|Bid||60.16 x 800|
|Ask||60.18 x 1400|
|Day's range||59.76 - 60.60|
|52-week range||49.55 - 82.74|
|Beta (5Y monthly)||0.86|
|PE ratio (TTM)||9.54|
|Earnings date||29 Nov 2016 - 04 Dec 2016|
|Forward dividend & yield||3.26 (5.62%)|
|Ex-dividend date||21 Apr 2020|
|1y target est||88.84|
(Bloomberg) -- Russian President Vladimir Putin’s shipment of medical equipment to help the U.S. fight the coronavirus epidemic may have contained a hidden message from the Kremlin.Included in the aid appear to be ventilators produced by a firm under U.S. sanctions, according to video of the plane’s unloading at New York’s JFK airport posted by Russian state-owned news agency Ruptly.Among the boxes were Avanta M ventilators, produced by a subsidiary of KRET, which has been on the Treasury’s Specially Designated Nationals list since 2014, when Russia annexed Crimea from Ukraine. RBC newspaper first reported the connection.Even if the ventilators were not purchased directly from KRET, sanctions generally prevent importing anything that an SDN has a property interest in, according to Brian O’Toole, a former senior adviser in Treasury’s sanctions unit and now a senior fellow at the Atlantic Council.“This is another example of Putin playing the U.S.,” O’Toole said by phone. “While there are no real consequences for the government violating its own sanctions, it looks stupid for them to be breaking their own rules.”A spokeswoman for the KRET subsidiary, based near Yekaterinburg almost 900 miles east of Moscow, referred all questions to the Industry and Trade Ministry. The ministry did not respond to calls or an emailed query.While the aid was billed as a humanitarian shipment, the cost of the shipment was split evenly between U.S. companies and the Kremlin’s sovereign wealth fund. The Russian Direct Investment Fund is subject to sectoral sanctions, which prohibit it from most borrowing in the U.S. but don’t prevent it from doing business with American entities.Despite the tensions between Moscow and Washington, Putin and President Donald Trump enjoy a warm relationship. The leaders agreed on the aid during a March 30 phone call during which they also discussed the collapse of oil prices.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The number of Americans applying for unemployment benefits soared to a record 6.65 million last week, a level unimaginable just a month ago.As states shut down commerce to prevent the deadly coronavirus from spreading, the weekly claims data have been among the first detailed figures to show the devastating economic hit, highlighting the extent to which U.S. businesses and workers are reeling from the global health crisis.The figures also may add to pressure on the federal government to ensure that aid payments and loans under the $2 trillion stimulus package flow quickly to people and businesses.“I never thought I’d see such a print in my lifetime as economist,” said Thomas Costerg at Pictet Wealth Management, who had the highest forecast in the Bloomberg survey, at 6.5 million. Claims are likely to stay elevated as more states announce stay-at-home orders, and it would be “not unthinkable” to see a 20% unemployment rate, more than double the high that followed the last recession, he said.The 6.65 million jobless claims filed in the week ended March 28 were more than double the previous record of 3.31 million in the prior week, according to Labor Department figures released Thursday.The data come a day before the March jobs report, which is expected to show the first monthly decline in payrolls since 2010. Nonetheless, those figures will show only the start of the labor-market damage, as the government’s survey period covered early March, prior to the biggest rounds of layoffs and closures.U.S. stocks rose after President Donald Trump said Russia and Saudi Arabia would announce crude oil production cuts.The report showed that the virus is having a wider impact beyond just hotels and restaurants, with states reporting impacts in health and social assistance, factories, retail and construction. The 9.96 million combined initial claims in the last two weeks is equivalent to the total in the first 6 1/2 months of the 2007-2009 recession.What Bloomberg’s Economists Say“If initial claims in the vicinity of 3-5 million persist for several more weeks, unemployment will climb toward 15% in April. Further increases in the unemployment rate will largely depend on how long the crisis (and lockdown) lasts.”\-- Eliza Winger and Carl RiccadonnaClick here for the full note.Continuing claims, which are reported with a one-week lag, jumped by 1.25 million to 3.03 million in the week ended March 21 -- the highest since 2013. That pushed the insured unemployment rate up to 2.1% from 1.2%.“When you look at the number last week and this week and take those together that’s roughly a 6 percentage-point rise in the April unemployment already, and we have a few more weeks to go for the April employment report,” Michael Gapen, chief U.S. economist at Barclays Plc, said on Bloomberg Radio. “It is likely the unemployment rate will be rising above where we saw it in ’08 and ’09 and may come as soon as that April employment report, if not certainly into the May report.”One caveat to the data: the department’s seasonal adjustments are likely overstating the level of claims, according to Jacob Oubina of RBC Capital Markets. On an unadjusted basis, there were 5.82 million applications last week following 2.92 million the prior week.State BreakdownCalifornia reported the most initial claims last week at an estimated 879,000 on an unadjusted basis, following 186,000 the prior week; it was also the biggest increase among all states and territoriesPennsylvania had an estimated total of about 406,000, following 377,000New York had 366,000Michigan reported 311,000Texas had about 276,000Ohio reported 272,000Florida had 227,000New Jersey had 206,000For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The U.K. Debt Management Office (DMO) has put out a signal of intent: More government bond supply is about to come thick and fast. The amount of gilts to be sold in April will be raised from 20 billion pounds ($22 billion) to 45 billion pounds.Boris Johnson’s government needs swift access to more funding to support the economy during the coronavirus shutdown. The good news is the bond market can handle it with ease, even in a market environment like this one. It helps enormously that the U.K. Treasury and the Bank of England are working in lockstep to deal with the financial side of the Covid-19 crisis. It makes sense to front-load the surge in Gilt issuance, as the BOE is already ramping up its Quantitative Easing bond-buying program by 200 billion pounds in an accelerated schedule. The net effect on investor demand should therefore be fairly muted, as the central bank will be in the market, hoovering up debt.Thankfully the DMO, which operates as the Treasury’s agent in the debt market, has vast experience in this area from the financial crisis a decade ago. Even after more than doubling the size of April’s gilts sale, the yield on the benchmark 10-year note was little changed at 31 basis points, not far from its record low yield of seven basis points seen on March 9.Britain’s coordinated response to the economic mayhem has been genuinely impressive, and groundbreaking. The DMO and the central bank are working together to smooth out what — according to analysts from Royal Bank of Canada — could be a doubling of overall debt sales across the whole of the upcoming financial year (April to April) to about 300 billion pounds. There will be 17 gilt auctions in April alone. This is a full-blown emergency response. It’s especially important to tread carefully with this almost unprecedented surge in supply with the most sensitive and illiquid longer maturity gilts. The DMO is limiting issuance of the longest-dated stuff to 12 billion pounds in April, which will be outweighed by planned BOE purchases of 21 billion pounds. The central bank has raised its total purchases of assets to nearly 5 billion pounds on three days per week and will probably buy more than 60 billions pound in April alone, easily exceeding new supply.The two entities are having to be careful not to get in each other’s (or investors’) way by making sure the BOE doesn’t snap up too many of the most in-demand bonds, and equally not to overload any sector.The BOE only buys from investment bank primary dealers in the secondary market rather than directly from the Treasury but the rules might be relaxed with so many auctions taking place, to avoid straining the primary dealers’ balance sheets. This could necessitate direct monetary financing , as former BOE deputy governor Charlie Bean said this week, meaning the BOE actually buys straight from the Treasury. With so many traders working from home, the risk of an operational glitch causing a failed auction is disproportionately high. The authorities need an insurance policy.Both debt issuance and QE buybacks will probably tail off later in the year and both can be altered together if the economic situation improves — or worsens. This is a make it up as you go along moment, but as long as the communication to the market remains as clear as it has been, any amendments shouldn’t cause problems. It helps that the average maturity of U.K. debt is significantly longer than all other major bond markets at 15 years, meaning there’s less urgency in refinancing debt. But having such joined-up institutions in the country’s hour of need is very fortunate.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Saudi Arabia held firm on its position in the price war with Russia, saying on Friday that the kingdom hasn’t had any contacts with Moscow about oil production cuts or enlarging the OPEC+ alliance.The comments from the Saudi Energy Ministry dispelled speculation that Riyadh and Moscow may be seeking diplomatic talks. They came hours after the Russian deputy oil minister Pavel Sorokin said in Moscow that OPEC+ alone couldn’t fix the market and “many more countries should participate in rebalancing.”The kingdom’s statement suggests that both Saudi Arabia and Russia are prepared for a long price war -- despite the howls of protest from other members of the Organization of Petroleum Exporting Countries. Their dispute threatens to turn the industry into a Darwinian survival of the fittest that could put both rivals and allies out of business, including U.S. shale oil producers.“There have been no contacts between Saudi Arabia and Russia energy ministers over any increase in the number of OPEC+ countries, nor any discussion of a joint agreement to balance oil markets,” the Saudi Ministry of Energy said in the statement.Brent crude dipped below $25 a barrel on Friday as the coronavirus pandemic threatens to wipe out a fifth of global oil demand. Crude prices have fallen more than 60% since the beginning of the year.Despite a strong appeal by the American government to Saudi Arabia to end the price war, Riyadh has so far kept firm on its position.Earlier this week, U.S. Secretary of State Michael Pompeo urged the kingdom to “rise to the occasion and reassure” energy markets at a time of economic uncertainty. He spoke with Saudi Crown Prince Mohammed bin Salman on the eve of a conference call between the leaders of the Group of 20 on the global pandemic. Yet the meeting ended on Thursday with a communique that made no reference to oil.Russia has been sending mixed messages. In addition to his comments about bringing more countries together to rebalance the market, Sorokin also said the current oil-market turmoil shows his country was right to propose maintaing the existing OPEC+ output cuts until June, instead of cutting deeper as the Saudis had proposed.In an interview later on Friday with RBC TV, Sorokin said crude at $25 a barrel is “unpleasant” for Russia, but isn’t a catastrophe.(Updates with comments from Sorokin in final paragraphs)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- For investors looking for deals in biotech, Wall Street firms like Baird advise “cash is king.”Losses in the U.S. stock market have decimated many portfolios. And while biotechnology companies haven’t been immune, they have withstood the losses better than the broader market. That may be because health-care stocks are defensive in nature, as the need for medicines isn’t usually buffeted by the winds of economic change. Early commercial and development-stage biotechs are a wholly different beast, however.Developing new drugs isn’t easy, and making bets in biotech comes with the risk of failure. Yet, the potential payoff for investors can also be enormous when a new medicine succeeds.Wall Street analysts have been quick to point out their favorites. Baird analysts led by Brian Skorney said they preferred “well-capitalized names” that had enough cash to get them beyond 2021 or those with “major data events this year that could support value creation.”Baird’s list of companies includes Neurocrine Biosciences Inc., Dicerna Pharmaceuticals Inc., Coherus Biosciences Inc., Arrowhead Pharmaceuticals Inc., Sarepta Therapeutics Inc. and Intercept Pharmaceuticals Inc.“Investors seemed largely positive on the outlook, particularly longer term, though still view several risks as underappreciated, particularly clinical trial conduct and regulatory timelines,” RBC analysts led by Brian Abrahams said Wednesday after an investor survey.More than half of the 88 investors RBC spoke to saw investment opportunities in the sector, though the bank cautioned that the generalists who are key to bolstering the sector might not return, “at least not until the dust settles.” Roughly $1.5 billion has left the iShares Nasdaq Biotechnology fund in the past year.“Our sense is that investors are sharpening their focus on the ability of promising pre-cash flow companies to weather the immediate crisis and potential prolonged economic downturn,” Abrahams wrote last week, saying that after a strong multi-year run in the secondary market most of the unprofitable companies the bank covered appeared to have enough cash to last the next 18 months and could cut operating expenses or form partnerships to keep afloat.Among companies RBC covers, only a handful were likely to need cash before the next 12 months were up. Those companies included Ovid Therapeutics Inc., Corbus Pharmaceuticals Holdings Inc. and BioCryst Pharmaceuticals Inc. Some of those companies will have to rely on upcoming clinical data catalysts. That could be problematic as drug trials are becoming more and more likely to get delayed.Takeovers, of course, are always at the top of investors’ minds, with an estimated $1 trillion in dry powder spread across the health-care sector. Still, deals will depend on how the pandemic and the ensuing financial mayhem resolves, RBC analysts said.Some stocks like Ideaya Biosciences Inc., Surface Oncology Inc., Jounce Therapeutics Inc. and Idera Pharmaceuticals Inc. have started trading below their cash position, Baird said. “While tough to know when sentiment might shift, we think the argument could be made that these companies are at least worth cash on hand,” the analysts said.Bloomberg screened for other biotech companies that are trading close to or below cash levels, based on recent trading and the last quarterly reported cash position. Many of the companies listed have had recent disappointing regulatory updates such as Lexicon Pharmaceuticals Inc. or failed trials like Cymabay Therapeutics Inc. weighing on their valuations.Those names include: Akorn Inc., Amag Pharmaceuticals Inc., AnaptysBio Inc, Cymabay Therapeutics Inc., Cellectis SA, CytomX Therapeutics Inc., Endo International Plc, Evolus Inc., GlycoMimetics Inc., Lexicon Pharmaceuticals Inc., Prothena Corp, Supernus Pharmaceuticals Inc., ResTORbio Inc., Voyager Therapeutics Inc., XBiotech Inc., Xeris Pharmaceuticals Inc.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Sterling is trading at its lowest level against the dollar since 1985. It is at a record low against the Swiss Franc. The drivers of the pound’s newfound and sudden decline are substantial.The currency fleetingly enjoyed some upward momentum after December’s decisive U.K. general election. Traders upped their exposure expecting a rally in the wake of this month’s budget. Those positions are doubtless being unwound.Of course, the drop is partly the flipside of dollars being in demand. The pound does not benefit from safe-haven status like the Swiss franc or Japanese yen. The U.K. economy is heavily weighted towards the service sector and the coronavirus pandemic could lead to a 10% fall in gross domestic product in the second quarter, according to economists at Jefferies.The Bank of England is also expected to cut interest rates down to 0.1% and restart quantitative easing via a potential 100 billion pounds ($118 billion) bond-buying program, according to economists at Royal Bank of Canada. This likely extra stimulus relative to what other central banks are doing further weighs on the British currency by reducing its attractiveness.With the additional 350 billion pounds of measures announced by the government on Tuesday, and a promise of more, there is clearly sizeable economic support on the way for British business. The U.K. policy response has been large and well coordinated. But until there is hard evidence the virus is abating there will be no concomitant consumer growth rebound which would help reverse sterling’s fall.In the background, Brexit uncertainty still looms. An extension to the transition period which ends this year would surely help the pound. For now Prime Minister Boris Johnson’s government appears resistant to its core agenda getting blown off course.There are signs that the cost of securing dollar funding is easing, as currency swap lines provided by the six major central banks, alongside separate action by the U.S. Federal Reserve, floods the market with in-demand greenbacks. If so, some of the impact on sterling could soften.But for now, the forces pushing a cheap currency cheaper are raging.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Tesla Inc.’s factory and other California operations will remain open in the midst of a San Francisco Bay Area lockdown, with Elon Musk telling employees he will keep going in to work despite the spread of the coronavirus.“I’d like to be super clear that if you feel the slightest bit ill or even uncomfortable, please do not feel obligated to come to work,” the chief executive officer wrote to staff in an email seen by Bloomberg News. “I will personally be at work, but that’s just me.”Musk’s email didn’t specifically address whether Tesla will keep open its lone U.S. auto plant in Fremont, California. But his head of North American human resources sent a follow-up email saying that vehicle manufacturing and energy infrastructure are deemed crucial sectors, and that the factory will remain in operation despite Bay Area orders for people to stay home to limit the spread of Covid-19.“Tesla and our supplier network will continue operations that directly support factory production, vehicle deliveries and service,” wrote Valerie Capers Workman, the company’s regional HR chief.Tesla representatives didn’t respond to requests for comment. Musk’s email did not say if workers who want to stay home will be paid.The spread of the coronavirus in the Bay Area prompted several counties to implement a shutdown this week, calling for people to shelter in place and shutter businesses unless they’re essential. Tesla is one of the largest employers in Alameda County, which reported 18 confirmed cases of Covid-19 as of Monday. The county’s public health department referred inquiries about Tesla to the company.Musk told his millions of Twitter followers on March 6 that “the coronavirus panic is dumb.” The electric car-maker has said little publicly about how it’s handling the virus, in contrast with other automakers and Silicon Valley’s leading technology companies.But Tesla has some experience to rely on: its Chinese factory near Shanghai was temporarily shuttered earlier this year and is now back online.“My frank opinion remains that the harm from the coronavirus panic far exceeds that of the virus itself,” Musk wrote in the email on Monday. “If there is a massive redirection of medical resources out of proportion to the danger, it will result in less available care to those with critical medical needs, which does not serve the greater good.”Tesla shares pared a decline of as much as 11% to trade down 2.5% as of 11:30 a.m. Tuesday in New York. The stock, which was up 119% for the year as of Feb. 19, erased its 2020 gains in early intraday trading.Some employees probably will opt to stay home and assembly lines likely will be slowed, Chris McNally, an analyst at Evercore ISI, wrote in a report. He assumes Tesla will lose output of as much as 10,000 vehicles and burn through up to $1.2 billion in the first quarter, more than double his original bear-case scenario.Tesla has not said how many cars it expects to produce and deliver in the first quarter. In January, the company said deliveries should “comfortably” exceed 500,000 units for the year. That number is now in question, with analysts at RBC Capital Markets saying Monday they expect the company to hand over 364,600 cars to customers, down slightly from its 2019 total.(Updates with Evercore estimates in penultimate paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Apple Inc. shares tumbled on Monday and could fall further as the company’s decision to close all of its retail stores outside China due to the coronavirus “marks an escalation in the impact of COVID-19 on both Apple and our coverage more broadly,” according to Credit Suisse.The stock declined as much as 14% in their biggest one-day intraday percentage drop since May 2010, though it last traded down 8.3%. At current levels, the stock has lost more than a fifth of its value from a record hit just last month.Despite the scale of the recent sell-off, “uncertainty remains too high for us to step in at these levels,” wrote Credit Suisse analyst Matthew Cabral, who reiterated a neutral rating and $290 price target. He cited “both the possibility of closures extending beyond two weeks,” and the risk of a broader slowdown in consumer spending as factors behind his cautious near-term view.Last month, Apple warned the outbreak would cause it to miss its sales targets this quarter.Wall Street has been struggling to evaluate the impact the outbreak will have on Apple and its share price. According to data compiled by Bloomberg, consensus estimates for Apple’s second-quarter earnings have dropped by 13% over the past month; revenue expectations are down 7.2% over the same period.At least three firms cut their price targets on Monday, with Goldman Sachs lowering its view to $265 from $300. The firm wrote that the current environment “warrants increased caution regarding global demand outside of China.” It added that it expects “incremental demand weakness in large global markets” through mid-May and noted this could be an optimistic view if the impact to demand globally proves to be as severe as in China.CFRA lowered its target to $320 from $350, writing that the retail stores “are at risk of staying closed longer than stated,” though the impact should be “largely transitory.” Analyst Angelo Zino affirmed a buy rating on the shares.RBC Capital Markets lowered its target to $345 from $358, though it recommended adding to positions. The “near-term choppiness presents opportunity for increasing exposure” to the iPhone maker as the long-term bull case remains intact. A 5G iPhone remains “a sizable opportunity for both higher unit sales and higher selling prices.”Over the weekend, Loup Ventures estimated that the move to close stores could reduce revenue by as much as 2% in the current quarter. Last week, Cowen warned that the stock could face additional downside risk of 15% to 20%, based on its valuation and a worst-case scenario for revenue. However, Wells Fargo upgraded its view on the stock, citing a “compelling risk/reward for long-term patient investors.”(Adds comments from Goldman Sachs and CFRA in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The event streaming platform Confluent Inc. has held talks with potential investors about a new funding round, according to people with knowledge of the matter.Confluent is seeking to raise about $200 million to $300 million, said one of the people, who asked not to be identified because the discussions are private. The round could value Confluent at about $5 billion, another person said.The company raised $125 million in a series D fundraising in early 2019. That round valued the company at $2.5 billion.Confluent, based in Mountain View, California, is tapping the private market ahead of a possible initial public offering, the people said.IPOs of software companies have fared well in the past year. Globally, shares of those companies have gained 58% overall based on a weighted average from their offer prices, according to data compiled by Bloomberg. That compares with an increase of 20% for all IPOs.Confluent’s annual recurring revenue is growing at a rate of almost 100% a year, it said in a statement. It counts Royal Bank of Canada, Ticketmaster Entertainment Inc. and TiVo Corp. among customers, its website shows.Representatives for Confluent didn’t respond to requests for comment on the fundraising details.Confluent was started by the early developers of streaming processing software Apache Kafka. Its backers include Benchmark, Index Ventures and Sequoia Capital.(Updates with details on starting Apache Kafka in last paragraph)To contact the reporters on this story: Crystal Tse in New York at firstname.lastname@example.org;Gillian Tan in New York at email@example.comTo contact the editors responsible for this story: Liana Baker at firstname.lastname@example.org, ;Alan Goldstein at email@example.com, Elizabeth Fournier, Michael HythaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Canadian policy makers are stepping up efforts to bolster confidence in the nation’s economy, including the central bank sending cash into funding markets and suggestions from Justin Trudeau’s government that fiscal stimulus could soon follow.The Bank of Canada said Thursday after the closing bell that it plans to inject billions of dollars into markets to shore up stability, just eight days after it slashed interest rates by half a percentage point.Two hours later, Finance Minister Bill Morneau held an impromptu news conference to underscore the government’s urgency in dealing with the fallout from the coronavirus pandemic.“What we’re going to do is to use our fiscal strength to make sure our economy stays strong in the face of this uncertainty,” Morneau said, without providing specifics.The additional steps followed the biggest plunge in Canadian stocks prices in eight decades on Thursday as concern mounted that a global recession is at hand. Several of Canada’s largest banks are predicting a technical recession this year as the country takes a double hit from falling oil prices and virus-related stoppages. In a report released Friday, Royal Bank of Canada predicted Canada will undergo a contraction in the second and third quarters of 2020, before rebounding in the fourth quarter.Tentative StepsWhile the prime minister himself is in isolation after his wife tested positive for Covid-19, Trudeau’s government has so far taken a cautious approach. It has promised just C$1.1 billion ($790 million) in additional funding to respond to the virus, but it’s hinting it may change tack.On Thursday, Morneau confirmed the government has been forced to redo its revenue forecasts for the 2020 budget he plans to release on March 20. He also said he’s speaking with global counterparts, including Treasury Secretary Steven Mnuchin, and the government was busy all day discussing its response to the deteriorating conditions.“The prime minister today spent significant time with myself and with the broader team to think about how we make sure to get the economic decisions right,” Morneau said. Trudeau spoke with U.S. President Donald Trump and U.K. Prime Minister Boris Johnson, according to the prime minister’s office.Also Thursday, the U.S. Federal Reserve took aggressive steps to ease what it called “temporary disruptions,” promising a cumulative $5 trillion in liquidity and widening its purchases of U.S. government bonds.The Bank of Canada cut its benchmark interest rate to 1.25% on March 4. Since then, oil prices have plunged, adding another shock to an already faltering economy and raising the likelihood of more rate cuts. Swaps trading suggests investors are expecting another 75 basis points in cuts by mid April.On Thursday, the bank said it will “proactively” support interbank funding by increasing the frequency with which it purchases Canadian government bonds to weekly, from every two weeks, and widening the terms to include six-month and 12-month operations. It will also expand the scope of a bond buyback program.(Updates with bank forecasts in fourth paragraph)\--With assistance from Divya Balji, Michael Bellusci and Erik Hertzberg.To contact the reporter on this story: Shelly Hagan in ottawa at firstname.lastname@example.orgTo contact the editors responsible for this story: Theophilos Argitis at email@example.com, Stephen Wicary, Chris FournierFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Bank of America Corp. backed out of financing the biggest take-private of a U.K. company this year, in a sign lenders are getting more wary of extending credit as market volatility surges, people familiar with the matter said. The bank had been in talks to finance private equity firm Clayton Dubilier & Rice’s 400 million-pound ($525 million) buyout of public relations firm Huntsworth Plc, the people said. It pulled out in the final days leading up to last week’s deal announcement, after its credit committee refused to sign off on the transaction, the people said, asking not to be identified because the information is private.Royal Bank of Canada jumped in and provided a $295 million term loan facility and 35 million-pound revolving credit facility to fund the transaction, according to a regulatory filing. Bank of America, RBC and boutique firm Houlihan Lokey Inc. advised CD&R on the purchase of Huntsworth, which owns agencies including Citigate Dewe Rogerson and Grayling.Large Wall Street firms often win deal mandates by offering to provide loans for a deal, making it relatively unusual for them to advise on a transaction without committing funds from their balance sheet.Bank of America worked on the biggest private equity buyout of a U.K. company last year, advising on Blackstone Group Inc.’s purchase of $6 billion theme-park operator Merlin Entertainments Plc. The lender also worked with Apax Partners and Warburg Pincus on their $3.4 billion acquisition of satellite operator Inmarsat Plc.In both cases, the bank lent money to the buyer groups in addition to its advisory work. It also helped finance TDR Capital’s $2.4 billion purchase of U.K. online car seller BCA Marketplace Plc last year. While Bank of America continues to lend for major transactions, it’s become more selective amid the market volatility, the people said. It’s still possible the firm will participate in the financing at a later stage, when the debt is syndicated out to a wider group of banks.Representatives for Bank of America, CD&R and Huntsworth declined to comment.To contact the reporters on this story: David Hellier in London at firstname.lastname@example.org;Dinesh Nair in London at email@example.comTo contact the editors responsible for this story: Ben Scent at firstname.lastname@example.org, Amy ThomsonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Canada's biggest banks said on Monday they are moving some traders to alternate locations, joining global banks splitting up operations to reduce disruptions due to the coronavirus outbreak. Bank of Montreal , Canadian Imperial Bank of Commerce , Toronto-Dominion Bank and Royal Bank of Canada all told Reuters they are splitting their trading operations in major centres between multiple sites.
(Bloomberg) -- The two new leaders of the British economy need to hit the ground running and in lockstep.Chancellor of the Exchequer Rishi Sunak is less than a month into the job. Andrew Bailey doesn’t even become Bank of England governor until next week. But both are being thrown straight into a battle to protect the economy.The coronavirus threat has already meant emergency meetings, warnings of economic pain and hints of crisis-era policy measures. Sunak, 39, has had to retool his Budget on Wednesday to focus on the virus response, something that may include joint action with the BOE.Possible steps include purely fiscal ones like increasing spending on the health service and support for businesses. The Treasury and Bank of England could unite to guarantee bank lending, or the latter could even announce an emergency interest-rate cut. A successful joint operation could be a model for other governments and central banks.They “face a baptism of fire as they take up their new roles,” said Elizabeth Martins, senior economist at HSBC Holdings Plc. “While both might have intended to proceed with caution, the global outbreak of COVID-19 and the consequences for markets mean now is not the time to hold back.”Across the world, the outbreak has shut factories, stores and offices, and forced entire regions into lockdown. Troubled U.K. airline Flybe collapsed last week. Overnight, Germany eased rules on companies applying for aid to offset wages when they are forced to temporarily halt work.But Monday saw markets in a panic, with European equities and U.S. futures plunging. Oil prices crashed, and the yields on U.K. benchmark bonds fell below zero for the first time.Weak PositionEven before the full scale of the virus became apparent, economists were forecasting U.K. growth of just 1% this year, which would be the worst performance in more than a decade. Also rumbling in the background are Britain’s trade negotiations with the European Union, still a source of huge uncertainty.Sunak will present his Budget facing the most serious threat to the economy since the financial crisis a decade ago. According to the Sunday Times, ministers have warned local authorities to prepare for a potential death toll as high as 100,000.In interviews on Sunday, Sunak pledged to respond “at scale to whatever scenario comes our way” and indicated that fiscal rules designed to keep spending in check could be relaxed.“This could be a challenging period for businesses,” he said on Sky News.As the front line in the battle against the virus, the National Health Service would receive the resources it needs, he told BBC Television. He hinted that companies facing cash-flow problems would receive forbearance on their tax bills to help them “bridge through a difficult time.” There could also be help for people on flexible contracts who are forced to stay away.When Bailey, 60, takes over from Mark Carney in a week, he could be under pressure to cut rates quickly if such a step has not already been taken. The BOE’s next scheduled Monetary Policy Committee announcement is on March 26.Speaking to lawmakers last week, Bailey noted that there’s room to move. But not much given the benchmark is just 0.75%.He also suggested that collective action between the central bank and Treasury may be needed to offset the impact on companies’ cashflow. U.K. surveys already point to delivery delays and cancellations.Other BOE options include relaunching a scheme to encourage banks to lend and reversing a hike to the amount of capital banks must hold.“A rate cut alone is perhaps not going to be enough,” Martins said. “Assistance to businesses is going to be key. That might mean getting loans to companies where actually maybe some of the risk is on the government, as opposed to the banks.”The Budget was originally intended to be a showcase for Prime Minister Boris Johnson’s plan for investment to raise the country’s long-term growth potential. Now, the virus response is taking priority.Both Sunak and Bailey are newcomers to their roles, albeit with vastly different degrees of experience.Bailey, 60, a former BOE Deputy Governor, helped shaped the U.K.’s response to the financial crisis, though he never been directly involved in setting monetary policy. Most recently, he’s run the country’s banking regulator.Sunak only became an MP in 2015 and was elevated to run the Treasury only after the resignation of Sajid Javid. He does have experience in finance including a stint at Goldman Sachs Group Inc.The lack of time in their new posts and the fact that Johnson has yet to reach his first anniversary as prime minister contrasts with the U.K.’s leadership during the financial crisis.Then, the country was led by Gordon Brown, who’d spent more than a decade as chancellor and then prime minister. BOE Governor Mervyn King was well-established in Threadneedle Street, having been in charge for five years, and been deputy governor before that.While Bailey won’t begin his job until March 16, he’s already in contact with the chancellor. Last Thursday, Sunak, Johnson and Carney also held a rare joint meeting in the prime minister’s office.Most policy makers “have been very keen to point out that this is not a task for monetary policy acting on its own,” said Cathal Kennedy, an economist at RBC in London. “This is a task which the fiscal authorities have to take a certain amount of responsibility for.”(Updates market moves in seventh paragraph)\--With assistance from Andrew Atkinson.To contact the reporters on this story: Jill Ward in London at email@example.com;David Goodman in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Fergal O'Brien at email@example.com, Catherine Bosley, Alaa ShahineFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- With the annual Geneva car show canceled for the first time since the World War II era, automakers are going virtual in a bid to wow the hordes who would otherwise descend on the Swiss city to get a closer look at the latest models.BMW AG will live stream the debut of its i4 battery-car concept on Tuesday, while Mercedes-Benz’s popular E-Class sedan and Audi’s A3 sportback and all-electric E-Tron S will also be touted in digital displays.Even as manufacturers have been pulling back from auto shows in recent years, the gatherings still attract media, suppliers and aficionados eager to run their hands over the latest upholstery trend or settle in behind the wheels of new vehicles.Audi parent Volkswagen AG used last year’s Frankfurt event to unveil its ID.3 electric car, and to spread the message that the world’s largest auto manufacturer was moving on after the diesel-cheating crisis and honing its image as a leader in the transition to battery powered-cars.The Geneva showcase, which was scheduled to start this week, was called off due to the rapid spread of the coronavirus in Europe. Carmakers were forced into contingency planning, with online events emerging as a way to salvage part of their marketing efforts. Scrapping the show will cost a few million euros, PSA Chief Executive Officer Carlos Tavares said in an LCI television interview Sunday, adding that the company’s Citroen brand amplified its DS9 launch on social media.BMW was aiming to make a big splash for its i4, a car meant to help reassert the German company’s momentum in electric vehicles. The group is sticking to the same program on Tuesday, albeit with a “digital press conference” by Chief Executive Officer Oliver Zipse, who will speak from BMW’s Munich headquarters.Even before being canceled, the Geneva show -- a luxury-car expo that’s typically dominated by glitzy rides from the likes of Ferrari NV, Porsche and Mercedes’s AMG unit -- was in danger of being overshadowed by industry woes.The virus outbreak, which has depressed car sales in China and disrupted supplier lines, adds to the challenges. Trade wars and tariffs, and an economic slowdown sent sales into a tailspin last year in China, the world’s largest auto market and a key country for exports for the three big German manufacturers.‘High Risks’At home, European automakers are saddled with tough emissions rules that have forced them to speed up the expensive roll-out of new electric vehicles. Then there’s the lingering tension with the U.S. over trade policy that could bring additional tariffs.“The state of the global economy and the situation of the auto industry are marked by high risks,” Ferdinand Dudenhoeffer, a researcher at the University of St. Gallen, Switzerland, said before the auto show was called off.Analysts have started to factor in the impact from the latest shock. RBC Capital Markets expects European auto production to drop as much as 4% this year, while LMC Automotive analysts have penciled in as much as a 4.4% global decline in auto sales in a worst-case scenario. The German auto industry’s demand index plunged in February, according to the Ifo institute.Read more: German Auto Industry Bracing for Slump as Demand Dips, Ifo SaysSneak PreviewThe broader uncertainties have made it even more crucial for automakers to cut through the gloom and entice potential car buyers.Polestar, the luxury electric-car venture of Volvo Cars and its Chinese owner Geely Group, last week held a live video-conference to draw attention to its Precept concept vehicle, in what was billed as a sneak preview ahead of Geneva. The move generated media attention ahead of the formal event planned for Tuesday, when Polestar would likely have been crowded out by bigger carmakers such as BMW and Daimler.BMW’s i4, targeted for release in 2021, is built on a new platform that can underpin electric cars, hybrids or combustion vehicles. The flexible architecture will be used to make a battery version of the popular X3 SUV this year, as well as the futuristic iNext. It gives BMW a weapon to fight back against Tesla Inc. after the U.S. upstart ate into its market share.Lost AllureAudi’s E-tron S similarly is aimed at scaling up the VW premium unit’s Tesla-fighting capabilities as Elon Musk prepares to open a gigafactory near Berlin. The Mercedes-Benz E-Class is a critical model for the carmaker in terms of global sales volumes and revenue per vehicle.Manufacturers scouring their books for ways to cut costs and better target marketing had already scaled back spending on Geneva and other industry events, which have subsequently lost some of their allure.This year at Geneva, for example, VW had done away with hosting an evening reception it traditionally used to kick off the media days preceding the opening of the trade fair to the public. This pressure is unlikely to ease anytime soon.“The current economic weakness in important markets amplifies the cost pressure and the trend toward consolidation,” said Stefan Bratzel, a researcher at the Center of Automotive Management near Cologne, Germany.(Adds comment from PSA CEO in fifth paragraph.)To contact the reporters on this story: Christoph Rauwald in Frankfurt at firstname.lastname@example.org;Oliver Sachgau in Munich at email@example.comTo contact the editors responsible for this story: Anthony Palazzo at firstname.lastname@example.org, Tara Patel, Andrew NoëlFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- On Feb. 25 at 3 p.m. New York time, Federal Reserve Vice Chair Richard Clarida said it was “still too soon” to say whether the spreading coronavirus would result in a material change to the central bank’s economic outlook. For months, that has been the lofty bar for officials to shift from their current stance on monetary policy. At that moment, the S&P 500 Index was at 3,155, down about 7% from its record set the week before, and the benchmark 10-year Treasury yield was near a record low at 1.34%. Suffice it to say, the financial markets have only worsened since then. Stocks entered a correction at the fastest pace ever by falling more than 10% from their Feb. 19 peak, while 10-year yields dipped below 1.25% and two-year yields hurtled toward 1% in the steepest weekly decline since the financial crisis. Remember, the current fed funds rate is well above those, at 1.5% to 1.75%. Simply put, in a matter of just a few days, the bond market has priced in a tremendous amount of action from the Fed, in stark contrast to Clarida’s comments and those more recently from Chicago Fed President Charles Evans, who on Thursday called it “premature” to think about changing monetary policy.In one example spotted by Bloomberg News’s Edward Bolingbroke, some bond traders are placing huge bets that the fed funds rate will approach the zero lower bound in just the next few months. While short-term rates markets were already pricing in close to two quarter-point interest-rate cuts from the central bank by mid-year, this kind of wager, combined with growing calls for immediate central-bank support, puts into play the idea that the Fed will cut its lending benchmark by 50 basis points in one fell swoop.That’s a remarkable stance to take, given recent Fed commentary and the broad acknowledgment that a coronavirus outbreak simply can’t be cured by lower interest rates. Bond traders, effectively, are speculating that the Fed won’t replicate its “mid-cycle adjustment” strategy of a few consecutive quarter-point rate cuts given the recent market turmoil. Rather, it’s going to be an all-or-nothing event, starting with its March 18 decision.“If risk markets do not stabilize almost immediately, the Fed may attempt to ease market pressure by taking a softer stance in public statements on policy,” Ward McCarthy and Thomas Simons at Jefferies LLC wrote on Thursday. “If that does not work, it is likely that the Fed will act by cutting the fed funds rate by 50 bps.”Meanwhile, in a sign of how accustomed the financial markets have become to central banks coming to the rescue, “many folks are asking about inter-meeting cuts with the Fed,” said Russ Certo at Brean Capital LLC. It’s somewhat ridiculous to think that would actually happen, though perhaps it was more a question of whether that sort of action is unprecedented. It’s not.Rising above all the market carnage of the past week, the reality is the Fed’s March decision will be a close call. For one thing, officials have only one more week to convey their outlook to investors before their self-imposed “blackout” period begins. As it stands now, New York Fed President John Williams will have the last word on March 5. If central bankers were of the mind to cut interest rates next month — and certainly by any more than a quarter-point — expect more speakers to make last-minute appearances.Ordinarily, I’d take a firm stance that the bond market is expecting far too much from the Fed and that policy makers would be wise to hold interest rates steady. After all, it’s not as if borrowing costs are punishing U.S. companies, local governments or individuals. Quite the opposite. The yield on the Bloomberg Barclays U.S. Corporate Bond Index fell to a record low 2.45% this week, yields on top-rated 10-year municipal debt fell below 1% for the first time, and it’s probably just a matter of time before 30-year mortgage rates reach a new low. However, I also thought the Fed would remain on pause and let the U.S.-China trade war run its course last year. Instead, Chair Jerome Powell embarked on back-to-back-to-back interest-rate cuts. The difference between benchmark Treasury yields and the upper bound of the fed funds target range has reached extreme levels similar to the period from early June through mid-September of last year. That was precisely when the Fed gave in to traders’ demands for easier policy. Because of that precedent, I wouldn’t be surprised if the Fed reduced its short-term rate by 25 basis points next month. An even bigger cut seems unlikely, barring a complete collapse in the stock market. It’s reasonable to assume that the coronavirus outbreak and the various efforts to contain it will cause economic activity around the world to worsen in the coming months and potentially in the U.S. as well.My hunch is still that the Fed would prefer to hold steady in March and use the statement and Powell’s press conference to indicate that policy makers stand ready to act in April or June if the impact of the coronavirus shows up in economic data. For that reason, I’d expect coming speakers to mimic Clarida’s words, with Williams or another official swooping in at week’s end if it’s clear the bond market is priced for a cut and financial conditions don’t improve. It’s notable that on Thursday, European Central Bank President Christine Lagarde said the coronavirus outbreak was not yet at the stage where it would require a monetary policy response. While the ECB clearly has less room to maneuver than the Fed, its next decision is even sooner, on March 12, and the virus has caused pockets of havoc in the region, including Milan, Italy’s financial hub. If there’s a coordinated global monetary policy response in the offing, central bank leaders are doing a good job of hiding it.All told, I can’t help but be of the mind that the Fed should fight the impulse to cut interest rates after the stock market’s swoon. Tom Porcelli at RBC Capital Markets summed it up well:“Markets are calling for policy prescriptions that address demand shocks to solve what is a potential transitory supply shock, driven by pandemic fears. Even if it gets worse, unless you all of a sudden think we are looking at a 1918 Spanish Flu-like event, this too shall pass folks. And what do rate cuts at the front-end do exactly to shift the trajectory of the core short-term problems stemming from COVID-19? It boggles the mind.”However, traders place their bets based on expectations for what the Fed will do, not should do. And they’ve made up their minds that the central bank has no choice but to ease policy — definitely by its April meeting and quite possibly in March. Headlines like “Bank of America Says World Economy Weakest Since 2009” only add to their case.Will Fed officials stand up for themselves in the face of these massive trades and gloomy outlooks? History suggests not.To contact the author of this story: Brian Chappatta at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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"We want to broaden the product and service offering that we have (in the U.S.), similar to what we have in Canada," CFO Rod Bolger said. RBC's consumer bank would initially focus on high-net-worth clients in U.S. but eventually target the "mass affluent" as well, he said. With this strategy, RBC is joining U.S. rivals including Bank of America, which are expanding their private banking arms.