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Presidential candidate Elizabeth Warren slamming Goldman's response to allegations of bias in how it evaluates applicants for Apple's credit card, according to reports. Yahoo Finance's Dan Howley joins Akiko Fujita to discuss.
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(Bloomberg Opinion) -- The global bond market rallied for a second consecutive day on Thursday in an awkward development for the growing chorus of voices that have cropped up the last few weeks contending that the synchronized global slowdown was over. From China to Germany, and from Cisco Systems Inc. to freight shipments, the latest data show it’s too soon to turn optimistic.In China, industrial output rose 4.7% in October from a year earlier, below the median estimate of 5.4%. Germany did post a surprise expansion in its gross domestic product for the third quarter, but that came with plenty of caveats. For one, the increase was only 0.1%, and the contraction for the second quarter was deeper than initially reported — negative 0.2% versus negative 0.1%. In the U.S., economists were passing around the latest Cass Freight Index for October, which fell 5.9% to mark its 11th consecutive year-over-year decline. This gauge has been around since 1995 and tracks freight volumes and expenditures by hundreds of companies in North America conducting $28 billion of transactions annually. More important, the compilers of the index noted in the latest survey that the index “has gone from ‘warning of a potential slowdown’ to ‘signaling an economic contraction.’” Cisco is not in the freight business, but comments by Chief Executive Officer Chuck Robbins late Wednesday after the computer company released fiscal second-quarter results echoed the sentiment in the freight industry. “Just go around the world and you see what’s happening in Hong Kong, you look at China, what’s happening in D.C., you’ve got Brexit, uncertainty in Latin America,” he said on a conference call with investors and analysts. “Business confidence suffers when there’s a lack of clarity, and there’s been a lack of clarity for so long that it’s finally come into play.”Maybe the global economy isn’t worsening, but it’s too soon to say an upswing is underway. Despite the sell-off in the bond market since September, yields are still showing caution. Yields on bonds worldwide as measured by the Bloomberg Barclays Global Aggregate Index stand at 1.45%, which is closer to its all-time low of 1.07% in 2016 than last year’s high of 2.27% in November.AWASH IN MORE DEBTThe Institute of International Finance came out with its quarterly look at the mountain of global debt, concluding that it rose by about $7 trillion in the first half of the year to a record of just more than $250 trillion. That increase is more double the $3.3 trillion expansion for all of last year. It pegs global debt, which it sees expanding to $255 trillion by the end of the year, at a lofty 320% of global GDP. It’s no surprise that the world is awash in debt, but yields show there seems to be a dearth of it for the public because of massive purchases by central banks. As of October, the collective balance-sheet assets of the Federal Reserve, European Central Bank, Bank of Japan and Bank of England stood at 35.7% of their countries’ total GDP, up from about 10% in 2008. Still, this is no time to be complacent. The IIF points out that much of the growth in debt has come in emerging markets, which is generally considered riskier than that of developed economies and where central banks are not doing things like quantitative easing. This could become an issue relatively quickly; the IIF pointed out that $9.4 trillion of bonds and syndicated loans from emerging markets come due by the end of 2021.CORPORATE CASH SHRINKSThe latest doubts about the strength of the economy kept the S&P 500 Index little changed for a second consecutive day. Perhaps that’s for the better because falling interest rates and bond yields are perhaps the single-biggest reason equities are up 23.4% this year in the absence of earnings growth. The second is probably share repurchases. But a new report from Societe General SA raises concern that the cash companies use to fund those buybacks is being depleted. “A boon for U.S. share buybacks” has left companies with less cash in their coffers, Societe Generale strategists Sophie Huynh and Alain Bokobza wrote in a report. Cash and money-market investments held by companies in the S&P 500 peaked in 2018’s first quarter on a per-share basis before falling 5.3% through the third quarter of this year, according to Bloomberg News’s David Wilson. S&P 500 companies have bought back the equivalent of 22% of their market value since 2010, the Societe Generale strategists noted in their report.CHILEAN CRISIS ENTERS NEW PHASEThe chaos in Chile, long known as the safest bet in Latin America, has become so bad that not even direct intervention by the nation’s central bank was able to reverse the slide in the peso. The currency fell about 1% Thursday, bringing its slide to 11.4% since mid-October. That’s the worst of the 31 major currencies tracked by Bloomberg and more than five times the next biggest loser, the Hungarian forint. What should have investors worried is that the peso depreciated even after the central bank announced a $4 billion currency swap program to ease liquidity in the market amid the worst civil unrest in a generation. “I don’t think it will help stop the sell-off in any way,” Brendan McKenna, a currency strategist at Wells Fargo, told Bloomberg News in reference to the swaps program. “There has to be some breakthrough on the political front for the currency to stabilize.” Foreign investors have been especially rattled since the government said Sunday that it backed plans to rewrite the constitution in response to four weeks of riots and protests in support of better pensions, wages, education and health care. If that were to happen, it’s possible the government would swing too far to the populist left to the detriment of the economy. FOLLOW THE CLIMATE CHANGE MONEYDespite the overwhelming evidence about climate change, there is still an alarming number of deniers. But if it was really all a big hoax or overblown, then why are the world’s biggest, most influential investment firms steering away from areas that are likely to be hit the hardest, such as the coasts? Goldman Sachs Group Inc. is considering real estate markets including Denver; Austin, Texas; and Nashville, Jeffrey Fine, a managing director at the firm’s merchant-banking division, said Thursday at a conference hosted by the NYU School of Professional Studies. Fine may not have specifically cited climate change, but according to Bloomberg News’s Gillian Tan, he did note that more companies and young people are moving away from the coasts. The Fed held its first conference on climate change last week in San Francisco, with one central bank official saying it has the potential to “displace people permanently” amid damaging wildfires in California and storms punishing the Eastern Seaboard. About 3 billion people — or some 40 percent of the world’s population — live within 200 kilometers (124 miles) of a coastline, according to Bloomberg News. It’s projected that by 2050 more than 1 billion will live directly at the water’s edge.TEA LEAVESThe idea that the U.S. consumer was strong and carrying the economy took a hit a month ago when Commerce Department data showed that retail sales in September fell unexpectedly. The 0.3% decline from August was directly opposite the 0.3% advance expected based on the median estimate of economists surveyed by Bloomberg. That’s why Friday’s update from the government on October retail sales is so critical, especially heading into the holiday sales season. Economists are calling for a 0.2% rebound. Bloomberg Economics isn’t so optimistic, saying that decelerating wage growth suggests household demand will moderate. It is forecasting no change in spending. Although the headline number will get the attention, the smart money will be looking at sales among a control group that are used to calculate GDP and exclude food services, auto dealers, building-material stores and gas stations. By that measure, sales are seen rising 0.3% from no change in September.DON’T MISS Stock Investors Could Use a Refresher on the Basics: Nir Kaissar You Care About Earnings? The Stock Market Doesn’t: John Authers Too Many Young American Men Still Aren’t Working: Justin Fox Brazil’s Politics and Economics Are Growing Apart: Mac Margolis Matt Levine's Money Stuff: You Can Buy Almost All the StocksTo contact the author of this story: Robert Burgess 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.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.
The benchmark S&P 500 stock index posted a slim gain to end with a record closing high on Thursday, as a dour forecast from tech stalwart Cisco Systems was offset by a strong report from big box retailer Walmart. The Dow index ended barely negative, after posting a closing high on Wednesday, while the Nasdaq also ended fractionally lower.
U.S. prosecutors criminally charged two former executives of Herbalife Nutrition Ltd's Chinese unit with running a decade-long scheme to bribe Chinese government officials to win business and evade regulatory scrutiny, a person familiar with the matter said. Herbalife was not criminally charged, and the multi-level marketing company was not identified by name in Thursday's indictment against Yanliang Li, also known as Jerry Li, and Hongwei Yang, also known as Mary Yang. The person familiar said Herbalife was their employer.
Wall Street's main indexes slipped from near record levels on Thursday, as a dour forecast from tech stalwart Cisco Systems raised fresh questions about the global economy's health and overshadowed a strong report from big box retailer Walmart. Cisco shares tumbled 7.8% after the network gear maker forecast second-quarter revenue and profit below expectations as increasing global economic uncertainties kept clients away from spending more on its routers and switches.
The latest U.S.-China trade war setback. Walmart's blowout quarterly earnings and early Disney+ success. Other quarterly results. And why Douglas Dynamics (PLOW) is a Zacks Rank 1 (Strong Buy) stock at the moment...
(Bloomberg) -- Investors in the retail industry are a tough crowd. Just ask Walmart Inc., which matched sales growth estimates, raised its forecast -- and watched its shares drift lower in midday trading as analysts picked over the numbers.The shares fell as much as 1.2% on Thursday afternoon after earlier hitting a record high. What changed? After all, the key gauge of same-store sales was in line with expectations -- the 21st consecutive gain. Both the number of customers and the size of their average orders were up, fueling the growth.But concerns remain, including persistent weakness at Sam’s Club, which lacks a leader, the high cost of new initiatives and slow progress in diversifying sales beyond groceries. Walmart also kept its sales guidance intact, disappointing some analysts.“Overall we view the result as disappointing,” Mark Astrachan, an analyst at Stifel, said in a note.Even with Thursday’s decline, the shares have had a great 2019. They’re up 29% for the year, compared with a 23% gain for the S&P 500. The reaction to earnings reflects the broader anxiety on Wall Street about whether stocks at record highs have much more room to run.More Non-FoodChief Financial Officer Brett Biggs said in prepared remarks that the company’s online unit needs to sell more general merchandise, which delivers better margins than bread and bananas. This sentiment was echoed by experts.“Walmart needs to improve its position in non-food,” Neil Saunders, an analyst at GlobalData Retail, said in a note. “Progress is slower than Walmart would like.”On a call with reporters, e-commerce chief Marc Lore said the company is trying to improve sales of home decor and apparel, like its recent re-launch of the Scoop fashion brand.Sam’s TroublesSam’s Club, the company’s warehouse division that accounts for about 11% of its revenue, is still a sore spot. Comparable sales there rose only 0.6%, just one-third the pace analysts surveyed by Consensus Metrix had been expecting, due largely to reduced sales of tobacco. Profit also declined due to price cuts and technology investments, the company said.Performance at Sam’s was “surprisingly weak,” RBC Capital Markets analyst Scot Ciccarelli said.The warehouse chain is also still without a leader a month after Sam’s CEO John Furner was tapped to replace Greg Foran as head of Walmart’s U.S. stores division. The executive shuffle and a re-organization of the company’s web operations over the summer have created unwelcome uncertainty entering the holiday season. The key period will be compressed this year by six days, putting pressure on Walmart, Target Corp. and others to reach shoppers early.No Guidance OverhaulWalmart now sees full-year adjusted earnings per share increasing slightly compared to last year, after saying in August either a slight decrease or slight increase was possible. This is the second time this year Walmart has upgraded its outlook.Also, comparable sales excluding gas for Walmart stores in the U.S. rose 3.2% in the period, beating analysts’ 3.1% growth estimate and marking the 21st straight gain.Still, the muted share reaction shows that Walmart can’t help but get roped into the underlying gloom enveloping the sector. Earlier this month, Moody’s cut its expectations for the entire U.S. retail industry, citing “intense competition in the fight for market share.”\--With assistance from Janet Freund.To contact the reporter on this story: Matthew Boyle in New York at email@example.comTo contact the editors responsible for this story: Crayton Harrison at firstname.lastname@example.org, Jonathan RoederFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
U.S. stocks dipped on Thursday, weighed down by technology shares after Cisco's weak forecast raised worries of a slowdown in global economic growth, overshadowing strong results from big box retailer Walmart. The pullback in the benchmark S&P 500 and blue-chip Dow Jones Industrial Average came a day after they closed at record highs. Cisco Systems Inc tumbled 7.7% after it warned current-quarter revenue would drop 3% to 5% amid declining global spending on its routers and switches, some of which are made in China.
(Bloomberg) -- Institutional investors see opportunities in real estate in mid-size U.S. cities away from the coasts.Goldman Sachs Group Inc. is eyeing markets including Denver, Austin and Nashville, Jeffrey Fine, a managing director at the firm’s merchant-banking division, said Thursday at a conference hosted by the NYU School of Professional Studies.“Companies are moving there, young people are moving there, there’s an affordability component to it,” Fine said. “We’re looking at places in Texas where taxes are having a big, big, big impact.”Goldman’s merchant bank -- which makes both debt and equity bets -- is not a large investor in New York or Washington because of slower job growth and an unattractive supply-demand dynamic, he said.Growth markets are also a focus of the Baupost Group, according to Nick Azrack, a managing director at the firm. There’s still money to be made, he said, even though markets like Nashville have already attracted significant investment.“How tall can that tree grow, we don’t know, but we’ll keep trying to climb it, because why wouldn’t you?” he said. “If you can find a way to cushion your fall, that’s a great what to capitalize on those sorts of opportunities.”Some investors are still putting money into coastal markets. Those areas have historically been better at preserving value during economic slowdowns, according to Cia Buckley Marakovits, chief investment officer of Dune Real Estate Partners. She said her firm is taking a “cherry-picking” approach on the coasts, while also investing in hospitality and health-care real estate.“We’re just looking more holistically at what will outperform in a slowdown,” she said.To contact the reporter on this story: Gillian Tan in New York at email@example.comTo contact the editors responsible for this story: Alan Goldstein at firstname.lastname@example.org, Craig Giammona, Steven CrabillFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
It was a day of largely running in place on Wall Street. All three major stock indices were very little changed but the S&P 500 still crept up to a record closing high. National Securities chief market strategist Art Hogan: SOUNDBITE (ENGLISH): NATIONAL SECURITIES CHIEF MARKET STRATEGIST ART HOGAN, SAYING: "I think the only thing that we have to be concerned about is the fact that we've gotten to where we are pretty quickly. We've had a great five or six weeks where the market has gotten to all-time highs and it hasn't taken much of a breather." Walmart kicked off earnings season for the nation's big retailers. Results were better-than-expected on a number of metrics. A lot of the strength came from grocery shopping. Online sales were solid as well. Walmart boosted full-year forecasts ahead of the holidays. But the stock finished lower after hitting an all-time high. Cisco Systems was a drag. The stock fell 7 percent after its somber forecast renewed investor concerns about global business spending, which has been held down due in part to trade uncertainties and political tension like Brexit and protests in Hong Kong. Wall Street got another whiff of inflation. This time, producer prices saw their biggest jump in six months, led by the largest surge in healthcare costs since 2009. Economists, however, don't expect that to alter the Fed's neutral stance on interest rates.
U.S. Senator Elizabeth Warren slammed Goldman Sachs over its response to claims that the Apple Card is bias against women applying for it. Goldman - which oversees the card - and Apple have been embroiled in controversy after an entrepreneur complained about the evaluation process on Twitter, saying it gave him 20 times the credit limit it gave his wife. Answering to those accusations, Goldman said customers should request a second look at their credit limits. But that answer wasn't sufficient for Warren who said to Bloomberg on Wednesday: "Yeah, great. So let's just tell every woman in America, 'You might have been discriminated against, on an unknown algorithm, it's on you to telephone Goldman Sachs and tell them to straighten it out." The 2020 Democratic candidate added that it's the company's responsibility to come forward about how the algorithm was designed. And, if they can't explain it, they "need to pull it down."
EDITORS NOTE: ADDS INFORMATION ON REOPENING OF STORE IN EL PASO, TEXAS. Walmart spreading some pre-holiday cheer. Domestic same-store sales at the world's largest retailer rose for the 21st straight quarter and beat analysts expectations. Walmart grew its market share in food and groceries as shoppers spent more money at its stores. What's more, the company sees the momentum continuing, lifting its annual earnings forecast. Its CFO said the consumer remains in "pretty good shape" - comforting words for a Wall Street concerned about the risks of a recession. Walmart also managed to buck the impact of tariffs on Chinese goods. Analysts point out that the retailer earns more than half of its revenue from sales of food and groceries, enabling it to manage the pressure from tariffs better than many of its rivals. President Donald Trump used Walmart's results to argue that the tariffs he slapped on China have had little impact on consumers, tweeting, "Walmart announces great numbers. No impact from Tariffs." Online sales rose 41%, but it wasn't all rosy. Walmart's online expansion has come at a cost to profitability. Its investment in its e-commerce business drove down operating income. But investors overlooked that, sending Walmart's shares higher in early Thursday trading. Later in the morning in El Paso, Texas, employees cheered as they welcomed back customers to the Walmart store that was the site of a massacre that killed 22 people.. Three months after the attack, The vast majority of the store's 400 employees are returning to work at that location.