Business – Page 3 – TheTradersWire
All posts in "Business"

China’s big conglomerates are no longer buying up the world

china foreign deals resistance

China’s big conglomerates are no longer buying up the world

The party is over for some of China’s most acquisitive companies.

Three of China’s biggest conglomerates — Dalian Wanda, HNA and Anbang Insurance — have spent billions of dollars on deals around the world. Now the Chinese government is worried that they risk overextending themselves, and they are coming under pressure to sell assets.

The latest reversal came Friday, when Chinese regulators seized control of Anbang and removed its chairman. Analysts say the regulator is likely to offload some of the businesses Anbang snapped up during its global buying spree, such as New York’s Waldorf Astoria hotel.

Between them, Wanda, HNA and Anbang spent more than $50 billion in 2016 gobbling up assets around the world, according to research firm Dealogic.

Last year, their spending plummeted by almost 75%. That drop was echoed by a fall in overseas acquisitions by Chinese companies in general.

The Chinese government clamped down on companies borrowing heavily to make aggressive purchases abroad. That’s because officials were worried about the flood of money pouring out of the country and the risks of Chinese companies making irrational or risky investments.

Here’s how the biggest buyers became sellers:


Wanda’s billionaire chairman, Wang Jianlin, was once China’s richest man and proud of his sprawling global business empire. Now he’s offloading international properties and emphasizing his investments back home.

As well as real estate projects in cities such as Los Angeles, Chicago and Istanbul, Wang pumped money into entertainment, including the Hollywood studio that produced “Jurassic World” and “The Hangover” trilogy.

But in a sign that Wang’s international ambitions were starting to clash with the ruling Communist Party’s agenda, Wanda’s $1 billion deal to buy Dick Clark Productions, the producer of the Golden Globes and other leading awards shows, fell apart last year.

Under pressure to raise funds to pay down debts, the company has also dumped real estate projects in the U.K. and Sydney. This month, Wanda agreed to sell its stake in Spanish soccer club Atletico Madrid.

It’s not just overseas businesses Wang has been offloading. In July, Wanda sold several theme parks and dozens of hotels in China for around $9 billion.


HNA started out as a regional airline in southern China more than 20 years ago but went on a shopping spree in recent years, buying big chunks of major US and European companies.

Its sprawling empire grew to include the Radisson hotel chain, a big US technology supplier, a large stake in Hilton Worldwide(HLT) and about 10% of Germany’sDeutsche Bank(DB).

But it has run into trouble as it struggles with debts estimated at $100 billion or more.

Investors have dumped the stocks and bonds of some businesses in HNA’s vast web of subsidiaries. Credit rating agencies have downgraded debt linked to the company.

The company insists it’s in good financial shape, but it has still been selling off parts of its operations to raise cash.

Recently it sold two prime plots of land in Hong Kong for $2 billion only 15 months after it bought them. It has also trimmed its stake in Deutsche Bank.


Anbang was founded in 2004 as a provincial car insurer but has since ballooned into a global giant.

The firm is best known for its ambitious deal-making efforts, including the $1.95 billion purchase of the Waldorf Astoria, a failed $14 billion bid for the Starwood hotel chain, and unsuccessful talks with the Kushner family business over a Manhattan office tower.

The firm has spent more than $20 billion on deals since 2014, according to Dealogic. Its acquisitions included life insurers in the Netherlands and South Korea, and a Belgian bank.

Things began to turn sour last year, when chairman Wu Xiaohui was reportedly detained by Chinese authorities.

An investigation into the company culminated in the Chinese government seizing control of Anbang this week. Wu has been removed from his post and is being prosecuted for “economic crimes.”

A statement from Shanghai prosecutors carried by Chinese state media said Wu had been indicted for fraudulent fund-raising and improperly taking company assets.

The insurance regulator may now seek to sell off a lot of the businesses Anbang bought, according to Brock Silvers, managing director of Shanghai-based investment firm Kaiyuan Capital.

— Sherisse Pham and Nanlin Fang contributed to report.

Published at Fri, 23 Feb 2018 12:51:46 +0000

Continue reading >

Are rubber bands putting American jobs at risk? Trump trade team is investigating

U.S. trade moves could spark Chinese retaliation
U.S. trade moves could spark Chinese retaliation

The nation’s leading producer of rubber bands, a small company in Arkansas, is worried that imports from China, Thailand and Sri Lanka are putting its 150 workers in jeopardy. It petitioned the Commerce Department to start an investigation, which began Thursday.

Commerce Secretary Wilbur Ross sounded like he had already made up his mind.

“The department will act swiftly,” Ross said in a statement, promising a fair review. “The Trump administration is committed to the enforcement of America’s trade laws that ensure U.S. businesses and workers have a fair chance to compete.”

Commerce officials and the independent U.S. International Trade Commission must determine whether foreign rubber bands are being sold in the United States at prices so low that they box outthe Arkansas business, Alliance Rubber Company.

Commerce acted quickly on the case: The company filed its petition just three weeks ago.

If both Commerce and the ITC agree that China, Sri Lanka and Thailand are dumping rubber bands in the United States at unfair prices, the Trump administration will impose tariffs from 27% to 133%, depending on the country and thetype of rubber band.

Commerce reported that each country’s government provides its rubber producers with generous subsidies that allow them to sell rubber bands on the cheap.

The United States imported nearly $20 million of rubber bands from those three countries combinedlast year. The case isn’t particularly big, and probably won’t matter much to trade relations. But it illustrates the Trump administration’s desire to get tougher on trading partners.

Since Trump took office, Commerce has launched nearly 100 investigations into various imports. That’s up 81% from the prior year, according to a recent Commerce report.

The ITC will make its preliminary decision by March 16.

The Alliance Rubber Company had no immediate comment.According to its website, it produces the vast majority of rubber bands made in the United States. In its January petition, it accused foreign producers of selling rubber bands at 60% less than the normal value.

Published at Thu, 22 Feb 2018 21:01:33 +0000

Continue reading >

GE no longer wants a hasty divorce from Baker Hughes

5 stunning stats about General Electric
5 stunning stats about General Electric

 GE no longer wants a hasty divorce from Baker Hughes


General Electric isn’t planning a hasty divorce from oil services giant Baker Hughes after all.

GE was considering a sale of its majority stake in Baker Hughes(BHGE) because it is running low on money.

But the company reversed course on Wednesday and said that Baker Hughes won’t be part of its broader plans to get rid of at least $20 billion of businesses in the next few years.

A sale would have been stunning because GE had only completed a combination of its oil and gas business with Baker Hughes months earlier. It also would have forced GE to get around restrictions that prevented it from selling the stake before mid-2019.

“At this point in time, we have no intent to change anything” before the restrictions lift, Jamie Miller, GE’s chief financial officer, told analysts at the Barclays Industrial Select Conference.

“We like that combination a lot. Managing is doing a very nice job executing in the portfolio and we have a lot of confidence in them,” said Miller, who also serves as a Baker Hughes director.

Shares of Baker Hughes soared as much as 7% on the news before closing up just modestly. The stock remains down 15% this year following a plunge of 51% in 2017.

In November, GE CEO John Flannery said he had asked a board committee to evaluate”our exit options on Baker Hughes.” He said the “problem and challenge that we have in this business is the cyclicality and the commodity nature of the business.”

Decades of bad decisions have left GE in a cash crisis that has forced management to halve its dividend, slash jobs and put long-held businesses up for sale. GE is searching for buyers for its iconic lightbulb business as well as the century-old railroad unit.

Last month, Flannery signaled GE is even exploring an outright breakup of a company that was once America’s most successful conglomerate. Despite years of shrinking itself, GE still makes everything from jet engines and power plants to MRI machines.

GE’s shares lost almost half their value in 2017 and crashed further earlier this year after the company took a $6.2 billion hit due to insurance problems in its finance unit.

GE’s insurance troubles led Deutsche Bank to predict in January that the company may need to raise money by issuing more stock. GE hasn’t had to take such drastic action since the 2008 financial crisis.

However, GE reiterated on Wednesday that it’s not planning to sell stock, a move that would dilute the value of the shares people currently own.

“We’ve gone through fairly deep dives into the different elements of the company and we have no plans for an equity raise,” Miller said. “It’s not been discussed.”

Miller pointed out that GE ended 2017 with $11.2 billion of cash on the balance sheet, exceeding the company’s expectations.

Another trouble spot at GE is the company’s $31 billion pension shortfall, the largest among S&P 500 companies. The pension nightmare has been driven by years of attention as well as historically low interest rates that have driven up pension liabilities around the world.

Miller noted that GE’s pension situation has improved due to the recent interest rate shock that has spooked the stock market. She estimated that each 0.25 percentage point increase in interest rates reduces GE’s pension deficit by $2.2 billion.

“That actually helps us from a pension perspective,” Miller said.

Published at Wed, 21 Feb 2018 22:15:46 +0000

Continue reading >

Walmart Stock Nears Key Support After Earnings Miss

Walmart Stock Nears Key Support After Earnings Miss

By Justin Kuepper | February 21, 2018 — 3:25 PM EST

Walmart Inc. (WMT) shares have fallen more than 12% since the beginning of the week after the company reported worse-than-expected fourth quarter financial results. Revenue rose 4.1% to $136.3 billion – beating consensus estimates by $1.39 billion – but earnings per share hit only $1.33 and missed consensus estimates by four cents per share. The company’s full-year profit guidance also came in at $4.75 to $5.00 per share, below expectations of $5.13 per share.

Aside from the lackluster guidance, the company’s e-commerce growth came in at just 23%, which was sharply lower than the growth of roughly 40% seen in past quarters. Management primarily attributed the slower growth to the acquisition that added scale but anticipates the growth rate to ramp back up to the 40% range after the first quarter. Full-year e-commerce sales remain up 44% versus the prior year. (See also: Walmart Sellers in Control After Earnings Miss.)

Technical chart showing the performance of Walmart Inc. (WMT) stock

From a technical standpoint, the stock broke down from trendline support earlier this month, rebounded to the pivot point and fell again to key support levels. The relative strength index (RSI) appears oversold at 31.71, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These two technical indicators suggest that the stock could see some consolidation and a possible move even lower if the trend reverses in the longer term.

Traders should watch for some consolidation above trendline support levels after closing the gap dating back to mid-November. If the stock breaks down from these levels, it could reach the 200-day moving average at around $86.21 or reaction lows at around $77.50. If the stock rebounds, traders should watch for a move to S1 support and the 50-day moving average at around $100.00 on the upside. (For more, see: Why Walmart Will Never Be Amazon.)

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

Published at Wed, 21 Feb 2018 20:25:00 +0000

Continue reading >

KFC is running out of chicken across the U.K.

KFC has a chicken delivery problem in the UK
KFC has a chicken delivery problem in the UK

KFC is running out of … chicken?

The fast food chain has been forced to temporarily close hundreds of restaurants in the United Kingdom after a logistics snafu stopped chicken deliveries.

About 800 of the company’s roughly 900 locations in Britain were closed as of midday on Monday. Some had opened for business by the afternoon, according to the company’s website.

KFC, which is owned by Taco Bell and Pizza Hut parent Yum!(YUM), said the chicken shortage had been caused by a “couple of teething problems” with its new delivery partner, DHL(DPW).

“We won’t compromise on quality, so no deliveries has meant some of our restaurants are closed, and others are operating a limited menu, or shortened hours,” KFC said in a statement.

DHL acknowledged that a number of its deliveries had been “incomplete or delayed” because of “operational issues.” The logistics company said it was working with KFC to solve the problem.

KFC switched suppliers from Bidvest Logistics to DHL last Wednesday. Bidvest said that from its perspective, the transition had been “seamless.”

Franchisees operate 95% of KFC’s outlets in the U.K. The company said in a statement that it would pay its staff as normal, and it was encouraging franchisees to do the same.

KFC said it is too early to say how long it would take to restore normal service.

Britain is KFC’s largest market in Europe, and one of its top five globally.

KFC fans were not happy — and many used social media to complain and express amusement over a chicken restaurant running out of its signature product.

Published at Mon, 19 Feb 2018 17:19:05 +0000

Continue reading >

Proxy advisory firm ISS says Qualcomm should negotiate sale to Broadcom

by mikadago from Pixabay

Proxy advisory firm ISS says Qualcomm should negotiate sale to Broadcom

(Reuters) – U.S. semiconductor company Qualcomm Inc should try to negotiate a sale to Broadcom Ltd following the latter’s sweetened $121 billion offer, proxy advisory firm Institutional Shareholder Services Inc (ISS) said.

Qualcomm has been seeking to walk a fine line between resisting Broadcom’s acquisition approach, which it says undervalues it and is fraught with regulatory risks, and demonstrating to shareholders and proxy advisory firms such as ISS that it is willing to engage to secure a better deal if possible.

In a report published late on Friday, ISS recommended to Qualcomm shareholders that they vote for four out of the six board director nominees that Broadcom has put forward for election at Qualcomm’s shareholder meeting on March 6.

While this recommendation would fall short of Broadcom’s nominees winning a majority on Qualcomm’s 11-member board, ISS said such a vote by Qualcomm shareholders would offer a reasonable path to a negotiated deal that would deliver value.

“The tenor of (Qualcomm‘s) engagement leading up to the present raises questions as to whether the incumbent (Qualcomm) board is committed to playing its part in attempting to maximize the offer,” ISS said in its report.

Broadcom first unveiled an unsolicited $70 per share cash-and-stock offer in November, which Qualcomm rejected. It raised its offer to $82 per share in cash and stock on Feb. 5 and offered other concessions, including paying an $8 billion breakup fee in the event regulators thwart the deal, which would be the technology sector’s largest-ever acquisition.

ISS said it did not recommend voting for all six Broadcom nominees because Qualcomm’s board would then be less inclined to drive a hard bargain with Broadcom in deal negotiations. ISS recommended that Broadcom nominees Samih Elhage, Julie Hill, John Kispert and Harry You should be elected as Qualcomm board directors.

Qualcomm on Friday called a Feb. 14 meeting with Broadcom constructive and opened the door to more talks, but continued to reject the proposed deal.

As of Saturday afternoon, no new meeting between the two companies had been scheduled, according to people familiar with the matter. Broadcom and Qualcomm representatives offered no immediate comment.

FILE PHOTO: Broadcom Limited company logo is pictured on an office building in Rancho Bernardo, California May 12, 2016. REUTERS/Mike Blake/File Photo

The takeover battle is at the heart of a race to consolidate the wireless technology equipment sector, as smartphone makers such as Apple Inc and Samsung Electronics Co Ltd use their market dominance to negotiate lower chip prices.

Singapore-based Broadcom is mainly a manufacturer whose connectivity chips are used in products ranging from mobile phones to servers. San Diego-based Qualcomm primarily outsources the manufacturing of its chips which are used for the delivery of broadband and data, a business that would significantly benefit from the rollout of 5G wireless technology.

ISS said in its report that Broadcom’s latest $82 per share cash-and-stock bid, which Broadcom CEO Hock Tan has called its best and final offer, does not appear to be clearly superior to Qualcomm’s potential standalone value in the short term. ISS added, however, that the offer seemed to represent a reasonable starting point for negotiations.

Even though both companies “have adopted strategies that do not lend themselves to fluid negotiations,” a deal between them is possible, ISS said. It suggested that Qualcomm shareholders could gain greater exposure to the deal’s potential upside if they were to receive more of the combined company.

ISS also said it appeared more likely than not that Broadcom and Qualcomm, with their collective experience and resources, can find a reasonable path to regulatory approval, despite Qualcomm’s current concerns about antitrust risk.


Qualcomm is currently seeking to complete a $38 billion deal to acquire NXP Semiconductors NV, which is still pending regulatory approval. NXP shares ended trading on Friday at $118.50, significantly above Qualcomm’s $110 per share all-cash offer, as some NXP shareholders, led by activist hedge fund Elliott Management Corp, have called on Qualcomm to raise its price.

Broadcom has said its acquisition offer is contingent on either Qualcomm buying NXP at currently disclosed terms of $110 per share in cash or the deal being terminated.

ISS said in its report that Qualcomm could negotiate provisions with Broadcom to close the NXP deal at a mutually agreed price, which would provide Qualcomm with the “next-best safety net of diversification” in the event the deal with Broadcom falls through.

China’s MOFCOM is the only regulator globally required to approve the Qualcomm-NXP deal that has yet to do so. With the start of the Chinese New Year public holiday this week, Qualcomm may now delay its decision on raising its offer for NXP until after the March 6 Qualcomm shareholder meeting.

Reporting by Greg Roumeliotis in New YorkEditing by Matthew Lewis

Published at Sat, 17 Feb 2018 20:41:42 +0000

Continue reading >

Trying to calm investors, Wells Fargo CEO stresses on stability

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

Trying to calm investors, Wells Fargo CEO stresses on stability

(Reuters) – Wells Fargo & Co Chief Executive Tim Sloan tried to deliver a message of consistency and stability at an investor event on Tuesday, less than two weeks after it disclosed a regulatory sanction related to a long-running sales scandal.

Asked whether an asset cap imposed by the U.S. Federal Reserve would have any impact on Wells Fargo’s expenses, growth, core businesses, customer retention, employee turnover or capital return plans, Sloan said repeatedly that nothing much had changed.

“We’re absolutely open for business,” Sloan said at a Credit Suisse industry conference. He has returned to that catch-phrase repeatedly to dampen concerns about fallout from the scandal.

Wells Fargo’s problems took root more than a decade ago, when the bank started pushing employees to sell as many products as possible to customers.

That culture became a serious problem for the bank in September 2016, when it reached a settlement with regulators over employees opening fake accounts in customers’ names without their permission to hit aggressive sales targets.

Since then, Wells Fargo has discovered other issues with auto loans, mortgages, frozen funds and improperly closed accounts and has faced a number of other regulatory probes and litigation.

On Feb. 2, the Fed announced a consent order requiring Wells Fargo to prove that it is making appropriate changes to corporate governance and risk management. Until the requirements are met, Wells cannot grow its balance sheet beyond the $1.95 trillion in assets it had at year end.

Management immediately detailed plans to comply with the order, and said it would not hit profits significantly. Still, the severity of the Fed’s action so many months after the scandal erupted, underlined questions about how long it will take for the bank to get past its sales practices woes.

At the event on Tuesday, Credit Suisse analyst Susan Katzke pressed Sloan on whether the Fed’s action, and broader reputational issues, are affecting business on the ground, or management’s outlook for growth and shareholder returns.

Sloan reiterated statements he has made about business being stable, employees being happy to work at the bank, and Wells Fargo management being focused on generating better results. Asked to share metrics to back up some of his comments, Sloan jokingly changed topics and began talking about the Olympics.

“There’s a lot of different metrics that you look at, but they’re all pointing to a slow but steady recovery,” he eventually said, without offering any specific numbers. “It’s never as fast as I would like, but it’s absolutely occurring.”

Sloan also said the bank intends to get capital levels down to about 10 percent over the next two to three years. The bank ended 2017 with common equity Tier 1 ratio of 11.9 percent.

Wells Fargo shares were up 2.1 percent at $57.69 in afternoon trading. Through Monday’s close, the stock had lost nearly 14 percent since the Fed placed restrictions on it on Feb 2.

Reporting By Aparajita Saxena in Bengaluru; Writing by Lauren Tara LaCapra in New York; Editing by Maju Samuel and Shailesh Kuber

Published at Tue, 13 Feb 2018 19:07:30 +0000

Continue reading >

Clean Oil That Only Costs $20

by GDJ from Pixabay

Clean Oil That Only Costs $20

The United States is in the midst of an energy revolution.

Oil production has risen by 5 million barrels per day (bpd) since 2010, an increase of nearly 100 percent. New technology, particularly techniques in shale oil drilling, has opened up vast new opportunities for oil and gas companies.

The proof is in the numbers. In 2017, the United States averaged 9.3 million bpd. This year, the EIA predicts that U.S. oil and gas production will reach record levels, averaging 10.3 million barrels bpd to surpass the record reached in 1970 (9.6 million bpd).

In 2019, the EIA expects U.S. production to average 10.8 million bpd, which will allow the U.S. to rival Saudi Arabia and Russia as the world’s largest oil producer.

If there’s one big reason for the U.S. energy revolution, it’s that new technology has allowed American companies to beat the competition

Thanks to such innovation, a barrel of oil produced in the U.S. can cost as little as $20 to produce.

Not even OPEC could stop the host of American shale drillers, who persevered through a global production glut and historically low prices from 2015 to 2017, and who have now emerged victorious.

But the shale revolution is starting to reach its limits. With shale production likely to peak shortly after 2020, investors are looking for new, innovative technologies that will break new barriers to output.

Companies like Petroteq Energy Inc. are pioneering new approaches to energy extraction. While OPEC producers stick to the tried-and-true methods, American companies are exploring new horizons, watching production costs fall and profits shoot through the stratosphere.

A key area where advancements will be made is in oil sands, a sector most companies had left for dead. Thanks to Petroteq and other innovative firms, the technology to unlock clean, cheap oil sands could soon fuel the next chapter of the U.S. energy revolution.

Oil Sands: the Alternative Unconventional

Oil sands are deposits of bitumen, a thick and viscous substance that can be refined into petroleum products.

The potential trapped within oil sands deposits is staggering: the Canadian tar sands deposits in Alberta is estimated to contain 165.4 billion barrels.

In the United States, large deposits of oil sands bitumen remained untapped. In Utah, for instance, there are bitumen deposits totaling 30 billion barrels.

However, three things are holding back oil sands exploitation: cost, political opposition and environmental risk.

Producing from oil and tar sands had always been a costly enterprise. When prices fell in 2015, companies began divesting from their tar sands investments, cutting and running from oil that was now too expensive to produce.

In 2017, oil giant Royal Dutch Shell completed its divestment from the Canadian tar sands. After entering the unconventional drilling field several years before, Shell concluded that the cost to continue investment in Canadian tar sands was simply too high.

Other companies have done the same: investment in Alberta tar sands fields was dumped by Marathon Oil, Statoil and other companies.

Low prices and rising concerns over the “dirty” nature of tar sands production, which is believed to be one of the most carbon-heavy methods of energy production, fueled an exodus.

Oil sands gained a bad reputation as the dirtiest source of energy, which fueled a political backlash. News coverage of Canada’s oil industry has lately focused on how tar sands production is dirty, costly, destructive and ultimately non-economical. Opposition to new tar sands projects inside the U.S. has risen in recent years.

But that trend may be reversing. Despite divestment, bad press and lower-than-average prices, oil sands production will increase in 2018.

Unlocking Potential

Advances in oil sands technology, and efforts to make the process cleaner and cheaper, means that the sector could be poised for a turnaround.

Petroteq Energy is pioneering safe and clean methods for unlocking oil sands assets. The company has two patents on technical methods for extracting oil sands in a way that avoids producing waste materials.

The company produced 10,000 barrels from its production facility in Utah in 2015 using its brand-new technology, and now it’s upgrading a second facility in Utah to increase its production capacity.

The company’s goal, according to CEO Alex Blyumkin, is developing “sustainability.” Proprietary methods allows Petroteq to extract oil sands without producing excess waste. By utilizing blockchain technology, the company cuts down on production costs and allows oil sands production to be more streamlined.

Petroteq has already found interested partners in Mexico, where it has signed a lucrative deal with national energy company Pemex for its blockchain-based management platform.

Other companies are getting in on the action as well. By following Petroteq’s lead, unconventional drillers are taking a second look at oil sands production.

Question of Cost

What made shale drilling in the U.S. so successful was the question of cost. At a time when oil prices were plummeting, American drillers used new technology to radically cut costs and maintain competitiveness. By 2017, shale drillers had reduced cost by as much as 42 percent.

Today, the average cost of a barrel of fracked oil varies between $20 and $50. That might look like a lot compared to cheap oil from Saudi Arabia or Kuwait, where per-barrel costs can be as low as $10.

But that doesn’t take into account “social costs” that OPEC states have to consider. The plunge in oil prices after 2015 placed immense pressure on OPEC states, which all depend on oil exports to maintain fiscal equilibrium.

Middle Eastern oil producers have endured immense pressure, while Venezuela was thrown into political and economic chaos by the drop in prices.

Social costs, according to a study by the Oxford Institute for Energy Studies, will increase the cost of OPEC oil in the coming years. While U.S. shale drillers can operate profitably with prices at $50 per barrel, OPEC countries ideally want $70 or even $100 a barrel to sustain their economics. This gives U.S. producers a massive competitive edge.

Now, thanks to technological advances from Petroteq and other companies, oil sands could be as profitable and as cheap as shale.

Through cleaner methods and blockchain-based management, Petroteq can produce for as little as $20 a barrel.

Petroteq’s methods can be licensed anywhere, and could release the billions of barrels locked inside oil sands deposits all across the American West.

If its technology catches on, oil sands could be the next big play in the U.S. energy revolution, ensuring American oil dominance for years to come.

By. James Stafford

NOT AN INVESTMENT ADVISOR. is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

RISK OF INVESTING. Investing is inherently risky. While a potential for rewards exists, by investing, you are putting yourself at risk. You must be aware of the risks and be willing to accept them in order to invest in any type of security. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell securities.

RISK OF BIAS. We often own shares in the companies we feature. For those reasons, please be aware that we are extremely biased in regards to the companies we write about and feature in our newsletter and on our website.

More Top Reads From

Information/Articles and Prices on a wide range of commodities: We
have assembled a team of experienced writers to provide you with information
on Crude Oil, Oil Price History, Gold Prices, etc… In a format that appeals
to both novices and industry professionals.

Copyright © 2009-2017

All Images, XHTML Renderings, and Source Code Copyright ©

Published at Tue, 13 Feb 2018 17:23:05 +0000

Continue reading >

Japan’s zany tech billionaire wants to be Warren Buffett

Meet 'crazy' tech tycoon Masayoshi Son
Meet ‘crazy’ tech tycoon Masayoshi Son

Japan’s zany tech billionaire wants to be Warren Buffett


Japanese billionaire Masayoshi Son has said he wants to be the Warren Buffett of tech. Now, he’s going after the legendary investor on his home turf.

SoftBank(SFTBF), the deal-happy tech company founded by “Masa” Son, is negotiating for a minority stake in European reinsurance provider Swiss Re. The talks are still in a “very early stage” and could still fall apart, Swiss Re said.

The prospect of SoftBank getting into the insurance business has added fuel to comparisons between Son and Berkshire Hathaway(BRKA) boss Buffett: Both investors make bold deals, and both look long term.

Insurance interests would be yet another similarity.

“SoftBank has often been compared to Berkshire Hathaway in terms of the exceptional acumen of each founder: if this deal went through, they would have more in common,” said analysts at CLSA.

Berkshire’s core business is insurance, and Buffett uses the cash it generates to invest in blue chip companies including Wells Fargo(WFC), Kraft Heinz(KHC), Apple(AAPL) and Coca-Cola(KO).

SoftBank is a telecoms company that owns Sprint(S). Son’s $100 billion Vision Fund, which is backed by Saudi Arabia and Apple(AAPL), has invested in companies including Slack, WeWork and Nvidia(NVDA).

The tycoon has said his goal is to raise another 100 trillion yen ($900 billion) to fund future investments.

SoftBank did not respond to a request for comment on Thursday.

Analysts said the interest in insurance made sense for SoftBank, which could benefit from a having a more diverse portfolio of investments.

Swiss Re has historically paid an annual dividend around 5%. The Zurich-based firm suffered big losses in 2017 from hurricanes Harvey, Irma and Maria, but generated profits of more than $3.5 billion in each of the previous four years.

“To some extent, [a Swiss Re investment] could be seen as a major hedge against the diverse business risk of [SoftBank’s] operations,” said analysts at CLSA.

While Buffett and Son both love a deal, the comparison is not perfect.

“Whereas investors trust Buffett’s instincts and understand his value investing approach, they fear Masa’s big bets on the future,” Chris Lane, an analyst at Sanford C. Bernstein & Co., wrote in October.

Son, who says he has a 300-year plan for SoftBank, could be looking to shake up the insurance business.

“It is … possible that SoftBank sees some room to disrupt the current structure of the insurance business through better application of technology,” saidthe CLSA analysts.

Published at Thu, 08 Feb 2018 16:41:51 +0000

Continue reading >

Steve Wynn steps down as CEO of Wynn Resorts

Steve Wynn accused of sexual misconduct in WSJ report

Steve Wynn accused of sexual misconduct in WSJ report

Steve Wynn steps down as CEO of Wynn Resorts


Steve Wynn has stepped down as the CEO of Wynn Resorts after allegations of sexual misconduct piled pressure on the billionaire casino mogul and sent the company’s stock tumbling.

“It is with a collective heavy heart, that the board of directors of Wynn Resorts today accepted the resignation of our founder, CEO and friend Steve Wynn,” one of the directors, Boone Wayson, said in a company statement late Tuesday.

Wynn, 76, has denied the accusations of misconduct, which gained widespread attention in late January after an investigative report by The Wall Street Journal detailed numerous allegations against him, citing dozens of sources.

“In the last couple of weeks, I have found myself the focus of an avalanche of negative publicity,” Wynn said in a statement. “As I have reflected upon the environment this has created — one in which a rush to judgment takes precedence over everything else, including the facts — I have reached the conclusion I cannot continue to be effective in my current roles.”

Wynn Resorts(WYNN) said it has appointed Matt Maddox, who currently serves as the company’s president, as its new CEO effective immediately. Wayson will take over as chairman.

Losing Wynn is a heavy blow for the global gambling empire he built and that bears his name.

He said he was stepping down from “a company I founded and that I love.”

Analysts have expressed concern about how Wynn’s businesses in Las Vegas and the Chinese territory of Macau would operate without him at the helm.

“Mr. Wynn is the Wynn,” analysts at investment firm Bernstein wrote in a note to clients last week. “Without him, the Wynn Resorts … is a different operation.”

But the allegations against him made his position increasingly untenable.

He already resigned as finance chairman for the Republican National Committee shortly after the Journal story came out. And the Wynn Resorts board formed a special committee to investigate the allegations.

The accusations against him have also drawn scrutiny from gambling regulators in Nevada, Massachusetts andMacau.

The Chinese territory is particularly significant for Wynn Resorts, accounting for the large majority of its revenue and profits.

Investors have become increasingly concerned about the situation, driving down the company’s stock. Wynn Resorts shares have plunged more than 18% since news of the allegations broke.

The stock was down about 1.5% in pre-market trading early Wednesday, according to data from FactSet.

The company said details of Wynn’s “separation agreement” would be announced once it has been finalized.

The casino business has already made him an incredibly rich man. Forbes puts his current net worth at $3.3 billion.

His wealth includes an 11.8% stake in Wynn Resorts, making him its biggest single shareholder. That means that even after his departure, he could carry a lot of influence at the company.

The tycoon is also handsomely paid for his work as CEO. His total compensation for 2016 came to $28.2 million. And over the past five years of reported income, his total compensation came to $111.6 million.

Wynn has been a major figure in the gambling world for decades.

The mogul is credited with being the person who transformed Las Vegas casinos from gambling dens into entertainment hubs where guests could watch spectacular shows and eat in high-end restaurants.

Wynn first entered the world of gambling when he took over his father’s bingo parlors in Maryland. He moved to Las Vegas in 1967 with a stake in the Frontier Hotel, followed by a short stint as the owner of a wine and liquor distributor, Wynn said in a 2014 interview with the Hoover Institution’s Peter Robinson.

Things picked up when Wynn scored a lucrative land deal via business mogul Howard Hughes. He parlayed that money into an investment in the Golden Nugget Casino.

Steve Wynn bets billions on Macau
Steve Wynn bets billions on Macau

Wynn’s success in transforming the Golden Nugget into an elegant destination led to a string of new projects, each one increasingly opulent.

The Mirage, Wynn’s first major casino on the Vegas Strip, opened in 1989. He then opened Treasure Island in 1993, and the Bellagio in 1998.

In 2006, he opened his first casino in Macau, where gambling revenues now dwarf those of Las Vegas. An even bigger one, Wynn Palace, followed 10 years later.

— Julia Horowitz contributed to this report.

Published at Wed, 07 Feb 2018 07:51:32 +0000

Continue reading >

Tesla Earnings Could Reward Loyal Shareholders

Tesla Earnings Could Reward Loyal Shareholders

By Alan Farley | February 7, 2018 — 9:07 AM EST

Tesla, Inc. (TSLA) has struggled with the Model 3 production ramp-up in recent months, forcing CEO Elon Musk to backtrack on ambitious goals he has outlined for the highly anticipated electric automobile. That could change after this week’s earnings report, with a little good news having an outsized impact on recently weak buying interest. It is urgently needed at this point, given rapid cash burn that could empty company coffers before the end of 2018.

Musk has been firing on all cylinders in other recent projects, including the successful launch of SpaceX’s Falcon Heavy rocket and selling out an inventory of 20,000 flamethrowers through his Boring Company. Loyal but frustrated shareholders hope that this momentum escalates into publicly traded Tesla, lifting the stock through heavy resistance between $350 and $400 and into a major uptrend. (See also: Elon Musk Biography.)

TSLA Long-Term Chart (2010 – 2018)

The company came public at $19 in June 2010, quickly selling off to $14.98, which marks the lowest low in the past eight years. It bounced into the mid-$30s a few months later and settled into a broad trading range, testing resistance several times before breaking out in April 2013. The subsequent uptrend advance posted dramatic gains into the third quarter of 2014, topping out just below $300.

Sideways action into 2015 generated strong support just above $180, with that level finally breaking down in the first quarter of 2016, dropping the stock to a two-year low at $141. It popped back above broken range support two months later, denying short sellers while generating a failed breakout attempt. The stock pulled back to the contested level once again after the presidential election, posting a higher low that established a strong platform for an April 2017 breakout.

That trend advance lasted just two months, lifting to a new high at $387 and pulling back to $300 in July. It returned to range resistance in September, exceeding it by less than three points before aggressive sellers took control, generating a selling wave that undercut the July low. Deeper support at the April breakout level held, with the subsequent bounce drifting into the midpoint of the 10-month trading range ahead of this week’s earnings report.

The monthly stochastics oscillator is perfectly positioned for bulls heading into the release, crossing over at the deepest oversold technical reading since December 2016. This predicts at least six to nine months of relative strength, suggesting that bulls will ultimately prevail, lifting the stock through resistance and into a rally impulse that could eventually cross $500 while silencing Musk’s many critics. (For more, see: How Tesla Mauled the Bears.)

TSLA Short-Term Chart (2016 – 2018)

The stock has carved a seesaw trading range since May 2017, loosely outlining a rectangle or head and shoulders pattern. A bearish reaction to the report needs to hold the red line near $310 to avoid a downswing that completes the head and shoulders pattern and favors a more bearish outcome, including a failed breakout and descent through $250. Conversely, a rally that exceeds the Jan. 23 high at $360 opens the door to a second test at range resistance, completing a more bullish rectangle that could yield a major breakout.

On-balance volume (OBV) peaked in 2014 and drifted through a long distribution phase, finally turning higher in the fourth quarter of 2016. It posted a new high in September 2017 and has pulled back into 2018, indicating that funds and private investors are sitting on their hands, concerned about the slow Model 3 ramp-up. However, it will take just a few higher-than-average rally days for the indicator to hit another high. (See also: Tesla Stock Poised to Rebound By March, Traders Say.)

The Bottom Line

Tesla heads into earnings with relative strength indicators turning up from deeply oversold technical levels. This pattern strongly favors bulls following the release, with the potential to break resistance and head into a new trend advance. (For additional reading, check out: Tesla Raises $546M in First Asset-Backed Deal.)

Published at Wed, 07 Feb 2018 14:07:00 +0000

Continue reading >

Snap Stock Breaks Out to New Highs Following Earnings

Snap Stock Breaks Out to New Highs Following Earnings

By Justin Kuepper | February 7, 2018 — 11:55 AM EST

Snap Inc. (SNAP) shares surged more than 40% in early trading on Wednesday after the company reported favorable fourth quarter financial results. Revenue rose 72.4% to $285.69 million – beating consensus estimates by $32.74 million – and net losses of 13 cents per share beat consensus estimates by three cents per share. Shares rose in after-hours trading before opening sharply higher and rising during Wednesday’s session.

Aside from the top-line financials, user growth exceeded analyst expectations with a 5% increase over the previous quarter. Average revenue per user rose 46% year over year to $1.53, while the cost of revenue per user rose 5% year over year to $1.02. The company had cash and equivalents of just over $2 billion by the end of the year, with its fourth quarter cash burn reaching nearly $200 million. (See also: Snap Crosses IPO Price After Adding Nearly 9 Million Users.)

Technical chart showing the performance of Snap Inc. (SNAP) stock

From a technical standpoint, the stock broke out from trendline and R2 resistance at $16.25 and longer-term trendline resistance at $18.00 to its highest levels since last summer. The relative strength index (RSI) moved to overbought conditions at 80.91, but the moving average convergence divergence (MACD) experienced a bullish crossover that could signal more upside ahead over the coming weeks and months.

Traders should watch for some near-term consolidation, given the overbought RSI readings, above $18.00 support levels. After a period of consolidation, the stock could move higher to test its next major trendline resistance levels at around $22.00, which were set back in June of last year. Analysts remain mixed, with Bank of America Merrill Lynch upgrading the stock with a $24.00 price target and Susquehanna downgrading the stock with a $7.00 price target. (For more, see: Snap’s VP of Product Announces Exit Amid Crucial Redesign Rollout.)

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

Published at Wed, 07 Feb 2018 16:55:00 +0000

Continue reading >

Prime Working-Age Population At New Peak, First Time Since 2007

Prime Working-Age Population At New Peak, First Time Since 2007

by Bill McBride on 2/06/2018 02:19:00 PM

Update through January: The U.S. prime working age population peaked in 2007, and bottomed at the end of 2012. As of January 2018, according to the BLS, for the first time since 2007, there are now more people in the 25 to 54 age group than in 2007.

Demographics is a key reason GDP growth has been slow over the last decade.

Changes in demographics are an important determinant of economic growth, and although most people focus on the aging of the “baby boomer” generation, the movement of younger cohorts into the prime working age is another key story. Here is a graph of the prime working age population (25 to 54 years old) from 1948 through January 2018.

Note: This is population, not work force.

Prime Working Age Populaton

Click on graph for larger image.

There was a huge surge in the prime working age population in the ’70s, ’80s and ’90s.

The prime working age labor force grew even quicker than the population in the ’70s and ’80s due to the increase in participation of women. In fact, the prime working age labor force was increasing 3%+ per year in the ’80s!

So when we compare economic growth to the ’70s, ’80s, or ’90s we have to remember this difference in demographics (the ’60s saw solid economic growth as near-prime age groups increased sharply).

The good news is the prime working age group should grow at 0.5% per year (depending on immigration policies), and this should boost economic activity.



Continue reading >

Starbucks launches new credit card for coffee addicts

Inside the first ever Starbucks store
Inside the first ever Starbucks store

Starbucks launches new credit card for coffee addicts


Put it on your Starbucks card. But we’re not talking about one of those gift cards.

The coffee king has a new idea to fight slowing sales — its own Visa credit card. It’ll help you build Starbucks rewards even if you’re using it to buy stuff outside of the coffee shops.

Starbucks(SBUX) announced the new Starbucks Rewards Visa Card Thursday. It’s backed by JPMorgan Chase(JPM). Starbucks first hinted last year that a new co-branded card was coming soon.

Customers can use the card at Starbucks as well as other stores that accept Visa(V), and they can earn points, dubbed Stars (why not Bucks?), that can be redeemed for drinks and food at more 8,000 Starbucks locations nationwide.

Cardholders will also become members of the company’s Starbucks Rewards loyalty program, which already has more than 14 million people signed up.

The card will have an annual fee of $49. People who apply for the card will get a physical piece of plastic within 7-10 days of getting approved for the card. They will also get a digital version of the card immediately loaded into the Starbucks mobile app.

But Starbucks said that it and JPMorgan Chase(JPM) are also working on a co-branded prepaid debit card that will launch later this year. That could attract consumers who have poor credit histories or are wary of adding on more debt.

Any moves that can potentially boost sales at Starbucks would be welcomed by investors. The company needs a caffeine jolt.

Revenue growth has started to slow in the United States. Starbucks said in its fourth quarter earnings report that sales at U.S. stores open at least a year rose just 2% — below analysts’ expectations.

CEO Kevin Johnson, who took over for Howard Schultz last year, told analysts during a conference call that demand for the company’s limited-time holiday beverages, gift cards and other merchandise “did not resonate with our customers as planned.”

Starbucks is also having trouble attracting new customers. All its same-store sales growth in the United States came from customers spending more. The number of actual transactions in the fourth quarter was flat.

Shares of Starbucks fell more than 4% on the disappointing earnings report and the stock is now down for the year — missing out on the hot start for the broader market so far in 2018. Starbucks stock is also down slightly since Johnson succeeded Schultz.

Meanwhile, the S&P 500 is up 20%, while Starbucks’ rival Dunkin’ Brands(DNKN) has gained nearly 20% and the resurgent McDonald’s(MCD), which has added more premium coffee beverages to its menu lately, has soared more than 30%.

 Published at Thu, 01 Feb 2018 16:45:11 +0000

Continue reading >

Fidelity Investments Has $40B Outflows From Actively Managed, $50B Inflows to Passive Funds: Morningstar

Fidelity Investments Has $40B Outflows From Actively Managed, $50B Inflows to Passive Funds: Morningstar

Mutual funds and exchange-traded funds (ETFs) saw massive inflows in 2017, with passive funds leading the charge and Vanguard and BlackRock, Inc. (BLK) clear winners, according to Morningstar data. Fidelity Investments also saw billions of dollars pour into its passive funds, but when it came to actively managed mutual funds, Fidelity was a clear loser.

According to a Morningstar report, Fidelity Investments had outflows of $40 billion from its actively managed funds, leading the fund companies that saw outflows in that area of investing. The Boston-based firm did have $51.3 billion of inflows into passive funds during 2017, underscoring the movement on the part of investors to shun actively managed mutual funds, which typically have higher fees and expenses associated with them. Pimco, which had $33 billion of inflows in its actively managed funds, was the winner on that front. In passive investing, Vanguard had inflows of $328 billion – almost half of all inflows for 2017 – while BlackRock came in second place with $213 billion in inflows, Morningstar found.

All told, inflows into mutual funds and ETFs hit $684 billion in 2017, with actively managed funds breaking even last year. Morningstar called that a bit of a victory given “extreme” outflows in both 2015 and 2016. Without taxable bond inflows, however, Morningstar said that active funds would have seen outflows of $185.8 billion last year.

While Fidelity suffered from outflows on its actively managed funds, investors who stuck with those funds last year were rewarded, even if the investment vehicles are out of fashion. According to an earlier Morningstar report, after years of posting disappointing results, Fidelity’s actively managed mutual funds showed signs of improvement in 2017, excluding the flagship Fidelity Magellan Fund.

Morningstar pointed to the Fidelity Contrafund, Fidelity Low-Priced Stock Fund, Fidelity Growth Company Fund, Fidelity Blue Chip Group Fund and Fidelity OTC Fund, all of which did better than their peers. These funds not only beat their rivals – they came out as the top funds in their groups. What’s more, Morningstar said that Fidelity’s major U.S. stock funds beat their index rivals, in some cases by a lot.

“Of course, one year isn’t very long,” wrote Morningstar research analyst John Rekenthaler in a recent report. “Fidelity’s stock funds would need to outdo the indexes for three years at the very least to qualify as long-term successes, and their record during that time period is decidedly more mixed. Even with their powerful 2017 showings comprising the final third of their 36-month records, the funds haven’t as a group demonstrated their superiority.”

Published at Thu, 01 Feb 2018 18:44:00 +0000

Continue reading >

EBay and PayPal’s divorce just got messier

Apple exec: No one will use cash in the future
Apple exec: No one will use cash in the future

EBay and PayPal’s divorce just got messier


EBay and PayPal’s divorce just got messier.

EBay(EBAY), one of the world’s biggest online marketplaces, announced Wednesday that it’s dropping PayPal as its main partner for processing payments in favor of Dutch company Adyen.

The news prompted investors to offload PayPal(PYPL) stock, which fell more than 11% in after-hours trading.

The two U.S. tech companies have a complicated history.

In 2002, eBay paid $1.5 billion to buy PayPal, an online payments company whose founders include Silicon Valley heavyweights Elon Musk and Peter Thiel.

It proved to be a very successful investment. When eBay spun off PayPal in 2015 — something investors and analysts had urged it to do — the payments company’s market value was close to $50 billion. It’s now above $100 billion.

Despite the split, the two companies’ businesses have remained tightly linked. PayPal continued to process payments for eBay and is the preferred payment method for most of the buyers and sellers on the site.

But eBay is now moving to cut those ties. The ecommerce company plans to take more direct control of payments on its site with help from Adyen.

EBay said the benefits of the changes would include lower costs for sellers and more payment options for buyers.

The shift will start gradually in North America later this year and eBay expects most marketplace customers around the world to be using the new system in 2021.

PayPal spokeswoman Amanda Miller said the company will “continue to provide a comprehensive payments solution to eBay through July 2020.” It will also remain a payment option at checkout for eBay customers until July 2023.

PayPal’s business with eBay is big and still growing: it was up 10% in the fourth quarter of 2017. But that’s slower growth than other parts of PayPal’s operations, which means that eBay makes up a decreasing portion of the tens of billions of dollars of payments the company processes.

EBay accounted for 13% of the payments PayPal handled in the fourth quarter, down from 16% in the same period a year earlier, PayPal said.

Adyen said it’s “thrilled” to be getting its hands on the eBay payments business.

“We look forward to powering transactions on eBay, starting in North America, and supporting their continued global growth,” the Dutch company said in a statement.

Based in Amsterdam, Adyen already works with other big tech companies including Uber and Netflix(NFLX). It says it handles more than 200 different payment methods and over 150 currencies.

Published at Thu, 01 Feb 2018 16:30:23 +0000

Continue reading >

Massachusetts Steve Wynn probe hinges on $7.5 million settlement to manicurist

Massachusetts gambling regulators want to know why Steve Wynn and Wynn Resorts failed to disclose a $7.5 million settlement when they were applying for a state license in 2013.

The settlement will be a primary part of the investigation as it moves forward, investigators said at a meeting Wednesday.

The Massachusetts Gaming Commission announced Sunday that it’s reviewing the license it issued for Wynn Boston Harbor, a $2.1 billion casino and hotel project set to open in 2019. The commission could ultimately decide to alter, suspend or revoke the license as a result.

The probe follows a Wall Street Journal investigation published last week thatdetailed decades of sexual misconduct allegations against Wynn, the 76-year-old founder and CEO of Wynn Resorts(WYNN).

Wynn has denied all the charges against him, calling them “preposterous.”

Karen Wells, director of the commission’s investigations team, said Wednesday that during the state’s “suitability” review of both Wynn and Wynn Resorts, no one disclosed a $7.5 million settlement that had been paid to a manicurist over sexual misconduct claims she made in 2005.

The Massachusetts Gaming Commission wasn’t told about the payout until it was reported by the Wall Street Journal, she said.

Wells said she confirmed the existence of a settlement with a lawyer for Wynn Resorts, who told her it had not been disclosed to investigators “upon advice of counsel.”

The Wynn Resorts attorney also told Wells that the settlement had been resolved outside of court, so there were no court documents that could have been provided.

Wells said the commission intends to investigate the matter further.

“The circumstances around this $7.5 million settlement and the decision not to disclose it to investigators during the suitability investigation remain a critical element of this review,” Wells said.

The Massachusetts Gaming Commission explained Wednesday that it intends to look not just at Wynn’s suitability, but also at the suitability of the board, as well as the company’s ongoing financial stability.

“[We will look into] any corporate action or lack thereof contemporaneous with the alleged misconduct,” Wells said. “The question is: Who knew what when, and what did he or she do about it?”

In a statement, Wynn Resorts said it plans to cooperate.

“We respect the process outlined by the Massachusetts Gaming Commission and will cooperate fully with the investigation. Our construction is on schedule for a 2019 opening and continues to create more than 4,000 local union trade jobs,” a Wynn Resorts spokesperson said.

Shares of Wynn Resorts fell after the meeting. They ended the day down nearly 3.4%.

Wynn faces a number of investigations into his conduct.

The board of directors of Wynn Resorts has formed a special committee to look into the allegations. The Nevada Gaming Control Board is conducting its own review, and officials in Macau — where Wynn’s business makes most of its money — have also expressed concern.

Published at Thu, 01 Feb 2018 00:05:34 +0000

Continue reading >

Restaurant Stocks Sell Off After McDonald’s Earnings


Restaurant Stocks Sell Off After McDonald’s Earnings

By Alan Farley | January 30, 2018 — 9:36 AM EST

Dow component McDonald’s Corporation (MCD) led a slate of restaurant earnings and analyst calls on Tuesday morning, triggering modest sell-the-news reactions. The group has shaken off 2017 worries that higher commodity prices would affect margins, riding the wave of strong U.S. economic growth and overseas opportunities. Even so, performance has now bifurcated into winners and losers, with giant chains prospering while mid-size and smaller franchises, including Jack in the Box Inc. (JACK) and Sonic Corp. (SONC), have been sold aggressively.

Mickey D’s beat fourth quarter EPS and revenue estimates by a wide margin, also reporting that quarterly comps increased by a healthy 5.5%. The stock fell more than a point after the news, suggesting a vanishing pool of available capital on the sidelines following months of higher prices. However, the State of the Union address and Federal Reserve rate decision may be distorting order flow, and it could take several sessions to gauge the market’s true reaction. (See also: McDonald’s Earnings: Same-Store Sales Will Be Key.)

McDonald’s stock has been on a tear since breaking out above May 2016 resistance at $132 in April 2017, posting a high-volume breakaway gap and adding more than 45 points in a powerful uptrend that has held above the 50-day exponential moving average (EMA) for the past four months. It posted an all-time high near $180 just one day before the earnings release, indicating that complacent shareholders were confident that quarterly metrics would not stall or reverse the rally.

Ironically, this superior performance sets the stage for an intermediate correction because price action has generated extremely overbought technical readings that need to be worked off through price and time. The stock has been trading above the 200-day EMA since November 2016, while a single eight-point pullback characterized the sum total of 2017 bear power. This type of upside is unsustainable, raising the odds for a decline as low as $150 some time in 2018. (For more, see: Why Is McDonald’s Valued Like a Big Tech Stock?)

Yum! Brands, Inc. (YUM) has matched McDonald’s rapid ascent in the past year, lifting to an all-time high. Nomura Securities downgraded the holding company for Pizza Hut, KFC and Taco Bell from “Buy” to “Neutral” just an hour before its rival reported earnings, generating a knee-jerk decline that is testing weekly support in the mid-$80s. Yum! Brands reports earnings on Feb. 8, with mixed action likely between now and then.

The stock topped out in the upper $60s in May 2015 following a multi-year uptrend and sold off to a two-year low in the mid-$40s in the first quarter of 2016. The company spun off China operations through Yum China Holdings, Inc. (YUMC) in November 2016, generating healthy uptrends in both parent and child. Yum! Brands stock broke out above the 2015 high in May 2017 and has gained nearly 30 points since that time. Like McDonald’s, the stock looks overbought following its dramatic run, raising the odds that earnings will trigger a sell-the-news reaction. (See also: McDonald’s, Yum Are the Best Chains: Bernstein.)

Chili’s parent Brinker International, Inc. (EAT) broke out above the 2007 high in the mid-$30s in 2013 and ended the rally at an all-time high in the mid-$60s in 2015. It then turned sharply lower, entering a multi-legged downtrend that cut through breakout support, dropping to a four-year low in September 2017. A bounce into December reinstated the breakout before pausing in the upper $30s, building a holding pattern through the first month of 2018.

The company beat fiscal second quarter EPS estimates by a wide margin in Tuesday’s pre-market release but missed revenues by a small margin. A healthy increase in fiscal year 2018 guidance may keep sellers at bay, supporting a bounce that faces stiff resistance in the mid-$40s. A breakout above that barrier could take months, but strong accumulation since September should allow bulls to complete that task. (For more, see: Here’s How Brinker Plans to Turn Chili’s Around.)

The Bottom Line

McDonald’s reported strong fourth quarter earnings but sold off after the news, suggesting that overbought technical conditions are starting to exert their influence. However, it will take a decline through the 50-day EMA near $172 to overcome the strong fundamentals and signal an intermediate correction. (For additional reading, check out: How to Analyze Restaurant Stocks.)

Published at Tue, 30 Jan 2018 14:36:00 +0000

Continue reading >

JPMorgan promotes Pinto and Smith, fueling race to succeed Dimon


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

JPMorgan promotes Pinto and Smith, fueling race to succeed Dimon

NEW YORK (Reuters) – JPMorgan Chase & Co on Monday promoted Daniel Pinto and Gordon Smith to be co-presidents and co-chief operating officers, a move seen as heightening competition for the job of CEO held by Jamie Dimon.

However, Dimon said in a statement he plans to continue in his current role “for approximately five more years”.

Pinto and Smith run JPMorgan’s most prominent businesses, with Pinto, 55, overseeing the corporate and investment banking unit while Smith, 59, runs consumer and community banking.

While their names have been mentioned before as potential successors to Chief Executive Officer Jamie Dimon, their elevation is the clearest signal that planning is actively under way for when he steps aside.

Dimon, 61, has been running JPMorgan since 2005, making him one of just two big bank CEOs who have been in the role since before the 2007-2009 financial crisis. The other is Goldman Sachs Group Inc CEO Lloyd Blankfein, who also has two deputies acting as co-presidents and co-COOs.

The question of who will be succeed Dimon is one of Wall Street’s favorite parlor games, and his eventual departure is something that worries investors who credit him with steering JPMorgan through the financial crisis and turning it into the largest U.S. bank.

“The longer he can stay, the better,” said Walter Todd, president and chief investment officer of Greenwood Capital Associates. “We’ve been a long-time holder of JPMorgan and you could argue he’s probably the best bank CEO in the country.”

Dimon’s plan to stay as CEO for about five more years may provide some relief for shareholders who were worried he might leave to run for political office in 2020, said Brian Kleinhanzl, a bank analyst at Keefe, Bruyette & Woods.

“A small overhang is lifted from shares of JPMorgan,” Kleinhanzl wrote in a note to clients. JPMorgan shares were little changed in after-hours trading.

Shareholders have worried about Dimon’s departure for some time.

When JPMorgan suffered more than $6 billion losses from outsized positions of a trader known as the “London whale” in 2012, there was speculation that Dimon might be forced to leave.

Two years later, Dimon was diagnosed with cancer, for which he was successfully treated.

Just last autumn, there were conflicting reports about whether he would leave to become U.S. Treasury Secretary under President Donald Trump.

More recently, people in political and business circles have wondered whether Dimon will run for U.S. president himself in 2020. It is something he has mused about publicly, though people close to Dimon say he has no intention of hitting the campaign trail.

While Pinto and Smith are now considered front-runners to succeed Dimon, Monday’s promotions do not guarantee that either of them will become CEO.

In the past, top JPMorgan executives who were said to be favorites in the CEO race ended up leaving the bank instead.

They include Matt Zames, who had been sole COO until June, as well as Michael Cavanagh, who left to join private equity firm Carlyle Group LP in 2014, and Jes Staley who instead became CEO of Barclays PLC.

Other names cited by sources as potential successors include Chief Financial Officer Marianne Lake, as well as Mary Erdoes, who runs asset management and Doug Petno, who runs commercial banking. In the statement, Dimon thanked them for taking on added responsibilities last year and for supporting company-wide initiatives.

Reporting by David Henry in New York; Writing by Lauren Tara LaCapra; Editing by Clive McKeef

Published at Tue, 30 Jan 2018 01:32:26 +0000

Continue reading >

Jamie Dimon plans to lead JPMorgan until 2023


Jamie Dimon, who took over JPMorgan Chase more than 12 years ago, will turn 62 in March. Credit Mike Blake/Reuters

Jamie Dimon plans to lead JPMorgan until 2023

Jamie Dimon isn’t planning on going anywhere.

The JPMorgan Chase(JPM) boss revealed Monday that he’ll stay at the helm of America’s largest bank for about five more years. He said he and the board agreed on the time frame.

Dimon, already Wall Street’s longest-serving CEO, is credited with steering JPMorgan through the financial crisis. The new plan would leave Dimon, who is 61, in charge for about 17 years.

The announcement could quiet speculation that Dimon, who leads a powerful business lobby, could leave Wall Street for Washington as a presidential candidate or a cabinet secretary.

Some of JPMorgan’s rising stars have left the bank in recent yearsas it became clear the top job would remain filled.

JPMorgan emphasized on Monday that it’s grooming potential successors. The bank announced the promotions of Daniel Pinto and Gordon Smith eachto the roles of co-president and co-chief operating officer. That sets them up as potential heirs.

“Both have proven track records of working successfully across the firm,” Dimon said in a statement, “and both truly possess the capabilities, character and intellect that exemplify great leadership.”

Pinto isCEO of JPMorgan’s corporate and investment bank, while Smith leads its consumer and community banking division.

“The Board and Dimon both believe that under all timing scenarios, whether today or in the future, the company has several highly capable successors in place,” JPMorgan said in a statement.

The management shuffle comes after several potential successors departed JPMorgan.

Last June, chief operating officer Matt Zames left the bank after 13 years. Michael Cavanagh left in 2014 for private equity firm The Carlyle Group(CG), and Jes Staley departed in 2013 and later became CEO of Barclays(BCS).

In 2014, Dimon received successful treatment for curable throat cancer.

Dimon became JPMorgan’s CEO on December 31, 2005, and was named chairman a year later. His leadership helped JPMorgan escape the financial meltdown better than many other big banks. Dimon has also been a vocal critic of additional regulation after the crisis.

Dimonchairs the Business Roundtable, a powerful lobbying group that took out a multimillion-dollar advertising blitz to champion tax reform.

In the past, Dimon has been floated as a potential Treasury secretary or even a presidential candidate.

“I would love to be president,” Dimon said in 2016, before adding that he thinks it’s “too hard and too late.”

— CNNMoney’s Paul R. La Monica contributed to this report.

Published at Mon, 29 Jan 2018 22:12:56 +0000

Continue reading >
Page 3 of 5