News Archive

Third Point likes opportunities in Europe: letter

NEW YORK Hedge fund manager Daniel Loeb told investors on Thursday that his $16 billion hedge fund Third Point saw more opportunities in Europe and was positioned to absorb a modest sell-off in U.S. stocks.

Third Point took a position in Italian bank Unicredit Spa and German utility E.ON, the firm said in its first quarter letter. During the first three months of the year, Third Point earned a 5.9 percent return.

(Reporting by Svea Herbst-Bayliss; Editing by Andrew Hay)

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Boeing seeks U.S. anti-dumping probe against CSeries jet

PARIS/NEW YORK Boeing Co (BA.N) said on Thursday it had asked the U.S. Commerce Department for an investigation into alleged subsidies and unfair pricing for Canadian planemaker Bombardier’s (BBDb.TO) CSeries airplane.

The request for anti-dumping measures was also addressed to the U.S. International Trade Commission, a federal trade agency, the U.S. planemaker said in a statement.

“Bombardier has embarked on an aggressive campaign to sell CSeries aircraft into the U.S. market at absurdly low prices – less than $20 million for airplanes that cost $33 million to produce, based on publicly available information,” Boeing said in an emailed statement.

(Reporting by Tim Hepher, Alwyn Scott; Editing by Jonathan Oatis)

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Starbucks quarterly revenue falls short, stock falls

LOS ANGELES Starbucks Corp (SBUX.O) reported quarterly sales that just missed Wall Street’s expectations, hurt by a slight cooling in spending growth by customers in its core U.S. market, sending shares down 4.4 percent in extended trading on Thursday.

The world’s biggest coffee chain said net revenue was up 6 percent to $5.3 billion for the fiscal second quarter, falling short of the $5.4 billion expected by analysts polled by Thomson Reuters I/B/E/S.

The average amount spent per order was up 4 percent in the United States for the quarter ended April 2, versus the 5 percent gain in the prior quarter.

Kevin Johnson, who this month succeeded Howard Schultz as chief executive officer, said the company is on track to deliver stronger results.

“With our U.S. business accelerating throughout the quarter and strong performance in China, we are poised to deliver strong revenue growth in the second half and into the future,” Johnson said in a statement.

Schultz, Starbucks’ co-founder, in April transitioned to the role of executive chairman in charge of expanding the company’s super-premium offerings.

Sales at U.S. cafes open at least 13 months were up 3 percent in the latest quarter, unchanged from the prior quarter. Traffic, referred to as transactions, fell 2 percent for the second quarter in a row amid a stubborn industry-wide slump.

Net income attributed to Starbucks was $652.8 million, or 45 cents per share, for the second quarter, up from $575.1 million, or 39 cents per share, a year earlier. Results from the latest quarter matched the average estimate of analysts polled by Thomson Reuters I/B/E/S.

Starbucks in January reported disappointing results from U.S. cafes and pinned most of the blame on mobile orders that had piled up at drink pickup stations.

The company has since sought to ease congestion by reworking some job duties and giving managers more leeway to add needed labor as part of a broad customer re-engagement program called North Star.

Shares of Starbucks were down $2.70 at $58.60 in after-hours trade.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Matthew Lewis)

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Google parent Alphabet’s profit soars on strong ad sales

Google parent Alphabet Inc (GOOGL.O) posted a surge in profit on Thursday, underscoring that despite concerns about an advertiser revolt on YouTube, the popular video streaming site remains the engine of its growth.

Wall Street grew anxious as a series of high-profile advertisers fled YouTube amid concerns about ads appearing alongside extremist content. But Google’s results showed that controversy was little more than a speed bump for the company as quarterly profit climbed 29 percent.

“YouTube revenues continue to grow at a significant rate, driven primarily by video advertising,” Alphabet Chief Financial Officer Ruth Porat said during an earnings call.

Alphabet’s net income rose to $5.43 billion, or $7.73 per Class A and B shares and Class C capital stock, in the first quarter ended March 31 from $4.21 billion, or $6.02 per share, a year earlier. (

Shares of the company rose 2.8 percent to $916.80 after the bell on Thursday.

Analysts marveled at the company’s ability to continue to post sizeable year-over-year gains from such a large base.

“For a company of Google’s size to post the growth that it has is just a testament to the quality and usefulness of the products they make,” said Colin Gillis, an analyst with BGC Partners. “They are the dominant force in digital advertising.”

Google’s ad revenue, which accounts for the lion’s share of its business, rose 18.8 percent to $21.41 billion in the first quarter.

The company is locked in a battle with social media company Facebook Inc (FB.O) in the fast-growing mobile advertising market.

Google is expected to command a 61.6 percent share of the search ad market worldwide in 2017, up from 60.6 percent in 2016, according to research firm eMarketer.

Paid clicks, where an advertiser pays only if a user clicks on ads, rose 44 percent. Analysts on average had expected a rise of 29.7 percent, according to FactSet StreetAccount.

With the traditional business of search advertising maturing, the company is looking to YouTube as its next driver of growth.

The strong results also allayed concerns about a recent controversy surrounding the video service and its impact on Google’s ad revenue.

YouTube had come under fire for ads appearing alongside videos carrying homophobic or anti-Semitic messages, prompting a number of companies to suspend their digital ads on the video service.

“Advertisers can be fickle and certainly the approval of the advertiser is critical, but less so than the approval of the user,” said Phil Bak, CEO of ACSI Funds, an asset manager.

Alphabet is also reaping the benefits of investing heavily in areas such as hardware and cloud.

Revenue from its Google Other unit, which includes Pixel smartphone, Play Store and cloud business, rose 49.4 percent to $3.10 billion.

The company’s consolidated revenue rose 22.2 percent to $24.75 billion from $20.26 billion.

Analysts on an average had expected a first-quarter profit of $7.34 per share, according to Thomson Reuters I/B/E/S.

(Reporting by Rishika Sadam in Bengaluru and Julia Love in San Francisco; Editing by Anil D’Silva and Lisa Shumaker)

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Trump steps back from brink of killing North American trade pact

WASHINGTON President Donald Trump said on Thursday he pulled back from the brink of killing the 23-year-old trade pact with Canada and Mexico after requests from their leaders and expressed optimism about winning better U.S. terms in a renegotiated deal.

Trump, during a White House appearance with Argentine President Mauricio Macri, said terminating the North American Free Trade Agreement, a pact he has long condemned as unfair to the United States, “would be a pretty big shock to the system,” though he was planning to do so within two or three days.

Hours after White House officials disclosed on Wednesday that Trump and his advisers had been considering an executive order to withdraw from NAFTA, he said he received telephone calls from Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau.

“They asked me to renegotiate. I will,” Trump said. “And I think we’ll be successful in the renegotiation, which frankly would be good because it would be simpler” than killing NAFTA.

Trudeau said he had warned Trump of the disruption that pulling out of NAFTA would cause. Mexico’s foreign minister said a good outcome for all three countries was possible under a new accord.

News of the possible U.S. pullout from NAFTA rattled financial markets on Wednesday. Relative calm returned on Thursday after Trump’s comments, and the Mexican peso strengthened 0.86 percent against the U.S. dollar while the Canadian dollar was flat versus the greenback.

Mexico, Canada and the United States form one of the world’s biggest trading blocs, and trade disruptions among them could adversely affect agricultural, automotive, energy and other sectors in all three countries. NAFTA erased most trade and tariff barriers between the neighbors, but Trump and other critics have blamed it for deep U.S. job cuts.

Trump campaigned for president last year on a pledge to pull out of NAFTA if he could not renegotiate better terms. The United States went from running a small goods trade surplus with Mexico in the early 1990s to a $63-billion deficit in 2016. On Thursday he said NAFTA had been “horrible” for the United States but very good for Canada and Mexico.

“If I’m unable to make a fair deal … for the United States, meaning a fair deal for our workers and our companies, I will terminate NAFTA. But we’re going to give renegotiation a good strong show,” Trump said.


Trudeau, speaking at a news conference in Saskatchewan, said he had urged Trump not to withdraw from the trade pact and warned that doing so “would cause a lot of short- and medium-term pain.”

“That’s not something that either one of us would want, so we agreed that we could sit down and get to work on looking at ways to improve NAFTA,” Trudeau said.

Canada sends 75 percent of all its exports to the United States. On Tuesday, Trump said he did not fear a trade war with Canada, a day after his administration moved to impose tariffs on Canadian lumber.

In Mexico City, Mexican Foreign Minister Luis Videgaray said Pena Nieto had called Trump on Wednesday and spoke with him for about 20 minutes in a conversation focused exclusively on the looming talks over NAFTA’s “renegotiation and modernization.”

Trump has accused Mexico of luring away American factories and jobs with cheap labor and other advantages enabled by NAFTA. During the presidential campaign he accused Mexico of sending rapists and criminals into the United States, and as president plans a U.S.-Mexico border wall.

“I believe that all the conditions to reach a good negotiation exist, that will suit Mexico … and that is also good for the region, for both Canada and the United States,” Videgaray told local broadcaster Televisa.

Trump’s scorn toward multinational trade deals, part of his nationalist political message, appeals to Americans who feel such pacts have cost Americans jobs. He has said businesses that choose to move plants outside the country would pay a price.

Trump made pulling out of the 12-nation Trans-Pacific Partnership, negotiated by his Democratic predecessor Barack Obama, one of his first major acts after becoming president in January.

Several agriculture lobby groups in Washington were told U.S Agriculture Secretary Sonny Perdue, confirmed by the Senate on Monday, met with Trump on Wednesday evening to dissuade him from withdrawing from NAFTA.

American Soybean Association President Ron Moore said, “When you’re talking about $3 billion in soybean exports a year, any threats to withdraw from agreements and walk away from markets makes farmers extremely nervous.”

Formal NAFTA talks likely will not get started until August. The U.S. Trade Representative’s office must first send Congress a notice that starts a 90-day consultation period preceding any negotiations. A USTR spokeswoman said the notice would not be sent until the Senate confirms Trump’s nominee for trade representative, Robert Lighthizer.

(Additional reporting by Susan Heavey and Mohammad Zargham in Washington, Veronica Gomez and David Alire Garcia in Mexico City, David Ljunggren in Ottawa, and P.J. Huffstutter and Mark Weinraub; Writing by Will Dunham; Editing by Nick Zieminski and Tom Brown)

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Earnings lift Nasdaq to record; Amazon, Alphabet up after hours

NEW YORK The Nasdaq Composite ended at a record high on Thursday, boosted by results-related gains in Comcast, PayPal and Intuit, while the SP 500 and the Dow were little changed.

The tech-heavy index is likely to extend its record-breaking string of gains as heavyweights Amazon and Alphabet jumped more than 4 percent each after the bell, following stellar earnings.

Earnings were back in the spotlight, a day after the Trump administration unveiled its tax reform priorities without details on how the reform would be paid for, raising questions on whether deficit hawks in Congress would support it.

Comcast (CMCSA.O) rose 2.1 percent to $39.59 after touching a record high of $40.62 as strong subscriber growth brought a forecast-beating profit.

Overall profits of SP 500 companies are estimated to have risen 12.4 percent in the first quarter, the most since 2011, according to Thomson Reuters I/B/E/S.

“Most folks were expecting a build in earnings acceleration and that’s what we’ve got. Despite all the economic and geopolitical noise, ultimately the market has been responding to improving earnings,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

He said a premium has been built into stock prices on bets of tax reform and other policies expected from the Trump administration, so “when that is in question you see a sideways action.”

U.S. businesses would mostly benefit if President Donald Trump’s plan to cut corporate tax rates and slash taxes on cash parked overseas becomes law. But the economic benefits and the timing of a possible bill remain in question.

The Dow Jones Industrial Average .DJI rose 6.24 points, or 0.03 percent, to 20,981.33, the SP 500 .SPX gained 1.32 points, or 0.06 percent, to 2,388.77 and the Nasdaq Composite .IXIC added 23.71 points, or 0.39 percent, to 6,048.94.

In after-hours trading, Amazon (AMZN.O) added 4.1 percent to $955.92 while Google’s parent Alphabet (GOOGL.O) jumped 4.5 percent to $931.91 as both continue to race to $1,000.

Alphabet jumped as Google’s ad revenue rose 18.8 percent to $21.41 billion in the first quarter, while Amazon reported revenue and profit that topped analysts’ estimates.

In regular market hours, Intuit (INTU.O) rose 8.5 percent to $125.61 after it reported consumer tax-season results and reiterated its quarter and full-year forecast.

PayPal (PYPL.O) shares hit a record high a day after it raised its earnings outlook and reported higher-than-expected quarterly profit.

Sportswear maker Under Armour (UAA.N) shares jumped 9.9 percent to $21.67 after it posted a smaller-than-expected quarterly loss.

Energy .SPNY was the biggest decliner among the 11 major SP 500 sectors, falling 1.1 percent on the back of a 0.8 percent decline in U.S. crude futures CLc1.

American Airlines (AAL.O) dropped 5.2 percent to $43.98. The company said it had offered a mid-contract pay increase for pilots and flight attendants that JPMorgan analysts called “a wealth transfer of nearly $1 billion to its labor groups.”

Indexes ticked up but declining issues outnumbered advancing ones on the NYSE 1.03-to-1 while on Nasdaq a 1.15-to-1 ratio favored decliners.

The SP 500 posted 76 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 180 new highs and 45 new lows.

About 7.18 billion shares changed hands in U.S. exchanges, above the 6.5 billion daily average over the last 20 sessions.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

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Jobless claims rise, but four-week average at two-month low

WASHINGTON, April 27 The number of Americans filing for unemployment benefits rose more than expected last week, but the four-week average of claims fell to a two-month low, indicating that labor market conditions continue to tighten.

Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 257,000 for the week ended April 22, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 fewer applications received than previously reported.

Claims have now been below 300,000, a threshold associated with a healthy labor market, for 112 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is close to full employment, with the unemployment rate at a near 10-year low of 4.5 percent.

Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 245,000 last week.

A Labor Department analyst said there were no special factors influencing last week’s data and only claims for Louisiana had been estimated.

Claims, however, tend to be volatile around this time of the year because of the different timings of spring and Easter holidays, which often throws off the model the government uses to smooth the data of seasonal fluctuations.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 500 to 242,250 last week, the lowest level since February.

The claims report also showed the number of people still receiving benefits after an initial week of aid rose 10,000 to 1.99 million in the week ended April 15.

It was the second straight week that the so-called continuing claims remained below 2 million. The four-week moving average of continuing claims fell 16,000 to 2.0 million, the lowest level since June 2000.

The continuing claims data covered the survey week for April’s unemployment rate. The four-week average of claims fell 23,500 between the March and April survey periods, suggesting a further improvement in the unemployment rate after it dropped two-tenths of a percentage point to 4.5 percent last month.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

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Oil prices fall on oversupply

LONDON Oil prices fell on Thursday, weighed down by oversupply, but losses were limited by expectations that major exporters would agree to extend production cuts to try to rebalance the market.

Benchmark Brent crude was down 60 cents at $51.22 a barrel by 0915 GMT, almost 10 percent below this month’s peak. U.S. light crude was down 55 cents at $49.07.

Traders reported ample supplies in all key markets despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to cut output by 1.8 million barrels per day (bpd) in the first half of the year to tighten the market and prop up prices.

OPEC is discussing extending its cuts into the second half of the year, but the group has an uphill task as oil inventories are near record levels in many parts of the world.

“It is clear that the world has plenty of oil in stock, making OPEC’s life that much harder,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

U.S. data on Wednesday showed a drop in crude oil stocks, but gasoline inventories surged as refiners produced more fuel than the market could consume.

“U.S. commercial stocks increased by more than 6.5 million barrels last week,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates. “Stock rebalancing has been put on hold as U.S. commercial oil inventories have jumped.”

U.S. crude oil production is also rising, up 10 percent since mid-2016 at 9.27 million bpd.

Rystad Energy expects U.S. shale oil output to grow by 100,000 bpd each month for the rest of this year and into 2018 if oil prices hold around $50-$55 a barrel, well above estimates by the U.S. Energy Information Administration for monthly gains of about 29,000 bpd in 2017 and 57,000 bpd in 2018.

“We see a risk for a weaker oil price towards the end of the year … because shale is delivering so much oil,” Jarand Rystad told Reuters.

Still, with an expectation that OPEC will extend its production cuts to cover all of 2017, analysts said there was support for prices around current levels.

“Brent oil looks neutral in a range of $51.30 to $52.32,” said Reuters technical commodities analyst Wang Tao.

(Additional reporting by Henning Gloystein in Singapore; Editing by David Goodman)

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Trump tax cut caution, ECB meeting cools risk rally

LONDON A record-setting rally in world stocks ran out of steam on Thursday, with unconvincing U.S. tax cut plans cooling investors’ spirits and caution setting in as the European Central Bank met.

Europe’s main bourses were as much as 0.7 percent lower as traders pulled back after six days of unbroken gains fueled by relief at the outcome of the first round of France’s presidential election and encouraging earnings and economic data. [.EU]

Asia felt groggy too. The Bank of Japan offered its most upbeat economic assessment in nine years but Asia-Pacific shares ended flat a day after hitting their highest in almost two years.

A surprise move by Sweden to expand its stimulus program pushed the crown down sharply, and the Canadian dollar and Mexican peso jumped as the U.S. said it would not scrap the North American Free Trade Agreement.

But the focus was turning to the ECB and what its head Mario Draghi and his colleagues have made of the recent improvement in euro zone economic data.

The bank is not expected to make any changes to its record low interest rates or mass-stimulus program, so market reaction to this meeting may hinge on just a few crucial words.

“It is possible that the ECB will remove the language stating that the risks (to the economy) “remain tilted to the downside,” said Mike Bell, Global Market Strategist, JPMorgan Asset Management.

Euro zone government bond yields nudged up along with the euro which was at $1.0913 having been as high as $1.0950 this week after pro-EU centrist Emmanuel Macron topped the first round vote in France.

Disappointment lingered after U.S. President Donald Trump’s plans to slash company tax rates to 15 percent from the current 35 percent and 39.6 percent for small firms offered no details on how they would be paid for.

Billed beforehand as the biggest tax cut in history, it amounted to little more than a one-page plan and fueled the suspicion that it could run into opposition from U.S. lawmakers worried about increasing the country’s debt levels.

“There was virtually no new information, just as expected. He was essentially repeating his campaign promises,” said Tomoaki Shishido, senior fixed income strategist at Nomura Securities.


The dip in European shares saw them retreat from 20-month highs, with financials and commodity-related stocks the main drag, although gains in other cyclical industrials, on the back of strong earnings, kept losses down. [.EU]

Deutsche Bank shares fell as much as 3.5 percent even as its first-quarter net profit more than doubled following a rebound in bond trading. It shares have nearly doubled though after worries about its future late last year.

Elsewhere, upbeat results from the likes of SKF, Bayer and Subsea 7, companies closely geared to economic growth, were cheered as more investors piled into the European recovery story.

Wall Street futures pointed to a flat start for New York. The SP 500 ended down fractionally on Wednesday as the questions left by Trump’s tax plans overshadowed more upbeat earnings.

Overall profits of SP 500 companies are estimated to have risen 11.8 percent in the first quarter, the most since 2011, according to Thomson Reuters I/B/E/S.

China’s growth accelerated at the fastest pace since mid-2015 in the January-March quarter, while South Korea on Thursday also reported stronger than expected first-quarter growth, fueled by improving global demand.

Among commodities, industrial metals steadied though oil prices dipped again on concerns about globally bloated markets[O/R].

Brent futures dropped to $51.60 per barrel, down 22 cents, or 0.42 percent, from their last close. Brent is almost 9 percent below its April peak.

The dollar, meanwhile, slipped to 111.23 yen from near a one-month high of 111.78 yen scored earlier on Wednesday.

(Additional reporting by Hideyuki Sano in Tokyo; editing by John Stonestreet)

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