News Archive


Energy pipelines back in investor favor after Trump orders


NEW YORK Investors have rushed back into North American pipelines after U.S. President Donald Trump revived growth prospects in a sector that struggled to cope with a two-year oil price slump and strident opposition from environmental and Native American activists.

Investor confidence in the industry was shaken last year when the administration of former President Barack Obama halted the $3.8 billion Dakota Access Pipeline, just as Energy Transfer Partners (ETP.N) had nearly finished building it. Protesters have rallied for months against plans to route the Dakota Access pipeline under a lake near the Standing Rock Sioux reservation in North Dakota, saying it threatened water resources and sacred Native American sites.

A year earlier, Obama rejected TransCanada Corp’s (TRP.TO) C$8 billion ($6.08 billion) Keystone XL project, which would ship oil from Canada to U.S. refiners.

Trump sought to smooth the way for both projects with executive orders on Tuesday as he made good on campaign promises to drive infrastructure investment throughout the world’s largest economy.

The orders sparked a rally in indices that track pipeline companies to a more than 14-month high.

The shares of firms that build the pipelines and storage tanks such as Magellan Midstream Partners (MMP.N) and Enterprise Products Partners (EPD.N) have rallied as much as 9 percent in the days following Trump’s orders.

Those gains came on top of a rally of about 13 percent in these firms since Trump’s surprise election victory on Nov. 8.

“Energy companies can invest more confidently over the next four years with less concern over federal delays,” said Libby Toudouze, a portfolio manager at Cushing Asset Management. The firm manages around $2.7 billion of investments in pipeline and energy transport and storage firms.

“I do think we are going to see a good consistent flow of new investors coming into this (pipeline) space for next 3-5 years.”

The top picks for investors include Valero Energy Partners LP (VLP.N), Phillips 66 Partners LP (PSXP.N) and MPLX LP (MPLX.N).

Energy infrastructure companies, once a darling of the industry, had languished in 2015 and early 2016 as oil prices plummeted to multiyear lows.

These firms, often structured as master limited partnerships (MLPs), are typically the vehicles used by investors to gain exposure to the pipeline industry.

MLPs are a tax-exempt corporate structures that pay out profit to investors in dividend-style distributions. Investors have funneled billions of dollars into the infrastructure industry through them since the shale boom began.

BLISTERING RALLY

The Alerian MLP index .AMZ, which tracks a number of pipeline firms including Magellan, Enterprise, Energy Transfer Partners and Plains All American Pipeline LP (PAA.N), has risen more than 17 percent since Trump’s election, including a 6 percent rally this week to the highest level since November 2015.

The pipeline sector has outperformed both oil and gas producers .SPLRCOILP and the SP 500 index .SPX, which have risen about 13 percent and 7.5 percent, respectively, since the U.S. election.

“You don’t have to take a lot of risk in the MLP space at this point to make outsized returns … so it’s an interesting time and a unique opportunity in the MLP space,” said Matt Sallee, a portfolio manager at Tortoise Capital.

The Alerian index rose 9 percent in 2016 as oil prices rose, OPEC and non-OPEC exporters announced supply cuts, and on Trump’s election. That came after a crash of more than a third in 2015.

Mutual and exchange traded funds’ investment in MLPs crashed to $3.8 billion in 2015 before recovering to about $6.2 billion last year, according to Morningstar.

The revival in U.S. shale activity sparked by the recovery in oil prices has also given pipeline companies a boost and opened the way to further development. Significant challenges remain – activists plan to take their fight to the courts on a state-by-state basis, which could bog down future developments.

But for now, investors see room for the value of pipeline firms to go higher.

“We think drilling is going to expand in the U.S. and will need plenty of new infrastructure, particularly in the Permian Basin,” said Jay Hatfield, portfolio manager of the InfraCap MLP ETF. MLPs were around 60 percent undervalued compared with BBB bonds which usually fetch the same yield, he added.

Already, pipeline companies such as Plains All American have announced large deals and expansions in the Permian, the biggest shale play in the United States.

“Production is getting back to the growth mode,” said Toudouze, “so we need to have the infrastructure and these are the companies that are going to build it.”

(Reporting by Devika Krishna Kumar and Catherine Ngai in New York; Editing by Simon Webb and Matthew Lewis)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/F1bmpjOTT7s/us-usa-trump-pipeline-industry-idUSKBN15B2HJ

Wall Street slips after soft GDP data, earnings


NEW YORK U.S. stocks edged lower for a second consecutive session on Friday as some underwhelming corporate earnings and gross domestic product data offset recent enthusiasm over policy actions by President Donald Trump.

U.S. economic growth slowed more than expected in the fourth quarter, with GDP rising at a 1.9 percent annual rate, below the 2.2 percent rise expected by economists and the 3.5 percent growth pace logged in the third quarter.

Chevron (CVX.N) fell 2.4 percent to $113.79 after its quarterly profit fell short of analysts’ expectations. The stock was the biggest drag on the SP 500 and the Dow Jones Industrial Average indexes. The SP energy index .SPNY, down 0.9 percent, was the worst performing of the 11 major SP sectors.

Starbucks (SBUX.O) curbed gains on the Nasdaq. Its shares dropped 4.0 percent to $56.12 after the world’s biggest coffee seller trimmed its full-year revenue forecast.

“The market has rallied on expectations of good things to happen in the future but as we are getting the data that is factual of what is going on, it is not as good as people are hoping,” said Andrew Slimmon, portfolio manager at Morgan Stanley Investment Management in Chicago.

“Which tells you, this earnings recovery that is expected in 2017, a good chunk of it is already baked into the market.”

Even with some disappointing corporate results, fourth-quarter earnings are expected to show growth of 6.8 percent, which would mark the biggest increase in two years and second straight quarter of growth, according to Thomson Reuters data.

The Dow remained above 20,000 for the third straight day, after breaching the milestone for the first time on Wednesday as the post-election rally reignited.

For the week, the Dow rose 1.3 percent, the SP 500 gained 1 percent and the Nasdaq advanced 1.9 percent.

The Dow Jones Industrial Average .DJI fell 7.13 points, or 0.04 percent, to 20,093.78, the SP 500 .SPX lost 1.99 points, or 0.09 percent, to 2,294.69 and the Nasdaq Composite .IXIC added 5.61 points, or 0.1 percent, to 5,660.78.

Microsoft (MSFT.O) rose 2.3 percent to $65.78, while Intel (INTC.O) gained 1.1 percent to $37.98 after both reported quarterly results above Wall Street expectations.

However, Google parent Alphabet (GOOGL.O) lost 1.4 percent to $845.03 after it posted fourth-quarter profit below analysts’ estimates.

Colgate-Palmolive (CL.N) slumped 5.2 percent to $64.68 after the personal products maker’s fourth-quarter revenue missed estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.35-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored decliners.

The SP 500 posted 27 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 116 new highs and 26 new lows.

About 5.81 billion shares changed hands in U.S. exchanges, compared with the 6.56 billion daily average over the last 20 sessions.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/SDfCQsErrYg/us-usa-stocks-idUSKBN15B15T

Buffett, Gates have hope for America after Trump ascension


NEW YORK Bill Gates and Warren Buffett on Friday expressed optimism that the United States will move ahead as a nation, even as it works through political differences and gets used to the new Trump administration.

The world’s two richest people were speaking to students at Columbia University after U.S. President Donald Trump started to unwind the work of his predecessor Barack Obama in a series of executive orders, prompting concern from critics over what the actions mean for Americans and their place in the world.

“I am confident that America will move ahead,” Buffett said.

Gates, meanwhile, said the desire for innovation and support for research are “strong” and “largely bipartisan,” despite differences on how to accomplish and fund both.

“This administration is new enough; we don’t know how its budget priorities are going to come out,” but there is much intensity to ensure that the executive branch and Congress encourage “amazing things,” Gates said.

Gates co-founded and was the first chief executive of Microsoft Corp, while Buffett runs the conglomerate Berkshire Hathaway Inc.

Forbes magazine said on Friday that Gates is worth $85.2 billion and Buffett is worth $73.9 billion.

An estimated 1,300 people attended Friday’s event to watch the close friends, who have known each other for a quarter century.

Gates is also a Berkshire director, while Buffett is donating much of his wealth to the charitable foundation set up by Gates and his wife, Melinda.

Both told students it is important to invest and focus on doing good works over the long term, despite the impulse or perceived need for shorter-term thinking.

Gates said this was particularly true in areas such as climate change and vaccinations, calling it just as important to be sure people can get vaccines as it is to develop them.

Buffett said: “It’s very hard to have politicians think of something that’s wonderful for the country 20 years from now” if the short-term impact might cost them reelection, with their decisions often tainted by too much money, which he called “bad news.”

He also stressed the importance of immigration, a central issue for Trump, whom neither Buffett nor Gates discussed.

Buffett said the country has been “blessed” by immigrants, and might have come out quite different had the physicists Albert Einstein and Leo Szilard not in 1939 urged U.S. President Franklin Roosevelt to develop a nuclear program to counter threats from Nazi Germany.

“If it weren’t for those two immigrants, who knows if we would be sitting in this room,” Buffett said.

(Reporting by Jennifer Ablan and Jonathan Stempel in New York; editing by Bill Rigby)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Yig_M5xTmuk/us-buffett-gates-idUSKBN15B2FC

Wall Street dips after tepid GDP, earnings


NEW YORK U.S. stocks edged lower for a second consecutive session on Friday as underwhelming corporate earnings and gross domestic product data dampened recent enthusiasm over policy actions by President Donald Trump.

U.S. economic growth slowed more than expected in the fourth quarter, with GDP rising at a 1.9 percent annual rate, below the 2.2 percent rise expected by economists and the 3.5 percent growth pace logged in the third quarter.

Chevron (CVX.N) fell 2.4 percent to $113.77 after its quarterly profit fell short of analysts’ expectations. The stock was the biggest drag on the SP 500 and the Dow Jones Industrial Average indexes. The SP energy index .SPNY was the worst performing of the 11 major SP sectors.

The Nasdaq was weighed down by Starbucks (SBUX.O), whose shares dropped 3.8 percent to $56.21 after the world’s biggest coffee seller trimmed its full-year revenue forecast.

Traders were encouraged losses were not steeper despite the disappointing data and earnings.

“The market is exhausted today. This week just wore everybody out, just flat-out, wore everybody out,” said Keith Bliss, senior vice-president at Cuttone Co in New York.

“You take a look at what the market is doing, albeit an exhausted market, and it is not getting whacked. Some things like that would have had the ability to take the Dow down one hundred points, to take the SP down twelve or thirteen points, and it’s not.”

Even with some disappointing corporate results, fourth-quarter earnings are expected to show growth of 6.8 percent, which would mark the biggest increase in two years and second straight quarter of growth, according to Thomson Reuters data.

The Dow remained above 20,000 for the third straight day, after breaching the milestone for the first time on Wednesday as the post-election rally reignited.

All three major indexes were also on track to post weekly gains.

The Dow Jones Industrial Average .DJI fell 10.43 points, or 0.05 percent, to 20,090.48, the SP 500 .SPX lost 3.08 points, or 0.13 percent, to 2,293.6 and the Nasdaq Composite .IXIC added 1.77 points, or 0.03 percent, to 5,656.95.

Microsoft (MSFT.O) rose 2.2 percent to $65.72, while Intel (INTC.O) gained 1.5 percent to $38.11 after the two companies reported quarterly results above Wall Street expectations.

However, Google parent Alphabet (GOOGL.O) was down 1.2 percent at $846.74 after it posted fourth-quarter profit below analysts’ estimates.

Colgate-Palmolive (CL.N) fell 5.5 percent to $64.52 after the personal products maker’s fourth-quarter revenue missed estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.39-to-1 ratio; on Nasdaq, a 1.19-to-1 ratio favored decliners.

The SP 500 posted 25 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 96 new highs and 25 new lows.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/SDfCQsErrYg/us-usa-stocks-idUSKBN15B15T

Tycoon Slim says ready to help Mexico negotiate with Trump


MEXICO CITY Mexican billionaire Carlos Slim said on Friday a united Mexico was ready to help the government negotiate with Donald Trump and called on all political parties to support President Enrique Pena Nieto in his discussions with the U.S. president.

In a rare news conference by the generally media-shy mogul, Slim said Mexico needed to negotiate from a position of strength, noting that Trump, who he called a “great negotiator,” represented a major change in how politics is conducted.

(This story corrects headline and text to clarify Slim talking about all Mexicans united to help)

(Reporting by Christine Murray)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ZlgR7HfZZLc/us-mexico-slim-idUSKBN15B25Q

U.S. supermarket shares dip after Trump threatens Mexico trade


SAN FRANCISCO Shares of U.S. supermarket operators fell on Friday as President Donald Trump kept up his criticism of Mexico, which is a major supplier of produce and other foods for U.S. consumers.

A day after the White House suggested that the United States could impose a 20 percent tax on goods from Mexico, shares of both Wal-Mart Stores (WMT.N) and Kroger Co (KR.N) fell more than 1 percent, while Whole Foods Market (WFM.O) dropped as much as 2.8 percent.

Trump on Friday repeated statements that Mexico has taken advantage of the United States and said Mexico “beat us to a pulp,” deepening worries about a crisis between the two trading partners.

On Thursday, Mexican President Enrique Pena Nieto scrapped a planned trip to Washington to meet Trump, who has repeatedly demanded that Mexico pay for a wall on the U.S. border to halt illegal immigration. The White House later said the potential 20 percent tax could be used to pay for the wall.

Kroger shares were down about 3 percent from before Trump’s inauguration a week ago while food distributor Sysco (SYY.N) has lost about 1 percent.

With investors also concerned that Trump could tear up trade deals with China and other countries, Wal-Mart has fallen 4.4 percent since he won the November election.

(Reporting by Noel Randewich; Editing by Leslie Adler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/GhJwy3UsPPk/us-usa-markets-grocers-idUSKBN15B27L

GM to cut 625 jobs in Canada, move some work to Mexico: union


TORONTO General Motors Co will cut 625 jobs at its auto assembly plant in Ingersoll, Ontario, by the end of July as it moves some production work to Mexico, the president of Canada’s largest auto workers union said on Friday.

The union blamed the North American Free Trade Agreement and Mexico’s cheaper labor costs for the job losses, which it called unjustified given strong sales of the Chevrolet Equinox crossover and GMC Terrain sport utility vehicle assembled in the southern Ontario plant.

“This came right out of left field,” said Jerry Dias, president of the Unifor union. “This nothing to do with Trump, but it has everything to do with NAFTA.”

U.S. President Donald Trump, who has vowed to renegotiate NAFTA with Canada and Mexico, met with the chief executives of the Big Three U.S. automakers earlier this week, urging them to build more U.S. plants and invest less in Mexico.

General Motors Canada notified Unifor in advance about the labor impact from phasing out older models and shifting production of a new Equinox model, said spokeswoman Jennifer Wright in a statement.

GM has been planning the Terrain move for years, but only recently decided to end assembly of an older version of the Equinox at Ingersoll, said Sam Fiorani, vice president of global vehicle forecasting with AutoForecast Solutions.

The job cuts were somewhat surprising, given GM’s investment of some C$800 million on upgrades to produce a new 2019 Equinox model, said Tony Faria, a University of Windsor professor who studies the industry.

He added that all automakers pare costs where they can, however.

“As companies move their operations, somebody’s going to win within the NAFTA region and somebody’s going to lose. And here’s a case where we lose,” Faria said.

Ingersoll was not part of a four-year labor deal the union negotiated with GM Canada last September, which secured C$554 million ($422 million) of investments for other plants. The Ingersoll contract expires in September, said Dias, who expects negotiations to begin in late summer.

“Everything we’ve been led to understand is that by concentrating the Equinox production on our Ingersoll facilities, everything was going to be fine,” Dias said.

“There is a solution. They should halt plans immediately to shift the Terrain to Mexico.”

GM said earlier in January that it would invest an additional $1 billion in its U.S. factories in 2017 and move some parts production from Mexico to the United States.

(Reporting by Susan Taylor and Alastair Sharp; Editing by Chizu Nomiyama and Tom Brown)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/J-B_5mouv6E/us-gm-canada-mexico-idUSKBN15B1VN

Ex-Jefferies bond trader Litvak guilty on one of 10 fraud counts


NEW HAVEN, Conn. A federal jury found former Jefferies Group bond trader Jesse Litvak guilty for a second time for defrauding customers on bond prices, but acquitted him on nine of the 10 counts he faced.

The verdict on Friday by jurors in New Haven, Connecticut on the sixth day of deliberations is a mixed result for prosecutors trying to crack down on suspicious sales tactics on Wall Street.

A different jury found Litvak guilty on all 10 securities fraud counts plus other charges in March 2014. That verdict and a two-year prison sentence were overturned on appeal in December 2015.

Litvak’s lawyer Dane Butswinkas declined to comment Friday.

Litvak, 42, of Boca Raton, Florida, faces up to 20 years in prison at his April 21 sentencing. Six other former traders face similar charges.

“We are confident that these prosecutions have acted as a forceful disincentive to market participants tempted to commit securities fraud,” U.S. Attorney Deirdre Daly said.

Litvak, who was a Jefferies managing director, was accused of generating $2.25 million of illegal profit by misleading customers including AllianceBernstein and Soros Fund Management about bond prices from 2009 to 2011.

Prosecutors said Litvak was motivated by greed, and that his “lies” caused customers to overpay for bonds they bought and accept lower prices for bonds they sold.

But defense lawyers said Litvak’s customers were sophisticated, with a deep well of talent and resources, and would be skeptical if prices that Litvak quoted looked wrong.

Chief Judge Janet Hall presided over both of Litvak’s trials. She urged jurors to reach a verdict on Wednesday after they appeared deadlocked on two counts.

“It’s a good verdict for defense lawyers, but less so for the client who still faces risk of significant jail time,” said J. Bruce Maffeo, a Cozen O’Connor partner and former federal prosecutor.

Litvak worked in the Stamford, Connecticut, office of Jefferies, a unit of Leucadia National Corp (LUK.N).

Three former Nomura Holdings Inc (8604.T) traders – Ross Shapiro, Michael Gramins and Tyler Peters – have pleaded not guilty to similar charges and face trial May 4. David Demos of Cantor Fitzgerald Co pleaded not guilty on Dec. 9.

Matthew Katke and Adam Siegel from Royal Bank of Scotland Group Plc (RBS.L), could withdraw their 2015 guilty pleas under some circumstances upon an acquittal of Litvak.

Katke’s lawyer Richard Albert said: “We are reviewing the verdict with interest.” Lawyers for Siegel did not respond to requests for comment.

The case is U.S. v. Litvak, U.S. District Court, District of Connecticut, No. 13-cr-00019.

(Reporting by Andy Thibault in New Haven, Connecticut; Additional reporting by Jonathan Stempel; Editing by Matthew Lewis and Grant McCool)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/gYIDp9lXElk/us-jefferies-group-litvak-idUSKBN15B1PL

Nasdaq amends disputed fee proposal for key stock market data


NEW YORK Nasdaq Inc (NDAQ.O) no longer plans to charge additional fees to access key data essential for stock market operations following complaints of price gouging from other exchanges, trading firms and an industry trade group, according to a regulatory filing.

The data is related to systems called securities information processors, or SIPs, which consolidate stock orders and last sales prices from the 13 U.S. stock exchanges. Regulators use the information to determine the best market prices, which brokers must give their clients when executing trades.

In August, Nasdaq said it planned to separate its proprietary trading data from third-party data – including the SIP for Nasdaq-listed stocks – it offers its customers.

The third-party data would be housed on a new network that could be accessed for additional fees, Nasdaq said in a filing with the U.S. Securities and Exchange Commission. Increased capacity of the new network connections would ensure the data could be accessed during peak demand, making the system more robust, it said.

Governance of the SIPs has been a contentious issue since August 2013, when a software glitch following unusually high message volume crippled the Nasdaq SIP, leading to a three-hour halt in trading of Nasdaq-listed stocks, including Apple Inc (AAPL.O) and Facebook Inc (FB.O).

After the outage, Nasdaq received industry support to undertake measures to make the SIP more resilient, including moving the system over to the same technology used to run its exchanges.

But Nasdaq’s latest proposal drew opposition from exchange operators Bats Global Markets (BATS.Z) and IEX Group (IEX.AS), trading firms Virtu Financial (VIRT.O), KCG Holdings (KCG.N) and Citadel Securities, as well as the Securities Industry and Financial Markets Association trade group.

In letter to the SEC, they argued the SIP is an industry utility and fee increases must be approved by a committee that includes representatives from all the exchanges. They also said the increased capacity was not technically necessary and was just an excuse for Nasdaq to hike fees.

Nasdaq said it “strenuously disagrees” with the arguments against its plan, in a letter to the SEC dated Thursday.

But the exchange operator said it amended its proposal to give each of its customers one connection to the SIP at no additional cost.

It also said its customers could choose between a lower-capacity connection and the higher-capacity connection to the new network, though firms that choose the lower-capacity option would have to take responsibility if problems arise as a result.

(Reporting by John McCrank, editing by G Crosse)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/OlnVMMc0V_g/us-nasdaq-data-idUSKBN15B23P