Amazon

Amazon Hikes Prime Monthly Membership Prices by 18%

12:18 PM, Jan 19, 2018 — Amazon.com (AMZN) raised prices on its Prime monthly membership, increasing the cost for its delivery and exclusive content service for both new and existing subscribers.

The monthly Prime membership for new members was lifted by $2, or 18%, to $12.99 as of Friday. The Prime Student discounted plan for new subscriptions is $1 higher at $6.49 now, the Seattle-based e-commerce giant said on its website. No reason was given for the hike.

“Prime provides an unparalleled combination of shipping, shopping and entertainment benefits, and we continue to invest in making Prime even more valuable for our members,” Amazon said in a statement as reported by CNBC and Recode.

Existing monthly Prime and Prime Student members will pay the new price for renewals happening after Feb. 18, Amazon said. Annual memberships will still be $99 and student subscriptions will continue to be $49.

Amazon said in its statement that it’s increased the number of items eligible for its unlimited free two-day shipping to more than 100 million, and same-day and one-day delivery service under Prime has expanded to more than 8,000 locations.

The company also touted its original programs that are included with Prime Video and said Prime members will continue to benefit from its music and reading services and other “exclusive products.”

In the third quarter, Amazon said subscription services jumped 59% to $2.44 billion, although that number includes Prime as well as audiobook, e-book, digital video, digital music, and other non-Amazon Web Services subscriptions.

Companies: Amazon.com, Inc.
Price: 1296.71 Price Change: +3.39 Percent Change: +0.26

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Pearson Full-Year Sales Fall as Sales from US Higher Education Courseware Slips

11:01 AM, Jan 17, 2018 — Education publishing company Pearson (PSO, PSON.L) expects to report a fall in full-year sales following the continuation of a declining trend in its flagship US higher education courseware business and an adjusted operating profit below an earlier guidance range based on the average effective exchange rate from 2017.

Total underlying sales fell 2% during the 12 months that ended December 31, Pearson said in a trading update ahead of the release of its full year results on February 23. Revenue from US higher education courseware slid 3% due to the continuation of trends seen in the first nine months coupled with cautious buying behavior of channel partners in the fourth quarter.

Based on an average effective exchange rate from 2017, the company said it expects an adjusted operating profit of about 570-575 million pounds ($785.6-$792.5 million) and earnings per share of 53.5-54.5 pence. That compares with an October 2017 guidance range of 576-606 million pounds and 49-52 pence, respectively. Pearson said the beat on earnings reflects, among other things, an improved tax rate. At guidance exchange rates from December 2016, the adjusted operating profit is likely to come near the top end of the forecast.

As part of a program to increase simplification and efficiency, the company has been making asset disposals, including the sale in late December of 44.75% equity stake in its Mexican online university partnership, Utel. Good cash generation and proceeds from disposals also helped Pearson to reduce its net debt, which is anticipated to come in at $500 million in 2017, down from $1.1 billion a year ago.

The company also said its efficiency program is on track to deliver 300 million pounds of annualized cost savings by 2020. Restructuring costs in 2017 stood at about 80 million pounds, above the 70 million pounds guidance and reflecting faster progress. Total restructuring costs are set to be in line with guidance of 300 million pounds over 2017-2019, with 90 million pounds earmarked in 2018.

Pearson said it sees an adjusted operating profit of between 520-560 million pounds less the full-year impacts of disposals made in 2017 of 45 million pounds, and less favorable exchange rates as at December 31 of 25 million pounds. It added that the group effective tax rate will remain unchanged for the US tax reform over the medium term.

“Our restructuring program is on track and our 2017 performance has set us up well to make further progress against our strategic priorities and grow profit in 2018,” Chief Executive Officer John Fallon said in the update. The company has “made good progress in 2017 on the simplification of our portfolio” and the “strengthening of our balance sheet,” he added.

Companies: Pearson, Plc
Price: 9.38 Price Change: -0.44 Percent Change: -4.48

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General Electric

GE to Book $6.2 Bn Charge in Fourth Quarter From Legacy Insurance Portfolio

10:32 AM, Jan 16, 2018 — General Electric (GE) is expecting to book a $6.2 billion charge in the fourth quarter as a result of a review and reserve testing for GE Capital’s run-off insurance portfolio, North American Life & Health (NALH).

The Boston-headquartered manufacturing conglomerate said on Tuesday that the review and reserve testing for GE Capital’s insurance portfolio North American Life & Health (NALH), which has been in run-off for more than a decade, would result in an after-tax GAAP charge of $6.2 billion for the fourth quarter of 2017 and that GE Capital expects to make statutory reserve contributions of approximately $15 billion over seven years.

The Kansas Insurance Department, NALH’s primary regulator, has approved a phased contribution of approximately $3 billion in the first quarter of 2018 and approximately $2 billion annually from 2019 through 2024, the company added.

Earlier in the year GE Capital initiated a review of its insurance reserves in a process which the company said had involved “complex factors and estimates relating primarily to long-term care policies written by primary insurance companies and reinsured by NALH.”

The company said that the required contributions to the statutory reserve would be made by GE Capital, which it said has sufficient liquidity to do so. It said that it had been taking actions to make GE Capital smaller and more focused while maintaining its capabilities to support financing for GE Industrial products.

“These actions will also help restore GE Capital ratios to appropriate levels,” John Flannery, chief executive of GE, said. “At a time when we are moving forward as a company, a charge of this magnitude from a legacy insurance portfolio in run-off for more than a decade is deeply disappointing”.

Price: 18.11 Price Change: -0.66 Percent Change: -3.49

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Self Driving Car Concept

General Motors Files Safety Petition for Self-Driving Cars Without Steering Wheels, Pedals

12:38 PM, Jan 12, 2018 — General Motors (GM) has filed a safety petition with the US Department of Transportation for a self-driving car that eliminates the driver, steering wheel, pedals and manual controls, the automaker said on Friday.

The petition is asking the department for permission to “safely deploy” the self-driving Cruise AV, its fourth generation autonomous vehicle, in 2019, GM said on its website.

In the company’s 2018 self-driving safety report, GM said it’s envisioning a world with no car crashes, no emissions and no traffic congestion. “Safely developing and deploying electric self-driving vehicles at scale will dramatically change our world,” the Detroit-based maker of Chevrolet, Cadillac and GMC cars and trucks.

Automakers and technology firms have been investing time and money into self-driving cars, with companies from Ford (F) to Toyota (TM) and Tesla (TSLA) working on autonomous vehicles. Car service companies have also been testing self-driving cars, with Uber putting them on the streets of Pittsburgh in recent years.

The Cruise AV “was built from the start to operate safely on its own, with no driver,” GM said. “It doesn’t drink and drive, doesn’t text and drive, doesn’t get upset, doesn’t get tired, never gets distracted and doesn’t produce any emissions.”

GM plans to deploy the cars in its own ride-share app within “known geo-fenced boundaries.” The cars will operate only on roads for which GM has developed high-definition map data, and will drive only “under known operational conditions and constraints that apply to the entire fleet.”

Companies: General Motors Company
Price: 43.96 Price Change: -0.23 Percent Change: -0.52

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Bitcoin cryptocurrency

Cryptocurrencies Face Hurdles to Wide Usage But Offers Appeal for Unstable Markets, Goldman Says

10:58 AM, Jan 10, 2018 — Digital currencies like Bitcoin are facing “significant hurdles” to widespread usage including excessive volatility and regulations from governments, although they could have appeal in areas with instability in local money systems, according to Goldman Sachs.

“The fact that cryptocurrencies function without central banks may make them valuable as inflation hedges or stores of value, but also makes them vulnerable to demand-driven fluctuations in price,” Goldman analysts Zach Pandl and Charles Himmelberg wrote in a note Wednesday. “Such volatility makes them poorly suited as a substitute for money generally.”

Still, there’s evidence that demand in digital currencies is growing in countries with instability or capital controls, and places where the US dollar is widely used for local transactions.

Goldman said a Google Trends search showed that the highest intensity for queries about Bitcoin over the last five years have come from Nigeria, South Africa and Ghana, which have volatile local currencies or restrictions on foreign exchange — or both.

The popularity of cryptocurrencies has surged, bringing wide price swings in some of the top units including Bitcoin and Ripple, while companies look to jump on the trend with investments in technologies such as blockchain, a shared database that was developed to support the digital money.

But the anonymity of cryptocurrencies means they could face extra government scrutiny as a potential “useful medium of exchange for criminal activities,” Goldman said.

Digital currencies could succeed as a source of money, Pandl and Himmelberg wrote, but face a high bar as developed-nation currencies already deliver monetary services like facilitating transactions at a low cost “and/or providing better risk-adjusted returns for portfolios.”

“That said, Bitcoin (and cryptocurrencies more generally) may offer viable alternatives in countries and corners of the financial system where the traditional services of money are inadequately supplied,” the analysts said.

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EIA Projects US Average Crude Output in 2018 at Highest Level on Record

1:11 PM, Jan 9, 2018 — The Energy Information Administration is projecting US crude output in 2018 that would be the highest level on record, with the agency seeing production averaging 10.3 million barrels a day.

The level would be up from an average estimate of 9.3 million barrels a day in 2017, and would surpass the previous record high of 9.6 million barrels in 1970, the EIA said in a short-term energy outlook on its website Tuesday. In the first views on 2019, the projection outlook stands at 10.8 million barrels a day, and is seen surpassing 11 million barrels in November of that year.

The EIA said Brent crude prices averaged $54 a barrel last year and are seen at $60 this year and $61 in 2019. West Texas Intermediate, the main US variety, is seen $4 less than Brent in both this year and next.

Moves by global crude nations under the Organization of the Petroleum Exporting Countries to cut output have been somewhat dented by rising production from the US, which is estimated to have reached an average of 9.9 million barrels a day in December.

OPEC’s crude oil production averaged 32.5 million barrels a day last year, down 0.2 million barrels from a year earlier, as the cartel’s supply reduction agreements took effect, the EIA said. For 2018, the group’s output is seen rising 0.2 million barrels this year and another 0.3 million in 2019 “as crude oil production slowly returns to pre-agreement levels,” the agency said.

Dry natural gas production is seen averaging 80.4 billion cubic feet per day in 2018, a 6.9 billion increase from 2017. The EIA said that would be the highest year-over-year increase on record. For 2019, a rise of 2.6 billion cubic feet per day is forecast.

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Bristol-Myers Squibb

Goldman Sachs Sees Upside for Bristol-Myers Squibb in 2018; ‘CheckMate-227’ Trial Key ‘Catalyst’

12:31 PM, Jan 5, 2018 — Goldman Sachs (GS) has issued a buy rating on Bristol-Myers Squibb (BMY), saying that it sees upside for the pharmaceutical stock this year which will be affected by the strength of data from the company’s so-called Checkmate-227 (CM-227) trial.

The brokerage firm said that it continues to see approximately 14%-to-31% upside to Bristol-Myers Squibb’s stock depending on the strength of the data from the CM-227 trial in both its bull and uber bull cases, according to a note published on Friday. But the firm was also clear to point out that the outcome of the CM-227 trial would not be the only factor in the likely trajectory of the drug company’s share price over the coming months.

With a 12-month price target of $72 for Bristol-Myers Squibb, Goldman Sachs said that it sees key risks as clinical data readout, competition and commercial execution. It expects Bristol-Myers Squibb to generate $20.6 bn in revenues and $3.23 in earnings per share for 2018.The firm said that if the CM-227 trial fails, it believes the Bristol-Myers Squibb stock could go to a base value of approximately $55.

“While a negative outcome would be clearly disappointing, we don’t believe the BMY [Bristol-Myers-Squibb] story is pinned to this outcome alone with optionality in 1L NSCLC [Non-Small Cell Lung Cancer] through monotherapy, chemo combo and other trials like CM-9LA expected in 2019”.

It went on to say that Bristol-Myers Squibb would continue to have one of the most dominant immuno-oncology assets in ‘Opdivo’, a drug used to treat patients with certain forms of colorectal cancer which secured accelerated approval from the Food and Drug Administration in July 2017.

With “a very broad and promising next gen IO [immuno-oncology] portfolio” likely making it an attractive candidate for mergers and acquisitions, Goldman Sachs said that in a mergers and acquisitions scenario, it believes the stock could be worth approximately “$59-to-$74 ex-1L NSCLC”.

“While we believe the longer term BMY story is not limited to this trial, it is clearly the most important catalyst for the stock this year,” the Goldman Sachs note said. “Having said that, even if CM-227 fails (in the IO-IO arm), we believe BMY remains an attractive asset given its still dominant position in IO with Opdivo and Yervoy making them an attractive M&A candidate as well.”

“Our options analysts recommend buying BMY March Calls and MRK[Merck] March straddles ahead of CM-227 interim data,” the note said.

Price: 253.93 Price Change: -2.90 Percent Change: -1.13

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US Manufacturing Growth Hits Strongest Pace Since March 2015, Signaling 2018 Optimism

11:50 AM, Jan 2, 2018 — Manufacturing growth in the US was at the strongest pace last month since March 2015, with output and new orders on the upswing, bringing a gain in factory hiring and optimism for the new year.

The seasonally adjusted IHS Markit final Manufacturing Purchasing Managers’ Index rose to 55.1 in December from 53.9 in November. The consensus among analysts on Econoday was 55.

Manufacturers’ output grew at an 11-month high amid stronger demand, and employment rose at the fastest pace since September 2014, the IHS Markit release showed on Tuesday. Costs went up and the rate of cost inflation was “sharp overall” amid supply chain delays and increased global demand for inputs.

“With business optimism about the year ahead running at its highest for two years in the closing months of 2017, companies are clearly expecting to be busier in 2018,” said Chris Williamson, chief business economist at IHS Markit. “Indicators of backlogs of work and input buying likewise suggest production will continue to grow at a solid pace as we move into 2018.”

Williamson said strengthening growth, a solid jobs market and rising prices “will add to expectations that the Fed will remain on track for another rate hike in the near future, with March looking a likely possibility.”

The Federal Reserve raised interest rates three times last year. While the broad expectation on the CME Group’s FedWatch tool is for a rate hold later this month, there’s a 56% probability of a 25 basis-point hike in March.

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Stock Chart Graphic

US Stocks Open Higher After Republican Tax Bill Gains Approval, Oil Futures Rise

11:12 AM, Dec 21, 2017 — US equity benchmarks were trading higher on the penultimate day of the week, the morning after the Republican tax bill secured approval and as oil prices gained traction after government data showed a decline in US stockpiles.

Fresh data meanwhile showed that economic growth for the third quarter was lower than previously projected but still above the level seen in the prior quarter. Gross domestic product rose by 3.2% on an annualized basis during the period, down from an earlier estimate of 3.3% growth, according to the Bureau of Economic Analysis, but nevertheless higher than the 3.1% growth rate seen in the second quarter of the year.

In equity news, Envision Healthcare (EVHC) was leading the gainers, up by 7.4% two days after it said that it and some of its subsidiaries had agreed to a final settlement with the United States Department of Justice (DOJ) with a payment of approximately $31 million to resolve a DOJ investigation into physician services.

Discovery Communications was up by 4.4%, and technology consulting company Accenture was 3.9% higher after it lifted its outlook for earnings and revenue growth in the fiscal year after first-quarter results came in ahead of Wall Street’s expectations.

Oil prices were higher after government data showed that US stockpiles of crude oil contracted by 6.5 million barrels last week. West Texas Intermediate crude oil futures were 0.1% higher at $58.14 per barrel while Brent crude, the international gauge, was up by 0.1% at $64.66 per barrel in recent trade.

The Dow Jones Industrial Average was 0.42% higher, the Standard & Poor’s 500 was up by 0.32% and the Nasdaq was up by 0.14% at the time of writing.

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US markets

Markets Jump to Intraday Record on US Tax Bill Hopes, Merger Moves

11:40 AM, Dec 18, 2017 — Stocks in the US surged on Monday, with the Dow Jones Industrial Average posting a triple-digit gain amid hopes that the tax reform bill being debated by lawmakers will be put to a vote and pass this week.

The Dow, Standard & Poor’s 500 and the Nasdaq Composite all hit intraday record highs as Republican lawmakers said on Sunday talk shows that they believe they have enough votes to pass the consensus plan on taxes. The blue-chip Dow has surged about 5,000 points this year and Monday’s gains were led by DowDuPont (DWDP), which rose 2.2%, and Intel (INTC), which advanced 2.1%.

Mergers also buoyed the measures, with Campbell Soup (CPB) up 1.2% after saying it would acquire snack-food maker Snyder’s-Lance (LNCE), which jumped 6.6%. Amplify Snack Brands (BETR) surged 70% after Hershey (HSY) said it was buying the company in a $1.6 billion deal.

WellCare Health Plans (WCG) fell 2.6% after the company said it expects 2018 adjusted earnings of $8.40 to $8.65, below the $8.66 average estimate from analysts polled by Capital IQ.

In economic news, builder confidence for new, single-family homes rose to 74 in December, the highest since July 1999 and ahead of the consensus on Econoday for 70. November’s rate was lowered by one point to 69, the National Association of Home Builders/Wells Fargo Housing Market Index showed.

In late morning trading, the Nasdaq was up 0.8%, the Dow increased 0.7% and the S&P 500 added 0.6%.

Globally, the FTSE 100 rose 0.7%, the Nikkei 225 jumped 1.6%, the Hang Seng increased 0.7% and the Shanghai Composite added 0.1%.

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