|Bid||232.25 x 1300|
|Ask||232.34 x 800|
|Day's range||231.25 - 236.75|
|52-week range||180.73 - 250.46|
|Beta (5Y monthly)||1.31|
|PE ratio (TTM)||11.04|
|Earnings date||12 Apr 2020 - 16 Apr 2020|
|Forward dividend & yield||5.00 (2.11%)|
|Ex-dividend date||27 Feb 2020|
|1y target est||268.11|
(Bloomberg) -- The head of the World Health Organization called for nations around the globe to boost funding to fight the coronavirus while the outbreak is still mostly confined to China, and the airline industry forecast the first annual decline in global passenger demand in more than decade. Almost 60 police officers in Hong Kong are being quarantined after a colleague was infected.Hubei, the province at the center of the outbreak, reported a sharp drop in new cases, but another change in the way China diagnoses infections called into question the reliability of the data.The global death toll climbed to 2,129 and confirmed cases reached 75,730. Results from two early trials of treatments are expected in three weeks, the WHO said.The rise in cases outside China hurt markets. The yuan fell to the weakest this year versus the dollar, European and U.S. stocks dropped as investors mulled how the spread of the virus will affect corporate earnings. Goldman Sachs said a near-term correction “is looking much more probable.”Key DevelopmentsChina death toll rises to 2,118, with cases at 74,576Hubei adds 108 deaths, new cases up by 349; 1,209 dischargedInvestor anxiety rises as virus spreads outside ChinaJapan is becoming a new hotbed of casesClick VRUS on the terminal for news and data on the novel coronavirus and here for maps and charts. For analysis of the impact from Bloomberg Economics, click here.Fifty-Nine Hong Kong Police Are Quarantined (1:24 p.m.)A group of 59 Hong Kong police officers are being quarantined after a fellow officer preliminarily tested positive for the virus, the city’s police force said in a statement on Facebook.Two days before being tested because he was feeling sick, the police officer had a meal with the 59 other officers at a restaurant in Hong Kong.“After learning of the incident, the police have immediately arranged that all colleagues immediately stop police work, avoid contact with the public, and go home to wait for quarantine arrangements,” the department said in the statement.The officer works with a riot team in Hong Kong’s Eastern Police District. Members of the riot control unit that the sick officer is part of aren’t being considered close contacts subject to quarantine, the department said. Drug-Trial Results Expected in Three Weeks, WHO Says (11:53 a.m. NY)Preliminary results from two clinical trials of treatments prioritized by the World Health Organization are expected in three weeks, Director-General Tedros Adhanom Ghebreyesus told reporters in Geneva Thursday.One of the trials is for a pill combining the anti-retroviral medicines lopinavir and ritonavir, a brand-name combination of which is sold by AbbVie Inc. The second trial is testing the experimental injected drug remdesivir, which is being developed by Gilead Sciences Inc.The trials are being run in China, where health officials are seeking ways to treat patients infected with the coronavirus using existing and experimental therapies.Airlines Expect First Global Traffic Drop Since 2003 (11:20 a.m. NY)The airline industry expects the first annual decline in global passenger demand in 11 years, after tallying up the initial impact of the thousands of flights canceled because of the coronavirus outbreak in China.The estimate shaves about 4.7 percentage points off of a passenger-growth forecast issued just two months ago, with almost all of the impact in the Asia-Pacific region, according to the International Air Transport Association. That may be conservative: The projections assume the loss of demand will be limited to markets linked to China.The drop would be the first overall decline since the financial crisis of 2008-2009. Global passenger demand is now seen contracting by 0.6% this year, compared with a December forecast for 4.1% growth, IATA said.WHO Says More Funding Needed to Fight Virus (10:50 a.m. NY)The head of the World Health Organization urged countries to boost funding to fight the spread of the novel coronavirus, saying that the response to its call for $675 million has been limited.“This is the time to attack the virus while it is manageable,” Director-General Tedros Adhanom Ghebreyesus said at a briefing in Geneva Thursday.Tedros said he’s surprised donations have been low and that countries aren’t treating the outbreak seriously enough. If the response isn’t strong now, the spread outside of China, which so far has been manageable, may become a wider threat, he said. “The virus is very dangerous, and it’s public enemy No. 1.”Foxconn, Norwegian Cruise Warns on Virus Impact (7:57 a.m. NY)Apple Inc. supplier Foxconn said the virus will impact 2020 revenue. Separately, Norwegian Cruise Line said the outbreak has caused it to cancel, modify or redeploy 40 Asia voyages, hurting projected earnings. Earlier, Air France-KLM slumped after it said the outbreak will wipe as much as $216 million from earnings and Qantas Airways Ltd. said it is slashing capacity on international flights in Asia.Lenovo Group Ltd. warned of “short-term volatility and challenges” because of disruptions at its suppliers, but said most of its plants had re-started operations and demand should rebound once the outbreak stabilizes. A.P. Moller-Maersk A/S is also positioning itself for a “strong rebound” based on an expectation that the fallout of the coronavirus on global trade may soon peak.Goldman Sees High Risk of Stock Correction (7:36 a.m. NY)Investors may be underestimating the negative impact of the coronavirus on corporate earnings, which poses a threat to the stock market rally, according to Goldman Sachs Group Inc.’s chief equity strategist.While coronavirus fears triggered a worldwide sell-off in January, those losses proved short-lived. Global equities are trading near record highs on optimism that the impact from the epidemic will be limited and China will step up support for its economy. Goldman’s Peter Oppenheimer cautioned against complacency.“While a sustained bear market does not look likely, a near-term correction is looking much more probable,” Oppenheimer, chief global equity strategist at Goldman, wrote in a note.China Urges More Production Resumption (6:56 a.m. NY)Local governments should seek to increase the rate of resumed production, China Central Television reported, citing Premier Li Keqiang.Deutsche Bank Singapore Employee Infected (6:42 a.m. NY)An employee at Deutsche Bank’s Singapore office, located at One Raffles Quay, has tested positive for the novel coronavirus. The bank said it deep cleaned the office, and completed contact tracing when first notified.Baselworld Watch Fair Still On (6:52 p.m. HK)The watch industry trade fair will go ahead as scheduled in late April. Organizers are in contact with health authorities and will take precautions including more frequent cleaning and disinfecting.Hubei Asks Firms Not to Resume Work Before March 11 (6:14 p.m. HK)Producers of drugs, medical equipment and protective items are not subject to the requirement, according to a statement from the Hubei provincial government.All Westerdam Crew Tested Negative for Coronavirus (6:13 p.m. HK)The Cambodian Ministry of Health confirmed all 747 crew on board the Westerdam ship have tested negative for the coronavirus, according to an emailed statement from Holland America Line which owns the vessel.Separately, Dream Cruises said it will suspend the Genting Dream Cruise from Singapore until March 27.China Considers Prolonging Electric-Car Subsidies (6:10 p.m. HK)Beijing may extend subsidies for electric-vehicle purchases beyond this year in an effort to revive sales in the world’s biggest market, people familiar with the matter said. The move could add to state aid being considered in wake of virus.Policy makers have been discussing the possibility after China’s first annual decline in sales of new energy vehicles, according to the people. Though the talks predate the emergence of the coronavirus as a global threat, the outbreak has piled more pressure on the auto industry by causing production halts and keeping people away from showrooms.Iran Reports Three Confirmed Cases After Two Deaths (5:18 p.m HK)Iran reported three more cases, a day after confirming two people had died from the outbreak. Two residents in Qom and one in Arak and have been hospitalized, state-run Iranian Students News Agency said, citing the country’s health ministry.China Says 29 Foreigners Infected (4:51 p.m. HK)Ten people were diagnosed in the Hubei province, Ding Xiangyang, deputy secretary-general at the State Council said. Two foreign nationals have died and 18 have been discharged.Indonesia Cuts Rates, Lowers Growth Forecast (4:30 p.m. HK)Indonesia’s central bank cut its benchmark interest rate after a three-month pause, and lowered the growth forecast as the spread of the coronavirus threatens the outlook for Southeast Asia’s biggest economy.South Korea Reports First Death (4:24 p.m. HK)South Korea reported its first fatality from the coronavirus as confirmed cases more than tripled within a day. The bulk of the increase is tied to a cluster from a religious sect and the outbreak has raised renewed concerns about the virus in the country after a lull in reported cases last week.South Korea’s Centers for Disease Control and Prevention said the number of domestic cases had reached 104. The CDC didn’t provide many details on the fatality but gave its location as a hospital near Daegu, one of the country’s biggest cities where infections have been found among members of the Temple of the Tabernacle of the Testimony, formerly known as Shincheonji Church of Jesus.The center said at least 28 new cases confirmed on Thursday involved those who attended church services with a person confirmed with the virus earlier this week. The pastor told JoongAng Ilbo newspaper in an interview that some 1,000 people attended the same service.Hubei Region Sells First Bonds Since Lockdown Began (3:46 p.m. HK)The Chinese province at the center of the outbreak sold about 10 billion yuan ($1.4 billion) of bonds in its first public fundraising effort since Beijing quarantined its capital.Japan Confirms Two From Cruise Died From Virus (2:14 p.m. HK)Japan confirmed two people who were on the cruise ship off Yokohama died from the novel coronavirus. The fatalities were a man and woman, both Japanese nationals in their 80s, who had existing medical conditions, NHK reported.The cruise ship has the most infections anywhere outside China, with more than 600 confirmed cases. Following 14 days of quarantine, Japan on Wednesday allowed passengers to start disembarking from the Diamond Princess liner, despite worries the country hasn’t done enough to prevent the spread of disease from the vessel.China Premier Says Don’t Halt Grain Planting (2:10 p.m. HK)Chinese Premier Li Keqiang told local governments to make sure farmers don’t miss the crucial grain planting season during a critical time for controlling the spread of coronavirus. Government officials are worried that the epidemic could spread to rural areas, where medical facilities are less developed than urban locales.“If we miss the planting season, we’ll be unable to make up for it, which will have an impact on the economic foundation and social stability of the whole year,” Li said in a release posted on the government’s website. “We are holding the rice bowl for 1.4 billion people in our own hands.”Fecal Transmission May Be Behind Virus’s Rapid Spread (12:37 p.m. HK)The novel coronavirus is shed in the feces of infected people, which may help explain why it’s spread so fast, according to Chinese researchers. The finding of live virus particles in stool specimens indicates a fecal-oral route for coronavirus, which may be why it’s caused outbreaks on cruise ships with an intensity often seen with gastro-causing norovirus, which also spreads along that pathway.Hong Kong Extends Work-From-Home for Civil Servants (12:23 p.m. HK)Hong Kong will extend work-from-home arrangements for civil servants to March 1 to reduce social contacts and the risk of spread of novel coronavirus in the community, according to an official statement. The government previously announced it would extend the work-from-home arrangement for civil servants to Feb. 23.U.S. Condemns China’s Expulsion of WSJ Reporters (11:04 a.m. HK)U.S. Secretary of State Mike Pompeo criticized China’s move to revoke the press credentials of three Wall Street Journal reporters over a controversial headline, a decision that comes as Beijing continues to lash out at countries that fault its handling of the deadly coronavirus outbreak.China Loan Rate Drops After Central Bank Eases Policy (9:48 a.m. HK)China’s banks lowered the benchmark borrowing costs for new corporate and household loans after Beijing slashed a range of policy rates this month to blunt the economic impact of a deadly virus outbreak. Earlier this month, the central bank cut the rates on its short-term funds and one-year loans to commercial lenders.Hubei Adds Fewer New Cases (7:50 a.m. HK)China’s Hubei province reported 349 additional confirmed cases for Feb. 19, a sharp drop from almost 1,700 the previous day. No explanation was given for the decline, although it came a day after national guidelines advised the province to only report two numbers in its overall count: confirmed cases and suspected cases. Prior to that, the province reported whether cases were confirmed via CT scans, or testing kits.China has faced questions about the transparency of its data as it repeatedly adjusts how it reports coronavirus cases. Last week, a shift in methods resulted in a surge of almost 15,000 new Hubei cases.(An earlier version of this story was corrected after an airline industry group revised its statement to say it would be first drop in travel since 2009, not 2003, in first paragraph and third paragraph of 11:20 a.m. update)\--With assistance from Michelle Fay Cortez, Jason Gale, Peter Pae, Jihye Lee and Siddharth Dahiya.To contact Bloomberg News staff for this story: Thomas Mulier in Geneva at email@example.comTo contact the editors responsible for this story: Adveith Nair at firstname.lastname@example.org;Jeff Sutherland at email@example.comFor 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) -- Morgan Stanley is trading in its white shoes for Converse Chuck Taylors.That’s the initial impression on Wall Street at least after the bank announced Thursday that it had agreed to buy discount brokerage E*Trade Financial Corp. for $13 billion in an all-stock takeover, the biggest acquisition by a large U.S. bank since the financial crisis. It would add E*Trade’s $360 billion of client assets to Morgan Stanley’s $2.7 trillion and instantly give the bank more direct access to consumers through digital banking and brokerage services. While the two brands would remain distinct under the arrangement, it seems on its face like a match between two companies with polar opposite reputations.Now, it was hardly a secret that Chief Executive Officer James Gorman has been emphasizing wealth management as Morgan Stanley’s future, largely because the revenue is more dependable than high-stakes trading. In the firm’s second-quarter earnings call last July, when the wealth-management division posted a 28% profit margin, Gorman was asked how he could possibly sustain that pace. He insisted “we’re playing for the long run.”The long run, it turns out, involves going where Morgan Stanley has rarely opted to go before: down-market. “It is so off-brand for the white-shoe investment bank Morgan Stanley, I’m just stunned,” David Bahnsen, founder of wealth-management firm the Bahnsen Group, who used to work at Morgan Stanley, said on Bloomberg TV. I’m not so sure it should come as much of a surprise. After all, there were rumors toward the end of last year that Goldman Sachs Group Inc. was contemplating an acquisition of E*Trade on top of its other retail-client initiatives like its consumer bank, Marcus. Yes, Goldman and Morgan Stanley are probably the two Wall Street titans most associated with catering to the wealthiest and most financially savvy. But they’re also astute enough to see which way the winds are blowing for the industry: Technology is democratizing the way people invest, save and trade.As Gorman sees it, that trend is especially true for the “next generation.” In a conference call, he summarized his vision by saying that E*Trade gives Morgan Stanley access to people with what he called “emerging wealth.” By getting them into the fold early, Gorman expects they’ll move over to the bank’s existing wealth-management offerings once they accumulate more money and need a robust financial plan. He said that even now, clients and their children only want to interact with the bank digitally, so E*Trade provides a better way for that to happen. “We’re not messing around,” he said.E*Trade also stands to benefit from standing underneath Morgan Stanley’s umbrella. After Charles Schwab Corp. slashed commissions for U.S. stock trading to zero in October, E*Trade had little choice but to follow suit. Unsurprisingly, smaller fees means compressed profit margins. The race to the bottom was due in part to the rise of Robinhood Financial LLC, which said it had more than 10 million accounts as of December. About a week earlier, CNBC’s Jim Cramer claimed that Robinhood had turned E*Trade into a dinosaur.Powered by Morgan Stanley, E*Trade will almost certainly avoid extinction. E*Trade shares soared 24% and Morgan Stanley’s dipped 4.1% at the start of trading. The deal should close in the fourth quarter — nothing about the transaction seems like a glaring issue for regulators. The one wild card would be a rival bid, but Bloomberg Intelligence’s David Ritter considers that “unlikely” because of the already steep premium.Plus, it seems as if the two CEOs are already becoming fast friends. Mike Pizzi, E*Trade’s recently appointed leader who’s in his mid-40s, joked on the conference call that the companies’ cultures are similar, apart from the dress code. Gorman piggybacked off that by noting that when they got together, Pizzi asked whether he owns a pair of jeans (Gorman said he does).Maybe some Converse shoes will be next. To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis 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.
(Bloomberg) -- Masayoshi Son will head to New York next month for the first time since the implosion of WeWork, seeking to persuade hedge funds and institutional investors that the fortunes of SoftBank Group Corp. have turned since the disastrous investment.The Japanese billionaire is scheduled to address investors on March 2. There, he could point to the approved sale of Sprint Corp., a rally in Uber Technologies Inc. shares and Elliott Management Corp.’s purchase of SoftBank stock as signs of progress at his company, said people familiar with the plans. It’s unclear where WeWork will fit into the agenda.Within SoftBank, there’s disagreement about how to convey the company’s strategy. Son, 62, is known for his eccentric financial presentations, which have included a “hypothetical illustration” of WeWork profitability and stock photos of ocean waves and calm waters. One memorable slide from 2014 contained only a drawing of a goose and the words: “SoftBank = Goose.” Many staff at headquarters in Tokyo love the founder’s showmanship, but some senior executives are exasperated and argue a clearer and more sober message is needed, said people familiar with internal discussions who asked not to be identified because the matter is private.Ultimately, Son will decide. He has downplayed any pressure from Elliott, a New York-based activist investor that disclosed a nearly $3 billion stake in SoftBank this month. Son called Elliott an “important partner” and said he’s in broad agreement with the investor’s arguments for buybacks and increasing the stock price. Son has signaled less receptiveness to Elliott’s other suggestions: selling more of the stake in Alibaba Group Holding Ltd. and reining in the Vision Fund, a $100 billion investment vehicle that accounted for more than $10 billion of losses in the past two quarters.In private meetings with SoftBank, Elliott raised issues over the clarity of SoftBank’s strategy, people familiar with the talks said. SoftBank is planning to make hires within its investor relations department to help shape the message to shareholders. SoftBank declined to comment. A spokesperson for Elliott declined to comment.“Right now, serious heat is being applied on Son,” said Justin Tang, head of Asian research at United First Partners in Singapore. “Son has to be seen actually doing something.”Although next month’s event was scheduled before Elliott disclosed its stake and is not designed to specifically address the activist investor’s involvement, it will be a focus for attendees, said people familiar with the preparations. Executives are bracing for questions about Elliott’s intentions and how far the shareholder will go to boost the stock’s value.Goldman Sachs Group Inc. is organizing the March event, the people said. The firm, which helped Japan’s Sony Corp. and Toshiba Corp. in their dealings with activist investors, is vying for the job of advising SoftBank on Elliott, said a different person said. However, SoftBank is likely to manage the relationship in-house, another person said. The job may fall to Marcelo Claure, the chief operating officer who’s helping oversee the WeWork debacle; Katsunori Sago, the chief strategy officer and a former Goldman Sachs executive; or Ron Fisher, a director and trusted adviser to Son. A Goldman representative declined to comment on SoftBank.Dogs and PizzaSoftBank is recovering from a series of stumbles in recent months. WeWork’s plan to go public last year imploded, forcing SoftBank to arrange a rescue financing of $9.5 billion in October. Uber, despite a two-month surge, is still trading about 10% below last year’s offering price. The Vision Fund has suffered other high-profile setbacks, including investments in failed online retailer Brandless Inc., dog-walking app Wag Labs Inc. and pizza robot company Zume Pizza Inc.Elliott has said it took the stake in SoftBank because the Japanese company’s shares are woefully undervalued compared with its assets. Son himself has been pleading the case with increasing frequency. SoftBank’s own sum-of-parts calculation puts its total value at 12,300 yen a share ($111). That’s more than double SoftBank’s actual share price, which values the company at about $104 billion. Elliott has pegged SoftBank’s net asset value at about $230 billion, people familiar with the discussions have said.The disconnect between what SoftBank and Elliott say the company is worth and the market value can be explained by several quirks of how the business is run, according to a report from Pierre Ferragu, an analyst at New Street Research. Many shareholders would like the company to return more capital and improve its governance, he wrote. Risks associated with the Vision Fund and a lack of details about tax liabilities associated with cashing out its investments are other factors.SoftBank recognized the need for more oversight as early as 2018, when it charged Claure with a broad review of operations across SoftBank companies. Claure, the former head of Sprint, spent months assembling a team of about 40 executives. In the end, he was forced to cede control of the so-called SoftBank Operating Group to the man it was supposed to be overseeing: Rajeev Misra, the head of the Vision Fund.Elliott wants SoftBank to set up a special committee to review investment processes at the Vision Fund. Elliott argues the fund has dragged down the share price despite making up a small portion of assets under management, said people familiar with the discussions.Some at SoftBank are resistant to the idea of an oversight committee. Instead, SoftBank is seeking to resolve issues at the Vision Fund with new governance standards for the companies it invests in. The new rules will encompass how the fund approaches the composition of the board of directors, founder and management rights, rights of shareholders, and mitigation of potential conflicts of interest.Son has conceded that missteps with the original fund is making it difficult to raise money for a successor. He said last week that SoftBank may need to invest in startups using solely its own capital for a year or two.‘Black Swan’Elliott is also calling for a buyback of as much as $20 billion. A repurchase of that scale could boost SoftBank’s shares by 40%, Ferragu estimated. SoftBank’s last share repurchase was announced about a year ago, a record 600 billion yen. It sparked a rally that pushed the stock to its highest price in about two decades.Selling Alibaba shares to pay for a buyback, as Elliott has proposed, could be a point of contention with Son. In the past, Son has used the shares as collateral to borrow money for big acquisitions, including the $32 billion purchase of chip designer ARM Holdings. Son said last week during a quarterly financial briefing that he’d prefer to sell as little as possible and that there’s “no rush” to do so.SoftBank said on Wednesday it plans to borrow as much as $4.5 billion against shares of its Japanese telecom unit. The company, which had 3.8 trillion yen of cash and equivalents at the end of December, said it was raising capital for operations. SoftBank’s debt load exceeds $120 billion.Son’s reliance on debt is raising alarms, said Tang, the financial analyst. “He’s going to get wiped out if there is some black swan event,” Tang said. “SoftBank needs to de-leverage, and the best way to do it is to sell the Alibaba stake.”Elliott has a tradition of using strong-arm tactics to get its way with target companies, but there’s little chance of that happening with SoftBank. Elliott’s stake enables it to call an emergency shareholder meeting, but pushing through a proposal without the founder’s backing is a long shot. Son, who often goes by the nickname Masa, controls more than a quarter of SoftBank stock through various vehicles, and the company bylaws require two-thirds of votes to pass any proposal made through the board, according to a person with knowledge of the rules.“Unless everyone is against him,” said Tang, “it’s not possible to dislodge Masa.”\--With assistance from Scott Deveau.To contact the reporters on this story: Pavel Alpeyev in Tokyo at firstname.lastname@example.org;Giles Turner in London at email@example.com;Takahiko Hyuga in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Peter Elstrom at email@example.com, Mark Milian, Colum MurphyFor 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) -- Ivi.ru, Russia’s largest streaming platform, hired Goldman Sachs Group Inc. to study options to fund the firm’s growth, according to the firm’s chief executive officer.“These could be private placement, strategic alliances or an IPO,” Oleg Tumanov, Ivi’s founder and CEO, said in an interview in Moscow. “We need funding to produce our own content and keep growing faster than the market.” He declined to elaborate on the amount the service is seeking to raise as no decisions have been taken.Founded in 2010, when most Russians downloaded movies for free on pirate websites, Ivi originally used a combination of advertising and a Netflix-like subscription fee. Now, three quarters of the streaming service’s revenue comes from paying users, Tumanov said, as the market matures following the introduction of measures by the government to fight online piracy. Sales rose 55% last year to almost $100 million.Streaming services ranging from Netflix Inc. to Walt Disney Co. are battling to grow their user numbers globally as customers switch away from traditional television services in favor of watching content on mobile phones and tablets. Ivi is Russia’s largest streaming service with a market share of about 35%, according to researcher TMT Consulting.Its competitors include Okko, co-owned by Russia’s largest lender Sberbank PJSC, billionaire Len Blavatnik-backed Amediateka, local technology giant Yandex NV’s Kinopoisk, Gazprom PJSC-linked Premier, and other services. Netflix, which doesn’t have a local-language service and translates only selected titles, isn’t a dominant player in the country.Goldman Sachs has been successful in doing deals in Russia even amid economic and geopolitical hurdles. Last year, it helped the country’s largest online-recruitment firm HeadHunter Group Plc to sell shares in the U.S. and sold a stake in retailer Familia to TJX Companies Inc. in a private deal. Goldman held shares in both companies. The bank’s spokesperson declined to comment on Ivi.Tumanov denied an earlier Kommersant report that Ivi hired JPMorgan Chase & Co. to manage an IPO in the U.S. He said JPMorgan is not involved, and an IPO isn’t the only option being considered. Tiger Global Management, Baring Vostok and Leonid Boguslavsky’s RTP Global are among the investors in the streaming service.To contact the reporter on this story: Ilya Khrennikov in Moscow at firstname.lastname@example.orgTo contact the editors responsible for this story: Neil Callanan at email@example.com, 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.
(Bloomberg) -- Telefonica SA reported profit that missed estimates, highlighting that a plan to reinvent itself globally is nevertheless vulnerable to increased competition in Spain, its biggest market.The phone company reported operating income before depreciation and amortization of 3.67 billion euros ($3.96 billion euros) in the fourth quarter, falling short of the 4.18 billion euros forecast by analysts. Impairments from Mexican and Argentine operations, along with staff cuts and other restructuring measures, were a drag on earnings.The carrier, based in Madrid, is pledging to maintain sales growth and cut debt as it undergoes a shift to focus mainly on four key markets. Investors have been punishing the company, with its shares down about 15% over the past year compared to a 7.3% increase for the Stoxx 600 Telecommunications index. The slide prompted Chairman Jose Maria Alvarez-Pallete to announce in November a new strategy to focus on Spain, Brazil, the U.K. and Germany, which generate the bulk of sales, and place other Latin America activities into a separate division.Telefonica shares fell 4.9% to 6.22 euros at 10:09 a.m. in Madrid. Thursday’s report flagged the difficulties the company has in the region, an area once seen as a potential engine of expansion. Oibda in the quarter was hit by a combined 445 million euros of impairments from Mexico and Argentina. A further 266 million euros of impairments came from staff cuts and other restructuring measures, part of the broader move to streamline the company.Performance in Spain raised some points of concern for analysts including Nawar Cristini at Morgan Stanley and Michael Bishop at Goldman Sachs Group Inc. Growth in average revenue per user slowed to 0.2% from 1.6%, while revenue from the consumer division dropped 1.2%.The company faces increased competition from Orange SA and attacks from Vodafone Group PLC and Masmovil Ibercom SA at the lower end of the market. Revenue growth in the country gained 0.4% overall, helped by business sales.On Thursday it forecast stable earnings and revenue for this year after reporting a mixed result for 2019: profit gained 1.9% while sales increased 3.2%; the company had guided for growth of about 2% in both cases.A bright spot in the quarterly report was the decline in net debt for an 11th straight quarter, to 37.74 billion euros, indicating that Pallete is continuing a push to lower leverage with cash generation.(Updates share price in fifth paragraph, adds details on Spain in eighth.)To contact the reporter on this story: Rodrigo Orihuela in Madrid at firstname.lastname@example.orgTo contact the editor responsible for this story: Jennifer Ryan at email@example.comFor 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.
Goldman Sachs (GSBD) is seeing favorable earnings estimate revision activity and has a positive Zacks Earnings ESP heading into earnings season.
(Bloomberg Opinion) -- In the asset-management industry, reputation is everything. A mutual-fund manager might have a fantastic strategy, but without a steady stream of cash flowing in to set up the position, returns may come in weaker than expected. That, in turn, could lead some investors to lose confidence that the concept was ever great in the first place.That, in a nutshell, is what happened to Franklin Resources Inc. over the last several years. The company has been stuck near $700 billion in assets under management for the past 18 months, down from a peak of $921 billion in mid-2014, while its competitors have grown steadily. Moody’s Investors Service downgraded Franklin’s credit rating in mid-2018 and last year “expressed concern that Franklin's reputation for global/international strategies and solid relative investment performance has been undermined.” That’s not quite a death knell, but it’s close. Faced with that grim reality, Franklin made the obvious move: It got bigger in a hurry. On Tuesday, it announced an agreement to acquire asset manager Legg Mason Inc. for almost $4.5 billion. The deal would create a $1.5 trillion behemoth whose size trails only BlackRock Inc., Vanguard Group Inc., Fidelity Investments, Capital Group Cos. and Amundi Asset Management among “independent asset managers,” according to Willis Towers Watson data cited by Franklin. It would leap ahead of Invesco Ltd and T. Rowe Price Group Inc. in this arms race. (The ranking format conspicuously excludes investing giants tied to Wall Street banks like Goldman Sachs Group Inc. and JPMorgan Chase & Co., or those affiliated with insurers, like Allianz Group and Prudential Financial.)At first glance, the takeaway is that the entire asset-management industry is consolidating because of the rise in passive, low-cost index funds, and Franklin’s move is just the latest example. While that’s true, the combination of these two firms in particular suggests that in the current investing landscape, fund companies can either choose to be the biggest, or they can elect to remain small, nimble and specialized, but falling somewhere in the middle is purgatory. Neither firm is accustomed to being viewed as a second- or third-tier money manager. After all, Franklin, which leans into its affiliation with one of America’s iconic founding fathers, started in 1947, while Legg Mason’s precursor firm dates back to the 19th century. And yet, both Legg Mason and Franklin have fallen way behind the top firms, and Franklin in particular was at risk of slipping even further away from the next group of asset managers.Franklin’s website declares it’s “a global leader in asset management with more than seven decades of experience.” At what ranking does being a “global leader” no longer hold up? The company clearly wasn’t interested in finding out.With the purchase, Franklin will strike an almost perfect balance between institutional and retail investors, which may help mitigate volatility in fund flows. Notably, it expects to maintain a nearly identical geographic focus, which is important given that some of its flagship offerings are worldwide in scope. For example, the $26.3 billion Templeton Global Bond Fund holds a large position in Brazil’s bonds, and both Franklin and Legg Mason have a presence in Sao Paulo. Even as active managers grow, they need to retain their identity.The acquisition also braces for an uncertain future. Legg Mason recently made headlines for announcing plans to take a majority stake in Precidian, known for its ActiveShares exchange-traded funds. If successful, the products could upend the mutual-fund industry because they would trade daily and yet require reporting only once a quarter. Analysts have suggested some $7.2 trillion in mutual-fund strategies could work in this format. Franklin took too long to get on the ETF bandwagon years ago and appears eager not to make a similar misjudgment.Now, one big move probably won’t be enough to bring Franklin back to its glory days. But by combining with Legg Mason, it at least has more than a puncher’s chance to reclaim its place as a leader in active management. Traders certainly seem optimistic: Franklin’s shares rose as much as 13.3% on Tuesday to $27.60, the biggest intraday jump since November 2016.The onus is now on Franklin’s fund managers to live up to their reputations. If there were any malaise in the air over in San Mateo, Calfornia, about the company’s future, management has alleviated it for now. Franklin is back in the game.(Corrects the size of the combined entity in the third paragraph. )To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis 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.
(Bloomberg) -- Oil steadied around $57 a barrel in London as China and others in Asia promised economic stimulus to offset the impact of the coronavirus, buoying the outlook for fuel demand.Prices recovered more than 5% last week, the biggest gain since September, as some of the fears over how far the infection will hurt the global economy abated. China, Hong Kong and Singapore have pledged extra fiscal stimulus to counter the economic hit from the disease, with Beijing considering measures such as lowering corporate taxes.“Oil appears to have finally shaken off its bearish malaise,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “Investors cheered a salvo of stimulus measures from China’s central bank aimed at mitigating the economic impact.”Brent for April settlement rose 35 cents to $57.67 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March delivery increased 28 cents to $52.33 a barrel on the New York Mercantile Exchange, after last week gaining by the most since December. There was no WTI settlement on Monday because of Presidents Day holiday.China on Monday offered more funding to banks and cut the interest rate it charges for the money. Singapore has also promised a “strong” package of budget measures and central banks in the Philippines, Thailand and Malaysia have cut interest rates as Asian economies grapple with the virus-induced slowdown.That’s offsetting any disappointment from OPEC and its partners apparently dropping plans for an emergency meeting to respond to the crisis. Russia, a pivotal member of the alliance known as OPEC+, has so far resisted a push by Saudi Arabia to launch fresh production cuts in response to the loss of demand.Traders are now likely to focus on whether the coalition announces new cutbacks at its scheduled meeting on March 5 and 6. A technical committee recommended earlier this month that the group reduce supply by a further 600,000 barrels a day, on top of current curbs.Concerns over the impact of the virus remain strong with Hubei, the Chinese province at the epicenter of the outbreak, reporting new cases and additional deaths. This is seeping into the oil market with the International Energy Agency forecasting global oil demand will decline this quarter for the first time in more than a decade. Goldman Sachs Group Inc. slashed its 2020 crude-consumption forecast almost in half and lowered its first-quarter price estimate by $10 a barrel.(Updates Brent and WTI price in fourth paragraph.)\--With assistance from James Thornhill, Serene Cheong, Saket Sundria and Amy Stillman.To contact the reporter on this story: Grant Smith in London at firstname.lastname@example.orgTo contact the editors responsible for this story: James Herron at email@example.com, Rakteem Katakey, Christopher SellFor 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) -- Beijing is throwing all it’s got at the coronavirus. Less visible than the drama of quarantining communities, however, is the new pressure that the outbreak is bringing on China Inc.’s hard-up borrowers.They face $944 billion of debt maturities onshore and $90 billion offshore this year. Authorities are going back to their old playbook of spewing handouts to get them through. The costs will add billions of dollars of debt and cripple an already-weakened financial system. It may be doing more harm than good.Workers are stranded and factories remain widely shut. There is no imminent sign of that changing, even if the increase in infections has trended downward in recent days. The resulting economic slowdown will bite into earnings by 10% to 20% for months and hamper the ability of companies to pay their debts. As asset quality deteriorates, Goldman Sachs Group Inc. estimates that Chinese banks’ implied ratio of bad-to-total loans will jump to 8.1% from an earlier prediction of 5.4%.China has responded with all-too-familiar palliatives. Regulators and local governments have laid out measures that include billions of dollars for tax cuts, borrowings at cheaper rates, and incentives to keep workers employed. Banks are being asked to push off repayments and to roll over debts. They’re allowing companies to add more working capital loans before they have paid down existing ones.Trouble is, China Inc. was already struggling before the virus hit, especially the private sector. A stimulus campaign to pull manufacturers out of the trade-war doldrums didn’t do much for their balance sheets last year. Private companies’ accounts receivables remain elevated and have been increasing for the likes of large machinery makers. Short-term funding and average average payback periods are also rising. Financing for capital expenditures and working capital slowed into the end of last year. A recent survey of 995 small- and medium-size companies showed that a just over a third could survive for a month with their current savings. Another third could hang on for two months, while just under 18% could last three. All this as large banks reported a more than 30% increase in loans to smaller borrowers in the first half of 2019.Beijing’s latest round of financial forbearance will only worsen the situation. Lending more with looser terms may help tide over some companies and refinance their debt for now, but does little to flush out the ones that just aren’t financially viable. That many cannot support themselves without the state for even three months shows China’s vulnerabilities. Lenders, the pillars of the financial system, are weaker than the numbers betray. The central bank’s stress tests show as much. Before the virus, they were contending with a bank failure and a deleveraging campaign that unearthed billions of dollars of bad credit assets. Government coffers, meanwhile, are shrinking. All of the state’s largesse has meant fiscal revenue growth slowed to 3.8% last year, well under its 5% target and down almost half from 6.8% in 2018.In theory, Beijing has the tools and a vast number of financial institutions aside from banks to lean on. In times of crises, financial forbearance isn’t unheard of. But repeated use of banks this way multiplies the dangers to unsustainable levels. Small and medium enterprises facing funding issues have to reach for more shadowy financing. The private sector is cash-starved and debt piles up. That debt, as the deleveraging campaign has shown, clogs the system and makes every yuan of credit even more ineffective. Companies can’t grow and lenders start to fail. The state is left holding the bag.A more prudent approach this time might be call into service insurance companies with huge balance sheets, and asset management companies, with their experience in dealing with stressed companies. Insurers have been big buyers of bonds, stocks and private equity deals for years. As operators in a marketplace, they understand credit risk better than banks. They could be more effective in managing small and medium companies’ debts.It’s time to let weak companies that have high operating leverage and short-term debts close down. But that might be too risky for President Xi Jinping, who continues to voice support for them. After all, they account for around 80% of urban employment.When China dealt with Severe Acute Respiratory Syndrome in 2003, an era of supercharged growth was beginning. It had recently joined the World Trade Organization and even indebted companies had cash flowing in and the prospect of a lot more coming. That’s no longer the case. Even if Beijing manages to rein in the coronavirus, debt will keep sickening China Inc.To contact the author of this story: Anjani Trivedi at firstname.lastname@example.orgTo contact the editor responsible for this story: Patrick McDowell at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. 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) -- Oil clinched the best weekly gain for the year on signs the worst economic impacts of the lethal viral outbreak have been accounted for, easing concern about free-falling demand for crude.Futures advanced 1.2% in New York on Friday, settling above $52 for the first time this month. Investor confidence was lifted after China reassured the international community that a huge spike in new coronavirus cases was a one-off event. The optimism outweighed Goldman Sachs Group Inc. slashing its 2020 crude-demand growth forecast almost in half and lowering its first-quarter oil-price estimate by 16%.“There’s no doubt this rally will inspire more confidence for oil markets,” said Leo Mariani, an analyst at KeyBanc Capital Markets.The Organization of Petroleum Exporting Countries and its allies have signaled a desire to stabilize the oil market that has tumbled almost 15% this year as the coronavirus wreaked havoc on the world’s second-largest economy and beyond.The past two weeks have been rife with uncertainty for oil markets as Riyadh’s push for an early meeting in February and fresh production cuts face an impasse with Russia.OPEC and its allies were close to abandoning any plans for an emergency meeting though Saudi Arabia had not given up on the proposal outright, several delegates from the group said on Friday. The outbreak has intensified concerns about crude demand, prompting technical experts from the coalition to propose deepening the current supply cuts by 600,000 barrels a day to relieve excess inventories.“Expectations are low but markets still expect some incremental action from OPEC,” Mariani said.Chinese independent refiners have seized on the recent slump in oil prices to bulk up on cheap cargoes in a sign that they may be positioning for an eventual rebound in demand.West Texas Intermediate crude for March delivery gained 63 cents to settle at $52.05 a barrel on the New York Mercantile Exchange.Brent for April settlement rose 1.7% to settle at $57.32 on the ICE Futures Europe exchange.The structure of the Brent futures market also flipped into a backwardation, signaling that some of the oversupply may have eased.See also: Coronavirus Will Hit Oil Hard. That’s Where the Consensus EndsMeanwhile, Kuwait and Saudi Arabia will resume oil production from their shared fields this month, more than five years after a dispute halted supply. The projects will bring additional production capacity to an oil market that’s already dealing with excess supply.\--With assistance from James Thornhill, Grant Smith, Elizabeth Low and Alex Longley.To contact the reporter on this story: Jackie Davalos in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: David Marino at email@example.com, Christine BuurmaFor 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) -- Mike Blum was supposed to revolutionize the way Goldman Sachs did business with the fastest-trading hedge funds. He ended up leaving for a marijuana startup.Blum -- one of several senior technology executives who departed the bank in recent days -- is joining cannabis provider PharmaCann as its tech chief. It’s a bit of a departure from his previous role overseeing Goldman Sachs Group Inc.’s ambitious overhaul of an electronic-trading platform that the Wall Street firm hopes will win more business with quant hedge funds.Blum had joined the bank in 2017 as a partner, a rare exception at a firm where the normal path to its highest rank is to spend years toiling away at the company. At PharmaCann, he will reunite with some of his former colleagues from electronic-trading firm KCG Holdings. The marijuana venture started a half-decade ago and says it provides “top-quality cannabis products to improve people’s lives.”“We’re excited for Mike to be joining the PharmaCann team as our company continues to attract top-tier talent,” Brett Novey, PharmaCann’s chief executive officer, said in a statement.The hire solves part of a mystery that unfolded last week inside Goldman’s biggest division. Blum and two more senior tech executives quit in the midst of overseeing projects key to the firm’s strategy, raising questions about what prompted the departures and what they might do instead. For Blum, the answer is that he’s leaving the industry.Separately, the bank also lost Jeff Winner, the chief technology officer in its consumer-banking business, which the firm is looking to as a new frontier for growth. That unit includes Goldman’s credit-card partnership with Apple Inc. and its Marcus online-loan platform.Winner was with Goldman for only two years after stints as a senior engineering executive at Silicon Valley heavyweights Stripe Inc. and Uber Technologies Inc.Winner didn’t respond to a request for comment. Goldman Sachs declined to comment.To contact the reporters on this story: Sridhar Natarajan in New York at firstname.lastname@example.org;Julie Verhage in New York at email@example.comTo contact the editors responsible for this story: Michael J. Moore at firstname.lastname@example.org, David Scheer, Dan ReichlFor 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.
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(Bloomberg Opinion) -- Sajid Javid’s resignation as Britain’s Chancellor of the Exchequer doesn’t so much signal a major shift in Britain’s economic policy as confirm a sea change in the rules of British politics under Boris Johnson’s administration. That could be just as consequential.With the country’s first post-Brexit budget due in less than a month and major trade decisions underway, this would seem an odd time to put the country’s budget in a new pair of hands. It certainly wasn’t expected. While there was talk of a “Valentine’s Day massacre” for some weeks after the election, the chancellor’s job wasn’t one of those slated to change in this reshuffle; indeed he was the only cabinet minister whom Johnson had publicly promised would keep his job.The prime minister just didn’t promise to make staying tenable. Javid lost a long-running battle to keep control over his team of special advisers (known as spads in Britain). These officials are very important — and usually loyal — to cabinet ministers, but the prime minister’s office now wants to centralize their appointments. Javid’s advisers became pawns in a bigger contest for control, a word this government rather likes.Johnson demanded that Javid fire his five most senior aides and also set up a joint economic unit with the prime minister’s office. “I was unable to accept those conditions and I do not believe any self-respecting minister would,” Javid told journalists.There are two big conclusions to draw from his departure. The first — reinforced by the overall cabinet reshuffle — is that the center of power in the British government is Boris Johnson and his own chief adviser and strategist Dominic Cummings. They intend to maintain an iron grip on message discipline. It was Cummings who fired Javid’s media adviser Sonia Khan in August, without his knowledge. In a warning to any other advisers with their own ideas, Khan was escorted out of No. 10 Downing Street by a police officer. The prime minister’s senior aide has also issued strict instructions to advisers and cabinet officials about contact with the media. In his resignation letter Javid wrote that it was important for leaders “to have trusted teams that reflect the character and integrity that you would wish to be associated with.” That sounds a lot like a dig at Cummings.The second conclusion from Thursday’s events is that Britain’s purse strings probably just got even looser. Javid, an admirer of Margaret Thatcher, had already gone a long way to accommodating Johnson’s big-spending plans; rewriting Britain’s fiscal rules to allow the government to take advantage of low interest rates and to increase borrowing for investment. The new rules commit the government to balancing the budget and limiting investment spending to 3% of gross domestic product, up from 2% before. He also pledged that debt would be lower at the end of the five-year parliamentary term, rather than at the end of this year, as promised previously.But that didn’t mean the fiscally conservative chancellor was happy to sign off on an all-around spending bonanza. Cabinet ministers were told to axe at least 5% of their budgets, targeting any program that doesn’t impact health, crime-fighting or regional inequalities. In recent weeks, there were reports of tension between the chancellor’s office and Cummings over spending.Javid’s replacement, Rishi Sunak, will have less control over his advisory team. He may also have a harder time standing up to No. 10 than Javid, a Tory big beast. It's not clear whether the Javid rules will hold or even whether the budget will be delivered as planned on March 11.Educated at the elite Winchester School, Oxford and then Stanford University (he also has Goldman Sachs on his resume), Sunak arrives at the job with every elite credential apart from experience in such a huge job. Both former Tory Prime Minister John Major and Labour politician Alistair Darling also became chancellor having served as Chief Secretary to the Treasury, Sunak’s last job, but each of them moved onto other major cabinet roles first. This is quite a promotion for the 39-year-old member of Parliament.Sunak has risen so far so fast that most Britons won’t have heard of him before a few months ago. Back in June, he and two other lawmakers wrote an article in the Times newspaper backing Johnson as Conservative Party leader. Javid was running for the job then too, along with other now-forgotten candidates.“Boris Johnson is one of life’s optimists and can help us recapture a sense of excitement and hope about what we Conservatives can do for Britain,” they wrote. Johnson, they argued, is a “one nation” Conservative like them, best placed not only to deliver Brexit but to unite the country. The Sunak piece arguably marked a point at which Johnson’s leadership bid become unstoppable.During the general election campaign, Sunak stood in for Johnson in TV debates. His calmness and willingness to stick doggedly to the government’s message saw him tipped for a big move in the cabinet reshuffle as early as December — and even as a future prime minister. Since the election, Sunak seems to have had more media appearances than other ministers combined, and he was put in charge of the government’s first public spending review. If the government’s lavish spending plans and reports of wealth taxes haven’t unnerved traditional conservatives already, a tamed Treasury will. David Gauke, a former Remain-supporting MP and cabinet minister, suggests Javid’s ouster undermines the chancellor’s ability to ask hard questions about spending. “The credibility of the Treasury also matters internationally,” Gauke tweeted Thursday. “Governance matters to foreign investors. The strength of the Treasury is embodied in the Chancellor.”It isn’t so much the personnel change but the way it signals the centralizing stranglehold of Cummings and Johnson that suggests fiscal discipline might weaken.Of course, Sunak — who, until now, has been fiscally hawkish — will want to prove otherwise. And it would be wrong to suggest that chancellors are always right on spending or that they don’t also act politically. Sunak has one handy advantage, though: It will be very hard for Johnson to sack a second chancellor in a row.(This column was updated with details from Javid’s resignation letter.)To contact the author of this story: Therese Raphael at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Therese Raphael writes editorials on European politics and economics for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.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.
Goldman Sachs BDC (GSBD) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
(Bloomberg) -- The pound rallied while gilts fell after Chancellor of the Exchequer Sajid Javid resigned, causing speculation the U.K. may move toward more fiscal stimulus.U.K. markets reacted after the country’s finance minister quit after a face-to-face row with Prime Minister Boris Johnson inside 10 Downing Street. Javid’s replacement with Rishi Sunak led to talk of increased government spending.“We are now seeing a rally to a new high,” said Adam Seagrave, head of global sales trading at Saxo Capital Markets U.K. Ltd. “This is presumably the market interpreting the announcement as Johnson wanting advisors who are more willing to back aggressive fiscal stimulus.”The pound traded up 0.7% to $1.3053 as of 4:00 p.m. in London, on course for its biggest gain this month. It climbed 1.0% against the euro to reach its strongest level since mid-December. Gilts fell to send 10-year yields up three basis points to 0.64%, bucking gains elsewhere in bond markets.Nonetheless, some analysts noted the longer-term changes to British government spending remain unclear, perhaps making the move in U.K. government bonds overly-hasty.“Gilt reaction may be on assumption Boris Johnson’s office has a stronger hand on the fiscal tiller than thought, and that adherence to fiscal rules may become looser than Javid would have been prepared to countenance,” said John Wraith, the head of U.K. rates strategy at UBS Group AG . “I very much doubt it will in fact have any material implications for near-term borrowing, investment and issuance numbers.”Still, with focus now turning sharply to Javid’s successor, there is some evidence increased spending may be on the cards. Sunak, a former Goldman Sachs banker, was previously chief secretary to the Treasury, and is seen as an ally to Johnson. Paul Dales, chief U.K. economist at Capital Economics, said it’s possible that the March budget will provide a “bigger bang” than forecasts, which are already predicting a sharp increase in spending.“Sunak’s previous votes in Parliament suggest his views are perhaps more aligned with those of the Prime Minister and his chief special adviser, Dominic Cummings, than Javid’s,” Dales said. “His voting history shows he’s an ardent Brexiteer, supports reductions in corporation tax, cuts to capital gains tax and he’s gone on the record as favoring infrastructure investment.”(Updates prices in fourth paragraph.)To contact the reporter on this story: Greg Ritchie in London at email@example.comTo contact the editors responsible for this story: Dana El Baltaji at firstname.lastname@example.org, Michael Hunter, Neil ChatterjeeFor 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.