Echostar Holdings beats by $0.17, reports revs in-line
- Reports Q1 (Mar) earnings of $0.15 per share, $0.17 better than the single analyst estimate of ($0.02); revenues rose 5.8% year/year to $531.08 mln vs the $529.55 mln two analyst estimat
Bunge beats by $0.32, misses on revs (49.98)
- Reports Q1 (Mar) adjusted earnings of $0.36 per share, $0.32 better than the S&P Capital IQ Consensus of $0.04; revenues fell 6.6% year/year to $9.94 bln vs the $10.67 bln S&P Capital IQ Consensus.
- In Agribusiness, based on the current soy crush margin environment, 2019 full-year results would be expected to be lower than 2018. Actual soy crush margins over the course of the year are likely to evolve based on U.S.-China trade discussions, crop sizes and farmer commercialization. Based on the current softseed crush margin environment, results would be slightly higher than last year, driven by strong oil demand. Improvements in risk management and in how we operate should support higher results in Grains compared with last year.
- Separately, Bunge also announces today that it has appointed John Neppl as Chief Financial Officer, effective May 29, 2019. He will succeed ThomasBoehlert who has served as Chief Financial Officer since 2017 and will remain for a transition period.
- Raul Padilla, President, South America and Sugar & Bioenergy, becomes President, Global Operations. Christos Dimopoulos, President, Agribusiness, becomes President, Global Supply Chains. In this role, he will lead the physical commodity supply chains that support Bunge's handling and processing assets. Brian Zachman, President, Global Risk Management, continues in this role, working to improve returns while reducing volatility across the company
Coty beats by $0.01, misses on revs (12.25)
- Reports Q3 (Mar) earnings of $0.13 per share, excluding non-recurring items, $0.01 better than the S&P Capital IQ Consensus of $0.12; revenues fell 10.4% year/year to $1.99 bln vs the $2.06 bln S&P Capital IQ Consensus.
- adjusted gross margin of 62.9% decreased by 140 bps, as margin expansion in Luxury and Professional Beauty was more than offset by margin contraction in Consumer Beauty, reflecting the negative impact from the change in revenue recognition accounting, adverse regional mix and margin weakness at Younique.
- Co states, "As a result, we ended the quarter with our leverage under control. Having been immersed in the business for several months and deeply involved in the formulation of the strategic plan, I would like to confirm that, in the medium term, we are targeting a net debt to adjusted EBITDA ratio of less than 4 times, which will be achieved through a combination of EBITDA growth and net debt paydown. Consistent with this objective, Coty will maintain our quarterly dividend of $0.125 per share and initiate a stock dividend reinvestment program giving shareholders the option to receive dividends fully in cash or in a combination of 50% cash and 50% common stock. JAB has informed us that it will elect to receive its dividend in stock for half of its holdings until Coty has reached its medium term targeted leverage
Thomson Reuters beats by $0.11, reports revs in-line; reaffirms FY19 and FY20 outlook (60.99)
- Reports Q1 (Mar) earnings of $0.36 per share, excluding non-recurring items, $0.11 better than the S&P Capital IQ Consensus of $0.25; revenues rose 7.8% year/year to $1.49 bln vs the $1.5 bln S&P Capital IQ Consensus.
- Sees FY19 rev +7.0-8.5% ex-FX (+3.0-3.5% organic), EBITDA $1.4-1.5 bln.
- Sees FY20 rev +3.5-4.5% ex-FX, EBITDA (margin) 30-31%
- "The trajectory of the business continued to improve on the progress made last year. Revenue growth is tracking to our outlook. Recurring revenue growth is the strongest we have seen in several years. Net sales are strong and our book of business continues to grow. Our transformation initiatives are on track and we are seeing good underlying margin improvement. We remain confident in our ability to achieve our 2019 and 2020 targets
Early premarket gappersGapping up:
- OUT +12.5%, EVH +9.5%, EVRI +8.6%, MTSI +8.6%, MTCH +8.5%, AVLR +8.4%, EA +8.2%, DIOD +8%, AKCA +6.8%, CYH +6%, SGMS +6%, TXMD +5.3%, QRVO +4.6%, KGC +3.9%, CTRE +3.7%, CRZO +3.5%, JCOM +3.5%, FUN +3.3%, NCR +3%, PZZA +2.8%, PEN +2.6%, PAA +2.3%, EDIT +2.3%, FANG +2.2%, TWO +2.2%, BYND +2%, COTY +2%, SMI +2%, JAZZ +1.9%, BECN +1.6%, ATVI +1.5%, PUMP +1.5%, TTWO +1.3%
Gapping down:
- INGN -26.2%, NVTA -17.6%, TWOU -16.7%, DDD -16.1%, SUPN -13.4%, PBPB -12.5%, LTHM -11.5%, HCLP -8.3%, AERI -8.2%, MYGN -6.8%, FARM -6.6%, TRIP -6.3%, OPK -5.9%, X -4.7%, ACLS -4.6%, ZAGG -4.5%, OSPN -4.3%, ICHR -3.9%, HUBS -3.6%, WU -3.4%, MCHP -3.3%, UUUU -3.1%, RGNX -2.5%, KAR -1.8%, LADR -1.8%, HALO -1.4%, PEGA -1.3%, S -0.9%
Donald Trump turns the screw in US-China trade dispute
Threat to raise tariffs fuelled by fury at Beijing’s tactics and confidence in economy
Last Sunday started out quietly by Donald Trump’s standards. His first tweet was about the appointment of a new head for the US immigration and customs enforcement agency. His second lamented the outcome of the Kentucky Derby horse race, after the original winner was controversially disqualified.
Then came the bombshell: in two more posts, the US president turned the screws on Xi Jinping, his Chinese counterpart, in their high-stakes negotiations to end a year-long trade dispute between the countries. If Beijing did not stop trying to “renegotiate” previously agreed provisions of the draft agreement, the president wrote, US tariffs would rise on Chinese goods worth hundreds of billions of dollars by Friday. After months of suggesting that the trade talks were going well, the president’s suggestion that a deal was in peril rattled global markets and unnerved policymakers worldwide.
According to senior administration officials and people briefed about the negotiations, Mr Trump’s irate messages did not come out of nowhere.
They were driven by anger at perceived backtracking by China on some commitments it had made earlier in the talks, mounting confidence that the US economy and markets could withstand more confrontation if necessary, and politics — the president needed to prove to the growing ranks of China hawks in Washington that he would not settle for a weak agreement.
“When all the dust settles . . . we have to show that this was a worthwhile negotiation,” said Chuck Grassley, the veteran Iowa Republican senator.
“The president is the one who has to step up and sell this deal, putting his reputation — and possibly the 2020 election — on the line,” said Derek Scissors, a resident scholar at the American Enterprise Institute, a Washington-based think-tank. “He’s not going to take that risk if he feels he’s being jerked around.”
In recent days, US negotiators have squarely blamed China for the eleventh-hour impasse. “Over the course of the last week or so we have seen an erosion in commitments by China,” Robert Lighthizer, the US trade representative, told reporters on Monday.
Mr Lighthizer did not say in which areas Beijing had pulled back on its promises but people familiar with the negotiations say they included two issues at the heart of the dispute: codifying in law protections for US intellectual property and preventing the forced transfer of technology.
Another problem was that Mr Xi’s negotiators had not provided a full Chinese text of a possible agreement, further irritating Washington.
Steven Mnuchin, the US Treasury secretary, said there had been “some signs” of a Chinese shift during negotiations in Beijing last week. But when he and Mr Lighthizer returned home over the weekend “it looked like we were going substantially backwards”. That prompted the two cabinet secretaries to “update” Mr Trump, precipitating his tweets.
Since then, both sides have kept a small window open for negotiations. Mr Trump declined to break off the talks and Beijing decided to plough ahead with plans to send Liu He, Mr Xi’s lead negotiator, to Washington later this week, albeit delayed by a day and with a smaller delegation.
“China got greedy and wanted to renegotiate entire parts of the deal,” said one person familiar with the talks. “The question is whether Liu comes to Washington with a mea culpa, saying he is prepared to negotiate on all outstanding issues, or will he come to say that if the US escalates, China will escalate right along with it.”
Others dispute such assertions, citing related Chinese amendments to a host of existing regulations — including those governing trademarks and fair competition — and a new foreign investment law. “Liu He is a straight-shooter,” said James Zimmerman, a Beijing-based partner at Perkins Coie, the law firm. “I can’t imagine he reneged on terms that are clear and actionable.”
Notwithstanding the loss of trust in recent days, many analysts believe that China and the US want to avoid a new round of tariffs. “Beijing would still like to have a trade deal that has the potential to defuse friction in the relationship and put it on a more stable footing — that’s their goal and they don’t want to throw that out,” said Bonnie Glaser at the Center for Strategic and International Studies, a Washington-based think-tank. “It’s significant that Liu is coming: if Liu didn’t have Xi’s support he would have been pulled.”
A person close to the Chinese negotiating team echoed that view. “Liu He has been entrusted with getting this deal done — that’s his mandate,” the person said. “To walk away doesn’t get you any closer to getting it done.”
Andy Rothman, an investment strategist at Matthews Asia, believes that Mr Trump would also rather have a deal than a full-blown trade war. “The underlying motivation driving his desire to negotiate with Xi hasn’t changed,” he said.
“Escalation will depress US corporate profits and hurt American consumers, leading to a weak equity market . . . But the president has decided once again to treat the talks between the world’s two largest economies as if it’s a Manhattan real estate deal.”
For many US executives who had hoped an agreement ending the uncertainty would be signed as early as this week, the sudden threat of new tariffs is deeply worrying. “We are concerned that this gets worse and instead of a tariff regime that lasts for a few months, we see a tariff regime that lasts for years,” said David French at the National Retail Federation.
“The choice of tariffs as a tool is an error on the part of the US. The Chinese are trying to get out of this conflict with the most modest concessions possible, and that’s an error on their part,” he added.
Risks rise of an accidental war in the Middle East
The US stance towards Iran increases the tension in a combustible region
David Gardner
The US decision to send a military task force to the Middle East was described on Sunday by John Bolton, national security adviser to President Donald Trump, as a “clear and unmistakable warning to the Iranian regime” that any attack on the US or its allies would be met with “unrelenting force”.
It is not clear what information the US has of imminent, Iran-inspired attacks, if any.
The USS Abraham Lincoln aircraft carrier strike group, to which Mr Bolton referred, set out for the Mediterranean and the Gulf more than a month ago, as part of a scheduled rotation. Mr Bolton is a warmonger. Nevertheless, the bellicose tone towards Iran of Trump administration hawks such as Mr Bolton and Mike Pompeo, secretary of state, are part of a pushback against the Islamic Republic that probably increases the risk of war.
That risk had already shot up after President Trump withdrew unilaterally from the nuclear accord that Iran signed with the US and five other world powers in 2015. Washington thereby unshackled Tehran from a commitment to mothball most of its nuclear programme in exchange for relief from economic sanctions.
Until now, Iran had been honouring the deal even though Mr Trump has reimposed sanctions and threatened allies, as well as adversaries, unless they cease doing business with Iran. The US is now escalating further.
Recently it listed the Islamic Revolutionary Guard Corps (IRGC) — the elite praetorians of the regime at home and its expeditionary force abroad — as a terrorist organisation, the first such outlaw designation of part of another country’s government. Now it has announced the ending of legal waivers to countries that still buy oil and gas from Iran, such as China, India and Turkey, with the stated intention of reducing Iranian oil exports to zero and triggering the collapse of its economy.
These measures alone have replaced a rare triumph of diplomacy with a detonator — in the most combustible region in the world, already on fire with proxy wars.
Iran is on one side of these regional conflicts, taking cynical advantage of the sectarian whirlwind loosed across the region by the US-led invasion of Iraq in 2003, and the Arab Spring turmoil from 2011. The rekindled schism between Shia and Sunni Islam — championed respectively by Iran and Saudi Arabia — has helped lay waste to much of Iraq and Syria, incubating the five-year reign of terror of Isis in a cross-border proto-state that has now collapsed. But the embers of Sunni resentment at Tehran’s creation of a Shia and Persian axis through Iraq, Syria and Lebanon burn on, even if Iran sees these forward positions in Arab countries as lines of defence.
Israel, too, regards the presence in Syria of the Revolutionary Guard and its militias, alongside the menace of Hizbollah, the Lebanese paramilitaries, as intolerable.
Right now, Israel, under the hard right leadership of Benjamin Netanyahu, is the spearhead of moves against Iran, intensifying hundreds of air strikes on Iranian and Hizbollah targets inside Syria — it is an undeclared conflict that regularly threatens to turn into an all-out war.
There are other actors in this shadowy picture.
Saudi Arabia and the United Arab Emirates are supporting powerful Syrian Kurdish militia, who managed to take control of north-east Syria with US air cover provided in the fight against Isis. But the Saudis and Emiratis are doing this to hit out at Iran and Turkey — both of whom confront their own Kurdish minorities. They have an additional grievance in Ankara’s case: Recep Tayyip Erdogan, the Turkish president, supports the Muslim Brotherhood. They have blockaded Qatar, the gas-rich Gulf emirate, for two years as a Brotherhood nest and Iranian surrogate — even though Qatar hosts the biggest US air base in the region.
Adding to the murk and confusion is the still discreet Gulf interest in Syria. Saudi Arabia, the UAE and Qatar backed Sunni rebels against Bashar al-Assad’s Iran-backed and Russia-supported minority regime. But now, the Saudis and Emiratis look ready to rebuild fences, and even help reconstruct the devastated areas of Syria. The UAE reopened its embassy in Damascus in December.
The Saudi-led Gulf looks anxious not to repeat the mistake Riyadh made by shunning diplomatic contact with Shia-majority Iraq and abandoning it to Iran. That is, at least, a more thoughtful response than the one Mr Trump urged on his first foreign trip as president in May 2017, to Riyadh — calling on the Saudis to lead a Sunni jihad against Iran.
Yet in this part of the world, pushback elicits pushback: for every action there is an equal and opposite reaction.
The present flare-up in Gaza, for example, looks to have an Iranian dimension; Tehran’s closest client, Islamic Jihad, seems to have started it by firing into Israel. In north-west Syria, meanwhile, President Vladimir Putin of Russia and the Assad regime have started an offensive in Idlib, the last Sunni rebel enclave, in disregard of the deal they struck with Turkey last October.
In the Middle East, there are many dangerous moving parts, and many immoderate actors who believe in executive action (Messrs Bolton, Pompeo, Netanyahu, Putin, Assad, Erdogan and General Qasem Soleimani, the IRGC commander in Arab territories). And in the US there is a president as erratic as Mr Trump.
With a cast like this it is rational to expect mishaps — as Iran’s foreign minister Mohammad Javad Zarif put it in New York last month. Some wars can and do happen by accident.
China’s central bank stocks up on gold as it seeks to diversify
PBoC adds to reserves for a fifth month as many economies seek to shift from dollar
China’s central bank added gold to its reserves for the fifth month in a row in April, the latest emerging market central bank to stock up on the yellow metal.
The People’s Bank of China said its gold reserves rose to 61.1m ounces last month, an increase of 480,000 ounces from March, and bringing its total gold holdings to about $78.3bn.
Emerging market central banks have become some of the largest buyers in the gold market as they look to diversify their reserves away from the dollar. Last year central banks, led by Russia, bought more gold last year than at any time since America decided to move off the gold standard in 1971, with around $27bn worth of purchases.
In the first quarter of this year central banks purchased a total of about $6bn worth of gold, an increase of 68 per cent compared with the same period a year earlier, according to the World Gold Council.
China’s purchases in April equate to around 15 tonnes of gold. Since it started buying gold in December after a 25-month pause, China has built up its gold holdings by almost 60 tonnes, according to analysts at Commerzbank.
Still, the PBoC’s total gold holdings are less than 3 per cent of its total reserves, according to the international gold institution.
The price of gold, which rose to as much as $1,347 a troy ounce in February, has recently fallen to trade at $1,287 a troy ounce.