|Bid||623.00 x 0|
|Ask||610.20 x 0|
|Day's range||609.60 - 615.70|
|52-week range||6.30 - 687.70|
|Beta (3Y monthly)||0.78|
|PE ratio (TTM)||8.82|
|Earnings date||28 Oct 2019|
|Forward dividend & yield||0.32 (5.25%)|
|1y target est||9.20|
(Bloomberg) -- From booming bond sales and benign default rates to benevolent central banks, all seems well in the credit market right now. That’s unless you ask the robot prognosticator at HSBC Holdings Plc.The machine-learning model reckons there’s now an 84% chance of a bear market sweeping U.S. corporate debt within the next year. That’s the highest level since before the financial crisis and “a validation” of HSBC’s mildly bearish view, according to strategists led by Song Jin Lee.“This suggests the year-to-date rally in credit spreads is likely to be a temporary ‘pullback’ before the big sell-off hits in 2020,” the team wrote in new research this month.The urgent question for investors is what the robot knows that the market doesn’t.HSBC’s credit strategists are among the swelling cohort of investment banks and investors around the globe who are complementing their forecasts with this much-touted branch of artificial intelligence, which seeks to perform cutting edge data analysis without human guidance at every step.The bearish-credit robot uses an advanced version of a decision tree -- geeks would call it an XGBoost model -- to divine the chances of a market downturn from nearly a dozen indicators. The pitch is that, by learning from its mistakes and mapping the complex relationships between various factors, it can make better predictions than humans using more traditional approaches.HSBC trained its model with four decades of data, from 1950 to 1989, then tested it on data from 1990 onward. It accurately predicted five of the last six credit bear markets with a lead time of between seven and 16 months.To skeptics, machine-learning is often little more than a marketing exercise that provides no great advance in sorting signal from noise. And for now at least, markets show few overt signs of an imminent downturn. High-yield credit spreads have tightened this year to far below the five-year average on expectations a global return to monetary easing will drive more money into bonds and avert a recession along the way.HSBC acknowledges these models can seem like a “black box,” but the team does delve into one process to support its predictions. Known as SHAP, it’s a machine-learning technique that essentially tries to explain predictions by simplifying the model. It shows two indicators flashing red for U.S. corporate debt now: elevated consumer confidence, which tends to precede economic weakness, and a flat Treasury yield curve.Other inputs include things like bond issuance, earnings growth and truck sales.Two more caveats: Some degree of human intervention is still necessary, mostly in the initial phase of gauging and improving data quality. And the model tends to miss bear markets triggered by external shocks, such as a crash in commodities.“This exercise demonstrates the versatility of tree-based machine learning algorithms, even when faced with poor quality data and/or a large imbalance in the occurrence of the predicted state (in this case, credit bear markets),” the team said. “But as flexible as these algorithms are, they still require a helping hand from friendly humans.”To contact the reporter on this story: Justina Lee in London at email@example.comTo contact the editors responsible for this story: Samuel Potter at firstname.lastname@example.org, Sid VermaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Federal prosecutors are closing in on JPMorgan Chase & Co. officials in an investigation of price rigging in precious metals markets.With help from at least two of the bank’s former traders who pleaded guilty, the government is looking to bring charges against people higher up the chain at the bank, two people familiar with the years-old inquiry said. Just last month, a managing director who oversaw global precious-metals trading was placed on leave along with another employee, other people said.The traders who admitted guilt said the manipulation was routine, sanctioned by higher-ups and went on for years. “While at JPMorgan I was instructed by supervisors and more senior traders to trade in a certain fashion, namely to place orders that I intended to cancel before execution,” former trader John Edmonds said at a October 2018 hearing after pleading guilty to commodities fraud and conspiracy.The JPMorgan investigation grew out of a multibank U.S. crackdown on manipulation of commodities markets using techniques including spoofing, in which traders place orders without intending to execute them to try to move prices in their favor. The Justice Department has brought criminal charges against 16 people, including traders who worked for Deutsche Bank AG and UBS Group AG. Seven pleaded guilty, one was convicted at trial and another was acquitted.Deutsche Bank, HSBC Holdings Plc and UBS last year agreed to pay a total of about $50 million to settle civil claims by the Commodity Futures Trading Commission that the firms’ traders engaged in spoofing techniques to manipulate prices of precious-metals futures. Deutsche Bank agreed to pay $30 million, UBS $15 million and HSBC $1.6 million. The banks didn’t admit or deny wrongdoing.Peter Carr, a Justice Department spokesman, declined to comment. The bank disclosed the Justice Department inquiry in company filings earlier this year, saying it was cooperating with the Justice Department and other authorities.Michael Nowak, the managing director who was previously named in a civil suit, was placed on leave in August along with Gregg Smith, according to the people familiar with the matter. Nowak didn’t respond to a request for comment, and Smith couldn’t be reached. The moves were reported earlier by Reuters.JPMorgan officials believe the probe is limited to the bank’s trading desk, one of the people familiar with the matter said. Investigators are examining a paper trail related to the spoofing activities, another person said, in addition to drawing on testimony from former insiders.One of those insiders, Christiaan Trunz, a former trader for Bear Stearns and JPMorgan, told a federal judge in Manhattan last month that spoofing trades of precious metals was rampant at the bank for nearly a decade and that he was taught how to do it from other traders at JPMorgan. Trunz, who pleaded guilty on Aug. 20 to two federal fraud charges, said he manipulated futures markets for gold, silver, platinum and palladium from offices in New York, London and Singapore from 2007 to 2016.“It is understood that spoofing was a strategy that we used to trade precious metals futures,” Trunz said.Trunz was echoing descriptions offered by Edmonds, another trader, who several months earlier pleaded guilty for transactions involving silver futures. He said the conspiracy ran from 2009 to 2015 and involved hundreds of trades that he made personally. Edmonds said he was taught how to rig the market by veterans and supervisors.“I was instructed that if a client wished to sell futures I should simultaneously place both bids and offers with the intent of canceling the bids prior to execution,” Edmonds said during his plea hearing.Edmonds said the purpose was to falsely transmit liquidity and price information in order to deceive other market participants about the supply and demand so they would trade against the orders that JPMorgan wanted to execute.“We created market activity which artificially drove the sale price up and induced other market participants to purchase at an inflated price,” he said. Edmonds entered into a cooperation agreement with the CFTC in July.After Edmonds pleaded guilty, JPMorgan was hit with a proposed class action lawsuit by investors that also names Nowak and another onetime managing director, Robert Gottlieb. Gottlieb didn’t respond to a request for comment.That civil case was put on hold in February after the Justice Department intervened, claiming that the litigation could harm its criminal investigation.\--With assistance from Michelle F. Davis, Mark Burton and Ben Bain.To contact the reporters on this story: Tom Schoenberg in Washington at email@example.com;Joe Deaux in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jeffrey D Grocott at email@example.com, David S. Joachim, Peter BlumbergFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
VIENNA/MUNICH, Sept 16 (Reuters) - Osram advised shareholders to accept a 4.3 billion euro ($4.8 billion) bid from AMS on Monday, bringing the Austrian sensor specialist a step closer to taking over the bigger German lighting group. AMS, best known for supplying Apple with sensors for its latest iPhones, this month offered 38.50 euros per share for the leader in automotive lighting, outbidding private equity investors Bain Capital and Carlyle Group by 10%.
There is "power to be able to have connected like-minded individuals [who] understand different contexts, who have similar aspirations,” she said.
Stockopedia’s own data points to a jarringly simple stock market truth amidst the daily whirlwind of financial data: share prices that have gone up tend to kee8230;
A U.S. appeals court on Thursday upheld the conviction of a former HSBC Holdings Plc executive who was sentenced to two years in prison for defrauding Cairn Energy Plc in a $3.5 billion currency trade. A unanimous three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan ruled that a jury had enough evidence to find that Mark Johnson, formerly head of HSBC’s global foreign exchange cash trading desk, withheld material information from Cairn. "We are extremely disappointed with the result," said Alexandra Shapiro, Johnson's lawyer.
PARIS/LONDON, Sept 12 (Reuters) - Management of HSBC in France on Thursday denied a media report that it plans to sell underperforming retail banking operations in the country, a union source told Reuters, as it tried to reassure 8,000 local staff. The Wall Street Journal report on Wednesday cited people familiar with the matter and comes amid a sweeping review of HSBC's operations worldwide by interim chief executive Noel Quinn. "We have just received a denial of the rumours by the general management," the union source told Reuters.
PARIS/LONDON (Reuters) - Management of HSBC in France on Thursday denied a media report that it plans to sell underperforming retail banking operations in the country, a union source told Reuters, as it tried to reassure 8,000 local staff. The Wall Street Journal report on Wednesday cited people familiar with the matter and comes amid a sweeping review of HSBC's operations worldwide by interim chief executive Noel Quinn. HSBC declined to comment.
Management of HSBC in France on Thursday denied rumours about the bank's exit from retail banking in the country in a message to staff, a union source said. "We have just received a denial of the rumours by the general management," the union source told Reuters. The Wall Street Journal reported the plan on Wednesday.
With the FTSE 100 (INDEXFTSE:UKX ) not being immune to upcoming Brexit developments, Jonathan Smith writes on the benefits of including Burberry Group plc (LON:BRBY) and HSBC Holdings plc (LON:HSBA) in your portfolio.
I think these two FTSE 100 (INDEXFTSE: UKX) shares could improve your chances of becoming less reliant on the State Pension.
Britain's new system of banker accountability has led to a "tangible" improvement in culture but modest changes are still needed, UK Finance said on Tuesday. The trade body for banks in Britain published the sector's first major appraisal of the senior managers and certification regime (SMCR) introduced in 2016 as part of reforms implemented after the 2007-09 financial crisis that left taxpayers to bail out lenders while few individual bankers faced punishment. SMCR makes it easier for regulators to pinpoint blame when things go wrong.
DUBAI/LONDON (Reuters) - Saudi Arabia plans a gradual listing of Aramco on its domestic market, sources familiar with the matter said on Monday, as it finalises the roles banks will play in the initial public offering (IPO) of the world's biggest oil company. The kingdom intends to list 1% of the state oil giant on the Riyadh stock exchange before the end of this year and another 1% in 2020, the sources said, as initial steps ahead of a public sale of around 5% of Aramco. Based on the indicated $2 trillion valuation that Saudi Aramco had hoped to achieve, a 1% float would be worth $20 billion, a huge milestone for the local stock market.
(Bloomberg Opinion) -- A type of financial engineering that proved to be toxic during the financial crisis is slowly making a comeback as banks try to offset the risk of their borrowers not repaying their loans.Capital relief trades, or synthetic deals, are making a comeback — and Europe is about to refine the rules of the game. Getting those right will be crucial if we are to avoid a repeat of history.The products all have one thing in common: They provide a cosmetic improvement to a lender’s balance sheet. They shunt the risk of a borrower defaulting away from the lender to other players in the financial system — in much the same way that loans were securitized, or sliced up and sold, before the financial crisis.But these aren’t true disposals. Banks are, in effect, only taking out insurance against the risk of future losses by using derivatives. The actual loan remains on the books of the original bank — and the insurance allows the lender to reduce the amount of its own capital it has to set aside to cover the risk that the borrower defaults.The incentives for both buyers and sellers of credit protection are becoming more compelling than ever. On one hand, European banks are still struggling to get their capital buffers to the levels required of them, a goal that is being complicated by the ongoing squeeze negative interest rates are putting on profits.On the other hand, yield-hungry investors — from hedge funds to insurers — are only too keen to pick up some juicy returns in the era of, wait for it, negative interest rates.The deals aren’t cheap. They tend to yield more than Additional Tier 1 bonds, which can be converted into shares if a bank’s capital ratio falls below a certain level.But they do allow lenders to release a fair amount of equity without attracting public scrutiny. That’s just as well: With their valuations near record lows, banks would prefer not to raise fresh funds on the stock market.What is far from clear is the extent to which synthetic transactions actually transfer risk given their complexity. In deals that aren’t funded, or collateralized, the buyer of the protection (the lender) remains exposed to the risk that the counterparty may not be able to make good on the pledge to cover credit losses.Add to the mix a lack of transparency about where the risk is moving to in the financial system — the sellers of the protection tend to be more loosely regulated — and it will come as no surprise that watchdogs in the U.K. and the U.S. discourage these trades.Because most of the deals tend to be private, bilateral agreements between banks and investors, data on the breadth and depth of the market is sketchy. Anecdotally, those active in this pocket of structured finance say that there has been a steady pickup in business over recent years. The market may have seen as much as 25 billion euros ($28 billion) of protection being sold, insuring portfolios of as much as 350 billion euros, according to data compiled by Structured Credit Investor.Banks that have used risk-transfer trades include big lenders like HSBC Holdings Plc, Deutsche Bank AG and Banco Santander SA. But new European Union rules that came into effect this year are also attracting smaller firms to the market: Banca Popolare di Bari SCpA, an Italian lender whose capital is below minimum requirements, struck a deal with a hedge fund in July to provide capital relief on a 3 billion-euro portfolio of loans. The deal improved its common equity Tier 1 ratio by 100 basis points.The new rules allow banks using standardized risk models, as opposed to their own internal risk models, to gain capital relief from synthetic deals. And more regulatory changes are on the way.The European Banking Authority is preparing a consultation this month that could pave the way for synthetic deals to be granted the “simple, transparent and standardized” label that securitizations enjoy. This EU-wide seal of approval is designed to attract more investors willing to fund these deals. The EBA may also decide to apply that label to derivatives that are fully-funded with high quality collateral. That requirement cuts the risk that individual investors are stretching themselves beyond their means and may not be able to deliver on their commitments. The EBA may also push for more transparency, requiring parties to report trades to ESMA, the European securities watchdog.This is all a step in the right direction — but expect some pushback from big finance. Over the last year, insurers in particular have been getting into the market, and they don’t like the idea of posting collateral, much like they don’t when underwriting other risks. No doubt, if done right, synthetic securitizations should be part of the financial industry’s instruments. But regulators will need to ensure participants are exercising due prudence. More stringent rules on funding and transparency would go a long way to ensuring that.To contact the author of this story: Elisa Martinuzzi at firstname.lastname@example.orgTo contact the editor responsible for this story: Edward Evans at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.