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on 18/02/2020 at 12:42 pm

Headlines moving the stock market in real time.

on 18/02/2020 at 12:37 pm

(Bloomberg) -- Franklin Resources Inc. agreed to acquire asset manager Legg Mason Inc. for almost $4.5 billion in a deal that would create an active-management investing giant.Franklin will pay all cash for Legg Mason, the companies said in a statement Tuesday. The transaction values Legg Mason at $50 per share, a 23% premium to the Baltimore-based company’s share price Friday.The transaction is another case of consolidation in the industry, as firms grapple with falling fees and the rising challenge from managers of index-tracking funds. In November, Charles Schwab Corp. agreed to buy TD Ameritrade Holding Corp. for about $26 billion; Janus Henderson Group Plc and Standard Life Aberdeen Plc were both formed in mergers in 2017.Tuesday’s announcement comes less than a year after activist investor Trian Fund Management took a 4.5% stake in Legg Mason, enough to secure its founder Nelson Peltz a position on the board.Just days later, the fund manager said it would cut about 12% of its staff and reduce its executive committee to four from eight members. Peltz said at the time his three top priorities were “significantly reducing costs, driving revenue growth organically and through acquisition, and increasing profitability.”The combined companies will have $1.5 trillion in assets under management. Franklin will also assume about $2 billion in Legg Mason debt.“This is a landmark acquisition for our organization that unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies,” Greg Johnson, executive chairman of the board of Franklin Resources, said in a statement.Legg Mason closed down less than 1% to $40.72 on Friday, giving the company a market value of about $3.5 billion.Asset and wealth managers are facing unprecedented pressures on their bottom lines as investors increasingly pull money from actively managed funds and move them to cheaper passive ones that track benchmarks. The flood of money out of active and into passive funds has sent fees grinding lower, led to thousands of job cuts and forced large-scale consolidation.Among other changes, Banco de Sabadell SA agreed in January to sell its asset-management business to Amundi SA for 430 million euros ($466 million), while GAM Holding AG considered a sale of the company last year. On Monday, Jupiter Fund Management Plc agreed to acquire rival U.K. asset manager Merian Global Investors.Tuesday’s announced deal is complementary because Legg Mason primarily focuses on retail investors, while Franklin Resources caters to institutional investors.\--With assistance from Suzy Waite.To contact the reporters on this story: Ed Hammond in New York at [email protected];Annie Massa in New York at [email protected] contact the editors responsible for this story: Elizabeth Fournier at [email protected], ;Sam Mamudi at [email protected], Liana Baker, Alan MirabellaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 12:18 pm

(Bloomberg) -- U.S. equity-index futures fell along with European stocks on Tuesday after Apple Inc. said quarterly sales would miss forecasts, spooking investors who had hoped for a limited economic impact from the deadly coronavirus. Treasuries rose and the dollar edged higher.Contracts on the three major U.S. equity benchmarks dropped, with Apple shares slumping as much as 4.2% in pre-market trading after the iPhone maker warned on both production and sales disruptions due to the epidemic. In Europe, tech companies were among the biggest laggards in the Stoxx 600 index as Apple suppliers including Dialog Semiconductor Plc and AMS AG slid. HSBC Plc tumbled the most in more than a decade after saying it will slash jobs in a “fundamental restructuring,” while also flagging risks due to the virus.Equity benchmarks in Tokyo, Seoul and Hong Kong saw declines of over 1%, while stocks in Shanghai fluctuated. European bonds climbed, while the euro edged lower after a German investor-confidence index plunged. Crude oil retreated toward $51 a barrel in New York on concern the illness will cut fuel demand.Corporate reports on Tuesday raised renewed concerns about the coronavirus impact, even as the growth rate of cases in China’s Hubei province -- the epicenter of the disease -- continues to stabilize. It’s a turnaround from Monday, when sentiment was lifted by Chinese policy makers’ moves to support companies hit by the prolonged shutdown of large parts of the country. BHP Group said commodity prices will take a hit if the fallout extends beyond the end of next month.“Sentiment toward global risk turned sour today,” said Dariusz Kowalczyk, an emerging-markets strategist at Credit Agricole SA. “We continue to believe that markets have not yet fully priced in the magnitude of the hit to China’s economy as a result of the Covid-19 outbreak.”Elsewhere, the Australian dollar weakened after the Reserve Bank of Australia said it reviewed the case for a further rate cut at its last meeting, but didn’t go ahead. Emerging-market stocks and currencies fell, led by South Africa’s rand.Here are some key events coming up:Earnings season rolls on, with results from Deere & Co. set for Friday.Minutes of the most recent Federal Reserve meeting are published on Wednesday.Indonesia is expected to cut interest rates on Thursday, following emerging-market peers that have already moved.Group of 20 finance ministers and central bank chiefs are scheduled to meet Feb. 22-23 in Riyadh, Saudi Arabia, and are expected to discuss efforts to support growth amid the coronavirus threat.These are the main moves in markets:StocksThe Stoxx Europe 600 Index sank 0.5% as of 7:06 a.m. New York time.Futures on the S&P 500 Index declined 0.5%.The MSCI All-Country World Index declined 0.3%.The U.K.‘s FTSE 100 Index decreased 1%.CurrenciesThe Bloomberg Dollar Spot Index increased 0.1%.The euro declined 0.1% to $1.0824.The British pound climbed 0.2% to $1.3038.The Japanese yen appreciated 0.1% to 109.73 per dollar.BondsThe yield on 10-year Treasuries declined four basis points to 1.54%.The yield on two-year Treasuries fell three basis points to 1.40%.Germany’s 10-year yield declined two basis points to -0.42%.Britain’s 10-year yield decreased three basis points to 0.613%.CommoditiesWest Texas Intermediate crude sank 1.8% to $51.11 a barrel.Gold strengthened 0.4% to $1,587.48 an ounce.\--With assistance from Benjamin Dow, Andreea Papuc and Joanna Ossinger.To contact the reporter on this story: Robert Brand in Cape Town at [email protected] contact the editors responsible for this story: Christopher Anstey at [email protected], Yakob PeterseilFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 12:01 pm

Could JPMorgan Chase & Co. (NYSE:JPM) be an attractive dividend share to own for the long haul? Investors are often...

on 18/02/2020 at 11:44 am

(Bloomberg) -- Apple Inc. said it would miss sales targets, driving down European stocks and U.S. futures. German investor sentiment plunged, South Korea warned of an economic emergency and Singapore set aside millions to counter the outbreak.China reported the lowest number of new cases since announcing a change in its method of detection last week. A top expert in China said the outbreak could peak in parts of the country this month, but the World Health Organization has said it’s too early to know if infections are truly declining.So far, 73,424 people have been infected and 1,873 have died around the world, the vast majority of them in China’s Hubei province.Key DevelopmentsChina death toll 1,868; mainland cases rise to 72,436Hubei reports 1,807 new cases; 93 more deathsApple’s cut revives questions about China over-relianceHow fast can China’s economy bounce back from lockdownClick VRUS on the terminal for news and data on the novel coronavirus and here for maps and charts. For analysis of the impact from Bloomberg Economics, click here.IHG CEO Calls Coronavirus ‘Short-Term Blip’ (6:28 a.m. NY)InterContinental Hotels Group shares reversed a decline after Chief Executive Officer Keith Barr said the outbreak was a “short-term blip” in the Chinese market.IHG opened six hotels in China in January and signed 11 hotels in February, Barr said on an earnings call. “Business is still moving ahead” and the “long-term fundamentals in China remain absolutely strong,” he said.Passengers Should Have Been Released Earlier: Netanyahu (6:10 a.m. NY)Passengers on the Diamond Princess cruise ship should have been dispersed as quickly as possible, Israeli Prime Minister Benjamin Netanyahu said. There were 15 Israeli citizens on board -- three have been infected and the remainder are scheduled to be flown back to Israel on Thursday.Japan said on Tuesday another 88 people aboard the quarantined ship had been infected, bringing the total number of cases to 542 people. Earlier, Britain became the latest country to look at evacuating its nationals from the Diamond Princess, following Australia and South Korea.Japan expects to remove all passengers from the cruise ship by Friday.Fredriksen’s Bulk-Shipping Firm Warns on Profits (6:09 a.m. NY)Golden Ocean Group Ltd., one of the world’s biggest dry-bulk shipping companies, said the coronavirus outbreak will hurt profits and slashed its dividend to a third to protect its balance sheet. The warning illustrates the toll from the virus on the world’s second-biggest economy and the global ripple effects, including on demand for transport of goods in and out of China.German Investor Confidence Plunges (6:08 p.m. HK)Investor sentiment in Europe’s largest economy dropped on concerns the outbreak will disrupt trade. ZEW’s index of expectations for the next six months fell below even the most pessimistic estimate in a Bloomberg survey. The poll suggests confidence is fading that Germany can stem a manufacturing recession that has lasted more than a year.“Economic development is rather fragile at the moment,” ZEW President Achim Wambach said in a statement. The outlook for export-intensive sectors has deteriorated “particularly sharply” as a result of the epidemic that originated in China, he said.Earlier on Tuesday, South Korea’s President Moon Jae-in called for “extraordinary” steps to minimize the virus’s impact and said it was an emergency for the country’s economy.Virus May Curb China Oil and Gas Use But Not Emissions (5:33 p.m. HK)A government stimulus package being planned to combat the economic impact of the viral outbreak will probably focus on increasing investment in infrastructure, which will likely boost usage of coal, BloombergNEF said in a report. The dirtiest fossil fuel continues to be the main source of power in China despite efforts in the past decade to clean up the sector by favoring new renewable generation.Brent futures fell 1.8% to trade below $57 a barrel in London.Apple Slumps on Sales Warning (5:12 p.m. HK)Apple shares fell 4.2% in pre-market trading after the technology giant said it doesn’t expect to meet revenue guidance for the March quarter, citing the impact of the coronavirus outbreak.The news also hit U.S. futures as well as technology stocks in Europe and Asia.Hong Kong Jobless Rate Was Rising Before Virus Hit (5:02 p.m. HK)The jobless rate rose in January for a fourth straight month, reaching its highest level since 2016 as Hong Kong’s businesses struggle from the political unrest and also from the disruption starting late in the month caused by the coronavirus outbreak.The city’s jobless rate rose to 3.4% for the November to January period, the same as the median forecast in a survey of economists. The string of increases was the longest since 2009, in the aftermath of the global financial crisis. The data does not reflect the full impact of shutdowns from the coronavirus outbreak.HK to Extend Virus Monitoring, Lab Tests (4:54 p.m. HK)Hong Kong health authorities will extend novel coronavirus surveillance to include testing outpatients and those at emergency wards, Under Secretary for Food and Health Chui Tak-yi said at a briefing.China Outbreak May Peak in Some Areas in Feb.: Expert (4:41 p.m. HK)Zhong Nanshan, a respiratory disease expert advising the Chinese government, expects the coronavirus outbreak to peak by mid to late February in southern China, Xinhua reported. The forecast is based on mathematical models and governments’ control measures.IMF Cuts Nigerian Growth Forecast (4:15 p.m. HK)The International Monetary Fund cut its estimate for Nigerian economic growth, as oil prices slump amid the coronavirus outbreak. The forecast for Africa’s top crude producer was lowered to 2% from 2.5%, the lender said in a statement on Monday.SAT Tests Scrapped For Chinese Students (3:43 p.m. HK)The College Board, which organizes the standardized Scholastic Assessment Test, or SAT, for admission to colleges in the U.S., canceled the March 14 test for all registered students traveling from China to other locations for the exam.The test will be administered in Hong Kong, Macau and Singapore, but not in mainland China.Singapore Budgets Millions to Counter Virus (3:09 p.m. HK)Singaporean authorities are setting aside an additional S$800 million ($575 million) in the city-state’s budget to support efforts to fight and contain the virus, Deputy Prime Minister Heng Swee Keat told Parliament.Earlier this month, Singapore Airlines and subsidiary SilkAir announced a temporary reduction in flight services across their global network, owing to weak demand as a result of the outbreak.Shanghai Schools to Remain Suspended (3 p.m. HK)Colleges and schools in China’s financial hub will remain suspended in March due to the outbreak and online teaching will be provided, the city’s government said. It said it would decide when to reopen campuses based on the development of the epidemic.Philippines to Allow Workers to Return to Hong Kong, Macau (3 p.m. HK)The Southeast Asian nation will allow its citizens employed in Hong Kong and Macau to return to their jobs, partially lifting a travel ban imposed weeks ago to prevent the virus’s spread.The government will exempt those working in the two cities from the ban “subject to certain formalities,” Foreign Affairs Undersecretary Brigido Dulay tweeted. It comes after the government lifted a days-old travel ban on Taiwan on Feb. 14.New Doctor Fatality (2:03 p.m. HK)State-run CCTV reported the death of neurosurgery expert Liu Zhiming, director of Wuhan Wuchang Hospital, underscoring the risks of the virus for medical workers on its front lines. It comes after the death earlier this month of Li Wenliang, a city doctor who was sanctioned for attempting to bring the virus to light early on -- and whose death sparked a rare outpouring of public anger in the country.More than 1,700 medical workers have been infected by the coronavirus, according to China’s National Health Commission, most of them in Wuhan. At least six have died.Macau Casinos Back in Play (11:26 a.m.)The casinos were cleared to open again on Thursday, a move that could lift a sector that’s already been reeling from China’s economic and a shift to gambling operations in Southeast Asia.Lei Wai Nong, the territory’s secretary for economy and finance, said at a briefing that casinos can reopen Feb. 20, though it will be conditional based on criteria on which he didn’t elaborate. Wynn Resorts Ltd., a major operator, said it will open its casinos in a “phased approach that matches guest demand and employee availability.”China Aviation Shrinks Due to Virus (11:02 a.m. HK)The Chinese aviation market had been projected to overtake America’s this decade. Then the virus struck. Now it’s shrunk to such an extent that it’s fallen from third to 25th -- behind Portugal.Airlines have slashed capacity due to the outbreak, with global carriers dropping some 1.7 million seats -- that’s nearly 80% of capacity -- from China services from Jan. 20 to Feb. 17. Chinese airlines also slashed 10.4 million seats domestically.Hong Kong Wants Virus Funding ‘Soon as Possible’: Lam (10:35 a.m. HK)Hong Kong’s government seeks close to HK$28 billion ($3.6 billion) in funding from the city’s Legislative Council for virus control and prevention measures, leader Carrie Lam said, following weeks of criticism from groups who said she wasn’t doing enough to protect the financial hub.Lam revised a previous funding request for “at least” HK$25 billion after further review and industry consultation, she told reporters at a weekly briefing before meeting with Hong Kong’s Executive Council.“I sincerely hope legislators could pass the funding application as soon as possible. We will explain the urgency and implementation timetable for each measure in the documents submitted to LegCo,” she said.\--With assistance from Shinhye Kang, Dominic Lau, Drew Armstrong, Isabel Reynolds, Anand Krishnamoorthy, Natalie Lung, Peter Elstrom, Sam Kim and Derek Wallbank.To contact Bloomberg News staff for this story: Karen Leigh in Hong Kong at [email protected] contact the editors responsible for this story: Rachel Chang at [email protected], ;Adveith Nair at [email protected], Karen Leigh, Jeff SutherlandFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 11:34 am

Top news and what to watch in the markets on Tuesday, February 18, 2020.

on 18/02/2020 at 11:00 am

(Bloomberg) -- The Federal Reserve has doled out tens of billions to calm the short-term lending markets after they went haywire in September.But initiatives by the U.S. Treasury Department -- to ensure it always has enough cash to pay its bills as the deficit soars to a trillion dollars -- could make it harder for the Fed to prevent a repeat.As the department copes with higher spending, large swings in the amount of money it has on deposit with the central bank have already undercut the Fed’s ability to keep bank reserves stable. Last year, one particularly big shift helped to drain so much liquidity from the banking system that it contributed to a spike in overnight lending rates.Now, as Treasury considers setting aside even more money, market watchers say the swings are bound to get worse. That could lead to more disruptions and upend the Fed’s goal of scaling back its involvement in the repo market.Treasury’s cash needs “have created dislocations that are putting greater strains on the Fed’s reserve management and funding markets,” said Ward McCarthy, chief financial economist at Jefferies & Co. and a former senior economist at the Richmond Fed. “But the Treasury needs to fund the government, so the Fed has to work around around that.”The situation also underscores how America’s fiscal imbalance, which has been exacerbated by the combination of tax cuts and spending increases under the Trump administration, is putting strains on the financial system.Though arcane even in finance circles, repurchase agreements -- or repos for short -- are what keep the global capital markets spinning. And that includes the $16.7 trillion market for U.S. government debt.Big SwingsThe Treasury General Account, as it’s officially known, operates like the government’s checking account at the Fed. Money comes in when taxes are paid out of bank accounts of individuals and corporations (which drains banks’ reserves held at the New York Fed) and money goes out when the government pays its bills (which does the opposite).While the Fed has had to deal with fluctuations before, the sheer size and swings of the account in recent years stand out. Under the Obama administration, Treasury in 2015 instituted a policy of keeping at least five days’ worth of expenditures, or a minimum of $150 billion, in case unexpected disruptions from natural disasters or cyber attacks locked it out of the debt markets. Prior to the change, Treasury had enough cash for just two days.But that cushion has grown and become more volatile as deficit spending rose and cash flows in and out of the account increased. And the fluctuations have at times been exacerbated when Congress dragged its heels on the debt limit.Since the start of 2019, the account balance has averaged $303 billion, versus about $240 billion in the prior four years. It has also swung as high as $451 billion and dropped as low as $112 billion.All that money flowing in and out of Treasury’s account has made it harder for the Fed to keep reserves in the banking system stable, and crucially, to manage monetary policy. That’s contributed to abrupt swings in repo rates, which spiked to 10% in mid-September.The turmoil forced the Fed to step in with tens of billions of dollars in emergency repo financing. It also began to purchase $60 billion a month in T-bills to permanently lift reserves. The central bank has continued to backstop the repo market -- in various amounts and over various terms -- so it doesn’t seize up again. It has said it will continue its repo operations at least through April, but ultimately wants to step back from active involvement once reserves rise enough to ensure ample liquidity in the banking system.Of course, one way Treasury could help is by keeping most of its cash in accounts of the nation’s commercial banks instead, as it did before the financial crisis. That would keep the Fed from having to manage the daily swings in Treasury’s cash cushion to prevent liquidity from drying up.Treasury Secretary Steven Mnuchin isn’t convinced. In fact, he suggested such a shift could lead to even bigger financial-stability problems.“If you’re a regulator, you wouldn’t want a major bank’s balance sheet to go up and down based upon what could be very, very large cash movements,” he told Bloomberg News in an interview last month. “It shouldn’t impact the market one way or another whether we put money at the Fed or at a bank.”Fed Chairman Jerome Powell said in December that bank officials had yet to discuss the topic with their Treasury counterparts. Nevertheless, he added that “there may come a time when we talk about that.”Even if there’s some kind of agreement between the two, some analysts say the best, and perhaps only, option for the Fed is to simply accept the fact that its repo operations have become a fact of life -- and to stand ready to provide more cash whenever it’s needed.“The Fed should just plan to do repos, beyond just as an emergency tool, as needed,” said Wrightson ICAP’s Lou Crandall.To contact the reporters on this story: Liz Capo McCormick in New York at [email protected];Saleha Mohsin in Washington at [email protected] contact the editors responsible for this story: David Papadopoulos at pap[email protected], Michael Tsang, Larry ReibsteinFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 10:06 am

(Bloomberg) -- Tesla Inc.’s potential to become a key battery supplier for electric vehicles has prompted a bearish analyst on the carmaker to nearly double his bull case for the shares.Morgan Stanley’s Adam Jonas increased his most optimistic projection for Tesla to $1,200 a share from $650. That’s about 50% above the U.S. company’s $800.03 closing price Friday and would give Tesla a market capitalization of $220 billion. Jonas raised his base case target to $500 a share from $360 but reiterated his underweight recommendation.The new bull scenario is based on an “aggressive assumption” that Tesla could win 30% of the global electric-vehicle market, Jonas wrote in a report to clients. This would include 4 million car deliveries by 2030 plus the potential for Tesla to supply powertrains, including batteries and electric motors, to other auto manufacturers. In 2019, the company handed over 367,500 vehicles to customers.Tesla shares have had a wild ride this year. The stock is up 91% in 2020, a jump variously attributed to good results, a short squeeze, the opening of a key new factory in China or an extreme case of investor FOMO -- or all of the above. The surge cooled before the Palo Alto, California-based company undertook a $2 billion share offering Friday, priced at the steepest discount the carmaker has ever given to its investors.Analysts either have yet to adjust to the gain or remain highly skeptical. The average share-price target among analysts tracked by Bloomberg is $489.47, or 39% below the current level.Morgan Stanley’s bear case for the stock is now $220. While that’s a 91% improvement from the broker’s most recent worst-price scenario, Jonas is sticking to his recommendation against buying the stock, saying the risk-reward balance on the manufacturer continues to be “unfavorable.”\--With assistance from Lisa Pham and Catherine Larkin.To contact the reporter on this story: Sam Unsted in London at [email protected] contact the editors responsible for this story: Beth Mellor at [email protected], Tom Lavell, Namitha JagadeeshFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 9:31 am

(Bloomberg) -- Apple Inc.’s shares fell 4.1% in pre-market trading after the company said the fallout from the coronavirus will cause it to miss its sales targets this quarter, sending shockwaves across tech stocks globally.Shares of Apple’s European suppliers fell in early trading, echoing an earlier decline in their Asian counterparts. Europe’s benchmark Stoxx Tech Index fell as much as 1.6% on Tuesday, with Dialog Semiconductor Plc down 6%, AMS AG dropping 5.1% and STMicroelectronics NV falling 4.8%. Equipment makers like ASML Holding NV were also affected by the broader selloff. The shares fell as much as 2.9% in Amsterdam.Mirabaud’s Neil Campling said that Apple’s warning threatens to open the “floodgates” as the virus affects supply chains around the world. The Chinese factories that make the iPhone, Apple’s main revenue generator, are ramping up production slower than expected as they work to contain the virus, which has killed more than 1,800 people in the country. Chinese demand has also been held down as stores closed and customers stayed away, the Cupertino, California-based company said in a statement on Monday.“The semiconductor industry and supply chain is both complex and truly global,” Campling said in emailed comments. “As we navigate through the rest of the quarter, we continue to see a high probability of there being a plethora of downward revisions.”In Asia, Apple suppliers TDK Corp. dropped 4.7% and Murata Manufacturing Co. declined 4.2% in Tokyo. In the U.S., futures on the Nasdaq 100 are down 0.9%.Read more: ‘Nightmare’ for Global Tech: Virus Fallout Is Just BeginningUntil now, tech stocks have been on a tear this year, with the U.S. Nasdaq 100 Index up 10% in 2020. Goldman Sachs Group Inc. analysts said that they see the impact from the virus as a “temporary issue” for Apple, even as they reduced their forecasts for the March and June quarters.Here’s what analysts are saying about Apple’s outlook cut and the impact on the global semiconductor supply chain:ODDO (Stephane Houri)Apple didn’t provide a new forecast for fiscal 2Q20 revenue on Monday and it’s still uncertain -- probably for the company, too -- how much the guidance will be affectedApple is expected to announce a new, cheaper iPhone model this spring, and it’s unclear if delays in China will affect that launchRead-across is negative for companies exposed to Apple, such as AMS, STMicro, Dialog and SoitecGOLDMAN SACHS (Rod Hall)As with every other company operating in China, the situation on the ground continues to evolveWhile the firm reduced Apple forecasts for the March and June quarters, this is a temporary issue for AppleRegarding June quarter, effects are mainly supply-oriented as expected new products like the SE 2 and iPad Pro roll out potentially push out and Apple finds itself without enough inventory more broadlyGoldman has a neutral rating on AppleERSTE GROUP BANK (Daniel Lion)Apple’s warning will not be the last; AMS will be hit as they haven’t factored in any impact from the coronavirus, STMicro should also see some slowdown while NXP won’t be able to avoid an impact, eitherThe issue is the disturbed supply chain, which will impact most producers to some extentHard to say if the impact will be limited to this quarter\--With assistance from William Canny.To contact the reporters on this story: Kit Rees in London at [email protected];Amy Thomson in London at [email protected] contact the editors responsible for this story: Giles Turner at [email protected];Beth Mellor at [email protected] more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 9:09 am

(Bloomberg) -- HSBC Holdings Plc is set to slash about 35,000 staff from its workforce and is taking $7.3 billion of charges in its most dramatic overhaul under Chairman Mark Tucker.The London-based lender is targeting cost reductions of $4.5 billion at underperforming units in the U.S. and Europe. In the meantime, it will accelerate investments in Asia, where the bank draws the bulk of its profit but is grappling with risks from the Hong Kong protests and China’s coronavirus outbreak. The board is also deciding whether the sweeping overhaul announced by interim boss Noel Quinn is enough to secure him the top job permanently.“Parts of our business are not delivering acceptable returns,” Quinn said in the bank’s full-year earnings statement on Tuesday. Quinn, who is also exiting several business lines, also said staff numbers could drop by 15% within the next three years.“We are looking at an endgame of closer to 200,000,” he said in an interview with Bloomberg.The cutbacks will extend into parts of HSBC’s European and U.S. investment banking businesses, particularly in fixed income. In the U.S., assets linked to its trading operations will be nearly halved under the new plan. HSBC is also scaling bank its retail network by 30%.The shares fell more than 5% in London trading, the most in three years and the biggest drop among Europe’s banks. HSBC also suspended share buybacks for 2020 and 2021, when most of the restructuring will occur.The fresh strategy makes sense, but is “on the conservative side,” Alan Higgins, chief investment officer of Coutts & Co., said on Bloomberg television.The lender will bolster its investment banking units in Asia and the Middle East. Questions have mounted over HSBC’s relatively poor returns given its exposure to many of the world’s fastest-growing economies, particularly China.“We are intending to exit a lot of domestically-focused customers in Europe and the U.S. on the global banking side,” Chief Financial Officer Ewen Stevenson said in a Bloomberg Television interview. Management will be “surgical and ruthless” in targeting parts of the business where returns aren’t acceptable, he said.Executives said on a conference call that the loan book has shown “great resilience” so far in the face of the coronavirus outbreak. However, the bank warned the virus and economic disruption in Hong Kong may impact its 2020 performance.“While reduced capital allocation to low-return businesses is a positive, we expect weaker profitability in what have traditionally been strong markets, primarily Hong Kong,” Morgan Stanley analysts wrote, maintaining their underweight rating on HSBC.Speculation had mounted months ago that Quinn was likely to get the CEO’s role on a permanent basis, but that has faded. People familiar with the matter said earlier this month that HSBC was seriously considering external candidates.On the conference call, Tucker declined to clarify whether the bank is closer to finding its next CEO.Stevenson also said there was no update on HSBC’s review of its French division. Efforts to sell HSBC’s French retail business are progressing, people familiar with the matter have said.The main points of today’s earnings report include:HSBC’s adjusted pretax profit of $22.2 billion beat estimates, despite themulti-billion dollar charge for the restructuring. HSBC had been forecast to report adjusted pretax profit of $21.8 billion, according to analysts.The bank plans gross asset reduction of more than $100 billion by the end of 2022, and a lowered cost base of $31 billion or less by 2022Consumer banking and private banking will be merged into a single wealth platformGlobal banking and commercial banking middle and back offices to be combinedGeographic reporting lines will fall from seven to four(Adds London stock slide, details from conference call from 6th paragraph.)To contact the reporters on this story: Harry Wilson in London at [email protected];Alfred Liu in Hong Kong at [email protected] contact the editors responsible for this story: Ambereen Choudhury at [email protected], Jonas BergmanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 9:07 am

French Finance Minister Bruno Le Maire warned Renault on Tuesday against shutting factories in France and cutting jobs there after the carmaker announced "no taboos" cost cuts last week. Renault reported on Friday its first loss in a decade which triggered a commitment to cut costs by 2 billion euros ($2.2 billion) over the next three years, in a plan that could also hit plants in France, its interim chief said. "The state will play its role as shareholder in Renault to make sure that the choices which will be made will not go against jobs and factories in France," Le Maire told journalists in Brussels, adding the government would talk with the carmaker and remain "very vigilant" on its cost cuts strategy.

on 18/02/2020 at 8:23 am

(Bloomberg) -- One of the world’s richest corners has become a magnet for a growing number of Wall Street firms.The Nordic countries -- best known for their universal welfare models and domination of world happiness rankings -- now have a surplus of cash after years of central bank stimulus. That’s prompting banks from across the globe to line up with advice on everything from money management to mergers and acquisitions.JPMorgan Chase & Co, Goldman Sachs Group Inc. and BNP Paribas SA have all recently announced they’re either expanding existing operations or creating new offices in the Nordic region. Many of them are interested in hiring locally to build their presence.“We see an opportunity locally to grow our investment banking and private banking business organically,” said Klaus Thune, co-head of Nordic banking at JPMorgan, which has about 40 bankers in London handling the Nordic corporate market. He also says that “there are a lot of new M&A mandates coming through.”Eirik Winter, chief executive officer in the Nordics at BNP Paribas, says the region’s appeal lies in its “tendency to grow a bit faster than the rest of Europe and in some cases even faster than the U.S.”And big U.S.-based investment managers are also turning to the region. Neuberger Berman recently opened an office in Stockholm, while Nuveen added to its presence in Scandinavia by creating an office in Copenhagen.JPMorgan says it’s relocating bankers to the Nordic region. It also wants to hire as it tries to expand a portfolio of ultra-high net worth clients, and do more investment banking. Goldman Sachs, which already has a Nordic base in Stockholm, will open an office in Copenhagen in April, starting with around 10 people.Pension funds in particular are desperate for investment ideas as entrenched negative rates and high stock valuations push the industry into increasingly risky corners of the asset market. Many are relying more than ever on so-called alternative investments, which tend to be illiquid and difficult to price.Nordic WealthThe region has been able to amass its wealth despite having one of the world’s highest tax burdens. It also boasts some of the smallest gaps between rich and not-so-rich, while GDP-per-capita rankings are some of the highest on the planet. The banks and asset managers Bloomberg spoke to also cited the region’s stable political and regulatory environment, and a corporate landscape in which there’s considerable appetite for debt issuance and M&A.BNP, which employs around 800 people in the Nordics, hired several dozen people in the past year and a half. It wants to focus on “areas where we are less known, such as M&A, investment banking and in equity markets,” Winter said. “We’re not ‘smile and dial’ bankers who fly in for deals.”New York-based investment manager Neuberger Berman has seen its business in the Nordic region grow by more than 50% a year since 2005. It relied on flying bankers in and out of the region, but has now decided it needs an office in the Swedish capital.“At the end of the day, we also need to have a few feet on the ground and not only operating from a hotel reception or a hotel lobby,” Mark Oestergaard, head of the Nordic operations, said. “That is to signal to the clients that this is not just for a brief moment in time in the investment industry. This is for the long haul.”It’s also worth noting that roughly a third of Nordic corporate deals involve a buyer outside the region, and in most cases that buyer will bring its own banks. The figure is even higher, when it comes to private-equity deals, according to Nordic Knowledge Partners.“The more foreign interest in the market, the higher the share of global banks,” NKP’s chief executive officer, Andreas von Buchwald, said. “Typically buyers would want their Goldman Sachs, rather than depend entirely on local banks.”Meanwhile, some of the biggest Nordic banks are in the middle of sweeping cost-cut programs that are eating into personnel numbers.Frank Vang-Jensen, the new CEO of Nordea Bank Abp, has slashed the lender’s wholesale operations after shareholders demanded bigger returns. The second-biggest Nordic lender, Danske Bank A/S, has frozen headcount as it grapples with the consequences of a huge money-laundering scandal.But Nordic banks are keen to hold on to their business, with the resources they have.Nordea plans to increase its asset management operations by doubling inflows from pension funds, Snorre Storset, head of wealth management, said. He’s also targeting private banking for growth, but points to the “tough competition” as “others also see that it’s very attractive.”Danske wants “to show that we are a bank that can both provide solid investment advice and can provide clear and relevant perspectives on customers’ financial opportunities in the light of their individual situation,” according to John Poulsen, head of investments.But according to Kristiina Hirva, a Helsinki-based attorney with DLA Piper, international banks with their sights set on the Nordics face few barriers.“There are a lot of real estate transactions, a lot of M&A transactions,” said Hirva, whose employer is among those to have expanded in the Nordics, and now has 450 lawyers in the Nordic region alone.“At least at the moment there seems to be a place for all of them,” she said. And that includes “new players in the sandbox.”(Adds reference to Danske share price decline)\--With assistance from Jonas Cho Walsgard.To contact the reporters on this story: Frances Schwartzkopff in Copenhagen at [email protected];Hanna Hoikkala in Stockholm at [email protected] contact the editor responsible for this story: Tasneem Hanfi Brögger at [email protected] more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 8:05 am

(Bloomberg Opinion) -- In 2014 the French manufacturer Alstom SA was burning cash, its debt was rising and it was under investigation in the U.S. for alleged bribery. By selling its sprawling energy division to its better capitalized rival General Electric Co. the following year, Alstom shed 70% of its revenue, paid down borrowings, and refocused on its remaining business: building trains. In hindsight, it played a blinder.Five years later Alstom is involved in another transformational deal, only this time it’s in the driving seat, while Canadian manufacturer Bombardier Inc. is the one in need of emergency balance sheet help, having burned through cash because of delayed aircraft projects and mismanaged rail contracts.On Monday the Canadian conglomerate completed a downsizing that’s every bit as drastic as Alstom’s was. The French manufacturer has agreed to pay about 6 billion euros ($6.5 billion) for Bombardier’s rail activities, which account for about half of the Canadian company’s sales. Alstom will own a globe-spanning rail business with 15.5 billion euros of combined sales and a 75 billion-euro order backlog. Having already announced an exit from commercial aviation, Bombardier will be left to focus on making private jets.The fossil-power assets that Alstom parted with in 2015 were hurt not long afterward by the rise of solar and wind power, forcing GE to book billions of dollars of impairments. GE is now mulling a sale of the steam turbine business. There’s reason to think Alstom’s trains acquisition will be a better deal than the one secured by the Americans.Unlike gas turbines, rail demand is booming because of urbanization and climate fears. Germany, where Bombardier’s train unit has its headquarters, plans to invest an astonishing 86 billion euros ($93 billion) in expanding and modernizing its railways by 2030. As long as Bombardier’s rail contracts aren’t in a worse state than is known publicly, and competition authorities agree to the takeover, Alstom should do fine.At first glance, it’s surprising that these two big train companies are stitching together a deal so soon after the European Commission blocked Alstom’s attempt to join with Siemens AG’s rail unit.  Alstom’s willingness to endure the approval process again attests to the new deal’s attractions and the more limited risk of it being blocked. While Alstom and Bombardier both have large European businesses, Bombardier isn’t a big player in European signalling or very high-speed trains, where the Commission’s antitrust worries are most acute. While getting bigger will help Alstom compete against Chinese rail colossus CRRC, that’s not the main appeal.Bombardier’s rail unit generated a derisory 0.8% operating return on sales in 2019 after it screwed up several large contracts. But Alstom is confident things will improve with better management; until recently Bombardier’s profit margins were superior to Alstom’s. Meanwhile, Bombardier’s installed fleet of about 100,000 vehicles will provide lucrative servicing work.Including assumed liabilities, Alstom is paying about 12 times Bombardier’s historic adjusted operating profit, in line with similar transactions. Alstom’s own shares trade on more than 17 times operating profit, according to Bloomberg data. It is acquiring a business with similar revenue, while paying a lot less than its own 11 billion-euro market capitalization.Alstom’s share price has more than doubled since 2016 thanks to strong orders and those better margins. That explains why it’s funding most of the transaction with equity, rather than debt. Alstom’s shareholders will be asked to contribute 2 billion euros via a rights issue, with a bigger chunk coming from Canadian pension fund Caisse de Depot et Placement du Quebec (CDPQ), which will have an 18% stake in the combined company.About 400 million euros in promised yearly cost savings — worth about 3 billion euros to Alstom shareholders — won’t depend much on plant closures, which can be politically difficult and expensive. That’s reassuring for investors and employees.For Bombardier, the benefits don’t look as impressive, reflecting the pressure to sell. The transaction lets it shift about $1 billion of pension liabilities to Alstom but Bombardier must pay to retire some convertible stock that it sold to CDPQ back in 2015. This means it will receive only about $4.5 billion of net proceeds to help pay down its $9 billion debt pile. Net indebtedness should decline to about $2.5 billion, or about 2.5 times the Ebitda it expects to generate from its remaining business aviation activities.Such leverage is still ample for an aerospace company, albeit one with a refreshed lineup of private jets and a $14 billion order backlog. Unlike trains, corporate aircraft have a more uncertain future in an era of climate-related flight shame. Still, the lesson of Alstom’s recent history is that it’s possible to shrink and thrive. On an investor call this week, Alstom’s senior managers sounded like they couldn’t believe their luck in getting hold of Bombardier trains given such a rosy demand outlook. They shouldn’t celebrate just yet. When GE announced its takeover of Alstom’s energy business in 2014, Siemens AG prepared a counterbid. Siemens also has history with Bombardier, having held talks about a possible combination of their rail businesses in 2017. For now, there’s no sign of a rerun — the antitrust hurdles are off-putting — but the Germans will be watching closely.To contact the author of this story: Chris Bryant at [email protected] contact the editor responsible for this story: James Boxell at [email protected] column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 7:28 am

Heavy rains sent Mississippi’s Pearl River to its highest level since 1983, forcing the evacuation of low-lying areas of Jackson, the state capital. Photo: Rory Doyle for The Wall Street Journal

on 18/02/2020 at 7:27 am

(Bloomberg) -- Concern is mounting over the speed of a nearly $900 billion rebound in Chinese equities that’s been driven by bets of sustained government support.The CSI 300 index of stocks in Shanghai and Shenzhen has climbed 10% since a record sell-off earlier this month, wiping out the slide following the end of the extended Lunar New Year break due to the coronavirus outbreak. The ChiNext gauge of smaller companies, typically the most speculative part of the market, has popped 21% from its bottom to be the best performer in Asia Pacific this year.But the central bank’s move to withdraw another 220 billion yuan ($31.5 billion) from the banking system on Tuesday citing ample liquidity, after pulling out a net 700 billion yuan the day before, may show the risks of chasing further gains. The CSI 300 index closed down 0.5% Tuesday while the ChiNext climbed 1.2%, again notching its highest finish since December 2016.“Shares are acting like we’re in times of exuberance, not the middle of a huge public health crisis,” said Shi Junbo, a fund manager at Hangzhou Xiyan Asset Management Co. in Beijing. “But as a rule, when shares rise solely on liquidity hopes, they will without exception tumble. We’re not getting away from the impact of the virus on markets once and for all.”The ChiNext recouped post-holiday losses just two days after the A share market reopened to the virus scare on Feb. 3 with a record $720 billion plunge, followed by the CSI 300’s jump on Monday to surpass its close before the break. While the ChiNext is up 21% this year, the CSI 300 is down 1%. Many overseas markets are up so far in 2020 despite the spreading of the virus globally, with the S&P 500 Index rising 4.6%.However keen Beijing is to mitigate economic pain, officials are also facing constraints on aggressive monetary easing as they struggle with a mountain of debt built up in the aftermath of the 2008 global financial crisis. The government’s 4 trillion yuan stimulus back then helped give rise to a ballooned shadow banking industry that threatened to destabilize the financial system, a heavily indebted state sector that local authorities bear contingent liabilities for and increasingly leveraged households as home prices surged.In downplaying deleveraging efforts of the past few years, China’s government has cut taxes, lowered interest rates and allowed local governments to accelerate borrowing.“You can’t expect China to keep rolling out supportive policies,” said Dai Ming, a Shanghai-based fund manager with Hengsheng Asset Management Co. “The regulators will likely monitor the effects of those on boosting the economy, before their next policy moves.” He plans to continue selling into the rally.Everything China Is Doing to Support Its Virus-hit MarketsThe rapidly rising valuations since the post-holiday slump have driven some investors to wonder how long the bullishness may last. Some are getting ready to take profit and exit once the outbreak shows signs of steady easing. The government’s historical caution against inflating asset bubbles, the still-unknown economic impact of shutdowns due to coronavirus-caused movement curbs and uncertainty over how the epidemic may evolve are weighing on their sentiment.To be sure, some traders are less worried, arguing that the health crisis has created an unprecedented situation and that the government will go all out to put a floor under the economic slowdown.“Expectations of more liquidity to be unleashed means it won’t be bad year for stocks,” said Wang Cheng, a fund manager at Shanghai Lubao Investment Management Co. “More opportunities may emerge in the months ahead when the government beefs up economic stimulus policies.”Even though officials have insisted the virus outbreak wouldn’t stop the world’s second-largest economy from accomplishing its already-set goals, economists have joined one another to cut growth forecasts. China’s real gross domestic product is now forecast to grow about 5.5% this year, according to the median result in a Bloomberg survey. That’s down from 5.9% last month.Wu Yuefeng, a fund manager at Funding Capital Management Beijing Co. who is holding on to semiconductor and gaming shares, is enjoying the outperformance while it lasts. But he’s also keeping an eye on the exit.“I’m gradually moving closer to the door as once the virus situation improves to avoid a stampede.”(Updates with closing levels in second, third and fifth paragraphs.)\--With assistance from Amanda Wang.To contact Bloomberg News staff for this story: April Ma in Beijing at [email protected] contact the editors responsible for this story: Sofia Horta e Costa at [email protected], Fran Wang, Kevin KingsburyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

on 18/02/2020 at 7:08 am

When Kristin and Thomas Schmitt took out a mortgage and bought a house last summer, the German couple's dream looked as if it was coming true. Two months later, they learned that the tire factory where both work would be shut down early next year. A malaise in Germany's mighty automobile industry, caused by weaker demand from abroad, stricter emission rules and electrification, is starting to leave a wider mark on Europe's largest economy by pushing up unemployment, eroding job security and hitting pay.

on 18/02/2020 at 6:12 am

The Boy Scouts of America said on Tuesday it had filed for Chapter 11 bankruptcy amid a flood of lawsuits over allegations of child sexual abuse stretching back decades. The Boy Scouts, based in Irving, Texas, has said that it sincerely apologizes to anyone harmed, that it believes the accusers and that it encourages victims to come forward. Founded in 1910, the organization has been overwhelmed by hundreds of claims after several states, including New York, removed legal hurdles that had barred people from suing over old allegations of child sex abuse.

on 18/02/2020 at 5:06 am

Could British American Tobacco p.l.c. (LON:BATS) be an attractive dividend share to own for the long haul? Investors...

on 18/02/2020 at 4:31 am

Is your Pier 1 Imports store closing? Here is the list of U.S. locations slated to close or that recently closed, which includes more than 330 stores.

on 18/02/2020 at 4:20 am