Today - Thursday, October 27, 2016
- The British economy grew by a much better-than-expected 0.5% in the third quarter, the first time impacts from the Brexit vote could fully be analyzed.
- The dominant services industry, which accounts for almost 80% of the economy, was once again the driving force, expanding by 0.8%.
- Initial predictions of doom post-Brexit have yet to materialize - with the exception of the crashing pound - and economic data has broadly held up well.
- ETFs: EWU, FKU, DXPS, DBUK, QGBR, HEWU
- The United States has for the first time abstained from voting against the annual U.N. resolution calling for an end to its economic embargo against Cuba.
- "After 55+ years of pursuing the path of isolation, we are choosing to take the path of engagement," Ambassador Samantha Power declared, adding that the abstention "doesn't mean that the U.S. agrees with all of the policies and practices of the Cuban government", including "serious human rights violations".
- CEF: CUBA
- Although Belgium moved closer to a deal on the EU-Canada trade pact on Wednesday, Prime Minister Justin Trudeau still canceled his trip to Brussels as negotiations failed to break the impasse.
- Backed by all 27 other EU governments, CETA has been seven years in the making, but was rejected by the French-speaking region of Wallonia, meaning Belgium as a whole cannot sign it.
- ETFs: EWC, CNDA, EWCS, FCAN, QCAN, HEWC
- Remarkably steady growth rates for three straight quarters in China had some economists suspicious, but the country's state media agency said Beijing is not "data smoothing" the numbers.
- "The reality is that the government simply has no incentive or necessity to whitewash the real economic picture," according to Xinhua.
- Separately, China's industrial profit growth slowed in September as several sectors showed weak activity.
- ETFs: FXI, ASHR, YINN, EWH, CAF, FXP, YANG, KWEB, PGJ, GXC, HAO, CQQQ, MCHI, PEK, CHN, CHIQ, CHIX, TAO, QQQC, TDF, XPP, ASHS, CNXT, YXI, CHAU, YAO, CN, FCA, GCH, CHAD, ECNS, CXSE, CHII, CHIM, KBA, CHIE, EWHS, JFC, FCHI, KFYP, AFTY, FHK, HAHA, ASHX, CNHX, XINA, CNYA
Wednesday, October 26, 2016
- European telecoms have a stable outlook into the new year, Moody's says, thanks to flexibility in raising prices driven by customers' need for high-speed data -- and their willingness to spend.
- "Customers are willing to pay more for better value, and telcos" -- including some of the largest, like Telefonica (NYSE:TEF), Orange (NYSE:ORAN) Deutsche Telekom (OTCQX:DTEGY), Vodafone (NASDAQ:VOD), Telia (OTCPK:TLSNY), and Telecom Italia (NYSE:TI) -- "will continue to offer higher speeds, more capacity, content and additional services, such as roaming, greater network security and cloud storage capacity, to support price increases," the firm says.
- The demand should support industrywide revenue growth of 1-2% over the next 12-18 months, Moody's says, and margins will rise from around 35% now to 36% by 2017.
- Another tailwind is regulators focused less on reducing consumer prices and more on pushing investments in high-speed networking, the report says. But big cross-border M&A isn't likely to occur with fewer synergies to be grabbed as well as less financial flexibility, and governments protecting incumbent firms.
- Ericsson (ERIC +0.4%) "faces some tough decisions" of a strategic nature that will call for "courage," incoming CEO Börje Ekholm says, calling for reinvestment after a rough year where the company's market value has been nearly halved.
- Ekholm was named early today to take over for interim chief Jan Frykhammar, who had taken over when Hans Vestberg left in July. Most observers had been expecting one of Hakan Eriksson, former company CFO Karl-Henrik Sundstrom and Vodafone CTO Johan Wibergh to take over.
- Speaking to Barron's, Ekholm says "the struggles lately are more of an overall market question" than something fundamentally problematic at Ericsson.
- "I don't think you can cut your way to success," he said, emphasizing some capital rearrangement: “We need to invest in technology and development, that’s what is going to drive the top line. We need to re-invest in our business.”
- Mergers and acquisitions are on the table as well. “We will need to make acquisitions for our product offerings,” he says, “if we can buy complementary assets.” But he declined comment on whether a merger with a traditional firm like existing partner Cisco Systems might be possible.
- Morgan Stanley (NYSE:MS) CEO James Gorman tells Bloomberg he loves the financial ecosystem of London, but Brexit means a move for some employees and families from the city as well as a possible relocation of the bank's European HQ from Canary Wharf.
- Currently about 5K employees are based in that office.
- Gorman's comments suggest Morgan Stanley doesn't feel the EU will let the U.K. keeps its coveted bank passporting rights post-Brexit, i.e. rights for financial institutions to sell services across the EU.
- ZTO Express (Pending:ZTO) is expected to launch its IPO this week.
- The company set a pricing range of $16.50 to $18.50 for the public offering of 72.1M shares.
- The ZTO Express IPO is expected to the largest of the year, with the express shipper set to bring in $1.261B at the midpoint of the range.
- SEC Form F-1
- Seeking Alpha contributors are already deep into the numbers with their analysis.
- TrueCar estimates new U.S. vehicles sales will fall 6.6% in October to 1.36M units.
- The forecast doesn't adjust for the two fewer selling days in the period this year. Hurricane Matthew was also a negative factor on sales during the month.
- Rather suddenly, one of the more common words in the automobile sector in relation to sales growth has been "plateau" or variations of the noun. "As retail demand plateaus automakers will be forced to make the critical decision to cut vehicle production or increase incentives,' notes TrueCar analyst Eric Lyman.
- Incentive spending is forecast to increase 16% Y/Y during October.
- TrueCar's sales forecasts by automaker are posted below.
- BMW (OTCPK:BMWYY) -10.7% to 30K units, market share 2.2% vs. 2.1% last month.
- Daimler (OTCPK:DDAIF) +0.1% to 32.5K units, market share 2.4% vs. 2.3% last month.
- FCA (NYSE:FCAU) -11.0% to 175K units, market share 12.9% vs. 13.5% last month.
- Ford (NYSE:F) -9.9% to 192K units, market share 14.1% vs. 14.2% last month.
- General Motors (NYSE:GM) -8.9% to 239.5K units, market share 17.6% vs. 17.4% last month.
- Honda (NYSE:HMC) -2.8% to 128K units, market share 9.4% vs. 9.3% last month.
- Hyundai (OTC:HYMLF) -7.0% to 55.8K units, market share 4.1% vs. 4.6% last month.
- Kia (HYUMLF) -2.1% to 49K units, market share 3.6% vs. 3.4% last month.
- Nissan (OTCPK:NSANY) -2.6% to 113K units, market share 8.3% vs. 8.9% last month.
- Subaru (OTCPK:FUJHY) +0.7% to 52K units, market share 3.8% vs. 3.8% last month.
- Toyota (NYSE:TM) -1.5% to 201K units, market share 14.8% vs. 13.7% last month.
- Volkswagen (OTCPK:VLKAY) -16.9% to 43.5K units, 3.2% vs. 3.2% last month.
- Research firms are likely to include Tesla Motors (NASDAQ:TSLA) in their monthly forecasts in the future as the EV automaker scales up with increased production of the Model S, Model X and the Model 3 in due time.
- Theresa May's government is backing the expansion of London's Heathrow airport, saying the construction of a third runway will prove that Britain is open for business after the Brexit vote.
- However, the £18B infrastructure project still faces a range of political and legal challenges before a final decision on its future is made.
- Another Tory civil war cleared for takeoff?
- ETFs: EWU, FKU, DXPS, DBUK, QGBR, HEWU
- A planned EU-Canada summit to sign a free trade deal is still possible tomorrow, European Council President Donald Tusk declared, as Belgian politicians entered a second day of talks on the future of the pact.
- Without assent from its regions and linguistic communities, the country cannot sign CETA.
- Progress has been made on investment issues, but agricultural problems still need to be discussed.
- The People's Bank of China is making changes to its so-called Macro Prudential Assessment risk-tool to broaden its regulatory oversight to include wealth management products often sold by banks and not counted on their balance sheets, Reuters reports.
- The move marks another step in the PBOC's efforts to control rising leverage in the nation's financial system and underscores worries that unsustainable credit could dent an already slowing economy.
- ETFs: CHIX
- NATO will press allies today to contribute to its biggest military build-up on Russia's borders since the Cold War, as the U.S. looks for binding commitments from Europe to fill future deployments.
- The battle groups have taken on greater symbolism since Russia pulled out of several nuclear disarmament agreements in the past two months, moved nuclear-capable missiles into its Baltic exclave and strengthened its military presence in Turkey.
- The U.S. policy of trying to persuade North Korea to give up its nuclear weapons "is probably a lost cause" and the best hope is to cap its capability, according to U.S. National Intelligence director James Clapper.
- In September, the country carried out its fifth and largest nuclear test, and has conducted two atomic explosions and more than 20 ballistic missile tests this year.
Tuesday, October 25, 2016
- Telefonica Brasil (NYSE:VIV) posted Q3 earnings that rose by 9.6% but missed expectations slightly with hints of an economic recovery in the beleaguered country.
- Brazil's top telecom earned 953M real (about $306M) for the quarter and has boosted free cash flow by 43% over the nine months.
- Average revenue per user rose 15%.
- Meanwhile, in an economic bellwether, sales of prepaid wireless rose for the first time in two years.
- CEO Amos Genish said Vivo's success in grabbing synergies from an acquisition of broadband firm GVT would make it the highlight of earnings for the global Telefonica (NYSE:TEF), reporting Thursday.
- After hours: VIV +0.3%; TEF +0.2%.
- Vodafone (VOD +0.9%) is set to receive fines in the millions of pounds when UK regulator Ofcom produces the results of a pair of probes tomorrow, Sky reports.
- The probes, which have lasted almost a year and a half, dug into how Vodafone handled customer complains as well as in delivery of services to the company's pay-as-you-go customers.
- For prepaid customers, Vodafone was charged with "rendering bills to such customers that did not represent the true extent of the service actually provided to them." And the other probe dealt with whether complaint handling had proper transparency and access to alternative dispute resolution, among other charges.
- Casino gaming revenue in Macau is expected to increase 3% to 7% in October, according to a scan of recent forecasts.
- The Macau sector has recorded two straight months of positive growth, including a 7.4% increase in September.
- The revenue tally for October will be impacted negatively by the arrival of Typhoon Haima. The storm hit Macau during the weekend when mass market traffic is higher.
- Nomura on Macau: "We remain cautious on Macau casino stocks as we believe improving industry fundamentals are already priced in."
- Telsey on Macau: "Overall indications, both anecdotal and quantitative, continue to suggest that the Macau market is improving."
- Macau casino stocks: Wynn Macau (OTCPK:WYNMF, OTCPK:WYNMY, WYNN), Sands China (OTCPK:SCHYY, OTCPK:SCHYF, LVS), MGM China (OTCPK:MCHVF, OTCPK:MCHVY, MG), Galaxy Entertainment (OTCPK:GXYEF), SJM Holdings (OTCPK:SJMHF, OTCPK:SJMHY), Melco Crown (NASDAQ:MPEL).
- Philippine President Rodrigo Duterte heads to Japan today to meet PM Shinzo Abe amid rising concerns about what his recent rapprochement with China and deteriorating ties with the U.S. will mean for the region.
- In Beijing last week, Duterte said he wanted a "separation" from America, as he signed deals with China worth some $24B, but later clarified that he didn't want to sever ties rather forge a more independent foreign policy.
- ETFs: EPHE
- Venezuela's government and its opposition are to meet for crisis talks, according to the Vatican, after an intervention from Pope Francis.
- No official agenda was announced, but the opposition is bound to bring up complaints about the foiling of its bid to remove President Maduro via a referendum and the sidelining of the National Assembly.
- The country is facing its third year of recession, with widespread shortages and rising prices.
- Business confidence in Germany remained buoyant in October as Ifo's business climate index hit 110.5 and climbed ahead of economists' expectations to a fresh two-and-a-half-year high.
- The results follow a big rebound reported yesterday in Germany’s purchasing managers' index and suggest the EU's largest economy is holding up well despite many concerns about Brexit.
- The DAX touched a 2016 high on the news, rising to 10,827.
- ETFs: EWG, DAX, GF, DXGE, DBGR, HEWG, EWGS, FGM, QDEU
- Weakness seen in South Korea's Q3 GDP growth data was largely due to the scrapping of Samsung's Galaxy Note 7, Hyundai Motor's strikes and the collapse of Hanjin Shipping, according to the Bank of Korea.
- Gross domestic product grew by a seasonally adjusted 0.7% over July-September vs. the second quarter, but is still expected to hit the central bank's 2.7% forecast this year.
- ETFs: EWY, KF, KEF, KORU, DXKW, DBKO, FKO, QKOR, HEWY, KOR
- Eurozone officials have approved a €2.8B tranche of financial aid for Greece after the cash-strapped nation delivered the needed reforms.
- Those included milestones in pension reform, bank governance, the energy sector and revenue collection.
- So far Greece has received €31.7B of its €86B bailout granted in July 2015, its third since being engulfed by debt in 2010.
- ETFs: GREK
- The European Union's free trade deal with Canada is hanging in the balance after Belgium failed to formally back the plan, which was meant to be signed with Canadian Prime Minister Justin Trudeau on Thursday.
- While the possible postponement of CETA doesn't necessarily spell the end of the accord, it does highlight the acute difficulties the EU is facing in striking ambitious trade pacts.
- ETFs: EWC, CNDA, EWCS, FCAN, QCAN, HEWC
Monday, October 24, 2016
- Intelsat (NYSE:I) will distribute TV programming for Nine Network Australia (OTC:NNMTF), one of the country's top-rated commercial TV networks, via a new contract extending well into the 2020s.
- The company will also provide satellite and fiber connectivity to get content from from around to world into Australia, along with distributing programming to the company's six domestic stations.
- The two had an existing relationship as Intelsat did occasional-use work for NNA, including services for the 2016 Olympics in Rio de Janeiro.
- Intelsat will initially provide service with the Ku-band beam on Intelsat 19.
- Toyota (NYSE:TM) and Lexus topped the annual car reliability survey from Consumer Reports once again. Responses from owners, track testing and safety data were all factored in to generate the Consumer Reports rankings.
- Buick (NYSE:GM) surprised with a jump up to the third spot on the list, while Audi (OTCPK:VLKAY) dropped a spot to fourth. Infiniti (OTCPK:NSANY) shot up 16 spots to land at eighth.
- Brands ranking near the bottom of the CR survey included GMC (GM), Tesla (NASDAQ:TSLA), Dodge, Chrysler (NYSE:FCAU), Fiat, and Ram.
- Model standouts: Toyota Prius, Lexus CT 200h, Infiniti Q70, Audi Q3, Lexus GX, Mercedes-Benz GLC.
- CR brand reliability survey
- FanDuel (Private:DUEL) and DraftKings (Private:DRAFT) are desperately short on cash as they near a settlement with the New York attorney generals' office, reports The New York Times.
- The companies still have a thriving business model, but have been buried with legal and lobbying costs. There's a general sense in the gaming industry that casinos will jump into daily sports fantasy games after the legal clouds clear.
- Related stocks: NYNY, PENN, MCRI, GDEN, PNK, WYNN, ISLE, CNTY, ERI, CZR, LVS, BYD, OTC:WIMHF, OTCPK:WIMHY, OTCQB:TPCA, OTC:WIMHF, AYA, DDAY, OTCPK:DTFSF, OTCPK:EIHDF, OTCQB:GLXZ.
- Related ETF: BJK.
- BMW (OTCPK:BMWYY) is bringing back the 8 Series, reports German publication Automobilwoche.
- Plans for the 8-Series include a two-door coupe, a convertible and possibly a M8 performance model.
- The high-end 8 Series was built by BMW from 1989 to 1999 with V8 and V12 engines. Sales were very limited in North America.
- Star Entertainment Group (OTC:SETY) CEO Matt Bekier canceled a scheduled trip to Macau after authorities in the region held employees of Crown Resorts (OTC:CWLDF, OTCPK:CWLDY) last week on allegations of gambling violations.
- Shares of Crown and Star Entertainment both fell sharply last week in reaction to the Chinese crackdown.
- Previously: Chinese crackdown on Crown Resorts raises heads (Oct. 17)
Sunday, October 23, 2016
- Genworth Financial (NYSE:GNW) has agreed to be acquired by China Oceanwide (OTC:HHRBF), for about $2.7B overall -- $5.43/share in cash, about a 4.2% premium to Friday's close.
- China Oceanwide has also committed $600M of cash to address debt maturing in 2018 and $525M to the U.S. life insurance businesses (over and above $175M that Genworth Holdings committed to those businesses).
- The deal will be executed through one of China Oceanwide's investment platforms (Asia Pacific Global Capital Co.)
- The two say they have structured the deal with purpose to increase the likelihood of getting a regulatory OK.
- Genworth will separately take after-tax charges of $535M-$625M, unrelated to this transaction but tied to long-term insurance claim reserves and taxes.
- A half-hour conference call will come tomorrow at 8 a.m. ET to discuss the deal.
Saturday, October 22, 2016
- While Tesla Motors (NASDAQ:TSLA) may have grabbed some headlines this week for its ambitious goals with autonomous driving (SAE level 5), the technology is being widely discussed across industries as a potential future reality.
- At a real estate conference in New York this week, a panel member called autonomous vehicles the biggest tech news concerning real estate in the last ten years. Some see a future reversal of urbanization trends in a development that could have significant investment implications.
- City planners and architects are already thinking of next-gen design. A paper titled "Beyond Google's Cute Car" (.pdf version) is a good example of how cities are being reimagined.
- Then there's this from the man who designed the 2015 Ford Mustang. "The next 10 years in this business is going to be the biggest change and challenge since the turn of the last century when cars took over for horses," said Ford design chief Moray Callum. Ford (NYSE:F) aims to have a high-volume, fully autonomous SAE level 4-capable vehicle in commercial operation in 2021.
- Self-driving car development is a topic of discussion on FedEx (NYSE:FDX), UPS (NYSE:UPS), Lyft (Private:LYFT), Uber (Private:UBER), Hertz Global (NYSE:HTZ), Google (GOOGL, GOOG), Avis Budget (NASDAQ:CAR), Domino's Pizza (NYSE:DPZ) and Nvidia (NASDAQ:NVDA). Earnings season is just heating up, but a host of companies -- including OTCPK:TMOAF, OTCPK:DDAIF, OTCPK:VOLVY, MXIM, CPRT, WBC, GNTX and XLNX -- have already talked up the trend on their conference calls. GM reports earnings this week and will update on any self-driving Chevy Bolt plans.
- Looking ahead, insurance companies, chipmakers, truckers and cybersecurity firms (NYSEARCA:HACK) will be firmly in the self-driving conversation.
- So who has a profitable trade idea off of the evolution of cars?
Friday, October 21, 2016
- Egyptian billionaire Naguib Sawiris is considering a bid for bankrupt telecom Oi (NYSE:OIBR) by teaming with creditors to put in $1.5B, Reuters reports.
- The intent would be to take control from Oi's current shareholders, primarily Pharol SGPS (the former Portugal Telecom), and ready it for sale in the next three years.
- A preliminary plan has the consortium aiming to cut $21B in debt and attain a stake of about 85%.
- Bondholders led by Moelis & Co. had said they were working with Sawiris on a new plan earlier this month.
- Audi will buy back 25K older-generation diesel cars in the U.S., according to Der Spiegel.
- The company is being forced to buy back the Q7s because they are too old to be fixed to meet emissions standards.
- Volkswagen (OTCPK:VLKAY) is still negotiating with U.S. regulators on how to deal with diesel cars tied to the emissions test cheating scandal.
- A proposed bid from British American Tobacco bid for Reynolds American has the tobacco sector on the move. A combination of the two would create the largest tobacco company in the world.
- It was only two years ago that Reynolds and Lorillard merged in a dramatic development.
- Gainers today include Altria Group (MO +3.7%), Vector Group (VGR +2.3%), and Turning Point Brands (TPB +1.6%), Imperial Brands (OTCQX:IMBBY +1.7%), and Philip Morris International (PM +1.7%),
- Previously: BAT bids $47B to take Reynolds American ownership to 100% (Oct. 21)
- Previously: Reynolds American confirms British Tobacco offer, shares +20% (Oct. 21)
- Analysts are already weighing in on the impact of a merger between Coach (NYSE:COH) and Burberry (OTCPK:BURBY, OTCPK:BBRYF) -- even with the deal still only in the speculative stage.
- "A merger of Coach and Burberry would primarily be a merger of problems," notes Exane BNP Paribas analyst Luca Solca.
- "M&A history in luxury has shown that mergers don't obviously help in regaining brand traction and desirability, while cost efficiency in the face of declining brand momentum are often just a way to run in order to stand still," he adds.
- Coach is believed to be working with Evercore on the Burberry deal.
- Previously: Burberry and Coach higher amid merger speculation (Oct. 21)
- Burberry is now up only 3.2% in London.
- Canada's CPI rose 1.3% on a year-over-year basis in September, that's up from 1.1% in August. Core CPI, however, decelerated to 1.5% from 1.7%.
- August retail sales, meanwhile, fell 0.1% vs. what was expected to be a 0.3% gain. Ex-autos, sales were flat vs. +0.3% expected. In addition, July's originally reported -0.1% decline was revised down to -0.2%; July's ex-autos was revised lower as well.
- The loonie (NYSEARCA:FXC) has tumbled about 100 pips since the news hit, now down 0.8% vs. the greenback at $0.7501.
- ETFs: EWC, CNDA, EWCS, FCAN, QCAN, HEWC
8:24 AM| 8:24 AM
- Nissan (OTCPK:NSANY) says it will decide on what to do in the U.K. in November following a critical meeting last week between CEO Carlos Ghosn and U.K. Prime Minister Theresa May.
- The Japanese automaker is looking for some reassurances on the impact of Brexit before investing more in the region.
- Nissan operates the largest car factory in Britain.
- This should come as no surprise to anyone, but Bank of Japan Governor Haruhiko Kuroda has said that the bank may once again push back its 2% inflation target, which currently sits somewhere in fiscal 2017.
- Recall that when Kuroda started his job in early 2013 and began his turbo-charged asset-purchase policy that continues to this day, he originally hoped that inflation would hit 2% by late 2014 or 2015.
- Almost four years later, inflation has disappeared after an initial rise.
- The yen is -0.2% at 103.69.
- ETFs: FXY, YCS, JYN, YCL
- China's house-price index dropped to 4.3% in September from 9.2% in August amid attempts by central and local governments to dampen the red-hot sector with purchasing restrictions in a number of cities.
- In the first weeks of October, new-home prices in Beijing dropped 3.7% and 2.5% in Shanghai after rising in both cities in September.
- In 63 of the 70 cities tracked, new-home prices, excluding government-subsidized housing, grew last month, down from 64 in August.
- Despite the early signs of cooling, analysts are skeptical about the government actions amid mounting concerns about the huge debt in China.
- "The most powerful property control is credit tightening, which we haven't seen," UBS economist Wang Tao said. "The purchase restrictions currently imposed can still be bypassed."
- ETFs: CYB, CNY, DSUM, FXCH, CBON, KCNY
Thursday, October 20, 2016
- The new Switch videogame system is likely to have a positive effect for Nintendo (OTCPK:NTDOY +2.5%) even though the particulars are largely what's been expected for some time, Jefferies says.
- The system isn't as big a deal as Nintendo making a long-awaited move to smartphone gaming, says analyst Atul Goyal in an overnight note. But it does showcase the company's software, which is important, he says.
- "In the long term NX may still turn out to be far less successful than its predecessors or when compared to its peers," he writes. "But – when it showcases the product – most of its audience is likely to find it 'interesting' and die-hard Nintendo fans are going to buy it regardless." And if the system is great, then that's a positive catalyst.
- He also contrasted the importance of expectations: While gamers have been anxious over the release timeline, "hardly any investor we have met has any expectation from NX or its launch" and most see it as a negative catalyst that could get them a better entry price before Super Mario Run comes out in December.
- He has a Buy rating on shares and a target of ¥37,000, implying 37% upside from the company's Thursday close in Tokyo.
- Kandi Technologies Group (NASDAQ:KNDI) says its Kandi Electric Vehicles Group JV signed a strategic cooperation agreement with Shanxi Coal Asset Management Group to sell over 50K electric vehicles during a five-year cooperation period.
- Shanxi Coal is a subsidiary of Shanxi Financial Investment Holding Group Co., Ltd., which is a wholly state-owned company.
- "Our cooperation agreement with Shanxi Coal is a major milestone in our successful expansion throughout China," says Kandi CEO Hu Xiaoming.
- Source: Press Release
- Vivendi (OTCPK:VIVHY -0.5%) has a new "fair warning" to Mediaset (OTCPK:MDIUY) in its contentious battle to acquire the Italian company's pay TV unit, but that doesn't preclude an alternative deal still being struck, sources told Reuters.
- The TV unit, Mediaset Premium, plays a key role in Vivendi's strategy to use Southern Europe to advance its media ambitions. But Vivendi backed out of a binding deal to take full control in July, and the companies have been at legal loggerheads since (with a court date set for March).
- Vivendi now says it's no longer interested in an amicable solution after Mediaset asked a court to order seizure of a 3.5% stake in Vivendi: "Enough is enough," said a Vivendi-tied source. "We've made a lot of efforts to find a solution. This is a fair warning."
- Still, backchannel negotiations have been reported and are said to still be taking place. Vivendi is said to be working a preferred alternative where Mediaset and Vivendi would each get 40% of the Premium unit and a third party would hold the remaining 20%.
- MTN Group (OTCPK:MTNOY) is off 2.9% in U.S. trading today after a Bloomberg report found a Nigerian lawmaker saying the carrier may have illegally moved way more than $14B out of the country.
- “We have realized from preliminary investigations that it is actually outrageously higher" than that original estimate, says Dino Melaye, the senator who pressed allegations that the company was moving funds out.
- Nigeria has tried to impose fines on MTN -- first for $5.2B, then for $3.9B, before the company agreed to pay 330B naira (about $1.1B) tied to the company's missed deadline on disconnecting unregistered SIM cards amid an insurgency. The company's market value has halved since the fine issue came up a year ago.
- Shares dropped to a six-year low in Johannesburg.
- Nissan (OTCPK:NSANY) expects big returns from its investment in Mitsubishi Motors (OTCPK:MMTOF).
- CEO Carlos Ghosn says new synergies will add ¥24B in FY17 and ¥60B in FY18.
- "We are proud to be providing strategic, operational and management expertise as well as capital investment to ensure that Mitsubishi Motors not only overcomes its immediate, significant challenges but also flourishes in the future," says Ghosn.
- Nissan is now part of a powerful triple alliance with Renault (OTC:RNSDF, OTCPK:RNLSY) and Mitsubishi.
- Previously: Nikkei: Nissan CEO to become Mitsubishi Chairman (Oct. 19)
- The euro (NYSEARCA:FXE) has popped higher and European shares (NYSEARCA:FEZ) lower after Mario Draghi - in his post-ECB meeting press conference - says there was no discussion of extending QE at today's get-together.
- While the vast majority of watchers hadn't expected any policy changes today, many had anticipated some movement towards expanding or extending the bank's QE program, which is slated to end early next year.
- Flat on the session moments ago, the euro is now higher by 0.5% vs. the dollar. The Stoxx 50 has turned lower by 0.25%.
- ETFs: FXE, VGK, EUO, HEDJ, FEZ, ERO, IEV, EPV, EZU, DRR, FEU, EURL, DBEU, ULE, EEA, EUFX, FEP, HEZU, UPV, IEUR, URR, FEEU, ADRU, FIEU, DBEZ, FEUZ, SBEU, HFEZ, HFXE, DEZU, FIEE, GSEU, HGEU, PTEU, RFEU
- U.K. retail sales fell 4.0% in September (ex-fuel) on a year-over-year comparison. Sales were flat in comparison to August vs. +0.3% expected by economists.
- Weak sales were recorded in the food, footwear and clothing categories during the month.
- Office of National Statistics data
- In a novel initiative, Sprint (NYSE:S) is set to issue $3.5B in five-year bonds that are backed by its wireless spectrum, which the telecom operator values at $16.4B.
- Investors seem to like the idea, with orders hitting $30B.
- The first-of-its-kind deal will allow Sprint to slash its borrowing costs. The paper is expected to yield 3.5% and the telecom provider plans to use the money to repay maturing debt. This could cut its financing costs and boost cash flows by an estimated $200M a year.
- The debt is receiving investment grade status from Fitch and Moody’s despite Sprint itself being rated as junk.
- ETFs: LQD, VCIT, CORP, CIU, CSI, CRED, ITR, QLTA, COBO, FCOR, CBND, SKOR, IGIH, WFIG
- Australia's unemployment rate slipped to 5.6% in September from 5.7% in August, caused by a fall in the participation rate to 64.5% from 64.7%.
- The number of people in work dropped 9,800 vs a reduction of 8,600 a month earlier and badly missed consensus for growth of 15,000.
- The Australian Bureau of Statistics said that the shift this year to part-time employment continued as the number of full-time positions dropped 53,000 following a decrease of 10,100, while that for part-time jobs grew 43,200 vs -18,600.
- However, one analyst is highly skeptical about the figures due to the problems that the ABS has had with the data over the past couple of years.
- "The numbers are rubbish. No one is going to believe these numbers," says TD Securities' Annette Beacher. "The massive shifts in full-time/part-time is very easy to discount. It's the sort of irregularities seen in recent months."
- The S&P/ASX 200 rose 0.1%, while the AUD-USD is -0.8% at $0.7658.
- ETFs: FXA, EWA, IAF, AUSE, CROC, KROO, EWAS, FAUS, QAUS, HAUD, DBAU
- As expected, Saudi Arabia has raised $17.5B in the largest ever bond sale by an emerging-market country as it looks to reduce its $97B budget deficit.
- The government could have raised even more, with Bloomberg reporting that it received orders of $67B.
- The debt issue is part of Saudi Arabia's plan to open up its $650B economy and reduce its massive reliance on oil, the low prices for which have exacerbated the government's budgetary problems.
- The kingdom, which Moody's rates at A1, sold $5B debt in each of five- and 10-year bonds and $6.5B in 30-year debt.
- ETFs: EMB, PCY, TEI, EDF, ELD, EDD, EMLC, VWOB, GHI, EDI, EMD, MSD, SBW, LEMB, EMAG, EBND, KSA, EMSH, FEMB, EMIH, EMBH, EMTL, IGEM
Wednesday, October 19, 2016
- Bankrupt Brazilian telecom Oi (NYSE:OIBR) may cut ties with PJT Partners as it looks for a financial adviser with more local experience to help it negotiate with bondholders, its CEO suggests.
- The situation last year (prior to filing for Brazil's biggest-ever bankruptcy) was different, but “Now that we are in a judicial recovery process, it is natural that we look for a financial adviser that understands very well the legal issues," says CEO Marco Schroeder.
- The company's in tentative deals with suppliers and labor groups and is talking with the government's regulator on fines and taxes, leaving debt restructuring talks as a major hurdle. The company's trying to rearrange $20B in debt.
- One sticking point is Oi's right under its plan to redeem convertible debt -- which creditors repped by Moelis & Co. say gives current shareholders the chance to avoid dilution in a turnaround while leaving bondholders also holding the bag.
- Previously: Telecom Italia chief: Not interested in buying debt-ridden Oi (Oct. 18 2016)
- Previously: Brazil regulator: Not our goal to intervene in Oi bankruptcy (Oct. 17 2016)
- Qatar is considering putting itself into a $100B global tech fund being created by SoftBank (OTCPK:SFTBY -0.4%), Bloomberg reports.
- Qatar's sovereign wealth fund may pour billions into the fund as a way to diversify out of oil. Crude-heavy Saudi Arabia is already set to be the lead partner in SoftBank's fund, and could put in up to $45B over five years.
- SoftBank itself has committed at least $25B to the fund, which is tentatively called the SoftBank Vision Fund.
- A plunge in oil prices has led Gulf Arab countries to look at new sources of income. And SoftBank Chairman Masayoshi Son has reportedly visited various destinations in the Gulf region to discuss investments.
- Vodafone Portugal (VOD -1%) is counting on a positive outcome with the European Commission, which it expects will force an opening of Altice's (OTCPK:ATCEY) fiber network to rival firms.
- The EC had opened an early probe into decisions by Portugal's telecom regulator not to force Altice-owned MEO (the market-leading pay TV and broadband provider) to allow others onto the fiber net.
- With a ruling due by the end of the month, Vodafone Portugal chief Mario Vaz says arguments are lining up that suggest open access is coming: "We expect a positive result for Portugal."
- Such a move would build incentives for co-investment and greater competition in currently noncompetitive parts of the country, he said.
- Saudi Arabia (NYSEARCA:KSA) has launched a sale of $17.5B of debt, WSJ reports, in a bid to support a major effort to keep its economy afloat as oil income dwindles.
- The sale, in what would be the largest emerging market bond issue, is the latest example of a Persian Gulf state turning to international markets to offset declining oil revenues; other Gulf oil exporters such as Qatar, Bahrain, Oman and Abu Dhabi earlier this year raised a combined $20B through international bond issues.
- The fresh funds will help Saudi Arabia narrow its budget deficit, which stood at a record $98B last year.
- Ericsson (ERIC -1.1%) may be looking outside of telecoms for its new CEO, a source tells Reuters, after the company looks past well-discussed, more obvious candidates.
- That comment came in response to a newspaper column today raising the prospect that Saab chief Hakan Buskhe could be in the running. "I understand there is a person on the short list but that it is not so easy to get the person concerned," the source said.
- CEO Hans Vestberg stepped down in July after key shareholders began pushing for an ouster.
- The conventional-wisdom short list for a replacement points at the company's Australia-based Hakan Eriksson, former company CFO Karl-Henrik Sundstrom and Vodafone CTO Johan Wibergh (also a two-decade Ericsson veteran).
- Meanwhile, the CEO search is the company's top priority, according to Ericsson's biggest shareholder. Johan Forssell, chief of Investor AB, says: “It needs to be a good leader, someone with strategic abilities, considering the large technology shifts that are happening in this industry ... It’s also an advantage to have the ability to understand the technology.”
- Shares are down nearly 25% over the past week.
- Fiat Chrysler Automobiles (FCAU +0.8%) recalls 310.8K vehicles in separate recall actions.
- 225K Jeep Wrangles SUVs from the models years 2016 and 2017 are being recalled due to faulty sensor wiring.
- The automaker is also recalling about 86K Ram pickup trucks (2500/3500/45/99/5500) from model years 2007 to 2013 and Dodge Chargers from model years 2011 to 2014 on concerns over alternator wear.
- Incumbent British telecom BT Group (BT -1%) -- in the middle of a lengthy public/government debate about whether it must spin off its Openreach infrastructure arm -- is maintaining that there's a "strong case" to invest in fiber if the company stays intact that doesn't add up in the case of a spin-off.
- A split would also force a difficult and expensive separation of pension liabilities, says BT CEO Gavin Patterson.
- "The case for more investment is quite strong," Patterson says. "There is going to be no shortage of opportunities to invest, the challenge for us as a company is to make sure the investment cycles are reasonable and we are able to make a return from them."
- In summer 2015, Patterson famously raised the specter of a decade of litigation if British regulators forced a spin-off of Openreach, which holds wholesale infrastructure used by telecom rivals to deliver service.
- Past Openreach coverage
- China Unicom (NYSE:CHU) is up 2.3% in U.S. trading despite noting preliminary profits that are set to slide for the first nine months of the year as it invested to keep up with market leader China Mobile (NYSE:CHL).
- A turnaround may be in the offing, though, as the company's heavy network investments in 4G begin to pay off with subscriber additions.
- Preliminary net income tumbled to about 1.59B yuan (about $236M), vs. 8.18B yuan ($1.21B) in the prior year's first nine months.
- In just September, though, the company expects record net additions of 6.05M 4G subscribers, well up from August's 5M. Overall, it added about 9.76M wireless subs, bringing its total to 262M.
- Full earnings are set to come on Thursday.
- The U.K.'s unemployment rate held steady at an 11-year low of 4.9%, as expected, in the three months to the end of August.
- However, while the number of people in work rose 106,000, that's down from increases of above 170,000 in recent months.
- The number of unemployed increased 10,000 to 1.66M for the first rise since February.
- Basic pay growth increased to 2.3% from 2.2%, although total pay slowed to +2.3% from +2.4%.
- While the data will probably be scrutinized for what it says about the impact of the Brexit vote, it's still way to early to tell.
- The pound is +0.1% at $1.2309, while the FTSE 100 is -0.3%.
- ETFs: FXB, EWU, GBB, EWUS, FKU, DXPS, DBUK, QGBR, HEWU
- China's GDP growth remained at 6.7% on year in Q3, as expected, boosted by yet more government spending, record bank lending and an over-heating property market, all of which are adding to the massive debt in the country.
- Q2 growth was also 6.7%.
- The figure is in the middle of the government's 2016 growth target of 6.5%-7%.
- Industrial production slowed to +6.1% on year in September from 6.3% in August and missed forecasts of +6.4%.
- Retail sales accelerated slightly to +10.7% from +10.6% and topped estimates of +10.6%.
- Fixed-asset investment growth jumped to +8.2% from +6.1% and met expectations.
- "Economic activity seems to be holding up reasonably well, with few signs that a renewed slowdown is just around the corner," says economist Julian Evans-Pritchard. "Nonetheless, the recent recovery is ultimately on borrowed time given that it has been driven in large part by faster credit growth and a property market boom, both of which policy makers are now working to rein in."
- Chinese shares -0.7%, Hong Kong -0.6%.
- ETFs: FXI, ASHR, YINN, EWH, CAF, FXP, YANG, KWEB, PGJ, GXC, CYB, HAO, CQQQ, CNY, MCHI, PEK, CHN, CHIQ, CHIX, TAO, QQQC, DSUM, TDF, XPP, ASHS, CNXT, YXI, CHAU, YAO, CN, FCA, GCH, CHAD, FXCH, ECNS, CXSE, CHII, CHIM, KBA, CBON, CHIE, EWHS, JFC, KCNY, FCHI, KFYP, AFTY, FHK, HAHA, ASHX, CNHX, XINA, CNYA
Tuesday, October 18, 2016
- The surprising exit of Guy Laurence from the helm of Rogers Communications (RCI +0.6%) -- along with earnings released a few days early -- has analysts abuzz about prospects at the Canadian telecom.
- RBC Capital and Scotiabank reiterated Outperform ratings today, with price targets of C$56 and C$60 respectively (vs. today's close in Toronto of A shares at C$55.01).
- Improving performance in wireless and cable subscribers sets up well for the coming year, says RBC's Drew McReynolds, and Scotiabank's Jeff Fan thinks momentum is good enough for the coming quarters with interim chief Alan Horn -- though a lengthy transition before Joe Natale takes over (due to his non-compete agreement, which could run to Aug. 1) has Fan worried other senior management may leave.
- Credit Suisse stayed Neutral on the stock but bumped its price target to $54 from $53. Meanwhile, Macquarie's Greg MacDonald (C$60 price target) is OK with the "musical chairs" at the top since Natale (a former chief at Telus) looks to have stronger operating skills in both wireline and wireless. Laurence may have done his "fix-it" job of trimming management and improving operations.
- Liberty Global (NASDAQ:LBTYA) is shoring up its lead in Poland, sealing a $760M cash deal to take over the cable business of Multimedia Polska.
- Multimedia Polska is the No. 3 cable provider in the country, and adding it brings the reach of Liberty's UPC Poland to more than 4M homes and businesses.
- UPC Poland had passed 3.1M homes (about 20% of households) at the end of June, while Multimedia had passed 1.6M homes. Poland made up 2.2% of Liberty Global's 2015 sales.
- The deal's expected to close in the next 12 months.
- A government-commissioned report says the mammoth $880B sovereign wealth fund should up its investments in equities to 70% of assets from the current 60%, with that extra money coming out of fixed-income.
- It's not small potatoes given that the fund owns on average 1.3% of every single listed company in the world, and 2.5% in Europe. Maybe even more importantly, it could be a bell-ringer for the bull market - the equity allocation was last raised (from 40% to 60%) in 2007. Oops!
- As is typical these days, the current rate regime has officials struggling to find a way to boost returns, and the natural answer is to take on more risk.
- Remember this name: Knut Mork. He's the chairman of the nine-member commission which put out the report, and he's the only dissenter from the vote to recommend boosting equity exposure. In fact, he argues for cutting the stock allocation to just 50% in order to give the government a more predictable stream of income.
- Sony Music Entertainment (SNE +2.1%) is promoting Rob Stringer to succeed Doug Morris as its chief executive officer, as Morris moves on to become chairman of the group.
- Those moves are effective in April. Stringer is chairman and CEO at the company's Columbia Records, the label representing Beyonce and Adele.
- Stringer has led Columbia to be the leading label by market share, Sony says.
- Vodafone (VOD +1.6%) is the latest Western phone company to make a move into Iran as sanctions ease up, forming a partnership with local Internet service provider HiWeb.
- In the non-equity deal, Vodafone will help HiWeb expand and modernize its network, while HiWeb will offer mobile/landline service in Iran to Vodafone's multinational customers. The scope of the pact includes marketing, distribution and even "Internet of Things" services.
- The move by Vodafone follows similar steps by Orange (NYSE:ORAN), which says it's talking cooperation deals with Iran's Mobile Telecommunication Co.
- A heavy debt load tied to now-bankrupt Oi (NYSE:OIBR) means that Telecom Italia (TI +2.9%) isn't interested in a purchase, says CEO Flavio Cattaneo.
- Speaking to newspaper Valor Economico, Cattaneo pointed to 20B reais (about $6.2B) in fines owed by Oi, almost the same as the market value of TI's Brazilian unit TIM Participações (TSU +1.9%). "If Oi manages to split its debt from its assets ... we will be watching," Cattaneo says.
- Cattaneo took over as TI's CEO amid well-documented disputes between former chief Marco Patuano and investing shareholder Vivendi (OTCPK:VIVHY +1.4%) over the disposition of TIM. Patuano was inclined to hold on to the Brazilian unit while Vivendi actively pushed to sell the division.
- Previously: Patuano exit from Telecom Italia likely to speed pending deals (Mar. 29 2016)
- Telefónica Brasil (VIV +1.8%) is planning to diversify to build a broader base of revenue as well as cut costs and optimize investments in 4G and even 5G networks, its CEO says.
- Speaking at a São Paulo event, CEO Amos Genish says the company will focus on high-growth areas such as cloud computing.
- In a move in the works for months, Genish is transitioning out of the chief executive role, to be replaced by Eduardo Navarro de Carvalho on Jan. 1.
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