RY - Royal Bank of Canada

NYSE - NYSE Delayed Price. Currency in USD
+0.04 (+0.05%)
At close: 4:03PM EDT
Stock chart is not supported by your current browser
Previous Close80.56
Bid66.00 x 900
Ask80.59 x 900
Day's Range80.42 - 80.92
52 Week Range65.76 - 81.61
Avg. Volume972,584
Market Cap114.773B
Beta (3Y Monthly)1.03
PE Ratio (TTM)12.82
Earnings DateN/A
Forward Dividend & Yield3.15 (3.91%)
Ex-Dividend Date2019-10-23
1y Target EstN/A
Trade prices are not sourced from all markets
  • Bloomberg

    Deripaska’s Ex-Wife and Family Seek Buyers for En+ Stake

    (Bloomberg) -- Family members of sanctioned Russian billionaire Oleg Deripaska are seeking to sell their stake in En+ Group International PJSC, according to people familiar with the matter.Deripaska’s ex-wife Polina Yumasheva and former father-in-law Valentin Yumashev are looking for buyers of their stakes, as well as holdings owned by Deripaska’s children, said the people, who asked not to be identified because the discussions are private.They said discussions have been preliminary and informal to sound out potential acquirers, and there’s no work being done on a deal. No one has expressed interest in purchasing the stakes and it’s possible a buyer won’t be found, the people said.Yumashev declined to comment. Polina didn’t respond to questions sent to her Facebook account or representatives of Forward Media Group, a publishing house that she owns. An En+ spokeswoman declined to comment.In an interview with Russian media outlet RBC, Polina said she hasn’t held any negotiations yet on selling the stake.En+ owns a majority stake in United Co. Rusal, one of the world’s biggest aluminum producers, and runs hydropower plants in Russia. Finding a buyer could face hurdles given the chief owner is still Deripaska, who remains under U.S. sanctions.En+ was sanctioned last year by the Treasury’s Office of Foreign Assets Control in response to Russia’s “worldwide malign activities,” which included annexing Ukraine’s Crimean peninsula.Treasury officials agreed to lift the penalties on Deripaska’s companies in January as part of an agreement that he would step back from running the businesses. The billionaire still owns about 45% of En+ shares. Under the agreement with OFAC, he’s allowed to vote 35% of the shares and the rest are done by independent trustees.Polina and her father own 6.75% of the company. Her two teenage children have 3.42%. The voting of their shares is also via trustees.En+ global depositary receipts are listed in London and Moscow, but infrequently traded so a market valuation is difficult to determine. Based on the London share price, the company is worth $5.3 billion.The Financial Times reported last month that VTB Group, which is also a large En+ shareholder, held talks with Chinese companies over a potential investment. The newspaper cited people familiar with the matter saying VTB had been approached by two Chinese state-related industrial groups about a share sale.(Adds comment from Polina Yumasheva in fifth paragraph.)To contact the reporters on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net;Irina Reznik in Moscow at ireznik@bloomberg.net;Andrey Biryukov in Moscow at abiryukov5@bloomberg.netTo contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.netFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Iranian Oil Tanker Attacked as Middle East Tensions Remain High

    Iranian Oil Tanker Attacked as Middle East Tensions Remain High

    (Bloomberg) -- Iran said missiles struck one of its tankers in the Red Sea, the latest in a series of attacks on oil infrastructure in the region that have roiled energy markets.The Islamic Republic’s tanker company initially said the attacks probably came from Saudi Arabia, but later withdrew the claim. The incident, which caused a spill and a jump of as much as 2.6% in crude prices, comes weeks after a devastating attack on major Saudi oil facilities that Riyadh blamed on Tehran.Tensions have been rising steadily in the region since U.S. President Donald Trump unilaterally withdrew from an international nuclear deal with Iran and imposed harsh sanctions on the Islamic Republic. Although so far all sides have said they want to avoid war, there’s a growing risk to supplies from the world’s most important oil-producing region.“The market has been entirely too complacent given that we are one security incident away from a war,” said Helima Croft, chief commodities strategist at RBC Capital Markets.The Sabiti, a tanker capable of carrying 1 million barrels a of crude, was damaged on Friday near the Saudi port of Jeddah after being hit by suspected missiles, Iranian state media said. The explosions on the tanker occurred between 5:00 and 5:20 a.m. local time damaging two of its main oil tanks, the Islamic Republic News Agency reported.A spokesman for the National Iranian Tanker Company, initially said in a call with Iran’s Press TV that the missiles probably came from the direction of Saudi Arabia. NITC later withdrew that claim in a statement.The ship was hit twice within a 30-minute interval from the east of the Red Sea near its crossing route, Foreign Ministry spokesman Abbas Mousavi said on Telegram. The Iranian authorities presented no further evidence of the nature or origin of the attack.The Saudi Ports Authority confirmed that an incident involving a tanker had occurred near the port of Jeddah overnight, but was unable to verify if the vessel was Iranian, according to a press officer.After initially saying the spill from the tanker had been halted and the damage minimized, the Iranian oil ministry’s Shana news service said crude was again flowing into the Red Sea. No one has provided any assistance to the damaged ship, Al-Alam news channel reported, citing Nasrollah Sardashti, head of NITC.Oil AttacksThe Sabiti was fully laden with crude and heading toward the Suez Canal and the Mediterranean Sea, according to Florian Thaler, chief executive of data analytics firm OilX. On its previous voyages it has carried Iranian crude to the East Mediterranean he said.According to tanker-tracking data compiled by Bloomberg, the vessel was under way using its engine and heading south at a speed of 9.6 knots as of 8:45 a.m. London time. Its destination was listed as Larak, an Iranian island in the Strait of Hormuz.Oil prices jumped above $60 a barrel in London after the attack. Despite the growing risk to Middle Eastern supplies, crude prices have been depressed by fears of an economic slowdown due to the U.S.-China trade dispute. Brent is still lower than it was before the Sept. 14 drone and missile strikes on Saudi Arabia’s Abqaiq and Khurais oil facilities last month that briefly cut global supplies by 5%, the worst sudden disruption in history.In an interview with CBS’s “60 Minutes” last month, Saudi Crown Prince Mohammed Bin Salman warned that conflict between his country and Iran would lead to a “total collapse of the global economy” and should be avoided. The Foreign Ministry of China, which gets a significant proportion of its oil imports from the Persian Gulf, urged restraint on Friday in order to safeguard peace and stability in the area.The attack on the Sabiti came a day before Pakistani Prime Minister Imran Khan is scheduled to visit Tehran for talks on how to reduce tensions with Saudi Arabia, Iranian lawmaker and member of the parliamentary commission for national security, Heshmattolah Falahatpisheh, said in an interview with the semi-official Iranian Labour News Agency. Khan was one of several leaders who unsuccessfully tried to broker dialogue between Trump and Iranian President Hassan Rouhani at the United Nations General Assembly last month.The Pentagon said on Friday that it’s sending more U.S. forces to the Middle East to “assure and enhance the defense of Saudi Arabia” against Iran. Overall about 3,000 personnel are being deployed or having their missions extended in the region, including a previously promised delivery of additional Patriot and Thaad missile defense systems.(A previous version of this story corrected the job title and company name of Florian Thaler.)\--With assistance from Dan Murtaugh, Dandan Li, Golnar Motevalli, Verity Ratcliffe, Dana Khraiche, Julian Lee, Chloe Whiteaker and Adrian Leung.To contact the reporters on this story: Golnar Motevalli in Tehran at gmotevalli@bloomberg.net;Arsalan Shahla in Dubai at ashahla@bloomberg.net;Yasna Haghdoost in Beirut at yhaghdoost@bloomberg.netTo contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, James Herron, Christopher SellFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Hugo Boss Can't Compete When Luxury Is All About Handbags

    Hugo Boss Can't Compete When Luxury Is All About Handbags

    (Bloomberg Opinion) -- Just 24 hours after LVMH reported knockout sales growth, Hugo Boss AG has provided a sober reminder that the luxury sector’s spoils will not be spread evenly.The maker of smart suits on Thursday issued a warning on full-year sales and profits, the second time it’s pared its outlook in two months, blaming the problems in Hong Kong and ongoing weakness in the U.S. The shares fell as much as 14% to the lowest level in nine years.Chief Executive Officer Mark Langer made a mistake by being too optimistic about the outlook. What’s far less clear now is whether his plan of boosting online sales, focusing on a slimmed-down portfolio of brands and embracing faster fashion is enough to weather the shocks on the horizon on top of the enduring shift toward casual office attire.Hugo Boss gets just 2-3% of its sales from Hong Kong, compared with about 6-7% in China, so it should have been more cushioned. But it struggled to offset a 50% plunge in third-quarter sales in Hong Kong, which remains a popular shopping destination for mainland Chinese. By contrast, LVMH said its Hong Kong sales fell 40% in August and September, but much of that was recouped elsewhere.Workwear, unlike handbags, isn’t the sort of thing you naturally buy on your holidays, so lost sales of suits, say because stores are closed, are less likely to be transferred to another shopping location.That highlights one of Boss’s two big weaknesses: It generates 90% of its sales from clothing. These are proving more vulnerable than leather goods, which remain highly desirable, particularly for middle class and younger Chinese consumers.The other is that Boss also operates in the upper premium segment of the market, rather than super-luxury part.  The very wealthy tend to be more resilient spenders than the merely comfortably off who have greater cause to fear political and economic uncertainty. Hugo Boss’s professional customers are more likely to fret about instability, which seems to be popping up everywhere, as well as the possibility of a U.S downturn next year.Boss blamed its last downgrade to forecasts, in early August, on problems in the U.S. It generates about 15% of its sales in that market, where it has been hurt by heavy discounting by rivals and fewer tourists, given the strength of the dollar. With U.S. consumer confidence posting the biggest drop since the start of the year in September, that doesn’t bode well for a quick recovery in this crucial market.All this raises serious questions about the ambitious targets that Langer set less than a year ago. Expanding sales growth from 4% in 2018 to 5-7% by 2022 always looked ambitious. Now the trajectory looks even more challenging, given that the company’s new forecast is for sales growth in the low single digits in 2019. Lifting the margin to 15% of earnings before interest and tax looks equally unrealistic. Analysts at RBC estimate the EBIT margin at 11.7% in 2019.The shares have fallen 37% over the past year, and trade on a forward price-earnings ratio of just 10 times, about half the other clothing-focused luxury groups, indicating that investors have little faith in the group meeting its medium-term goals.Langer’s strategy of moving to just two brands – Boss, catering to core customers, and Hugo for the younger crowd – looks sensible. Bolstering online sales, getting the latest looks into stores more quickly and increasing personalization are logical moves, too. But all of this is increasingly being undermined by weak markets and consumers continuing to turn off clothing.Like an ill-fitting suit, Langer’s aspirations need some careful alterations.To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis 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.

  • Hedge Funds Are Selling Royal Bank of Canada (RY)
    Insider Monkey

    Hedge Funds Are Selling Royal Bank of Canada (RY)

    Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at […]

  • Moody's

    RBC Capital Markets, LLC -- Moody's announces completion of a periodic review of ratings of RBC Capital Markets, LLC

    Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of RBC Capital Markets, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.

  • Restricted stock units can be a building block for retirement savings

    Restricted stock units can be a building block for retirement savings

    In a bygone era, employees followed a fairly standard path to retirement using a combination of Social Security benefits and company pension plans. Today, a type of equity compensation called restricted stock units (RSUs) offers a new building block toward retirement, while also opening doors for investments, experiences and major purchases throughout the course of your life. In addition to possibly providing valuable assets for a retirement portfolio, RSUs can also play a role in how you manage your cash flow and credit liabilities, and even help in hitting financial milestones that you might have thought would be out of reach until much later.

  • Bloomberg

    Bond-Trading Bots on Verge of Becoming Masters of the Universe

    (Bloomberg) -- They were the “golden crumbs,” those bits of money that fall off as bonds get traded around the world.Those crumbs were enough to make bond traders the Masters of the Universe in Tom Wolfe’s 1987 novel “The Bonfire of the Vanities.” But those days are long gone.AllianceBernstein Holding LP has introduced a robot to execute corporate-bond trades directly with bots at dealer counterparties. The $587 billion asset manager used the system in August to complete three trades with similar digital assistants at Citigroup Inc., Morgan Stanley and Royal Bank of Canada.“We’ve taken a traditional human-to-human interaction and augmented it to allow a machine to meet another machine,” said Maryanne Richter, global head of credit electronic trading strategy at Morgan Stanley in New York.While computers have already transformed equities trading, the corporate bond market has been one of the last holdouts in finance’s digital revolution. Firms are slowly stepping up their use of artificial intelligence and crunching reams of data to get ahead as electronic bond trading becomes more prevalent.Automation is making inroads on trading desks, such as at UBS Group AG and HSBC Holdings Plc, where robots are making bond  sales more efficient. More than 40% of capital market participants that took part in a Greenwich Associates survey earlier this year said that their firms are using AI for trading. Another 17% said they will introduce it within the next two years.Still, this is the first time that bots have traded with other bots in corporate bonds, according to AllianceBernstein.The robot is an extension of the asset manager’s virtual assistant, named  Abbie, which pores through data and identifies for traders the best bonds to buy or sell. AllianceBernstein gathers about 4 million data points a day to work out the best ways to trade including bid and offer prices from dealers and electronic trading venues.“Right now they aren’t replacing traders, they’re really just helping us trade”Executing trades involves a number of manual steps. Currently it can take traders up to 20 minutes to negotiate the size, price and precise maturity of a trade with a counterparty on the other end of the phone or instant message. With bots that could become almost instantaneous.“Machines are helping us to make smarter decisions and be more efficient,” said James Switzer, global head of fixed-income trading at AllianceBerstein. “I guess we could look out 5 or 10 years and start anticipating what would happen, but right now they aren’t replacing traders, they’re really just helping us trade.”The robot is designed to save traders time and beat competitors, a meaningful edge in a secondary market starved of liquidity. It could also be developed using AI to remember the best counterparties for certain trades and target them first in future, a system known as smart order routing, according to Switzer.In the test cases, AllianceBernstein made three separate trades in investment-grade U.S. corporate bonds with each of the three banks and the firm expects to expand that to more dealers in the coming months. The bots agreed to the transactions on the signal of a human trader.“The master is telling the dog to fetch and bring the stick back,” said Switzer.In the future, AllianceBernstein expects the bot to spot the best prices within parameters previously set by a trader and execute automatically. That would mean it would no longer need a human to give the execute command, although to be sure, the firm will still have human checks and balances including compliance.Citi and Morgan Stanley both expect their trading algorithms to be able to directly handle requests to trade and execute without human command, depending on the nature of the transaction. A spokesman for RBC Capital Markets declined to comment on the trade with AllianceBernstein.“We’re automating parts of a very manual process,” said Kevin Foley, head of markets electronification at Citi in New York. “Phase two is fully-automated straight-through processing.”It’s surely a world Bonfire’s bond trader Sherman McCoy would have no place in as the crumbs disintegrate.“Just imagine that a bond is a slice of cake, and you didn’t bake the cake, but every time you hand somebody a slice of the cake a tiny little bit comes off, like a little crumb, and you can keep that,” Wolfe wrote in his novel.(Updates with reference to electronic trading in fifth paragraph. An earlier version of this story corrected assets under management for AllianceBernstein in third paragraph.)To contact the author of this story: Katie Linsell in London at klinsell@bloomberg.netTo contact the editor responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, James HertlingFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Nvidia (NVDA) Upgrade: Could Be Time To Buy

    Nvidia (NVDA) Upgrade: Could Be Time To Buy

    Nvidia???s niche market positioning and innovative core make them a great bet for your portfolio of the future.

  • Our Take On Royal Bank of Canada's (TSE:RY) CEO Salary
    Simply Wall St.

    Our Take On Royal Bank of Canada's (TSE:RY) CEO Salary

    In 2014 Dave McKay was appointed CEO of Royal Bank of Canada (TSE:RY). First, this article will compare CEO...

  • U.S. Tech Giants Turn to India for New Apps Before World Release

    U.S. Tech Giants Turn to India for New Apps Before World Release

    (Bloomberg) -- India is emerging as the testing and acquisition playground for global consumer technology companies, especially the so-called FAANGs, according to a veteran internet analyst.RBC Capital Markets’ Mark Mahaney, who calls himself Wall Street’s “oldest internet analyst” after covering the sector for more than two decades, said India is now more popular than markets like China because it has the same growth dynamics but with fewer regulations.As one of the largest economies and most populous countries in the world, India has turned into a testing ground for companies such as Facebook Inc., which has used it to beta-test a payments feature for WhatsApp. Netflix Inc. rolled out a mobile plan in India at 199 rupees ($2.80), much cheaper than what it charges for a basic plan elsewhere, and has created original content to capture more market share.“India does have regulations but it doesn’t seem to be as protectionist as China,” said the 53-year-old analyst. India has been considering a new law that would require personal data to be stored locally, which could impair the operations of the Internet giants but Mahaney remains confident they can still penetrate the market.Besides organic growth, acquisitions are another strategy for these companies in India, especially since they are facing more scrutiny back home and in western Europe. “There’s an opportunity to build growth” in Asia, particularly in India, Mahaney said.Amazon.com Inc. has already tried its hand at deals in the South Asian nation by attempting to acquire Indian e-commerce pioneer Flipkart Online Services Pvt., before it was snapped up by Walmart Inc. last year.Facebook, Netflix, Amazon and Alphabet Inc. can all win big in India, said Mahaney, who has a buy rating on the stocks. “India is less than 5% of the Amazon’s total revenues but it has the potential” to get to that level within five years, Mahaney said.To contact the reporters on this story: Ishika Mookerjee in Singapore at imookerjee@bloomberg.net;Abhishek Vishnoi in Singapore at avishnoi4@bloomberg.netTo contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Teo Chian Wei, Naoto HosodaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Here is Hedge Funds’ 21st Highest Ranked Stock Idea
    Insider Monkey

    Here is Hedge Funds’ 21st Highest Ranked Stock Idea

    Does salesforce.com, inc. (NYSE:CRM) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to […]

  • Etsy Decision to Go Free on Shipping Delivers the Bulls

    Etsy Decision to Go Free on Shipping Delivers the Bulls

    (Bloomberg) -- Free shipping has delivered a lot of bulls to Etsy Inc.Wall Street has warmed up to the e-commerce company of late as the online marketplace’s offer of free shipping on orders of more than $35 and other initiatives are perceived as growth catalysts.In the latest positive call, KeyBanc Capital wrote that the change should be an important long-term driver of gross merchandise sales as “baskets close to the $35 free shipping threshold tend to see incremental purchases in an effort to hit the hurdle.”Analyst Edward Yruma affirmed his overweight rating and $90 price target on the stock in a note dated Oct. 2, saying he’s “increasingly confident” about the company’s long-term growth opportunity following a meeting with Etsy CEO Josh Silverman.Etsy rose 2.6% on Thursday.KeyBanc’s comments were echoed by Canaccord Genuity, which earlier this week wrote that the company’s initiatives were driving “robust growth and improving profitability.” Analyst Maria Ripps called free shipping “an important step in bringing Etsy’s platform closer to par” with other e-commerce leaders like Amazon.comNot only will free shipping improve “consumer perception around the platform,” but she estimated that it could add upside of 3%-5% upside to 2020 estimates for both revenue and adjusted Ebitda. The company’s Etsy Ads initiative, she added, “should ultimately attract high affinity customers with strong repeat purchase behavior.”According to data compiled by Bloomberg, consensus estimates for Etsy’s 2020 revenue have risen by about 2.5% over the past three months; the free shipping initiative was announced July 9.Free shipping and Etsy Ads have also prompted at least two analyst upgrades over the past month, with both RBC Capital Markets and Wedbush specifically citing the initiates as their lifted their ratings to the equivalent of a buy.Currently, 13 firms recommend buying Etsy, compared with the two analysts who have a hold-equivalent rating on the stock. None of the firms tracked by Bloomberg recommend selling the shares, while the average price target of $77 implies upside of nearly 40% from current levels.Shares of Etsy are up more than 16% this year, though the stock is down more than 20% from a record close that was hit in early March.The next trading catalyst for the stock could come in early November, when the company is expected to report third-quarter results. Wall Street anticipates revenue growth of nearly 30%, according to data compiled by Bloomberg. Gross merchandise sales are seen coming in at $1.13 billion, which represents year-over-year growth of about 22%, according to a Bloomberg MODL estimate.\--With assistance from Crystal Kim.To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will DaleyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters

    U.S. regulator fines RBC Capital Markets $5 million for unlawful trades

    RBC Capital Markets has been fined $5 million (C$6.7 million) by the U.S. Commodities and Futures Trading Commission for failures that resulted in unlawful trades and other violations between at least late 2011 and May 2017. Between December 2011 and October 2015, RBC Capital Markets (RBCCM), a unit of Canada's biggest lender, Royal Bank of Canada , engaged in at least 385 non-competitive, fictitious or unlawful trades, the CFTC said in a statement on its website https://www.cftc.gov/PressRoom/PressReleases/8034-19 on Tuesday. The CFTC said 217 of the trades took place after the entry of a consent order in December 2014 of a CFTC enforcement action against RBC for fictitious transactions.

  • Reuters

    U.S. regulator fines RBC Capital Markets $5 mln for unlawful trades

    RBC Capital Markets has been fined $5 million (C$6.7 million) by the U.S. Commodities and Futures Trading Commission for failures that resulted in unlawful trades and other violations between at least late 2011 and May 2017. Between December 2011 and October 2015, RBC Capital Markets (RBCCM), a unit of Canada's biggest lender, Royal Bank of Canada , engaged in at least 385 non-competitive, fictitious or unlawful trades, the CFTC said in a statement on its website https://www.cftc.gov/PressRoom/PressReleases/8034-19 on Tuesday. The CFTC said 217 of the trades took place after the entry of a consent order in December 2014 of a CFTC enforcement action against RBC for fictitious transactions.

  • Tesla Sets Deliveries Record While Falling Short of Elon Musk’s Mark

    Tesla Sets Deliveries Record While Falling Short of Elon Musk’s Mark

    (Bloomberg) -- The good and the bad Elon Musk were on full display Wednesday, when Tesla Inc. released its much-awaited third-quarter delivery figures.The good: Musk’s relentless drive to ramp up output helped push deliveries to a record 97,000 units. The bad: Because he had recently hyped the idea -- in typical Musk-ian fashion -- of reaching 100,000, investors came away disappointed with the final number. Tesla shares sank rather than rallying immediately after the release.“When Elon Musk says they are aiming for 100,000 deliveries, you are hoping for 102,000. Not 97,000,” Gene Munster, a managing partner at venture capital firm Loup Ventures, said by phone. “This is a credibility hit. This is a textbook example of Elon not being disciplined and having difficulty managing expectations.”Tesla shares fell as much as 7.1% to $225.93 as of 9:53 a.m. in New York. The stock has fallen 32% this year.Tesla delivered 79,600 Model 3 sedans, plus 17,400 Model S cars and Model X crossovers in the quarter. Analysts were warning ahead of the report that because the company has relied on its much cheaper sedan to grow, total average selling prices probably declined and may have dragged revenue down from a year ago. The carmaker, which last reported a drop in 2012, will release earnings in the coming weeks.“If you look at the mix of S and X deliveries to Model 3s, profitability is likely to be a challenge,” Dan Ives, an analyst at Wedbush who rates Tesla the equivalent of a hold, said by phone.Going into the quarter, Tesla said its order backlog was expanding. It announced in July it would no longer disclose the number of vehicles in transit to customers every three months.The company did, however, report for the first time in its quarterly deliveries statement the portion of vehicles that were subject to lease accounting, a level of disclosure it usually holds off on until earnings.Tesla said 15% of Model S and X and 8 percent of Model 3 deliveries were leases. That’s up from about 10% and 5.6% in the previous quarter, which is likely to hurt revenue, according to Joe Spak, an analyst at RBC Capital Markets. He expects automotive revenue to drop both from a year ago and the second quarter.What Bloomberg Intelligence Says:“Tesla’s missed 3Q delivery target and 2% sequential volume gain may be a sign that pushing into untapped markets isn’t the demand bonanza the company expected. China will be key to boosting deliveries by the 8% needed in 4Q -- to a record 105,000 -- to reach the bottom of Tesla’s guidance.”\-- Kevin Tynan, senior autos analystClick here to read the researchTesla didn’t say in its statement Wednesday whether it’s still expecting to deliver 360,000 to 400,000 vehicles this year. The company will have to hand over roughly 105,000 cars in the last three months of the year to hit the low end of that forecast.“Just as they tend to move their sales to the end of each quarter, they also tend to go out in the fourth quarter with a bit of a bang, so I think they’ll get there,” Alan Baum, an independent auto analyst in West Bloomfield, Michigan, said in a Bloomberg Television interview.Tesla doesn’t disclose deliveries by region, but the U.S., China, Norway and the Netherlands were its biggest sources of revenue in the second quarter.That pecking order may have changed in the latest three-month period. Tesla topped the Dutch sales charts last month, boosted by tax incentives that can save drivers several hundreds of euros a month on vehicle leases. The government plans to dial back some of those subsidies next year.(Updates with Thursday opening share price in fourth paragraph.)\--With assistance from Chester Dawson, Romaine Bostick and Joe Weisenthal.To contact the reporter on this story: Dana Hull in San Francisco at dhull12@bloomberg.netTo contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson, Kara WetzelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • U.S. Slowdown Spurs Concern Economy Is Near Stalling

    U.S. Slowdown Spurs Concern Economy Is Near Stalling

    (Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.The U.S. economy’s growth rate is losing speed, prompting questions over how slow it can go and still avoid crashing into a recession.Whereas expansion below 2% used to almost guarantee the economy would subsequently contract, some economists now reckon the U.S. can wobble around 1%-1.5% without falling over.The decline in the economy’s so-called stall speed is a relief after data released Tuesday signaled the weakest manufacturing sector in a decade. It still leaves the Federal Reserve under pressure to cut interest rates and President Donald Trump facing challenges heading into next year’s election.Whether the longest expansion in history remains intact may ultimately depend on whether consumers are able to maintain spending enough to offset the slump in manufacturing amid the U.S.-China trade war.“Suddenly the idea of stall speed is much more important today than it has been for most of the expansion,” said Stephen Gallagher, chief U.S. economist at Societe Generale SA. “The economy is running on one engine, and that’s the consumer.”At Commerzbank AG, currency strategist Ulrich Leuchtmann told clients in a report on Wednesday that “the fact that stall speed is becoming an issue of common interest” may undermine demand for U.S. assets.Taking a page from aviation, in which the stall speed is the slowest a plane can fly while still maintaining a level flight, the economic equivalent is the point at which growth is no longer self-sustaining.Consumer ResponseThat happens when consumers and companies pull back in the face of the lackluster economic performance.“When economic actors become sufficiently concerned -- whether justified or not -- a mild slowdown can easily become worse,” Eric Lascelles, chief economist at RBC Global Asset Management Inc., wrote in a report last month.The outlook for growth has indeed softened, with the manufacturing sector already slipping into a recession during the first half of the year, capital investment weakening and job gains moderating. Data out Wednesday from the ADP Research Institute showed that hiring at U.S. companies is cooling, with employers adding 135,000 jobs in September. Analysts expect growth in gross domestic product to slow to 1.7% next year.In expansions dating back to the 1940s, real GDP growth below 2% was almost always followed by a recession, according to Lascelles. Now, he and other economists expect the economy can avoid buckling at that pace. A reduced stall speed means growth can be slower and monthly payroll gains can be softer and still sustain the expansion.Growth PotentialThe stall speed has largely declined because the potential growth rate of the economy has slowed.The two concepts are closely tied. Potential growth is the pace at which the economy can expand without inflation heating up. Right now, the Fed sees potential growth at 1.9%. Predictions by the Congressional Budget Office for the rate have also come down over time. It’s eased amid demographic changes like slower population growth and softer productivity gains.“The problem here is if potential growth is slowing, what constitutes a rapid expansion today is very different than what it looked like maybe 40 years ago,” said Michael Gapen, chief U.S. economist at Barclays Plc.And the expansion has been lackluster. Since the end of the recession in 2009, GDP has increased about half as much on a percentage basis as it did during the 1991-2001 expansion, the nation’s second-longest. Wage growth has remained subdued and inflation has repeatedly missed the Fed’s 2% target.What Our Economists Say“We expect stall speed for the economy to be in the vicinity of 1.4-1.5% real GDP growth (in year-on-year terms). Below that, household income creation slows to such a pace that consumers are unable to shoulder the growth burden.”--Carl Riccadonna and Yelena Shulyatyeva, Bloomberg EconomicsMore VulnerableMost economists predict the economy can stay above their self-defined stall speed level next year, but Joachim Fels and Andrew Balls of Pacific Investment Management Co. expect growth to slow to about 1% in the first half of 2020.“While a recession is not our base case, it doesn’t take much to tip over an economy that is moving along at stall speed,” Fels and Balls wrote in the report last week.While a slower stall speed means the economy can expand at a more subdued pace without signaling imminent recession, the bad news is that it doesn’t mean the U.S. is less exposed to a downturn.Lower potential growth “tells you that a shock that we may have experienced before the crisis which may not have tipped you into recession could certainly do so now,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank AG.As economic growth withers, fiscal and monetary stimulus, provided that they are employed in a timely fashion, can give the economy much-needed lift. But policy makers at the Fed and in Congress have less room to keep the nation from hitting stall speed -- or possibly accelerating out of it.“It raises the risk of the end of the economic cycle,” Gapen said. “We’ve done what we can do on the fiscal side. There’s limited space for monetary policy to react.”(Adds employment data from ADP in tenth paragraph.)To contact the reporter on this story: Reade Pickert in Washington at epickert@bloomberg.netTo contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle, Margaret CollinsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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  • Impeaching Trump Like ‘Bill Clinton 2.0,’ Wall Street Says

    Impeaching Trump Like ‘Bill Clinton 2.0,’ Wall Street Says

    (Bloomberg) -- House Speaker Nancy Pelosi’s decision to launch a formal impeachment inquiry of Donald Trump is reminding analysts of proceedings against Bill Clinton in the 1990s, which failed to topple a then-popular president. Other events had more of a market impact then, and might now, too.Observers also expect little from Congress ahead of the 2020 elections, as the inquiry may sideline potential moves on drug pricing, infrastructure and the USMCA. A deal with China is still up in the air, while an already slipping Joe Biden seems to have been weakened, and Elizabeth Warren’s chances seem to have brightened.U.S. stocks dipped in Wednesday morning trading. The S&P 500 fell as much as 0.5%, amid mixed reactions to the prospect of an impeachment investigation and news China is preparing to buy more U.S. pork, and after a rough transcript of a call between Trump and the president of Ukraine was release.Here’s a sample of the latest commentary:Wells Fargo, Christopher Harvey“Though a short-term repricing is possible, the latest impeachment news does not change our view of a 3088 year-end” S&P 500, Harvey wrote in a note. He said that “formal articles of impeachment being approved remains in doubt,” and even if they were approved, “history suggests impeachment is not a market-mover.” He flagged both Bill Clinton and Richard Nixon.“Is This Even News?” Harvey wrote, asking whether Pelosi’s declaration has “any meaningful effect,” and questioned the “appetite for such proceedings among the all important estimated 30-50 moderate Democrats from districts where Pres.Trump’s popularity cannot be ignored.”Harvey added that “a serious move to impeach would not only place House members’ votes on record, but also include the impaneling of a special prosecutor and other procedural moves. Until we see those, we expect no further material impact on equities.” He continues to expect trade developments and the start of the third-quarter earnings season to be key market drivers.KBW, Brian GardnerKBW is “confident that regardless of whether or not the House votes to impeach Mr. Trump, the Senate will not remove him from office,” Gardner wrote. He noted that using the 1998-1999 impeachment of President Bill Clinton as a proxy shows impeachment had “little impact on the market,” with events connected to the Russian default crisis and the Asian financial crisis triggering greater market moves.Gardner also sees Trump’s reelection prospects as improving slightly, as the president “has a unique ability to manipulate these kinds of situations to his advantage.” A House move to impeach may backfire and unite Republicans. The news coverage is hurting Biden, he added, and helps Warren, while “Trump has a better shot at beating Sen. Warren in the general election than he does against Mr. Biden.”Raymond James, Ed Mills“Legislating is dead,” Mills wrote in a note, as “impeachment will lead to Congress doing nothing except that which it must do by established deadlines (like funding the government).” That means there probably won’t be bipartisan action on drug pricing, infrastructure, and passing the USMCA until after the 2020 election.Regarding China, he said, “the debate will be about a Trump pivot towards a win via a ‘mini deal’ or doubling down to cater to his base,” as per his U.N. speech on Tuesday. Mills also said “impeachment is bad for Biden,” as hearings will keep the “Trump-claimed Biden and his son issue in the news,” and undercuts Biden’s “return to normalcy” campaign.There’s a “real risk that Democrats overplay their hand, increasing Trump’s reelection chances,” Mills added. At the same time, more uncertainty might hurt consumer and business confidence, he said, with any increased risk for recession possibly dooming Trump’s reelection.Beacon Policy Advisors“The latest impeachment imbroglio is a negative catalyst for markets,” the firm wrote. “While political gridlock is often good for markets by reducing the risk of government interference, dysfunctional paralysis of government is not because it increases uncertainty over the government’s ability to handle a crisis.”Beacon sees a higher risk of a “Trump-induced event, akin to the government shutdown last year, in order to distract attention from the impeachment headlines.”Compass Point, Isaac Boltansky“Pelosi’s’ announcement does not represent a seismic shift from a practical perspective,” Boltansky wrote, as the “House was already investigating the Trump administration and the committees of jurisdiction will continue with that work.” Plus, the Senate’s composition “effectively guarantees that removal from office is not on the table.”Evercore ISI, Sarah Bianchi“Putting the focus on impeachment is an enormous undertaking that makes everything else harder,” Bianchi wrote, including prescription drug pricing legislation and the USMCA.As for whether it matters for the election, Bianchi said “impeachment politics are tricky and unpredictable. It is very possible that it will just further put each side in their respective camps and further polarize the country. What it does to the moderate middle of the road voters is very hard to say.”Cowen, Chris KruegerOn Tuesday, Krueger said he expected the House will impeach Trump, while the Senate won’t convict, a scenario he called “Bill Clinton 2.0,” adding that “this could all be over by the end of 2019.”RBC, Brian Abrahams, biotech analystInvestors may want to come back to biotech as drug pricing probably won’t be overhauled now, Abrahams wrote in a note. An impeachment investigation may create “a sustained impasse,” he said, and “reaffirm the low likelihood of draconian price cuts and over time improve investor confidence returning to the biotech space.”RBC, Adam Cole, currency strategist“We would note that this is only a small step on the road to impeachment, which would ultimately require a 2/3 majority in the Republican-controlled Senate and that it is not clear yet whether the House will vote to endorse the inquiry,” Cole wrote. He flagged Betfair’s probability of Trump leaving before the end of his first term jumping to 22% from 14%, which was “still far below levels that prevailed in the early part of his presidency.”“Beyond the knee-jerk reaction to rising uncertainty, it is also unclear that diminishing risk of a returned Trump would be negative for risk assets.”(Updates stocks move in the third paragraph. Adds comment from Wells Fargo and Compass Point.)\--With assistance from Cristin Flanagan.To contact the reporters on this story: Felice Maranz in New York at fmaranz@bloomberg.net;Janet Freund in New York at jfreund11@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will DaleyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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