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Health insurer Anthem could rise 30 percent on earnings potential: Barron’s

NEW YORK Anthem Inc (ANTM.N) shares could rise by 30 percent as the U.S. health insurer is undervalued and has the most room for improvement in profit margins and earnings among its peers, Barron’s reported.

The company also has the lowest price-to-earnings ratio among its peers including UnitedHealth Group Inc (UNH.N) and Aetna (AET.N), Barron’s said, adding that the stock trades at just 13 times the projected 2017 earnings, a discount to its four big rivals.

Last week, a U.S. judge blocked Aetna’s proposed $34 billion acquisition of smaller peer Humana Inc (HUM.N), raising the stakes for rival Anthem as it battles to close a $54 billion deal to buy Cigna Corp (CI.N).

If Anthem does manage to complete the deal, investors are likely to view that as a positive development since the company projects a $3-a-share in earnings benefits in 2018, Barron’s said.

U.S. President Donald Trump and a Republican-controlled legislature are seeking to undo much of the Affordable Care Act, better known as Obamacare.

The law has reshaped the U.S. healthcare industry by mandating health insurance and creating online exchanges where consumers can shop for individual policies and get subsidies. Companies including Anthem had cited Obamacare as one of the main reasons their industry needed to consolidate.

Anthem could be a winner from a potential move by Trump to repeal Obamacare since it insures nearly 900,000 people on health exchanges and is losing money on that business, Barron’s said.

Barron’s listed several possible benefits to earnings: $1 a share from public-exchange reform, 50 cents from a repeal of a special health-insurer tax, $2 to $3 from a lower corporate tax rate and $2 from renegotiation or ultimate lapsing of the Express Scripts (ESRX.O) drug-benefit contract.

(Reporting by Devika Krishna Kumar in New York; Editing by Lisa Von Ahn)

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Investors upbeat on data, Fed; wary of Trump

NEW YORK In an ordinary world, a U.S. Federal Reserve meeting, jobs data and a hefty number of earnings reports next week would provide investors with welcome distraction from speculation about the U.S. president’s policy plans.

But the current world is less than ordinary. In the second week after Donald Trump’s inauguration, issues such as his controversial immigration policies will likely keep his voice ringing louder in investors’ ears than the words of Fed Chair Janet Yellen.

Wall Street has already bet on solid economic data, strong earnings and the pace of Fed interest rate hikes, but investors are still uncertain how to bet on the president.

On Friday Trump ordered a 120-day hold on allowing refugees into the country, an indefinite ban on refugees from Syria and a 90-day bar on citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen.

The action has sparked confusion and anger after immigrants and refugees were kept off flights and left stranded in airports and was met with international criticism, outrage from civil rights activists and legal challenges.

“I don’t see how markets could look on this favorably,” David Kotok, chairman and chief investment officer of Cumberland Advisors, said late Saturday. “International tensions are raised. Obstacles to peaceful exchanges are abruptly announced. And litigation commences.”

Kotok said stocks may react negatively as the market is ripe for a correction, and for “current market prices to be justified, the Trump agenda must unfold perfectly.”

While stocks have risen since the Nov. 8 election on hopes for tax cuts, lighter regulation and fiscal stimulus, investors are waiting for evidence Trump has the willingness and ability to follow through on his pro-business campaign promises.

On top of this, add to the uncertainty the fear of his threats to slap massive tariffs on imports and his comments on China’s currency policy.

“Wall Street’s already figured out that the recovery is in place, that the Fed is going to start getting aggressive. What they haven’t figured out yet is, exactly who is Donald Trump,” said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.

Fed fund futures show bets of a 96-percent chance the Fed leaves rates unchanged when it ends its two-day meeting on Wednesday, according to Reuters data.

Investors will watch for hints of policymakers’ plans for the rest of 2017. If their language indicates faster-than-expected hikes, “the equity rally could pause as investors recalibrate,” said Paul Christopher, head global market strategist at Wells Fargo Investment Institute in St. Louis.

But investors don’t see the Fed rocking the boat next week, at least until it has some clarity on Trump’s policies.

“Like many of us, the Fed is probably waiting to see what is going to come of all the new policies and changes that can be expected out of the new administration,” said Tim Dreiling, senior portfolio manager at the Private Client Reserve at U.S. Bank in Kansas City.

Strong fourth-quarter corporate earnings and forecasts have partly driven the SP 500’s .SPX 10-percent increase since Nov. 4, and many big companies are due to report next week.

A few weeks into the reporting season, analysts now expect quarterly earnings to have risen 6.8 percent, up from an expectation of a 6.1 percent gain on Jan. 1, according to Reuters data. This growth rate would be the fastest in two years.


On Friday, the U.S. is expected to report 171,000 new non-farm jobs were created in January, up from 156,000 in December. Unless the number is below 100,000 or above 300,000, stocks will likely not move sharply, according to Wells Fargo’s Christopher.

“If the data coming in are unremarkable, it would tend to turn attention back to Washington,” he said.

Aside from seeking clarity on Trump’s pro-business policies, the market will also watch for signs of whether the president will help or hurt foreign trade. For example, the administration has said it would tax imports from Mexico to help pay for a new wall to secure the border. But such a tax could push inflation higher, nudging the Fed closer to tightening policy.

Investors are also nervous about the implications if Trump officially declares China a currency manipulator, as he has implied he might do.

The best-case scenario would be that he sits down to negotiate trade concessions with the world’s second-biggest economy, said Wells Fargo’s Christopher.

“I think Trump is serious about getting things done, but he does have to reckon with the fact that even as the most powerful person in the world he does have to work with others,” he said.

(Additional reporting by Chuck Mikolajczak and Megan Davies; Editing by Rodrigo Campos and Nick Zieminski)

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U.S. tech leaders sound alarm over Trump immigration order

SAN FRANCISCO The U.S. technology industry, a major employer of foreign workers, hit back on Saturday at President Donald Trump’s sudden executive order on immigration, with some leaders calling it immoral and un-American.

Trump’s order temporarily bars citizens of seven majority-Muslim countries from entering the United States even if they hold valid visas or permanent residence permits, a move that caught many companies off-guard.

Netflix Inc Chief Executive Reed Hastings called it “a sad week” and added: “It is time to link arms together to protect American values of freedom and opportunity.”

Apple Inc CEO Tim Cook sent a letter to employees saying Trump’s order was “not a policy we support” and promised to help affected employees.

“We have reached out to the White House to explain the negative effect on our coworkers and our company,” Cook added.

Elon Musk, the South African-born founder of Tesla and SpaceX who met recently with Trump, said on Twitter: “The blanket entry ban on citizens from certain primarily Muslim countries is not the best way to address the country’s challenges.”

Airbnb co-founder and CEO Brian Chesky said: “Not allowing countries or refugees into America is not right and we must stand with those who are affected.”

Airbnb will provide free housing to anyone not allowed into the United States, Chesky said.

Aaron Levie, the outspoken founder and CEO of online storage company Box Inc, said: “The executive order on immigration is immoral and antithetical to our values.”


Friday’s order could be a major headache for tech companies, potentially leaving employees stranded overseas and unable to return to the United States.

Alphabet Inc’s Google urgently called back employees from overseas and told ones who might be affected by the ban not to leave the United States.

CEO Sundar Pichai said in an email to staff that more than 100 Google employees were affected by the order, according to a Google executive.

One Google employee of Iranian nationality with legal U.S. residency made it back to the United States just hours before the order took effect, the executive said.

“We’re concerned about the impact of this order and any proposals that could impose restrictions on Googlers and their families, or that could create barriers to bringing great talent to the U.S.,” Google said in a statement.

Microsoft Corp President and Chief Legal Officer Brad Smith said in a company-wide email posted on LinkedIn that 76 company employees were citizens of the seven countries in question and held U.S. work visas, and thus were directly affected by the order.

He said the company had not determined how many people with green cards, or permanent residence status, might be affected.

“As a company, Microsoft believes in a strong and balanced high-skilled immigration system,” Smith said in the post. “We believe in the importance of protecting legitimate and law-abiding refugees whose very lives may be at stake in immigration proceedings.”

Uber Technologies Inc [UBER.UL] CEO Travis Kalanick, who has faced criticism from some employees for participating in President Trump’s business advisory council, said in a statement that the company would compensate drivers from the seven countries who might not be able to return to the United States for three months or more. He said the company knew of about a dozen affected employees.

“This ban will impact many innocent people – an issue that I will raise this coming Friday when I go to Washington for President Trump’s first business advisory group meeting,” Kalanick said.

Facebook Inc CEO Mark Zuckerberg said in a post on Friday that was “concerned” about the order and voiced support for immigrants.

(Reporting by Joseph Menn, Julia Love and Kristina Cook; Writing by Jonathan Weber; Editing by Alan Crosby, Bill Rigby and Nick Zieminski)

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German‎ watchdog suspected VW scam on CO2 emissions: report

BERLIN Germany’s motor industry watchdog raised suspicions Volkswagen (VOWG_p.DE) was using prototype vehicles to lower carbon dioxide (CO2) emissions in tests in 2015 soon after VW’s manipulation of diesel emissions tests was uncovered, the Berliner Zeitung newspaper reported on Saturday.

It quoted the Federal Motor Transport Authority (KBA) as telling VW in a November 2015 email it would choose test models randomly and appoint new external experts to carry out testing because of doubts about the independence of the company’s CO2 testing regime.

“VW has to give a declaration that they (vehicles submitted to tests) comply with standards for serial production models and were not subject to change in any way,” the newspaper quoted the KBA’s email as saying.

There was no immediate comment from a VW spokesman. The German Transport Ministry, which is home to the KBA, declined to comment as its investigation into CO2 emission tests is not concluded yet, a spokesman said.

It was not clear in Saturday’s report whether the KBA remains concerned about the transparency of VW’s CO2 emissions tests.

VW admitted in November 2015 that besides rigging diesel emissions tests it had understated the fuel consumption and CO2 emissions of about 800,000 vehicles. It then announced a month later that follow-up tests had shown the CO2 irregularities affected less than 40,000 cars.

(Reporting by Andreas Cremer and; Gernot Heller; editing by Mark Heinrich)

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FBI request for Twitter account data may have overstepped legal guidelines

WASHINGTON The FBI appeared to go beyond the scope of existing legal guidance in seeking certain kinds of internet records from Twitter as recently as last year, legal experts said, citing two warrantless surveillance orders the social media company published on Friday.

Twitter said its disclosures were the first time the company had been allowed to publicly reveal the secretive orders, which were delivered with gag orders when they were issued in 2015 and 2016. Their publication follows similar disclosures in recent months by other major internet companies, including Alphabet’s Google and Yahoo.

Each of the two new orders, known as national security letters (NSLs), specifically request a type of data known as electronic communication transaction records, which can include some email header data and browsing history, among other information.

In doing so, the orders bolster the belief among privacy advocates that the FBI has routinely used NSLs to seek internet records beyond the limitations set down in a 2008 Justice Department legal memo, which concluded such orders should be constrained to phone billing records.

The FBI did not immediately respond to a request for comment. An FBI inspector general report from 2014 indicated that it disagreed with the memo’s guidance.

In a blog post announcing the two NSL disclosures, Twitter said it did not hand over all the information the FBI requested.

“While the actual NSLs request a large amount of data, Twitter provides a very limited set of data in response to NSLs consistent with federal law and interpretive guidance from the U.S. Department of Justice,” Elizabeth Banker, associate general counsel at Twitter, wrote.

The identity of the accounts sought by the FBI are redacted in both of the NSLs.

Andrew Crocker, a staff attorney at the Electronic Frontier Foundation, said the orders disclosed Friday were among a small handful of those publicly released that show the FBI continues to ask for internet records despite the 2008 guidance.

“This is an ongoing practice and it is significantly beyond the scope of what is intended,” said Crocker, whose organization is challenging the constitutionality of NSLs in the Ninth U.S. Circuit Court of Appeals. Twitter has also sued the government to more freely discuss NSLs.

National security letters are a type of government order for communications data sent to service providers. They are usually issued with a gag order, meaning the target is often unaware that records are being accessed, and they do not require a warrant.

They have been available as a law enforcement tool since the 1970s, but their frequency and breadth expanded dramatically under the USA Patriot Act, which was passed shortly after the Sept. 11, 2001, attacks. Tens of thousands of NSLs are issued annually.

In June of last year the U.S. Senate narrowly rejected a Republican-backed proposal to expand the kinds of telephone and internet records the FBI could request under an NSL to include senders and recipients of emails, some information about websites a person visits and social media log-in data.

The legislation failed amid opposition from some major technology companies and civil liberties advocates, but lawmakers have said they intend to pursue the expansion again.

(This version of the story corrects name of Electronic Frontier Foundation attorney to Andrew Crocker from Aaron Crocker, paragraph 9)

(Reporting by Dustin Volz; Editing by Andrew Hay)

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Snapchat to reveal financials within a week: sources

Snap Inc, the secretive technology company that owns the popular messaging service Snapchat, is due to reveal its financials within a week as it moves toward its eagerly awaited initial public offering (IPO), sources familiar with the situation said on Friday.

The Venice, California-based company will publish the registration document it secretly filed with U.S regulators last autumn, containing a dossier of tightly held finances and its plans for operating as a public company.

The sources, who cautioned that Snapchat’s plans may still change, asked not to be named because the information is private. A spokeswoman for Snap Inc declined to comment.

Snap Inc expects to go public as soon as March and could be valued at $20 billion to $25 billion, based on reports of its latest round of funding, which would make it the largest U.S. technology IPO since Facebook Inc’s in 2012.

Snapchat has already confidentially filed with the U.S. Securities and Exchange Commission under the U.S. Jumpstart Our Business Startups Act. Under that law, companies with less than $1 billion in revenue can secretly file for an IPO, allowing them to quietly test investor appetite.

A company must make its initial IPO prospectus filing, officially known as an S-1, public at least 15 days before beginning its so-called “road show,” in which it markets the IPO to investors.

The prospectus details a company’s business background, finances and corporate governance for investors. Companies often update the filings several times before their IPOs, adding details such as the amount they expect to raise and the exchange they expect to list on.

Snapchat is expected to offer new investors “no-vote” shares as part of its IPO, the sources said. Such a structure will deny investors voting power over the company’s corporate decisions, leaving more control in the hands of its board and co-founders, Evan Spiegel and Bobby Murphy.

Keeping tight control is common in companies closely associated with their visionaries, who often prefer to innovate without being questioned by a broad array of investors.

Snapchat started in 2012 as a free mobile app that allows users to send photos that vanish within seconds. It has more than 100 million active users, about 60 percent of whom are aged 13 to 24, making it an attractive way for advertisers to reach millennials.

But investors worry that Snapchat’s advertising sales, which began in October 2014, is the company’s only significant revenue stream.

Recode first reported Snapchat’s plan to publish its registration document on Friday.

(This version of the story corrects year when Snapchat began selling ads to October 2014, not last October in paragraph 11)

(Reporting by Lauren Hirsch in New York and Liana B. Baker in San Francisco)

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Boeing machinists in South Carolina to vote in February on unionizing

SEATTLE Boeing Co (BA.N) and its largest union said on Friday they had agreed on a February date for a union vote at Boeing’s jetliner factory in South Carolina, setting up what is likely to be a fresh battle between the union and the world’s biggest plane maker.

International Association of Machinist and Aerospace Workers spokesman Mike Evans said in a statement that about 2,850 workers at the factory that builds 787 Dreamliners would be eligible to vote on union representation in the Feb. 15 ballot.

Boeing spokesman Doug Alder said the company is “strongly encouraging all eligible teammates, roughly 3,000, to be sure to vote.”

The machinists canceled an earlier vote set for April 2015 citing a “a toxic environment” and violations of workers’ rights to organize, in the strongly anti-union state.

At the time, union organizers described the decision as a tactical move, allowing time to build union support. Boeing called the union’s allegations of intimidation “frivolous.”

South Carolina is a state where employees are not required to join unions or pay dues. It has among the lowest rates of union membership in the United States.

Evans, in the statement, cited fresh “intimidation tactics” against organizing by Boeing.

Boeing said it has hired a lawyer it used when workers tried to unionize in 2015.

“Boeing is applying the appropriate resources to protect the competitive advantage created by the Boeing South Carolina (BSC) team,” the company said in a statement.

(Reporting by Alwyn Scott; Editing by Lisa Shumaker)

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Tycoon Slim says Trump not ‘Terminator,’ sees opportunities for Mexico

MEXICO CITY Billionaire Carlos Slim said on Friday that Mexico should not fear Donald Trump, seeing opportunities for his country in the U.S. president’s economic policies, and praising Mexicans for uniting behind their government in talks with the northern neighbor.

In a rare news conference, the telecommunications and construction mogul called Trump a negotiator, “not Terminator” and said his repeated attacks on Mexico had united the country, giving President Enrique Pena Nieto “strength” in trade and border security talks.

“This is the most surprising example of national unity that I’ve had the pleasure of seeing in my life,” said Slim, who turns 77 on Saturday. He compared Mexicans’ response to that when a devastating earthquake that hit Mexico City in 1985. “We have to back the president of Mexico so he defends our national interests.”

Slim spoke to reporters after Pena Nieto on Thursday canceled a planned Washington summit with Trump following a tweet by the American that he should stay away unless Mexico agreed to pay for a border wall. Aiming to cool tensions, the two presidents spoke for an hour by phone on Friday, and the battered peso currency strengthened.

Trump’s threats to impose steep tariffs on Mexican products have ravaged the peso and spread worries about the economy, which is heavily dependent on the U.S. market.

However, Slim, who spoke out against his fellow billionaire during the U.S. election campaign but had dinner with him after the Nov. 8 victory at the polls, said Trump’s policies aimed at growing the U.S. economy would boost Mexico’s growth as well as provide jobs for Mexican laborers living north of the border.

“The circumstances in the United States are very favorable for Mexico,” Slim said, adding that he has not had any communication with Trump’s team since the December dinner.

“It wasn’t a romance,” he joked about the meeting.


Referring repeatedly to Trump’s books and other writings, Slim argued that people should not be surprised at Trump’s actions because it is all in his book “Great Again: How to Fix Our Crippled America,” which Slim said he had not finished reading.

“He’s a great negotiator,” Slim said.

He said businesses should not be too worried if Trump’s policies led to the collapse of the North American Free Trade Agreement (NAFTA) underpinning Mexico’s economy, saying the country could fall back on World Trade Organization tariffs.

He said Mexican workers in the United States would benefit from Trump’s planned infrastructure push, but warned that U.S. protectionism and other policies could hurt American consumers.

“Among these changes is a return to the past, what a dear friend called ‘regressive utopias’,” he said, calling on the United States to focus on advanced manufacturing.

Asked about Trump’s plan to build a wall along the U.S.-Mexico border, Slim said the best barrier to illegal immigration would be investment that created opportunities and jobs in Mexico.

Before the highly-anticipated news conference, speculation had been growing about whether Slim might try to run for president in 2018, but he poured cold water on that talk.

“I think I can do more on the business side,” he said.

Slim’s largest companies do not have much obvious exposure to any border tax Trump might impose on Mexican imports.

His high-profile holding in the New York Times Co, made him a target during the U.S. campaign, when Trump accused him of using the newspaper to try to help Democratic Party candidate Hillary Clinton. Slim’s shares have limited voting rights.

Slim on Friday said he had been selling New York Times stock, but his son-in-law later said this was not correct.

At the conference he was flanked by two of his sons, Carlos and Marco Antonio, and his son-in-law, Arturo Elias, with other family members watching. Most of the Slim family’s wealth comes from Latin America-focused telecoms giant America Movil.

America Movil does have a substantial U.S. business called TracFone which sells prepaid phone plans to customers and rents the networks of big operators.

His next largest companies are retail and industrial conglomerate Grupo Carso and Mexico-focused bank Grupo Financiero Inbursa.

(Writing by Frank Jack Daniel; Editing by Andrew Hay and Jonathan Oatis)

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Starbucks in crosshairs as Mexico boycott campaign simmers

MEXICO CITY Seeking to quell a social media campaign imploring Mexicans to boycott U.S. companies, Starbucks defended itself on Friday, saying it had invested millions in the country, created more than 7,000 jobs, and that its local unit is Mexican-owned.

The statement came after disparate social media campaigns directed at U.S. companies based in Mexico gained traction, following U.S. President Donald Trump’s order to build a border wall along the country’s southern border and promise to make Mexico pay for it.

In a statement, Starbucks (SBUX.O) said its Mexican operator Alsea (ALSEA.MX) has some 560 stores across Mexico, representing an investment of 5 billion pesos ($239 million), and sells Arabica coffee beans harvested in the southern Mexican state of Chiapas around the world.

Even so, a campaign urged Mexicans not to buy products from the world’s biggest coffee seller, with the hashtag #AdiosStarbucks trending on Twitter earlier this week.

Social media users have also called for boycotts of U.S. companies including McDonald’s (MCD.N), Wal-mart (WMT.N), and Coca-Cola (KO.N).

Earlier this month, a Mexican state governor said his administration would no longer buy cars from U.S. auto maker Ford (F.N), calling on others to do the same after the company abruptly canceled a planned investment in the country.

“It’s time for Mexicans to show what we’re made of,” Alejandro Moreno, governor of the southeastern state of Campeche, said.

“Actions like this should multiply across the country.”

On Friday, Mexico’s wealthiest man, Carlos Slim, weighed in on the topic, saying he thought attempts to boycott U.S. companies were wrong.

“They are American businesses that have come to invest in Mexico, to give employment in Mexico, to produce in Mexico,” Slim said. “What needs to be done really is consuming what the country produces.”

Shares of Starbucks closed down 4 percent on Friday to $56.12, the lowest level since Jan. 4.

(Reporting by Natalie Schachar and Christine Murray; Editing by Sandra Maler)

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