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Homebuilder Toll Brothers profit beats estimates


Toll Brothers Inc (TOL.N), the largest U.S. luxury homebuilder, reported a better-than-expected quarterly profit, helped by a lower tax provision.

The company, whose homes can cost more than $2 million, also raised the low end of its average selling price by $5,000 to $730,000. The upper end was retained at $760,000.

However, second-quarter revenue fell short of the average analyst estimate as the number of homes sold in the company’s West market fell 7 percent.

The market consists of Arizona, California, Colorado, Nevada and Washington.

Total number of homes handed over fell 2 percent to 1,195.

The company’s shares fell as much as 3.7 percent to $35.63 on the New York Stock Exchange on Wednesday.

Toll Brothers said average selling price rose 1 percent to $713,500 in the second quarter ended April 30.

“The economy and housing continue on parallel paths of recovery,” Executive Chairman Robert Toll said. “It appears the housing market is on firm footing and heading in the right direction.”

Net orders, a key metric of future revenue for homebuilders, rose 10.4 percent in the quarter.

The company narrowed its forecast for full-year home completions to 5,300-5,900 homes from 5,200-6,000.

Net income rose to $67.9 million, or 37 cents per share, from $65.2 million, or 35 cents per share, a year earlier.

The company said it had reversed tax reserves of $13.7 million in the quarter due to a favorable settlement of a state tax liability.

Total revenue fell 1 percent to $852.6 million.

Analysts on average had expected earnings of 35 cents per share and revenue of $861.1 million, according to Thomson Reuters I/B/E/S.

The company’s shares were down 2.2 percent at $36.15 in afternoon trading.

Up to Tuesday’s close of $36.99, the stock had risen about 4 percent in the past 12 months, compared with the 11 percent rise in the Dow Jones U.S. home construction index .DJUSHB.

(Reporting by Ankit Ajmera and Rishika Sadam in Bangalore; Editing by Anupama Dwivedi and Sriraj Kalluvila)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/R4wmh7j6eDc/story01.htm

G7 finance chiefs ponder flagging growth, Greek risk


DRESDEN, Germany G7 ministers and central bank heads convened on Wednesday to discuss how to revive global growth and China’s increasing clout, while keeping a close eye on the protracted talks to avoid a Greek default.

Although the Greek crisis is not on the official agenda for the three-day meeting in the German city of Dresden, it will be discussed on the sidelines.

The United States is likely to use the talks, running through to Friday, to press Europe to reach a funding-for-reforms deal with Greece.

U.S. Treasury Secretary Jack Lew said he feared a miscalculation could lead to a new crisis which could have consequences for the wider world and said Greece’s creditors may have to give some ground.

“The challenge for the Europeans, the political and economic institutions — the IMF — is to show enough flexibility,” Lew said in London.

The threat of a Greek default, rising oil prices and bond market turmoil are helping fuel investor nervousness.

Canadian Finance Minister Joe Oliver was in more confident mood on Greece. “Decisions have to be made but they are going to be made, I think, with knowledge of the consequences,” he told Reuters.

“SERIALLY DISAPPOINTING”

Oliver, like the host nation Germany, wants to focus on how to revive global growth that he said had been “serially disappointing”.

A German official said one key to sustainable investment was through solid government finances, which could prove a challenge to nations battling big deficits.

“I expect tomorrow a clear recognition from the deliberations that the necessary reforms will be advanced. Of course it is clear that the economic challenges are very different from country to country,” the official said.

Oliver said one way to boost growth was to relax labor laws and make it easier for firms to lay off workers, while acknowledging “that’s what gets people demonstrating in the streets”.

There have been widespread protests in Greece against austerity measures imposed at the insistence of creditors.

Greece is now scrambling to strike a deal with its international lenders before an IMF loan falls due on June 5.

Greek officials have said there may not be enough money to meet a series of June bills to the IMF totaling 1.6 billion euros without outside help — raising the prospect of default.

“The notion that the risk is completely contained, that there’s no contagion, I think that it’s a mistake to think that a failure is of no consequence outside of Greece. We don’t know the exact scope,” Lew said.

SOFT POWER

The G7 — which groups the United States, Japan, Canada, France, Italy and Britain — must also grapple with the rise of a power not even present: China.

German Finance Minister Wolfgang Schaeuble told Reuters last week that officials could talk informally about the increased importance of the Chinese yuan.

The inclusion of the yuan in the International Monetary Fund’s currency basket would mark another stage in China’s rise as a global economic player, requiring the United States to accept a dilution of its power in international finance.

Having ignored U.S. urgings not to sign up to a China-led development bank, European G7 members have signaled an openness to add the yuan to the basket of currencies which makes up the IMF’s Special Drawing Rights (SDR) — a virtual currency that is used for lending to countries in financial difficulty.

“We’re not expecting specific decisions at the G7 (on this subject), but it is a question in people’s heads and about which there will be discussions,” said a French official.

The United States and Japan are more cautious.

Including the yuan in the basket would increase China’s influence at the IMF, an institution Washington was instrumental in designing and through which it has projected “soft power” for the last 70 years.

The IMF said on Tuesday that the yuan, also known as the renminbi, was no longer undervalued after its recent gains, but Beijing should quicken progress to a floating exchange rate.

(Additional reporting by Jan Strupczewski in Brussels, David Milliken and Lidia Kelly in London, Krista Hughes in Washington and Ingrid Melander in Paris; Editing by Andrew Roche)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/N2XZTCqaGRo/story01.htm

Ahead of G7, U.S. warns Europe not to miscalculate over Greece


LONDON The United States urged international creditors to show more flexibility in negotiations with Greece’s cash-strapped government to avert a possible Greek default and exit from the euro zone with incalculable consequences.

U.S. Treasury Secretary Jack Lew issued the warning on Wednesday in a stopover in London on his way to a meeting of Group of Seven finance ministers in Dresden, Germany.

“My concern is not the goodwill of the parties — I don’t think anyone wants this to blow up — but … a miscalculation could lead to a crisis that would be potentially very damaging,” Lew told students at the London School of Economics.

“The challenge for the Europeans, the political and economic institutions — the IMF — is to show enough flexibility,” he said.

Washington is the dominant shareholder in the global lender and also sees strong geopolitical grounds for keeping Greece firmly anchored to the European Union.

Finance ministers from the United States, Japan, Germany, France, Italy, Britain and Canada are meeting in Dresden on Thursday and Friday, and although Greece is not formally on the agenda, it will be discussed on the sidelines.

Greece’s government has said it does not have enough money to repay loans from the International Monetary Fund without further help from Europe.

Markets rallied strongly on Wednesday after Athens issued a statement attributed to a Greek official saying negotiators had begun drafting a staff-level agreement on a cash-for-reform deal. However EU officials dismissed the report and said the sides were still far apart on key issues.

A senior EU source said behind the scenes, the United States was leaning heavily on the IMF and on Germany to be more conciliatory towards Greece to permit a deal, if Greek Prime Minister Alexis Tsipras also makes a significant move.

But further support for Greece is unpopular with the public in many euro zone countries such as Germany, especially as the current Greek government has reversed previous reforms.

While most Greek debt is now owned by public institutions rather than commercial banks — reducing the risk of a bank run in case of default — Lew warned against complacency.

“The notion that the risk is completely contained, that there’s no contagion — I think that it’s a mistake to think that a failure is of no consequence outside of Greece. We don’t know the exact scope,” he said.

Greece itself needed to pursue reforms which any government would find hard, Lew added.

Lew’s office said he spoke earlier on Wednesday with Tsipras and urged him to find common ground with EU and IMF negotiators.

YUAN FLEXIBILITY

Lew was cautious about an IMF announcement on Tuesday that the yuan CNY=CFXS was no longer undervalued. The United States has long complained that China gives its exporters an unfair advantage by not allowing the yuan to strengthen freely.

Lew said it was too early to say if China had permanently changed its ways, and that the IMF may be unable to reach a decision this year and add the yuan to the basket of currencies like the dollar that form its internal currency, the SDR.

“The standard has to be what will they do when there’s pressure on the (yuan). For competitive purposes, will they continue to refrain from intervention. And … are they truly committed to having a market-determined exchange rate?”

Addressing the U.S. economy, Lew said weak growth in the first three months of the year had been an anomaly, and that he expected the second half to be stronger.

Asked about the prospect of the Federal Reserve raising interest rates, he said central banks needed to communicate their intentions clearly.

Bond markets have been volatile in recent weeks as well as last year, which traders partly attribute to uncertainty about when the United States will start to raise interest rates.

(Additional reporting by Andy Bruce in London and Paul Taylor in Brussels.; Editing by Paul Taylor/Mike Peacock.)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/fnNLaIgcNU4/story01.htm

Dollar has quick pitstop, then motors to new highs


NEW YORK European stocks lead major markets higher on Wednesday and the euro edged up on signs, later dismissed, that Greece and its creditors were drafting an agreement that would provide Athens much-needed debt relief.

The U.S. dollar index added to the previous session’s gains, boosted by an advance against the yen, and Nikkei futures rallied.

Greece’s government said it is starting to draft an agreement with creditors including the European Union and the International Monetary Fund, but European officials quickly dismissed that as wishful thinking.

The rebuttal notwithstanding, market moves triggered by the Greek announcement mostly held into the end of the European session. The euro edged up against the U.S. dollar, European stocks rallied and U.S. stocks also gained.

“It clearly shows that the markets have got a reaction on all these occasions as they’d like to see a deal, a continuation of the euro zone as a whole,” said IG analyst Chris Beauchamp.

“But you shouldn’t really believe anything until the deal is officially on the table and the ink is dry. Until you reach that point, everything is just up in the air as it has been.”

The Dow Jones industrial average .DJI rose 124.25 points, or 0.69 percent, to 18,165.79, the SP 500 .SPX gained 17.91 points, or 0.85 percent, to 2,122.11 and the Nasdaq Composite .IXIC added 67.74 points, or 1.35 percent, to 5,100.49.

The FTSEurofirst 300 index .FTEU3 of top European shares closed 1.3 percent higher after falling 1.1 percent in the previous three sessions.

Nikkei futures NKc1 rose 1.1 percent on the back of a softer yen.

EURO TICKS UP, YEN FALLS

Even with the advance in the euro, the dollar index .DXY edged up to extend its previous day’s rally. The greenback hit a fresh eight-year high against the yen at 124.06. A move above 124.16 would take the yen to its weakest since late 2002.

At $1.0891 per euro, the single currency rose 0.2 percent on the day.

“All those comments have to be taken with a big pinch of salt, but it’s helping there are signs we are moving toward a deal,” said Charles St. Arnaud, currency strategist at Nomura Securities International in New York in regard to news on Greece.

After tumbling nearly 3 percent on Tuesday, U.S. crude CLc1 fell ahead of inventory data. It was last down 0.9 percent at $57.51 a barrel, while Brent LCOc1 fell 2.7 percent to $62 a barrel.

U.S. 30-year Treasury prices were last up 1/32 in price to yield 2.888 percent and benchmark 10-year U.S. Treasury notes were last down 3/32 to yield 2.146 percent, from a yield of 2.135 percent late Tuesday.

Spot gold was unchanged in a choppy session and silver fell 0.4 percent.

(Additional reporting by Liisa Tuhkanen and Atul Prakash in London; Reporting by Rodrigo Campos; Editing by Meredith Mazzilli)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/8F-W5rKWdHI/story01.htm

Investor Bill Gross: Bet against Bunds ‘well timed, not well executed’


Bill Gross, the widely followed investor, admitted in his June Investment Outlook on Wednesday that his bet against the German Bund market was well timed but not profitable.

“My famous (infamous?) ‘Short of a lifetime’ trade on the German Bund market was well timed but not necessarily well executed,” Gross, who runs the Janus Global Unconstrained Fund (JUCAX.O), wrote in his latest report to clients titled “Mr. Bleu.”

Gross’s Janus Global Unconstrained portfolio is down 0.40 percent so far this year, underperforming its peers by 1.88 percentage points and lagging 93 percent of its non-traditional bond category, according to Morningstar data on Tuesday.

Last month, Gross said he placed a wager against German bonds, tweeting on April 21 that German 10-year Bunds were “the short of a lifetime” and that the bet was better than the pound in 1993.

Gross was referring to investors George Soros and Stanley Druckenmiller, who made their names betting against the pound in 1992.

German 10-year Bund yields set record lows following the European Central Bank’s purchases of public-sector bonds on March 9 as part of its trillion-euro stimulus program, with the latest low of 0.049 percent touched on April 17.

Gross’s investment appeared prescient, with prices on German bonds falling and their yields rising. The yield on the 10-year Bund has risen to 0.54 percent on Wednesday.

All told, Gross said the bet against Bunds “was a prime example of opportunities hatched by the excess of global monetary policy – zero based policy rates and tag team match quantitative easing programs which continue to encourage malinvestment in financial assets as opposed to the real economy.”

Gross said there was still opportunity to make money.

The ECB is still committed for over a year’s worth of 700 billion euro asset purchases, while the U.S. Federal Reserve is “chomping at the bit” to raise policy rates in late-2015, Gross said. “Partially because of these differences, there remain significant disparities in global asset prices that potentially can be successfully arbitraged.”

Gross said 10-year Treasuries still trade at a 175-basis-point premium to 10-year Bunds versus a long-term historical average of 25 basis or so.

“A purchase of Treasuries and a sale of Bunds allows for not only a potential capital gain if the spread narrows, but a yield pickup while the Rip Van Winkle investor potentially waits for a probable outcome,” Gross said.

(Editing by Jeffrey Benkoe)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/o-GscG6pVS4/story01.htm

‘Brexit’ would be bad for business: Lloyd’s of London CEO


LUXEMBOURG A British referendum in favour of leaving the European Union would damage the country’s business prospects, Lloyd’s of London [LOL.UL] Chief Executive Inga Beale said in Luxembourg on Wednesday.

Prime Minister David Cameron has pledged to renegotiate Britain’s ties with Europe and then give voters a referendum on European Union membership by the end of 2017, though expectations are growing that it will take place next year.

    “We believe it would be bad for business. We think that open trade and being part of a bigger community is very important,” Beale said in response to a question at the annual meeting of trade body Insurance Europe.

    Speaking with a stronger European voice was important as countries such as China and India become ever more powerful, Beale said.

    “I would wholeheartedly welcome a stronger Europe, rather than countries becoming smaller and less important in the world on their own,” she said.

British institutions say they will find it harder to sell their products across Europe if Britain is outside the region’s single market, and many business leaders have already publicly expressed their views.

    On the same conference panel in Luxembourg the president of German financial market watchdog Bafin, Felix Hufeld, said London was a hub for the insurance business. It made a crucial contribution to the industry through its people and their know-how, expertise and global networks.

    “It would be absolutely disastrous to lose that from the EU point of view, so let’s try everything we can to avoid that happening,” he said. “It would be disastrous, including for the British people themselves.”

    Henri de Castries, chief executive of French insurer Axa (AXAF.PA), said politicians should use the British request for reform to improve governance at European level.

    “We should leverage the British request for clarification to come out with a better prioritisation and some reforms,” de Castries said.

         

(Reporting by Jonathan Gould; editing by Susan Thomas)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/l-fp_q2yaIE/story01.htm

Goldman tops 2015 City of London bank bonus charts


LONDON Bankers at Goldman Sachs received the highest bonuses in London’s banking industry this year but bonuses paid out by the top 10 banks were down overall compared to last year, a survey published on Wednesday showed.

Goldman Sachs bankers received an average bonus of 194,000 pounds ($300,000), some 14 percent more than their peers at second-placed Morgan Stanley, according to salary benchmarking site Emolument.com.

The top five in the survey were all U.S. banks. They paid notably higher bonuses than the leading European banks, in some cases nearly double. Other banks in the top five were Bank of America Merrill Lynch, JP Morgan and Citigroup.

Last year, Goldman was ranked 8th in the table and Morgan Stanley was ranked 6th. Citi wasn’t even in last year’s top 10.

Goldman paid the largest bonuses this year but JP Morgan’s overall compensation, including salary and bonuses, was higher, Emolument said.

“Continuing a trend established in the last few years, we expect to see base salaries shoot up in order to circumvent bonus cap regulations, especially at director and managing director level,” said Emolument.com’s Alice Leguay.

The European Union’s banking watchdog is seeking to impose rules on lenders aimed at stopping bankers from taking excessive risks to earn big bonuses.

The British government has opposed the new rules, saying it will drive up fixed pay. But many citizens support a cap in bonuses amid a wave of popular anger over rising income inequality and the way risky lending contributed to the 2008 financial crash.

The 2015 bonus data were collated from 189 front office directors working at investment banks in London.

Below is a table of 2015 and 2014 figures.

2015

BANK AVERAGE BONUS (UK pounds)

Goldman Sachs 194,000

Morgan Stanley 170,000

BAML 166,000

JP Morgan 162,000

Citigroup 143,000

Credit Suisse 135,000

Deutsche Bank 121,000

Nomura 119,000

HSBC 116,000

UBS 115,000

2014

BANK AVERAGE BONUS (UK pounds)

Deutsche Bank 233,000

UBS 233,000

JP Morgan 222,000

Credit Suisse 214,000

Nomura 196,000

Morgan Stanley 192,000

BAML 179,000

Goldman Sachs 174,000

HSBC 134,000

Societe Generale 123,000

(Reporting by Jamie McGeever; Editing by Katharine Houreld)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Hfpo_ThdXC8/story01.htm

Citi keeps top spot in FX trading as European banks slump: poll


LONDON European banks Deutsche Bank, Barclays and UBS have seen their market share in foreign exchange trading slump in the past year, as U.S. banks led by Citigroup (C.N) grabbed business, according to widely watched industry rankings.

Citigroup kept its top spot as the leading foreign exchange trading bank with a market share of 16.1 percent, up from 16 percent a year ago, according to the Euromoney FX Survey 2015.

Deutsche Bank (DBKGn.DE) and Barclays (BARC.L) remained in second and third spots, but their market shares fell to 14.5 percent from 15.7 percent and to 8.1 percent from 10.9 percent, respectively.

UBS (UBSG.VX) fell to fifth from fourth as its market share slumped to 7.3 percent from 10.9 percent, and HSBC (HSBA.L) dropped to seventh from fifth with a market share of 5.4 percent from 7.1 percent a year ago.

U.S. banks made strong gains on their European rivals.

JPMorgan (JPM.N) moved to fourth as its market share rose to 7.7 percent from 5.6 percent and Bank of America Merrill Lynch (BAC.N) rose to sixth with a 6.2 percent share, up from 4.4 percent.

Euromoney, whose annual poll of liquidity consumption is watched closely by the foreign exchange (FX) industry, said a majority of business was conducted electronically for the first time in the past year, with e-channel execution accounting for 53.2 percent of total volumes, up from 47 percent in 2014 and 40 percent in 2011.

The shift to electronic trading is adding to change across the industry, as banks come under pressure to change business models to focus on areas of strength and cut back where they lack scale.

Two years of scandal over market manipulation and the fallout of a 30 percent move in minutes by the Swiss franc in January have led many banks to reassess their FX operations, traditionally among their biggest and most reliable earners.

One of the previous leaders, Royal Bank of Scotland (RBS.L), has fallen away and other European banks, striving to find new business models in response to a raft of new regulation and generally tighter margins on FX trading, have slashed staffing on trading floors.

The industry was rocked last year by allegations of market rigging, and authorities in the United States and Europe have fined seven banks over $10 billion for failing to stop traders from trying to manipulate rates.

(Reporting by Steve Slater and Patrick Graham; Editing by Mark Potter)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/UkHbTy57mVU/story01.htm

Sony mobile executive: pricing tweaks, cost cuts to cope with dollar’s rise


TOKYO The head of Japanese electronics maker Sony Corp’s (6758.T) mobile business said on Wednesday he plans to deal with the effects of a stronger dollar versus the yen by tweaking the pricing of its handsets and by cutting costs.

Hiroki Totoki, who leads Sony’s mobile phone business, warned that currency fluctuations could potentially have a bigger impact than competition on profitability.

“We’re seeing a strengthening in the dollar under way. But despite the impact of exchange rates, we would like to limit losses through pricing and lower operating expenses,” said Totoki, speaking at an investor conference in Tokyo.

(Reporting by Ritsuko Ando; Editing by Kenneth Maxwell)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Br50K6iqTEQ/story01.htm