After the election of Jair Bolsonaro, there was some skepticism about the new administration's ability to liberalize the economy. His finance minister Paulo Guedes is trying to change those perceptions. John Pual Rathbone and Andres Schipani report at the FT: The election victory in October of Mr Bolsonaro, a former army captain who admires US president Donald Trump and has frequently praised Brazil’s military dictatorship, was widely seen as part of the global shift to rightwing nationalism and a threat to Brazilian democracy. Mr Guedes insisted that was a mischaracterisation. “It is the … [Read more...]
Morgan Stanley Calls an “Earnings Recession”
Morgan Stanley's chief US equity strategist, Michael Wilson, has predicted what's known as an "earnings recession," for 2019. The FT reports: A string of disappointing forecasts from S&P 500 companies has led one of Wall Street’s leading market strategists to warn of a potential drop in earnings this year. Michael Wilson, chief US equity strategist for Morgan Stanley, slashed his base-case estimate for 2019 earnings per share growth to 1 per cent, down from 4.3 per cent. By contrast, Wall Street’s consensus estimate calls for earnings to grow 5 per cent to $170 a share, according to … [Read more...]
Cyber-War: Walmart Wants Amazon’s Ad Business
With the runaway success of Amazon's ad business, Walmart executives have become envious. They would like to replicate Amazon's success on their own websites. Bloomberg's Matthew Boyle reports: Walmart Inc. is big in almost every way—4,755 stores, 1.5 million employees and $380 billion in revenue in the U.S. alone. But one part of the world’s largest retailer remains minuscule. “We have a tiny ad business,” Chief Executive Officer Doug McMillon told investors in October. “It could be bigger.” With about 300 million shoppers visiting its stores each month, according to Forrester … [Read more...]
Germany Doesn’t Like Facebook’s Data Collection
Germany has begun a crackdown on internet companies by telling Facebook it may no longer collect data about users across the internet without their consent. The move is a direct hit to Facebook's business model. Sam Schechner and Sara Germano report for The Wall Street Journal: Germany ordered Facebook FB -0.70% to stop combining data it collects about users’ activities across the internet without their consent, a novel application of competition law that strikes at a cornerstone of the social-media giant’s business model. In a decision issued Thursday, Germany’s Federal Cartel Office, the … [Read more...]
Bank Bulk Up: BB&T Buys SunTrust
In a move to compete with the larger tier of banks, BB&T will acquire SunTrust Bank in the largest banking merger in a decade. In the press release discussing the deal, management was focused on cutting costs by closing brick and mortar locations, while putting increased funding into the combined bank's digital operations. Bloomberg's Hannah Levitt reports: Industry executives have long predicted a wave of bank mergers that until Thursday had played out only in smaller or midsize deals. Brian Moynihan, chief executive officer of Bank of America Corp., said last month he could envision the … [Read more...]
Where Did all the Investors Go?
Volatility speculation (and hedging) seems to be in fashion. Take the ProShares Ultra Short-term VIX ETF for example. The fund seeks to deliver 1.5X the performance of the short-term VIX futures contract. The fund isn’t terribly large with only $300 million in assets, but consider these volume figures. In 2016, the ETF traded 51 million shares. In 2017, volume increased to 814 million shares. Then last year, volume soared to over 2 billion shares. At an average price of about $60 per share, the dollar volume of the ETF was about $120 billion, or 400X the assets in the fund. You read that … [Read more...]
How High Can Cloud Computing Soar?
Despite predictions of difficulty for cloud computing, the business continues to perform well. Bloomberg reports that despite uncertainty over the market for cloud computing solutions, investors have been rewarded for their faith in the business. Matt Day and Jeran Wittenstein write: Earnings reports from the biggest providers of internet-based computing services – Amazon.com Inc., Microsoft Corp., and Alphabet Inc.’s Google – showed that these companies are grabbing a larger share of business technology spending, defying warnings from some of their suppliers that a hot corner of the industry … [Read more...]
After Storied Career, Bill Gross Retires
Bill Gross, manager of the Janus Henderson Global Unconstrained Bond Fund, best known for his time managing the Pacific Investment Management Co.’s Total Return Fund, has decided to retire. Gross has spent over forty years changing the way people invest in bonds. Bloomberg reports: Gross, who announced his retirement Monday, struggled in the last four years as head of the Janus Henderson Global Unconstrained Bond Fund. His performance failed to match the stellar track record he achieved while building Pacific Investment Management Co.’s Total Return Fund into a bond giant. “I look back … [Read more...]
India Targets E-Commerce Giants with new Rules
Amazon and Walmart (owner of Flipkart) are India's two largest e-commerce companies. New ownership rules coming into effect in India are about to hammer their businesses. Bloomberg's Saritha Rai reports: Amazon.com Inc. and Walmart Inc. suffered a blow in India, the next frontier of e-commerce, when the government rejected requests to defer a deadline requiring online retailers to comply with tighter new rules starting on Friday. That means Amazon and Walmart-owned Flipkart, India’s two largest online retailers who dominate the market, won’t be able to sell the products of companies in … [Read more...]
Central Banks Are on a Gold Buying Spree
Central banks of countries trying to move away from dollar reserves are buying up gold in amazing numbers. Russia, Turkey and Kazakhstan were leaders in increased gold buying last, reports Henry Sanderson in the Financial Times. He goes on to write: Central banks bought a net $27bn worth of gold, driven by Russia, whose net purchases were the highest on record, according to the World Gold Council, an industry-backed body. Volumes came to 651.5 tonnes, an increase of 74 per cent on the previous year. The buying reflects continued efforts by emerging market central banks to diversify their … [Read more...]
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