|Bid||105.16 x 0|
|Ask||85.80 x 0|
|Day's Range||95.30 - 95.88|
|52 Week Range||95.30 - 95.88|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Producing more waste and recycled materials than could be processed at home did not previously create problems for developed countries. The excess was simply exported to poorer countries, mainly in Asia. ...
(Bloomberg) -- If you think credit markets in Europe couldn’t look more forbidding, think again.Just look at Switzerland. Companies there entered the $16 trillion labyrinth of global negative yielding debt back in 2015. With almost all high-grade corporate bonds in Swiss francs now offering below-zero yields, the nation offers a cautionary tale for the euro zone.The lesson: the stockpile of notes likely to impose losses for many buy-and-hold investors can expand fast -- ensnaring portfolios with interest-rate risk along the way.“I like drawing comparisons between the Swiss market and what could happen in Europe,” said Johan Nebel, head of research at Bridport & Cie SA in Geneva. “What happened in a small country was maybe a first experiment and now could happen in a bigger market.”Around 94% of senior Swiss franc corporate bonds have negative yields, according to data compiled by Bloomberg. Just five months ago, that amount stood closer to 50% -- a level the euro market is at today.While the average euro high-grade yield remains positive at about 0.25%, their Swiss counterparts are trading at -0.35% after turning below zero two months ago, Bloomberg Barclays data show. That includes a Novartis AG note with almost 16 years left to maturity now quoted at 17 basis points below nothing.German government yields are near record lows spurred by recession risk and bets on European Central Bank stimulus. Over in Switzerland, the central bank has been engaged in a decade-long battle against a strong currency despite being home to the world’s lowest interest rate. It has kept the sovereign’s entire curve and huge swathes of the senior corporate market below 0%.Monetary moves like that are why credit trading in euros has demonstrated a striking propensity to follow the Swiss lead. A year after the first corporate in the nation turned negative in local currency, euro obligations followed suit in 2016.The triple-A rated nation was the first to offer a sub-zero 10-year trade, courtesy of Total SA’s 200 million Swiss francs ($202 million) issue in July. It took just a month for the euro market to catch up, after the yield on Nestle SA’s 750 million notes in euros ($830 million) that mature in 2029 plunged to as low as -0.11% last week.Read more: Nestle Brings Negative Yields to Long-Dated Euro Company BondsEven analysts who reckon the ECB is under less pressure to ease than the Swiss National Bank, at least from a currency standpoint, say the single-currency bloc can become more Swiss-like.“It is uncharted territory but I don’t see any technical reason why it should not be trading more negative than it is already,” according to Dominik Meyer, head of credit research at Vontobel in Zurich, referring to company bonds in euros.To contact the reporter on this story: Tasos Vossos in London at email@example.comTo contact the editors responsible for this story: Vivianne Rodrigues at firstname.lastname@example.org, Hannah Benjamin, Sid VermaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Big food is salivating over fake meat after the blockbuster initial public offering of Beyond Meat Inc., the leading plant-based protein brand, in May. Traditional producers have rushed into the booming market for meat substitutes, which threaten to take a slice of their business. Tyson Foods Inc. was an early investor in Beyond Meat, but sold its stake before the company’s trading debut and announced its own line of faux meat. Other U.S. companies, such as Smithfield Foods Inc., are introducing alternative protein products. European giants are getting in on the act too, with Nestle SA snapping up California-based Sweet Earth two years ago and Unilever NV buying The Vegetarian Butcher last year.It’s a familiar playbook. The big drinks companies have bought craft brewers. Major cosmetics houses are blending more artisan scents into perfumes. But there’s one segment where the similarities – and potential pitfalls -- are striking: tobacco, which is trying to woo smokers with the products they describe as lower risk, such as electronic cigarettes. Just as the tobacco industry has turned to vaping products to cope with high taxes and declining rates of smoking, big food sees a growing market for meat substitutes as people eat less animal protein and governments slap taxes on their other unhealthy products (and even consider levies on red meat). But traditional food manufacturers eager for vegan profits may struggle with some of the same obstacles tobacco has faced with vaping: adoption and regulation.Just look at Japan. It’s the most developed nation for devices that heat, rather than burn, tobacco, accounting for about 25% of the market. While tech-savvy early adopters were quick to switch to the new devices, older generations were slower to follow suit.Meat substitutes could see a similar trajectory. Analysts at Barclays Plc point out that men drive demand for meat. Convincing them –particularly older generations to switch -- will be crucial. Plant protein substitutes also tend to be more expensive. The premium will need to be whittled away for consumption to be widespread.While there’s no suggestion that fake meat products cause harm in any way – as has been alleged in some cases with vaping – not everyone agrees that they are healthier than animal protein. Chipotle Mexican Grill Inc. said it would not be stocking meat alternatives because they are too processed for the burrito chain. Beyond Meat has hit back at the claims, saying that its products and facilities are more transparent than those in the meat industry. More importantly, faux meat manufacturers will need to keep innovating – and investing – to grow, just as tobacco companies have had to come up with ways to make electronic cigarettes more satisfying for smokers to encourage them to switch. Plant-based protein producers will need to stay one step ahead of the competition with new ingredients, akin to how the market for milk substitutes expanded from soy to embrace soaring demand for nut and oat drinks. Beyond Meat and Nestle’s Sweet Earth use peas for their meatless dishes; Unilever’s The Vegetarian Butcher uses lupine beans to give some meals a fatty, nutty flavor. The possibilities are endless.Yet with innovation comes the risk of alienating consumers and inviting regulation. The magic ingredient at Impossible Foods Inc. – the other big independent plant-based protein maker – is heme, which gives its burgers a bloody meat-like taste. The ingredient is genetically engineered. The U.S. Food and Drug Administration recently found heme to be safe as a color additive, paving the way for sales in supermarkets. But using a genetically-engineered ingredient could turn off the very ethical, health-customers Impossible wants to attract.As big food courts vegans, it will confront pickier consumers than smokers-turned-vapers. Already some are worried about Burger King cooking the Impossible Whopper on the same grill as meat burgers, unless the customer asks for it to be prepared separately.A bigger danger would be if any plant products were found to contain animal traces. Impossible recently partnered with meat processor OSI Group to add more manufacturing capacity and ease supply constraints. It has dedicated capacity at OSI’s facilities, and the production line is not shared with animal-derived products. But it’s a risky move, and one that traditional meat producers going vegan will also have to manage.Like big tobacco, food manufacturers are already confronting challenges to the way they label products. States including Arkansas and Mississippi have banned companies from using the word “burgers” or “dogs” to describe plant-based alternatives. That’s a regulatory breeze compared the crackdown on vaping. In June, San Francisco became the first U.S. city to ban the sale of electronic cigarettes. But it’s still a headwind in what is a nascent industry. While the path of big tobacco highlights some of the challenges facing plant-based protein, there’s one more appetizing similarity. Last year, Altria Group Inc., which owns Philip Morris, took a 35% stake in Juul Labs Inc., the U.S. market-share leader in electronic cigarettes, valuing the company at $38 billion. Beyond Meat is now valued at a staggering $9 billion, almost a third of what food giant Tyson is worth. Such lofty valuations reflect long-term consumer trends. But as the tobacco industry has learned from its foray into alternatives, big food producers shouldn’t assume fake meat is an easy recipe for success. To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Stephanie Baker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Norway’s $1tn oil fund held a record amount of equities at the end of June, raising fears that the world’s largest sovereign wealth investor could have loaded up on shares again at the top of the cycle. said on Wednesday that it now had 69.3 per cent of its assets in equities, up from 66.3 per cent at the end of 2018. The fund — which on average owns 1.4 per cent of every listed company worldwide — previously increased its exposure to equities in 1998 and 2007, just before market crashes.
(Bloomberg Opinion) -- Negative mortgage rates in Denmark. Sub-zero yields on 10-year corporate bonds from Nestle SA. A 100-year Austria bond trading at more than twice its face value. Record low yields on 30-year Treasuries. For fund managers trying to navigate the fixed-income universe, the bond market’s reaction to the prospect of a recession makes life more treacherous every day.Investors see a second Federal Reserve interest-rate cut at its next meeting on Sept. 18 as a certainty, based on prices in the interest-rate futures market. But it’s the European Central Bank that appears to be facing the more difficult policy decision, given that its key interest rate is stuck at -0.4%.As the chart above shows, futures contracts in the euro zone have dramatically repriced since the beginning of the month. Traders are anticipating that borrowing costs will drop even further into negative territory and that the ECB will resume its quantitative easing program.But some investors are questioning how effective the central bank’s effort to gobble up more of the outstanding debt in the government bond market can be when yields have already reached record lows.For Philipp Hildebrand, vice-chairman of BlackRock Inc., the ECB is already out of ammunition – which means investors should indulge in some more magical thinking about what comes next in the list of unconventional policy measures.“We’re going to see a regime change in monetary policy that’s as big a deal as the one we saw between pre-crisis and post-crisis, a blurring of fiscal and monetary activities and responsibilities,” Hildebrand told Bloomberg Television’s Francine Lacqua last week.BlackRock has just published a paper detailing what it expects the guardians of monetary stability to do next. Here’s the key recommendation from the paper, which is entitled “Dealing with the next downturn: From unconventional monetary policy to unprecedented policy coordination.”An unprecedented response is needed when monetary policy is exhausted and fiscal policy alone is not enough. That response will likely involve “going direct”: Going direct means the central bank finding ways to get central bank money directly in the hands of public and private sector spenders.What’s incredible about the BlackRock policy prescription is that three of the paper’s four authors are former central bankers who now work for the asset manager. Hildebrand is the former head of the Swiss Central Bank, Stanley Fischer did stints at the Federal Reserve and the Bank of Israel, while Jean Boivin is ex-deputy governor of the Bank of Canada.Think about that for a second. Three former central bankers – not academics, not professors, not theoreticians – are saying that central bankers are out of ammunition, and that politicians won’t be able to muster enough fiscal firepower to resuscitate growth. These are people who’ve been at the coalface of implementing monetary policy. So the rest of us need to pay attention.QuicktakeHelicopter MoneyAs my Bloomberg Opinion colleague Brian Chappatta points out, BlackRock’s publication is timed to coincide with the annual Kansas City Fed’s Economic Policy Symposium that kicks off on Thursday in Jackson Hole, Wyoming. While that gathering has the anodyne title of “Challenges for Monetary Policy,” the size of the task currently facing the world’s central bankers suggests the meeting could be one of the most important in recent years.Concern about the outlook for growth is mounting. Even the German government, which has resisted the temptation to take advantage of ultra-cheap money to boost spending, is readying a package of fiscal measures to counter a deep recession, my colleague Birgit Jennen at Bloomberg News reported Monday. But improving energy efficiency, encouraging hiring and increasing social welfare payments may prove too little, too late.In the euro zone, BlackRock suggests the ECB could adopt a plan first proposed in 2016 by Eric Lonergan, a fund manager at M&G Prudential, in which the central bank offers zero-coupon loans to each adult citizen. While Lonergan is explicitly in favor of helicopter money, the BlackRock paper sees a risk of it creating runaway inflation:History is littered with examples of how central bank money printing leads to runaway inflation or hyperinflation. Yet there is little experience in using helicopter money to generate just-enough inflation to achieve price stability. History as well as theory suggests large-scale injections of money are simply not a tool that can be fine tuned for a modest increase in inflation.BlackRock’s tweak to the helicopter money proposal, popularized by former Fed Chairman Ben Bernanke in a 2002 speech, involves establishing a permanent “standing emergency fiscal facility” that would only used in extremis, and in combination with monetary and fiscal policy becoming “jointly responsible for achieving the inflation target.” It would come with “a predefined exit point and an explicit inflation objective.”Both of those latter constraints are likely to prove as problematic for BlackRock’s proposal as they have for the current unconventional policies pursued by central banks. Exiting quantitative easing and returning interest rates to more normal levels have both turned out to be far more difficult than expected; and explicit inflation objectives are useless when prices stubbornly refuse to rise.Nevertheless, bond investors have definitely caught wind of something shifting in the monetary-policy air, and have reacted by extending the list of never-seen-before happenings in the debt market. Maybe the next thing will turn out to be a helicopter dropping money – with Christine Lagarde, the incoming president of the ECB, in the pilot’s seat.To contact the author of this story: Mark Gilbert at email@example.comTo contact the editor responsible for this story: Edward Evans at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- The promise of artificial intelligence has yet to translate into big business. Now Kai-Fu Lee, a prominent venture capitalist in China and founder of Sinovation Ventures, says his firm’s new startup should be able to reach $100 million in revenue next year and go public the year after.AInnovation, established in March 2018, develops artificial intelligence products for companies in industries such as retail, manufacturing, and finance. Its customers include Mars Inc., Carlsberg A/S, Nestle SA, Foxconn Technology Group, China Everbright Bank Co. and Postal Savings Bank of China Co.Chief Executive Officer Hocking Xu, a veteran of International Business Machines Corp. and SAP SE, has hired staff that work with traditional companies to figure out how to take advantage of AI in their operations. AInnovation is on track to hit $100 million in revenue within two years of its founding, the fastest pace yet for such a startup, Lee said.“We took the approach of ‘Let’s take some of the best business people and let’s target the industries which need AI the most’,” he said.Lee figures AInnovation will be able to go public in less than two years at a valuation of $1 billion to $2 billion. The firm has raised about $70 million so far from Sinovation, CICC ALPHA and Chengwei Capital. Since the company was funded with yuan, it would most likely list domestically, either on China’s new NASDAQ-like Star market, or on the country’s ChiNext.For retail companies, AInnovation sells products including a smart vending machine that opens with facial recognition and software that monitors retail shelves with image recognition. It’s created computer vision technology that detects defects on the production line for manufacturers and underwriting software and natural language processing technology for financial firms. There’s a large market in particular for technology to catch flaws early in the manufacturing process, said Jeffrey Ding, a researcher with Oxford’s Center for the Governance of AI. That effort “aligns with the Chinese government’s priorities to upgrade smart manufacturing capabilities to compete with countries like Germany and Switzerland,” he said in an email.The former president of Google China, Kai-Fu Lee founded Sinovation Ventures in 2009. It manages more than $2 billion across seven funds in U.S. and Chinese currencies. It holds shares in more than 300 companies, most of which are in China. Its investments include autonomous driving company Momenta, consumer AI chip firm Horizon Robotics Inc. and bitcoin mining and AI chip company Bitmain Technologies Ltd.In artificial intelligence, “we’re still at a very early stage in the commercialization,” Lee said. “We’re still at the equivalent of early internet portals, back when everybody was using Yahoo and there wasn’t even a Google, Amazon, or Facebook.”Global economic ructions, however, may present short-term challenges. Venture deals in China have been plummeting as investors pull back amid escalating trade tensions and slowing economic growth. The value of investments in the country tumbled 77% to $9.4 billion in the second quarter from a year earlier.“In an economy that’s slowing down, everything slows, including venture capital. There will definitely be a shakeout,” Lee said. “The positive side is that if the economy is challenging, and valuations are down, it’s a good time for us to go shopping.”Sinovation was one of the first Chinese venture capital firms with a presence in the U.S. With the trade war and the Trump administration’s tighter scrutiny of foreign investments, the firm has scaled back investments and no longer has an office in the U.S., Lee said, adding that investments in America have always been a small fraction of its overall investments.“In the long term, it’s a pity if we have to cause a total separation of two countries because one could argue that AI got to where it got because the whole world has been able to work together.”(Updates with analyst’s comment in the 9th paragraph)To contact the reporter on this story: Selina Wang in China at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Peter Elstrom, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Switzerland is one of the richest places on the planet but it isn’t all sunshine and alpine flowers when you’re encircled by the world's biggest trading bloc: the European Union. While the Swiss are pretty nimble in managing this unfortunate state of affairs, there are limits to what they can do.Take currency. The Swiss National Bank is facing the perennial dilemma of an over-strong franc stifling its export-led economy, leading to a halving of growth over the past year. Instability in some emerging markets and Italy, as well as fears about a global trade war and a euro area recession, have encouraged investors to pile into the haven of the Swiss franc, which is trading as its strongest level in more than two years.The SNB is widely believed to have been intervening to weaken its currency; the telltale sign being that so-called “sight deposits” have risen at the central bank. This is the cash commercial banks hold there, which economists consider an early indicator of SNB moves in foreign exchange markets. But it’s all been to no avail as the franc has carried on strengthening against the euro.The problem for Switzerland is that its room for maneuver is so limited by its euro zone neighbors. With the European Central Bank’s rate set at -0.4%, the SNB’s is at -0.75% to try to deter FX investors attracted by its more alluring haven status. And with the markets expecting another cut from Mario Draghi’s ECB in September, people are preparing themselves for a fresh reduction from the Swiss central bank to maintain the buffer.Both for the ECB and the Swiss the priority is stopping their currencies from rising and hurting exporters. It’s just that Bern, unlike Frankfurt, is a price-taker not a price-maker.The SNB may even have to lower its official deposit to below -1% to dissuade those safe haven flows. It might also implement other smart measures such as stepping up its highly successful policy of purchasing overseas equities with its burgeoning foreign currency reserves.At least the Swiss are better at using the element of surprise than most central banks. They haven’t taken policy action at a formal meeting for a decade – instead choosing the best moment. In 2015, just before the ECB introduced its monster 2.7 trillion euro ($3 trillion) bond-buying program, the SNB ambushed everyone by dropping its ruinously expensive policy of intervening to sell its own currency whenever the franc threatened to rise beyond 1.20 per euro. It was one of the most brutal actions a major central bank has ever taken. When the cap was dropped, the franc appreciated by almost 30% against the currencies of the Group of 10 industrialized nations– unprecedented for a global reserve currency. That 2015 policy shift means the Swiss are largely stuck with cutting their interest rates to defend the currency. But the knock-on impact of that has been seriously challenging: The country’s entire yield curve (the rates on all different maturities of bonds) is substantially below zero. Its 10-year yields are already nearing -1%. Even Swiss corporate bonds don’t yield much. Nestle SA, the food group, won the dubious honor of becoming the first company whose 10-year debt in euros fell below zero yield.This is all bad news for Switzerland’s legions of savers and for its huge private banking industry, which has started charging wealthy customers for their deposits. While incredibly low funding rates help the country’s corporate sector and government financing, that’s outweighed by an over-mighty currency that crimps exports. Switzerland isn’t alone in this dilemma of trying to keep its currency from appreciating versus the euro. The Scandinavian countries face a similar challenge.Reacting ahead of time to more ECB easing may soften the blow but it doesn’t alter the reality that the currency game is weighted heavily against the EU’s closest neighbors. Central bank rate shifts and currency wars have casualties. Size matters.(This column was updated to clarify the 2015 rise in the Swiss franc.)To contact the author of this story: Marcus Ashworth at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of...
(Bloomberg Opinion) -- In two and a half years, Nestle SA chief executive Mark Schneider has gone from zero to hero.An outsider faced with the monumental task of tuning Nestle into consumers’ changing tastes, he initially underwhelmed when he set out his vision for the Swiss group in early 2017.But since then, he has shown that his aim of steering Nestle between two extremes – top line growth with little profit expansion and the pursuit of fatter margins without the revenue increase to match – is the right one. He’s supplemented this with canny acquisitions and disposals at better-than-expected prices.The second quarter of 2019 continued the progress, with organic sales growth of 3.9%, an acceleration from the first three months. The underlying operating margin also rose by a percentage point to 17.1%. The U.S. was particularly strong, helped by Nestle’s focus on coffee, including Nespresso and now the Starbucks brand, along with pet food.The mystery is why Nestle has kept its guidance for the full year so conservative.The company forecasts full-year organic sales growth of around 3.5%. Although that would be the best performance since 2015, the consensus of analysts’ forecasts was already for a 3.7% increase, so this looks a bit light.The full-year operating margin is on track to reach the lower end of the 17.5-18.5% range it wants to achieve in 2020. Though that will enable the company to meet its profitability target a year early, given how impressive the increase was in the first half that doesn't look too ambitious either.There are reasons why Nestle may want to be cautious.Firstly, the company was able to raise prices in the first half, particularly in the U.S. It may not be able to achieve the same level of pricing power over the coming months. Secondly, commodity costs are expected to rise this year. This wasn’t as much of a problem as had been feared in the first half. But an acceleration could crimp the potential for more aggressive margin expansion.And finally, Nestle faces tough comparisons, particularly in the final quarter, when it enjoyed a bump in organic sales growth.But perhaps Schneider, who has made the middle course his mantra, just wants to under-promise and over-deliver.The shares are up 42% since he took over, and reached a record high on Friday. At this valuation, he can’t afford any stumbles. Activist investor Dan Loeb’s Third Point also continues to be a shareholder. Schneider has done many of the things he was urging, such as improving profitability and overhauling the portfolio, so Loeb can’t have much to complain about right now.But any downturn in performance would give him scope to agitate for more change. This could include pushing the company harder to offload its stake in L’Oreal SA, something Nestle has long opposed.Given the uncertainties ahead, Schneider is right to keep his Nespresso coffee lukewarm for now.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Jennifer Ryan at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.