FT : Cobham faces FCA investigation over profit warning

The Financial Conduct Authority has launched an investigation into Cobham over its handling of inside information ahead of one of its many profit warnings over the last year.

The defence equipment company’s shares plunged 20 per cent last April, when the company revealed 2016 profits would be £15m below expectations, and announced a £500m rescue rights issue. The announcement was made less than two months after the group’s then chief executive, Bob Murphy, had told investors at the annual results in early March that he expected a flat performance for 2016.

Cobham said on Monday that it had been informed by a phone call that the FCA’s Enforcement division was investigating how inside information had been handled in the weeks ahead of the April profit warning.

It does not appear that Cobham directors sold any shares in the period between the announcement of annual results on March 3 and the April 26 statement. However, companies are obliged to publish material information as soon as possible, in order to avoid a false market being made in the shares. In general, in the UK this means at the start of the next trading session.

In June 2015, the FCA imposed a £4.6m fine on Asia Resources, the mining company formerly known as Bumi, for a number of breaches in the disclosure of material information, including related party transactions. The company was also found to have failed to “establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations”. Photo-me, the photo booth operator, was fined £500,000 in 2010 for failing to “disclose inside information to the market as soon as possible and to avoid the creation or continuation of a false market in listed securities”.

The investigation is yet another setback for Cobham investors, who have suffered five profit warnings, and have been asked to subscribe to a second £500m rescue rights issue.
A new management team, led by chief executive David Lockwood, was put in place at the start of the year after investors demanded the departure of both Mr Murphy and the former chairman John Devaney.

The company earlier this month announced a sharply higher pre-tax loss £847.9m for last year, compared with £39.8m for 2015, and warned there would be no dividend this year.

WSJ : Amazon Delays Convenience Store Opening to Work Out Kinks

Amazon Delays Convenience Store Opening to Work Out Kinks
Cashier-less shop must fix glitches in technology that automatically charges customers

Amazon.com Inc. is delaying the public opening of its first cashier-less convenience store because of technical complications.

Amazon Go was due to launch to the public by the end of the month, after launching in beta mode to employees in December, according to people familiar with the matter. It is unclear when it will now open, as it works out kinks in the technology to automatically charge customers when they leave, instead of needing to have cash registers, checkouts and lines.

The store in Amazon’s hometown of Seattle uses cameras, sensors and algorithms to watch customers and track what they pick up, according to the people. But Amazon has run into problems tracking more than about 20 people in the store at one time, as well as the difficulty of keeping tabs on an item if it has been moved from its specific spot on the shelf, according to the people.

For now, the technology functions flawlessly only if there are a small number of customers present, or when their movements are slow, the people said. The store will continue to need employees to help ensure the technology is accurately tracking purchases for the near future.

Amazon declined to comment. It previously said that the store would open to the public in “early 2017.” Bloomberg earlier reported that the technology has been crashing in tests when the store gets too crowded.

The setbacks with Amazon Go highlight the difficulty the online retail giant faces in modernizing brick-and-mortar retail. Amazon is exploring chains of book, convenience and grocery stores to challenge its rivals on all fronts. But it has little experience in anticipating and managing the flow of customers and products in a physical space.

Amazon has already opened five bookstores, with another five announced, according to its website. It also has about 30 mall pop-up stores, and two drive-up grocery pickup store locations in Seattle are expected to open soon.

Brick-and-mortar stores are key to Amazon’s plan to capture more food sales, opening the door to a key driver of consumer spending and broadening the online retailer’s influence. It would help it better compete against rivals like Wal-Mart Stores Inc., which is building out its own grocery pick-up strategy.

While the Amazon Go store is still working out kinks, the company is already envisioning future hires to work on expansion across multiple sites, according to several job postings for the concept on its site last week.

Amazon Go testing started at a mock-up store in a warehouse in the SoDo neighborhood in Seattle before the first store’s beta opening on the ground floor of an Amazon building. Employees were the guinea pigs for the technology, which relies on video streaming and computer vision algorithms to process images in real-time, along with sensors, identifying customers and tracking them—and the items they grab—throughout the store. The retailer has said it uses technology similar to an autonomous car to make the process work.

Three months ago, Amazon announced its Go concept with a video showing customers scanning their phones on a kiosk as they walk in. After they leave the store, Amazon charges their account for the items and sends a receipt.

But if there are more than about 20 people in the store, the system can start to malfunction, making it increasingly difficult to track where people are and what they are picking up, the people said. That’s a hindrance to the public opening of Amazon Go, which the company expects will generate big crowds, one of the people said.

The project, part of a deeper effort to reevaluate the future of brick-and-mortar retail, is being led by Steve Kessel. The senior vice president, who reports directly to CEO Jeff Bezos, previously helped create the Kindle e-readers.

On a recent weekday, a handful of Amazon employees at a time were browsing in the store, scanning their phones at turnstiles as they entered, then picking out items, heading back to an area with utensils and condiments, before walking out without paying.

Some who have shopped there said it feels odd to walk out of the store without stopping to pay.

>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • WFT +6.1%, GFI +4.3%, SPWR +3.8%, SBGL +3.5%, AU +3.4%,MIK +3.2%, AG +2.7%, CGIX +2.6%, GOLD +2.4%, GDX +2.3%,RACE +2.3%, ABX +2.2%
  • DDC +2.2%, NEM +1.9%, SLW +1.7%, HL +1.6%, SNY +1.5%, CYH+1.2%, SHPG +1.2%, SLV +1%, AZN +0.9%, GLD +0.7%, NVO +0.7%
Gapping down:
  • CLF -5.4%, VALE -4.1%, X -3.6%, AKS -3.6%, FCX -3.2%, GOGL-2.9%, CHK -2.7%, IPI -2.4%, BBL -2.4%, PBR -2.3%, BAC -1.9%,BHP -1.8%, AA -1.7%
  • WLL -1.7%, PRGO -1.5%, JPM -1.4%, NVDA -1.4%, KEY -1.3%, GS-1.3%, MS -1.3%, DB -1.3%, NFLX -1.3%, RIO -1.2%, C -1.2%,BABA -1.1%, BIDU -1.1%
  • WFC -1.1%, TSLA -1%, CAT -1%

Haaretz : Mossad Reportedly Turned French Spies Into Double Agents After Joint S

Mossad Reportedly Turned French Spies Into Double Agents After Joint Syria Op
Le Monde reveals how Israeli espionage agency allegedly exploited a successful chemical weapons operation to get French counterparts to become sources; former head of French counterintelligence agency being questioned as suspect in case.
PARIS – An internal report written by French intelligence, parts of which were published in the daily newspaper Le Monde on Sunday, reveal efforts by the Mossad to develop relationships with French spies, “to the point of crossing the line of turning them into double agents.”
The audit report recommends investigating Bernard Squarcini, the head of the General Directorate for Internal Security until 2012, on suspicion of maintaining unauthorized and unreported ties with the Mossad’s Paris bureau chief at the time (identified in the report only by his initials, D.K.).
>> Get all updates on Israel and the Mossad: Download our free App, and Subscribe >>
The background to all this was a joint operation launched by the Mossad and French counterintelligence agency in 2010 to collect intelligence about Syrian President Bashar Assad’s chemical warfare plans. The operation, code-named Ratafia, aimed to recruit a senior Syrian engineer, who was meant to come to France to do additional training in chemistry and also to help recruit other engineers.
The Mossad and French agents would hold work meetings using assumed names, as is customary. The French agents, who belonged to three different counterintelligence units, were responsible for the operation in Paris, while the Mossad agents were responsible for the plot that would enable the Syrian target to leave the country for studies and to recruit others in the French capital.
But according to the report, the Israelis exploited the operation to persuade an unknown number of French agents to also serve as intelligence sources for Israel.
One of the French agents under surveillance was seen going up to the apartment of the Mossad’s Paris chief for dinner one Friday night. Later, he reported to his superiors that he was going to Dubai on vacation, when in fact he flew with his family to Israel, where he spent time with Mossad agents without permission and without reporting the meetings afterward.
In addition, according to the report, suspicious sums of money were deposited in the bank accounts of those French agents who were involved in the Ratafia operation.
The internal report calls for further investigation to understand what damage was done to the French intelligence service.
Le Monde also published details about the Ratafia operation. The paper claimed that the Mossad succeeded in recruiting the Syrian engineer and extracted information from him about Assad’s chemical weapons arsenal.
The French daily said the operation enabled Israel to prove that the scientific cooperation between the European Union and Syria was being used to boost Assad’s chemical weapons program, which led to the cancellation of the agreement with the Syrians in 2011.
According to Le Monde, the Mossad’s interest in building relations with French spies was exposed because a different French espionage agency, responsible for information security, was keeping the agents under surveillance and photographed them with Mossad agents.
The paper said that all the Mossad agents involved were identified by their real names. The French filed a formal complaint, and two Israeli diplomats in the Israeli Embassy in Paris left their posts and returned to Israel. The Mossad chief, D.K., also returned to Israel following the French complaint.
According to the report, the two Mossad agents suspected of contacts with the French have left the service and are now private businessmen in Tel Aviv. But during 2016, the report noted, they made contact with Squarcini (the counterintelligence head they’d worked with) in Paris.
Squarcini, who is now being questioned as a suspect in the case, told investigators he met the two “totally by chance.”
A short time before the suspicions came to light, Squarcini himself launched an internal inquiry into whether the Mossad was trying to recruit French agents as sources. However, the agents he put under surveillance did not include those involved in the Ratafia operation, even though Squarcini was fully aware of the close ties that had developed between his people and the Mossad operatives, the report said.
An investigating judge appointed by the French filed an official request with Israel to question the two ex-Mossad agents who made contact with Squarcini in 2016. It isn’t clear if he received a response.
The judge is seeking to build on the internal investigative report and broaden the investigation into whether the Mossad infiltrated French intelligence under Squarcini.

NY Post : Goldman hired by Mobileye to oversee $15B sale to Intel

Goldman Sachs has at least one billion reasons to hope President Trump’s paring back of Dodd-Frank will include the Volcker Rule.

The Wall Street bank, which has already banked a cool $1 billion profit with its early stage investment in Israeli car tech company Mobileye, lost out on nearly doubling that gain when it sold off its stake in the company to comply with the Volcker Rule, sources said.

Goldman Sachs will get to earn a little of that “lost” profit back now that it has been hired by Mobileye to act as an adviser on its $15 billion sale to Intel, The Post has learned.

The hiring was made in recent days, sources said.

Previously, Mobileye was working only with investment bank Raymond James.

Goldman made most of its $1 billion profit soon after it helped take Mobileye public in 2014 at $25 a share — then the largest US initial public offering of an Israeli company.

A the time of the IPO, Goldman owned roughly 17.5 percent of the company, whose computer chips and cameras alert cars to brake to avoid hitting other cars and pedestrians, thanks to an early $130 million investment in the company — and a followup 2013 investment.

The first investment came in 2007, just as Mobileye’s technology was getting into cars and when it needed the cash to survive.

But the firm had to sell its shares, owned through Goldman Sachs Investment Partners, its private-equity fund, to comply with 2013’s Volcker Rule, which restricts banks from making speculative bets with its own money.

Partly as a result of the Volcker Rule, Goldman, around 2015, sold all its Mobileye shares, netting a roughly $1 billion profit, two sources said.

If it didn’t have to sell the stake, Mobileye’s fast-rising stock price would have handed Goldman another nearly $1 billion profit when it agreed to be bought this month by Intel, sources said.

“They were the only institution that funded them in the financial crisis,” a source said. At the time, Mobileye had a reported $600 million valuation.

It is now worth $13.5 billion.

Mobileye shares at the end of 2015 traded at $35.98 a share. Intel is paying $63.54 per share for the company.

Mobileye is coveted because of the role it is likely to play not only in today’s cars — as it helps drivers to avoid accidents — but in driverless cars.

The company has retained Goldman for the Intel sale even though it has already signed a deal because it wants to reward the bank for its help over the years, a source said.

Goldman declined to comment.

(Recode.net) The U.S. will be hit worse by job automation than other major econo

The U.S. will be hit worse by job automation than other major economies
A new study from PwC estimates that 38 percent of U.S. jobs could be lost to automation in the next 15 years.

Nearly 40 percent of jobs in the U.S. may be vulnerable to replacement by robots in the next fifteen years, according to a new study by the research firm PwC.

Other major advanced economies have fewer jobs at risk. The study estimates that 30 percent of jobs in the United Kingdom could be threatened by technical advancements in automation from AI and robotics, compared to 35 percent in Germany and 21 percent in Japan.

The U.S. has a higher percentage of jobs under threat by automation because more workers in the U.S. are employed in positions that require routinized tasks, like filling out paperwork.

Jobs most at risk of being done by new technologies are in industries related to transportation, manufacturing and retail.

To arrive at these estimates, PwC broke down the types of tasks of various jobs in different industries. The researchers then applied an algorithm that took into account the “automatability” of those tasks and characteristics of the workers employed to do them.

One example of how jobs in the U.S. may be more susceptible to automation than jobs in the U.K., according to the study, is in the financial services sector. Although both countries have similarly service-dominated economies, financial services jobs in the U.S. are more retail oriented and routinized. Jobs in financial services in the U.K., however, are mostly occupied by professionals working in international banking, whose jobs are harder to automate and require more education.

More of Germany’s workforce is employed in manufacturing than the U.K., which are the types of jobs that could one day be done by robots, according to the report, accounting for its higher percentage of jobs that may potentially be automated.

In Japan, the low percentage of jobs at risk to automation compared to the other major economies examined in the study may, in part, have to do with the fact that jobs that are highly “automatable” in other countries are historically less so in Japan. Retail, for example, requires more training and skills in Japan, where workers have more management and organizing tasks, than similar jobs in the other countries studied, the report notes. (Japan also already utilizes a significant amount of automation, such as vending machines at fast-food restaurants that often handle the job of a cashier.)

The researchers point to a few policy interventions that might be explored to address the effects of broad job loss due to automation, like workforce re-training programs or universal basic income schemes.

But new policies require government action, and in the U.S. — where job loss to automation may reach 38 percent by the 2030s, according to the study — the Trump administration doesn’t seem immediately concerned.

At an event with Axios Friday morning, Treasury Secretary Steve Mnuchin said that job loss to technical advancements in AI and robotics “isn’t even on their radar screen” and that he imagines these changes are more like “50 to 100 more years away.”

>>> AdMacro: US Lending, Autos, the Road to Nowhere and EM Warning Lights

 US Lending, Autos, the Road to Nowhere and EM Warning Lights
Importance: High

 

See piece below, where tactically we expect Risk to fair badly at the start of the week, with commensurate trades, to look to end flat (or even short) fixed income 7yr+ post Thursday’s auction and quarter end.

 

Core Themes for the Week onwards:

 

  • The FOMC acted prematurely
  • Lending contracts at the fastest pace since 2008
  • The auto pile up is well underway
  • Markit PMI suggest the Trump boom euphoria maybe over
  • A white swan: US Housing
  • Political paralysis is a growing risk
  • We don’t believe in the dots
  • EM warning lights are flashing

 

 

A fortnight ago, ahead of the FOMC, we discussed why we thought that a decision to raise rates was unnecessary, even though it was extremely likely. Since then, data and other news has strengthened our view that the Fed may have acted prematurely.

Bank lending has continued to contract with commercial and industrial loans leading the way. More concerning is that the last time we saw them fall at this pace was in late 2008. Some readers have told us that they are not overly concerned by this and question our focus on this area. Our rationale is very simple. C&I loans represent lending to SMEs and they only tend to borrow to invest. In other terms, C&I lending has higher multiplier effects than large scale corporate borrowing which has been disproportionately directed towards buybacks and dividend payments. Moreover,  when bank lending as a whole is not growing it makes increasingly difficult to see nominal GDP rising at the 4% rate that the FOMC is forecasting it to. It’s also worth noting that the FOMC did not have the latest data when it made its policy decision.


Source: Federal Reserve

Bank lending aside we have for some time been flagging the swelling risk to growth of the auto sector. Automakers’ inventory is close to record highs, auto loan delinquencies have been accelerating for the past five quarters and lending standards are tightening sharply. This week’s profit warning by Ford has confirmed our fears with the company announcing that production in Q1 alone will be down 4%. Further out it sees volumes falling this year and in 2018. Where Ford goes, so does the rest of the industry. Moreover, the auto sector represents roughly 4% of GDP so falling production and the reintroduction of “traditional restructuring”, i.e. production cuts and layoffs, will act as another drag on growth.

 

Unsurprisingly, the S&P auto index is down a whopping 7% since last Friday. (Our favourite stock expression still intact)

 

It is also likely that sentiment surveys, which have been providing the bulk of the upside to economic surprise surveys will reverse, particularly the ISM manufacturing PMI. One can’t have the largest manufacturing sector in the US contracting and the PMI being unscathed.

S&P Auto Index & ISM Manufacturing PMI



A ‘Markit’ Warning:


The ISM data is looking increasingly out of line, it is the still the benchmark for most people. However, Friday’s Markit US PMI data was noticeably soft. The composite output index fell sharply to a 6-month, pre-election low with the services business activity leading the way.


“Survey respondents noted that a softer increase in new business had acted as a brake on growth in March. Reflecting this, the latest rise in new work received by service providers was only modest and the weakest for 12 months. Some firms commented on greater caution among clients, despite a supportive economic backdrop so far in 2017. Staff hiring continued to ease from the 15-month peak recorded last December. Moreover, the rate of service sector job creation in March was one of the weakest reported over the past three years.”

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“The US economy shifted down a gear in March. A slowing in the pace of growth signalled by the PMI surveys for a second straight month suggests that the economy is struggling to sustain momentum. The survey readings are consistent with annualized GDP growth of 1.7% in the first quarter, down from 1.9% in the final quarter of last year. “The employment readings from the survey have also deteriorated, suggesting private sector hiring is running at a reduced rate of around 120,000 per month.”

Current non-farm payroll forecasts are few and thin but according to Bloomberg the limited consensus is around +165k.

One thing that the rates market, nor the FOMC is prepared for is for a downshift in employment growth of this magnitude.

 

A White Swan – Housing

 

While we have our concerns and believe that growth is likely to be softer than expected it is important to keep some perspective. One area that we do see continuing to support growth is housing. Activity remains at very low levels when measured against the population and it is clear to us that there is pent-up demand. The chart below of permits, starts and new home sales relative to population clearly shows that. The sector continues to recover, but activity is only at levels seen in the recessions of the 70s, 80s and 90s. (Best expressed through various REIT products, on request)

 




However, while volumes are picking up it’s worth noting that commercial bank residential real estate loans lending has also been contracting over the past couple of months and gross loans outstanding are at their lowest since September.


Source: Federal Reserve

 

Political paralysis

Returning to sentiment surveys, a significant factor driving business optimism has been the hope of major, business friendly tax reform. That seems increasingly unlikely as policy paralysis descends on Washington.

We have previously frequently voiced our doubts about the likelihood of the Trump Administration achieving any significant fiscal change and current events seem to be confirming our view.

 

The boarder tax, which was supposed to be a significant source of revenue, looks to be a dead duck. Meanwhile healthcare reform  was supposed to reduce expenditure. However, the current turmoil over the AHCA highlights how difficult that will be. Even, it the act is passed by the House, it is extremely unlikely to survive the Senate. End result? No change.

 

Against this background it is vital to consider just how fiscally restricted the Administration is in terms of being able to reallocate monies. The chart below highlights this and the increase in poverty since the great recession. Social benefits as a percentage of GDP, while slightly off the recession high, have barely fallen. It is the same with food stamps with some 17 million more people dependent on them than in 2007. And yet unemployment has plunged.


Social Benefits % GDP, Food Stamps Recipients & Unemployment

 

Leaving the fiscal considerations aside, one cannot ignore the other issues surrounding the Trump Presidency. Largely through his own actions the President is looking ever more isolated and there is the ongoing FBI investigation into the links between his campaign team and Russia, it’s unlikely on global geo-political space this may well survive. Politics is an issue that we prefer to avoid, but with bookmakers offering odds of 10/11 that Trump will not last his full term we cannot. Investors should, at the very least, incorporate a degree of planning should that happen.

 

Furthermore, it seems increasingly obvious that many on the Hill are thinking, but not voicing the same. This also seems to impacting on the President’s ability to attract nominees to the 550 posts that require Senate approval. So far, less than 10% of the positions have been confirmed. The effects on efficiency and policy implementation are obvious.

Meanwhile the issue of the debt ceiling has not been addressed yet. Given the actions of the Freedom Caucus over the AHCA getting the House to pass an increase could prove to be difficult.

 

From a market perspective we obviously see none of the above as positives for equities. In rates space we remain reasonably constructive and view a 2y note at 1.25% as a not unattractive safe haven. By default, it leaves us big doubters about the FOMC’s dots. Indeed we don’t see the fed funds target rate going significantly above 1.5%, making longer dated USTs attractive. We also believe that inflation is peaking, globally. That also means that we remain bearish on the US dollar for the rest of the year and stick with our EUR & GBP upside calls. (though recognise that the former is now a consensus view, see below and EUR$ fx skew and advise taking protective measures for French 1st round.

EM warning lights are flashing

At the beginning of this year we felt that the bearish sentiment towards EM, and China in particular, was overdone. Alongside that we also believed that the “Trump miracle” was an essentially flawed concept. Regular readers will be familiar with our trade recommendations.

More recently we have had an anything but the dollar theme, particularly liking current account surplus currencies.

 

However, in the past week a variety of factors have caused us to become a lot more cautious with regards to the whole EM complex and we now believe that wholesale risk reduction is the order of the day. Further still we increasingly regard EM equity and FX weakness strategies as offering greater optionality.

Further out, we still like EM, though we are increasingly cautious on China. However, the offsetting balance of a less hawkish than currently expected Federal Reserve should be a positive.

Risks

  • On balance we see the weakness in oil prices as an EM negative. But we also believe that much of the commodity complex is overvalued, particularly ore. Inventories are high and Chinese steel production and demand is likely to disappoint.
  • Weakness in credit, particularly in high yield in the US and Asia.
  • Tightening Chinese liquidity. 1y CNY 7 day repo NDIRS are above 3.7% while 3 month Shibor looks to have embarked on a fresh leg higher. We have seen this story many times before, and it rarely ends well.
  • China CDS has also leapt by 10% over the past week.
  • Excessive euphoria in EM equities & S&P.
  • China data is softening. Retail sales at a 15y low. PMIs softening. Excessive supply of commercial real estate. Residential sales falling. (available on request)
  • Asia political risks.


1y CNY NDRIS

 

 

3mth Shibor



EM Equities (VWO ETF, red), FX (JPM EM spot index, blue), Credit(CDX EM, green & inverted)

S&P(blue), US HY(red), Russell 2000 (green) & Transports Index (black) – catch up due

JPM EM FX spot & AUDJPY



CDX EM CDS (inverted) & EMB ETF – gap due to rate move. CDS the better short.

Trade ideas:

 

FX

 

3m USDKRW 1150/1200 Call Spread, offer ~ 0.71%, ref 1118.0 d18% (payout ratio 6.3:1)

 

  • Gamma on the lows in USD/Asia bar INR.

 

 

 

As written, medium term EURO upside is one of our favourites, recommended previously from 1.0550, however,

 

1m EURUSD 1.0650/1.0450 Put Spread, offer ~ 0.32%, ref 1.0803 d16% (payout ratio 5.8:1)

 

  • Tactical EUR downside worth including in the portfolio.
  • Risk Reversals are well priced for positive non LePen outcome, with the 1m dates higher, they include the French 1st round result, hence worth considering a low cost protection play. Additionally, EURUSD seems currently capped at the recent 1.0830 highs, even though there is an increasing divergence between EUR and US PMIs.

 

Equity

 

May17 UKX 7000 Put, offer ~ 68, ref 7264 d25%

 

May17 KOSPI2 275 Put, offer ~ 2.02, ref 282.31 d25%

 


Refreshed ideas from last week which we still hold:

 

12May2017 exp GBPUSD 1.27 Call vs 1.30 RKI 1.33 Call, offer now 0.54% ref 1.2489 d22.5% (entered at 0.40% with ref 1.2372)

 

12May2017 exp EURGBP 0.855/0.835 Put Spread, offer now ~ 0.56% ref 0.8654 (entered at 0.46% with ref 0.8688)

 

Week ahead key Data & Events:

 

Mon: Ger IFO est. higher at 111.1 and expectations at 104.4.
Thu: US Q4 GDP est. revised up at 2.0% q/q. Ger March CPI est. lower at 0.4% m/m and 1.8% y/y. AUD new home sales will be released. MXN Rates meeting est. to hike by 25bps. SA Rates meetingest. unch.

Fri: MONTH/QUARTER-END China Mfg (est. higher at 51.7) and Non-Mfg PMI released. EUR March CPI est. lower at 1.8% y/y with Core at 0.8% y/y. US PCE Core est. at 0.2% m/m and 1.7% y/y. UK Q4 GDP est. unrevised at 0.7% q/q.

Jap CPI est. at 0.3% y/y with Core at 0.1% y/y and IP est. higher at 1.2% m/m & 3.9% y/y. CAD Jan GDP est. at 0.3% m/m.

 

Supply: Germany (€4bn), Italy (est. €9.75bn) and Finland (est. €1bn).

UST $101bn across the 2yr, 5yr and 7yr sectors, and 2yr FRN. £2.5bn of the 0.5% Gilt 2022 Tues.

 

Have a successful week, thoughts on the above/general appreciated.

AdMacro TEAM

 

Tel: +44 207 290 2770

 

 

7 Savile Row

2nd Floor

London W1S 3PE UK

 

This message has been sent by AdMacro Limited (the appointed representative of Makor Securities London Ltd which is authorised and regulated by the FCA (625054)).

This message is for professional clients and eligible counterparties only, not intended for "retail clients".  The information contained in this message is confidential and is for the exclusive use of the intended recipient. If you receive this message in error please inform us and delete all copies of it. The information is not intended as an offer or solicitation to buy or sell any financial instrument. All comments and statements are to be considered the opinions of the author not the Company and are not intended to be relied upon. We cannot guarantee that this message or any attachments are virus free and accept no liability for any viruses or the consequences thereof.

Research Disclaimer

 

This publication has been prepared by Makor Capital Limited (“Makor Capital”) and is intended for professional or qualified investors only. Makor Securities London Ltd (“Makor Securities”)is distributing this material to its clients who are Eligible Counterparties or Professional Clients under FCA Rules. It may also be disseminated to persons who are Investment Professionals within the meaning of the Financial Services and Markets Act 2000 (Financial Promotion Order 2005).  In the United States, Makor Capital only distributes this material to major US institutional investors (as that term is defined in Rule 15a-6 of the Securities and Exchange Act of 1934) and to SEC-registered broker-dealers or  banks acting in a broker–dealer capacity. This material is not intended for distribution to any other persons and should not be redistributed.  If you do not fall into any of these categories you should disregard it.

 

This material is a marketing communication.  It is not investment research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is not subject to any prohibition on dealing ahead of the dissemination of investment research under U.K. law. This material is not a research report and is not intended to be a research report as defined under U.S. securities laws and regulations.  This material is not intended to provide information reasonably sufficient upon which to base any investment decision.   

 

This material does not take into account the particular investment objectives, financial situation or needs of individual clients or other recipients. Before acting on this material, clients and other recipients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. 

 

This material should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. 

 

In the United States, Makor Capital does not offer securities services to U.S. persons except pursuant to SEC Rule 15a-6 only to major US institutional investors and SEC registered broker-dealers or  banks acting in a broker–dealer capacity. Transactions in the United States must be effected through the U.S. broker-dealer, Oscar Gruss & Son Incorporated. Oscar Gruss & Son has not prepared, reviewed or distributed this material.

 

Some of this material is produced by providers which Makor Securities believes to be reliable, but Makor Securities does not warrant or represent (expressly or impliedly) that it is accurate, complete, not misleading or as to its fitness for the purpose intended and it should not be relied upon as such. 

Opinions expressed will be the current opinions of those producing this material as of the date appearing on this material only. We expect those producing the material in  this publication to update it on a timely basis but can give no undertaking that they will do so and regulatory compliance or other reasons may prevent  them from doing so (or us from disseminating updated material).  

 

Members and employees of Makor Securities London Ltd, employees of Makor Capital, Makor Capital Markets may from time to time have long or short positions in securities, warrants, futures, options, derivatives or other financial instruments referred to in this material. For Makor Securities, this information is set out in our Conflicts of Interest Policy which is available on request.  Policies for the production of research from other research providers are available on request.  Unless otherwise stated, share prices provided within this material are as at the close of business on the day prior to the date of the material.

 

Neither the whole nor any part of this material may be duplicated in any form or by any means. Neither should any of this material be redistributed or disclosed to anyone without prior consent. This material is issued for general information and discussion purposes only. None of  Makor Securities, Makor Capital, Makor Capital Markets accepts  liability whatsoever for any direct, indirect or consequential loss or damage of any kind arising out of the use of all or any of this material. 

 

The services, securities and investments discussed in this material may not be available to, nor are suitable for all investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.

 

All investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.

 

 

 

FT : US producers build up sales hedges as oil falls

US producers build up sales hedges as oil falls
Cash flows and capital spending protected even if crude price continues to slide

US independent oil companies have used derivatives to protect much more of their expected revenues against a fall in crude prices than they had a year ago, helping them sustain capital spending and production even if the market continues to weaken.

Filings from the leading US exploration and production companies show they have hedged the revenues from about 27 per cent of their expected 2017 oil production, according to Wood Mackenzie, the research firm. This time a year ago, they had protected just 17 per cent of their revenues for 2016.

Crude prices jumped in the final two months of last year as 13 Opec member countries and 11 non-members agreed to cut production, and US companies were quick to take advantage by locking in those levels.

In the fourth quarter of 2016, the 33 small and midsized oil companies surveyed by Wood Mackenzie put on hedges for 648,000 barrels per day of oil production, almost four times as much as they hedged in the equivalent period of 2015.

The hedges, which include swaps and collars using options, typically have strike prices of $50-$60 per barrel of benchmark Brent crude, and an average price of $54. That compares with an average strike price of $42 per barrel for new contracts in the first quarter of last year.

Anadarko Petroleum and Apache, two of the larger independent oil producers that have assets offshore as well as in US shale reserves, were the most active in the fourth quarter, accounting for about 28 per cent of the oil hedges taken on in the quarter.

Andrew McConn of Wood Mackenzie said that if oil prices continued to decline after their $5-a-barrel drop this month, companies that had hedged would be better placed to stick to their capital spending plans.

The number of rigs drilling the horizontal wells used in shale oil production has more than doubled from its low point last May, and recorded another strong increase last week, rising 13 to 543, according to Baker Hughes, the oilfield services group. Many companies have been telling investors that they plan to increase production this year.

The US government’s Energy Information Administration estimates that December was the low point in onshore oil production for the “lower 48” states of the US, and it expects that output to grow steadily through 2017.

Companies producing in the shale oil regions of the US have cut their costs sharply since the crude price slide that began in the summer of 2014.

Hess, for example, said last month that it had slashed the average cost of drilling a well in the Bakken formation of North Dakota from $7.5m in the first quarter of 2014 to $4.6m in the final quarter of 2016.

However, Wood Mackenzie still says the US industry needs oil at about $55-$60 per barrel to sustain the increase in capital spending and production.

Mr McConn identified EOG Resources and Pioneer Natural Resources as “outliers” that could continue to increase production even with prices at lower levels.