Monday, 24 June, 2019
: THE WEEKEND PRESS
PRICE ACTION: last week the S&P +2.2%, Dow +2.4%, Nasdaq +3%, Russell 2k +1.8%. The Stoxx600 +1.7% over the past 5 days. The MSCI Asia Pacific index +2.6%, the EM benchmark +3.7% over the same period.
EVERYTHING BUBBLE: Stocks rose to records, bonds surged, oil jumped almost 10% and even gold got into the act, as traders celebrated a dovish conversion at the Federal Reserve. One back-of-the-envelope measure shows the rally in everything was the strongest since 2011.
TRADE WARS: China local press says the US must drop all tariffs imposed on China if it wants to negotiate.
GEOPOLITICS: Trump to hit Iran with heavier sanctions in retaliation for the downing of a US drone.
ARM RETURN: SoftBank CEO wants to re-list ARM Holdings within five years.
RETAIL M&A: Metro received €5.6bn bid from two billionaire investors.
BANK CONSOLIDATION: German govt sought to interest UniCredit in a stake in Commerzbank.
——— BLOOMBERG ———
China has the strength and patience to withstand the trade war, and will fight to the end if the U.S. administration persists with it, China’s state-run People’s Daily said in an editorial Saturday. The U.S. must drop all tariffs imposed on China if it wants to negotiate on trade, and only an equal dialogue can resolve the issue and lead to a win-win, the newspaper said.
President Trump gave himself a pat on the back Saturday for the recent stock market rally, and tagged a fake Twitter account from Russia in the process. “Stock Market is on track to have the best June in over 50 years! Thank you Mr. President! @WallStreetJour” Trump said in a tweet.
Trump said the U.S. will impose major new sanctions on Iran Monday, days after he abruptly called off a plan for airstrikes against the Islamic Republic based on the concept of proportionality after Iran shot down a U.S. Navy drone. Trump told reporters he intended to impose additional economic sanctions and that military action is “always on the table until we get this solved” and that if Iran’s leadership “behaves badly, it’s going to be a very bad day for them”. He also said that having the Strait of Hormuz open to shipping is less important to the U.S. because of its large domestic oil production, and benefits China, Japan, Indonesia and other countries much more.
The Trump administration will roll out the first part of its long-awaited Middle East peace plan, which aims to raise billions to help Palestinians and other Arabs in the region. Top Trump officials and business leaders will attend the unveiling of the plan, spearheaded by Jared Kushner, at a summit Tuesday in Bahrain. Mnuchin is among U.S. officials in Bahrain to promote $50bn plan.
State-backed Iranian hackers have stepped up cyberattacks on the U.S., according to the Department of Homeland Security’s cyberagency. There has been a “recent rise in malicious cyberactivity directed at United States industries and government agencies by Iranian regime actors and proxies,” Christopher Krebs, the director of the Cybersecurity and Infrastructure Security Agency, said Saturday in a statement.
A market-based gauge of the outlook for European price increases – five-year, five-year inflation swaps – completed its steepest weekly rise in more than seven years on Friday. The jump started after the ECB president gave a speech on Tuesday flagging the likelihood that additional monetary stimulus is on the way.
Boris Johnson’s bid to become the U.K.’s next prime minister was thrown into turmoil after an argument with his partner prompted police to visit his London residence. Police said they found no cause for action as both Johnson and Symonds were safe and well after a neighbor raised concerns for her safety. But the incident dominated Saturday’s U.K. newspapers and threatened to damage Johnson’s campaign at a critical time in the Conservative Party leadership contest.
Boris Johnson pitched his bid for U.K. prime minister to Conservative Party members and drew cheers when he dodged questions about a spat with his partner that brought the police to his London home. Front-runner Johnson and his opponent Jeremy Hunt made their opening appeals to grass-roots Tories on Saturday at a hustings, or political roadshow, that focused attention on Johnson’s character. The two candidates will crisscross Britain seeking to become party leader before a membership ballot in July.
Italy needs to respect financial targets in order to maintain investor confidence, Bank of Italy Governor Ignazio Visco said at an event in Venice, Ansa news agency reported.
Thousands of demonstrators who surrounded Hong Kong police headquarters dispersed peacefully after they had blocked all entrances to the building for 15 hours as part of ongoing protests over a proposed China-backed extradition bill.
Bitcoin breached $10,000 for the first time in about 15 months, recouping more than half of the parabolic increase that introduced mainstream investors to the digital asset before the bursting of the cryptocurrency bubble.
Germany’s top financial watchdog has warned that banks must prepare to weather several years with the “lowest” interest rates, the Boersen-Zeitung reported. “Many banks have adjusted too little to these market conditions,” the newspaper cited Bafin President Felix Hufeld as saying. “Banks need to be more focused and efficient, otherwise they will be eliminated from the market.”
German government officials had sought to interest UniCredit in a stake in Commerzbank, Passauer Neue Presse reports citing unidentified German lawmakers who were part of a delegation visiting Rome this week. UniCredit didn’t express interest, the newspaper reported.
A group of Natixis fund assets dropped by €1.1bn on Thursday, a day after Morningstar Inc. raised concerns about one of the investment pool’s holdings and suspended its rating. The H2O Allegro fund’s assets, managed by Natixis-backed H2O Asset Management, declined by €225mln, according to the company’s website. That’s on top of a €113mln fall on Wednesday, when the research and rating company published its report on that fund, data compiled by Bloomberg show. Three other funds, Adagio, Multi Aggregate and Multibonds, also saw their assets decline, bringing the combined one-day drop to more than €1bn.
A plan to rescue troubled Italian lender Banca Carige will proceed without the participation of Apollo Global Management, la Repubblica reported.
Two investors in Metro made a takeover offer valuing the German food distributor at €5.8bn, saying they wanted to guide the company through its recovery. Metro received the bid from Czech billionaire Daniel Kretinsky’s EP Global Commerce VI and Slovak investment partner Patrik Tkac. Their bid valued the company at €16 per ordinary share and €13.80 per preferred share.
Beiersdorf is seeking to accelerate growth via acquisitions that strengthen its core business of skincare and broaden the company’s geographical reach, Boersen-Zeitung reported, citing an interview with the company’s finance chief.
Orange is considering a bid for a minority stake in Ethiopia’s state-owned phone monopoly as Africa’s second-most populous country prepares to welcome foreign telecommunications investors for the first time.
Volkswagen is in discussions with Turkish officials about the prospect of building a new factory in the country for manufacturing cars under the Seat and Skoda brands.
Daimler was ordered to recall about 60,000 Mercedes-Benz GLK 220 diesel cars after Germany’s motor authority said the carmaker used a device to manipulate emissions, Bild am Sonntag reported.
The chief of one of Germany’s biggest real estate companies suggested an alternative to Berlin’s plan to freeze rents for five years, including linking rate increases to tenants’ incomes. The freeze agreed by the city’s Social Democratic-led government this week may cause “chaos and discord,” Deutsche Wohnen SE Chief Executive Officer Michael Zahn told the Tagesspiegel am Sonntag newspaper. He also recommended quotas for the construction of apartments for low-income households.
A fire at the largest refinery on the U.S. East Coast sent gasoline prices soaring, threatening to raise pump prices from Delaware to Maine just as American drivers get set to head off on vacation. Futures jumped 3.9%, the most in more than three months after an explosion and fire Friday at the Philadelphia Energy Solutions oil refinery. Pump prices are likely to rise as the surge filters down to retail stations, reversing a more than 20-cent drop from early May that took the nationwide average down to $2.67 a gallon.
Nissan CEO Hiroto Saikawa is due to be questioned by the board on Monday about allegations by a former senior executive that he broke company rules to pay for a house in Tokyo, according to people familiar with the matter.
Mitsubishi Motors will sell its 15% stake in Harbin Dongan Auto Engine Co. this fiscal year ending March 2020, Nikkei reports, not saying where it obtained the information.
SoftBank Masayoshi Son says he wants to re-list ARM Holdings within five years, re-introducing stock markets to the British chipmaker his company bought for $32bn in 2016. SoftBank has not yet decided where the public offering will be held, Son said in Taipei Saturday.
Fast Retailing is planning to raise wages by the spring of 2020 for management-track employees to encourage outstanding workers, Nikkei reported, citing Chief Executive Officer Tadashi Yanai.
Japan will ask the U.S. to reduce or eliminate tariffs on agricultural items including rice and beef at the G-20 Summit this week in Osaka, the Sankei newspaper reported.
——- REUTERS ——-
Autonomous vehicle technology company Velodyne Lidar has hired bankers for an initial public offering, Business Insider reported on Saturday, citing sources familiar with the process. Velodyne is looking to surpass its private valuation of $1.8 billion and go public before the end of 2019, Business insider added, citing a source.
Exxon Mobil is considering selling all of the stakes it holds in oil and gas fields off the Norwegian coast, a spokeswoman said. A number of private-equity backed firms, including Okea, and independent oil firms Aker BP and DNO, have this year said they were looking to buy more assets on the Norwegian continental shelf.
FedEx said an “operational error” caused a Huawei Technologies Co Ltd phone to not be delivered to the United States and the package delivery company apologized for the error, the Global Times reported on Sunday.
Trading in Neil Woodford’s £3.7bn Equity Income Fund may not be reopened swiftly after it was suspended on June 3 because of the illiquid assets it holds. The fund’s authorized owner, Link Fund Solutions, must update investors on whether it intends to keep the fund closed to trading at least every 28 days. The first deadline is July 1.
—— ASSOCIATED PRESS ——
Prague won’t have seen anything like this since the protests of 1989 which brought down the communist regime in what was then Czechoslovakia. Some 400,000 have signed a petition calling on Czech Prime Minister Andrej Babis to step down over fraud allegations and subsidies paid to his former companies. And hundreds of thousands are expected at a rally in Prague on Sunday to urge the populist billionaire to stand down.
—— WASHINGTON POST ——
President Trump approved an offensive cyber strike that disabled Iranian computer systems used to control rocket and missile launches, even as he backed away from a conventional military attack in response to its shoot-down Thursday of an unmanned U.S. surveillance drone, according to people familiar with the matter. The cyber strikes, launched Thursday night by personnel with U.S. Cyber Command, were in the works for weeks if not months, according to two of these people, who said the Pentagon proposed launching them after Iran’s alleged attacks on two oil tankers in the Gulf of Oman earlier this month.
—— SUNDAY TIMES ——
The Tory leadership contest erupted in acrimony last night as Jeremy Hunt said Boris Johnson did not “deserve” to lead the country unless he answered questions about his “character”. In an astonishing escalation of hostilities, cabinet allies of Hunt claimed that Johnson’s colourful private life meant he was a security risk and vulnerable to blackmail from foreign powers.
Two bosses at Hargreaves Lansdown who promoted the fallen fund manager Neil Woodford have volunteered to defer their bonuses in the wake of the investment scandal. The failure to give up their bonuses entirely, however, has sparked anger. More than 290,000 clients of the funds supermarket have had £1.6bn trapped in the Woodford Equity Income Fund since withdrawals by investors were suspended on June 3.
TSB’s “rising star” chief operating officer has become the latest senior executive to leave the bank as it tries to draw a line under its technology fiasco. Helen Rose, who joined from Lloyds Bank in 2011, is set to leave at the end of the summer. Other high-profile departures include the head of TSB’s branch network, Peter Navin, and commercial banking boss Richard Davies.
Some of the biggest government outsourcers face being barred from lucrative contracts if they fail to start paying small business suppliers on time. From September, companies that do not pay 95% of subcontractors within 60 days risk being frozen out of public sector procurement, which is worth £50bn a year. The rule will apply to all contracts worth more than £5m.
Taxpayers could end up on the hook for cost overruns if a new £20bn nuclear power station in Suffolk blows its budget by more than 30%, under plans proposed by French energy giant EDF.
Sir Richard Branson’s Virgin Atlantic has demanded 150 of the new runway slots due to be created at Heathrow to prevent British Airways stifling competition. Shai Weiss, boss of Virgin Atlantic, said his airline should be given 43% of the 350 new take-off and landing slots when the airport’s £14bn third runway is built. IAG, which owns British Airways, Aer Lingus and Iberia, holds about 57% of Heathrow’s current capacity.
Greene King’s dividend will come into focus this week as the pub group’s new boss faces the City for the first time after the departure of Rooney Anand. Nick Mackenzie will be tasked with ensuring Greene King continues to pay off debts relating to the acquisition of the rival Spirit pub group in 2015. He will also face questions over his plans for the dividend. He is expected to hold it steady at the full-year results on Thursday.
Waitrose is close to offloading eight supermarkets in a deal that will relieve some of the pressure on the John Lewis Partnership’s finances. The chain has received bids for stores in locations including Bath, Reading and Market Harborough. Property sources expect the sales to raise at least £170m. Waitrose will continue to operate them under leases from the buyers.
The New York hedge fund trying to overthrow the board of train and bus giant FirstGroup is threatening to sue its directors if they sign a deal to run the new West Coast rail franchise. Coast Capital has called a vote to oust half the FTSE 250 company’s board and replace them with its own nominees.
Smartphone technology supplier IQE could face an investor backlash for paying boss Drew Nelson a bonus.
Amazon has come up with yet another way to watch us: surveillance drones. The online retail behemoth has received a patent in America for “surveillance as a service”, where a drone would hover over an “authorised” home to take pictures or videos.
Facebook will be hauled before Congress next month to explain its new cryptocurrency, which threatens to undermine the governments that are seeking to regulate the social media giant.
—— TELEGRAPH ——
Robots could replace judges in dealing with parking fine disputes, the Justice Secretary has said. David Gauke said that whilst there would be controversy about a “bewigged robot judges” making decisions about a person’s the industry might be “happy” with artificial intelligence (AI) creating “simple tools to provide straightforward justice”.
Hedge fund manager Crispin Odey has ramped up his bet against WeBuyAnyCar.com owner BCA Marketplace, despite a £1.9 billion private equity buy-out bid.
Bitcoin surged past the $11,000 mark in less than 24 hours after breaching the $10,000 level for the first time in over a year.
FirstGroup is set to win West Coast main line franchise if it can avoid boardroom coup this week.
—— MAIL ON SUNDAY ——
Dave Dyson, the boss of mobile operator Three, has warned that banning Huawei from the UK could force telecoms firms to merge with rivals to cut costs.
BMW has declared it remains ‘committed’ to the UK in a boost for the embattled automotive industry.
AfriAg Global, one of the few cannabis firms listed in London, is considering a move to America’s heavyweight Nasdaq Exchange.
—— CNN ——
Richard Barry, CEO of Tru Kids Brands and former global chief merchandising officer at Toys “R” Us, plans to open at least two Toys “R” Us stores this year, with “more planned for 2020”. The owners of Tru Kids Brands won the rights to the Toys “R” Us brand last October. A source said the new stores would be smaller than old Toys “R” Us’ old stores and “experiential”.
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