News Archive

U.S. watchdog examines SoftBank over ex-president Arora: Bloomberg

TOKYO U.S. regulators are examining Japanese internet conglomerate SoftBank Group over possible conflicts of interest or other problems involving former president Nikesh Arora, who stepped down last week, Bloomberg News reported on Thursday.

The report, citing sources, said the Securities and Exchange Commission was looking into whether Arora, who was tipped as the next CEO, held conflicts of interest or engaged in questionable behavior before resigning from SoftBank last week.

SoftBank and Arora have described his departure as an amicable one, saying Masayoshi Son, chairman and chief executive of the company, recently decided he wanted to stay longer instead of handing over to Arora when turning 60 next year.

Earlier this year, a law firm saying it represented the interests of unidentified shareholders called on SoftBank to investigate whether Arora had conflicts of interest due to his role as a senior adviser to private equity firm Silver Lake.

Asked about the report on Thursday, a SoftBank spokesman referred to a company statement last week saying the allegations were without merit.

Arora was not immediately available to comment.

(Reporting by Yoshiyasu Shida; Editing by Stephen Coates)

Article source:

North America leaders mount strong defense of trade despite threats

OTTAWA Canada, the United States and Mexico on Wednesday mounted a fierce defense of free trade, vowing to deepen economic ties despite an increasingly acrimonious debate about the value of globalization.

U.S. President Barack Obama and Mexican President Enrique Pena Nieto also took swipes at U.S. Republican presidential candidate Donald Trump, who has vowed to renegotiate or scrap the North American Free Trade Agreement (NAFTA) if he wins November’s election.

“The integration of national economies into a global economy: that’s here, that’s done,” Obama told a news conference at the end of a summit dubbed the “Three Amigos”.

“And us trying to abandon the field and pull up the drawbridge around us is going to be bad for us,” he said after the talks, hosted by Canadian Prime Minister Justin Trudeau.

Trump says free trade has been disastrous, costing thousands of U.S. jobs and depressing wages.

Similar complaints were heard in Britain ahead of a surprise referendum vote last week to leave the European Union and its free trade area.

Obama and Pena Nieto stressed the importance of the relationship between their countries, which has come under strain amid heated U.S. campaign rhetoric.

“Isolationism cannot bring prosperity to a society,” Pena Nieto said after bilateral talks with Obama.

Later, at the news conference, Pena Nieto warned of the dangers of populism in a globalized world and defended comments earlier this year in which likened Trump to Adolf Hitler and Benito Mussolini.

“Hitler, Mussolini, we all know the result,” he said when asked to explain the comparison. “It was only a call for reflection and for recognition, so that we bear in mind what we have achieved and the great deal still to achieve.”

The summit, Trudeau’s first and Obama’s last, could be the final harmonious one between the three countries if Trump wins the White House in the November U.S. presidential election.

Trudeau, who has generally steered clear of commenting on Trump’s remarks since taking power last November, said that regardless of rhetoric the three nations would continue to have tremendously close relations.

Obama has strongly criticized Trump in recent weeks and took aim at the Republican’s promises to clamp down on what he says is out-of-control illegal immigration.

The United States, he said, acknowledged public fears about the uncontrolled arrival of foreigners and had worked hard to secure its borders.

“America is a nation of immigrants. That is our strength … The notion that we would somehow stop now on what has been a tradition of attracting talent and strivers and dreamers from all around the world, that would rob us of the thing that is most special about America,” he said.

Obama – whose progressive social policies are very similar to Trudeau’s – later received a rapturous welcome when he addressed the Canadian Parliament. In a speech often interrupted by prolonged applause, he said he understood that some people had genuine concerns about the pace of change.

“If the benefits of globalization accrue only to those at the very top, if our democracies seem incapable of assuring broad-based growth and opportunity for everyone, then people will push back out of anger or out of fear,” he said.

“For those of us who truly believe that our economies have to work for everybody, the answer is not to try and pull back from our interconnected world. It is, rather, to engage with the rest of the world, to shape the rules so they’re good for our workers and good for our businesses.”

Protests over immigration have also been seen in Britain in the wake of the so-called Brexit vote last week, which at one point wiped more than $2 trillion off global equity markets.

Obama said he expected the world economy would be steady in the short run but expressed longer term concerns about global growth if Brexit went ahead.

Trump also opposes the 12-nation Trans-Pacific Partnership, which was signed in February but may not be ratified by the United States given increasing domestic resistance. Obama said on Wednesday he was committed to ensuring the pact contained high labor and trade standards.

One obstacle to free trade is the dumping of products at artificially low prices, and Trudeau, Obama and Pena Nieto said they agreed on the need for the governments of all major steel-making nations to address excess capacity.

The three also pledged to produce 50 percent of their nations’ electricity from clean energy by 2025.

(Writing by David Ljunggren; Editing by James Dalgleish and Diane Craft)

Article source:

Deutsche, Santander fail U.S. stress test; Morgan Stanley gets second chance

NEW YORK/WASHINGTON U.S. bank subsidiaries of Deutsche Bank AG (DBKGn.DE) and Banco Santander SA (SAN.MC) yet again failed the Federal Reserve’s stress test on Wednesday due to “broad and substantial weaknesses” in their capital planning processes.

The Fed gave Morgan Stanley (MS.N) only a conditional pass, saying that the bank also had to resolve weaknesses in its processes. Morgan Stanley has until Dec. 29 to resubmit its capital plan for approval.

The stress test results announced on Wednesday, known as CCAR, are particularly important because they determine how much capital big U.S. banks can put toward dividends, stock buybacks, acquisitions or investments.

The vast majority of participants passed with flying colors, including some that have had trouble in the past, like Citigroup Inc (C.N), Bank of America Corp (BAC.N) and Ally Financial Inc (ALLY.N). JPMorgan Chase Co (JPM.N), Goldman Sachs Group Inc (GS.N) and Wells Fargo Co (WFC.N) also passed.

(Click here to see how the banks performed:

Later on Wednesday, many of the banks that passed will release statements on dividend and stock buyback plans.

The CCAR results come after the Fed released results of a separate stress test last week, in which all 33 banks exceeded minimum regulatory capital requirements. But CCAR is a more nuanced examination, in which the Fed can fail banks for the way they go about capital planning as well as whether they technically pass a numerical threshold.

Banks had a few days to resubmit their capital plans last week if they felt that they were on shaky ground. MT Bank Corp (MTB.N) was the only bank to do so.

While the stress tests are only hypothetical scenarios and the Fed’s evaluations are subjective, the annual process is forcing banks to be better prepared for real life events. Big U.S. banks have more than doubled their capital since the financial crisis, adding more than $700 billion in common equity capital from the beginning of 2009, according to the Fed.

Market upheavals that followed a referendum last week in which United Kingdom voters decided to leave the European Union is a good example of how prepared U.S. banks are for turmoil, said Mike Alix, a bank consultant at PricewaterhouseCoopers and a former supervisory official at the Federal Reserve Bank of New York.

“The benefits of CCAR are an absolute rise in capital ratios and risk management,” said Alix.

The Fed’s checks on the quality of risk management and capital planning “are driving improvements in governance, infrastructure and controls” at the banks, he added.

At least one bank each year has failed to have its capital plan approved since the Fed began issuing pubic verdicts in 2012.

(Reporting by David Henry in New York and Patrick Rucker in Washington; Writing by Lauren Tara LaCapra; Editing by Bernard Orr)

Article source:

Wall Street rebounds from Brexit with second day of big gains

Wall Street recorded big gains for a second day on Wednesday as investors continued to scour for bargains and digest the fallout from Britain’s stunning vote to leave the European Union.

The SP 500 has recouped more than half of its losses from the two-day equities rout sparked by the British referendum, which had erased $3 trillion in value from global equity markets, according to SP Dow Jones Indices.

The SP financial sector .SPSY, which was beaten up in the wake of the vote, gained 2.3 percent, leading all sectors.

Energy shares .SPNY jumped 2 percent, supported by higher oil prices. All 10 industry groups closed higher.

“It’s not the end of the world and it never was the end of the world, and to have these kinds of reactions was ridiculous,” said Jeff Weniger, senior portfolio strategist at BMO Private Bank in Chicago.

The Dow Jones industrial average .DJI rose 284.96 points, or 1.64 percent, to 17,694.68, the SP 500 .SPX gained 34.68 points, or 1.7 percent, to 2,070.77 and the Nasdaq Composite .IXIC added 87.38 points, or 1.86 percent, to 4,779.25.

The gains marked the biggest two-day run for the SP 500 in four months.

Wall Street’s rebound in the past two days has coincided with a bounce in oil prices, which rose on Wednesday after a larger-than-expected drawdown in U.S. crude inventories.

“People are still using oil as kind of a proxy for a read on the global economy,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “If oil prices firm, that seems to be giving a little bit more breathing room that Brexit and everything else isn’t going to just tank the global economy.”

Adding to the positive sentiment, U.S. consumer spending rose for a second straight month in May on increased demand for automobiles and other goods. But there are fears Brexit could hurt confidence and prompt households to cut back on consumption.

Traders have largely discounted a near-term U.S. interest rate increase, betting on only a 16-percent chance of a hike at the Federal Reserve’s December meeting, according to the CME Group FedWatch website.

“The delay in expectations for any type of a rate hike is helping the overall market enjoy the prospect of a longer period of easy-money policy,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York.

Investors are still bracing for volatility in coming weeks amid uncertainty about how Britain will pursue its EU exit, with some pointing to more possible downside. The SP 500 was within 17 points of its May 2015 record high last Thursday.

Tesaro (TSRO.O) soared 108 percent to $77.40 after the company’s ovarian cancer drug met its main goal. The stock was the top percentage gainer on the Nasdaq.

About 8 billion shares changed hands in U.S. exchanges, above the roughly 7.5 billion average over the past 20 sessions.

NYSE advancers outnumbered decliners by a 6.07-to-1 ratio; on the Nasdaq, a 3.78-to-1 ratio favored advancers.

The SP 500 posted 48 new 52-week highs and no new lows; the Nasdaq recorded 41 new highs and 43 new lows.

(Additional reporting by Chuck Mikolajczak in New York and Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty and Nick Zieminski)

Article source:

North American leaders vow to boost trade despite threats

OTTAWA Canada, the United States and Mexico on Wednesday vowed to deepen their economic ties, pushing back against anti-free-trade sentiment that has shifted political debate in the United States and Europe.

The three nations are member of the North American Free Trade Agreement (NAFTA), which U.S. Republican presidential candidate Donald Trump has vowed to renegotiate or scrap if he wins November’s election.

U.S. President Barack Obama, Prime Minister Justin Trudeau and President Enrique Pena Nieto, meeting at a “Three Amigos” summit in Ottawa, said an efficient North American economy was vital for creating good-paying, middle-class jobs.

“We will build upon this strong trilateral economic relationship, and further facilitate trade among our three countries, and improve the networks that allow us to produce products and services together,” they said in a statement.

Trump says free trade has been disastrous, costing thousands of U.S. jobs and depressing wages.

Similar complaints were heard in Britain ahead of a surprise referendum vote last week to leave the European Union and its free trade area.

Obama and Pena Nieto stressed the importance of the relationship between the United States and Mexico, which has come under strain amid heated U.S. campaign rhetoric, and Obama invited the Mexican leader for a last visit to Washington before Obama’s term ends in January.

“Isolationism cannot bring prosperity to a society,” Pena Nieto said after talks with Obama.

Obama said their meeting comes at “a time when we are all too often hearing rhetoric that ignores the enormous contributions that have been made by Mexican Americans, and the enormous strengths that we draw from the relationship with our good neighbors to the south.”

Trump also opposes the 12-nation Trans-Pacific Partnership, which was signed in February but may not be ratified by the United States given increasing domestic resistance. Obama said on Wednesday he was committed to ensuring the pact contained high labor and trade standards.

The Ottawa summit, Trudeau’s first and Obama’s last, could be the final harmonious one between the three countries if Trump wins the White House.

One obstacle to free trade is the dumping of products at artificially low prices, and Trudeau, Obama and Pena Nieto said they agreed on the need for the governments of all major steel-making nations to address excess capacity.

Although they did not single out any country, the United States has acted several times to prevent dumping of some Chinese steel products.

The three are scheduled to hold a news conference at 3 p.m. The leaders usually meet about once a year.

The trio will also discuss Britain’s vote to leave the EU, which wiped more than $2 trillion off global equity markets and dealt a huge blow to the EU.

The three have pledged to produce 50 percent of their nations’ electricity from clean energy by 2025.

The North American countries plan initiatives including cutting power waste by aligning 10 appliance efficiency standards or test procedures by 2019, the White House said.

Obama is due to address the Canadian Parliament at 5.25 p.m.

(Writing by David Ljunggren; Editing by James Dalgleish)

Article source:

Monsanto in talks with Bayer, others about ‘strategic options’

CHICAGO Monsanto Co is in talks with Bayer AG and other companies regarding “alternative strategic options,” a month after it rejected the German company’s $62-billion takeover offer, the U.S. seed producer said on Wednesday.

Monsanto’s options include combinations with other companies and businesses in the sector beyond Bayer. Potential deals could involve BASF and any businesses divested from the Dow/DuPont merger, according to analysts.

Monsanto, which also reported lower-than-expected sales for the sixth straight quarter on Wednesday, had approached Bayer about a potential acquisition of its crop science unit, Reuters reported in March.

“Monsanto remains the partner of choice in this industry and I assure you that we will continue to actively explore these opportunities,” Chief Executive Officer Hugh Grant said.

Monsanto said there was “no formal update on the Bayer proposal,” but that talks have been ongoing for the past several weeks.

A Bayer spokesman said the company had no comment.

The seeds and agrochemicals industry, long dominated by six large companies, has been jolted by several large deals in the past year as low crop prices and belt-tightening by farmers pressured earnings. Syngenta agreed in February to be acquired by ChemChina for $43 billion, while Dow Chemical and DuPont struck a $130 billion mega merger last year.

Companies have also explored selling assets that may be underperforming or non-core to their businesses going forward.

Monsanto had not opened its books more than two weeks after rejecting Bayer’s offer but left the door open to a possible deal, Reuters reported this month, citing sources.

Bayer, however, has no plans to raise its offer without reviewing Monsanto’s confidential information, the sources said.

Bayer had planned to issue about $15.4 billion in new shares to help fund the proposed all-cash deal.


Monsanto’s weak earnings could increase the possibility of MA for the company, according to Bernstein analyst Jonas Oxgaard.

Still if Monsanto’s stock price fails to rally strongly, that could give Bayer some cover if it decided to back out of the deal, he said.

“This certainly explains why Monsanto required a higher offer before opening their books – once their books are read it seems to be less likely that a higher offer would materialize,” Oxgaard wrote in a note Wednesday.

Bayer’s offer, which was opposed by some of its own shareholders, puts the deal at $122 per share.

Monsanto shares rose 0.7 percent to $101.79 on Wednesday, well below a high above $112 shortly after the Bayer offer was announced.

Bernstein Research estimated that Bayer can issue no more than 290 million shares before a shareholder vote is needed. That could raise almost 26 billion Euros ($29 billion) based on Bayer’s share price on Wednesday.


Separately, Monsanto reported that net income tumbled more than 37 percent to $717 million, or $1.63 per share, in the third quarter ended May 31.

A global glut of generic glyphosate, the active ingredient in Monsanto’s Roundup herbicide, and delays in securing European Union import approval for Monsanto’s next-generation biotech soybeans dragged down profits in the quarter, the company said.

Earnings per share totaled $2.17 from continuing operations, well below the average analyst estimate of $2.40, according to Thomson Reuters I/B/E/S. Net sales declined 8.5 percent to $4.19 billion, missing estimates of $4.49 billion.

Monsanto tweaked its 2016 full-year as-reported EPS forecast to the low end of the $3.36 to $4.14 adjusted range and said it expects to be at the low end of its ongoing EPS full-year range of $4.40 to $5.10.

(Additional reporting by Arathy S Nair in Bengaluru, P.J. Huffstutter in Chicago, Gregory Roumeliotis in New York and Patricia Weiss and Ludwig Burger in Frankfurt; Editing by Kirti Pandey and Jeffrey Benkoe)

Article source:

Crystal Pepsi: the ‘clear’ 90s hit makes a return

PepsiCo is going retro. The company is officially bringing back Crystal Pepsi, a clear cola drink that was hugely popular for a brief period during the early 1990s.

PepsiCo Inc (PEP.N) said on Wednesday said it would sell Crystal Pepsi this year for a limited time in the United States and Canada.

Crystal Pepsi will be sold in 20-ounce bottles starting July 11 in Canada and Aug. 8 in the United States.

The soft drink was introduced in 1992. The clear soda caught the imagination and soon hit an iconic status on the back of a slick advertising campaign.

It, however, fell out of favor equally fast and disappeared from shelves in 1994.

This, however, will not be the soda’s first comeback since.

Pepsi had made the drink available for two days in December last year in the United States through a sweepstakes on a company app.

“We’ve always had a special place in our heart for Crystal Pepsi, and there has been a huge groundswell of support to bring it back,” said Stacy Taffet, senior director of marketing for Pepsi said in a statement.

Indeed, a Facebook page called “Bring Back Crystal Pepsi” has garnered more than 7,000 ‘likes’ since it was started more than six year back.

However, opinions seem to be divided on the official comeback.

Some such as Keenan Watson ‏(@MrBuddyGarrity) were nostalgic, “@pepsi hell yeah! My childhood #CrystalPepsi”.

Others such as Iliza Shlesinger ‏(@iliza) were not so impressed. “THERE IS NO REASON TO BRING BACK #CRYSTALPEPSI other than Pepsi is out of ideas. Are you a soda company or movie studio? MAKE SOMETHING NEW.”

The news comes two days after Pepsi said it planned to bring back aspartame, an artificial sweetener it removed from Diet Pepsi in the United States last year.

(Reporting by Subrat Patnaik in Bengaluru; Editing by Savio D’Souza)

Article source:

EU tells UK single market access requires full free movement

LONDON/BRUSSELS European Union leaders met for the first time without Britain on Wednesday less than a week after it voted to leave, delivering a tough message that London can access the bloc’s lucrative single market only if it agrees to allow free movement for EU workers.

Last week’s shock referendum vote to leave the EU has caused global financial market turmoil, sent the pound sterling tumbling and wiped billions off the value of British shares. Britain’s giant financial services sector, roughly 8 percent of economy, relies crucially on access to the EU market.

Prime Minister David Cameron, who campaigned to stay in the EU and lost, has announced his resignation and left it up to his successor to negotiate the terms of Britain’s exit.

But leaders of the victorious Leave campaign have not spelled out in detail what sort of relationship they hope to build with Brussels, creating uncertainty about the future for both Britain and the rest of the bloc.

Cameron, staying on as caretaker until a successor is found, told EU leaders at his final summit with them on Tuesday that he believed the referendum was lost over the principle of unrestricted travel among EU citizens.

But free movement of workers is one of “four freedoms” — along with movement of capital, goods and services — that the EU says must be maintained by any country that wants access to its common market. The 27 leaders added a line to their summit statement at the last minute emphasizing that principle.

They also called on Britain to trigger the EU’s exit clause by notifying them of its intention to withdraw, which would start a two year clock to negotiate its exit.

“There can be no negotiations of any kind before this notification has taken place,” the statement said. Cameron wants time for his successor to formulate a strategy and sound out European colleagues before beginning the countdown.


Cameron, who had expressed regret and sadness at last week’s referendum result over dinner with his EU peers on Tuesday, told parliament the British economy faced hard times as a result.

“There’s no doubt in my mind these are going to be difficult economic times,” he said.

A senior British lawmaker, Andrew Tyrie, said Britain should not give official notice until a new government had agreed on a negotiating position.

“A crucial task is to identify the maximum level of EU market access, consistent with the need for some control on migration,” he said in a statement on behalf of the influential Treasury Select Committee.

The battle to succeed Cameron as ruling Conservative Party leader is likely to be fought over promises to limit EU migration while still retaining as much access to the common market as possible after Brexit.

One of the candidates to succeed Cameron, Stephen Crabb, said securing control of immigration was essential and acknowledged that might mean less access to the EU market.

Work and pensions minister Crabb ruled out holding another referendum and said his Conservative Party and the country must now unite in focusing on negotiating the best Brexit deal.

“The British people want control of immigration … For us, this is a red line,” he told a news conference.

Former London mayor Boris Johnson, who led the Leave camp and is bookmakers’ favorite to succeed Cameron, has suggested Britain could have full market access, including for the vital financial sector, without having EU rules enforced by the European Court of Justice or paying as much as London does now into the EU budget. He has also said British citizens would keep rights to live and work in Europe. His critics say his position is unrealistic.

The political turmoil following Britain’s decision to exit the EU has not only triggered a leadership contest in Cameron’s ruling Conservative Party, it also caused lawmakers from the opposition Labour Party to turn on their leader, leftist Jeremy Corbyn, accused of leading a half-hearted campaign to stay in.

Labour lawmakers voted no confidence in Corbyn on Tuesday, but he refused to step down, setting the stage for a bitter fight to push him out. Party rivals want a stronger figure to lead Labour in a general election if the Conservative government falls or parliament is dissolved.

The UK itself could split apart. Voters in Scotland and Northern Ireland voted to stay in the EU, and Scotland’s first minister Nicola Sturgeon has said Scots must not be taken out of the bloc against their will.

Sturgeon visited Brussels on Wednesday to make her case to European leaders to keep Scotland in, hours after Cameron had left. She got a polite hearing but won no commitment, and Prime Minister Mariano Rajoy of Spain, which is concerned about separatism in its own Catalonia region, said Madrid would block direct negotiations with Scotland.

“If the United Kingdom leaves, Scotland leaves,” he said.

EU Commission chief Jean-Claude Juncker agreed to meet Sturgeon, a decision that drew criticism from some EU diplomats who called it a provocation towards London. EU summit chairman Donald Tusk declined to meet her.

German Chancellor Angela Merkel, Europe’s most influential leader, convinced her peers to give Britain time to find its feet and choose a new leader before it starts formal exit talks.

But she too was firm on the price for market access, saying London could not “cherry-pick” the EU benefits it liked.

French President Francois Hollande highlighted the threat to the City of London’s position as the euro zone’s offshore financial center, saying other European cities should prepare to do clearing in euros once Britain leaves.

(Writing by Paul Taylor; editing by Peter Graff)

Article source:

U.S. judge dismisses SIFMA case over market data fees

NEW YORK A U.S. judge dismissed a long-simmering legal battle over the cost of market data that is used by brokerages and high-speed trading firms, in a victory for the New York Stock Exchange and Nasdaq.

The Securities Industry and Financial Markets Association (SIFMA) had challenged whether fees charged by the two exchanges to traders, including a fee increase in 2010, for proprietary equity market data were justified due to an alleged lack of competition.

The NYSE, a unit of Intercontinental Exchange Inc (ICE.N); Nasdaq (NDAQ.O) and Bats Global Markets (BATS.Z) charge fees for the data, with NYSE Arca’s “ArcaBook” and Nasdaq’s “Level 2” products at the heart of the issue.

Market makers and brokerages have complained that the cost of market data, which has profit margins of 70 percent or more, is prohibitive. Prices for market data must be “fair and reasonable,” according to securities regulations.

Administrative law judge Brenda Murray of the U.S. Securities and Exchange Commission found significant competitive forces constraining the price of depth-of-book data, and said in her June 1 order that assertions that the fees increased overall costs for ordinary investors was unsupported.

The order was made public on Tuesday.

“We are reviewing the decision in detail with our counsel and evaluating all of our legal options,” said Ira Hammerman, executive vice president and general counsel for SIFMA.

The fight against the exchanges started in 2006, when a coalition of internet companies filed a challenge against NYSE Arca after it won approval from the SEC to implement a new rule to start charging fees. SIFMA later joined the dispute.

A Nasdaq spokesman declined to comment, and the NYSE was not immediately available for comment.

(Additional reporting by Herb Lash)

Article source: