News Archive

Cancer-drug setback sends Merck shares down again

NEW YORK (Reuters) – A setback for Merck Co’s (MRK.N) key cancer drug sent the drugmaker’s stock swooning on Monday for a second straight session, putting the shares on track for their biggest two-day decline in more than eight years.

Late on Friday, Merck withdrew an application for European use of its flagship drug Keytruda as an initial, or first-line, treatment for advanced lung cancer in combination with chemotherapy, raising questions about future sales.

The Keytruda/chemo combination is already approved in the United States based on initial promising data. But the company determined that a similar European first-line approval without more mature late-stage data was unlikely.

Lung cancer is by far the most lucrative oncology market with first-line approval providing access to the most patients.

In the wake of the news, at least three analysts cut their ratings on Merck’s stock, a component of the blue-chip Dow Jones Industrial Average .DJI, while other analysts lowered their target prices for the stock.

“We are downgrading MRK shares to Equal Weight from Overweight based on diminished upside potential from Keytruda, which is by far Merck’s biggest value driver,” Barclays analyst Geoff Meacham said in his downgrade note.

Aside from the European withdrawal, Meacham and other analysts also cited delays for another Keytruda study, revealed on Friday morning. Merck said a decision to make overall survival a main goal for a large, pivotal lung cancer trial of Keytruda plus chemotherapy would delay those results until February 2019.

Merck shares fell 5.6 percent to $54.95 on Monday, touching their lowest point since May 2016. The stock had dropped 6 percent on Friday following the company’s third-quarter results.

The drugmaker said that the cost of a June cyber attack that temporarily crippled manufacturing coupled with lower sales of off-patent products caused its third-quarter revenue to fall 2 percent to $10.33 billion, even as Keytruda sales topped $1 billion for the first time.

The combined, roughly 11-percent two-day decline for Merck shares would be the biggest since February 2009.

Merck’s setback boosted shares of Bristol-Myers Squibb Co (BMY.N), which sells a rival cancer therapy. Bristol-Myers shares were up 1.6 percent.

Pharmaceutical stocks have endured a rocky month so far as earnings results have poured in. The NYSE Arca Pharmaceutical index .DRG is down 2 percent in October against a 2.1 percent rise for the overall SP 500 .SPX.

Pharmaceutical heavyweight Pfizer Inc (PFE.N) is set to report results on Tuesday.

additional reporting by Bill Berkrot; Editing by Nick Zieminski

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Wall Street 2017 profits set to surpass last year’s: report

(Reuters) – Wall Street profits for 2017 are set to exceed that of 2016, according to a report on Monday from New York State Comptroller Thomas P. DiNapoli.

Profits from the securities industry topped $12.3 billion in the first half of this year, a third higher than the same period a year earlier.

Bonuses could also be higher this year, with 4 percent more set aside by the securities industry for compensation than a year earlier. The average bonus paid in 2016 was around $138,210, the report estimated.

Wall Street employment has strengthened slightly this year. As of September, there were 178,000 jobs in the securities industry in New York City.

While the securities industry has shrunk since the 2008 financial crisis, it still remains critical to New York City’s economy. The sector represents 4.8 percent of private sector jobs, but was responsible for 20.1 percent of all private sector wages paid in the city.

Reporting by Olivia Oran; editing by Susan Thomas

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Apple’s Cook, Facebook’s Zuckerberg meet China’s Xi in Beijing

SHANGHAI (Reuters) – Apple Inc chief executive Tim Cook and Facebook Inc’s Mark Zuckerberg met Chinese President Xi Jinping on Monday at an annual gathering of advisers to Beijing’s Tsinghua University business school.

Xi was speaking to business leaders and officials at the meeting, state broadcaster China Central Television (CCTV) reported. Cook and Zuckerberg are on the advisory board of the Tsinghua School of Economics and Management.

The meeting comes at a particularly key time for Apple as it prepares to launch its much-anticipated iPhone X on Friday, amid hopes the anniversary smartphone can revive the firm’s sales in the world’s number two economy.

Tsinghua’s business school, founded in 1984, has seen scores of top Chinese and foreign industry leaders sit on its board, including Chinese central banker Zhou Xiaochuan and Goldman Sachs chief executive Lloyd Blankfein.

Facebook’s Zuckerberg has also been very active in China, eager to get his popular social network unblocked in the world’s most populous nation, where it has been banned since 2009 and held behind the country’s so-called Great Firewall.

An Apple spokeswoman said the firm couldn’t “comment on Tim’s schedule and or meetings”. Facebook confirmed Zuckerberg was in Beijng, but declined to comment on details of his visit.

In a post on his Facebook page on Saturday, Zuckerberg wrote he was in Beijing for the annual meeting. “Every year this trip is a great way to keep up with the pace of innovation and entrepreneurship in China,” he said.

Reporting by Adam Jourdan; editing by Alexander Smith

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Goldman CEO has high hopes for London HQ post-Brexit, much outside his control

LONDON (Reuters) – Goldman Sachs (GS.N) chief executive Lloyd Blankfein expects to fill the firm’s new European headquarters which is currently under construction in London, but said Britain’s exit from the European Union left much outside the bank’s control.

“In London. GS still investing in our big new Euro headquarters here. Expecting/hoping to fill it up, but so much outside our control. #Brexit,” Blankfein tweeted on Monday, alongside a bird’s eye picture of the new building.

The Wall Street bank is building a 1.1 million square foot office in London with initial occupancy slated for 2019 to house its 6,000 UK employees, but the firm needs to ensure it can still service its EU clients after Brexit and may have limited access to the EU’s single market from Britain.

Goldman also has flexibility to adjust the number of floors it takes in the new building, according to a source familiar with the situation, so it is not committed to occupying the entire office. That option was put in place prior to the Brexit vote.

Earlier this month, Goldman said it had agreed to lease office space at a new building in Frankfurt, giving it space for up to 1,000 staff.

That would be five times the current staff of 200 and see it bolstering activities including trading, investment banking and asset management.

Blankfein sparked a wave of speculation earlier this month when he tweeted he was planning to spend a lot more time in Frankfurt.

“Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I’ll be spending a lot more time there. #Brexit,” he tweeted on Oct. 19.

Frankfurt is so far seen as the biggest beneficiary from Wall Street banks moving jobs out of London as a result of Brexit, with JPMorgan, Citi and Morgan Stanley all setting out plans to expand operations there.

Reporting by Anjuli Davies; Editing Rachel Armstrong and Mark Potter

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U.S. regulator wants to loosen leash on Wells Fargo: sources

WASHINGTON (Reuters) – A leading U.S. regulator wants to make it easier for Wells Fargo to pay employees when they leave, loosening a restriction in place since a phony accounts scandal hit the bank last year, according to people familiar with the matter.

The initiative comes as President Donald Trump is trying to lighten rules on Wall Street and the bank regulator, Keith Noreika, acting Comptroller of the Currency (OCC), must weigh whether to vet new Wells Fargo executives.

If Noreika’s approach prevails, the OCC could go easier on Wells Fargo and any other large banks sanctioned in the future.

Since Noreika took control of the OCC in May, he has advocated easing up on sanctions imposed on Wells Fargo in the wake of the scandal over abusive sales practices, according to current and former officials.

Wells Fargo reached a $190 million settlement in September 2016 after admitting that its sales staff opened as many as 2.1 million accounts without customers’ consent. Since then the estimate has climbed to as many as 3.5 million.

As part of the deal with regulators, incoming Wells Fargo executives can face a vetting from the OCC while severance payouts must be cleared by the OCC and a sister agency, the Federal Deposit Insurance Corporation.

But Noreika wants officials to work faster when they review severance pay and the agency can choose to waive its check on incoming executives.

Wells Fargo declined comment on the reviews.

Hundreds of Wells Fargo employees have had their severance payouts frozen when they left as regulators tried to determine what role those employees might have had in the scandal.

Under one proposal floated by the OCC, departing employees would collect severance automatically if regulators could not finish their review within weeks, according to one current and two former officials who were not authorized to discuss an internal debate.

Under another scenario, the OCC could push for payouts to a Wells Fargo employee without waiting for the FDIC to concur. The FDIC has the final say on severance and until now the decisions have always been made jointly.

The FDIC has resisted hurrying its severance reviews, according to those familiar with the discussions.

But the current FDIC chief, Martin Gruenberg, could be replaced within weeks by a President Trump nominee.

If that happens and Noreika prevails, it could provide relief for Wells Fargo as it faces fresh scrutiny for wrongly charging customers for car insurance and mortgages.

Noreika is expected to leave the OCC in coming weeks, but the matter could be settled by Joseph Otting, the former banker who is Trump’s permanent pick for the OCC. Otting is expected to favor a similar, light touch approach to financial rules.


The “golden parachute” rule is meant to halt payouts to employees who played a role in a bank’s problems, but Noreika has said too many innocent Wells Fargo employees are caught up in the reviews.

In a June 5 letter to a former Wells Fargo employee made public by the OCC, Noreika said that he had personally called Gruenberg to expedite a payment.

In the weeks after that letter was sent, sources said, the OCC has proposed speeding up the reviews, but the FDIC pushed back against setting “artificial” deadlines, according to one official.

“The OCC has sought ways to make regulatory reviews more efficient (and) complete in weeks not months,” OCC spokesman Bryan Hubbard said, while declining to discuss inter-agency deliberations.

The FDIC defended the pace of its severance audits, which in some cases have taken months to finish.

“When delays occur, it is generally because the applying institution provided incomplete or inconsistent information,” said Barbara Hagenbaugh, spokeswoman for the FDIC.

Severance payouts are simple to calculate for rank-and-file Wells Fargo employees who can get two weeks’ pay for each year of work. It gets more complex for senior executives who get a mix of salary, bonuses, stocks and other perks.

For example, James Strother, the bank’s former chief counsel who retired this summer, was among senior Wells Fargo executives that had $32 million in payouts frozen in March. But Strother has yet to repay a $310,000 interest-free loan Wells Fargo granted him in 2001, a year before such insider loans were banned, according to securities filings and the bank.

“Mr. Strother has informed us that he does plan on paying back the loan, as required and expected,” said Diana Rodriguez, a spokeswoman for Wells Fargo.

Strother declined to comment.

According to several former officials, the FDIC has authority to scrutinize such loans under their ‘golden parachute’ review, adding another layer of complexity to the process.

Editing by Carmel Crimmins and Tomasz Janowski

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Asia shares get technology boost, crude near two-year top

SYDNEY (Reuters) – Asian shares climbed on Monday, as technology stocks were bolstered by solid earnings from U.S. tech stalwarts and on strong pre-orders for Apple’s iPhone X, while oil hovered around a 2-year peak on supply fears.

Apple Inc (AAPL.O) said pre-orders for the 10th anniversary iPhone X, which started on Friday, were “off the charts”, a blessing for Asian suppliers such as South Korea’s LG Display (034220.KS) and Taiwan Semiconductor Manufacturing Company (2330.TW).

Indeed, technology stocks were the top gainers in MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS, which was up 0.5 percent. Samsung Electronics (005930.KS) led the charts.

Energy stocks did well too, with Brent crude LCOc1 at its highest since July 2015 after Saudi Arabia agreed to support the extension of a global oil production cut agreement. [O/R]

Seoul shares .KS11 edged up 0.2 percent while Australia’s benchmark index climbed 0.3 percent.

Japan’s Nikkei .N225 steadied around the highest since mid-1996, having soared 8 percent in October so far.

Global share markets have been on an uptrend since the start of the year, helped by solid corporate earnings and positive economic data across major countries.

The world share index .MIWD00000PUS has surged 17.6 percent so far in 2017, on track for its best showing since 2013.

“The continuation of quantitative easing (QE) in Europe at a time when Japan remains locked on QE and the U.S. is only tightening gradually highlights that global monetary conditions will remain easy for a long while yet,” said Shane Oliver, head of investment strategy at AMP Capital.

“This, along with strong economic growth and earnings, largely explains why global share markets are so strong.”

In the United States, Alphabet (GOOGL.O) GOOG.L, Amazon (AMZN.O) and Microsoft (MSFT.O) all jumped last week after solid quarterly performances, sending U.S. indexes higher.

Amazon (AMZN.O), up 13.2 percent, was responsible for the biggest boost to the SP 500 on Friday after reporting a quarterly sales surge. [L2N1N221K]

Apple is due to report on Thursday.


The dollar index .DXY was a touch softer, with investors focused on the impending appointment of the Federal Reserve chair, with speculation rife that Fed governor Jerome Powell is the favoured suitor.

Wagers that Powell – who markets see as a less hawkish candidate – will be the chosen one, tempered the dollar’s advances and dragged 2-year Treasury yields off a nine-year top US2TY=RR. An announcement is expected this week.

In Europe, political uncertainty and the European Central Bank’s decision to extend its stimulus further weighed on the common currency, marking its biggest weekly loss of the year.

The euro EUR= steadied at $1.1613, not far from $1.1573 which was the lowest since July 20.

Spain sacked Catalonia’s regional government on Friday, dissolved the Catalan parliament and called a snap election after Catalonia declared independence from Spain.

The ECB’s decision last week to extend its bond purchases into September 2018 also hurt the euro, driving yields on two-year German bunds lower DE2YT=RR.

The premium that 2-year U.S. debt pays over 2-year German yields is now the widest since mid-1999, making it more attractive to borrow in euros to buy dollars.

In commodities, copper was near a two-week low CMCU3. Spot gold XAU= was trading 0.1 percent lower at $1,270.74 per ounce. [GOL/]

U.S. crude CLc1 ticked up 4 cents to $53.94 a barrel.

Editing by Eric Meijer and Jacqueline Wong

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Kobe Steel to withdraw earnings forecast after data scandal: Nikkei

TOKYO (Reuters) – Embattled Kobe Steel Ltd has decided to withdraw its forecast for the current financial year as it struggles to quantify the impact of its data falsification scandal, the Nikkei business daily reported on Monday.

The steelmaker’s forecast for its first full-year profit in three years has been thrown into doubt by revelations of widespread tampering of data on products used across the world in cars, trains, airplanes and other equipment.

It reports earnings on Monday at 3:30 p.m. (0630 GMT). Japan’s third-biggest steelmaker has also decided to cancel plans to pay an interim dividend for the first time in two years, the Nikkei reported.

A company spokesman declined to comment on the Nikkei report.

Kobe Steel forecast in July that it would earn net profit of 35 billion yen ($308 million) in the year through March 2018 after two years of losses.

The company is also trimming its recurring profit forecast for the full year to 50 billion yen, from 55 billion yen, the Nikkei reported.

In a later article the Nikkei said Japan’s biggest banks are considering a loan of 50 billion yen for Kobe Steel, to shore up its finances.

Kobe Steel shares were down about 1 percent by the end of morning trading on the Tokyo exchange, while the Nikkei 225 was off by 0.1 percent.

Kobe Steel’s market value has slumped by about $1.5 billion since it said in early October it had found widespread data tampering in its aluminum and copper business. The cheating has since been found across its businesses.

Reporting by Sam Nussey; Writing by Aaron Sheldrick; Editing by Edwina Gibbs and Tom Hogue

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GM settles California county recall case for $13.9 million

WASHINGTON (Reuters) – General Motors Co agreed to a $13.9 million settlement with Orange County, California after prosecutors accused the Detroit automaker of intentionally concealing serious safety defects including those involving faulty ignition switches tied to nearly 400 deaths and injuries, the company said on Sunday.

An Orange County superior court judge late Friday approved the settlement for alleged violations of unfair competition and false advertising laws for some vehicles recalled in 2014, including the ignition switch recall. Earlier this month, GM agreed to a separate $120 million settlement with 49 states and the District of Columbia over faulty ignition switches and its auto safety practices.

Orange County District Attorney Tony Rackauckas said in a statement that GM failed to disclose defects in power steering, airbag and braking systems.

The largest U.S. automaker had previously paid about $2.5 billion in penalties and settlements over faulty ignition switches that could cause engines to stall and prevent airbags from deploying in crashes. The defect has been linked to 124 deaths and 275 injuries, and prompted a recall that began in February 2014 of 2.6 million vehicles.

GM spokesman David Caldwell said in a statement that since 2014, GM had taken important steps to help ensure vehicle safety, including a new organizational structure and a new program to encourage employees to report potential issues.

GM still faces more than 100 lawsuits in connection with the ignition switch recall, including economic loss and personal injury claims. The only remaining governmental lawsuit is from the state of Arizona.

In 2015, GM paid $900 million to settle a U.S. Justice Department criminal investigation and agreed to three years of oversight by an independent monitor after being charged with wire fraud.

No individuals were charged, but Chief Executive Mary Barra fired 15 people, including eight executives, over the issue. The ignition switch probe prompted an industrywide jump in recalls in 2014 to an all-time high and cast a spotlight on GM’s safety record as Barra testified before the U.S. Congress.

Editing by Richard Chang

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GE Board did not know about CEO’s extra plane: WSJ

(Reuters) – General Electric Co (GE.N) executives did not tell the multinational conglomerate’s board until October about a spare business jet that routinely flew for its now-retired chief executive, the Wall Street Journal reported on Sunday, citing people familiar with the matter.

Executives also did not tell directors that the maker of aircraft engines, locomotives, power plants and other industrial equipment had received an internal complaint about the jet several years ago, the publication said, also citing people familiar with the matter.

The Wall Street Journal reported on Oct. 18 that former Chairman and CEO Jeff Immelt had an extra aircraft follow his corporate jet on some overseas trips during much of his 16 years in the role. GE executives first informed the board about the practice after the report, the publication said.

GE told its directors the company had scaled back the practice in mid-2014 and would continue to use the backup plane only in limited situations, such as going to risky locations, the Journal reported.

Immelt told the Journal on Thursday that he did not know the spare plane was flying.

Immelt, 61, stepped down as CEO on Aug. 1 and planned to continue as chairman through Dec. 31. But John Flannery was named chairman on Oct. 2.

Flannery has grounded GE’s corporate aircraft fleet to cut costs and initiated a new policy under which executives will fly on commercial or charter flights, the Journal said.

Reporting by Suzanne Barlyn; Editing by Richard Chang

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