Finance

Opening Bell: 11.13.18

Welcome to the new Opening Bell from The Water Coolest. We think you’re gonna like it here … Go home, you’re drunk [The Water Coolest] Diageo is divesting 19 of its “value” brands. You know, the ones best served in plastic bottles and consumed before 10 AM under a bridge. The lower end brands (read: the Camel cigarettes of booze) including Seagram’s Canadian whiskey and Goldschlager schnapps will fetch roughly $550M in cash. The buyer? Privately held US spirit maker, Sazerac. Diageo to Sell 19 Brands Amid Focus on Premium Spirits [WSJ] Jho Low can it go? [The Water Coolest] D-Sol and the Terrible, Horrible, No Good, Very Bad Day. Malaysia’s finance minister demanded a full refund for Lloyd’s handy-work on the 1MDB debacle that earned the company roughly $600M. News of the Malaysian governm...

Goldman Sachs cuts Apple iPhone estimates on negative supplier outlook

Goldman Sachs estimates Apple will produce 6 percent fewer iPhones next year than previously expected after key supplier Lumentum reduced its shipment outlook, according to a report Tuesday. “We are concerned that end demand for new iPhone models is deteriorating,” Goldman said in the note. “We note this could easily right itself given the bulk of demand comes in late December but we feel more prudent sell through forecasts are warranted due to the timing and magnitude of this warning.” WATCH:Apple’s stock is plunging — Here’s what six experts say investors should know Goldman has a neutral rating on Apple and lowered its price target on the company’s stock to $209 a share from $222 a share. Apple shares fell 0.2 percent in trading Tuesday. WATCH: ...

How ex-JP Morgan silver trader’s guilty plea could boost manipulation claim against bank

A previously secret guilty plea by a former commodity trader at J. P. Morgan Chase, who admitted that he rigged precious metals markets, last week drew the attention of a lawyer who has already accused traders at the nation’s largest bank of similar conduct. The lawyer, David Kovel, told CNBC he was struck by how much in common his civil case pending in New York federal court against J. P. Morgan Chase has with the conduct outlined in the ongoing criminal case in Connecticut against John Edmonds. Edmonds, a 36-year-old Brooklyn resident, pleaded guilty in October to fraudulently manipulating the precious metals markets from 2009 to 2015. He admitted working with “unnamed co-conspirators” at his former employer, J. P. Morgan, the Justice Department made public Nov. 6, when...

Goldman Sachs bankers ‘cheated’ Malaysia over 1MDB: PM Mahathir

Bankers at Goldman Sachs “cheated” Malaysia in dealings with state fund 1MDB, Prime Minister Mahathir Mohamad said, amid growing calls in the country for more aggressive steps to recoup fees earned by the bank. The U.S. investment bank has been under scrutiny for its role in helping raise funds through bond offerings for 1Malaysia Development Bhd (1MDB), which is the subject of corruption and money-laundering investigations in at least six countries. The U.S. Department of Justice has said about $4.5 billion was misappropriated from 1MDB, including some money that Goldman Sachs helped raise, by high-level officials of the fund and their associates from 2009 through 2014. U.S. prosecutors filed criminal charges against two former Goldman Sachs bankers earlier this month. One of ...

Treasury yields fall amid reports US-China trade talks have resumed

U.S. government debt prices rose on Tuesday amid reports that Treasury Secretary Steven Mnuchin has resumed trade talks with his Chinese counterpart. The yield on the benchmark 10-year Treasury note fell to around 3.162 percent, while the yield on the 30-year Treasury bond dipped to 3.368 percent. Bond yields move inversely to prices. The Wall Street Journal and Bloomberg News reported that Mnuchin and Chinese Vice Premier Liu He had returned to the negotiating table, speaking over the phone on Friday. That news came after a separate report that said President Donald Trump intends to meet with his trade team on Tuesday to discuss a draft report on European auto tariffs. Worries around a simmering trade dispute between the two have put investors on edge as of late. Investor sentiment has al...

Treasury yields decline on first day of holiday-shortened week

Treasury yields fell on Tuesday as a return of volatility in equity markets spurred a shift toward the relative refuge of government debt. The U.S. bond market, which was closed Monday due to the Veterans Day holiday, had its first chance to react to the prior session’s 600-point drop in the Dow Jones Industrial Average and a broad sell-off in technology stocks. The yield on the benchmark 10-year Treasury note fell to around 3.165 percent, while the yield on the 30-year Treasury bond dipped to 3.383 percent. The 2-year note yield fell about 4 basis points to 2.9 percent. Bond yields move inversely to prices. Investor sentiment has been shaken in recent weeks on fears that the Federal Reserve may be tightening monetary policy too quickly. The U.S. central bank is expected to hike inte...

Shares of Apple suppliers in Asia sink amid worries about iPhone demand

Shares of some major Apple suppliers fell in Asian trading Tuesday — some to multi-year lows — after the iPhone maker’s stock plunged on concerns about customer demand. Apple dropped 5 percent overnight in New York trading after Lumentum, a manufacturer of lasers that can sense in 3-D, said it received a request from one of its largest customers to “materially reduce” shipments to them. Lumentum shares dropped nearly 33 percent. The company did not name Apple in Monday’s report, but previously listed the tech giant as its largest customer in a filing for fiscal year 2018. Also on Monday, TF International Securities’ Ming-Chi Kuo reversed his view on iPhone XR sales by cutting his outlook for shipments by 30 million units. The reduction followed a Nikkei report...

Inward US Bound FDI

There’s been a drastic fall-off in inbound FDI. Figure 1: Inward US bound FDI, in millions $ (blue), 2017$ (red). NBER defined recession dates shaded gray. Trump administration denoted by orange shading. Deflation using CPI-U. Source: OECD, NBER, and author’s calculations. The decline in inbound FDI is remarkable given the buoyant stock markets around the world, and fast GDP growth globally.

Analyst betting on GE CEO Larry Culp: ‘This is a dark day,’ but stock ‘will come back’

General Electric may be beaten down for a while, but it is bound to turn around, analyst Brian Langenberg told CNBC on Monday. Langenberg said he believes in new CEO Larry Culp, whom he met when Culp was in his mid-30s. Culp, now 55, replaced John Flannery as chairman and CEO on Oct. 1. “It isn’t going to be fixed today, it’s not going to be fixed tomorrow, and it isn’t going to be fixed next year,” the principal at Langenberg & Company said on “Closing Bell.” “But you believe in this guy because he will get it done. He’s been there, done that.” Shares of the industrial conglomerate closed down 6.88 percent on Monday, after Culp said he feels the “urgency” to reduce the company’s leverage and will do so throu...

Trump to meet with White House trade team to discuss tariffs on European automakers: Report

President Donald Trump plans to meet with his trade team on Tuesday to discuss a draft report on European auto tariffs, according to Bloomberg News, citing three people familiar with the matter. Trump’s focus remains on crushing foreign automakers with heavy tariffs, according to an Axios report earlier on Monday. The president reportedly sees the threat of auto tariffs as a successful negotiating tactic. Trump used the auto tariffs threat when he negotiated with Canadian Prime Minister Justin Trudeau earlier this year. “Trump says gleefully that the moment he started talking about maybe tariffs on cars, that [European Commission President Jean-Claude] Juncker got on the fastest plane known to mankind, comes straight over to Washington and starts offering deals,” a senior...

Ex-Goldman Banker: $6 Billion Deals Just Don’t Happen If You Tell Compliance About Them

Much to David Solomon’s chagrin, things keep dribbling out about his bank’s involvement in some Malaysian shenanigans, which shenanigans Goldman now acknowledges are likely to prove very expensive for the bank, indeed. The latest comes from the redacted transcript of Leissner’s at-the-time secret guilty plea in August, in which he acknowledges that “other employees and agents of Goldman Sachs” had been in on the whole thing. This we already knew, what with one of Leissner’s underlings also being indicted, another of his former colleagues being rather embarrassingly unindicted, and one former CEO extremely embarrassingly linked to the whole unpleasant game. The statement also includes some music to D.J. D-Sol’s ears, specifically that those rogue agents worked overtime to keep those meddlin...

Cramer: ‘Apple has to find its footing’ for the tech correction to end

Apple and other big tech names need to recover for the overall stock market to rebound, CNBC’s Jim Cramer said Monday. “FAANG cannot keep rolling over,” Cramer said on “Fast Money: Halftime Report.” (FAANG, a term coined by Cramer, stands for Facebook, Apple, Amazon, Netflix, and Google-parent Alphabet.) The tech-heavy Nasdaq led Wall Street lower, with Apple shares falling more than 4 percent after one of the iPhone-maker’s suppliers cut its outlook. “Apple has to find its footing” in order to declare the tech correction over, said Cramer, the host of “Mad Money.” The tech slide that began last month has been broad and persistent, with almost 73 percent of the once high-flying sector in correction levels or worse. Case in point, ...