News Archive

Taiwan to apply to join China-backed AIIB investment bank

TAIPEI (Reuters) – Taiwan will submit an application to join the Beijing-led Asian Infrastructure Investment Bank (AIIB) on Tuesday, despite historical animosity and a lack of formal diplomatic relations between the island and China.

In a statement released late on Monday, Taiwan presidential office spokesman Charles Chen said joining the AIIB will help Taiwan in its efforts at regional economic integration and raise the possibility of joining other multinational bodies.

It was not immediately known whether Beijing would accept Taiwan’s application to join the AIIB. The bank is seen as a significant setback to U.S. efforts to extend its influence in the Asia-Pacific region and balance China’s growing financial clout and assertiveness.

Most countries, including the United States, do not recognize Taiwan due to pressure from China. Taiwan is not a member of the United Nations, the World Bank or the International Monetary Fund.

China set a Tuesday deadline to become a founding member of the AIIB, prompting a rush of nations including Russia, Australia, Denmark and the Netherlands to announce their intent to join. A total of 42 countries have applied, Taiwan’s statement said.

The United States has urged countries to think twice about joining the AIIB until it could show sufficient standards of governance and environmental and social safeguards.

China views Taiwan as a renegade province and has not ruled out the use of force to bring it under its control. However, since Taiwan’s current president Ma Ying-jeou took office in 2008, enmity has declined considerably and the two sides have signed a number of trade and investment deals.

(Reporting by Jeanny Kao and Michael Gold; Editing by Richard Pullin and Ian Geoghegan)

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Exclusive: Cablevision to make $1 offer for New York Daily News

(Reuters) – U.S. cable T.V. operator Cablevision Systems Corp is planning to make an offer for the New York Daily News as early as this week, valuing the troubled tabloid at just $1, according to a person familiar with the matter.

The offer would come one month after New York media and real estate magnate Mortimer Zuckerman said he was considering selling the newspaper and had hired Lazard Ltd to assist with the process. It underscores the declining readership and plunging advertising revenue that have plagued the tabloid for years.

Cablevision’s $1 bid takes into account the New York Daily News’ reported $30 million annual loss and $150 million investment in a printing press, and declining circulation that relies heavily on newsstand sales rather than on subscriptions, the source said.

The source asked not to be identified because the offer has not been formally presented yet. Cablevision declined to comment while a representative for the New York Daily News could not immediately be reached for a comment.

To be sure, newspapers are not the only part of the media industry which is struggling. Cable distributors such as Cablevision and its larger rivals have also been under pressure to stop consumers from dumping their cable subscriptions, or “cutting the cord”, as subscribers shift to internet services such as Netflix and Hulu.

Cablevision also owns the suburban newspaper Newsday. The company, which is controlled by New York’s Dolan family, said last month its number of video customers fell 4.7 percent to 2.68 million in the fourth quarter ended Dec. 31.

Zuckerman is co-founder, executive chairman and former chief executive officer of Boston Properties Inc, a real estate investment trust. New York Daily News’ cross town rival, the New York Post, is owned by Rupert Murdoch’s media conglomerate News Corp.

(Editing by Muralikumar Anantharaman)

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IBM says to invest $3 billion in ‘Internet of Things’ unit

(Reuters) – International Business Machines Corp said on Tuesday it will invest $3 billion over the next four years in a new ‘Internet of Things’ unit, aiming to sell its expertise in gathering and making sense of the surge in real-time data.

The Armonk, New York-based technology company said its services will be based remotely in the cloud, and offer companies ways to make use of the new and multiplying sources of data such as building sensors, smartphones and home appliances to enhance their own products.

For its first major partnership, IBM said a unit of the Weather Co will move its weather data services onto IBM’s cloud, so that customers can use the data in tandem with IBM’s analytics tools.

As a result, IBM is hoping that companies will be able to combine live weather forecasting with a range of business data, so companies can quickly adapt to customer buying patterns or supply chain issues connected to the weather.

For example, insurance companies could send messages to policyholders in certain areas when hailstorms are approaching and tell them safe places to park, saving money all round.

Or retail stores could compare weather forecasts with past data to predict surges or drop-offs in customer buying due to extreme weather, and to adjust staffing and supply chain logistics accordingly.

IBM said it was already working with some large companies, such as German tire maker Continental AG and jet engine maker Pratt Whitney to help them use data in their processes.

Focusing on the cloud is part of IBM’s gradual shift away from its traditional hardware and consulting business. The company is targeting $40 billion in annual revenue from the cloud, big data, security and other growth areas by 2018, which should be about 45 percent of its total revenue at that time, based on analysts’ growth estimates.

(Reporting by Bill Rigby in Seattle; Editing by Lisa Shumaker)

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Starbucks U.S. cafes debuting new smoothies, kale optional

LOS ANGELES (Reuters) – Starbucks Corp (SBUX.O) and Danone SA (DANO.PA) on Tuesday will begin selling a smoothie line at more than 4,300 U.S. Starbucks shops as part of a Greek yogurt partnership that will also include yogurt parfaits and ready-to-eat yogurt to be sold by grocers.

The rollout comes as Starbucks seeks to double food sales and as Danone’s popular Dannon yogurt brand wrestles with Chobani in the popular Greek yogurt category. The partners each declined to give sales estimates.

The coffee chain, which has about 12,000 U.S. shops, will offer smoothies made with its own Evolution Fresh juices and an exclusive-to-Starbucks Dannon Greek yogurt at shops in Washington state, Oregon, Alaska, Northern California and Idaho.

Priced at $5.95 for a 16-ounce size, the smoothies will come in three flavors and can be customized by adding ingredients such as protein powder and fresh kale, said Jeff Hansberry, president of Starbucks’ Evolution Fresh brand.

In early May, Starbucks and Dannon will begin selling Evolution Fresh Greek yogurt parfaits in about half of Starbucks’ U.S. stores.

Then, this summer, the partners will start selling fruit-on-the-bottom Greek yogurt cups at U.S. supermarkets.

Evolution Fresh Greek yogurt is a proprietary blend for Starbucks that includes three yogurt cultures, instead of the traditional two, said Jeffrey Rothman, vice president of marketing for Dannon. Rothman added that it is the mildest, creamiest Greek yogurt Dannon makes.

U.S. yogurt sales totaled $8.3 billion in 2014 and were dominated by Dannon, according to research firm Euromonitor International, which does not break out sales in popular Greek yogurt category.

(Reporting by Lisa Baertlein; Editing by Steve Orlofky)

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U.S. may skirt oil storage crisis as drivers hit the road

NEW YORK (Reuters) – A month ago, it seemed inevitable: a massive global oversupply of crude oil production would overwhelm storage tanks in Oklahoma and fill supertankers off Singapore.

Now, there are growing signs that the U.S. oil market can avoid the doomsday scenario in which it runs out of room to stockpile surplus crude, a development that oil traders worried would send crude prices into another tailspin.

One reason is that refiners, spurred by high profit margins, are rushing to buy crude and churn out more fuel in response to an unexpectedly swift rise in U.S. road travel and soaring Chinese demand for fuel-hungry sport utility vehicles.

Furthermore, shale oil drillers have hit the brakes on new wells faster than many anticipated. This could throw years of unyielding growth into reverse as early as May.

Oil prices are starting to reflect these changes. U.S. crude CLc1 has rebounded from a six-year low of $42 a barrel, although those gains were built partly on growing anxiety over tumult in Yemen last week and a drop in the U.S. dollar.

“On a global basis I think sentiment has definitely shifted,” says Amrita Sen from Energy Aspects. “The main reason it’s shifted is that people are realizing demand isn’t actually that bad; in fact, it’s phenomenally strong.”

A subtle, but perhaps more telling, shift is taking place in how crude futures are priced.

U.S. oil futures for May delivery, the month by which most traders had been expecting the key storage hub of Cushing, Oklahoma, to fill to the brim, traded at a $1.73 a barrel discount to April on Monday, down from the $2 discount weeks earlier.

The gap between the first- and 12th-month Brent crude contract LCOc1-LCOc12 has narrowed to around $7 from around $10 a barrel in mid-February.

In short, despite a partial U.S. ban on exporting crude and dwindling storage capacity, this may not be the year that America begins drowning in oil, some say.

“While the US faces a structural problem, 2015 is unlikely to be the tipping point,” Morgan Stanley analysts wrote last week. They expect stockpiles to peak in May at 115 million barrels above a year ago. That would still be a record high, but well below maximum capacity.


Until recently, traders have focused on oil supply, looking for signs of a slowdown in U.S. shale drilling that would eventually reduce a global surplus estimated at over 1.5 million barrels per day (bpd).

It is fuel demand, though, that caught markets by surprise as consumers across the world responded with surprising fervor to tumbling prices. The results is that many refiners are outbidding storage-seeking traders for crude, cashing in on some of the highest margins since 2007. BRT-USG-REF-MA

U.S. refiners processed 15.5 million barrels per day (bpd) of crude in the week to March 22, a record for this time of year and nearly 450,000 bpd above last year’s previous high, government data show. REFCR-T-EIA

They are expected to restart nearly 400,000 bpd of refining capacity this week and almost 300,000 bpd the week after as spring maintenance season winds down early, according to data from IIR Energy made available to Reuters.

U.S. gasoline demand surged 6 percent in January alone, the fastest growth rate since 1993, according to government data, as Americans drove a record number of miles for the month.

“If this trend continues toward the summer driving season, margins should support extremely high U.S. refinery run rates,” Barclays analysts said in a report on Monday.

Gains in big emerging Asian markets have also surprised, especially as gasoline growth has overtaken that of diesel, traditionally the main driver of the region’s demand.

In India, domestic fuel sales rose more than 9 percent in February, with gasoline use alone jumping 18 percent. [ID:nL3N0WL3R7] In China, sales of sport utility vehicles this year have surged by two-thirds versus a year ago.


To be sure, crude is still rushing into Cushing at an unprecedented pace. In the week to March 27, stocks rose by 2.8 million barrels, according to traders citing data from Genscape. At an average rate of around 2 million barrels a week for the past four months, stocks could reach their theoretical limit in about seven weeks, according to U.S. government estimates.

Yet that may start to slow. U.S. refiners along the Gulf of Mexico are bidding up the price of cash crudes such as Light Louisiana Sweet (LLS) WTC-LLS to the highest premium against WTI since early 2014. This might make it more profitable to ship sweet crude down to the Gulf instead of into Cushing.

And there is growing sense that oil storage available beyond Cushing is more than sufficient to soak up any overflow.

Stocks in one of Canada’s larger storage hubs, Edmonton, hit a record last week, according to Genscape, but remained at 64 percent of capacity. Even in Cushing, savvy traders may be able to squeeze a few million extra barrels into so-called “contingency” space in the tanks, analysts say.

“We do not expect US oil inventories to dominate market sentiment much beyond May,” said analysts at Standard Chartered.

(Additional reporting By Catherine Ngai)

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Fed’s Fischer floats shadow bank regulation framework

STONE MOUNTAIN, Ga. (Reuters) – A top U.S. Federal Reserve official on Monday suggested stress tests and certain capital requirements to contain the risks within the non-bank lending sector, while acknowledging there is little the central bank can do to impose such restrictions.

Fed Vice Chairman Stanley Fischer offered a framework to more tightly regulate the lending activities of hedge funds, mutual funds and other non-bank entities – often referred to as shadow banks – though he was careful to show that he was offering suggestions and not potential central bank rules.

Fischer also gave a nod to the Bank of England, which formed a nimble and powerful financial stability arm, and suggested the Fed is headed in a similar direction.

“To promote solvency, one could impose ratio-type capital requirements, such as leverage-ratio requirements or risk-based requirements,” Fischer said, referring to non-bank lenders.

Fischer, in remarks at an Atlanta Federal Reserve Bank event, added that shadow banks should also consider conducting a stress test on themselves.

The Fed has ramped up its focus on crisis-prevention, recognizing the regulatory failures that led to the 2007-09 financial industry collapse.

Fischer and other Fed officials have pointed to the Bank of England’s financial stability arm, known as the Financial Policy Committee, as an ideal body to combat financial risks, as it has the legal power to impose policy changes on regulators. The U.S. Financial Stability Council (FSC), a group of 10 U.S. regulatory agencies, lacks that kind of power.

“I think the Bank of England has a particularly good way of doing it,” Fischer said, referring to the task of financial stability, in response to a question after his speech. “I think the Fed might be tending in that direction.”

The Fed regulates banks and systemically important financial institutions, but it does not hold the same power over non-bank lenders, even though the sector generates two-thirds of U.S. non-financial credit market debt.

Fischer on Monday said the key to regulating non-banks is focusing on solvency, liquidity and close monitoring of the system.

Fed officials have pointed to the $2.7 trillion U.S. money market industry as cog in the financial system that could see disruptions when the central bank moves ahead with raising interest rates, a move expected sometime later this year.

“Only time will tell” if money market reforms succeed in preventing runs on the institutions, Fischer said, reminding listeners that the industry is not subjected to capital rules.

(Reporting by Michael Flaherty and Howard Schneider; Editing by Lisa Shumaker)

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SEC says Wal-Mart can omit shareholder proposal on staff ‘engagement’

(Reuters) – Wal-Mart Stores Inc said it would omit a shareholder proposal that sought to link executive pay to a measure of staff motivation from a vote at its annual meeting in June after the U.S. securities regulator ruled in the retailer’s favor.

The proposal was submitted by Connecticut Treasurer Denise Nappier in December. It called for a measure of “employee engagement” to be used in tandem with financial metrics in determining the pay of senior executives.

The Securities and Exchange Commission sided with Wal-Mart’s assertion that it could be omitted on the grounds that it had already been “substantially implemented” in other ways by the company, according to the ruling posted on the SEC’s website.

“The SEC agreed that it could be excluded again this year on that basis,” Wal-Mart spokesman Randy Hargrove said, referring to a similar version of the proposal that failed to make the ballot last year as well.

The fate of the proposal had been in focus after Wal-Mart announced in February that it would raise its minimum wage in a move that was in part aimed at better engaging with and retaining its rank-and-file staff.

While Nappier applauded Wal-Mart’s decision on wages she had argued that her proposal was still needed to ensure that Wal-Mart was committed to investing in its workers over the longer term. Her office oversees $40 million worth of the retailer’s shares in state pension and trust funds.

Earlier this month the SEC ruled against Wal-Mart in its bid to omit a separate shareholder proposal, submitted by the International Brotherhood of Teamsters General Fund, that calls for an independent board chairman.

(Reporting by Nathan Layne; Editing by Chris Reese)

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Wall St. rebounds from recent losses; deals help

NEW YORK (Reuters) – U.S. stocks climbed more than 1 percent on Monday, rebounding from a sharp decline last week, helped by deal activity in healthcare and a bounce in energy shares.

Also boosting investors’ risk appetite, Chinese stocks surged to seven-year highs, helped by hopes for more infrastructure spending and monetary policy easing.

The Dow registered its biggest daily percentage gain since Feb. 3 and all 10 primary SP 500 sectors rose on the day, led by energy .SPNY, which jumped 2.1 percent despite a slight decline in Brent and U.S. oil prices.

“(The rally) sort of seems to be global growth based right now: the Chinese economy is falling but they’re going to stimulate,” said Uri Landesman, president of Platinum Partners in New York.

MA activity has helped boost equities, especially shares of smaller companies, Landesman said. “That’s been a theme of this market on and off for a very long time.”

On the deal front, OptumRx Corp, a unit of UnitedHealth Group (UNH.N), agreed to buy pharmacy benefit manager Catamaran Corp (CTRX.O)(CCT.TO) in a deal worth $12.78 billion. Shares of UnitedHealth, a Dow component, rose 2.5 percent to $121 while U.S. shares of Catamaran added 23.8 percent to $59.83.

The Dow Jones industrial average .DJI rose 263.65 points, or 1.49 percent, to 17,976.31, the SP 500 .SPX gained 25.22 points, or 1.22 percent, to 2,086.24 and the Nasdaq Composite .IXIC added 56.22 points, or 1.15 percent, to 4,947.44.

Major indexes each lost more than 2 percent last week.

Uncertainty about Friday’s jobs report and upcoming earnings, which start in earnest in mid-April, could create volatility this week, with the stock market closed for Good Friday.

The Nasdaq Biotech index .NBI rose 1.1 percent but remains roughly 5 percent below a record high from earlier this month. The group has recently been under pressure, with the index down 5.2 percent last week in its biggest weekly decline in a year.

Teva Pharmaceutical (TEVA.TA) (TEVA.N) said it would buy Auspex Pharmaceuticals Inc (ASPX.O) for $3.5 billion. Ireland’s Horizon Pharma Plc (HZNP.O) said it would acquire Hyperion Therapeutics Inc (HPTX.O) in an all-cash deal worth about $1.1 billion.

U.S. shares of Teva were up 0.9 percent at $62.52 while Auspex added 41.5 percent to $100.36. Horizon rose 18.2 percent to $25.78 on the Nasdaq while Hyperion rose 7.6 percent to $45.98.

Separately, Fujifilm Holdings Corp (4901.T) agreed to acquire U.S. biotechnology firm Cellular Dynamics International Inc (ICEL.O) for $307 million. Cellular shares more than doubled in heavy trading.

About 5.8 billion shares changed hands on U.S. exchanges, below the 6.7 billion daily average this month, according to BATS Global Markets.

Advancing issues outnumbered declining ones on the NYSE by 2,271 to 806, for a 2.82-to-1 ratio; on the Nasdaq, 1,856 issues rose and 881 fell, for a 2.11-to-1 ratio.

The SP 500 posted 26 new 52-week highs and 1 new low; the Nasdaq Composite recorded 110 new highs and 44 new lows.

(Editing by Chizu Nomiyama and Nick Zieminski)

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Ackman says shutting Herbalife down is key to him

BOSTON (Reuters) – Hedge fund mogul William Ackman, who has spent more than two years accusing Herbalife Ltd (HLF.N) of running a pyramid scheme, said on Monday that shutting down the company is the most important thing he can do.

Speaking at a meeting of the Council of Institutional Investors’ in Washington, Ackman said again that Herbalife preys on a “vulnerable population” of undocumented Latinos and urged Herbalife investors in the audience to sell their stock.

The company has vehemently denied running a pyramid scheme ever since Ackman’s $20 billion hedge fund, Pershing Square Capital Management, first unveiled a $1 billion short bet against the company in December 2012. Federal and state regulators, including the Securities and Exchange Commission and the Federal Trade Commission, are investigating the company.

Herbalife’s stock closed at $42.72 on Monday, up 13.47 percent for the year.

(Reporting by Sarah Lynch and Svea Herbst-Bayliss; Editing by Steve Olofsky)

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