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WFC | Global stock bulls still running but a bit more tired | By Rahul Karunakar BENGALURU Reuters Global stock markets will rise further in 2018 even as the era of low inflation bond yields and volatility has come to an end and the rocket fuel behind a bull run that began in 2009 is running dry a Reuters polls of strategists showed After nearly a decade of easy monetary policy the U S Federal Reserve is almost certain to raise rates three times this year The Bank of Canada and the Bank of England will probably tighten too while the European Central Bank is expected to end its stimulus program ECILT US CA POLL ECILT GB ECILT EU Fears of a pickup in inflation and the expected surge in government borrowing to fund a gaping budget shortfall from the U S administration s tax cuts and new spending have pushed bond yields higher and that has reined in stocks a bit While world stock markets enjoyed a record 15 month winning streak in January on strong economic growth and solid company earnings they plunged earlier this month as U S Treasury yields soared to a four year high on fears interest rates will rise faster than expected Still more than 200 equity strategists and brokers around the world polled by Reuters expect all but one of 17 indexes to build on the recent recovery from this month s sell off and rise further through to the end of next year Equity bullishness is being tempered however by rising global bond yields and expectations for increased volatility About 80 percent of over 50 strategists who answered an extra question said the period of low inflation bond yields and volatility is over We do see inflation bond yields and volatility all higher in 2018 than levels we were at in 2017 Better economic growth and more fiscal stimulus will put upward pressure on inflation and interest rates this year noted Darrell Cronk president at Wells Fargo NYSE WFC Investment Institute We would find it difficult to imagine that we will return to the lows in volatility during the second half of 2017 Volatility spiked during the deep sell off in equities and all but one of 82 specialists who answered a separate question said the CBOE Volatility index VIX this year will stay above its average of 11 percent over the past year Twenty seven of 81 respondents said it will roughly average 10 15 percent 44 said 15 20 eight said 20 25 and two said 25 30 percent A robust U S economic expansion that is expected to be supported by additional fiscal stimulus and higher profit growth will boost Wall Street the poll found The recent sell off makes valuations look less stretched than in January The benchmark S P 500 SPX is forecast to end this year about 8 5 percent above 2017 s finish and up 4 3 percent from Monday s close Things are actually less expensive because of the powerful earnings growth and to a certain extent the market pulling back said Jonathan Golub Credit Suisse s chief U S equity strategist We re in this nice place where things are moving forward but the risk that something goes wrong has been contained Canada s main stock index is forecast to rise to a record high by the end of the year as the prospect of higher global inflation boosts the appeal for its resource shares but a rising recession risk will help cap the index in 2019 European shares were also expected to bounce back according to strategists who also said the things that supported European markets in 2017 will continue to do so even if the market is now more volatile But concerns over the terms of Britain s exit from the European Union and rising volatility will hold back the FTSE share index from rising above its record high in the next two years Emerging economies stock markets are expected to underperform developed ones as risks from huge fiscal deficits remain and on higher global interest rates Indian stocks are expected to recover most of their recent losses helped by strong corporate earnings but will close out 2018 a little short of the record high hit at the end of January Brazil s market rally is expected to head into a third year on strong growth expectations but the government s inability to plug a fiscal deficit could put a lid on those gains Russian stocks will end 2018 close to where they are now shrugging off a presidential election but contemplating pressure from tepid economic growth and on any possible changes to Western sanctions against Russia When asked what will be substantially affected by any sharp moves in U S stocks the top pick was emerging market shares If the U S experiences sharp moves this year everything will be affected noted David Joy chief market strategist at Ameriprise How much and where will depend on what the dollar does If the dollar rallies on a tighter Fed EM will feel it the most Additional reporting and polling by correspondents in Bengaluru London Mexico City Milan Moscow New York Sao Paulo Shanghai Tokyo and Toronto Editing by Ross Finley and Janet Lawrence OLUSECON Reuters US Online Report Economy 20180228T011644 0000 |
WFC | Wells Fargo Probes Widen as Fed Says Sanctions Will Be Lasting | Bloomberg Wells Fargo NYSE WFC Co s legal and regulatory struggles expanded to previously untarnished businesses Thursday as the company revealed new allegations of improper sales practices The Federal Reserve vowed to keep unprecedented sanctions in place for a significant period
The bank still trying to steady itself from a bogus account scandal that took down former Chief Executive Officer John Stumpf said government agencies had inquired about improprieties in the wealth management business related to 401 k rollovers and other products The lender is also responding to queries from government agencies into its foreign exchange business the company said in a regulatory filing
Read more Inside Tim Sloan s Struggle to Move Past Apologizing
Wells Fargo has yet to put behind it 18 months of scandal in its retail banking business where employees under pressure to meet aggressive sales goals may have opened millions of accounts in customers names without permission The bank has said it s facing at least three major probes including one by the U S Department of Justice Last month the Fed put in place sanctions preventing the bank from getting any bigger until it fixes its problems
We will not lightly lift that restriction Fed Chairman Jerome Powell told lawmakers at a Senate Banking Committee hearing Thursday responding to Senator Elizabeth Warren s call for the agency to stand firm Wells Fargo will probably be subject to the sanctions for a significant period Powell said
Shares of the company fell 1 6 percent to 57 49 at 2 30 p m in New York trading extending this year s decline to 5 4 percent
Inappropriate Referrals
The wealth management review which began in response to inquiries by federal government agencies is assessing whether there have been inappropriate referrals or recommendations given to 401 k plan participants and customers seeking alternative investments the bank said in the filing Wells Fargo also said that the probe is examining referrals given to brokerage clients to use services provided by its investment and fiduciary services business which is a part of the wealth management division run by Jonathan Weiss
CEO Tim Sloan said in a Feb 12 interview with Bloomberg that the bank hadn t uncovered issues similar to the consumer bank scandal in the wealth management unit I m not going to provide any absolute guarantee ever ever that we re ever not going to find an issue in any of our businesses Sloan said
Incorrect Fees
The company is conducting a separate review of incorrect fees charged to customers fiduciary and custody accounts according to Thursday s filing which said outside consultants are trying to determine how it miscalculated the value of certain assets Wells Fargo said the review is in its preliminary stages and centered around non publicly traded assets
The foreign exchange review follows the bank s disclosure late last year that four currency traders left the firm over a transaction conducted for a client The bank said its leadership took steps to hold accountable the individuals who were involved
Adding to the list of probes and reviews are allegations by a former Wells Fargo financial crimes investigator who said in a complaint filed Wednesday that the bank improperly follows up on allegations of fraud in customer accounts
Matthew Valles who worked at the bank until January said that instead of investigating potential fraud the bank would close the accounts leaving some customers on the hook for unauthorized withdrawals according to a copy of the complaint filed in Multnomah County circuit court in Oregon
We take seriously the concerns of current and former team members and we investigate them thoroughly Jim Seitz a Wells Fargo spokesman said in an emailed statement Wells Fargo is reviewing the legal complaint that was filed on Wednesday afternoon |
WFC | Alaska s renowned Iditarod race mired in controversy to start Saturday | By Yereth Rosen ANCHORAGE Ala Reuters The world s most famous dog race is mired in a doping scandal under pressure from animal rights activists and coping with a drop in revenue Still the show will go on Alaska s Iditarod Trail Sled Dog Race starts on Saturday Sixty seven mushers and their dog teams are due to gather in Anchorage for the ceremonial start of the 1 000 mile race After what will likely be a leisurely 11 mile trot through Alaska s biggest city timed competition begins on Sunday in Willow an 80 mile drive north The winner is expected in Nome a Gold Rush town on the Bering Sea eight days later The race is a tribute to a life line of mushers and dogs who carried supplies to remote outposts in the early days of Alaska s non aboriginal settlements The most famous of those missions was in 1925 when a relay of teams completed a Serum Run delivering a supply of antitoxin to Nome for children stricken by a diphtheria epidemic Notably absent from the starting line this year will be four time champion musher Dallas Seavey the Iditarod star at the center of the dog drugging scandal At the end of last year s race in which Seavey finished second his dogs tested positive for a banned opioid Seavey was not punished Iditarod officials said information was too sketchy to prove deliberate misconduct and race rules were too vague to justify discipline Seavey has proclaimed his innocence accusing race officials of botching test protocols and alleging that his dogs were doped in an act of sabotage He is boycotting this year s Iditarod racing instead in Norway s long distance Finnmarksl pet He has called for several Iditarod officials to resign retained an attorney and hired a public relations firm to try to clear his name This is the only thing I do This is my career This is my entire life he said in an Anchorage Daily News interview before leaving for Norway Seavey is a third generation racer and second generation champion His father Mitch Seavey won his third victory last year The Iditarod has lost a major sponsor Wells Fargo NYSE WFC and others have reduced contributions cutting its total purse to 500 000 from almost 750 000 last year Animal rights activists are increasing pressure on the race citing deaths of four dogs in last year s competition and what they deem to be cruel year round practices by Iditarod mushers People for the Ethical Treatment of Animals is planning to protest Saturday s start Iditarod officials said It s a hard pill for me to swallow when somebody s trying to take down this event that we all so dearly love race director Mark Nordman said at a Wednesday press conference Vern Halter a former Iditarod musher and now mayor of the Matanuska Susitna Borough north of Anchorage said the race is due for reforms but for the next couple of weeks he said concerns can be put aside I just hope all the mushers forget about this stuff and travel to Nome the best they can and have fun he said |
WFC | Wells Fargo reviews wealth business for possible customer abuse filing | Reuters Wells Fargo Co N WFC is examining its wealth and investment management business for possible customer abuse including overcharging and inappropriate referrals after inquiries from government agencies the company said on Thursday The third largest U S bank s board of directors is looking at whether customers in its smallest business to 401 k plans certain alternative investments and brokerage operations according to its annual 10 K U S Securities and Exchange Commission filing The U S Justice Department instructed Wells Fargo in late 2017 to investigate its wealth management business after whistleblowers accused the bank of pushing nonessential products or services on customers the Wall Street Journal reported earlier on Thursday The Justice Department did not immediately respond to a request for comment Wells Fargo spokeswoman Kathleen Leary directed Reuters to a statement by Chief Executive Tim Sloan who said the review happened after inquiries from government agencies When we discover a problem we are moving to find the root cause and fix it Sloan said He emphasized Wells Fargo s effort to be more transparent as it discovers new issues Wells Fargo has been embroiled in a sales practice scandal in its retail operations for more than a year primarily related to employees opening perhaps 3 5 million phony accounts in customers names without their permission The bank also found evidence that some customer accounts were improperly closed or their funds were improperly frozen and that customers were enrolled in add on products like identity theft protection that they did not request Problems in other areas including mortgage lending and auto insurance also have surfaced through internal reviews and regulatory probes But until now Wells Fargo s wealth and investment management business had largely avoided scrutiny According to the filing as part of its review of the wealth business Wells found that some customers were overcharged for investment and fiduciary services due to incorrect set up and maintenance in the system of record The bank is now trying to determine the extent of the issue and causes of any problems in the unit which generated 2 7 billion worth of profit last year
This story was corrected to removes extraneous words from first paragraph |
WFC | Stanley Furniture announces closing of sale of substantially all of its assets | Stockholders of Stanley Furniture STLY approved the previously announced sale of substantially all of its assets to Churchill Downs LLC for 10 8M in cash a subordinated promissory note in the principal amount of 7 4M and a 5 equity interest in Buyer s post closing ultimate parent company The Company used cash proceeds from the asset sale of 1 3M to pay the outstanding balance under its credit agreement with Wells Fargo NYSE WFC and estimates additional transaction costs for the asset sale of 2 7M In connection with this purchase agreement the Company is changing its name to HG Holdings Inc Steven A Hale II Chairman of the Board stated We re pleased to close this transaction and thank the many people who contributed to its successful completion The Company will now be able to focus solely on evaluating alternatives for deploying its cash and potentially deriving a benefit from the Company s net operating loss carryforwards We look forward to this next chapter in the Company s history Previously Stanley Furniture update results revises sale agreement Jan 23 Previously Stanley Furniture sells most of its assets Nov 20 2017 Now read |
EBAY | UPDATE 1 EBay ex CEO Whitman plans run for Calif governor | SAN FRANCISCO Feb 9 Reuters Former eBay Inc Chief
Executive Meg Whitman one of the highest profile Republican
technology executives in Silicon Valley has formed a committee
to explore running for governor of California in 2010 the
first official step of a campaign
The most populous U S state is known for its liberal
trend making social ways but it has a strong socially
conservative element and a long history of electing Republican
governors from Ronald Reagan to current Governors Arnold
Schwarzenegger
California is in the middle of a fiscal crisis with a 40
billion budget gap over a year a half spiking unemployment and
a continuing mortgage industry crisis
California faces challenges unlike any other time in its
history a weak and faltering economy massive job losses and
an exploding state budget deficit Whitman 52 said in a
statement I refuse to stand by and watch it fail
Whitman built eBay from a tiny start up to the dominant
online auctioneer She will face at least one other Republican
tech exec in the battle for the party nomination Insurance
Commissioner Steve Poizner
Reporting by Peter Henderson Editing Patricia Zengerle |
EBAY | REFILE UPDATE 2 EBay planning spin off of Skype through IPO | Refiles to fix typographical error in headline
Recasts adds spin off details background byline
Skype IPO expected by first half of 2010
EBay shares rise 4 percent
By Alexandria Sage
SAN FRANCISCO April 14 Reuters EBay Inc said on
Tuesday it would spin off its Skype Web telephone services unit
through an initial public offering cheering investors who had
prodded the online giant to unload the fast growing
low revenue business and return cash to shareholders
Share of eBay rose 4 percent after hours
The move by eBay which has given up trying to integrate
Skype into its main marketplaces business could also seen as
placing a for sale sign on the unit to fetch offers from
potential buyers
San Jose based eBay which acquired Skype in 2005 for 2 6
billion has signaled it would be ready to unload the division
for the right price Recent media reports said the business
co founders were seeking to bid on the company and
shareholders have pushed for a sale or spin off
We believe operating Skype as a stand alone publicly
traded company is the best path for maximizing its potential
eBay Chief Executive John Donahoe said in a statement adding
there were few synergies with the larger company
But the outlook for an IPO is still unclear said
Commresearch analyst Gregory Lundberg
The very first thing that I have to say is market
conditions currently would not support an IPO of Skype
Lundberg said 2010 will be equally questionable unless the
business completely changes course with the launch of the
Blackberry and iPhone applications
But he added Strategically something else might happen
altogether
The announcement comes a year after Donahoe took the helm
at eBay and said he would evaluate whether the telephone
service was a good fit with the rest of eBay which also
includes Web payments service PayPal along with its core
auctions business
Many on Wall Street raised eyebrows when former eBay head
Meg Whitman purchased Skype skeptical of the high price tag
and eBay s claims that its customer base of buyers and sellers
would use Web phone calls and the company would benefit from a
strong Web brand
Last month at an analyst day Donahoe said he would make
the right decisions to maximize Skype s value
Skype which posted revenues of 551 million in 2008
allows international and local calls through the Web Fellow
Skype customers can call each other for free a strategy that
has helped to spread the service
EBay shares rose 4 percent to 14 95 in after hours trade
from their Nasdaq close of 14 38 down 2 percent
Reporting by Alexandria Sage Additional reporting by Ritsuko
Ando in New York Editing by Richard Chang |
WFC | U S stock investors shrug off higher yields for now | By Lewis Krauskopf NEW YORK Reuters Spooked one week sanguine the next Some stock investors are drawing optimism from the market s ability to move upwards in the face of loftier yields even though those higher yields were partly blamed for last week s violent selloff Those investors are optimistic about economic growth and stocks that can benefit from that environment although they concede the overhanging risk that a sharp spike in yields could cause another rout Even though yields are moving higher the equity market seems to be continuing to follow through on some of the upward movement that we saw earlier in the year that is related to global growth said Tracie McMillion head of global asset allocation strategy at Wells Fargo NYSE WFC Investment Institute in Winston Salem North Carolina Rising yields spooked the stock market last week following employment data on Friday that caused concerns about inflationary pressures However this week has seen a rising stock market despite yields remaining near their four year high Wednesday s move up in stocks including a 1 3 percent surge for the S P 500 SPX came even as the benchmark 10 year Treasury s yield rose from 2 84 percent to 2 91 percent following closely watched inflation data showing U S consumer prices rose more than expected in January The equity markets had to reprice for this higher yield environment and now the stock market is saying We re OK with this Game On said Jason Ware Chief Investment Officer of Albion Financial in Utah who said he still preferred stocks to bonds It s still a no brainer Ware said The total return for equities is so much more attractive than the meager income you get from bonds Wednesday s rise in stocks also came as volatility levels had fallen with the Cboe Volatility index VIX dropping into the 20s after rising as high as 50 a week earlier and coincided with expiring VIX futures and options Rising bond yields threaten stocks because they present investment competition following years of very low rates that supported equities Increasing rates also could indicate a tightening of economic conditions I think the turnaround in the equity market was more associated with an improving economy and removing the focus on the yield environment said Robert Pavlik chief investment strategist senior portfolio manager at SlateStone Wealth LLC in New York The market switched its attention to OK we have an expanding economy it s not running so hot that I have to be overly worried about interest rates Pavlik and McMillion favor sectors that should perform well during an improving economy including financials and consumer discretionary stocks Since October the S P 500 and 10 year Treasury yields have been positively correlated moving in the same direction when viewed over a mid term 60 day period according to Thomson Reuters data But the move higher came as bond yields were rising off of very low levels The benchmark 10 year yield hovered on Thursday around 2 90 percent after touching a more than four year high during the session If the economy is accelerating then we should be able to handle higher bond yields and not derail the economy said Willie Delwiche investment strategist at Baird in Milwaukee If growth is accelerating and moving higher then along the way we can handle higher levels The biggest risk from rates is a fast move higher in yields that catches the market off guard as opposed to breaching a specific level Delwiche said But if the benchmark 10 year tops 3 percent that could cause some fear for stock investors said Brian Shepardson portfolio manager for the James Balanced Golden Rainbow fund in Alpha Ohio
If higher rates are what caused the market to pull back that is still a concern Shepardson said Nothing has changed fundamentally within the market |
WFC | ING says cryptocurrency exchange Bitfinex has an account with it | AMSTERDAM Reuters Dutch financial services company ING AS INGA on Tuesday confirmed that Bitfinex one of the largest exchanges for trading in cryptocurrencies such as Bitcoin has a bank account with it in the Netherlands Bitfinex s banking arrangements have been unclear since Wells Fargo NYSE WFC severed ties with it last April In January Reuters reported that the U S Commodity Futures Trading Commission CFTC had sent a subpoena on Dec 6 to both Bitfinex and sister company Tether for undisclosed reasons Bitfinex whose parent company iFinex is incorporated in the British Virgin Isles and which has offices in Taiwan could not be reached for comment ING spokesman Harold Reusken confirmed in an email that Bitfinex has an account in the Netherlands but would not provide details on the amount held or whether ING also provides banking services for other Bitfinex related companies With regards to companies that are active in the crypto market we are very conservative Reusken said He said ING does not itself provide any services to help customers buy or sell cryptocurrencies But he said the bank which is actively experimenting with distributed ledger technology is willing to serve companies that are in the value chain of cryptocurrencies
Two members of parliament in the Netherlands have lodged questions for the finance minister after Dutch language website Follow The Money published a report on Feb 14 disclosing ING s banking relationship with Bitfinex |
WFC | Bosch starts new division acquires U S carpooling start up | Reuters Germany s Robert Bosch ROBG UL on Wednesday created a new division to expand its reach in the markets for ride services and connected vehicles and acquired a small U S ride services company as part of the strategic shift The carpooling start up Splitting Fares Inc whose app connects people who share the same route to their place of work or study will be part of Bosch s new Connected Mobility Solutions division the world s largest automotive supplier said The two companies did not disclose the purchase price Splitting Fares founded in 2015 was helped by early investments from Verizon Wells Fargo NYSE WFC and Detroit based Fontinalis Partners which is co owned by Ford Motor NYSE F Executive Chairman Bill Ford Bosch said its new division will focus on vehicle sharing ridesharing and connectivity based services for car drivers It will also include Bosch s unit COUP which rents e scooters in Berlin and Paris and its newly developed system of connected electrified powertrain components called System e Connectivity is a way for us to rethink not just the car but the whole way we use modes of transport Bosch Chief Executive Volkmar Denner said As the automotive supplier expands to ride sharing services Bosch would be pitted against its auto parts customers such as Uber and Didi which are also working on self driving cars Earlier this month Bosch said it would start testing self driving cars that it has been developing with Mercedes Benz owner Daimler |
WFC | Sangamo bulls running after Gilead deal shares up 13 4 | The pact extends Sangamo s NASDAQ SGMO value beyond gene editing and gene therapy says Wells Fargo NYSE WFC s Jim Birchenough boosting his price target to 39 from 30 SGMO up 13 4 to 25 17 Gene therapy peers are also on the move Regenxbio RGNX 3 9 Audentes Therapeutics BOLD 2 7 to name two Source BloombergPreviously Sangamo up 6 premarket on Gilead deal to develop oncology focused cell therapies Feb 22 Previously Sangamo Therapeutics Q4 revenues up 47 shares ahead 7 premarket Feb 22 Now read |
WFC | 4 Trade Ideas For Wells Fargo Bonus Idea | Here is your Bonus Idea with links to the full Top Ten
Wells Fargo NYSE WFC WFC raced higher after the November election gaining 10 in only 2 days It continued to move higher at a slower pace after that reaching an ultimate top at the end of February The pullback from there found support at the 200 day SMA and the price bounced It settled into a sideways channel for through the end of August when it broke the channel to the downside That proved to be a failed break down and it rapidly recovered back into the channel but remained under the 200 day SMA It ended September with a push back over the 200 day SMA and then consolidated there last week near the top of the channel
The Bollinger Bands are shifted higher to allow a move up The RSI is high in the bullish zone The MACD is rising and bullish All support more upside price action A break of the channel at 56 30 would see resistance at 60 the prior top Support lower sits at 54 75 and then 53 30 Short interest is low under 1 and the company is expected to report earnings Friday morning before the open
The options chain for this week shows an expected 1 40 move by Friday or a range of 54 15 to 57 Open interest is biggest at the 54 strike this week with big size at the 53 put strike as well October monthly options show biggest open interest at the 55 strike followed by 52 50 there is also big open interest at 57 5 and 60 above on the call side In November the focus range is 52 50 to 55 and December spread more from 47 5 to 55 January 2018 options after the following earnings report show a focus of open interest on the call side from 50 to 60 and on the put side at 50 and 45
Wells Fargo Ticker WFC
Trade Idea 1 Buy the stock on a move over 56 30 with a stop at 54 50
Trade Idea 2 Buy the stock on a move over 56 30 and add an October 13 Expiry 55 5 54 Put Spread 51 cents as protection through earnings Sell the December 60 Call 32 cents to lower the cost of protection
Trade Idea 3 Buy the October 13 Expiry December 57 50 Call Calendar 80 cents
Trade Idea 4 Buy the January 50 57 5 bullish Risk Reversal 78 cents
After reviewing over 1 000 charts I have found some good setups for the week These were selected and should be viewed in the context of the broad picture reviewed Friday which heading into the next week sees the SPY NYSE SPY and iShares Russell 2000 NYSE IWM looking ready to hand over the lead to the PowerShares QQQ Trust Series 1 NASDAQ QQQ as they take a breather after strong runs
Elsewhere look for Gold to continue lower while Crude Oil also moves to the downside The US Dollar Index looks better to the upside short term while US Treasuries are biased lower The Shanghai Composite and Emerging Markets are biased to the upside for the week
Volatility looks to remain very low keeping the bias higher for the equity index ETF s SPY IWM and QQQ Their charts all look great on the longer timeframe while the SPY and IWM are extended in the shorter timeframe and could pause or pullback slightly Use this information as you prepare for the coming week and trad em well
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment I or my affiliates may hold positions or other interests in securities mentioned in the Blog please see my page for my full disclaimer |
EBAY | Column Ecommerce loses immunity to economy woes Eric Auchard | Eric Auchard is a Reuters columnist The opinions expressed
are his own
By Eric Auchard
LONDON Nov 26 Reuters For years Web retailers have
touted their convenience and efficency over conventional
retailers and enjoyed surging double digit sales growth
especially in the crucial year end holiday shopping season
But the steady draining of consumer confidence reflected in
recent government data and the latest market research reports
suggest the online retail industry is bracing for a humbling
first ever year of flat or even contracting holiday sales
Ecommerce for reasons tied to both the global economic
crash and Web specific factors is poised to fall harder than
the much maligned retail store industry itself struggling with
recent high profile bankruptcies and widespread signs that
consumers are looking to sharply curtail their spending
Retail spending has not really dropped says Gian
Fulgoni chairman of consumer audience measurement firm comScore
Inc It s ecommerce growth rates that have fallen off a cliff
This week comScore once again cut its forecast for U S
holiday shopping reporting that sales in the first 23 days of
November had fallen to 8 2 billion down 4 percent from a year
earlier
Forecasts for online holiday shopping issued in October or
early November took the glass half full view of the coming
shopping season predicting low double digit growth That
would be below prior years but healthy versus overall retail
The declining outlook comes after third quarter U S
Department of Commerce data showed dismal October growth online
Forecasters who had clung to the notion that online retailers
would prove an exception have changed their tune recently
Nonetheless the consumer tracking firm predicted online
holiday sales for November and December could end flat at around
29 2 billion in terms of year over year growth but only if
there is no further decline in the economy in coming weeks
Until recently comScore had forecast 6 percent growth in
U S holiday sales Fulgoni said Similarly this week eMarketer
cut its 2008 ecommerce forecast to 4 percent from 10 1 percent
Flat growth this season would compare with a 19 percent rise
in 2007 sales 24 percent in 2006 and 26 percent in 2005
Overall the National Retail Federation forecasts total U S
holiday sales to grow a tepid but positive 2 2 percent to 470
billion The includes both classic stores and Web storefronts
In statistical terms online retailers just had farther to
fall than their distressed store based rivals
Similarly in Britain the exception that once applied to
ecommerce is losing steam fast Visits to UK shopping sites this
month have declined by 14 percent as of Nov 24 according to
data from online market research firm Hitwise Declining traffic
has come despite heavy Web discounting activity at big retailers
such as HMV Waterstones and Tesco
CYBER MONDAY MISLEADING DATA
The gloomy forecasts come out just ahead of Cyber Monday
next week s symbolic start to the U S online holiday shopping
season
Retail industry promoters of the Cyber Monday concept will
tell you this coming Monday is a crucial test of the American
consumer s waning appetite to spend at the holidays
Don t believe it
If anything Cyber Monday is one of the worst days from
which to extrapolate year end holiday sales trends Rather it s
a day of special one off promotional discounts designed to
remind consumers they can shop online instead of in stores A
survey by Shopzilla found 84 percent of retailers will have some
sort of Cyber Monday promotion this year up from 72 percent a
year ago with the biggest come on in the form of discounts
Despite the media hype that surrounds the occasion Cyber
Monday ranked just ninth among heaviest shopping days in 2007
and is not expected to behave much differently this time around
ComScore says online shopping has a few remaining bright
spots in categories like video games sports and fitness
products and furniture and appliances
But apparel is off and consumer electronics seems to have
lost its luster Fulgoni said of falling demand for products
like big screen TVs among online buyers
When all is said and done ecommerce is where disposable
income is spent says Fulgoni comScore s co founder
Everything has absolutely fallen apart in October and
November
Some facets of the online industry may be better positioned
than others but none are immune Not pure ecommerce players
such as Amazon com or eBay Inc not gift card purveyors nor
multichannel marketers that operate both stores and a Web site
Major ecommerce companies derive a disproportionate share of
their revenue from fourth quarter sales Susquehanna Financial
analyst Marianne Wolk estimates companies such as Amazon com Inc
or Overstock com Inc derive just over one third of their sales
in the final quarter of the year
GSI Commerce which delivers ecommerce services to retailers
who lack their own Web presence generates nearly 40 percent of
its annual revenue and a whopping 83 percent of its annual cash
flow in the current quarter Wolk estimates
Stifel Nicolaus analyst Scott Devitt says falling sales
forecasts have put in peril expectations for many online
retailers who despite their advantages over offline retailers
can t alter the fact that consumers are using this holiday
season to contemplate all the ways they can pare back spending
At the time of publication Eric Auchard did not own any
direct investments in securities mentioned in this article He
may be an owner indirectly as an investor in a fund For
previous columns Reuters customers can click on
Editing by Chris Wickham |
EBAY | EBay ex CEO Whitman plans run for Calif governor | SAN FRANCISCO Feb 9 Reuters Former eBay Inc Chief
Executive Meg Whitman one of the highest profile Republican
technology executives in Silicon Valley has formed a committee
to explore running for governor of California in 2010 the
first official step of a campaign
California faces challenges unlike anyother time in its
history a weak and faltering economy massive job losses and
an exploding state budget deficit Whitman 52 said in a
statement I refuse to stand by and watch it fail
Reporting by Peter Henderson Editing Patricia Zengerle |
EBAY | Here s What Hedge Funds Are Expecting From EBay On Wednesday | With the proliferation of smartphones it seems inevitable that mobile payments will be the next big step forward in e commerce Several apps are already competing to conquer the space in both consumer to merchant and peer to peer financial transactions through email and other forms of electronic transfers eBay s NASDAQ EBAY subsidiary PayPal is one of the most established and well known mobile payment platforms out there
While PayPal s growth has taken off in recent quarters eBay s core online auction and shopping business has remained relatively quiet Hedge fund manager and activist investor Carl Icahn took a stake in eBay and demanded that eBay spin off PayPal into a separate business eBay CEO John Donahoe stood his ground and insisted that eBay and PayPal have natural synergies and should be kept together Icahn backed down from his aggressive stance in April and there is no reason to believe PayPal will be broken off from eBay any time soon
eBay Inc EBAY is set to report FQ2 2014 earnings after the market closes on Wednesday July 16th This quarter 49 contributing analysts on Estimize com have come to a consensus earnings expectation of 70c EPS and 4 390B in revenue compared to a consensus of 68c EPS and 4 378B from Wall Street Over the previous 6 quarters crowdsourced forward looking financial estimates platform has been more accurate than Wall Street in forecasting eBay s earnings per share and revenue 5 times and twice resepctively
Estimize com allows the ranking and sorting of analysts by accuracy the analyst with the lowest error rate on eBay with at least 2 estimates scored is an information technology professional who goes by the username pedroos Over 2 estimates pedroos has averaged an incredibly small error rate of just 0 1 Estimize is completely open and free for anyone to contribute and the base of contributing analysts on the platform includes hedge fund analysts asset managers independent research shops non professional investors and students
The Estimize consensus was more accurate than the Wall Street consensus 65 of the time last quarter on the coverage of nearly 1000 stocks A combination of algorithms ensures that the data is not only clean and free from people attempting to game the system but also weighs past performance and many other factors to gauge future accuracy
Last quarter eBay reported an atypically large earnings beat coming in well above the consensus from both Estimize and Wall Street Over the past 2 years eBay has reported either in line or ahead of the Wall Street consensus in each period This quarter contributing analysts on the Estimize com platform are expecting eBay to maintain its streak and come in a few cents per share ahead of the Street s consensus Barring much higher consumer adoption of PayPal than anticipated there s no clear catalyst to drive earnings too much higher
On the other hand two negative one time events from the quarter could threaten eBay s brand going forward In early June well respected PayPal chief David Marcus left his post to go take a place on the Facebook NASDAQ FB team Perhaps worse back in May eBay revealed it was the victim of a cyber attack and recommended that 145 million users change their passwords Hacking and cyber attacks are an unfortunate reality of the 21st century but if any company s brand is going to be affected by a cyber attack it would be a mobile payments company like eBay
Graph above from ChartIQ Visual Earnings
Although there have been a couple of one time events with potential negative consequences this quarter the Estimize community has come to a consensus forecast that eBay will likely outperform the Wall Street consensus by a small margin this quarter Contributing analysts are predicting that eBay will beat the Street s EPS projection by 2c 3 per share and edge past revenue estimates by 12 million 1 The Estimize community is also looking for year over year earnings and revenue growth of 11 and 13 respectively compared to FQ2 of last year |
EBAY | eBay Stock Soars On Rumors Of Possible PayPal Spinoff | eBay Inc NASDAQ EBAY stock is almost up 5 following a report stating that the company could spin off its cash cow PayPal payments units as early as next year The stock is currently trading at 55 89 per share and up about 4 63 for the day EBay has been telling potential recruits for the position of PayPal president that it s considering spinning off the payments business as soon as next year according to two people briefed on the conversations Reasons for Possible Spin Off eBay is a massive company with a market capitalization valued at 69 45 Billion and generating annual revenue of about 17 05 Billion They have a solid business plan that will continue generating high revenue for decades to come So why would this multi billion dollar company decide to spin off one of its most lucrative divisions Spin offs offer the opportunity for a division to trade independently of a parent company and in theory see value unlocked In eBay s particular case PayPal is the mobile payment system that customers have to use in order to buy items of eBay It makes sense if an adverse news event for example impacts eBay s stock PayPal in theory will not be impacted due to its independence from eBay and pure revenue generation from eBay s customer transactions One potential reason for the split according to The Economist is that companies seeking buyers for parts of their business are not getting good offers from other firms or from private equity Also according to The Economist another incentive of spin offs is called the conglomerate discount that stock markets value a diversified group at less than the sum of its parts What it means for investors Current shareholders of the parent company would receive equivalent shares in the new company in order to compensate for the loss of equity in the original stocks Shareholders may then buy and sell stocks from either company independently potentially making investment in both companies more attractive This spin off will be a good opportunity for new and current investors to invest in a new independent stock that is just focused on payments and isn t tied to the failure or success of eBay As of right now many could argue that PayPal is the main reason to own EBAY so it will be interesting to see how two separate companies perform
Still PayPal while it does generate revenue from alternative methods does get a great deal of business from eBay The online auction side is a key source of free leads for the payment service so it will be interesting to see what happens to that model in a split Bottom Line The potential spin off of PayPal from eBay is exciting news for investors because it could unlock the value in both companies and allow both to prosper more than they might as a combined entity Investors should note however that given mixed opinions on earnings estimate revisions as of late eBay has a Zacks rank of 3 hold and has an industry rank in the bottom 42 so as it stands right now EBAY isn t looking too favorable Still the potential for a PayPal spin off is up in the air though now it is leaning more toward the optimistic side so investors should keep a lookout in the news to see if eBay actually follows through and if PayPal becomes its own company |
WFC | Wells Fargo Expects to Boost Consumer Loans Amid Fed Order | Bloomberg Wells Fargo NYSE WFC Co reckons it won t suffer a consumer backlash from the unprecedented punishment the Federal Reserve leveled this month
The third largest U S bank anticipates an increase in loans made to consumers to finance homes and other purchases even as an order from the government s top banking regulator prohibits it from growing
My expectation is that we ll have higher consumer loan balances a year from now than we do today Chief Financial Officer John Shrewsberry said in an interview Monday at the bank s San Francisco headquarters He said as long as the economic environment stays broadly the same and risks don t dramatically change there s no bogey on loan growth
Any loan increase would happen despite reputation damage the bank suffered since a fake accounts scandal erupted in late 2016 Last year its consumer loans fell 1 7 percent to 453 billion even as rivals increased lending activities
After acknowledging the fake accounts the bank revealed that auto loan clients were forced to pay for unwanted car insurance and that mortgage customers were improperly charged fees The Fed acted ordering that Wells Fargo can t boost assets until it proves it can fix shortcomings including internal oversight The firm can take deposits and lend to consumers but not balloon past 1 95 trillion in total assets
Read more Wells Fargo hit with rare growth ban in Yellen s final act
Shrewsberry s boss Chief Executive Officer Tim Sloan said at investor conference Tuesday that the bank s customers are seeing few effects from the Fed order
The customer impact has been really nonexistent Sloan said at a conference sponsored by Credit Suisse SIX CSGN Group AG in Florida But it s really it s been bankers relationship managers including me by the way out there reinforcing to customers that we re open for business and we ll be able to work through it
Consumer Business
Wells Fargo doesn t need to adjust strategies to achieve growth in consumer or institutional businesses Sloan said in a separate interview Monday at the bank s headquarters
If something works that s fine Sloan said We don t feel like we have to do anything new other than to make sure our customers understand we re out there
The auto lending business is expected to return to growth one or two quarters after the firm completes a consolidation of its regional car loan centers in March or April Shrewsberry said He also said that the bank is pursuing vigorously credit card customers who will spend more and those that will keep balances longer than a month
In terms of fundamentally changing how we re going about doing our business we don t need to do that Sloan said
Updates with Sloan comments in sixth paragraph |
WFC | Wells management still expects consumer loan growth | Wells Fargo NYSE WFC is aiming to fix and grow in 2018 in the wake of the devastating fake accounts scandal last year Speaking to Bloomberg CFO John Shrewsberry says he expects consumer loan balances to be higher one year from now Management is sticking to a strategy that continues to work by returning to growth once internal oversight has improved as ordered by the Fed as The CEO Tim Sloan was quoted while speaking at a Credit Suisse SIX CSGN conference that The customer impact has been really nonexistent and also said We don t feel like we have to do anything new other than to make sure our customers understand we re out there |
WFC | Trying to calm investors Wells Fargo CEO stresses on stability | Reuters Wells Fargo NYSE WFC Co Chief Executive Tim Sloan tried to deliver a message of consistency and stability at an investor event on Tuesday less than two weeks after it disclosed a regulatory sanction related to a long running sales scandal Asked whether an asset cap imposed by the U S Federal Reserve would have any impact on Wells Fargo s expenses growth core businesses customer retention employee turnover or capital return plans Sloan said repeatedly that nothing much had changed We re absolutely open for business Sloan said at a Credit Suisse SIX CSGN industry conference He has returned to that catch phrase repeatedly to dampen concerns about fallout from the scandal Wells Fargo s problems took root more than a decade ago when the bank started pushing employees to sell as many products as possible to customers That culture became a serious problem for the bank in September 2016 when it reached a settlement with regulators over employees opening fake accounts in customers names without their permission to hit aggressive sales targets Since then Wells Fargo has discovered other issues with auto loans mortgages frozen funds and improperly closed accounts and has faced a number of other regulatory probes and litigation On Feb 2 the Fed announced a consent order requiring Wells Fargo to prove that it is making appropriate changes to corporate governance and risk management Until the requirements are met Wells cannot grow its balance sheet beyond the 1 95 trillion in assets it had at year end Management immediately detailed plans to comply with the order and said it would not hit profits significantly Still the severity of the Fed s action so many months after the scandal erupted underlined questions about how long it will take for the bank to get past its sales practices woes At the event on Tuesday Credit Suisse analyst Susan Katzke pressed Sloan on whether the Fed s action and broader reputational issues are affecting business on the ground or management s outlook for growth and shareholder returns Sloan reiterated statements he has made about business being stable employees being happy to work at the bank and Wells Fargo management being focused on generating better results Asked to share metrics to back up some of his comments Sloan jokingly changed topics and began talking about the Olympics There s a lot of different metrics that you look at but they re all pointing to a slow but steady recovery he eventually said without offering any specific numbers It s never as fast as I would like but it s absolutely occurring Sloan also said the bank intends to get capital levels down to about 10 percent over the next two to three years The bank ended 2017 with common equity Tier 1 ratio of 11 9 percent
Wells Fargo shares were up 2 1 percent at 57 69 in afternoon trading Through Monday s close the stock had lost nearly 14 percent since the Fed placed restrictions on it on Feb 2 |
EBAY | Oversold eBay Nears Daily Support | Leading online commerce company eBay Inc NASDAQ EBAY has been steadily declining lower since topping out on February 27 2014 at 59 70 a share Today EBAY is trading lower by 0 33 cents to 49 a share It should be noted that the stock is currently trading below all of its major daily chart moving averages and that anytime a stock trades below its 20 50 and 200 day moving averages it s usually a sign of near term weakness
Keep Looking
Traders and investors that are trying to find a reason to own the stock will need to find other supporting factors Watch for near term daily chart support around the 47 25 an area where the stock topped out in 2006 While that area was a resistance level in 2012 it will now become a support area if the stock goes lower in the coming days It also has major support around the 40 68 level if 47 25 fails to hold |
WFC | Fed won t overreact to good economic news Williams says | By Ann Saphir HONOLULU Reuters The Federal Reserve will stick to its plan for steady gradual interest rate increases a Fed policymaker said Wednesday despite market gyrations and strong data on U S wage growth that has bond traders pricing in faster rising inflation I am going to try to dispel you of the myth that the Federal Reserve is going to overreact or somehow undermine the good news on the economy San Francisco Federal Reserve Bank President John Williams told community leaders at a luncheon in Honolulu Asked by reporters afterwards about the stock meltdown that wiped out 4 trillion in market value worldwide on Monday Williams said it did not fundamentally change his outlook for inflation to rise back to the Fed s 2 percent target by next year and for unemployment now at 4 1 percent to fall further The economy clearly can handle gradually rising interest rates he told reporters afterwards I m not really worried about the downside risks of the economy slowing too much The Fed signaled last year it would raise rates three times this year and Williams repeated Wednesday that he sees three or four interest rates this year A report Friday showing hourly wages grew at 2 9 percent in January a smart increase from prior readings was a welcome confirmation of a strong economy he said I do not see this as a sign inflation is moving faster than I expected Williams said adding that in a healthy economy with 2 percent inflation wages could be expected to grow at between 3 percent and 3 5 percent a year Williams who is said to be under consideration for the position of vice chair under incoming Fed Chair Jerome Powell said the goal of Fed restrictions announced Friday on asset growth at Wells Fargo Co N WFC was to make the point that we want the banks in the United States to be following the law and regulations and we want to make sure that the leadership of the organizations are managing the organizations well and consistent with fulfilling their obligations He declined to comment further
Wells is not allowed to grow beyond the 1 95 trillion in assets it had at the end of last year until it sufficiently improves its governance and controls the Fed said Friday |
WFC | Credit Suisse kept 300 million from brokers in closed U S unit lawsuit | By Jonathan Stempel Reuters A new lawsuit accuses Credit Suisse SIX CSGN Group AG of withholding up to 300 million of pay from U S based brokers who refused or were unable to move to Wells Fargo NYSE WFC Co after their private banking unit was shuttered in 2015 In a complaint filed on Wednesday Christopher Laver said Credit Suisse canceled deferred compensation owed to him and other brokers who did not join Wells Fargo under a recruiting agreement between the banks by maintaining a facade that they had voluntarily resigned en masse Laver said Credit Suisse knew many brokers would not join Wells Fargo because its business and client base were different but entered the recruiting pact because a sale of the unit would have constituted a change of control requiring the payments Credit Suisse should not be able to avoid its obligation to compensate the advisers fully and fairly by claiming they resigned when in fact Credit Suisse simply ceased operating this business the complaint said Laver lives near San Francisco worked at Credit Suisse for 13 years and has worked for another Swiss bank UBS since leaving He has been in financial services since 1981 The proposed class action complaint filed in the U S District Court in San Francisco seeks unspecified damages for roughly 200 brokers Credit Suisse spokeswoman Karina Byrne the lawsuit had no merit and that it is standard industry practice for Wells Fargo and other brokerages to pay the deferred compensation at issue to new hires Simply put the plaintiff here is looking to be paid the same money twice she said Wells Fargo is not a defendant and was not accused of wrongdoing Credit Suisse awarded Wells Fargo the exclusive right to recruit its brokers on Oct 20 2015 It told its roughly 275 brokers in 13 U S offices that the business was too small to compete without significant investment or acquisitions In addition they were told if you went to Wells you could keep your deferred compensation and if not you were out of luck Robert Nelson a lawyer for Laver said in an interview Wells Fargo is based in San Francisco Its retail brokerage recently had 14 544 financial advisers and 1 7 trillion of client assets and its wealth management business recently had 248 billion of client assets
The case is Laver v Credit Suisse Securities USA LLC U S District Court Northern District of California No 18 00828 |
WFC | U S stock market chill threatens to put IPOs on ice | By Joshua Franklin NEW YORK Reuters Wide swings in the U S stock market has blunted initial public offering IPO activity on Wall Street in what was set to be the busiest week for new listings in more than two and a half years All signs points to the disruption to IPOs continuing Ten companies had planned U S stock market debuts for this week according to Renaissance Capital a manager of IPO focused exchange traded funds It would have followed the biggest January haul of IPO proceeds on record and would have been the most active IPO week since June 2015 Thomson Reuters data showed Only six companies went ahead with their IPO due to the volatile stock market which has sapped much of the investor demand for new listings This bodes poorly for companies looking to pull the IPO trigger in the short term Forty companies have filed for an IPO with the U S Securities and Exchange Commission in the past year aiming to raise an aggregate 9 2 billion according to data from Renaissance Capital This does not include so called confidential IPO filings which are not yet visible on the SEC s website This volatility has the potential to put IPOs on ice said Kathleen Smith principal at Renaissance Capital A saving grace for the IPO market is that mid February typically sees a lull period for new listings This is because the year end financial information necessary for filing an IPO by a calendar year company with the Securities and Exchange Commission SEC goes stale in the middle of this month After that companies will need to compile and audit a new set of quarterly earnings Only three IPOs are currently scheduled for next week When stability does come back to the market the IPO market should benefit from a growing domestic and global economy with heightened consumer confidence said Lear Beyer co head of Equity Capital Markets Origination and head of Financial Institutions Group Origination at Wells Fargo NYSE WFC Co U S stocks see sawed this week demonstrating swings Wall Street has not seen in years The S P 500 closed down 3 75 percent on Thursday and was on track for its biggest weekly percentage drop since 2011 IPO postponements included a 500 million listing of IPSCO Tubulars the U S subsidiary of Russian oil and gas pipe maker TMK the 220 million flotation of Turkish fast food chain operator TFI Tab Food Investments and a 130 million listing by Argentine biotechnology firm Bioceres Medical technology company Motus GI scheduled to list on Thursday also did not price its IPO this week The biggest IPO to go ahead was the 437 million listing for Cactus Inc which supplies wellheads and pressure control equipment Other listings included Victory Capital Holdings and Chinese wearable technology company Huami although the Victory IPO priced at 13 per share below its 17 to 19 indicated price range Cardlytics priced on Thursday in a 70 million listing Listings for blank check company Mudrick Capital and medical aesthetics provider Evolus Inc went ahead while Quintana Energy Services sold shares at 10 below its 12 15 target range Of the seven listings this week four were trading below their IPO prices on Friday
Investors will be looking at what companies and sectors will benefit from the impact of the recent tax reform and a higher interest rate environment relative to inflation fears that have disrupted the market said Beyer |
WFC | U S CPI Data Take on Bigger Importance After Markets Plunge | Bloomberg Wednesday s report on the U S consumer price index will be the most closely watched in recent memory with investors seeking to understand the recent plunge in the stock and bond markets They ll probably need to look beyond the main numbers for the full story
The core CPI which excludes food and energy rose 1 7 percent in January from a year earlier compared with 1 8 percent in December according to the median projection of economists ahead of the Labor Department data Viewed another way though inflation may be higher A 0 2 percent monthly rise in the same index as economists forecast would result in a three month annualized rate of 2 3 percent according to analysts at Wells Fargo NYSE WFC Securities That would match the fastest pace since February 2017
On top of that jittery financial markets could convulse on any sign that inflation is exceeding expectations at a rate that may spur the Federal Reserve to quicken its plans for tightening The threat of higher interest rates after strong job and wage figures on Feb 2 sent Treasury yields spiking and started a rout in equities that pushed them into the first correction in two years Bonds and stocks have been in a tug of war since as battered equity investors seek the haven of fixed income driving yields back down
S P 500 futures pointed to a retreat in stocks at the market open after two days of gains while bonds climbed with the yield on the 10 year Treasury note declining after touching 2 89 percent on Monday
Markets seem primed for inflation risk right now and so because of that there may be a bigger response to the monthly reading said Sam Coffin an economist at UBS Securities LLC The tension comes from the average hourly earnings and to some extent policy announcements If there s an especially strong reaction to the data that would be part of the thinking But at the end of the day one print doesn t change one s view of inflation
To find the real underlying story and to figure out how to trade on it investors will have to sift through several factors at play in January s CPI including the unexpected strength in some parts of the prior month s figures adjusting for the normal practice of companies raising prices at the start of the year and changes to how some of the data are tracked
Moreover the expected cooling in the year over year number stems in part from the January 2017 figure being the highest of the year at 2 3 percent
Certain sectors that saw a robust pickup in December may settle back in January including medical goods and cars according to Bloomberg Economics That could be balanced out Wells Fargo Securities says by another phenomenon companies testing consumers ability to afford higher price tags at the start of the year something not always weeded out with seasonal adjustments
Adding further potential complications the report will include methodology changes to a few categories Smartphone prices will be adjusted to account for more rapid technological advancement while the cost index for used cars and trucks will change from a three month moving average to a single month price change
Last week the agency revised data for 2017 resulting in a 0 2 percent monthly increase in the core index for December compared with a previously reported 0 3 percent
The recent swings in the S P 500 and Dow Jones Industrial Average which both entered a correction last week were prompted by fears of increasing borrowing costs as Treasury yields rose Only six of 70 economists surveyed by Bloomberg predict a 0 3 percent monthly gain in January CPI above the median But readings in line with estimates won t necessarily be cause for calm
Given strong consumer demand companies have decent pricing power and are likely to pass these higher costs on through their prices ING chief international economist James Knightley said in a note So while there might be some respite for markets this week with a subdued inflation reading it is unlikely to last
Updates with stock futures Treasury yields in fourth paragraph |
CMCSA | Comcast Stock Rises 3 | Investing com Comcast NASDAQ CMCSA Stock rose by 3 01 to trade at 43 94 by 10 25 15 25 GMT on Tuesday on the NASDAQ exchange
The volume of Comcast shares traded since the start of the session was 5 11M Comcast has traded in a range of 43 38 to 43 94 on the day
The stock has traded at 44 7200 at its highest and 42 6200 at its lowest during the past seven days |
CMCSA | Sprint T Mobile and Comcast Collaborate to Stop Robocalls | In a joint press release early Tuesday morning telecom operator Sprint NYSE S and cable giant Comcast NASDAQ CMCSA announced a shared effort to block so called robocalls from reaching their phone service customers
What s new
Two technologies known as Secure Telephone Identity Revisited STIR and Signature based Handling of Asserted information using toKENs SHAKEN will combine to check the identities of calls between these compliant networks Robocalls often employ fake caller identities in order to spread unwanted marketing calls and other voice based spam
These providers have already dipped the odd toe in the anti robocall waters In a separate press release today Sprint also announced a STIR SHAKEN implementation for connections to T Mobile NASDAQ TMUS Comcast recently signed a similar agreement with Canadian phone network operator Telus NYSE TU
What s next
More deals should follow STIR SHAKEN support among American carriers is a requirement under the TRACED Act an anti robocall law that was signed at the end of December The Federal Communications Commission is tasked to design a regulatory framework for this by the end of September 2020 Comcast T Mobile and Sprint are simply getting started before anybody forces them to
While all carriers compete fiercely in the marketplace we all agree that the industrywide plague of robocalls and scammers must be tackled arm in arm with other carriers as we put the latest technology to work to help protect our customers said Sprint CEO Michel Combes in a prepared statement STIR SHAKEN is one tool among many that Sprint is utilizing in a multi year anti robocalling development program to improve our customers experience |
CMCSA | How Comcast and Charter Have Used Cellphone Services to Sell Wifi | Just a few years ago some investors along with a handful of analysts scoffed at the idea of Comcast NASDAQ CMCSA successfully competing with more entrenched players in the mobile phone business The chorus was repeated in 2018 when Charter Communications NASDAQ CHTR decided to take on the likes of AT T NYSE T and Verizon NYSE VZ by launching Spectrum Mobile under its Spectrum cable TV umbrella Cable television companies have a cord cutting problem to stave off after all they said and shouldn t take on a lost cause
Charter and Comcast are enjoying the last laugh now Between the 288 000 wireless subscribers Charter signed on last quarter and Comcast s quarterly additions of 261 000 the two cable and internet providers now collectively service a total of 3 million cellphone customers
That s not the most interesting part of the story for investors however Most curious is how both companies utilized their mobile services as a means of selling internet access now arguably the more important and fruitful of the two other services each provide
This bundle actually works
Recently I suggested the days of cable television companies bundles were over with consumers now buying cable phone and internet services a la carte In retrospect there may be one exception to that new norm People are willing to buy a broadband mobile phone combo Those 3 million wireless customers Charter and Comcast now boast between them They re also customers of each company s high speed internet service It s a requirement in fact
The data tells the tale Comcast once again added residential internet customers to the tune of 424 000 last quarter in conjunction with its 261 000 new mobile customers Charter picked up 313 000 internet customers along with its 288 000 new cellphone subscribers during the fourth quarter
These numbers don t inherently indicate that all new phone customers also signed up for new high speed internet service existing broadband customers could also be among the new cellphone subscribers But the numbers are strangely close and the longer term trend of this data suggests there s a meaningful correlation between the two that somehow Verizon and AT T haven t plugged into Clearly some bundles still work
The contra data actually bolsters this argument Verizon for instance only picked up 35 000 broadband customers during Q4 bringing its total to 5 9 million but its total wireless connections prepaid and postpaid now stand at 94 5 million up a whopping 731 000 from Q3 s count AT T picked up a comparable number of mobility customers last quarter yet somehow lost broadband customers Those disparate numbers suggest there s little correlation between the addition of wireless customers and growing a high speed internet business perhaps because AT T and Verizon don t require the purchase of one to buy the other
Implications for established mobility companies
As for why Comcast and Charter have found co selling success with a package that would seemingly be difficult to market one can only speculate Most plausibly though I believe the disparate numbers suggest Comcast and Charter are simply in a better position to sell mobile services to consumers than AT T and Verizon are positioned to sell broadband or even television to consumers
Both Charter and Comcast can work with their existing cable television lines to deliver internet and are offloading much of their mobility workload to localized wifi connections in a way that ultimately lowers the cost of providing such service That in turn means it can sell such service for less and they are Neither Verizon nor AT T has enough of the right infrastructure or technology in place to do the same and instead they rely on conventional mobile phone towers and spectrum It s a more expensive means of connecting customers phones to a network
Addressing that cost is still a logistics nightmare for the phone giants too Whereas Comcast and Charter can mount strand mounted cells on poles propping up cable lines they already own without the need for permission or a permit Verizon and AT T can t They must get approval before setting up a pole mounted small cell that does the equivalent work
Far more important though is what the advent of lower cost wifi supported as well as MIMO and CBRS supported mobility means for the future
While slow and subtle thus far the two cable giants in question are effectively turning wireless service into the easy cheap add on that makes a particular internet service more marketable Mobile service itself isn t the limited option premium commanding service it used to be That s not to say wireless is a full blown commodity and priced as such just yet but it seems to be moving in that direction It s another problem for the big and entrenched wireless service names simply because their broadband networks are already smaller and less robust than cable companies are |
CMCSA | Upstart Neon wins top Oscars prize Netflix falls short again | By Lisa Richwine
LOS ANGELES Reuters Three year old independent film distributor Neon upstaged the traditional Hollywood studios and streaming giant Netflix Inc NASDAQ NFLX on Sunday to grab the coveted best picture Oscar for South Korean have and have nots tale Parasite
The movie topped World War One drama 1917 from Comcast NASDAQ CMCSA Corp s Universal Pictures gangster epic The Irishman from Netflix and Once Upon a Time in Hollywood from Sony Corp T 6758 among others at the televised Academy Awards
Netflix which had led all distributors going into the ceremony with 24 nominations missed out on best picture for a second time Its drama Roma was a leading contender last year This year s The Irishman featuring an A list team including director Martin Scorsese and star Robert De Niro ended the night without any Oscar trophies
Overall Netflix scored two golden statuettes Laura Dern won best supporting actress for divorce drama Marriage Story while American Factory was named best documentary feature
But it was Neon founded in 2017 to produce and distribute independent films that secured top bragging rights The company s previous releases included Vox Lux and I Tonya which won Allison Janney a supporting actress Oscar in 2019
This year Neon helped turn Parasite into a phenomenon in the United States and Canada a rarity for a film with English subtitles The movie tells the story of a poor family in Seoul that schemes its way into working in a wealthy household
As of Sunday Parasite had collected 35 5 million in ticket sales in the U S and Canadian market part of its 165 4 million global haul
Korean company CJ Entertainment released the film in South Korea Shares in South Korea s Barunson Entertainment Arts Corp the producer of Parasite soared as much as 27 after the Oscars
In total Parasite won four awards including best director and best international feature film
The Oscars recognition should immediately boost interest in Parasite which is playing in 1 000 theaters and is also available on DVD and streaming said Paul Dergarabedian senior media analyst at Comscore Comcast owns the home distributing rights in the United States
Any self respecting film buff will be making immediate plans to hit the multiplex this week Dergarabedian said Many fans also will purchase the film to watch it over and over again to unravel its many mysteries he added
Among other studios Sony Corp landed four Oscars including best supporting actor for Brad Pitt in Quentin Tarantino s Once Upon a Time in Hollywood Walt Disney NYSE DIS Co collected the best animated feature accolade for Toy Story 4 and three other trophies |
CMCSA | Will Disney Blast DIS To Infinity Beyond | Disney NYSE DIS is up to bat this earnings season and this quarterly report is crucial to how investors perceive this evolving tech firm moving forward It will be the first earning report that will include Disney The entertainment conglomerates esteemed streaming platform
Disney reported excellent traction in the first 24 hours of its release with 10 million new subscribers right off the bat Whether the platform was able to maintain its prolific user growth will be illuminated in DIS s earnings release on Tuesday January 4th after the bell
Bernie McTernan an analyst from Rosenblatt Securities is estimated that Disney s new streaming service had 25 million subscribers rounding out 2019 This would represent a substantially higher signup rate than what was initially anticipated Analysts are estimating that Disney has already pouched more than 1 million subscribers from Netflix NASDAQ NFLX Disney is undoubtedly shaking up the streaming space
Disney is not alone Comcast NASDAQ CMCSA is releasing their new streaming platform Peacock on April 15th and AT T NYSE T is releasing HBO Max the following month There is room for more than one platform to thrive in this space Price point and content quantity quality will be the deciding factors that dictate whether these services thrive or dive
Disney is this company s shiny new product offering which is expected to be a significant profit driver for the company moving forward Though there is still quite a bit of uncertainty regarding this service s timeline to profitability Disney is undercutting its cohorts offering its platform for only 6 99 a month which will allow the company to attract a broader demographic This seemingly discounted price is exactly that Disney is offering this low rate to initially attract customers but will increase this as its reach expands and its library of quality original content continues to develop something that Netflix has been doing for years
What To Expect On From The Report
Disney is typically not a huge mover on earnings releases but its September quarter results excited investors with the anticipation of Disney pushing the share price up 5 following the report According to Zacks Consensus estimates Disney is expected to report a record 21 08 billion in sales and an EPS of 1 43 This would represent sales growth of 38 but an EPS decline of 22 due to integration costs of recently acquired 21st Century Fox as well as costs associated with the launch of Disney
DIS has trended marginally down following the initial hype surrounding Disney which launched the share price up over 15 in 14 trading days ending on November 26th The stock has since broken down almost 9
This downward price move may have created a springboard for this stock to jump off in the upcoming earnings Disney will be the most important topic to focus on while reading the report or listening to the earnings call The exciting subscription expectations that Bernie McTernan is estimating gives me optimism about how much Disney could have topped analyst s expectations
Any realized synergies with 21st Century Fox could boost the stock while any unexpected additional integration costs could put downward pressure on the stock
Take Away
Disney s new streaming service is the first step in the evolution of this media entertainment conglomerate into a fast growing tech company Disney is changing the streaming game for binge watchers around the world as well as DIS shareholders Management guidance and forward sentiment will be crucial to how this stock reacts following this report
Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
CMCSA | Disney s First Quarterly Results Are On Deck | Disney NYSE DIS is preparing to release its December quarter earnings after the bell Tuesday Feb 4th and the market s eyes will be fixated on the company s esteemed new streaming service Disney
Expectations have been growing since this service was released in November The media giant announced that they had gained 10 million subscribers in the first 24 hours of the platform s release which pushed shares of DIS towards growth multiples
Disney undercuts the cost of most of its cohorts at 6 99 per month and still offers a vast library of quality content This service is slowly becoming a must have household streaming platform
An analysts for Rosenblatt Securities think that Disney rounded out the year with 25 million subscribers This estimation would blow past market expectations
DIS typically isn t a big mover on earning but this new significant topline driver is changing everything for the firm If Rosenblatt s subscriber estimations can be I could see a sizable upside to the share price
Another thing to look out for is any added integrations costs from the 21st Century Fox acquisition as well as the extent to which the coronavirus is impacting Disney s profitability Both of these factors could put negative pressure on the stock
For more detail on this upcoming earnings take a look at my recent article
Tuesday s earning could have implications on Netflix NASDAQ NFLX as well as Comcast NASDAQ CMCSA and AT T s NYSE T impending streaming platform expectations
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CMCSA | Disney To Report Earnings Today Here s What To Expect | The Walt Disney Company NYSE DIS is set to report first quarter fiscal 2020 results on Feb 4 after market close Disney s top releases and newest additions are likely to boost its top line However expenses related to the launch of the streaming business and new attractions may weigh on its bottom line Box Office New Attractions and Disney It has been a year of blockbusters from the entertainment giant with Avengers Endgame ranking as the biggest grossing movie of all time in 2019 In first quarter fiscal 2020 the two movies drew high revenues and increased footfall in the park something that Disney was concerned about since the beginning of last year Among the seven billion dollar movies released by Disney in 2019 Frozen 2 and Star Wars Rise of Skywalker premiered in the quarter ending December 2019 Both movies have broken box office collection records As per Box Office Mojo Frozen 2 has made nearly 1 50 billion to date while Star Wars Rise of Skywalker raked in 1 05 billion Additionally sales of toys and merchandise rose on Disney s crowd pulling franchises that include blockbusters Marvel Star Wars and Frozen A decline in the footfall in theme park had been a concern for Disney However new attractions that include the much hyped Star Wars Galaxy s Edge and Rise of the Resistance at Walt Disney World have appealed to many What investors are eyeing at present is the result of heavy spending on Disney s streaming transformation Well Disney added 10 million subscribers just one day after the service was launched in the United States and two other countries and that should certainly boost its top line Disney offers a comparably cheap streaming service for binge watchers at a 12 99 month bundle that includes Disney ESPN and ad supported Hulu which has a vast video library Disney could overshadow Netflix Inc NASDAQ NFLX in the coming year And based on a consumer survey and the tally of app downloads since launch it looks like Disney has closed the year by adding roughly 25 million subscribers What s more In a survey Disney subscribers claimed that nearly 9 of them had canceled their Netflix membership and nearly 29 said they had unsubscribed from other streaming services to sign up for Disney The Zacks Consensus Estimate for this Zacks Rank 2 Buy company s sales is 21 08 billion suggesting 37 7 growth year over year You can see the complete list of today s Zacks 1 Rank stocks here Factors to Weigh on Bottom LineThough there are several factors that might have boosted sales in fiscal Q1 the Zacks Consensus Estimate for Disney s earnings is 1 43 per share indicating a 22 3 decline year over year Disney has still not been able to drop the baggage of loss from 21st Century Fox s acquisition that it made in March 2019 The acquired studio is expected to report an operating loss of nearly 60 million Coming to the concerns related to footfall the political unrest in Hong Kong had impacted Hong Kong Disneyland and the company expects a decline of nearly 80 million in operating income Additionally costs related to new attractions may also hurt its bottom line especially since the company had to hire labors at higher wage rates Summing UpEven though cost of launching Disney and new attractions are weighing on Disney s bottom line in fiscal Q1 it will help the company soar in the future In fact as the entertainment giant keeps adding newer attractions and expanding its franchise portfolio through acquisitions Disney World may hit the 100 million visitors per year mark soon And thanks to the line up from Marvel Star Wars and Pixar studios new Disney shows will also keep hauling in subscribers to beat streaming service dominator Netflix and new rivals like Comcast Corporation s NASDAQ CMCSA Peacock and AT T Inc s NYSE T HBO Max 7 Best Stocks for the Next 30 DaysJust released Experts distill 7 elite stocks from the current list of 220 Zacks Rank 1 Strong Buys They deem these tickers Most Likely for Early Price Pops Since 1988 the full list has beaten the market more than 2X over with an average gain of 24 7 per year So be sure to give these hand picked 7 your immediate attention |
CMCSA | The Zacks Analyst Blog Highlights Disney Netflix Comcast And ATT | For Immediate ReleaseChicago IL February 4 2020 Zacks com announces the list of stocks featured in the Analyst Blog Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets Stocks recently featured in the blog include Disney NYSE DIS Netflix NASDAQ NFLX Comcast NASDAQ CMCSA and AT T NYSE T Here are highlights from Monday s Analyst Blog Will Disney Take DIS To Infinity And Beyond Disney is up to bat this earnings season and this quarterly report is crucial to how investors perceive this evolving tech firm moving forward It will be the first earning report that will include Disney The entertainment conglomerates esteemed streaming platform Disney reported excellent traction in the first 24 hours of its release with 10 million new subscribers right off the bat Whether the platform was able to maintain its prolific user growth will be illuminated in DIS s earnings release on Tuesday January 4th after the bell Bernie McTernan an analyst from Rosenblatt Securities is estimated that Disney s new streaming service had 25 million subscribers rounding out 2019 This would represent a substantially higher signup rate than what was initially anticipated Analysts are estimating that Disney has already pouched more than 1 million subscribers from Netflix Disney is undoubtedly shaking up the streaming space Disney is not alone Comcast is releasing their new streaming platform Peacock on April 15th and AT T is releasing HBO Max the following month There is room for more than one platform to thrive in this space Price point and content quantity quality will be the deciding factors that dictate whether these services thrive or dive Disney is this company s shiny new product offering which is expected to be a significant profit driver for the company moving forward Though there is still quite a bit of uncertainty regarding this service s timeline to profitability Disney is undercutting its cohorts offering its platform for only 6 99 a month which will allow the company to attract a broader demographic This seemingly discounted price is exactly that Disney is offering this low rate to initially attract customers but will increase this as its reach expands and its library of quality original content continues to develop something that Netflix has been doing for years What To Expect On From The ReportDisney is typically not a huge mover on earnings releases but its September quarter results excited investors with the anticipation of Disney pushing the share price up 5 following the report According to Zacks Consensus estimates Disney is expected to report a record 21 08 billion in sales and an EPS of 1 43 This would represent sales growth of 38 but an EPS decline of 22 due to integration costs of recently acquired 21st Century Fox as well as costs associated with the launch of Disney DIS has trended marginal down following the initial hype surrounding Disney which launched the share price up over 15 in 14 trading days ending on November 26th The stock has since broken down almost 9 This downward price move may have created a springboard for this stock to jump off in the upcoming earnings Disney will be the most important topic to focus on while reading the report or listening to the earnings call The exciting subscription expectations that Bernie McTernan is estimating gives me optimism about how much Disney could have topped analyst s expectations Any realized synergies with 21st Century Fox could boost the stock while any unexpected additional integration costs could put downward pressure on the stock Take AwayDisney s new streaming service is the first step in the evolution of this media entertainment conglomerate into a fast growing tech company Disney is changing the streaming game for binge watchers around the world as well as DIS shareholders Management guidance and forward sentiment will be crucial to how this stock reacts following this report Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look Media ContactZacks Investment Research800 767 3771 ext 9339 Past performance is no guarantee of future results Inherent in any investment is the potential for loss This material is being provided for informational purposes only and nothing herein constitutes investment legal accounting or tax advice or a recommendation to buy sell or hold a security No recommendation or advice is being given as to whether any investment is suitable for a particular investor It should not be assumed that any investments in securities companies sectors or markets identified and described were or will be profitable All information is current as of the date of herein and is subject to change without notice Any views or opinions expressed may not reflect those of the firm as a whole Zacks Investment Research does not engage in investment banking market making or asset management activities of any securities These returns are from hypothetical portfolios consisting of stocks with Zacks Rank 1 that were rebalanced monthly with zero transaction costs These are not the returns of actual portfolios of stocks The S P 500 is an unmanaged index Visit for information about the performance numbers displayed in this press release |
CMCSA | Buy Roku Stock On The Dip Before Q4 Earnings On Streaming TV Growth | Roku NASDAQ ROKU shares have moved sideways for six months and now the streaming TV firm is set to report its Q4 financial results after the closing bell on Thursday The question is should investors consider buying once high flying Roku stock amid an ever expanding streaming TV market
Recent Roku Worries
Roku stock tumbled after it reported its Q3 earnings results in early November even though its growth remained strong Wall Street seemed to focus on slightly lower than expected new active account growth and disappointing fourth quarter guidance
Investors also sold Roku stock in mid September after Comcast NASDAQ CMCSA announced that it would give its own streaming TV device to users of its broadband internet service for free
Roku s Pitch
Roku is famous for its small devices that plug into TVs that allow users to watch streaming TV content from the likes of Netflix NASDAQ NFLX and countless others Despite some of the recent setbacks Roku s pitch to Wall Street remains strong as more people drop cable
For instance 1 7 million consumers cut the cord just during the third quarter of 2019 which continues to impact the likes of Comcast AT T NYSE T and others
Overall roughly 56 million households will have canceled cable or satellite TV subscriptions by 2023 according to eMarketer And Roku currently sells multiple streaming TV players which compete against rival offerings from Amazon NASDAQ AMZN Google NASDAQ GOOGL and Apple NASDAQ AAPL that address this growing market
The company has expanded its reach via smart TVs which have its operating system built in Its portfolio of devices helped Roku top the category with 44 2 of viewers according to eMarketer This came in well above Amazon Fire TV Google Chromecast and Apple TV
Wall Street has also turned its focus to Roku s expanding digital advertising business The company is able to attract advertisers through its Roku Channel that allows users to watch free streaming movies and TV shows More importantly the company sells advertising across its marketplace enabling marketers to buy targeted ads and more
Roku s monetized video ad impressions again more than doubled YoY in Q3 The company also completed its purchase of demand side platform firm Dataxu in November
The deal is expected to help bolster its ad business which is set to grow as more advertisers start to spend more heavily across connected TV Acquiring Dataxu is a natural progression of our ad tech strategy to offer more buy side tools and to provide the industry s best holistic TV plus OTT planning and buying solution that delivers better results for TV buyers Roku s senior VP of Platform Business Scott Rosenberg said in prepared remarks
Outlook
Last quarter Roku s revenue soared 50 Meanwhile its ad heavy platform revenue skyrocketed 79 which came on top of the year ago period s 74 expansion Investors should note that platform revenue accounted for 69 of total Q3 sales compared to 58 in Q3 2018
Meanwhile the company added 1 7 million accounts to close with 32 3 million with average revenue per user up 30 Despite the solid expansion Roku reported a larger adjusted loss last quarter 0 22 vs 0 09 in Q3 FY18 Some of the losses can be attributed to its international expansion efforts
With this in mind our current Zacks estimates call for Roku s Q4 revenue to jump 42 3 to 392 4 million Overall its full year fiscal 2019 sales are projected to climb over 49 to 1 11 billion with 2020 expected to come in another 41 higher at 1 56 billion
Investors should note that these growth estimates look strong compared to 2018 and 2017 The firm s full year 2018 sales jumped 45 with 2017 up 29 at 513 million Roku went public in 2017
The company s bottom line is expected to continue its decline with its adjusted Q4 earnings projected to fall from 0 05 in the year ago period to a loss of 0 14 per share Meanwhile its adjusted full year EPS figure is expected to sink from 0 08 to 0 53 per share Roku s 2020 earnings are then expected to come in nearly flat at 0 54
Bottom Line
Roku stock is still up over 200 in the last two years and 460 since its September 2017 IPO Thanks to its recent downturn Roku shares closed regular trading Monday at 132 21 This marked a roughly 20 discount against their 52 week highs which might give it room to run if it is able to impress investors Thursday
Roku is currently a Zacks Rank 3 Hold that can be viewed as a larger bet on the expansion of streaming TV And the addition of newcomers such as Disney NYSE DIS only help Roku The company has also crushed our quarterly earnings estimate by an average of 75 in the trailing four quarters
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CMCSA | TEGNA TGNA Q4 Earnings Beat Estimates Revenues Rise Y Y | TEGNA NYSE TGNA reported fourth quarter 2019 non GAAP earnings of 47 cents per share which beat the Zacks Consensus Estimate by 9 3 However the figure declined 36 5 on a year over year basis Revenues were up 8 1 year over year to 694 million which beat the consensus mark by 0 7 The year over year growth was driven by solid contribution from recent acquisitions continued growth in subscription revenues revenues related to certain 2020 political advertising campaign spending and stronger advertising marketing services revenues Excluding political advertising revenues adjusted revenues increased 33 3 year over year Quarter in DetailAdvertising and Marketing services 56 1 of revenues revenues were 375 3 million up 35 4 on a year over year basis Subscription 42 8 of revenues revenues were 286 6 million up 31 2 year over year The top line benefited from increased subscriber base due to new station acquisitions in mid third quarter as well as increase in rate TEGNA Inc Price Consensus and EPS Surprise Political 3 6 of revenues revenues were 24 4 million down 82 5 year over year Other revenues 1 1 of revenues were 7 7 million up 15 year over year TEGNA inked multi year distribution agreements with Altice Comcast NASDAQ CMCSA Cox and Spectrum repricing 50 its subscriber base in the fourth quarter Non GAAP adjusted EBITDA declined 15 2 year over year to 240 7 million Adjusted EBITDA margin was 36 down from the year ago quarter s figure of 56 5 Non GAAP operating expenses 74 5 of revenues were 498 5 million up 27 3 year over year primarily due to increased programming expenses Non GAAP operating income slumped 22 year over year to 195 4 million Operating margin was 29 2 compared with the year ago quarter s 49 9 Balance Sheet Cash FlowAs of Dec 31 2019 total cash was 29 million Total debt was 4 2 billion and net leverage was 4 9 times as of Dec 31 Free cash flow at the end of the fourth quarter was 111 million GuidanceFor first quarter 2020 TEGNA expects GAAP revenues to increase more than low to mid 30s range Non GAAP revenues excluding political are anticipated to grow more than mid 20s range Total non GAAP operating expenses are anticipated to increase in the low to mid 30s range Excluding programming operating expenses are expected to grow more than high 20s range For 2020 TEGNA expects subscription revenues to increase more than mid 20 on a year over year basis Political revenues are expected to be more than 300 million Total capital expenditures are anticipated to be 62 66 million Moreover the company expects net leverage to reduce to 4x by the end of 2020Zacks Rank and Other Stocks to ConsiderCurrently TEGNA sports a Zacks Rank 1 Strong Buy YETI Holdings NYSE YETI and Ralph Lauren NYSE RL are some other top ranked stocks in the broader consumer discretionary sector with the same Zacks Rank as TEGNA You can see Long term earnings growth rate for YETI and Ralph Lauren is pegged at 17 2 and 9 6 respectively Today s Best Stocks from ZacksWould you like to see the updated picks from our best market beating strategies From 2017 through 2019 while the S P 500 gained and impressive 53 6 five of our strategies returned 65 8 97 1 118 0 175 7 and even 186 7 This outperformance has not just been a recent phenomenon From 2000 2019 while the S P averaged 6 0 per year our top strategies averaged up to 54 7 per year |
EBAY | As Fed Pares The Dow Steps Up | The FOMC s positive assessment of the U S economy and decision to scale back asset purchases by another 10 billion breathed new life into the stock market Wednesday after the dismal Q1 GDP revision threatened to halt Wall Street s two day winning streak All major indices close with constructive gains with the S P 500 outperforming due to strength in telecom and utility stocks The Dow Industrials rebounded off key support at 16 500 to close at a record high for the first time this year as the Nasdaq Composite recovered choppy trade to also end higher
Blame It On The WeatherThe severe winter weather took a documented toll on the economy last quarter causing growth to come to near standstill First quarter GDP was revised downward to only 0 1 from 2 6 initially and much worse than an expected revision to 1 1 While it was obvious that the data was skewed by bad weather the knee jerk reaction in the market sent stocks into negative territory exacerbating an already defensive Nasdaq on disappointing results from Twitter NYSE TWTR and eBay NASDAQ EBAY But the defensive tone was mitigated by an earlier bullish report on the job market from ADP which found that private payrolls rose by a greater than expected 220 000 in April beating forecasts of 210 000 and following an upwardly revised 209 000 in March This is expected to translate into upward revisions to Friday s non farm payroll report currently at 215 000 new jobs in April
Here s Where The Markets Stood At The Close
US MARKETS
Dow Jones Industrial Index was up 45 points 0 3 at 16 580
S P 500 was up 5 points 0 3 at 1 883
Nasdaq Composite Index was up 11 points 0 3 at 4 114
GLOBAL SENTIMENT
FTSE 100 was up 0 15
Nikkei 225 was up 0 11
Hang Seng Index was down 1 42
Shanghai China Composite Index was up 0 30
UPSIDE MOVERS
ZA Reported weaker earnings compared to the year ago period but announced a dividend
UBIC Announced the commercial introduction of its Lit i View ANALYZER
ALLT Sales beat street estimate and EPS matches new CEO named
DOWNSIDE MOVERS
NYMX Prostrate cancer drug study can t assess primary endpoint but shows benefit
RM Reported a sharp decline in Q1 EPS missing analyst estimates
POWI Results for Q1 fell short of analysts expectations provided revenue guidance for Q2 below Street forecasts
After Hours Stock News From Copyright 2014 MT Newswires a Division of MidnightTrader Inc |
WFC | Asian Shares Slump As Late US Tailspin In Stocks Hits Sentiment | Investing com Asian shares fell sharply on Tuesday in line with a tailspin in late US equity trading that carried straight into the region and hit sentiment
Japan s Nikkei 225 eased 6 66 at the break Toyota was down 3 47
In Australia the S P ASX 200 with the energy sub index was among the worst performing in the morning falling 4 03 The Reserve Bank of Australia released its February rate review and held steady at a record low 1 50 for the cash rate as expected Further progress in reducing unemployment and having inflation return to target is expected although this progress is likely to be gradual the statement said
Notwithstanding the improving labour market wage growth remains low This is likely to continue for a while yet although the stronger economy should see some lift in wage growth over time
Earlier Australia reported the trade balance at a surprise deficit of A 1 358 billion compared with an A 250 million surplus seen for December and retail sales fell 0 5 compared with a 0 2 increase seen on month in December and posted a 0 9 rise compared with a 0 8 gain expected on quarter
In Greater China the Shanghai Composite dropped 2 15 and the Hang Seng index slumped 4 94 Tech giant Tencent tumbled 5 4
Overnight the selloff on Wall Street deepened as Financials led the decline following sharply after shares of Wells Fargo NYSE WFC tumbled more than 8 while a fall in crude oil prices weighed on energy
The Dow Jones Industrial Average closed lower at 24345 68 The S P 500 closed 4 10 lower while the Nasdaq Composite closed at 6967 53 down 3 78 The Dow Jones tumbled as much as 1 600 points to its lowest since Nov 28
Energy was one of the worst performers of the session falling more than 3 after oil prices extended their slide from last week settling 2 lower at 64 15
Shares of Wells Fargo NYSE WFC closed more than 8 lower after the Fed late Friday said that it capped Wells Fargo s assets prohibiting the bank from growing any larger than its total assets as of the end of 2017
The move from the Fed was in response to the Wall Street bank s widespread consumer abuses
Bullish ISM services data meanwhile provided markets with a brief period of respite before the selloff resumed in earnest
ISM nonmanufacturing data for January showed an uptick to 59 9 beating expectations of 56 5
Analysts said the strong ISM reading was indicative of a strong economic activity which could strengthen further should tax reform measures lead to a solid rise in consumption
The reading today is consistent with an economy that is growing close to 3 Bank of Tokyo Mitsubishi said If consumers and companies spend the tax reform monies like they are supposed to this could be the best year for the economy since the housing bubble years in the mid 2000s |
WFC | Wall Street casts weary eye at Wells Fargo s latest woes | By Ross Kerber BOSTON Reuters As Wells Fargo NYSE WFC Co enters the latest chapter in its long running sales practices saga Wall Street is trying to figure out how to make sense of new developments that do not affect profits very much but can send the bank s stock price careening On Friday the U S Federal Reserve unveiled a consent order imposing a cap on Wells Fargo s balance sheet as well as letters it sent to the bank s directors and two former chairmen criticizing them for weak oversight On Monday Wells Fargo s share price fell 9 2 percent more than twice as sharply as the market during a broad selloff The Fed s order followed two others issued by financial regulators in September 2016 Those were tied to a 190 million settlement over Wells Fargo employees creating millions of phony customer accounts to hit aggressive sales targets The Fed did not detail any new misdeeds at Wells Fargo and executives said the order would reduce profits by less than 2 percent this year But the regulator s tough stance a full 514 days after the scandal erupted shows how hard it will be for Wells Fargo to shake it investors and analysts said As the bank s asset and revenue growth has softened it has been difficult to quantify how much is related to current regulatory actions and negative headlines about Wells Fargo s past behavior they said The thing people are really struggling with is what does this do to revenue Brian Foran a bank analyst with Autonomous Research said in an interview In a note to clients on Sunday Chris Kotowski an analyst with Oppenheimer Co wondered whether the Fed would go so far as to replace senior management including Chief Executive Officer Tim Sloan The distraction of the sales practices scandal continues and we fear will leave choppy financial performance in its wake Kotowski wrote Wells Fargo spokesman Mark Folk referred Reuters to Sloan s earlier statements in which he expressed confidence the bank would meet the Fed s requirements and serve customers While other regulators punished Wells Fargo for consumer abuses the Fed s action pertained to the board of directors which the Fed has sole jurisdiction over a Fed official said It was months in the making and stemmed from a report the board released in April as well as news articles The Fed believes the punishment is appropriate given the scale of Wells Fargo s compliance failures the official said PROBLEMS LINGER During the scandal Wells Fargo launched a broad review of sales practices installed new executives and board members including a new CEO and chair changed incentive structures overhauled risk management and compensated many customers who said they were harmed But the problems have not ended In July Wells Fargo said it may have forced customers into unwanted products and improperly closed accounts or frozen funds In October the bank fired its head of consumer lending for disparaging comments about regulators some of whom are still mulling enforcement actions It is unclear whether regulators appointed by President Donald Trump will be as aggressive in scrutinizing Wells Fargo as their predecessors since Trump has pledged to ease regulatory burdens broadly Investors and analysts said they were skeptical that the bank was out of the woods yet given the ongoing consent orders and outstanding regulatory probes On the other hand the weakened stock could be a bargain some said Greg Donaldson of Donaldson Capital Management a mid sized holder of Wells Fargo shares said the Fed action seemed deserved even though he sees the stock price decline as an opportunity to buy more shares
I m a great fan of Wells Fargo but what they did was wrong he said |
WFC | U S trade deficit rises to nine year high on robust imports | By Lucia Mutikani and David Lawder WASHINGTON Reuters The U S trade deficit widened more than expected in December to its highest level since 2008 as robust domestic demand pushed imports to a record high adding to the stiff headwinds faced by the Trump administration s America First trade policies The import driven surge in the trade gap reported by the Commerce Department on Tuesday also suggests 3 percent annual economic growth may be hard to achieve Imports which subtract from gross domestic product could get a further boost from a 1 5 trillion tax cut package that became effective in January The fiscal stimulus comes with the economy almost at full employment which means the resulting increase in demand will likely be satisfied with imports Companies would also need to invest in equipment some of which is bought overseas to boost production Trump s trade team has not been able to stem the flood of imports into the country said Chris Rupkey chief economist at MUFG in New York Don t forget it is American companies assembling goods outside the country and then bringing them back in which is the problem with the trade imbalance in goods The trade deficit increased 5 3 percent to 53 1 billion in December the highest level since October 2008 Economists polled by Reuters had forecast the trade gap widening to 52 0 billion in December Part of the rise in the trade gap reflected higher commodity price increases The deficit surged 12 1 percent to 566 0 billion in 2017 the highest since 2008 That represented 2 9 percent of GDP up from 2 7 percent in 2016 The politically sensitive U S China trade deficit jumped 8 1 percent to a record 375 2 billion last year President Donald Trump has vowed to shrink the trade gap by shutting out more unfairly traded imports and renegotiating free trade agreements Trump has repeatedly threatened to terminate the North American Free Trade Agreement unless the 1994 pact linking Canada Mexico and the United States can be made more favorable to Washington And his administration has launched an investigation into China s intellectual property practices that could lead to major new trade sanctions on Beijing Many American factory workers bought into the promise of the president s trade policy reforms but they are still waiting for results said Scott Paul president of the Alliance for American Manufacturing When adjusted for inflation the trade deficit increased to 68 4 billion from 66 5 billion in November The jump in the so called real trade deficit at the end of the year puts trade on course to be a drag on GDP in the first quarter Trade subtracted 1 13 percentage point from economic growth in the final three months of 2017 The economy grew at a 2 6 percent annualized rate during that period helping to lift growth in 2017 to 2 3 percent from 1 5 percent in 2016 U S stocks rose in volatile trading following the biggest one day declines for the S P 500 index SPX and Dow Jones Industrial Average DJI in more than six years The dollar DXY rose against a basket of currencies as investors sought a safe haven from the stock market rout Prices of U S Treasuries were trading higher BROAD TARIFFS The Trump administration believes a smaller trade deficit together with deep tax cuts could boost annual economic growth to 3 percent on a sustained basis Late in January Trump imposed broad tariffs on imported solar panels and large washing machines and is considering slapping tariffs or quotas on steel and aluminum for national security reasons Such actions may prove politically popular with Trump s working class supporters particularly in states hard hit by factory closures and import competition But economists say they would likely do little to change the growth trajectory of the overall trade deficit which is tied more to macroeconomic factors Goods imports increased 2 9 percent to a record 210 8 billion in December Imports of food capital and consumer goods were the highest on record in December Imports of consumer goods were buoyed by pharmaceutical preparations cellphones and motor vehicles Imports are being driven by robust domestic demand which grew at its quickest pace in more than three years in the fourth quarter The country s import bill in December was also pushed up by more expensive crude oil which averaged 52 10 per barrel the highest price since July 2015 Tax reform is probably going to put further pressure on the trade and current account deficit as firms invest in more capital equipment to increase productive capacity said Eugenio Aleman a senior economist at Wells Fargo NYSE WFC Economics in Charlotte North Carolina Imports from China fell 7 6 percent in December There were also declines in goods imported from Canada and Mexico the United States major trading partners Exports of goods increased 2 5 percent to 137 5 billion in December the highest level since October 2014 Exports of capital goods hit a record high lifted by civilian aircraft and industrial machines There were also gains in exports of industrial supplies and materials Petroleum exports increased to their highest level since August 2014 Exports are being boosted by a strengthening global economy A weakening dollar is also making American made goods more competitive on the international market
Exports to China surged 7 5 percent to a record high in December As a result the U S China trade deficit declined 13 percent in December |
WFC | Wells Fargo Hikes S P 500 Target Saying Worst in Stocks Is Over | Bloomberg Wells Fargo NYSE WFC has a message for its clients the worst is over and you are free to trade
The firm sees almost 10 percent upside to the S P 500 through 2018 with most of the gains coming in the next three to six months It s boosting its year end target for the gauge to 2 950 from 2 863
The pullback in the equity market provides almost a free look at earnings analysts Christopher Harvey and Anna Han wrote in a note Wednesday This year will be a tale of two halves with the first featuring strong corporate earnings growth and a healthy merger and acquisition cycle and the second heavily influenced by the Fed tightening cycle
The increase in the target was partially due to Wells Fargo s increase in annual earnings per share projections to 150 76 from 146 01 the analysts said and also to a reduction in the risk premium to 150 basis points from 165 basis points as the Cboe Volatility Index spiked and interest rates rose The new 2 950 target compares with an average 2 923 prediction from strategists whose estimates are compiled by Bloomberg as of Jan 19
Recently we ve been telling clients to slowly and methodically invest their cash as the selloff unfolded Now we re telling clients that they re free to trade invest the balance of your cash the report said Get in motion |
WFC | S P cuts Wells Fargo s credit ratings on regulatory risks | By Pallavi Dewan Reuters Credit rating agency Standard Poor s on Wednesday cut Wells Fargo NYSE WFC Co s credit ratings days after the U S Federal Reserve imposed regulatory restrictions on the bank Wells Fargo s long term issuer credit rating was downgraded to A from A and short term issuer credit rating to A 2 from A 1 Regulatory risk for Wells is more severe than previously expected and the process for improving its governance and operational risk policies may take longer than previously expected S P said in a statement Wells Fargo said it was disappointed with the S P rating As part of the Fed s restrictions the lender is not allowed to grow beyond the 1 95 trillion in assets it had at the end of 2017 until it sufficiently improves its governance and controls
We take the consent order very seriously and are confident in our ability to meet the requirements while continuing to serve customers financial needs the U S bank said in an emailed statement |
WFC | Bulls vs bears taking sides on the stock market | By Lewis Krauskopf and Sin ad Carew NEW YORK Reuters After a steep pullback in U S stocks in the last few days from record highs set in January investors are debating whether the market is ready to resume a march higher or if they should be bracing for a steeper correction Here are five arguments for each case REASONS TO BE BULLISH STRONG FUNDAMENTALS A strong economy is key to optimism that stocks will keep rising Bulls cite a healthy labor market and strong earnings Labor U S job growth surged in January and the unemployment rate of 4 1 percent is at a 17 year low Earnings Wall Street now expects S P 500 earnings growth of 18 4 percent for the year up from a 12 percent estimate on Jan 1 as analysts account for an earnings boost from a corporate tax cut We see a continued strong macro background said Sameer Samana global equity and technical strategist at Wells Fargo NYSE WFC Investment Institute in St Louis THE PULLBACK FINALLY HAPPENED As the market steadily climbed to record highs in January investors were nervous that the longer the market went without retrenching the more severe a pullback could be The S P 500 late last month reached a streak of 396 trading days without a 5 percent correction the longest on record according to LPL Financial With Monday s drop the S P 500 had declined 7 8 percent from its Jan 26 record It was about time to see a little bit of a correction in stocks Matthew Cheslock trader at Virtu Financial said from the New York Stock Exchange floor earlier this week POLICY POTENTIAL With a U S tax overhaul now signed into law investors are more optimistic that Congress may be able to pass legislation to boost infrastructure spending That stands to directly sway shares of construction related stocks but could also stimulate growth more widely Companies have announced significant earnings pickups as a result of the lower tax rate said David Katz chief investment officer at Matrix Asset Advisors in New York We definitely think that is not fully factored into the market RATES STILL LOW Even as concerns about rising bond yields and interest rates spook some investors bulls are quick to mention that rates are rising off extremely low levels Rates and inflation even though they have ticked up are still at very low levels relative to history monetary policy is still easy said Michael Arone chief investment strategist at State Street Global Advisors in Boston THE LONG TERM VIEW Strategists are keeping their year end targets intact Despite the 6 2 percent drop in the benchmark S P 500 from its Jan 26 high to Feb 6 investors are still expecting mild to moderate gains by year end REASONS TO BE BEARISH INFLATION The biggest most commonly held fear investors are talking about right now is that inflation will rise sharply enough to force the Federal Reserve to accelerate interest rate increases The S P 500 fell 2 percent on Feb 2 after data showed the biggest annual gain in wages in more than 8 1 2 years If interest rates continue to accelerate to the upside what scares the market is if they go up fast said Robert Phipps a director at Per Stirling Capital Management in Austin Texas LINGERING VOLATILITY Shaken after months of a relatively subdued market Wall Street is bracing for more severe swings ahead While some traders view this as opportunity the renewed volatility also could make investors more skittish about stocks The market is in concussion protocol here said Walter Todd chief investment officer with Greenwood Capital in Greenwood South Carolina It took a very violent hit over the last several days there are going to be some lingering effects from that Investors are also keeping an eye on other potential risks U S North Korea tensions an ongoing probe of possible ties between President Donald Trump s election campaign and Russia and the possibility that Democrats could gain ground on Trump s Republican party in U S mid term elections in November MORE SHOES TO DROP The stock slump led to a massive unwinding of a short position in products related to the VIX volatility index as Credit Suisse SIX CSGN and Nomura announced the shuttering of their respective exchange traded notes that bet on lower volatility Is there some systematic risk that we are not seeing as a result of some of these trades that are being unwound said Greenwood Capital s Todd STRETCHED VALUATIONS Even after the pullback stocks look expensive to some investors The S P 500 was trading on Tues at 16 9 times Wall Street estimates for the next 12 months compared with its 20 year average of 16 4 and the 20 year median of 15 6 We re dealing with a very historically expensive market offering little attractive value I expect investors will get a better entry point in the future said Michael O Rourke chief market strategist at JonesTrading in Greenwich Connecticut CHANGE AT THE FED Investors have generally expected a smooth transition from Janet Yellen to Jerome Powell as Fed chair with little difference in approach to rate policy But a change atop the U S central bank still adds to the uncertainty in the market and the pullback could test whether Powell s leadership will provide a put that supports stock prices as had been the expectation for investors under past Fed chairs Until we see what Powell policy is the markets aren t likely to give the Fed the benefit of the doubt said Michael Arone chief investment strategist at State Street Global Advisors in Boston |
CMCSA | Comcast acquires Blueface | Comcast NASDAQ CMCSA acquires Blueface a Dublin Ireland based global technology provider and leader in unified communications solutions
Terms of the acquisition were not disclosed
The acquisition adds Blueface s proprietary and fully customizable cloud voice unified communications platform to complement Comcast business solutions |
CMCSA | Comcast Raises Its Dividend 10 Ahead of Peacock Streaming TV Launch | Although it often plays second fiddle to other entertainment and communications giants Comcast NASDAQ CMCSA put the final wrap on a very successful 2019 Overall revenues and profits increased overcoming a wave of residential customers canceling cable TV packages a weak showing at the box office and no broadcasting bump from big sporting events like the Super Bowl or the Olympics
Fiscal 2020 should be an eventful year though with Comcast s NBCUniversal getting ready to enter the streaming TV wars high speed internet connections still rising and shareholders getting treated to a 10 boost to the dividend paid
2019 by the numbers
Comcast ended 2019 with some healthy results NBCUniversal finished down 3 in the fourth quarter due to its near universally panned film rendition of Broadway classic Cats leading to a 21 year over year drop in the company s films segment For the whole year revenues were down 5 most of that due to the extra advertising and related broadcasting revenue from the NFL s Super Bowl and Winter Olympics in South Korea brought in during 2018 At the end of the day profits excluding one time items were still up 2
And then there was European TV network Sky its first full year under Comcast s umbrella Revenue and adjusted profits were flat in the fourth quarter or up 1 4 and 0 4 respectively if excluding currency exchange rates but notched healthy gains for full year 2019 Adjusted profits excluding currency fluctuations grew 12 thanks to Sky adding 394 000 customer relationships and direct to consumer programming giving profit margins a boost
EBITDA earnings before interest tax depreciation and amortization Data source Comcast
High speed internet is where it s at
Let s circle back around to the cable segment Comcast s most important operation Cord cutting gets lots of attention these days and rightfully so as TV streaming services are hastening the decline of legacy cable TV operations Comcast said it lost net 671 000 residential and 61 000 business cable TV relationships in 2019 lowering its total to just over 21 million relationships
I m always surprised at just how much attention these figures get though Cable is undoubtedly on the downhill but it isn t as if it s ready to completely disappear for Comcast in the near future Those 21 million relationships are still a big number Besides NBCU s Peacock streaming service is landing this year which is sure to help offset some cable pain via advertising revenue and maybe even some subscription fees
But here s what should really be grabbing headlines Comcast s bread and butter within the cable communications segment high speed internet It added another net 1 32 million residential and 89 000 business connections in 2019 bringing the grand total up to 28 6 million and easily offsetting cable TV losses The move to broadband internet is the real number to watch here for the foreseeable future and the growth rates remain healthy
Add wireless business to the list of must watch items for Comcast as well The company piggybacks off of Verizon s network to offer discount cellular services and it reached 2 05 million total lines in Q4 Net lines added in 2019 were 816 000 and revenues from the segment grew 31 to 1 17 billion Comcast s wireless is nearing break even and could be a solid addition to the bottom line in 2020 and beyond
What s a potential investor to do
All told 2019 was a great outing for Comcast and the company announced it increased its annual dividend payout 10 good for a current yield of 2 Based on estimates for another solid year ahead for profits for the diversified media giant the stock trades for a mere 12 9 times expected earnings Existing shareholders might want to take a look at adding to positions as the stock has pulled back from highs post report even though the company topped expectations and Comcast looks like a must own value stock for those that aren t in already |
CMCSA | Will Comcast s Fears of Disrupting Cable Stifle Peacock s Streaming Future | Comcast owned NASDAQ CMCSA NBCUniversal is a part of the wave of companies releasing new streaming services But you d be forgiven if you d forgotten about Peacock which the company has been preparing with relatively little hype until an investor event earlier this month
Compared to Disney s NYSE DIS juggernaut Disney or even Apple s NASDAQ AAPL less popular Apple TV Peacock hasn t captured the imagination of streaming customers though investors seem to be starting to notice it
The relatively low profile is reflective of NBCUniversal s modest strategy The company has long had a reputation for caution in the streaming space and the design and launch of Peacock seems like it will do little to change the conventional wisdom NBCUniversal is clearly interested in limiting its potential downside but will playing it safe hurt Peacock in the long run
Peacock s structure
Peacock works a little differently than the SVOD giants that it will compete against Unlike Netflix NASDAQ NFLX Disney and the rest of the gang Peacock does not require its viewers to have a paid subscription Peacock is free and ad supported though it gives users the option to pay 4 99 per month for a premium version with extra content or 9 99 per month for an ad free version of the premium subscription Even that premium price with ads is less than Disney s monthly rate which itself is quite low for industry standards
NBCUniversal hasn t confirmed which original series will be available when the service debuts and none of the titles announced so far have gotten the sort of hype that Apple TV s The Morning Show got much less the level of anticipation that Disney s The Mandalorian enjoyed
Peacock may not have hot original series though there s still time for hype to build but what it will have are about 7 500 hours of free programming from NBCUniversal s stash Recent episodes of some NBC shows those in their first year airing will appear the day after they air Hulu style
A limited vision
Ad supported streaming services can work but they rarely draw as much attention be it from customers critics or tech investors as their paid counterparts NBCUniversal s stash of media properties could help change that especially with a hefty budget for original content
And Peacock s content budget does look pretty hefty at least in a vacuum Comcast will spend 2 billion on content over the next two years The problem is that 2 billion is not nearly as eye popping a figure for a content budget as it might have been a few years ago Apple announced a content budget of 1 billion ahead of its Apple TV launch but soon allowed its budget to balloon to 6 billion as of Apple TV s launch a few months ago Disney is spending 3 25 billion annually and Netflix could spend north of 17 billion in 2020
Can Peacock dazzle
The comparison to Apple TV only goes so far While Peacock is spending less than Apple is it also has more content in house from the get go Apple of course had pretty much nothing But it s also worth remembering that Apple TV s spending has netted it just one noteworthy show The Morning Show and even with that show more attention from culture critics than from subscribers
Peacock will be going to war with less to spend and with even more competitors including the soon to launch HBO Max from AT T NYSE T It will have to make its way in a fractured market full of subscription churn where pricing a service to be in direct competition with and to some budget minded consumers mutually exclusive with its peers may have more rewards but also more risks than its current free to stream strategy
Comcast s decision to structure Peacock differently appears to be a part of a larger strategy to remain cautious and avoid tackling Netflix and Disney head on with a big budget SVOD service Strategies like rolling out the ad supported version of the service to existing Comcast customers should help limit the downside to this service
But a limited vision also means a limited upside for Peacock For the time being it s hard to imagine that Peacock will draw attention in the way that Disney has |
CMCSA | Investors in Wireless Can t Ignore Comcast | Comcast NASDAQ CMCSA added 261 000 subscribers to its Xfinity mobile service in the fourth quarter and it now counts over 2 million total customers That represents its highest net addition number of any quarter since launching the service in 2017 and reverses a trend of declining net addition growth seen in the first three quarters of the year
Comcast s size and growth as an MVNO a virtual network operator that relies on another wireless company s network has become too big for investors in the big wireless companies to ignore Not only does Comcast represent a competitor in the industry stealing customers away from Verizon NYSE VZ AT T NYSE T T Mobile NASDAQ TMUS and Sprint NYSE S but it could represent a sizable customer for wholesaling network capacity
Comcast can stay strong when the industry is weak
Comcast was a beneficiary of higher churn in the fourth quarter When T Mobile provided a pre release of its fourth quarter earnings at the start of January it noted an increase in its own postpaid phone subscriber churn for the first time in nearly four years CFO Braxton Carter said industry churn was higher across the board at an investors conference the day of the release
Carter for one welcomed the higher switching rates in the industry He sees T Mobile as a share taker from AT T and Verizon and it s easy to grow gross additions when customers are making a switching decision
T Mobile remains one of the stronger wireless companies in the industry growing its phone subscribers at a much better pace than AT T and Verizon It s also smaller than the two wireless giants so it has fewer customers to lose to Comcast It s likely the bulk of Xfinity Mobile subscribers are coming from Verizon and AT T
Comcast s able to leverage its 31 5 million existing customer relationships to attract new subscribers with relatively low customer acquisition costs By comparison a competitive environment may lead the bigger competitors to offer significant promotional discounts on devices or service to attract new customers
If Comcast wants to increase subscriber growth as management s commentary on its fourth quarter earnings call suggests it could increase promotional activities That would be an extremely effective strategy in an environment where industry churn is elevated already AT T and Verizon would likely see greater impact on net additions than the smaller T Mobile or Sprint
A wholesale opportunity
Comcast currently relies on Verizon s wireless network as well as its WiFi network to support Xfinity Mobile But the terms of Verizon s deal aren t great Even with the expectation for faster subscriber growth in 2020 management only expects Xfinity Mobile to reach EBITDA breakeven in 2021
Comcast may be able to accelerate that timeline by renegotiating the deal with Verizon the original contract is from 2011 and was amended in 2015 or striking new deals with AT T or T Mobile To the degree Comcast might acquire more wireless spectrum and build out its own network capacity management said We ll be opportunistic on any spectrum opportunity but we like our capital light MVNO approach today
AT T s management said it s open to working with Comcast and other cable MVNOs as a wholesaler of its network capacity We ve got a lot of capacity now in this network and we re at the point of evolution in this industry where we ask How do you monetize most efficiently CEO Randall Stephenson said on the company s third quarter earnings call
Winning a contract with Comcast could offset some of the pressure Xfinity Mobile s growth puts on AT T s retail wireless business And with excess capacity from its FirstNet contract buildout wholesaling could be an efficient means of boosting its returns on the capital invested in the first responder network
As Comcast s wireless subscriber base grows the wholesale opportunity becomes more attractive but Comcast s negotiating power increases As such investors could see AT T or Verizon move to negotiate a contract in the next couple years before the wireless business turns profitable for Comcast |
CMCSA | Comcast Customer Data Bundling is Dying and That s Not All Bad | The concept is simple enough Customers of one Comcast NASDAQ CMCSA service are the company s top prospects for another Comcast service
The organization can even afford to offer price breaks to customers of multiple offerings since one of the telco industry s major expenses is bringing a consumer into an ecosystem Once there they can be further monetized in more cost effective ways The idea eventually turned into the triple play offered by several phone cable TV and internet providers Users of such services enjoy deep discounts when all three are purchased from the same company
At least for Comcast though customers are less and less interested in paying for multiple services creating a retention challenge But the company has been willing to become a disruptor even disrupting itself in a market environment that s becoming decidedly a la carte
Just the internet please
Of Comcast s 29 15 million residential service customers reported with its fourth quarter results 10 2 million only subscribe to one of the company s services Most are broadband users though it s still got a fair number of cable television customers despite a persistent cord cutting headwind Another 8 9 million use two Comcast services most likely cable and internet Just a tad under 10 million are customers of three different Comcast offerings
The noteworthy nuance of that data is the single service cohort is growing in step with the relative shrinking of two and three service customers despite strong efforts to the contrary
It doesn t take a rocket scientist to figure out what s happening Customers take no issue with the cost or quality of Comcast s high speed internet offering their beef is with cable TV Comcast has been losing paying subscribers for years shedding another 733 000 in 2019 Assuming nothing stops the bleeding it could feasibly lose another million this year
The company is responding The launch of its ad supported streaming platform Peacock is slated for the middle of this year but it was providing alternatives as far back as early last year
Something is better than nothing in May the company unveiled Flex offering reasonably full streaming service for 5 per month to Comcast internet customers who wanted to cut the cord Later it made ad supported Flex free for its internet customers
Comcast has also been in the wireless phone business since mid 2017 offering low cost mobile service to Comcast internet subscribers but not to anyone else And of course for years it s offered TV phone and internet bundles to encourage the purchase of multiple services
Consumers just aren t biting
It can t be terribly surprising Mobile phone stalwart AT T NYSE T acquired DirecTV in 2015 as a means of cross selling to each organization s existing customer base Some nibbled but most didn t despite the generous discounts available to them Comcast has shown a comparable outcome with cross selling its services More and more cable and internet customers are simply shrugging at the option
More good news than bad
There s a clear downside to the data That is Comcast could be extracting more revenue per household On average the company collected 156 98 per month from each of its customers which is about two services worth of sales Given the effort intended to funnel all of its customers into multiple services the cable giant has been a bit of a disappointment
On balance though there s more upside than downside to these numbers
One of the chief upsides is the opportunity to grow revenue without necessarily bringing new customers into the ecosystem The current plan is proving fairly ineffective but it s an opportunity nonetheless
Another upside Margins should improve for its cable business even if revenue shrinks Comcast CFO Mike Cavanagh explained last year that we will not chase unprofitable video subs echoing similar sentiments from AT T s chiefs as well as those steering Charter Communications through the industry s cord cutting nightmare
The biggest upside buried in the customer breakdown data however is that Comcast is doing well in the one area where it needs to While its cable television business continues to deteriorate and its wireless business is still only a shadow of the mobile operation operated by the likes of AT T Comcast is absolutely crushing it as an internet service provider It s now got 26 4 million high speed customers versus 23 2 million as of the first quarter of 2017
Of all the mediums available right now it s the one to beat That s because the plethora of video content providers coming to the market will not only all rely on high speed connectivity they ll find themselves in a price war that costs a relative fortune to wage Providing broadband service conversely is now easy and fairly cheap
In other words though not a growth name Comcast will be fine in the shadow of de bundling even if that wasn t the company s initial plan |
CMCSA | AT T Ended 2019 With Fewer Video Subscribers Than Comcast | AT T NYSE T lost another 1 16 million video subscribers in the fourth quarter bringing its 2019 total to 4 1 million The company ended the year with 20 4 million subscribers between DirecTV U Verse and AT T TV Now
The rapid decline in subscribers puts AT T behind its biggest competitor in pay TV Comcast NASDAQ CMCSA which closed out 2019 with 21 25 million video subscribers Even when only counting Comcast s residential subscribers it s about neck and neck with AT T at 20 29 million
AT T s management expects its subscriber losses to have peaked last year but that doesn t mean it s completely out of the woods Meanwhile Comcast expects its losses to increase in 2020 as it focuses more on profitability and its broadband business
Ultimately the relative size of AT T s video subscriber base could negatively affect the margins of the business as it loses leverage over media companies in negotiating carriage rates That could have a meaningful impact on AT T s 2020 results as it looks to launch AT T TV nationwide
AT T TV is the future of the video business
AT T TV will launch nationwide next month and management is holding it up as the future of its video business alongside HBO Max The product is a hybrid approach somewhere between its premium DirecTV product and its over the top AT T TV Now product
The service delivers linear TV over the top to consumers but they ll only be able to receive it via AT T s proprietary set top box That s in contrast to other live TV streaming services that allow consumers to use whatever connected TV device they choose However in doing so AT T is able to exercise greater control over the user experience which it thinks will enable it to attract consumers at the higher price point necessary to make such services profitable Furthermore it opens the opportunity for distribution revenue from other streaming services
Sending customers an easy to install box that connects to their TV also means AT T will see significantly lower customer acquisition costs DirecTV by comparison requires a contractor to come to a customer s home install a satellite dish on their roof and wire cable to their television set Management says it ll be able to pass those cost savings onto subscribers in the form of lower prices compared to its legacy DirecTV service
Management also expects to see a higher take rate from its broadband subscribers for AT T TV compared to DirecTV satellite That could further reduce its average customer acquisition costs for the new video service
All of those factors could lead to a video business with better margins Operating margin for AT T s Entertainment segment which also includes its broadband business fell 30 basis points to 6 6 in the fourth quarter despite AT T eliminating many of its low value video subscribers over the past year
Content is its biggest expense
AT T can cut overhead and operating expenses involved with acquiring new customers but nothing changes the fact that its biggest expense for its video business is programming And programming expenses per subscriber continue to climb
Comcast saw its programming expenses increase 1 1 in 2019 despite a 3 2 decline in subscribers That s the impact of contractual rate increases from media companies gaining increasing leverage after a series of mergers in the industry
As AT T s subscriber base continues to shrink faster than the rest of the industry it diminishes its ability to negotiate better contracts with media companies than the competition In an industry competing for a smaller and smaller customer base being able to negotiate better carriage deals could have the biggest impact on a company s ability to offer customers the best value and stand out from the competition Ultimately that s what s going to drive operating profits
When AT T focused its AT T TV Now on profitability raising prices twice in 2019 to offset higher programming expenses it lost over 40 of its subscribers Management expects to tell a different story for AT T TV despite offering a more expensive product to consumers and seeing diminishing negotiating power from its legacy subscriber base |
CMCSA | Comcast CMCSA Beats Q4 Earnings And Revenue Estimates | Comcast CMCSA came out with quarterly earnings of 0 79 per share beating the Zacks Consensus Estimate of 0 75 per share This compares to earnings of 0 64 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 5 33 A quarter ago it was expected that this cable provider would post earnings of 0 75 per share when it actually produced earnings of 0 79 delivering a surprise of 5 33
Over the last four quarters the company has surpassed consensus EPS estimates four times
Comcast which belongs to the Zacks Cable Television industry posted revenues of 28 40 billion for the quarter ended December 2019 surpassing the Zacks Consensus Estimate by 0 73 This compares to year ago revenues of 27 85 billion The company has topped consensus revenue estimates just once over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
Comcast shares have added about 5 5 since the beginning of the year versus the S P 500 s gain of 2 8
What s Next for Comcast
While Comcast has outperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for Comcast was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 0 79 on 27 62 billion in revenues for the coming quarter and 3 28 on 114 58 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Cable Television is currently in the top 13 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
EBAY | 3 Views To Bid On eBay At 45 50 | The auction giant has long been discussed as having some great business and very poor management Over 2012 the business story seemed to be a winner but now it seems that the stock is ready for a pullback Take a look eBay EBAY MonthlyThe first view is very simple The monthly chart of eBay EBay is printing a double top This is reinforced by the Relative Strength Index RSI in overbought territory and moving back lower with a Moving Average Convergence Divergence indicator MACD also turning lower The rising 20 month Simple moving Average at 45 near the peak on the bonce in 2005 seems a logical target eventually eBay EBAY DailyThis second view on the daily chart shows a simple rounding top There is support lower at 52 and a break of that would be a disaster scenario for the stock with support lower at 46 All said both of these views give a good amount of time to get out It is the last view that may cause some anxiety and accelerate the downside This shows the stock breaking a 2 and a half month symmetrical triangle to the downside The rising 200 day SMA is there to try to provide support but the target on the move lower out of the triangle is to 45 50 There you have it 3 views 46 45 45 50 average out to a target of 45 50 eBay EBAY DailyThe information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment I or my affiliates may hold positions or other interests in securities mentioned in the Blog please see my page for my full disclaimer |
EBAY | PayPal To Launch Space Payment Initiative | PayPal announced on Thursday that it was launching PayPal Galactic in partnership with the SETI Institute and astronaut Buzz Aldrin You know this has happened to you before You re flying around in space and you get halfway around the moon and you run out of antimatter Even worse all you have are dollars and everybody knows you can t pay for anything in space with dollars You find a Good Samaritan who happens to live on the moon to loan you enough to get back home If only there were some sort of universally accepted currency or payment portal that allowed you to pay while in space PayPal aims to solve that problem Thursday the eBay EBAY owned company announced PayPal Galactic and it aims to address the problem of space payments It sounds a little silly but it s not quite as out there as it sounds For now it s more of a partnership that will begin studying and developing infrastructure to address the issue As companies like Virgin Galactic and others begin shuttling people into space likely in the next couple of years PayPal believes that a payment infrastructure will have to be in place PayPal President David Marcus told We feel it s time now not next year not when space tourism starts to happen to start figuring out what this looks like Thursday the company held a press conference featuring astronaut Buzz Aldrin and announced a partnership with the Search for Extraterrestrial Intelligence SETI Institute along with the Space Tourism Society SETI will act as the representative for all life forms outside of Earth OK we made that up But in all seriousness PayPal acknowledges that on the surface the whole idea seems pie in the sky but throughout history people have laughed at those who looked to solve problems that people didn t know they had PayPal has a point With technology rapidly evolving space is no longer off limits to the masses and as soon as the masses leave the planet a new economy will have to be formed With a new economy comes a payment infrastructure If PayPal and its partners can develop the infrastructure now it will have the clear advantage when there is a real need and that will mean profit and a lot of it Until then we ll all have to make sure we have plenty of antimatter Disclosure At the time of this writing Tim Parker had never been to space BY Tim Parker |
WFC | Bonds yet to catch bid as stock selloff continues | Bond market veterans are struggling to remember the last time stocks sold off 2 and yields on the long end of the Treasury curve actually rose sharply But just that scenario occurred on Friday As for today stocks are selling off again the S P 500 down 0 9 but bonds still can t catch a bid The 10 year Treasury yield is flat at 2 842 TLT 0 4 TBT 0 8 Across the pond is a different story with the German 10 year Bund yield lower by 3 6 basis points to 0 73 as stocks in Europe slump 1 4 In other fixed income related news new Fed Chairman Jay Powell was sworn in this morning Janet Yellen heads to the Brookings Institution but not before presenting Wells Fargo NYSE WFC with a departing gift late on Friday WFC is lower by 8 4 ETFs AGG BND PTY BOND RCS BTZ DBL PCM SCHZ BHK SPAB JHI INC IUSB AGGY FBND JMMNow read |
WFC | Dollar rebounds as U S yield spike stalls | By Richard Leong NEW YORK Reuters The dollar rose against a basket of currencies on Monday as the U S bond market selloff leveled off after the 10 year yield hit a four year peak on worries that the Federal Reserve might raise interest rates faster to counter signs of wage pressure Analysts cautioned however that further gains in the greenback would be limited as other economies seem poised to expand quicker than the United States Speculation that other central banks besides the Federal Reserve may roll back stimulus will probably cap the U S currency s recovery The dollar selling had been overdone said Paul Christopher head global market strategist at Wells Fargo NYSE WFC Investment Institute in St Louis We think rates are not going to go up a lot more here Early on Monday the benchmark 10 year Treasury yield US10YT RR reached 2 885 percent its highest since January 2014 after a robust jobs report showed wage growth last month posted its biggest annual gain since June 2009 The yield was last at 2 843 percent down 1 basis point from late on Friday The Institute for Supply Management s gauge on U S services industries which hit a 12 1 2 year high last month also supported the dollar on Monday At 12 52 p m 1752 GMT the dollar DXY was up 0 3 percent against a basket of six major currencies at 89 469 after gaining 0 6 percent on Friday Could Monday s performance change the trend Christopher said I doubt it Data on currency futures positions showed net bearish bets against the dollar swelled to 17 5 billion last week just shy of a five year high The euro fell 0 4 percent to 1 2410 EUR slightly below a three year high of 1 2538 on the EBS trading system EUR EBS The euro briefly pared losses following upbeat comments by European Central Bank President Mario Draghi before the European Parliament But Draghi said the current surge of the single currency might impair its outlook for price stability Against the yen the dollar weakened in step with losses on Wall Street where rising bond yields have sparked selling in stocks on concerns about rising borrowing costs on corporate profits and consumer spending
The greenback slipped 0 05 percent to 110 03 yen holding above a four month low set on Jan 26 |
WFC | Global Markets Remain Wary | Asian markets were little changed on Tuesday for the most part waiting to see how the current situation between North Korea and the U S would play out Australian investors digested a sharply wider current account deficit and the Reserve Bank of Australia held pat on current monetary policy In Japan the Nikkei continued falling for a second consecutive day as traders continued to push the Yen higher against the USD
European markets finished mixed as investors there also struggled with the continuing geopolitical risks posed by a standoff between North Korea and the U S The Euro strengthened modestly putting further downward pressure on equities Investors also digested the latest European PMI and retail sales data which both point to a slowdown in European growth although the economy remains on track to post its best annual growth since 2010 In London the FTSE100 flipped lower erasing early gains as the Pound moved to a three week high against the USD and a reading on the services industry in the U K was weaker than expected
U S markets headed lower as U S investors returned following a three day holiday weekend Sentiment appears to be increasingly negative on Wall Street with investors not just concerned about geopolitical tensions but also beginning to worry about U S policy There is speculation that tax reform and pro business policy will either get watered down or simply will not happen at all Overlying it all Congress will soon reconvene and face the need to establish a Federal budget and there are concerns that this could lead to a government shutdown if the debt ceiling isn t raised
FOREX
EUR USD
The pair was little changed for a second consecutive session Tuesday hovering around the 1 1900 level and posting a modest gain by the close Traders are remaining understandably cautious ahead of the upcoming ECB monetary policy meeting which occurs on Thursday this week While no change is expected at this meeting there are hopes that the ECB will give some clues as to the timing of tapering for its bond buying program
USD CAD
The pair hit an intra day 26 month high against the USD on Tuesday as investors are expecting no change from the Bank of Canada monetary policy meeting on Wednesday but are expecting hawkish comments that will serve to send the Loonie even higher In addition to the potential strength of the Canadian dollar the USD has been facing headwinds of late that could see this pair trade near the 1 2100 level before finding support
Cryptocurrencies
The cryptocurrency markets sold off strongly over the weekend after Chinese officials made Initial Coin Offerings ICOs illegal but since then markets have rebounded off their weekend lows and have stabilized ending Tuesday little changed
Commodities
Metals
Precious metals strengthened on Tuesday as the weekend nuclear test by North Korea caused enough to send market participants into safe haven investments such as gold and other precious metals Gold hit a roughly 1 year high at the close although palladium pulled back somewhat from its 16 year high
Oil
U S crude prices jumped to a nearly three week high on Tuesday as Gulf Coast refineries and pipelines have begun to come back online easing concerns over rising U S crude inventory levels The global benchmark Brent crude in London continued moving higher as well hitting its highest close since May The price of crude in the coming days will be heavily influenced by how quickly U S refineries come back online and demand is expected to increase as the refineries begin production once again
Indices
S P 500
The S P500 snapped a five session winning streak on Tuesday falling broadly with ten of the eleven S P sectors ending the day in the red and only the energy sector showing a gain in response to the strong rally in crude prices The financial sector underperformed in response to concerns over the failure of the Trump administration to deliver on policy measures
FTSE 100
The British index started Tuesday well but later reversed to finish the day with a loss as the U K services PMI came in weaker than expected and the Pound rallied to a three week high against the USD Early mining and retail gains evaporated and the only advancing sector was energy Financial shares were particularly weak as investors are considering a scenario that sees global interest rates remain lower for longer than expected
Stocks
Walt Disney
Shares of Disney were supported Tuesday in a down market as Wells Fargo NYSE WFC upgraded the stock The upgrade came due to Disney s plans to create two new direct consumer subscription channels which the Wells Fargo analyst believes is a viable alternative to current cable subscription models Disney shares had slipped to the 100 level following their most recent earnings release and have remained at that level as the stock found support The analyst upgrade may be enough to give the stock some upward momentum |
WFC | 5 Low Beta ETFs For A Volatile Market | Volatility and uncertainty have shaken complacency from the stock market A myriad of woes including the North Korea nuclear threat Washington turmoil doubts over Trump administration uncertain Fed policy as well as Hurricane Harvey and its aftermath are currently acting as tailwinds Notably North Korea tensions have been high as Trump threatened to slap a trade embargo on countries that do business with it If this comes into effect the result would be a trade war with China causing massive turmoil in the U S economy which would have global repercussions Further warnings about Hurricane Irma barreling toward Puerto Rico and Florida also added to this week s woes read If these weren t enough September is historically the worst month of the year for the stock market However the news of the U S debt ceiling brought some relief President Donald Trump has reached an agreement with Democratic congressional leaders for an extension of the debt limit until Dec 15 Amid the uncertainties investors are seeking exposure to the alternative sources of income rather than equity and bonds For these investors an allocation to low beta funds could be the safest for as long as the disorder lingers Why Low Beta Beta measures the price volatility of stocks or funds relative to the overall market It has direct relationship to market movements A beta of 1 indicates that the price of the stock or fund tends to move with the broader market A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile while a beta of less than 1 indicates that the price of the stock or fund is less volatile than the market That said low beta ETFs exhibit greater levels of stability than their market sensitive counterparts and will usually lose less when the market is crumbling Though these have lesser risks and lower returns the funds are considered safe and resilient amid uncertainty However when markets soar these low beta funds experience lesser gains than the broader market counterparts and thus lag their peers read Given the huge levels of volatility in the market investors could find the following ETFs intriguing options until the market track clears PowerShares Financial Preferred Portfolio TO PGF Beta 0 10This fund tracks the Wells Fargo NYSE WFC Hybrid and Preferred Securities Financial Index which measures the performance of preferred securities traded in the U S market by financial institutions It holds 92 securities in its basket with a slight tilt toward the top firm at 7 1 while other firms hold less than 3 3 share The ETF has amassed 1 7 billion and trades in average volume of 286 000 shares per day It charges 63 bps in annual fees and has added 0 3 in a month see Reaves Utilities ETF SI UTES Beta 0 19 This is the only actively managed ETF that seeks to provide returns through a combination of capital appreciation and income primarily through investments in utilities stocks It holds 24 stocks with heavy concentration on the top firm at 13 5 while the other firms hold no more than 8 2 of assets UTES has AUM of 15 5 million and average daily volume of 1 000 shares It charges 95 bps in annual fees and has gained 2 4 in a month iShares Edge MSCI Multifactor Consumer Staples ETF Beta 0 28This fund targets companies that have the potential to outperform the broad U S consumer staples sector and tracks the MSCI USA Consumer Staples Diversified Multiple Factor Capped Index Holding 28 stocks in its basket it is guilty of concentration on the top firms In terms of industrial exposure about 60 of the portfolio is dominated by food beverage tobacco while food staples retailing and household and personal product take the remainder with a double digit exposure each This ETF debuted in the space 15 months ago and has attracted 2 5 million in its asset base It trades in a meager volume of about 234 shares and charges 35 bps in fees per year CNSF has lost 2 3 in the same time period and has a Zacks ETF Rank 2 Buy Cambria Value and Momentum ETF Beta 0 31This is an actively managed ETF providing exposure to a portfolio of companies that offer strong characteristics by focusing on all three factors value momentum and tactical hedging with the added benefit of lower volatility and protection from market downturns It results in a basket of 101 securities with none holding more than 2 9 of assets The fund has accumulated 9 4 million in its asset base while trades in average daily volume of 3 000 shares Expense ratio comes in at 0 59 VAMO is down 1 05 in a month s time read Reality Shares DIVCON Dividend Guard ETF NS GARD Beta 0 36This product seeks long term capital appreciation by tracking the Reality Shares DIVCON Leaders Dividend Index It invests in large cap companies that are most likely to increase their dividend in the next 12 months based on their DIVCON scores When the Guard Indicator forecasts a market downturn the ETF dynamically reduces its long exposure to 50 while adding a 50 short position in the lowest rated companies This approach results in a basket of 50 stocks while charging 85 bps in annual fees Industrials consumer staples and information technology are the top three sectors The long short ETF has amassed 1 7 million in its asset base and shed 0 5 in a month Bottom LineInvestors should note that these products are not meant for generating outsized returns Instead these provide stability in the portfolio protecting the initial investment In particular these products could be worthwhile for low risk tolerant investors looking to safeguard their portfolio in a rocky market and some outperformance especially if market uncertainty prevails in the coming months Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
WFC | U S Service Sector Rebounds 5 Mutual Funds In Spotlight | The U S service sector activity staged a rebound in August and reached the highest level in the last two months on the back of a strong upside in business activity new orders employment and prices paid Out of the 17 key non manufacturing industries steady growth in 15 industries boosted service sector activity in August Following this development the service sector looks quite attractive and is expected to expand further Strong growth in service activity came as a breather for the domestic economy after investors digested a slower pace of job additions Investing in mutual funds having significant exposure to services related companies may prove prudent at this point ISM Services Scales New HighThe Institute of Supply Management ISM reported that its ISM Services Index increased 1 4 from July to 55 3 last month To date the U S services index has posted expansion for 92 straight months Beside the ISM report IHS Markit Economics U S services PMI advanced from 54 7 in July to 56 in August registering its best pace of expansion since July 2015 After a poor July performance business activity new orders prices and employment registered growth at a faster pace in August Also most of the industries offered a positive outlook about the present business conditions and the economy in general Business Activity New Orders ExpandThe business activity index rose from 55 9 in July to 57 5 in August registering its 97th consecutive month of growth While 12 industries reported growth only three experienced a decline in business activity August not only experienced growth in business activity but also in new orders for the 97th successive month New order count rose from 55 1 in July to 57 1 in August Also 14 industries experienced expansion whereas only two witnessed contraction in new orders The prices index rose last month for the third straight time ISM s Non Manufacturing Prices index progressed from 55 7 in July to 57 9 in August Meanwhile 12 industries reported expansion in prices paid and three witnessed a fall Additionally employment activity advanced to 57 9 in August from 55 7 in the prior month Here 11 industries reported an increase in employment while three witnessed a slump in the same Buy These 5 Mutual FundsFollowing these developments in the economy investors may consider service sector related mutual funds We have selected five mutual funds that flaunt a Zacks Mutual Fund Rank 1 Strong Buy or 2 Buy Moreover these funds have encouraging year to date one year and three year annualized returns They also have minimum initial investment within 5000 and low expense ratios We expect these funds to outperform their peers in the future Remember the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers Unlike most of the fund rating systems the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund Fidelity Select Leisure Portfolio invests the majority of its assets in securities of companies engaged in the design production or distribution of goods or services in the leisure industries The fund seeks growth of capital This non diversified fund invests both in U S and non U S companies FDLSX has an annual expense ratio of 0 79 lower than the category average of 1 39 The fund has year to date one year and three year annualized returns of 17 3 20 6 and 11 2 respectively FDLSX has a Zacks Mutual Fund Rank 1 Wells Fargo NYSE WFC Utility and Telecommunications A invests heavily in common and preferred stocks and investment grade debt securities of utilities and telecom companies EVUAX also invests around 35 of its assets in convertible debentures of utilities and telecom companies This non diversified fund seeks returns through growth of income and capital EVUAX has an annual expense ratio of 1 14 lower than the category average of 1 25 The fund has year to date one year and three year annualized returns of 14 9 14 8 and 7 3 respectively EVUAX has a Zacks Mutual Fund Rank 2 Fidelity Select Medical Delivery Portfolio invests the bulk of its assets in companies that either own or are involved in operating hospital and nursing homes and are related to the healthcare services sector The fund focuses on acquiring common stocks of both U S and non U S companies It seeks growth of capital FSHCX has an annual expense ratio of 0 78 lower than the category average of 1 33 The fund has year to date one year and three year annualized returns of 17 1 19 6 and 11 1 respectively FSHCX has a Zacks Mutual Fund Rank 1 T Rowe Price Financial Services seeks both capital growth and current income The majority of its assets are invested in financial services sector companies It may also purchase securities of companies involved in providing financial software The fund uses fundamental bottom up analysis in order to select securities PRISX has an annual expense ratio of 0 88 lower than the category average of 1 42 The fund has year to date one year and three year annualized returns of 8 7 26 and 10 2 respectively PRISX has a Zacks Mutual Fund Rank 1 Fidelity Select Transportation seeks capital growth FSRFX invests a large part of its assets in securities of companies involved in design manufacture and sale of transportation equipment as well as providing transportation services The non diversified fund invests in both U S and non U S companies FSRFX has an annual expense ratio of 0 82 lower than the category average of 1 20 The fund has year to date one year and three year annualized returns of 5 20 9 and 6 8 respectively FSRFX has a Zacks Mutual Fund Rank 1 Want key mutual fund info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
WFC | The Zacks Analyst Blog Highlights PowerShares Financial Preferred Reaves Utilities ETF IShares Edge MSCI Multifactor Consumer Staples ETF Cambria Value And Momentum ETF And Reality Shares DIVCON Dividend Guard ETF | For Immediate ReleaseChicago IL September 8 2017 Zacks com announces the list of stocks featured in the Analyst Blog Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets Stocks recently featured in the blog includePowerShares Financial Preferred Portfolio NYSEARCA TO PGF Reaves Utilities ETF NYSEARCA SI UTES iShares Edge MSCI Multifactor Consumer Staples ETF BATS Cambria Value and Momentum ETF BATS and Reality Shares DIVCON Dividend Guard ETF NYSE NS GARD Today Zacks is promoting its Buy stock recommendations Here are highlights from Thursday s Analyst Blog Low Beta ETFs for a Volatile MarketVolatility and uncertainty have shaken complacency from the stock market A myriad of woes including the North Korea nuclear threat Washington turmoil doubts over Trump administration uncertain Fed policy as well as Hurricane Harvey and its aftermath are currently acting as tailwinds Notably North Korea tensions have been high as Trump threatened to slap a trade embargo on countries that do business with it If this comes into effect the result would be a trade war with China causing massive turmoil in the U S economy which would have global repercussions Further warnings about Hurricane Irma barreling toward Puerto Rico and Florida also added to this week s woes read If these weren t enough September is historically the worst month of the year for the stock market However the news of the U S debt ceiling brought some relief President Donald Trump has reached an agreement with Democratic congressional leaders for an extension of the debt limit until Dec 15 Amid the uncertainties investors are seeking exposure to the alternative sources of income rather than equity and bonds For these investors an allocation to low beta funds could be the safest for as long as the disorder lingers Why Low Beta Beta measures the price volatility of stocks or funds relative to the overall market It has direct relationship to market movements A beta of 1 indicates that the price of the stock or fund tends to move with the broader market A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile while a beta of less than 1 indicates that the price of the stock or fund is less volatile than the market That said low beta ETFs exhibit greater levels of stability than their market sensitive counterparts and will usually lose less when the market is crumbling Though these have lesser risks and lower returns the funds are considered safe and resilient amid uncertainty However when markets soar these low beta funds experience lesser gains than the broader market counterparts and thus lag their peers read Given the huge levels of volatility in the market investors could find the following ETFs intriguing options until the market track clears PowerShares Financial Preferred Portfolio NYSEARCA Beta 0 10This fund tracks the Wells Fargo NYSE WFC Hybrid and Preferred Securities Financial Index which measures the performance of preferred securities traded in the U S market by financial institutions It holds 92 securities in its basket with a slight tilt toward the top firm at 7 1 while other firms hold less than 3 3 share The ETF has amassed 1 7 billion and trades in average volume of 286 000 shares per day It charges 63 bps in annual fees and has added 0 3 in a month see Reaves Utilities ETF NYSEARCA Beta 0 19 This is the only actively managed ETF that seeks to provide returns through a combination of capital appreciation and income primarily through investments in utilities stocks It holds 24 stocks with heavy concentration on the top firm at 13 5 while the other firms hold no more than 8 2 of assets UTES has AUM of 15 5 million and average daily volume of 1 000 shares It charges 95 bps in annual fees and has gained 2 4 in a month iShares Edge MSCI Multifactor Consumer Staples ETF BATS Beta 0 28This fund targets companies that have the potential to outperform the broad U S consumer staples sector and tracks the MSCI USA Consumer Staples Diversified Multiple Factor Capped Index Holding 28 stocks in its basket it is guilty of concentration on the top firms In terms of industrial exposure about 60 of the portfolio is dominated by food beverage tobacco while food staples retailing and household and personal product take the remainder with a double digit exposure each This ETF debuted in the space 15 months ago and has attracted 2 5 million in its asset base It trades in a meager volume of about 234 shares and charges 35 bps in fees per year CNSF has lost 2 3 in the same time period and has a Zacks ETF Rank 2 Buy Cambria Value and Momentum ETF BATS Beta 0 31This is an actively managed ETF providing exposure to a portfolio of companies that offer strong characteristics by focusing on all three factors value momentum and tactical hedging with the added benefit of lower volatility and protection from market downturns It results in a basket of 101 securities with none holding more than 2 9 of assets The fund has accumulated 9 4 million in its asset base while trades in average daily volume of 3 000 shares Expense ratio comes in at 0 59 VAMO is down 1 05 in a month s time read Reality Shares DIVCON Dividend Guard ETF NYSE Beta 0 36This product seeks long term capital appreciation by tracking the Reality Shares DIVCON Leaders Dividend Index It invests in large cap companies that are most likely to increase their dividend in the next 12 months based on their DIVCON scores When the Guard Indicator forecasts a market downturn the ETF dynamically reduces its long exposure to 50 while adding a 50 short position in the lowest rated companies This approach results in a basket of 50 stocks while charging 85 bps in annual fees Industrials consumer staples and information technology are the top three sectors The long short ETF has amassed 1 7 million in its asset base and shed 0 5 in a month Bottom LineInvestors should note that these products are not meant for generating outsized returns Instead these provide stability in the portfolio protecting the initial investment In particular these products could be worthwhile for low risk tolerant investors looking to safeguard their portfolio in a rocky market and some outperformance especially if market uncertainty prevails in the coming months Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week Strong Stocks that Should Be in the NewsMany are little publicized and fly under the Wall Street radar They re virtually unknown to the general public Yet today s 220 Zacks Rank 1 Strong Buys were generated by the stock picking system that has nearly tripled the market from 1988 through 2015 Its average gain has been a stellar 26 per year Follow us on Twitter Join us on Facebook NASDAQ FB Zacks Investment Research is under common control with affiliated entities including a broker dealer and an investment adviser which may engage in transactions involving the foregoing securities for the clients of such affiliates Media ContactZacks Investment Research800 767 3771 ext 9339Past performance is no guarantee of future results Inherent in any investment is the potential for loss This material is being provided for informational purposes only and nothing herein constitutes investment legal accounting or tax advice or a recommendation to buy sell or hold a security No recommendation or advice is being given as to whether any investment is suitable for a particular investor It should not be assumed that any investments in securities companies sectors or markets identified and described were or will be profitable All information is current as of the date of herein and is subject to change without notice Any views or opinions expressed may not reflect those of the firm as a whole Zacks Investment Research does not engage in investment banking market making or asset management activities of any securities These returns are from hypothetical portfolios consisting of stocks with Zacks Rank 1 that were rebalanced monthly with zero transaction costs These are not the returns of actual portfolios of stocks The S P 500 is an unmanaged index Visit for information about the performance numbers displayed in this press release |
CMCSA | Comcast Stock Falls 3 | Investing com Comcast NASDAQ CMCSA Stock fell by 3 09 to trade at 44 23 by 12 00 17 00 GMT on Friday on the NASDAQ exchange
The volume of Comcast shares traded since the start of the session was 16 43M Comcast has traded in a range of 44 22 to 45 05 on the day
The stock has traded at 47 7400 at its highest and 44 2200 at its lowest during the past seven days |
CMCSA | Airlines Consumer Goods and Comcast | In this episode of MarketFoolery Chris Hill chats with Bill Barker about market news Comcast NASDAQ CMCSA is up on fourth quarter profits Bill and Chris discuss what the company might do with its streaming service Peacock and how it s differentiating itself from say Apple NASDAQ AAPL Several airlines are reporting many of them falling if they have heavy exposure to the 737 Max Boeing s NYSE BA new CEO makes some interesting comments about the future of the company s dividend which may or may not amount to anything Procter Gamble NYSE PG misses on revenue but the stock s fall is probably more attributable to its insane run up this last year Tangents include racquet sports and Schrodinger s Mr Peanut
To catch full episodes of all The Motley Fool s free podcasts check out our podcast center To get started investing check out our quick start guide to investing in stocks A full transcript follows the video
This video was recorded on Jan 23 2020
Chris Hill It s Thursday Jan 23 Welcome to MarketFoolery I m Chris Hill With me in studio Mr Bill Barker Thanks for being here
Bill Barker Thanks for having me
Hill We ve got some earnings Earnings are starting to heat up We ve got some airlines We ve got some consumer goods We re going to start with one of your favorite companies because it s based in your home country of Philadelphia Comcast Fourth quarter profits and revenue for Comcast came in higher than expected You know if it was just that that d probably be great but it was mixed in the sense that broadband is growing for Comcast but cord cutting is also growing The number of people just cutting the cord on Comcast TV services that s on the rise
Barker Yeah that s on the rise And OK the stock sold off a little bit today but it s up about 40 over the last year so some pretty high expectations embedded into the current operations for the company And if it had no response to the cord cutting that would be a bigger problem It is a problem I think this is the 11th consecutive quarter where it s lost pay TV customers And it s got Peacock coming out the NBC branded service that s going to compete with Disney and Apple and five other things that you can name So it s got a competitor A little bit late not too late in the game What do you think about it
Hill I think it s interesting that Comcast with their Peacock video streaming service they are making a very clear decision we are not going to be spending a ton of money on this we re not going to be spending a lot on original content So from an economic standpoint I think if you re a Comcast shareholder maybe you feel pretty good about this because it s not like they are I was going to say Netflix but really it s Apple I mean if you look at the numbers that Apple is spending per episode reportedly on their shows I mean it s Apple they have all the money in the world they can do that but for the profits that Comcast generates I think it s an interesting and probably at least out of the gate a smart decision by Brian Roberts and his brain trust at Comcast to go this route
Barker Probably smart I mean you d make a lot of money betting on his moves being smart ones or you have over the last couple of decades And I think that an indication of the degree to which they are doing this on the cheap which I think is kind of how you framed it
Hill Not on the cheap
Barker Not to their faces you re not framing it that way but that s what I heard from you
Hill laughs Sure let s go with that
Barker Is the fact that one of the premiere new offerings that you re going to be able to get on this service is a reboot of Saved by the Bell which I think to me underlines doing it on the cheap
Hill laughs You re saying it s not the reports of Apple saying We re going to spend 15 million per episode on this Jason Momoa futuristic show
Barker Or Picard or The Mandalorian or something like that Saved by the Bell one assumes less in space than these other things So therefore a little easier to spend only 10 15 per episode
Hill Absolutely And let s not forget that Comcast owns NBC and all the NBC properties They ve got the Olympics coming this summer so they will probably be using Peacock to serve up Summer Olympic content I m assuming And they will probably be promoting the hell out of Peacock on their TV network during the Summer Olympics
Barker Yeah I think that s all pretty accurate And so in the meantime internet use is growing High speed broadband sales and installation that sort of thing They re more than making up for the lost pay TV subscribers with increased internet And over time it looks like it ll be the larger chunk of their revenue
Hill Let s move on to the airlines We ve got three airlines that came out with fourth quarter results Jet Blue s profits and revenues came in higher than expected Different story for Amazon and Southwest just because those two airlines have the 737 Max which is grounded So Southwest s profits were down more than 20 in the fourth quarter because of the 737 Max American their profits were up I would say despite having the 737 Max
Barker I was going to say this is going to be correction week because the first time through you said Amazon rather than American
Hill Did I
Barker Yeah We ll edit that out
Hill You know what I m not going to get any email from people at American Airlines or Amazon I don t think in the way that I clearly offended the people in Sweden for saying that Davos was in Sweden
Barker But you didn t offend the Swiss
Hill I don t know if we have dozens of listeners in Switzerland like we do in Sweden
Barker I would think that Sweden wouldn t be offended by that They d be offended by our generic American lack of knowledge of basically everything outside of America
Hill Yeah that s probably it
Barker So on behalf of Switzerland perhaps they were offended
Hill Exactly And rising to Switzerland s honor
Barker Yes All part of the European Union Or not Who can remember who s part of that this week
Hill Can we get back to the airlines
Barker Yes we can
Hill laughs By the way Amazon doesn t have an airline yet
Barker Right And I was going to say because people may have listened to that and thought I haven t been following are they taking over airlines too They have a pretty big logistics look you talk about Amazon five days a week right Four Let s not talk about it today despite your attempts to do so American Airlines different from Amazon despite what you may have heard earlier in the day
JetBlue doing a little better in part because they don t have exposure to the Boeing Max problem Southwest really has large exposure to that That s mostly known and embedded and built into the expectations of today s numbers But still I think off a little bit
JetBlue seemingly doing a little better doing well with their cost cutting operations which is what they highlighted in their report
Hill Yeah And I don t own Jet Blue But I always like to see just as someone who is generally a fan of business I like to see companies come out and say This is our plan This is how long it s going to take And then at the end of that timeframe they actually hold themselves accountable and say OK this is what we did In Jet Blue s case it s a three year cost cutting plan that they executed and it s paying off for them and their shareholders literally
Can we go to Boeing for a second Because Dave Calhoun has been the CEO of Boeing for about I m going to ballpark two or three weeks Let s call it a month And he came out on Wednesday and was I think trying to be very optimistic and even bullish about Boeing as any CEO would want to be bullish about their company But he said something I don t know if you heard this but I m curious to get your take on this because he talked specifically about Boeing s dividend And he said We re not cutting the dividend unless something dramatic changes And I feel like that s a mistake to say out loud laughs and for publication because when companies cut their dividend they are given the opportunity to share with the investing public why they re cutting the dividend Dave Calhoun has now just basically removed any interpretation we as investors get to make He s already said Oh if we cut the dividend in six months which by the way is completely plausible as they continue to have troubles with the 737 Max So if they come out and cut the dividend even just a little bit everyone rightfully is going to point back to this comment and be like Wow I guess something dramatic changed huh
Barker Possibly Look certainly he s inherited a very difficult situation
Hill And he s being well paid to inherit this situation
Barker The nice thing is he s got an easy act to follow That s always a plus Yes and he s being well paid And even if he fails at the job he ll be well paid to leave because those are the rules of that game And I think that yeah if somebody missteps on part of a sentence early on in their job I ll note it and weigh it accordingly But I think one interpretation is It s safe We can never be sure that there won t be something dramatic We re not even calling what has happened so far dramatic from the perspective of a dividend cut We re not trying to belittle the consequences of it but vis a vis a dividend it s not dramatic enough We can t control everything that s going to happen in the future and they can t
So airlines are pretty poor performing stocks over the long term That s really still been the case although they ve gotten a little bit better Over the last five years airlines as a whole have only returned 1 5 The market s returned about 12 So pretty bad last three and five years for these things And it is largely attributable to the fact that it is not only a heavily regulated industry but for the most part one which people are not complaining about too many regulations especially in light of something like the 737 Max People look at that I think today there was a report from the Department of Transportation defending their work and saying Look we didn t drop the ball here but we ve got 32 recommendations to ourselves about ways to improve this oversight
So the outcome of this is contrary to much of the rest of this administration s work on regulations which is to find all of them hunt them down and kill them if possible not to do so in the airline industry So that inherently affects your profitability And all three of these stocks are getting the job done as businesses but really not keeping up with the rest of the market
Hill Procter Gamble out with second quarter results Revenue was lower than expected Procter Gamble is obviously a very big consumer goods company with a lot of different business lines One thing I noted was and they called this out the global birth rate which is slowing down And when you re in the business of selling diapers then you re just going to sell fewer diapers when the global birth rate particularly in places like the United States and China starts to slow down
Barker Yeah And I hadn t been following China s birth rate but that s been a problem I had thought that that was already kept artificially low But apparently it s trailing even more So being the size of market that it is for Procter Gamble and the competitors Kimberly Clark as well I think talked about mid single digits off on diaper use And I think they re also of course susceptible to increased and improved generics or white label
Hill Do you think a little bit of the drop that we re seeing in Procter Gamble s stock today has to do with the fact that over the past year the stock s up 30
Barker Yes
Hill That s kind of a crazy good year for a stock like Procter Gamble
Barker Yeah I ve got it up 42 over the last one year It was already up a little bit this year But 42 a year for a consumer products company which is not obviously growing the top line anywhere close to that amount They ve obviously sort of improved some profitability issues But any misstep is going to be an opportunity to take some profits off the table as the saying goes and I think that s a little bit of what s happening here because the outlook for the year as a whole is a pretty good one for a consumer products company I think they re talking about organic sales were up 5 for the quarter and I think the earnings per share guidance is high single digits to low double digits which again even though part of that is juiced by a lot of share buybacks which they re in the middle of that s still pretty impressive growth
Hill Do you think there s any chance Warren Buffett and Charlie Munger are looking at the results from Procter Gamble particularly over the past year and saying Hey that Kraft Heinz acquisition that s still not looking good And they don t get to use the excuse that it s a bad time for consumer products companies because P G is getting it done
Barker Yeah they are getting it done I imagine they have looked over their work for Kraft Heinz many times and thought
Hill What have we done laughs What have we done and how can we never do it again
Barker laughs We know the mistakes we made and we wish we hadn t made them But we did Thank goodness we ve got a lot of things that we ve done over the years that were not mistakes to make up for that one because it s a pretty big one
Hill So you were pointing out before we started this show that part of the Kraft Heinz empire of products you look at the brand portfolio within Kraft Heinz you ve got Planters Planters Nuts and within that you ve got Mr Peanut
Barker In the news
Hill Mr Peanut very much in the news because Mr Peanut apparently is going to die on Super Bowl Sunday There s an ad campaign that the Planters marketing folks are going to be rolling out where apparently Mr Peanut is going to die before the game and then sometime during the third quarter they re going to have a commercial featuring his funeral I was already planning on watching the Super Bowl but after initially being annoyed that Mr Peanut was trending on Twitter over the last 24 hours the more I read about this the more I thought OK yeah I m interested to see how this plays out I m already a customer I already think it s a fine product I spend money on those peanuts
Barker Yeah And here s my question Has Mr Peanut already died Because they ve released the commercial where he dies But only to the internet right So is he like Schrodinger s cat both dead and not dead yet Depending on whether you ve seen it Depending on whether you ve observed the commercial is he still alive I m getting metaphysical here You weren t expecting me to take it in that direction
Hill I really wasn t
Barker Were you expecting me to address this from a business perspective
Hill laughs No I was just going to say I think we ve all come to expect at this point when it comes to Super Bowl commercials that in the age of YouTube this is how it goes It s no longer enough for companies to say Yeah we ve got a Super Bowl ad and we re really excited about it You ll have to tune in to watch it They have to tease it out They have to often release it ahead of time on YouTube so that then during the game you can be like Oh there s that commercial I watched three days ago on YouTube
Barker Everybody come in watch this thing now that we could watch on YouTube as well
Hill Yeah and can for as long as we want I mean I know it doesn t look like a professional show but can you turn your phone off at least and pretend it s a professional show
Barker I m trying to laughs
Hill laughs If we hadn t already we ve now reached the end of this episode Bill Barker
Barker You ll just edit that part out
Hill No We re not editing out my Amazon
Barker Let me give you one thing that I learned while you were prattling on about something
Hill OK great
Barker It was when you were mistakenly talking about my cross training which is totally untrue Because I only play racquet sports
Hill Yeah but all kidding aside for anyone still listening this is the truth You compete at a national level in your racquet sport
Barker International level yes
Hill I mean you ve got to be in some kind of shape
Barker If you re in Chicago come by I ll be at the U S Open in a couple of weeks But so I was looking apropos of this show I know that when people hear the word apropos here they assume that it s not going to be relevant And yet here I go Brian Roberts a great squash player played the Maccabiah Games a couple of times the CEO of Comcast And looking up he is in the Philadelphia Jewish Sports Hall of Fame which I did not know I did not know there was a Philadelphia Jewish Sports Hall of Fame to start with but I m now going to spend a little time investigating
Hill Wait he s a squash player
Barker Yes He was I believe a squash player at Penn and then still plays
Hill Aren t you and Brian Roberts roughly the same age Is he a little bit older I m just wondering if in your time at Yale you may have competed
Barker No He s a little bit older than me
Hill OK He s solidly older than you Sports Hall of Fame though That s great
Barker Yeah
Hill Well there s no more appropriate way to end this episode than petering out with some random sports tidbits
Barker laughs We could talk about peanuts again if you think that s better
Hill No now we re just punishing people Thanks for being here
Barker Thank you
Hill As always people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against so don t buy or sell stocks based solely on what you hear That ll do it for this edition of MarketFoolery The show s mixed by Dan Boyd I m Chris Hill Thanks for listening We ll see you next week |
CMCSA | Even Comcast Is Embracing Cord Cutting Now | Industry disruption often happens slowly
In video streaming for example Netflix NASDAQ NFLX was long ignored by entertainment incumbents eager to reap bumper profits from the cable ecosystem that worked so well for a generation Time Warner s chief at one point dismissed the streaming challenger as the Albanian army but after years of growth inside the U S and abroad for Netflix the equation has changed
Not only are a slew of new streaming services coming onto the market including Disney and Apple late last year and AT T s HBOMax and Comcast s NASDAQ CMCSA Peacock coming this year but now even the country s biggest cable provider appears to see the light on streaming
In its fourth quarter earnings report Comcast s results and management commentary on the earnings call made clear that the company was looking forward to a future beyond its cable empire and better yet sees itself as a big winner in the streaming revolution Here s why
Cord cutting is accelerating
Investors have been talking about cord cutting for years but the vast majority of Americans still subscribe to a traditional pay TV service Still the movement away from cable and satellite TV toward video streaming now seems to be accelerating according to Comcast s latest numbers
During the seasonally strong fourth quarter when cable and streaming subscriptions are lifted by cold weather and the holidays driving more screen time Comcast said it lost 133 000 residential video subscribers in the period compared to a loss of just 19 000 in the quarter a year ago Those losses were likely fueled by the launch of Disney and Apple in the quarter as Netflix s domestic subscriber growth was unusually slow as well However Comcast s residential cable subscriber loss for the full year nearly doubled from 344 000 to 671 000 a sign that cord cutting momentum was picking up before the new services came online
Comcast now sees those cable losses accelerating this year Not only is Comcast launching its own streaming service Peacock but it s also shifting its video strategy as it sees video as primarily a way to add lifetime value to broadband centric subscribers It s not chasing more price conscious customers as CFO Michael Cavanagh explained on the call which has led to fewer new customers
Instead it s counting on broadband and streaming to drive growth in the coming years
Betting on streaming
What was even more notable from Comcast s earnings report is how bullish the company is on streaming
Last year Comcast introduced Flex a set top box that give its broadband subscribers access to over 100 video and music apps to help give them a premium streaming experience even if they aren t cable subscribers Describing the product CEO Brian Roberts said At Cable we leveraged X1 to launch our newest service Flex to better serve the segment of our broadband customers that prefer streaming only Our early results with Flex show that our customers love it In our first month we could not keep enough inventory in stock and we re deploying Flex as fast as we can The company is introducing a similar platform through Sky the British cable service it acquired so its European customers can enjoy the same benefits
With a unique combination of assets Roberts sees a bright future for Comcast in streaming saying So if you include Dave s broadband business plus Flex and Peacock I think our company is better positioned as the world moves to streaming than any other company in the world And I think you could argue in the next 10 or 20 years if you look at all those three businesses combined we could make more money in streaming than anyone else by a lot
Comcast in other words sees cord cutting as a driver of its future business rather than a headwind as it s long been thought of While it s not a company that investors think of as a player in the streaming industry Comcast does have a unique position and a collection of strengths as an internet provider a streaming device maker like Amazon or Roku and soon a streaming service with Peacock that gives the company and investors a number of ways to get exposure to streaming
What it means for the streaming industry
Comcast s report is the latest piece of good news for Netflix as it shows that the transition from linear TV to internet TV is only accelerating which will favor streaming stocks like Netflix and Roku over the coming years as well as those looking to gain from the growth of connected TV like The Trade Desk and Telaria
In Netflix s own earnings call earlier this week management again sought to deflect concerns about competition from new streaming options pointing instead to the massive opportunity coming from linear TV When even Comcast the nation s biggest cable company is jumping into the streaming fray we may be reaching the peak of this wave of disruption that has been building for a decade With HBOMax and Peacock coming online soon expect 2020 to be the biggest year yet for cord cutting That s good news for streaming stocks like Netflix |
CMCSA | Comcast Gives Cats the Silent Treatment in a Rocky Q4 Report | Media conglomerate Comcast NASDAQ CMCSA reported fourth quarter results on Thursday morning The company exceeded Wall Street s expectations across the board but the report was also studded with market by market trouble spots Meow
Comcast s fourth quarter results by the numbers
Data source Comcast GAAP generally accepted accounting principles
The reported year ago results were adjusted to include contributions from British broadcasting service Sky as if Comcast had acquired it on Jan 1 2017 This way we get to look at reasonably comparable results rather than accounting for a partial quarter of Sky s revenues and operating income as the deal was actually completed in mid October 2018
Comcast s segment results
On that note the Sky division s revenues rose 0 4 year over year according to the adjustments noted above landing at 5 04 billion EBITDA profits from this segment held steady at 765 million The service added 77 000 subscribers during the fourth quarter or 394 000 net new accounts across the full year but advertising sales fell 5 due to stricter regulations on the advertising of gambling services in Italy and the U K
Comcast s eponymous cable service lost 149 000 video subscribers while adding 442 000 broadband customers High speed internet services accounted for 4 79 billion of top line sales expanding its share of Comcast s total fourth quarter revenues from 14 9 two years ago to 16 9 this time
The NBCUniversal studio posted total sales of 9 15 billion 2 6 below the year ago period s reading The weakness was broad based with lower top line takes in nearly every sub section of this division but theatrical content led the way with a 59 revenue drop The star studded silver screen adaptation of the Broadway classic Cats collected just 60 million in global ticket sales on a 95 million production budget and an even larger advertising campaign Comcast s top brass didn t mention this flop even once in the fourth quarter earnings release or conference call Comcast would probably like us to forget about Cats but the film clearly made a significant dent in NBCUniversal s financial results
What s next for Comcast
Comcast has come a long way from the pure play cable TV giant we saw just 10 years ago The NBCUniversal buyout in 2011 was a game changer and the company is bleeding cable subscribers while adding internet accounts these days If these trends keep up for a few more years Comcast will become a marriage between a high speed internet service and a major movie studio that also happens to dabble in broadcasting on the side
CEO Brian Roberts sees the writing on the wall
With the rate adjustments read price increases that we are implementing in 2020 as well as the ongoing changes in consumer behavior we expect higher video subscriber losses this year Roberts said on the earnings call Video is still valuable for us to attach to our broadband centric customer relationships but only to the extent that it helps us increase the lifetime value of those relationships
It s good to see Comcast s management copping to the challenges that lie ahead 2020 could be a decent year due to the upcoming Olympics coverage and the opening of a Nintendo themed theme park in Japan That being said I find it hard to invest in strategy overhaul concepts like Comcast s current situation and will happily watch this stock from the sidelines There are too many better investment ideas on the market right now to make any significant bets on this patchy quilt of mismatched media businesses |
CMCSA | Comcast Thinks It Can Make More Money in Streaming Than Anyone Else | Comcast NASDAQ CMCSA just took the wraps off its forthcoming Peacock streaming service earlier this month and it discussed relatively modest expectations 30 million to 35 million viewers in the next five years bringing in 6 or 7 per month a pop for about 2 5 billion in annual revenue
So it was a bit curious when outgoing NBCUniversal Chairman Stephen Burke chimed in during Comcast s fourth quarter earnings call to say We can make more money in streaming than anyone else
Disney NYSE DIS and AT T NYSE T have much higher expectations for their flagship streaming services Disney sees as many as 90 million global Disney subscribers by 2024 AT T expects HBO Max to reach nearly the same level when including existing HBO subscribers AT T expects HBO Max to generate 5 billion in incremental revenue by 2025 Not to mention Netflix just wrapped up a year where it brought in over 20 billion in subscription revenue
Perhaps Burke is taking a broader view of the streaming market which seems to include providing broadband internet service in Burke s view Still the chairman seems to make a bad assumption about the strength of Comcast s streaming efforts and its competition
Focusing on broadband customers
Comcast hasn t been shy about its shifting focus to provide greater value to its broadband customers At the top of Comcast s earnings call CEO Brian Roberts said broadband is one of the company s top areas of investment for 2020
It s investing in faster speeds across its markets At CES earlier this year it introduced a new WiFi gateway to support those faster speeds It s offering customers who take the new gateway free cybersecurity protections
As it relates to streaming the company made the move to offer a free Xfinity Flex set top box to its broadband only customers in September The streaming device competes with Roku s NASDAQ ROKU devices and smart TVs and Amazon s Fire TV platform Management said demand for the device among its customers was so high that it ran out of stock and it s still trying to catch up
Comcast added more subscribers in 2019 than in any of the past 12 years and it expects another strong number in 2020 But it s also planning to raise its rates this year as it adds more value to the subscription The company can arguably justify higher rates with faster speeds the free Flex boxes and the inclusion of Peacock Premium in its broadband subscription Comments from management suggest they don t expect a rate hike to have a significant negative effect on net additions
If you consider broadband service as a key aspect of streaming Comcast is well positioned to keep growing revenue In fact incremental revenue from rate hikes and customers self selecting higher speeds ought to significantly outpace Peacock s contribution But that s a very broad definition of making money on streaming
Making a bad assumption about Flex and Peacock
Burke s comments about streaming seem to rely on an assumption that Comcast s Flex platform will become immensely popular Sure demand for Flex is extremely high but it s also a free streaming device Whether or not those customers actually use Flex and how much they use the devices remains to be seen
Flex as a streaming platform is playing catch up to the big guns like Roku Since Roku has a much broader and more engaged audience it s become a must for any streaming service looking to reach an audience on television sets As a result the channel selection on Roku devices is vastly superior to the availability of services on Flex Flex is notably missing Disney services including Disney Hulu ESPN and Disney s TV Everywhere apps as well as several other high profile streaming services
Meanwhile Roku is highly focused on winning a share of the smart TV market Management says Roku TVs account for one third of smart TVs sold in the U S Baking Roku OS into the television itself renders devices like Flex or Roku s own devices redundant and often inferior That s a market Comcast is unlikely to explore which means it ll become even more challenging to convince subscribers to actually use their free Flex devices
Burke s assumption about Flex s popularity is especially notable in his comment that Peacock represents a way for NBCUniversal to engage the growing audience of non linear television viewers and keep 100 of the ad revenue But if NBCU wants Peacock on the biggest streaming platforms like Roku it ll have to give up some of its ad inventory
On the other hand the company seems to think media companies like Disney should give up some of their ad inventories to NBCUniversal to sell in exchange for distributing their streaming services on Flex Burke s comments are out of alignment with Comcast s actual market power compared to its competitors in both the streaming platform and streaming content markets |
CMCSA | Comcast Expects More Customers to Cut the Cord in 2020 | Comcast s NASDAQ CMCSA video subscriber losses nearly doubled in 2019 The leading cable TV provider ended the year with just 21 25 million video subscribers down 733 000 from the end of 2018
And management says cord cutting is going to get worse this year We expect higher video subscriber losses this year CFO Mike Cavanaugh stated plainly to investors during the company s fourth quarter earnings call
That statement isn t entirely unexpected Comcast s management previously said it s shifting its focus to more profitable video subscribers in the same way AT T NYSE T shifted last year Since shifting its strategy to focus on profitable subscribers AT T has seen millions of subscribers leave its service Investors should expect a similar result at Comcast in 2020
Not chasing unprofitable video customers
Comcast s legacy video service is only good for its business insofar as it increases its customer lifetime value There s a growing segment of the market that doesn t value Comcast s video service to the point where it makes economic sense for Comcast to offer it to them not even as an add on to a broadband internet subscription As more and more streaming video options enter the market that segment is getting bigger
We re not chasing this segment of the market Cavanaugh said That stands in contrast to what some of its competitors are doing Charter Communications NASDAQ CHTR for instance offers skinny bundles to its broadband subscribers in order to squeeze more revenue out of them and increase their likelihood of staying subscribed to Charter Offering and marketing those skinny bundles may be heightened in markets where AT T has expanded its broadband efforts
On the contrary Comcast is raising its rates this year That echoes the moves AT T made last year when it raised rates across all of its video products and stopped offering big introductory discounts Additionally Comcast s introductory bundling discounts now reflect offers similar to AT T about 20 off per month for 12 months
Management already noted it s seeing fewer gross additions Combined with its unwillingness to retain unprofitable customers and a growing segment of the market with a decreased value for the cable bundle customer losses will surely take another step up in 2020 AT T lost 3 6 million out of 25 2 million subscribers in the 12 months ending in September While Comcast s subscriber decline might not be as severe it could easily top one million in 2020
All about serving the growing market for streaming
Instead of offering broadband subscribers a bundle with video service Comcast has shifted to focus on the growing demand for streaming video as a means to increase customer loyalty and increase revenue per subscriber
Last year it introduced a streaming device called Flex that its broadband only subscribers could rent for 5 per month After a tepid response from customers it switched to offering the device for free and Comcast couldn t keep enough in stock
Later this year the company will begin offering its subscribers access to Peacock Premium which it says is a 5 per month value Peacock Premium provides access to additional content over the standard free Peacock offering but it s still ad supported
Make no mistake though Comcast expects the increased value these add ons provide to enable it to increase its broadband rates Head of Comcast s Cable division Dave Watson said the company postponed planned rate increases from late 2019 to the early part of 2020 He expects to see a step up in revenue per subscriber in the first half of the year
The success of Comcast s broadband business stands in contrast to AT T The competitor lost about 150 000 subscribers over the past six months as it makes a similar shift to its TV business focusing more on higher value fiber customers
Comcast has managed to increase speeds and provide additional features and products for broadband subscribers and those moves could stave off competition from AT T and others That s essential as its de facto monopoly on video service erodes with the growing number of streaming video options |
CMCSA | Comcast to open six stores in Twin Cities this year | Comcast CMCSA 0 5 says it will open six new Xfinity stores in Minnesota s Twin Cities by the end of the year That means a new 1 5M investment part of an initiative to transform its retail stores around the country The move will bring the total of Xfinity stores in the area to 14 The new stores will range from 1 800 to 2 200 square feet Comcast has built or redesigned more than 400 stores since 2015 |
CMCSA | Comcast CMCSA Earnings Expected To Grow What To Know Ahead Of Next Week s Release | Comcast CMCSA is expected to deliver a year over year increase in earnings on higher revenues when it reports results for the quarter ended December 2019 This widely known consensus outlook gives a good sense of the company s earnings picture but how the actual results compare to these estimates is a powerful factor that could impact its near term stock price
The stock might move higher if these key numbers top expectations in the upcoming earnings report which is expected to be released on January 23 On the other hand if they miss the stock may move lower
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management s discussion of business conditions on the earnings call it s worth handicapping the probability of a positive EPS surprise
Zacks Consensus Estimate
This cable provider is expected to post quarterly earnings of 0 76 per share in its upcoming report which represents a year over year change of 18 8
Revenues are expected to be 28 23 billion up 1 4 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has remained unchanged over the last 30 days This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out Our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction has this insight at its core
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for Comcast
For Comcast the Most Accurate Estimate is higher than the Zacks Consensus Estimate suggesting that analysts have recently become bullish on the company s earnings prospects This has resulted in an Earnings ESP of 1 60
On the other hand the stock currently carries a Zacks Rank of 3
So this combination indicates that Comcast will most likely beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that Comcast would post earnings of 0 75 per share when it actually produced earnings of 0 79 delivering a surprise of 5 33
Over the last four quarters the company has beaten consensus EPS estimates four times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
Comcast appears a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
EBAY | eBay Continues To Soar | Shares of Ebay Inc EBAY have jumped to new 2012 highs after a two week rally on top of a gain of 70 already for this year The rally began after Fitch Ratings affirmed eBay s A outlook The ratings and outlook reflect the company s leading e commerce platform its strong position in on line payments as well as the significant potential growth opportunities for that business both on and off line its significant and consistent free cash flow generation and its relatively conservative balance sheet management Ebay reached an all time high back in early 2005 at about 59 a share Could this level be reached or surpassed in coming weeks Chart Courtesy of StockCharts comWe would bet on the bullish side for this stock but doing so with a sell stop around 48 a share This is near where the current rally started and if the gains of the past two weeks were to evaporate we would not want to own the stock As the stock gains ground a trailing stop near 6 would be appropriate The Fibtimer com Stock Timing Strategy does not currently have a position in the Ebay Inc |
EBAY | eBay Vol Breaches Annual High Well Ahead Of Earnings Report | eBay Inc EBAY is a global technology company that enables commerce through three reportable segments Marketplaces Payments and GSI I noticed eBay last night while perusing the market because of the vol namely vol that has reached an annual high well ahead of earnings due out in mid Apr very close to Apr expiry It s certainly expected that vol will rise into the event which is why the fact that the implied has breached its annual high already caught my attention The one year eBay Charts Tab is included below The top portion is the stock price the bottom is the vol IV30 red vs HV20 blue vs HV180 pink On the stock side we can see the rather consistent move upwards over the last twelve months One year ago this was a 38 08 stock so it s up 37 Y O Y For those that haven t looked recently this is nearly a 70 billion company eBay Whoa But unlike so many posts I ve published recently this is a stock that is seeing near annual highs in stock price and is also seeing new annual highs in vol Let s turn to the one year IV30 chart in isolation below We can see that hypnotic vol pattern into and out of earnings like almost every other firm But this time things are different The implied has breached its annual high and we are several weeks away from earnings As that event nears unless there is some sort of pre announcement the vol will continue to rise In English the annual high as of today will likely be shattered by the times earnings roll around in mid Apr But the stock has been going up so what s the happs Honesty I dunno But I thought it was interesting enough to write about at 10 22pm EST Finally let s look to the Options Tab below Across the top we can see the monthly vols are priced to 40 52 for Apr and 32 91 for May Although it seems like there is some ambiguity as to when earnings will be announced the option market reflects a date inside Apr expiry The 52 wk high in IV30 is the current level 38 89 with Apr already priced to 40 52 My best guess is we could see 50 IV30 in a couple of weeks not to mention Apr vol in and of itself IV30 is a weighted average of two months Disclosure This is trade analysis not a recommendation Images provided by Livevol |
WFC | Forex Aussie Drifts Weaker Despite Producer Price Gains Nonfarm Payrolls Ahead | Investing com The Aussie fell despite in Asia on Friday stronger than expected producer prices with markets focused on nonfarm payrolls data out of the US ahead
AUD USD traded at 0 8034 down 0 07 while USD JPY changed hands at 109 34 down 0 06 EUR USD fell 0 05 to 1 2508
Australia reported producer prices rose 0 6 on quarter and at a 1 7 pace on year both above expectations According to a Reuters survey of economists nonfarm payrolls probably rose by 180 000 jobs in January after increasing by 148 000 in December
The U S dollar index which measures the greenback s strength against a trade weighted basket of six major currencies was last quoted down 0 53 to 88 48
Overnight the dollar fell heavily against a basket of major currencies despite mostly upbeat economic data while a sharp rise in the euro added to downside momentum
The December ISM manufacturing PMI was reported at 59 1 beating economists forecasts for a reading of 58 8 new orders in December fell to reading of a 65 4 compared with 67 4 a month ago ISM prices paid index meanwhile was reported at a 72 7 beating expectations for a reading of 68 8
Despite some weakness in the ISM data market participants remained confident that the US economy would be able to continue its growth trajectory Wells Fargo NYSE WFC said that the ISM data showed backlogged orders and supplier delivery times grew during the month suggesting recent momentum should continue in the near term
The U S Department of Labor reported Thursday that initial jobless claims feel 1 000 to a seasonally adjusted 230 000 for the week ended Jan 27 beating forecasts of 238 000
The recent raft of bullish US economic data however has surprisingly not lead to reversal in the dollar as rival currencies such as euro continue to garner demand amid expectations that the European Central Bank is nearing the end of its quantitative easing program |
WFC | Fed orders Wells Fargo to halt growth over compliance issues | By Pete Schroeder and Lauren Tara LaCapra WASHINGTON NEW YORK Reuters Wells Fargo NYSE WFC Co detailed new regulatory restrictions imposed by the U S Federal Reserve on Friday that sent its shares down sharply in after hours trading as the third largest U S bank continues to reel from a sales scandal that erupted in 2016 Wells is not allowed to grow beyond the 1 95 trillion in assets it had at the end of last year until it sufficiently improves its governance and controls the Fed said in a statement Wells Fargo estimated that the cap will cut its annual profit by 300 million to 400 million this year as it reduces some parts of its balance sheet like corporate deposits and trading assets in order to continue growing core businesses That represents 1 5 to 1 9 percent of the profit Wells generated in 2017 The bank will also replace three board members by April and a fourth board member by the end of the year the Fed said without naming who they should be Wells Fargo shares fell 6 1 percent to 60 10 in after hours trading The Fed s consent order will have a manageable impact on profits and should not affect the bank s plans to return capital to shareholders this year Chief Executive Officer Tim Sloan said during a conference call with analysts on Friday evening We are in a very competitive business whether we have a consent order or not said Sloan Our marching orders to our team are go out and serve your customers fulfill our vision take deposits make loans We are open for business While Sloan said he takes the matter seriously he also characterized it as the latest step in a risk management and corporate governance overhaul that Wells Fargo began some time ago when it realized it had a serious problem with sales practices The bank reached a 190 million settlement with the Consumer Financial Protection Bureau the Office of the Comptroller of the Currency and a Los Angeles prosecutor in September 2016 over employees opening phony accounts in customers names without their permission to artificially hit internal targets The tally of fake accounts has since risen to as many as 3 5 million Regulators have rarely intervened directly in a bank s operations in the past and it is unprecedented for the Fed to order a bank to stop growing altogether officials said But Wells Fargo s aggressive business strategy prioritized growth over effective risk management leading to serious compliance breakdowns the central bank said Wells Fargo s balance sheet expanded steadily from the end of 2013 to 2016 but growth slowed dramatically last year as it battled to address the issues raised by the scandal The bank must submit a plan to the Fed within 60 days detailing how it has enhanced oversight from its board of directors and improved compliance and risk management functions and how it plans to improve further Once the Fed approves those plans Wells will hire third party consultants to review them and monitor its progress until the regulator is satisfied The San Francisco Fed and top regulatory officials in Washington will lead the review the central bank said We cannot tolerate pervasive and persistent misconduct at any bank said Chair Janet Yellen in a statement on her final day as leader of the central bank
Since the 2016 settlement Wells has taken steps to enhance oversight at the board level centralize risk management functions and install new executives to oversee key businesses and control functions Its board chair Betsy Duke is a former Fed governor and it recently hired Sarah Dahlgren a former New York Fed official as its head of regulatory relations |
WFC | Yellen Admits Disappointment Over Exit in Rare Interview | Bloomberg Federal Reserve Chair Janet Yellen professed her disappointment over not being tapped for a second term by President Donald Trump as she also predicted the central bank would keep on its path of gradual interest rate increases
I would have liked to serve an additional term and I did make that clear so I will say I was disappointed not to be reappointed she said Friday on PBS NewsHour in a rare television interview In her last day on the job Yellen added I feel great about the economy I think things are looking very strong
The Federal Reserve has been on a path of gradual rate increases and if conditions continue as they have been that process is likely to continue she said
In a break from past practice Trump opted not to nominate Yellen to a second four year term Instead he chose fellow Republican Jerome Powell to head the central bank Earlier on Friday the Brookings Institution announced Yellen 71 is joining the Washington based think tank to continue her economic studies and particularly her analysis of the labor market Powell is to be sworn in as chair on Monday February 5 at 9 a m
As perhaps her final act at the central bank Yellen late Friday hit one of the largest U S banks Wells Fargo NYSE WFC Co with an unusual ban on growth that follows the San Francisco based lender s pattern of consumer abuses and compliance lapses Regulators can t allow pervasive and persistent misconduct at any bank Yellen said in a statement
Labor Market Gains
Yellen said Friday that gains in the labor market had begun to benefit almost all groups in the American economy and that she expected the pace of wage growth to move up but perhaps not dramatically
Ultimately it s limited by productivity growth which is weak she said
During Yellen s four year term unemployment fell to 4 1 percent from 6 7 percent when she took office The January reading released oh Friday matched the lowest since 2000 and was below the level that most economists including those at the Fed reckon is equivalent to full employment
Inflation though has consistently fallen short of the Fed s 2 percent objective during Yellen s tenure and stood at 1 7 percent in December according to the Fed s favorite price gauge Yellen and her fellow policy makers said this week that they expect inflation to rise this year and to hit their target over the medium term
Notwithstanding this week s rout in the stock market investors have prospered during Yellen s time atop the central bank Since she took control in February 2014 the Dow Jones Industrial Average has risen by more than 65 percent
As Fed chair Yellen began the process of exiting from the extraordinary measures that the Fed put in place during the financial crisis and its aftermath gingerly lifting interest rates from near zero percent and slowly scaling back the central bank s big holdings of bonds
Yellen s exit marks the end of more than 15 years of public service in two stints at the central bank She first served as a governor under Chairman Alan Greenspan in 1994 to 1997 before chairing the White House Council of Economic Advisers from 1997 to 1999 during the Clinton administration She returned as president of the San Francisco Fed in 2004 became vice chair in 2010 and chair in 2014
Updates with Wells Fargo action from fifth paragraph |
WFC | Interest rate angst trips up U S equity bull market | By David Randall
NEW YORK Reuters For nearly nine years the global hunt for yield sent you to one place the U S stock market
On Friday stocks took their biggest pounding since September 2016 before U S President Donald Trump was elected after the U S government s monthly payrolls report showed the biggest wage gains for workers since 2009 That convinced investors the threat of inflation long tame since the 2007 2009 recession is growing larger sending bond yields soaring
With central banks having taken extraordinary measures to combat the financial crisis driving interest rates to record lows and making safe assets like U S Treasuries a scarcity investors of all stripes were forced to turn to equities
But when what had been a stealth increase in U S rates over several months suddenly broke out into the open in the last week investors were jolted awake to a new reality stocks are no longer the only solution for finding yield
One of the key mantras of the bull market has been stocks are inexpensive relative to bonds and bonds are getting cheaper especially at these highs said Michael O Rourke chief market strategist at JonesTrading in Greenwich Connecticut So people are taking profits and they probably should be
With the yield on the benchmark 10 year Treasury note on pace to top 3 5 percent this year for the first time since April of 2011 risk free bonds are becoming an increasingly attractive place for yield focused investors
At the current forward price earnings ratio of 18 2 according to Thomson Reuters proprietary research the S P 500 SPX index s earnings yield is 5 5 percent well below the historic norm of around 6 7 percent With bond yields rising across the spectrum the 5 5 cents of profit that underpins every 1 in share prices on average begins to look thin by comparison
We don t have a line in the sand but 10 year Treasuries near 3 percent are starting to look a lot more attractive said Mike Dowdall a portfolio manager with BMO Global Asset Management
That rise in yields prompted a broad sell off in stocks on Friday as investors reacted to data from the U S Labor Department showing wages last month recorded their largest annual gain in more than 8 1 2 years
Equities continued a five day downward trend with the S P 500 sliding more than 2 percent for its largest one day decline since September 2016 The Dow Jones Industrial Average DJI lost more than 2 5 percent nL2N1PS28O
Meanwhile a sell off in bonds that has gathered pace this year intensified with yields on 10 year Treasuries hitting a four year peak
That dynamic is putting pressure on areas of the market that had served as bond proxies As a result fund managers are rediscovering the risk of rising rates selling out of assets ranging from high yield junk bonds to utility stocks and pushing the broad S P 500 lower
Warning signs for equities have been long discussed as the market hit almost daily fresh highs On Friday Merrill Lynch s bull bear indicator which has accurately predicted 11 out of 11 U S stock market corrections since 2002 hit a sell signal
The rise in bond yields is certainly beginning to concern the markets said Nicholas Colas co founder at DataTrek Research in New York Rates have risen fairly quickly this year and the speed of the advance is worrying
The yield on the 10 year Treasury has risen to 2 84 percent from 2 46 percent at the start of the year the swiftest rise since November 2016
Earlier this week the Federal Reserve left rates unchanged but said it anticipated inflation likely would rise in 2018 bolstering expectations borrowing costs will continue to climb The Fed currently projects three rate hikes for this year
Stocks have so far proven largely immune to rising rates with the S P 500 jumping nearly 20 percent in 2017 Stocks have not fallen by 10 percent or more since the start of 2016 leaving recent declines as buying opportunities
A stock market correction could pose a political problem for President Donald Trump and his fellow Republicans ahead of congressional elections later this year Trump has trumpeted the sharp gains in U S equities since he took office as proof that his economic policies were working
SECTOR DECLINES
There already are signs investors are moving into actively managed stock funds in order to sidestep the impact of rising rates U S based active stock mutual funds which lost 7 2 billion in outflows as investors moved toward passive stock exchange traded funds ETFs attracted 2 4 billion in new assets during the week that ended Wednesday according to data from Lipper
At the same time the lowest end of the credit spectrum has been facing cash withdrawals as rising rates increase the cost of refinancing debt In the week ended Wednesday U S based high yield junk bond funds posted outflows of 1 8 billion their third consecutive week of cash withdrawals according to Lipper The four week moving average for the sector is negative 825 million the largest such figure since early December
Still some have piled in even as risks rose U S fund investors cashed out of cash funds and stocked up on stocks in the latest week Lipper data showed
Earlier in the week positioning data showed hedge funds and other big speculative investors to have their largest net long exposure to the S P 500 since September Weekly commitments of traders data released Friday by the Commodity Futures Trading Commission showed that as of Jan 30 so called noncommercial investors had modestly raised their net long positions for a third straight week
Stocks sensitive to rates are leading the market lower for the year Real estate stocks in the S P 500 are down 3 7 percent over the last month while utilities are down 4 6 percent over the same time
Consumer discretionary stocks which tend to outperform during periods of inflation due to rising wages are up 8 percent over the same time
Fund managers say they expect that other growth oriented sectors such as technology and financials will continue to outperform thanks in part to a pickup in inflation and the Republican led tax overhaul that slashed corporate rates
Overall 78 1 percent of companies in the S P 500 have reported fourth quarter earnings above analyst expectations compared with an average of 72 percent over the last year according to Thomson Reuters data
You re getting a pickup in economic growth and in wages so that makes the growth sectors still the place to be said Margaret Patel a senior portfolio manager at Wells Fargo NYSE WFC Funds who runs a portfolio of both equities and fixed income Even Treasury yields of 3 percent have never been an impediment to the stock market doing better |
WFC | Yellen Says Prices High for Stocks Commercial Real Estate | Bloomberg Outgoing Federal Reserve Chair Janet Yellen said U S stocks and commercial real estate prices are elevated but stopped short of saying those markets are in a bubble
Well I don t want to say too high But I do want to say high Yellen said on CBS s Sunday Morning in an interview recorded Friday as she prepared to leave the central bank Price earnings ratios are near the high end of their historical ranges
Commercial real estate prices are now quite high relative to rents Yellen said Now is that a bubble or is it too high And there it s very hard to tell But it is a source of some concern that asset valuations are so high
Yellen 71 stepped down as Fed chief on Saturday after one term after President Donald Trump opted to replace her with Republican Jerome Powell who s been a Fed governor since 2012
I made it clear that I would be willing to serve so yes I do feel a sense of disappointment about not being renominated Yellen said The only woman to serve as the head of the U S central bank described her work at the Fed as the core of my existence Yellen said she s supportive of former investment banker Powell 64 whom she termed thoughtful balanced and dedicated to public service
Greater Resilience
The financial system is now much better capitalized and the banking system more resilient than they were entering the global financial crisis a decade ago Yellen said
What we look at is if stock prices or asset prices more generally were to fall what would that mean for the economy as a whole Yellen said And I think our overall judgment is that if there were to be a decline in asset valuations it would not damage unduly the core of our financial system
Yellen s final act at the Fed was to hit one of the largest U S banks Wells Fargo NYSE WFC Co with an unusual ban on growth that follows the San Francisco based lender s pattern of consumer abuses and compliance lapses
In the interview that aired Sunday she warned that it would be a grave mistake to roll back the regulations put on banks after the previous economic collapse
The current U S economic expansion is now approaching nine years and is the third longest in duration since 1945 according to the National Bureau of Economic Research Yellen said the economy can continue to grow Yes it can keep going she said Recoveries don t die of old age
Updates with comment on economic expansion in final paragraph |
WFC | Buy These 5 Precious Metals Funds As Gold Hits 11 Week High | Gold prices touched the highest settlement in the last 11 weeks on Aug 21 Prices of the yellow metal also reached this year s best intraday high rising above 1300 an ounce on Friday Gold s rise was triggered by uncertainty in both domestic and global markets Tensions between the U S and North Korea were rekindled over the weekend which also heightened investors interest in safe havens such as precious metals Gold lost some of its luster in 2016 after a tumultuous 2015 but has managed to maintain its bull run this year With gold prices shining this looks like a good time to invest in mutual funds which have significant exposure to the precious metals sector Losses on Friday Despite Domestic Foreign Concerns Gold prices reached an intraday high level of 1 306 90 an ounce on Friday its best since last November following concerns over President Trump s administration and a terrorist attack in Barcelona The growing backlash against the President following his remarks on the Charlottesville incident has raised doubts over his abilities to implement his pro growth economic policies Also the departure of chief strategist Steve Bannon from the White House exposed a lot of difference in the Trump administration Additionally the terror attack in Barcelona during which 14 people were killed and about 130 were injured weighed on investor sentiment Tensions in domestic and global markets boosted gold prices during the day but gold lost 15 to settle at 1 291 60 an ounce on Friday from its intraday high Gold Rebounds on Monday to Strike 11 Week HighHowever rising geopolitical tensions between the U S and North Korea led gold prices to increase by 5 10 on Monday settling at 1 296 70 an ounce reaching an 11 week high level of 1 299 70 an ounce during the day Fresh concerns were raised with the start of joint military exercises between the U S and South Korea Officials from North Korea criticized this move terming it as reckless behavior and blamed Washington for heightening military tension in the Korean peninsula Further SPDR Gold Shares HK 2840 GLD NYSE GLD has increased 3 7 and 11 5 in the last six months and year to date YTD respectively According to Morningstar the precious metal mutual fund category has posted YTD and one month returns of 7 8 and 0 8 respectively 5 Precious Metals Mutual Funds to BuyWe have selected five precious metal mutual funds that boast a Zacks Mutual Fund Rank 1 Strong Buy or 2 Buy Moreover these funds have encouraging YTD returns These also have minimum initial investment within 5000 and low expense ratios We expect these funds to outperform their peers in the future Remember the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers Unlike most of the fund rating systems the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund Vanguard Precious Metals and Mining seeks growth of capital over the long term The fund invests heavily in stocks of both domestic and foreign companies whose primary operations concern precious metals including gold This non diversified fund may also invest around one fifth of its assets in gold silver and other precious metals coins and bullion VGPMX has YTD returnsof 11 8 and an expense ratio of 0 43 compared with the category average of 1 32 The fund has a Zacks Mutual Fund Rank 1 First Eagle Gold A seeks to derive returns by investing in gold SGGDX invests a large chunk of its assets in gold or securities of companies that operate within the gold industry including securities of gold operating and financing companies The fund may also invest to a lesser extent in other precious metals The First Eagle Gold A fund is non diversified SGGDX has YTD returnsof 10 4 and an expense ratio of 1 27 compared with the category average of 1 32 The fund has a Zacks Mutual Fund Rank 1 Oppenheimer Gold Special Minerals A invests primarily in common stocks of companies engaged in processing mining and dealing in gold gold bullion and precious metals based ETFs OPGSX invests not more than one fourth of its assets in the Oppenheimer Gold Special Minerals Fund Cayman Ltd The fund seeks growth of capital OPGSX has YTD returns of 13 6 and an expense ratio of 1 17 compared with the category average of 1 32 The fund has a Zacks Mutual Fund Rank 1 Fidelity Select Gold seeks appreciation of capital FSAGX normally invests a large part of assets in securities of companies which are engaged in various activities like exploration mining and processing of gold The fund may also invest nearly one fourth of its assets in various precious metals including gold through a wholly owned subsidiary FSAGX has YTD returns of 8 9 and an expense ratio of 0 84 compared with the category average of 1 32 The fund has a Zacks Mutual Fund Rank 2 Wells Fargo NYSE WFC Precious Metals A seeks capital growth for the long run by investing a bulk of its assets in stocks of companies involved in the precious metals business EKWAX may also invest in equity securities of foreign companies like ADRs The fund invests not more than 40 of its assets in equity securities of companies based in emerging markets EKWAX has YTD returns of 9 3 and an expense ratio of 1 09 compared with the category average of 1 32 The fund has a Zacks Mutual Fund Rank 2 Want key mutual fund info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
WFC | Missile Fears Lurking Seek Refuge In 5 Utility Mutual Funds | North Korea fired a ballistic missile over Japan on Aug 29 which crashed without causing harm in the Pacific Ocean Regardless Japan Prime Minister Shinzo Abe termed North Korea s action as a grave and careless threat to the country Following this development Asian shares plummeted and U S futures moved southward The sell off that followed had investors scurrying for safe haven sectors which emerged as the investments of choice One of the more popular safe haven sectors is utilities This sector comprises of companies that provide telephone gas water and electricity services In this context investors looking for stable dividend and interest income can opt to invest in utilities mutual funds North Korea s Missile Launch Rattle MarketPrime Minister Shinzo Abe said North Korea s missile launch represented an unprecedented serious and grave threat to Japan He added that during a 40 minute long telephonic conversation President Trump had told him that the U S will stand with Japan 100 Subsequently while speaking about the missile launch President Trump stated that all options are on the table Following the news of the missile launch investors shifted their focus to safe haven investments which weighed on Asian equity markets Japan s benchmark Nikkei 225 index fell 0 5 or 87 35 points to close at 19 362 55 on Aug 29 Meanwhile U S stock futures traded lower with Dow Jones Industrial Average futures losing more than 100 points in premarket trading Ultimately of course all the key indexes managed to end in the green at the close shrugging off early blues But the specter of a North Korea centric conflict remains Why Buy Utilities Funds In the safe haven sectors utilities could be good investments as these produce solid income for their investors Traditionally this segment offers protection against a downward trending market or when there is world strife that will impact the economy globally Investors with a conservative mindset looking for stable current income would do well to consider utility funds They are used as defensive instruments which protect investments during a market downturn This is because demand for essential services such as those provided by utilities remains unchanged even during difficult times Moreover most of the utilities maintain a high level of monopoly across their geographic markets This in turn helps these companies retain their profitability and continued existence Constant demand for utilities related services ensures long term sustainability for utilities mutual funds Buy These 5 Utilities Mutual FundsAs discussed above recent geopolitical tensions shifted investors attention toward safe haven investments like utilities mutual funds This is borne out by the fact that Utilities Select Sector SPDR Fund XLU has gained 6 5 in the last six months emerging as the second best performing sector among the S P 500 sectors XLU s performance was also better than the S P 500 s increase of 2 7 during the same period Additionally mutual funds related to this sector registered strong returns recently According to Morningstar utilities mutual funds have registered three month and year to date YTD returns of 4 1 and 14 7 respectively Banking on this encouraging backdrop we have selected five utilities mutual funds that flaunt a Zacks Mutual Fund Rank 1 Strong Buy or 2 Buy Moreover these funds have encouraging YTD returns These also have minimum initial investment within 5000 and low expense ratios We expect these funds to outperform their peers in the future Remember the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers Unlike most of the fund rating systems the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund Fidelity Select Utilities Growth normally invests the lion s share of assets in common stocks of companies mainly involved in the utilities sector and companies that generate a bulk of their revenue from multiple utilities operations FSUTX seeks growth of capital FSUTX invests both in U S and non U S companies FSUTX has YTD returns of 20 and an expense ratio of 0 78 compared with the category average of 1 25 The fund has a Zacks Mutual Fund Rank 1 American Century Utilities Fund Investor invests a major portion of its assets in equity securities of companies engaged in the utilities sector BULIX seeks appreciation of income and capital for the long run The fund managers generally use qualitative and quantitative management techniques BULIX has YTD returns of 4 and an expense ratio of 0 67 compared with the category average of 1 25 The fund has a Zacks Mutual Fund Rank 2 Wells Fargo NYSE WFC Utility and Telecommunications A invests heavily in common and preferred stocks and investment grade debt securities of utilities and telecom companies EVUAX also invests around 35 of its assets in convertible debentures of utilities and telecom companies This non diversified fund seeks returns through growth of income and capital EVUAX has YTD returns of 15 4 and an expense ratio of 1 14 compared with the category average of 1 25 The fund has a Zacks Mutual Fund Rank 2 Franklin Utilities C invests the lion s share of its assets in the securities of public utilities companies which are involved in providing water natural gas communication and electricity services FRUSX seeks growth of capital and income The fund invests at least one fourth of its total assets in companies based in the utilities sector FRUSX has YTD returns of 13 8 and an expense ratio of 1 23 compared with the category average of 1 25 The fund has a Zacks Mutual Fund Rank 2 Invesco Dividend Income A seeks current income as well as capital growth for the long run IAUTX invests a large part of its assets in equity securities which have high dividend paying abilities The fund also invests not more than one fourth of its assets in foreign securities IAUTX has strong holdings in utilities sector IAUTX has YTD returns of 3 7 and an expense ratio of 1 03 compared with the category average of 1 07 The fund has a Zacks Mutual Fund Rank 2 Want key mutual fund info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
WFC | Cramer Dubs Wells Fargo A Rogue Bank After New Fake Accounts Discovered | After a deeper investigation into its fraudulent sales scheme Wells Fargo NYSE WFC revealed that it discovered up to 1 4 million more fake accounts than it previously estimated leading famous Wall Street commentator Jim Cramer to declare the company a rogue bank
Wells Fargo just announced this new twist in its phony account scandal which began after the allegations surfaced nearly a year ago and now it looks like the extent of the bank s fraud was significantly greater than anyone expected
The company said it has now found a total of 3 5 million potentially fake bank and credit card accounts up from the previous total of about 2 1 million The newly discovered accounts were found during an analysis that searched back to January 2009 and reviewed the original suspect period from May 2011 to mid 2015
On top of this Wells Fargo said that it discovered a brand new issue as more than 500 000 people were found to be enrolled in online bill pay without their consent These new revelations are causing a deserved uproar around the markets on Thursday
It s not embarrassing it s rogue This is a rogue bank said s Jim Cramer They thought they got to the bottom of it but they left out a million accounts That does not seem like the bottom of this This is so outrageous
Cramer also called on members of Congress to continue investigating the company Earlier this year Sen Elizabeth Warren called for the ouster of 12 Wells Fargo board members
Meanwhile billionaire investor Warren Buffett took to the airwaves to defend the bank What you find is there s never just one cockroach in the kitchen when you start looking around the CEO of Berkshire Hathaway NYSE BRKa BRK B told Berkshire is Wells Fargo s largest shareholder
Shares of the bank were down nearly 0 7 through early morning trading hours Thursday The stock has now lost about 5 5 over the last month bringing its year to date slump to nearly 7 As for now Wells Fargo remains a Zacks Rank 3 Hold
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WFC | Wells Fargo s Weak Technicals Where s The Bid | Wells Fargo NYSE WFC has been declining for quite some time The company was caught in a bogus account scandal that has resulted in numerous fines and congressional investigations These problems are still lingering but history suggests that WFC will resolve these issues eventually
Recently the stock topped out on June 29 at 56 60 a share Since that high pivot the price has declined to 50 97 The stock is also trading below its important 50 and 200 day moving averages putting the stock in a weak technical position Traders and investors should watch the 46 00 area as the next major support level as it s an area that was defended in November 2016 Often past support levels are defended when retested
And that s where the stock should catch a bid |
CMCSA | Comcast results beat forecasts on broadband growth Cats hits NBC Universal unit | By Helen Coster and Neha Malara Reuters Comcast Corp O CSA on Thursday beat Wall Street s revenue and profit estimates due to growth in broadband customers but the company lost more cable TV subscribers than Wall Street expected and its NBC Universal unit revenues were hurt as the film Cats bombed at the box office Management said on the earnings call that it expected accelerating cable TV subscriber declines which helped push the stock down 1 3 Other media company shares were also down With the rate adjustments that we are implementing in 2020 as well as the ongoing changes in consumer behavior we expect higher video subscriber losses this year said Chief Financial Officer Michael Cavanagh Pay TV companies have been raising rates instead of trying to hang on to bargain chasers who are cutting cable service In the fourth quarter Comcast lost 149 000 video customers more than a loss of 139 000 estimated by research firm FactSet but fewer than the 238 000 video customers it lost in the third quarter The company has been vocal about its effort to chase broadband customers to offset cord cutting as viewers who stream TV and film require a broadband connection to do so It gained 442 000 broadband subscribers in the quarter beating analysts average estimate of 378 000 net additions according to FactSet Revenue from that business grew 8 8 to 4 79 billion Comcast will enter the streaming video war on April 15 when it launches its advertising supported Peacock streaming service to Comcast customers followed by a launch across the United States on July 15 The company reported fourth quarter revenue of 28 4 billion beating the Wall Street consensus estimate of 28 17 billion according to IBES data from Refinitiv Revenue growth was aided by British pay TV group Sky which the company acquired for 39 billion in 2018 The business generated fourth quarter revenue of 5 04 billion beating the average estimate of 4 82 billion For the fourth quarter Comcast s NBCUniversal segment which includes NBC Entertainment and Universal Pictures reported revenue of 9 15 billion down 2 6 from a year earlier Revenue at the filmed entertainment unit fell 21 from the same quarter a year earlier Net income attributable to Comcast rose to 3 16 billion or 68 cents per share from 2 51 billion or 55 cents per share a year earlier Excluding items the company earned 79 cents per share Analysts on average had estimated the company to earn 76 cents
Comcast increased its dividend by 10 to 0 92 per share on an annualized basis for 2020 |
CMCSA | Comcast takes aim at CNN with NBC Sky global news channel FT | Reuters Comcast s O CMCSA NBC and Sky will jointly launch a global news channel taking aim at CNN the Financial Times reported on Thursday
The channel NBC Sky World News will unite Comcast s transatlantic brands the report said
NBC Sky World News would draw on a 3 500 strong combined workforce of NBC and Sky news and hire 100 200 dedicated staff over time the report added citing Andy Lack chairman of NBC News
Ten new bureaus will be opened worldwide extending the NBC Sky reporting footprint by about 50 On launch the television channel will reach 130 million households according to the report
Comcast did not immediately respond to a Reuters request for comment |
CMCSA | Comcast Corporation CMCSA Q4 2019 Earnings Call Transcript | Comcast Corporation NASDAQ CMCSA Q4 2019 Earnings CallJan 23 2020 8 30 a m ETContents
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks
OperatorGood morning ladies and gentlemen and welcome to Comcast s Fourth Quarter and Full Year 2019 Earnings Conference Call Operator Instructions I will now turn the call over to Senior Vice President Investor Relations and Finance Mr Jason Armstrong Please go ahead Mr Armstrong Jason S Armstrong Senior Vice President Investor Relations and FinanceThank you operator and welcome everyone Joining me on this morning s call are Brian Roberts Mike Cavanagh Steve Burke Dave Watson and Jeremy Darroch Brian and Mike will make formal remarks and Steve Dave and Jeremy will also be available for Q A As always let me now refer you to Slide number 2 which contains our Safe Harbor disclaimer and remind you that this conference call may include forward looking statements subject to certain risks and uncertainties In addition in this call we will refer to certain non GAAP financial measures Please refer to our 8 K and trending schedules for the reconciliations of non GAAP financial measures to GAAP With that let me turn the call over to Brian Roberts for his comments Brian Brian L Roberts Chairman and Chief Executive OfficerGood morning everyone Before we get to the results I d like to embarrass my friend Jason Armstrong just for a moment and thank you for your incredible hard work these past six years as Head of Investor Relations And on behalf of everyone at Comcast and I believe all the investors say thanks for a great run and we wish you terrific success in your new role as Group Chief Financial Officer of Sky Also I d like to welcome Marci Ryvicker who s joining to take over Investor Relations Marci has got a talented and successful past and welcome to Comcast 2019 was a busy productive and exciting year for our company capped off by a strong fourth quarter And we ve already jumped right into 2020 with the debut of our exciting new streaming service Peacock As you heard last week it s a truly differentiated approach to streaming that leverages capabilities from all across our company As we look to the future I am confident that the company we have built has all the necessary components to succeed And our guiding principles remain the same be leaders in our markets continuously improve our products and experiences and build deep highly valuable recurring customer relationships Our world class teams are executing and operating at a high level all of which allows us to invest in our businesses and deliver consistent results The success of our strategy is demonstrated in our consolidated financial performance We delivered another year of terrific results with growth in pro forma EBITDA of 5 9 record free cash flow generation of 13 4 billion growth in adjusted EPS of 14 7 the 10th year of double digit growth in the last 11 years These results were driven by Cable as the team s successful pivot to a connectivity centric strategy and investment in xFi continue to pay off Cable delivered broadband net additions of 1 4 million the best in the last 12 years finishing off with an exceptional fourth quarter which included 442 000 net additions a 26 increase over the prior year In addition we continue to reap the benefits from our ongoing investments to improve the customer experience setting all time bests for many key metrics including agent contact rate and first call resolution We are increasing customer satisfaction and driving unnecessary costs out of the business All in this drove 1 1 million net customer relationship additions in 2019 our best year on record as well as outstanding EBITDA growth of 7 3 and net cash flow growth of 18 for the full year Thank you Dave Watson and your incredible team You re doing a phenomenal job At NBC our content continues to resonate with consumers We were the most watched media company in the US in 2019 NBC ended the 52 week season at Number 1 in the key demo for the sixth consecutive year and Telemundo was Number 1 for the third straight year in weekday prime Our film business grew EBITDA by double digits to 833 million making it the third most profitable year in Universal s history providing further evidence that our strategic slate approach is working At Theme Parks we had a challenging fourth quarter But overall it was a solid year during a particularly competitive period and we are looking forward to new attractions and parks to drive growth in the coming years In its first full year as part of Comcast despite difficult European market conditions Sky had a good year under Jeremy Darroch and his team delivering healthy customer additions and 12 EBITDA growth on a constant currency basis Our exclusive sports and award winning original content are resonating with our customers in Europe with viewership up year over year Sky has been a great addition to Comcast and positions us to better compete in a world where global scale matters As I mentioned at the outset we have all the pieces in place for long term success True to our guiding principles in 2020 we are leaning into investments that further improve our products and experiences across the Company First we ll continue to strengthen our already leading position in broadband At Cable we are launching our fastest gateway delivering true multi gig speeds with unprecedented Wi Fi range And we re providing our customers with added protection by offering new features like xFi Advanced Security for free At SKY we are building on our success in broadband in the UK and Cable s continued success with xFi in the US to launch broadband in Italy this year Second we will focus on the emerging growth areas of streaming and content aggregation by launching Peacock and accelerating our deployment of Flex and Sky Q Consumers are watching more and more video driven by growth in streaming And as we highlighted last week we believe that Peacock a premium ad supported service hits the mark for both consumers and advertisers In this app driven world consumers increasingly are overwhelmed by content fragmentation and endless scrolling So with X1 and Sky Q we enable our customers to aggregate all their apps and linear channels under TV and seamlessly search access and view all their content At Cable we leveraged X1 to launch our newest service Flex to better serve the segment of our broadband customers that prefer streaming only Our early results with Flex show that our customers love it In our first month we could not keep enough inventory in stock and we re deploying Flex as fast as we can Based on the proven success we had with X1 in the United States at Sky we are now accelerating the deployment of Sky Q getting to X1 like penetration levels as quickly as possible This is good for our customers and generates very attractive financial returns Finally we have some exciting new investments in our park business This year we will open Super Nintendo World in Japan with launches in the US to follow in the coming years Super Nintendo World combines one of a kind ride technology with iconic IP for a remarkable guest experience And we believe it has the potential to drive substantial incremental attendance at Universal Studios Japan On top of that we are also investing for long term growth with two amazing brand new parks We ll open in Beijing in 2021 the largest park we have ever built and have started construction on Universal s Epic Universe a new world class park in Orlando opening in 2023 The parks business is set up for growth for years to come The scale capabilities and talent across our company enable us to successfully execute our long term growth strategy while also strengthening our balance sheet and returning capital to shareholders Earlier this morning we announced that we are raising our dividend by 0 08 for 2020 up 10 over the prior year and our 12th consecutive annual increase Before I hand the call over to Mike I want to take a moment to personally recognized Steve Burke whose contributions have been instrumental in shaping not only my career but the company that we are today It s impossible for me to overstate what a terrific partner Steve has been His leadership first to Comcast Cable and later to NBCUniversal have been a critical component of our company s growth and success And maybe even more significantly his impact on our culture and personal integrity have been truly defining Steve has built a great team at NBCUniversal led by Jeff Shell and I know we are in good hands going forward Thank you Steve Mike over to you Michael J Cavanagh Senior Executive Vice President and Chief Financial OfficerThanks Brian and good morning everyone I ll begin by reviewing our consolidated results on Slides 4 and 5 As a reminder we completed our acquisition of Sky in the fourth quarter of 2018 Our reported results include Sky from the acquisition date while pro forma results are as if the Sky transaction had occurred on January 1 2017 Revenue increased 2 to 28 4 billion on a reported basis and was consistent with the prior year on a pro forma basis for the fourth quarter For the full year revenue increased 15 to 108 9 billion on a reported basis and was consistent with the prior year on a pro forma basis Adjusted EBITDA increased 3 to 8 4 billion on a reported basis and 2 1 on a pro forma basis for the fourth quarter and increased 14 to 34 3 billion on a reported basis and 5 9 on a pro forma basis for the full year Adjusted earnings per share increased 9 7 to 0 79 for the quarter and 15 to 3 13 for the year Finally free cash flow was 2 5 billion in the quarter and 13 4 billion for the full year Now let s turn to our segment results starting with Cable Communications on Slide 6 For the full year Cable revenue increased 3 7 EBITDA increased 7 3 and net cash flow increased 18 Total customer relationships grew by 1 1 million to 31 5 million an increase of 3 7 year over year On a per relationship basis EBITDA grew 3 5 and net cash flow grew 14 For the fourth quarter Cable revenue increased 2 6 to 14 8 billion EBITDA increased 5 4 to 5 9 billion and net cash flow increased 13 to 3 3 billion We generated 372 000 customer relationship net additions in the quarter a record for any quarter These results reflect our commitment to innovation execution and driving profitable growth including our continued focus on our high margin connectivity businesses residential high speed Internet and business services Together residential and business services generated 442 000 broadband customer net additions in the quarter and 1 4 million net additions for the full year In fact on the residential side of the business high speed Internet revenue was the largest contributor to year over year growth at Cable growing 8 8 in the fourth quarter and 9 4 for the full year We believe that our consistent and ongoing investment to extend our leadership in broadband through speed coverage control and now streaming as well as through security and privacy is unique among our competitors and across the industry We will continue to benefit from the growth in the overall market for broadband and we are taking share with a superior product On the business services side revenue increased 8 8 to 2 billion in the fourth quarter driven by a 4 1 increase in business customers year over year and a 4 3 increase in revenue per business customer as we ve added new products including WiFi Pro and Security Edge We ended the year at nearly 8 billion in business services revenue with an addressable market just in our footprint of approximately 50 billion There is no shortage of new customers or additional revenue for us to capture in this margin accretive growth business In 2020 we expect to deliver another year of well over 2 billion in highly margin accretive revenue growth in residential broadband and business services on top of the 26 5 billion in revenue that we generated from these businesses in 2019 Turning to video video is still valuable for us to attach to our broadband centric customer relationships but only to the extent that it helps us increase the lifetime value of those relationships We ve consistently said that there is a segment of the market that either doesn t value a traditional pay TV service or isn t profitable for us to serve We re not chasing this segment of the market and we saw fewer new connects with these customers With the rate adjustments that we are implementing in 2020 as well as the ongoing changes in consumer behavior we expect higher video subscriber losses this year Within this environment our X1 platform enables us to compete well for customers who want the most content and a premium experience including their favorite streaming apps And now with Flex we re able to better serve the customer segment that prefers to stream over the top and we are prioritizing Flex as a key initiative in 2020 Moving on to our wireless business we continue to be happy with what we re seeing with Xfinity Mobile and its positive impact on the Cable business We launched Xfinity Mobile 2 5 years ago and we ended 2019 with more than 2 million lines including the 261 000 net adds in the fourth quarter We are pleased with the acceleration in net adds in the fourth quarter and we expect this momentum to continue in 2020 Our results to date indicate that adding mobile improves broadband customer retention and increases prospective customers consideration And importantly we continue to see a significant improvement in the financial performance at Xfinity Mobile We reduced our quarterly adjusted EBITDA losses at Xfinity Mobile to 116 million a 40 improvement compared to last year s fourth quarter And we expect Xfinity Mobile to be EBITDA positive for the full year in 2021 And finally advertising revenue in the quarter decreased 19 1 due to a comparison to record political spending in the prior year period Excluding political advertising revenue in the fourth quarter was consistent with the same period last year Moving now to Cable expense and margin on Slide 7 Total Cable expenses in the fourth quarter were relatively consistent with the prior year despite a record growth in customer relationships as we continued to benefit from cost management our connectivity centric strategy and a lack of programming renewals On a per customer relationship basis non programming opex decreased 1 9 compared to the same period last year We re clearly seeing the benefits of our ongoing focus on operational improvements as we continue to make progress in providing a better overall experience and eliminating unnecessary activity and transactions including through digital service tools On a full year basis non programming opex per relationship improved by 2 and we expect continued improvement in 2020 Cable EBITDA margins were 39 8 in the fourth quarter of 2019 up 100 basis points year over year and 40 1 for the full year up 140 basis points For 2020 we expect higher programming expense growth due to a number of contracts scheduled for renewal during the year with the increase in expense back half weighted Despite this we expect to improve Cable EBITDA margin by up to 50 basis points for the full year benefiting from growth in our high margin connectivity businesses continued operational improvements better performance at Xfinity Mobile as well as higher political advertising revenue We re also pleased with the efficiency of and returns on our Cable capital expenditure Capex decreased 10 5 to 6 9 billion for the full year resulting in capex intensity of 11 9 190 basis points of year over year improvement Looking ahead we ll continue to invest in the business to extend our leading market position However based on the size and consistency of our past investment and our leading scale we can continue to improve our capital intensity In 2020 we expect approximately 50 basis points of year over year improvement reflecting continued decreases in video centric CPE spending partially offset by an increase in the level of investment in our network consistent with the broader shift in our business toward connectivity These are demand driven and success based investments and we re happy to make them In summary we feel great about Cable s results in 2019 and we re confident that the business will continue to deliver healthy growth in 2020 Now I ll turn to NBCUniversal s results on Slide 8 NBCUniversal s revenue declined 2 6 to 9 2 billion and EBITDA declined 4 7 to 2 billion in the quarter Cable Networks revenue increased 1 2 to 2 9 billion and EBITDA declined 1 4 to 1 billion in the fourth quarter as solid growth in advertising and content licensing and other revenue was more than offset by higher programming and production costs and subscriber declines Advertising revenue increased 2 benefiting from the timing of returning series Golf Presidents Cup and improved MSNBC performance Content licensing and other revenue increased 3 4 reflecting continued timing related licensing comparisons to last year which was more than offset by the performance of some of our digital businesses Distribution revenue was flat year over year as the ongoing benefits of previous renewal agreements were largely offset by subscriber losses that modestly accelerated in the quarter Against the backdrop of continued subscriber declines it will be tough to grow affiliate revenue until our next round of renewals starting in 2021 Overall higher revenue in the quarter was more than offset by increased expenses primarily driven by the timing of programming and a couple of new sports contracts that will continue to impact our first half 2020 result Broadcast revenue increased 2 1 to 3 2 billion and EBITDA increased 14 to 471 million driven by growth in retrans and content licensing partially offset by lower advertising revenue Advertising revenue declined 1 5 largely reflecting a difficult comparison to record political advertising last year Adjusting for this comparison advertising would have been up low single digits reflecting strong NFL results and the benefits of higher upfront pricing partially offset by ratings declines Retrans increased over 10 to nearly 500 million bringing the full year total to 2 billion up about 15 compared to 2018 Content licensing increased 5 8 reflecting the delivery of content under our existing licensing agreements as well as new licensing deals Last we expect to benefit from a profitable Tokyo Olympics this summer and anticipate robust political advertising in the back half of the year Turning to film revenue declined 21 to 1 6 billion and EBITDA declined by 88 million to 91 million reflecting a tough comparison to the size and timing of our slate in the fourth quarter of 2018 which included the successful releases of Grinch and Halloween Overall we had a great year in film highlighted by key franchise animated hits including DreamWorks How to Train Your Dragon The Hidden World and Secret Life of Pets 2 the summer spin off of our tent pole Fast and Furious franchise Hobbs Shaw successful original movies such as Glass and Us as well as Downton Abbey which was Focus Features top title of all time For the full year film EBITDA increased 14 to 833 million Looking ahead to 2020 we are excited about our film business and outlook for growth underscored by a continuation of our strategic slate strategy Keep in mind the first quarter will have a tough comparison to the release of How to Train Your Dragon but we have several exciting films opening later this year including more animated franchise titles with Trolls World Tour this spring Minions 2 this summer and Croods 2 at the end of the year along with another summer installment in the Fast and Furious franchise Wrapping up the TV and film segments we are confident and optimistic in our ability to continue monetizing our vast portfolio of new and existing premium content As we ve said before we will sponsor a broad and varied distribution environment by continuing to license to third parties when it makes sense and NBCUniversal would benefit from selling to new buyers of content including our very own Peacock As we discussed at our investor event last week we believe that Peacock will be a fantastic product for consumers and advertisers alike and a new channel to better monetize our content Theme Parks revenue increased 3 2 to 1 6 billion and EBITDA declined 4 5 to 636 million reflecting steady results at our domestic parks offset by some softness at our Japan park Looking ahead we remain confident in our outlook for growth in the parks business which will benefit from our robust pipeline of new attractions At our domestic parks we ll have a new Jason Bourne themed live action stunt show and over 2 000 hotel rooms coming online in Orlando this year as well as a Secret Life of Pets themed ride in Hollywood And we re especially excited for the opening of Super Nintendo World at Universal Studios in Japan which will be open and ready during the summer coinciding nicely with the Tokyo Olympics Pre opening expenses for this new land in Japan will weigh on results in the first half of 2020 but we expect Super Nintendo World to be a meaningful driver of our parks results in the second half We re also looking forward to the opening of our park in Beijing in 2021 which will be a major milestone for us And we ll see some pre opening expenses throughout this year Even longer term we re excited for Epic Universe which will transform our already successful Orlando park Now let s move on to Sky results on Slide 9 As a reminder I will be referring to our pro forma results as if the Sky transaction has occurred on January 1 2017 and growth rates on a constant currency basis consistent with what s reflected in our earnings release Sky revenue increased 1 4 to 5 billion as growth in direct to consumer and content revenue was offset by lower advertising Overall macro headwinds have persisted but Sky continues to perform well in a challenging environment Direct to consumer revenue increased by 2 3 to 4 billion driven by growth in customer relationships Sky added 77 000 customers during the quarter ending the year with 24 million total customer relationships and average revenue per customer remained stable As expected we delivered improvement in net adds compared to the third quarter Sky delivered customer growth in all three territories in the fourth quarter and continued to make good progress in growing key products including broadband and mobile Content revenue grew by 2 7 to 371 million with growth driven by the wholesaling of programming Importantly viewership on Sky channels was impressive In the fourth quarter total viewership on Sky s branded channels was up 5 while total TV viewership on non Sky channels was flat Viewership across Sky Sports channels was up 8 driven by the performance of Formula One in Italy and the Premier League in the UK On advertising the market remained soft across all of our territories reflecting continued macro weakness as well as the impact of a change in legislation related to gambling advertising in the UK and Italy which began impacting our results in 3Q 19 Against this backdrop advertising revenue in the quarter declined by 4 1 to 647 million Sky s fourth quarter EBITDA of 765 million was consistent with the prior year as revenue growth was offset by higher costs in part driven by our efforts to accelerate the deployment of Sky Q In 2020 we ll continue the accelerated deployment and we are coming out of the gate quickly As a reminder like X1 Sky Q enables the aggregation of streaming apps and other advanced features functionality that s not available on our legacy platform Our Sky Q customers have higher viewership better retention levels better product attachment and higher ARPU and therefore we want more of our customers to have it and quickly We re pleased with the progress Sky is making by delivering growth in customer relationships and creating award winning popular content We expect these tailwinds to continue in 2020 but keep in mind we also expect our results will continue to be impacted by the challenging macroeconomic environment and changes in gambling legislation All in before the few hundred Phonetic million dollars of investment we ve previously outlined for Sky Q and broadband in Italy and using today s foreign exchange rates we expect Sky s 2020 EBITDA to be consistent with our reported 2019 results I ll wrap up with free cash flow and capital allocation on Slide 10 We generated record 13 4 billion in free cash flow and paid 3 7 billion in dividends to our shareholders in 2019 We also made great progress in deleveraging ending the year at 2 8 times net leverage down from 3 3 times at the end of 2018 Deleveraging will remain a top focus for us in 2020 which we will balance with the key investment priorities we have outlined across Cable NBCUniversal and Sky On return of capital as Brian mentioned we raised our dividend by 0 08 to 0 92 a share a 10 increase marking our 12th consecutive annual increase And in 2021 we expect that we will be well positioned to resume share repurchases In summary 2019 was another fantastic year for Comcast and the fundamentals of our business remain strong We feel good about our outlook for 2020 and expect our overall performance to accelerate through the year Jason over to you Jason S Armstrong Senior Vice President Investor Relations and FinanceThanks Mike Let s open up the call for Q A please Questions and Answers Operator Operator Instructions Our first question comes from the line of Ben Swinburne with Morgan Stanley Please go ahead Ben Swinburne Morgan Stanley AnalystThanks Good morning Two questions Brian you mentioned in your prepared remarks sort of the benefits of global scale across the Company and I think there s certainly a debate in the market about that a bit So I was curious if you could sort of touch on it in two ways One how does this scale allow Comcast to grow faster over time Obviously we ve seen some very strong results across the Company recently but I d love to get more thoughts from you on how that plays out And secondly how do you assess sort of the optimal level of scale I m sure there s a lot of interest from shareholders about where you think about future acquisition opportunities or how you think about deploying capital longer term And then when you think about that Mike you mentioned some comments about free cash flow at a conference last year Comcast delivers pretty consistent double digit earnings growth and you ve raised the dividend consistently double digits Should free cash flow over time generally follow earnings and the overall dividend growth Because obviously you guys are in a pretty heavy investment year this year and I think people are obviously interested in the free cash flow profile over time Thank you both Brian L Roberts Chairman and Chief Executive OfficerWell let me begin thank you Ben I do think we have consistent growth across all parts of the business Sky was a unique asset and I don t want to look backwards more than just for a moment here to your question And I think it happened I m really thrilled we bought it I feel better about that decision today The nature of our company we displayed the great technical team at the Peacock Day the ability for Cable to help with broadband Jason going over to be CFO the gentleman running Germany Devesh was our Head of Strategy It s we re a better company And it s there is it s a longer conversation happy to have it But I think the essence of your question if I might might be well do you feel you have to go to other countries and what are you thinking about And one of the points we tried to make throughout this year is that if you take the four countries US plus the three principal UK Germany and Italy where Sky principally operates that represents 50 of the world s broadband and video revenues and that s pretty extraordinary So our strategy with now 60 million or 55 million or so relationships and growing those relationships and we had a great year in growing customer relationships with a terrific ARPU north of 100 these are exceptional opportunities So I don t want to say we won t look at other things and consider other things but it s there was nothing quite like Sky was unique Mike Michael J Cavanagh Senior Executive Vice President and Chief Financial OfficerSo Ben on free cash flow it s certainly our stated objective and belief that we can healthy get healthy growth of free cash flow over the long term I ve said that before the recent conference and continue to believe that s the case We don t focus on it in the near term And this year coming up obviously we talked about the many investments in organic growth that will benefit that long term free cash flow growth trajectory So we ll have that pressure in some Olympics working capital in 2020 But the dividend increase is absolutely an indication that we feel very confident in the long term growth trajectory of free cash flow Ben Swinburne Morgan Stanley AnalystThank you both Jason S Armstrong Senior Vice President Investor Relations and FinanceThanks Ben Next question please OperatorYour next question comes from the line of Doug Mitchelson with Credit Suisse Please go ahead Doug Mitchelson Credit Suisse AnalystThank you so much I wanted to focus on streaming so both Flex and Peacock For Mike or Dave with Mike you talked about prioritizing Flex in 2020 Sort of what specifically does that mean And for you both what s your vision as to what that service will look like in a few years And I guess I m thinking not just everything that you bring to bear but also third party apps and how they re authenticated integrated into Flex as well And then for Steve on Peacock I think the Peacock Analyst Day was well received but I m getting the question a lot as to what the difference will be between the premium and free tiers And I m also getting the question that if it s free what would the friction be signing up other distributors other than Cox Phonetic Thank you all David N Watson President and Chief Executive Officer Comcast Cable CommunicationsHey Doug this is Dave So let me start with Flex And I think Flex shows and in particular the Flex and Peacock combination just shows how uniquely positioned we are for streaming And Flex is a natural extension of two things our broadband innovation and also the fact that we ve been investing steadily in X1 So we re Flex is going to help fuel broadband over time comes with it s free as Brian has said And we ll continue to innovate around broadband So you look at what s coming up and we have tons of apps that are available right now We re pleased with the road map ahead good progress coming up for Flex in terms of content Hulu We ve talked about CBS All Access We ll be the first to do that But in particular we re really excited about the prospects of Flex and Peacock together So that is I think a real opportunity In addition down the road of course the main consideration is broadband growth with Flex But I think it opens up other opportunities whether it s app participation or and or advertising It s a great long term platform for us Brian L Roberts Chairman and Chief Executive OfficerSo if you include Dave s broadband business plus Flex and Peacock I think our company is better positioned as the world moves to streaming than any other company in the world And I think you could argue in the next 10 or 20 years if you look at all those three businesses combined we could make more money in streaming than anyone else by a lot If you then move to Peacock the idea behind Peacock and Matt Strauss mentioned Spotify it s a little bit like Spotify We have an entry level of Peacock which is about 7 500 hours which is completely free for anyone We then have a 15 000 hour version of Peacock that costs 5 if you re not a member of a participating cable or satellite company that provides multi channel video That universe is still about 80 So 80 of the people in America I think eventually are going to be able to get that 5 product for free As to your question about other cable companies and satellite companies it s such a great value to be able to give all of your customers a product that s 5 a month in value or 60 a year for free that I think eventually we will get the vast majority if not all of cable and satellite It will take some time And a lot of times the Peacock discussion will be tied to the ongoing MVPD discussion and we have a lot of big deals up in this year But I think by the end of this year you re going to see the 5 Peacock product be offered for free to a lot of cable and satellite customers Doug Mitchelson Credit Suisse AnalystThank you both Jason S Armstrong Senior Vice President Investor Relations and FinanceThank you Doug Next question please OperatorYour next question comes from the line of Jessica Ehrlich with Bank of America Please go ahead Jessica Ehrlich Bank of America Merrill Lynch AnalystThanks I have I guess three questions for the three divisions On Peacock can you talk a little bit about how you see what will the impact be on your legacy businesses including TV stations cable networks and I guess other Comcast businesses Going back to Flex it s such an interesting product You re keeping customers engaged on the Comcast platform Can you talk about a little bit more detail about what the benefits would be for it seems like there might be benefits for advertising as well as other parts of your business And then on Sky this 300 million or so step up in investment can you talk about how that will drive growth in the various businesses in 2020 and beyond If there s anything more specific you could say about growth that would be great Michael J Cavanagh Senior Executive Vice President and Chief Financial OfficerLet me start with Peacock s effect on the other businesses If you imagine a television show where 70 of the viewing comes from some place other than linear television what Peacock is designed to do is to go after that 70 get it on our platform in a place where we re ad supported and we get 100 of the ad revenue That s the intent And if you look at it from that perspective I think Peacock is going to be very good for our company We re going to make more money from the television ecosystem and that will allow us to continue to invest in the linear platform So if I were talking to an affiliate if I were talking to a cable company I would say Peacock is a way to make us a better stronger competitor in a way that s good for all of our businesses not just streaming Brian L Roberts Chairman and Chief Executive OfficerSo in regards to Flex Jessica the it starts with our strategy and I think it gives us real choice in the marketplace And we will continue to compete I think very well for the many segments that value X1 and everything that that brings but for this growing streaming segment it really positions us well the great proposition being able to use all the attributes of X1 the voice capability the integrated data being able to find what you want very quickly So in terms of the drivers your point is a good one You look at the first one is going to help us compete continue to do well with broadband So we re going to look at broadband share growth and Flex will be part of that one of several things that we re doing You do look at additional revenue opportunities whether it s everything from the when we sell an app on this platform we participate in that economically there is going to be I think long term a platform You can think about advertising And in addition there s syndication We have great partners that we have with X1 And I would anticipate that we ll continue to make progress in syndication with Flex with these partners So I think it s we will use it as a growth platform primarily focused on broadband but we ll be opportunistic going forward in these other areas Jeremy Jeremy Darroch Group Chief Executive SkyYeah sorry And then on Sky the investments we re making here so Sky Q we think that s the best TV service here in Europe So we want to accelerate its penetration in our base We re actually pulling costs forward really rather than spending additional costs pulling costs forward in our plan to get Sky Q penetration up more quickly The benefits really are twofold The short term benefits are sort of Phonetic purely financial really As Mike alluded to we see lower churn higher viewing higher ARPU And of course as we sell Sky Q into our customer base it gives us the opportunity to cross sell another product or more products in the point at which we do that And then the second thing to say is we have Sky Q in the base for some Technical Issues good line of sight in terms of the financial returns that flow from those investments And while the number aggregates it s all customer by customer So if you don t get a customer the if you don t get the benefits you don t spend the cost upfront if you see what I mean The second one that is broadband in Italy obviously that s a big new adjacent category for us about 7 billion market in Italy We ve got a very strong incredible brand we know that in Italy to step into the broadband market I think we ve got all of the skills that we need across the Company to be able to do that for the longer term investment profile although a very strong one again given that it s a new category And then beyond that I think the real benefit as we ve seen here in the UK is that s a business that we think we can grow to significant scale over time It was probably the single biggest thing we did in the UK to step change our business growth in the UK So I think the tale of growth we ll see from broadband and the ability for broadband to reset the size of our business in Italy is pretty strong And then the final thing I d say just operating in Europe one of the great things about being part of the broader Comcast Group from my point of view is of course we can keep our foot on the gas and accelerate these investments while we see strong returns profiles at a time when many in Europe are probably being a bit more cautious in a more challenging consumer environment So I think this is a good example of how as part of the broader group we can really think about the medium term returns from Sky and drive those hard And we ll see those benefits progressively come through in 2020 and then into 2021 Jessica Ehrlich Bank of America Merrill Lynch AnalystThank you Jason S Armstrong Senior Vice President Investor Relations and FinanceThank you Jessica Next question please OperatorYour next question comes from the line of John Hodulik with UBS Please go ahead John Hodulik UBS AnalystGreat thanks Maybe some questions for Dave Dave you ve had some solid results this quarter and this year in your connectivity business So maybe first starting with broadband the 1 4 million subs accelerated second time in a row on a year over year basis Is that a decent number for 2020 And can you talk a little bit about the pricing power that you may have in that business given the deceleration we re seeing in high speed data revenues And then over in wireless again another solid quarter You talked about momentum continuing into 20 What s driving the growth there Is it improved distribution Is at handset availability I think your pricing has been the same but the sub numbers continue to beat our view So some commentary there would be great too Thanks David N Watson President and Chief Executive Officer Comcast Cable CommunicationsWell thanks John And I won t give specifics in regards to 20 but we d say that the 1 4 million does demonstrate just consistency broad based growth strength across our entire area when it comes to broadband So pleased with the quarter pleased with the year and pleased with momentum going forward So yeah it starts with we re going to grow relationships with broadband This is our top priority It s what we focus on when it comes to innovation I talked about Flex that we have many other examples of innovation including the advanced security product that we are rolling out for free to those that lease our gateway device Another example of that speed increases we continue to do So very very focused We wake up every day thinking about how are we going to grow and sustain broadband And so and it s working I think xFi when you combine the best of speed the best of control coverage Brian mentioned a great new gateway device We re leading in regards to the gateway devices that are in the marketplace We feel in terms of the combination of speed Wi Fi speed and Wi Fi coverage and combine that with the pods that we have in the marketplace so all these things I think position us well going forward So our game plan is to continue to lead with broadband I think it is very sustainable You look at the macro conditions the marketplace is growing Penetration we have upside And we re taking share And we re balancing this share growth with a strong financial performance For the year we re pleased One point in terms of the quarter to quarter revenue performance just to make sure there are some context there that we did move out a couple of rate increases off Q4 into the early part of 2020 So you can look on a go forward basis I think you re going to see good strong runway for growth in share growth in revenue on a per subscriber basis and for the whole category So we re pleased with our momentum going forward And wireless I would say the keys there are a little bit of maturity We talked about the reasons why we re doing it We re real pleased with broadband retention The area that s beginning to pick up that we re really pleased that we wanted to focus on is just growing consideration using wireless because I think it does help broadband But getting people into retail stores they didn t really think about doing that before beginning to see real traction in retail Most certainly when you see a solid product introduction like Apple that they had in other wireless devices I think we benefit We re in a good position for bring your own device I think we re uniquely positioned in the ability to have a combination of unlimited and by the gig pricing So you add all those things up and we re really pleased with our overall wireless momentum as well John Hodulik UBS AnalystOkay Thanks Dave Jason S Armstrong Senior Vice President Investor Relations and FinanceThank you John Next question please OperatorYour next question comes from the line of Brett Feldman with Goldman Sachs Please go ahead Brett Feldman Goldman Sachs AnalystYeah thanks Actually I m going to follow up here on wireless Two questions One the big national operators are going to increasingly making 5G a part of their marketing throughout the year I m interested if you can give us some context on how you re thinking about the 5G opportunity for your mobile business And then obviously the line is that you have to EBITDA break even next year is a key milestone How do you think about maybe improving the profit profile of your wireless business even more from there So for example how much of a priority if at all is it to get better MVNO terms or find more MVNO vendors And then you re going to have a few mid band spectrum auctions coming up over the next couple of months and into next year Are you interested in maybe looking to acquire spectrum to see if you can bring traffic onto your own infrastructure Thank you Brian L Roberts Chairman and Chief Executive OfficerWell thanks Brett So in regards to 5G one of the great things about our existing relationship that we have with our partner that we have we will participate in 5G mobile as that market matures and they start rolling it out in earnest So we re I think we ll be right there and we ll evaluate that as it goes In regards to economics we talked about we re right on track with the profitability trajectory that we talked about So we re absolutely pulling off what we thought we would in regards to the economics And what I would say we re always going to be opportunistic when it comes to either a combination of the ability to do more with Wi Fi and the LTE network and manage traffic flow between the two we ll always be looking at that We ll be opportunistic on any spectrum opportunity But we like our capital light MVNO approach today It s accomplishing what we need to We ll always be talking to our partner about opportunities but I think we re in a really good position going forward Brett Feldman Goldman Sachs AnalystThank you Jason S Armstrong Senior Vice President Investor Relations and FinanceThank you Brett Next question please OperatorYour next question comes from the line of Phil Cusick with J P Morgan Please go ahead Phil Cusick J P Morgan AnalystHey guys thanks Cable EBITDA margin guide of 50 basis points growth is similar to what you said a year ago and it came in nearly 3 times that level If I think about your price increase which is similar to last year and the trajectory of declining mobile losses it seems like this is fairly conservative How should we think about programming is a headwind this year and next or anything else going on And then second if I can in parks can you talk about the environment for customer traffic overall and any feel for share shift And if we look forward to those new gates and parks in the next few years what should we think about for the cadence of both capex and revenue Thank you Brian L Roberts Chairman and Chief Executive OfficerPhil I ll start it off As Mike mentioned earlier as expected we re going to have a number of programming renewals in 2020 So we had a couple of years where it was a lower number and that is picking up in 2020 and in particular it will ramp more toward the back half of 2020 So despite that the part even with that we expect to improve Cable margins up to the 50 basis points that Mike talked about for the full year And the strategy and the expectations are built around our focus on the connectivity businesses which are margin accretive We re going to continue to drive that That pivot has happened and we re making great progress there We re going to continue to focus on the non programming opex We re going to be taking a lot of transactions out whether they re truck rolls or telephone calls the customer experience improvements There s a big runway ahead for us to continue to take out those transactions We re always going to be disciplined on cost control And I think you look at what we ve talked about earlier Xfinity Mobile economic improvement if you look there s going to be a pretty big year for political advertising in the tail end of this year All those things considered I think put us in a pretty good position to overcome whatever programming renewals that are going to occur in 2020 Stephen B Burke Chief Executive Officer NBCUniversalSo regarding parks if you look over the last five years our EBITDA our OCF in the park business has almost exactly doubled to about 2 5 billion Parks were about a third of NBCUniversal 30 of NBCUniversal And when you have that kind of growth you re used to parks being a driver of the overall NBCUniversal growth profile which they were not this quarter A big part of it and Mike mentioned this in his introduction was Japan where we faced a number of headwinds and actually went backwards If you look out I think the next big thing on the horizon is Nintendo Nintendo based on our research is one of the biggest potential drivers of attendance that you could have of any kind of IP It s up there with Harry Potter which in some of our parks Harry potter drove incremental attendance of about 2 million people So Nintendo is in very rarefied air And the attraction that we re building in Osaka is spectacular From a creative standpoint it s really unbelievable And that opens sometime midyear this year in Osaka and then we re going to bring it to Hollywood and we re going to bring it obviously in the fourth gate in Florida So I think Nintendo is going to be potentially a big accelerator of growth in the Theme Park business And then once you get into 2021 we haven t talked about it maybe as much as we should The fact that we re opening a park in Beijing and the fact that the park is so spectacular from a design and creative standpoint I think is going to generate a lot of growth And then Brian mentioned in his introduction the fourth gate which opens in 2023 So when you look at the capital side of it these are all high return projects that are all all make a ton of business sense And I think if you look over the next five years it s likely our Theme Park business is going to be a driver of growth Maybe not quite as much as it has been in the last five years because the growth has been so phenomenal and we re getting to a bigger base now But I would look at the parks business as a real opportunity for us We still don t have the share that I think we deserve given the quality of the experience we re giving our guests and there s a lot of opportunity over the next five 10 20 years Phil Cusick J P Morgan AnalystThank you Jason S Armstrong Senior Vice President Investor Relations and FinanceThank you Phil Next question please OperatorYour next question comes from the line of Craig Moffett with MoffettNathanson Please go ahead Craig Moffett MoffettNathanson AnalystHi I wonder if I could return to the wireless business for a second With AT T having potentially opened the door to at least have a discussion about MVNO terms can you just talk about what that process is like Are you engaged in discussions with other potential MVNO suppliers And have any of the discussions with any of the wireless operators expanded to ways that they might leverage your wired infrastructure So as you think about how your wired infrastructure sort of brings value to wireless there are all different ways you could do it whether it s capitalizing yourself through retail or doing something at a wholesale level or using it to get better terms with your MVNO Just how do you think about those opportunities David N Watson President and Chief Executive Officer Comcast Cable CommunicationsHey Craig So I think it starts with that our very strong feeling that we are the cable industry Comcast we re a great partner for the wireless industry So I think we bring share We bring customers over to them I think we re a great investment for the long term So that s kind of how we start our thinking and that with all the goals that I mentioned before From a process perspective not much to talk about right now We are always thinking about ways of improving an already good platform a good approach to the business If there are opportunities we ll explore them And if anything does develop we ll let you know Brian L Roberts Chairman and Chief Executive OfficerYeah The only thing I want to add to that is simply that I think we ve shown we can get some scale It s still early days And that previous question about it keeps accelerating a bit I think we re seeing that now throughout the rest of the industry and others coming into wireless So I think I just want to echo that point that we have a successful beginning and hopefully a very long runway that we re just getting started Craig Moffett MoffettNathanson AnalystAll right Thank you Jason S Armstrong Senior Vice President Investor Relations and FinanceThank you Craig Regina we will take one last question OperatorOur final question will come from the line of Vijay Jayant with Evercore Please go ahead Vijay Jayant Evercore ISI AnalystThanks I have two one for Jeremy Just wanted to understand in the UK Ofcom is pushing to reduce what I think they dubbed as the loyalty penalty the difference between what new customers pay and what existing out of contract customers pay Is there really any impact to your business from that regulation And then for Dave at CES I think you guys showed a new xFi advanced gateway that supports 85 megahertz mid split really increasing the upstream part of your network Obviously I just want to understand what business opportunity and capex implications that may have as you scale that Thank you David N Watson President and Chief Executive Officer Comcast Cable CommunicationsJeremy do you want to go first Jeremy Darroch Group Chief Executive SkySure I think not majorly for us If you think of our business we ve really I think led the way over the last decade really around breaking out breaking down the bundle making pricing more transparent We re a leader in service According to Ofcom it starts across all of our products so not just pay TV but broadband and mobile and fixed line as well At the heart of that we have a belief about trying to right size customers to the products that they want and the price that they want to pay because we think that s important and is the most durable way And typically therefore we moved a long time ago to essentially offering the same deals right across our bases The deal for new customers is typically available for an existing customer as well So there will be some transition obviously within that There will be some there s been noise as the market quickly moved to that but I don t expect it would have a big effect on our business David N Watson President and Chief Executive Officer Comcast Cable CommunicationsOn the new gateway that we did talk about at CES we re excited about this I think there are several steps forward with this gateway in regards to Wi Fi speed the improvements in terms of coverage both for the 2 4 band as well as the 5 band improvements both in those areas improvements in latency Across the board it checks a lot of boxes And so like we do with a great new product like this we ll package that in some of our higher tier packages And on a go forward basis we ll compete If you think about segments where this matters it s an ideal product for the gaming segment So we re going to we ll segment it and go after it But the fundamentals of being able to provide the best speed the best coverage control all those aspects I think this gateway helps us in our position very well Vijay Jayant Evercore ISI AnalystThank you so much Michael J Cavanagh Senior Executive Vice President and Chief Financial OfficerAnd it s Mike Let me just jump back in at the end here and echo Brian s thanks to Jason Armstrong for a great job he s done for all of us in the IR job And I know he will be a great add to the Sky team I welcome Marci Ryvicker to the Company and thank all of you for the support and joining us on this call as we get 2020 kicked off So thanks everybody Have a great day OperatorThere will be a replay available of today s call starting at 12 00 o clock PM Eastern Time It will run through Thursday January 30 at midnight Eastern Time The dial in number is 855 859 2056 and the conference ID number is 3469916 A recording of the conference call will also be available on the Company s website beginning at 12 30 PM Eastern Time today Operator Closing Remarks Duration minutesCall participants Jason S Armstrong Senior Vice President Investor Relations and FinanceBrian L Roberts Chairman and Chief Executive OfficerMichael J Cavanagh Senior Executive Vice President and Chief Financial OfficerDavid N Watson President and Chief Executive Officer Comcast Cable CommunicationsJeremy Darroch Group Chief Executive SkyStephen B Burke Chief Executive Officer NBCUniversalBen Swinburne Morgan Stanley AnalystDoug Mitchelson Credit Suisse AnalystJessica Ehrlich Bank of America Merrill Lynch AnalystJohn Hodulik UBS AnalystBrett Feldman Goldman Sachs AnalystPhil Cusick J P Morgan AnalystCraig Moffett MoffettNathanson AnalystVijay Jayant Evercore ISI Analyst
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EBAY | Cruising What s Not To Like | During uncertain economic times true value becomes the consumer s guiding mantra Getting your money s worth on whatever it s spent on is the definition of true value in this sense Whether it s a great meal at a discount a good deal on a luxury car or going on a first class vacation at a fraction of the expected price true value for one s discretionary income has become a driving force in consumer culture Evidence of the consumer seeking his money s worth is made clear in the success of discount coupon websites like Groupon Nasdaq GRPN and Living Social as well as the proliferation of peer to peer deal auction businesses like eBay Nasdaq EBAY But nowhere is the pursuit of true value followed as strongly as in the leisure travel business Limited resources and uncertain economic times force consumers to seek out the most bang for their buck as possible And I think I smell an opportunity for investors in this space The growth in the cruise line business is proof of this search for true value Once reserved strictly for the wealthy cruising has become the go to vacation choice for the masses Not only does a cruise vacation offer true value for one s money it s also a very relaxing way to vacation Modern cruise ships are truly floating resorts with all the luxuries and entertainment of land based vacations Not to mention the obvious appeal of moving from location to location without the hassle of packing and unpacking your belongings No longer floating cafeterias and low end hotel type accommodations as was offered at the start of the mass market cruise boom today s ships have recruited the world s best chefs and designers to create an experience that is second to none The best part of taking a cruise vacation is the price Generally cruises are all inclusive journeys meaning that meals entertainment and lodging are included in one price This amount is often much lower than a comparable land based vacation due to the economy of scale provided by cruise ships The lower price combined with luxurious surroundings and the benefit of seeing numerous locations add together to create true value for the consumer Big Revenues Keep GrowingThe statistics reflect the popularity of the cruise industry Annual revenue for cruise lines in the United States is over 38 billion with more than 154 million passengers worldwide since 1990 The latest numbers indicate this industry is still growing despite the worldwide economic slowdown Just as consumers look for true value in their choices investors seek value in their portfolios Provided the macroeconomic drivers of the value oriented cruise industry and its surge in popularity investment in this sector makes sense Let s take a closer look at two of the major players 1 Carnival Cruise Lines NYSE CCL This Miami Florida based company provides cruises to various vacation destinations with a portfolio of cruise brands comprising Carnival Cruise Lines Holland America Princess Cruises and Seabourn in North America and AIDA Cruises Costa Cruises Cunard Ibero Cruises and P O Cruises in Europe Australia and Asia The company trades at 15 5 times last year s earnings and pays a 3 2 dividend The sinking of their European based ship Costa Concordia in January 2012 knocked shares off of their 35 highs The price has rebounded however recently trading in a tight 30 33 channel I would be a buyer on a break above the 33 level 2 Royal Caribbean Cruises Ltd NYSE RCL This is another multi brand Miami Florida based cruise company It owns five cruise brands which comprise of Royal Caribbean International Celebrity Cruises Pullmantur Azamara Club Cruises and CDF Croisieres de France The company boosts a P E ratio of 9 2 and has a dividend yield of 1 6 Shares have been beaten down recently because the company cut its full year profit forecast due to rising fuel costs Royal Caribbean may have acted too fast by cutting their profit forecast however because fuel prices are actually decreasing The sell off has set up a buying opportunity in the stock Although the price is below the 200 day moving average placing shares outside of my value zone opportunity exists by buying an upside breakout above 25 Risks to Consider Due to the international nature of the cruise industry there are political and economic risks in buying these companies In addition fuel prices and other costs may start to increase hampering growth prospects Action to Take I really like the cruise industry on many fronts Serious upside potential exists in the business especially as the global economy recovers and the carriers can afford to raise prices I will be watching both of these stocks closely and suggest buying on the upside breakouts noted above BY Dave Goodboy |
EBAY | EBay Earnings Trade Ideas | EBay EBAY pulled back over the last month just as it did for the month prior to its last earnings report As it headed into the report tonight it has a Relative Strength Index RSI that has held in bullish territory on the recent pullback and is moving back up and a Moving Average Convergence Divergence MACD indicator that is negative but improving towards a cross to positive both supporting an upward bias eBay EBAY There is support lower at 47 50 and 46 10 followed by 43 20 to 43 50 Resistance is higher at 49 25 and 50 50 The reaction to the last 6 earnings reports has been a move of about 4 93 on average or 2 40 making for an expected range of 45 90 to 50 70 The at the money October Straddles suggest a roughly 2 75 move by Expiry with Implied Volatility at 90 above the historical at 25 and November at 37 Trade Idea 1 Buy the November 50 Call for 1 37 Trade Idea 2 Buy the October 48 50 Call Spread for 0 90 Trade Idea 3 Buy the October November 50 Call Calendar for 0 70 Selling the October 50 Call and buying the November 50 Call looking for the October call to expire worthless in 2 days Trade Idea 4 Buy the November 45 50 bull Risk Reversal for 0 53 Selling the November 45 Put and buying the November 50 Call Trade Idea 5 Sell the October 46 50 Strangle for a 1 16 credit A bet on volatility bleeding out of the October options after the report with protection to a range of 44 84 to 51 16Disclaimer The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment I or my affiliates may hold positions or other interests in securities mentioned in the Blog please see my page for my full disclaimer |
WFC | U S pensions seen adding bonds paring stocks Wells Fargo | NEW YORK Reuters U S pensions are expected to shift more money into bonds and out of equities to rebalance their holdings at month end in the wake of strong gains in the stock market in January Wells Fargo NYSE WFC strategists said on Monday The possible increased allocation into bonds comes as global bond yields have been rising on strengthening business activities across the world and expectations of reduced stimulus from major central banks On Monday the benchmark 10 year Treasury yield touched 2 727 percent the highest since April 2014 Reuters data showed Higher yields would help provide pensions with a stable source of income to meet payouts to retirees Rising long term yields can bring a considerable relief to private pensions the Wells Fargo strategists wrote based their estimates on month end allocation changes Corporate pensions have struggled from historic low yields which have made their existing pension obligations expensive Their average pension funding gap future obligations versus current investments has remained wide despite the run up in stock prices Retirement plans may need to add 16 billion in fixed income and to reduce up to 20 billion in equities for their month end asset allocation rebalancing they wrote in a research note Corporate pensions could pocket some gains from Wall Street s blistering start to 2018 with the S P 500 gaining 7 percent in January They could put the money in less risky Treasuries
The 15 20 billion asset allocation shift is quite sizable in the context of recent experience the Wells Fargo strategists wrote The size of the January shift is a testament to the large gap in performance between equities and Treasuries at the start of 2018 |
WFC | Asset managers rush to launch MSCI index funds ahead of China A share inclusion | By Samuel Shen and John Ruwitch SHANGHAI Reuters Chinese asset managers seeking to get ahead of an expected wave of foreign money inflows are racing to launch index funds that place bets on a select group of mainland stocks which will be included in MSCI s emerging market benchmark this year The first such product to follow MSCI s inclusion announcement in June is Truvalue Asset Management Co s MSCI China stock index fund which launched after receiving the regulatory green light earlier this month Launches from other fund managers are also in the pipeline While some foreign investors are still haunted by painful memories of China s 2015 stock market crash and concerns about current elevated valuations a deeper fear of missing out is expected to support a surge in mainland stocks MSCI s decision last June to include yuan denominated Chinese stocks known as A shares into its emerging market EM index has already boosted interest in China s banking and consumer heavyweights But an explosion in funds allowing more focused bets will likely add fuel to China s blue chip euphoria Truvalue fund manager Chen Long forecasts that the partial inclusion would initially trigger 80 billion yuan 12 52 billion of passive investments into China while an eventual full inclusion will usher in 2 5 trillion yuan of inflows The fund which tracks the MSCI China A International Index would enable investors to get ahead of overseas investors with just one press of a button Chen said Such a strategy has a good chance of success he said citing post inclusion stock performances in markets including South Korea South Africa and Taiwan In June and September MSCI will add around 230 large cap Chinese stocks into its EM index in a two stage process They will represent a 0 73 percent index weighting with MSCI s 5 percent partial inclusion factor taking China s foreign ownership caps and market accessibility into account Truvalue s rivals Invesco Great Wall PingAn UOB and Huaan have also applied to launch MSCI index funds which are among about two dozen such products awaiting the regulatory nod Already foreign funds with existing exposure to A shares have witnessed a surge in demand Four years ago U S asset managers Krane Funds Advisors launched its New York listed KraneShares Bosera MSCI China A Share ETF P KBA In 2017 this fund saw a 12 fold surge in assets under management to about 300 million following MSCI s inclusion announcement MSCI estimates that a full inclusion could potentially give A shares an approximately 18 percent weighting in the MSCI EM Index enabling China to dwarf many large emerging markets such as Brazil Russia and India Investor concerns center on some lofty valuations in Chinese stocks as well as recollections of the 2015 market rout during which over 1 000 stocks were suspended from trading to avert a deeper meltdown A bigger worry however seems to be the possibility of having no exposure to China at all Prejudice and information disparity resulted in foreign under investment in China stocks in the past The MSCI inclusion is an ice breaking event that will stimulate foreign demand for A share allocation said Wan Qiong fund manager at Bosera Asset Management As foreigners understanding of China deepens global investors will gradually move from underweight China to equal weight and eventually overweight UBS strategist Gao Ting expects foreign ownership in Chinese A share market to be raised to 10 12 percent in the coming years from less than 2 percent currently Anthony Cragg senior portfolio manager at Wells Fargo NYSE WFC Asset Management and a veteran China investor said while many global investors have finally woken up to China funds worldwide remain massively underweight Victoria Mio Asia Pacific equities co head at Dutch asset manager Robeco put it more bluntly If you are underweight China there s a price to pay
1 6 3895 Chinese yuan |
WFC | Wells Fargo names new head of regulatory relations | Reuters Wells Fargo NYSE WFC Co on Tuesday appointed Sarah Dahlgren as its head of regulatory relations effective March 12 Dahlgren joins from McKinsey and will report to Wells Fargo s chief risk officer Mike Loughlin until his successor is named Loughlin had announced his retirement on Jan 17 |
WFC | U S consumer confidence rebounds house prices march higher | WASHINGTON Reuters U S consumer confidence rebounded in January and house prices increased further in November suggesting that a recent acceleration in consumer spending was likely to be sustained despite sluggish wage growth Robust consumer confidence and rising household wealth as a result of record gains on the U S stock market and rising house prices have left Americans less fearful about the future That is encouraging some to dip into their savings to fund purchases More confident U S consumers point to stronger spending as the year begins said Jennifer Lee a senior economist at BMO Capital Markets in Toronto The Conference Board said its consumer confidence index increased 2 3 points to a reading of 125 4 this month But consumers were less upbeat in their assessment of current conditions They were also ambivalent about their income prospects over the coming months which the survey attributed to some uncertainty regarding the impact of the tax plan The Trump administration and the Republican controlled U S Congress pushed through a 1 5 trillion tax cut package last month While many Americans will see an increase in their paychecks taxes will increase for some middle income families The survey s so called labor market differential derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful rose to a cycle high of 21 2 in January from 20 3 in December This measure closely correlates to the unemployment rate in the Labor Department s employment report and is consistent with further absorption of labor market slack The labor market is near full employment with the unemployment rate at a 17 year low of 4 1 percent STRONG CONSUMER SPENDING The report came as Federal Reserve officials began a two day policy meeting on Tuesday The U S central bank is expected to leave interest rates unchanged at the end of the meeting on Wednesday Economists expect the Fed which has forecast three rate increases this year to raise its economic assessment The central bank raised borrowing costs three times last year The dollar was little changed against a basket of currencies U S Treasury yields rose putting pressure on Wall Street with the Dow Jones Industrial Average DJI falling more than 350 points Strong consumer confidence bodes well for consumer spending even though households buying plans showed mixed intentions in January Consumers inflation expectations over the next 12 months slipped a bit in January Consumer spending increased at its quickest pace in three years in the fourth quarter Robust consumer confidence also provides a boost to the economy after it grew 2 3 percent in 2017 Households are drawing down savings to boost spending The saving rate fell to a 10 year low of 3 4 percent in 2017 A second report on Tuesday showed the S P CoreLogic Case Shiller composite index of house prices in 20 metropolitan areas rose 6 4 percent in November on a year over year basis after increasing 6 3 percent in October An acute shortage of homes on the market and strong demand are pushing up house prices While rising house prices are boosting equity for homeowners the dearth of properties is sidelining first time buyers from the market hurting home sales The house price appreciation has outpaced wage growth which has been stuck below 3 percent Strong economic growth has boosted home buying but new construction has been slow to ramp up The persistent supply demand imbalance has driven prices higher across the country and worsened affordability concerns said Mark Vitner a senior economist at Wells Fargo NYSE WFC Securities in Charlotte North Carolina
Home prices have risen about three times faster than inflation and twice as fast as income growth over the past year |
WFC | Rising bond yields not high enough yet to spook investors | By David Randall
NEW YORK Reuters The jump in U S Treasury yields to more than three year highs is pushing fund managers to sell interest rate sensitive utility and real estate stocks but does not yet threaten to derail the nine year long bull market in U S equities or slow down the broader economy
Instead the 10 year Treasury yields would need to rise above 3 percent or about 30 basis points from their current 2 71 percent for the effects of higher borrowing costs to start to seep into the economy in the form of a slowdown in the housing market or consumer spending fund managers say
Rates can go quite a bit higher before we see any lasting negative affects in the stock market said Margaret Patel a senior portfolio manager at Wells Fargo NYSE WFC Asset Management With a pickup in global economic growth and the recent U S tax cuts the backdrop for equities looks a lot better than it did one or two years ago
As a result Patel is selling some of her high yield junk bond holdings and buying growth focused equity sectors like technology and healthcare leaving her overall bond allocation near multi year lows she said
The broad S P 500 fell nearly 1 percent in early trading Tuesday in part due to concerns about rising interest rates The yield of the benchmark 10 year Treasury note which helps set consumer interest rates ranging from automobile loans to mortgages touched 2 71 percent on Tuesday up from a low of 2 06 percent in early September
Yet fund managers say that the recent rise in yields helps bring interest rates back to more natural levels after years of massive intervention by central banks in response to the 2008 financial crisis
Yields are moving back to what we consider their intrinsic valuation yet are still low on a historical basis and aren t quite at a level where we consider them an attractive alternative to equities at a time when the economic expansion in the U S economy is accelerating said Mike Dowdall a portfolio manager with BMO Global Asset Management
NO SIGNS OF BROAD ROTATION
The current bull market has weathered other quick jumps in Treasury yields without faltering The yield of the 10 year Treasury rose from 1 7 percent in early November 2016 to 2 5 percent in March of 2017 due in part to expectations that the election of President Donald Trump would lead to higher inflation Global economic growth and a Republican led effort to slash corporate taxes helped push the S P 500 up nearly 20 percent in 2017
Overall rising yields have not yet pushed fund managers to broadly rotate out of stocks and into bonds So called balanced mutual funds those that invest in a mixture of both stocks and bonds had 55 4 percent of their portfolios in equities at the end of 2017 down approximately 2 percentage points from 2014 according to Lipper data
Sectors most exposed to interest rates have fallen The SPDR Utilities Select fund P XLU an exchange traded fund that tracks the performance of utilities companies is down 4 2 percent year to date while the Real Estate Select SPDR P XLRE fund is down 4 1 percent The broad S P 500 is up 5 8 percent over the same time
Martin Jarzebowski a portfolio manager of the 631 million Federated Clover Small Value fund O VSFAX said that he expects the stock market rally to continue even if the 10 year Treasury yield tops 3 percent by the end of the year As a result he is increasing his overweight in financial companies such as Iberiabank Corp O IBKC and Radian Group Inc N RDN both up 8 percent or more for the year to date
The rationale is there aren t just rising rates but you also have deregulation as a result of the Trump administration he said It s been almost a decade since the financial sector has been in vogue |
WFC | Crypto Exchange Bitfinex Tether Are Said Subpoenaed by CFTC | Bloomberg U S regulators are scrutinizing one of the world s largest cryptocurrency exchanges as questions mount over a digital token linked to its backers
The U S Commodity Futures Trading Commission sent subpoenas on Dec 6 to virtual currency venue Bitfinex and Tether a company that issues a widely traded coin and claims it s pegged to the dollar according to a person familiar with the matter who asked not to be identified discussing private information The firms share the same chief executive officer
Tether s coins have become a popular substitute for dollars on cryptocurrency exchanges worldwide with about 2 3 billion of the tokens outstanding as of Tuesday While Tether has said all of its coins are backed by U S dollars held in reserve the company has yet to provide conclusive evidence of its holdings to the public or have its accounts audited Skeptics have questioned whether the money is really there
We routinely receive legal process from law enforcement agents and regulators conducting investigations Bitfinex and Tether said Tuesday in an emailed statement It is our policy not to comment on any such requests
Erica Richardson a CFTC spokeswoman declined to comment
Bitcoin tumbled 11 percent to 9 986 92 at 1 54 p m in New York The virtual currency hasn t closed below 10 000 since November according to a composite of prices compiled by Bloomberg
See also Mystery shrouds Tether and its links to Bitcoin exchange
While Tether and Bitfinex don t disclose on their websites or in public documents where they re located or who s in charge Ronn Torossian a spokesman for the firms said in a Dec 3 email that Jan Ludovicus van der Velde is the CEO of both Phil Potter is a Tether director according to documents dubbed the Paradise Papers recently leaked by the International Consortium of Investigative Journalists He s also the chief strategy officer at Bitfinex
Last year Wells Fargo NYSE WFC Co ended its role as a correspondent bank through which customers in the U S could send money to bank accounts held by Bitfinex and Tether in Taiwan The firms sued the lender but later withdrew the complaint Torossian previously declined to identify the banks used by Bitfinex unless a non disclosure agreement was signed which Bloomberg News refused
No Audit
While little public information exists about how tethers are created market pricing suggests traders believe that each coin is worth 1 Trading the token for Bitcoin at Bitfinex has helped drive up Bitcoin prices Barry Leybovich a product manager at IPC Systems Inc who creates risk and compliance products for financial institutions interested in blockchain applications said last month
A document on Tether s website compiled by accounting firm Friedman LLP shows it had 443 million and 1 590 euros 1 970 in bank accounts as of Sept 15 Tether tokens were valued at 420 million that day according to Coinmarketcap com Tether hasn t identified the banks where that money was held and their names were blacked out in the document
Friedman said in its report that it didn t investigate the reliability of Tether s records The accounting firm and Tether have recently cut ties Tether said in a separate statement Monday
Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether it became clear that an audit would be unattainable in a reasonable timeframe Tether said
Friedman didn t reply to messages seeking comment
Updates Bitcoin price drop in sixth paragraph A previous version of this story corrected the subpoena timing |
WFC | Conference Board Leading Economic Index Continued Increases In July | The latest LEI for July increased to 128 3 from a revised 127 9 in June and is currently at another all time high The 0 3 percent month over month gain matched the 0 3 increase forecast by Briefing com
The Conference Board LEI for the U S continued to increase through July with gains widespread across nearly all of its components except for building permits which contributed negatively In the six month period ending July 2017 the leading economic index increased 2 3 percent about a 4 7 percent annual rate faster than the growth of 1 5 percent about a 3 1 percent annual rate during the previous six months In addition the strengths among the leading indicators have remained widespread in PDF
Here is a log scale chart of the LEI series with documented recessions as identified by the The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale
For additional perspective on this indicator see the latest which includes this overview
The U S LEI improved in July suggesting the U S economy may experience further improvements in economic activity in the second half of the year said Ataman Ozyildirim Director of Business Cycles and Growth Research at The Conference Board The large negative contribution from housing permits a reversal from June was more than offset by gains in the financial indicators new orders and sentiment
For a better understanding of the relationship between the LEI and recessions the next chart shows the percentage off the previous peak for the index and the number of months between the previous peak and official recessions
LEI and Its Six Month Smoothed Rate of Change
Based on suggestions from Neile Wolfe of LLC and Dwaine Van Vuuren of we can tighten the recession lead times for this indicator by plotting a smoothed six month rate of change to further enhance our use of the Conference Board s LEI as a gauge of recession risk
As we can see the LEI has historically dropped below its six month moving average anywhere between 2 to 15 months before a recession The latest reading of this smoothed rate of change suggests no near term recession risk Here is a twelve month smoothed out version which further eliminates the whipsaws |
CMCSA | Comcast is set to report earnings before the bell Here s what the Street expects | Comcast fourth quarter results exceeded expectations on the top and bottom lines The company added 442 000 new high speed internet customers during the quarter which surpassed analysts expectations for 378 000 net adds |
CMCSA | Comcast Stock Falls 3 | Investing com Comcast NASDAQ CMCSA Stock fell by 3 01 to trade at 46 07 by 09 36 14 36 GMT on Thursday on the NASDAQ exchange
The volume of Comcast shares traded since the start of the session was 2 71M Comcast has traded in a range of 46 04 to 46 97 on the day
The stock has traded at 47 7400 at its highest and 45 5000 at its lowest during the past seven days |
WFC | P G second quarter beats but margins worry investors | By Siddharth Cavale Reuters The world s largest consumer goods maker Procter Gamble Co reported better than expected sales and profit for its second quarter on Tuesday but investors focused on a drop in gross margins sending its shares down 2 percent Margins fell by nearly 1 percent in the quarter hit by higher commodity costs investment outlays and cuts in prices in the grooming business that includes Gillette razorblades The company has just quelled activist investor Nelson Peltz s attacks on its strategy by offering him a board seat but is struggling to boost Gillette sales against cheaper competitors like Unilever s Dollar Shave Club It has reduced prices on the shaving products upping volume growth but eating into profits and headline revenue from one of its biggest businesses Some of that was offset by its efforts to pour more money into other lines including beauty and health care leading to a 2 percent increase in organic sales Analysts however characterized the results as mixed and stopped short of predicting any upside for P G shares after a rally spurred by the proxy fight with Peltz Second quarter was not a quality beat with gross margin lower than expected and little near term benefit from the Tax Act Wells Fargo NYSE WFC analyst Bonnie Herzog wrote in a note DON T EAT SOAP The company said it was doing all it could against a social media fad that has teenagers daring each other to eat its Tide Pods laundry detergent live on video Our product labeling is clear but it can t prevent intentional abuse fueled by poor judgment P G s Chief Financial Officer Jon Moeller told a media call We re going to have to work with the broader part of society to address that P G raised its full year adjusted earnings per share growth forecast to 5 8 percent from 5 7 percent as it expects a 135 million net benefit from the recent U S tax overhaul which sees corporate taxes falling to 21 percent Net income attributable to the company fell to 2 50 billion or 93 cents per share in the second quarter ended Dec 31 compared with 7 88 billion or 2 88 per share a year earlier The company said the drop reflects a net charge of 628 million it took related to the tax overhaul and a gain it incurred from the sale of a chunk of its beauty brands to Coty Inc in the same period last fiscal year Excluding items the company earned 1 19 per share including a 5 cent benefit from the tax changes Analysts had expected 1 14 per share but several Wall Street brokerages said those estimates did not account for the tax benefit Net sales rose 3 percent to 17 4 billion boosted by strong Demand for Olay skincare products and its high end SK II brand and brisk sales of Oral B toothbrushes as well as Vicks cough and cold products in a colder than usual winter season
P G s shares which have risen 9 3 percent in 2017 were down 3 percent at 89 54 |
WFC | Will Cryptos End Spoofing Or Enable It | Capital will always flow to where it is treated best Of that I have no doubt When talking about market manipulation the question becomes where is the intersection between the rules of the exchange and trading volume
Practices like Stop Loss Raiding and the like are as old as markets themselves With each new technological advancement the way these techniques are implemented changes but the behavior itself is exactly the same
As is the goal to shake up the markets gain an advantage through arguably fraudulent activity
On Wall St these practices are de rigeur and the exchanges refuse to clamp down on them The large money center banks control the exchanges and are also the market makers on these exchanges so they are incentivized to keep these practices alive to drive retail investors away
I Spoof Your Milk Shake
In short the NYSE NASDAQ and COMEX are not going to change No amount of lobbying on our part will persuade the SEC to alter the rules to level the playing field for all traders
This is why non algorithm trading volume has all but disappeared on these exchanges It s also why the markets are becoming more and more fragile by the day because of the sheer level of coordination of action between the various computers
on this behavior invading the cryptocurrency trading markets One part history lesson about what happened on Mt Gox in the before time and one part cautionary tale It s a good read
As noted above spoofing is actually illegal as ultimately the trader has no intention of ever executing the publicized trade but as Bitcoin markets are largely unregulated it s a very common practice
What is unusual in this case is the nearly unlimited bankroll that Spoofy the suspected evil doer TL has at his disposal He regularly places orders approaching 60 million
Even more unusual is that as cointelegraph reports most of Spoofy s activity occurs on a single exchange Bitfinex This exchange came under fire earlier this spring when Wells Fargo NYSE WFC cut off their banking ties As a result it s virtually impossible to deposit fiat on Bitfinex without going through intermediaries
Yet unlike most Bitfinex traders Spoofy appears to have special privileges and has massive sums of both fiat and Bitcoin at his disposal on that exchange likely one of the only traders who does
Legal illegal Pfeh
Spoofing happens all the time on the NYSE We all know it And the SEC selectively prosecutes someone every so often for PR purposes to keep the rubes awake enough to not complain too bitterly bite down on that juicy steak go back to sleep and keep putting money in their 401 Ks
That said I m not here to eternally complain about this I frankly could care less The exchanges are rigged and I m not going to play their games
I m here to tell you that there is a limit to what the market will tolerate in the crypto space
In the real world of high finance the exchanges are protected by the SEC and the U S government Regulation keeps competition off the playing field Startup costs for a new exchange alone are enormous and then there is the competitive hurdle to get over if your exchange has tighter rules which will absolutely keep a lid on volume profit and marketshare
Crypto Spoofing
In the crypto space that barrier to entry for building a new exchange is lower There is no pain to move money from one exchange to another It s a cheap blockchain transaction
Ever try moving from one brokerage account to another It s a nightmare It s designed that way to keep you right where you are
Is the barrier to entry for a crypto exchange lower as a percentage of potential revenue than a real exchange I don t know
But what I do know is this and it s what everyone in the securities trading industry knows
Placing a fee to place and cancel an order on the exchange is the way to stop spoofing Period
Spoofing occurs because there is no risk to the spoofer They place order that are never intended to be filled and lift them as a block the second it looks like they could get hit It s a practice done to move price without any skin in the game
It s fraud But it s nearly impossible to control fraud
And then it can only be done in arrears Rarely are people made whole after the fact
I m not advocating for anything new Critics have been begging for this in the capital markets for years to end the practice
But as I said when the exchanges are the market makers are the spoofers and all of them own the regulators in D C
Who Watches the Watchmen
So Bitfinix may or may not be directly complicit in L affair Spoofy as Zerohedge suggests but all the exchanges that do not charge for placing an order are indirectly
And I note that having just opened an account on BitShares OpenLedger exchange they charge the same price for placing an order as they do canceling one
Placing an order on OpenLedger happens on the BitShares blockchain
There s a cost to this and that cost is reflected in the trading fees
There are no market makers There are no dark pools of liquidity
Overall the trading fees are lower than they are on Bitfinix and other exchanges but the fee is broken up between placing the order and executing it
Spreads on OpenLedger are wide for a lot of pairs because many of the pairs traded are incredibly thin But at least I know that if I m going to play around trading Steem or bitRubles then I know the person on the other side of the trade is committed to their bid or ask
And that s where the limit to spoofing lies in creating an exchange more immune to it with a transaction history anyone can monitor and or audit at any time because it s all on the blockchain
Fraud thrives in secrecy and dies in the open The promise of the blockchain is its potential to discourage and or eliminate fraud
What s next is finding out what the people really want The juicy steak of fake liquidity and fraud or the reality of price discovery without it |
WFC | Is The Market Reacting To Earnings Or Just Charts | S P Profits
Are corporate results improving or is the stock market rising based purely on technicals From The Fat Pitch
The headline numbers for 2Q17 financial reports are good S P profits are up 19 year over year sales are 6 higher profit margins are at new highs This is in stark contrast to early 2016 when profits had declined by 15
Simple Can Be Powerful
The chart of the NYSE Composite above can be powerful based on its simplicity This week s video reviews the three basic types of markets in the context of risk vs reward in 2017 The present day charts reveal a great deal when viewed in the proper context
Economy Has Room To Run
Those who lived through the dot com and housing bubbles know that the present day shares very little with those excessively euphoric periods From The Wall Street Journal
Expansions tend to get tripped up by boiling excesses like a housing bubble in the 2000s a tech bubble in the 1990s and inflation in the early 1980s But this economy appears to have some more room to run as it enters its ninth Compared to six months ago the global economic outlook has certainly shifted in a positive direction said John Silvia chief economist at Wells Fargo NYSE WFC In the U S there are more jobs and better jobs and that s a confidence builder
As Long As The Trends Remain Favorable
The markets started telling us to be open to better than expected long term outcomes in Given that the long term facts in hand continue to favor good things happening relative to bad things happening we will continue to run a growth oriented allocation until the facts shift in a material manner |
WFC | Ranger Energy Services IPOs Friday | This week a number of companies are set to launch the initial public offering of their shares These companies include Zealand Pharma NASDAQ ZEAL Contura Energy NYSE CTRA and Ranger Energy Services NYSE RNGR whose target market valuation is at around 240 million The company would start trading on Friday on the New York Stock Exchange under the symbol RNGR
Range Energy Services is known for providing Permian Basin E P companies well services The company whose shares are set to be priced at around 16 18 is being managed by Credit Suisse NYSE CS and will be offering around five million Class A common shares Ranger Energy Services is also known for providing existing production tubing retrieval and replacement high spec services rig and facilities
The company which currently houses around seven hundred employees is based in Houston Texas under Darron Anderson as their chief executive officer
In the U S Securities and Exchange Commission SEC filing from the company for its initial public offering the company is set to price 5 million shares at around 16 18 along with an overallotment option for 750 000 more shares
Companies such as Barclays NYSE BCS Credit Suisse Wells Fargo NYSE WFC Evercore ISI and Capital One Securities among many others are set to be the offering s underwriters The Ranger Energy Services offering is expected to go up by as much as 103 5 million
The company has now a target of raising around 485 during the initial public offering of its shares Despite the positive outlook on the company s IPO as well as its ongoing backing from current investors the company is in the middle of negative financial numbers with its net loss rising to 32 million during the first quarter of this year compared to last year s loss of 22 1 million
However Ranger s revenue has been showing some upbeat growth with their gross margin rising by 22 during the end of 2016 By the end of March this year Ranger had 2 million worth of cash and its overall liabilities totaled to 48 9 million |
CMCSA | Peacock Details Suggest High Speed Internet Is Still Comcast s Top Priority | Cable communications and media juggernaut Comcast NASDAQ CMCSA ignored by most investors even though it has more than doubled the return of the S P 500 index over the last decade has gotten some rare attention lately The massive success of Netflix NASDAQ NFLX has legacy competitors and new entrants trying to capture a little of the streaming TV pie and Comcast s NBCUniversal is the latest to make a splash with its Peacock service due out on April 15
Peacock a nod to NBCUniversal s logo has attracted its fair share of excitement among shareholders and critics alike and the company s conservative strategy looks like it has differentiated itself enough that it should do just fine But just fine may not be what some were hoping for and some are thinking that Peacock won t be able to stay afloat against the likes of Netflix Disney NYSE DIS Apple and others and that Comcast will cannibalize its already struggling cable TV segment But they re looking at the puzzle the wrong way
A recap on Peacock
More details came out about the upcoming streaming service last week In an investor presentation Peacock management said it will have three tiers for subscribers to choose from a free ad supported version with some limits on what can be streamed and over 7 500 hours of programming at launch a 4 99 per month ad supported tier free for the 24 million Comcast and Cox cable subscribers out there with fewer limitations on what can be streamed and over 15 000 hours of programming at launch and a 9 99 per month tier for an ad free experience or 5 a month for those same Comcast and Cox customers
Comcast will load up the service with its extensive library of movies and TV shows including The Office 30 Rock and Parks and Rec which have been some of the most streamed programs running on Netflix and the paid premium tiers will get next day access to current seasons of shows and early access to things like late night talk shows Live news and sports will also be available including coverage of the 2020 Summer Olympics Additionally 2 billion will be spent on new content in the first two years in an attempt to keep subscribers interested
But it s the mix of live sports news and reality TV programming that s the real difference maker for Peacock compared with the other competition out there with the service essentially mimicking many aspects of the broadcast and cable channels NBCUniversal already operates Netflix Disney Apple and others only address the on demand show and movie market leaving out sports late night and news and most Spanish programming That could help attract viewers in an increasingly crowded streaming TV market Management expects Peacock to have 30 35 million subscribers by 2024 generating an average of 6 to 7 per user per month
No need for a savior
While the paid tier subscriptions will surely be an element to the service s money making scheme it does beg the question What about Comcast s existing cable business Won t Peacock hasten the cord cutting movement
Maybe However since Peacock is aiming to bundle its service for free for current cable subscribers in part through partnerships like an agreement with Cox for those cable customers which NBC hopes to replicate with other cable providers in the future it s clear NBC is trying not to undercut cable and is offering a free add on rather than a replacement After all for those millions of households that continue paying for cable all Peacock needs to do to succeed is capture some of the time those viewers spend on a streaming platform That ultimately would mean more ad dollars for Comcast
The low price means NBCUniversal will be relying primarily on advertising Live cable and broadcast TV viewers are already used to ads so making the switch to internet based programming will be a cinch All of this implies Peacock is aimed at being a sort of bridge between traditional TV and streaming Do bear in mind though Comcast doesn t need Peacock to be a runaway success like Netflix or Disney Comcast makes the bulk of its money on high speed internet and that isn t going to change anytime soon Three quarters of the company s profits came from the cable communications segment in 2018 which includes TV internet mobile phones and related services Through the first nine months of 2019 reported so far cable communications still accounted for two thirds of the company s profits which includes the addition of the European Sky business that Comcast acquired a year ago
Besides even though 222 000 cable customers were lost in Q3 2019 high speed internet subscriber additions more than offset that and helped Comcast increase its total relationship count by 3 4 to 31 2 million while Sky added a net 482 000 new relationships in Europe during the period
It remains to be seen how many of those millions of households around the globe will sign up for Peacock but it s a safe assumption that a fair number of them will eventually use the service and contribute to Comcast s ad based revenue stream Thus it s important to remember that Peacock isn t meant to be a blockbuster success It only needs to be a small bolt on value added segment to help offset cord cutting for it to make sense for shareholders |
CMCSA | 1 Big Hurdle That Could Prevent Comcast s Peacock From Succeeding | Comcast NASDAQ CMCSA revealed a lot of details about its forthcoming streaming service Peacock earlier this month It ll be mainly ad supported It ll have lots of live and on demand content And Comcast cable and internet subscribers will get early access to everything Peacock has to offer
But there s still one big question Will Peacock be able to partner with other companies for distribution
At the event unveiling Peacock management talked about partnering with other pay TV providers for distribution It also showed off the streaming service on its X1 platform which is licensed by Comcast s first distribution partner Cox Communications Comcast internet subscribers will be able to stream the service on Comcast s own Xfinity Flex platform
But most consumers use one of two platforms to stream video on their televisions Roku NASDAQ ROKU or Amazon s NASDAQ AMZN Fire TV Comcast could have trouble negotiating deals with the connected TV leaders which could seriously harm its growth prospects
The connected TV duopoly Comcast is dealing with
Roku and Amazon combine to account for nearly 70 of all streaming devices in the United States according to data from Parks Associates Not only that but both companies are seeing their installed bases grow faster than the rest of the industry In other words they re growing their market share
That has serious implications for a company like Comcast that s trying to get its streaming service into the homes of 35 million viewers over the next five years Roku and Amazon can be hard nosed negotiators
Disney NYSE DIS notably saw negotiations with Amazon stretch out to the final week before Disney s launch The two were stuck negotiating ad inventory shares on Disney s other apps Considering Comcast expects most Peacock viewers to use an ad supported version of the service it could face a similar challenge from Amazon or Roku
Peacock s ad load plans could make a deal even tougher to reach
One thing Comcast s management continuously harped on during its presentation was the industry low ad load in Peacock The service will show a maximum of five minutes of ads per hour which is nearly half of Hulu s ad load
Amazon and Roku make money by taking a share of ad inventory in most ad supported apps Some very popular apps that make the platform more attractive like Alphabet s YouTube often get a pass or share very little inventory but new upstarts like Peacock generally have to share more typically around 30 of inventory
Since advertising and the ad experience are an important part of Peacock Comcast Roku and Amazon may have an even tougher time coming to terms they can agree upon
Can Comcast go without a distribution partner
Comcast is a distribution company in its own right Practically all of its 20 million cable TV subscribers receive video through its platform Additionally its broadband subscribers of which it has around 26 million are all eligible to receive its Xfinity Flex set top box at no additional cost Comcast is also looking to partner with other pay TV distributors to include Peacock in their set top boxes
Peacock s pricing and Comcast s efforts to partner with other pay TV distributors is indicative of the company s strategy to make Peacock more of a complement to pay TV than a competitive offering in the streaming space And its modest goal of just 30 million to 35 million viewers within five years of launching also suggests it s not as aggressive about scaling its service as consumer discretionary competitors like Disney
But there will surely be consumers without a Comcast subscription that are at least mildly interested in Peacock Comcast will offer Peacock to everyone albeit at a slightly higher price than if you have a relationship with Comcast or one of its partners How will those people stream Peacock if there s no support for Roku or Amazon
If Comcast wants to see engagement at any meaningful level it needs to go to the places where consumers are streaming video But supporting Roku and Amazon s platforms could detract from Comcast s main goal of supporting the cable TV ecosystem that represents the core of its business Additionally those partnerships will eat into the advertising inventory that ll be Peacock s main source of revenue Comcast s unwillingness to go all in on streaming video the way Disney has puts it in a tough position |
CMCSA | Comcast s Peacock Streaming Service Will Be a Win for Viewers and Investors Here s Why | Comcast NASDAQ CMCSA unit NBCUniversal announced details for its Peacock streaming service at a star studded investor event held at the famed Studio 8H at 30 Rockefeller Plaza the home of Saturday Night Live SNL The event was hosted by a variety of Comcast and NBCU execs and included celebrity appearances by Tina Fey Jimmy Fallon and Seth Meyers
The company s approach will combine a premium catalog of content with a sustainable advertising and subscription model that will delight viewers and investors alike
Plenty of choices
Peacock will take a different approach from existing services with a hybrid style that turns the streaming model on its head The service will offer three tier choices with something for everyone The first tier will contain 7 500 hours of long tail and current programming that will be free to everyone The second tier will offer 15 000 hours of content including premium and original programming and will be free to Comcast and Cox cable subscribers and 4 99 per month for everyone else
By using targeted advertising Peacock will limit commercials to five minutes per viewing hour but viewers can go completely ad free for an additional 5 per month
A huge library of current ad back catalog content
The service will offer a deep library of content including hit NBC shows like The Office Parks and Recreation Will Grace Bates Motel Brooklyn Nine Nine every episode of SNL 30 Rock Frasier and Cheers and all of Dick Wolf s Law and Order and Chicago franchises
There will also be a laundry list of movies from Universal including Bridesmaids Shrek Field of Dreams American Pie A Beautiful Mind Back to the Future and E T the Extra Terrestrial as well as films from The Mummy Fast Furious Bourne Despicable Me and Jurassic Park franchises
Not to be outdone by its streaming rivals Peacock is also developing a broad slate of original shows including Dr Death based on the true crime podcast Brave New World based on the dystopian novel by Aldous Huxley and the Tina Fey produced Girls5Eva about a one hit wonder girl group from the 90s that reunites to give their pop star dreams one more shot Peacock will also release revivals reboots of popular nostalgic favorites including Battlestar Galactica Punky Brewster and Saved by the Bell
One thing that has been lacking in many streaming services is access to current news and live sports but Peacock s familial connection with NBC puts that issue to rest The streaming service will have access to news programming from NBC News MSNBC CNBC and Sky News with both live news and same day rebroadcasts For sports fans Peacock will have live coverage and exclusive coverage of the 2020 Olympics Premier League Soccer and Ryder Cup golf
Good for investors
While the lion s share of Comcast s revenue about 38 comes from its cable business the phenomenon of cord cutting is accelerating Peacock gives Comcast a way to simultaneously protect its legacy pay TV business while profiting from the ongoing consumer shift toward streaming A look at some of the metrics the company provided shows a pretty robust opportunity and plenty for investors to like
Management said Peacock will eventually generate between 6 and 7 per month in average revenue per user ARPU but that could be conservative Hulu is the closest approximation of Peacock s business model with a free ad supported tier and a premium tier with no commercials While some estimates put Hulu s ARPU at about 8 per subscriber for its ad supported tier Comcast management said the figure was closer to 10 This gives Peacock room to expand its ARPU even accounting for its promise of just five minutes of ads per viewing hour
That isn t all Comcast said it expects Peacock to attract between 30 million and 35 million subscribers by 2024 and it already has a head start as 24 million Comcast and Cox cable customers will get free access to the ad supported tier of the service with their cable subscription To put Peacock s goals in context Disney expects its Disney subscriber base to grow to between 60 million and 90 million by 2024 with about one third of subs coming from the U S
A big opportunity
Wedbush analyst Daniel Ives fresh from the investor presentation said Comcast was lowballing the subscriber estimates We believe given the massive content library sports properties and distribution footprint that these sub numbers are conservative as we believe 20 million subs over the next 12 to 18 months is a realistic goal he said
If Peacock were to reach its extremely modest ARPU and subscriber goals and there isn t any reason to think it won t it will reach adjusted EBITDA profitability by 2024 or sooner and the majority of revenue from each successive subscriber will drop to the bottom line
By providing both premium content and a free price tag as well as low cost upgrades Peacock is focusing on an untapped segment of the streaming market which could turn out to be both popular and lucrative |
WFC | Wells Fargo s chief risk officer to retire | Reuters Wells Fargo NYSE WFC Co said on Wednesday Chief Risk Officer Mike Loughlin will retire and a successor will be appointed in the next few months Loughlin a 36 year veteran at Wells Fargo has been the chief risk officer since 2008 and had helped the bank navigate through the financial crisis He was one of the top executives at Wells Fargo whose 2016 bonus was withheld as the lender looked to rebuild its reputation hurt by a sales scandal In September 2016 Wells Fargo reached a 190 million settlement with regulators for its employees creating phony bank and credit card accounts in customers names without their permission The San Francisco based company said last week it was not certain it had uncovered and fixed all problems related to the sales scandal
Loughlin will remain in his current role through the transition Wells Fargo said on Wednesday |
WFC | Investors yawn at latest U S government shutdown squabble | By Sinead Carew Reuters Investors have shrugged off the latest threat of a federal government shutdown saying they are not worried about a major pullback in shares even if U S lawmakers fail to strike a deal If history is any guide a shutdown would not be enough to knock the market off course And investors have already shown they can ignore political risks at home and abroad focusing instead on earnings and economic data to drive shares to record highs Republican leaders in U S Congress scheduled a vote on Thursday for a proposed temporary extension to fund government operations in the hope of getting it to President Donald Trump s desk before Friday s midnight deadline Wall Street strategists were hopeful a deal would be reached in the nick of time Congress on Dec 21 averted a shutdown just one day before federal funding was due to expire sending Trump a bill to provide just enough money to keep agencies operating through Jan 19 But even if a shutdown does occur strategists expect investors to take it in stride given the muted reaction during the three past shutdowns that have occurred when equity markets were open For a graphic showing S P 500 performance during U S government shutdowns see Shutdowns happen when Congress does not approve a budget or a continuing resolution to keep the government operating without a budget The first of these was in November 1995 and the last was in October 2013 And even with the S P 500 Index at near record highs after rising 19 percent in 2017 investors were skeptical the reaction to a 2018 shutdown would be any different The market impact is likely to be limited simply because the U S Treasury still has enough money to pay its bills through March said Peter Donisanu global research analyst for Wells Fargo NYSE WFC Investment Institute in St Louis We d see pullback in markets as buying opportunity While he put the chance of a shutdown at 50 50 Robert Phipps director at Per Stirling Capital Management in Austin Texas said he was not making any changes to his portfolio to protect against a shutdown The market reaction would be very short lived said Phipps Investors have been buying equities because of strong economic data and earnings growth according to Phipps who pointed out they have been mostly ignoring political turmoil including the specter of nuclear war between the United States and North Korea and the investigation of potential links between the Trump campaign and Russia Even the S P 500 s weakest shutdown performance still meant a slight gain The benchmark index rose 0 06 percent during the Clinton era shutdown between Dec 16 1995 and Jan 5 1996 Some strategists warned that the age of the nearly nine year old bull market makes it vulnerable to some volatility but even so any disruption would likely be brief It doesn t take much to be a catalyst for higher volatility said Peter Cecchini managing director and chief market strategist at Cantor Fitzgerald in New York If there s an unexpected impasse I think you can get a 2 5 percent to 5 percent pullback but it ll be a temporary bout of volatility |
WFC | Weak Dollar Poses 3 4 Trillion Question for U S Credit Markets | Bloomberg A key patron of U S corporate debt markets overseas investors may turn from friend into foe this year
The weak dollar has whittled down returns for unhedged money managers raising the prospect of capital flight if the greenback s losing streak gathers pace warn Wells Fargo NYSE WFC Co strategists
We see a distinct risk that non U S investors could become net sellers as global economic growth converges and central banks transition from a nearly a decade of easing to more normalized polices resulting in a lower USD strategists led by George Bory wrote in a report distributed to media this week
Higher relative yields and the U S recovery lured a tide of capital inflows into U S credit markets from mid 2014 That eased last year as a dip in the greenback created a nasty drag on unhedged portfolios in paper terms
Overseas flows into the 8 6 trillion U S investment grade high yield and leveraged loan markets fell by 35 percent in 2017 according to Wells Fargo estimates
With spreads on U S corporate bonds at 2007 lows Wall Street shares no such fears over waning foreign demand amid buoyant retail demand for fixed income strong economic data and higher nominal yields relative to Europe Currency weakness meanwhile makes debt cheaper for new buyers outside the U S and may reduce the incentive to snap up costly hedges in foreign exchange markets
But with non resident investors amassing 39 percent of the outstanding debt stock after a three year binge a ripple of foreign selling could unanchor credit markets from their bullish moorings Bory and his team conclude
A period of sustained foreign selling due to changes in FX valuations could be quite destabilizing for USD and global credit markets |
WFC | Wells Fargo says resolved payment duplication glitch | Reuters Wells Fargo Co N WFC said on Thursday it resolved an internal processing error that resulted in customers online bill payments being processed twice On January 17 an internal processing error caused temporary double posting of some items impacting some customers The issue was corrected overnight and customers should now see their correct balances the company said in an emailed statement The lender which is embroiled in a long lasting sales scandal said any fees or charges that customers may have incurred as a result of the error would be taken care of
The technical snag which was spotted on Wednesday left many customers with empty accounts |
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