Posts by Aaron Task
Aaron Task at Yahoo Finance 2 days ago
The Comcast-Time Warner Cable merger may be dead but cable M&A is alive and well -- and now featuring some international flair. Cable stocks jumped Wednesday in an otherwise lackluster tape after Luxembourg-based Altice (ATC.AS) announced plans to acquire a controlling stake in Suddenlink Communications from its private equity owners for $9.1 billion. The deal is relatively small and with 1.5 million subscribers, St. Louis-based Suddenlink is only the seventh-largest cable operator in the U.S. But the Suddenlink deal is widely viewed as a beachhead for Altice and founder Patrick Drahi's plans to tap the American cable industry. The Moroccan-born, French-bred Drahi is viewed as the John Malone of Europe, having built an empire largely via debt-financed acquisitions. In just the past year, Altice spent $35 billion on France's SFR and Portugal Telecom, according to Breaking Views. The company also has cable and telecom operations in Belgium, Switzerland, Israel and the Dominican Republic. The allusions to Malone are no accident as Drahi once worked for the American cable billionaire. After the Suddenlink deal, about 12% of Altice's portfolio would be based in America and "the goal is to be fifty-fifty," Altice CEO Dexter Goei said on a conference call with analysts Wednesday. "This is a very attractive market for us that'll be consolidating for many years to come." Goei noted Europe is about two times ahead of the U.S. in terms of broadband penetration, viewing that as an opportunity for the industry moving forward. "The churn numbers across U.S. cable are significant" relative to European counterparts, he said. "That, in our mind, has a lot to do with processes and customer care on the way to approach the retention of subscribers who tend to disconnect and reconnect, which is a very expensive proposition for an operator. And we think we can operate that and do a lot better." Getting to 50-50 would require Altice buying much bigger fish than Suddenlink and, sure enough, various news outlets report the firm is interested in acquiring Time Warner Cable (TWC). If true, that could put Drahi on a collision course with his former mentor. Malone's Liberty Broadband (LBRDA) is the biggest shareholder of Charter Communications (CHTR) and the two firms tried to acquire Time Warner Cable last year. Meanwhile, Charter is moving ahead with plans to acquire Bright House Networks, the nation's sixth-largest cable company. Just to keep things really interesting (or is it confusing?) Malone's other company, Liberty Global (LBTYA) is rumored to be in merger talks with Britain's Vodafone (VOD). "If you listen to the conference call today, it's pretty clear [Altice] didn't want to stop with this first acquisition; they want to buy more," said Walt Piecyk, a tech and telecom analyst at BTIG. "They've executed quite well in Europe -- buying companies and finding synergies. They've been doing this in Europe for a while...and the U.S. market offers robust monthly payments." Amid all this dealmaking and deal-rumoring, Time Warner Cable shares rose 5% Wednesday while Cablevision (CVC), another potential target, soared 18%.
Aaron Task at Yahoo Finance 2 days ago
Kids say the darndest things...and so do central bankers. In a recent sit-down with Yahoo Finance's editorial team, San Francisco Fed President John Williams was asked about the risks of a bubble in the tech sector generally, and the Bay Area specifically. After saying he wasn't particularly concerned about a bubble in the SF Fed's district, Williams added: "On the West Coast we invent things without leverage, and on the East Coast you create [mostly] leverage." The implication, of course, is that while Wall Street titans are busy inventing derivatives and other such speculative financial tools that depend on leverage, California’s innovators are creating useful, tangible things that serve consumers and corporations – without the need for massive amounts of debt.
Williams didn't quite go that far but he also didn't back away from the comment in a follow-up conversation.
Williams demurred when I asked if Volcker's perspective represented the prevailing outlook at the Fed, saying, "I can only speak for myself."
'Masters of the Universe' No More
Aaron Task at Yahoo Finance 3 days ago
When Richard Thaler and Werner De Bondt published a 1985 study in the Journal of Finance called "Does the Market Overreact?," it was borderline heresy to suggest the markets weren't completely rational and efficient. Anyone who's paid even passing attention the past 20-odd years knows financial markets are prone to bouts of what Alan Greenspan called "irrational exuberance" and it's pessimistic counterpart. And, yet, "there are still people clinging to the belief markets are perfectly rational all the time despite what we've seen the last 20 years," Thaler tells me in the accompanying video. Ironically, the idea that supposedly learned people would believe something despite mountains of contrary evidence is something behavioral economics, the field Thaler and De Bondt helped birth, would at least try to factor into the analysis. Thaler's last book, Misbehaving, is an attempt to explain the origins of behavioral economics and "to explain some of the things we learned along the way." Among those lessons are two the University of Chicago Booth School professor says are particularly relevant to investors:
Aaron Task at Yahoo Finance 8 days ago
The global economy is undergoing such a major transformation it takes not one...not two...but three directors of the McKinsey Global Institute to write a book about it. But seriously folks... No Ordinary Disruption: The Four Global Forces Breaking All the Trends is that book. One of its co-authors, Richard Dobbs, joins me in the accompanying video to explain why he beleves these forces will have 3,000 times the impact of the Industrial Revolution. "We've built up an intuition about how the world works over our lives... we're now getting these disruptions happening at speed and scale we've never seen before," Dobbs says. "And they're all happening at same time. Such that our intuition about how the world works...a lot of that intuition could be wrong." The four 'global forces' detailed in the book are: Emerging markets growth and urbanization: McKinsey predicts that emerging markets will grow 75% faster than the rest of the world in the next decade. Between now and 2025, just 440 emerging market cities -- such as China's Tianjin, India's Surat and Brazil's Porto Alegre -- will generate nearly 50% of additional global GDP growth, the authors estimate. Technological breakthroughs and disruption: One example of the rapid pace of technological adoption; it took radio 38 years to get to 50 million users vs. just nine months for Twitter. McKinsey predicts 140 million service sector workers could be replaced by computers by 2025 and 75 million (more) jobs will done by robots. Realignment of global trading: 'Interconnectivity' isn't just about mobile communications and social networks. The global trading system is expanding far beyond the traditional post-War hubs of Europe and Asia, with China's plans to build a 'New Silk Road' through Central Asia to Europe being one obvious example. McKinsey predicts Central Asia will be the world's center of economic activity by 2025, "just north of where it was in the year 1 A.D." Aging global population: It's not just Russia, Japan and Western Europe...China's population is aging too and McKinsey predicts the global workforce will shrink two-thirds by 2030. By 2050, the book projects developed countries will have twice as many elderly people as children, a mirror image of the trend in 1950. These trends have major potential implications "for policymakers, investors, families, for how long you have to work, your children's education," Dobbs says. The bad news is most businesses, policymakers and individuals "know it's happening but [are] not reallocating resources or efforts nearly enough given the scale" of the transformation, he continues. Furthermore, many workers are ill-trained for the coming shifts and the U.S., particularly, faces a shortage of grads in the fields of science, technology, engineering, and mathematics, aka STEM.
Aaron Task at Yahoo Finance 9 days ago
President Obama's effort to pass the Trans-Pacific Partnership (TPP) hit a temporary roadblock earlier this week as Senate Democrats blocked debate on Trade Promotion Authority (TPA), which the President says he needs to finalize the massive trade deal between the U.S. and 11 other nations. But what many in the press called a "stinging rebuke" for the President indeed turned out to be a mere "procedural snafu", as the White House dubbed it.
Late Wednesday, Senate Democrats agreed to a compromise under which a seperate vote will be held on a bill designed to discourage alleged currency manipulation.
Rick Helfenbein, chairman of the board of the American Apparel and Footwear Association, says Democrats like Sen. Chuck Schumer (D-NY) were "holding out for more sugar in the coffee" but predicts TPP and TPA "absolutely will pass" in the end.
"Senator Schumer has been fighting for currency manipulation [legislation] for a long time - he wants to see it passed," Helfenbein says. "But do you really need it for TPP countries? Is New Zealand or Australia manipulating their currency? It's absurd."
Aaron Task at Yahoo Finance 10 days ago
Will they or won't they? It's the biggest parlor game on Wall Street: Will the Fed raise rates this year or remain at zero into 2016? San Francisco Fed President John Williamsis a voting member of the Federal Open Market Committee and thus presumably has better insight on the answer to that question. "At some point later this year is my forecast given how much the data has improved and the fact the economy is in much better condition than it has been last few years," he tells me in the accompanying video. Specifically, Williams cited the "progress we've made on the [full] employment mandate," as evinced by the unemployment rate falling to a seven-year low of 5.4% in April. That is "close to full employment," he says, forecasting the unemployment rate "will get down to 5% by year-end." At that juncture he expects "faster wage gains" and says the economy will be "running a little bit hot," citing a belief that "inflation has [already] stabilized and I think moving back to 2%." Having said that, Williams concedes the unemployment rate "overstates somewhat the strength of the labor market," noting still-elevated levels of individuals working part time who'd prefer full-time jobs and the lackluster labor participation rate, which remains mired in the low 60% range. But "with the economy continuing to grow and with job gains continuing to be pretty good we'll see broader measures of a full strength economy next year," he predicts.
Aaron Task at Yahoo Finance 11 days ago
When Fed Chair Janet Yellen said "equity-market valuations at this point generally are quite high” last week, a lot of veteran market participants recalled Alan Greenspan's infamous "irrational exuberance" comment in December 1996. If the pattern repeats, stocks will struggle a bit in the immediate aftermath of such Fed speak before racing higher to truly outrageous valuation levels. Among others, San Francisco Fed President John Williams is hoping a repeat performance isn't in the offing, as he recalls the "bad affects" of the eventual bursting of the 1990s stock bubble. Suggesting higher asset prices are "normal" in a low interest rate environment, Williams says "I don't think stock valuations are a huge risk [to the economy] but of course if it would continue [like in the late 1990s] it's something we'd pay close attention to." For the moment, at least, the SF Fed President is more concerned about "what would happen if long-term yields went up rapidly...what would it mean for the economy and thinking through risk scenarios for that." Chair Yellen expressed similar concerns in her speech last week, saying "there are potential dangers" in bonds and warning yields “could see a sharp jump” if (and when) the Fed starts to raise rates.
Aaron Task at Yahoo Finance 15 days ago
The Federal Reserve is facing new kind of conundrum: The U.S. economy is slowing even as labor costs are rising.
Consistent with the minuscule first-quarter GDP growth already reported, the government on Wednesday said Q1 productivity fell 1.9% on annualized basis -- marking the first back-to-back quarterly decline in productivity since 1993. In the same report, unit labor costs rose 5%, the most since the first quarter of 2014 and the latest sign of what the Fed called "modest upward pressure on wages" in last month's Beige Book report. Meanwhile, ADP reported private sector payrolls rose just 169,000 last month, the lowest since January 2014 and the fourth-straight month of weaker-than-expected growth.
The latest reports aren't making life any easier on Fed Chair Janet Yellen and the FOMC. While "further improvement" in both growth and the labor market remain elusive, a rebound in oil prices, rising wages and the recent backup in bond yields could mark the early stirrings of higher inflation expectations, if not actual inflation.
Aaron Task at Yahoo Finance 17 days ago
By now, you’ve probably heard that David Einhorn trashed the frackers, Doubleline's Jeff Gundlach said "rates have bottomed" and Bill Ackman didn't talk about CSX at the Ira Sohn Conference in New York on Monday. The annual confab brings together some of Wall Street's best and brightest for a worthy cause -- the Sohn Conference Foundation has raised more than $50 million to fight pediatric cancer in its 20-year history. And while the "big names" (understandably) get all the press, I wanted to highlight some of the "hidden gems" of Ira Sohn...and by that I don't necessarily mean the picks below but the people behind them. Larry Robbins of Glenview Capital may not be a household name but he's a big name on Wall Street; the self-desrcibed "suggestivist" investor pulled in $570 million in 2014, making him one of the 25 highest-paid hedge fund managers, The NYT reports.
Robbins' picks this year include:
Aaron Task at Yahoo Finance 21 days ago
Floyd Mayweather could earn as much as $200 million for Saturday night's fight with Manny Pacquiao, who is projected to make about $120 million for what is being billed as "The Fight of the Century". It seems (almost) pedestrian by comparison but Jameis Winston is looking at about $22 million, including a $14.5 million signing bonus, as the first pick in the NFL draft, according to reports. Lost in the eye-popping headlines is the fact that most professional athletes are about as good as managing their money as you and I are at their craft. Helping athletes deal with the financial windfall -- and responsibility -- of stardom is a "huge opportunity" for The Players' Tribune, according to producer (and former NBA All-Star) Jerry Stackhouse. "From a financial literacy standpoint we have to start early," he says. "Guys get to level where they feel they should know some things. It's ego. You're talking about some of best alpha males in the world. There's intuitive things we can do...be more creative so guys don't feel vulnerable and don't feel dumb. There's no blueprint for it." The conversation took a surprising turn when I asked Stackhouse, who played in the NBA from 1995 to 2013 and reportedly has a net worth of $60 million, about how he manages his own finances. "Coach [Dean] Smith put with a group Franklin Street [Partners]...and I've been there ever since," he says of the Chapel Hill-based trustee. Stackhouse remembers Smith calling him and telling him "you need to slow down a little" after seeing his financial statements during his rookie year. Until that moment, the player didn't know his former coach was even getting the reports. "Having that type of conversation with my dad about what to do with millions of dollars was out of his world, unrealistic," Stackhouse recalls. "So I had to trust [someone]. Coach Smith took it upon himself to be that person, to make sure protect me from myself. I'm so proud he took that initiative." Dean Smith, who coached at UNC from 1961 to 1997, passed away in February at the age of 83. "I miss him a lot," Stackhouse says. "He was a father figure to me." Watch the accompanying video to hear more from Stackhouse about The Players' Tribune, a new media platform founded by former New York Yankee's star Derek Jeter with a mission to give athletes a forum to speak directly to their fans.