about a recession following Friday's disappointing U.S. jobs report, indicating Wall Street may carry on with the heavy casualties seen at the end of last week.
- Investors are also looking ahead to testimony from Fed Chair Janet Yellen on Wednesday and Thursday, triggering continued uncertainty around the potential for the central bank to still raise interest rates this year.
- Major Asian markets are closed for the Lunar New Year holidays.
- Asia: Japan +1.1%. Hong Kong closed. China closed. India -1.7%
- Europe: London -2%. Paris -2.6%. Frankfurt -2.8%.
- U.S. futures: Dow -1.4%. S&P -1.5%. Nasdaq -2%.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, PSQ, SPXU, TQQQ, SPXL, RSP, SPXS, QID, SQQQ, QLD, DOG, DXD, RWL, UDOW, EPS, SDOW, DDM, VFINX, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, LLSP, UDPIX, OTPIX, RYARX
- Russia is exploring an international bond issuance for the first time since the war in Ukraine sparked sanctions from the West, in a sign that the Kremlin is keen to find additional sources of revenue as the economy heads for a second year of recession.
- The country, which last raised cash on international markets with a $7B bond in 2013, has already approached 25 Western investment banks and big Russian lenders Sberbank (OTCPK:SBRCY), VTB, and Gazprombank about a possible eurobond.
- ETFs: RSX, RUSL, RUSS, ERUS, RSXJ, RBL
- Argentina has offered to pay about $6.5B in cash to U.S. holdouts that refused debt restructurings after its 2001 default, implying a haircut of about 25% on the amount bondholders say they are owed.
- If accepted by all the holdouts, which are led by billionaire Paul Singer's Elliott Management, the deal will clear the way for Argentina's return to the international capital markets.
- ETFs: ARGT
- Previously: Argentina debt talks continue to make progress (Feb. 04 2016)
- Previously: Argentina agrees to pay Italian holdouts (Feb. 03 2016)
Sunday, February 7, 2016
- Casino Guichard Perrachon (OTC:CGUIF, OTCPK:CGUSY) strikes a deal to sell Thai grocery store chain Big C to TCC Holding for $3.5B.
- Big C is a listed stock on the Stock Exchange of Thailand.
- The sale will allow Casino to improve its debt position. Earlier this year, Casino was the target of a Muddy Waters attack piece over debt load.
- Previously: Casino Guichard Perrachon slammed by short seller report (Dec. 17, 2015)
- North Korea fired a long-range missile that skirted over Okinawa in another act of defiance.
- The launch prompted an immediate response from Japanese Prime Minister Abe Shinzo and calls for a reaction from the U.N.
- South Korean defense stocks have rallied in the past when tension on the Korean peninsula has increased.
- The Peoples Bank of China discloses that its foreign-exchange reserves fell by almost $100B in January.
- The decrease is less than the $120B drop forecast by economists.
- Beijing's fierce defense of the yuan has reduced its foreign exchange reserves to a three-year low.
- Related ETFs: FXI, YINN, GXC, PGJ, FXP, CYB, YANG, CNY, MCHI, CHN, TDF, XPP, YAO, YXI, CN, GCH, FCA, FXCH, JFC, CXSE.
Friday, February 5, 2016
- Telstra (OTCPK:TLSYY -1.8%) and Optus Mobile were the big spenders in Australia's competitive 1800-MHz spectrum auction, which drew A$543.5M in spending from the country's big four providers.
- Optus led all comers with A$196M, just ahead of Telstra at A$191M. TPG (OTC:TPGTF) spent A$88M, and Vodafone (VOD -2.4%) the least at A$68M.
- The auction was set to improve 4G coverage in regional and remote Australia; currently, Telstra, Vodafone and Optus use the 1800-MHz band to deliver their 4G networks in metropolitan areas.
- Vodafone, which skipped the digital dividend auction in May 2013, has been looking at regional expansion after refarming spectrum in Australian Capital Territory, the coast of New South Wales and the Blue Mountains, and switching on 850 MHz 4G in sites across Queensland.
- Vodafone (VOD -2.4%) finished lower for the second straight day after earnings, swept up in market downdrafts despite a chorus of analysts signaling approval for the company's recovering European business.
- The FTSE 100 finished 0.9% lower in London and a tech-stock downdraft sent the Nasdaq down 3.3%.
- Meanwhile, a wide number of firms reiterated buys on the stock. Barclays and JPMorgan Chase reiterate their Overweight ratings, while Buys were also reinforced at HSBC and Beaufort Securities.
- Nomura raised its price target to 255 pence/share. Among the other firms' price targets, they range from Barclays' 250-pence price through RBC's 255 pence, HSBC's 260 pence and JPMorgan's 275 pence.
- Shares closed in London today down 1.6% at 207 pence, implying 21-33% upside in the various targets.
- Mexico is giving clearance to AT&T (T +1%) and Carlos Slim's America Movil (AMX -2.4%) to take part in a wireless spectrum auction there.
- The sale process will begin Feb. 15. IFT, the country's telecom regulator, says the two companies can put in bids for 80 MHz of spectrum in a pair of bands: 1710-1780 MHz, and 2110-2180 MHz.
- The two companies are also competing with Telefonica (TEF +1.1%) in Mexico's tender for a large wholesale mobile network.
- Already at a three-year low, China's foreign-exchange reserves fell by $118B to $3.2T in January, according to economists' estimates. That would exceed the current record $108B whoosh in December. For all 2015, reserves fell more than $500B - the first annual decrease in nearly a generation.
- The PBOC is tasked with taking the other side of a weakening yuan and massive capital outflows. “It’s an astounding reduction in their capital account position," says a fund manager. "The economy itself cannot turn this around."
- The official number from the PBOC is due on Sunday.
- Source: Bloomberg
- ETFs: FXI, YINN, GXC, PGJ, FXP, CYB, YANG, CNY, MCHI, CHN, TDF, XPP, YAO, YXI, CN, GCH, FCA, FXCH, JFC, CXSE
- The announcement last week sent the Nikkei skying and the yen plunging, but the yen has surged since, and is now stronger than before the BOJ move. As for the Nikkei, it's more than given back its gains.
- "More symbolic than dramatic," says CLSA's Chris Wood of the BOJ action. He points to Europe - where there's been negative deposit rates for some time - and notes bank deposits at the ECB have barely fallen in the face of a negative rate of 0.3%. While European base money growth is up 41% Y/Y, broader M3 is ahead only a fraction of that. Households and businesses continue to sock money away because investment opportunities just aren't there.
- Japan is seeing similar action between base money and broad money supply.
- Citi Research today, downgraded Japan's Big 3 megabanks to sell - not necessarily because of negative rates which should have limited impact on earnings - but due to the perception that the BOJ will cut even more.
- ETFs: DXJ, EWJ, FXY, YCS, DBJP, NKY, JYN, JPNL, EZJ, JEQ, EWV, HEWJ, YCL, JPP, DXJF, FJP, JPN, JPNH, JPXN, HGJP, HEGJ, FXJP, HFXJ
- Ku6 Media (KUTV -3.1%) has hired Weil, Gotshal & Manges as legal counsel and Duff & Phelps Securities as a financial adviser as it considers a buyout proposal from Shanda Interactive Entertainment.
- Shanda has offered to acquire Ku6 and take it private for about $51.5M -- about $1.08 per ADS. The company's depositary shares are trading at $0.83 today.
- Shares have gained 18.6% since Monday's proposal for the transaction.
- Previously: Ku6 Media gets buyout proposal from Shanda (Feb. 01 2016)
- TIM Participações (NYSE:TSU) is 6.1% lower after Q4 earnings where revenue disappointed expectations after sliding more than 20%.
- Revenues came in at 4.12B reais (about $1.05B), short of an expected 4.33B reais by about 4.9%. EPS of 0.19 reais beat consensus for 0.12 reais.
- The company said it moved in 2015 to cover 411 cities with 4G, up from 45 in 2014, and 4G users reached more than 7M lines (about 11% of total). Smartphone penetration has hit 68% of its base, up from 2014's 49%.
- In Mobile Services, data services now make up 38% of net revenue (up from 31% the prior year).
- Capex for 2015 came to 4.7B reais (about $1.2B).
- Press Release
- Nippon Telegraph & Telephone (NYSE:NTT) is up 1.7% after beating expectations on top and bottom lines in its fiscal Q3 report, paced by strong gains in international communications and a solid increase in mobile.
- Quarterly revenue of ¥2.91T beat an expected ¥2.83T and EPS gained nearly 50% to ¥108.06 from the prior year's ¥73.12. For the first nine months, revenue of ¥8.5T was up 3.9% Y/Y.
- Operating revenues rose for the sixth straight year to hit record levels. For the nine months, net income of ¥604.1B was up 34%.
- Revenue breakout (nine months): Regional communications, ¥2.52T (down 2%); Long distance and international communications, ¥1.68T (up 15.8%); Mobile communications, ¥3.38T (up 1.7%); Data communications, ¥1.15T (up 7.6%); Other, ¥872.7B (down 2.4%).
- With the sale of shares in NTT DoCoMo and a surplus from NTT East, the company revised its fiscal 2015 forecast: It bumped its forecast for operating revenues and operating income by ¥100B and raised guidance for net income by ¥393B, to ¥681B.
- Press Release
- Youku Tudou (YOKU +0.2%) has set a special general meeting to consider its buyout by Alibaba.
- Shareholders will meet March 14 at 10 a.m. local time in Hong Kong to vote on the plan. If approved, American depositary shares would delist from NYSE as the company went privately held.
- Shareholders of record at the close of business Feb. 11 will be entitled to vote.
- Previously: Youku Tudou up 9.7% premarket on Alibaba buyout's higher price (Nov. 06 2015)
- Sharply lower this week as the Fed and markets continue to walk back expectations for tighter monetary policy, the dollar (UUP +0.6%) is moving higher following this morning's jobs numbers.
- Jobs gained of 151K was a sizable miss, but the unemployment rate fell to 4.9% (even with labor force participation rising), and annualized wage growth topped 5%.
- Fixed-income and currency markets, for now, are focused on the strength in the report, with the 10-year yield up three basis points and the dollar ahead vs. the other major currencies.
- ETFs: UUP, UDN, USDU
- Volkswagen (OTCPK:VLKAY) announces it will push back the release of full year and Q4 results from the scheduled date of March 10.
- The company's board is still meeting to discuss how to account for the impact of the emissions cheating scandal.
- The annual shareholder meeting slated for April is also being delayed.
- Canada lost 5.7K jobs in January against forecasts for a 5.5K gain. The unemployment rate rose to 7.2% vs. estimates for it to hold steady at 7.1%.
- Alongside those gloomy numbers, December's 22.8K job gain was revised lower to just 1.3K.
- The loonie (NYSEARCA:FXC) loses a little ground against the greenback (which has its own mixed jobs numbers to ponder this morning).
- ETFs: EWC, CNDA, EWCS, QCAN, FCAN, HEWC
5:37 AM| 5:37 AM
- The number of visitors to Macau from Mainland China rose 11% compared to an equivalent pre-Chinese New Year period last year.
- The number of total visitors to the gambling destination was up 5%.
- This year's Chinese New Year season is seen as critical for the local arms of Wynn Resorts (NASDAQ:WYNN), Las Vegas Sands (NYSE:LVS), and MGM Resorts (NYSE:MGM).
- The official Chinese New Year holiday period begins on February 7.
- Olympics organizers in Brazil say they have no plans to cancel the Summer Olympics in Rio de Janeiro due to the Zika outbreak.
- A statement from the Sports Minister Group says the government is "fully committed" to ensure the games take place.
- Local media on the continent has been buzzing on the prospect of the first Olympics cancellation after the World Health Organization issued a stark warning on Zika earlier this week.
- Toyota (NYSE:TM) is on track to top three trillion yen ($25.7B) in annual operating profit even after suspending production in Japan last week due to an explosion at a plant and fighting through recalls.
- This year, the automaker is outpacing the profit of the rest of the Japanese automakers combined.
- Toyota recorded Q3 sales of 7.34T yen ($63B) to top the estimate of analysts. Strong sales in North America helped to take up the slack from dips in Europe and Asia.
- Honda (NYSE:HMC) recalls another 443K vehicles in Japan due to faulty air bags made by Takata (OTCPK:TKTDY).
- The latest Takata headache for the Japanese automaker covers 13 different models, including the Fit compact car. The global tally of recalled vehicles tied to Takata air bags is now over 50M.
Thursday, February 4, 2016
- The sweeping Pacific trade deal is expected to face a stiff challenge in Congress as more politicians head for the election year safety of pulling support.
- GOP Senator Rob Portman is the latest to raise concerns over the current form of the trade pact.
- Representatives from 12 nations formally signed the agreement in New Zealand earlier this week to kick off the road to ratification, although a vote in the U.S. Congress isn't expected to occur until after the elections in November.
- Israeli telecom Partner Communications (NASDAQ:PTNR) says it plans to launch a new brand and provide most of its goods and services under that brand -- the next step in a process where it's terminated its brand license agreement with Orange (NYSE:ORAN).
- On Jan. 5, the company said it would provide its service and hardware under the Orange brand until further notice; the company now plans a launch event Feb. 16 to unveil the results of its marketing study.
- The carrier had said last summer that it would assess its position in Israel as part of its framework agreement with Orange, following disputes over remarks by Orange chief Stephane Richard about abandoning its relationship with Israel.
- Partner stock is up 32.4% over the past year.
- The Reserve Bank of Australia issued a cautiously optimistic report on the economy in Australia in a new monetary policy statement. The RBA sees growth of 2.5% to 3.5% this year and headline inflation of between 2% and 3%.
- The central bank warned that uncertainty with key trading partner China is still a significant risk.
- Analysts think that if the RBA is it to be moved off its 2% benchmark rate level, it will be due to offshore headwinds.
- Related ETFs: EWA, IAF, AUSE, FAUS, QAUS, DBAU, HAUD
- The Competition Bureau in Canada has given the go-ahead to Shaw Communications' (NYSE:SJR) C$1.6B bid for Wind Mobile.
- The news clears the way for Shaw to jump into the wireless market by acquiring the country's fourth-largest provider.
- The regulator said the deal wasn't likely to lessen competition since Shaw doesn't currently own any wireless assets.
- Shaw had considered an entry into the market as long ago as 2011 but seemed to have abandoned those ambitions and sold spectrum last year.
- Shares in Shaw have fallen 21.9% in the six weeks since it announced the bid. Shares are up 0.6% after hours in U.S. trading today.
- Previously: Canadian telecoms off sharply following Shaw's entry to wireless (Dec. 17 2015)
- Previously: Shaw Communications -9.2% in wake of C$1.6B WIND Mobile purchase (Dec. 17 2015)
- Previously: Shaw Communications buys into wireless with C$1.6B WIND acquisition (Dec. 16 2015)
- BCE is up 1.8%, and now at its highest point since the beginning of December, after it missed revenue expectations slightly for Q4 but raised its dividend almost 5%.
- Service revenue breakout: Bell Wireless, $1.59B (up 6.3%); Bell Wireline, $3.16B (down 1.5%); Bell Media, $816M (up 3.4%).
- Cash flow from operations was C$1.51B; free cash flow was C$916M (up 10%) driven by higher EBITDA, lower capex, and favorable impact from privatizing Bell Alliant.
- BCE gained 91,308 net wireless postpaid customers, and lost 28,844 net prepaid subs. Fibe TV posted 74,092 net new subs, and Satellite TV logged a net loss of 36,306 subs. The company added 38,908 new high-speed Internet customers.
- The company boosted guidance for EPS in 2016, to C$3.45-C$3.55, but now expects lower free cash flow growth of 4-12% (compared to 2015's forecast of 8-15%).
- Press Release
- Philip Morris International (PM -1.3%) is down for the day, although ahead of tobacco peers, after a largely in-line Q4 report.
- As always, capital allocation is a key question with the company.
- SA contributor Bill Maurer weighs in: "Lower earnings will hurt cash flow, and a rising share count won't allow for as much of a dividend raise."
- PM yields 4.60% at today's share price.
- Previously: Philip Morris lower after earnings (Feb. 4)
- The dollar (UUP -0.6%) is retreating again today, continuing a move which began at the start of the week and picked up steam yesterday morning when New York Fed President Bill Dudley called out the greenback's strength as a cause for concern.
- Not coincidentally, commodity stocks are bouncing off of sharply discounted levels, with names like Freeport McMoRan, Vale, and Cemex up double digit percentages over the last day-plus.
- Turning to countries, Brazil (EWZ +3.7%) is on a two-day tear of about 6%, and Canada (EWC +2%) of just under 3%. In its first chance to respond to Dudley's remarks, Australia (EWA +2.1%) gained 2.1% overnight.
- ETFs: DBB, BOM, RJZ, BOS, JJM, BDD, UBM, BDG, HEVY
- Vodafone (NASDAQ:VOD) is off 2.5% in U.S. trading following a fiscal third quarter showing continuing growth in underlying revenue, feeding the company's story that Europe (its biggest regional business) is back on track.
- Underlying service revenue grew 1.4% and the company is tracking toward in-line full-year earnings of £11.7B-£12B. Decline in underlying revenue in Europe slowed again, to 0.6% from Q2's decline of 1%.
- Emerging markets saw underlying revenue growth of 6.5%. "We have taken another step forward in the last three months, with the highlights being a strong performance in South Africa and improving trends in Germany and Italy," says CEO Vittorio Colao.
- Its "Project Spring" worldwide upgrade plan is 92% through its mobile buildout, with 4G coverage now at 84% in Europe. The company has committed £19B to the plan.
- Press release
- The Bank of England is happy to continue letting the Fed experiment with rate hikes. As expected, it holds its benchmark overnight rate at 0.5%.
- In somewhat of a surprise, the vote was unanimous this time - in recent past meetings, one member had held out for higher rates.
- The dovish move sends the pound lower by about 100 pips. It's now flat on the session at $1.4572. The FTSE adds to gains, now higher by 1.2%.
- ETFs: FXB, EWU, GBB, EWUS, DXPS, FKU, QGBR, DBUK, HEWU, UK
- The United Nations has suspended Syria peace talks until later this month, as Syrian government forces (backed by Russian air strikes) sharply escalated an offensive by cutting off rebel supply lines between the northern city of Aleppo and Turkey.
- The civil war, which has killed 250K people over five years and forced millions of others to flee their homes, has confronted Europe with a growing migrant crisis and the rising threat of terrorism.
- The risk of acting too late on ultra low inflation is greater than that of acting too early as a wait-and-see stance could lead to a lasting loss of confidence, ECB President Mario Draghi said at a Bundesbank event in Frankfurt.
- "And if that were to happen, we would need a much more accommodative monetary policy to reverse it," he added. "Seen from that perspective, the risks of acting too late outweigh the risks of acting too early."
- Euro +0.4% to $1.1159.
- ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
- Argentina's New York-law sovereign bonds outperformed on Wednesday thanks to growing belief that a settlement with the country's holdout creditors could be in the cards.
- "Some progress was made today. Discussions will continue tomorrow," said Daniel Pollack, the court appointed mediator.
- Thursday's talks between Argentine Finance Secretary Luis Caputo and various holdouts will mark the fourth straight day of meetings between the two sides in the dispute.
- ETFs: ARGT
- The Trans-Pacific Partnership has been signed in New Zealand by ministers from its 12 member nations, but the massive trade pact will still require years of tough negotiations before it becomes a reality.
- The deal will now undergo a two-year ratification period in which at least six countries - that account for 85% of the combined gross domestic production of TPP members - must approve the final text for the agreement to be implemented.
Wednesday, February 3, 2016
- Anheuser-Busch InBev (BUD -1.1%) and SABMiller (OTCPK:SBMRY +0.8%) landed approval from regulators in India to merge.
- If the deal is finalized, the combined company will sell a list of brands in the nation that includes Budweiser, Budweiser Magnum, Coronoa, Stella Artois, Leffe, Knockout, Haywards, Foster's and Royal Challenge.
- Meanwhile in the U.S., resistance from craft brewers on the mega beer merger is growing. Smaller brewers think A-B InBev's growing portfolio of craft beers gives it an unfair advantage due to its control over a large part of the distributorship network .
- Anheuser-Busch is adding some muscle to its craft beer brands, including slotting in Shock Top with a prime Super Bowl ad.
- Previously: Shock Top looks like a Super Bowl winner (Jan. 28 2016)
- Orange (ORAN +0.8%) CEO Stephane Richard describes a "positive dynamic" in talks to merge with competitor Bouygues (OTCPK:BOUYY) -- though he believes the odds of a deal are 50/50.
- "I can't say at this point whether it will be at the end of February [when talks conclude] or the start of March, but that will be around that time," Richard says. He had previously hoped for a sealed deal by the time Orange reports earnings on Feb. 16.
- Orange is proposing buying its rival for about €10B in cash and stock; it would create a new telecom giant in France, and the company has already approached Iliad and Numericable-SFR about selling assets from Bouygues that Orange would have to divest to enable a deal.
- Previously: Bloomberg: Orange pitching Bouygues deal to France this week (Jan. 27 2016)
- Previously: Orange chief: Bouygues deal will have to create value, boost investment (Jan. 12 2016)
- In a multiyear partnership, ESPN (DIS +1%) and Chinese Internet leader Tencent Holdings (OTCPK:TCEHY -2%) will pair to offer games and commentary in Mandarin.
- Financial terms weren't disclosed. Tencent's sports site, QQ, will get live streams of the NCAA men's basketball tournament (March Madness) along with 100 other college basketball games, the X Games, and ESPN analysis for the NBA playoffs and soccer matches starting in April.
- Most NBA viewing in China happens on computers or mobile devices via the Internet. The deal's an example of Disney's country-by-country approach to expanding ESPN and Disney content; traditional pay TV is still the focus in the U.S., while online distribution is taking the lead in other markets.
- The unsteady markets to start the year have finally gotten to FRBNY President Bill Dudley, who's sounding awfully dovish in an interview he gave this morning. He specifically mentioned weakening global growth and the strong dollar as concerns.
- The greenback (UUP, UDN) immediately spiked lower as his remarks hit, and the dollar index is now off 0.6% on the session.
- Just for the record - while the long-term trend remains up and to the right - the dollar index has weakened thus far in 2016 and is at roughly the same level it was at one year ago.
- In a sour mood to start the year, the events of January has Bill Gross (NYSE:JNS) taking a victory lap of sorts in his February market outlook.
- "[Central banks] all seem to believe that there is an interest rate SO LOW that resultant financial market wealth will ultimately spill over into the real economy. I have long argued against that logic and won't reiterate the negative aspects of low yields and financial repression ... What I will commonsensically ask is 'How successful have they been so far?'"
- "What I do know is that our finance-based global economy is transitioning due to the impotence of monetary policy which has always, and is now increasingly focused on the elixir of low/negative interest rates."
- ETFs: AGG, BND, BOND, PTY, RCS, DBL, BTZ, HTR, PCM, SCHZ, JHI, BHK, TAI, JMM, BNDS, ICB, VBF, FBND, PAI, SAGG, GBF, IUSB, VBND, UBND
- The eurozone's manufacturing and services industries cut prices at the fastest pace in almost a year in January, underlining concerns about weak inflation in the region.
- Markit's composite PMI declined to 53.6 - a four-month low - from 54.3 in December, and the measure of output prices dropped to the lowest since March.
- ECB President Mario Draghi has said the Governing Council will review its stimulus again next month amid signs that falling oil prices will push the region’s inflation rate back to zero.
- Euro +0.1% to $1.0924.
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