Reportedly raising its prices in the US by 13-18% for 58M subscribers - press (update) - Most popular plan going to $13/mo from $11/mo
Gapping down
In reaction to disappointing earnings/guidance:
- SHW -10%, JPM -3%, DAL -1.7%, EVBG -1.3% (also announces launch of proposed underwritten public offering of $125 mln of its common stock), NAV -1.1%, ENR -0.9% (also commenced concurrent offerings of $187.5 mln of shares of common stock and $187.5 mln of shares of Series A Mandatory Convertible Preferred Stock pursuant to an effective registration statement), CTRN -0.9%, UNH -0.6%
Other news:
- PCG -10% (following 50%+ move lower amid bankruptcy concerns)
- ALNY -7.2% (prices 5 mln shares of common stock at $77.50 per share)
- STML -4.7% (proposed offering to sell 6.6 mln shares of common stock)
- JCP -3.8% (announces executive leadership changes; seeking to fill key senior management positions and address current business needs)
- ARR -2.9% (prices underwritten public offering of 6 mln shares of common stock at a public offering price of $20.41 per)
- TOT -2% (reports Q4 average liquids price of $57.2/barrel versus $57.6/barrel last year)
- XLRN -1.9% (announces proposed public offering of $200 mln of its common stock)
- CVS -1.5% (Walmart (WMT) expected to leave CVS Caremark pharmacy networks following dispute over pricing, according to the WSJ)
- BSX -1.2% (Boston Scientific, Edwards Lifesciences (EW) reach agreement to settle all outstanding patent disputes)
Analyst comments:
- CTRL -5.5% (downgraded to Mkt Perform from Outperform at Raymond James)
- ALB -1.4% (downgraded to Neutral from Buy at Nomura)
- ADSK -1.3% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
Gapping up
In reaction to strong earnings/guidance:
- APRN +12.5%, PLAY +6.8%, RBBN +4.7%, MUX +2.2%, TTMI +1.8%, CPG +1.5%, CHEF +0.8%
Other news:
- ARRY +9.8% (announces updated safety and efficacy results from Phase 3 BEACONC CRC trial)
- TRXC +9.4% (confirms receipt of FDA 510(k) clearance for its Senhance Ultrasonic System)
- NBEV +8.3% (ongoing volatility)
- BGNE +4% (receives FDA Breakthrough Therapy designation of zanubrutinib for the treatment of adult patients with mantle cell lymphoma)
- EXEL +3.9% (announces FDA approval of CABOMETYX tablets for previously treated hepatocellular carcinoma)
- GNW +3.3% (Genworth Financial receives approval from New York regulator for proposed Oceanwide transaction)
- TLRY +3.1% (Tilray and Authentic Brands Group sign global revenue sharing agreement to develop and market consumer cannabis brands)
- FFBC +1.1% (announces stock repurchase plan of up to 5.0 mln shares of common stock)
- BABA +0.8% (after seeing late sell-off as exec comments from conference circulated)
- MU +0.8% (Micron exercises right to purchase Intel's (INTC) interest in the IM Flash Technologies joint venture for approx. $1.5 bln, as previously disclosed)
Analyst comments:
- BOX +3.4% (upgraded to Buy from Neutral at Rosenblatt)
- INCY +3% (added to Conviction Buy List at Goldman)
- HP +0.5% (upgraded to Overweight from Neutral at JP Morgan)
Trump Discussed Pulling U.S. From NATO, Aides Say Amid New Concerns Over Russia
WASHINGTON — There are few things that President Vladimir V. Putin of Russia desires more than the weakening of NATO, the military alliance among the United States, Europe and Canada that has deterred Soviet and Russian aggression for 70 years.
Last year, President Trump suggested a move tantamount to destroying NATO: the withdrawal of the United States.
Senior administration officials told The New York Times that several times over the course of 2018, Mr. Trump privately said he wanted to withdraw from the North Atlantic Treaty Organization. Current and former officials who support the alliance said they feared Mr. Trump could return to his threat as allied military spending continued to lag behind the goals the president had set.
In the days around a tumultuous NATO summit meeting last summer, they said, Mr. Trump told his top national security officials that he did not see the point of the military alliance, which he presented as a drain on the United States.
At the time, Mr. Trump’s national security team, including Jim Mattis, then the defense secretary, and John R. Bolton, the national security adviser, scrambled to keep American strategy on track without mention of a withdrawal that would drastically reduce Washington’s influence in Europe and could embolden Russia for decades.
Now, the president’s repeatedly stated desire to withdraw from NATO is raising new worries among national security officials amid growing concern about Mr. Trump’s efforts to keep his meetings with Mr. Putin secret from even his own aides, and an F.B.I. investigation into the administration’s Russia ties.
A move to withdraw from the alliance, in place since 1949, “would be one of the most damaging things that any president could do to U.S. interests,” said Michèle A. Flournoy, an under secretary of defense under President Barack Obama.
“It would destroy 70-plus years of painstaking work across multiple administrations, Republican and Democratic, to create perhaps the most powerful and advantageous alliance in history,” Ms. Flournoy said in an interview. “And it would be the wildest success that Vladimir Putin could dream of.”
Retired Adm. James G. Stavridis, the former supreme allied commander of NATO, said an American withdrawal from the alliance would be “a geopolitical mistake of epic proportion.”
Editors’ Picks
The Insect Apocalypse Is Here
The Itsy-Bitsy, Teenie-Weenie, Very Litigious Bikini
How Does Your State Make Electricity?
“Even discussing the idea of leaving NATO — let alone actually doing so — would be the gift of the century for Putin,” Admiral Stavridis said.
Senior Trump administration officials discussed the internal and highly sensitive efforts to preserve the military alliance on condition of anonymity.
After the White House was asked for comment on Monday, a senior administration official pointed to Mr. Trump’s remarks in July when he called the United States’ commitment to NATO “very strong” and the alliance “very important.” The official declined to comment further.
American national security officials believe that Russia has largely focused on undermining solidarity between the United States and Europe after it annexed Crimea in 2014. Its goal was to upend NATO, which Moscow views as a threat.
Russia’s meddling in American elections and its efforts to prevent former satellite states from joining the alliance have aimed to weaken what it views as an enemy next door, the American officials said. With a weakened NATO, they said, Mr. Putin would have more freedom to behave as he wishes, setting up Russia as a counterweight to Europe and the United States.
An American withdrawal from the alliance would accomplish all that Mr. Putin has been trying to put into motion, the officials said — essentially, doing the Russian leader’s hardest and most critical work for him.
When Mr. Trump first raised the possibility of leaving the alliance, senior administration officials were unsure if he was serious. He has returned to the idea several times, officials said increasing their worries.
ADVERTISEMENT
Mr. Trump’s dislike of alliances abroad and American commitments to international organizations is no secret.
The president has repeatedly and publicly challenged or withdrawn from a number of military and economic partnerships, from the Paris climate accord to an Asia-Pacific trade pact. He has questioned the United States’ military alliance with South Korea and Japan, and he has announced a withdrawal of American troops from Syria without first consulting allies in the American-led coalition to defeat the Islamic State.
NATO had planned to hold a leaders meeting in Washington to mark its 70th anniversary in April, akin to the 50-year celebration that was hosted by President Bill Clinton in 1999. But this year’s meeting has been downgraded to a foreign ministers gathering, as some diplomats feared that Mr. Trump could use a Washington summit meeting to renew his attacks on the alliance.
Leaders are now scheduled to meet at the end of 2019, but not in Washington.
Mr. Trump’s threats to withdraw had sent officials scrambling to prevent the annual gathering of NATO leaders in Brussels last July from turning into a disaster.
Senior national security officials had already pushed the military alliance’s ambassadors to complete a formal agreement on several NATO goals — including shared defenses against Russia — before the summit meeting even began, to shield it from Mr. Trump.
But Mr. Trump upended the proceedings anyway. One meeting, on July 12, was ostensibly supposed to be about Ukraine and Georgia — two non-NATO members with aspirations to join the alliance.
Accepted protocol dictates that alliance members do not discuss internal business in front of nonmembers. But as is frequently the case, Mr. Trump did not adhere to the established norms, according to several American and European officials who were in the room.
He complained that European governments were not spending enough on the shared costs of defense, leaving the United States to carry an outsize burden. He expressed frustration that European leaders would not, on the spot, pledge to spend more. And he appeared not to grasp the details when several tried to explain to him that spending levels were set by parliaments in individual countries, the American and European officials said.
Then, at another leaders gathering at the same summit meeting, Mr. Trump appeared to be taken by surprise by Jens Stoltenberg, the NATO secretary general.
Backing Mr. Trump’s position, Mr. Stoltenberg pushed allies to increase their spending and praised the United States for leading by example — including by increasing its military spending in Europe. At that, according to one official who was in the room, Mr. Trump whipped his head around and glared at American officials behind him, surprised by Mr. Stoltenberg’s remarks and betraying ignorance of his administration’s own spending plans.
Mr. Trump appeared especially annoyed, officials in the meeting said, with Chancellor Angela Merkel of Germany and her country’s military spending of 1 percent of its gross domestic product.
Congressional Republicans criticized Mr. Trump’s news conference with President Vladimir V. Putin of Russia in Helsinki, Finland, just days after the NATO leaders summit meeting in Brussels.
By comparison, the United States’ military spending is about 4 percent of G.D.P., and Mr. Trump has railed against allies for not meeting the NATO spending goal of 2 percent of economic output. At the summit meeting, he surprised the leaders by demanding 4 percent — a move that would essentially put the goal out of reach for many alliance members. He also threatened that the United States would “go its own way” in 2019 if military spending from other NATO countries did not rise.
During the middle of a speech by Ms. Merkel, Mr. Trump again broke protocol by getting up and leaving, sending ripples of shock across the room, according to American and European officials who were there. But before he left, the president walked behind Ms. Merkel and interrupted her speech to call her a great leader. Startled and relieved that Mr. Trump had not continued his berating of the leaders, the people in the room clapped.
In the end, the NATO leaders publicly papered over their differences to present a unified front. But both European leaders and American officials emerged from the two days in Brussels shaken and worried that Mr. Trump would renew his threat to withdraw from the alliance.
Mr. Trump’s skepticism of NATO appears to be a core belief, administration officials said, akin to his desire to expropriate Iraq’s oil. While officials have explained multiple times why the United States cannot take Iraq’s oil, Mr. Trump returns to the issue every few months.
Similarly, just when officials think the issue of NATO membership has been settled, Mr. Trump again brings up his desire to leave the alliance.
Any move by Mr. Trump against NATO would most likely invite a response by Congress. American policy toward Russia is the one area where congressional Republicans have consistently bucked Mr. Trump, including with new sanctions on Moscow and by criticizing his warm July 16 news conference with Mr. Putin in Helsinki, Finland.
Members of NATO may withdraw after a notification period of a year, under Article 13 of the Washington Treaty. Such a delay would give Congress time to try blocking any attempt by Mr. Trump to leave.
“It’s alarming that the president continues to falsely assert that NATO does not contribute to the overall safety of the United States or the international community,” said Senator Jeanne Shaheen, a New Hampshire Democrat who is among the lawmakers who support legislation to stop Mr. Trump from withdrawing from the military alliance. “The Senate knows better and stands ready to defend NATO.”
NATO’s popularity with the public continues to be strong. But the alliance has become a more partisan issue, with Democrats showing strong enthusiasm and Republican support softening, according to a survey by the Ronald Reagan Institute.
Kay Bailey Hutchison, Washington’s ambassador to NATO and a former Republican senator, has sought to build support for the alliance in Congress, including helping to organize a bipartisan group of backers.
But even if Congress moved to block a withdrawal, a statement by Mr. Trump that he wanted to leave would greatly damage NATO. Allies feeling threatened by Russia already have extreme doubts about whether Mr. Trump would order troops to come to their aid.
In his resignation letter last month, Mr. Mattis specifically cited his own commitment to America’s alliances in an implicit criticism of Mr. Trump’s principles. Mr. Mattis originally said he would stay through the next NATO meeting at the end of February, but Mr. Trump pushed him out before the new year.
Acting Defense Secretary Patrick M. Shanahan is believed to support the alliance. But he has also pointedly said he thinks that the Pentagon should not be “the Department of No” to the president.
European and American officials said the presence of Mr. Mattis, a former top NATO commander, had reassured allies that a senior Trump administration official had their back. His exit from the Pentagon has increased worries among some European diplomats that the safety blanket has now been lost.
Visteon narrows FY18 rev guidance; sees FY19 EPS in line (66.90)
- Co issues narrows guidance for FY18 (Dec), sees FY18 (Dec) revs of $2.97-2.98 bln from $2.95-3.0 bln vs. $2.97 bln S&P Capital IQ Consensus.
- Co issues in-line guidance for FY19 (Dec), sees FY19 (Dec) revs of $2.9-3.0 bln vs. $2.93 bln S&P Capital IQ Consensus.
--> Watch FR, EO,CON,...
No pre-market yet for VC US
Delta Air Lines beats by $0.04, reports revs in-line; guides Q1 EPS below consensus (47.75)
- Reports Q4 (Dec) earnings of $1.30 per share, excluding non-recurring items, $0.04 better than the S&P Capital IQ Consensus of $1.26; revenues rose 5.0% year/year to $10.74 bln vs the $10.71 bln S&P Capital IQ Consensus. Total unit revenues excluding refinery sales (TRASM, adjusted) increased 3.2% during the period driven by healthy leisure and corporate demand offsetting an approximately 0.5 point headwind from unfavorable foreign exchange rates.
- ON January 3, co raised EPS to $1.25-1.30 from $1.10-1.30, pre-tax margin to 10-11% from 9-11% and lowered unit rev to 3% from 3.5%.
- Co issues downside guidance for Q1, sees EPS of $0.70-0.90, excluding non-recurring items, vs. $0.95 S&P Capital IQ Consensus; adj. TRASM +0-2%, adj. CSM +1-2%. pre-tax margin 6.5-8.5%.
- "Our March quarter adjusted unit revenue growth is expected to be flat to up two percent including impacts from the timing of Easter, increasing currency headwinds, and the ongoing government shutdown.
China shifts from buying cars to sharing them
Fewer people want to buy automobiles because ride-sharing services are widely available
According to the lunar calendar, this is the year of the pig but, clearly, the greed that it symbolises does not extend to the desire to buy a new car in China.
In December, Chinese car sales were down a fifth from the previous year, while for the whole of 2018 they were lower than the previous year for the first time in about two decades. The US dream of car ownership, which 20 years ago was the definition of everything good that America represented, seems to be dying across the Pacific.
Most analysts think there is worse to come. “Inventory is at a multiyear high and volumes have deteriorated continuously,” said Goldman Sachs analysts, predicting that Chinse car sales will be lower in 2021 than they were in 2017.
At that time, 70 per cent of growth in car sales worldwide came from China. That means the subsequent drop in mainland sales has global implications given how many international car companies have operations there.
Any pessimism is solidly based. The slowdown in car sales is part of a general, broader slowdown in retail sales in China. Among the factors accounting for the drop is bearish consumer sentiment in the wake of friction with the US, tighter credit conditions especially for households, lower stock and property prices, and the end of tax breaks that brought a lot of demand forward after their introduction three years ago.
Goldman entitled its recent report “Not Yet”, in a reference to a possible recovery in demand. But should the brokerage have instead entitled it “Maybe Never”? Most of the reasons cited for the slowdown in sales are cyclical factors. But what if there is more to it than that? In fact, there are secular factors at work as well that suggest lower sales are not simply a passing cyclical phenomenon.
Cars are at the forefront of a larger transformation that is part of the sharing economy, and the sharing economy is fundamentally deflationary. Cars are going from being a manufactured good that households aspire to own to being a service. China is at the forefront of this transformation.
That is why many hedge fund managers are short many carmakers in China, including the stronger domestic ones such as Geely Automobile, Guangzhou Automobile, Dongfeng Motor, and those with joint ventures including American carmakers such as General Motors, the Germans, and the Japanese such as Toyota and Honda.
The transformation is gathering momentum. Looking at the data on retail sales, China seems to be on the verge of a much more drastic slowdown than the 6.2 per cent growth that analysts at JPMorgan are predicting for this year.
But retail sales data only capture part of the picture, noted Chris Wood, an analyst with the CLSA unit of Beijing-based Citic Securities. “The quarterly household survey shows a better growth rate since it includes services” and not just physical goods (unlike the retail sales data), and services accounts for 40 per cent of all household spending, he said.
For example, ride-sharing and car-sharing services are a big part of the reason why fewer people wish to buy cars in urban areas, even though incomes are much higher than in the countryside, meaning affordability is less of an issue.
But there are generational shifts as well. “Everything happens earlier in China,” said one mainland hedge fund manager. “We are a nation of early adaptors.”
Young people who have a penchant for spending rather than saving as their parents’ generation has done, express little desire to own a car, not least because they cannot text while they are at the wheel.
Meanwhile government policy, which is a big influence on demand, aims to encourage a shift from traditional polluting, fuel-guzzling vehicles to cleaner electric ones. Moreover, virtually every local government in the country wishes to champion local electric vehicles and battery producers.
Some hedge funds are strong believers in BYD as an alternative to both traditional carmakers in China and international competitors in the new world of electric vehicles, notably Tesla.
In 2018, “BYD sales grew 118 per cent and it is profitable, and yet it only has a market cap of $20bn, compared to Tesla, which makes losses and has a market cap of $58bn”, said Zhang Wei, founder of Yuanhao Capital Management in Shanghai.
While new economy plays such as BYD may well turn out to be the future of China’s car industry, even they will not be exempt from the more sobering maths facing the country’s consumers these days.
Early premarket gappersGapping up:
- ARRY +8.4%, PLAY +6.2%, EXEL +5.3%, RBBN +4.7%, BGNE +4%, NBEV +3.4%, MUX +2.2%, GNW +2.1%, UNH +2%, CPG +1.5%, BABA +1.2%, MU +1.2%, FFBC +1.1%, LULU +0.8%, AIMT +0.8%
Gapping down:
- PCG -9.8%, ALNY -6%, STML -4.2%, JCP -3.8%, ARR -3.2%, JPM -2.9%, XLRN -1.9%, EVBG -1.5%, NAV -1.1%, ENR -0.9%, CTRN -0.9%, TTMI -0.6%
