WASHINGTON — Steven T. Mnuchin, President-elect Donald J. Trump’s pick to be Treasury secretary, failed to disclose nearly $100 million of his assets on Senate Finance Committee disclosure documents and forgot to mention his role as a director of an investment fund located in a tax haven, an omission that Democrats said made him unfit to serve in one of the government’s most important positions.
The revelation came hours before Mr. Mnuchin, a former Goldman Sachs banker, began testifying on Thursday before the Senate Finance Committee, which has historically been bipartisan in its demands for transparency from nominees. Mr. Mnuchin was ready to outline his vision for the economy and defend himself against claims that he headed a bank that ran a “foreclosure machine” during the financial crisis.
“The Treasury secretary ought to be somebody who works on behalf of all Americans, including those who are still waiting for the economic recovery to show up in their communities,” said Senator Ron Wyden, the ranking Democrat on the committee. “When I look at Mr. Mnuchin’s background, it’s a stretch to find evidence he’d be that kind of Treasury secretary.”
In a hearing marked by sharp exchanges, Mr. Mnuchin struggled to answer questions about his use of tax havens as a hedge fund manager and whether he thought such loopholes should be closed.
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Senator Debbie Stabenow, Democrat of Michigan, pointedly asked Mr. Mnuchin if he was using Cayman Islands corporations to avoid taxation. He responded that he was working on behalf of his clients, in accordance with the law.
“Let me just be clear again: I did not use a Cayman Islands entity in any way to avoid paying taxes for myself,” Mr. Mnuchin said. “I would love to work with the I.R.S. to close these tax issues that make no sense.”
He added: “I would support changing the tax laws to make sure they are simpler and more effective.”
Republicans came to Mr. Mnuchin’s defense, suggesting that none of his omissions were willful, and they gave strong indications that they would vote for him.
Senator Orrin G. Hatch, Republican of Utah, defended Mr. Mnuchin’s business record and described him as extremely qualified for the job.
“Objectively speaking, I don’t believe anyone can reasonably argue that Mr. Mnuchin is unqualified for the position,” Mr. Hatch said. “If the confirmation process focused mainly on the question of a nominee’s qualifications, there would be little, if any, opposition to Mr. Mnuchin’s nomination.”
But the process was also focused on Mr. Mnuchin’s financial disclosure form, and that prompted intense scrutiny.
“In his revised questionnaire, Mr. Mnuchin disclosed several additional financial assets, including $95 million worth of real estate — a co-op in New York City, a residence in Southampton, New York, a residence in Los Angeles, California, and $15 million in real estate holdings in Mexico,” Democratic staff members of the Senate Finance Committee wrote in a memo on Thursday. “Mr. Mnuchin has claimed these omissions were due to a misunderstanding of the questionnaire.”
According to the memo, Mr. Mnuchin also initially failed to disclose that he is the director of Dune Capital International, an investment fund incorporated in the Cayman Islands, along with management posts in seven other investment funds.
And he belatedly disclosed that his children own nearly $1 million in artwork.
Asked about the omissions at the hearing, Mr. Mnuchin described them as a simple mistake made amid a mountain of bureaucracy.
“I think as you all can appreciate, filling out these government forms is quite complicated,” Mr. Mnuchin said, noting that he had handed over 5,000 pages of disclosures. “Let me first say, any oversight, it was unintentional.”
But Democrats pounced and tied Mr. Mnuchin to Mr. Trump’s campaign pledge to “drain the swamp” in Washington.
Pressed as to whether his failure to disclose the information was an ethical lapse, Mr. Mnuchin insisted that he was following the guidance of his lawyers and made an innocent error.
“I assure you that these forms were very complicated,” he said, explaining that he had pledged to be forthcoming to “the best of my knowledge.”
Senator Robert Menendez, Democrat of New Jersey, was unsatisfied with the response and shot back, “It doesn’t take a rocket scientist to understand the words ‘list all positions.’”
To that, Senator Chuck Schumer of New York, the Democratic leader, added: “Never before has the Senate considered such an ethically challenged slate of nominees for key cabinet positions. Mr. Mnuchin’s failure to disclose his Cayman Islands holdings just reeks of the swamp that the president-elect promised to drain on the campaign trail.”
“By slamming through Mnuchin, Senate Republicans are becoming accessories to Trump’s future corruption, helping him stack his cabinet with shady billionaires who, like Trump, will rig the government to serve their own interests at the expense of the American people,” said Shripal Shah, vice president of American Bridge.
Propco spin-off in focus as geopolitical headwinds ease; remains Buy
Source of opportunity
December French travel data was strong (Paris airport passengers +9% yoy) and RevPAR is growing, as security concerns ease. This has allowed investors to refocus on Accor’s plan to have external investors hold the majority of the capital in 90% of its propco (“Booster”; 48% of 2016E EBIT). We believe the spin-off could provide: (1) value crystallisation: Our SOTP implies upside to current levels; and (2) cash optionality: We assume Accor would have €3.8 bn of cash to reinvest or return to shareholders if it sells 50% and increases leverage. Our SOTP value/share is €47, or €52 in a bull-case scenario (80% sale of Booster at Accor’s Jan-17 external property valuation). We reiterate our Buy.
Catalyst
(1) Accor will provide an update on the intended use of cash proceeds from its planned propco spin-off at its FY16 results (February 22). We would view significant cash returns to shareholders post the deal positively.
(2) Hotel sector M&A, particularly post Accor’s partial propco spin-off, as it becomes asset-light, reducing operating leverage and capital intensity.
Valuation
Accor’s valuation fails to adequately reflect the potential for value crystallisation through a partial spin-off of its propco, in our view. Our SOTP valuation of the propco (€6.1 bn) implies a CY17E EV/EBIT of 13.0x for the opco (IHG at 14.8x), or
just 10.5x if Accor were to achieve its estimated propco asset value in the spinoff (€7.3 bn). Our price target reflects optionality on the deployment of cash proceeds post the planned spin-off (we assume €1.9 bn of cash to shareholders,
18% of market cap), but we do not incorporate this in our estimates. Our €47 SOTP-based price target implies 23% upside and includes a 15% M&A weighting at a multiple of 13.5x 2018E EV/EBITDA (in line with sector activity).
Key risks
Weaker-than-expected RevPAR growth from exogenous events, increased Airbnb penetration, weaker macro, dilutive M&A, FX translation.
From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 01/19/17 21:39:10
Subject: >>> Hearing of S.Mnuchin as Treasury Seretary in Front of Finance Committee
- largest precious metal inflows in 5 months ($1.3bn), 4th consecutive week of bond inflows ($4.5bn), and a week of modest $1.7bn equity inflows
>>> Asset Class Flows
- Equities: $1.7bn inflows ($1.7bn mutual fund outflows vs $3.4bn ETF inflows)
- Bonds: $4.5bn inflows (4 straight weeks)
- Precious metals: first inflows in 10 weeks
>>> Equity Flows
- Japan: strong $2.5bn inflows
- Europe: $0.7bn outflows (largest in 6 weeks)
- EM: small inflows of $64mn (2 straight weeks)
- US: $2.5bn outflows (outflows in 4 of past 5 weeks)
- By sector: first outflows from financials in 17 weeks ($0.7bn); first outflows from tech in 6 weeks ($0.1bn); inflows to energy in 6 of past 7 weeks ($0.4bn); inflows to materials in 10 of past 11 weeks ($0.2bn)
>>> Fixed Income Flows
- First outflows from HY bond funds in 8 weeks ($0.3bn)
- First govt bond inflows in 6 weeks ($1.0bn – largest in 6 months)
- 4 straight weeks of IG bond inflows ($2.2bn)
- 10 straight weeks of inflows to bank loan funds ($0.7bn)
- 6 straight weeks of inflows to TIPS funds ($0.3bn)
- 3 straight weeks of inflows to EM debt funds ($0.4bn)
Jan 19 Europe's largest construction and concessions group Vinci will submit a bid for the construction of the new Mumbai airport in the coming weeks, its chairman and chief executive told Reuters on Thursday.
Vinci, which operates 35 airports worldwide, is also looking at opportunities to grow in airport concessions in Indonesia and Brazil, said Xavier Huillard.
"We are associated with Tata for the new Mumbai airport. We ought to have put in our bids 15 days ago, it was pushed back, and we will now submit in the coming weeks," he said in an interview.
The Navi Mumbai airport is a new greenfield project, aiming to ease congestion at the existing international Mumbai airport.
Vinci has expanded into faster growing and more profitable concessions such as foreign airports and motorways, as well as engineering deals in the energy sector, to counter weakness in its domestic French construction business.
Last year Vinci also led a consortium which obtained the 60 percent stake in the regional Lyon Saint-Exupery airport being sold off by the French state.
It was too early to say if Vinci would be interested in buying stakes in France's Marseille or Lille airports if they came up for sale, added Huillard.
Dow -0.37% S&P -0.36% Nasdaq -0.28% Russell -0.94%
US Market Closed lower ahead of tomorrow ceremony in Washington. Financials stayed weak despite a growing batch of better-than-expected earnings reports. the European Central Bank announced its latest policy decision this morning. The market response was muted, however, as the ECB left rates and the stimulus program unchanged and ECB President Mario Draghi struck a dovish tone in his post-decision press conference. The euro slid in reaction to Mr. Draghi's remarks, but retraced that decline to end higher by 0.3% against the dollar at 1.0660. At the opposite end of today's leaderboard were utilities (-0.9%) and real estate (-1.0%), suffering from an uptick in Treasury yields. Treasuries were in negative territory for the entire session, but the benchmark 10-yr yield retreated from its high by the close, ending higher by four basis points at 2.47%. Energy (-0.7%) finished only slightly better, ignoring crude oil's modest gain (0.5% at $51.27/bbl). US after hours SWKS +8% following earnings and lifting peers and other RFMD/Apple suppliers... IBM -1.7%, AXP -1% following earnings/guidance. Asian equity indices continue to trade mixed as sentiment is rangebound in anticipation of power transition in the US heralding greater clarity on economic priority of the new administration. Australia was one of the more notable decliners as mining shares stumbled, while Nikkei managed to preserve a modest gain despite the rally in JPY early in the day. China economic data were mostly steady, as Q4 GDP edged up to 6.8% after 3 straight quarters at 6.7% growth; Fixed investment growth slowed, mainly due to a slight retreat in property sales value growth; Industrial output also hit a 5-month low, with slower growth in power generation, steel, and NatGas. Consumption accounted for 64.6% of 2016 GDP; Services sector accounted for 51.6%.
Nikkei +0.34% Hang Seng -0.32% CSI +0.65% Shanghai +0.57%
Eur$ 1.0680 CNH 6.8421 CNY 6.8744 JPY 114.69 GBP 1.2358 CHF 1.0049 RUB$ 59.7850 WTI$ 52.24 +0.25%
S&P +0.11% EuroStoxx -0.03% FTSE +0.20% Dax -0.10% SMI +0.16%
Macro :
- China Temporarily Cuts Reserve Ratio for 5 Major Banks: Reuters
- George Soros Says Markets Will Falter as Uncertainty Takes Over
- Apple Suppliers Gain Post-Market After Skyworks Beats
- China’s Yuan Outflows Plummet, Showing Capital Controls Pay Off
- Oil Demand at Risk as China Reins In Buyers That Bought Less
Keep an eye on :
- ABBN VX : ABB Group to Hire 2,000 People in Polish Service Center
- ALTA FP : Predica Sells 300k Altarea Shares at EU175/Share
- AAPL US : Apple slightly higher after hours following strong report from RFMD chip supplier Skyworks (SWKS +10%)
- BOL SM / BLUE FP : Bollore’s Electric-Car Venture Leaves Investors on Side of Road
- BC IM : Brunello Cucinelli Shares to Be Priced at EU21.09 Each: Terms
- CABK SM : CaixaBank Parent Co. to Distribute EU100m to Foundation
- COFA FP : Coface Said to Guarantee EU350m of Intesa/Yamal Loan: Interfax
- CDA FP : Compagnie Des Alpes 1Q Rev Rises 8.9%, Boosted by Leisure Unit
- DEXB BB : Belgian Government Faces Extra EU132 Mln Cost From Dexia: L’Echo
- ENG SM : Enagas Says Peru’s GSP Concession May Be Terminated
- FRE GY : Fresenius Places Convertible Bonds at 101% Nominal Value
- GAM SM : Gamesa to Supply 134 Turbines to Iberdrola in Mexico
- HEIA NA : Heineken Said Paying About $870m for Kirin Brazil Ops: Nikkei
- HEIA NA : Heineken Confirms is in Talks With Kirin Over Brazil Operations
- ISP IM : Intesa Keen to Participate in More Russian Share Deals: Izvestia
- SDF GY : K+S Wants to Postpone Name Change for Esco Unit: FAZ
- EDEN FP : Edenred Investor Colday Selling 5.7% Stake: Terms
- LLOY LN : Lloyds Said to Shuffle Executives, Preparing for Strategy Review
- KN FP : Natixis May Match EU0.35 DPS of Last Year, Beat Consensus: UBS
- NOVN VX : Novartis Put Bets Jump to 10-Month High as Stock Falls Further
- UG FP : Hollande Says French State to Keep Stake in PSA: AFP
- DPB GY : Postbank CEO Backs Separation From Deutsche Bank: Handelsblatt
- RHK GY : Holzinger to Be Rhoen-Klinikum CEO If Supervisory Board Approves
- GLE FP : Societe Generale Tests First Bail-In Bonds in a Nordic Currency
- SYNN VX : ChemChina Files for U.S. Antitrust Approval of Syngenta Deal
- TIT IM : Vivendi denies it is considering selling Telecom Italia stake - Milano Finanza
- TKA GY : Thyssenkrupp Rules Out Capital Boost in Targeted 15% E/R: FAZ
- TRYG DC : Tryg 4Q Net Misses Estimates; CEO Says 2017 on Track for Targets
- UCG IM : UniCredit Said to Pay Bankers 400 Million Euros for Share Sale
- VIV FP : Vivendi denies it is considering selling Telecom Italia stake - Milano Finanza
- VOW3 GY : VW Says Automaker Won’t Publish Details of Jones Day Probe
- ZC FP : Zodiac Targets Stable Sales, Gain in Op. Income in FY 2016/17
Vivendi denies it is considering selling Telecom Italia stake (translated)
20 JAN 2017
Vivendi [EPA:VIV] has denied press rumours that it plans to sell its 24% stake in Telecom Italia [BIT:TIT], Italian- language daily Milano Finanza reported. The report cited a Vivendi spokesperson who described the holding in TI as a long-term investment.
The report noted that the spokesperson was responding to newswire claims that Vivendi was considering selling the stake so that it could focus on Mediaset [BIT:MS], in which Vivendi holds a stake of just under 30%.
The item said that by selling the stake Vivendi would remove regulatory obstacles impeding a bid on Mediaset.