Tag Archives: Business

Equities take a spill on Trump healthcare setback; bonds shine


HONG KONG Asian stocks are set to start the week on a cautious note as President Donald Trump’s stunning failure to get healthcare reform passed raised concerns about the prospects for his plans to use fiscal stimulus to boost economic growth.

Financial markets were unnerved on Friday by Trump’s inability to get enough support for legislation to “repeal and replace” the Obamacare health insurance reforms, a major 2016 election campaign promise.

Despite some recent profit-taking, U.S. stocks .SPX are still up more than 12 percent since Trump was elected on Nov. 8, the stock prices reflecting views that lower taxes, deregulation and fiscal stimulus would boost economic growth and corporate earnings.

But the failure of Trump’s healthcare bill knocked the wind out of risky assets in early Asian trading with U.S. stock index futures falling to a six-week low in heavy volumes while Treasury futures edged higher. and

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was flat in early trade though Australia’s stock market tumbled 0.9 percent at the open. Rising policy uncertainty also raised concerns that a recent revival in business and consumer sentiment, particularly in Asia as evident from recent industry surveys, would be derailed at a time when market valuations appeared stretched.

“For markets, that doesn’t sound like an ideal situation,” ANZ strategists wrote in a daily note.

The greenback took a spill in early Asian trade on Monday with early moves exaggerated in a very thin market.

The U.S. dollar was down 0.8 percent against the yen at one stage to a 110.44 JPY=.

The euro rose to a near four-month peak at $1.0847 EUR=. Against a basket of currencies, the dollar was down nearly half a percent at 99.306. .DXY.

Treasury futures TYv1 gained 5/32s in price, suggesting benchmark yields would start lower. On Friday, benchmark 10-year U.S. yields US10YT=RR closed near their lowest levels in a month.

Safe-haven gold perked up, rising to $1,253 an ounce.

Oil prices were broadly flat as investor concerns lingered that OPEC-led supply cuts were not yet reducing record U.S. crude inventories.

U.S. crude CLc1 was trading slightly higher at $48.15 per barrel.

(Reporting by Saikat Chatterjee; Editing by Eric Meijer)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/E9zX1prAdLs/us-global-markets-idUSKBN16Y016

China Southern Airlines in talks over American Airlines cooperation deal


SHANGHAI China Southern Airlines (600029.SS)(1055.HK)(ZNH.N) is negotiating a potential strategic tie-up with American Airlines (AAL.O) that could involve a share issue and other forms of business cooperation, it said on Sunday.

A stock exchange filing from China’s largest carrier by passenger numbers said the proposed cooperation is subject to approval by shareholders and government authorities and no binding agreement has yet been made.

The company’s U.S.-listed shares jumped 6.9 percent on Friday after it halted trading in its China and Hong Kong-listed shares and said it was negotiating a possible cooperation with a third party.

Trading in the shares will resume on Monday, the company said.

(Reporting by Brenda Goh; Editing by David Goodman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/rzaSESElQyQ/us-china-southern-american-airline-idUSKBN16X0S5

U.S. equity futures at six-week low after Trump healthcare setback


U.S. equity index futures fell to a six-week low on Sunday in a sign Wall Street would start the week defensively after Republicans pulled legislation to overhaul the U.S. healthcare system in a stunning setback for President Donald Trump.

SP 500 e-mini futures ESv1 were down over 0.65 percent, shortly after electronic trading resumed on Sunday evening.

Volume of more than 17,000 contracts in the first 30 minutes marked the heaviest trading activity to kick off a week since Trump took office. That was roughly 2-1/2 times the average of fewer than 7,000 contracts in early Sunday evening trading since the inauguration.

U.S. Treasury futures were up 0.18 percent Sunday, indicating that yields would start the week lower when bonds start trading in Asia later.

Markets were unnerved last week by Trump’s inability to get enough support for legislation to reform the U.S. healthcare system, a major 2016 election campaign promise of the president and his allies.

Investors had worried that the difficulties with the health bill could delay other legislation such as tax reform. Trump said he would now turn his attention to getting “big tax cuts” through Congress.

Speaking on “Fox News Sunday,” White House chief of staff Reince Priebus said the administration was open to working with moderate Democrats and Republicans to pass other aspects of Trump’s agenda, such as revamping the tax code.

David Ader, chief macro strategist at Informa Financial Intelligence, said about the failed health care bill: “The friction in Washington over all this is tempting to extrapolate to Trump’s broader economic plans – lower taxes, fiscal stimulus – in that these, too, may stumble or at least retreat from the levels initially offered.”

News that Republican leaders pulled the bill broke just before the markets closed on Friday, sending stocks lower.

For the week, the SP 500 fell 1.4 percent, its worst weekly decline of the year.

The equity run-up since Trump’s election, which was largely based on expectations of tax cuts and deregulation of financials, appeared to be waning, said Putri Pascualy, managing director and partner at Pacific Alternative Asset Management Company, which has $24 billion in assets under management.

“Recent market pullback tells me that some of the euphoria is starting to ebb as reality sinks in,” Pascualy said. “Congress can throw a big wrench into how some of these plans are going to be executed.”

Mark Grant, chief strategist and managing director at Hilltop Securities, recommended investors move into 5-10 year corporate bonds “because I don’t see stocks posting double-digit returns after their huge run-up since the elections.”

(Reporting by Jessica Toonkel and Jennifer Ablan in New York,; additional reporting by Trevor Hunnicutt in New York; Editing by Peter Cooney and Andrew Hay)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/vyGNj-OFf0U/us-usa-stocks-idUSKBN16X15C

Uber suspends self-driving car program after Arizona crash


Uber Technologies Inc [UBER.UL] suspended its pilot program for driverless cars on Saturday after a vehicle equipped with the nascent technology crashed on an Arizona roadway, the ride-hailing company and local police said.

The accident, the latest involving a self-driving vehicle operated by one of several companies experimenting with autonomous vehicles, caused no serious injuries, Uber said.

Even so, the company said it was grounding driverless cars involved in a pilot program in Arizona, Pittsburgh and San Francisco pending the outcome of investigation into the crash on Friday evening in Tempe.

“We are continuing to look into this incident,” an Uber spokeswoman said in an email.

The accident occurred when the driver of a second vehicle “failed to yield” to the Uber vehicle while making a turn, said Josie Montenegro, a spokeswoman for the Tempe Police Department.

“The vehicles collided, causing the autonomous vehicle to roll onto its side,” she said in an email. “There were no serious injuries.”

Two ‘safety’ drivers were in the front seats of the Uber car, which was in self-driving mode at the time of the crash, Uber said in an email, a standard requirement for its self-driving vehicles. The back seat was empty.

Photos and a video posted on Twitter by Fresco News, a service that sells content to news outlets, showed a Volvo SUV flipped on its side after an apparent collision involving two other, slightly damaged cars. Uber said the images appeared to be from the Tempe crash scene.

When Uber launched the pilot program in Pittsburgh last year, it said that driverless cars “require human intervention in many conditions, including bad weather.” It also said the new technology had the potential to reduce the number of traffic accidents in the country.

The accident is not the first time a self-driving car has been involved in a collision. A driver of a Tesla Motors Inc Model S car operating in autopilot mode was killed in a collision with a truck in Williston, Florida in 2016. A self-driving vehicle operated by Alphabet Inc’s Google was involved in a crash last year in Mountain View, California, striking a bus while attempting to navigate around an obstacle.

The collision comes days after Uber’s former president Jeff Jones quit less than seven months after joining the San Francisco-based company, the latest in a string of high-level executives who have departed in recent months.

In February, Alphabet’s Waymo self-driving car unit sued Uber and its Otto autonomous trucking subsidiary, alleging theft of proprietary sensor technology.

(Reporting by Gina Cherelus in New York; Editing by Frank McGurty and Bill Rigby)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/7HXF3KcUtwg/us-uber-tech-crash-idUSKBN16W0UZ

Exclusive: Venezuela increased fuel exports to allies even as supply crunch loomed


HOUSTON/CARACAS A gasoline shortage in OPEC member Venezuela was exacerbated by an increase in fuel exports to foreign allies such as Cuba and Nicaragua and an exodus of crucial personnel from state-run energy company PDVSA, according to internal PDVSA documents and sources familiar with its operations.

Leftist-run Venezuela sells its citizens the world’s cheapest gasoline. Fuel supplies have continued flowing despite a domestic oil industry in turmoil and a deepening economic crisis under President Nicolas Maduro that has left the South American country with scant supplies of many basic necessities.

That changed on Wednesday, when Venezuelans faced their first nationwide shortage of motor fuel since an explosion ripped through one of the world’s largest refineries five years ago. At the time, the government of then-President Hugo Chavez curbed exports to guarantee there was enough fuel at home.

This week’s shortage was also mainly due to problems at refineries, as a mix of plant glitches and maintenance cut fuel production in half.

Unlike five years ago, Caracas has continued exporting fuel to political allies and even raised the volume of shipments last month despite warnings within the government-run company that doing so could trigger a domestic supply crunch.

Shipments from refineries to the domestic market needed to be redirected to meet those export commitments, the internal documents showed.

“Should this additional volume … be exported, it would impact a cargo scheduled for the local market,” read one email sent from an official in the company’s domestic marketing department to its international trade unit.

Venezuela last month exported 88,000 barrels per day (bpd) of fuels – equivalent to a fifth of its domestic consumption – to Cuba, Nicaragua and other countries, according to internal PDVSA documents seen by Reuters.

That was up 22,000 bpd on the volumes Venezuela had been shipping to those two countries under accords struck by Chavez to expand his diplomatic clout by lowering their fuel costs through cheap supplies of crude and fuel.

The order to increase exports came from PDVSA’s top executives, according to the internal emails seen by Reuters.

Venezuela’s oil ministry and state-run PDVSA, formally known as Petroleos de Venezuela SA, did not reply to requests for comment for this story.

FUEL STRAIN, BRAIN DRAIN

The strain on the country’s fuel system has been worsened by the departure of staff in PDVSA’s trade and supply unit who are key to ensuring fuel gets to where it is needed and making payments for imports, three sources close to the company said.

The unit has seen around a dozen key staffers depart since Maduro shook up PDVSA’s top management in January. Among those who left was the head of budget and payments, two sources said.

“Every week someone leaves for one reason or another,” said a PDVSA source familiar with the unit’s operations.

Some have been fired, while others have left since the shake-up inserted political and military officials into top positions and bolstered Maduro’s grip on the company that powers the nation’s economy.

The imposition of leaders with little or no experience in the industry has further disillusioned some of the company’s experienced professionals and accelerated an exodus that had already taken hold as economic and social conditions in Venezuela worsened.

A recent internal PDVSA report seen by Reuters mentioned “a low capacity to retain key personnel,” amid salaries of a few dozen dollars a month at the black market rate.

UNPAID BILLS

The departure of staff responsible for paying suppliers, as well as a cash crunch in the company and the country, have led to an accumulation of unpaid bills for fuel imports into Venezuela.

Had those bills been paid, the supply crunch would have been less acute, the company sources said.

About 10 tankers are waiting near PDVSA ports in Venezuela and the Caribbean to discharge fuel for domestic consumption and for oil blending.

Only one vessel bringing fuel imports has been discharged since the beginning of the week, shipping data showed.

PDVSA ordered some of the cargoes as it prepared alternative supplies while refineries undergo maintenance.

The tankers sitting offshore will not unload until PDVSA pays for their cargoes, said shippers and the company sources.

Should PDVSA pay – up to $20 million per cargo – shortages could blow over relatively soon.

The cash-strapped company has struggled since the global oil price crash that began in 2014 cut revenue for its crude exports. PDVSA is tight on cash as it prepares for some $2.5 billion in bond payments due next month.

While the vessels sit offshore, lines of dozens of cars waited at gas stations in central Venezuela on Wednesday and Thursday. The shortages angered Venezuelans who already face long lines for scarce food and drugs.

PDVSA blamed the supply crunch on unspecified problems for shipping fuel from domestic refineries to distribution centers. The company said it was working hard to solve the gasoline situation by boosting deliveries to the worst-hit regions.

A shortage of trucks to move refined products has also caused bottlenecks, oil workers told PDVSA President Eulogio Del Pino during a visit to a fuel facility this week, asking for help. Trucks are in short supply because the country does not have enough funds to pay for imports of spare parts.

It was unclear when fuel supplies would return to normal, although by late Thursday PDVSA appeared to have distributed some fuel from storage to Caracas and the eastern city of Puerto Ordaz. Lines to fill up at gasoline stations shortened in both cities, according to Reuters witnesses.

Workers at the 335,000-bpd Isla refinery on the nearby island of Curacao operated by PDVSA said on Friday that the refinery had begun restarting its catalytic cracking unit, which could boost fuel supplies in the coming days.

(Additional reporting by Mircely Guanipa in Punto Fijo and Maria Ramirez in Puerto Ordaz; Editing by Simon Webb and Marguerita Choy)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ITnFAPK9C7Q/us-venezuela-gasoline-idUSKBN16V2D5

Chinese court rules in favor of Apple in local design patent disputes


BEIJING A Chinese court has ruled in favor of Apple in design patent disputes between the Cupertino, California company and a domestic phone-maker, overturning a ban on selling iPhone 6 and iPhone 6 Plus phones in China, Xinhua news agency reported.

Last May, a Beijing patent regulator ordered Apple’s Chinese subsidiary and a local retailer Zoomflight to stop selling the iPhones after Shenzhen Baili Marketing Services lodged a complaint, claiming that the patent for the design of its mobile phone 100c was being infringed by the iPhone sales.

Apple and Zoomflight took the Beijing Intellectual Property Office’s ban to court.

The Beijing Intellectual Property Court on Friday revoked the ban, saying Apple and Zoomflight did not violate Shenzhen Baili’s design patent for 100c phones.

The court ruled that the regulator did not follow due procedures in ordering the ban while there was no sufficient proof to claim the designs constituted a violation of intellectual property rights.

Representatives of Beijing Intellectual Property Office and Shenzhen Baili said they would take time to decide whether to appeal the ruling, according to Xinhua.

In a related ruling, the same court denied a request by Apple to demand stripping Shenzhen Baili of its design patent for 100c phones.

Apple first filed the request to the Patent Reexamination Board of State Intellectual Property Office. The board rejected the request, but Apple lodged a lawsuit against the rejection.

The Beijing Intellectual Property Court on Friday ruled to maintain the board’s decision. It is unclear if Apple will appeal.

(Reporting by Ryan Woo, editing by David Evans)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/_uj7-rAdRn0/us-apple-china-idUSKBN16W0KT

Trump greenlights Keystone XL pipeline, but obstacles loom


WASHINGTON/CALGARY, Alberta U.S. President Donald Trump’s administration approved TransCanada Corp’s (TRP.TO) Keystone XL pipeline on Friday, cheering the oil industry and angering environmentalists even as further hurdles for the controversial project loom.

The approval reverses a decision by former President Barack Obama to reject the project, but the company still needs to win financing, acquire local permits, and fend off likely legal challenges for the pipeline to be built.

“TransCanada will finally be allowed to complete this long-overdue project with efficiency and with speed,” Trump said in the Oval Office before turning to ask TransCanada Chief Executive Officer Russell Girling when construction would start.

“We’ve got some work to do in Nebraska to get our permits there,” Girling replied.

“Nebraska?” Trump said. “I’ll call Nebraska.”

Trump announced the presidential permit for Keystone XL at the White House with Girling and Sean McGarvey, president of North America’s Building Trades Unions, standing nearby. He said the project would lower consumer fuel prices, create jobs and reduce U.S. dependence on foreign oil.

The pipeline linking Canadian oil sands to U.S. refiners had been blocked by Obama, who said it would do nothing to reduce fuel prices for U.S. motorists and would contribute to emissions linked to global warming.

Trump, however, campaigned on a promise to approve it, and he signed an executive order soon after taking office in January to advance the project.

TransCanada’s U.S.-listed shares (TRP.N) dipped 5 cents to close at $46.21 on Friday.

JOBS

Trump has claimed the project would create 28,000 jobs in the United States. But a 2014 State Department study predicted just 3,900 construction jobs and 35 permanent jobs.

The president said he would get in touch with Nebraska Governor Pete Ricketts later in the day.

TransCanada applied to the Nebraska Public Service Commission in February for approval of the pipeline’s route through the state. The company said it expects that process to conclude this year.

Ricketts said in a statement posted on Twitter that the project would help his state.

“I have full confidence that the Public Service Commission will conduct a thorough and fair review of the application,” he said.

The White House has said the pipeline is exempt from a Trump executive order requiring new pipelines to be made from U.S. steel, because much of the pipe for the project has already been built and stockpiled.

“As we move forward, we’ll continue to look to buy the rest of the materials we need from … American manufacturers. We’ll put American workers to work,” Girling told reporters.

Environmental groups vowed to fight it.

Greenpeace said it would pressure banks to withhold financing for the multibillion-dollar project, and others said they would fight the pipeline in court.

“We’ll use every tool in the kit,” said Rhea Suh, president of the Natural Resources Defense Council.

Since Obama had nixed the pipeline based on an environmental assessment commissioned by the State Department in early 2014, opponents will likely argue in court that Trump cannot reverse the decision without conducting a new assessment.

CHALLENGES

Fred Jauss, partner at the international law firm Dorsey Whitney and a former attorney with the Federal Energy Regulatory Commission, said local permitting would also be a challenge.

“The Presidential Permit is only one part of a web of federal, state, and local permits that must be obtained prior to starting construction,” he said. “Other federal agencies, such as the Army Corps of Engineers, state regulatory commissions, and even local planning boards may have requirements that need to be fulfilled by Keystone prior to construction.”

“In addition, TransCanada may still need to reach deals with hundreds of potentially affected landowners on the pipeline’s route. There is a lot of work ahead for TransCanada.”

The Keystone XL pipeline would bring more than 800,000 barrels per day of heavy crude from Canada’s oil sands in Alberta into Nebraska, linking to an existing pipeline network feeding U.S. refineries and ports along the Gulf of Mexico.

The project could be a boon for Canada, which has struggled to bring its vast oil reserves to market.

“Our government has always been supportive of the Keystone XL pipeline and we are pleased with the U.S. decision,” said a spokesman for Canada’s minister of natural resources. “The importance of a common, continental energy market cannot be overstated.”

The president of the American Petroleum Institute, Jack Gerard, said the approval was “welcome news” and would bolster U.S. energy security.

Expedited approval of projects is part of Trump’s approach to a 10-year, $1 trillion infrastructure package he promised on the campaign trail. The White House is looking for ways to speed up approvals and permits for other infrastructure projects, which can sometimes take years to go through a regulatory maze.

TransCanada tried for more than five years to build the 1,179-mile (1,897-km) pipeline, until Obama rejected it in 2015. The company resubmitted its application for the project in January, after Trump signed the executive order smoothing its path.

(Additional reporting by Timothy Gardner in Washington, Luciana Lopez in New York, Ahmed Farhatha in Bengaluru, and Denny Thomas in Toronto; Writing by Richard Valdmanis and Jeff Mason; Editing by Bernadette Baum and Matthew Lewis)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/qhhxUzllN9A/us-usa-pipeline-keystone-transcanada-idUSKBN16V1CN

Trump touts Charter hiring that was in works for two years


WASHINGTON U.S. President Donald Trump on Friday touted Charter Communications Inc’s decision to invest $25 billion in the United States and a plan the company announced before he was elected to hire 20,000 workers over four years.

At a White House event with the second-largest U.S. cable company’s Chief Executive Thomas Rutledge and Texas Governor Greg Abbott, Trump praised Charter for planning to close its offshore call centers and move them to the United States.

Much of the announcement was not new. Charter said last May that it planned to add 20,000 jobs as part of its merger with Time Warner Cable and acquisition of Bright House Networks. As early as June 2015, Rutledge said Charter would need an additional 20,000 employees after those deals.

On a number of occasions, Trump has touted job announcements at the White House that had been previously planned or announced

The company said more than a year ago in February 2016 that it planned to close foreign Time Warner Cable call centers and move the jobs to the United States.

On Friday, Trump said, “We’re embracing a new economic model – the American Model. We’re going to massively eliminate job-killing regulations – that has started already, big league – reduce government burdens, and lower taxes that are crushing American businesses and American workers.

“You’re going to see thousands and thousands and thousands of jobs, of companies, and everything coming back into our country.”

Charter, which has 24 million residential and business customers in 41 states, said on Friday it had committed to Trump to hiring those workers within four years. It plans to invest $25 billion in broadband infrastructure and technology in the next four years.

In May 2016 Rutledge said in a recorded interview there would be some overlap in management positions (after the TWC merger) but said the company would hire about 20,000 people over four years.

Rutledge said the broadband investment was being made “in the right regulatory climate and right tax climate … We’re committed to spending that predicated on the kind of regulatory consistency and efficiency that we expect as a country.”

Charter agreed in May 2016 to make significant broadband investment under a deal with the Federal Communications Commission that was part of winning approval to acquire the cable networks. At that time Charter agreed to extend high-speed internet access to another two million customers within five years, with one million served by a broadband competitor.

Federal Communications Commission chairman Ajit Pai said in a statement on Friday that the commission was “working to set rules of the road that encourage companies to build and upgrade broadband networks across the country.” He credited the FCC’s “investment-friendly policies” in part for Charter’s commitments.

The agency is considering a petition by the American Cable Association to strike the requirement Charter extend service to areas already served by companies because it could harm smaller competitors.

Charter also touted its plans to open a new bilingual call center in McAllen, Texas and said it expects to employ 600 there by the end of 2018. Plans to open a call center in Texas were announced last October.

In December, Trump announced that telecommunications group Sprint Corp and U.S. satellite company OneWeb would bring 8,000 jobs to the United States, and the companies said the positions were part of a previously disclosed pledge by Japan’s SoftBank Group Corp.

In January, Sprint Chief Executive Marcelo Claure said of its decision to shift 5,000 call center jobs to the United States that the company “had plans to do this for a while.”

(Reporting By Steve Holland and David Shepardson in Washinggton Additional reporting by Anjali Athavaley in New York; Editing by Toni Reinhold)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/EHxLzfJ8Ahg/us-usa-trump-charter-commns-idUSKBN16V22I

Bull market not dead as tax reform takes spotlight


NEW YORK The death of the Republican healthcare reform may not prove to be the knife to the heart of the bull market some had feared, but to keep the Trump Trade alive investors should temper expectations for the breadth of expected tax cuts.

Anxiety over prospects for the healthcare bill gave stocks their largest weekly drop since the November presidential election. But its failure to pass could also force the Trump administration to come up with a palatable tax reform that could deliver this year some of the stimulus Wall Street has rallied on.

The SP 500 rose as much as 12 percent since the surprise Nov. 8 election win President Donald Trump, mostly on bets that lower taxes, deregulation and fiscal stimulus would boost economic growth and corporate earnings.

As he acknowledged defeat for the healthcare bill, Trump said Republicans would likely pivot to tax reform. Bets on that shift in focus were seen in stocks late on Friday, as the market cut its day losses when news of the health bill being pulled emerged.

“The market believes it raises the probability of a tax cut later this year since Trump is showing more strategic behavior. (It) puts the market a little more at ease,” said Paul Zemsky, chief investment officer of multi-asset strategies and solutions at Voya Investment Management in New York.

On the campaign trail Trump promised to lower the corporate tax to 15 percent. In order to make the tax reform revenue-neutral, and agreeable to the most money-sensitive wing of his party, his administration counted on savings from the health bill that will no longer materialize.

“If we want to get something passed by the August break, it’s going to look a lot like tax reform light,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“If we settle somewhere between the 25-30 percent corporate tax rate, that is far from the 15 percent offered in the campaign trail and the 20 percent currently in the House plan, (and) I think that’s where we end up.”

Softer cuts in corporate taxes leave stocks vulnerable after a rally on hopes for more, he said.

“It’s not a negative, it’s just not the positive the market had priced in.”

Aside from Trump’s pro-growth agenda some investors have pointed to an improving global economy and expectations for double-digit growth in corporate earnings as support for the lofty valuations in stocks.

“The evidence suggests to me that there is some Trump fairy dust sprinkled on this rally. That said, the underlying fundamentals do look better,” said Alan Gayle, director of asset allocation at RidgeWorth Investments in Atlanta, Georgia.

A survey on Friday showed Germany’s private sector grew at the fastest pace in nearly six years in March, suggesting an acceleration in growth for Europe’s largest economy in the first quarter.

Stocks could also turn to earnings to justify their price. First quarter earnings are expected to grow by more than 10 percent, according to Thomson Reuters data. In another sign of investor bullishness, February’s reading on consumer confidence touched its highest level since July 2001.

If earnings fail to deliver double-digit growth, stocks could again be seen as too expensive. At $18 per dollar of expected earnings over the next 12 months, investors are paying near the most since 2004 for the SP 500.

“The advance we’ve had and the large spike in confidence, the expectations on the economy and earnings expectations – we continue to believe it is too high,” said Julian Emanuel, executive director of U.S. equity and derivatives strategy at UBS Securities in New York.

(Additional reporting by Lewis Krauskopf; Editing by Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/IZ5pNcD5J0Y/us-usa-stocks-weekahead-idUSKBN16V2Z1

New home sales hit seven-month high; jobless claims rise


WASHINGTON New U.S. single-family home sales jumped to a seven-month high in February, suggesting the housing market recovery was gaining momentum despite higher prices and rising mortgage rates.

Other data on Thursday showed an unexpected increase in the number of Americans filing for unemployment benefits last week. Still, the labor market continues to tighten, which together with the strength in housing, should underpin economic growth.

“New home sales are the secret sauce that helps make the economy grow,” said Chris Rupkey, chief economist at MUFG Union Bank in New York. “This will put some backbone in investment spending and make this economic expansion more sustainable.”

The Commerce Department said new home sales increased 6.1 percent to a seasonally adjusted annual rate of 592,000 units last month, the highest level since July 2016. Sales have now more than recouped the sharp drop suffered in December.

Economists had forecast new home sales, which account for about 9.7 percent of the overall market, rising 0.7 percent to a rate of 565,000 units in February. Sales were up 12.8 percent compared to a year ago, showing the housing market’s resilience despite reduced affordability.

The 30-year fixed mortgage rate is around 4.30 percent. House prices increased 5.7 percent in January from a year ago, according a government report published on Wednesday.

Last month’s new home sales were likely partially buoyed by unseasonably warm weather. Most economists see a limited impact on housing from higher mortgage rates because a tightening labor market is improving job opportunities for young adults.

“Rising mortgage rates don’t appear to have been much of an impediment to increasing housing demand in February as solid job gains, faster wage growth, and stronger household formations offset the drop in affordability,” said David Berson, chief economist at Nationwide in Columbus, Ohio. 

In a separate report, the Labor Department said initial claims for state unemployment benefits increased 15,000 to a seasonally adjusted 258,000 for the week ended March 18.

Claims have now been below 300,000, a threshold associated with a healthy labor market for 80 straight weeks. That is the longest stretch since 1970 when the labor market was smaller. The job market is currently near full employment.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose only 1,000 to 240,000 last week.

U.S. financial markets were little moved by the data as investors focused on whether the House of Representatives would pass a Republican-sponsored bill to begin dismantling Obamacare, which is seen as the first significant policy test for President Donald Trump.

Stocks on Wall Street were trading higher, with the PHLX housing index .HGX gaining 0.7 percent. U.S. government bond prices fell while the dollar .DXY rose slightly against a basket of currencies.

LABOR MARKET FIRMING

The claims data covered the period during which the government surveyed employers for March’s nonfarm payrolls report. The four-week average of claims fell 7,750 between the February and March survey weeks, suggesting another month of strong job gains.

Job growth has averaged 209,000 per month over the past three months and the unemployment rate is at 4.7 percent, close to the nine-year low of 4.6 percent hit last November. Tightening labor market conditions and rising inflation enabled the Federal Reserve to raise interest rates last week.

“The claims data do not suggest a clear shift in labor market conditions between the reference periods for the February and March reports,” said Daniel Silver, an economist at JPMorgan in New York.

The market for new houses is benefiting from a shortage of properties for sale. A report on Wednesday showed a 3.7 percent drop in sales of existing homes in February.

Last month, new single-family homes sales surged 30.9 percent to their highest level since November 2007 in the Midwest and increased 3.6 percent in the South. They jumped 7.5 percent in the West but slumped 21.4 percent in the Northeast.

The inventory of new homes on the market increased 1.5 percent to 266,000 units last month, still less than half of its peak during the housing boom in 2006.

At February’s sales pace it would take 5.4 months to clear the supply of houses on the market, down from 5.6 months in January. A six-month supply is viewed as a healthy balance between supply and demand.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/uWJGT-RaeI8/us-usa-economy-idUSKBN16U1M4

U.S. Senate votes to overturn Obama broadband privacy rules


WASHINGTON The U.S. Senate on Thursday voted narrowly to repeal regulations requiring internet service providers to do more to protect customers’ privacy than websites like Alphabet Inc’s Google (GOOGL.O) or Facebook Inc (FB.O).

The vote was along party lines, with 50 Republicans approving the measure and 48 Democrats rejecting it. The two remaining Republicans in the Senate were absent and did not cast a vote.

According to the rules approved by the Federal Communications Commission in October under then-President Barack Obama, internet providers would need to obtain consumer consent before using precise geolocation, financial information, health information, children’s information and web browsing history for advertising and internal marketing.

The vote was a victory for internet providers such as ATT Inc (T.N), Comcast Corp (CMCSA.O) and Verizon Communications Inc (VZ.N), which had strongly opposed the rules.

The bill next goes to the U.S. House of Representatives, but it was not clear when they would take up the measure.

Senate Majority Leader Mitch McConnell said the Senate was overturning a regulation that “makes the internet an uneven playing field, increases complexity, discourages competition, innovation, and infrastructure investment.”

But Democratic Senator Ed Markey said, “Republicans have just made it easier for American’s sensitive information about their health, finances and families to be used, shared, and sold to the highest bidder without their permission.”

FCC Chairman Ajit Pai said consumers would have privacy protections even without the Obama administration internet provider rules.

In a joint statement, Democratic members of the FCC and the Federal Trade Commission said the Senate vote “creates a massive gap in consumer protection law as broadband and cable companies now have no discernible privacy requirements.”

Republican commissioners, including Pai, said in October that the rules would unfairly give websites like Facebook, Twitter Inc (TWTR.N) or Google the ability to harvest more data than internet service providers and thus dominate digital advertising. The FCC earlier this month delayed the data rules from taking effect.

The Internet and Television Association, a trade group, in a statement praised the vote as a “critical step towards re-establishing a balanced framework that is grounded in the long-standing and successful FTC privacy framework that applies equally to all parties operating online.”

Websites are governed by a less restrictive set of privacy rules overseen by the Federal Trade Commission.

Jonathan Schwantes, senior policy counsel for advocacy group Consumers Union, said the vote “is a huge step in the wrong direction, and it completely ignores the needs and concerns of consumers.”

(Reporting by David Shepardson; Editing by Chris Reese and Jonathan Oatis)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/01DpThJ511w/us-usa-internet-idUSKBN16U2ER

Dollar hangs on for U.S. healthcare vote, Asia shares muted


SYDNEY The dollar was living on borrowed time on Friday after U.S. lawmakers delayed a vote on a healthcare bill seen as crucial to President Donald Trump’s policy credibility.

Asian share markets were in limbo as a vote on the American Health Care Act might not happen until later Friday or Monday, as it meets opposition from warring factions within the Republicans themselves.

Some in the markets suspect a failure to pass such a high-stakes bill could endanger Trump’s promises of tax cuts and stimulus so beloved by Wall Street and U.S. corporates.

“The Trump reflation trade – particularly the equity leg of it, which has seen U.S. equity indexes roar to record highs – has arguably been long on optimism and short on substance for some time now,” said analysts at ANZ in a note.

“It comes at a sensitive time for the market, with the initial post-election exuberance having waned and as it weighs up political uncertainty, a strong U.S. economy and an increasingly hawkish Federal Reserve.”

Adding to the unease was a Reuters report that the Trump administration is preparing new executive orders to re-examine all 14 U.S. free trade agreements, including those in Asia, to aid American companies.

All of this kept stock markets muted. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.2 percent, while South Korea .KS11 barely moved.

Japan’s Nikkei .N225 added 0.3 percent. A Reuters poll published on Friday showed confidence among Japanese manufacturers rose for a seventh straight month to a three-year high.

After falling sharply mid-week, Wall Street had lapsed into waiting mode on Thursday with the Dow .DJI down 0.02 percent. The SP 500 .SPX lost 0.11 percent and the Nasdaq .IXIC 0.07 percent.

DOLLAR STRUGGLES

As stocks stalled, bonds rallied. Two-year Treasury yields US2YT=RR have fallen 15 basis points in the past week or so to stand at 1.256 percent.

At the same time, German yields have risen on speculation the European Central Bank might begin the long process of rate normalization this year. The central bank issued an upbeat outlook on the Euro zone economy overnight.

The net result was a contraction in the dollar’s yield advantage over the euro, which has seen the single currency steady at $1.0777 EUR= after scoring a six-week top of $1.0828 earlier this week.

The dollar was a fraction firmer on the yen at 111.11 JPY=, having hit a four-month low of 110.62. Against a basket of currencies, it was crouched at 99.843 .DXY having shed 1.5 percent in the past two weeks.

“The dollar is likely to struggle as global investors gradually realize that the U.S, can still produce policy gridlock even with one party holding the White House, Senate and House,” said Sean Callow, a senior currency analyst at Westpac.

“Moreover, the euro is looking more appealing, with the growth gap with the U.S. not as wide as previously thought and the euro having lost some of its political risk premium as European voters edge away from local Trump wannabes.”

In commodity markets, safe-haven spot held at $1,245.61 an ounce after hitting three-week high of $1,253.12 XAU=.

Oil prices idled near four-month lows on investor concerns that OPEC-led supply cuts were not yet reducing record U.S. crude inventories.

U.S. crude CLc1 inched up 14 cents to $47.84 in early trade, while Brent crude LCOc1 added 12 cents to $50.68. [O/R]

(Editing by Sam Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/hiBQk0flEk0/us-global-markets-idUSKBN16V040

Trump Tantrum looms on Wall Street if healthcare effort stalls


NEW YORK The Trump Trade could start looking more like a Trump Tantrum if the new U.S. administration’s healthcare bill stalls in Congress, prompting worries on Wall Street about tax cuts and other measures aimed at promoting economic growth.

Investors are dialing back hopes that U.S. President Donald Trump will swiftly enact his agenda, with a Thursday vote on a healthcare bill a litmus test which could give stock investors another reason to sell.

“If the vote doesn’t pass, or is postponed, it will cast a lot of doubt on the Trump trades,” said the influential bond investor Jeffrey Gundlach, chief executive at DoubleLine Capital.

U.S. stocks rallied after the November presidential election, with the SP 500 posting a string of record highs up to earlier this month, on bets that the pro-growth Trump agenda would be quickly pushed by a Republican Party with majorities in both chambers of Congress.

The SP 500 ended slightly higher on Wednesday, the day before a floor vote on Trump’s healthcare proposal scheduled in the House of Representatives.

On Tuesday, stocks had the biggest one-day drop since before Trump won the election, on concerns about opposition to the bill.

Investors extrapolated that a stalling bill could mean uphill battles for other Trump proposals. Trump and Republican congressional leaders appeared to be losing the battle to get enough support to pass it.

Any hint of further trouble for Trump’s agenda, especially his proposed tax cut, could precipitate a stock market correction, said Byron Wien, veteran investor and vice chairman of Blackstone Advisory Partners.

“The fact that they are having trouble with (healthcare repeal) casts a shadow over the tax cut and the tax cut was supposed to be the principal fiscal stimulus for the improvement in real GDP,” Wien said. “Without that improvement in GDP, earnings aren’t going to be there and the market is vulnerable.”

Strategists have been cautioning for weeks that markets are pricing in a scenario where nothing goes wrong with Trump’s agenda. Investors are paying $18.10 for every dollar in earnings expected on the SP 500 over the next 12 months, near the most expensive U.S. stocks have been since 2004.

“This is really about the fact that the market is pricing in too much certainty on a number of accounts,” said Julian Emanuel, executive director of U.S. equity and derivatives strategy at UBS Securities. “Even if you got the positive vote, there’s still the residual knowledge that the agenda will be difficult to get through the Senate.”

While investors and strategists have said they do not see an immediate threat to the eight-year-old bull market, there is a risk of a 5-to-10 percent drop. Only a bear market -a 20 percent decline- would put an end to the bull.

“It looked like a mini tantrum,” said David Kotok, chief investment officer of Cumberland Advisors. “Trump has made the House vote his own now so he has a lot at stake. My guess it will pass the House. If not, markets will be shocked and it won’t be pleasant.”

Michael Arone, chief investment strategist at the US SPDR Business at State Street Global Advisors in New York said that it the healthcare bill fails, “a correction of 5 percent is not unreasonable given how far we’ve come in such a short period of time.”

FOCUS ON LEGISLATION

Investors are now more focused on the actual mechanics of the legislative process, said Brian Daingerfield, Macro Strategist at NatWest Markets.

“I noticed this was the first day (on Tuesday) I was getting inquiries about the healthcare law and the vote count,” Daingerfield said. Wall Street views the healthcare vote “as a test of Trump’s ability to unify the party,” he said. “It has a symbolic significance.”

After the healthcare bill, the market will look for movement on tax and infrastructure. The president has said he wants the health bill passed by the mid-April Easter holiday and a schedule from the administration aims for tax reform being passed by August. Only then will they begin to tackle infrastructure spending.

“U.S. equities have been priced for perfection since the start of 2017 and (Tuesday) was a rude reminder that the legislative process is imperfect on even its best days,” said in a research note Nicholas Colas, chief market strategist at Convergex, a global brokerage company based in New York.

(Additional reporting by Jennifer Ablan, Chuck Mikolajczak, Caroline Valetkevitch, Sinead Carew, Richard Leong, Lewis Krauskopf, Saqib Ahmed; Editing by David Gregorio)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/MVuSXZ_EugY/us-usa-markets-trump-analysis-idUSKBN16T2YH

Slide in U.S. infrastructure stocks sign of ‘Trump trade’ weakness


NEW YORK If the swoon this week in financials was one sign of the Trump trade running out of fuel, recent weakness in transportation and infrastructure shares is another.

The Dow Jones Transportation Average .DJT, seen as a barometer of economic health, rose after the election and closed at a record high on March 1 but is now down nearly 5 percent for the month so far.

Steel shares, which soared just after the Nov. 8 election, fell sharply this week and are down for the month of March. Also, the SP 1500 construction and engineering index .SPCOMCSE is down 3.6 percent so far for March.

Along with financials, those names helped lead a post-election U.S. stock market rally, fueled by Republican Donald Trump’s promises of increased infrastructure spending, tax reform and reduced regulations. The SP 500 .SPX remains up 9.8 percent since the vote.

But signs that Republicans are facing difficulties uniting their majority behind a bill to replace Obamacare have caused investors to question how soon Trump’s pro-growth policies may be implemented.

“Transports are the lifeblood of the economy; they are the unsung heroes of the bull market,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.

“They need to hold up in order to continue to provide validation to the broader trade, to the trade higher,” he said, adding that he saw more room on the downside for transports and infrastructure stocks, largely because of the run up.

The transportation average on Wednesday held above the key 8,970 area, a Fibonacci retracement of its move from October to early March. A decided break below 8,970 would leave support at 8,900 and then open for a drop to the 8,760 area, another Fibonacci retracement.

“The transports are broken right now,” said Andre Bakhos, managing director at Janlyn Capital LLC  in Bernardsville, New Jersey.

“We will be biding time along the way to create a consolidation or support level. Whether that starts around here or in the transports around 8,500 I don’t know.”

Helping the transports on Wednesday, however, was FedEx (FDX.N), which gained 2.1 percent after it reported mostly upbeat results late Tuesday.

The transportation average ended up 0.6 percent on Wednesday after falling 1.9 percent in the market selloff Tuesday.

Steel shares also managed to rebound from Tuesday’s selloff but were still down for the month. The SP 1500 steel index .SPCOMSTEEL was down 5 percent for March so far, while U.S. Steel (X.N) was down nearly 11 percent for month.

Their decline may be tied to a combination of profit-taking and other factors, though many investors likely have overestimated the infrastructure benefit to these stocks, said Charles Bradford, president of Bradford Research, a research firm.

“Some of the stocks that ran up the most get almost no benefit from construction, like U.S. Steel… Yet that was one of the big names that some people are promoting as infrastructure plays,” he said.

“There’s an awful lot of bad information floating out, and a lot of it comes from Washington.”

(Reporting by Chuck Mikolajczak and Caroline Valetkevitch; Editing by Andrew Hay)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/2eY1PTRtFSE/us-usa-stocks-infrastructure-idUSKBN16T38F

Asia stocks advance, dollar, oil recover from multi-month lows


SINGAPORE Asian stocks rose on Thursday, taking their cues from a Wall Street bounce, while the dollar crawled up from a four-month low but remains clouded by concerns about U.S. President Donald Trump’s pro-growth policies.

Sterling GBP=D3 was about 0.1 percent lower at $1.247 in early trade but had fallen as much as 0.4 percent on Wednesday, after an attack close to Britain’s Parliament killed five people, including the attacker and a police officer, and injured 40. Police said they believed the attacker was inspired by Islamist-related terrorism.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced 0.1 percent.

Japan’s Nikkei .N225 gained 0.25 percent, thanks to a weaker yen.

Overnight, the Nasdaq .IXIC jumped 0.5 percent and the SP 500 .SPX closed higher, while the Dow Jones Industrial Average .DJI was flat, after all three touched their lowest levels in about five weeks earlier in the session.

“Investors with a lot of cash used yesterday’s downturn and the morning’s weakness today as a buying opportunity,” said Alan Lancz, president of investment advisory firm Alan B. Lancz Associates in Toledo, Ohio. He said, however, that U.S. stocks could slip again if Trump’s healthcare bill fails to progress.

The dollar advanced 0.15 percent to 111.32 yen JPY= in early trade, after dropping to 110.71, its lowest since Nov. 22 overnight.

The dollar index .DXY also recovered about 0.1 percent to 99.77, after touching a seven-week low overnight.

Trump has been trying to rally support for his plan to repeal the 2010 Affordable Care Act, Democratic former President Barack Obama’s signature healthcare legislation. Republican leaders of the House of Representatives plan a vote on the bill, Trump’s first major legislation since he took office, later on Thursday.

“Failure to push ahead with this legislation will be seen as a defeat for Trump and the market may react negatively in the short-term; however this should be seen as a buying opportunity,” James Woods, global investment analyst at Rivkin Securities in Sydney, wrote in a note.

Investors in Asia are awaiting a rate decision from Taiwan’s central bank, which is expected to remain on hold.

The central bank is asking some custodian banks to advise their clients not to remit new funds, two people with direct knowledge of the matter told Reuters on Wednesday.

The U.S. dollar was up 0.15 percent at 30.503 Taiwan dollars TWD=TP.

The New Zealand dollar NZD= was 0.1 percent lower after the central bank held interest rates at a record low 1.75 percent, and reiterated it would remain there for a “considerable” period of time, citing global volatility and U.S. protectionism.

In commodities markets, oil prices inched higher having touched their lowest level since November overnight, after data showed U.S. inventories, already at a record high, grew by far more than forecast.

U.S. crude CLc1 gained 0.4 percent to $48.26 a barrel in early trade on Thursday.

The dollar’s recovery weighed on gold XAU=, which retreated 0.2 percent to $1,246.20 after hitting a three-week high overnight.

(Reporting by Nichola Saminather; Additional reporting by Sam Forgione; Editing by Sam Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/bcIpYL5czIA/us-global-markets-idUSKBN16U03X

Uber board backs CEO Kalanick, still looking for chief operating officer


SAN FRANCISCO Uber Technologies Inc [UBER.UL] plans to keep co-founder Travis Kalanick as chief executive following a series of damaging events at the ride services company, a member of its board said on Tuesday in a rare call with reporters.

“The board has confidence in Travis,” said Arianna Huffington, co-founder of news site Huffington Post and one of seven voting Uber board members. The possibility of him resigning has not “come up and we don’t expect it to come up,” she said.

But she added that Kalanick, 40, needed to change his leadership style from that of a “scrappy entrepreneur” to be more like a “leader of a major global company.”

The privately held company, valued at $68 billion, is pushing ahead in its search for a chief operating officer to help Kalanick run the business, but gave no hints on possible candidates or timing of an appointment.

Huffington and three Uber executives on the call said they were working on repairing the company’s tarnished image and improving its culture and leadership after a series of embarrassing setbacks, including allegations of sexual harassment from a former employee and the recent departure of its president, Jeff Jones, who cited deep misgivings about the company. Kalanick was not on the call.

Uber expects to conclude an internal investigation into the sexual harassment allegations by the end of April, Huffington said The investigation was prompted by a former Uber employee who last month published a blog post describing a workplace where sexual harassment was common and went unpunished.

Huffington is part of a committee – along with Uber board members David Bonderman of TPG Capital and Bill Gurley, a venture capitalist at Benchmark and close adviser to Kalanick – that will review the findings of the investigation.

Huffington pledged to make those findings public.

Meanwhile, the search for a COO – announced two weeks ago by Kalanick – is continuing, Huffington said, without mentioning any candidates by name or saying when the job would be filled. She said the COO, a role that has not previously existed at Uber, will be a “true partner” to Kalanick.

“This is the first time that Travis has really understood the importance of having a partner,” said Liane Hornsey, Uber’s chief human resources officer, on the call.

News service Bloomberg last month released a video that showed Kalanick berating an Uber driver who had complained about cuts to rates paid to drivers, resulting in Kalanick making a public apology and admitting he needed leadership training.

(Reporting by Heather Somerville; Editing by Bill Rigby)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/BRWdZwAl4Fs/us-uber-ceo-idUSKBN16S2Y0

Asian stocks pull back on fresh doubts about Trump policies


HONG KONG Asian stocks fell on Wednesday as a sharp pullback in Wall Street on doubts about Donald Trump’s economic agenda prompted investors to rush to safe haven assets such as gold and government bonds.

Both the SP 500 .SPX and the Dow Jones Industrial Average .DJI lost more than one percent on Tuesday in frantic trading, their biggest one day slide since before Donald Trump’s election victory in November. [.N]

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.5 percent in early trades after it hit its highest level since June 2015 in the previous session.

Early Asian market openers such as Japan .N225 and Australia fell more than a percent.

“Nerves about implementation of the Trump agenda will remain the focus for markets with the Obamacare repeal vote in U.S. congress on Thursday,” ANZ strategists wrote in a daily note.

With valuations stretched — U.S. stocks are trading at the upper end of their historical valuation ranges — investors see the Trump administration’s struggles to push through the healthcare overhaul as a sign he may also face setbacks delivering promised corporate tax cuts.

Expectations of those tax cuts have been a major driver behind the 10-percent surge in the SP 500 since Trump’s election.

With investor mood decidedly risk-off, the Japanese yen scored some chunky gains against the U.S. dollar JPY=, rising to a four-month high. The greenback fell below a key level of 100 .DXY against a trade-weighted basket of its peers.

Bonds gained with yields on two-year U.S. debt US2YT=RR falling to 1.27 percent in overnight trades, retreating further from a 7-1/2 year high of 1.38 percent hit last Wednesday when the U.S. Federal Reserve raised interest rates.

Gold XAU= was on track to extend its overnight strong performance with the precious commodity perched comfortably at a two-week high of $1,248 per ounce.

Oil prices declined as concerns about new supply overshadowed the latest talk by OPEC that it was looking to extend output cuts.

U.S. West Texas Intermediate crude CLc1 fell 1.8 percent to its lowest level since late-November to settle at $47.34 per barrel. Contracts were yet to be traded in Asia.

(Reporting by Saikat Chatterjee; Editing by Sam Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/lOmMZymVm2Q/us-global-markets-idUSKBN16T017

Markets fret as Trump agenda shows signs of cracks


NEW YORK The steepest pullback in stocks since the U.S. presidential election reveals investor angst about President Donald Trump’s ability to push through major reforms, leaving stocks vulnerable to a long-anticipated correction.

The SP 500, in its second longest bull market ever, has risen close to 10 percent since the Nov. 8 election on optimism about Trump’s pro-growth agenda. With valuations at their highest in over a decade, investors have been expecting a pullback even if its catalysts haven’t been clear.

Trump, looking to score the first major political win of his presidency, on Tuesday warned Republican lawmakers that if a healthcare bill he backs fails to pass, it would cause “political problems.” Stocks fell alongside the U.S. dollar, while Treasuries and gold rallied.

“It’s like the Trump agenda getting kind of slapped in the face,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

Investors saw the health bill vote, expected on Thursday, as testing optimism that the Trump administration and Republican leaders will implement tax cuts, deregulation and infrastructure spending expected to boost economic growth.

The muddled view on the healthcare bill “carries over to what will happen with the infrastructure plan and the tax reform plan and the reduced regulation plan,” Tuz said.

Adding to the angst, FBI Director James Comey on Monday confirmed that the bureau is investigating possible ties between Trump’s presidential campaign and Russia as Moscow sought to influence the 2016 U.S. election. The investigation, he said, could last for months.

Comey’s testimony “pointed to the fact that there could be a lot of drawn-out political infighting that could delay some of the pro-business ideas from being passed,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

He said he doesn’t expect to see a correction unless the SP 500, currently down about 2 percent from the record high set March 1, retreats another 1.5 to 2 percent in the next few days.

“That would cause investors to maybe take a pause in what has been a buy-the-dip mentality since the election,” Meckler said.

The SP forward price to earnings ratio has jumped to above 18 from 16.6 on Election Day, making U.S. equities the most expensive level since 2004. At the same time, the index’s dividend yield sits just above 2 percent, losing some of its allure against the 10-year Treasury note.

SKITTISH INVESTORS

The SP 500 has not posted a daily decline of more than 1 percent since Oct. 11. Tuesday’s move in stocks underscores trends in other markets already pricing in a risk that the Trump administration’s plans could be delayed.

The Mexican peso MXN=, which weakened during the presidential campaign with rising prospects of a Trump win, traded last week at its strongest versus the dollar since the November election. It had hit a historic low in mid-January.

The yen JPY=, up against the dollar for a sixth straight session, was on track to close below 112 per $1 for the first time since Feb. 8.

Junk bond investors also pounced earlier this month. The spread between the Bank of America Merrill Lynch U.S. High Yield index .MERH0A0 and benchmark Treasuries US10YT=RR bottomed on March 1 and has since widened by about 40 basis points.

Ten-year Treasury yields fell below 2.43 percent Tuesday, the lowest in about three weeks, partly reflecting traders scaling back their view on the domestic economy in the absence of any fiscal stimulus this year.

“Republicans should have prioritized tax reform ahead of health care reform,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

“They’re coming across as a motley crew rather than a party that can get things done.”

(Additional reporting by Richard Leong, Lewis Krauskopf, Caroline Valetkevitch and Chuck Mikolajczak; Editing by Nick Zieminski)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/l1Vu-58VZYg/us-usa-stocks-analysis-idUSKBN16S2LR

Snap snaps back after analyst assigns first ‘buy’ rating


SAN FRANCISCO Snap Inc (SNAP.N) stock rose on Monday after the Snapchat owner received its first “buy” rating from a Wall Street analyst following a $3.4 billion public listing this month that raised the eyebrows of many on Wall Street.

The social media company’s public listing on March 1 was the hottest by a technology firm in three years, but after two days of explosive gains, its stock has mostly fallen as investors worry about Snap’s high valuation and lack of profitability.

Based on the average of analysts’ buy, sell and neutral recommendations, Snap is the worst-rated stock among 288 U.S. companies that have a market capitalization of at least $20 billion, according to Thomson Reuters data.

Crespi, Hardt Co analyst James Cakmak on Monday gave Snap its first “buy” rating and a $25 target price. Its stock at midday was up 2.09 percent at $19.96.

“We see a company with the potential to outpace revenue growth of peers by 7x, along with a steep margin trajectory, while peer margins have likely peaked,” he said in a report.

Cakmak’s recommendation stands out among reports by analysts concerned about Snap’s slowing user growth, widening losses and lack of voting rights for outside investors. Snap has warned it may never be profitable.

Another five analysts have recommended selling Snap while four analysts have neutral ratings.

In its first two days of trading, Snap surged 59 percent from its $17 IPO price. Since then, it has lost 26 percent.

(Reporting by Noel Randewich; Editing by Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/aWxD-nMj2jI/us-snap-stocks-idUSKBN16R1ZE

Snap snaps back after analyst assigns first ‘buy’ rating


SAN FRANCISCO Snap Inc (SNAP.N) stock rose on Monday after the Snapchat owner received its first “buy” rating from a Wall Street analyst following a $3.4 billion public listing this month that raised the eyebrows of many on Wall Street.

The social media company’s public listing on March 1 was the hottest by a technology firm in three years, but after two days of explosive gains, its stock has mostly fallen as investors worry about Snap’s high valuation and lack of profitability.

Based on the average of analysts’ buy, sell and neutral recommendations, Snap is the worst-rated stock among 288 U.S. companies that have a market capitalization of at least $20 billion, according to Thomson Reuters data.

Crespi, Hardt Co analyst James Cakmak on Monday gave Snap its first “buy” rating and a $25 target price. Its stock at midday was up 2.09 percent at $19.96.

“We see a company with the potential to outpace revenue growth of peers by 7x, along with a steep margin trajectory, while peer margins have likely peaked,” he said in a report.

Cakmak’s recommendation stands out among reports by analysts concerned about Snap’s slowing user growth, widening losses and lack of voting rights for outside investors. Snap has warned it may never be profitable.

Another five analysts have recommended selling Snap while four analysts have neutral ratings.

In its first two days of trading, Snap surged 59 percent from its $17 IPO price. Since then, it has lost 26 percent.

(Reporting by Noel Randewich; Editing by Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/aWxD-nMj2jI/us-snap-stocks-idUSKBN16R1ZE

Snap snaps back after analyst assigns first ‘buy’ rating


SAN FRANCISCO Snap Inc (SNAP.N) stock rose on Monday after the Snapchat owner received its first “buy” rating from a Wall Street analyst following a $3.4 billion public listing this month that raised the eyebrows of many on Wall Street.

The social media company’s public listing on March 1 was the hottest by a technology firm in three years, but after two days of explosive gains, its stock has mostly fallen as investors worry about Snap’s high valuation and lack of profitability.

Based on the average of analysts’ buy, sell and neutral recommendations, Snap is the worst-rated stock among 288 U.S. companies that have a market capitalization of at least $20 billion, according to Thomson Reuters data.

Crespi, Hardt Co analyst James Cakmak on Monday gave Snap its first “buy” rating and a $25 target price. Its stock at midday was up 2.09 percent at $19.96.

“We see a company with the potential to outpace revenue growth of peers by 7x, along with a steep margin trajectory, while peer margins have likely peaked,” he said in a report.

Cakmak’s recommendation stands out among reports by analysts concerned about Snap’s slowing user growth, widening losses and lack of voting rights for outside investors. Snap has warned it may never be profitable.

Another five analysts have recommended selling Snap while four analysts have neutral ratings.

In its first two days of trading, Snap surged 59 percent from its $17 IPO price. Since then, it has lost 26 percent.

(Reporting by Noel Randewich; Editing by Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/aWxD-nMj2jI/us-snap-stocks-idUSKBN16R1ZE

Snap snaps back after analyst assigns first ‘buy’ rating


SAN FRANCISCO Snap Inc (SNAP.N) stock rose on Monday after the Snapchat owner received its first “buy” rating from a Wall Street analyst following a $3.4 billion public listing this month that raised the eyebrows of many on Wall Street.

The social media company’s public listing on March 1 was the hottest by a technology firm in three years, but after two days of explosive gains, its stock has mostly fallen as investors worry about Snap’s high valuation and lack of profitability.

Based on the average of analysts’ buy, sell and neutral recommendations, Snap is the worst-rated stock among 288 U.S. companies that have a market capitalization of at least $20 billion, according to Thomson Reuters data.

Crespi, Hardt Co analyst James Cakmak on Monday gave Snap its first “buy” rating and a $25 target price. Its stock at midday was up 2.09 percent at $19.96.

“We see a company with the potential to outpace revenue growth of peers by 7x, along with a steep margin trajectory, while peer margins have likely peaked,” he said in a report.

Cakmak’s recommendation stands out among reports by analysts concerned about Snap’s slowing user growth, widening losses and lack of voting rights for outside investors. Snap has warned it may never be profitable.

Another five analysts have recommended selling Snap while four analysts have neutral ratings.

In its first two days of trading, Snap surged 59 percent from its $17 IPO price. Since then, it has lost 26 percent.

(Reporting by Noel Randewich; Editing by Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/aWxD-nMj2jI/us-snap-stocks-idUSKBN16R1ZE

Snap snaps back after analyst assigns first ‘buy’ rating


SAN FRANCISCO Snap Inc (SNAP.N) stock rose on Monday after the Snapchat owner received its first “buy” rating from a Wall Street analyst following a $3.4 billion public listing this month that raised the eyebrows of many on Wall Street.

The social media company’s public listing on March 1 was the hottest by a technology firm in three years, but after two days of explosive gains, its stock has mostly fallen as investors worry about Snap’s high valuation and lack of profitability.

Based on the average of analysts’ buy, sell and neutral recommendations, Snap is the worst-rated stock among 288 U.S. companies that have a market capitalization of at least $20 billion, according to Thomson Reuters data.

Crespi, Hardt Co analyst James Cakmak on Monday gave Snap its first “buy” rating and a $25 target price. Its stock at midday was up 2.09 percent at $19.96.

“We see a company with the potential to outpace revenue growth of peers by 7x, along with a steep margin trajectory, while peer margins have likely peaked,” he said in a report.

Cakmak’s recommendation stands out among reports by analysts concerned about Snap’s slowing user growth, widening losses and lack of voting rights for outside investors. Snap has warned it may never be profitable.

Another five analysts have recommended selling Snap while four analysts have neutral ratings.

In its first two days of trading, Snap surged 59 percent from its $17 IPO price. Since then, it has lost 26 percent.

(Reporting by Noel Randewich; Editing by Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/aWxD-nMj2jI/us-snap-stocks-idUSKBN16R1ZE

Wal-Mart to launch investment arm in e-commerce push


Wal-Mart Stores Inc, the world’s largest retailer, will launch its first investment arm to expand its e-commerce business in partnership with retail start-ups, venture capitalists and entrepreneurs, the company said on Monday.

The plan is being spearheaded by Marc Lore, Wal-Mart’s e-commerce chief, who joined the Bentonville, Arkansas-based company from retail upstart Jet.com, which it acquired for more than $3 billion in August.

Since then, Wal-Mart has acquired three small web retailers to add urban and millennial shoppers.

The venture, called Store No. 8, will work with startups that specialize in areas that include robotics, virtual and augmented reality, machine learning and artificial intelligence, Lore said at Shoptalk, a retail conference in New York. It will be based in California’s Silicon Valley, he added.

Wal-Mart will keep the startups separate from the broader organization so that they will not affect the retailer’s bottom line in the near term, Seth Beal, senior vice-president, incubation and strategic partnerships, said in an interview.

He declined to give a timeframe for the launch.

(Reporting by Nandita Bose in Chicago; Editing by Richard Chang)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ypDboDZGjBU/us-walmart-ecommerce-idUSKBN16R2Q9

Wal-Mart to launch investment arm in e-commerce push


Wal-Mart Stores Inc, the world’s largest retailer, will launch its first investment arm to expand its e-commerce business in partnership with retail start-ups, venture capitalists and entrepreneurs, the company said on Monday.

The plan is being spearheaded by Marc Lore, Wal-Mart’s e-commerce chief, who joined the Bentonville, Arkansas-based company from retail upstart Jet.com, which it acquired for more than $3 billion in August.

Since then, Wal-Mart has acquired three small web retailers to add urban and millennial shoppers.

The venture, called Store No. 8, will work with startups that specialize in areas that include robotics, virtual and augmented reality, machine learning and artificial intelligence, Lore said at Shoptalk, a retail conference in New York. It will be based in California’s Silicon Valley, he added.

Wal-Mart will keep the startups separate from the broader organization so that they will not affect the retailer’s bottom line in the near term, Seth Beal, senior vice-president, incubation and strategic partnerships, said in an interview.

He declined to give a timeframe for the launch.

(Reporting by Nandita Bose in Chicago; Editing by Richard Chang)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ypDboDZGjBU/us-walmart-ecommerce-idUSKBN16R2Q9

Wal-Mart to launch investment arm in e-commerce push


Wal-Mart Stores Inc, the world’s largest retailer, will launch its first investment arm to expand its e-commerce business in partnership with retail start-ups, venture capitalists and entrepreneurs, the company said on Monday.

The plan is being spearheaded by Marc Lore, Wal-Mart’s e-commerce chief, who joined the Bentonville, Arkansas-based company from retail upstart Jet.com, which it acquired for more than $3 billion in August.

Since then, Wal-Mart has acquired three small web retailers to add urban and millennial shoppers.

The venture, called Store No. 8, will work with startups that specialize in areas that include robotics, virtual and augmented reality, machine learning and artificial intelligence, Lore said at Shoptalk, a retail conference in New York. It will be based in California’s Silicon Valley, he added.

Wal-Mart will keep the startups separate from the broader organization so that they will not affect the retailer’s bottom line in the near term, Seth Beal, senior vice-president, incubation and strategic partnerships, said in an interview.

He declined to give a timeframe for the launch.

(Reporting by Nandita Bose in Chicago; Editing by Richard Chang)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ypDboDZGjBU/us-walmart-ecommerce-idUSKBN16R2Q9

Wal-Mart to launch investment arm in e-commerce push


Wal-Mart Stores Inc, the world’s largest retailer, will launch its first investment arm to expand its e-commerce business in partnership with retail start-ups, venture capitalists and entrepreneurs, the company said on Monday.

The plan is being spearheaded by Marc Lore, Wal-Mart’s e-commerce chief, who joined the Bentonville, Arkansas-based company from retail upstart Jet.com, which it acquired for more than $3 billion in August.

Since then, Wal-Mart has acquired three small web retailers to add urban and millennial shoppers.

The venture, called Store No. 8, will work with startups that specialize in areas that include robotics, virtual and augmented reality, machine learning and artificial intelligence, Lore said at Shoptalk, a retail conference in New York. It will be based in California’s Silicon Valley, he added.

Wal-Mart will keep the startups separate from the broader organization so that they will not affect the retailer’s bottom line in the near term, Seth Beal, senior vice-president, incubation and strategic partnerships, said in an interview.

He declined to give a timeframe for the launch.

(Reporting by Nandita Bose in Chicago; Editing by Richard Chang)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ypDboDZGjBU/us-walmart-ecommerce-idUSKBN16R2Q9

Wal-Mart to launch investment arm in e-commerce push


Wal-Mart Stores Inc, the world’s largest retailer, will launch its first investment arm to expand its e-commerce business in partnership with retail start-ups, venture capitalists and entrepreneurs, the company said on Monday.

The plan is being spearheaded by Marc Lore, Wal-Mart’s e-commerce chief, who joined the Bentonville, Arkansas-based company from retail upstart Jet.com, which it acquired for more than $3 billion in August.

Since then, Wal-Mart has acquired three small web retailers to add urban and millennial shoppers.

The venture, called Store No. 8, will work with startups that specialize in areas that include robotics, virtual and augmented reality, machine learning and artificial intelligence, Lore said at Shoptalk, a retail conference in New York. It will be based in California’s Silicon Valley, he added.

Wal-Mart will keep the startups separate from the broader organization so that they will not affect the retailer’s bottom line in the near term, Seth Beal, senior vice-president, incubation and strategic partnerships, said in an interview.

He declined to give a timeframe for the launch.

(Reporting by Nandita Bose in Chicago; Editing by Richard Chang)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ypDboDZGjBU/us-walmart-ecommerce-idUSKBN16R2Q9

Asian shares near 15-month high, dollar soft on less hawkish Fed


TOKYO Asian shares clung to their 15-month highs on Tuesday while the dollar and U.S. bond yields were on the back foot on the prospects of a less-hawkish Federal Reserve policy trajectory.

In early trade, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent, staying near a 15-month high it touched on Monday, with South Korean shares .KS11 hitting two-year highs.

Japan’s Nikkei .N225 dropped 0.8 percent, weighed by financial stocks, which were hurt by lower U.S. yields and exporter stocks, which fell on the yen’s gains against the dollar.

While Asian shares have been supported by signs of strong global economic growth, concerns about protectionism cast a shadow after financial leaders of the world’s biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States

Wall Street shares drifted lower on Monday as investors worried that President Donald Trump’s plan to cut taxes and boost the economy could take longer than previously expected.

“Any fiscal spending by the Trump administration will not come until August at earliest and probably much later. So any economic benefit of that will show up only next year,” said a senior trader at a European bank.

“So the markets are gradually pricing that in, winding back their initial rally after the elections.”

Although Trump promised in early February to deliver a “phenomenal” tax plan within a few weeks, no such details have been released yet.

“U.S. stocks valuations are getting really expensive, so I expect the market to be capped for now. That also means Japanese shares are unlikely to gain further,” said Tatsushi Maeno, senior strategist at Okasan Asset Management.

Expectations that the Federal Reserve will have to step up rate hikes to counter inflationary pressure from Trump’s stimulus are also waning after the Fed dropped no hints of an acceleration in credit tightening last week.

Chicago Federal Reserve President Charles Evans, in one of the first official comments after the Fed raised rates as expected last week, reiterated that message on Monday.

He said that two more interest rate hikes this year are likely, disappointing investors who had anticipated a faster path of rate increases.

His comments helped to bring down the 10-year U.S. Treasuries yield US10YT=RR to 2.463 percent, its lowest level in two weeks.

Lower yields undermined the greenback’s allure, softening the dollar to three-week lows near 112.485 yen JPY=.

The dollar’s index against a basket of six major currencies .DXY =USD stood at 100.37, after hitting a six-week low of 100.02 on Monday.

The euro EUR= traded at $1.0737, off Friday’s high of $1.07825, which was its highest level since early February.

The spectre of slower U.S. rate hikes has been helping high-yielding currencies.

The Australian dollar AUD=D4 traded at $0.7725, after hitting a 4-1/2-month high of $0.7748 on Monday. It has risen 2.2 percent since the Fed’s policy meeting last week.

The South African rand ZAR=D4 has gained 4.0 percent since then to a near 1-1/2-year high while the Brazilian real rose 3.2 percent BRL=.

Oil prices stayed under pressure, though they hovered above their 3-1/2-month lows touched a week ago, as investors continue to grapple with worries about growing U.S. oil output and high inventories.

Brent crude futures LCOc1 settled at $51.62 a barrel on Monday, down 14 cents but above last week’s low of $50.25.

U.S. crude futures CLc1 traded at $48.30 per barrel in early Asian trade, up slightly from late U.S. levels but down 1.1 percent so far this week.

(Editing by Sam Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/4C0HV_-FL5g/us-global-markets-idUSKBN16S030

Asian shares near 15-month high, dollar soft on less hawkish Fed


TOKYO Asian shares clung to their 15-month highs on Tuesday while the dollar and U.S. bond yields were on the back foot on the prospects of a less-hawkish Federal Reserve policy trajectory.

In early trade, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent, staying near a 15-month high it touched on Monday, with South Korean shares .KS11 hitting two-year highs.

Japan’s Nikkei .N225 dropped 0.8 percent, weighed by financial stocks, which were hurt by lower U.S. yields and exporter stocks, which fell on the yen’s gains against the dollar.

While Asian shares have been supported by signs of strong global economic growth, concerns about protectionism cast a shadow after financial leaders of the world’s biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States

Wall Street shares drifted lower on Monday as investors worried that President Donald Trump’s plan to cut taxes and boost the economy could take longer than previously expected.

“Any fiscal spending by the Trump administration will not come until August at earliest and probably much later. So any economic benefit of that will show up only next year,” said a senior trader at a European bank.

“So the markets are gradually pricing that in, winding back their initial rally after the elections.”

Although Trump promised in early February to deliver a “phenomenal” tax plan within a few weeks, no such details have been released yet.

“U.S. stocks valuations are getting really expensive, so I expect the market to be capped for now. That also means Japanese shares are unlikely to gain further,” said Tatsushi Maeno, senior strategist at Okasan Asset Management.

Expectations that the Federal Reserve will have to step up rate hikes to counter inflationary pressure from Trump’s stimulus are also waning after the Fed dropped no hints of an acceleration in credit tightening last week.

Chicago Federal Reserve President Charles Evans, in one of the first official comments after the Fed raised rates as expected last week, reiterated that message on Monday.

He said that two more interest rate hikes this year are likely, disappointing investors who had anticipated a faster path of rate increases.

His comments helped to bring down the 10-year U.S. Treasuries yield US10YT=RR to 2.463 percent, its lowest level in two weeks.

Lower yields undermined the greenback’s allure, softening the dollar to three-week lows near 112.485 yen JPY=.

The dollar’s index against a basket of six major currencies .DXY =USD stood at 100.37, after hitting a six-week low of 100.02 on Monday.

The euro EUR= traded at $1.0737, off Friday’s high of $1.07825, which was its highest level since early February.

The spectre of slower U.S. rate hikes has been helping high-yielding currencies.

The Australian dollar AUD=D4 traded at $0.7725, after hitting a 4-1/2-month high of $0.7748 on Monday. It has risen 2.2 percent since the Fed’s policy meeting last week.

The South African rand ZAR=D4 has gained 4.0 percent since then to a near 1-1/2-year high while the Brazilian real rose 3.2 percent BRL=.

Oil prices stayed under pressure, though they hovered above their 3-1/2-month lows touched a week ago, as investors continue to grapple with worries about growing U.S. oil output and high inventories.

Brent crude futures LCOc1 settled at $51.62 a barrel on Monday, down 14 cents but above last week’s low of $50.25.

U.S. crude futures CLc1 traded at $48.30 per barrel in early Asian trade, up slightly from late U.S. levels but down 1.1 percent so far this week.

(Editing by Sam Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/4C0HV_-FL5g/us-global-markets-idUSKBN16S030

Asian shares near 15-month high, dollar soft on less hawkish Fed


TOKYO Asian shares clung to their 15-month highs on Tuesday while the dollar and U.S. bond yields were on the back foot on the prospects of a less-hawkish Federal Reserve policy trajectory.

In early trade, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent, staying near a 15-month high it touched on Monday, with South Korean shares .KS11 hitting two-year highs.

Japan’s Nikkei .N225 dropped 0.8 percent, weighed by financial stocks, which were hurt by lower U.S. yields and exporter stocks, which fell on the yen’s gains against the dollar.

While Asian shares have been supported by signs of strong global economic growth, concerns about protectionism cast a shadow after financial leaders of the world’s biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States

Wall Street shares drifted lower on Monday as investors worried that President Donald Trump’s plan to cut taxes and boost the economy could take longer than previously expected.

“Any fiscal spending by the Trump administration will not come until August at earliest and probably much later. So any economic benefit of that will show up only next year,” said a senior trader at a European bank.

“So the markets are gradually pricing that in, winding back their initial rally after the elections.”

Although Trump promised in early February to deliver a “phenomenal” tax plan within a few weeks, no such details have been released yet.

“U.S. stocks valuations are getting really expensive, so I expect the market to be capped for now. That also means Japanese shares are unlikely to gain further,” said Tatsushi Maeno, senior strategist at Okasan Asset Management.

Expectations that the Federal Reserve will have to step up rate hikes to counter inflationary pressure from Trump’s stimulus are also waning after the Fed dropped no hints of an acceleration in credit tightening last week.

Chicago Federal Reserve President Charles Evans, in one of the first official comments after the Fed raised rates as expected last week, reiterated that message on Monday.

He said that two more interest rate hikes this year are likely, disappointing investors who had anticipated a faster path of rate increases.

His comments helped to bring down the 10-year U.S. Treasuries yield US10YT=RR to 2.463 percent, its lowest level in two weeks.

Lower yields undermined the greenback’s allure, softening the dollar to three-week lows near 112.485 yen JPY=.

The dollar’s index against a basket of six major currencies .DXY =USD stood at 100.37, after hitting a six-week low of 100.02 on Monday.

The euro EUR= traded at $1.0737, off Friday’s high of $1.07825, which was its highest level since early February.

The spectre of slower U.S. rate hikes has been helping high-yielding currencies.

The Australian dollar AUD=D4 traded at $0.7725, after hitting a 4-1/2-month high of $0.7748 on Monday. It has risen 2.2 percent since the Fed’s policy meeting last week.

The South African rand ZAR=D4 has gained 4.0 percent since then to a near 1-1/2-year high while the Brazilian real rose 3.2 percent BRL=.

Oil prices stayed under pressure, though they hovered above their 3-1/2-month lows touched a week ago, as investors continue to grapple with worries about growing U.S. oil output and high inventories.

Brent crude futures LCOc1 settled at $51.62 a barrel on Monday, down 14 cents but above last week’s low of $50.25.

U.S. crude futures CLc1 traded at $48.30 per barrel in early Asian trade, up slightly from late U.S. levels but down 1.1 percent so far this week.

(Editing by Sam Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/4C0HV_-FL5g/us-global-markets-idUSKBN16S030

Asian shares near 15-month high, dollar soft on less hawkish Fed


TOKYO Asian shares clung to their 15-month highs on Tuesday while the dollar and U.S. bond yields were on the back foot on the prospects of a less-hawkish Federal Reserve policy trajectory.

In early trade, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent, staying near a 15-month high it touched on Monday, with South Korean shares .KS11 hitting two-year highs.

Japan’s Nikkei .N225 dropped 0.8 percent, weighed by financial stocks, which were hurt by lower U.S. yields and exporter stocks, which fell on the yen’s gains against the dollar.

While Asian shares have been supported by signs of strong global economic growth, concerns about protectionism cast a shadow after financial leaders of the world’s biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States

Wall Street shares drifted lower on Monday as investors worried that President Donald Trump’s plan to cut taxes and boost the economy could take longer than previously expected.

“Any fiscal spending by the Trump administration will not come until August at earliest and probably much later. So any economic benefit of that will show up only next year,” said a senior trader at a European bank.

“So the markets are gradually pricing that in, winding back their initial rally after the elections.”

Although Trump promised in early February to deliver a “phenomenal” tax plan within a few weeks, no such details have been released yet.

“U.S. stocks valuations are getting really expensive, so I expect the market to be capped for now. That also means Japanese shares are unlikely to gain further,” said Tatsushi Maeno, senior strategist at Okasan Asset Management.

Expectations that the Federal Reserve will have to step up rate hikes to counter inflationary pressure from Trump’s stimulus are also waning after the Fed dropped no hints of an acceleration in credit tightening last week.

Chicago Federal Reserve President Charles Evans, in one of the first official comments after the Fed raised rates as expected last week, reiterated that message on Monday.

He said that two more interest rate hikes this year are likely, disappointing investors who had anticipated a faster path of rate increases.

His comments helped to bring down the 10-year U.S. Treasuries yield US10YT=RR to 2.463 percent, its lowest level in two weeks.

Lower yields undermined the greenback’s allure, softening the dollar to three-week lows near 112.485 yen JPY=.

The dollar’s index against a basket of six major currencies .DXY =USD stood at 100.37, after hitting a six-week low of 100.02 on Monday.

The euro EUR= traded at $1.0737, off Friday’s high of $1.07825, which was its highest level since early February.

The spectre of slower U.S. rate hikes has been helping high-yielding currencies.

The Australian dollar AUD=D4 traded at $0.7725, after hitting a 4-1/2-month high of $0.7748 on Monday. It has risen 2.2 percent since the Fed’s policy meeting last week.

The South African rand ZAR=D4 has gained 4.0 percent since then to a near 1-1/2-year high while the Brazilian real rose 3.2 percent BRL=.

Oil prices stayed under pressure, though they hovered above their 3-1/2-month lows touched a week ago, as investors continue to grapple with worries about growing U.S. oil output and high inventories.

Brent crude futures LCOc1 settled at $51.62 a barrel on Monday, down 14 cents but above last week’s low of $50.25.

U.S. crude futures CLc1 traded at $48.30 per barrel in early Asian trade, up slightly from late U.S. levels but down 1.1 percent so far this week.

(Editing by Sam Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/4C0HV_-FL5g/us-global-markets-idUSKBN16S030

Asian shares near 15-month high, dollar soft on less hawkish Fed


TOKYO Asian shares clung to their 15-month highs on Tuesday while the dollar and U.S. bond yields were on the back foot on the prospects of a less-hawkish Federal Reserve policy trajectory.

In early trade, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent, staying near a 15-month high it touched on Monday, with South Korean shares .KS11 hitting two-year highs.

Japan’s Nikkei .N225 dropped 0.8 percent, weighed by financial stocks, which were hurt by lower U.S. yields and exporter stocks, which fell on the yen’s gains against the dollar.

While Asian shares have been supported by signs of strong global economic growth, concerns about protectionism cast a shadow after financial leaders of the world’s biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States

Wall Street shares drifted lower on Monday as investors worried that President Donald Trump’s plan to cut taxes and boost the economy could take longer than previously expected.

“Any fiscal spending by the Trump administration will not come until August at earliest and probably much later. So any economic benefit of that will show up only next year,” said a senior trader at a European bank.

“So the markets are gradually pricing that in, winding back their initial rally after the elections.”

Although Trump promised in early February to deliver a “phenomenal” tax plan within a few weeks, no such details have been released yet.

“U.S. stocks valuations are getting really expensive, so I expect the market to be capped for now. That also means Japanese shares are unlikely to gain further,” said Tatsushi Maeno, senior strategist at Okasan Asset Management.

Expectations that the Federal Reserve will have to step up rate hikes to counter inflationary pressure from Trump’s stimulus are also waning after the Fed dropped no hints of an acceleration in credit tightening last week.

Chicago Federal Reserve President Charles Evans, in one of the first official comments after the Fed raised rates as expected last week, reiterated that message on Monday.

He said that two more interest rate hikes this year are likely, disappointing investors who had anticipated a faster path of rate increases.

His comments helped to bring down the 10-year U.S. Treasuries yield US10YT=RR to 2.463 percent, its lowest level in two weeks.

Lower yields undermined the greenback’s allure, softening the dollar to three-week lows near 112.485 yen JPY=.

The dollar’s index against a basket of six major currencies .DXY =USD stood at 100.37, after hitting a six-week low of 100.02 on Monday.

The euro EUR= traded at $1.0737, off Friday’s high of $1.07825, which was its highest level since early February.

The spectre of slower U.S. rate hikes has been helping high-yielding currencies.

The Australian dollar AUD=D4 traded at $0.7725, after hitting a 4-1/2-month high of $0.7748 on Monday. It has risen 2.2 percent since the Fed’s policy meeting last week.

The South African rand ZAR=D4 has gained 4.0 percent since then to a near 1-1/2-year high while the Brazilian real rose 3.2 percent BRL=.

Oil prices stayed under pressure, though they hovered above their 3-1/2-month lows touched a week ago, as investors continue to grapple with worries about growing U.S. oil output and high inventories.

Brent crude futures LCOc1 settled at $51.62 a barrel on Monday, down 14 cents but above last week’s low of $50.25.

U.S. crude futures CLc1 traded at $48.30 per barrel in early Asian trade, up slightly from late U.S. levels but down 1.1 percent so far this week.

(Editing by Sam Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/4C0HV_-FL5g/us-global-markets-idUSKBN16S030

Uber president Jeff Jones quits, deepening turmoil


SAN FRANCISCO Ride services company Uber Technologies Inc [UBER.UL] has been thrust deeper into turmoil with the departure of company president Jeff Jones, a marketing expert hired to help soften its often abrasive image.

Jones quit less than seven months after joining the San Francisco company, an Uber spokesman said on Sunday.

The reason for his departure was not immediately clear, but Jones’ role was put into question after Uber earlier this month launched a search for a chief operating officer to help run the company alongside Chief Executive Travis Kalanick.

Jones had been performing some of those COO responsibilities. He joined Uber from Target Corp (TGT.N), where he was chief marketing officer and is credited with modernizing the retailer’s brand.

“We want to thank Jeff for his six months at the company and wish him all the best,” an Uber spokesman said in an emailed statement.

Jones is the latest in a string of high-level executives to leave the company. Last month, engineering executive Amit Singhal was asked to resign due to a sexual harassment allegation stemming from his previous job at Alphabet Inc’s (GOOGL.O) Google. Earlier this month, Ed Baker, Uber’s vice president of product and growth, and Charlie Miller, Uber’s famed security researcher, departed.

Technology news site Recode first reported Jones’ departure on Sunday.

Uber, while it has long had a reputation as an aggressive and unapologetic startup, has been battered with multiple controversies over the last several weeks that have put Kalanick’s leadership capabilities and the company’s future into question.

A former Uber employee last month published a blog post describing a workplace where sexual harassment was common and went unpunished. The blog post prompted an internal investigation that is being led by former U.S. Attorney General Eric Holder.

Then, Bloomberg released a video that showed Kalanick berating an Uber driver who had complained about cuts to rates paid to drivers, resulting in Kalanick making a public apology.

And earlier this month Uber confirmed it had used a secret technology program dubbed “Greyball,” which effectively changes the app view for specific riders, to evade authorities in cities where the service has been banned. Uber has since prohibited the use of Greyball to target local regulators.

Uber is also facing a lawsuit from Alphabet Inc’s self-driving car division that accuses it of stealing designs for autonomous car technology known as Lidar. Uber has said the claims are false.

Jones joined Uber in August and was widely expected to be Kalanick’s No. 2. Jones was tasked with overseeing the bulk of Uber’s global operations, including leading the ride-hailing program, running local Uber services in every city, marketing and customer service, and working with drivers.

The Independent Drivers Guild, an organization that advocates for Uber drivers, on Sunday was critical that Jones “has left the company without making a single improvement to help drivers struggling to make a living,” said Ryan Price, executive director of the guild.

(Reporting by Heather Somerville; Editing by Alistair Bell)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/VpPzbglahAs/us-uber-jeffjones-idUSKBN16Q0X3

Albertsons held preliminary merger talks with Sprouts: Bloomberg


NEW YORK Grocery business Albertsons Cos held preliminary talks to merge with Sprouts Farmers Market Inc (SFM.O), Bloomberg reported on Sunday, citing people familiar with the situation.

Bloomberg said the early stage discussions took place in recent weeks and involved a plan to take Sprouts private. Doing so would add the natural and organic foods-focused business to the Albertsons suite of supermarket brands, which includes Safeway, Vons and Shaw’s.

Albertsons is backed by private equity firm Cerberus Capital Management. Representatives for Albertsons and Sprouts did not immediately respond to requests for comment, while a spokeswoman for Cerberus declined to comment.

Shares of Sprouts spiked to a four-month high on Thursday and Friday amid a surge in stock options trading.

(Reporting by Lawrence Delevingne; Editing by Mary Milliken and Peter Cooney)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/_KkxrIGHXVw/us-albertsons-cos-sprouts-idUSKBN16Q0XG

MoneyGram offers to give Euronet confidential info to firm up bid-sources


U.S. electronic payments company MoneyGram International Inc (MGI.O) has offered to share confidential information with peer Euronet Worldwide Inc (EEFT.O), after the latter made a $1 billion acquisition offer, people familiar with the matter said.

MoneyGram has found that Euronet’s cash offer of $15.20 per share, which was unveiled last week, could be expected to result in a superior proposal compared with a deal it agreed to in January to sell itself to China’s Ant Financial Services Group for $13.25 a share in cash, the people said on Sunday.

Before Euronet carries out its due diligence on MoneyGram, it will have to agree to the terms of a non-disclosure agreement, the people added. Negotiations on such a confidentiality pact may take several days, the people cautioned.

Euronet is then expected to take about a week going through MoneyGram’s books before firming up its offer, the people said. MoneyGram will also receive information from Euronet that will allow it to better assess potential antitrust risks to such a deal, the sources added.

Should MoneyGram declare Euronet’s bid superior, Ant Financial will have four business days to decide whether it wants to improve its offer.

The sources asked not to be identified because the deliberations are confidential. Euronet, MoneyGram and Ant Financial declined to comment.

Based in Dallas, MoneyGram is one of the biggest players in the global remittance market. An acquisition would enable Euronet to better compete against digital startups that are transforming the money transfer business.

Euronet has also argued that MoneyGram’s focus on large retailers and national post offices, combined with Euronet’s strong position with independent agents and its broad set of consumer payment solutions, would create a more valuable business.

While a deal with Euronet would bring cost synergies, a combination of Ant Financial’s technological expertise and Moneygram’s brand had been seen as a game-changer for the international payments industry, with scope for more consumers to use online transfer services rather than taking cash to store fronts.

Ant Financial, the financial services affiliate of Albia Group Holding Ltd (BABA.N), dominates China’s online payment market and has been ramping up investment overseas amid fierce rivalry at home with peers such as Tencent Holdings Ltd’s (0700.HK) popular Escheat Pay.

Ant Financial’ s acquisition of MoneyGram is being reviewed by the Committee on Foreign Investment in the United States, a government panel that scrutinizes deals over potential national security concerns.

MoneyGram will have to pay Ant Financial $30 million as a termination fee if it abandons their deal for another bid.

(This version of the story corrects the name MoneyGram in paragraphs 4 and 8)

(Reporting by Greg Roumeliotis in New York; Editing by Phil Berlowitz and Peter Cooney)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/GB_V6WuKrxo/us-moneygram-intl-m-a-euronet-worldwid-idUSKBN16Q0W9

VW CEO offices searched in Audi investigation: Bild am Sonntag


FRANKFURT Munich prosecutors searched the offices of Volkswagen (VOWG_p.DE) Chief Executive Matthias Mueller as part of an investigation into diesel emission test cheating at Audi, German weekly Bild am Sonntag said.

Some 100 officials searched Audi’s headquarters in Ingolstadt, Germany, and its Neckarsulm plant last week, as well as the Wolfsburg base of Audi’s parent Volkswagen.

Bild am Sonntag said prosecutors targeted 47 VW employees including Mueller and Audi CEO Rupert Stadler, searching personal calendars, notebooks and even memory cards in smartphones.

Mueller was targeted because he is also supervisory board chairman at VW’s premium car unit Audi, Bild am Sonntag said.

Volkswagen was not immediately available for comment.

(Reporting by Edward Taylor; editing by David Clarke)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/OFdZ9QtLaMQ/us-volkswagen-emissions-ceo-idUSKBN16P0VJ

U.S. judge signs Peabody bankruptcy exit after environmental deal


CHICAGO A U.S. judge formally approved Peabody Energy Corp’s (BTUUQ.PK) plan to emerge from bankruptcy late Friday after the coal producer struck a settlement with the U.S. government over legacy environmental claims at a gold and metal mining subsidiary.

Under a last-minute deal with the U.S. Department of Justice, Peabody agreed to create a $43 million trust to manage environmental liabilities stemming from its dormant Gold Fields Mining subsidiary, according to court papers.

“This is a great day for Peabody and, more importantly, our multiple stakeholders who benefit from the many products and services we provide,” Peabody spokesman Vic Svec said on Saturday.

St. Louis-based Peabody, the world’s largest private-sector coal producer, owns mines in Australia and the United States and supplies the global market with the metallurgical coal used in steelmaking and the thermal coal used to generate electricity.

Peabody expects to exit bankruptcy in early April with about $2 billion of debt amid dramatically improved short-term prospects for its business versus a year ago, when it sought Chapter 11 protection with more than $8 billion of debt.

In the environmental settlement, the Department of Justice was negotiating on behalf of the Environmental Protection Agency, the Interior Department, five states and seven Indian tribes. The parties filed claims worth billions of dollars, which Peabody disputed but said it agreed to settle to avoid drawn-out litigation.

Peabody agreed earlier in March to cover about $1 billion in future coal mine cleanup costs with third-party bonds.

The company is financing its reorganization plan through a $1.5 billion stock sale, consisting of a $750 million rights offering available to bondholders and a $750 million private placement of preferred equity for institutional investors.

It was still in talks over a settlement with four individual investors who filed a lawsuit alleging that Peabody and other parties in the bankruptcy case violated their fiduciary duties by blocking individuals from the lucrative private stock sale.

It was unclear on Saturday whether the settlement would apply only to the four investors who filed the lawsuit or to all individual owners of the same unsecured bonds.

At least one investor, Mark Gottlieb, told Reuters he had not been included in the deal. Lawyer David Kovel, who filed the lawsuit for the four investors, declined to comment.

U.S. Bankruptcy Judge Barry Schermer, who oversaw Peabody’s bankruptcy, denied a request on Friday by a group of dissenting bondholders to stay the Chapter 11 confirmation while they prepared an appeal.

(Reporting by Tracy Rucinski; Editing by Tom Hals and Leslie Adler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/pIlUrTvnRXc/us-peabody-energy-bankruptcy-idUSKBN16P0TA

Unilever prepares 6 billion pound sale of food brands: newspapers


LONDON Unilever (ULVR.L) (UNc.AS) is preparing a 6 billion pound ($7.44 billion) sale of some of its food brands, British newspapers reported on Saturday.

The Anglo-Dutch company is planning to sell Flora margarine and Stork butter brands, the Sunday Times said.

The Sunday Telegraph, which also cited a 6 billion pounds figure, cited sources as saying private equity firms Bain Capital, CVC and Clayton Dubilier and Rice have started working on offers for the “spreads” business, citing sources.

Unilever did not immediately respond to a Reuters request for comment.

The maker of Knorr soups, Dove soap and Ben Jerry’s ice cream rebuffed a surprise $143 billion takeover offer from Kraft Heinz (KHC.O) last month.

The company has launched a business review to consider returning cash to shareholders, making medium-sized acquisitions and more aggressive cost cuts, the Financial Times reported on Wednesday.

(Reporting by Andy Bruce; Editing by James Dalgleish)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/4aiz1wU6sDA/us-unilever-sale-idUSKBN16P0UH

Wall Street bonuses may show first uptick since 2009, firm says


Wall Street bonuses may climb as much as 15 percent this year in their first meaningful uptick since 2009, compensation firm Johnson Associates Inc said on Friday.

An increase in market volatility since the election of U.S. President Donald Trump may boost trading profits, the firm said in a presentation to an industry group. It described the forecast for financial services pay as “upbeat.”

The improved outlook for the banking industry is a shift from 2016, when bankers and traders received slightly lower bonuses on average.

Bank stocks have touched peak levels since the 2007 crisis on hopes that higher interest rates, as well as lighter regulation, lower taxes and faster economic growth promised by Trump, would boost profits for lenders.

The KBW Nasdaq Bank Index, which measures the largest U.S. banks, has risen 48 percent in the last 12 months, compared with the SP 500’s .SPX 17 percent gain.

Banking executives are particularly hopeful that looser regulation under Trump will lift trading profits. Wall Street firms’ bond trading revenue has fallen for about seven years as new rules on trading and capital have curbed profits.

Bankers may also see more creativity with their pay packages as regulations are lifted. While today, most bankers are paid heavily in restricted stock, Johnson Associates expects a move to more stock options and unique products.

(Reporting by Olivia Oran in New York; Editing by Lisa Von Ahn)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/DIznr5Ee6DY/us-banks-bonus-idUSKBN16O1YD

Post-Fed boost for small-cap stocks may be limited


NEW YORK Small-cap stocks benefited from a dovish lining to the U.S. Federal Reserve’s decision to raise interest rates this past week, but strategists warn it will take more to make these pricey stocks outperform their larger brethren in the long haul.

The Fed on Wednesday raised rates by a quarter of a percentage point, as expected, but did not flag any plan to accelerate the pace of monetary tightening. A less aggressive monetary policy may benefit small-caps, which tend to get hit harder as borrowing costs increase when rates rise.

Stocks in the small-cap space rallied after the Nov. 8 election that put Donald Trump in the White House as investors bet Trump’s plans to cut back on regulations and taxes would especially help small companies.

That hasn’t panned out in the new year, as they have underperformed the SP 500 year-to-date. Their near-term performance hinges on how much the profit picture improves, but so far small-cap earnings have yet to rebound in the same way that large caps have.

Investors consider small-cap stocks comparatively expensive.

“We’re in a show-me state for small caps,” said Steve DeSanctis, equity strategist at Jefferies. “We’ve gotten (price-to-earnings) multiple expansion, so you need earnings growth.”

Fourth-quarter earnings for companies in the small-cap SP 600 .SPCY were down 1.0 percent from a year ago, while the benchmark SP 500’s earnings .SPX rose 7.8 percent, Thomson Reuters data show.

Analysts expect profit growth for the SP 600 in the first quarter of 2017, but at a rate still well below that of the SP 500.

The SP 600 is up just 1.4 percent since Dec. 31, after rising 24.7 percent in 2016. The SP 500 by comparison has gained 6.2 percent since the start of the year.

At 20.4 times forward earnings estimates, the SP 600 looks expensive compared with its long-term average of 17, Thomson Reuters data showed. The SP 500 trades at about 17.8 times forward earnings, also above its long-term average.

The Russell 2000 , a widely used gauge for small-caps, has a forward price-to-earnings ratio of 25.4, brushing against its highest level since 2009. Its 10-year average sits at 20.7.

“Growth and the interest rate trajectory are going to be two key factors,” said Dan Suzuki, senior U.S. equity strategist at Bank of America Merrill Lynch in New York. He thinks small caps may have more room to gain in the short run, especially if earnings surprise to the upside, but that valuations remains a negative.

On the flip side, rising rates also tend to boost the U.S. dollar, which would have a bigger negative impact on large-cap multinationals as a stronger dollar weighs on offshore revenues when they are translated into the U.S. currency.

Investors also worry that any tax reductions under the Trump administration may not come for many months, or even until 2018.

“Small-caps generally pay more in terms of U.S. corporate taxes,” said Nicholas Colas, chief market strategist at Convergex, a global brokerage company based in New York.

“You can somewhat view small-caps as a bit of a proxy for confidence in the tax reduction piece of the Trump economic plan.”

(Reporting by Caroline Valetkevitch; Editing by Daniel Bases and Leslie Adler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/m2F3RrfakGM/us-usa-stocks-weekahead-idUSKBN16O2VF

Missing from Trump’s grand Navy plan: skilled workers to build the fleet


WASHINGTON U.S. President Donald Trump says he wants to build dozens of new warships in one of the biggest peace-time expansions of the U.S. Navy. But interviews with ship-builders, unions and a review of public and internal documents show major obstacles to that plan.

The initiative could cost nearly $700 billion in government funding, take 30 years to complete and require hiring tens of thousands of skilled shipyard workers – many of whom don’t exist yet because they still need to be hired and trained, according to the interviews and the documents reviewed.

Trump has vowed a huge build-up of the U.S. military to project American power in the face of an emboldened China and Russia. That includes expanding the Navy to 350 warships from 275 today. He has provided no specifics, including how soon he wants the larger fleet. (For graphics on projected strength of U.S. Navy, shipyard employment see: tmsnrt.rs/2n3vOr0)

The Navy has given Defense Secretary Jim Mattis a report that explores how the country’s industrial base could support higher ship production, Admiral Bill Moran, the vice chief of Naval Operations with oversight of the Navy’s shipbuilding outlook, told Reuters.

He declined to give further details. But those interviewed for this story say there are clearly two big issues – there are not enough skilled workers in the market, from electricians to welders, and after years of historically low production, shipyards and their suppliers, including nuclear fuel producers, will struggle to ramp up for years.

To be sure, the first, and biggest, hurdle for Trump to overcome is to persuade a cost-conscious Congress to fund the military buildup.

The White House declined to comment. A Navy spokeswoman said increases being considered beyond the current shipbuilding plan would require “sufficient time” to allow companies to ramp up capacity.

The two largest U.S. shipbuilders, General Dynamics Corp (GD.N) and Huntington Ingalls Industries Inc (HII.N), told Reuters they are planning to hire a total of 6,000 workers in 2017 just to meet current orders, such as the Columbia class ballistic missile submarine.

General Dynamics hopes to hire 2,000 workers at Electric Boat this year. Currently projected order levels would already require the shipyard to grow from less than 15,000 workers, to nearly 20,000 by the early 2030s, company documents reviewed by Reuters show.

Huntington Ingalls, the largest U.S. military shipbuilder, plans to hire 3,000 at its Newport News shipyard in Norfolk, Virginia, and another 1,000 at the Ingalls shipyard in Mississippi this year to fulfill current orders, spokeswoman Beci Brenton said.

Companies say they are eager to work with Trump to build his bigger Navy. But expanding hiring, for now, is difficult to do until they receive new orders, officials say.

“It’s hard to look beyond” current orders, Brenton said.

Smaller shipbuilders and suppliers are also cautious.

“You can’t hire people to do nothing,” said Jill Mackie, spokeswoman for Portland, Oregon-based Vigor Industrial LLC, which makes combat craft for the Navy’s Special Warfare units. “Until funding is there … you can’t bring on more workers.”

 

SCALING UP WORKFORCE

Because companies won’t hire excess workers in advance, they will have a huge challenge in expanding their workforces rapidly if a shipbuilding boom materializes, said Bryan Clark, who led strategic planning for the Navy as special assistant to the chief of Naval Operations until 2013.

Union and shipyard officials say finding skilled labor just for the work they already have is challenging. Demand for pipeline welders is so strong that some can make as much as $300,000 per year, including overtime and benefits, said Danny Hendrix, the business manager at Pipeliners Local 798, a union representing 6,500 metal workers in 42 states.

Much of the work at the submarine yards also requires a security clearance that many can’t get, said Jimmy Hart, president of the Metal Trades Department at the AFL-CIO union, which represents 100,000 boilermakers, machinists, and pipefitters, among others.

To help grow a larger labor force from the ground up, General Dynamics’ Electric Boat has partnered with seven high schools and trade schools in Connecticut and Rhode Island to develop a curriculum to train a next generation of welders and engineers.

“It has historically taken five years to get someone proficient in shipbuilding,” said Maura Dunn, vice president of human resources at Electric Boat.

It can take as many as seven years to train a welder skilled enough to make the most complex type of welds, radiographic structural welds needed on a nuclear-powered submarine, said Will Lennon, vice president of the shipyard’s Columbia Class submarine program.

The Navy envisioned by Trump could create more than 50,000 jobs, the Shipbuilders Council of America, a trade group representing U.S. shipbuilders, repairers and suppliers, told Reuters.

The U.S. shipbuilding and repairing industry employed nearly 100,000 in 2016, Labor Department statistics show. The industry had as many as 176,000 workers at the height of the Cold War in the early 1980s as the United States built up a fleet of nearly 600 warships by the end of that decade.

 

SUBMARINE CRUNCH

Apart from the labor shortage, there are also serious capacity and supply chain issues that would be severely strained by any plan to expand the Navy, especially its submarine fleet.

Expanding the Navy to 350 ships is not as simple as just adding 75 ships. Many ships in the current 275-vessel fleet need to be replaced, which means the Navy would have to buy 321 ships between now and 2046 to reach Trump’s goal, the Congressional Budget Office said in a report in February.

The shipyards that make nuclear submarines – General Dynamics’ Electric Boat in Groton, Connecticut, and Huntington’s Newport News – produced as many as seven submarines per year between them in the early 1980s. But for more than a decade now, the yards have not built more than two per year.

The nuclear-powered Virginia class and Columbia class submarines are among the largest and most complex vessels to build. The first Columbia submarine, which is set to begin construction in 2021, will take seven years to build, and two to three additional years to test.

Retooling the long-dormant shipyard space will take several years and significant capital investments, but a bigger problem is expanding the supply chain, said Clark, the former strategist for the Navy and now a senior fellow at the Center for Strategic and Budgetary Assessments.

Makers of submarine components such as reactor cores, big castings, and forgers of propellers and shafts would need five years to double production, said a congressional official with knowledge of the Navy’s long-term planning.

“We have been sizing the industrial base for two submarines a year. You can’t then just throw one or two more on top of that and say, ‘Oh here, dial the switch and produce four reactor cores a year instead of two.’ You just can’t,” the official said.

In his first budget proposal to Congress on Thursday, Trump proposed boosting defense spending by $54 billion for the fiscal 2018 year – a 10 percent increase from last year. He is also seeking $30 billion for the Defense Department in a supplemental budget for fiscal 2017, of which at least $433 million is earmarked for military shipbuilding.

A 350-ship Navy would cost $690 billion over the 30-year period, or $23 billion per year – 60 percent more than the average funding the Navy has received for shipbuilding in the past three decades, the Congressional Budget Office said.

Senator John McCain, chairman of the Senate Armed Services Committee, who will have a major say in approving the defense budget, said in a statement to Reuters that he supported Trump’s vision to increase the size of the Navy to deter adversaries.

“However, this is not a blank check,” he said.

 

 

(Click here for a graphic on ‘Fleet expansion’ here)

 

(Additional reporting by Luciana Lopez in New York, Editing by Soyoung Kim and Ross Colvin)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/WYBNFt7fdNc/us-usa-trump-shipbuilding-insight-idUSKBN16O142

Caterpillar seeks ex-U.S. attorney general’s help over govt probe


Caterpillar Inc (CAT.N) has tapped former U.S. Attorney General William Barr to help the company address an ongoing government investigation of its import and export practices.

Earlier this month, U.S. law enforcement officials raided three of the heavy machinery manufacturer’s Illinois facilities as part of an Internal Revenue Service probe related to profits earned by the company’s Swiss parts unit, Caterpillar SARL.

The IRS has demand that the company pay $2 billion in taxes and penalties for profits assigned to the Swiss unit.

The unit was also the subject of a 2014 Senate committee report that concluded Caterpillar shifted billions in profits abroad and had $2.4 billion in taxes deferred or avoided from 2012.

“I have asked Bill – who has no prior connection with Caterpillar – to draw on his experience … to take a fresh look at Caterpillar’s disputes with the government,” Chief Executive Jim Umpleby said in a statement on Thursday.

Barr served as the 77th attorney general when George H.W. Bush was president. Before that he was the deputy attorney general and assistant attorney general in charge of the U.S. Department of Justice’s Office of Legal Counsel.

He also served for over 14 years as executive vice president and general counsel of Verizon Communications Inc (VZ.N).

(Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/rpF3MnAqr44/us-caterpillar-probe-idUSKBN16N2XM

Snap shares drop 4 percent, fall below $20 for the first time


SAN FRANCISCO Snap Inc shares tumbled below $20 on Thursday for the first time since the company’s $3.4 billion public listing after the Snapchat owner received another “sell” rating from an analyst.

The social media company this month pulled off the hottest technology offering in three years, but after two days of explosive gains its stock has steadily retreated from a peak of more than $29 as investors worry about Snap’s high valuation and lack of profitability.

Snap was down 4 percent at $19.92 in afternoon trade.

(For a graphic on Snap Inc since its IPO, click bit.ly/2mzcuP2)

MoffettNathanson analyst Michael Nathanson on Thursday launched coverage of Snap with a “sell” rating, warning in a note that “the market has priced SNAP for perfection.”

Others on Wall Street have flagged Snap’s slowing user growth, widening losses and lack of voting rights for outside investors. Snap has warned it may never be profitable.

Including Nathanson, six analysts recommend selling shares of Snap, while three have neutral ratings and none recommend buying, according to Thomson Reuters data.

The stock remains up 17 percent from its $17 IPO price set on March 1.

(Reporting by Noel Randewich; Editing by Meredith Mazzilli)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/F9_IQp7YWxY/us-snap-stocks-idUSKBN16N2PD

Wall Street slips with healthcare stocks, Nasdaq flat


NEW YORK U.S. stocks slipped on Thursday pressured by healthcare shares as traders cashed in gains from one of the best performing sectors so far this year.

Proposals in President Donald Trump’s budget signaled higher regulatory costs for the sector and a cut in federal funding for medical research. Though still a ways away from becoming a reality, they gave traders a reason to sell.

The SP 500 healthcare index .SPXHC dropped 0.9 percent.

Financials .SPSY outperformed in a rebound after the sector was the worst performer on Wednesday and as the benchmark U.S. Treasury note yield rose, while utilities .SPLRCU weakened.

Biogen (BIIB.O) weighed down the SP 500, falling 4.7 percent to $278.96 after two brokerages downgraded the stock.

“Healthcare is being dragged down by equipment and supplies, biotechnology, and tools and services. These sectors have actually done quite well year-to-date, so this is just a little speed bump,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

“There’s a push and a pull with these stocks as the President has promised to accelerate the (drug and device) approval process, but now he’s proposing to cut the budget of the FDA, which could make it difficult to get expedited approvals.”

The Dow Jones Industrial Average .DJI fell 15.55 points, or 0.07 percent, to close at 20,934.55, the SP 500 .SPX lost 3.88 points, or 0.16 percent, to 2,381.38 and the Nasdaq Composite .IXIC added 0.71 point, or 0.01 percent, to 5,900.76.

Oracle (ORCL.N) surged to a record high of $46.99 before closing up 6.2 percent at $45.73, after it posted a better-than-expected quarterly profit.

Tyson Foods (TSN.N) slipped 1.7 percent to $62.00 on news that a form of bird flu that is highly lethal for poultry had infected a second farm that supplies Tyson.

Advancing issues outnumbered declining ones on the NYSE by a 1.29-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.

The SP 500 posted 52 new 52-week highs and one new low; the Nasdaq Composite recorded 145 new highs and 52 new lows.

About 6.60 billion shares changed hands in U.S. exchanges, below the 6.96 billion daily average over the last 20 sessions.

(Additional reporting by Sinead Carew; Editing by James Dalgleish)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/s60fxzvITlc/us-usa-stocks-idUSKBN16N1FE

Dollar crunched, bonds boosted as Fed goes gradual


SYDNEY The dollar nursed bitter losses in Asia on Thursday while sovereign bonds savored their biggest rally in nine months after the Federal Reserve hiked interest rates as expected but signaled no pick up in the pace of tightening.

The euro got an added bonus when exit polls showed the anti-EU party of Geert Wilders won fewer seats than expected in Dutch elections, soothing fears that public opinion was swinging inexorably toward a break-up of the union.

The sigh of relief was heard across Asia as investors had feared faster U.S. hikes and more political upheaval in Europe could spook funds out of emerging markets.

“The Fed makes the world safe for risk until June,” said CitiFX strategist Steven Englander. “Buy emerging market FX, equities, commodities.”

Somebody seemed to be listening as gold, copper and oil all rallied as the dollar dropped. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.7 percent to its highest since mid-2015.

The Dow .DJI had ended Wednesday with gains of 0.54 percent, while the SP 500 .SPX added 0.84 percent and the Nasdaq .IXIC 0.74 percent.

Japan’s Nikkei .N225 looked set to go the other way as a jump in the yen pressured exporters. Futures pointed to an opening drop of more than 100 points JNIc1.

The Fed lifted its funds rate by 25 basis points to a range of 0.75 percent to 1.00 percent, but said further increases would only be “gradual.”

Crucially, officials stuck to their outlook for two more hikes this year and three more in 2018, when many had expected an accelerated spate of moves.

Rather, the Fed said its inflation target was “symmetric,” indicating that after a decade of below-target inflation it could tolerate a quicker pace of price rises.

That was painful news for bond bears who had built up huge short positions in Treasuries in anticipation of a hawkish Fed.

DOLLAR DOLDRUMS

Yields on two-year notes US2YT=RR were down at 1.30 percent, having fallen 8 basis points overnight in the biggest daily rally since June last year. They had been at their highest since June 2009.

The drop pulled the rug out from the dollar, which sank to a three-week low of 100.540 against a basket of currencies .DXY.

The euro was taking in the view at $1.0735 EUR=, having climbed 1.2 percent overnight in its steepest rise since June. The dollar suffered similar losses on the yen to huddle at 113.37 JPY= in early trade.

Richard Franulovich, a forex analyst at Westpac, noted history showed a strong positive correlation between the dollar and yields one week after a Fed meeting and the direction and magnitude of the change in the dots from meeting to meeting.

“The absence of any overt hawkish guidance from the Fed and their dots should leave the dollar trading on the back foot over the next month,” he said.

The yen and the Swiss franc tended to move the most in the first week, he added, but the impact tended to be longer lasting on the Australian and Canadian dollars.

Indeed, the Aussie currency rose a rousing 2 percent on Wednesday to stand at $0.7710 AUD=D4.

A protracted bout of weakness for the U.S. dollar would be seen as positive for commodities priced in the currency.

Spot gold XAU= was up at $1,218.46 an ounce, after enjoying its biggest daily jump since September.

U.S. crude futures CLc1 rose 25 cents to $49.11 per barrel, adding to a 2.4 percent gain on Wednesday. Brent LCOc1 stood at $52.00, after rising more than a dollar overnight.

(Editing by Richard Borsuk)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ibT0Zif0Czw/us-global-markets-idUSKBN16M3C9

Fed raises rates as job gains, firming inflation stoke confidence


WASHINGTON The U.S. Federal Reserve raised interest rates on Wednesday for the second time in three months, a move spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank’s target.

The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75 percent to 1.00 percent marked a convincing step in the Fed’s effort to return monetary policy to a more normal footing.

Fed Chair Janet Yellen pointed to growing faith in the economy’s trajectory.

“We have seen the economy progress over the last several months in exactly the way we anticipated,” Yellen said in a press conference following the end of a two-day policy meeting. “We have some confidence in the path the economy is on.”

The Fed also stuck to its outlook for two additional rate increases this year and three more in 2018. The central bank lifted rates once in 2016.

Stock markets extended gains .SPX and bond yields fell on the benign economic outlook and the continued steady path of rate rises signaled by the central bank. The dollar .DXY was trading lower against a basket of currencies.

Fed policymakers noted that inflation was now “close” to the central bank’s 2 percent target, and that business investment had “firmed somewhat” after months of weakness.

However, they did not flag any plan to accelerate the pace of monetary tightening, with the policy-setting committee reiterating and Yellen emphasizing that future rate increases would be “gradual.” At the current pace, rates would not return to a neutral level until the end of 2019.

Rather, the Fed’s statement said the inflation target was “symmetric,” indicating that after a decade of below-target inflation it could tolerate a quicker pace of price rises.

“It relieves some of the fears we’ve had that perhaps the Fed was going to raise rates faster in the future. They’ve chosen not to signal that,” said Brad McMillan, chief investment officer at Commonwealth Financial.

‘NOT A CEILING’

Labor groups have urged the Fed to raise rates as slowly as possible so hiring can continue and wage increases take hold.

U.S. job gains have averaged 209,000 per month over the past three months, well above the 75,000 to 100,000 needed to keep up with growth in the working-age population. The jobless rate is 4.7 percent, at or near a level consistent with full employment.

The Fed projected that the unemployment rate would fall to 4.5 percent this year and remain at that level through 2019.

Yellen, who has consistently said that the Fed was better equipped to fight inflation than a fresh downturn or surge in joblessness, did not rule out inflation edging above target.

“This seemed like a good time to remind Americans that … sometimes it (inflation) is going to be below 2 percent, sometimes it is going to above 2 percent,” Yellen told reporters. “Two percent is not a ceiling.”

Fresh economic forecasts released with the statement were largely unchanged from those of the December policy meeting and gave little indication the Fed has a clear view of how President Donald Trump’s policies may impact the economy.

“We have not discussed in detail potential policy changes that could be put into place and we have not tried to map out what our response would be,” Yellen said. “We have plenty of time to see what happens.”

She added that she had held meetings with Treasury Secretary Steven Mnuchin, and met with Trump once since he took office.

The Fed’s projections showed the economy growing 2.1 percent in 2017, unchanged from its December forecast. The median estimate of the long-run interest rate, where monetary policy would be judged as having a neutral effect on the economy, held steady at 3.0 percent.

Core inflation was seen as slightly higher at 1.9 percent versus the previous 1.8 percent forecast.

The rate increase came amid a broad improvement in the world economic outlook and a sense among Fed policymakers that the U.S. economy is close to the central bank’s employment and inflation goals.

According to the policy statement, the risks to the outlook remained “roughly balanced.”

Minneapolis Fed President Neel Kashkari was the only official to dissent in Wednesday’s decision, saying he preferred to leave rates unchanged.

(Reporting by Howard Schneider and Jason Lange; Editing by Paul Simao and David Chance)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Cng9WZ9rK5U/us-usa-fed-idUSKBN16M0GY

Tesla to raise about $1.15 billion in stock, notes; Musk to buy shares


SAN FRANCISCO Tesla Inc (TSLA.O) said on Wednesday it expects to raise about $1.15 billion from a stock and senior notes offering, an infusion of needed capital as the electric car maker enters pre-production of its upcoming Model 3 electric sedan.

A capital raise by Tesla has been anticipated since late last year, gaining steam last month after Chief Executive Elon Musk said the company could be “close to the edge” on cash needs.

Some Wall Street analysts had predicted that Tesla would seek to raise as much as $2.5 billion in capital.

Tesla has repeatedly turned to Wall Street for fresh capital throughout its history. It has had negative cash flow since 2014 and has posted a quarterly profit only twice since going public.

Tesla had $3.39 billion in cash and cash equivalents at the end of 2016, but most comes from a May stock offering, cash from its SolarCity acquisition and nearly $1 billion in draws on its credit facilities.

Tesla’s warning that it would spend $2 billion-$2.5 billion in the first half of 2017 in capital expenditures left little cushion at a critical time ahead of its Model 3 production, which the company says will begin in July.

The company’s shares, which are down 9 percent since a 52-week year high in February, rose 2.1 percent to $261.11 in after-hours trade.

Tesla said it would offer $250 million of common stock and $750 million of convertible senior notes due in 2022 in concurrent underwritten registered public offerings.

Tesla said it would use the proceeds to “strengthen its balance sheet and further reduce any risks associated with the rapid scaling of its business due to the launch of Model 3, as well as for general corporate purposes.”

The Silicon Valley-based company also said Musk will participate by purchasing $25 million of the company’s stock.

(Reporting By Alexandria Sage and Ankit Ajmera in Bengaluru; Editing by Bernard Orr)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/TAoCRRF4iF8/us-tesla-offering-idUSKBN16M30U

Energy drags on Wall St. as oil falls further; airlines slide


U.S. stocks fell on Tuesday as oil prices dropped to their lowest since November and airlines pulled industrial stocks down as a blizzard hit the U.S. Northeast.

Hospital operator shares were hit after a nonpartisan research report showed 14 million Americans would lose medical insurance by next year under a Republican proposal.

Trading volume was light ahead of a Federal Reserve statement due on Wednesday in which the U.S. central bank is expected to raise interest rates by 25 basis points.

Airline stocks dropped as a blizzard swept through the heavily populated northeastern United States, grounding thousands of flights. United Continental (UAL.N) fell 4.7 percent to $66.55 while Southwest Airlines (LUV.N) dropped 3.0 percent and American Airlines (AAL.O) lost 2.7 percent.

Oil prices slid to the lowest since late November after OPEC reported a rise in global crude inventories and raised its forecast of production in 2017 from outside the group, suggesting complications in an effort to clear a glut and support prices.

The SP energy sector .SPNY fell 1.1 percent to close at its lowest since Nov. 4. Chevron (CVX.N) was off 1.8 percent and was the biggest drag on the Dow and the SP 500.

“None of the data you’re getting is good if you’re trying to increase (crude) prices; it doesn’t look like oil supply is diminishing,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

She said energy sector earnings have little upside potential so their stocks’ underperformance is to be expected.

The Dow Jones Industrial Average .DJI fell 44.11 points, or 0.21 percent, to 20,837.37, the SP 500 .SPX lost 8.02 points, or 0.34 percent, to 2,365.45 and the Nasdaq Composite .IXIC dropped 18.97 points, or 0.32 percent, to 5,856.82.

About 6.23 billion shares changed hands on U.S. exchanges, compared with the 6.93 billion daily average over the last 20 sessions.

Shares of hospital operators fell after the U.S. Congressional Budget Office forecast that 14 million Americans would lose medical insurance by next year under a Republican plan to dismantle Obamacare. Among hospital stocks, HCA Holdings (HCA.N) slipped 1.5 percent, Tenet Healthcare (THC.N) fell 3.3 percent, Community Health Systems (CYH.N) shed 2.2 percent and LifePoint Health (LPNT.O) was down 1.5 percent.

Valeant (VRX.N) plunged 10.1 percent to $10.89 after billionaire investor William Ackman said his hedge fund, Pershing Square Capital, sold its entire stake in the company.

Declining issues outnumbered advancing ones on the NYSE by a 1.99-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favored decliners.

The SP 500 posted 14 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 55 new highs and 60 new lows.

(Reporting by Rodrigo Campos; Editing by Dan Grebler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ZqbB1fEyn6I/us-usa-stocks-idUSKBN16L1B6

McDonald’s, late to mobile ordering, seeks to avoid pitfalls


CHICAGO McDonald’s Corp this month will begin testing its long-awaited U.S. mobile ordering app with the goal of avoiding the kinds of service hiccups that have haunted digital debuts by companies such as Starbucks Corp.

Digital ordering has been challenging for many restaurant chains and their customers. Domino’s Pizza Inc, now the industry leader, took years to perfect it. Starbucks’ technology took far less time, but in January the chain said mobile orders poured in faster than they could be processed, creating backlogs that drove away time-crunched walk-in customers.

McDonald’s sees mobile as a way to win back customers after four straight years of traffic declines, but the project is not without risks.

“We can’t impact the speed or the quality of our food,” Jim Sappington, McDonald’s executive vice president of operations, digital and technology, told Reuters in an interview at a temporary warehouse space in Chicago’s West Loop where the company has built a new high tech restaurant. It features a redesigned kitchen to speed order flow and show off its technology initiatives.

If its famous french fries are served cold or if mobile customers have to wait for orders, “you get a question of ‘Why did I use the app?’,” Sappington said. “Our focus is to make the overall experience clearly better.”

McDonald’s said that automating more orders should cut transaction times, reduce errors and free up workers to do things like deliver food to tables or cars in spots designated for mobile orders.

“It’s better to be right than to be first to market,”

McDonald’s Chief Executive Steve Easterbrook said recently.

To that end, Sappington plans multiple pilot tests to work out any kinks and streamline the integration with the company’s existing technology systems before rolling out the finished app in nearly all 14,000 U.S. restaurants and some 6,000 others in Canada, the UK, France, Germany, Australia and China, by the end of this year.

LOW-TECH SOLUTIONS

Kitchens are the heart of McDonald’s business and crucial to the success of mobile ordering.

“The potential is that they can screw up the flow of the whole restaurant,” said Janna Sampson, co-chief investment officer at Oakbrook Investments LLC, which holds 65,000 McDonald’s shares. McDonald’s appears to be taking steps to protect itself from kitchen hiccups, she added. McDonald’s is bringing restaurant operators to its Chicago warehouse space to show off a “hub and spoke” kitchen layout developed in French restaurants after the installation of self-service ordering kiosks.

Among other things, that kitchen system clusters food preparation to increase efficiency, shaving miles off the daily distances covered by a restaurant’s crew.

Franchisees who operate most U.S. McDonald’s restaurants will be tasked with sorting out the human elements of mobile ordering – namely how to best adjust kitchen layouts, work flows and staffing, said Richard Adams, a former McDonald’s franchisee who now advises McDonald’s restaurant operators.

Unlike many others, McDonald’s app will track a customer’s location to ensure that orders are sent to the right restaurant and timed so that food is not left to wilt under heat lamps.

When the customer arrives at the restaurant, the app asks for confirmation and payment before sending orders to the kitchen.

“If they don’t start your order until you pull in the lot, are you really gaining that much time?” investor Sampson asked.

The final version of the app will also ask customers to choose table service, counter or drive-through pickup, or curbside delivery.

Easterbrook said that if 20 percent of drive-through customers use curbside and another 20 percent use the lanes for pickup only, restaurants could serve another 20 cars per hour, lifting business at U.S. drive-throughs that account for some 70 percent of U.S. sales.

(Reporting by Lisa Baertlein, editing by Peter Henderson and Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/5Pt5181V8WU/us-mcdonalds-mobile-idUSKBN16L2RM