All posts in "Business"

Mastercard Reports Strong Growth but Could See Consolidation

by AKuptsova from Pixabay

Mastercard Reports Strong Growth but Could See Consolidation

By Justin Kuepper | November 1, 2017 — 10:30 AM EDT

Mastercard Incorporated (MA) shares fell about 0.3% on Tuesday after the company reported strong third quarter financial results. Revenue soared 18.1% to $3.4 billion – beating consensus estimates by $120 million – while earnings per share of $1.34 beat consensus estimates by 11 cents per share. Gross dollar volume also grew 10%, while purchase volume and cross-border volume both jumped by 11% during the third quarter.

The stock initially rallied following its earnings announcement, but shares moved lower after the company disclosed that it expects fines from the European Commission (EC). According to a regulatory filing, the EC could fine the company upwards of $1 billion if the agency makes an adverse decision about antitrust violations. Management expects to have more clarity on the issue next quarter, but the warning drew concern among investors.

Technical chart showing the performance of Mastercard Incorporated (MA) stock

From a technical standpoint, the stock has stalled over the past couple of trading periods after reaching all-time highs late last month. The relative strength index (RSI) has moved into overbought territory with a reading of 76.6, while the moving average convergence divergence (MACD) has been trending lower since mid-September. However, the MACD could be on the verge of experiencing a bullish crossover if the stock rebounds higher.

Traders should watch for some consolidation between trendline and R1 resistance at $153.48 and the pivot point at $147.29 until the RSI reaches more moderate levels. A breakout from trendline and R1 resistance could send shares to R2 resistance at $158.19, while a breakdown from the pivot point could lead to a test of trendline support at $145.00. Traders should maintain a cautiously bullish long-term bias, but the stock could see some short-term consolidation. (See also: MasterCard’s Stock Can Continue to Rise for Years.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

 

Published at Wed, 01 Nov 2017 14:30:00 +0000

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Apple could drop Qualcomm components in next year’s iPhones, iPads

Apple could drop Qualcomm components in next year’s iPhones, iPads

(Reuters) – Apple Inc (AAPL.O) has designed iPhones and iPads that would drop chips supplied by Qualcomm Inc (QCOM.O), according to two people familiar with the matter.

The change would affect iPhones released in the fall of 2018, but Apple could still change course before then, these people said. They declined to be identified because they were not authorized to discuss the matter with the media.

The dispute stems from a change in supply arrangements under which Qualcomm has stopped providing some software for Apple to test its chips in its iPhone designs, one of the people told Reuters.

The two companies are locked in a multinational legal dispute over the Qualcomm’s licensing terms to Apple.

Qualcomm told Reuters it is providing fully tested chips to Apple for iPhones. “We are committed to supporting Apple’s new devices consistent with our support of all others in the industry,” Qualcomm said in a statement.

FILE PHOTO: One of many Qualcomm buildings is shown in San Diego, California, U.S. on November 3, 2015. REUTERS/Mike Blake/File Photo

The Wall Street Journal first reported that Apple could drop Qualcomm chips Monday.

Bernstein analyst Stacy Rasgon said Apple’s move is not totally unexpected.

Though Qualcomm has for several years supplied Apple’s modems – which help Apple’s phones connect to wireless data networks – Intel Corp (INTC.O) has provided upward of half of Apple’s modem chips for iPhones in recent years, Rasgon said. Intel in 2015 acquired a firm that would let it replace more of Qualcomm’s chips in iPhones, Rasgon said.

Rasgon said it’s too early to say definitively whether Apple fully intends to drop Qualcomm next year because Apple can likely make multiple contingency plans for different supplier scenarios.

“Apple is big enough that they want to support multiple paths, they can do that,” Rasgon said. “Samsung (Electronics Co (005930.KS)) did this too. A couple of years ago, Samsung designed Qualcomm out, but Qualcomm didn’t even know until it was close to time to ship” Samsung’s phones, Rasgon said.

Reporting by Stephen Nellis in Bengaluru and Liana B. Baker in San Francisco; Editing by Kenneth Maxwell and Stephen Coates

Our Standards:The Thomson Reuters Trust Principles.

 

Published at Tue, 31 Oct 2017 04:31:02 +0000

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Morgan Stanley quits brokerage industry pact on recruiting

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Morgan Stanley quits brokerage industry pact on recruiting

NEW YORK (Reuters) – Morgan Stanley is quitting a pact it signed with rival securities brokerages over a decade ago agreeing not to sue one another when brokers quit to join rivals and take clients with them.

FILE PHOTO: The headquarters of Morgan Stanley is pictured in New York, U.S., June 1, 2012. REUTERS/Eric Thayer/File Photo

The bank’s announcement on Monday comes amid a changing competitive landscape for the securities industry. Top advisers are increasingly leaving major brokerages to join independent registered investment firms, the majority of which are not party to the pact.

Morgan Stanley said in a statement that quitting the agreement would allow it to invest more in its advisers and their teams.

Industry recruiters said that by exiting the industry accord, Morgan Stanley will be able to act more aggressively to keep its top advisers and fight for the clients of those who leave.

”If you’re going to be a net loser rather than a net gainer in terms of recruiting, why stay in the protocol?” said Danny Sarch, president of the recruiting firm Leitner Sarch Consultants.

Morgan Stanley is the first Wall Street brokerage to exit the industry truce, called the Protocol for Broker Recruiting, and its departure could trigger a wave of defections.

Representatives of others subject to the protocol, including Bank of America Merrill Lynch, UBS Wealth Management Americas and Raymond James, could not immediately be reached for comment. A representative for Wells Fargo Advisors declined to comment.

The agreement was struck in 2004 when major broker-dealers still dominated the wealth management industry.

Increased regulation of major banks in the wake of the financial crisis has made independent firms increasingly attractive to financial advisers seeking relief from red tape. They often taken their clients with them when they leave, and under the protocol, their former firms cannot sue them.

From 2006 to 2016, the top four U.S. securities brokerages, Morgan Stanley, Bank of America, Wells Fargo and UBS Wealth Management Americas, lost 10 percent of the industry’s asset market share and now account for 36 percent of assets under management, according to research firm Cerulli Associates.

Cerulli estimates that so-called registered investment advisers, a popular type of independent firm, will control 28 percent of assets under management by 2018 and 24.6 percent of the advisers. In 2016, they controlled 23 percent of investor assets.

Morgan Stanley’s decision comes just a few months after several large wealth management firms made changes to their recruiting practices, including reducing adviser recruiting. For years, brokerage executives have complained about endless competition among Wall Street firms to offer ever more lucrative recruitment packages to gain top advisers and their clients and assets.

Additional reporting by Olivia Oran; Editing by Steve Orlofsky and Dan Grebler

 

Published at Mon, 30 Oct 2017 17:50:19 +0000

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CVS and Aetna’s mega health insurance merger could set a record

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cvs store front
CVS could be close to making the biggest health insurance deal of all time.

CVS and Aetna’s mega health insurance merger could set a record

  @CNNMoney

If CVS buys Aetna, it wouldn’t only be the largest U.S. merger of the year — it would be the largest American health insurance deal of all time.

CVS(CVS) is considering buying Aetna(AET) for about $66 billion, according to the Wall Street Journal.The companies are reportedly in active merger discussions.

The hefty price tag would easily surpass Express Scripts’ $29 billion acquisition of Medco in 2012, the current largest health provider merger.

If the two companies agree to the deal, it would also be much larger than the two most expensive deals of the year, according to analytical firm Dealogic. Medical equipment supplier Becton Dickinson announced plans to acquire C R Bard for $24 billion and United Technologies has a $23 billion deal to acquire Rockwell Collins.

Mergers and acquisitions have been on a downward trend from their 2015 peak, according to Datalogic. The total dollar value of corporate deals is down 29% this year — and half of what it was in 2015.

Tech sector mergers have also fallen this year their lowest point since 2003, Morgan Stanley says.

“The current M&A cycle appears to be ending in the US,” the firm wrote in a research note Thursday.

Still, there has been significant activity in the health care space — even if two of the biggest deals never saw the light of day.

In 2015, Anthem agreed to acquire Cigna for $54 billion and Aetna and Humana announced a $34 billion merger, but both deals fell apart. Federal judges blocked the pair of deals in February, citing antitrust law.

M&A might be dying down, but momentous deals are still happening. For example, United Tech’s blockbuster partnership with Rockwell would become of the biggest aviation mergers in history.

AT&T’s(T, Tech30) $85 billion megadeal with Time Warner(TWX) — which includes CNN — is currently the largest agreement still pending, according to Datalogic. The Justice Department is expected to complete its review of the agreement by the end of the year.

And the largest successful acquisition in U.S. history? Verizon’s Communications $130 billion 2013 agreement to buy out Vodafone Group’s 45% stake in its wireless business.

 

Published at Fri, 27 Oct 2017 17:55:58 +0000

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U.S. wants to remove ‘unnecessary’ barriers to self-driving vehicles

 

U.S. wants to remove ‘unnecessary’ barriers to self-driving vehicles

WASHINGTON (Reuters) – The U.S. National Highway Traffic-Safety Administration said Friday it is looking for input on how it can remove regulatory roadblocks to self-driving cars.

FILE PHOTO -The rear of a Lexus SUV equipped with Google self-driving sensors is seen during a media preview of Google’s prototype autonomous vehicles in Mountain View, California September 29, 2015. REUTERS/Elijah Nouvelage/File Photo

The auto safety agency said in a report that it wants to find any “unnecessary regulatory barriers” to self-driving cars “particularly those that are not equipped with controls for a human driver.”

The agency also wants comments on what research it needs to conduct before deciding whether to eliminate or rewrite regulations. But it could take the agency years to complete the research and finalize rule changes, and advocates are pushing Congress to act.

NHTSA said in a statement it plans to issue a formal notice in the “near future requesting comment” on the hurdles. The agency hopes to make the notice public by the end of November.

Automakers must meet nearly 75 auto safety standards, many of which were written with the assumption that a licensed driver will be in control of the vehicle. The agency said last year that current regulations pose “significant” regulatory hurdles to vehicles without human controls.

In early October, a U.S. Senate committee unanimously gave the green light to a bill aimed at speeding the use of self-driving cars without human controls and would allow the agency to waive requirements.

General Motors Co (GM.N), Alphabet Inc (GOOGL.O), Ford Motor Co (F.N) and others have lobbied for the landmark legislation, while auto safety groups urged more safeguards and have pledged to keep fighting for changes.

The Senate Commerce Committee approved the bill, and the U.S. House passed a similar measure last month. Automakers would be able to win exemptions from NHTSA for safety rules for up to 80,000 vehicles annually within three years.

Under the Senate measure, NHTSA would have to write permanent rules on self-driving cars within a decade.

Reporting by David Shepardson; Editing by Cynthia Osterman

 

 

Published at Fri, 27 Oct 2017 22:17:04 +0000

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Puerto Rico sees an opportunity to reimagine the island

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Small power company lands $300M Puerto Rico contract
Small power company lands $300M Puerto Rico contract

Then the storm devastated the island’s transportation and communication networks. President Trump says “broken infrastructure” was to blame for any delayed response by the federal government. Seven in 10 Puerto Ricans still have no power.

Despite the suffering, one of Puerto Rico’s leaders sees the hurricane’s destruction as a chance for a clean slate.

“We have this historic opportunity: Instead of going with incremental changes, we can go and push the envelope to really transform the infrastructure,” Economic Secretary Manuel Laboy told CNNMoney on Thursday in New York. “That is the silver lining opportunity that we have.”

The first sign of that type of sweeping rebuild came Wednesday, when Tesla CEO Elon Musk announced that a children’s hospital in San Juan, the capital, is being powered by Tesla solar panels and power packs.

Musk wrote in an Instagram post that the project is the “first of many solar + battery Tesla projects going live in Puerto Rico.”

Laboy, the economic secretary, said Tesla has “five to 10” projects in the works in Puerto Rico, including schools and community centers. Tesla(TSLA) declined to provide specifics.

AT&T(T, Tech30) and a project owned by Google’s parent company, Alphabet, teamed up to provide cell phone coverage to parts of the island cut off from communication. Project Loon won approval from the U.S. government to fly up to 30 giant balloons over Puerto Rico, beaming down LTE service.

Puerto Rico is even pitching itself as a site for Amazon’s second headquarters. Laboy declined to provide specifics but said he sent Amazon(AMZN, Tech30) a lucrative package of incentives to consider.

He sees the island’s recovery as a selling point with Amazon, in addition to Puerto Rico’s educated and bilingual workforce.

“The opportunity to transform the infrastructure … for me, that is a very powerful message,” Laboy said.

Of course, Puerto Rico has to get the lights back on before it can carry out big plans. And that hasn’t been easy, nor without controversy.

The utility company, PREPA, found itself under fire after it gave a $300 million contract to an infrastructure repair company, Whitefish Energy. The company only has two official employees, though it’s hired hundreds of subcontractors to help restore the power grid.

Investigations are under way into the the contract’s procurement. Critics say the contract is bloated and didn’t go through proper bidding.

Beyond the physical damage, Puerto Rico must overcome vast other challenges to rebuild an innovative infrastructure system.

Unemployment is high, and some the island’s young, educated class has been leaving for the mainland United States for years. Some fear the hurricane’s destruction could expedite the exodus. The island’s government also filed for bankruptcy last spring.

But Laboy says those challenges shouldn’t prevent Puerto Rico from thinking big.

“We need to be bold and we need to transform the system,” he added. “That is going to be the key for the recovery, and the sustainable economic growth that we are aspiring to have in Puerto Rico.”

 

Published at Fri, 27 Oct 2017 15:17:54 +0000

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6 Major Credit Card Mistakes

6 Major Credit Card Mistakes

By Amy Fontinelle | Updated October 27, 2017 — 6:00 AM EDT

Are you having trouble getting your credit card balances under control? If so, Don’t beat yourself up over it – you’re in the same boat as thousands of other consumers. Once you choose to change you spending habits, however, it is possible to make your debt manageable. Use these simple tips to stop adding to your existing credit card debt and start regaining control of your finances.

1. Pay More Than the Minimum Balance

It’s tempting to send in the minimum monthly payment (often $15 to $25) when you’re under financial duress.

Don’t do it.

Not only will you never pay off your bill, but the interest rates that credit card companies charge will actually keep your bill growing every month. Instead, send as large a payment as you can afford. Where possible, reduce your spending in other areas to focus on paying off your credit card debt. It might be worth going without extras like cable television or new clothes for a while if it means you can sleep easier at night knowing that you’ll soon be free of debt. (For more insight, read Understanding Credit Card Interest.)

It may not feel like you’re saving money when you increase your credit card payments, but you are. Depending on your interest rate, you’re saving an average of 10% to 29% per year in interest on any balance that you manage to get off your cards. That means that if you pay off an extra $1,000 this year, you’re actually coming out $160 to $290 ahead, depending on your interest rate. If you’re already in debt, chances are money is tight for you, so freeing up this extra money can really start to give you some breathing room in the long run. Whether you use this money to accelerate your debt payments further, start an emergency fund, or invest in your retirement, the power of compound interest will start working for you instead of against you.

2. Don’t Use Your Credit Card for Everyday Items

Except in extenuating circumstances, you should have your budget under control enough that you can at least pay for your monthly necessities with your monthly income. By keeping required purchases like groceries and utility bills off your credit card, you’ll be taking a major step in the right direction to getting your spending under control. Consider that a $3 gallon of milk purchased with a credit card can quickly turn into a $30 gallon of milk if you don’t pay off the balance at the end of the month. There’s no need to incur interest charges on necessary items that you should be paying for with your monthly income.

3. Be Wary of Credit Card “Rewards”

The rewards you can earn from credit cards, while a nice perk, are worth far less than the extra interest you’ll accrue if you can’t pay off the money you spend to earn such bonuses. The credit card reward schemes that allow you to earn points on your credit card purchases often come out to a reward of 2% or less. For example, you may receive one point for each dollar that you spend, but you must redeem 5,000 points to get a $100 discount on a plane ticket. Because the amount of interest that is charged on outstanding account balances exceeds the 2% bonus that you received, it may not be worthwhile to incur the interest charges for such a small reward.

You should also avoid signing up for multiple credit cards, regardless of the sign-up bonuses they may offer. If you already know that you don’t manage credit cards well, don’t give yourself more temptation in the form of more cards. It’s also easier to miss a payment deadline when you have more cards than you can comfortably keep track of, and a few $39 late fees or interest payments will quickly obliterate any $100 gift card you may have received when you applied.

Once you have your credit card debt paid off, if you understand how your cards work and you trust yourself to not go into debt again, you can start using credit cards as convenience cards. As long as you pay your balance in full and on time each month, there is nothing wrong with using credit cards to avoid carrying around cash or to take advantage of rewards like cash back or frequent flier miles – as long as your purchases fit within your monthly budget, of course.

4. Say “No” to Cash Advances

Credit card companies employ tactics such as sending you checks in the mail as often as once a week and encouraging you to use them to pay bills or treat yourself to something nice, but only in the fine print do they mention that these checks are considered a cash advance.

The main reason why taking a cash advance is such a bad idea is that you start accruing interest the minute you take the advance – unlike with regular credit card purchases, there is often no grace period. you’re also charged an automatic fee, usually around 2 to 4%, on the amount of the cash advance in addition to a higher interest rate than what you’re paying on the rest of your credit card balance. To add insult to injury, the credit card company often won’t consider the cash advance to be paid off until you’ve paid off your balance for your other purchases.

The best thing to do with these checks is to shred them as soon as you receive them. This way, you’ll avoid the temptation to use them and prevent would-be identity thieves from snagging them out of your trash. Many credit cards will also send you a PIN number shortly after you sign up for a card so that you can use your credit card to get cash from an ATM. Shred that PIN number, too – cash advances are a terrible deal for consumers.

5. Avoid Using Your Credit Card as a Cure for Medical Bills

Medical bills can be overwhelmingly expensive, especially if you’re uninsured. If you’re having trouble paying your medical bills, negotiate an agreement with the hospital or other company to whom you owe money. Don’t add to your bills and your stress by tacking exorbitant credit card interest rates onto them. You should also consider going over your bills with a fine-toothed comb to make sure they are accurate and that you understand all of the charges.

6. Don’t Ignore Your Debt

Some people become so stressed out or embarrassed by their credit card debt that they simply stop opening their bills and pretend that the problem isn’t there. While this tactic may appear to work for a month or two, It’s a bad approach. While you’re ignoring your bills, interest rates are causing the balance you owe to grow every day. In fact, if you miss a payment or two, the interest rate itself may even increase under the terms of your credit card agreement. Not paying your bills on time also has a detrimental effect on your credit score. (For related reading, check out The Importance Of Your Credit Rating and Consumer Credit Report: What’s On It.)

If you’re feeling overwhelmed, you can call each of your credit cards and ask to renegotiate the terms of your agreement. Sometimes you can get your interest rate lowered, set up a payment plan that will allow you to pay off your debt, or even get some of your debt forgiven, all with a simple phone call. If your first call doesn’t work, remember that just because one person says no doesn’t mean that’s the final answer. Keep calling the company back – you’ll often get a different customer service rep almost every time, and talking to different people may allow you to negotiate a better deal. (To learn more on this topic, read How To Dispute A Credit Card Charge)

Ignoring your debt can also spur debt collectors into action, and with the unsavory tactics some collectors are employing these days, you definitely don’t want to do anything that might put you on their radar. For more, see 5 Things Debt Collectors Are Forbidden To Do.

Finally, don’t let embarrassment prevent you from taking action; you might assume that most everyone you know has their finances under control, but some of them probably have at least as much debt as you do.

The Bottom Line

Cleaning up your credit card debt takes time and self control, but the steps outlined here aren’t difficult. There’s no reason that credit cards can’t be a helpful, convenient tool – assuming you can learn to use them sensibly and responsibly. These tips will help you keep control of your cards instead of letting them control you.

 

Published at Fri, 27 Oct 2017 10:00:00 +0000

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Clariant, Huntsman Abandon $20B Merger After Investor Revolt

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Clariant, Huntsman Abandon $20B Merger After Investor Revolt

By Daniel Liberto | October 27, 2017 — 7:17 AM EDT

Swiss chemicals company Clariant AG and Huntsman Corp. (HUN) have abandoned their proposed $20 billion merger because opposition from activist investors had created “too much uncertainty.”

In a joint statement, the two manufacturing giants announced that the rising influence of White Tale Holdings threatened to undermine the deal, designed to create $400 million in annual cost savings and a combined group capable of better competing with the world’s largest specialty chemicals company, Germany-based Evonik.

Activist investor White Tale, which is funded by Keith Meister’s Corvex hedge fund and New York investment vehicle 40 North, had been campaigning against the tie-up for months and steadily strengthened its hand by accumulating more shares in Clariant. White Tale recently brought its stake in the company up to 20 percent. (See also: White Tale Takes Clariant Stake Above 20 Pct- Source.)

That large holding, coupled with growing support for its view that the tie-up had no strategic merit and significantly undervalued Clariant, led the two companies to determine that they would be unlikely to get sufficient backing from shareholders to approve the merger.

“Given the continued accumulation of Clariant shares by activist investor White Tale Holdings and its opposition to the transaction, which is now supported by some other shareholders, we believe that there is simply too much uncertainty as to whether Clariant will be able to secure the two-thirds shareholder approval that is required to approve the transaction under Swiss law,” the companies said in a statement.

Clariant and Huntsman added that the proposed merger would have been in the best interest of shareholders. The merger termination agreement ensures that neither company will have to pay break-up fees.

Clariant CEO Hariolf Kottmann told reporters it was too soon for the company to discuss specific options now that the merger is off. According to the Wall Street Journal, Kottmann said the company is well prepared to continue on its own and “and still has, several options to increase value” for its shareholders.

Kottmann also criticized activist funds, according to the Financial Times, claiming that they were only interested in maximizing the value of their holdings over a short time period and cared little about the long-term health of their targeted companies. “It is not healthy for the economy of this country,” he said. (See also: European Companies Seek Help Dealing With Activist Investor Threat.)

White Tale has been campaigning against the merger of Clariant and Hutsman ever since disclosing a 7.2 percent holding in the Swiss company in July. In an open letter last month, the activist investor argued that a tie-up of the two companies would transform Clariant from a pure-play specialty chemicals company into an “unfocused and commodity-oriented business with increased volatility and a lower market multiple”.

 

Published at Fri, 27 Oct 2017 11:17:00 +0000

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Wall Street loves electric cars, America loves trucks

by ArtisticOperations from Pixabay

Wall Street loves electric cars, America loves trucks

DETROIT (Reuters) – Wall Street may love the shares of Silicon Valley electric carmaker Tesla Inc, but Americans love big, fuel-thirsty trucks like Ford Motor Co’s bestselling F-Series pickups and are paying ever higher prices to buy them.

A finished Ford F150 pickup leaves the final inspection station at Ford’s Kansas City Assembly Plant where new aluminum intensive Ford F-Series pickups are built in Claycomo, Missouri May 5, 2015. REUTERS/Dave Kaup

The auto industry is at a crossroads, with the future of legacy automakers like Ford, General Motors Co and Fiat Chrysler Automobiles NV uncertain as governments float proposals to ban internal combustion engines over the next two decades.

But in the present, consumer enthusiasm for trucks and sport utility vehicles is strong, especially in the United States. And that is providing Ford, GM and other established automakers with billions in cash to mount a challenge to Tesla.

Tesla has ambitions to boost annual sales to 500,000 vehicles a year. But it is wrestling with the sort of production problems that old-line automakers have largely put behind them, and has reported a net loss of $666.7 million through the first six months of 2017. Analysts expect the company to post a third quarter net loss of $380.4 million when it reports results next Wednesday.

Electric cars are money losers, which explains why global automakers have been slow to roll them out until now. But regulatory and consumer pressures are forcing established automakers to put more electric vehicles in their fleets over the next several years. In a cash-intensive industry, profits from pickups and SUVs may give them a competitive edge.

Ford said on Thursday that the average price of one of its F-series pickups rose $2,800 to an average $45,400 a truck in the third quarter. Sales of F-series trucks, which range from spartan work trucks to Platinum models with the features – and price tags – of a European luxury sedan, were up nearly 11 percent to 658,636 vehicles for the first nine months of this year.

GM has driven its share price up nearly 30 percent so far in 2017 as Chief Executive Mary Barra has talked up plans for putting self-driving, electric Chevrolet Bolts into ride services fleets within a few quarters.

Barra told investors on Tuesday improved profit margins on trucks were “one of the big drivers of the overall 8.3 percent margins” in the automaker’s North American business during the latest quarter.

GM has forecast free cash flow for the full year of roughly $6 billion. That is $1 billion less than forecast earlier this year, but strong enough to fund the company’s promise to develop 20 more electric vehicles by 2023 and send $7 billion back to shareholders.

GM, which emerged from a government funded bankruptcy eight years ago, now has $31.4 billion in available funds, including $17.3 billion in cash.

Ford lags behind GM in sales of battery electric models, but the company has said it will spend $5 billion developing battery electric and hybrid models. Ford’s new Chief Executive Officer Jim Hackett has said the plans include shifting $500 million into electric vehicle development from internal combustion projects.

Ford’s share price has been flat for the year as the No. 2 U.S. automaker ushered out former CEO Mark Fields. Still, it had $28 billion in cash and marketable securities as of Sept. 30.

Automakers also are becoming more confident they can make money on electric cars as battery costs come down.

Volkswagen AG’s (VOWG_p.DE) Audi brand is gearing up a fleet of electric models that the company expects will account for 25 percent of sales by 2025. In the United States, Audi plans to launch an electric SUV “in the sweet spot of the market” in 2019, Scott Keogh, head of Audi’s U.S. operations, told Reuters on Thursday.

Sales of Audi’s current lineup of SUVs “pay for what we want to do, which is lead the future,” Keogh said.

Renault SA Chief Executive Carlos Ghosn expressed confidence earlier this month that electric cars will become “a significant contributor to our performance.”

Tesla, by comparison to its legacy rivals, is market value rich, and cash poor. It had $3 billion in cash on hand at the end of the second quarter, and some analysts predict the automaker will have to raise more to cover the expected cash drain from the slow launch of the Model 3, which is lower priced than other Teslas and aimed at the market for $35,000 to $45,000 cars.

Tesla Chief Executive Elon Musk has outlined ambitious plans to expand its network of factories and service facilities, including potentially an assembly plant in China and up to three more electric battery Gigafactories. He told investors in July the company could sell more shares to fund that expansion.

“I‘m sure there will be some funding rounds that happen in the future,” he said.

Reporting by Joe White; Editing by Tom Brown

 

Published at Fri, 27 Oct 2017 05:52:12 +0000

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Could GE get booted from the Dow after 110 years?

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Jeff Immelt steps down as CEO of General Electric
Jeff Immelt steps down as CEO of General Electric

Could GE get booted from the Dow after 110 years?

  @lamonicabuzz

Could the Dow show GE the door?

Shares of General Electric(GE) keep falling after the company reported lousy earnings last week. GE is down more than 30% this year, easily the worst performer of the 30 companies in the venerable stock average.

It’s already sold NBC and GE Capital, and has even put its light bulb business on the block. There’s talk that new CEO John Flannery could unload even more assets.

Now GE faces a question that would have been inconceivable not long ago — whether it should lose its blue-chip status after 110 uninterrupted years as a Dow component.

CNBC, Reuters and MarketWatch have all asked whether GE’s days in the Dow could, or should, be numbered. (Marketwatch is owned by News Corp.’s(NWSA) Dow Jones, but the committee that selects Dow stocks is run by S&P Global(SPGI), the same company that picks the stocks for the S&P 500.)

GE was one of the first components when the Dow debuted in 1897. Back then, the average included just a dozen companies. GE was removed and added back several times. It returned to the Dow in 1907 and has been there ever since.

Here’s why GE could be in real danger of getting booted again.

Unlike the S&P 500 and most other major market barometers, the Dow is weighted by stock price, not market value. And even though GE isn’t the smallest company in the average — not even close — it has the lowest stock price, about $21.40 a share.

The folks running the Dow like to have no more than a 10-to-1 ratio between the stock with the highest price and the stock with the lowest. Boeing(BA) trades at about $236 a share — nearly 12 times the price of GE. Goldman Sachs(GS) and 3M(MMM) also trade at more than 10 times higher.

Still, the people who manage the Dow are reluctant to make big changes willy-nilly.

Technically, a new company was added to the Dow just this summer. And it’s even named Dow. DowDuPont(DWDP) joined after Dow Chemical merged with DuPont, an existing Dow component.

But the last time the Dow made a real major move was more than two years ago, when Apple(AAPL, Tech30) was added and AT&T(T, Tech30) was removed. (AT&T is buying CNN parent company Time Warner(TWX).)

The most recent change before that was in September 2013, when Alcoa(AA), Bank of America(BAC) and Hewlett-Packard(HPQ) were removed and replaced by Goldman Sachs, Nike(NKE) and Visa(V).

By way of comparison, stocks are added to and dropped from the S&P 500 much more often — usually because a company has been bought or has become too small.

David Blitzer, managing director and chairman of the index committee for S&P Dow Jones Indices, had no comment about the speculation surrounding GE being removed from the Dow. GE was not immediately available for comment.

But it’s worth noting that while GE’s ever-shrinking stock price may not be bringing good things to life for investors, GE is not the smallest company in the Dow by market value.

GE has a market value of about $185 billion, higher than Merck(MRK), Disney(DIS), IBM(IBM, Tech30), Nike and 10 other Dow components. The smallest Dow company — insurance firm Travelers(TRV) — is worth just $36 billion.

But GE’s problems may remind people of other erstwhile titans of American commerce who were once in the Dow — companies like Sears(SHLD), Eastman Kodak(KODK), the defunct Bethlehem Steel and Woolworth, which now is known as Foot Locker(FL).

So could GE really be kicked out of the Dow? It’s possible. But don’t bank on it just yet.

It’s true that the Dow is not meant to be a representation of just the largest companies. If that were the case, Amazon(AMZN, Tech30), Facebook(FB, Tech30) and Google owner Alphabet(GOOGL, Tech30) would be in.

And yes, GE is a shell of its former self. But what’s left is a large industrial company with $125 billion in annual sales. So to paraphrase Mark Twain — who was still alive when GE joined the Dow — the rumors of its demise may be greatly exaggerated.

 

Published at Wed, 25 Oct 2017 20:23:42 +0000

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Pandora Stock Breaks Down and Eyes June Lows

Pandora Stock Breaks Down and Eyes June Lows

By Justin Kuepper | October 23, 2017 — 5:50 PM EDT

Pandora Media, Inc. (P) shares fell nearly 4% on Monday following a sharp decline in the wider technology sector. Despite the $480 million strategic investment in September by Sirius XM Holdings Inc. (SIRI​), Pandora stock has fallen more than 12% over the past month and nearly 45% so far this year. The strategic investment put three Sirius XM executives on Pandora’s board and left Sirius with a roughly 20% stake in the currently outstanding shares via convertible preferred stock.

Last quarter, Pandora reported revenue that increased just 6.3% to $316 million – missing consensus estimates by $2.15 million – while a 24 cent per share loss beat consensus estimates by ten cents per share. Stifel analysts believe that the Sirius investment represents a move in the right direction, and in late September, they reiterated their $12.00 per share price target on Pandora, which represents a significant 66% premium to the current market price. (See also: Pandora Media Shares Climb After New CEO Announcement.)

Technical chart showing the performance of Pandora Media, Inc. (P) stock

From a technical standpoint, the stock broke down from trendline support at $7.50 and S1 support at $7.29. The relative strength index (RSI) moved to oversold levels of 28.92, but the moving average convergence divergence (MACD) remains in a sideways trend. Traders should maintain a bearish bias on the shares over the long term and intermediate term, but Pandora stock could see a short-term rebound as it moves deeper into oversold territory.

Traders should watch for a rebound from S1 support to retest trendline resistance at $7.50 or a breakdown to S2 support and prior lows at around $6.87. The oversold RSI reading suggests that a period of consolidation is likely over the near term, but the long-term trend remains decidedly bearish, as the stock has trended lower since late July. (For more see: Pandora Stock Struggles to Regain Momentum.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

 

Published at Mon, 23 Oct 2017 21:50:00 +0000

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Hasbro hurt by Toys ‘R’ Us bankruptcy

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Monopoly welcomes the rubber duck
Monopoly welcomes the rubber duck

Hasbro hurt by Toys ‘R’ Us bankruptcy

  @lamonicabuzz

It looks like it’s going to be a blue Christmas for toy maker Hasbro — and the rest of the industry too.

Shares of Hasbro(HAS) plunged nearly 10% Monday after the company said that sales for the all-important holiday fourth quarter will be lower than expected, largely due to the recent bankruptcy of Toys ‘R’ Us.

Hasbro did report sales and profits for the third quarter that topped forecasts.

But chief financial officer Deborah Thomas warned that sales would be up only 4% to 7% from a year ago in the fourth quarter because of the Toys ‘R’ Us turmoil and weakness in some international markets. Wall Street was expecting growth of 11.5%.

The bankruptcy of Toys ‘R’ Us is yet another sign of the rise of Amazon(AMZN, Tech30) as well, as more consumers opt to buy their holiday toys on their smartphones instead of fighting crowds at the mall on Black Friday and throughout December.

Hasbro’s bad news hit rival Mattel too. Mattel’s(MAT) shares fell 4% Monday.

Even the mighty Lego has been hurting lately. The maker of interlocking toy bricks posted a surprise drop in sales last month and reported layoffs too.

Shares of smaller toy companies Jakks Pacific(JAKK) and Canada’s Spin Master, which makes the popular Hatchimals line of toys, were lower as well. Jakks Pacific said last month it expected a loss this year due to the Toys ‘R’ Us bankruptcy.

Hasbro’s stock fell last month after the Toys ‘R’ Us filing, but the poor Hasbro outlook Monday still took Wall Street by surprise.

The company has been doing well this year, thanks to hit toys tied to Disney franchises such as Star Wars as well as its own popular brands such as the Monopoly board game, Nerf, My Little Pony and Transformers.

And Hasbro’s stock is still up more than 15% this year, despite Monday’s plunge.

Mattel, on the other hand, has continued to struggle. It recently lost the rights to the lucrative Disney Princess line of toys to Hasbro and sales of its iconic doll Barbie have slumped.

The company brought in a new CEO earlier this year from Google, Margo Georgiadis, in order to focus more on high-tech toys.

But Mattel has continued to slide. Shares are now down nearly 45% this year and are trading at multi-year lows.

So for now, it looks like toy stocks are a worse gift for investors than a lump of coal in your stocking or under the Christmas tree.

 

Published at Mon, 23 Oct 2017 16:19:54 +0000

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AI Is NVIDIA’s to Lose, Says Jefferies, Upping PT

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AI Is NVIDIA’s to Lose, Says Jefferies, Upping PT

By Donna Fuscaldo | October 23, 2017 — 12:38 PM EDT

Graphics chip maker NVIDIA Corp. (NVDA) has more room to climb even if it’s one of the best-performing stocks of this year and it has artificial intelligence to thank for more of a surge in the stock.

That’s according to Wall Street investment firm Jefferies, which reiterated its buy rating on shares Monday and lifted its price target to $230 from $180 a share. In a research report, Jefferies analyst Mark Lipacis said the company’s Volta chip is becoming popular for AI applications, which bodes well for the company and its stock. In fact, the analyst thinks the strength of demand for Volta will result in “upside surprises over the next 18-24 months,” the analyst wrote in a research note to clients covered by CNBC. NVIDIA launched the Volta chip in May.

At $230 a share, Jefferies thinks the stock could gain an additional nearly 17%. So far this year it is up more than 88%. Recently NVIDIA was trading down 0.03% or $0.06 to $196.84 a share. As CNBC pointed out, the stock is way higher than the S&P 500, which as of Friday was up 20%. (See also: Bill Gates Responds to Musk’s AI Concerns.)

Garnering Dominance

The way Lipacis sees it, the AI market is NVIDIA’s to lose, with the company likely to control 80% of the share over the long haul. He likened the chipmaker’s prospects in AI to Apple Inc. (AAPL) and Microsoft Corp. (MSFT) in the PC and smartphone markets. Both were able to garner dominant positions in those marketplaces that continues to today. The analyst thinks NVIDIA will have EPS of $4.12 for fiscal 2019, which is higher than the $4.00 a share Wall Street is looking for. Lipacis is the latest in a laundry list of Wall Street analysts that have been getting increasingly bullish on the graphics chip company and its stock. (See also: Goldman Gets Even More Bullish on NVIDIA.)

Just last week Mizuho USA hiked its price target to $220 a share from $180 a share owning to the strength of cryptocurrency and PC gaming. In a research note to clients, Mizuho analyst Vijay Rakesh said shares NVIDIA will continue to benefit from “strong underlying trends in cryptocurrency and gaming” that are ahead of even the company’s expectations.

“We believe NVDA continues to see strong GPU [graphics processing unit] trends in cryptocurrency and gaming. GPU pricing remains up post-launch (of its new graphics chip) given shortage and strong demand,” wrote the analyst. NVIDIA has been benefiting all year from a diversification strategy that finds itself playing in fast-growing markets including AI, cryptocurrency, the data center and self-driving vehicles.

 

Published at Mon, 23 Oct 2017 16:38:00 +0000

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Wells Fargo brokerage to return $3.4 million for risky products

 

Wells Fargo brokerage to return $3.4 million for risky products

NEW YORK (Reuters) – A brokerage industry regulator on Monday ordered Wells Fargo & Co to return $3.4 million to customers after selling them inappropriate investment products, the latest sign that a culture of problematic sales practices has bled into areas outside its consumer bank.

From July 2010 to May 2012, Wells Fargo brokers sold risky exchange-traded products (ETPs) to at least 1,300 affected accounts with moderate and conservative risk profiles. The bank also failed to make sure brokers unloaded the products from customer accounts within 30 days, according to the Financial Industry Regulatory Authority (FINRA).

The products’ value shifted based on market volatility over short durations, but some Wells brokers mistakenly believed they could be used as long-term hedges against a market downturn, FINRA said.

Although Wells, the third-largest U.S. lender, had procedures in place to ensure the products were sold only under certain circumstances, the bank failed to implement them correctly, FINRA said. In doing so, the bank violated two securities rules.

Wells identified the problem and began remediation efforts in May 2012, around the time it faced a separate penalty from FINRA for similar violations related to other types of ETPs.

“In cooperating fully with FINRA, we have made significant policy and supervision changes, including the discontinuation of the ETPs in focus,” Wells Fargo spokeswoman Shea Leordeanu said on Monday.

Wells did not admit or deny wrongdoing in reaching the settlement.

Wells Fargo has been embroiled in a wider sales practices scandal that was touched off more than a year ago. It reached a $190 million settlement with bank regulators and a Los Angeles prosecutor after its employees opened bank accounts in customers’ names without their permission.

Since then, Wells has acknowledged that thousands of employees opened perhaps 3.5 million phony accounts to hit sales targets over a period of several years. The bank also said its employees had sold unwanted auto insurance, a mortgage rate-lock feature and other “add-on” products that customers did not request.

However, the questionable sales practices appeared to have had limited impact so far on its wealth management business, called Wells Fargo Advisors.

Last November, Wells’ management told lawmakers the bank had fired hundreds of employees with brokerage licenses for improper sales practices, but the workers technically were employed by the retail bank.

On a conference call with analysts on Friday to discuss third-quarter results, Chief Executive Officer Tim Sloan said its internal reviews have found the sales scandal did not affect Wells’ wealth or investment management businesses.

Last year, FINRA launched a review of cross-selling programs in which brokerages also try to sell clients products from other parts of the bank, like mortgages. The regulator said this order was unrelated to that review.

Brokerages frequently reach settlements with FINRA over violations that result in refunds to clients.

(FINRA corrects paragraph 2 to reflect that at least 1,300 accounts were affected, instead of at least 1,300 customers)

Additional reporting by Dan Freed; Editing by Andrea Ricci, Lauren Tara LaCapra and Jeffrey Benkoe

 

Published at Mon, 16 Oct 2017 19:07:16 +0000

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How to close the race-based chasm in U.S. retirement wealth

CHICAGO (Reuters) – The gap in U.S. retirement wealth between white and minority families has widened to the point where it really is not a gap anymore. It is a canyon.

In 2016, white families had six times more money saved for retirement on average than black or Latino families, according to new data from the Federal Reserve’s Survey of Consumer Finances. As recently as 2007, the gap was fourfold for black families and fivefold for Latino households, according to a new analysis of the Fed data by the Urban Institute. (urbn.is/1Vj06A3).

Research shows that low-income families can – and do – save. Instead, the widening chasm results from a range of economic factors and upside-down tax policy. Lifetime income inequality certainly is one driver, but the problem is much broader than that, said Signe-Mary McKernan, co-director of the institute’s opportunity and ownership initiative.

“The cards are stacked against lower-income Americans,” she said. “We’re a country built on the premise of economic opportunity but entire groups are not getting the same chances to move up.”

For starters, minority workers are far less likely than whites to hold jobs that offer tax-advantaged retirement saving programs like 401(k) plans. That means these workers are not enjoying the benefits of plan features such as employer matches or automated contributions. Even workers who are offered these accounts do not benefit as much, since the tax incentives associated with 401(k) and Individual Retirement Accounts are structured as deductions, and flow predominantly to taxpayers in higher brackets.

Lower rates of home ownership among minority households also contribute to the retirement gap, the researchers found. Last year, 68 percent of white households were homeowners, compared with 46 percent of Latino households and 42 percent of black households, the Urban Institute reports. That means fewer minority households can tap in to home equity to meet retirement needs.

”When you think about home ownership, part of the story is appreciation of home values, but families of color have faced structural barriers in achieving this goal,” said Kilolo Kijakazi, an Urban Institute fellow also working on the wealth gap research.

Well-qualified home buyers of color face substantial barriers such as being shown fewer homes, the institute’s research shows. And price appreciation for homes in neighborhoods of color is lower than in white neighborhoods with comparable income levels. Lower home ownership rates and less home equity mean fewer families of color can tap in to home equity to meet retirement needs.

Federal tax policy is upside-down here, too, with current tax subsidies flowing to the most affluent households, who are more likely to itemize their filings and tend to be in higher tax brackets. The capital gains exclusion on housing also benefits higher-income taxpayers, who tend to own more expensive homes.

TRUMP PLAN HEADS IN WRONG DIRECTION

Targeted federal policies could go far to close the gap – starting with the tax code. On home ownership, for example, we could establish a first-time homebuyer tax credit and a refundable credit on property taxes. This could be funded by limiting the mortgage interest deduction for the most affluent households. For example, the Bowles-Simpson fiscal commission back in 2010 proposed capping the deductibility of mortgage interest at $500,000.

Improving the federal Saver’s Credit also could be a big help. The credit provides a second layer of tax incentives for lower-income households beyond the benefit of tax deferral that everyone receives for contributing to a 401(k) or IRA. Taxpayers with yearly incomes of less than $31,000 (single filers) and $62,000 (joint filers) this year can claim a credit of up to $1,000 for contributions to a qualified retirement plan or individual retirement account (IRA) – but only if they have a tax liability.

Near 10 percent of tax filers could claim the credit, but only about 5 percent do so, according to the National Institute on Retirement Security. Restructuring the credit into a match would have the biggest impact. That could be done by making the credit refundable – in other words, available no matter what your tax liability (reut.rs/2hACrwq).

Federal policy under the Trump administration is heading in exactly the opposite direction, especially where retirement saving and tax policy are concerned. The administration is phasing out the U.S. Department of the Treasury’s myRA program, a low-cost, simple entry-level retirement saving plan targeting workers who are not offered a plan by employers. And Congress has pulled back two Obama-era rules aimed at helping states launch their own low-cost saving programs.

Meanwhile, the administration’s tax plan would further fuel the inequality trends, not reverse them. Tax cuts would flow mainly to businesses and high-income households. If in place next year, 50 percent of the cuts would flow to households with the top 1 percent of income ($730,000 or more), according to the Tax Policy Center, while middle-income households (earning $50,000-$90,000) would receive about 8 percent. Low-income households would receive even less. And the plan is silent on the issue of mortgage interest deductions and credits for first-time homebuyers.

Instead, we need smart policies that help low-income households get ahead. Let’s start narrowing the retirement chasm – now.

Editing by Matthew Lewis

 

Published at Thu, 12 Oct 2017 15:00:15 +0000

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Weekly Initial Unemployment Claims decrease to 243,000

 

Weekly Initial Unemployment Claims decrease to 243,000

by Bill McBride on 10/12/2017 08:34:00 AM

The DOL reported:

In the week ending October 7, the advance figure for seasonally adjusted initial claims was 243,000, a decrease of 15,000 from the previous week’s revised level. The previous week’s level was revised down by 2,000 from 260,000 to 258,000. The 4-week moving average was 257,500, a decrease of 9,500 from the previous week’s revised average. The previous week’s average was revised down by 1,250 from 268,250 to 267,000.

Hurricanes Harvey, Irma, and Maria impacted this week’s claims.
emphasis added

The previous week was revised down.

The following graph shows the 4-week moving average of weekly claims since 1971.
 

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 257,500.

This was below the consensus forecast.  The recent increase in claims is due to the hurricanes.

Read more at http://www.calculatedriskblog.com/2017/10/weekly-initial-unemployment-claims_12.html#ZBl10oRHEX8F7LWL.99

Published at Thu, 12 Oct 2017 12:34:00 +0000

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Early filers for college financial aid reap benefits

 

Early filers for college financial aid reap benefits

NEW YORK (Reuters) – Want to increase your chance to get financial aid for college? File the Free Application for Federal Student Aid (FAFSA) by the end of 2017.

“The sooner the better,” said financial aid expert Mark Kantrowitz, publisher at Cappex.com.

In a 2015 study he did for Edvisors, Kantrowitz found that students who quickly filed for aid in the first three months received double what those who waited obtained.

Time is already ticking. Families were allowed to file the FAFSA for the 2018-2019 school year as of Oct. 1 – this is the second year since the Department of Education shifted to the earlier date, from January.

The FAFSA is used by colleges to determine what families can afford to pay, and whether colleges should give students grants they will not have to pay back or federal student loans that they must repay. Families report their income and assets in the FAFSA and it is sent to colleges selected by students. Some private colleges also request an additional form known as the CSS Profile.

October may seem early for the FAFSA, because many students are still deciding on colleges. But an early start gives families a sense of the financial burden they can sustain, before students make their final lists.

Another reason to file early is state aid, said Kantrowitz. Thirteen states hand out financial aid on a first come, first serve basis until they run out of funds.

Students in four-year college programs received $11,380 on average in grants and scholarships in 2015-2016, according to the National Center for Education Statistics. State grants averaged $3,867 per student in 2015-2016. Private colleges granted $17,965 on average per student.

Parents complain about the grueling task of filling out the FAFSA form, but it is easier this year than the past, said Jessica Thompson, policy and research director for the Institute for College Access and Success.

With a change in technology, parents of first-year students do not have to record income details. Instead, the online FAFSA will upload the data from the IRS Data Retrieval Tool that taps into tax return from the previous year, which is 2016 for the 2018-19 FAFSA filing. (Security measures were put into the tool after a breach last spring so existing college students cannot use it yet.)

Yet it is not so easy that you should have your kid fill it out for you, said Kalman Chany, author of “Paying for College Without Going Broke,” a book that provides strategies for maximizing aid.

Mistakes can be costly. For instance, if you report $100,000 in a 401(k) as an investment account instead of a retirement asset, it could reduce aid eligibility by $5,640. Families need to be especially careful reporting rollovers from 401(k)s into IRAs so they do not appear to have cash available for college, said Chany.

Parents also need to take extra steps to insure colleges have the latest information, said Kantrowitz. An income change due to a layoff, retirement, or serious illness will not be reflected in the 2016 tax return and should be reported to college financial aid offices to ensure needs are assessed correctly. Amended returns also should be reported to financial aid offices, because they will not be captured by the automatic download tool.

The caveat to “the sooner the better” mantra is with families expecting a big influx of cash in the fall. Chany gives the example of parents who have just sold their home and are parking the money in a bank account temporarily while waiting to close on a new home. They could have to pay thousands more for college than someone with the same income but no temporary stockpile. Chany’s advice: Wait until the cash is dispatched into a new home and then file the FAFSA.

Editing by Beth Pinsker and Steve Orlofsky

 

Published at Wed, 11 Oct 2017 17:05:32 +0000

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Port of Long Beach: Record Month, “Looks like retailers are optimistic about the holiday season”

 

Port of Long Beach: Record Month, “Looks like retailers are optimistic about the holiday season”

by Bill McBride on 10/11/2017 06:45:00 PM

 

From the Port of Long Beach: Port of Long Beach Sets Record for September

Cargo volume continues to break records at the Port of Long Beach, which moved more containers last month than any September in its history.

The 701,619 twenty-foot equivalent units (TEUs) processed in Long Beach for September — up 28.3 percent — also resulted in the Port’s best quarter ever. In the third quarter (July, August and September), the Port of Long Beach handled 2,114,306 TEUs, as volumes swelled 15.9 percent over the same period last year.

“Simply put, we are having the best trade months in Port history,” said Harbor Commission President Lou Anne Bynum. “Back-to-school merchandise was strong for us, and it looks like retailers are optimistic about the holiday season.”

CR Note: I’ll have more on port traffic soon.

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 252 thousand initial claims, down from 260 thousand the previous week.

• Also at 8:30 AM, The Producer Price Index for September from the BLS. The consensus is a 0.4% increase in PPI, and a 0.2% increase in core PPI.
Read more at http://www.calculatedriskblog.com/2017/10/port-of-long-beach-record-month-looks.html#9FfxoHmz6eXfUIVw.99

Published at Wed, 11 Oct 2017 22:45:00 +0000

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Exclusive: Symantec CEO says source code reviews pose unacceptable risk

by Pexels from Pixabay

Exclusive: Symantec CEO says source code reviews pose unacceptable risk

WASHINGTON (Reuters) – U.S.-based cyber firm Symantec (SYMC.O) is no longer allowing governments to review the source code of its software because of fears the agreements would compromise the security of its products, Symantec Chief Executive Greg Clark said in an interview with Reuters.

Tech companies have been under increasing pressure to allow the Russian government to examine source code, the closely guarded inner workings of software, in exchange for approvals to sell products in Russia.

Symantec’s decision highlights a growing tension for U.S. technology companies that must weigh their role as protectors of U.S. cybersecurity as they pursue business with some of Washington’s adversaries, including Russia and China, according to security experts.

While Symantec once allowed the reviews, Clark said that he now sees the security threats as too great. At a time of increased nation-state hacking, Symantec concluded the risk of losing customer confidence by allowing reviews was not worth the business the company could win, he said.

The company’s about-face, which came in the beginning of 2016, was reported by Reuters in June. Clark’s interview is the first detailed explanation a Symantec executive has given about the policy change.

In an hour-long interview, Clark said the firm was still willing to sell its products in any country. But, he added, “that is a different thing than saying, ‘Okay, we’re going to let people crack it open and grind all the way through it and see how it all works’.”

While Symantec had seen no “smoking gun” that foreign source code reviews had led to a cyberattack, Clark said he believed the process posed an unacceptable risk to Symantec customers.

“These are secrets, or things necessary to defend (software),” Clark said of source code. “It’s best kept that way.”

Because Symantec’s market share was still relatively small in Russia, the decision was easier than for competitors heavily invested in the country, Clark said.

“We’re in a great place that says, ‘You know what, we don’t see a lot of product over there’,” Clark said. “We don’t have to say yes.”

Symantec’s decision has been praised by some western cyber security experts, who said the company bucked a growing trend in recent years that has seen other companies accede to demands to share source code.

“They took a stand and they put security over sales,” said Frank Cilluffo, director of the Center for Cyber and Homeland Security at George Washington University and a former senior homeland security official to former President George W. Bush.

FILE PHOTO – Greg Clark, Chief Executive Officer of Symantec, takes part in the Yahoo Finance All Markets Summit in New York, U.S., February 8, 2017. REUTERS/Lucas Jackson

“Obviously source code could be used in ways that are inimical to our national interest,” Cilluffo said. “They took a principled stand, and that’s the right decision and a courageous one.”

Reuters last week reported that Hewlett Packard Enterprise (HPE) (HPE.N) allowed a Russian defense agency to review the inner workings of cyber defense software known as ArcSight that is used by the Pentagon to guard its computer networks.

HPE said such reviews have taken place for years and are conducted by a Russian government-accredited testing company at an HPE research and development center outside of Russia. The software maker said it closely supervises the process and that no code is allowed to leave the premises, ensuring it does not compromise the safety of its products. A spokeswoman said no current HPE products have undergone Russian source code reviews.

ArcSight was sold to British tech company Micro Focus International Plc (MCRO.L) in a sale completed in September.

    On Monday, Micro Focus said the reviews were a common industry practice. But the company said it would restrict future reviews of source code in its products by “high-risk” governments, and that any review would require chief executive approval.

“SLIPPERY SLOPE”

Earlier this year, Beijing enacted a cyber security law that foreign business groups have warned could adversely impact trade because of its data surveillance and storage requirements. The law has further fueled concern that companies increasingly need to choose between compromising security to protect business or risk losing out on potentially lucrative markets.

Clark said Symantec had not received any requests to review source code from the Chinese government, but indicated he would not comply if Beijing made such a demand.

“We just have taken a policy decision to say, ‘Any foreign government that wants to read our source code, the answer is no’,” Clark said.

The U.S. government does not generally require source code reviews before purchasing commercially available software, according to security experts.

“As a vendor here in the United States,” Clark said, “we are headquartered in a country where it is OK to say no.”

Some security experts fear heightened requests may further splinter the tech world, leading to an environment where consumers and governments only feel safe buying products made in their own countries.

“We are heading down a slippery slope where you are going to end up balkanizing (information technology), where U.S. companies will only be able to sell software to parts of Europe,” said Curtis Dukes, a former head of cyber defense at the National Security Agency now with the non-profit Center for Internet Security, “and Russia won’t be able to sell products in the U.S.”

Additional reporting by Jack Stubbs in Moscow; Editing by Paul Thomasch

 

Published at Tue, 10 Oct 2017 21:26:00 +0000

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New York-area hedge fund manager charged with Ponzi fraud

 

New York-area hedge fund manager charged with Ponzi fraud

NEW YORK (Reuters) – A suburban New York hedge fund manager accused of losing or spending all but about $27,000 of the $21.8 million he told investors he had was criminally charged on Thursday with running a Ponzi scheme.

Prosecutors said Michael Scronic, who once worked at Morgan Stanley (MS.N) and has degrees from Stanford University and the University of Chicago, stole more than $19 million from 45 investors he had lured to his Scronic Macro Fund by lying about his track record.

Scronic, 46, of Pound Ridge, New York, allegedly lost money in 28 of 29 calendar quarters since April 2010, even as he reported largely positive returns on bogus account statements.

Prosecutors said he also spent $2.9 million on himself over 5-1/2 years, including $180,000 annually on credit cards, fees for beach and country club memberships, and mortgage payments for a vacation home near Stratton Mountain in Vermont.

Scronic was criminally charged with one count each of securities fraud and wire fraud.

He was released on $500,000 bond after a brief appearance in the federal court in White Plains, New York, and is forbidden from trading other people’s money or raising new funds.

The U.S. Securities and Exchange Commission filed related civil charges.

Robert Anello, a lawyer for Scronic, declined to comment.

The defendant had worked for Morgan Stanley from 1998 to 2005, including on an equities trading desk, court papers show. Morgan Stanley was not accused of wrongdoing.

Authorities said Scronic used some new money to repay earlier investors, but as cash became tight this summer refused to honor some investors’ redemption requests.

According to court papers, Scronic had emailed one of those investors in November 2015 that “what’s cool about my fund is that i‘m only in publicly traded options and cash so any redemptions are met within 2 business days so if you do need to withdraw for your business needs it will be quick and painless.”

Authorities said it proved otherwise.

They said Scronic blamed a vacation, a relative’s medical condition, email issues, and a new quarterly redemption policy for refusing the investor’s Aug. 8 redemption request.

As of Monday, that investor was still waiting for his money, court papers showed.

Reporting by Jonathan Stempel in New York; Editing by Tom Brown, Lisa Shumaker and David Gregorio

 

Published at Thu, 05 Oct 2017 21:45:59 +0000

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