|Bid||110.86 x 1800|
|Ask||110.89 x 1400|
|Day's Range||110.74 - 111.58|
|52 Week Range||91.11 - 119.24|
|Beta (3Y Monthly)||1.22|
|PE Ratio (TTM)||11.97|
|Earnings Date||Jul 16, 2019|
|Forward Dividend & Yield||3.20 (2.89%)|
|1y Target Est||118.84|
(Bloomberg) -- General Electric Co.’s transformation is being led by its aviation business, given the unit’s stability and underlying growth, Citi analyst Andrew Kaplowitz wrote in a note to clients.While the aviation business is not perfect, it does seem to be “operating on all cylinders,” the analyst said. He noted that the company is raising the projected growth for its military segment and continuing to gain share versus its primary competitor with large new orders announced at the Paris Air Show.GE and Safran SA’s joint venture, CFM International, earlier this week also won a $20 billion order for jet engines from Indian carrier IndiGo.“We sense a new energy in aviation and across GE especially regarding cash generation led by CEO Culp,” Kaplowitz added. The analyst maintained the buy rating on GE with a price target of $14.GE is currently undergoing a turnaround process after an unraveling that has wiped out more than 60% of the company’s market value over the past two years, and prompted the diversified manufacturer to divest multiple businesses. While its power turbine business is widely understood to be the most troubled, the aviation unit is often lauded as a competitive, well-run unit.JPMorgan analyst Stephen Tusa, who holds a bearish view on the stock, said the aviation business would have a valuation of about “$60 billion at best,” assuming a 2021 free cash flow yield of about 7%.To contact the reporter on this story: Esha Dey in New York at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Jennifer Bissell-Linsk, Steven FrommFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Earlier this month, my colleague Elisa Martinuzzi suggested that merging Deutsche Bank AG and UBS Group AG would, on paper at least, create a European banking champion. She concluded, though, that the regulatory obstacles to such a deal would probably be insurmountable. But there is a three-way combination that could create a regional lender with the heft to take on the U.S. banks without falling foul of national regulators.Jean Pierre Mustier has done much house-cleaning in his two years as chief executive officer of Italy's UniCredit SpA. So it’s not much of a stretch to posit that he might regard himself as the right leader to forge a European powerhouse. And while his current institution owns HypoVereinsbank in Germany, it still depends on Italy for almost half of its revenue.Mustier has already dallied with the idea of buying Commerzbank AG after talks between the German lender and Deutsche Bank broke down in April. Adding Commerzbank would increase his access to the small- and medium-sized German clients known as Mittelstand companies.With Deutsche Bank still in intensive care, the German authorities should welcome the opportunity to see its other problem child adopted by UniCredit for many of the same reasons as they championed the mooted domestic tie-up. But to build a true challenger to the growing U.S. dominance of European lending, Mustier would need to add a third geographic region to his stable – and here his nationality might be key to overcoming tribal objections.As a Frenchman running an Italian-German institution, Mustier would be well-placed to convince the authorities in Paris that Societe Generale SA would thrive under his stewardship.Adding SocGen’s expertise in derivatives would expand the range of balance-sheet tools that Mustier can offer to those Mittelstand companies and other customers in Europe. And the newly merged triumvirate – let’s call it UniComSoc, ignoring the Orwellian overtones – would be a true regional champion. In international bond underwriting, the trio would command a 6.3% market share based on the individual performance of the three banks in the first five months of this year. None of the trio is currently a top ten player; the merged group would rank behind only JPMorgan Chase & Co. with 7.2% of the market, and Citigroup Inc. with 6.9%.In European equity offerings, the merged firm would sneak into a top 10 dominated by U.S. and Swiss firms, again based on market share through May:But in European loans, a market worth almost 300 billion euros ($336 billion) so far this year, the combination would be a market-beating powerhouse with a share of almost 13 percent. Given European companies remain reliant on bank loans rather than the capital markets to satisfy the bulk of their funding needs, that’s the most important reservoir of capital and the one that European regulators would be keenest to see being provided by a leading domestic source.The futures market is now starting to anticipate a cut in borrowing costs from a European Central Bank whose ultra-low interest rates have already weighed heavily on bank profitability. The worsening economic outlook that’s seen European government bond yields drop to record lows this week should add a sense of urgency to the acknowledged need for cross-border banking mergers.If the combination of Deutsche Bank and Commerzbank turned out to be shooting for the moon, maybe Mustier should aim even higher to land among the stars.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 Opinion) -- Expect “Pig-gate” to blow over. UBS Group AG’s ultra-rich Chinese clients are unlikely to desert the Swiss bank for local rivals, whatever the level of outrage over language used by its chief economist in a research report last week.The bank's potential loss of Chinese share-sale mandates isn’t a critical blow: UBS ranks a distant 11th in underwriting Hong Kong IPOs in 2019. (The bank fell behind after a one-year ban by the Securities and Futures Commission over deficiencies in its work on three companies that ran into trouble after listing.) Nor is the loss of bond mandates, such as its exclusion from a sale by state-owned China Railway Construction Corp.Wealth management is different. UBS is vying for a share of a Chinese private-banking market that was worth a record $24 trillion in 2018, according to Boston Consulting Group. The furor among local brokerages over UBS’s use of “Chinese pig” in a report on pork supply and inflation comes just as the Swiss firm and other foreign banks are muscling in on their turf. Switzerland’s Credit Suisse Group AG, Japan’s Nomura Holdings Inc., and Wall Street giants JPMorgan Chase & Co. and Morgan Stanley are among firms that have received approval to expand or are working toward taking majority stakes in China ventures.On top of that, Chinese regulators have cracked down on high-risk wealth management products sold by local banks and brokerage firms. That’s leveled the playing field for overseas competitors, which say their stricter compliance guidelines wouldn’t allow them to offer such investments.Still, it’s outside China where UBS has most to protect. Like all foreign banks, it’s a minnow in the mainland market. By contrast, there’s a treasure trove of Chinese money being managed offshore in cities such as Hong Kong, Singapore and New York, according to a survey by consulting firm Capgemini SE last year. Boston Consulting reckons that market is worth $1 trillion. And here, UBS is hard to beat.At the end of last year, the Zurich-based bank had $152 billion more in assets under management in Asia outside mainland China than Credit Suisse, its nearest rival. Chinese players don’t rank in the top 10 for bankers to well-heeled individuals in the region, according to data from Asian Private Banker.UBS took in an unprecedented $16 billion in net new money in the first quarter, driving its Asia-Pacific assets to $405 billion. Credit Suisse collected the equivalent of $4.4 billion. UBS was also the region’s top equities trading house in the region last year, ahead of Morgan Stanley and JPMorgan, according to data from London-based analytics firm Coalition Development Ltd. It’s been Asia’s No. 1 equities house since 2010. That’s key for high-net-worth individuals looking for ideas to trade on.Money tends to flow to where it earns the most, other things being equal. Also, many clients have bought derivatives from UBS, which can’t be unwound at short notice without heavy penalties. UBS can console itself with the thought that other foreign banks have been able to ride out similar difficulties in Asia. Time is on its side. To contact the author of this story: Nisha Gopalan at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Investors have been excited for a while now about the potential for a Palantir market debut, even though the company has yet to lay out any specific plans for an initial public offering.
"The types of developments our clients are looking for, Aureum fits that to a tee," says developer with a client roster including J.P. Morgan, Liberty Mutual, Toyota, State Farm and defense contractor Raytheon.
(Bloomberg) -- U.S. new-home construction fell in May after an April reading that was stronger than initially reported, signaling stabilization in the market amid lower borrowing costs.Residential starts dropped 0.9% to a 1.27 million annualized rate after a revised 1.28 million pace in the prior month, according to government figures released Tuesday that compared with a 1.24 million estimate in Bloomberg’s survey. Permits, a proxy for future construction, increased 0.3% to a 1.29 million rate that was about in line with estimates.Key InsightsPermits increased to the best level since January in a sign that the market is poised to hold up during the busy summer season despite the dip in starts. Still, housing has shown signs of weakness including a report Monday that homebuilder sentiment fell for the first time this year on rising construction costs and trade concerns.Reports due over the next week are forecast to show existing home sales, which make up the majority of the U.S. housing market, rose in May while the pace of new home sales also increased.Economist’s View“Although housing prices continue to show signs of cooling and some other housing indicators have wobbled in recent months, this morning’s starts and permits data suggest little cause for immediate concern,” JPMorgan Chase & Co.’s Jesse Edgerton wrote in a note. Still, there’s “little sign of a decisive pickup.”What Our Economists Say“Wet weather conditions in the Midwest and cost increases for building materials amid higher tariffs will limit near-term progress in housing construction. Housing is unlikely to contribute to economic growth to any meaningful degree either this year or in this business cycle.”-- Yelena Shulyatyeva and Carl Riccadonna, economistsClick here for the full noteGet MoreSingle-family starts fell 6.4% to 820,000 while permits climbed 3.7%.New construction declined in three of four regions, led by the Northeast dropping 45.5% to a four-year low. The South posted an 11.2% increase.The report is produced jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.(Updates to add chart, quote and Bloomberg Economists section.)\--With assistance from Jordan Yadoo.To contact the reporter on this story: Reade Pickert in Washington at email@example.comTo contact the editors responsible for this story: Scott Lanman at firstname.lastname@example.org, Jeff KearnsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
JPMorgan Chase & Co plans to convert its $2 billion Highbridge multi-strategy fund into a credit-focused fund as the bull market shows signs of slowing and clients want to invest elsewhere, a company spokesman said on Tuesday. The Highbridge fund, which is available to institutional and wealthy private investors, is part of JP Morgan's $150 billion global alternatives business, which offers real estate, private equity, credit, infrastructure and hedge fund portfolios. As part of the change, one of the four lead portfolio managers, Arjun Menon, will be leaving the company.
JPMorgan Chase & Co NYSE:JPMView full report here! Summary * Perception of the company's creditworthiness is neutral * ETFs holding this stock are seeing positive inflows * Bearish sentiment is low * Economic output for the sector is expanding but at a slower rate Bearish sentimentShort interest | PositiveShort interest is extremely low for JPM with fewer than 1% of shares on loan. This could indicate that investors who seek to profit from falling equity prices are not currently targeting JPM. Money flowETF/Index ownership | PositiveETF activity is positive. Over the last month, ETFs holding JPM are favorable, with net inflows of $7.28 billion. Additionally, the rate of inflows is increasing. Economic sentimentPMI by IHS Markit | NegativeAccording to the latest IHS Markit Purchasing Managers' Index (PMI) data, output in the Financials sector is rising. The rate of growth is weak relative to the trend shown over the past year, however, and is easing. Credit worthinessCredit default swap | NeutralThe current level displays a neutral indicator. JPM credit default swap spreads are within the middle of their range for the last three years.Please send all inquiries related to the report to email@example.com.Charts and report PDFs will only be available for 30 days after publishing.This document has been produced for information purposes only and is not to be relied upon or as construed as investment advice. To the fullest extent permitted by law, IHS Markit disclaims any responsibility or liability, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for any loss or damage arising from any reliance on or the use of this material in any way. Please view the full legal disclaimer and methodology information on pages 2-3 of the full report.
(Bloomberg) -- European Central Bank policy makers anticipate using an interest-rate cut as their first stimulus move if they need to act again to boost inflation, according to three euro-zone central bank officials.Lowering borrowing costs further below zero would be the most likely initial step rather than resuming asset purchases, said the officials, whose alarm at the descent of market inflation expectations to a record low is nudging them all toward favoring action. They didn’t want to be identified, citing the confidentiality of such discussions. An ECB spokesman declined to comment.ECB President Mario Draghi appeared to set a low bar for action on Tuesday when he said additional stimulus will be needed “in the absence of any improvement” to the outlook for growth and inflation. He specifically cited rate reductions as an option, sending the euro lower and prompting money markets to price in a 10 basis-point cut by December.Investors subsequently brought forward their expectations to September after Bloomberg’s report. Commerzbank AG now predicts such a policy step in July, while JPMorgan Chase & Co. said it now expects a rate cut in September.“Draghi is going to finish his tenure with a cut,” said Claus Vistesen, chief euro-zone economist at Pantheon Macroeconomics. “The door is now open and I don’t see how they can not walk through it.”An ECB rate reduction could stoke trade tensions with U.S. President Donald Trump’s administration. He tweeted on Tuesday that ECB action that weakens the euro is unfair.Draghi, who spoke at the ECB’s annual forum in Sintra, Portugal, also said the institution could resume quantitative easing, even if it needs to raise self-imposed limits to do so. While those rules were put in place to avoid crushing markets and crossing the line between monetary and fiscal policy, he said they are “specific to the contingencies we face.”What Bloomberg’s Economists Say...“Draghi seems to be notching up his dovish tone. Today he hinted that the Governing Council may be willing to tolerate inflation running above the ECB’s goal to compensate for the recent, protracted period of below target price gains...Achieving this objective could involve further interest rate cuts or restarting the asset purchase program.”\--David Powell and Maeva Cousin Click here to read the full REACTThe ECB is grappling with an economic slowdown and an inflation rate that remains entrenched below its goal. Draghi said risks from geopolitical factors, protectionism and vulnerabilities in emerging markets haven’t dissipated and are weighing in particular on manufacturing.That sentiment is being felt at major central banks around the world, which are moving back into battle mode. The U.S. Federal Reserve, Bank of England and Bank of Japan all hold policy meetings this week, which should give further insight into their concerns. Investors are betting on U.S. interest rate cuts later this year, while central banks in Australia, Russia, India and Chile have already loosened policy.The ECB Governing Council looked at stimulus possibilities at its June 6 decision, though stopped short of determining a need for immediate action. Draghi’s mention then of the option of more QE left his former adviser, Arnaud Mares, now an economist at Citigroup, with the impression that the ECB would use that tool first rather than rate cuts.One concern over further rate cuts is that it might squeeze banks’ profitability to the point where they pare back lending to companies and households. They’ve complained that they can’t easily pass on the negative deposit rate onto their depositors.On Tuesday, Draghi also referred to possible need for “mitigating measures” to soften the effect of the ECB’s negative rate, currently at minus 0.4%.While one ECB official said a tiering system that exempts some banks’ deposits from the sub-zero penalty would almost certainly be required in the event of further cuts, that could be a sticking point. Another of the officials said there’s no need for tiering and a decision on that could at least be put off until later.The officials were open on the timing of any move. A Federal Reserve interest-rate cut could become a trigger if a narrower difference between U.S. and euro-area policy rates threatened to boost the euro, two of them said. The exchange rate isn’t a policy target for the ECB, but the officials noted that it can have a significant impact on inflation and growth.ECB staff see inflation reaching only 1.6% in 2021, compared with a goal of just under 2%, and Draghi will leave office this October as the only ECB president never to have raised interest rates.“If the crisis has shown anything, it is that we will use all the flexibility within our mandate to fulfill our mandate,” Draghi said Tuesday. “And we will do so again to answer any challenges to price stability in the future.”(Updates with money markets, Trump comments starting in fourth paragraph.)\--With assistance from Catherine Bosley and Joao Lima.To contact the reporters on this story: Paul Gordon in Sintra, Portugal at firstname.lastname@example.org;Piotr Skolimowski in Sintra, Portugal at email@example.comTo contact the editors responsible for this story: Craig Stirling at firstname.lastname@example.org, Fergal O'BrienFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
JPMorgan Chase’s asset management chief Chris Willcox is retiring and will be replaced by senior executive George Gatch. The bank’s asset and wealth management boss Mary Erdoes announced the news in a memo to sent staff on Tuesday afternoon and seen by the Financial Times. A spokesman for JPMorgan confirmed the memo’s contents.
(Bloomberg Opinion) -- Ever since Deutsche Bank AG abandoned talks to merge with Commerzbank AG in April, a drip-feed of information on what Germany’s biggest lender plans next has leaked out.For Chief Executive Officer Christian Sewing, the danger is that he finds most of his cards have been played well before he can unveil his overhaul at the end of next month. He can ill afford to disappoint investors. Deutsche Bank has presented four strategic overhauls in as many years, not one of which has been able to stop the shares from plumbing new record lows. The firm is valued at just one quarter of its tangible book value – the steepest discount among its peer group.This week, the Financial Times reported that Sewing will transfer about as much as 50 billion euros ($56 billion) of trading assets – mostly long-dated derivatives – into a so-called bad bank. The firm is also considering plans to close its equities and rates trading businesses outside Europe.Exiting U.S. equities and rates has been a long time coming. A retreat from the U.S. securities business is a shift many (including yours truly) have argued is worth pursuing in light of Deutsche Bank’s sub-scale presence in the market. Global equities has been a sore spot for the firm, racking up annual losses of about 600 million euros, according to estimates from JPMorgan Chase & Co.What investors are still missing, though, is a clearer sense of how a smaller footprint would help restore profitability. Even if Deutsche Bank were able to finance the retreat from capital-intensive businesses without having to tap investors for more funds, sustainable returns remain a distant prospect.The bank had been counting on growing revenue this year to reach a 4% return on tangible equity. Given the dire outlook for trading in the second quarter after a contraction in the first, it’s hard to imagine that objective will be met.Return on tangible equity stood at 1.3% in the first quarter. Further cost-cuts beyond the investment bank may be necessary. According to JPMorgan, annual firm-wide costs may need to drop to 18 billion euros from 22.8 billion euros in 2018 for the firm to stand a chance of reaching a ROTE of 5% or more by 2021.What is also missing so far from Sewing’s vision is a sense of how and where the firm can grow as interest rates are likely to stay lower for longer. At home, the commercial bank, which generates about 40% of revenue, faces stiff competition from savings and cooperative lenders that is squeezing margins.Sewing is considering giving a boost to the firm’s transaction banking business, which tends to be overshadowed by the trading units, Bloomberg News reported in May. What that will mean in practice hasn’t been articulated. To keep up with the competition in payments and cash management, the lender will need to spend on technology. For the commitment to be credible, it will need to come with a big number attached.All that said, Sewing deserves to have a shot at putting his own mark on the company. The merger talks with Commerzbank have overshadowed a lot of his work so far. He has over-delivered on cost-cutting under the existing (if unambitious) plan. But with a German recession just around the corner, time isn’t on his side. He urgently needs to communicate his vision for Deutsche Bank – and on his own terms.To contact the author of this story: Elisa Martinuzzi 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.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
JPMorgan-owned hedge fund Highbridge is shutting large parts of its business to focus on corporate debt investing, after a long spell of poor performance by its former flagship “multi-strategy” fund. The hedge fund’s chief investment officer Mark Vanacore said in a letter to investors on Tuesday that after reflecting on “the most prudent approach for the future of our business, our employees and most importantly, our investors”, it has decided to focus exclusively on its credit funds. Among the funds being closed is the multi-strategy fund that once managed nearly $10bn, but was hit by the financial crisis and struggled to recover.
JPMorgan Chase (JPM) closed the most recent trading day at $109.22, moving -0.55% from the previous trading session.
(Bloomberg) -- Apple Inc. could be seeing weaker-than-expected demand for its iPhone product line, especially in China, where trade tensions have been weighing down sales, analysts said on Monday.Shares of Apple rose 0.7%, rebounding after a three-day decline. While the stock is up about 12% from a low hit earlier this month, Apple is still down more than 8% from a peak in early May.JPMorgan wrote that macroeconomic uncertainty “is likely to drive greater headwinds to the smartphone market.” The bank lowered its iPhone shipment forecasts for the second quarter through the fourth quarter, dropping them by 4% to 139.5 million units. Analyst Samik Chatterjee also trimmed his price target by $2 to $233, although he kept his overweight rating.The macro issues are “cyclical and likely resolved with a trade resolution,” Chatterjee wrote, adding that Apple could see a tailwind from its growing services business.The iPhone is critically important to Apple’s fortunes, accounting for more than 60% of the company’s 2018 revenue, according to data compiled by Bloomberg. The company derived nearly 20% of last year’s revenue from China, and weakness there pushed Apple to cut its sales forecast in January.JPMorgan was not the only firm to express caution about the outlook for iPhone sales on Monday. Longbow Research wrote that “concerns are rising that the ban on sales to Huawei will further impair iPhone demand in China,” and that there was a risk Apple “will not see notable share gains outside of China.” Analyst Shawn Harrison has a neutral rating on Apple, and wrote that the company’s efforts “to expand the reach and breadth of its services is key amidst a challenged iPhone demand environment, particularly in China.”Loop Capital Markets wrote that while iPhone unit demand was “well aligned with Street expectations” for June, consensus forecasts were “too high” for the second half of the year.“We continue to believe that risk remains to iPhone revenue through the year from mix (both units and capacity per unit), but with a stabilizing China,” analyst Ananda Baruah wrote, affirming Loop’s hold rating and $190 price target.A more optimistic view on the iPhone came from Credit Suisse, which wrote that China iPhone sales were becoming “less bad.”“The pace of decline for iPhone shipments in China has significantly improved” so far this quarter, analyst Matthew Cabral wrote, touting the impact of price cuts. But he noted that units were still down 4% this quarter compared with the year-ago period, and that iPhones were “lagging the overall Chinese smartphone market.”While “less bad” is a “clear positive given the magnitude of the prior headwind, risk remains,” he wrote. Credit Suisse has a neutral rating and $209 price target.Cabral expects trade-related uncertainty will keep the stock within a range, but that risks are “skewed to the downside.”Even beyond trade, he added that “aggressive local competition and a narrower ecosystem advantage in China remain deeper structural challenges for Apple, with no easy near-term fix.”To contact the reporter on this story: Ryan Vlastelica in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Scott SchnipperFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Most people who download these apps never use them; and elderly and rural customers are often left behind.
What’s behind the scenes of high-frequency algorithmic trading (HFT)? Here's a detailed look at the breakneck world of algorithmic and high-frequency trading
(Bloomberg) -- Financial markets are signaling investors see little risk of disruption from upcoming events, despite the potential for major shifts in the course of Federal Reserve policy and U.S.-China trade negotiations.The range of options for this week’s Fed meeting spans a surprise interest-rate cut, a set-up of one down the road or a continued stance of patience, given still-solid economic growth. Late next week, the outcomes of the Group-of-20 summit look binary: either U.S.-China trade talks get back on track, or investors must anticipate further tariff hikes. And the usual run of data must be added to the mix, such as the July 5 payroll report.Yet despite the potential for major market moves from these events, JPMorgan Chase & Co. strategists estimate that the embedded volatility risk premium is “significantly” below its historical average. The group, including Nikolaos Panigirtzoglou, cited a gauge of implied to realized volatility using 12 measures across five asset classes.Other oddities include a large number of short positions on futures tied to the VIX -- the so-called fear gauge tied to U.S. stocks -- and a low amount of hedging as seen in the put-to-call open-interest ratio for S&P 500 Index options, the JPMorgan team wrote in a note Friday.“Option markets do not embed enough cushion against the significant event risk markets are facing over the coming weeks,” the strategists concluded.And then there’s equity positioning, which is still on the high side and vulnerable to a spike in volatility, according to Deutsche Bank AG. Positioning from hedge funds is light on U.S. equities though concentrated in the same stocks as the S&P 500, while in equity futures it’s near the top its historical range, strategists including Hallie Martin and Binky Chadha wrote in a separate report.Systematic strategies “are heavily allocated to U.S. equities and would be sellers on a significant vol spike into a record low liquidity environment,” the Deutsche strategists wrote. Buybacks, which have been supportive of U.S. stocks, will start to run into quarterly blackout periods later this month coinciding with the G-20 meeting, they highlighted.Read: As Threats Mount, Equity Bulls Retain Footing in Tumultuous WeekThere are some markets appearing to gird for stormy weather ahead. Treasuries have been climbing since early May, when President Donald Trump announced he’d expand tariffs on Chinese imports. Five-year notes are effectively pricing in a recession, the JPMorgan analysts calculated. Base metals too are discounting trouble ahead, they estimated.Not so for the S&P 500. The benchmark closed Friday just 2% below its record high from April, and futures were up 0.1% as of 8:17 a.m. Monday in New York. That leaves equities vulnerable to a Fed disappointment. Indeed, one consideration for Fed policy makers is that they might lose the power of surprise should they hold off this week, then lower rates in the aftermath of a negative outcome on trade talks, the JPMorgan team noted.“The resilience of the equity market is in our opinion showing that equity investors have been leaning towards the thesis of a preemptive Fed,” the strategists said. “A more cautious and patient Fed next week could cast doubt on the above thesis, creating the risk of an equity-market correction.”(Adds futures in second-to-last paragraph.)\--With assistance from Namitha Jagadeesh.To contact the reporter on this story: Joanna Ossinger in Singapore at email@example.comTo contact the editors responsible for this story: Christopher Anstey at firstname.lastname@example.org, Cormac MullenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Abu Dhabi National Oil Co. and chemical producer OCI NV plan to combine their Middle East and North Africa crop-nutrient businesses, creating the region’s fertilizer producer to challenge U.S. and Russian exporters.OCI will merge its ammonia and urea assets in North Africa with Adnoc’s fertilizer complex in the United Arab Emirates, the companies said in a statement Monday. The combined company will have $1.74 billion in annual sales, according to the statement, which confirmed an earlier Bloomberg News report.Shares of OCI were down 2.9% at 12:27 p.m. Monday in Amsterdam, giving the company a market value of about 5 billion euros ($5.6 billion).A global ramp-up in fertilizer output has flooded the market with too much supply, prompting players to explore consolidation to improve economies of scale and global reach. A clampdown on tax inversions scuppered CF Industries Holdings Inc.’s plan to buy OCI’s fertilizer arm in 2016.The formation of the joint venture, which will be 58% owned by OCI, is expected to generate as much as $75 million in annual savings, the companies said. It will be headed by the Dutch firm’s chief executive officer, billionaire Nassef Sawiris.Broadening Economy“It looks like a sensible deal, which should generate commercial synergies and create a stronger export platform for nitrogen fertilizers,” Berenberg analyst Rikin Patel said by email.OCI assets may be valued at around $5 billion, as it deserves a multiple of about 10 times earnings due to its superior efficiency, Patel said. Its Middle East and North Africa business generated about $501 million of adjusted earnings before interest, taxes, depreciation and amortization last year, according to a company presentation.State-owned Adnoc has been expanding its downstream operations and bringing in partners for businesses including its pipeline network and refining unit. It has also listed its distribution unit and agreed in October to sell a 5% stake in its $11 billion drilling business to Baker Hughes. The moves come as the emirate of Abu Dhabi, home to about 6% of the world’s crude reserves, seeks to diversify an economy that’s dependent on oil. Adnoc Fertilizers was set up in 1980 to make urea for agricultural use. It sells its products to local and international markets, including the Indian subcontinent, the U.S., Latin America, Australia and Europe.Growth PotentialOCI owns a plant in Egypt with capacity to produce about 1.65 million metric tons of granular urea per year, according to its latest annual report. It also has a 60% stake in another Egyptian production complex that makes anhydrous ammonia, as well as a trading arm in the United Arab Emirates. OCI’s fertilizer venture in Algeria can produce about 1.6 million metric tons of gross anhydrous ammonia and 1.26 million metric tons of granular urea annually.“This platform has significant potential for future growth and value creation,” Sawiris said in the statement.OCI held talks earlier this year about a potential sale of its methanol assets to Saudi Basic Industries Corp. in a deal that could have valued the business at as much as $4 billion, Bloomberg News reported in March. The Dutch company’s largest shareholder is Sawiris, who is Egypt’s richest person with a fortune of about $6.8 billion, according to the Bloomberg Billionaires Index.The transaction with Adnoc is expected to close in the third quarter of 2019. JPMorgan Chase & Co. advised OCI on the deal, while Adnoc worked with Citigroup Inc.(Updates with analyst comment in sixth paragraph.)\--With assistance from Mahmoud Habboush.To contact the reporters on this story: Andrew Noël in London at email@example.com;Dinesh Nair in London at firstname.lastname@example.org;Aaron Kirchfeld in London at email@example.comTo contact the editors responsible for this story: Ben Scent at firstname.lastname@example.org, Andrew Noël, Amy ThomsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- UBS Group AG has managed to alienate an important client that it’s hoping to milk for millions in fees.State-owned China Railway Construction Corp. has decided against hiring UBS as a joint global coordinator on a dollar-bond sale, Cathy Chan of Bloomberg News reported Monday. Haitong International Securities Group Ltd. has already cut business ties with the Swiss bank, while the Securities Association of China recommended members shun research by global chief economist Paul Donovan over language used in a research report last week.At issue were Donovan’s comments on the rise of inflation in China:“Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China. It does not really matter to the rest of the world.”Two debates ensued. The first is whether Donovan’s words are offensive and racist. Even linguists are chiming in. The second is whether U.S. President Donald Trump’s administration is right after all: Is doing business in China more perilous for foreign firms? Will Beijing continue to protect domestic players despite its vows to open up?As a native Chinese speaker, I don’t find Donovan’s comments racist, and certainly didn’t draw a connection with the pejorative term for Chinese laborers who built U.S. railroads in the 19th century. Rather, I find his choice of words unfortunate, and perhaps insensitive, given UBS is keen on luring wealthy Chinese clients.Bear in mind that 2019 is the Year of the Pig, which is supposed to be bountiful and abundant. Yet the nation, where pork remains the main source of animal protein, is suffering from a swine fever epidemic. To make matters worse, this year is shaping up to be another painful one for the economy: Growth is losing steam, despite Beijing’s trillion-yuan stimulus package, and the stock market is now in correction zone. Donovan’s comments were inauspicious, at a time when Chinese investors are already in a foul mood. I’d be willing to bet that we Chinese would better absorb his dry humor if the nation’s economic engine was running at full steam. You could say that China’s response has been a bit heavy-handed. But tough luck. It’s called the cost of doing business in emerging markets, and China is by no means an exception. Foreign banks have gotten into just as much trouble for lesser offenses. Two examples in the recent past come to mind.Andy Xie, an MIT-trained star economist, left Morgan Stanley in 2007 after an email he wrote citing “money laundering” as one reason for Singapore’s economic success. Never mind that it was an internal message. Donovan’s published report, meanwhile, presumably went through the requisite compliance hoops. Xie had disparaged Singapore, an Asian Tiger. Or consider what happened to JPMorgan Chase & Co. in Indonesia. In 2017, the government severed business ties with the bank, eliminating its role as a primary dealer in sovereign-bond auctions. That came after its research division downgraded the nation’s stocks to underweight, citing a “spike in volatility” following Trump’s surprise election win. The response also punished investment bankers for equity research, despite the well-established split between the businesses. That penalty certainly hurt: Indonesia is a mover and shaker in the bond world, with close to 40% of its sovereign issues taken up by foreigners.For UBS, even bigger asset-management fees are at stake. Unlike in the U.S., where passive funds now dominate, China is the last big market on earth where investors still have faith in active managers. That explains why global banks are falling over themselves to bulk up there.When I wrote about this in April, I warned that domestic brokers wouldn’t leave the field to the foreign “barbarians.” A cynic could ask about the conflict of interest apparent in Pig-Gate. After all, core members of the Chinese Securities Association of Hong Kong, which demands Donovan’s dismissal, and the Securities Association of China, which aims to block out UBS, compete with the Swiss bank for China money. In that light, the outcome with Haitong isn’t all that surprising. At the end of the day, beggars can’t be choosers. With its investment-banking business falling behind that of U.S. mega banks and Swiss rival Credit Suisse AG, UBS needs its wealth-management business. In that case, it had better start doing more to please a moody client.To contact the author of this story: Shuli Ren at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
President Donald Trump aimed his latest criticism at the Federal Reserve on Friday, ahead of the central bank policy makers’ meeting next Tuesday and Wednesday, and said he predicted an eventual trade deal with China.
JPMorgan Chase & Co. declared dividends on the outstanding shares of the Firm’s Series I, R and S preferred stock. Information can be found on the Firm’s Investor Relations website at jpmorganchase.com/press-releases.