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Heading off a housing crisis for U.S. seniors

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A sign advertising a home for sale at a reduced price is shown in Pacifica, California December 31, 2008.REUTERS/Robert Galbraith

Column: Heading off a housing crisis for U.S. seniors

By Mark Miller | CHICAGO

Debates about improving America’s infrastructure typically focus on projects like bridges, roads, railroads and power grids. But with President-Elect Donald Trump calling for $1 trillion in infrastructure spending over the next 10 years, here is an item that should be added to that list: affordable housing for seniors.

By 2035, one of every three U.S. households will be headed by someone aged 65 or older, according to a new study by the Harvard Joint Center for Housing Studies (JCHS) – an increase of a whopping 66 percent to 50 million households. Households headed by people aged 80 and older will increase at the fastest rate – more than doubling to 16 million.

We are not ready for this dramatic transformation – not even close, the Harvard researchers conclude.

Wealthier people will have the means to adapt their housing to fit their needs – although signs suggest few are laying the groundwork for that. Less than 5 percent of homes have elements such as zero-step home entrances, single-floor living and wide halls and doorways that can accommodate wheelchairs, according to JCHS.

But the biggest problem will be a bulging population of low-income seniors.

The number of seniors earning less than 80 percent of their area median income will nearly double by 2035, to 27 million, according to the report. These households will face enormous challenges paying for housing and supportive services, with housing expenses sapping resources bad needed for food and healthcare.

JCHS defines any housing cost higher than 30 percent of income as a “burden,” and the number of burdened households will rise sharply over the coming two decades: by 2035, some 8.6 million people will be paying more than half their income for housing.

“Our shifting demographic outlook really brings with it a lot of housing needs that we haven’t figured out how to fill,” said Jennifer Molinsky, a senior research associate at JCHS and the report’s lead author.

DEMOGRAPHIC TRENDS

Along with affordability, there will be a huge need for housing that is physically accessible as the number of older Americans with disabilities and dementia soars. Social isolation is another concern, especially as baby boomers move into their eighties and beyond. The country’s over-80 population is forecast to double by 2035 to 24 million; 70 percent of

that growth will take place after the year 2025.

The demographic trends driving these numbers have been evident for decades. But a problem that once seemed far off in the future is now on our doorstep, argues Linda Couch, director of housing policy and priorities at Leading Age, an association representing 6,000 aging services agencies. “We’re at a moment where we have to decide how we are going to address the housing needs of seniors,” she said.

The federal government provides rental assistance to low-income seniors through public housing, housing choice vouchers and subsidized affordable housing, but only a third of eligible seniors receive help due to funding problems. “The waiting lists are very long,” Couch said.

The U.S. Department of Housing and Urban Development (HUD) has a program – known as Section 202 – that funds development of rental housing for very low-income elderly households, but funding has been falling since 2008, and Congress has not appropriated any new funding for housing unit construction under the program since fiscal year 2011.

MAJOR INVESTMENT

The JCHS report recommends increasing the amount of accessible housing units for disabled seniors, and creating programs to help older owners shoulder housing cost burdens, such as property taxes and utility bills. It also calls for increased subsidies to older renters, and strengthened ties between housing and delivery of community-based healthcare services.

Leading Age is calling for a major housing investment – perhaps the advocates should call it infrastructure – of $600 million in fiscal 2018. A new HUD-administered housing fund would be the initial source of dollars that could leverage tax credits and state and local resources to help fund nonprofit development for very-low income seniors.

Leading Age also advocates expansion of the existing Low-Income Housing Tax Credit, which provides dollar-for-dollar tax credits for investments in affordable housing. The group also is pushing for creation of a “special purpose voucher” that would provide rental assistance to low-income seniors.

Good ideas, all – and they should be put in motion now, before the senior housing crisis is in full bloom. Says Couch: “The challenges of an aging population are upon us – no longer in the future. How we address these needs will be a true test of our moral character.”

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Editing by Matthew Lewis)

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Published at Wed, 21 Dec 2016 12:11:50 +0000

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Nordstrom and Peers Fall on Bleak Analyst Comments

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Nordstrom and Peers Fall on Bleak Analyst Comments

Shares of Nordstrom plunged nearly 9% on Friday after JPMorgan downgraded the stock from neutral to underweight with a price target of $48. JPMorgan analyst Matthew Boss claimed that the struggling department store chain had “no silver bullets in the barrel” to revive its stagnant sales, and that it had “yet to find an equilibrium” between brick-and-mortar stores and e-commerce efforts.

The key facts

Nordstrom has aggressively expanded its e-commerce ecosystem with e-gifting options on its website, its flash sale site HauteLook, and its styling service Trunk Club. Nordstrom’s e-commerce businesses now generate over 20% of its revenues, but its investments in those businesses are causing its expenses to outpace its sales growth.

Nordstrom management also told JPMorgan that its brick-and-mortar traffic levels had dropped to their lowest levels since 1972, and that it expects its comparable sales to stay nearly flat on an annual basis through 2018. Wall Street expects Nordstrom’s revenue to rise 2.5% this year, but earnings are expected to fall 11% due to its higher e-commerce investments.

Co-President Blake Nordstrom told JPMorgan that the chain’s bottom line would continue declining if comps remained flat. This strongly indicates that Nordstrom will likely follow Macy’s lead and close many more stores in the near future.

Dragging down its peers

JPMorgan’s downgrade of Nordstrom also sank most of its industry peers. Macy’s and JCPenney both fell about 7% after the downgrade, and Kohl’s slumped 8%. All three companies are also struggling to grow their e-commerce ecosystems to offset sluggishness in their brick-and-mortar sales.

Despite the bearish sentiment regarding Nordstrom, the high-end department store has actually posted better sales growth than many of its rivals. Nordstrom’s sales rose annually in three of its past four quarters, in contrast to Macy’s, for example, which has posted seven straight quarters of year-over-year declines.

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Published at Mon, 19 Dec 2016 14:23:02 +0000

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Alphabet Could Determine Big Tech’s Fate in 2017

by 422737 from Pixabay

Alphabet Could Determine Big Tech’s Fate in 2017

By Alan Farley | December 19, 2016 — 11:06 AM EST

The tech-heavy Nasdaq-100 has lifted to a bull market and all-time high, joining the S&P 500, the Dow Industrial Average and Russell-2000 in a trend advance driven by expectations for higher growth and profits in the Trump administration. But the nation’s biggest tech giants still face political and economic headwinds, with the surging U.S. Dollar making it harder to sell their products overseas while Silicon Valley’s lopsided support for Hilary Clinton during the election has built an uncomfortable wall between CEOs and the President-elect.

Alphabet Inc. (GOOGL) faces complex challenges in 2017, with more than 75% of the world’s internet surfers using their ad-supported search engine in November. Search-based advertising drove the bulk of $75-billion in 2015 revenues, illustrating the outsized impact to the company’s bottom line. Profits and revenues could erode if the dollar continues to post new highs, making local alternatives more affordable, while trade and political tensions also weigh on their torrid growth rate.

The company holds a nearly 9% weighting in the Nasdaq-100 through two stock classes, telling market players the index will probably head in whatever direction those shares trade in 2017. As a result, current technical positioning may be instructive in predicting big tech timing and direction in coming months. In particular, a breakout from GOOGL’s broad trading range could signal the start of a high percentage index rally above 5,000.

GOOGL Long-term Chart (2004-2016)

GOOGL

The company came public near $50 in August 2004 (post a two-for-one split into multiple share classes) and shot higher immediately, benefiting from the mid-decade bull market. The uptrend topped out at $373 in November 2007 and rolled over in a decline that accelerated to the downside during the 2008 economic collapse. It turned higher in 2009 but the bounce stalled at the .786 Fibonacci selloff retracement level one year later, requiring another 2-and-a-half years to complete a round trip to the prior high.

It broke out in 2012, entering a powerful trend advance that ran into resistance at the psychological 800 level in December 2015. The stock tested that level twice in February 2016 and sold off to an 8-month low during the Brexit referendum. Price action since that time carved an August rally into range resistance and an October breakout that failed after the presidential election.

GOOGL Short-Term Chart (2014–2016)

GOOGL

The daily view highlights a series of rally stairsteps and successful tests at new support, in line with a secular uptrend driven by institutional buying power. The stock settled on top of the October 2015 rally gap into the August 2016 breakout attempt, which reached a nominal all-time high at $839 before rolling over in late October and reentering the prior range in a failure swing.

It tested range resistance after the election and sold off to the 200-day EMA, which cut through the range midpoint. A double bottom reversal attracted strong interest that’s lifted the stock back above the contested level. In turn, smart traders will now focus downside attention on $790, which needs to hold on a test to favor a trip back to the October high. Conversely, a rally above the red line at $840 will confirm the breakout and set the stage for a more vertical advance in coming months.

On Balance Volume (OBV) matched price action until August 2016, posting a series of new highs, but ground out a lower high when the stock posted a higher October high, signaling a bearish divergence that tracked mixed price action into December. The indicator continues to lag the current rally wave, holding well below the 2016 peak even though the price is trading less than 4% below the all-time high.

The Bottom Line

Alphabet broke out to a new high in October, but momentum failed to develop, triggering a failed breakout and an additional trend building into December. It needs to clear $840 to enter a more vertical uptrend, but that may be tough until the stock finds a larger supply of committed buyers. Hopefully, the flip of the calendar into January will do the trick, with a strong uptrend in this single iconic issue having the power to lift the Nasdaq-100 index into a fresh round of all-time highs.

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Published at Mon, 19 Dec 2016 16:06:00 +0000

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Hotels: Strong Finish to 2016, Could be Best Year Ever

by Pexels from Pixabay

Hotels: Strong Finish to 2016, Could be Best Year Ever

by Bill McBride on 12/18/2016 08:11:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 10 December

The U.S. hotel industry reported positive results in the three key performance metrics during the week of 4-10 December 2016, according to data from STR.

In year-over-year comparisons, the industry’s occupancy increased 1.7% to 59.2%, and average daily rate (ADR) was up 3.9% to US$120.12. As a result, revenue per available room (RevPAR) grew 5.7% to US$71.08.

STR analysts note that the week’s performance was helped by a comparison to a 2015 week that included the first day of Hanukkah.
emphasis added

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

The 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 2015, and well ahead of the median rate.    With a solid finish over the remaining weeks, 2016 could be the best year on record.

Year-to-date, the three best years are:
1) 2016: 66.69% average occupancy.
2) 2015: 66.68% average.
3) 2000: 65.5% average.

For hotels, the Fall business travel season is over and the occupancy rate will decline during the holiday season.

Data Source: STR, Courtesy of HotelNewsNow.com

Read more at http://www.calculatedriskblog.com/2016/12/hotels-strong-finish-to-2016-could-be.html#1hbr4R6cPr56J1k7.99

by Bill McBride on 12/18/2016 08:11:00 AM

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Published at Sun, 18 Dec 2016 13:11:00 +0000

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Bed Bath & Beyond Sued for Shorting Overtime Pay

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Home goods retailer Bed Bath & Beyond (NASDAQ: BBBY) is being accused of shorting employee wages by not paying them for overtime worked. Proposed class-action lawsuits have been filed in New Jersey and elsewhere.

According to NJ.com, Bed Bath & Beyond paid employees under a “fluctuating OT” scheme that penalized them by reducing their hourly overtime rate the more hours they worked. The lawsuit alleges the formula the retailer used divided an employee’s weekly base salary by all the hours they worked, reduced it by half, then multiplied it by the number of hours over 40 hours that were worked. It claims although the employees are salaried, they actually perform the same duties as the company’s hourly workers.

One of the employees suing the retailer received a $65,000 salary annually, but his duties also required him to unload freight, stock merchandise, help customers, serve as a cashier, and other tasks just like the hourly workers he supervised.

In another suit, department managers and assistant managers were also improperly paid less money for overtime hours worked than they were due because Bed Bath & Beyond wrongly applied a “fluctuating work week” requirement on them even though their schedules remained largely unchanged.

According to the suit, companies can use a FWW formula with employees whose schedules change from week to week in that they are paid a salary that meets minimum wage laws but earn a 50% wage premium (i.e., time-and-a-half) for hours worked over 50 hours a week. However, the aggrieved employers say their schedules were largely unchanged, and that they worked 11- or 12-hour days depending upon their shift, resulting in them working some 47 to 50 hours per week. That should have entitled the workers to overtime pay beyond the 40 hours worked, but Bed Bath & Beyond used the FWW formula instead to avoid paying the higher rates.

The suit also charges that assistant managers were unlawfully classified as “exempt” employees, meaning they did not receive an overtime pay at all.

The plaintiffs in the various cases are seeking the unpaid overtime pay, damages, and various fees.

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Published at Fri, 16 Dec 2016 23:10:03 +0000

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UPDATE 1-Goldman Sachs to settle U.S. rate-rigging lawsuit for $56.5 mln

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

Goldman Sachs to settle U.S. rate-rigging lawsuit for $56.5 mln

By Nate Raymond | NEW YORK

Goldman Sachs Group Inc (GS.N) has agreed to pay $56.5 million to resolve a U.S. class action lawsuit accusing it and other banks of rigging an interest rate benchmark used in the $553 trillion derivatives market.

The proposed settlement was disclosed in papers filed in federal court in Manhattan on Friday. It came after seven other banks agreed in May to pay a combined $324 million to resolve the litigation.

As part of the deal, Goldman has also agreed to provide lawyers for the plaintiffs evidence including transaction data, documents and witness interviews, which could be used in litigations against the remaining banks, the court papers said.

Neither a spokesman for Goldman Sachs nor a lawyer for the plaintiffs immediately responded to a request for comment late on Friday.

The case is one of many pending in Manhattan federal court accusing banks of conspiring to rig rate benchmarks, securities prices or commodities prices.

In the lawsuit, several pension funds and municipalities accused 14 banks, including those that settled, of conspiring to rig the “ISDAfix” benchmark for their own gain from at least 2009 to 2012.

Companies and investors use ISDAfix to price swaps transactions, commercial real estate mortgages and structured debt securities.

The lawsuit accused the banks of executing rapid trades before the rate was set each day. It said the banks also caused UK brokerage ICAP Plc (IAP.F) to delay trades until they moved ISDAfix where they wanted, and post rates that did not reflect market activity.

U.S. and European regulators have also examined whether ISDAfix was set properly. The U.S. Commodity Futures Trading Commission has secured settlements of $115 million with Barclays Plc in May 2015 and $250 million with Citigroup Inc in May 2016.

To date in the class action, seven other banks have settled, including JPMorgan Chase & Co(JPM.N), Bank of America Corp(BAC.N), Credit Suisse Group AG (CSGN.S) and Deutsche Bank AG(DBKGn.DE).

The remaining defendants are BNP Paribas SA(BNPP.PA), HSBC Holdings Plc(HSBA.L), Morgan Stanley(MS.N), Nomura Holdings Inc(8604.T), UBS AG (UBSG.S), Wells Fargo & Co (WFC.N) and ICAP, lawyers for the plaintiffs said.

The case is Alaska Electrical Pension Fund et al v. Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 14-07126.

(Reporting by Nate Raymond in New York; Editing by Richard Borsuk)
Published at Sat, 17 Dec 2016 04:46:53 +0000

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Yahoo hack renews doubts about Verizon deal

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One billion Yahoo accounts hacked

Yahoo hack renews doubts about Verizon deal

  @sfiegerman

 Yahoo’s massive new security breach is once again throwing its deal with Verizon into question.

Yahoo(YHOO, Tech30) stock fell more than 5% in trading Thursday morning following a Bloomberg report that Verizon (VZ, Tech30) is weighing whether to cut the $4.8 billion price tag of its acquisition or abandon it entirely.

“We are confident in Yahoo’s value and we continue to work toward integration with Verizon,” a spokesperson for Yahoo said in a statement.

Verizon declined to comment beyond an earlier statement on the breach.

“As we’ve said all along, we will continue to evaluate the situation as Yahoo continues its investigation,” Verizon said in the statement Wednesday. “We will review the impact of this new development before reaching any final conclusions.”

Yahoo disclosed the new breach on Wednesday, which may have affected more than one billion accounts. The breach dates back to 2013 and is thought to be separate from a massive cybersecurity incident announced in September, which affected at least 500 million accounts.

The latest security breach, likely the largest in history, may give Verizon new bargaining power to renegotiate the terms of the original deal. There is a possibility of user attrition, lawsuits and damage to Yahoo’s brand. But it may not scuttle the deal completely.

Verizon agreed to buy Yahoo in July with the goal of using the aging Internet company’s vast audience to compete for online advertising sales against the two dominant players, Facebook (FB, Tech30) and Google (GOOGL, Tech30).

That strategy still applies, as long as Yahoo hasn’t lost the majority of its user base.

“At the right price, it’s absolutely beneficial to Verizon. The key word is ‘at the right price.'” says Brian Wieser, an analyst who covers Yahoo for Pivotal Research Group.

Related: Got a hacked Yahoo account? Here’s what you should do

No new acquisition price was mentioned in the Bloomberg report, which cited an anonymous source. After the first hack was disclosed in September, SunTrust analyst Robert Peck estimated it could shave $200 million off the deal.

Verizon learned about the original hack months after the acquisition had been announced. Both companies have since admitted the acquisition is not a done deal.

“I’ve got an obligation to make sure we protect our shareholders and our investors,” Marni Walden, Verizon’s head of product, said at an event in October. “We need to have more information before we can determine [what happens to the deal].”

Earlier this month, however, AOL CEO Tim Armstrong said he was “cautiously optimistic” the Yahoo deal he had pushed for would actually go through. That was just days before the second breach was disclosed.

If Verizon were to back out of the deal entirely, it would be yet another mark against the leadership of Yahoo CEO Marissa Mayer — and a particularly costly one for her.

Mayer is entitled to a $44 million golden parachute if she is terminated after Verizon buys Yahoo, according to a company filing from September.

The deal was originally slated to be completed in the first quarter of 2017.

 Published at Thu, 15 Dec 2016 18:21:43 +0000

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Garmin Extends Its Share Buyback Program

by kaarton from Pixabay

 

Garmin Extends Its Share Buyback Program

GPS device maker Garmin (NASDAQ: GRMN) just authorized an extension of its share repurchase program through Dec. 31, 2017. About $80.4 million in potential buybacks remains under its current $300 million program. Garmin also adopted a Rule 10b5-1 plan, which lets it repurchase shares during otherwise unavailable times via a broker, which buys shares on the company’s behalf.

Do these buybacks matter?

Over the past 12 months, Garmin has spent $75.4 million, or 13% of its free cash flow, on share buybacks. Those repurchases were fairly well-timed, since the stock rallied nearly 40% during that period.

The extension indicates that Garmin plans to spend a comparable amount of its FCF on buybacks next year. Those will also help offset its stock-based compensation expenses, which rose 49% annually to $29.2 million (4% of its revenues) last quarter.

However, Garmin generally favors dividends over buybacks — it spent $386.2 million, or 67% of its FCF, on dividend payments over the past year. It currently pays a forward yield of 4.1%, which is supported by its payout ratio of 76%, and has raised its dividend annually for four straight years.

Where will Garmin head in 2017?

Garmin has been pivoting its business away from basic GPS devices toward fitness-focused wearables over the past year. Garmin currently ranks third in the overall wearables market after Fitbit and Xiaomi, according to IDC, and it’s posting faster year-over-year growth than both rivals.

That growth, which was fueled strong demand for its specialized wearable devices for certain activities — like swimming, golfing, and jogging — is offsetting ongoing losses at its shrinking automotive GPS business. Analysts expect that turnaround to continue this year with 5% sales growth and 8% earnings growth.

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Published at Thu, 15 Dec 2016 14:49:45 +0000

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Netflix Shares New Data on How Its Members Watch

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by jarmoluk from Pixabay

Netflix Shares New Data on How Its Members Watch

It’s fair to say that Netflix (NASDAQ: NFLX) members do not consume video in the same way as people traditionally have.

One obvious difference is the concept of binge watching — viewing many episodes of the same show all in a row. That could mean consuming a whole series in a night or watching a one show steadily during your TV viewing time to the exclusion of all others.

That’s not something that was possible with traditional networks because shows were aired one episode a week over an entire season. Netflix, of course, changed that by releasing all episodes of a show’s season simultaneously.

Now the company, which does not share ratings data, has shared a some new research about the ways that many of its members consume TV and movies. It’s perhaps not as groundbreaking as creating the phenomenon of binge watching, but it’s still some interesting information.

What are Netflix customers doing?

The streaming video leader examined its members’ viewing habits and found that the majority of them do not move from show to show. Instead they use movies as sort a palate cleanser before moving onto the next series.

After finishing a series, a majority of Netflix members (59%) take a pause, usually lasting three days, before committing to a new show. During that break, more than half (61%) watch a movie to keep the binge feeling alive, like pairing the whimsical The Princess Bride to the delightfully quirky Unbreakable Kimmy Schmidt or the criminally comedic The Big Short to the dramatically comedic Orange is the New Black.

That may explain why even though original television series have become Netflix’s big draw, the company is still investing in movies. People may come for their favorite shows, but they do still watch films.

“It’s interesting that in this golden age of television, movies are consistently in demand on Netflix,” said Chief Content Officer Ted Sarandos in a press release. “What we’ve come to figure out is that movies are really an important part of people’s viewing routines and complementary to the way they watch and enjoy TV.”

Netflix knows its customers

Unlike traditional television, which has historically had to rely on ratings of questionable accuracy to gauge viewership, Netflix knows exactly how its members behave. That gives the company an edge when it comes to deciding exactly how to spend its programming dollars. It also lets the streaming leader create a release schedule that maximizes viewing hours and customer experience as well as engagement.

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Published at Tue, 13 Dec 2016 22:45:02 +0000

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Who are Monsanto’s main competitors?

 

Who are Monsanto’s main competitors?

A:

Monsanto (MON) is a multinational company that provides seeds and agriculture products to farmers worldwide. Its business is divided into two main divisions: seeds and genomics and agricultural productivity. It has a market capitalization of $46.07 billion and gross revenues of $15 billion for fiscal year 2015, a 5% decline from the year before.

Major competitors for Monsanto Company in the seeds and genomics space include food processing and commodity trading firm Archer Daniels Midland Company (ADM), multinational American giant Dow Chemical Company (DOW), agricultural genomics firm Evogene Ltd., and seed and chemical supplier Syngenta (SYT), based in Switzerland.

Major competitors for Monsanto in the agricultural productivity division include retail fertilizer and agricultural product supplier Agrium (AGU), insecticide and herbicide producer American Vanguard (AVD); fertilizer producer CF Industries Holdings (CF); nitrogen fertilizer producer CVR Partners (UAN), fertilizer and agricultural product producer Chinese Green Agriculture, fertilizer and chemical product producer Israel Chemicals; bio-based pest management product producer Marrone Bio Innovations; phosphate and potash miner The Mosaic Company; potash miner Potash Corporation of Saskatchewan; nitrogen fertilizer producer Rentech Nitrogen Partners; genomic company and herbicide producer Syngenta; nitrogen producer Terra Nitrogen Company; Eastman Chemical; Dow Chemical; FMC Corporation; and Honeywell International.
Published at Tue, 13 Dec 2016 19:42:00 +0000

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Trump calls fighter jet costs ‘out of control’

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Trump says this fighter jet is too expensive

Published at Mon, 12 Dec 2016 16:45:16 +0000

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Iran seals $17 billion Boeing deal, close to Airbus order

Ground crew members escort a Boeing 737 MAX as it returns from a flight test at Boeing Field in Seattle, Washington January 29, 2016. REUTERS/Jason Redmond

Iran seals $17 billion Boeing deal, close to Airbus order

By Tim Hepher and Sami Aboudi
| PARIS/DUBAI

Iran signed a $16.6 billion deal for 80 Boeing (BA.N) passenger jets on Sunday and was said to be close to another for dozens of Airbus (AIR.PA) planes to complete what would be the biggest package of firm contracts with Western companies since Iran’s 1979 Islamic revolution.

The deal between IranAir and U.S. planemaker Boeing includes 50 narrow-body 737 MAX aircraft and 30 long-haul 777s, split equally between the 777-300ER, which is badly in need of an order boost, and the 406-seat 777-9, which is under development.

An Iranian official told Reuters that IranAir was also at the “very final stage” of formalizing a deal with Europe’s Airbus, which led Western companies back into Iran with a provisional agreement for 118 planes when Tehran emerged from global sanctions in January.

The Airbus deal, which is expected to involve a first batch of 50-60 jets, should be completed in the next couple of days, the official said.

Also closing in on a deal to renew Iran’s aging fleet, kept going by smuggled or improvised parts after decades of sanctions, European turboprop maker ATR said it had received U.S. approvals needed to finalize the sale of up to 40 aircraft.

The Boeing contract, the biggest Iran-U.S. deal since the fall of the Shah, clears a major technical hurdle toward implementing last year’s pact between Iran and world powers to reopen trade in return for curbs on Iran’s nuclear activities.

However, political opposition could yet threaten a deal that would provide a welcome boost to Boeing’s order book after a year in which it has lagged behind rival Airbus.

Congressional Republicans are trying to counter last year’s nuclear accord, with the U.S. House of Representatives passing a bill last month seeking to restrict financial transactions by U.S. banks in an effort to block the sale of Western passenger jets to Iran.

 

TEST FOR TRUMP, ROUHANI

The Iranian official said the Boeing deal was subject in part to further agreements on financing, but added that money from the deal would not pass through the U.S. financial system.

Financial sources said Boeing has a financing plan for 15 777-300ER jets, which are expected to be delivered from 2018, but the rest of the financing may still have to be negotiated.

Sunday’s move could also test relations between America’s top exporter and U.S. President-elect Donald Trump, days after he complained about the cost of new Boeing “Air Force One” jets.

Because of the length of the 10-year deal, some U.S. export licenses may need to be extended during Trump’s administration. The president-elect, who opposes last year’s nuclear sanctions deal with Iran, has also rattled Boeing by sparring with China, which accounts for a fifth of the company’s deliveries.

A Boeing statement said the Iranian contract would support tens of thousands of U.S. jobs for the 777-300ER jets and nearly 100,000 U.S. aerospace jobs for the whole package.

In Iran the deal is viewed as a crucial political test for the government of pragmatist President Hassan Rouhani, who has been criticized by hardliners opposed to opening up to the West.

The first Airbus aircraft are expected to reach Iran in 2017. Iran’s presidential elections are due in May.

 

(Editing by David Goodman)

 
Published at Sun, 11 Dec 2016 19:08:55 +0000

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OPEC, non-OPEC agree first global oil pact since 2001

by paulbr75 from Pixabay

OPEC, non-OPEC agree first global oil pact since 2001

 

OPEC and non-OPEC producers on Saturday reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices that overstretched many budgets and spurred unrest in some countries.

 

With the deal finally signed after almost a year of arguing within the Organization of the Petroleum Exporting Countries and mistrust in the willingness of non-OPEC Russia to play ball, the market’s focus will now switch to compliance with the agreement.

 

OPEC has a long history of cheating on output quotas. The fact that Nigeria and Libya were exempt from the deal due to production-denting civil strife will further pressure OPEC leader Saudi Arabia to shoulder the bulk of supply reductions.

 

Russia, which 15 years ago failed to deliver on promises to cut in tandem with OPEC, is expected to perform real output reductions this time. But analysts question whether many other non-OPEC producers are attempting to present a natural decline in output as their contribution to the deal.

 

“This agreement cements and prepares us for long-term cooperation,” Saudi Energy Minister Khalid al-Falih told reporters after the meeting, calling the deal “historic”.

 

Russian Energy Minister Alexander Novak told the same news conference: “Today’s deal will speed up the oil market stabilization, reduce volatility, attract new investments.”

 

Last week, OPEC agreed to slash output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting as much as 486,000 bpd. Falih said on Saturday that Riyadh may cut even deeper.

 

On Saturday, producers from outside the 13-country group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd but still the largest contribution by non-OPEC ever.

 

Of that, Russia will cut 300,000 bpd, Novak said. He added it would be gradual and by the end of March Russia would be producing 200,000 bpd less than its October 2016 level of 11.247 million bpd – Russia’s highest production estimate so far.

 

 

Russian output would fall to 10.947 million bpd after six months, Novak said.

 

“They are all enjoying higher prices and compliance tends to be good in the early stages. But then as prices continue to rise, compliance will erode,” said veteran OPEC watcher and founder of Pira Energy consultancy Gary Ross.

 

Amrita Sen from consultancy Energy Aspects said: “Compared to two months ago when the prospects of a deal were fading rapidly, this is a huge turnaround. Skeptics will argue about compliance but the symbolism in itself cannot be understated.”

 

Ross added that OPEC would target an oil price of $60 per barrel as anything above that could encourage rival production.

 

 

TWO YEARS OF PAIN

 

Oil prices have more than halved in the past two years after Saudi Arabia raised output steeply in an attempt to drive higher-cost producers such as U.S. shale firms out of the market.

 

The plunge in oil to below $50 per barrel – and sometimes even below $30 – from as high as $115 in mid-2014 has helped reduce growth in U.S. shale output.

 

But it also hit the revenues of oil-dependent economies including Saudi Arabia and Russia, prompting the two largest exporters of crude to start their first oil cooperation talks in 15 years.

 

 

In April in Doha, an attempt to clinch a deal collapsed. Novak said talks between OPEC and non-OPEC had been rescued after Saudi Arabia replaced veteran oil minister Ali al-Naimi with Falih, who “had fresh views and ideas”.

 

Apart from Russia, the talks on Saturday were attended by or had comments or commitments sent from non-OPEC members Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan.

 

Novak said OPEC and the non-OPEC countries at the meeting were responsible for 55 percent of global output. Their joint reduction of around 1.8 million bpd would account for about 2 percent of global oil supply.

 

Many non-OPEC countries such as Mexico and Azerbaijan face a natural drop in oil production and some analysts expressed doubts those declines should be counted as cuts.

 

Oman said it would cut output by 45,000 bpd and Kazakhstan said it would try to reduce by 20,000 bpd next year.

 

“While a lot of the countries are formalizing natural declines, cuts by Russia, Kazakhstan and Oman are real. Russia and Kazakhstan were between them expected to add 400,000 bpd to production next year,” Sen of Energy Aspects said.

 

(Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

 
Published at Sat, 10 Dec 2016 18:55:28 +0000

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How To Make Extra Money At Christmas Time

 

How To Make Extra Money At Christmas Time

By Rachel Brown | Updated December 10, 2016 — 6:00 AM EST

If the financial worries of Christmas are bringing you out in a seasonal sweat, then fret no more. In this time of austerity, it’s easy to feel more like Scrooge than Santa, but if you’re facing a credit crunch this December, here are a handful of ways to make a bit of extra money this holiday season.

Trade in Last Year’s Gadgets

Christmas can be an expensive time with kids wanting the latest releases of everything. So, why not trade in old models to help with the costs? If you’ve got old mobile phones, computer consoles or laptops gathering dust in your home they can be traded in for cash this Christmas. Websites such as gazelle.com or exchangemyphone.com are good places to start when it comes to discovering how much your items are worth.

Rent out Your House

Are you going to visit family for Christmas or New Year? If your home is going to be empty over this period you should consider renting it out? Airbnb is one such site where you can list your home for a short period. This could be a lucrative way to earn money over the holidays if you live in a popular city. Make sure that you check the terms of your lease and take steps to ensure your home will be safe. Going through a reputable company will go a long way in this regard.

Put in Extra Hours

Over the holidays, bars, shops and restaurants are often looking for extra staff. If you have the time, then maybe you could pick up extra hours that work around your current job. Perhaps you work in an office that closes for a week over Christmas. You could make the most of this downtime by getting a second job. If you’re willing to work in a restaurant or bar on Christmas Eve, Boxing Day or New Year’s Eve, you can expect the wage to be worth your while. If you own a car, driving for ride-sharing apps like Uber and Lyft is also a good option to rake in some quick cash.

Get Cash Back

Although this may be of little help in time for this Christmas, putting all your Christmas (and other spending throughout the year) on a credit card that gives you cash back can be an easy and free way to make extra money. Some credit cards will pay a percentage of your spending back to you. Just be sure you always pay the balance on these cards off in full. If you don’t it is a not a good deal at all.
If you’re reluctant to take out a credit card, there are cash back sites that will give you a percentage of any online spending. Does this sounds too good to be true? Well, it’s not. Cash back sites make money by referring you to other sites that you buy something on. To thank you for going from its website, the site shares this money with you. Many even offer bonus payments for referring a friend to the site. Topcashback.com, ebates.com are examples of such sites. If you did all your spending through a cash back site or card over the next 12 months you could have several hundred dollars ready to spend for next Christmas.

Bake Your Way to the Bank

Are you skilled in the kitchen? Christmas cakes are difficult to make and take time that many of us do not have. So, if your Christmas cake is good, why not sell it to friends and neighbors? Be sure to price up the ingredients and include the cost of cooking them to ensure that it makes good business sense. Advertise your services to friends on social media sites and fliers in your neighborhood.

Smile for the Camera

Companies are always looking for pictures of happy families at Christmas. So, get photographs of the family around the tree, and then upload them onto a stock photo website where people pay to use your image. Shutterstock and Getty are two websites in which you can upload your photos and get paid every time someone downloads them .

The Bottom Line

Christmas can be an expensive time, but there are ways to make a few extra dollars, and with these tips, Christmas needn’t break the bank after all.

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Published at Sat, 10 Dec 2016 11:00:00 +0000

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Murdoch’s new Sky bid should be probed says former UK minister

 

FILE PHOTO: Vince Cable during a keynote speech on the second day of Liberal Democrat party’s spring conference in Liverpool, northern England, March 14, 2015.REUTERS/Phil Noble/Files

Murdoch’s new Sky bid should be probed says former UK minister

By James Davey and Kate Holton | LONDON

Rupert Murdoch’s new takeover approach for British pay-TV firm Sky should be investigated by the UK’s competition authorities, according to opposition politicians, though analysts said a deal should be easier to get through this time round.

Liberal Democrat Vince Cable, who was Britain’s business secretary at the time of Murdoch’s first bid in 2010-11 told BBC radio the media tycoon’s new takeover attempt would not be in the public interest.

Cable referred Murdoch’s original bid to regulator Ofcom and said his latest offer should face the same scrutiny.

Tom Watson, deputy leader of Britain’s opposition Labour Party and a critic of the Murdoch business family, also called on regulators to be ready to properly vet the deal – but did not oppose it outright.

On Friday, Murdoch’s Twenty-First Century Fox said it had struck a preliminary deal to buy the 61 percent of Sky it does not own for around $14 billion. It came five years after a political scandal wrecked his previous bid.

That attempt to buy Sky through his News Corp business provoked uproar among some UK politicians, who said it would give the billionaire owner of The Sun and The Times newspapers too much control over Britain’s media.

It collapsed in 2011 when Murdoch’s UK newspaper business was engulfed in a phone-hacking scandal. It intensified political opposition, resulted in a criminal trial, and led to the closure of his News of the World tabloid newspaper.

Cable said the issue was the same five years on.

“This is yet again a threat to media plurality, choice, just as it was six years ago when I referred this to the competition authorities and it should be investigated,” he said.

“The ownership of the media, whether you’re looking at press, radio, television is very highly concentrated and this makes it even more concentrated.”

EASIER RIDE

However, analysts and Murdoch allies said Friday’s proposal was likely to have an easier ride, partly because News Corp has now separated from Fox, which means the bidding firm no longer owns UK newspapers, and because there are little or no competition issues, with very significant changes in the market for news in the UK since 2010.

They also said the British government was keen to promote investment in the wake of the Brexit vote and could present the deal as a sign of confidence in the economy.

Similarly Wilton Fry, analyst at stockbroker RBC Capital, saw “a high likelihood” of a deal being approved.

It will be up to Karen Bradley, the Conservative government’s culture, media and sport minister to decide whether the plurality situation has materially changed since 2010.

“Will the government really say he can’t own more than 39 percent of it? I don’t think so,” David Yelland, a former editor of Murdoch’s Sun newspaper, told Reuters.

“It takes a lot of negative energy to block a deal like this and I just don’t see it happening this time around.”

(Editing by Jeremy Gaunt and Ros Russell)

Published at Sat, 10 Dec 2016 11:45:48 +0000

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FedEx CEO: Tearing up NAFTA would be ‘catastrophic’

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fred smith fedex

  @CNNMoneyInvest

Donald Trump’s trade threats are getting no love from Corporate America or Congress.

In some of the sharpest remarks since Trump’s victory, FedEx CEO Fred Smith warned about the dangers of clamping down on free trade, especially tearing up NAFTA, the free trade agreement between the United States, Mexico and Canada.

Getting out of NAFTA “would be catastrophic for the U.S. economy,” Smith said at a meeting on national competitiveness in Washington on Friday.

“Trade has made America great,” Smith said. Going the other way “would be a severe mistake with enormous consequences for America and the world.”

He pointed out that 25% of U.S. manufacturing jobs depend on shipments abroad. Overall, trade supports 40 million jobs in America.

Trump has called NAFTA “the worst trade deal,” and threatened to impose a 35% tariff on U.S. companies that move jobs to other countries.

“I believe there is a better way of solving a problem than getting into a trade war,” House Majority Leader Kevin McCarthy told reporters earlier this week.

Trump blames NAFTA for the steep decline in manufacturing jobs in the United States over the past two decades.

However, Trump’s claim isn’t completely backed by research. While there have been job losses tied to NAFTA, most studies — even one from Congress — show that it wasn’t responsible for a mass exodus of manufacturing jobs. In fact, free trade with Mexico supports about 6 million current U.S. jobs, the U.S. Chamber of Commerce estimates.

Better technology — automation — is a bigger job killer than trade.

Trump’s recent deal with Carrier to save jobs in the U.S. has been in the headlines. As part of the deal Carrier’s parent company, United Technologies, would make a $16 million technology investment in its Indiana facilities. That technology would end up taking away some jobs.

“What that ultimately means is there will be fewer jobs,” Greg Hayes, CEO of United Technologies(UTX), told CNBC earlier this week.

Smith, the FedEx (FDX) CEO, portrayed a gloomy future for America if Trump chose to fulfill his starkest campaign promises of high tariffs and torn up trade deals. He compared such a situation to America’s last trade war in the 1930s. All economists, even those on Trump’s staff, agree that situation made the Great Depression worse than it would have been otherwise.

It was sparked by the Smoot-Hawley Act, which raised tariffs on thousands of goods with the initial aim of protecting American farmers. Other countries retaliated against the U.S. with tariffs of their own. Global trade plunged.

“This misguided act of Congress ignited the Great Depression,” Smith argued Friday. “Protectionism doesn’t work.”

Editor’s Note: An earlier version of this story, citing Bloomberg, reported that the Chamber of Commerce said it’s vying to stop Trump from fulfilling his campaign promise to tear up NAFTA. The Chamber says it is open to NAFTA being updated, as necessary.

 CNNMoney (New York)First published December 9, 2016: 12:04 PM ET

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Exxon CEO is now Trump’s secretary of state favorite -transition official

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ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015. REUTERS/Daniel Kramer/File Photo

 

 

ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015. REUTERS/Daniel Kramer/File Photo

Exxon CEO is now Trump’s secretary of state favorite -transition official

By Steve Holland | GRAND RAPIDS, MICH.

Exxon Mobil Corp Chief Executive Officer Rex Tillerson emerged on Friday as President-elect Donald Trump’s leading candidate for U.S. secretary of state, a senior transition official said.

Trump met Tillerson on Tuesday and may talk to him again over the weekend, the official said. Trump appears to be in the final days of deliberations over his top diplomat with an announcement possible next week.

Tillerson’s favored status was revealed as former New York Mayor Rudy Giuliani formally withdrew from consideration for secretary of state.

The transition official, who spoke on condition of anonymity, said Tillerson, 64, had moved ahead in Trump’s deliberations over 2012 Republican presidential nominee Mitt Romney, who has met Trump twice, including at a dinner in New York.

But the official said Romney was still under consideration for the job, along with John Bolton, a former U.S. ambassador to the United Nations; U.S. Senator Bob Corker of Tennessee, and retired Navy Admiral James Stavridis.

Giuliani’s withdrawal came after he was fully vetted by the Trump transition team for his overseas business ties in what was described by the Trump official as an “intense” effort by lawyers and accountants.

Giuliani, who runs a global consulting firm, was given a clean bill of health, with Trump’s aides concluding his business interests would not pose a risk to his confirmation.

Should Tillerson be nominated, his business ties, too, will come under scrutiny. Exxon Mobil has operations in more than 50 countries and boasts that it explores for oil and natural gas on six continents.

In 2011, Exxon Mobil signed a deal with Rosneft, Russia’s largest state-owned oil company, for joint oil exploration and production. Since then, the companies have formed 10 joint ventures for projects in Russia.

In 2013, Russian President Vladimir Putin awarded Tillerson his nation’s Order of Friendship.

But U.S. sanctions against Russia for its incursion into Crimea cost Exxon Mobil dearly, forcing it to scrap some projects and costing it at least $1 billion in losses. Tillerson has been a vocal critic of the sanctions.

Trump has spoken of wanting warmer relations with Moscow, which has sparked concerns in Congress that he could lift or loosen some of the sanctions on Russia.

Tillerson has been chairman and CEO of Exxon Mobil since 2006. He is expected to retire from the company next year.

Should Tillerson be nominated, climate change could be another divisive issue. The company is under investigation by the New York Attorney General’s Office for allegedly misleading investors, regulators and the public on what it knew about global warming.

(Reporting by Steve Holland and James Oliphant; Editing by Leslie Adler and Lisa Shumaker)

 

 

Published at Sat, 10 Dec 2016 01:34:14 +0000

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Murdoch’s Twenty-First Century Fox bids $14 billion for UK’s Sky

by Skitterphoto from Pixabay

Murdoch’s Twenty-First Century Fox bids $14 billion for UK’s Sky

Rupert Murdoch’s Twenty-First Century Fox Inc (FOXA.O) has struck a preliminary deal to buy the 61 percent of British pay-TV firm Sky Plc SKY.L it does not already own for around $14 billion, five years after a political scandal wrecked a previous bid.

 

The proposed offer of 10.75 pounds a share in cash, which is backed by Sky’s independent directors, would strengthen the position of James Murdoch – who is both chief executive of Fox and chairman of Sky – in his 85-year-old father’s media empire.

 

People familiar with the matter said Fox had pounced after Britain’s vote to leave the European Union in June sent the pound down about 14 percent against the U.S. dollar and Sky’s share price tumbling.

 

Owning Sky would give Fox, whose cable networks include Fox News and FX, control of a pay-TV network spanning 22 million households in Britain, Ireland, Austria, Germany and Italy.

 

It would also be the latest deal to marry distribution with content after AT&T Inc (T.N) announced an $85 billion bid to buy Time Warner Inc (TWX.N) earlier this year. While Sky does produce some of its own content, including in news and sport, the deal would give Fox full ownership of a wider distribution platform in Europe.

 

“Fox has always seen its 39 percent stake in Sky as an unnatural state of being and has long been trying to buy full control,” a person familiar with the deal said.

 

“Now it was the perfect moment. With the weak pound (and lower stock price), Sky has become 40 percent cheaper and the government is supportive of almost any investment in Britain.”

 

Rupert Murdoch’s previous attempt to buy Sky through his News Corp (NWSA.O) business provoked uproar among some UK politicians, who said it would give the billionaire owner of The Sun and The Times newspapers too much control over the country’s media.

 

That bid collapsed in 2011 when Murdoch’s UK newspaper business was engulfed in a phone hacking scandal that intensified political opposition, resulted in a criminal trial and led to the closure of his News of the World tabloid.

 

Liberum analysts said Friday’s proposal was likely to have an easier ride, partly because News Corp has now separated from Fox, which means the bidding firm no longer owns UK newspapers, and because there are no competition issues.

 

 

They also said the British government was keen to promote investment in the wake of the Brexit vote and could present the deal as a sign of confidence in the economy.

 

Prime Minister Theresa May met Rupert Murdoch after a visit to the United Nations in September, according to media reports.

 

Fox said it would reinforce Britain’s standing as a top global hub for content generation and technological innovation.

 

Tom Watson, deputy leader of Britain’s opposition Labour Party and a key critic of the Murdochs during the 2011 scandal, called on regulators to be ready to properly vet the deal – but did not oppose it outright.

 

“This bid has been expected since 2011,” he said.

 

 

JAMES TIGHTENS GRIP

 

Fox’s proposed bid is a 36.2 percent premium to Sky’s closing share price on Thursday. It values the company at about 18.5 billion pounds ($23.2 billion) and the stake Fox does not already own at 11.25 billion pounds, according to Reuters calculations.

 

Martin Gilbert, a member of Sky’s board who will assess the bid as part of its independent committee, told Reuters the offer was a good premium worth presenting to shareholders.

 

Even so, analysts at Citi characterized the offer as a “low-ball bid,” citing a fair value assessment of 13.50 pounds per share.

 

 

Sky’s shares closed up 26.7 percent at around 10 pounds, while Fox’s were down 1.8 percent at $28.12 at 2020 GMT.

 

Before Friday’s surge, Sky’s shares had dropped 30 percent this year in part due to concerns of an UK economic slowdown caused by Brexit.

 

The deal has also been made more attractive for Fox by a drop in the value of sterling, which makes it cheaper for foreign firms to buy UK assets. British tech company ARM was snapped up by Japan’s SoftBank Group Corp (9984.T) in the days after the Brexit vote and shares in UK commercial broadcaster ITV (ITV.L) Plc closed up 5 percent on Friday on speculation it could be next.

 

Long tipped as his father’s successor, James Murdoch’s reappointment as chairman of Sky earlier this year reignited speculation of another bid approach by Fox.

 

Britain’s takeover watchdog has set Fox a deadline of Jan. 6 to make a firm bid or walk away. Sky said that “certain material offer terms” remained under discussion, and that there could be no certainty that an offer would be made by Fox.

 

The terms still under discussion include the size of the break-up fee, as well as some other contractual obligations of the two companies to close the deal, according to people familiar with the matter. These are not expected to present any major hurdle to agreeing a deal, the people added.

 

Deutsche Bank AG (DBKGn.DE) and Centerview Partners Holdings LLC are advising Fox, and Goldman Sachs Group Inc (GS.N) also provided it with some advice. PJT Partners Inc (PJT.N), Morgan Stanley (MS.N) and Barclays Plc (BARC.L) ‎are working with Sky.

 

(Additional reporting by Paul Sandle in London, Greg Roumeliotis in New York and Anya George Tharakan in Bengaluru; Editing by Richard Chang, Mark Potter and Lisa Shumaker)

 
Published at Sat, 10 Dec 2016 01:10:14 +0000

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HBO, Netflix Get VR Upgrades

by fill from Pixabay

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HBO, Netflix Get VR Upgrades

Virtual reality (VR) entertainment is slowly making its way to every mainstream platform. Netflix (NASDAQ: NFLX) and Time Warner (NYSE: TWX) will get there with help from Google and its Daydream View headset.

For those unfamiliar, the Daydream isn’t a stand-alone headset but a device into which users must plug a compatible phone. Add VR-compatible apps, turn on the View, and you’ve immersive VR. HBO and Netflix have already upgraded their apps, which means it’s now possible to watch fully immersive episodes of Game of Thrones or any of Netflix’s Marvel TV series, for example.

Why should investors care? While we’re still in the early stages of the VR revolution, analysts are projecting huge growth in the years to come. IDC says the market is on pace to grow more than 181% annually between 2015 and 2020 if you also count augmented reality (AR) platforms and applications such as Pokemon Go. With numbers like that, Netflix and Time Warner shareholders should want to see as many experiments and deployments as possible.

Over time, it’s possible we’ll see both studios developing original VR and AR concepts. For now, though, Netflix CEO Reed Hastings says he’d rather stick with formats that lend themselves to binge watching. “We are more focused on a lean-back, relaxing experience,” he said in a May interview with VentureBeat.

Warner, for its part, isn’t just placing content on platforms like Daydream. Earlier this year the company’s HBO subsidiary joined Discovery Communications in making an equity investment in privately held OTOY, which specializes in 3D holographic content. Comedian Jon Stewart is also working with OTOY to produce new programming for HBO, though it isn’t yet clear exactly what he has in mind.

Maybe it doesn’t matter. Maybe the point is that IDC’s crazy estimates suggest we’ll see many more investments — in both companies and content — in the years to come, which makes the VR market a must-follow for any investor interested in emerging technologies.

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Tim Beyers owns shares of Netflix and Time Warner.

Published at Fri, 09 Dec 2016 18:04:03 +0000

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Will Sony Win With Marvel’s “Spider-Man” Makeover?

by theTEJESHWARMAGAR from Pixabay

Will Sony Win With Marvel’s “Spider-Man” Makeover?

A teaser trailer for Spider-Man’s latest adventure in the Marvel Cinematic Universe went up on Wenesday, energizing fans who’ve been waiting for Spider-Man: Homecoming, which is headed to the big screen on July 7, 2017.

Investors should be similarly excited. Not investors in Disney, which now owns Marvel — investors on Sony (NYSE: SNE). A February 2015 deal to allow the web-slinger to appear in Marvel Studios’ movies allows Sony to continue making (and profiting from) films starring Spidey. The House of Mouse won’t share in the profits.

If that sounds strange, that’s because it is. For years, investors have been treated to unofficial reports of fighting between Twenty-First Century Fox (NASDAQ: FOX)(NASDAQ: FOXA), which controls rights to Marvel characters tied to the X-Men and Fantastic Four franchises. Only recently have Fox and Marvel begun cooperating to support the upcoming FX television series Legion, which tells the story of a team of young mutants set in Fox’s version of the Marvel Universe. The structure of Sony’s deal with Marvel may have influenced the thaw.

According to a February report in Variety, Sony retains not only the rights to make Spiderman movies at its discretion but also keep the profits. Marvel and its parent will consult on those films and retain the right to add Spidey to MCU movies. And the price of this deal? Zero. Nada. Zilch.

Sony investors must be loving this arrangement, especially after the disaster that was The Amazing Spider-Man 2. The lowest grossing of Sony’s five films starring the wall-crawler — both globally and domestically — ASM 2 got approval from just 52% of critics and 65% of audiences, who also gave it a “meh” B+ CinemaScore. Combined the ratings help to explain why Sony chose to partner with Marvel and give actor Tom Holland a shot as the hero.

If the box office numbers from his first movie appearance, in last year’s Captain America: Civil War, are any indicator — $408.1 million domestically, $1.15 billion worldwide — it was a smart decision. And this time, with Homecoming, it’s Sony that will reap the financial rewards.

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Tim Beyers owns shares of Walt Disney and has the following options: long January 2017 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Published at Fri, 09 Dec 2016 18:35:02 +0000

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