Gapping up
In reaction to strong earnings/guidance:
- JWN +9.3%, ARAY +7.8%, CRMT +7.7%
Other news:
- ATRS +6.1% (continued strength after confirming FDA approval of generic EpiPen utilizing VIBEX auto injector), DDS +1.1% (after closing 9% lower following earnings),
- KSS +1.0% (following JWN results)
- BMY +0.5% (receives FDA approval for Opdivo)
Analyst comments:
- ESPR +2.8% (upgraded to Buy from Neutral at Citigroup)
- VNOM +1.7% (upgraded to Buy from Hold at Stifel)
- ENB +0.9% (upgraded to Buy from Neutral at BofA/Merrill)
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EU plan for capital markets union faces delay, warns Brussels
Project aiming to improve cross-border investment at risk due to slow progress by governments
The EU’s financial services chief has warned that the bloc’s flagship project to boost private sector investment in business is in jeopardy, with governments lagging in approving the necessary laws.
Valdis Dombrovskis, the European Commission vice-president responsible for the euro, said the EU’s goal of creating a capital markets union by 2019 might not be reached.
The CMU project aims to harmonise procedures within the bloc to improve cross-border investment, which has been held back for years despite EU treaties that guarantee free movement of capital.
But legislation underpinning parts of the project has been delayed, including simplified bankruptcy proceedings, the development of pan-European pension funds and the creation of a cross-border market in covered bonds.
“What we call for now is that CMU is made a priority, not only in words and political declarations but also in practice, and that tangible progress is made with the legislative proposals that are on the table,” Mr Dombrovskis said.
“It still remains our ambition to have our main building blocks for CMU in place by the end of this mandate,” he said, in reference to the end of the commission’s term of office in November 2019. “We still think it is realistic but it requires intensive work . . . all legislative proposals needed to reach this goal are on the table.”
Mr Dombrovskis’ comments follow a call by eight EU finance ministers in July for efforts to be “redoubled” on the project.
Of 13 legislative texts presented by the commission since 2014, only three have been adopted, despite EU leaders having identified the project as a priority.
The desire to improve the bloc’s capital markets is partly a response to Brexit. EU officials are concerned that the EU needs to improve financing conditions for companies after the exit of the UK, the bloc’s main financial centre.
The European Central Bank has also identified a capital markets union as a way to improve the eurozone’s ability to weather financial crises.
“The overarching idea is . . . to put European savings to productive use,” Mr Dombrovskis said. “In practice, in many cases it means removing barriers and advancing this logic of capital markets participants working in a single market based on a single European authorisation.”
In its fully developed state, the CMU would involve new pan-European licensing regimes for financial companies offering investment products, and more centralised EU-level supervision of markets.
Financial services professionals complain that progress has been slight — with the main legislative achievements so far being a trimming of red tape for small businesses that want to issue shares, and a lowering of capital charges for banks buying securitised debt.
EU officials said progress was difficult because some CMU initiatives touched on sensitive national sectors, such as pension funds, and long-established national procedures in areas such as business insolvency.
Many EU governments have also been reluctant to embrace the idea of transferring more power away from their own national financial supervisors to EU authorities.
The CMU is also seen as key to addressing the major economic imbalances within the EU, not least by finding ways to direct the savings of people in richer countries such as Germany into profit-bearing investments elsewhere in the bloc.
Mr Dombrovskis said the plan remained central to the EU’s growth prospects.
“If you look at reasons why many companies in Europe, capital markets companies, fintech companies, why they are not scaling up in Europe, it is exactly this fragmented regulatory and supervisory landscape where they are faced with different requirements in each member state,” he said. “That’s the issue we need to address — this scaling up.”
Tesla’s leader isn’t sleeping well
The carmaker’s board and investors have been worried about Elon Musk’s erratic behavior for some time — and especially after his out-of-the-blue tweet about potentially taking the company private. In an interview with the NYT, Mr. Musk blames exhaustion:
At multiple points in an hourlong interview with The New York Times, he choked up, noting that he nearly missed his brother’s wedding this summer and spent his birthday holed up in Tesla’s offices as the company raced to meet elusive production targets on a crucial new model.
He also laid out a timeline of how he ended up sending that tweet. One tidbit: He bumped up the price tag, which he’d calculated at $419 a share, to $420 because it was more auspicious. (He added, “I was not on weed, to be clear.” But his use of Ambien and, occasionally, recreational drugs worries his board.)
The conversation isn’t letting up. Kara Swisher of NYT Opinion calls him the “id of tech,” while Jonathan Guthrie of Lex compares him to a truculent teenager.
For his part, Mr. Musk has no regrets: “Why would I?”
Early premarket gappersGapping up:
- JWN +9.4%, ATRS +7.9%, ARAY +7.8%, CRMT +6.2%, KSS +1.9%, EDIT +0.5%
Gapping down:
- ZN -42.7%, AMRS -12%, VNET -6.3%, ZOES -5.6%, AMAT -5.5%, AVEO -4.9%, ZYNE -4.1%, NVDA -4.1%, ATAI -3.9%, ATGE -3.1%, VCEL -1.7%, LRCX -1.7%, MU -1.5%, DE -0.9%, SMH -0.8%
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Eurofiber could see near term takeover interest – source
17 AUG 2018
Netherlands-based Eurofiber is expected to be the next sizeable target in the wave of fibre consolidation, according to a source familiar with the situation and a sector banker.
It is being eyed by several potential buyers, with a sale expected this year or early 2019, the sector banker said. An approach could already be in the works, the source suggested.
The network provider was bought in 2015 by infrastructure-focused Antin for EUR 875m, at that time 11x EBITDA.
Eurofiber will appeal most to infrastructure funds, the source and banker said. Liberty Global [NASDAQ:LBTYA], Colt and BT [LON:BT.A] were identified as potential bidders during Eurofibre’s previous sale. It is also quite expensive, the sector banker said, ruling out similar sized strategics.
Critical communications companies are enjoying particularly high valuations due to a scarcity of assets, cheap debt financing and the desire for comprehensive networks, the source said. With the latter, the fibre industry has seen the combination of long-haul fibre with metro fibre, ensuring fast connections between and within cities, the source said.
Recent deals in the space include CityFibre’s acquisition by Connect Infrastructure, a consortium which includes Antin, at a premium of 92.9% to the day before the deal announcement. Gigaclear’s sale to infrastructure fund M&G Investment Management for GBP 270m constituted a 23% premium to its fund raise in 2017.
Fibre companies with extensive networks can easily command large multiples, the source said.
Antin did not respond to a request for comment. Eurofiber declined to comment.
WASHINGTON (AFP, BLOOMBERG) - Chinese bombers are likely training for strikes against United States and allied targets in the Pacific, according to a new Pentagon report that also details how Beijing is transforming its ground forces to "fight and win".
The annual report to Congress, released on Thursday (Aug 16), highlights China's growing military, economic and diplomatic clout, and how Beijing is leveraging this to rapidly build its international footprint and establish regional dominance.
In the case of China's air power, the report states that Chinese bombers are developing capabilities to hit targets as far from China as possible.
"Over the last three years, the PLA (People's Liberation Army) has rapidly expanded its overwater bomber operating areas, gaining experience in critical maritime regions and likely training for strikes against US and allied targets," the document states, noting how China is pushing its operations out into the Pacific.
In August 2017, six Chinese H-6K bombers flew through the Miyako Strait, south-west of the Japanese islands, and then for the first time, turned north to fly east of Okinawa, where 47,000 US troops are based.
The PLA may demonstrate the "capability to strike US and allied forces and military bases in the western Pacific Ocean, including Guam," the report says.
'NUCLEAR ELEMENT'
The Pentagon report also sounded a warning over China’s plans to introduce floating nuclear power plants on disputed islands and reefs in the South China Sea.
“China’s plans to power these islands may add a nuclear element to the territorial dispute,” the Pentagon said in the report titled “Military and Security Developments Involving the People’s Republic of China.”
“China indicated development plans may be underway to power islands and reefs in the typhoon-prone South China Sea with floating nuclear power stations; development reportedly is to begin prior to 2020.”
The China Securities Journal – a Chinese state-run financial newspaper – said in 2016 that China could build as many as 20 floating nuclear plants to “speed up the commercial development” of the South China Sea, the South China Morning Post reported last year.
Several Chinese state-run companies last year established a joint venture that aims to strengthen China’s nuclear power capabilities in line with its ambitions to “become a strong maritime power,” the Post said, citing a statement released by the venture.
Beijing claims more than 80 per cent of the South China Sea, which carries around US$3.4 trillion worth of global trade each year. Five other countries – including the Philippines and Vietnam – also have claims in the waters, which have led to clashes over fishing rights and energy exploration.
US-China military ties have deteriorated of late, with the Trump administration in May revoking an invitation for Beijing to join in Pacific naval exercises due to its activities in disputed parts of the sea. China has reclaimed 3,200 of acres of land in the Spratly Island chain and added with ports, runways and other military infrastructure.
LARGEST GROUND FORCE
China is engaged in a decades-long build-up and modernisation of its once-backward armed forces, and military leaders have set a goal of fielding a world-class military by 2050.
President Xi Jinping last year ordered the PLA to step up efforts, saying China needed a military ready to "fight and win" wars.
The call has alarmed China's neighbours, several of whom are embroiled in tense border disputes with the superpower.
According to the Pentagon, the PLA in April 2017 undertook a massive transformation of operational and tactical units as part of its structural reforms.
With nearly a million troops, the PLA is the largest standing ground force in the world.
"The purpose of these reforms is to create a more mobile, modular, lethal ground force capable of being the core of joint operations and able to meet Xi Jinping's directive to 'fight and win wars,'" the Pentagon report notes.
China's military budget for 2017 was about US$190 billion (S$260 billion), according to the report, far behind the Pentagon's annual budget of about US$700 billion.
When the Pentagon released its annual report last year, Beijing dismissed it as "irresponsible" in predicting that China would expand its global military presence by building overseas bases in countries like Pakistan.
This year's report reiterates that China will seek to establish new bases in such countries.
Key to this expanding footprint is China's "Belt and Road" initiative that seeks to bolster ties with other nations through lending and infrastructure deals.
TAIWAN 'CONTINGENCY'
The document also shines a light on China's ongoing military preparations for a "contingency" in the Taiwan Strait.
Officially, China advocates for a peaceful reunification with Taiwan, but it has never repudiated the use of military force, the document notes.
"The PLA also is likely preparing for a contingency to unify Taiwan with China by force, while simultaneously deterring, delaying, or denying any third-party intervention on Taiwan's behalf," it states.
"Should the United States intervene, China would try to delay effective intervention and seek victory in a high-intensity, limited war of short duration."
In addition, to the ire of regional neighbours, China has built a series of islets and ocean features into military facilities in the South China Sea.
Beijing has now stopped substantial land reclamation.
"However, it continued to build infrastructure at three outposts," the report says.
Food delivery startup DoorDash announced this afternoon that it has raised $250 million, just five months since the company announced a $535 million round.
Why raise more money so soon? CEO Tony Xu told Axios that he wasn’t actively looking for additional investment, but was open to investor interest because it could help the company expand more quickly. (Maybe he’ll have more to say about those plans at Disrupt SF next month.)
The new funding was led by Coatue Management and DST Global. It sounds like the terms were pretty appealing too, with the valuation growing from $1.4 billion to $4 billion.
In a blog post, the company said it’s had a good 2018, with deliveries increasing 250 percent year-over-year, restaurant chains like Chipotle and IHOP signing up and last week’s launch of the DashPass subscription service, where you can pay $9.99 per month to get unlimited free deliveries.
“As we grow, we will stay true to our values and our mission of connecting people with possibility — and, trust us, we’re just getting started,” DoorDash wrote.
Asian stocks are ending a bruising week on a positive note after an easing in trade tensions between China and the U.S and positive results from Walmart boosted American shares. The dollar edged lower alongside Treasuries.
Equities from Sydney to Hong Kong advanced after all major U.S. stock benchmarks climbed. Emerging market shares rose for the first time in eight sessions. Commodities steadied after rebounding alongside the currencies of nations reliant on raw-materials, like Australia. The Turkish lira pared some of its gains as U.S. Treasury Secretary Steven Mnuchin said Turkey would face more sanctions if the country didn’t release a detained American pastor.
US After Hours JWN +7.6%, CRMT +6.2%, AMAT -4.2%, NVDA -3.6% following earnings/guidance
Nikkei +0.46% Hang Seng +0.48% CSI -0.83% Shanghai -0.57% Shenzen -1.04%
Eur$ 1.1380 CNH 6.8771 CNY 6.8923 JPY 110.89 GBP 1.2723 CHF 0.9970 TRY 5.8296 RUB 66.7650 WTI$ 65.41 -0.08%
S&P -0.04% EuroStoxx -0.03% Dax -0.05% FTSE -0.08% SMI +0.03%
Macro :
- Oil Hedge Fund Manager Andurand Is Said to Lose 15% in July
- Pompeo Sets Up ‘Iran Action Group’ to Press Sanctions Campaign
Keep an eye on :
- AF FP : Air France-KLM Board Names Benjamin Smith as CEO
- ATL IM : Transport Ministry Starts Broader Review of Italy Roads, Dams
- ATL IM : Autostrade Must Produce Report to Avoid Losing License: Ministry
- ATL IM : S&P: Atlantia, Units ‘BBB+’ Rating on Creditwatch Negative
- BAYN GY : Bayer Lawyers Get Busy, Trump Strafes Opioid Makers: Health Wrap
- BAYN GY : Monsanto Faces Class Action Over Dicamba: Wiwo
- DEB LN : Debenhams Drops After Media Report on Potential Job Losses
- DTE GY : T-Mobile-Sprint Deal Top of Mind as 5G Ramps Up, Macquarie Says
- ELK NO : Elkem Second Quarter Ebitda Beats Highest Estimate
- ENI IM : Eni Granted Approval for Mexico Area 1 Development Plan: Sole
- GYC GY : Grand City Properties First Half Adjusted Ebitda EU136.8 Mln
- MAERSKB DC : Maersk Said to Plan Drilling Spinoff to Focus on Transport
- PSP SW : PSP Swiss Boosts Full Year Ebitda Forecast
- RNO FP : C.Ghosn bought worth €7m at €71.50 - Insider transaction disclosed yesterday night
- RHM GY : Australia Signs A$5.2B Deal W/ Rheinmetall for Combat Vehicles
- ROVIO FH : Rovio Second Quarter Revenue Beats Highest Estimate
- SAN SM : Santander Confirms Federal Reserve Terminates Enforcement Action
- SWTQ SW : Schweiter First Half Ebitda CHF58.3 Mln
- SCHP SW : Schindler Boosts Full Year Revenue Forecast
- SPU NO : Spectrum Second Quarter Operating Revenue $39.5 Mln
- STAN LN : Morgan Stanley Cuts Target For Standard Chartered on Low Returns
- TSLA US : FDA Approves First Generic Version of Epipen
- TKA GY : Lanxess CEO Not in Running for Thyssenkrupp CEO: Reuters
- VPK NA : Vopak Announces Review of 4 Terminals, Posts 2Q Adj. Ebitda Miss
>>> Up
* Esure Upgraded to Equal-weight at Barclays; PT 2.80 Pounds
* Glencore Upgraded to Hold at Liberum
* RBS Upgraded to Buy at HSBC; PT 2.90 Pounds
* Sparebanken Vest Raised to Buy at Kepler Cheuvreux; PT 58 Kroner
* Veidekke Upgraded to Buy at DNB Markets; Price Target 90 Kroner
* Wienerberger Raised to Hold at Kepler Cheuvreux; PT 21.50 Euros
>>> Down
* BowLeven Downgraded to Neutral at Arden Partners; PT 40 Pence
* DNO Downgraded to Hold at DNB Markets; PT 19.60 Kroner
* dormakaba Downgraded to Hold at HSBC; PT 600 Francs
* KSB Downgraded to Hold at LBBW; PT 351 Euros
>>> Initiation
>>> Call