News Archive


BlackRock’s Rieder halved fund’s emerging market exposure

NEW YORK (Reuters) – Top BlackRock Inc (BLK.N) bond investor Rick Rieder halved exposure in recent months to a once-major bet in his portfolios on emerging markets on concerns including that the dollar could move higher, he told Reuters on Friday.

“I still would argue volatility is going to be higher, the dollar could potentially continue to grind higher,” said Rieder, BlackRock’s chief investment officer of global fixed income.

“It’s just prudent to run a smaller exposure.”

Rieder cut emerging markets to just 7 percent of the $35.7 billion Strategic Income Opportunities Fund (BASIX.O) he manages at the end of June, from 17 percent in February, according to periodic disclosures on the company’s website.

He said the shift down in emerging markets exposure comes as liquidity drains out of the bond markets and with the U.S. Federal Reserve and poised, he said, to stop reducing its bond holdings and to signal a move toward the end of that balance-sheet reduction policy as soon as September.

The dollar .DXY has gained 3 percent this year against its major trading partners, driven by strong U.S. economic data, rising interest rates and the possibility that a trade war could cause inflationary pressures and reduce the trade deficit of the world’s largest economy.

The trade rift, strong dollar and other factors have conspired to make life more difficult for emerging markets from China to Turkey and Brazil.

U.S. bond yields are likely to “grind” a bit higher from where they are now, Rieder said, if for no other reason than because inflation is moving higher.

BlackRock is the world’s largest asset manager, overseeing $6.3 trillion in stocks, bonds and other investments.

Low-fee shares of Rieder’s Strategic Income Opportunities Fund are up 1.6 percent over one year, a bit ahead of its average peer, according to Thomson Reuters’ Lipper unit.

Reporting by Trevor Hunnicutt; Editing by Marguerita Choy

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/RvB03lcBPVM/blackrocks-rieder-halved-funds-emerging-market-exposure-idUSKBN1KH2J6

Wells Fargo apologizes to customers for recent account problems

NEW YORK (Reuters) – Wells Fargo Co (WFC.N) apologized on Friday to customers who were having issues with their bank accounts after getting a stream of complaints on social media about checks not clearing or mobile deposits not working.

“We apologize to our customers who may be experiencing an issue with certain types of transactions,” Wells Fargo’s Twitter account posted. “Thanks for your patience while we research this issue. If you are impacted, please check back here for updates.”

A representative did not immediately respond to a request for comment about the type and extent of account issues reported by customers.

Reporting by Imani Moise; Writing by Lauren Tara LaCapra; Editing by Marguerita Choy

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ZaeuPVVt-oQ/wells-fargo-apologizes-to-customers-for-recent-account-problems-idUSKBN1KH2I6

Exclusive: China eyes infrastructure boost to cushion growth as trade war escalates

BEIJING (Reuters) – China plans to put more money into infrastructure projects and ease borrowing curbs on local governments to help soften the blow to the economy from the Sino-U.S. trade war, policy sources told Reuters.

China’s trade war with the United States has clouded the outlook for the world’s second-largest economy and roiled financial markets. A sharper slowdown in the Chinese economy could fuel job losses, a concern that Beijing has raised.

But Chinese leaders have ruled out another round of strong fiscal stimulus, wary of inflaming debt risks. A 4 trillion yuan ($590 billion) spending package in 2008-09 shielded China’s economy from the global crisis but saddled local governments and state firms with piles of debt.

The amount of infrastructure spending this time will depend on how the trade war evolves, said four sources who are familiar with government policy. The sources are involved in internal policy discussions but are not part the final decision-making process.  

“In the short term, the most effective way is to boost infrastructure investment,” said one policy insider who advises the government, speaking on condition of anonymity. “We will let fiscal policy play a bigger role in supporting the economy as monetary policy is less effective.”

The economy has already felt the pinch from Beijing’s multi-year deleveraging drive that has driven up corporate borrowing costs and delayed government projects.

Economic growth slowed slightly to 6.7 percent in the second quarter – still above the official 2018 growth target of around 6.5 percent.

However, the trade row with Washington, a slowing domestic property market and reduced outbound shipments have sharply increased the risks to China’s economic outlook.

Earlier this month, the United States imposed tariffs on $34 billion of Chinese imports. China promptly levied taxes on the same value of U.S. products, leading U.S. President Donald Trump to threaten to tariffs on all $500 billion of goods imported from China.

China’s infrastructure investment growth tumbled to 7.3 percent in the first half from 21.1 percent a year earlier – dragging fixed-asset investment growth to a record low – due to due to stricter checks on investment projects to curb debt risks.

Fiscal policy will become “more proactive”, China’s cabinet said after a meeting on Monday, pledging to deliver more tax cuts and quicken the issuance of local governments’ special bonds to support infrastructure investment.

The meeting, chaired by Premier Li Keqiang, also called for banks to ensure funding to existing projects and meet reasonable funding needs of local government financing vehicles (LGFVs), which have been subjected to tight official scrutiny.

ROOM FOR FISCAL OUTLAYS

Room for boosting fiscal outlays is ample. Government spending surpassed revenues by 726 billion yuan in the first half, which was only about a third of the budgeted deficit of 2.38 trillion yuan for 2018.

China has cut its annual budget deficit target to 2.6 percent of gross domestic product from 3 percent in 2017 – the first reduction since 2012, boosting the amount of special bond issuance by local governments by 550 billon yuan to offset the drop.

“Fiscal spending could be quickened and investment in some projects under construction will be expedited. This will provide support for the economy,” said a second policy insider.

Another policy insider said China can step up spending on much-needed urban facilities such as parking lots and retirement homes, instead of mega projects.

The finance ministry, the National Development and Reform Commission and the People’s Bank of China (PBOC) did not immediately respond to Reuters’ request for comment.

POLICY DEBATEThe cabinet’s policy move signaled a victory for the PBOC following debate among researchers from the PBOC and finance ministry on whether fiscal policy should do more to spur growth, the policy insiders said.

That could take some heat off the PBOC, as it faces difficulty in channeling credit to small firms, which are vital for economic growth and job creation, they said.

State banks remain reluctant to lend to small firms, which are considered riskier than state-controlled firms.

The PBOC has cut banks’ reserve requirements three times this year, with further reductions widely expected. But aggressive policy easing could re-ignite debt risks and weigh on the weakening yuan CNY=CFXS, sparking capital outflows.

While authorities are seen pushing ahead with reducing debt, there have been some signs of softening in their stance.

Chinese policymakers have recently replaced use of the term “deleveraging” with “structural deleveraging”, a change that suggests less harsh curbs on debt.

“The deleveraging should consider external changes and the intensity could be weakened to avoid having a big impact on the economy,” said one of the policy sources.

Reporting by Kevin Yao. Editing by Lincoln Feast.

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ksrhQl80OQQ/exclusive-china-eyes-infrastructure-boost-to-cushion-growth-as-trade-war-escalates-sources-idUSKBN1KH0O6

New York state revokes approval of Charter-Time Warner Cable deal

(Reuters) – The New York State Public Service Commission said on Friday it revoked its approval of the 2016 merger agreement between Charter Communications Inc (CHTR.O) and Time Warner Cable, saying Charter failed to build out its network for enough homes and that the company must end its operations in the state.

The commission said the U.S. broadband provider failed to live up to its agreement as part of the merger to build internet access to an additional 145,000 households and businesses in rural areas of New York under-served by internet providers.

Charter said in a statement that its Spectrum internet brand “has extended the reach of our advanced broadband network to more than 86,000 New York homes and businesses since our merger agreement” with the Public Service Commission, and is working to deliver broadband to more New Yorkers.

The commission said it will begin a special proceeding or action in the New York State Supreme Court to seek penalties for Charter’s violations.

Charter has 30 days to appeal the commission’s decision to revoke its agreement to the merger.

A Charter spokesman did not respond to requests for further comment.

“The Company has had multiple opportunities to correct these issues and either has not done so or has been openly brazen in its efforts to avoid them,” the commission said.

The commission gave the company two months to find a new cable provider to replace its operations.

Reporting by Sonam Rai in Bengaluru and Sheila Dang in New York; Editing by Shounak Dasgupta, Dan Grebler and Will Dunham

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/cohkWfFfd7U/new-york-state-revokes-approval-of-charter-time-warner-cable-deal-idUSKBN1KH2EJ

Tech declines take down Wall Street

NEW YORK (Reuters) – Wall Street’s major indexes fell on Friday as weak earnings reports from major technology companies led to a big drop for the sector.

Intel Corp (INTC.O) shares sank 8.6 percent after the chipmaker’s data center business missed estimates amid stiff rivalry from Advanced Micro Devices Inc (AMD.O). AMD shares rose 3.2 percent.

Twitter Inc (TWTR.N) shares plunged 20.5 percent after the social media network reported a decline in monthly active users, versus the increase analysts had expected, and warned of further drops as it deletes phony accounts.

The SP 500 technology index .SPLRCT fell 2.0 percent, the most among the major SP sectors. Shares of Apple Inc (AAPL.O), which is set to report quarterly results on Tuesday, fell 1.7 percent. Shares of Microsoft Corp (MSFT.O) and Alphabet Inc (GOOGL.O), which had soared after both companies recently reported strong quarterly results, dropped 1.8 percent and 2.5 percent, respectively. Alphabet shares touched an all-time high earlier in the session but reversed course.

The pressure on tech stocks started on Thursday after Facebook Inc (FB.O) gave a dismal forecast that caught investors off guard about growth prospects in a sector that has led the market’s march toward record highs.

“There’s a bit of concern perhaps growing that the bloom’s off the rose for these tech stocks, that they are not invincible,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

The Dow Jones Industrial Average .DJI fell 76.01 points, or 0.3 percent, to 25,451.06, the SP 500 .SPX lost 18.62 points, or 0.66 percent, to 2,818.82 and the Nasdaq Composite .IXIC dropped 114.77 points, or 1.46 percent, to 7,737.42.

The Nasdaq exceeded Thursday’s losses to register once again its biggest daily percentage drop in a month.

For the week, the Nasdaq shed 1.06 percent, but the SP rose 0.61 percent. The Dow, cushioned by promising developments in trade relations between the United States and the European Union earlier this week, added 1.57 percent.

Intel and Twitter’s disappointing results overshadowed data from the Commerce Department showing the U.S. economy grew at a 4.1 percent annualized rate in the second quarter, its fastest pace in nearly four years, on higher consumer spending and farmers rushing soybean shipments to China to beat tariffs.

Economists and investors cautioned against putting too much weight on the growth, which matched expectations, as the trade-related boost is expected to unwind later this year.

“It’s old news,” Ghriskey said. “Trade is bound to have an impact on the coming quarters if the tariff issue isn’t resolved.”

AbbVie Inc (ABBV.N) shares fell 3.6 percent after sales of its Humira drug in the second quarter barely beat Wall Street views, raising concerns about the drug’s viability as a cash-cow.

Amazon.com Inc (AMZN.O) shares jumped as much as 4 percent to a record high of $1,880.05 after the e-commerce giant forecast strong sales and posted a profit that was double analysts’ estimates. Amazon shares closed up 0.5 percent.

Declining issues outnumbered advancing ones on the NYSE by a 2.03-to-1 ratio; on Nasdaq, a 3.39-to-1 ratio favored decliners.

The SP 500 posted 25 new 52-week highs and three new lows; the Nasdaq Composite recorded 63 new highs and 99 new lows.

Volume on U.S. exchanges was 6.81 billion shares, compared with the 6.04 billion average over the last 20 trading days.

Reporting by April Joyner in New York; Additional reporting by Amy Caren Daniel in Bengaluru; Editing by Leslie Adler and Dan Grebler

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/m1Id2hpbA54/tech-declines-take-down-wall-street-idUSKBN1KH1BH

U.S. appeals court to reconsider Hyundai-Kia gas mileage settlement

(Reuters) – A U.S. appeals court will reconsider its decision to throw out a $210 million nationwide class-action settlement for owners of Hyundai Motor Co (005380.KS) and Kia Motors Corp (000270.KS) vehicles whose fuel economy was inflated.

The 9th U.S. Circuit Court of Appeals in San Francisco on Friday said a Jan. 23 decision by a three-judge panel to decertify the 2013 settlement was no longer precedent, and an 11-judge panel will review the matter.

No explanation was given, and no timetable was set for the so-called “en banc” rehearing.

Hyundai said in a statement that it “continues to support the nationwide class action settlement” and is pleased there will be a rehearing. Kia said in a separate statement that it “appreciated the opportunity” to have the case reheard.

The settlement came after the U.S. Environmental Protection Agency found flaws in Hyundai’s and Kia’s testing procedures, and the automakers lowered their fuel efficiency estimates for about 900,000 vehicles in the 2011, 2012 and 2013 model years.

In the January decision, a 2-1 majority said a lower court judge failed to assess whether differences in state laws prevented certification of a nationwide class, and therefore approval of the settlement.

It also said owners of used cars should not have been part of the settlement because it was unclear whether they relied on the automakers’ fuel efficiency claims.

The $210 million figure represented the estimated lump sum payout available to the proposed class members, the court said. Some objectors said the accord undervalued their claims.

In dissent, Circuit Judge Jacqueline Nguyen said the majority ignored legal precedents, and wrongly dealt a “major blow to multistate class actions” by requiring class-action lawyers or judges to survey the laws of all 50 states before certifying nationwide classes in cases with state law claims.

Hyundai and Kia lawyers said in court papers requesting a rehearing that requiring such “procedural formalism” would sow confusion and “obstruct fair and efficient resolution of class actions through this nation’s most active class action circuit.”

The 9th Circuit covers nine western U.S. states, Guam and the Northern Mariana Islands.

It was where Toyota Motor Corp (7203.T) in 2013 completed a $1.1 billion class-action settlement of claims that its vehicles accelerated without warning.

The case is In re Hyundai and Kia Fuel Economy Litigation, 9th U.S. Circuit Court of Appeals, Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067.

Reporting by Jonathan Stempel in New York; Editing by Marguerita Choy

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/PNKPycz-zIU/u-s-appeals-court-to-reconsider-hyundai-kia-gas-mileage-settlement-idUSKBN1KH2GW

CBS probes misconduct claims against CEO Moonves amid legal battle

(Reuters) – U.S. broadcasting and media company CBS Corp (CBS.N) said on Friday it was investigating allegations of personal misconduct by its chief executive Leslie Moonves ahead of an upcoming New Yorker article that is expected to detail the claims.

“Upon the conclusion of that investigation, which involves recently reported allegations that go back several decades, the board will promptly review the findings and take appropriate action,” CBS said in a statement.

It was not clear when exactly the New Yorker would publish its story or what its contents would be. Moonves and the New Yorker did not immediately respond to requests for comment.

The allegations come as Moonves is locked in a battle over control of CBS with the company’s largest shareholder, National Amusements Inc, owned by Shari Redstone and her father Sumner Redstone who proposed merging CBS with media company Viacom Inc (VIAB.O), also owned by National Amusements.

Viacom declined to comment on the claims against Moonves.

“The timing of this report comes in the midst of the company’s very public legal dispute,” the CBS statement added. “While that litigation process continues, the CBS management team has the full support of the independent board members” CBS added.”

A spokeswoman for National Amusements Inc said, “(Shari) Redstone hopes that the investigation of these allegations is thorough, open and transparent.”

Moonves clashed with Redstone earlier this year over her bid to merge CBS with Viacom. Moonves resisted that deal because he believed CBS’s prospects were better without taking on Viacom’s turnaround challenges.

A CBS board committee in May turned down the potential merger with Viacom and sued to strip National Amusements of its control of CBS.

Viacom shares jumped 3.3 percent to $29.00 on Friday, while CBS shares fell 5.5 percent to $55.39, as investors speculated that the chances of a merger had increased.

Combining CBS, which owns cable networks including Showtime as well as the CBS TV Network and CBS TV Studios, with Viacom, whose businesses include Paramount Pictures, Comedy Central, Nickelodeon and MTV, would have more negotiating leverage with cable and satellite companies, analysts said.

Moonves, 68, joined CBS as an entertainment president in 1995 and has been CEO since 2006. He is widely credited with turning CBS into one of the top-performing U.S. media companies.

The allegations against Moonves involve incidents that go back, in part, more than 20 years, the Hollywood Reporter reported earlier on Friday, citing sources with knowledge of the matter who it did not identify.

Multiple accusations of sexual misconduct against politicians, business leaders and entertainers in the U.S. have been made in the past year, leading to resignations, often inspired by the #MeToo social movement.

Reporting by Vibhuti Sharma and Sonam Rai in Bengaluru; editing by Clive McKeef

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/mXqUUJzTflM/cbs-probes-misconduct-claims-against-ceo-moonves-amid-legal-battle-idUSKBN1KH264

Sanctions blamed as Silicon Valley firms won’t ship some kit to Russia

MOSCOW (Reuters) – Two Silicon Valley firms have stopped shipping some electronic components to Russian customers even though they are not on the list of firms subject to U.S. sanctions, according to sources who work in the sector and a document seen by Reuters.

Although Russian companies can find other suppliers, the fact that the U.S. firms turned away Russian business demonstrates the chilling effect that a fresh wave of sanctions on Russia adopted in the past 18 months is having on the U.S.-Russian technology trade.

That sector is especially vulnerable to the effect of sanctions because some of the components are “dual use” — they could in theory be used in weapons systems — an area now under especially tough scrutiny in Washington.

San Jose, California-based Broadcom has told Bulat, a Russian maker of telecoms equipment, that it would not supply it with printed circuit boards with microprocessors, an official at the Russian trade ministry told Reuters.

In a letter dated November 2017 seen by Reuters, Broadcom’s European distributor said the U.S. firm could not fulfil an order placed by Bulat “in light of export restrictions on the part of the manufacturer,” the ministry official said.

Negotiations to resolve the issue this year failed, the official said, asking not to be named because he was not authorized to speak to the media.

Broadcom and the distributor, EBV Elektronik, did not respond to requests for comment. Bulat and the trade ministry declined to comment.

San Jose-based Xilinx, a maker of devices used to build digital circuits, has introduced an export restriction on some of its products going to Russia, said Renat Yusupov, Vice President of Kraftway, a Russian company that develops telecoms hardware using imported components.

Two executives at two other Russian companies that import electronic components confirmed that Xilinx had stopped shipping some of its products. They asked not to be named because they didn’t want their comments to affect their business.

“Foreign manufacturers are not striving to stop deliveries to Russia, but to avoid the re-sale of their products into various nuclear products or other weaponry,” Yusupov said.

Xilinx and one of its distributors, Inline Group, did not respond to requests for comment.

A second distributor, Macro Group, said there was demand in Russia for Xilinx products, but did not address the issue of whether supplied had stopped.

The U.S. companies did not spell out exactly why they would not fulfill some orders, the executives and the trade ministry official said.

But they said it was clear to them from their dealings with the U.S. firms and their distributors, as well as the publicly-available information about the tightening U.S. sanctions regime, that the sanctions were the main reason.

WEAPONS MANUFACTURER

U.S. tech firms are worried that components they supply to a Russian customer could be transferred to firms subject to U.S. sanctions, or that they could be used in weapons systems, according to one of the executives and a fifth source who works at a Russian firm under U.S. sanctions.

Bulat is part-owned by Rostec, a Russian state conglomerate whose sprawling business includes weapons manufacturer Kalashnikov.

Rostec referred questions about Bulat to one of Rostec’s units, Avtomatika, which declined to comment.

The United States first imposed sanctions in 2014 over Moscow’s annexation of the Ukrainian region of Crimea.

Since then there has been a second wave of sanctions, in response to allegations of Russian meddling in the U.S. presidential election, the Russian military campaign in Syria and alleged Russian cyber-attacks on foreign infrastructure.

In September 2016, the U.S, Treasury Department added 11 Russian micro-electronics firms to its sanctions blacklist.

Legislation that came into force in January 2018 made U.S. firms liable to sanctions if they even unwittingly supplied products to Russian defense manufacturers.

And in May this year four Russian electronics distributors were added to the U.S. Commerce Department’s “unverified list” which means officials were not convinced that the end use of products supplied by those firms was legal.

Neither Bulat nor Kraftway are on any lists.

Executives working in the sector said the cumulative effect was that some U.S. exporters decided it was too risky, in some cases, to ship electronic components to Russia even to companies that aren’t on the list.

“They’re trying not to ship stuff that could be sold on to some place it shouldn’t,” said the first executive at the Russian importing company.

Editing by Sonya Hepinstall

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/CvbWjfx83Sc/sanctions-blamed-as-silicon-valley-firms-wont-ship-some-kit-to-russia-idUSKBN1KH1TC

IBM wins $83 million from Groupon in internet patent fight

(Reuters) – A U.S. jury on Friday awarded International Business Machines Corp (IBM.N) $83 million in a patent dispute with e-commerce company Groupon Inc (GRPN.O).

A jury in Delaware said Groupon used IBM’s patented e-commerce technology without authorization following a two-week trial.

“IBM invests nearly $6 billion annually in research and development, producing innovations for society,” IBM spokesman Douglas Shelton said in a statement. “We rely on our patents to protect our innovations. We are pleased by the jury’s verdict.”

“We continue to believe that we do not infringe on any valid IBM patents,” Groupon spokesman Bill Roberts said in a statement. “To the extent these patents have any value at all — which we believe they do not — the value is far less than what the jury awarded.”

The jury said Groupon’s infringement was willful, allowing IBM to ask a judge to award additional damages.

IBM had sought $167 million in damages, saying it developed widely licensed technology crucial to the development of the internet. Two of the patents relate to Prodigy, IBM’s late-1980s precursor to the web.

Groupon argued that some of IBM’s patents should not have been granted because they describe obvious ideas, and said the computing company’s damages request was unreasonable.

Armonk, New York-based IBM has secured more U.S. patents than any other company for the past 25 years.

The case was closely watched in the technology industry because it offered a glimpse into IBM’s efforts to license its large patent portfolio to other companies.

An IBM licensing executive testified that Amazon Inc (AMZN.O), Facebook Inc (FB.O), Alphabet Inc’s Google (GOOGL.O), LinkedIn and Twitter Inc (TWTR.N) have each paid IBM $20 million to $50 million as part of cross-licensing deals that gave them access to the patent portfolio.

In 2017 IBM generated about $1.2 billion in revenue from its licensing activities.

During the trial Groupon lawyer J. David Hadden portrayed IBM as using outdated patents to squeeze money out of other tech companies with threats of litigation.

IBM lawyer John Desmarais told jurors the company had no choice but to sue after Groupon refused to take responsibility for using IBM’s foundational technology.

“The verdict is a vindication for IBM’s licensing program,” Desmarais said by phone.

Reporting by Jan Wolfe; Editing by Richard Chang

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/69tLhBVa0rs/ibm-wins-83-million-from-groupon-in-internet-patent-fight-idUSKBN1KH2CL