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Morgan Stanley profit jumps on bond-trading comeback

 

The logo of Morgan Stanley is seen at an office building in Zurich, Switzerland September 22, 2016.REUTERS/Arnd Wiegmann/File Photo

Morgan Stanley profit jumps on bond-trading comeback

By Olivia Oran and Sweta Singh

Morgan Stanley reported a better-than-expected profit on Wednesday, boosted by a surge in bond trading that helped all Wall Street banks last quarter.

Morgan Stanley’s gains were especially notable. Its adjusted bond-trading revenue more than doubled, hitting Chief Executive James Gorman’s revenue target for that business for the second quarter in a row.

The bank had struggled for years to improve in bond trading, which has volatile revenue and tough capital requirements to meet. Earlier this year, Morgan Stanley restructured the unit, cutting 25 percent of staff and appointing new leadership.

In an interview, Chief Financial Officer Jonathan Pruzan said the bank was on the right track, though it might be too soon to claim victory.

“The success we’ve had in the last quarter or two has boosted morale and confidence of the team,” he said. “But these things take time and until we can do it for years as opposed to quarters, we’re not going to declare success.”

Though it is still early in the fourth quarter, Pruzan said the trading environment has so far been similar to the end of September.

Overall, Morgan Stanley’s earnings applicable to common shareholders rose 62 percent to $1.5 billion, from $939 million in the same quarter a year earlier. Earnings per share rose to 81 cents from 48 cents, helped by stock buybacks.

Analysts had estimated earnings of 63 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 15 percent to $8.9 billion. Analysts had expected revenue of $8.2 billion. Non-interest expenses rose just 4 percent, reflecting a cost-cutting program that Morgan Stanley hopes will shave $1 billion from annual expenses by next year.

That program, called Project Streamline, is on track despite costs associated with the bank’s stress test resubmission as well as Brexit, Pruzan said.

Morgan Stanley’s shares rose 0.8 percent to $32.57 at midday.

STRONG QUARTER Morgan Stanley wrapped up a surprisingly strong quarter for big U.S. banks. Goldman Sachs Group Inc, Morgan Stanley’s closest rival, reported a better-than-expected 58 percent rise in third-quarter profit on Tuesday.

Bond trading was strong across Wall Street, driven by Britain’s surprise vote to leave the European Union and bouts of anxiety about monetary policy around the world.

Morgan Stanley’s bond-trading revenue rose to $1.5 billion in the third quarter from $583 million in the year-ago period, when stripping out accounting gains and losses related to the value of its own bonds.

“We obviously did much better than probably anybody felt this quarter …,” Gorman said during a call with analysts. “… But we did not and are not going to run any victory lap around fixed income.”

Despite that rebound, Morgan Stanley posted an 8.7 percent return on equity, which is less than Gorman’s stated target of 9 percent to 11 percent by the end of 2017.

Pruzan said he continued to believe that the bank’s target ROE was achievable.

 

Equities sales and trading revenue, a traditional bright spot for the bank, edged up just 1 percent to $1.9 billion.

Revenue from investment banking fell about 7 percent to $1.23 billion, due to weaker M&A fees and capital markets activity.

Morgan Stanley ranked third to Goldman Sachs and JPMorgan Chase & Co in M&A fees collected during the quarter and fourth behind JPMorgan, Bank of America Corp and Goldman in fees from investment banking, which includes equity and debt underwriting, according to Thomson Reuters data.

Revenue from wealth management, which Morgan Stanley has been building for several years, rose 7 percent to $3.9 billion. The business hit a 23 percent pretax margin, in line with Gorman’s target for year-end.

Gorman said to expect an announcement from the firm’s wealth management executives in the coming weeks regarding how the bank will comply with the Department of Labor fiduciary rule. The rule, announced in April, sets a standard for brokers who sell retirement products and requires them to put clients’ best interests ahead of their own bottom line.

Gorman hinted that providing choice to clients about different investing products remains a priority for the firm.

(Reporting by Sweta Singh and Sudarshan Varadhan in Bengaluru and Olivia Oran in New York; Editing by Lauren Tara LaCapra and Nick Zieminski)

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Published at Wed, 19 Oct 2016 16:33:46 +0000

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Hotels: Occupancy Rate on Track to be 2nd Best Year

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Hotels: Occupancy Rate on Track to be 2nd Best Year

by Bill McBride on 10/17/2016 01:27:00 PM

 From HotelNewsNow.com: STR: US hotel results for week ending 8 October

The U.S. hotel industry reported mixed results in the three key performance metrics during the week of 2-8 October 2016, according to data from STR.

In year-over-year comparisons, the industry’s occupancy decreased 1.0% to 70.9%. However, average daily rate (ADR) was up 1.8% to US$127.88, and revenue per available room (RevPAR) increased 0.8% to US$90.67. STR analysts note that overall performance for the week was affected by the Rosh Hashanah calendar shift from 14 September 2015 to 3 October 2016. Performance in the Group segment was down in most major markets.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotel Occupancy RateThe red line is for 2016, dashed orange is 2015, blue is the median, and black is for 2009 – the worst year since the Great Depression for hotels.2015 was the best year on record for hotels.

So far 2016 is tracking just behind 2015, and well ahead of the median rate.

Year-to-date, the three best years are:
1) 2015: 67.6% average occupancy.
2) 2016: 67.4% average.
3) 2000: 67.0% average.

For hotels, this is now the Fall business travel season that will continue for another month or so – and then the occupancy rate will decline into the holiday season.

Data Source: STR, Courtesy of HotelNewsNow.com

Read more at http://www.calculatedriskblog.com/2016/10/hotels-occupancy-rate-on-track-to-be_17.html#R93k60JwRKqFfZ1T.99

by Bill McBride on 10/17/2016 01:27:00 PM

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Published at Mon, 17 Oct 2016 17:27:00 +0000

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Netflix subscriptions boom around world, shares jump 20 percent

 

The Netflix sign on is shown on an iPad in Encinitas, California, April 19, 2013.REUTERS/Mike Blake/File Photo

Netflix subscriptions boom around world, shares jump 20 percent

By Lisa Richwine and Rishika Sadam

(This version of the October 17 story corrects reference to past quarters in second paragraph)

By Lisa Richwine and Rishika Sadam

Netflix Inc added over 50 percent more subscribers than expected in the third quarter as original shows such as “Stranger Things” drew new international viewers and kept U.S. customers despite a price hike, sending its shares soaring 20 percent in late trade.

The company’s performance represented a turnaround from the previous quarter of disappointing subscription growth. Netflix, which has spent heavily to expand outside its home market, also said that it was on track to start harvesting “material global profits” next year, even as it raised spending on original programming.

Shares of Netflix rose to $119.82 in extended trade from a close of $99.80.

Netflix added about 3.20 million subscribers internationally in the third quarter, higher than the 2.01 million average analyst estimate. (bit.ly/2e2gsRD)

In the United States, Netflix added 370,000 subscriptions, compared with analysts’ estimate of 309,000, according to research firm FactSet StreetAccount.

“Investors appear laser focused on subscriber growth, and so long as Netflix delivers on that metric, investors will bid its shares up,” said Wedbush Securities analyst Michael Pachter. However, Pachter said he thought the continuing cost of developing new shows would undermine plans to deliver material profits in 2017.

Netflix has expanded into more than 130 markets worldwide, including most major countries, except China. It said on Monday it was dropping plans to launch a service in China in the near term, opting instead to license its shows for “modest” revenue.

The company said it still hopes to launch service in China “eventually.”

In the meantime, Netflix plans to keep pouring money into building its stable of original and licensed TV shows and movies. Content spending will rise to $6 billion next year, a $1 billion increase from 2016, the company said.”We will keep investing in growing the content spend, even domestically, for quite a long time,” Chief Executive Reed Hastings said on webcast.

Netflix has been facing a slowdown in subscription growth in the United States as the market matures and a planned U.S. price hike raised concerns it would not hit its targets. It also faces competition from the likes of Hulu and Amazon.com Inc.

But the company, whose other popular original shows include “Orange is the New Black” and “House of Cards”, said it expects to add 1.45 million subscribers in the United States in the current quarter.

Analysts on average were expecting 1.27 million additions, according to research firm FactSet StreetAccount.

“Netflix has successfully navigated the challenges of a price increase,” retail research group Conlumino said in a note, adding that it had been “somewhat less successful” in maintaining subscriber growth.

In its international markets, it expects subscriber additions of 3.75 million, compared with the average analyst estimate of 3.32 million.

Third-quarter revenue rose 31.7 percent to $2.29 billion.

Netflix’s shares have surged in the past few years, driven by rapid growth as the company redefined television and fueled “binge watching”.

The stock, however, was down 12.7 percent this year as investors fretted about slowing growth in its domestic market and increasing competition.

(Reporting by Rishika Sadam in Bengaluru and Lisa Richwine in Los Angeles; Additional writing by Peter Henderson; Editing by Don Sebastian, Bernard Orr)

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Published at Mon, 17 Oct 2016 22:32:57 +0000

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NY Fed: October “General business conditions index slipped five points to -6.8”

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NY Fed: October “General business conditions index slipped five points to -6.8”

by Bill McBride on 10/17/2016 08:33:00 AM

From the NY Fed: Empire State Manufacturing Survey

Business activity continued to decline in New York State, according to firms responding to the October 2016 Empire State Manufacturing Survey. The headline general business conditions index slipped five points to -6.8.

After reaching their lowest levels of the year last month, both labor market indexes rose, but remained negative. The employment index increased ten points to -4.7 and the average workweek index edged up one point to -10.4, indicating that employment counts and hours worked continued to decline.

Indexes for the six-month outlook suggested that respondents were more optimistic about future conditions than in September. The index for future business conditions increased two points to 36.0.

This was below the consensus forecast of 1.0, and suggests manufacturing contracted in the NY region in October.

Read more at http://www.calculatedriskblog.com/2016/10/ny-fed-october-general-business.html#XxzQ45UFOVpibqc1.99

by Bill McBride on 10/17/2016 08:33:00 AM

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Published at Mon, 17 Oct 2016 12:33:00 +0000

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Fed: Industrial Production increased 0.1% in September

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Fed: Industrial Production increased 0.1% in September

by Bill McBride on 10/17/2016 09:22:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production edged up 0.1 percent in September after falling 0.5 percent in August. For the third quarter as a whole, industrial production rose at an annual rate of 1.8 percent for its first quarterly increase since the third quarter of 2015. Manufacturing output increased 0.2 percent in September and moved up at an annual rate of 0.9 percent in the third quarter. In September, the index for utilities declined 1.0 percent; mining posted a gain of 0.4 percent, which partially reversed its August decline. At 104.2 percent of its 2012 average, total industrial production in September was 1.0 percent lower than its year-earlier level. Capacity utilization for the industrial sector edged up 0.1 percentage point in September to 75.4 percent, a rate that is 4.6 percentage points below its long-run (1972–2015) average.
emphasis added

Capacity UtilizationClick on graph for larger image.

This graph shows Capacity Utilization. This series is up 8.7 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 75.4% is 4.6% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007.

Note: y-axis doesn’t start at zero to better show the change.
 

Industrial ProductionThe second graph shows industrial production since 1967.

Industrial production increased 0.1% in September to 104.1. This is 19.2% above the recession low, and is close to the pre-recession peak.

This was below expectations of a 0.2% increase.

Read more at http://www.calculatedriskblog.com/2016/10/fed-industrial-production-increased-01.html#UgvJfyISTH7ahmLS.99

by Bill McBride on 10/17/2016 09:22:00 AM

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Published at Mon, 17 Oct 2016 13:22:00 +0000

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LA area Port Traffic: Exports up Year-over-year in September

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LA area Port Traffic: Exports up Year-over-year in September

by Bill McBride on 10/16/2016 12:48:00 PM

From Port of Long Beach: September Cargo Weighed Down by Hanjin Bankruptcy

Port of Long Beach container volumes declined 16.6 percent year-over-year in September, as the effects of the Hanjin bankruptcy reached West Coast ports.

Longshore workers moved 546,805 twenty-foot equivalent units last month. This included 282,945 TEUs in imports, down 15 percent from September 2015, a month which capped off the Port’s best quarter ever. Exports dropped to 120,383 TEUs, a decrease of 4.2 percent. Empties were 27.2 percent lower at 143,476 TEUs.

Port officials said the number of containers handled during September was impacted not only by reduced calls by Hanjin-operated ships, but also by the absence of Hanjin containers on vessels operated by fellow CKYHE Alliance members. Hanjin Shipping containers account for approximately 12.3 percent of the Port’s total containerized volume.

Special note: Now that the expansion to the Panama Canal has been completed, some of the traffic that used the ports of Los Angeles and Long Beach will eventually go through the canal. This could impact TEUs on the West Coast in the future.

Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.
 

LA Area Port TrafficClick on graph for larger image.

On a rolling 12 month basis, inbound traffic was down 0.4% compared to the rolling 12 months ending in August.   Outbound traffic was up 0.5% compared to 12 months ending in August.

The downturn in exports last year was probably due to the slowdown in China and the stronger dollar.  Now exports are picking up a little.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).
 

LA Area Port TrafficUsually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March (depending on the timing of the Chinese New Year).

In general exports might have started increasing, and imports have been gradually increasing.

Read more at http://www.calculatedriskblog.com/2016/10/la-area-port-traffic-exports-up-year.html#BxTOiE5v1Ty4vsQA.99

by Bill McBride on 10/16/2016 12:48:00 PM

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Published at Sun, 16 Oct 2016 16:48:00 +0000

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Gundlach says Yellen speech suggests accommodative Fed for longer

Gundlach says Yellen speech suggests accommodative Fed for longer

Jeffrey Gundlach, Chief Executive Officer, DoubleLine Capital LP., speaks at the Sohn Investment Conference in New York City, U.S. May 4, 2016.REUTERS/Brendan McDermid

By Jennifer Ablan | NEW YORK

Federal Reserve Chair Janet Yellen’s speech on Friday on running a “high pressure” economy with a tight labor market to reverse some of the negative effects of the Great Recession of 2008 suggests the U.S. central bank will stay accommodative for longer, according to Jeffrey Gundlach, chief executive of DoubleLine Capital.

“I didn’t hear, ‘We are going to tighten in December,'” Gundlach said in a telephone interview. “I think she is concerned about the trend of economic growth. GDP is not doing what they want.”

Gundlach, who oversees more than $106 billion at Los Angeles-based DoubleLine, said the GDP Now indicator from the Atlanta Federal Reserve has been cut in half to 1.9 percent for the third quarter, after only 1.1 percent actual growth for the first half of this year.

“GDP Now keeps fading away,” he said. “If we get only 1.9 percent GDP for third – and fourth quarters – we are looking at only 1.5 percent GDP this year.”

Gundlach said Yellen’s remarks suggest that she embraces the hypothesis introduced by former U.S. Treasury Secretary Larry Summers, who said secular stagnation, or a lack of demand, is pushing down global growth.

Yellen said there are “plausible ways” that running the U.S. economy hot for a while could fix some of the damage caused to growth trends by the Great Recession. In her speech to a Boston Fed conference on Friday, she said that increased business sales would “almost certainly” help boost the economy. “A tight labor market might draw in potential workers who would otherwise sit on the sidelines,” she said.

Gundlach said he read Yellen as saying, “‘You don’t have to tighten policy just because inflation goes to over 2 percent.’

“Inflation can go to 3 percent, if the Fed thinks this is temporary,” he said. “Yellen is thinking independently and willing to act on what she thinks.”

Gundlach said Yellen’s remarks “are in the same range” of European Central Bank President Mario Draghi’s ‘Do whatever it takes’ speech in 2012.

Gundlach noted the long-end of the yield curve “hated” Yellen’s remarks, because they suggest the Fed would allow inflation to run beyond the 2 percent level.

With the 10-year Treasury note now at a yield of 1.80 percent, which is up 48 basis points since early July, Gundlach said he is less bearish on government bonds. “I’m still defensive but one notch less than maximum negative on Treasuries,” he said, noting that the yields on Treasury bills, notes and bonds are now above their 200-day moving averages.

(Reporting by Jennifer Ablan; Editing by Leslie Adler)

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Published at Fri, 14 Oct 2016 22:31:49 +0000

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Ohio latest to bar Wells Fargo from state business

Ohio latest to bar Wells Fargo from state business

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

Ohio latest to bar Wells Fargo from state business

The state of Ohio on Friday joined a growing list of municipalities to suspend business relationships with Wells Fargo & Co over a scandal involving as many as two million bogus accounts.

Governor John Kasich announced that for one year he is barring Wells Fargo “participating in future state debt offerings and financial services contracts initiated by state agencies under his authority,” and will seek to exclude the California-based bank from participating in debt offerings initiated by the Ohio Public Facilities Commission.

“While Wells Fargo only does limited retail banking in Ohio, it does regularly seek state bond business so I have instructed my Administration to seek services from other banks instead, and I’ll cast my votes against Wells Fargo on the Public Facilities Commission,” Kasich said in a statement.

“This company has lost the right to do business with the State of Ohio because its actions have cost it the public’s confidence,” he added.

Last month, the bank agreed to pay a $190 million settlement over its staff opening as many as 2 million accounts without customers’ knowledge. The misconduct, carried out by low-level branch staff to meet internal sales targets, shattered the bank’s folksy image and triggered a raft of federal and state investigations.

The scandal cost former chief executive and chairman, John Stumpf, his job when he was forced to resign on Wednesday after 34 years with the bank.

Ohio joins other states and local municipalities, including California, Illinois, and Chicago in banning Wells Fargo from participating in bidding for bond underwriting and other types of business.

In addition to outright sanctions, the states of Massachusetts and Oregon, as well as the city of New York, have said they would press for reforms at the bank, await results of investigations while also reviewing their business relationship with the company.

 

Kasich did say he could possibly revisit the decision in the coming year if Wells Fargo were to “make progress in restoring a culture of integrity.”

(Reporting by Daniel Bases; editing by Andrew Hay, Bernard Orr)

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Published at Fri, 14 Oct 2016 19:19:10 +0000

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How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More

walGarrett Watts runs customer services for a Walmart in Fayettville, Ark. He was hired at $9 an hour and now makes $13. He is setting his sights on an assistant store manager job. CreditMelissa Lukenbaugh for The New York Times

How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More

Can the answer to what ails the global economy be found in the people in blue vests at your neighborhood Walmart?

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Sales scandal costs Wells Fargo; JPMorgan and Citi please Wall Street

A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015.  REUTERS/Mike Segar/FilesA view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015.REUTERS/Mike Segar/Files

 

Sales scandal costs Wells Fargo; JPMorgan and Citi please Wall Street

 

By David Henry and Dan Freed
| NEW YORK

JPMorgan Chase (JPM.N) and Citigroup (C.N) trounced third-quarter estimates on Friday on a sharp rebound in trading revenues while Wells Fargo & Co (WFC.N) barely beat expectations as a sales scandal engulfed the bank.

 

Wells Fargo is under pressure to keep its profit engine humming while dismantling the aggressive sales culture at the heart of its woes, since unlike JPMorgan and Citigroup it does not have a big trading arm.

“We’re prepared for things to get worse before they get better,” Chief Executive Tim Sloan, who took over as boss on Wednesday after John Stumpf, the bank’s veteran leader, announced he was leaving amid a public furor over the scandal.

Revelations that Wells’ branch staff had opened as many as 2 million accounts without customers’ knowledge to meet internal sales targets has shattered the bank’s folksy image.

Once a Wall Street darling for its ability to sell multiple products to individual customers, Wells Fargo said on Friday that new account openings had dropped sharply.

New consumer checking accounts were 30 percent lower than in August, and applications for consumer credit cards fell 30 percent in September from the prior month.

Wells Fargo’s staff are in a period of flux after the bank scrapped sales targets for branches last month and in a note following Sloan’s presentation, Brian Kleinhanzl, an analyst at KBW, said, “Management doesn’t know what the consumer bank will look like in the future.”

The bank has said the scandal will minimally affect its wealth management business and was unlikely to alter its plans to return capital to shareholders.

On Friday, the state of Ohio joined a growing list of municipalities to suspend business relationships with Wells Fargo. The bank makes less than 1 percent of its revenue from working with local governments but Ohio’s decision is a blow, coming days after Stumpf, a lightning rod for much of the criticism around the scandal, had departed.

 

Sloan must navigate federal and state investigations in coming months. The scandal has renewed left-leaning lawmakers’ attacks on Wall Street and bolstered their mission to introduce stricter oversight.

JPMORGAN MOMENTUM CONTINUES

 

While Wells Fargo’s overall profit dropped for a fourth straight quarter, net income in the third quarter topped estimates, helped in part by lower-than-expected loan-loss provisions.

 

JPMorgan and Citi also beat expectations as bond trading roared back in the third quarter, boosted by Brexit-inspired volatility along with changing expectations for monetary policy in the United States, Europe and Japan as well as money market reforms.

Banks got a fillip from a rise in the London interbank offered rate, which moved to a seven-year high during the quarter as U.S. money market funds scaled back holdings of short-term bank debt in advance of new U.S. regulations.

JPMorgan’s chief financial officer, Marianne Lake, said the fourth quarter so far is showing positive signs.

“The momentum that I just characterized as fairly broad and fairly consistent across the (third) quarter, has somewhat continued so far,” she told journalists.

JPMorgan’s after-tax income dropped 7.6 percent after recording a tax expense, compared with a rare tax benefit of $2.2 billion a year earlier. But revenues and profits both topped analysts’ estimates.

 

Citigroup, the fourth-biggest U.S. bank by assets, beat expectations for third-quarter net profit after trading revenue surged 35 percent.

While net income fell 11 percent to $1.24 per share, it exceeded the average estimate of $1.16 per share. Total adjusted revenue fell 4 percent to $17.76 billion, but beat the average estimate of $17.36 billion.

The strong trading performance helped U.S. financial stocks snap a three-day losing streak, with markets-focused bank shares such as Goldman Sachs (GS.N) and Morgan Stanley (MS.N) up 2 percent and 1.4 percent, respectively, ahead of their results next week.

Citigroup was up over 0.8 percent in late trade after earlier rising as much as 3 percent. JPMorgan tipped into negative territory after earlier gaining as much as 2 percent. Wells Fargo was up 0.25 percent. The S&P financial index .SPSY gained 0.85 percent.

The British government’s tougher line on immigration in the wake of the Brexit vote has bankers preparing for a scenario in which London loses access to the single market, meaning they would have to move parts of their operations elsewhere in Europe.

“As a result, we will be starting to build out technology systems and operations in Europe,” JPMorgan’s Lake said.

(Additional reporting by Olivia Oran and Elizabeth Dilts in New York; Writing by Carmel Crimmins; Editing by Jeffrey Benkoe and Leslie Adler)

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Published at Fri, 14 Oct 2016 22:22:12 +0000

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Retail Sales increased 0.6% in September

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By fancycrave1 from Pixabay

 

Retail Sales increased 0.6% in September

by Bill McBride on 10/14/2016 08:38:00 AM

On a monthly basis, retail sales increased 0.6 percent from August to September (seasonally adjusted), and sales were up 2.7% from September 2015.

From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for September, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $459.8 billion, an increase of 0.6 percent from the previous month, and 2.7 percent above September 2015. … The July 2016 to August 2016 percent change was revised from down 0.3 percent to down 0.2 percent.

Retail SalesClick on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline were up 0.5% in September.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.
 

Year-over-year change in Retail SalesRetail and Food service sales ex-gasoline increased by 3.3% on a YoY basis.

The increase in September was at expectations and the previous two months were revised up; a solid report.

Read more at http://www.calculatedriskblog.com/2016/10/retail-sales-increased-06-in-september.html#1LBT9H6vSfv43tLw.99

by Bill McBride on 10/14/2016 08:38:00 AM

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Published at Fri, 14 Oct 2016 12:38:00 +0000

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Wells Fargo CEO John Stumpf quits, replaced by Tim Sloan

Wells Fargo CEO John Stumpf quits, replaced by Tim Sloan

Wells Fargo CEO John Stumpf testifies before the House Financial Services Committee on Capitol Hill in Washington, DC, U.S. September 29, 2016.REUTERS/Gary Cameron
By Dan Freed and Elizabeth Dilts | NEW YORK

Wells Fargo & Co’s veteran chairman and chief executive officer, John Stumpf, abruptly departed on Wednesday bowing to pressure over its sales tactics that has damaged the bank’s reputation and put Wall Street under renewed scrutiny.

San Francisco-based Wells Fargo said Stumpf, 63, was retiring and would be replaced as chief executive by President and Chief Operating Officer Tim Sloan, 56.

The bank is splitting the role of chairman and CEO with Stephen Sanger, its lead director, becoming chairman.

Stumpf’s exit leaves Sloan with a steep challenge in rebuilding its reputation and overhauling its hard-charging sales culture without gutting profits. The new CEO will also contend with ongoing regulatory investigations and private litigation.

The departure is a stunning reversal of fortune for Stumpf, who successfully navigated Wells through the financial crisis and built it into the world’s most valuable bank with a focus on Main Street-style lending that was the envy of Wall Street.

“I have decided it is best for the company that I step aside,” he said in a statement.

The bank’s shares, which have slumped in the wake of the scandal, rose 2 percent in after-hours trading after the bank announced Stumpf’s exit.

Sloan said his immediate priority was to restore trust in the bank.

Long considered Stumpf’s successor, Sloan has spent most of his career at Wells working with corporations and institutional investors not the retail division, where the fraudulent accounts were opened.

But as the former CFO, and president and COO of the company since November, he has been responsible for the entire company, including the retail bank at the heart of the scandal.

Carrie Tolstedt, the woman who ran the retail division when the misconduct occurred, reported to Sloan from November of last year. She left the bank last month.

“They had three goals in replacing Stumpf: speed, integrity, and competence. If you want to move very fast and find someone intimately familiar with the business, you’ve got to hire an insider,” said Peter Conti-Brown, a business ethics and law professor at University of Pennsylvania’s Wharton School of Business.

“If you want to hire someone with unimpeachable integrity, that’s going to take time to find,” Conti-Brown said.

Sloan will preside over the bank’s third-quarter earnings on Friday.

FALL FROM GRACE

Stumpf’s fall from grace started with a $185 million regulatory settlement between the bank, regulatory authorities and a Los Angeles prosecutor over its staff opening as many as 2 million accounts without customers’ knowledge.

The misconduct, carried out by low-level branch staff to meet internal sales targets, shattered the bank’s folksy image and a raft of federal and state investigations followed.

Stumpf was summoned before the U.S. Senate and faced calls for his resignation after repeatedly deferring responsibility to low level workers and decision-making authority to his board of directors. Massachusetts Senator Elizabeth Warren called him a “gutless leader” who “should be criminally investigated.”

A week after that hearing, he agreed to forgo $41 million in unvested stock awards.

However, that was not enough and at a second hearing, some lawmakers called for the bank to be broken up.

California State Treasurer John Chiang, who announced a year-long ban on state business with Wells Fargo, released a statement praising Stumpf’s resignation.

“Based on his duck, dodge, and deny performance in the wake of admissions that his bank had fleeced legions of its own customers, he was not – and would never be – the change agent leader Wells Fargo so desperately needs,” Chiang said in the statement.

John Thielen, who grew up with Stumpf in Piers, Minnesota where he was a year behind the future CEO in school, said he felt sorry for Stumpf.

“He’s in hot water, but I think he put himself there,” Thielen told Reuters in a recent interview that preceded Stumpf’s resignation.

(Additional reporting by Sarah N. Lynch; Editing by Bernard Orr)

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Published at Thu, 13 Oct 2016 00:34:51 +0000

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U.S. job openings fall to eight-month low in August

U.S. job openings fall to eight-month low in August

 

 

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York, U.S. October 7, 2014. REUTERS/Shannon Stapleton/File Photo
By Lucia Mutikani | WASHINGTON

U.S. job openings fell to an eight-month low in August and hiring was little changed, suggesting some easing in labor market conditions amid an aging economic recovery.

Still, details of the Labor Department’s monthly Job Openings and Labor Turnover Survey (JOLTS) report published on Wednesday continued to point to a solid jobs market, with a steady rise in the number of people voluntarily quitting their jobs and declining layoffs.

Job openings, a measure of labor demand, declined 388,000 to a seasonally adjusted 5.4 million, the lowest level since December, after surging to a record high in July. That pushed down the jobs openings rate three-tenths of a percentage point to 3.6 percent, also the lowest reading since December.

“These data can be volatile and the openings rate is still fairly high, so it is too early to tell whether this is a signal or just the noise of volatile monthly data,” said John Ryding, chief economist at RDQ Economics in New York.

“However, if this drop is sustained, it could be a sign of increased caution on the part of businesses.”

The JOLTS report is one of the job market metrics on Federal Reserve Chair Janet Yellen’s so-called dashboard. Fed officials view the labor market as being at or near full employment.

The U.S. central bank is widely expected to increase interest rates in December, having kept borrowing costs steady over course of the year because of persistently low inflation.

The decline in job openings in August was led by professional and business services, where vacancies fell 223,000. Job openings in the durable goods manufacturing industries decreased 29,000, and dropped 28,000 in the arts, entertainment and recreation sector.

“The bigger concern in the data is that openings declined year-over-year in some high-wage industries, like finance, professional services, and information,” said Jed Kolko, chief economist for job site Indeed in San Francisco.

“Plus, last Friday’s jobs report showed slower job growth in higher-wage industries. These factors are worth watching.”The number of hires was little changed at 5.2 million in August, keeping the hiring rate steady at 3.6 percent.

Job growth is slowing, with nonfarm payrolls increasing 156,000 in September. Employment growth has so far this year averaged 178,000 jobs per month, down from an average gain of 229,000 positions per month in 2015.

With the bulk of the labor market slack largely absorbed and the economy’s recovery from the 2007-09 recession aging, the slowdown in payrolls growth is normal. Fed Chair Janet Yellen has said the economy needs to create about 100,000 jobs a month to keep up with population growth.

Layoffs slipped to 1.62 million in August from 1.64 million in July, the JOLTS report showed. About 3.0 million Americans quit their jobs in August, maintaining a recent trend. The quits rate, which the Fed looks at as a measure of confidence in the jobs market, was at 2.1 percent for a third straight month.

“Nearly two-thirds of job separations are people voluntarily quitting rather than getting laid off or fired. That’s a good indicator that workers are confident they will find new jobs,” said Kolko.

(Reporting By Lucia Mutikani; Editing by Meredith Mazzilli)

 

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Published at Wed, 12 Oct 2016 14:57:32 +0000

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Tesla, SolarCity shareholders vote Nov. 17 on merger

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https://pixabay.com/en/users/Blomst-3476834/By Blomst from Pixabay

Tesla, SolarCity shareholders vote Nov. 17 on merger

 

Tesla Motors Inc and SolarCity Corp said Wednesday in a U.S. securities filing that a vote to merge the two California-based companies will take place on Nov. 17.

 

Also on Wednesday, Tesla said in a company blog: “Over the next few weeks, Tesla will share important updates regarding our strategic plan for the combined company” including an Oct. 28 unveiling of a solar roof project.

The blog post also said that on Nov. 1, “Tesla will provide additional financial information relating to its plans for the combined company.”

 

Tesla reports third quarter financial results on Oct. 26.

 

 

(Reporting by Bernie Woodall)

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Published at Wed, 12 Oct 2016 14:43:01 +0000

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UPDATE 2-Investors demand answers, new phone from Samsung after Note 7 fire fiasco

Signage is seen at the Samsung 837 store in the Meatpacking District of Manhattan, New York, U.S., October 10, 2016.  REUTERS/Andrew Kelly

Signage is seen at the Samsung 837 store in the Meatpacking District of Manhattan, New York, U.S., October 10, 2016.REUTERS/Andrew Kelly

UPDATE 2-Investors demand answers, new phone from Samsung after Note 7 fire fiasco

 

By Se Young Lee
| SEOUL

Samsung Electronics Co Ltd needs to quickly find the cause of the fires that led to it pulling its Galaxy Note 7 smartphones and get a new model to market, investors said on Wednesday, as shares in the company slipped to a one-month low.

 

The world’s top smartphone maker on Tuesday scrapped the $882 flagship smartphone in what could be one of the costliest product safety failures in tech history.

Samsung announced the recall of 2.5 million Note 7s in early September following reports of the phones catching fire. The firm appeared to have the situation under control as it issued replacement devices with different batteries, until the new phones also began to smoke and combust.

Investors and analysts agreed that the damage to Samsung’s brand and future earnings would deepen the longer the market was left in the dark about the origin of the fault, with some already predicting lost revenue in the region of $17 billion.

“It’s good that Samsung made a firm decision on the Note 7, but people are concerned about the situation because people don’t know what the problem is,” said Kim Hyun-su, a fund manager at IBK Asset Management, which owns shares in Samsung.

“There needs to be explanation from Samsung in order for consumers to understand that problems won’t occur in the next models … Samsung needs to clearly explain and admit what went wrong.”

Samsung would likely push ahead to get the latest version of its premium S-series smartphones to market as soon as possible, fund managers said. Typically, the South Korean company unveils a new Galaxy S phone on the sidelines of the Mobile World Congress trade show in the first quarter as it battles Apple Inc to stay at the top of the smartphone market.

 

“We’ll have to see what the future plans are but I suspect Samsung will move quickly to get the Galaxy S8 ready; they have the manufacturing and production capabilities,” IBK’s Kim said.

Experts are baffled by what could be causing the overheating in the replacement phones, if not the batteries, and Samsung has not commented.

An official at the Korean Agency for Technology and Standards, which is investigating the problem alongside Samsung, said the fault in the replacement devices might not be the same as the problem in the original product. The official asked not to be identified as he was not authorized to speak publicly.

 

Aviation authorities and airlines around the world are telling passengers to switch off their Note 7s and keep them out of checked baggage, amid fears they could bring down a plane.

Samsung shares were down 1.6 percent as of 0436 GMT after touching a one-month low of 1.494 million won ($1,340), reflecting concerns about fourth-quarter earnings as well as the potential long-term impact on its smartphone business.

The stock is down 11 percent so far this week, on track for worst weekly percentage fall since December 2008.

“Damage control at Samsung will face an uphill battle to redeem the company’s tarnished image owing to the dangerous and dramatic nature of the phone’s failure,” Vijay Michalik, an analyst at research firm Frost & Sullivan, said.

 

A permanent end to Note 7 sales could cost Samsung up to $17 billion, according to calculations based on analysts’ projected sales of the phone.

While the damage to Samsung’s brand remains hard to quantify, negative publicity from the botched recall could touch off a turf war among Android smartphone manufacturers, analysts said.

Consumers tend to commit to their choice between Apple’s iOS operating system and Google’s Android, leaving Samsung’s fellow Android manufacturers such as G Electronics Inc and Alphabet Inc’s Google in prime position to strike.

($1 = 1,114.7500 won)

(Reporting by Se Young Lee; additional reporting by Joyce Lee; Writing by Lincoln Feast; Editing by Stephen Coates)

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Published at Wed, 12 Oct 2016 04:48:56 +0000

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Q&A: The musical and money evolution of hip hop’s Wyclef Jean

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tags
By Couleur from Pixabay

Q&A: The musical and money evolution of hip hop’s Wyclef Jean

 

By Chris Taylor
| NEW YORK

If anyone on Earth is familiar with the extremes of money – poverty and wealth – it is Wyclef Jean.

 

The famed musician, who founded The Fugees, along with bandmates Lauryn Hill and Pras Michel, overcame humble origins in Haiti to become a global superstar.

For the latest in Reuters’ “Life Lessons” series, we talked with Jean about what he has learned about money.

Q: WHO WAS YOUR BIGGEST INFLUENCE GROWING UP IN HAITI?

 

A: My papa and mama left for America when I was one, so I was actually raised by my grandmother for a few years. She was incredible and very wise. We were very poor, but she made sure we never felt it. We didn’t have anything like Disney World, so when the rains came, she let us go outside and run in puddles. That was our amusement park.

Q: WHAT WAS YOUR FIRST JOB?

 

A: I used to get five cents for doing chores for people in my village. Sometimes I would milk cows, sometimes I would walk the cows from one area to another, sometimes I would go to the well to get water for my neighbors. I started working literally when I was six years old.

Q: WHEN YOU CAME TO AMERICA AT AGE 10, WAS IT STRANGE TO MOVE FROM ONE OF THE POOREST COUNTRIES IN THE WORLD TO ONE OF THE WEALTHIEST?

A: It was definitely culture shock. I ended up at one of the worst housing projects in New York City, in Coney Island, but to me it seemed like everyone was rich. Remember, I was coming from Haiti, where my house was a hut, there was hardly any electricity, and for light, we used oil in a lamp.

Q: ONCE YOU BECAME A SUCCESS IN THE MUSIC WORLD, WHAT DID YOU LEARN ABOUT HANDLING MONEY?

 

A: Your business manager is one of the most important people in your life. When you are young and making money for the first time, you want to buy everything, like fancy cars. Your business manager has to be the bad guy and tell you to wait.

 

Q: DID MONEY CHANGE THE PEOPLE AROUND YOU?

 

A: At first, you feel like you have to give everyone money, and you automatically become a bank for a certain number of people. That is the biggest mistake I ever made. If I had to do it again, I wouldn’t give anyone a penny. Instead, I would say, ‘Bring me a business plan of something you want to invest in.’ I had to learn how to say ‘no’ when people ask for money.

Q: HOW DO YOU DECIDE WHAT PHILANTHROPIC CAUSES TO SUPPORT?

 

A: The name ‘Fugees’ stands for ‘Refugees,’ so that is a cause that has always been close to my heart. So many friends and family made their way over the seas, from places like Haiti and Cuba, to start new lives in America. I have performed in support of refugees many times, whether for Tibet or for Africa or for Haiti.

 

Q: YOU HAD SOME TROUBLES RUNNING YOUR OWN CHARITY. WHAT DID YOU LEARN FROM THAT?

 

A: The tricky part is that when you are using your name, no one cares who the charity’s CEO or president or accountants are. Any scrutiny that goes down, it goes down on the celebrity. We had some accounting problems, we fixed them, and at the end of the day, you have to move forward. What I learned is that the person you put in charge has to be accountable for every part of that foundation.

Q: WHAT MONEY LESSONS HAVE YOU PASSED ALONG TO YOUR DAUGHTER?

 

A: My wife and I actually have to tell her to save her money. She is always giving it away, for things like cancer benefits or shoe drives. It dates back to when she was four and I brought her to Haiti, to one of the most dangerous slums in the world, where she handed out Christmas gifts. For a dad, it is the best feeling in the world to see her give back.

Q: HAITIANS LOVE PROVERBS. WHAT IS YOUR FAVORITE ONE?

 

A: One of the greatest is something my dad taught me. It basically translates to, ‘Don’t bow down to anyone until you go to their funeral and see them rise from the coffin.’ In other words, no matter who you are, you are equal to everybody. Whether it is a king or queen or president, look them right in the eye.

(Editing by Lauren Young and Bernadette Baum)

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Published at Tue, 11 Oct 2016 13:12:20 +0000

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Banks ponder the meaning of life as Deutsche agonizes

Banks ponder the meaning of life as Deutsche agonizes

A statue is pictured next to the logo of Germany’s Deutsche Bank in Frankfurt, Germany September 30, 2016.

REUTERS/Kai Pfaffenbach/File Photo

 

By Carmel Crimmins and Olivia Oran | WASHINGTON

It wasn’t just Deutsche Bank that was grappling with big questions about the future at the International Monetary Fund meetings in Washington last week.

The German bank is scrambling to overhaul its operations as it faces a multi-billion dollar fine for selling toxic mortgage-backed securities in the United States.

But many others in the banking industry are also still figuring out what they should be doing, nearly a decade after the financial crisis, as they grapple with anemic economic growth, wafer-thin returns on lending and the possibility that regulators will further hike their cost of doing business.

“This new world of low interest rates and even negative interest rates is something that is very difficult,” said Frederic Oudea, the chief executive of French bank Societe Generale.

“It is a game changer, not just for banks but for the whole financial industry,” he told an audience from the Institute of International Finance (IIF), a trade group for big banks that holds its annual meeting alongside the IMF.

Deutsche Bank’s immediate obstacle is the U.S. Department of Justice’s demand for a massive fine over the sale of bad mortgage bonds that could far exceed the 5.5 billion euros ($6.2 billion) in provisions that the bank has set aside. Such a bill could require it to raise more capital.

But Deutsche Bank’s fundamental problem is that its large investment banking business doesn’t fit the post-crisis era.

Chief Executive John Cryan is in the middle of an overhaul, cutting jobs and selling assets. But with interest rates showing no signs of lifting, he needs to move fast.

Since the crisis of 2008, banks on both sides of the Atlantic have shored up their defenses against future losses, adding hundreds of billions of dollars in equity capital and shedding loss-making assets.

Sergio Ermotti, the chief executive officer of Swiss bank UBS, said those defenses had proved their worth in recent weeks when other European banks were largely insulated from the lurch in Deutsche Bank’s shares.

But with rates expected to stay lower for longer, more banks will be under pressure to change with the IMF warning last week that lenders in Germany, Italy and Portugal needed to take urgent action to address old, non-performing loans and bloated, inefficient business models.

“Crisis is the wrong word. We are in the middle inning of the reshaping of the financial landscape,” said Mark McCombe, global head of institutional client business at asset manager BlackRock.

THE MEANING OF LIFE

U.S. bankers attending the IIF meeting were far more upbeat than their European counterparts.

JPMorgan Chase CEO Jamie Dimon, Morgan Stanley head James Gorman and Citigroup boss Michael Corbat, did their version of the “Three Amigos,” taking to the stage together to talk up the strength of the U.S. consumer and their own roles in the global economy.

In a separate session, Goldman Sachs Group President Gary Cohn said the U.S. banking system was in the “best shape it has ever, ever been by far.”

Like their European rivals, many U.S. banks are struggling to get shareholder returns above their cost of capital, but they are making more progress because they wrote off larger portions of their bad loans earlier – enabling them to return to growth more quickly – and most of their crisis-era litigation costs are behind them. The U.S. economy is also improving at a faster clip than Europe.

“Is it sustainable for any sector to have a return on equity in the long-term that is below what shareholders expect? I don’t think so. Shareholders have been, so far, relatively patient. We should aim to sort out what can be sorted out,” said Oudea.

Britain’s vote to exit the European Union, known as “Brexit,” is another headwind facing international banks, with the UK financial industry risking a loss of up to 38 billion pounds ($48.34 billion) in revenue if the country has only limited access to the European Union’s single market, according to one study.

“The big winner for Brexit will be New York; you’ll see more business moving to New York,” Gorman said at the IIF meeting.

The competition from technology companies in banks’ traditional markets, such as lending and payments, has also ramped up the pressure to change.

In the pre-crisis days, banks would have merged to cut costs, but regulators are now much less in favor of allowing the creation of big, cross-border lenders which could disrupt markets if they got into trouble.

Instead, banks are left to swing the ax where they can and ideally build big market positions in areas that are not penalized by big capital charges, such as consumer lending and asset management.

“The transformation process is still ongoing and it is painful,” said Alex Manson, global head of transaction banking at Standard Chartered Bank. “But the quicker you can define what it is you stand for, the quicker you can go to execution from meaning of life mode.”

($1 = 0.8928 euros)

(Editing by Bill Rigby)

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Published at Sun, 09 Oct 2016 11:05:19 +0000

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UPDATE 1-Alibaba Pictures, Amblin to co-produce films for global, Chinese audiences

 

UPDATE 1-Alibaba Pictures, Amblin to co-produce films for global, Chinese audiencesSteven Spielberg (L), film director and chairman of Amblin Partners and Jack Ma, chairman and chief executive of Alibaba Group, attend an event to announce partnership between Alibaba Pictures Group Limited and Amblin Partners, in Beijing, China, October 9, 2016. REUTERS/Shirley FengSteven Spielberg (L), film director and chairman of Amblin Partners and Jack Ma, chairman and chief executive of Alibaba Group, attend an event to announce partnership between Alibaba Pictures Group Limited and Amblin Partners, in Beijing, China, October 9, 2016. REUTERS/Shirley Feng

 

Steven Spielberg’s Amblin Partners and Alibaba Pictures Group Ltd, the film unit of Chinese billionaire Jack Ma’s Alibaba Group Holding Ltd, said on Sunday they will co-produce and finance films for global and Chinese audiences.

 

They will also collaborate on the marketing, distribution and merchandising of Amblin Partner films in China, the companies said in a joint statement.

Amblin Partners creates film, television and digital content under the Amblin Entertainment, DreamWorks Pictures and Participant Media brands.

Big Chinese companies including Dalian Wanda Group Co are looking to bring more Western films and movie-making prowess into China even as they seek to expand their footprint in Hollywood.

China’s masses have the ability to keep Hollywood movies afloat, industry watchers say. They expect China to soon surpass the United States as the world’s biggest movie market.

This year’s ‘Warcraft’, which was a box office flop in the United States, raked in hundreds of millions of dollars in China, making it one of the country’s highest-grossing films of the year.

 

“Some of the stories I’m hoping Jack and I can tell in this new partnership between Amblin Partners and Alibaba Pictures will be able to bring Chinese-themed stories to the American audience, and we can do co-productions between our company and your company,” Spielberg said at a briefing in Beijing.

“And we can bring more of China to America, and bring some more of America to China.”

Hong Kong-listed Alibaba Pictures has yet to release any films, although the company formerly known as ChinaVision Media Group Ltd has several projects in production.

 

Alibaba Pictures began investing in Hollywood films in 2015 with its stake in ‘Mission: Impossible – Rogue Nation’. It was an investor in this year’s blockbusters ‘Star Trek Beyond’ and ‘Teenage Mutant Ninja Turtles: Out of the Shadows’.

Chinese e-commerce giant Alibaba Group paid about $800 million for a controlling stake in ChinaVision Media in 2014.

Under the terms of the partnership, Alibaba Pictures will also acquire a minority stake in Amblin Partners, which is chaired by Spielberg, the award-winning U.S. movie director and producer.

 

Dalian Wanda, the conglomerate controlled by China’s richest man Wang Jianlin, is partnering with Sony Pictures under which Wanda will market Sony Pictures’ films and co-finance some upcoming movie releases of Sony Corp’s film unit in China.

In January, Wanda paid $3.5 billion for a controlling stake in U.S. film studio Legendary Entertainment. The group has also since said it would start co-investing in global blockbusters next year.

“I heard a lot of people say the movie industries are dead. I think that’s a lack of imagination,” Ma said at the briefing. “All the cinemas in the future are going to be changed because of technology. So people will definitely have all kinds of experiences watching movies.”

(Reporting by Ryan Woo; Editing by Paul Tait and Clelia Oziel)

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Published at Sun, 09 Oct 2016 14:11:22 +0000

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IMF members to push spending, revive trade to boost growth

0msUFa.jpgIMF members to push spending, revive trade to boost growth

 

By David Lawder and Leika Kihara
| WASHINGTON

The International Monetary Fund’s member countries on Saturday pledged to revive flagging global trade, boost government spending and remove barriers to business to fight weak growth that has left too many people behind.

 

The pledge came as world finance leaders fretted over a rising populist backlash against trade and globalization at the IMF and World Bank annual meetings in Washington.

“The persistently low growth has exposed underlying structural weaknesses and risks further dampening potential growth and prospects for inclusiveness,” the Fund’s steering committee said in a communique.

Britain’s vote in June to leave the European Union, U.S. Republican presidential candidate Donald Trump’s anti-trade rhetoric and a global slowdown in trade volumes have prompted policymakers to try do a better job selling the benefits of global economic integration to the general public.

The International Monetary and Financial Committee said uncertainty and downside risks to the global recovery were elevated, and that it was increasingly threatened by protectionist policies and stalled reforms.

“We reinforce our commitment to strong, sustainable, inclusive, job-rich and more balanced growth. We will use all policy tools – structural reforms, fiscal and monetary policies – both individually and collectively,” it said.

 

The steering committee, made up of people who represent the fund’s 189 member countries, also included a pledge to “design and implement policies to address the concerns of those who have been left behind and to ensure that everyone has the opportunity to benefit from globalization and technological change.”

IMF Managing Director Christine Lagarde has been urging countries to do more to boost growth, spending more on infrastructure and education where possible and relying less on loose monetary policy that is already reached the limits of its influence. She also has sought more pro-market reforms in many countries

“We certainly decided to come up more loudly on this occasion to say, ‘central bankers cannot be the only game in town,'” Lagarde told a news conference. “Let’s get on with it and see some action on the part of the other authorities as well.”

 

The members repeated their pledge to refrain from competitive currency devaluations, to not target exchange rates for competitive purposes and to clearly communicate their policy stances.

“We will also redouble our commitment to maintain economic openness and reinvigorate global trade as a critical means to boost global growth.”

In addition, the IMF panel said it would “intensify” efforts to deal with bad loans and other financial sector problems left over from the last financial crisis in some advanced countries. The pledge comes as questions over Deutsche Bank’s (DBKGn.DE) financial health also prompted considerable discussion around the talks.

 

The IMF statement said that 26 member countries had pledged $360 billion in bilateral financing that can be used to supplement the Fund’s normal lending resources.

The members agreed with Lagarde’s proposal to delay the next review of the Fund’s “quota” shareholding system by about two years. They pledged to complete the review by no later than October 2019, compared with an original timetable for completion in 2017.

The last quota review, completed in 2010 but only ratified by the U.S. Congress in late 2015, resulted in a greater share for China, Brazil and other major emerging market economies.

(Reporting by David Lawder and Leika Kihara; Editing by Andrea Ricci)

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Published at Sat, 08 Oct 2016 20:19:54 +0000

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