|Bid||0.00 x 900|
|Ask||0.00 x 1400|
|Day's Range||44.06 - 44.69|
|52 Week Range||40.52 - 54.27|
|Beta (3Y Monthly)||1.04|
|PE Ratio (TTM)||11.47|
|Earnings Date||Oct. 16, 2019|
|Forward Dividend & Yield||1.24 (2.85%)|
|1y Target Est||46.74|
The coming week’s docket of economic reports and earnings releases comes just following the Trump administration’s announcement of a partial trade deal with China late last week.
The Zacks Analyst Blog Highlights: Verizon Communications, PepsiCo, Biogen, Bank of New York ??? Mellon and Cerner
(Bloomberg Opinion) -- Last week brought lots of bad news about the American economy. The stock market treated each new data point suggesting that activity was slowing down as bad news. And that, in itself, is bad news. Here’s why: Grim tidings for the economy aren’t necessarily so bad for investors, because they tend to lead to lower interest rates. That, in turn, makes it cheaper to invest and justifies paying a higher multiple for stocks. Growth that is too strong can mean higher rates, and that’s a problem. Hence equity investors yearn for “a Goldilocks economy” – one that is neither too hot nor too cold.So it makes sense that bad news about the economy is often treated as good news for the markets. But that changes when investors truly fear a recession. In that situation, central banks will make money much cheaper, but that doesn’t counteract the damage to stocks and bonds inflicted by the economy. With bad news plainly treated as bad news, the stock market has reached the point where fear of a recession is its greatest concern. For the first few years after the financial crisis, with the advent of quantitative easing, the stock market behaved like the giant plant in Little Shop of Horrors. Its constant demand to the Fed was: “Feed me!” And as new waves of central bank asset purchases made money cheaper, share prices rose. Any stabilization in the Fed’s campaign to buy assets would stall the stock market. From 2008 until 2015, when the Fed started to get serious about its desire to normalize and raise rates, the S&P 500 rose in line with the Fed’s balance sheet. Bad news, persuading a reluctant central bank to keep buying assets, was good news. Since then, the relationship has been more complicated and more variable. John Velis, foreign exchange strategist at BNY Mellon, offers the following simple measure of whether good or bad news is treated as such by the market. It shows the correlation between moves in the stock market and moves in Citigroup Inc.’s U.S. Economic Surprise index, which is fixed so that it will rise when economic data is surprisingly good, and fall when it is surprisingly bad. When the correlation is positive, good news is good news (and bad news is bad news). When the correlation is negative, the market is hoping for bad news. Put differently, when the line is above 0 in the chart, showing a positive correlation, the market is chiefly worried about a recession; and when it is below 0, it is chiefly worried about the Fed monetary policy being too tight. The correlation swings frequently, but at present it is as strong as at any point in five years. So markets really want to hear good news about the economy, even if that means they will have to do without cheap money from the Fed:That correlation remained strong through the week. Stocks sold off after bad news from manufacturing and services surveys earlier in the week, and then staged a rebound after Friday’s broadly strong payrolls report, which showed that the unemployment rate had almost reached an all-time low. And that gain came even though the jobs release caused bond investors to reduce slightly their forecasts for interest-rate cuts.There have been other sharp sell-offs over the last year, but they weren’t driven by the data as last week’s was. In December, investors were terrified by Fed Chair Jerome Powell’s determination to push ahead with higher rates, while shrinking the central bank’s balance sheet “on auto-pilot”; and the sell-off this summer was driven by escalating hostilities between the U.S. and China over trade. It’s clear investors are now much more worried about the prospect of an economic slump than they were even six months ago. The inversion of the bond yield curve during the summer (meaning yields on short-term bonds rose above yields on long-term bonds) unnerved many by sending a classic recession signal. The trade wars, worries about a slowdown in China, and a serious slump for German manufacturing have all made a downturn far more plausible. History also argues that stock-market investors would be wise not to wish for any more rate cuts from the Fed. Over history there are a few examples of “mid-cycle adjustments” – in the phrase Powell used earlier this year – where the Fed cut rates two or three times and managed to prolong an economic expansion. There are no precedents for the Fed cutting by a full percentage point or more without a recession following soon after. And there are also no precedents for a recession that is unaccompanied by a bear market in equities. The Fed has already cut rates by 0.5 percentage point so far this year. Bloomberg’s estimates show that the market is pricing a fifty-fifty chance that it will have cut by a full percentage point by the end of the year. That would be bad news for everyone.To contact the author of this story: John Authers at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.John Authers is a senior editor for markets. Before Bloomberg, he spent 29 years with the Financial Times, where he was head of the Lex Column and chief markets commentator. He is the author of “The Fearful Rise of Markets” and other books.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- There’s a showdown looming between financial advisers and the custodians that safeguard their clients’ money. It’s been brewing for some time, and the move by Charles Schwab Corp. on Tuesday to offer commission-free trading makes the clash all but inevitable.Retail investors know Schwab as a discount broker, but it’s also a custodian for financial advisers who break away from banks, insurance companies and other financial firms, or set up shop on their own. Those advisers need someone to house client accounts and execute trades, and firms such as Schwab, Fidelity Investments, Bank of New York Mellon Corp. and TD Ameritrade Holding Corp. are popular choices. (My asset-management firm works with Schwab and TD Ameritrade.)It was a blissful union. Clients paid financial advisers a fee for constructing portfolios and financial planning, typically a percentage of assets under management, and custodians collected interest on clients’ cash and margin, distribution fees from mutual funds and, of course, commissions on trades. Lately, though, the relationship between advisers and custodians has become strained. While advisers continue to collect their fees, custodians are increasingly under pressure.Roughly 40% of Schwab’s revenue last year came from proprietary mutual funds and ETFs, third-party mutual funds, commissions and – importantly – advisory fees. The value of all but the latter is now zero or trending in that direction. The other 60% of Schwab’s revenue, which is interest income primarily from margin loans, bank loans and fixed-income investments, isn’t likely to make up the difference. Schwab can only boost interest revenue by gathering more assets or praying for higher interest rates. Few expect rates to rise any time soon, and Schwab’s competitors are now offering free trades of their own, so there’s little reason for investors to flock to the broker. TD Ameritrade announced it will cut its commissions to zero mere hours after Schwab, and E*Trade Financial Corp. followed on Wednesday. The market reaction? Investors have roundly hammered discount brokers: As custodian-brokers raced to the bottom on fund fees and commissions, advisory fees have remained remarkably resilient. The average financial adviser continues to collect roughly 1% a year on accounts of $1 million, and more for smaller accounts. Industry observer and financial adviser Michael Kitces isn’t surprised. “When price competition breaks out, whoever is closest to the client wins,” he says. That’s why advisers have been able to maintain their fees even as trading commissions and expense ratios for mutual funds and ETFs have plunged, in part due to advisers’ growing preference for low-cost funds.It may also explain why investors are sticking with advisers despite growing competition from automated investing platforms that typically charge lower advisory fees, and in Schwab’s case, no fee (although Schwab makes money on its robo-adviser through proprietary ETFs and interest on cash balances). Investors may eventually feel comfortable handing their money to the bots, but most still seem to value proximity to human advisers.The predictable result is that custodians, and even some mutual fund companies, are keen on getting closer to clients. Schwab, Fidelity and Vanguard Group have all made a big push into the advisory business in recent years. While hard numbers are hard to track down, Kitces estimates that those firms now account for “a material slice of the overall market for financial advice and a huge portion of the cumulative growth of advisory assets over the last four years.”Custodians are likely to win. They have the expertise to navigate the dizzying array of mutual funds and ETFs sold to investors, plus the size and reach to undercut advisers’ fees and the resources to build technology advisers can only dream about. That doesn’t mean independent financial advisers will disappear, but many won’t survive the onslaught, and those who do can expect a pay cut. WealthManagement.com, a media and marketing outlet catering to financial advisers and wealth professionals, took a flash poll of advisers on Tuesday and concluded that many are skeptical of free commissions and question how Schwab and others will make up the lost revenue. “There’s no free lunch, after all,” it reminded readers.One adviser summed it up, saying he’s “looking for the catch.” Well, here it is: When the dust settles, financial advisers won’t be eating lunch – they’ll be on the menu.To contact the author of this story: Nir Kaissar at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nir Kaissar is a Bloomberg Opinion columnist covering the markets. He is the founder of Unison Advisors, an asset management firm. He has worked as a lawyer at Sullivan & Cromwell and a consultant at Ernst & Young. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on The...
Incoming Wells Fargo CEO Charles Scharf will face an old challenge: running a San Francisco-based company from New York City.
(Bloomberg) -- Follow @Brexit, sign up to our Brexit Bulletin, and tell us your Brexit story. The pound pulled back from a two-month high as Ireland warned a Brexit deal is not close, calming a rally sparked by optimism from European Commission President Jean-Claude Juncker.The currency halted two weeks of gains after Irish Foreign Minister Simon Coveney said the “mood music” has improved yet there is still “quite a wide gap” between the U.K. and European Union. Sterling had been closing in on its longest run of weekly increases since January after Sky News reported Thursday that Juncker thinks a deal can be reached by the Oct. 31 deadline.Pound traders are hanging on every word from both sides as they try to ascertain if an economically damaging crash-out scenario can be averted. Negotiations around Brexit have been stuck for months with little sign of movement as the October deadline looms for the U.K. to leave the EU.“The pound could have more to gain on the upside over the short-term,” said Derek Halpenny, the head of markets research at MUFG, adding the bank remained skeptical until it hears supportive comments from Brussels on any U.K. proposals. “We certainly have to acknowledge there might be something in this but equally this could so easily be much ado about nothing.”The pound was down 0.2% at $1.2501 by 13:12 p.m. in London, after touching the highest since July 15. It’s the best performer among peers this month, with a 2.9% rally.The positive noise around efforts to forge a deal for now is just rhetoric that can be interpreted either way. Juncker himself said Wednesday that a risk of a no-deal Brexit was “palpable.”’It’s “really unclear as to where things actually stand,” said Brendan McKenna, a foreign-exchange strategist at Wells Fargo Securities in New York.Sterling could rise 5% if a deal is clinched, or tumble to parity with both the dollar and the euro if the U.K. crashes out of the bloc, according to Shamik Dhar, chief economist at BNY Mellon Investment Management.(Updates throughout.)\--With assistance from Alyce Andres and Flavia Krause-Jackson.To contact the reporters on this story: Anooja Debnath in London at firstname.lastname@example.org;Susanne Barton in New York at email@example.comTo contact the editors responsible for this story: Paul Dobson at firstname.lastname@example.org, William ShawFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- There’s still plenty of time for things to go off the rails, but 2019 is shaping up to be one of those rare years when the global stock, bond, commodities and foreign-exchange markets are all poised to deliver positive returns. The last time that happened was in 2010. Investors say three things would keep the good times rolling; unfortunately, two of those items are unlikely to happen, starting with the Federal Reserve’s monetary policy decision on Wednesday.The latest monthly survey of global fund managers by Bank of America Merrill Lynch found that German fiscal stimulus, a 50-basis-point rate cut by the Fed and Chinese infrastructure spending would be the most bullish policies for risk assets over the next six months. But the famously austere Germans look hesitant to fend off a slowdown in Europe’s largest economy just by spending. Finance Minister Olaf Scholz said last week that Germany would stick to a balanced budget, but was ready to act in moments of crisis. As for the Fed, the odds that policy makers on Wednesday will announce a half-point cut in their target rate for overnight loans between banks instead of a quarter-point reduction has shrunk to less than 15% from more than 40% last month. This follows a string of data showing that, thanks to the consumer, the U.S. economy is holding up pretty well amidst the ongoing trade war with China. There are even some economists and strategists, such as those at Brown Brothers Harriman, who say the Fed maybe doesn’t need to lower rates at all this time. The most likely scenario is that the central bank will ease monetary policy on Wednesday, while saying any further loosening will depend on the data, which is something that isn’t exactly priced into markets. “There is a risk that absent a strong signal that the Fed is clearly at the beginning of a sustained easing cycle, we could see some disappointment,” BNY Mellon strategist John Velis wrote in a research note Tuesday.So if the Germans and the Fed disappoint, that leaves the heavy lifting to China. Here, though, there is some good news. Bloomberg News reported last month that China is considering allowing provincial governments to issue more bonds for infrastructure investment. Policy makers may raise the annual quota for so-called special bonds from the current level of 2.15 trillion yuan ($305 billion), Bloomberg News reported, citing people familiar with the situation who asked not to be named as the matter wasn’t yet public.OIL MARKETS HAVE A DEEP THROATOne day after soaring almost 15% following an attack that wiped out about half of Saudi Arabia’s output capacity, oil plunged as much as 7% as Reuters reported the kingdom’s output will be fully back on line in the next two to three weeks, which is much sooner than the months some expected it would take. No matter that Reuters cited one unidentified Saudi source who was briefed on the timeline – traders wanted to believe. It helped that Saudi officials later confirmed that at least one of the damaged facilities will be back to producing oil at pre-attack levels by the end of the month. However, oil traders might be wise to be a bit more skeptical. It’s not crazy to think that Saudi officials would want to downplay the success of the strikes at a time when its military is getting a lot of criticism for not detecting and stopping whatever it was that crippled the facilities. “We flip from worst case scenario to best case scenario in less than 24 hours,” John Kilduff, a partner at Again Capital LLC, told Bloomberg News. “We still need damage assessments and what it takes for those repairs.”CAN’T SPELL FUNDING WITHOUT ‘FUN’The repurchase, or repo, market went haywire for a second straight day on Tuesday, forcing the Fed to inject billions of dollars of cash into the system for the first time in a decade to temper a surge in short-term rates. All of this sounds concerning, especially since the financial crisis was partly exacerbated by a seizing up of the funding market. But that’s not what’s happening here. Market participants say the spike in short-term rates is a result mainly of a confluence of technical events, including the sudden withdrawal of cash from money-market funds by companies needing to pay taxes. But there are still reasons to be concerned. The first is that this all comes with the new York Fed still without a formal head of its markets group following the abrupt departure of the widely respected Simon Potter earlier this year. The implication is that if Potter were still around, traders at the central bank might have been better prepared to handle any unforeseen stresses in funding markets. The second reason for concern is that the move in the repo market has definitely had some knock-on effects, especially in overnight bank funding costs. Those reached 45 basis points Monday before easing to 41.9 basis points Tuesday, levels that are more in line with times of broad market turbulence. Bank earnings are already under pressure from a flat yield curve, and this spike in funding cost won’t help, which may explain why the KBW Bank Index fell the most in more than two weeks on Tuesday.SHAKING THE BEARS OUTTo say it hasn’t been a good month for the U.S. Treasury market would be an understatement. The Bloomberg Barclays U.S. Treasury Index was down 1.96% in September through Monday, putting the benchmark on track for its worst monthly performance since it dropped 2.67% in November 2016 following President Donald Trump’s election victory. The swift decline has many wondering whether the bond market is at the beginning of a sustained turn for the worse. The evidence, though, suggests the move has been more about positioning than anything fundamental. That is seen in the Bank of America survey. For the second straight month, it found that being “long” Treasuries was the most crowded trade in global markets, followed by being “long” technology and growth stocks and being “long” gold. So, with so many investors and traders leaning one way, it doesn’t take much for a move in the opposite direction to force traders to rebalance. On the positive side, JPMorgan Chase & Co.’s widely followed weekly survey of bond traders released on Tuesday suggested that the sell-off may be ending. Its index tracking clients who are “short” is back near its lowest level since 2016, suggesting all those who want to bet against the bond market have already done so.EARNINGS DON’T MATTERThe latest Bloomberg News survey of where Wall Street strategists expect the S&P 500 to end the year came out on Tuesday, and the results confirm just how reliant equities are on low interest rates. It’s not so much that strategists see the S&P 500 ending the year at 3,000, or little changed from current levels; it’s that they expect equities to be resilient in the face of ever lower profit forecasts. They now forecast 2019 earnings per share of $166.35 for the gauge, down from their estimate of $172.25 at the start of the year. Also back then, the strategists we’re only expecting the S&P 500 to end the year at 2,913. So they’ve raised their forecasts for how high the index will go while also cutting their earnings estimates. That may seem counter-intuitive, until you consider that simple discounted cash-flow analysis shows how lower rates make future earnings more valuable now, justifying higher multiples for equities even without profit growth. So, logic would dictate that the lower rates go, the better for equities. This makes Wednesday’s Fed meeting all the more important for equities, especially with the S&P 500 trading at about 18.2 times this year’s expected earnings, which is the highest since January 2018.TEA LEAVESA big drop in mortgage rates is giving new life to the U.S. housing market despite a slowing economy. The National Association of Home Builders/Wells Fargo Housing Market Index released on Tuesday increased to 68 in September from an upwardly revised 67 in August. The current level is at an 11-month high. Also on Tuesday, the Mortgage Bankers Association said its data show that mortgage applications for new home purchases increased 33% in August from a year earlier. Both reports are good omens for Wednesday’s government report on housing starts and permits. The median estimate of economists surveyed by Bloomberg is for starts to have rebounded 5% in August after falling 4% in July. Permits are seen declining 1.3%, but that shouldn’t be worrisome after July’s outsized 6.9% gain, which was the biggest since 2017.DON’T MISS Chaotic Funding Market Fell Asleep at the Wheel: Brian ChappattaStock Pickers Are Just Imagining an Index Bubble: Nir KaissarConflicted Dealers Shouldn't Advise the Treasury: James BiancoDraghi Lets Lagarde Pick Up the Pieces: Ferdinando GiuglianoEmpty Hair Salons Can't Be Saved by a Central Bank: Daniel MossTo contact the author of this story: Robert Burgess at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The...
(Bloomberg Opinion) -- By all accounts, it was supposed to be a sleepy August for the U.S. corporate bond market. Three weeks ago, the thinking went something like this: Sure, the Federal Reserve would cut its benchmark lending rate on July 31, in what Chair Jerome Powell would call a “mid-cycle adjustment.” But Treasuries were already pricing in such a move on the short end. Further out on the curve, the 30-year yield was about 2.6%, still more than 50 basis points away from its all-time low. Ten-year yields were about 2%, which seemed like a comfortable range for both buyers and sellers. For company finance officers, it had the makings of a sellers’ market but one that would be around once summer drew to a close.Then things got crazy. The 30-year yield lurched lower by 8 basis points on Aug. 1, then 13 basis points on Aug. 5, then another 13 basis points on Aug. 12. After a one-day reprieve near its all-time low of 2.0882%, it cruised through that level, tumbling to as low as 1.914%. The rally was so intense that the U.S. Treasury Department made an unusual, unscheduled announcement that it was again exploring issuing 50- or 100-year bonds. Companies clearly felt they couldn’t afford to pass up this opportunity. In the first full week of August, CVS Health Corp., Humana Inc. and Welltower Inc. headlined $35 billion of debt sales among investment-grade firms, easily surpassing estimates. Then in the week through Aug. 16, more than $22 billion went through, including a rarely seen offering from Exxon Mobil to the tune of $7 billion. Market watchers expected that would just about wrap things up until after Labor Day on Sept. 2.Some finance officers had other ideas. 3M Co. borrowed $3.25 billion on Monday to help finance its acquisition of medical-products maker Acelity Inc. In total, issuers sold $6.65 billion of investment-grade debt on Aug. 19, already topping some predictions for $5 billion this week. Then on Tuesday, Bank of New York Mellon Corp. priced $1 billion at the lower end of its expected yield range, along with a handful of other borrowers with multimillion-dollar deals.All this is to say, companies are simple: They see staggering low yields, and they issue bonds. Investors, for their part, can’t get enough of them. The Bloomberg Barclays U.S. Corporate Bond Index has returned 13.3% so far in 2019. Over the past 12 months, the index is up 12.5%, compared with just 1.5% for the S&P 500 Index. The average spread on corporate bonds has widened to 122 basis points, from 107 basis points at the end of July, but that’s just because they couldn’t keep up with the relentless rally in Treasuries, not because of a lack of buyers. If Bank of America Corp. strategists led by Hans Mikkelsen are correct, the demand in credit markets has lasting power. They say the $16 trillion of negative-yielding debt globally has left investors — and particularly those outside the U.S. — with few alternatives besides purchasing companies’ debt. “There is a wall of new money being forced into the global corporate bond market,” they wrote on Aug. 16. “Given the near extinction of non-USD IG yield, foreign investors are forced to take more risk.”Of course, buying investment-grade bonds hardly qualifies as a speculative endeavor. Exxon Mobil, in fact, has the same credit rating as the U.S. government from both Moody’s Investors Service and S&P Global Ratings. On the other hand, Bloomberg News’s Jeannine Amodeo and Davide Scigliuzzo reported this week that three leveraged-loan sales that had been languishing in the U.S. market for weeks were pulled as investors sought higher-quality assets. Vewd Software became the fourth on Tuesday, scrapping a $125 million term loan due to market conditions. Leveraged loans, it should be noted, are floating-rate securities and so face weaker demand when the Fed appears poised to cut rates, as it does now. But for large, highly rated companies, their behavior in recent weeks is exactly what should be expected. Exxon Mobil issued 30-year bonds to yield 3.095%. In November, five-year Treasuries offered the same amount. 3M, rated a few steps below triple-A, priced 30-year debt to yield 3.37%, less than the going rate on long Treasury bonds just nine months ago. No matter how you slice it, they’re getting borrowing costs that seemed unthinkable around this time last year.Interestingly, these low yields should be encouraging governments to borrow more, too. I wrote last week that the bond markets were begging for infrastructure spending. However, it seems neither Germany nor the U.S. has any appetite for that sort of initiative. The German government is reportedly preparing fiscal stimulus that could be triggered by a deep recession, while President Donald Trump hasn’t ruled out a payroll tax cut to stave off any economic weakness.It’s certainly possible that U.S. yields will only fall further from here, and other companies can also borrow or refinance at rock-bottom interest rates. But the move in global bond markets in recent weeks could was extreme, to say the least. The weak demand for Germany’s 30-year bond auction on Wednesday, which offered a coupon of 0% at a yield of -0.11%, suggests there are at least some lines that investors won’t cross.For prudent companies, it was well worth delaying summer vacations to get their deals done.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 the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Amazon, Bank of New York Mellon, CSX, Qualcomm and Neuralink are the companies to watch.
BNY Mellon (BK) witnesses lower revenues in the second quarter of 2019. However, lower expenses and rise in AUM support results to quite an extent.
Investing.com - Bank of NY Mellon (NYSE:BK) reported second quarter earnings that beat analysts' expectations on Wednesday and revenue that was inline with forecasts.
Bank of New York Mellon (BK) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.