GS - The Goldman Sachs Group, Inc.
| Previous close | 209.60 |
| Open | 209.22 |
| Bid | 211.35 x 900 |
| Ask | 211.39 x 900 |
| Day's range | 209.00 - 212.02 |
| 52-week range | 151.70 - 234.06 |
| Volume | 904,749 |
| Avg. volume | 2,369,078 |
| Market cap | 76.009B |
| Beta (3Y monthly) | 1.34 |
| PE ratio (TTM) | 9.45 |
| EPS (TTM) | 22.38 |
| Earnings date | 14 Jan 2020 - 20 Jan 2020 |
| Forward dividend & yield | 5.00 (2.39%) |
| Ex-dividend date | 2019-11-29 |
| 1y target est | 234.57 |
- Zacks
Northern Trust (NTRS) Q3 Earnings & Revenues Top, Costs Up
Northern Trust's (NTRS) third-quarter 2019 results reflect higher revenues and credit provision, partly offset by escalating expenses.
- Bloomberg
Goldman Looks to Chinese Bonds to Boost Europe ETF Expansion
(Bloomberg) -- Goldman Sachs Group Inc.’s asset management unit is rolling out a new exchange-traded fund aimed at European investors that will focus on Chinese sovereign debt.The New York-based bank plans to list the Goldman Sachs Access China Government Bond UCITS product on Thursday in London and Frankfurt, according to a release from the company. The ETF, the firm’s second for Europe’s $900 billion market, will charge a fee of 35 basis points a year.With the inclusion of China’s yuan-denominated government and policy bank bonds into the Bloomberg Barclays Global Aggregate Index in April, demand for the securities is set to increase. JPMorgan Chase & Co. and FTSE Russell are also expected to include Chinese debt in their fixed-income gauges, fueling investor interest.Goldman expects $150 billion to flow into the Chinese bond market as a result, according to Andrew Wilson, chief executive officer for EMEA at the bank’s asset management unit.“Over the next 3 to 5 years, we’re going to see increased interest from investors to get access to that market,” Wilson said in an interview on Bloomberg TV Wednesday. “It’s a way to get in at a very early stage, but I think over time we’d expect to see significant flows going into the Chinese markets.”Goldman’s product joins BlackRock Inc.’s iShares China CNY Bond UCITS ETF, which started trading in Europe earlier this year with a fee of 35 basis points, and has gathered $99 million in assets. Another regional product -- the Xtrackers II Harvest China Government Bond UCITS fund -- carries a 40 basis point fee and has collected $43 million in assets.Goldman listed its first ETF for the European market in September, a multi-factor fund that is a carbon copy of its mega-successful U.S. product, GSLC. The firm will continue to expand its offerings in the region over the next six months, according to the statement.Peter Thompson, head of Goldman’s European ETF business, said in September that the bank plans to introduce around 10 new products in both fixed income and equities by the end of the first quarter of 2020.(Updates with Andrew Wilson comments from fourth paragraph.)To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.netTo contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Yakob Peterseil, Rachel EvansFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks
Financial ETFs Gain Despite Mixed Earnings
Steepening yield curve boosted financial ETFs in October despite mixed earnings.
- Bloomberg
Malaysia Privately Discusses Goldman Penalty of Just $2 Billion Over 1MDB
(Bloomberg) -- Again and again, Malaysia has publicly demanded Goldman Sachs pay an eye-popping $7.5 billion for its role in the 1MDB scandal. But privately, Malaysian negotiators are considering settling for a fraction of that.Representatives for Malaysia have discussed figures of around $2 billion to $3 billion in talks with the Wall Street bank, according to people with knowledge of the matter. Though a final deal may diverge from that range, it shows what negotiators for the country may be willing to accept. Simultaneously, Malaysian prosecutors are trying to turn up the pressure by pushing for Goldman’s criminal case to be heard at the country’s High Court.Prime Minister Mahathir Mohamad, 94, is keen to reach an accord before year-end to show progress on his signature pledge to recoup money plundered from the scandal-ridden state investment fund. He’s dispatched Daim Zainuddin, a confidant outside his cabinet, to serve as a top dealmaker, the people said, asking not to be named because talks are confidential. A sizable settlement would help cement the country’s fiscal footing, which Mahathir has cited as a reason he’s delayed handing over power to his former protege, Anwar Ibrahim.Yet, for Goldman Sachs Group Inc., Malaysia’s probe is among a slew of related international investigations the company is eager to solve in their entirety, and it’s unclear how much credit regulators and prosecutors back in the U.S. may give the firm for a costly deal with the Southeast Asian nation.‘Reparation Payments’Goldman reaped $600 million from helping 1MDB raise $6.5 billion in 2012 and 2013, much of which later went missing. Malaysia has demanded the bank shoulder those losses. Earlier this month, Finance Minister Lim Guan Eng reiterated in an interview that means “reparation payments” amounting to $7.5 billion.It’s also unclear whether a multibillion-dollar settlement might lead Malaysia Attorney General Tommy Thomas to drop all charges against Goldman Sachs, or 17 current and former bank executives individually charged, the people said. The allegations against the directors are based on the criminal case against the bank’s units.Representatives for Goldman Sachs and the U.S. Department of Justice declined to comment. Representatives for Malaysia’s attorney general and for Daim’s office had no immediate comment. Goldman has previously blamed its entanglement in the scandal on its former Southeast Asia chairman, Tim Leissner, who pleaded guilty in 2018 to U.S. charges he conspired to launder money and violate the Foreign Corrupt Practices Act.U.S. prosecutors are expected to extract a serious penalty from the bank for its role in funding 1MDB. Last year, they undermined the firm’s effort to focus blame on one person by also charging another banker, Roger Ng, who’s denied any complicity in wrongdoing. The Justice Department previously stunned the Malaysian government in 2016 by filing a forfeiture case that implicated then-Prime Minister Najib Razak.Najib engaged in “a planned, premeditated breach of trust,” Malaysian prosecutors said on Tuesday at the first of the former premier’s two trials over his involvement in the scandal. That case hinges on whether he knew that $10 million deposited in his bank accounts came from 1MDB. His lawyers argue there’s no link between the funds and the decisions he took as prime minister.Mahathir, who was prime minister from 1981 to 2003, returned to power in 2018 while promising to recoup money allegedly stolen from the state investment fund. Najib is now fighting dozens of criminal charges related to 1MDB.Malaysia has been forced to cancel major projects and find other ways to cut government spending, after having to shoulder 51 billion ringgit ($12 billion) of 1MDB’s debt obligations.Daim is a longtime confidant of Mahathir, hailing from the same village in the northern Malaysian state of Kedah. He was finance minister from 1984 to 1991, and was brought back by Mahathir to help steer the economy in the aftermath of the Asian financial crisis in 1999 to 2001. When Mahathir returned to power last year, he appointed Daim as his top adviser to guide the new government’s economic policy in the first 100 days.Read a QuickTake on how the 1MDB scandal shook the financial worldProsecutors in Kuala Lumpur said Tuesday they have submitted an application to move their criminal case against Goldman to the High Court, a request typically made to underscore the seriousness of the case.Thomas has said he has a strong case against Goldman and isn’t dropping the charges against the units or the 17 people, responding to a report in Nikkei Asian Review that cited him as saying Goldman has been in settlement talks with Malaysia. “We’ll see them in court,” he said on Oct. 17.(Updates with former PM’s trial in ninth paragraph.)To contact the reporters on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net;Elffie Chew in Kuala Lumpur at echew16@bloomberg.net;Sridhar Natarajan in New York at snatarajan15@bloomberg.net;Anisah Shukry in Kuala Lumpur at ashukry2@bloomberg.netTo contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, ;Michael J. Moore at mmoore55@bloomberg.net, ;Fion Li at fli59@bloomberg.net, ;Yudith Ho at yho35@bloomberg.net, David Scheer, Steve DicksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
ECB Dream of German Fiscal Firepower Effect Isn't Too Proven
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.If Germany does open its fiscal taps to unleash a major stimulus, it’s not clear how far that will benefit any economy other than its own.Seeking a German budget boost has become a priority for European Central Bank policy makers wanting to add thrust to their own monetary easing, and outgoing President Mario Draghi is likely to plea for help again from governments at his final decision this week. But the evidence that it would trickle beyond the country’s borders is mixed.It’s no surprise that Draghi and his successor, Christine Lagarde, look at the fiscal firepower of Europe’s largest economy with such yearning, since Germany has one of the region’s lowest debt burdens, while the institution’s own toolkit is depleted. ECB officials would dearly love that budget muscle to be flexed for everyone’s benefit.Yuriy Gorodnichenko, an economics professor at the University of California, Berkeley who has researched fiscal impacts, reckons a rising stimulus tide in Germany would indeed lift all boats with a noticeable result.“My sense is it’s a big number,” he says. “Others will disagree.”Such divergence in the field was acknowledged in a 2017 paper by three ECB officials. They said so-called fiscal spillovers are “largely debatable” -- in terms resembling former Federal Reserve chief Ben Bernanke’s description of quantitative easing as working in practice, but not in theory.“The evidence derived from macroeconomic models suggests that the spillovers are small,” the ECB paper said. “Empirical studies, in contrast, tend to be more robust and support the existence of significant spillover effects.”A 2016 European Commission analysis reckoned an increase in German and Dutch public investment of 1% of GDP would generate output spillovers to the euro area of as much as 0.5%. A paper the previous year by former IMF Chief Economist Olivier Blanchard and colleagues found “a large and positive impact” in the region’s periphery of fiscal expansion at its core.According to Oxford Economics, the interconnectedness of EU economies means the spillover effect is quite large, while the domestic benefit is lower than elsewhere. A coordinated approach would be best -- “it almost doesn’t pay to engage in a fiscal expansion within the EU without cooperation,” economist Tamara Basic Vasiljev said in a report this month.German officials are less convinced. Bundesbank chief Jens Weidmann argued last year that because public expenditure wouldn’t affect imports much, spillovers “are likely to be small.”That chimes with an economy ministry analysis from 2015, which found that Berlin increasing public investment would boost euro-area output only “slightly” and without any lasting effect on growth.One issue likely to affect the outcome of any study is whether there could be counter-effects to a fiscal boost, such as a strengthening of the euro or higher interest rates.German stimulus might also help countries which don’t really need it. Ansgar Belke, professor at the University of Duisburg-Essen, reckons more affluent Finland, Ireland and the Netherlands could be beneficiaries, while effects on Greece, Spain and Portugal might be “rather low.”Belke adds that at the current juncture, the trade war poses a challenge to the transmission of a stimulus. His research shows that “fiscal policies are not as effective in uncertain times as in tranquil times.” Others have also noted that government spending shocks had larger impact in booms than in recessions.On that last point, IMF officials seem to disagree. The wider impact of fiscal stimulus “intensifies when a source or recipient country is in recession and/or benefiting from accommodative monetary policy,” according to its 2017 World Economic Outlook.Crucial to any analysis is what form German stimulus would take. With a railway network plagued by delays and patchy wireless connectivity, projects focused on transport and 5G networks could generate “quite advantageous” multipliers elsewhere, according to Marc Bruetsch, chief economist at Swiss Life.What Bloomberg’s Economists SayBerlin could probably justify easing fiscal policy by as much as 2.2% of GDP in 2020. That would free up space for spending or tax cuts of as much as 80 billion euros -- a bigger dose of stimulus than unleashed during the financial crisis. But it won’t happen.\-- Jamie Rush, chief European economistSee BECO for more from Bloomberg EconomicsWhatever its wider effects, a fiscal stimulus for Germany is clearly a relatively inefficient way of aiding the euro region as a whole. But while French President Emmanuel Macron has pushed a euro-zone budget to make countries pool resources, there remains strong opposition in richer members towards sharing their tax money.“Germany saying they would ease fiscal policy because they’re in a deep recession is not the same as Germany saying we should ease fiscal policy because we’re benefiting from being in the euro and we should help everyone else,” Trevor Greetham, head of multi asset management at Royal London Asset Management, told Bloomberg Television. “But Macron has got a euro-zone budget started, and that’s something to keep watching.”In the meantime, all Draghi and Lagarde can do is keep calling on governments to step up, which is probably what will happen on Thursday.“We would expect him to lean into the fiscal policy rhetoric,” Andrew Wilson, co-head of global fixed income at Goldman Sachs Asset Management, said on Bloomberg TV. “We all know that monetary policy is really reaching the end of its limits.”(Adds comment from Wilson in final two paragraphs.)\--With assistance from Birgit Jennen and Zoe Schneeweiss.To contact the reporters on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net;Yuko Takeo in Tokyo at ytakeo2@bloomberg.netTo contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, ;Paul Gordon at pgordon6@bloomberg.net, Craig StirlingFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters - UK Focus
UPDATE 2-Vodafone and MasMovil deny holding tie-up talks in Spain
Both Vodafone and MasMovil denied a report by the El Confidencial news website saying the Spanish mobile operator was working with Goldman Sachs to buy the British telecom's business in Spain for 6 billion euros ($6.67 billion). MasMovil and Goldman Sachs have held talks with the world's second largest mobile operator regarding its Spanish business, the Spanish website reported, citing unnamed sources close to the talks. El Confidencial said MasMovil, which has grown significantly in recent years via acquisitions in many cases financed by the U.S. investment bank, last summer submitted a non-binding offer rejected by Vodafone, which instead asked for 8 billion euros for its Spanish unit.
- Reuters
Malaysia, Goldman discuss smaller penalty over 1MDB scandal - Bloomberg
Malaysia has discussed a $2 billion to $3 billion settlement with Goldman Sachs over the U.S. bank's alleged role in the 1MDB scandal, Bloomberg reported on Wednesday, less than half the sum the Southeast Asian nation had demanded earlier. Investigators in Malaysia and the United States say about $4.5 billion was misappropriated from the now-defunct state investment fund 1Malaysia Development Berhad, set up in 2009 by former Prime Minister Najib Razak who has been slapped with several charges. Last year, Malaysia filed criminal charges against Goldman over its role as underwriter and arranger of three bond sales that raised $6.5 billion for 1MDB.
- Reuters
Morgan Stanley elbows out rivals for plum role in $1.5 billion IPO relaunch - sources
Morgan Stanley has usurped rivals including Deutsche Bank, Citigroup, Credit Suisse and Goldman Sachs to lead the relaunch of a $1.45 billion IPO - Hong Kong's second-largest this year - in an unusually brutal shuffling of banks' roles on a big deal. The Wall Street bank was approached by ESR Cayman and its main backer, Warburg Pincus, in August to develop a rescue plan for ESR's initial public offering (IPO), according to two sources involved in the transaction, after the industrial property investor was forced to pull its original planned float in June.
- Reuters
Morgan Stanley elbows out rivals for plum role in $1.5 billion IPO relaunch: sources
Morgan Stanley has usurped rivals including Deutsche Bank, Citigroup, Credit Suisse and Goldman Sachs to lead the relaunch of a $1.45 billion IPO - Hong Kong's second-largest this year - in an unusually brutal shuffling of banks' roles on a big deal. The Wall Street bank was approached by ESR Cayman and its main backer, Warburg Pincus, in August to develop a rescue plan for ESR's initial public offering (IPO), according to two sources involved in the transaction, after the industrial property investor was forced to pull its original planned float in June.
- Bloomberg
Software Stocks in Free Fall With ServiceNow Results on Deck
(Bloomberg) -- An ugly two months for software stocks is getting worse, and bullish investors are looking to earnings reports this week from ServiceNow Inc. and Microsoft Corp. to stem the tide.Zoom Video Communications Inc. and ServiceNow fell more than 5% on Tuesday, each extending losing streaks to a fifth consecutive day. The group has been under renewed pressure since last week, despite an earnings report from Atlassian Corp. that was praised by analysts. Both ServiceNow and Microsoft are due to report Wednesday afternoon.“We all know there’s some frothiness in some of these specialty software as a service companies,” said Jason Benowitz, a senior portfolio manager with Roosevelt Investment Group. “I’m interested in how the market will react when Microsoft reports, because I think everyone is expecting results to be strong.”Software valuations have come under the microscope amid concerns about whether their break-neck growth is sustainable in a slowing economy and a renewed focus on profitability in the wake of WeWork’s initial public offering stumble. A Goldman Sachs basket of expensive software stocks has fallen 28% from a July peak, with nearly all of that decline coming since the start of September.Other big decliners on Tuesday included Slack Technologies Inc. and Alteryx Inc., which both fell more than 7%, while Coupa Software Inc.has lost 24% since the beginning of last week.To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Courtney DentchFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks
Regions Financial's (RF) Q3 Earnings in Line, Revenues Up
Regions Financial's (RF) Q3 earnings reflect expansion in non-interest income and lower expenses, offset by declining net interest income and higher provisions.
- Bloomberg
Goldman Sachs Is Either Mad or Brilliant on Junk Bonds
(Bloomberg Opinion) -- In markets, a theme can often become the overwhelming consensus. When that happens, traders feel two conflicting urges at the same time. The first is to say the majority is wrong and stake a contrarian position. The other is to wonder whether maybe everyone is onto something.This captures the current struggle for investors in the U.S. high-yield and leveraged loan markets. The consensus opinion is perhaps best stated by this Bloomberg News headline from last week: “Leveraged Loan Buyers Are Running for Cover as Fear Ramps Up.” Simply put, money managers are flocking into debt with higher credit ratings because they’re worried about how riskier securities will hold up if economic growth slows and their weak investor protections are put to the test. Already, big price moves are roiling certain pockets of the credit markets with greater frequency. That’s pushed the gap between prices on single-B and double-B rated leveraged loans, as well as the spread between triple-C and double-B junk bond yields, to the widest levels since mid-2016.As if to add fuel to the fire, S&P Global Ratings released a report late last week with the title “Weakest Links Reach a 10-Year High.” S&P defines weakest links as issuers rated B- or lower with negative outlooks or on its CreditWatch with negative implications. There were 263 of them globally in September, the most since November 2009. “The default rate of weakest links is nearly eight times greater” than the broad junk-bond market, analysts Nicole Serino and Sudeep Kash wrote. “The rise in the weakest links tally may signify higher default rates ahead.”This report is catnip for those who believe the high-yield consensus. The longest economic expansion in U.S. history has effectively stamped out default risk except around the edges of the bond market. Notably, even with all these weakest links, S&P still says its base case is for the U.S. default rate to reach 3.4% by mid-2020 — hardly an apocalypse. But if there’s even a chance that corporate failures exceed estimates, bondholders aren’t the types to stick around and risk it. At least not until the securities get too cheap to pass up.Goldman Sachs Asset Management is one of the few contrarians suggesting the market might already be at that point. “We are starting to find opportunities where we are willing to go down in quality,” Ashish Shah, the firm’s co-chief investment officer of fixed income, said last week. “We think the market is being too bearish on the economy.” In Shah’s view, investors may be hesitant to make risky bets in the final months of 2019 but will get aggressive in the new year.Obviously, Shah isn’t endorsing all low-rated bonds. No credit investor will ever recommend a rating category or an industry broadly. But even just the suggestion of picking and choosing among the riskiest junk debt goes against the grain. Time will prove this stance either mad or brilliant.It’s a tricky call. By Shah’s own thought process, buying riskier junk bonds now might be getting in too early if most investors are going to clean up their portfolios heading into the end of the year. Traders are all-too-familiar with the pain from December 2018, for one, which was the high-yield market’s worst month in three years.On the other hand, the Federal Reserve isn’t tightening monetary policy as it was at the end of last year. Rather, policy makers have cut interest rates twice since July and look poised to do it again on Oct. 30. Those actions are all in the name of sustaining the economic expansion, which should bolster lower-rated companies. Dallas Fed President Robert Kaplan even noted last week that, in hindsight, the criticism of the December 2018 rate increase was fair. Now, interest-rate cuts are far from a guarantee that the economy can keep chugging along. Oaktree Capital Group LLC’s co-founder, Howard Marks, for one, is skeptical that the Fed can hold off an eventual recession. He said last week that his firm, one of the world’s largest distressed-debt investors, has gradually been putting more emphasis on safety in credit, though he’s still comfortable holding single-B rated obligations that his analysts have vetted. “Ratings don’t tell you whether something is safe or not,” he said.Money managers will always criticize ratings companies. But now credit raters are also flagging that a growing number of companies are at risk of deteriorating. The S&P report, for instance, shows the U.S. has 177 “weakest links,” compared with the five-year average of 138 and the 10-year average of 114. That ought to concern those who believe that credit-rating companies, on average, tend to hand out grades that are too high. Morgan Stanley strategists, for instance, used similar language to S&P in a report that concluded “beneath the veneer of relative spread resilience and muted realized defaults, the weak links in the leveraged credit markets are coming under pressure.”At the same time, markets have fallen for the end-of-cycle head fake time and again. Fed Vice Chair Richard Clarida, in remarks last week before the central bank’s blackout period, said that the global economy is “muddling through” and that the situation isn’t dire. That seems like a fair assessment. In those kinds of conditions, the riskiest junk bonds can largely find a way to scrape by as well.That kind of flimsy assurance doesn’t cut it anymore for a number of high-yield investors. Until (or unless) more of them join Goldman Sachs Asset Management in wading back into the risky end of the market, the dominant up-in-quality consensus looks unstoppable.To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg
Eskom’s Looming Day of Reckoning Puts Investors on Defensive
(Bloomberg) -- Investors are prepared for the worst as the day of reckoning looms for Eskom Holdings SOC Ltd., the state-owned power utility seen by Goldman Sachs Group Inc as the biggest threat to the country’s economy.Yields on benchmark South African government notes are at their highest in three weeks, trumped only by junk-rated Nigeria, Turkey and Lebanon among 29 major emerging markets. Rand-denominated sovereign debt has lost 3% for dollar investors this half, the worst performance after Colombia and Argentina. Foreigners have dumped a net 25 billion rand ($1.7 billion) of the country’s bonds this year, cutting their holdings to 37% of the total, from 43% less than 18 months ago.The rand has weakened 4.6% in the half to date, and is among the five worst-performing developing-nation currencies versus the dollar. Speculative long-rand contracts retreated to the lowest level in more than three months last week, Commodity Futures Trading Commission data show. When it comes to the cost of insuring South Africa’s debt against default, only Turkey and Argentina are more expensive.Eskom, which supplies about 95% of the country’s power, has 450 billion rand ($30.5 billion) of debt and is surviving on state bailouts after massive cost overruns at two partially completed coal-fired power plants. The country endured four days of controlled blackouts last week to prevent total collapse of the grid. Power shortages and policy uncertainty have damped economic growth and plunged business confidence to multi-decade lows as investors await the government’s turnaround plan for the utility.“These outages threaten South Africa’s fragile growth profile,” Siobhan Redford, a Johannesburg-based analyst at Firstrand Bank Ltd., said in a client note. “Clarity and certainty on plans for Eskom -- both in terms of financing needs and returning to a more sustainable power generation profile -- are vital in boosting the confidence of both domestic and offshore investors.”South Africa will “soon” announce the appointment of a permanent chief executive officer for the utility and “shortly” release a special paper on the path the CEO and a strengthened board should take, President Cyril Ramaphosa said in a statement on Monday, in which he described Eskom’s financial situation as “untenable.”“The sheer scale of Eskom’s debt is daunting,” Ramaphosa said. “Further bailouts are putting pressure on an already constrained fiscus.”Lingering UncertaintyThe bailouts will probably widen South Africa’s budget deficit to the biggest since the financial crisis, threatening the country’s last remaining investment-grade credit rating at Moody’s Investors Service, according to a Bloomberg survey of economists. Moody’s is scheduled to review the assessment on Nov. 1, days after the mid-term budget is presented to lawmakers.A risk premium was priced in to the rand and local debt partly due to weak economic fundamentals and uncertainty on the future of Eskom, the medium-term budget policy statement and the credit assessment from Moody’s, said Elna Moolman, a Johannesburg-based economist at Standard Bank Group Ltd.Last week, the government published its latest Integrated Resource Plan, which maps out the energy mix for the next decade. It includes a switch to more green energy as the country, which sources most of its electricity from coal, faces pressure to meet emissions-reduction targets.South Africa will develop a framework to take aging coal-fired plants out of service, Ramaphosa said. While this will present challenges for communities and workers where fossil fuel-powered energy generation takes place, “it also presents opportunities for those affected to have access to technologies that are more cost-effective and better for human health.”The rand gained 0.2% to 14.7878 per dollar by 3:40 p.m. in Johannesburg. Yields on benchmark 2030 government bonds climbed four basis points to 8.97%.(Updates prices in final paragraph)\--With assistance from Ana Monteiro.To contact the reporters on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net;Colleen Goko in Johannesburg at cgoko2@bloomberg.netTo contact the editors responsible for this story: Gordon Bell at gbell16@bloomberg.net, Robert Brand, Alex NicholsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Pound May See Only a Limited Rally Even If Brexit Deal Is Passed
(Bloomberg) -- Forecasts for the pound to rally above $1.35 may be too optimistic even if Boris Johnson gets approval in Parliament for his Brexit deal.Sterling opened lower after U.K. politicians failed to deliver the decisive Brexit vote that had been promised at the weekend. Still, analysis of Saturday’s debate and the comments that lawmakers made during it shows the U.K. prime minister still has a chance of getting his Brexit deal done. This has boosted the U.K. currency only modestly on Monday, in a sign that current pricing may already be reflecting optimism that the Brexit accord will eventually pass.Banks including NatWest Markets, Credit Agricole SA and Goldman Sachs Group Inc. expect the pound to rally to as high as $1.35 should Johnson’s plan get through Parliament. Sterling has already gained close to 6% this month amid growing optimism that a solution to the Brexit deadlock will be found, and the currency was little changed at $1.2996 Monday.Options gauges also suggest that a level close to $1.30 in pound-dollar is incorporating a high probability that Johnson will get his way in the House of Commons. Overnight volatility rose to its strongest level since the U.K. elections in June 2017 on bets that Commons Speaker John Bercow may allow the vote to take place Monday. This at at time when traders acknowledge high risks that the pound may weaken in the short term, as risk reversals show.Certainly, a vote in favor of the Brexit deal could see the pound rallying. This, however, may only amount to a knee-jerk reaction and investors may be looking to fade the move.Russell Silberston, a portfolio manager at Investec Asset Management Ltd., estimates the Brexit deal is already 60%-to-70% priced in, and that the currency could gain to at least $1.33 on a deal passing through Parliament.“On the negative side, however, is the relatively short transition - Dec 2020,” he said. “It seems highly unlikely we can get a free trade deal with the EU by then, so I think this tempers the medium term view.”Corporate names have already taken profit on long exposure through options. Real money accounts still prefer to sell rallies, while hedge funds’ flows run two-ways, according to three traders in Europe who asked not to be identified because they are not authorized to speak publicly.Technically, the first key resistance comes around $1.3150 and may be where a knee-jerk rally will stall. The 200-weekly moving average stands at $1.3149, while the midpoint of sterling’s losses since April 2018 comes at $1.3168. Its May 6 high is at $1.3185.(Updates with banks’ forecasts, currency level in 3rd paragraph.)To contact the reporters on this story: Vassilis Karamanis in Athens at vkaramanis1@bloomberg.net;Charlotte Ryan in London at cryan147@bloomberg.netTo contact the editors responsible for this story: Paul Dobson at pdobson2@bloomberg.net, Michael Hunter, Anil VarmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Goldman’s Unwelcome Streak: A String of Insider Trading Charges
(Bloomberg) -- Goldman Sachs Group Inc. has built itself into a global dealmaking force whose bankers are often stitching together the biggest and most sensitive corporate transactions.But a trio of charges in just the last 18 months has threatened to tarnish that standing.Bryan Cohen, a Goldman investment banker in New York, was arrested Friday over allegations of insider trading, court records show. It comes just months after another banker was sentenced to three months in prison for sharing illicit deal tips. And a third pleaded guilty last year to leaking information to a National Football League linebacker in exchange for tickets to games.Such accusations strike at the sanctity of the business where corporate titans seek out the advice of large investment banks to navigate discussions over deals that can move billion of dollars in market prices. The allegations highlight the struggles of even top-tier banks in trying to successfully clamp down on such misconduct. For Goldman, the cases against these junior bankers each seem to have been carried out independent of each other.Cohen, a vice president, leaked nonpublic information for almost three years in exchange for cash as part of an international insider-trading scheme that led to $2.6 million in illicit gains, according to a separate complaint from the U.S. Securities and Exchange Commission that didn’t identify his employer.Some information was tied to pending deals involving Syngenta AG and Buffalo Wild Wings Inc., the documents show.A Goldman spokeswoman confirmed Cohen was an investment banker who worked in the consumer retail division. The bank was unaware of the allegations until Cohen was arrested on Friday morning at his apartment in Manhattan. He has since been placed on leave.“We are cooperating with the authorities on the situation regarding Mr. Cohen,” Nicole Sharp, a representative for the firm, said in an emailed statement. “Protecting client confidential information is our highest internal priority and we condemn this alleged behavior.”Cohen appeared before U.S. Magistrate Judge Stewart D. Aaron on Friday and was released on a $250,000 bond pending a conference scheduled for Tuesday. Patrick Smith, an attorney representing Cohen, declined to comment.Cohen, 33, shared the information with a trader who hasn’t been identified and who subsequently passed it on to George Nikas, who realized the gains, according to the SEC complaint. Nikas, a 54-year-old New York restaurateur who owns the chain GRK Fresh, was also charged by prosecutors. Cohen expected and received an unspecified amount of cash in exchange for the tips he provided, the filings show.Cohen has been with Goldman for almost 10 years, starting in the London office before being transferred to New York in 2017. The insider tips were shared between April 2015 and November 2017, according to the SEC complaint.The complaint offers a detailed view of how the alleged scheme unfolded. For example, shortly after Cohen moved to New York, Buffalo Wild Wings contacted Goldman to help as the Minneapolis-based casual dining chain was approached by Arby’s Restaurant Group Inc. Cohen was made aware of the potential acquisition the same day, Oct. 17, 2017. Nikas purchased 22,000 Buffalo Wild Wings shares between Oct. 20 and Oct. 27 for $2.5 million, selling 9,000 of them by Nov. 1 for an initial profit of $79,074.Acquisition NewsAfter the market close on Nov. 13, news broke of a potential Buffalo Wild Wings acquisition. The next day, the restaurant chain’s stock price rose 24%, and Nikas sold his remaining shares for a profit of $343,298, according to the complaint.Nikas was indicted on Oct. 7 along with a friend, Telemaque Lavidas, on charges they conspired to steal material non-public information about Ariad Pharmaceuticals Inc. from Lavidas’ father, who served on the company’s board until 2016, according to court documents unsealed Friday. Takeda Pharmaceutical Co. agreed to buy Ariad, a maker of cancer drugs, for $4.66 billion in 2017.Nikas was also accused of participating in a “large-scale, international insider trading ring” from 2012 to 2017, during which he received information about acquisitions and potential acquisitions of publicly traded companies from an unidentified securities trader in Switzerland, according to the indictment. Nikas didn’t immediately respond to a message seeking comment.Lavidas was arraigned on Friday before U.S. District Judge Denise L. Cote and held without bail pending trial due to a potential risk of flight, according to court records. His attorney, Jennifer Achilles, didn’t immediately respond to an email seeking comment.Cohen was arrested at 6 a.m. on Friday and appeared in court later that afternoon. He was released after surrendering his passport, along with some helpful advice from the judge: “Refrain from conduct alleged in charging document.”\--With assistance from Chris Dolmetsch.To contact the reporters on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net;Matt Robinson in New York at mrobinson55@bloomberg.netTo contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, David ScheerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
ESR Seeks $1.45 Billion in Year’s Second-Biggest H.K. IPO
(Bloomberg) -- ESR Cayman Ltd., a logistics real estate developer, is seeking to raise as much as HK$11.4 billion ($1.45 billion) in what could be Hong Kong’s second-biggest initial public offering this year.The company and some shareholders including Warburg Pincus and Goldman Sachs Investments Holdings (Asia) Ltd. are offering 653.7 million shares at HK$16.20 to HK$17.40 apiece, according to terms of the deal obtained by Bloomberg. ESR in June postponed its IPO attempt of raising as much as $1.24 billion, citing unfavorable market conditions.ESR’s offering attracted Ontario Municipal Employees Retirement System as a cornerstone investor, with the Canadian pension fund agreeing to subscribe for a total of about $585 million of stock, based on mid-point pricing, the terms show.The comeback of ESR would further propel Hong Kong’s IPO market momentum even as anti-government protests continue to rock the city. The developer’s share sale would trail Budweiser Brewing Company APAC Ltd.’s $5.8 billion IPO last month, according to data compiled by Bloomberg. The city’s first-time share sales have slumped by 43% to $18.4 billion so far this year from the same period last year, the data shows.The rapid growth of e-commerce in Asia Pacific, fueled by local players such as Alibaba Group Holding Ltd., has boosted demand for logistics warehouse systems. ESR is raising capital as it continues to expand in the region. It bought a majority stake in Singapore’s Sabana Investment Partners Pte. after pledging to invest more than $1 billion in a logistics park in Yokohama, Japan.APG Asset Management, General Electric Pension Trust and JD.com Inc.’s Jingdong Logistics Group Co. are also among the seven holders selling shares in the IPO.ESR aims to price the offering on Oct. 25 before beginning trading on Nov. 1, the terms show. Deutsche Bank AG and CLSA Ltd. are joint sponsors for the offering.(Adds selling shareholders in six paragraph)To contact the reporters on this story: Crystal Tse in New York at ctse44@bloomberg.net;Carol Zhong in Hong Kong at yzhong71@bloomberg.netTo contact the editors responsible for this story: Fion Li at fli59@bloomberg.net, Ville HeiskanenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters - UK Focus
UPDATE 2-Brexit stumble slightly dents pound's euphoria as trading resumes
Sterling slipped half a percent as world currency markets opened for the first time since the UK parliament delayed a crucial vote on a Brexit withdrawal agreement. As trading opened in Wellington, New Zealand, the pound slipped 0.6% to $1.2929, but the bulk of its recent rally held amid confidence that a disorderly exit from the European Union would still be avoided. The British currency closed on Friday just below the $1.30 mark, right at the peak of a 6.5% surge it has enjoyed since British Prime Minister Boris Johnson first made a breakthrough on striking an EU divorce deal on Oct. 10.
- Reuters - UK Focus
Goldman Sachs lowers “no deal” Brexit probability to 5% from 10%
- Reuters
Goldman Sachs investment banker charged in insider trading scheme
Bryan Cohen, a vice president at Goldman Sachs who works in the Consumer Retail industry group, was arrested early Friday on charges of conspiracy to commit securities fraud. Cohen is the third Goldman Sachs employee to be charged in an insider trading scheme since May 2018. Goldman Sachs spokeswoman Nicole Sharp said on Saturday the firm is "cooperating with the authorities on the situation regarding Mr. Cohen.
- Yahoo Finance
Illy Chairman: People drink coffee even when the economy slows
Illycaffe's Andrea Illy on why his company thinks now is the time to expand in the U.S. gourmet coffee market.
- Bloomberg
Casper Is Said to Work With Morgan Stanley, Goldman on IPO
(Bloomberg) -- Online mattress retailer Casper Sleep Inc. is working with Morgan Stanley and Goldman Sachs Group Inc. on a U.S. initial public offering, according to people with knowledge of the matter.The New York-based company could go public as soon as this year or the first half of 2020, said the people, who asked not to be identified because the information is private.Casper, which sells and delivers mattresses directly to consumers, reached a $1.1 billion valuation this year in its most recent private funding round. Target Corp., New Enterprise Associates and Dani Reiss, the chief executive officer of Canada Goose Holdings Inc., are among its investors.The company could attain a higher valuation in an IPO, one of the people said.Representatives for Casper, Morgan Stanley and Goldman Sachs declined to comment.Despite poor performances by high-profile listings including Peloton Interactive Inc. and the collapse of WeWork’s IPO plans, many companies are still aiming to go public before end of the year.Casper, which has expanded its products to include bedding, pillows and bed frames, operates in the U.S., Canada, the U.K., Germany, Switzerland and Austria. CEO Philip Krim said in March that the company’s next big international market would be Asia.The company also plans to open hundreds of physical stores. Part of its motive for going public is to raise capital for that expansion, one of the people said.(Updates with Casper’s response in fifth paragraph)To contact the reporters on this story: Crystal Tse in New York at ctse44@bloomberg.net;Alistair Barr in San Francisco at abarr18@bloomberg.netTo contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, ;Jillian Ward at jward56@bloomberg.net, Michael Hytha, Matthew MonksFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Malaysia Said to Privately Discuss $2B-$3B Goldman Penalty Over 1MDB
Oct.23 -- Malaysia is privately discussing a penalty for Goldman Sachs of as little as $2 billion over the bank’s role in the 1MDB scandal. That’s despite previously demanding Goldman repay $7.5 billion. Bloomberg’s Anisah Shukry reports on “Bloomberg Markets: China Open.”
