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Ameriprise Financial joins race to buy UniCredit’s Pioneer: sources

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Ameriprise Financial joins race to buy UniCredit’s Pioneer: sources

By Gianluca Semeraro and Maria Pia Quaglia
| MILAN

U.S. financial services company Ameriprise Financial has joined the race to buy asset manager Pioneer Investments, which has been put on the block by Italy’s biggest bank UniCredit, two sources close to the matter said on Thursday.

The Minneapolis-based company, which controls Threadneedle Asset Management, joins four other bidders that are expected to present binding offers for Pioneer by Nov. 10, the sources said.

Ameriprise and UniCredit declined to comment on the issue.

Europe’s biggest asset manager Amundi and an Italian consortium led by Poste Italiane are seen as frontrunners in the race.

Australia’s Macquarie and British group Aberdeen Asset Management are also interested in the unit.

The sale of the asset gatherer is part of a broader effort by UniCredit to boost its capital. Led by its new CEO Jean-Pierre Mustier, the bank is due to unveil a new strategic plan on Dec. 13.

The offers will likely value Pioneer between 3.2 billion and 3.4 billion euros ($3.8 billion), another source said.

Poste Italiane has had contacts with both Aberdeen and Macquarie over joining forces to buy Pioneer but the talks have so far led nowhere, a fourth source said.

One of the sources said a further extension of the deadline for presenting binding offers could not be ruled out.

 

($1 = 0.9013 euros)

(Additional reporting by Francesca Landini)

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Published at Thu, 03 Nov 2016 16:53:04 +0000

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Wells Fargo CEO sees ‘relatively quick’ review of sales practices

 

 

 

A Wells Fargo Bank is shown in Charlotte, North Carolina, U.S., September 26, 2016. REUTERS/Mike Blake
By Dan Freed

Wells Fargo CEO sees ‘relatively quick’ review of sales practices

Wells Fargo & Co’s (WFC.N) CEO Tim Sloan said on Thursday a comprehensive review of the bank’s sales practices would be done ‘relatively quickly’ and unveiled a series of immediate changes at the bank’s retail unit under new division boss Mary Mack.

Management is reaching out to employees who were wrongly fired, while continuing to review sales practices across the bank, and changing compensation plans to avoid incentivizing bad behavior. It is also ramping up marketing efforts after having slowed them in the wake of the problems, Mack told an industry conference in Boston, her first with analysts since taking over the retail business.

The bank, which earlier said in a regulatory filing that legal costs could exceed reserves by $1.7 billion, has also hired an outside consultant to guide changes to the retail business.

The retail unit’s new risk chief now reports into the broader company’s risk chief, rather than to Mack. The bank also said it created a new ‘Change Leader’ position in the unit to focus on ‘what great customer experience looks like,’ according to Mack and Sloan’s presentation.

“We’re going to leave no stone unturned,” said Sloan.

“I don’t want there to be a question about how we interact with customers at Wells Fargo,” he added. “We’re going to put that to rest. That’s going to be done in a very comprehensive way and it’s going to be done relatively quickly, but it’s going to be done right.”

An independent consultant is now reviewing sales practices across the whole bank, Sloan said, without identifying the company. Because most of Wells Fargo’s senior leadership has been at the bank for a long time, they may have inadvertently contributed to some of its problems, he said.

Wells Fargo’s period of atonement follows a $185 million settlement on Sept. 8 with federal regulators and a Los Angeles prosecutor regarding its opening as many as 2 million accounts in retail customers’ names without their permission.

At the time, the bank said it fired 5,300 employees for improper sales practices over a period of five years, but since then reports have surfaced of employees also being fired for raising red flags or not meeting aggressive sales quotas imposed by their managers.

Wells Fargo welcomes back employees fired ‘inappropriately’ if they would like to return, Sloan said. He took the reins on Oct. 12 from former CEO John Stumpf, who abruptly left the bank under harsh scrutiny for its practices.

Mack became head of the retail unit in July, before the scandal came to light. She replaced Carrie Tolstedt, who forfeited $19 million in stock in September following a public uproar over the sales issues. Stumpf gave up $41 million.

Even with the settlement, the management shakeup and the steps is taking to improve, Wells Fargo’s problems are not over.

The bank faces probes from several other regulators and authorities, including the U.S. Department of Justice and congressional committees. The Securities and Exchange Commission is also examining the bank, Wells said in its filing on Thursday.

Wells’ $1.7 billion estimate of its potential legal expense shortfall is up from a $1 billion estimate in August.

(Reporting by Dan Freed in New York; Additional reporting by Sruthi Shankar in Bengaluru and David Henry in New York; Writing by Lauren Tara LaCapra; Editing by Nick Zieminski)

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Published at Thu, 03 Nov 2016 15:40:46 +0000

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Love or Money? The economics of online dating

 

A couple tries to hold on to an umbrella flipped inside out at a sea front off the coast of the Arabian Sea, in Mumbai June 14, 2013.REUTERS/Danish Siddiqui

Love or Money? The economics of online dating

By Chris Taylor | NEW YORK

When it comes to love, money has nothing to do with it. Right?

Not so fast.

After all, they don’t call it a “meet market” for nothing. The dating world is, in fact, its own market, with complex economic judgments taking place all the time.

That is according to Dr. Marina Adshade, an economics professor at the University of British Columbia and author of the book “Dollars & Sex,” which examines the relationship between money and love.

“Dating markets don’t have currency, so they depend on other mechanisms to operate, much like a barter system,” Adshade said. “It all depends on what you are bringing to the table. Some of those qualities might be age or attractiveness – and some are financial.”

Indeed, just go on popular dating sites such as Match.com, and one of the criteria for winnowing down potential matches is annual income. You can look for someone who makes $50,000 a year, or $75,000, or $100,000.

So, does that matter? Well, in one study published in the Journal of Economic Behavior & Organization, which crunched data from a popular Chinese online-dating website, male profiles with the highest income levels got 10 times more visits than the lowest.

Another study, co-authored by famed behavioral economist Dan Ariely, uncovered similar online-dating preferences.

“Men and women prefer a high-income partners over low-income partners,” the authors wrote in the journal Quantitative Marketing and Economics. “This income preference is more pronounced for women.”

The takeaway: As much as we like to think we are beyond the days of Jane Austen, when suitors were evaluated largely based on how much money they brought in – the famous Mr. Darcy in “Pride & Prejudice” was worth “Five thousand a year!” – money can be critical in our romantic lives.

“Someone’s income will almost always factor into the equation,” says Douglas Kobak, a financial planner in Conshohocken, Pennsylvania.

“When you are becoming serious, you need to consider what your partner is bringing to the table besides love and a good time. The question becomes one about the potential to earn the income needed to build wealth and live a lifestyle you want.”

ECONOMIC JUDGMENTS

Just think about the numerous economic judgments we are making while dating online. First off, we are essentially estimating our own value (which may or may not be accurate), Adshade notes. At the same time we are estimating others’ value, and whether they are likely to respond – or whether they are “out of our league.”

Then we are weighing interested suitors against the “opportunity costs” that there may be other, ‘better’ options still out there. And we make these judgments against the backdrop that we are all, sadly, depreciating assets. Wait too long for an ideal person, and you could miss out on quality matches, who will eventually be snapped up themselves.

There are also competing economic theories at work. Are you looking for someone relatively similar in qualities like income and education (“market theory”)? Or are you looking for someone sufficiently different from yourself, that you both gain from the union (“economic trade theory”)?

One note to remember: Annual income is just one financial data point, and probably not even the most important one. In terms of long-term economic security, it is better to partner with someone who makes $50,000 annually but lives below their means, than someone who makes $100,000 a year but spends wildly and racks up debt.

“Money itself is not nearly as important as are money habits,” says Robert Braglia, a financial planner in New York.

Adshade’s key advice for would-be romantics: Broaden the criteria you are looking for in a mate. If you are solely looking for a man who is over 6’2″ and makes six figures annually, you have instantly gone from a “thick” market – one with literally millions of people – to a “thin” one, with few remaining options. Indeed, the tall, rich guy with a full head of hair is probably off the market already, she says.

Instead, devote yourself to a more “exhaustive” search that includes a wider variety of income levels, she advises. It will take more time to sift through that broader pool, but that is better than “artificially reducing the size of your search sample,” she says. “That is the biggest mistake.”

The writer is a Reuters contributor. The opinions expressed are his own.

(Editing by Lauren Young and Alan Crosby)

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Published at Wed, 02 Nov 2016 13:06:36 +0000

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Facebook reports better-than-expected rise in revenue

 

3D-printed models of people are seen in front of a Facebook logo in this photo illustration taken June 9, 2016.REUTERS/Dado Ruvic/Illustration
By Rishika Sadam and Dustin Volz

Facebook Inc (FB.O) on Thursday posted earnings growth that beat Wall Street’s high expectations as the world’s biggest online social network said daily mobile users exceeded the one billion mark for the first time.

Its shares were down 1.7 percent, in after-hours trading, at $124.97.

Mobile ads accounted for 84 percent of Facebook’s total advertising revenue of $6.82 billion in the third quarter that ended Sept. 30, compared with 78 percent a year earlier.

The company is also reaping the benefits of a big push into video, both on Facebook itself and on the Instagram photo app.

“We’re making progress putting video first across our apps and executing our 10 year technology roadmap,” Chief Executive Officer Mark Zuckerberg said in a statement.

Facebook reported a 55.8 percent rise in quarterly revenue, to $7.01 billion, beating analysts’ average estimate of $6.92 billion, according to Thomson Reuters I/B/E/S.

Facebook said about 1.79 billion people were using its site monthly as of Sept. 30, up 16 percent from a year earlier.

The strong numbers come as Facebook has struggled in recent months to combat allegations that it unfairly removes certain content on its service, and news in September that the company had for years overestimated how it calculates the average time users spend watching video.

But investors appear optimistic Facebook will continue to grow revenue through its aggressive expansion of mobile and video advertising.

More than 90 percent of Facebook’s users access the social network through mobile devices, and the company now boasts daily average mobile users of 1.09 billion, up 22 percent from last year.

With the company’s photo-sharing app Instagram and messaging apps WhatsApp and Facebook Messenger facing increasing competition from Snapchat, Facebook has been adding features to keep users hooked and attract advertisers.

The company said in September that Instagram’s advertising base had more than doubled to more than 500,000 in six months. Instagram had about 500 million users as of June. (bit.ly/2f1SJfP)

Facebook took its attempts to boost user engagement to the workplace last month, launching a subscription-based enterprise version of its mobile app.

The company also launched Marketplace, a feature that allows people to buy and sell items locally, and has been focusing more on video to better compete with Google’s (GOOGL.O) YouTube.

Facebook is expected to generate about $22 billion in mobile ad revenue in 2016, according to research firm eMarketer, up about 67 percent from 2015. Total ad revenue is forecast to rise to about $26 billion, an increase of about 52 percent.

However, there are questions about how long Facebook can continue to boost mobile ad revenue, given limits to the number of ads that Facebook can show each user.

Net income attributable to Facebook shareholders jumped to $2.37 billion, or 82 cents per share, in the quarter from $891 million, or 31 cents per share, in the third quarter of 2015.

Excluding items, the company earned $1.09 per share. On that basis, analysts had expected 97 cents per share.

Up to Wednesday’s close of $127.17, Facebook’s shares had risen 21.5 percent since the start of the year.

(Reporting by Rishika Sadam and Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty and Bill Rigby)

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Published at Wed, 02 Nov 2016 20:25:45 +0000

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Big Fidelity investor in Wells Fargo trimmed position in September

 

Big Fidelity investor in Wells Fargo trimmed position in September

 

Fidelity Contrafund, one of the largest investors in Wells Fargo & Co (WFC.N), reduced its stake in the scandal-hit bank by 5 percent in September, according to the fund’s latest holdings report.

Run by star portfolio manager Will Danoff, Contrafund had a $2.2 billion stake in Wells Fargo, or about 50.1 million shares, at the end of September, according to a report released on Sunday. The fund owned about 52.65 million shares at the end of August.

Wells Fargo is the only bank in a Contrafund top 10 holdings list dominated by tech companies. The bank’s shares dragged on Contrafund’s third-quarter performance, falling nearly 6 percent amid disclosure Wells Fargo branch staff opened as many as 2 million accounts without customers’ knowledge.

Contrafund is the third-largest mutual fund investor in Wells Fargo, behind two Vanguard Group index funds, according to Thomson Reuters data.

 

(Reporting By Tim McLaughlin; Editing by Meredith Mazzilli)

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Published at Mon, 31 Oct 2016 14:26:03 +0000

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Got bank? Election could create flood of marijuana cash with no place to go

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marijuana-269851_1280By noexcusesradio from Pixabay

Got bank? Election could create flood of marijuana cash with no place to go

By Lisa Lambert
| October 31

Although the sale of marijuana is a federal crime, the number of U.S. banks working with pot businesses, now sanctioned in many states, is growing, up 45 percent in the last year alone.

Still, marijuana merchants say there are not nearly enough banks willing to take their cash. So many dispensaries resort to stashing cash in storage units, back offices and armored vans.

Proponents believe the Nov. 8 election could tip the balance in favor of liberalizing federal marijuana laws, a move seen as key to getting risk-averse banks off the sidelines.

Measures on ballots in California, Florida and seven other states would bring to 34 the number of states sanctioning pot for medical or recreational use, or both. That could push annual sales, by one estimate, to $23 billion.

The prospect for a market of such scale is adding urgency to calls for a national approach to marijuana that expands banking options. Law enforcement and Federal Reserve officials have expressed concern about the fraud and crime associated with un-bankable cash.

Nearly 600 dispensary robberies have been reported in Denver since recreational pot was legalized in Colorado three years ago.

“There’s not a single human being who thinks there is any benefit at all in forcing marijuana business to be conducted on an all-cash basis,” said Rep. Earl Blumenauer, a Democrat from Oregon who has called for the decriminalization of marijuana since coming to Congress in 1996.

MONEY LAUNDERING

The U.S. Justice Department said in 2014 it would not prosecute banks for serving state-sanctioned marijuana businesses. At the same time, the Treasury Department requires banks to report suspected drug crimes.

At last count, 301 banks were serving marijuana businesses, according to the Treasury Department. Many more have avoided the sector out of fear that making the wrong call could put them at risk, said Robert Rowe, a vice president at the American Bankers Association.

The National Cannabis Association is pressing Congress for a law that would hold banks harmless for handling pot cash, said Michael Correia, a lobbyist for the trade group. If California legalizes recreational use next week, the nation’s biggest Congressional delegation will have a big stake in the issue.

In lieu of federal action, some states have tried their own fixes. Colorado created a credit union system for state-sanctioned marijuana businesses. But it fell apart when the Kansas City Federal Reserve denied a Colorado pot credit union access to the national payments system, which distributes currency and clears checks and electronic payments.

California has no such plans, said Tom Dresslar, spokesman for the state’s Department of Business Oversight.

“This was a problem created by federal law,” Dresslar said, “and it needs a federal solution.”

In northern California, where growers serve state-sanctioned medical dispensaries as well as the black market, the Community Credit Union of Southern Humboldt stopped opening pot business accounts because of the red tape and uncertainty, said senior vice president Janet Sanchez.

“We’re not being asked to go over to the gun dealer and ask them if they’re making appropriate background checks,” she said.

Dispensary operators unable to find willing banks tell tales of subterfuge, recordkeeping nightmares and armies of security guards. Many open bank accounts and submit credit card charges in ways that obscure their true enterprise, such as “spa services.”

Susana de la Rionda has run a Los Angeles medical marijuana dispensary for 12 years and has had to find a new bank about once a year and submit to tax audits twice as often.

“I feel like a gangster,” she said.

Denver Relief dispensary founder Ean Seeb said operators always are trying workarounds to get cash into banks, including washing bills in fabric softener to hide the odor of pot. For a time, he said, one automated teller machine near a Denver mall drew lines every night of marijuana merchants, each depositing the maximum $500 in cash.

 

WEEDING OUT RISK

Partner Colorado Credit Union began working with state-sanctioned dispensaries two years ago and has developed elaborate protocols to minimize risk, including an initial vetting that can take three weeks. It uses armored trucks to take cash deposits directly from dispensaries to the Denver branch of the Federal Reserve Bank.

When the credit union spots a red flag, Chief Executive Sundie Seefried dispatches employees to pay the dispensary a visit, and she has closed two accounts for compliance problems. Seefried encourages operators to visit by keeping fine cigars in her office, and she stays in touch with regulators.

“Our program is designed with eyes on the business, eyes on the owner, eyes on the money,” she said.

With 95 dispensary members, Seefried said the credit union is at capacity, and she hopes more bankers will get involved. She fields calls for advice, speaks to industry groups and, earlier this year, shared what she’s learned in a book.

Despite the safeguards, Seefried said she takes nothing for granted. Every few months, she said she drills her staff to make sure they know what to do in the event of her arrest.

“What calls are you going to make?” she said she asks them.

“If you don’t have a little fear going into this because of the illegality at the federal level, you’re probably not the person to do this job,” she said.

(Reporting by Lisa Lambert; editing by Linda Stern and Lisa Girion)

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Published at Mon, 31 Oct 2016 09:49:03 +0000

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UBS beefs up funds for U.S. mortgage mis-selling case to $1.4 billion

 

The logo of Swiss bank UBS is seen at the company’s headquarters in Zurich, Switzerland February 10, 2015.REUTERS/Arnd Wiegmann/File Photo
By Joshua Franklin and Angelika Gruber | ZURICH

UBS revealed it had set aside an extra $417 million to cover potential penalties tied to mis-selling mortgage-backed securities ahead of the financial crisis as it delivered an 11 percent rise in third-quarter profit.

Results from UBS on Friday showed the Swiss bank had upped provisions to cover a range of ongoing residential mortgage-backed securities (RMBS) legal to $1.405 billion, from $988 million previously.

This follows news last month that the U.S. Department of Justice had demanded a $14 billion fine from Deutsche Bank in an RMBS investigation.

The DOJ demand was far more than analysts had expected and prompted fears UBS, the world’s biggest wealth manager, could also face a stiffer penalty. But Chief Executive Sergio Ermotti said on a call following that each case was different.

“Every bank has its own legal position,” he said, declining to make any comment on the timing of any resolution.

UBS also told investors Hong Kong’s regulator was investigating its role as sponsor of some initial public offerings. If found guilty, it could face financial penalties and a temporary ban from providing corporate finance advisory services in Hong Kong.

Pre-tax profit for the three months to end-September rose to 877 million Swiss francs ($883 million), beating expectations thanks to strong business in the Swiss market and cost cuts.

“Overall, it was certainly positive,” Kepler Cheuvreux analyst Peter Casanova, who has a “hold” rating on the stock with a target price of 14.60 francs, said. “Basically it shows progress on the cost side.”

UBS shares gained 2 percent to 14.21 francs by 0814 ET, outpacing the European banking sector index.

CLIENT CAUTION

Nevertheless, UBS maintained its gloomy outlook amid negative interest rates in Switzerland and economic uncertainty which has kept many investors on the sidelines.

“Our clients really are just not making any moves,” Chief Financial Officer Kirt Gardner said.

UBS did not benefit from the same surge in investment banking revenues experienced by U.S. banks since its business is more geared towards equities in Europe and Asia, and Wall Street earnings were boosted by U.S. bond trading.

It is the downside to UBS’s widely lauded post-financial crisis strategy to focus on capital-light wealth management while scaling back in investment banking and fixed income, where earnings are more volatile and which consume more capital.

In the tough environment, UBS’s wealth management division saw a sixth straight quarter of falling or stagnating gross margins. However, the unit’s net margin – which factors in cost savings – rose slightly to 27 basis points.

Transaction-based income in wealth management fell to 334 million francs, the lowest since 2008.

“I don’t expect, until we see a change in the environment, that we’re going to see a material increase at all in our transaction revenue,” Gardner said.

Net new money inflows – a volatile but important indicator of future earnings in private banking – totaled 9.4 billion francs at its wealth management unit and $800 million at its wealth management business in the Americas.

COST PRESSURE

UBS netted 100 million francs in third-quarter savings, bringing total net cost cuts since 2013 to 1.5 billion francs.

However, the bank said increased expenditure from new regulation meant it needed to find additional savings to achieve targeted net cuts of 2.1 billion francs by end-2017.

Ermotti told analysts cost pressures would likely spur industry consolidation and left the door open for acquisitions.

“We are not immune from having to consider (non-organic growth). It would be irresponsible for us not to look at all options.”

Group net profit fell to 827 million francs from 2.1 billion francs in the year-ago quarter, which benefited from a net tax benefit of 1.3 billion francs.

UBS saw a positive impact from deferred tax assets (DTAs) of 424 million francs, the bulk of the roughly 500 million the bank had forecast in 2016. DTAs are tax breaks from losses suffered in the financial crisis.

UBS delivered an annualized adjusted return on tangible equity (RoTE) – a key measure of profitability – of 10.1 percent, short of the bank’s target for more than 15 percent, although it does not give a time frame for this.

The bank’s common equity tier 1 capital ratio, an important measure of balance sheet strength which UBS uses as a benchmark for its dividend, fell to 14.0 percent from 14.2 percent due to a slight rise in risk-weighted assets.

Ermotti played down prospects of raising the ordinary dividend from 0.60 francs per share in 2015, saying the priority this year was to protect the baseline.

($1 = 0.9932 Swiss francs)

(Editing by Michael Shields and Alexander Smith)

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Published at Fri, 28 Oct 2016 12:22:15 +0000

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October 2016: Unofficial Problem Bank list declines to 177 Institutions

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By fancycrave1 from Pixabay

October 2016: Unofficial Problem Bank list declines to 177 Institutions

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for October 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for October 2016.  During the month, the list fell from 177 institutions to 173 after five removals and one addition.  Assets dropped by $562 million to an aggregate $54.9 billion.  A year ago, the list held 264 institutions with assets of $79.2 billion.

Actions have been terminated against Horry County State Bank, Loris, SC ($383 million  Ticker: HCFB) and Heritage Community Bank, Greeneville, TN ($89 million).  Finding merger partners were Landmark Community Bank, National Association, Isanti, MN ($80 million); Citizens State Bank, Kingsland, GA ($56 million); and Home Savings Bank, Jefferson City, MO ($24 million).  Added this month was The First National Bank of Lacon, Lacon, IL ($70 million).

In a change, the OCC released an update on its enforcement action activity today, the last Friday of the month.  Historically, the OCC has issued its update on the first Friday following the 15th of the month.  While the FDIC provides a release on the last Friday of the month as well; however, it only includes action changes for the preceding month, so their information has a longer lag time.  Conversely, the Federal Reserve releases individual action changes as they occur instead of waiting to accumulate them in a monthly release.

Read more at http://www.calculatedriskblog.com/2016/10/october-2016-unofficial-problem-bank.html#MdAq8E6FbruHRaup.99

by Bill McBride on 10/29/2016 02:45:00 PM

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Published at Sat, 29 Oct 2016 18:45:00 +0000

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Madoff trustee reaches $277 million accord with money manager’s family

 

Bernard Madoff exits the Manhattan federal court house in New York in this January 14, 2009 file photo.REUTERS/Brendan McDermid/File Photo
By Jonathan Stempel

The court-appointed trustee liquidating Bernard Madoff’s firm said on Friday he has reached a settlement with the family of late Beverly Hills money manager Stanley Chais that will provide more than $277 million to victims of Madoff’s Ponzi scheme.

Irving Picard, the trustee, said victims will receive at least $232 million of cash, and the rights to $30.7 million of assets that are expected to be sold.

A separate $15 million fund will pay claims by California investors, resolving litigation by that state’s Attorney General Kamala Harris, and which had been brought in 2009 by her predecessor, California Governor Jerry Brown.

Friday’s settlement requires approval by U.S. Bankruptcy Judge Stuart Bernstein in Manhattan, who oversees the liquidation of Bernard L. Madoff Investment Securities LLC. A hearing is scheduled for Nov. 22.

The cash payout would boost to $11.46 billion the sum that Picard has recovered for former Madoff customers, or 65 percent of their estimated $17.5 billion loss. Picard has said half of the 2,597 accounts with valid claims have been fully paid off.

Madoff, 78, is serving a 150-year prison term after pleading guilty to running a decades-long fraud uncovered in December 2008.

Chais, who died in September 2010 at the age of 84, once handled investments for elite Hollywood clients like Oscar-winning director Steven Spielberg, and had been a close friend of Madoff since the 1960s.

Picard had sought to recoup $1.32 billion of “fictitious profits” that he claimed the Chais defendants, including Chais’ widow Pamela, withdrew from Madoff’s firm.

The U.S. Securities and Exchange Commission in June 2009 filed a related civil lawsuit against Chais, claiming he ignored red flags that Madoff’s seemingly steady returns were bogus.

In a court filing, Picard’s lawyers said the settlement covered all of Stanley Chais’ estate and substantially all of his widow’s assets, and represented “a good faith, complete and total compromise.”

Chais had maintained that he was also a Madoff victim and had lost nearly all of his own money.

Lawyers for the Chais defendants did not immediately respond to requests for comment.

Through Sept. 30, more than $1.42 billion has been spent on recovery efforts, including $824.6 million for legal fees for Picard’s law firm Baker & Hostetler and $370.2 million for consultant fees, a Thursday court filing shows.

A $4 billion fund overseen by former SEC Chairman Richard Breeden will also compensate Madoff victims.

The cases are Picard v Chais et al, U.S. Bankruptcy Court, Southern District of New York, No. 09-ap-01172; and In re: Bernard L. Madoff Investment Securities LLC in the same court, No. 08-01789.

(Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky and Cynthia Osterman)

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Published at Fri, 28 Oct 2016 17:04:46 +0000

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UPDATE 1-AutoNation net income drops on recall costs; to add used-car stores

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https://pixabay.com/en/users/Hans-2/By hans from Pixabay

UPDATE 1-AutoNation net income drops on recall costs; to add used-car stores

By Joseph White

AutoNation Inc (AN.N) reported a 9 percent decline in third quarter net income on Friday, weighed by $6 million in aftertax costs relating to used vehicles affected by Takata airbag inflator recalls.

AutoNation said it could not sell 14 percent of its used-vehicle inventory because the cars have recalled Takata airbag inflators that have not been replaced.

The U.S. auto retail chain also said on Friday it will invest at least $500 million over the next several years to expand beyond new-vehicle sales, including opening standalone used-vehicle stores that would compete with used-car specialist Carmax Inc.(KMX.N)

The company said it had identified 25 markets where it could open standalone used-vehicle stores under the AutoNation USA brand, and expects to open five stores next year.

These stores will offer services to customers whose vehicles are no longer covered by manufacturer warranties, and sell a new line of AutoNation branded replacement parts, the Ft. Lauderdale, Florida company said in a statement.

AutoNation, the largest U.S. new car dealership chain, faces slowing growth in the U.S. car and light truck market, and increasing pressure on profit margins for new vehicle sales.

The company will expand its collision-repair operations, and plans to build or buy at least 18 new collision-repair operations over the next two years. AutoNation currently operates 70 body repair stores in the United States.

Profit margins on vehicle repair services, replacement parts, collision repairs and used vehicle sales are usually higher than those for new car sales.

In a related move to capture more revenue from a car’s life cycle, AutoNation said it will open four more AutoNation vehicle auction operations over the next two years, adding to a wholesale used vehicle auction it operates in Southern California.

Revenue grew 4 percent to $5.6 billion in the quarter. AutoNation said net income per share remained flat at $1.05 a share, reflecting share repurchases. That was below the $1.15 consensus forecast according to ThomsonReuters I/B/E/S. The company said its board has approved another $250 million in common stock buybacks.

(Editing by Bernadette Baum)

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Published at Fri, 28 Oct 2016 12:34:50 +0000

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Amazon forecast for holiday seasons disappoints as investment rises

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Amazon.com’s logo is seen at Amazon Japan’s office building in Tokyo, Japan, August 8, 2016.REUTERS/Kim Kyung-Hoon
By Jeffrey Dastin and Anya George Tharakan

Amazon.com Inc on Thursday said high spending on warehouses and video production would drag on profits in the holiday quarter, disappointing investors who are weary of roller coaster results from the e-commerce giant and sending its shares down 6 percent.

Amazon is racing to ship packages as quickly as possible by building out its own delivery system. It is making heavy U.S. investments as well as pouring funds into foreign markets, and it also is building out its home electronics and video businesses, aiming to make it difficult for customers to leave.

As a consequence, the Seattle-based company projects operating income in the fourth quarter would range from nothing to $1.25 billion, a wide span that is considerably below Wall Street’s $1.62 billion, according to market research firm FactSet StreetAccount.

“Investments are going to be lumpy,” Chief Financial Officer Brian Olsavsky said on an analyst call. “The second half of this year looks like a big step up compared to the first half – and it is.”

Long known for heavy spending and losses, Amazon has come to turn a profit consistently, partly thanks to selling computer storage and services in the cloud. Companies globally are turning to Amazon, the market leader, and rival Microsoft Corp to host their data. In the just-ended third quarter, Amazon’s cloud business grew sales by 55 percent from a year earlier.

But investors are focused on rising costs for the company’s retail operation.

 

Amazon grew its workforce by 38 percent in the third quarter.

In addition, the company has nearly doubled its spending on the creation and marketing of movies and TV shows in the second half of 2016. Amazon’s hope is that people will sign up for its Prime service to watch these videos – and in turn buy more goods from Amazon to make the $99-per-year subscription worth it.

“Amazon tends to flex investment up and down somewhat unpredictably from time to time in order to drive growth, and that’s what’s challenging for investors,” said analyst Jan Dawson of Jackdaw Research. “Some investors thought the new era of higher margins was here to stay permanently, and this quarter has likely taught them (otherwise).”

But investment is necessary to be competitive, particularly in video if established media companies withhold their content from the likes of Amazon, Dawson added.

Amazon’s income tripled in the third quarter to $252 million, or 52 cents per share, marking the company’s sixth straight profitable quarter. But analysts on average expected 78 cents, according to Thomson Reuters I/B/E/S.

Amazon forecast net sales would rise as much as 27 percent in the current quarter to $45.5 billion.

“Even if it reaches the top end of these forecasts, this would still represent the worst performance in growth terms of this fiscal year,” Neil Saunders, head of retail research firm Conlumino, wrote in a note.

“That said, over the longer term Amazon’s investment in physical should help it get a tighter grip on fulfillment costs,” he added. “Amazon is playing the long game.”

Shares of the company were down at $772 in late trade.

(Reporting by Anya George Tharakan in Bengaluru; Writing by Peter Henderson; Editing by Ted Kerr, Bernard Orr)

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Published at Thu, 27 Oct 2016 21:17:19 +0000

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U.S. funds downbeat on AT&T even before Time Warner deal

 

Traders work on the floor near the post where telecoms company AT&T is traded at the New York Stock Exchange (NYSE) in New York City, U.S., October 24, 2016.REUTERS/Brendan McDermid

U.S. funds downbeat onAT&T even before Time Warner deal

By Tim McLaughlin and Ross Kerber | BOSTON

Many actively managed U.S. mutual funds were cool toward AT&T Inc even before the telecom giant’s planned $85.4 billion acquisition of Time Warner Inc.

The chilly attitude from professional stock pickers partly explains the lackluster reception for AT&T’s planned takeover of Time Warner.

Large-cap growth funds, for example, prefer tech companies whose operations require less capital than a regulated telecom operator like AT&T.

Even a major benefit to owning AT&T – its juicy 5 percent-plus dividend yield – is a cause for investor concern as higher interest rates may make the return look less attractive.

“There will be more options available for other, higher-yielding assets if rates are going up,” said Carrie Tallman, director of research at Parsec Financial, a North Carolina financial adviser that owns shares of AT&T and Time Warner.

Approval of AT&T’s proposed takeover has provoked broad skepticism as the deal faces some of the toughest regulatory scrutiny in recent U.S. history of mergers and acquisitions.

“We are committed to our dividend and to maintaining the financial flexibility for the board to consider future growth in the dividend,” AT&T spokeswoman Emily Edmonds said in email. “On Saturday we announced we’ll increase our quarterly dividend for the 33rd straight year, even as we announced we’ve secured a $40 billion bridge facility to finance our acquisition of Time Warner.”

HUNT FOR YIELD

Meanwhile, seven out of AT&T’s 10 largest fund investors are passive index funds, which are obligated to buy the stock because they track the S&P 500 Index, or other benchmarks that count AT&T as a component.

Overall, more than 600 index funds own nearly 13 percent of AT&T’s shares, according to Thomson Reuters data. That is more than actively managed income, value and growth funds combined, which hold about 8 percent of AT&T shares.

By contrast, those types of actively managed funds hold nearly 18 percent of the shares of rival Verizon Communications Inc, according to Thomson Reuters data.

Large-cap growth portfolio managers like Fidelity Contrafund’s Will Danoff see AT&T as a regulated, capital intensive, slow growth company. Danoff, who oversees about $109 billion for the fund, does not own any AT&T shares, telling investors in recent commentary he has largely avoided telecom stocks.

Only 21 out of 181 large-cap growth funds tracked by Lipper Inc held AT&T shares. During the first half of this year, not owning AT&T hurt these funds’ relative performance to the S&P 500 because the stock surged 26 percent.

Retail investors piled into AT&T as the hunt for yield intensified against a backdrop of historically low interest rates. AT&T’s current dividend yield is 5.3 percent on an annualized basis.

Matthew Benkendorf, chief investment officer of Vontobel Asset Management, a subadviser to Virtus mutual funds, said low rates have undoubtedly driven increased interest in stocks like AT&T.

But in recent months, as higher U.S. interest rates appear more likely, AT&T shares have been under pressure. The stock is off 14 percent in the past three months, reflecting interest rate concerns and Saturday’s announcement of the Time Warner deal.

Questions for investors now include whether Time Warner’s TV and film assets can deliver meaningful growth for AT&T, and whether the new conglomerate will continue to satisfy an important base of investors with a healthy dividend payout.

Vontobel’s Benkendorf said an added wrinkle to those questions is the sustainability of the dividend AT&T is paying. “That is a real question for them,” he said.

(Reporting By Tim McLaughlin and Ross Kerber in Boston; Editing by Bill Rigby)

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Published at Tue, 25 Oct 2016 21:40:18 +0000

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Goldman, closer to Murdoch than Bugs Bunny, misses year’s biggest deal

 

A view of the Goldman Sachs stall on the floor of the New York Stock Exchange July 16, 2013.REUTERS/Brendan McDermid

Goldman, closer to Murdoch than Bugs Bunny, misses year’s biggest deal

By Liana B. Baker

It has been six years since Goldman Sachs Group Inc, a perennial No. 1 in the M&A league tables, did not feature as an adviser on the year’s biggest deal. But sticking with Rupert Murdoch over Bugs Bunny just cost it this year’s biggest deal.

Goldman missed out on an advisory role on telecom giant AT&T’s deal to buy Time Warner Inc for $85.4 billion because of its perceived conflict stemming from advising media mogul Murdoch’s Twenty-First Century Fox Inc two years ago, when it made a failed bid for Time Warner.

The media conglomerate’s franchises range from CNN and HBO to Harry Potter films, hit TV show “The Big Bang Theory” and Bugs Bunny. The code name for Time Warner in deal talks was “Rabbit,” perhaps an homage to Warner Bros’ carrot-chewing, wise-talking cartoon character.

As a result, investment banking rival Morgan Stanley is now No. 1 in the U.S. merger advisory rankings with $435.3 billion in announced deals, about $435 million ahead of Goldman, which has $434.9 billion, according to Thomson Reuters data.

“CEOs value loyalty from investment banks and have long memories,” said Erik Gordon, a University of Michigan business professor. “This can put banks in an impossible position, because companies often expect them to turn down business now for the uncertain prospect of business later.”

To be sure, the year is not yet over, and on a global basis, Goldman remains the undisputed king. The 147-year-old investment bank has ranked No. 1 in the global M&A league tables every year since 1997, with the exception of 2009 and 2010, when it ranked No. 2 behind Morgan Stanley.

The last time Goldman missed out on the biggest deal of the year was 2010, on the $27.5 billion acquisition of Mexican telecommunications group Carso Global Telecom by America Movil.

But Goldman’s absence from the AT&T-Time Warner deal shows that even the most successful investment banks can miss out on mega-deals by virtue of companies showing a preference for advisers that stick with them rather than their competitors.

When this year’s second-biggest deal was announced last month, Bayer AG’s $66 billion acquisition of seeds and agrichemicals group Monsanto Co, Goldman was also absent from the advisers listed.

Goldman had won no favor with Monsanto after having helped thwart its hostile bid for Syngenta AG last year by providing advice to the Swiss seeds company, and subsequently helping it sell itself to ChemChina for $43 billion instead.

The New York-based bank did, however, manage to secure a financing role in Bayer’s debt package for the Monsanto acquisition.

And Goldman’s allegiance to Murdoch has also paid off handsomely over the years. It advised Fox in 2014 on a $9 billion deal to sell European satellite TV firms to British Sky Broadcasting Group and on the corporate split of News Corp and Fox in 2013.

TOP FOR FEES

Despite missing out on advisory roles on the two blockbusters of 2016, Goldman Sachs is still No. 1 for advisory fees worldwide, according to Thomson Reuters data, generating fees on $659 billion worth of deals so far in 2016, ahead of Morgan Stanley’s $620.5 billion. Goldman declined to comment.

Goldman is advising Reynolds American Inc on British America Tobacco Plc’s offer to buy the stake it does not own for $47 billion, and is also working with Qualcomm Inc on a $37 billion takeover of NXP Semiconductors NV, which is expected to be announced this week.

A mix of big investment banks and boutique advisers shared the $240 million in fees earned from the AT&T-Time Warner deal, with an additional $100 million stemming from the $40 billion financing, according to Freeman Consulting Services.

Perella Weinberg Partners LP was the lead adviser to AT&T, while Allen & Co was the lead adviser to Time Warner. This buoyed Perella Weinberg to 15th in the U.S. rankings and 20th globally, and Allen & Co to 10th in the U.S. and 15th globally.

Citigroup Inc and Morgan Stanley also advised Time Warner, and along with Allen & Co, they will share $80 million to $120 million, according to Freeman.

Along with Perella Weinberg, JPMorgan Chase & Co and Bank of America also advised AT&T and will share an estimated $80 million to $120 million in advisory fees if the proposed deal goes through, according to estimates by Freeman.

Of the $40 billion bridge loan supporting the deal, JPMorgan is providing $25 billion, while Bank of America is offering $15 billion. These financing banks will share about $100 million to $130 million in fees from this role, Freeman said.

(Reporting by Liana B. Baker in New York; Editing by Carmel Crimmins and Bill Rigby)

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Published at Tue, 25 Oct 2016 05:11:07 +0000

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U.S. banking group forms unit aimed at reducing cyber risk

 

A padlock is displayed at the Alert Logic booth during the 2016 Black Hat cyber-security conference in Las Vegas, Nevada, U.S. August 3, 2016.REUTERS/David Becker

U.S. banking group forms unit aimed at reducing cyber risk

The Financial Services Information Sharing and Analysis Center (FS-ISAC), an influential U.S. financial industry group, said on Monday it had formed a unit to enhance collaboration among its members and the U.S. government as a way to help reduce cyber security threats to the financial system.

The new unit, known as the Financial Systemic Analysis & Resilience Center (FSARC), will proactively identify, analyze, and coordinate activities using more sophisticated techniques, the FS-ISAC said in a statement. (bit.ly/2enoimt)

The FSARC is the result of a meeting this year involving the six biggest U.S. banks plus custody banks State Street Corp and Bank of New York Mellon Corp, the FS-ISAC said. The FS-ISAC has more than 7,000 industry members.

(Reporting by Sudarshan Varadhan in Bengaluru; Editing by Ted Kerr)

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Published at Mon, 24 Oct 2016 15:35:56 +0000

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Time Warner, AT&T shares fall with concerns over deal clearance

Ticker and trading information for telecoms company AT&T are displayed at the post where it is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 24, 2016. REUTERS/Brendan McDermid

Ticker and trading information for telecoms company AT&T are displayed at the post where it is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 24, 2016.  REUTERS/Brendan McDermid

Time Warner, AT&T shares fall with concerns over deal clearance

By Jessica Toonkel and Supantha Mukherjee

Wall Street signaled skepticism on Monday that AT&T Inc would secure the government approvals needed to carry out its planned $85.4 billion acquisition of Time Warner Inc, with shares of both companies falling as analysts scrutinized the deal.

Time Warner shares were trading some 20 percent below the implied value of AT&T’s $107.50 per share cash and stock offer, indicating investors doubt that the companies would be able to complete the transaction.

The deal, announced on Saturday, would give AT&T control of cable TV channels HBO and CNN, film studio Warner Bros and other coveted assets and reshape the media landscape.

Dallas-based AT&T said on Saturday it would need approval of the U.S. Department of Justice and the companies were determining which Time Warner U.S. Federal Communications Commission licenses, if any, would need to transfer to AT&T. Any such transfers would require FCC approval.

AT&T Chief Executive Randall Stephenson said on Monday he expects government clearances for the deal because it is a so-called vertical integration that will not eliminate a competitor, a situation that is viewed more favorably by antitrust enforcers.

“While regulators will often times have concerns with vertical integrations, those are always remedied by conditions imposed on the merger, so that’s how we envision this one to play out,” Stephenson told CNBC.

Despite its big media footprint, Time Warner has only one FCC-regulated broadcast station, WPCH-TV in Atlanta. Time Warner could sell the license to try to avoid a formal FCC review, several analysts said.

Any decision to review the deal would be made by regulatory officials at the Department of Justice and the Federal Trade Commission, White House spokesman Josh Earnest told reporters on Monday.

“The president would hope and expect that regulators would carefully consider the potential impact of this deal on consumers,” Earnest added.

Shares of AT&T closed down 1.7 percent at $36.86 and shares of Time Warner fell 3 percent to $86.78.

FOCUS ON APPROVALS

Wall Street analysts and traders on Monday expressed concerns about the implications of the antitrust and regulatory challenges.

The total value of broken deals is nearly $700 billion so far this year, a fact that has sidelined some investors.

“The regulatory environment has been unbelievable this year and I think everyone is on edge,” said an arbitrage investor considering buying exposure to the deal who did not want to be identified because they were not authorized to speak to the press.

The biggest deals to fall apart in 2016 include Office Depot–Staples, Baker Hughes–Halliburton, Allergan–Pfizer and Norfolk Southern–Canadian Pacific Railways. Many of the deals drew objections from the Department of Justice and U.S. Treasury.

“We are unprepared at this point to assign anything higher than a 50/50 probability of deal approval,” wrote MoffettNathanson Research in a report, downgrading Time Warner to ‘neutral’ but raising its target price by $8 to $100.

The deal’s arbitrage spread of more than 20 percent is wider than five other recent deals that regulators subsequently shot down or were withdrawn, including Comcast Corp’s planned takeover of Time Warner Cable. That deal had a spread of only 5 percent.

The deal, announced just over two weeks before the Nov. 8 U.S. election, was also generating skepticism among both Republicans and Democrats.

OTHER QUESTIONS

Other analysts were unnerved by the massive $170 billion debt balance the combined company may hold after the deal closes and some questioned the rationale for the combination.

Analysts at Cowen & Co said it was a “struggle” to understand why the acquisition made sense.

“If it is simply differentiated content AT&T is interested in we don’t understand why this couldn’t have been solved by some form of partnership,” the firm wrote in a note to downgrade the company’s investment rating to ‘market perform’ from ‘outperform.’

Analysts at Moody’s, which put AT&T on review for a downgrade after the acquisition was announced, said regulators could include conditions that limit the wireless provider’s ability to use Time Warner content as a competitive advantage, ultimately undermining its objective to differentiate its mobile and pay TV platforms with exclusive content.

(Additional reporting by Malathi Nayak, Carl O’Donnell and Roberta Rampton; Editing by Nick Zieminski, Meredith Mazzilli and Bill Rigby)

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Published at Mon, 24 Oct 2016 21:12:09 +0000

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WSJ: “Retailers Rushed to Hire for Holidays”

https://pixabay.com/en/users/Unsplash-242387/by unsplash from Pixabay

WSJ: “Retailers Rushed to Hire for Holidays”

by Bill McBride on 10/24/2016 10:40:00 AM

From the Eric Morath at the WSJ: Retailers Rushed to Hire for Holidays, a Sign of Tight Labor Market

Retailers geared up to hire holiday-season workers in August this year, an unusually early start showing how competition has intensified for temporary help in a tight labor market.

Data from job-search site Indeed.com shows retailers, and the warehouse and logistics firms they compete with for seasonal labor, started searching for temporary workers a month earlier than in recent years. This suggests retailers and other firms “anticipate stronger consumer demand and expect that it will be harder to find the people they want to hire,” said Indeed economist Jed Kolko.

Last year, more than one in four retail workers hired in the fourth quarter of 2015 started their jobs in October, the highest share on records back to the 1930s.

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.
 

Seasonal Retail HiringClick on graph for larger image.

This graph really shows the collapse in retail hiring in 2008. Since then seasonal hiring has increased back close to more normal levels.

Note that retailers have been hiring earlier with more seasonal hires in October (red).

Based on the information in the WSJ article, it appears seasonal hiring will be at record levels in October this year.

Read more at http://www.calculatedriskblog.com/2016/10/wsj-retailers-rushed-to-hire-for.html#6mIHWdcrOgEYhGYS.99

by Bill McBride on 10/24/2016 10:40:00 AM

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Published at Mon, 24 Oct 2016 14:40:00 +0000

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Vehicle Sales Forecasts: Sales Over 17 Million SAAR Again in October

https://pixabay.com/en/users/MichaelGaida-652234/by MichaelGaida from Pixabay

Vehicle Sales Forecasts: Sales Over 17 Million SAAR Again in October

by Bill McBride on 10/23/2016 12:41:00 PM

 The automakers will report October vehicle sales on Tuesday, November 1st.
Note:  There were 26 selling days in October 2016, down from 28 in October 2015.

From WardsAuto: Forecast: October Daily Sales to Reach 15-Year High

A WardsAuto forecast calls for October U.S. light-vehicle sales to reach a 17.8 million-unit seasonally adjusted annual rate, making it the seventh month this year to surpass 17 million.

A 17.8 million SAAR is greatly higher than the 17.3 million recorded year-to-date through September, but does not beat the 18.1 million result recorded in the same month last year.
emphasis added

From J.D. Power: New-Vehicle Retail Sales in October Slip; Sixth Monthly Decline of 2016

The SAAR for total sales is projected at 17.7 million units in October 2016, down from 18.1 million units a year ago.

This graph shows light vehicle sales since the BEA started keeping data in 1967.
Vehicle Sales

The dashed line is the September sales rate.

Sales for 2016 – through the first nine months – were up slightly from the comparable period last year.

After increasing significantly for several years following the financial crisis, auto sales are now mostly moving sideways.

Read more at http://www.calculatedriskblog.com/2016/10/vehicle-sales-forecasts-sales-over-17.html#wCcZhgYef3FLk25b.99

by Bill McBride on 10/23/2016 12:41:00 PM

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Published at Sun, 23 Oct 2016 16:41:00 +0000

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Rockwell Collins buys B/E Aerospace for $62 per share

Cockpit equipment made by Rockwell Collins and used in a CH-47 Chinook helicopter is pictured at the ILA Berlin Air Show in Schoenefeld, south of Berlin, Germany, June 1, 2016. REUTERS/Fabrizio Bensch

Cockpit equipment made by Rockwell Collins and used in a CH-47 Chinook helicopter is pictured at the ILA Berlin Air Show in Schoenefeld, south of Berlin, Germany, June 1, 2016.REUTERS/Fabrizio Bensch

Rockwell Collins buys B/E Aerospace for $62 per share

By Alwyn Scott

Aircraft component maker Rockwell Collins Inc (COL.N) has struck a deal to buy aircraft interior maker B/E Aerospace Inc (BEAV.O) for $62 per share in cash and stock, the companies said on Sunday.

The acquisition, valued at $6.4 billion plus the assumption of $1.9 billion in debt, expands the range of products Rockwell Collins supplies to major commercial and business aircraft and broadens its customer based internationally.

The combination is expected to produce cost savings of about $160 million and provide a double-digit boost to per-share earnings in the first full year, the companies said. They also anticipate it generating more than $6 billion in free cash flow over five years.

Rockwell agreed to pay $34.10 per share in cash and $27.90 in shares of Rockwell Collins stock, a 22.5 percent premium to B/E Aerospace’s closing price on Friday.

The companies have little product overlap. Rockwell is best known for avionics, flight control systems and cabin connectivity, while B/E Aerospace is a major provider of aircraft seats, galleys, lighting and other systems.

Rockwell, based in Cedar Rapids, Iowa has market value of about $11 billion, more than twice the size of Wellington, Florida-based B/E Aerospace, which has a market value of $5.1 billion.

B/E Aerospace brings more aftermarket and aircraft retrofit business to Rockwell, which is mainly focused on new equipment, and also adds exposure to twin-aisle aircraft, said Richard Aboulafia, an aerospace analyst at the Teal Group.

Pricing pressures from Boeing Co (BA.N) and Airbus (AIR.PA) are one driver of such a deal. “But it’s also a pretty clear indicator that the market has peaked in terms of deliveries and orders,” Aboulafia said of new aircraft sales. “In this environment, consolidation is inevitable as a cost-control move.”

(Reporting by Alwyn Scott in New York and Mike Stone in Washington; Editing by Mary Milliken and Bill Trott)

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Published at Sun, 23 Oct 2016 17:25:07 +0000

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AT&T to buy Time Warner for $85 billion, create telecom-media giant

The Time Warner building is pictured in New York, New York December 11, 2013. REUTERS/Eric Thayer/File Photo

The Time Warner building is pictured in New York, New York December 11, 2013. REUTERS/Eric Thayer/File Photo

AT&T to buy Time Warner for $85 billion, create telecom-media giant

 

By Greg Roumeliotis and Jessica Toonkel
| NEW YORK

AT&T Inc (T.N) said on Saturday it agreed to buy Time Warner Inc (TWX.N) for $85.4 billion, the boldest move yet by a telecommunications company to acquire content to stream over its high-speed network to attract a growing number of online viewers.The biggest deal in the world this year will, if approved by regulators, give AT&T control of cable TV channels HBO and CNN, film studio Warner Bros and other coveted media assets. The tie-up will likely face intense scrutiny by U.S. antitrust enforcers worried that AT&T might try to limit distribution of Time Warner material.AT&T will pay $107.50 per Time Warner share, half in cash and half in stock, worth $85.4 billion overall, according to a company statement. AT&T said it expected to close the deal by the end of 2017.

Dallas-based AT&T said the U.S. Department of Justice would review the deal and that it and Time Warner were determining which Federal Communications Commission licenses, if any, would be transferred to AT&T in the deal.

U.S. lawmakers were already worried about cable company Comcast Corp’s (CMCSA.O) $30 billion acquisition of NBCUniversal, creating an industry behemoth. Several argued for close regulatory scrutiny of the AT&T deal.

“Such a massive consolidation in this industry requires rigorous evaluation and serious scrutiny,” said U.S. Senator Richard Blumenthal, former attorney general of Connecticut. “I will be looking closely at what this merger means for consumers and their pocketbooks.”

U.S. Republican presidential nominee Donald Trump said at a rally on Saturday he would block any AT&T-Time Warner deal if he wins the Nov. 8 election. Trump has complained about media coverage of his campaign, especially by Time Warner’s CNN.

“It’s too much concentration of power in the hands of too few,” said Trump.

Representatives of his Democratic rival, Hillary Clinton, did not immediately respond to a request for comment.

CONTENT PLUS DELIVERY

AT&T, whose main wireless phone and broadband service business is showing signs of slowing, has already made moves to turn itself into a media powerhouse. It bought satellite TV provider DirecTV last year for $48.5 billion.

It had about 142 million North American wireless subscribers as of June 30, and about 38 million video subscribers through DirecTV and its U-verse service.

New York-based Time Warner is a major force in movies, TV and video games. Its assets include the HBO, CNN, TBS and TNT networks as well as the Warner Bros film studio, producer of the “Batman” and “Harry Potter” film franchises. The company also owns a 10 percent stake in video streaming site Hulu. The HBO network alone has more than 130 million subscribers.

The deal is the latest in the consolidation of the telecom and media sectors, coming on the heels of AT&T’s purchase of NBCUniversal. AT&T’s wireless rival Verizon Communications Inc (VZ.N) is in the process of buying internet company Yahoo Inc (YHOO.O) for about $4.8 billion.

Time Warner Chief Executive Officer Jeff Bewkes rejected an $80 billion offer from Twenty-First Century Fox Inc (FOXA.O) in 2014.

FINANCING

AT&T said the cash portion of the purchase price would be financed with new debt and cash on its balance sheet. AT&T said it has an 18-month commitment for an unsecured bridge term facility for $40 billion.

AT&T currently has only $7.2 billion in cash on hand. Further borrowing could put pressure on its credit rating as it already had $120 billion in net debt as of June 30, according to Moody’s.

AT&T said the deal would add to earnings per share in the first year after closing. It said it expects $1 billion in annual run-rate cost savings within three years of closing, chiefly driven by lower corporate and procurement spending.

5G IS COMING

Owning more content gives cable and telecom companies bargaining leverage with other content companies as customers demand smaller, hand-picked cable offerings or switch to watching online. New mobile technology including next-generation 5G networks could make a content tie-up especially attractive for wireless providers.

“We think 5G mobile is coming, we think 5G mobile is an epic game-changer,” Rich Tullo, director of research at Albert Fried & Co, said in a research note, adding that mobile providers would be in position to disrupt traditional pay-TV services.

A previous Time Warner blockbuster deal, its 2000 merger with AOL, is now considered one of the most ill-advised corporate marriages on record.

Perella Weinberg Partners LP, Bank of America Corp and JPMorgan Chase & Co were financial advisers to AT&T, with Bank of America and JPMorgan also offering bridge financing, while Sullivan & Cromwell LLP and Arnold & Porter LLP provided legal advice.

Allen & Co LLC, Citigroup Inc and Morgan Stanley acted as financial advisers to Time Warner, while Cravath, Swaine & Moore LLP was its legal adviser.

(Additional reporting by David Shepardson, Liana Baker, Malathi Nayak and Diane Bartz; Writing by Bill Rigby; Editing by David Gregorio)

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Published at Sun, 23 Oct 2016 01:38:08 +0000

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Schedule for Week of Oct 23, 2016

 

 

https://pixabay.com/en/users/geralt-9301/photo by geralt from pixabay

Schedule for Week of Oct 23, 2016

by Bill McBride on 10/22/2016 08:01:00 AM

The key economic reports this week are the advance estimate of Q3 GDP and September New Home Sales.

Also the Case-Shiller House Price Index for August will be released.

For manufacturing, the October Richmond and Kansas City Fed manufacturing surveys will be released this week.

—– Monday, Oct 24th —–

8:30 AM ET: Chicago Fed National Activity Index for September. This is a composite index of other data.

—– Tuesday, Oct 25th —–

9:00 AM: FHFA House Price Index for August 2016. This was originally a GSE only repeat sales, however there is also an expanded index.  The consensus is for a 0.5% month-to-month increase for this index.
Case-Shiller House Prices Indices

9:00 AM ET: S&P/Case-Shiller House Price Index for August. Although this is the August report, it is really a 3 month average of June, July and August prices.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the July 2016 report (the Composite 20 was started in January 2000).

The consensus is for a 5.1% year-over-year increase in the Comp 20 index for August. The Zillow forecast is for the National Index to increase 5.2% year-over-year in August.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for October.

—– Wednesday, Oct 26th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.
New Home Sales

10:00 AM ET: New Home Sales for September from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the August sales rate.

The consensus is for an decrease in sales to 600 thousand Seasonally Adjusted Annual Rate (SAAR) in September from 609 thousand in August.

—– Thursday, Oct 27th —–

8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 255 thousand initial claims, down from 260 thousand the previous week.  Note: I expect some further impact on claims due to Hurricane Matthew.

8:30 AM: Durable Goods Orders for September from the Census Bureau. The consensus is for a 0.2% increase in durable goods orders.

10:00 AM: Pending Home Sales Index for September. The consensus is for a 1.0% increase in the index.

10:00 AM: the Q3 Housing Vacancies and Homeownership from the Census Bureau.

11:00 AM: Kansas City Fed Survey of Manufacturing Activity for October.

—– Friday, Oct 28th —–

8:30 AM ET: Gross Domestic Product, 3rd quarter 2016 (Advance estimate). The consensus is that real GDP increased 2.5% annualized in Q3.

10:00 AM: University of Michigan’s Consumer sentiment index (final for October). The consensus is for a reading of 88.5, up from the preliminary reading 87.9.

Read more at http://www.calculatedriskblog.com/2016/10/schedule-for-week-of-oct-23-2016.html#veu3G2t8x5w4rVoE.99

by Bill McBride on 10/22/2016 08:01:00 AM

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Published at Sat, 22 Oct 2016 12:01:00 +0000

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