Ford launches new business model in Europe

Ford to cut 12,000 jobs in Europe by end of 2020

Ford to realign its European operations, Stockwinners

Ford (F) said in a statement that it is launching a new business model and fresh vehicle line-up as part of the most comprehensive redesign in the history of its business in Europe.

The company also is on track to significantly improve its financial results in Europe this year, paving the way to sustainable profitability and its longer-term goal of delivering a 6% EBIT margin.

The new European operating model and resulting organization are effective July 1.

Three new business groups – Commercial Vehicles, Passenger Vehicles and Imports – are being established to facilitate fast decision-making centered on customer needs, Ford said.

Ford Kuga will now be manufactured in China instead of Europe, Stockwinners

Ford is freshening and expanding its vehicle line-up in Europe, introducing at least three new nameplates in the next five years as it continues to grow its utility vehicle portfolio, including the all-new Mustang-inspired fully electric performance utility.

The new nameplates are in addition to all-new Kuga, Puma and Explorer Plug-In Hybrid coming by early 2020.

Manufacturing efficiency is being improved through the previously announced proposed or confirmed closure or sale of six assembly and component manufacturing plants by the end of next year: Proposed closure of Bridgend Engine Plant in South Wales; Closure of Ford Aquitaine Industries Transmission Plant in France; Closure of Naberezhnye Chelny Assembly, St. Petersburg Assembly and Elabuga Engine Plant in Russia; Sale of the Kechnec Transmission Plant in Slovakia to Magna.

This Ford Mustang designed for the European market, Stockwinners

As a result, Ford’s manufacturing footprint in Europe will be reduced to a proposed 18 facilities by the end of 2020, from 24 at the beginning of 2019.

In the U.K., the Ford of Britain and Ford Credit Europe headquarters in Warley also will close later this year and operations consolidated in Dunton.

In addition, Ford is implementing shift reductions at its assembly plants in Saarlouis, Germany, and Valencia, Spain, as well as a more streamlined management structure and marketing and sales operations.

In total, approximately 12,000 jobs will be impacted at Ford’s wholly owned facilities and consolidated joint ventures in Europe by the end of 2020, primarily through voluntary separation programs.

Around 2,000 of those are salaried positions, which are included among the 7,000 salaried positions Ford is reducing globally.

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No more rate hikes in 2019

Majority of Fed members see rates unchanged for rest of 2019

Members see rates to remain unchanged in 2019, Stockwinners

Minutes from the last Federal Reserve meeting read, “With regard to the outlook for monetary policy beyond this meeting, a majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year.

Several of these participants noted that the current target range for the federal funds rate was close to their estimates of its longer-run neutral level and foresaw economic growth continuing near its longer-run trend rate over the forecast period.

Participants continued to emphasize that their decisions about the appropriate target range for the federal funds rate at coming meetings would depend on their ongoing assessments of the economic outlook, as informed by a wide range of data, as well as on how the risks to the outlook evolved.

Short term rates should decline as 30-year rates rise, Stockwinners

Several participants noted that their views of the appropriate target range for the federal funds rate could shift in either direction based on incoming data and other developments.

Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year.”

Economic growth in 2019 likely lower than previous forecast

“Participants continued to view a sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes over the next few years.

Underlying economic fundamentals continued to support sustained expansion, and most participants indicated that they did not expect the recent weakness in spending to persist beyond the first quarter.

Nevertheless, participants generally expected the growth rate of real GDP this year to step down from the pace seen over 2018 to a rate at or modestly above their estimates of longer-run growth. Participants cited various factors as likely to contribute to the step-down, including slower foreign growth and waning effects of fiscal stimulus.

A number of participants judged that economic growth in the remaining quarters of 2019 and in the subsequent couple of years would likely be a little lower, on balance, than they had previously forecast. Reasons cited for these downward revisions included disappointing news on global growth and less of a boost from fiscal policy than had previously been anticipated.”


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Altaba to dissolve itself

Altaba board approves plan of complete liquidation and dissolution

Altaba to dissolve itself, Stockwinners

Altaba (AABA) announced last night that the fund’s board of directors has approved the liquidation and dissolution of the fund pursuant to a plan of complete liquidation and dissolution, subject to stockholder approval.

Altaba Inc. is a non-diversified, closed-end management investment company based in New York City that was formed from the remains of Yahoo! Inc. after Verizon acquired Yahoo’s Internet business  The company that remained after the purchase changed its name to Altaba Inc. on June 16, 2017.

Verizon completed its acquisition of Yahoo!’s core internet business on June 13, 2017, and put the assets under a new subsidiary named Yahoo! Holdings within its newly created division, Oath.

The only Yahoo!-branded interest held by Altaba was its stake in the joint venture Yahoo! Japan but this stake has since been sold to SoftBank Group.

The fund intends to file a proxy statement with the U.S. Securities and Exchange Commission with respect to a special meeting of stockholders to seek stockholder approval of the liquidation and dissolution pursuant to the plan.

Altaba said the fund “has pursued a number of strategies with the goal of achieving its investment objective, including by repurchasing the shares, both in the open market and through an exchange offer of American Depository Shares of Alibaba Group Holding Limited (BABA) and cash for shares, the simplification of the fund through the disposition of assets other than its position in Alibaba and the resolution of certain actual and contingent liabilities, and through other means.

After carefully considering the risks, timing, viability and potential impact on the fund’s stockholders of additional strategies potentially available to the fund to achieve its investment objective, as well as the recommendation of management, and in consultation with the fund’s advisors, the board unanimously determined that the liquidation and dissolution pursuant to the plan is advisable and in the best interests of the fund and its stockholders.

” If the liquidation and dissolution pursuant to the plan is approved by the fund’s stockholders, the fund expects to sell or otherwise dispose of all of the remaining ordinary shares and ADSs of Alibaba held by the fund, other than Alibaba ADSs, if any, to be distributed in kind, and its equity interests in Excalibur IP, to the extent any such assets have not been sold or disposed of by the fund before the special meeting, Altaba stated.

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Top Stories for weekend of February 22

U.S. extends trade talk deadline with China

As a result of these very… productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1.

1. Using his Twitter account, President Donald Trump said that, “I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.

Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”

2. Kraft Heinz (KHC) has tapped investment bank Credit Suisse to review options for its Maxwell House coffee business, which could include a potential sale, CNBC’s Lauren Hirsch reported, citing people familiar with the matter. Based off valuations for other sales of consumer brands, a sale could fetch a price of at least $3B, sources said.

3. While investors are cheering indications of progress being made toward a resolution of trade issues between China and the U.S., the battle for tech supremacy between the two global superpowers shows few signs of abating, Reshma Kapadia wrote in this week’s edition of Barron’s. Global chip makers remain highly reliant on China, which makes just 30% of the chips it actually needs, the publication noted.

Companies with revenue exposure to china include Qualcomm (QCOM), Micron (MU), Marvell Technology (MRVL), Broadcom (AVGO), NXP Semiconductors (NXPI), AMD (AMD), Maxim Integrated Devices (MXIM), Applied Materials (AMAT), Intel (INTC), Xilinx (XLNX), Skyworks (SWKS), Nvidia (NVDA), Analog Devices (ADI), Lam Research (LRCX), and KLA-Tencor (KLAC).

How to train your dragon top the box office, Stockwinners

4. Comcast (CMCSA; CMCSK) subsidiary Universal’s “How to Train Your Dragon: The Hidden World” won the weekend with a franchise-best launch of $55.5M from 4,259 theaters in North America, the top opening of the year so far. Overseas, the threequel earned another $34.7M from 53 market for a foreign total of $216.9M and $274.9M globally. The movie sports an audience grade of A and a 92% Rotten Tomatoes score.

5. Altria Group’s (MO) and WellCare Health (WCG) saw positive mentions in Barron’s, while Windstream (WIN) was mentioned cautiously.

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Yum China receives takeover offer

Yum China rises after reportedly spurning $46 per share takeover bid

Yum China receives takeover offer, Stockwinners
Yum China receives takeover offer, Stockwinners

Shares of Yum China (YUMC) are on the rise following a media report saying the company has rejected a buyout offer of $46 per share made by a consortium led by Hillhouse Capital.

Earlier this month, Bloomberg had reported that China’s sovereign wealth fund, China Investment Corp., was part of the consortium bidding to take Yum China private.

BUYOUT OFFER REPORTEDLY REJECTED

Yum China has rejected a private buyout offer from a consortium of investors that valued the company at over $17B, according to The Wall Street Journal, citing a person familiar with the matter.

An investor group led by Hillhouse Capital Group in recent months offered to take the restaurant operator private at $46 per share, but the all-cash offer was turned down by the company’s board in recent weeks, source told the publication.

Last month, The Information had reported that Hillhouse Capital was in talks to acquire Yum China. The company operates over 8,000 KFC and Pizza Hut restaurants across mainland China.

A takeover led by Hillhouse would assist the company in accelerating its efforts to implement high-tech initiatives in its brick-and-mortar stores in order to attract Chinese millennials, the report pointed out.

CHINA INVESTMENT PART OF CONSORTIUM

Earlier this month, Bloomberg reported that China’s sovereign wealth fund, China Investment Corp., was part of the consortium bidding to take Yum China private.

The sovereign fund and DCP Capital, an investment fund run by former KKR (KKR) executives, are considering a buyout of Yum China, which runs KFC and Pizza Hut outlets, along with Hillhouse Capital, the publication added. Yum China spun off from Yum! Brands (YUM) in 2016.

PRICE ACTION

In tuesday’s trading, shares of Yum China trading in New York are off their earlier highs, but are trading up 3.8% to $37.14.


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Market higher at midday

Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800 for the first time since the middle of March.

Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800, Stockwinners
Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800, Stockwinners

The Dow has also been strong, though not much of that outperformance is due to JPMorgan (JPM) after the bank and several of its large peers kicked off earnings season with their reports this morning.

ECONOMIC EVENTS:

In the U.S., the June trade price report was mixed, with a weaker than expected 0.4% import price decline and a stronger than expected 0.3% increase in export prices.

The University of Michigan consumer sentiment survey was weaker than expected, falling 1.1 points to a 6-month low of 97.1 in the preliminary print for July. In Asia, China’s exports were strong in June, rising 11.3%, while imports fell a bit short of expectations with an increase of 14.1%.

COMPANY NEWS:

Shares of JPMorgan advanced fractionally after it started off this summer’s earnings season by reporting better than expected earnings for the second quarter. Of note, the bank’s CEO Jamie Dimon said he sees “good global economic growth, particularly in the U.S.”

Meanwhile, Wells Fargo (WFC) slipped 2% after reporting downbeat results for Q2, with the company noting in presentation slides that the third party review of customer accounts is “ongoing.”

Citi (C) shares also fell about 2% after its quarterly report, though the bank’s headline earnings for the quarter beat analysts’ estimates.

In addition, PNC Financial (PNC) reported better than expected results for the quarter and guided for third quarter net interest income to be up low-single digits…

Meanwhile, AT&T (T) was in focus after the U.S. Department of Justice said it plans to appeal the approval of the merger between AT&T and Time Warner. In an interview on CNBC this morning, AT&T CEO Randall Stephenson said that he doesn’t know exactly what the government basis will be for an appeal and that the move by the DOJ “changes nothing”.

Johnson & Johnson (JNJ) dipped about 1% after a Missouri jury awarded $4.69B to 22 women who alleged that use of J&J’s talcum powder products caused their ovarian cancer. The jury award includes $550M in compensatory damages and $4.14B in punitive damages against the company. J&J responded by saying it “intends to pursue all available appellate remedies.”

MAJOR MOVERS:

Among the noteworthy gainers was Biocept (BIOC), which surged 58% after it announced a provider agreement with Alliance Global FZ.

Also higher was Achillion (ACHN), which gained 13% after it said it began dosing in its Phase 1 trial of ACH-5548. Among the notable losers was Gogo (GOGO), which fell 11%, reversing last night’s afterhours gains following the company’s announcement of a strategic review.

Also lower was Ingredion (INGR), which dropped 11% after it announced a $125M cost savings program, provided lower than expected Q2 guidance, and cut its outlook for fiscal 2018.

INDEXES:

Near midday, the Dow was up 93.18, or 0.37%, to 25,018.07, the Nasdaq was up 13.35, or 0.17%, to 7,837.26, and the S&P 500 was up 4.74, or 0.17%, to 2,803.03.


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Tariffs sink stocks

Boeing, others drop after China retaliates with 25% tariffs on U.S. products

Tariffs sink stocks. Stockwinners
Tariffs sink stocks.

Shares of companies including Boeing (BA) and Tesla (TSLA) dropped in Wednesday’s pre-market trading after China retaliated against President Donald Trump’s proposed penalties on Chinese goods with plans for 25% tariffs on American products, including airplanes, automobiles and soybeans.

stockwinners.com/blog
Tariffs sink stocks

BACKGROUND

On Thursday, U.S. President Donald Trump signed an executive memorandum imposing retaliatory tariffs on up to $60B in Chinese imports, according to CNBC.

The new measures are designed to penalize the country for trade practices that the White House says involve stealing American companies’ intellectual property, the report noted, adding that the tariffs will primarily target certain products in the technology sector.

Trump’s plan levies 25% tariffs on a wide range of goods — about 1,300 categories in all — and includes steel, Chinese-made solar panels, dishwashers, medical equipment and machine tools.

Shares of Alibaba (BABA), Tencent (TCEHY) and Baidu (BIDU) were under pressure following the news.

CHINESE TARIFFS

On Tuesday, China’s Ministry of Commerce announced plans to levy 25% reciprocal tariffs on critical U.S. exports, covering over 106 categories of products and impacting around $50B of Chinese imports of U.S. products.

China has targeted the largest American exports to China, airplanes and soybeans, as well as automobiles, chemicals, wheat, corn, cotton and tobacco.

People familiar with the plans tell The Wall Street Journal that many of the other goods on the list, including beef and sorghum, “intentionally affect the U.S. Farm Belt, where voters supported President Trump.”

Neither the U.S. nor Chinese tariffs will take effect immediately.

“Those who attempt to make China surrender through pressure or intimidation have never succeeded before, and will not succeed now,” Foreign Ministry spokesman Geng Shuang told reporters.

PRICE ACTION

Boeing is down 6.6%, Tesla dropped 5%, Ford (F) is down 3.4% and General Motors (GM) is down 4% in pre-market trading.


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Asia Pacific Wire and Cable is in play

Lonsin Capital submits indication of interest to acquire majority of APWC

Lonsin Capital submits indication of interest to acquire majority of APWC. Stockwinners.com
Lonsin Capital submits indication of interest to acquire majority of APWC

LONSIN Capital Limited, together with its affiliates, representing over 5% of the shares outstanding of Asia Pacific Wire and Cable (APWC) on February 23, 2018 wrote to the Board of Directors of the Company and to the Board of Directors of the main Shareholder Pacific Electric Wire and Cable Co. the intention of interest to acquire a majority of APWC US at $4.00 per share.

The proposal would represent a 62% premium to February 22, 2018 ‘s close of $2.475 and a 47% premium to the five-year average closing price on NASDAQ.

LONSIN said, “LONSIN has expressed concern to the management, both orally and in writing, concerning the failure of the Company to take sufficient action to enhance shareholder value and to include an additional independent director on the Company’s board of directors over time.

On May 18, 2016 LONSIN wrote a requisitioned, open letter to the Board of Directors of APWC asking the Board to consider a range of measures that could help deliver enhanced shareholder value without much cost to the Company.

The Board responded by stating that they ‘took very seriously concerns about shareholder value.’…In light of the underwhelming track record of the incumbent Board and Management of APWC over the short, medium and longer term, LONSIN believes that the acquisition of the majority stake would bring ‘fresh impetus’ to APWC’s assets and ‘swiftly deliver enhanced value for all shareholders.'”

A response received from the Board of PEWC’s US legal counsel, Michael Hagan, on February 27, 2018 states that the “LONSIN letter has been circulated to the board for their consideration.”

The response goes on to state that “a substantive response to the LONSIN offer” will be issued in due course but it is unlikely to be before the March 8, 2018 owing to existing commitments of the directors.

APWC closed at $2.50.


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Alibaba buys a third of Ant Financial 

Alibaba to take 33% equity stake in Ant Financial 

Alibaba to take 33% equity in Ant Financial. Stockwinners.com
Alibaba to take 33% equity in Ant Financial

Alibaba Group (BABA) and Ant Small and Micro Financial Services Group announced that pursuant to 2014 transaction agreements, Alibaba will acquire a 33% equity interest in Ant Financial.

The parties have agreed to certain amendments to their 2014 transaction agreements to facilitate the transaction.

Under the terms of the amended agreements, Alibaba will acquire newly-issued equity from Ant Financial in exchange for certain intellectual property rights owned by Alibaba exclusively related to Ant Financial. There will be no cash impact to Alibaba following completion of the transaction.

Upon closing, the companies will terminate the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees in an amount equal to 37.5% of its pre-tax profits to Alibaba.

Daniel Zhang, CEO of Alibaba Group, said, “This transaction is a significant step for Alibaba to enhance our long-term strategic relationship with Ant Financial as we continue to pursue our mission to make it easy to do business anywhere.

Importantly, an equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector, as well as the benefits of user growth and improved customer experience.”

The transaction was reviewed and approved by a committee of non-executive directors, the majority of whom are independent under NYSE rules, the audit committee of Alibaba’s board and the full Alibaba board of directors.

The closing of the transaction is subject to customary conditions. Alibaba will acquire the equity interest in Ant Financial through a Chinese domestic subsidiary.

Morrison & Foerster and King & Wood Mallesons acted as legal advisors, Credit Suisse acted as financial advisor and PricewaterhouseCoopers acted as tax advisor to the Alibaba Independent Committee.

Wachtell, Lipton, Rosen & Katz, Sidley Austin LLP and Fangda Partners acted as legal advisors to Ant Financial.


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JAKKS Pacific receives $2.95 per share offer

JAKKS Pacific receives interest from Meisheng to acquire 51% stake

JAKKS Pacific receives interest from Meisheng to acquire 51% stake. Stockwinners.com
JAKKS Pacific receives interest from Meisheng to acquire 51% stake

JAKKS Pacific (JAKK) announced today that the company had received a letter dated January 25, 2018 from Hong Kong Meisheng Cultural Company, a wholly owned subsidiary of Meisheng Cultural and Creative Corp., containing a non-binding proposal expressing Meisheng’s interest in acquiring additional shares of JAKKS common stock for $2.95 per share.

Upon completion of the transaction, Meisheng’s shareholdings and voting rights would increase to 51%.

The Proposal states that it is subject to due diligence, and that Meisheng intends to fund the transaction through a combination of existing cash on hand and/or other financing sources to the extent required for the restructuring or refinancing of JAKKS’ outstanding senior convertible senior notes.

The Expression of Interest also states that the transaction is subject to approval by Meisheng’s Board of Directors, shareholders and Chinese regulatory authorities.

Hong Kong Meisheng currently owns 5,239,538 shares of JAKKS common stock constituting 18% of JAKKS issued and outstanding shares of common stock.

The board of JAKKS Pacific has authorized a Special Committee comprised solely of independent directors to evaluate the Expression of Interest.

The Special Committee intends to engage independent legal counsel and an independent financial advisor to assist in its evaluation of the Expression of Interest.

JAKKS Pacific, Inc. develops, produces, and markets consumer products worldwide. It operates through three segments: U.S. and Canada, International, and Halloween.

JAKK closed at $2.60.


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HSBC to pay more than $100M to resolve fraud charges

HSBC agrees to pay more than $100M to resolve fraud charges 

HSBC to pay more than $100M to resolve fraud charges. Stockwinners.com
HSBC to pay more than $100M to resolve fraud charges

HSBC Holdings (HSBC) has entered into a deferred prosecution agreement and agreed to pay a $63.1M criminal penalty and $38.4M in disgorgement and restitution to resolve charges that it engaged in a scheme to defraud two bank clients through a multi-million dollar scheme commonly referred to as “front-running,” the DOJ confirmed.

The DPA, which was filed in connection with a two-count criminal information charging wire fraud in the United States District Court for the Eastern District of New York, is pending review by the Court.

According to HSBC’s admissions, on two separate occasions in 2010 and 2011, traders on its foreign exchange desk misused confidential information provided to them by clients that hired HSBC to execute multi-billion dollar foreign exchange transactions involving the British Pound Sterling.

After executing confidentiality agreements with its clients that required the bank to keep the details of their planned transactions confidential, traders on HSBC’s foreign exchange desk transacted in the Pound Sterling for the traders and HSBC’s own benefit in their HSBC “proprietary” accounts.

In total, HSBC admitted to making profits of approximately $38.4M on the first transaction in March 2010, and approximately $8M on the Cairn Energy transaction in December 2011.

HSBC did not receive credit for voluntarily disclosing the misconduct.

HSBC received substantial cooperation credit because, although as detailed in the DPA, the bank’s initial cooperation with the government’s investigation was deficient in certain respects, after being notified of the Department’s concerns, HSBC changed course and its cooperation improved substantially.


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Bulls vs Bears on Principal Financial

Wells Fargo cautious on Principal Financial as Goldman says buy

Bulls vs Bears on Principal Financial. Stockwinners.com
Bulls vs Bears on Principal Financial

 

This morning, Goldman Sachs analyst Alex Scott upgraded Principal Financial (PFG) to Buy on his view that the company has potentially positive earnings growth drivers and the stock has limited downside risk.

 

Meanwhile, his peer at Wells Fargo downgraded the stock to Market Perform, arguing that its current valuation already reflects the relative growth in earnings derived from the company’s niche of fee-based businesses, aided by healthy equity market performance.

 

BUY PRINCIPAL FINANCIAL

 

In a research note to investors this morning, Goldman Sachs‘ Scott upgraded Principal Financial to Buy from Neutral after his work suggested a number of potentially positive earnings growth drivers.

 

The analyst noted that he sees organic growth in the Spread and International segments, upside to estimates driven by margins, potential for inorganic growth through deploying excess capital, and a possibility that the pension partnership with the China Construction Bank will be finalized in 2018.

 

Nonetheless, Scott pointed out that he believes the company could experience some pricing pressure within the Specialty Benefits segment during the year, but the improved growth related to tax reform and scale positions the segment well. The analyst also raised his price target on the shares to $80 from $71.

 

MOVING TO THE SIDELINES

Conversely, Wells Fargo analyst Sean Dargan downgraded Principal Financial to Market Perform from Outperform, with a $79 price target, saying the stock’s valuation already reflects the relative growth in earnings.

 

While the analyst acknowledged that Principal’s earnings per share will benefit from tax reform, like all companies under his coverage, #Dargan noted that its push to show growth in spread earnings via pension risk transfer exposes the company to “greater longevity risk,” which deserves a lower multiple than “pure” spread earnings.

 

The analyst told investors that he now prefers Voya Financial (VOYA), pointing out that the company should look more like Principal over time after shedding its capital-intensive annuity business. Furthermore, Dargan argued that he sees more upside in Voya at current valuation levels.

 

Principal Financial (PFG) is  up 1% to $73.12.


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The U.S. trade deficit in November at six year high

The U.S. trade deficit rises to a 6 year high

U.S. trade deficit rose to a 6-year high. Stockwinners
U.S. trade deficit rose to a 6-year high.

The U.S. trade deficit rose to a larger than expected $50.5 B, a 6-year high in November, after gaps of $48.9 (was $48.7) B in October and $44.9 B in September, versus a prior 5-year high of $48.8 B last January.

The November gap was $0.5 B wider than indicated by the “advance” trade report thanks to a larger upside import surprise than export surprise.

Exports of goods and services have returned to the cycle-high from October of 2014, while imports are now 4.1% above their level in October of 2014.

Analysts trimmed the Q4 GDP growth estimate to 2.5% from 2.6%, after a 3.2% Q3 rate, with a $38 (was $34) B net export subtraction, following a $16.2 B addition in Q3.

Analysts project a 5% growth rate in real exports in Q4 after a 2.1% rate in Q3, and a 9% growth rate for real imports in Q4 after a 0.7% Q3 contraction rate.

Analysts expect a current account deficit widening to $119.7 B in Q4 from just $100.6 B in Q3.

Analysts expect an annual current account gap of $458 B that will mark a new expansion-high in 2017, following the $452 B prior expansion-high in 2016.


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Barron’s is bullish on Chevron and Corning

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names: 

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy

BULLISH  MENTIONS

Chevron positioned to benefit in 2018 – No oil major is better positioned to benefit than Chevron (CVX) in 2018, who said it would spend about $18B next year while it starts to reap the benefits from the big projects that had been consuming cash since 2011, Ben Levisohn writes in this week’s edition of Barron’s.

Corning shares could gain over 25%– Shares of Corning (GLW) could keep climbing as demand grows for optical fiber, LCD-panel glass, and Gorilla Glass, Leslie Norton writes in this week’s edition of Barron’s.

Facebook could consider cash dividend – None of the fast-growing giants, namely Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Alphabet (GOOG; GOOGL), pay a cash dividend, but that may change before long, Jon Swartz writes in this week’s edition of Barron’s. Facebook is pushing up against the limits of growth, and if growth begins to taper, investors will begin calling for new strategies, such as dividends and stock buybacks, he notes. Several factors make Facebook the most likely FANG candidate to offer a dividend, perhaps as early as 2019, including sufficient earnings, Swartz contends.

 ‘Good time’ to buy GlaxoSmithKline stock.  GalxoSmithKline’s (GSK) earnings estimates have been sliding and shares have tumbled since the summer, but now looks like a good time to buy the stock, Jack Hough writes in this week’s edition of Barron’s. While GlaxoSmithKline will suffer an earnings hit in 2018 from new generic competition, it should get back on track quickly, he contends.

BEARISH MENTIONS

Some retail stocks look vulnerable – In a follow-up story, Barron’s says that prudent investors should assume that the recent burst of sunshine will give way to more rainy days for retail. Macy’s (M) may look inexpensive but its earnings per share are expected to tumble in each of the next two years, J.C. Penney (JCP) is in a long-term fight for its existence, Sears Holdings (SHLD) makes the former look like Amazon (AMZN), and Abercrombie & Fitch (ANF) sells a deflationary good at a dying venue against a fashion headwind, the report added. On the other hand, Barron’s argued that Wal-Mart’s (WMT) improvement remains intriguing, Home Depot (HD) and TJX (TJX) remain long-term winners, and Five Below (FIVE) seems to be a genuine fast-grower.


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Vipshop gets $863 million cash infusion

Vipshop receives $863M from Tencent and JD

Vips receives $863M investment. Stockwinners.com
Vips receives $863M investment.

Tencent, JD.com, Vipshop announce investment, business cooperation – Tencent Holdings (TCEHY), JD.com (JD), and Vipshop (VIPS) jointly announced that Tencent and JD.com have entered into definitive agreements with Vipshop, such that Tencent and JD.com will invest an aggregate amount of approximately $863M in cash in Vipshop at the closing of the transaction.

Pursuant to the share subscription agreement, Tencent and JD.com will subscribe for newly issued Class A ordinary shares of Vipshop in the amount of approximately $604M and approximately $259M, respectively.

The purchase price will be $65.40 per Class A ordinary share, which is equivalent to $13.08 per American Depositary Share of Vipshop, five of which represent one Class A ordinary share.

The purchase price represents a 55% premium over the closing price of the ADSs as of the last trading day on December 15.

The transaction is expected to close in the near future, subject to customary closing conditions. Upon the closing, Tencent and JD.com will beneficially own, taking into account any existing holding, approximately 7% and 5.5%, respectively, of Vipshop’s total issued shares.

The Class A ordinary shares issued to Tencent and JD.com will be subject to a two-year lock up restriction. Tencent and JD.com will have the right to appoint a director and an observer, respectively, to Vipshop’s board of directors during the two-year lockup period.

After the end of the lock-up period, for so long as Tencent and JD.com hold approximately 12% and 8%, respectively, of Vipshop’s total issued shares, or otherwise by mutual agreement with Vipshop, they will maintain director and board observer rights.

Concurrently with the entry of the share subscription agreement, Tencent and JD.com have entered into business cooperation agreements with Vipshop, effective upon closing, establishing a cooperative relationship among Tencent, JD.com and Vipshop.

Under these agreements, Tencent will grant Vipshop an entry on the interface of Weixin Wallet enabling Vipshop to utilize traffic from Tencent’s Weixin platform, and JD.com will grant Vipshop entries on both the main page of JD.com’s mobile application and the main page of its Weixin Discovery shopping entry, and will assist Vipshop in achieving certain GMV targets through JD.com’s platform.

VIPS closed at $8.44. It last traded at $12.48.


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