>>> Barrons weekend update: positive on KKR, EXPE

Barrons weekend update: positive on KKR, EXPE 
* Cover story: Barron's looks at funds that had a rough time in 2015, fared better in 2016, and are likely to continue to outperform as market conditions grow more favorable for active managers (Positive on PNEAX, DFLVX, DODGX, GOODX, SSHFX, PRFDX, VUVLX); Returns for index investing could underwhelm in the near future, while value managers should benefit. 
* Features: 1) Positive on KKR: Investors need to reconsider their take on the private equity firm, which may be hard to understand but which could benefit greatly from Donald Trump's proposed tax reductions; Positive on EXPE: Shares haven't risen too much during the past year and a half, but they have a 25% upside as the hotel sector improves and company's acquisitions pay off. Tech Trader: As smartphone sales slow, the tech industry increasingly sees automobiles as the next big opportunity; Developing smarter cars is likely to give tech firms a boost, especially incumbent auto-chip suppliers such as NXPI and NVDA. 
* Trader: JPM head of U.S. equity strategy Dubravko Lakos-Bujas says the rally in the S&P 500 has boosted its valuation to 17.1 times earnings, a sign investors are betting on better earnings in the months ahead; Cautious on M, KSS, JWN, ASNA, UA: Americans haven't slowed down their shopping, but they've moving from department stores to online retailers such as AMZN; Under the Trump administration, Japanese automakers could face risks, says Alain Bokobza of Societe Generale, while Jeffrey Miller of Eight Bridges Capital Management says it will be hard to figure out how to play the winners. 
* Small Caps: The column looks back on its hits (ESL, CFX, SBCF, HCHC, CUB) and misses (HMHC, RELY, JLL, PDCO, EPC) from 2016. 
* Mutual Fund Quarterly: 1) Morningstar analyst John Rekenthaler discusses how to invest in the Trump era and provides advice about the mutual fund industry, Dodd-Frank, fees, and the fiduciary rule; 2) Chris Davis of Davis Advisors hope the launch of three new actively managed exchange traded funds will prove such funds can succeed despite the daily transparency required by regulators; 3) Eleven mutual funds have survived since the crash of 1929, four of which are lesser-known than their bigger peers but continue to offer respectable performance, high payouts, and big discounts (Positive on ADX, CET, GAM, TY); 4) JNS, the poster child for active management, has been getting into the ETF sector, an inexpensive move but one which probably won't boost the firm's bottom line by much; 5) "U.S. mutual funds enjoyed a strong fourth quarter, helped by an increasingly bullish outlook for the domestic economy-causing many small-company, value, and financial portfolios to shine. 
* Follow-Up: Cautious on BKS: Following a weak holiday season, company faces a challenge stabilizing its book business amid a tough retail sector and an ongoing threat from AMZN-but a low valuation and 5.5% yield are attractive; Cautious on UPS: "The shipping company's shares look to have peaked for now, given growth strains and likely protectionist measures." 
* European Trader: Positive on CS: The Swiss bank "has struggled to restructure its business and address costly legacy issues in recent years," but investors seem to believe its on the right path, and shares could gain as much as 13%. 
* Asian Trader: Cautious on AirAsia: Southeast Asian budget carrier performed well in 2016, but a decline in Malaysia's currency coupled with the absence of growth catalysts could send shares down by 20%. 
* Emerging Markets: Experienced stockpickers are the best alternative for fund investors seeking value and portfolio diversification in markets such as Pakistan, Nigeria, and Kuwait. 
* Commodities: The natural-gas rally probably isn't over, because colder winter temperatures are still possible, making the recent price drop temporary; investors may want to consider ETFs to play the sector. 
* Streetwise: Vanguard chief executive Bill McNabb says investors need to prepare for uncertainty, save more, safeguard assets, and stay well-informed.

Reuters - Automakers, suppliers team up to share costs of self-driving cars

Automakers, suppliers team up to share costs of self-driving cars


Automotive suppliers and automakers are expanding alliances to develop self-driving car technology that can serve multiple automakers, as the race to put such vehicles on the road separates companies that can go it alone from those that need help sharing the financial and technical burdens.
While some companies, such as Tesla Motors (TSLA.O), General Motors (GM.N) and Ford Motor (F.N), are trying to develop proprietary driverless systems, a larger group of automakers appears to have decided it makes more sense to develop self-driving technology in collaboration with suppliers – as many other features such as anti-lock brakes or radar-enabled cruise control already are.
"What's going on in the industry right now is like a hyper version of musical chairs - and the music is still playing," said Gill Pratt, chief executive officer of Toyota Research Institute. "Everyone is changing partners."
Several suppliers - notably Mobileye (MBLY.N), Nvidia (NVDA.O) and Delphi Automotive (DLPH.N) - are among the more popular technology partners in the self-driving race, with multiple alliances around the globe.
"If you want to build a truly autonomous car, this is a task for more than one player," said Amnon Shashua, chief executive of Mobileye, an Israeli-based supplier of mapping and vision-based sensing systems.
"The technological challenges are immense," Shashua told Reuters. "I would compare it to sending a man to the moon."
Mobileye supplies cameras, chips and software for driver assist systems - the building blocks for self-driving cars - to more than two dozen manufacturers around the globe. The company was an early supplier of vision systems to Tesla, but the two companies had an acrimonious and public breakup last summer after the driver of a Tesla Model S was killed while operating his vehicle using Tesla's Autopilot system.
Since the break with Tesla, Mobileye has secured two critical partnerships to develop self-driving systems: With German automaker BMW (BMWG.DE) and U.S. chipmaker Intel (INTC.O), and with longtime supplier Delphi (DLPH.N).
The Delphi-Mobileye alliance involves a turn-key system that the partners plan to offer to smaller automakers that lack the resources to develop such systems on their own. It will be ready for production by 2019, said Jeff Owens, Delphi's chief technology officer, with a projected wholesale cost of about $8,000.
The alliance with BMW and Intel is expected to draw additional vehicle manufacturers and suppliers, according to Elmar Frickenstein, BMW's senior vice president for automated driving.
"We would like to create a standard system for everybody to use by 2021," Frickenstein said. "That would share the costs and speed up the process of development and adoption."
Eventually, BMW and its partners could offer self-driving hardware and software sets or an entire driverless system on a non-exclusive basis to companies ranging from Uber [UBER.UL] to Google (GOOGL.O), Frickenstein said.
A blueprint for collaboration is BMW's joint ownership with Daimler AG (DAIGn.DE) and Volkswagen AG's (VOWG_p.DE) Audi of Here, the mapping company acquired in late 2015 from Nokia (NOKIA.HE). Since then, both Intel and Mobileye have teamed with Here to pool and share data.
Chipmaker Nvidia (NVDA.O) also is ramping up its partnerships in self-driving technology and systems, this week announcing deals with Audi and Here, as well as German suppliers ZF [ZFF.UL] and Bosch [ROBG.UL].
"We're not looking to develop a proprietary system," said Dirk Hoheisel, the member of Bosch's board of management who oversees autonomous driving. "We want to work with others to develop a standard platform and open standards for self-driving systems, especially around data and mapping."

While pursuing similar partnerships with suppliers, Audi sees its role as a vehicle manufacturer evolving to that of systems integrator.
"There's not one supplier out there who can provide the whole solution - no one who knows everything, every part of what's needed to make an autonomous car," said Alejandro Vukotich, Audi's head of development for driver assistance systems.
Some key components of self-driving systems - cybersecurity, for instance - should remain the responsibility of vehicle manufacturers, said Guillaume Devauchelle, head of innovation and scientific development at French supplier Valeo (VLOF.PA).
But carmakers also will continue to rely on suppliers to provide specific self-driving technologies, he said.
"There will be a mix because it's quite a complex system (with) sensing, data fusion, artificial intelligence, connectivity, man-machine interface and so on," Devauchelle said. "Those are big blocks."

Reuters - Hollande étrillé par son ancien conseiller Aquilino Morelle

Hollande étrillé par son ancien conseiller Aquilino Morelle

L'ancien conseiller politique de François Hollande Aquilino Morelle étrille, dans une interview au Monde publiée samedi, le chef de l'Etat, un "faux gentil et vrai méchant" qui ne voulait pas exercer le pouvoir mais être "seulement" président de la République. /Photo d'archives/REUTERS/Gonzalo Fuentes
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PARIS (Reuters) - L'ancien conseiller politique de François Hollande Aquilino Morelle étrille, dans une interview au Monde publiée samedi, le chef de l'Etat, un "faux gentil et vrai méchant" qui ne voulait pas exercer le pouvoir mais être "seulement" président de la République.

Aquilino Morelle, qui soutient Arnaud Montebourg dans la course à l'élection présidentielle, profite de la parution prochaine de son livre - "L'Abdication" - pour revenir sur son expérience du pouvoir, trois ans après sa démission sur fond de soupçons de conflits d'intérêts et d'affaire de "cireur de chaussures".

François Hollande a fait dès 2012 "le choix de la résignation", estime l'énarque de 54 ans dans les colonnes du Monde. "Il n’a jamais voulu devenir ce leader d’une nouvelle Europe (...) Il a enterré tout espoir de changement en se résignant à l’austérité, en acceptant, sans véritable renégociation, le pacte budgétaire européen imposé par Merkel et signé par Sarkozy. Ce renoncement inaugural a précédé et déterminé tous les autres."

Après avoir fait planer le doute pendant plusieurs mois, François Hollande a annoncé début décembre qu'il renonçait à briguer un nouveau mandat à l'Elysée, invoquant la nécessité de ne pas diviser davantage la gauche face au danger du "conservatisme" et de l'"extrémisme".

"La vérité est simple et cruelle : François Hollande ne voulait pas exercer le pouvoir ; il voulait seulement être président de la République", estime l'ex-conseiller.

"Ce qui m’a frappé très vite (...) c’est son incapacité à comprendre et à respecter les règles de l’exercice de l’Etat. Il est toujours resté comme extérieur à la fonction présidentielle, qu’il n’a jamais su, ou peut-être voulu, incarner."

"Toutes les qualités de l’homme, celles qui lui ont permis de conquérir le pouvoir, se sont retournées contre lui, une fois à l’Elysée", ajoute-t-il. "Son intelligence ? A force de tout comprendre, il lui est arrivé trop souvent de ne rien décider. Son habileté ? La ruse ne sert plus au pouvoir, il faut alors la force, celle de s’imposer aux autres et aux événements. Son art de 'la synthèse' ? Vain et illusoire quand on est aux commandes, et qu’il faut trancher."

"TRAHI"

Plume de Lionel Jospin à Matignon de 1997 à 2002, Aquilino Morelle, fils d'immigrés espagnols à l'ascension sociale et politique fulgurante, fut l'auteur des discours de François Hollande durant la campagne présidentielle de 2012.

Deux ans après la victoire de ce dernier, il est contraint à la démission en avril 2014 sur fond de soupçons de conflit d'intérêts avec l'industrie pharmaceutique - finalement classés sans suite par la justice - et de révélations sur son train de vie - notamment sur l'entretien de ses chaussures - par Mediapart.

"Ce que je regrette surtout, c’est que le président, que j’ai toujours servi loyalement, se soit abaissé à utiliser cette faute pour se débarrasser de moi", explique Aquilino Morelle au Monde.

"Que pendant un an, alors qu’il avait été mis au courant de ce faux pas, il ne m’ait jamais parlé, jamais tancé. Que pendant un an, il m’ait menti, trahi méthodiquement, me souriant dans le même temps où il organisait mon éviction."

"J’ai commis une faute ? Certainement. Qui n’en commet pas ? Lui a consenti à un coup bas. François Hollande est un faux gentil et un vrai méchant", ajoute-t-il.

A moins de quatre mois de l'élection présidentielle, Aquilino Morelle réaffirme son soutien à l'ex-ministre de l'Economie et candidat à la primaire de la gauche de fin janvier, Arnaud Montebourg, car, "comme des millions de Français de gauche, je suis resté fidèle à l’esprit et aux engagements du discours du Bourget".

Interrogé sur Emmanuel Macron, qui a démissionné du gouvernement Valls pour lancer son mouvement présidentiel "En Marche !", l'ex-conseiller décrit un "homme intelligent et habile" doté d'une "cohérence politique, celle d’un vrai libéral, de l’économie aux questions internationales, en passant par le social et le culturel."

"A ce titre, il est le fils spirituel de François Hollande. Nous verrons bien si ce libéralisme complet et assumé convaincra les Français", ajoute-t-il.

>)>U.S. intel report says Putin directed cyber campaign aimed at helping Trump

U.S. intel report says Putin directed cyber campaign aimed at helping Trump

January 6, 2017 4:11 pm

WASHINGTON (Reuters) - Russian President Vladimir Putin ordered "an influence campaign" in 2016 aimed at the U.S. presidential election with the goal of undermining the democratic process and denigrating Democratic rival Hillary Clinton, a new, declassified intelligence report said on Friday.

"We further assess Putin and the Russian Government developed a clear preference for President-elect Trump," the report said.

"We also assess Putin and the Russian Government aspired to help President-elect Trump’s election chances when possible by discrediting Secretary Clinton and publicly contrasting her unfavorably to him," it said.

(Reporting by Warren Strobel and Yara Bayoumy; Editing by James Dalgleish)

>>> US Close Dow +0.32% S&P +0.35% Nasdaq +0.60% Russell -0.34%

Closing Market Summary: Stock Market Ends Week at Record High

The stock market closed the week on a higher note, with the S&P 500 and the Nasdaq finishing Friday's session higher by 0.4% and 0.6%, respectively. The Dow (+0.3%) finished the day 34 points shy of the elusive 20k mark after coming within one point of the milestone early Friday afternoon.

Equity indices started the day flat after the December Employment Situation report was met with a muted reaction from investors. The stock market picked up the pace about an hour into the session, trending upwards to a record intraday high where it remained until the closing bell.

Friday's release of the December Employment Situation report alluded to the fact that the labor market is approaching full employment; job growth is slowing, while wages are ticking up. Time will tell if the Fed sticks to their proposed rate-hike schedule, which calls for three rate hikes in 2017, but the Employment Situation report certainly didn't reveal anything that would suggest a change of plans.

Today's rally was led by the technology sector (+1.0%), which was aided by chipmakers and large cap components. For instance, Apple (AAPL 117.91, +1.30), Microsoft (MSFT 62.84, +0.54), Facebook (FB 123.41, +2.74), Alphabet (GOOGL 825.21, +12.19), and Visa (V 82.21, +1.12) all added between 0.9% and 2.3%, while the PHLX Semiconductor Index finished higher by 0.8%.

Cyclical sectors did slightly better than their defensive counterparts, with three of the six growth-sensitive sectors beating the benchmark index. Utilities (+0.3%) and health care (+0.3%) were the only non-cyclical sectors to perform in line with the broader market. Health care capitalized on the biotech industry's solid showing, evidenced by the 0.9% increase in the iShares Nasdaq Biotechnology ETF (IBB 280.65, +2.54). Telecom services (-2.7%) and real estate (unch) were the only sectors to finish in the red.

Standings for the week look much the same as ten out of eleven sectors finished the week higher, with telecom services (-1.2%) bucking the trend. The week's top performer was health care (+2.9%), followed closely by real estate (+2.2%), technology (+2.4%), and consumer discretionary (+2.3%). The consumer discretionary sector's gain was particularly impressive as the sector had to overcome a poor week from retailers. The SPDR S&P 500 Retail ETF (XRT 43.76, -0.26) finished the first week of 2017 lower by 0.7% after some of its components reported disappointing holiday sales.

Conversely, small caps ended the week on a down note as the Russell 2000 fell 0.4% in Friday's session. On the week, the small-cap index added 0.7%, but underperformed relative to the S&P 500's and the Nasdaq's respective, 1.7% and 2.6% week-to-date gains. Given that the domestically-focused Russell 2000 set the pace for the post-election rally, investors may be concerned about the index's recent struggle.

The Treasury market saw stepped-up selling pressure after the 8:30 ET release of the Employment Situation report for December, but cooled off afterwards. The 10-yr yield closed the day seven basis points higher at 2.42%.

Reviewing today's economic data:

  • Employment Situation Report
    • December nonfarm payrolls came in at 156,000 while the consensus expected a reading of 175,000. The prior month's reading was revised to 204,000 from 178,000. Nonfarm private payrolls added 144,000 while the consensus expected an increase of 170,000. The unemployment rate held at 4.7% (consensus 4.7%).
    • Average hourly earnings increased 0.4% (consensus +0.3%). The average workweek was reported at 34.3 while the consensus expected a reading of 34.4.
    • The key takeaway from the December employment report is that job growth is slowing while wages are rising, which are offshoots of a labor market running near full employment.
  • November trade balance showed a deficit of $45.2 billion while the consensus expected the deficit to hit $42.2 billion. The previous month's deficit was revised to $42.4 billion from $42.6 billion.
    • The key takeaway from the report is that the widening deficit will be a drag on fourth quarter GDP, as the fourth quarter average of $61.9 billion for the real trade deficit is 9.4% higher than the third quarter average.
  • The Factory Orders Report for November showed a decrease of 2.4% while the consensus expected a decrease of 2.1%. The October reading was revised up to 2.8% from 2.7%.
    • The key takeaway from the report is that the drop in manufacturing orders was owed predominately to a large retreat in orders for the volatile nondefense aircraft and parts component. Excluding transportation, orders were up 0.1%.

Monday's economic data will be limited to the November Consumer Credit report, which will be released at 3:00 pm ET.

  • Nasdaq Composite +2.6% YTD
  • S&P 500 +1.7% YTD
  • Dow Jones Industrial Average +1.0% YTD
  • Russell 2000 +0.6% YTD