288.30 +0.22 (0.08%)
After hours: 7:59PM EST
|Bid||288.39 x 800|
|Ask||288.40 x 1000|
|Day's range||286.15 - 302.53|
|52-week range||169.50 - 327.85|
|Beta (5Y monthly)||1.28|
|PE ratio (TTM)||22.87|
|Earnings date||27 Apr 2020 - 03 May 2020|
|Forward dividend & yield||3.08 (1.03%)|
|Ex-dividend date||06 Feb 2020|
|1y target est||333.31|
(Bloomberg) -- U.S. crash investigators faulted Tesla Inc.’s Autopilot system and the driver’s distraction by a mobile device for a fatal accident in 2018 and called on Apple Inc. and other mobile phone makers to do more to keep motorists’ attention on the road.Tesla was heavily criticized for not doing enough to keep drivers from using its driver-assist function inappropriately. American regulators, which have guidelines but no firm rules for the emerging automated driving systems, were also attacked by the safety board.“It’s time to stop enabling drivers in any partially automated vehicle to pretend that they have driverless cars, because they don’t have driverless cars,” National Transportation Safety Board Chairman Robert Sumwalt said.The hearing was a searing critique of how Tesla and other carmakers have introduced new technologies that automate aspects of driving but still require constant human supervision, and of the National Highway Traffic Safety Administration’s light-touch approach to regulating the safety of those systems.Even though the Tesla SUV in the 2018 crash in northern California had previously veered toward a concrete barrier, the driver, an Apple employee, allowed the semi-autonomous system to essentially steer itself as it passed that same location and moved toward a highway barrier, the NTSB concluded. The driver failed to intervene because he was distracted, likely because he was playing a game on a mobile phone provided by his company, which lacked a policy prohibiting employees from using devices while driving, the NTSB found.The NTSB has for years issued warnings about distracted driving and its deadly toll on the roadways. During the hearing, it called on Apple and other mobile phone manufacturers to develop protections to prevent misuse of electronic devices behind the wheel as a default setting.The agency also urged the NHTSA to conduct a fresh evaluation of Autopilot and take enforcement action if necessary if the agency finds defects.“We urge Tesla to continue to work on improving their Autopilot technology and for NHTSA to fulfill its oversight responsibility to ensure that corrective action is taken when necessary,” Sumwalt said.The death of 38-year-old Apple engineer Walter Huang in March 2018 in Silicon Valley prompted the NTSB to issue its strongest findings to date on safety risks posed by automated driving systems and driver distraction by mobile devices.“Limitations within the Autopilot system caused the SUV to veer towards the area with a concrete barrier that it ultimately struck, which the driver didn’t attempt to stop due to distraction,” the board found.NTSB recommended that both mobile device manufacturers such as Apple, Google and Samsung Electronics Co., as well as employers more broadly, do more to combat distracted driving.Mobile phone manufacturers should lock out features on the devices as a default setting, rather than as an optional feature that must be activated manually, the NTSB said. Employers should adopt policies banning non-emergency mobile phone use by employees when behind the wheel.The NTSB posted a document on Monday in its public record on the crash showing Apple didn’t have a policy on distracted driving.“I checked around with various groups and we do not have a policy related to phone use and driving,” wrote an Apple representative in an email response to the NTSB, which was posted to the safety board’s public investigative files on Monday.An Apple spokesman said the company expects its employees to follow the law. Tesla didn’t respond to a request for comment but has said it has updated Autopilot in part to issue more frequent warnings to inattentive drivers and that its research shows drivers are safer using the system than not. Tesla has also repeatedly stressed that drivers must pay attention while using Autopilot.The combination of growing mobile device use in semi-autonomous cars, in which drivers can take their eyes off the road for long periods, is a combustible mix, said NTSB Vice Chairman Bruce Landsberg.“What this crash illustrates is not only do we have the old kind of distraction” Lansberg said. Partly-automated driving systems present “yet another kind, which is the automation complacency of the system almost kind of always works, except when it doesn’t.”NTSB board member Jennifer Homendy criticized the NHTSA for issuing a recent statement saying it was trying to limit regulations to make cars more affordable.“What we should not do is lower the bar on safety,” Homendy said. “That shouldn’t even be considered for an agency that has the word safety in its name.”NHTSA said in a statement it was aware of the NTSB’s report and would review it. It also said distracted driving remains a concern and that drivers of every motor vehicle available currently on sale are required to remain in control at all times.It is also conducting more than a dozen of its own investigations into Tesla crashes linked to its semi-autonomous system known as Autopilot. Tesla is one of the leading developers of automated driving technology.Warnings to DriverHuang’s Tesla struck the concrete highway barrier at about 70 miles (113 kilometers) per hour. His hands weren’t detected on the steering wheel for about one-third of the drive and the car twice issued automated warnings to him.A protective barrier on the highway designed to reduce the crash impact wasn’t in place, the NTSB found.In addition, Tesla and government agencies haven’t bothered to respond to NTSB’s recommendations related to an earlier, similar crash.Smartphone manufacturers and software developers have taken some steps to address distracted driving. Apple’s iPhone, for example, has a feature to block text message and other notifications when driving that a user can activate in the phone’s settings.“The challenge is that they’re all passive systems. They require you as the owner of the phone to take that action, and many won’t or don’t because they don’t have to,” said Kelly Nantel, vice president of roadway safety at the National Safety Council.While the safety board stopped short of concluding that NHTSA’s lack of actions were part of the cause of the crash, it found that the regulator hadn’t done enough to set safety standards and called its approach to semi-automated vehicles “misguided.”Separately, the NTSB is prepared to cite the highway-safety regulator’s actions in another fatal Tesla crash as a contributing factor.In a March 2019 crash in Delray Beach, Florida, a Tesla drove into the side of a truck without braking, killing the driver. The conclusions of the investigation haven’t been published, but were read by Homendy during Tuesday’s meeting.(Updates with details from hearing, beginning in the fourth paragraph)To contact the reporters on this story: Ryan Beene in Washington at email@example.com;Alan Levin in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Jon Morgan at email@example.com, Elizabeth Wasserman, John HarneyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The planned digital tax, a new bill that could impact encryption, developments on U.S. Google's antitrust case and Amazon's challenge of the JEDI contract and other news is covered in this article.
(Bloomberg) -- Jamie Dimon sees competition everywhere he looks, so he’s vowing to be creative with what he can buy to stay ahead.JPMorgan Chase & Co. is looking “aggressively” at acquisitions across its businesses and could buy anything that’s not another U.S. bank, the chief executive officer said at the firm’s investor day in New York Tuesday. The bank has a greater appetite for deals than in previous years, helped by regulators who are more accommodative, he said.Coming off the most profitable year in U.S. banking history, Dimon attempted to push down expectations, saying last year’s bonanza was helped by unusually low credit costs and flagging 2020 as a “tougher year.” The bank’s presentation touted how it’s outperformed rivals in recent years, but also struck a cautious tone on challenges it faces from a series of industry trends that aren’t going away.“You’re going to get some form of competition from Apple, Amazon, Facebook, Google, WeChat, Alipay; you’re going to get it across payments, white label, black label and bank-in-a-box and marketplaces, and that’s the world we’re going to face,” Dimon said. “When it comes to M&A, we should be very, very creative.”One big change is in regulators’ attitudes toward letting big banks get bigger.“Now they’re giving more of a green light,” Dimon said. “The door is open for people to be a little more ambitious and aggressive with how they deploy capital in acquisitions.”In updating its outlook for 2020, the bank maintained its return on tangible equity target at 17%, and said its overhead ratio would be below 55% in the medium term. It expects net interest income to fall slightly to $57 billion this year as lower interest rates squeeze traditional lending businesses.Interest rates holding near multiyear lows will continue taking a bite out of revenue, it said.“Rates are much lower than expected both on the short and long end” than the bank forecast a year ago, Chief Financial Officer Jenn Piepszak said. While the firm expects NII to grow again in 2021, “all of this is market dependent, and yesterday’s volatility is a good reminder of that,” she said, referring to the stock-market tumble.“It’s gonna be a much tougher year in 2020,” Dimon said. While the bank is prepared for an economic downturn, “a lot of our managers haven’t been through one, so I do worry about that.”On other fronts, Dimon and Piepszak said JPMorgan plans to borrow from the Federal Reserve’s discount window from time to time. The facility is meant to provide emergency liquidity to banks that otherwise have healthy balance sheets. In a cash crunch, banks can pledge collateral to the Fed in return for cash. But lenders have been reluctant to use the window, in case investors interpret it as a sign of financial weakness.“We think this is an important step for us to take to break the stigma here,” Piepszak said.For the first quarter, net interest income will likely be $14.2 billion, slightly higher than previous estimates. And trading revenue for the period will probably increase by a percentage in the “mid-teens” compared with the same period last year, according to Daniel Pinto, co-president of the corporate and investment bank. The market is doing “pretty well” so far this year, Pinto said.Cost cuts have been a major focus, including shifting thousands of jobs out of the New York area to cheaper locations domestically and abroad over the past few years. Still, JPMorgan said expenses could jump 2.5% this year to around $67 billion. The bank said it would spend $500 million more on technology investments.Shares of the company fell 2.8% to $128.43 at 1:18 p.m. in New York, compared with a 3.1% decline for the KBW Bank Index.The bank also said it would help finance about $200 billion related to sustainable business practices and other green initiatives, up from $175 billion last year. It expects to use renewable energy for all its global power needs by the end of 2020.“There’s no meeting where this issue isn’t coming up,” Pinto said. “This situation is evolving so fast that whatever target you put for the next 10 years most likely will be obsolete.”Among other major initiatives is a national branch expansion, a push into China, investments in wholesale payments and a deeper effort to advise high-net-worth individuals.On the branch expansion, JPMorgan said it has $1.5 billion in deposits and investments from new markets, including Boston, Philadelphia and Washington D.C. New branches are reaching the break-even point seven months faster than the average six years ago, the company said.To contact the reporter on this story: Michelle F. Davis in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Michael J. Moore at email@example.com, Steve Dickson, Dan ReichlFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- Apple Inc. is reopening more than half of its retail stores in China, trying to rebound from a sales hit tied to the coronavirus.As of Monday, 29 of 42 Apple stores in the country are opening, according to a review of the company’s retail websites. Most of these locations are still operating on shortened hours. Some outlets will be open for fewer than 8 hours. That compares with a typical 12-hour day, depending on location.The Cupertino, California-based technology giant hasn’t said when the remaining stores will reopen. However, some Apple websites for specific stores show that operating hours will return to normal as early as the end of this week.Apple’s retail footprint in China is critical to the company’s sales. The store closures were one of two main reasons for Apple saying it wouldn’t meet its revenue target of at least $63 billion in the current quarter ending in March.Read more: Apple Outlook Cut Renews Questions About China Over-RelianceApple Chief Executive Officer Tim Cook told employees last week that retail locations in China were “starting to reopen, but we are experiencing a slower return to normal conditions than we had anticipated.”Earlier on Monday, an analysis of official Chinese data showed that Apple’s China iPhone shipments dropped in January as the coronavirus began to spread.To contact the reporter on this story: Mark Gurman in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Tom Giles at email@example.com, Alistair Barr, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Apple Inc.’s China iPhone sales dropped in January as the coronavirus began to spread, according to an analysis of government data on Monday.Demand for the product fell 28% compared with the previous month, a bigger decline than usual for that time of year, according to a UBS research note citing official Chinese data.“February numbers are likely to be far worse due to both supply and demand issues related to the virus outbreak,” UBS analyst Timothy Arcuri wrote in the note.Apple recently pulled its revenue forecast for the March quarter, saying the virus had stunted sales and slowed production. The company also closed all of its 42 physical stores in mainland China due to the outbreak. It is beginning to reopen them now.The situation is so fluid that Apple hasn’t given a new revenue forecast, Arcuri said. The pace of recovery in the company’s June quarter “is more dependent on the demand side – which is very hard to predict,” the analyst added.Overall January smartphone shipments in China slumped 37% year over year, according to numbers from the China Academy of Information and Communications Technology. UBS’s Arcuri said iPhone sales climbed 5% in the same period, thanks to its online stores and easier comparisons to the previous holiday period which was marred by trade war tensions.Read more: Apple Outlook Cut Renews Questions About China Over-Reliance\--With assistance from Linly Lin.To contact the reporter on this story: Mark Gurman in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Tom Giles at email@example.com, Alistair Barr, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The U.S. Supreme Court refused to consider an appeal by Apple Inc. as the iPhone maker seeks to avoid paying as much as $1 billion in patent damages to upstart software developer VirnetX Holding Corp.VirnetX, a Nevada company with less than $2 million in annual revenue, has waged a decade-long fight to collect royalties from Apple for secure communications technology used in FaceTime and virtual private network programs on devices including the iPhone, iPad and Mac computers.VirnetX jumped as much as 18% on the news.The high court denied Apple’s petition arguing that a $439 million judgment from the first of two cases brought by VirnetX was “grossly excessive” and should be thrown out because the U.S. Patent and Trademark Office, in separate proceedings, ruled that the patents at the heart of the dispute are invalid.A second case, not currently before the high court, resulted in a $503 million verdict over the same patents and newer Apple products. An appeals court has ordered a recalculation of damages in that case, although VirnetX has said it doesn’t expect the number to be significantly smaller.“It has always been our objective to create our own products with our proprietary technology,” VirnetX Chief Executive Officer Kendall Larsen said in a statement. “Unfortunately, when other companies are using your technology without permission, you must take action to protect that company asset. We have always believed that we were in the right with our court actions against Apple.”VirnetX said Apple’s Supreme Court appeal is part of that company’s effort to avoid paying to use another of VirnetX’s inventions. Cupertino, California-based Apple’s legal tactics were part of the reason the trial judge increased the jury’s verdict of $302 million, VirnetX’s lawyers said.“After 10 years of litigation, Apple has no plausible arguments for resisting the judgment,” VirnetX told the court. “It continues the pattern of ‘gamesmanship’ and delay that resulted in the district court enhancing damages below.”‘Loophole’ in RuleOn the question of damages, Apple said the U.S. Court of Appeals for the Federal Circuit, which handles all patent appeals, has created a “gaping loophole” in the rule that damages should be “limited only to the value of its patented invention” and not to the price of an end product that contains other features.Apple said that in this case, VirnetX equated the rate paid for a desktop phone with the more complex iPhone.VirnetX said its expert witness estimated the “dollar value” of the invention in any phone supporting secure voice and video calls over the Internet. In that way, the company said it sought to avoid arguments that it was tying the royalty rate to the price of an iPhone or other Apple device.The Federal Circuit affirmed the jury verdict without issuing a formal opinion, and VirnetX argued that meant there was no real issue for the high court to review. The appeals court refused to put its decision on hold while Apple appealed to the Supreme Court.Apple also contends the case should be thrown out because of the decisions from the patent office. While the Federal Circuit has affirmed some invalidity rulings from a patent office review board, it ordered a second look at others.‘Massive Damages’“There is no need or justification to require a defendant to pay massive damages for infringing patent claims that the PTO has decided should never have issued in the first place,” Apple said.Apple is fighting to find a way to overturn the second case, which ended at trial with a $503 million verdict. The Federal Circuit in November ordered a new trial on damages in that case after finding that newer models of FaceTime didn’t infringe the patents. It said Apple was barred from arguing invalidity because that issue was resolved in one of the earlier court appeals.VirnetX said that none of its patents have been canceled because the legal dispute on those issues is continuing.The Patent Trial and Appeal Board, established in a 2011 law as part of a sweeping overhaul of the U.S. patent system, is a favored venue for companies to challenge patents after they’ve been sued. The board has a reputation for siding with companies that challenge patents, and Apple is the most prolific user of the system.Often, district court judges will put a civil suit on hold until the reviews are completed. When they don’t, as in these cases, it becomes a race for the parties to see which forum will finish first.The case is Apple Inc. v VirnetX Inc., 19-832.(Updates with VirnetX comment in sixth paragraph.)To contact the reporters on this story: Susan Decker in Washington at firstname.lastname@example.org;Greg Stohr in Washington at email@example.comTo contact the editors responsible for this story: Jon Morgan at firstname.lastname@example.org, Laurie Asséo, Elizabeth WassermanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The National Transportation Safety Board on Tuesday will convene its second hearing on a fatal crash involving Tesla Inc.’s automated driver-assist technology even though the pioneering automaker hasn’t filed formal responses to recommendations stemming from the first one more than two years ago.The NTSB in 2017 recommended that automakers including Tesla make their driver-assist systems more resilient to misuse by inattentive drivers, and limit the operation of those systems to only the driving for which they were designed.Automakers including Volkswagen AG, Nissan Motor Co. and BMW AG have told NTSB how their systems ensured driver engagement, which agency deemed acceptable responses. Tesla has had no formal correspondence with NTSB officials responsible for monitoring how safety recommendations are implemented, NTSB spokesman Chris O’Neil said.“It’s not the norm,” O’Neil said. “Most recommendation recipients respond in the prescribed 90-day window.”Tesla didn’t respond to a request for comment but has said it’s updated Autopilot in part to issue more frequent warnings to inattentive drivers.The role of Tesla’s automated driver-assist features known as Autopilot, along with other factors including driver distraction and highway infrastructure, will be examined at an NTSB meeting on Tuesday regarding a March 2018 crash in Mountain View, California, that killed 38-year-old Apple Inc. engineer Walter Huang after his Tesla SUV slammed into a highway barrier while using Autopilot.The probe was marked by an unusually public display of tensions between the agency and Tesla Chief Executive Officer Elon Musk that peaked when the agency kicked Tesla off the probe after the CEO released information about the crash despite prohibitions against such disclosures during an investigation.The hearing could hold lessons for the auto industry as automated driving features are becoming increasingly common on new vehicles. Several other automakers have also equipped their vehicles with technologies that can provide automated steering, accelerating and braking, and some have installed systems to ensure drivers pay attention. General Motors Co. and Subaru Corp. use infrared cameras to track head and eye movement, and Nissan last year said it would include a similar driver-monitoring in a system designed to offer hands-free driving on the highway.Tesla has said Autopilot makes drivers safer, pointing to internal data it releases quarterly that it says demonstrates that drivers crash less frequently while using it than while driving manually. The company says drivers must remain attentive with their hands on the wheel while using Autopilot, which monitors by sensing steering wheel inputs by the driver.The company has said it has adjusted the the warnings drivers receive if their hands are off the wheel for too long, which federal investigators have faulted for being easy to sidestep.In 2017, the NTSB closed its first probe of a fatal crash linked to Autopilot by calling on companies to develop ways to better ensure drivers pay attention while using automated driving features that require human supervision. It also called on automakers to take steps to limit the use of automated driver-assist features to only the driving scenarios for which they’re designed.The recommendations stemmed from the agency’s probe of a 2016 crash in which former Navy SEAL Joshua Brown died after his Tesla Model S crashed into a commercial truck crossing the road in front of him on a Florida highway while using Autopilot. The agency cited an over-reliance on the car’s automation by Brown and a lack of built-in safeguards to prevent inattention as key factors that contributed crash.Last fall, the NTSB again cited inattention and Autopilot’s design in a January 2018 crash in which a Tesla driver rear-ended a parked fire truck on a freeway near Los Angeles. The agency said Autopilot’s design allowed the driver, who was uninjured in the crash, to stop paying attention to the road.After that crash, Tesla said it has updated Autopilot in part to issue more frequent warnings to inattentive drivers. The company has also been in regular contact with NTSB investigators and provided information about its systems to the agency, O’Neil said.“That doesn’t replace the need for formal responses to safety recommendations,” he said. “It’s a process designed to help us understand what they’re doing to implement those safety recommendations and what their progress toward them are, which may inform whether we feel other recommendations are necessary.”Records from the Mountain View investigation hint at several factors the NTSB could highlight during the meeting Tuesday. With Autopilot engaged and set to cruise at 75 miles per hour, Huang’s 2017 Tesla Model X sped up and slammed into a concrete barrier. Vehicle data showed neither the driver nor the vehicle’s automatic systems applied the brakes prior to impact, the NTSB has said.Huang had complained that Autopilot had repeatedly veered his vehicle toward the same spot during earlier trips on that same stretch of highway, according to the agency. Data taken from his Tesla’s computer confirmed that the situation had occurred at the same location four days before the fatal crash and once more several weeks earlier, records released by the NTSB show.The tip of the concrete lane divider struck by Huang’s Tesla was supposed to have been protected by a crash attenuator, a device attached to highway infrastructure to absorb impact forces like a car’s crumple zone. It was damaged 11 days earlier and hadn’t been repaired by the California Department of Transportation before Huang’s crash.Records reviewed by NTSB found Huang was playing a game on his Apple-provided mobile device before the collision, the agency said, citing data transmission records. However, the data couldn’t show how engaged he was with the game or whether he was holding the device with both hands at the time of the crash, the NTSB said.Crash investigators at the National Highway Traffic Safety Administration have opened 14 inquiries into Tesla crashes believed to involve Autopilot, plus 11 more involving other manufacturers with partial-automation systems.\--With assistance from Alan Levin.To contact the reporter on this story: Ryan Beene in Washington at email@example.comTo contact the editors responsible for this story: Jon Morgan at firstname.lastname@example.org, Elizabeth WassermanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Apple Inc.’s supply chain, which is heavily reliant on China, will probably take more than a month to get back to full capacity at the earliest amid disruptions caused by the coronavirus, according to Wedbush analyst Daniel Ives.Even in a best-case scenario, the iPhone maker’s supply chain won’t be fully functional until early April as workers at Apple’s manufacturing partners return to work in China, Ives wrote in a research note. The disruptions could last until as late as June in a worst case scenario that would probably delay Apple’s fall iPhone release by months, he said.“All the Street’s focus is on the supply chain and gauging when some form of normalization begins around iPhone production throughout China,” Ives wrote in a research note.Last week, Apple warned it wouldn’t achieve its revenue forecast for the current quarter due to work slowdowns and sagging demand for its products in China, where the virus has infected more than 70,000 people. Reports of new clusters of cases in Italy and Iran sent stocks around the world tumbling on Monday. Cupertino, California-based Apple fell as much as 7.6% before paring some of the losses, while semiconductor stocks dropped 5.4%.If Apple’s supply chain gets back to normal by April, the company’s lower priced iPhone may be delayed by several weeks in the spring, but the 5G iPhone release in the fall would probably be unaffected, said Ives, who has an outperform rating on the stock. If slower production lasts until June, both iPhone release dates could be pushed out by months, he said.Ives’s base case calls for full production resuming by late April or early May, which would delay the fall iPhones by a few weeks and the lower cost devices by about two months.To contact the reporter on this story: Jeran Wittenstein in San Francisco at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Richard RichtmyerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- European equities haven’t had such a bad day since the aftermath of the Brexit vote more than three years ago as increasing concerns over the economic impact of the coronavirus hurt travel and luxury sectors, and volatility spiked.The Stoxx Europe 600 Index closed down 3.8% after falling as much as 4.2% in the sharpest drop since June 27, 2016, led by the travel, mining and auto sectors. Today’s move also wiped out the year-to-date gains for the Stoxx 600. The Euro Stoxx 50 Volatility Index surged as much as 49%, the most since the so-called “Volmageddon” of February 2018 -- when Wall Street was rocked by a surge in volatility and a sell-off in stocks.Luxury companies tumbled on fears that the epidemic will hurt sales, with LVMH Moet Hennessy Louis Vuitton SE losing 4.7% and Roche Holding AG dropping 3.2%. The Stoxx 600 Travel and Leisure Index fell 6%, with Air France-KLM declining 8.7%, EasyJet Plc tumbling 17% and Ryanair Holdings Plc losing 14%.“We believe the coronavirus illness will substantially curtail store traffic in China and neighboring countries, may negatively affect incoming Chinese tourism, and is also likely to disrupt supply chains,” Oliver Chen, a retail analyst at Cowen & Co., wrote in a report on Monday.Money managers are selling stocks and looking for havens after South Korea saw a surge in cases to 763 and the concern about a jump in illnesses in Italy intensified. European equities advanced to a fresh record high last week, which is adding to investor anxiety about possibly stretched positioning and valuations.“Markets are in a risk-off mode amid concerns about the global spread of coronavirus, with a growing number of infections outside of China,” said Ulrich Urbahn, head of multi-asset strategy and research at Joh Berenberg Gossler & Co., which recently cut its exposure to commodities and favors quality European stocks. “Given the strong performance and elevated positioning in equities, the risks are clearly skewed to the downside.”The impact from China’s slowdown due to the coronavirus as well as supply, sales and production disruptions at major firms such as Apple Inc., are a major concern for asset managers. European equities are particularly sensitive as Goldman Sachs Group Inc. says the exposure of the Euro Stoxx 50 Index to China is about twice that of the S&P 500 due to such sectors as banks, automakers and luxury shares.Italy’s FTSE MIB Index led the declines among major European benchmarks, retreating as much as 6.1%, the most since June 2016, after Europe’s biggest surge of the coronavirus prompted the government to impose a lockdown on an area of 50,000 people near Milan, and authorities canceled the remaining days of the Venice Carnival, while universities closed. Some of the biggest Italian companies -- from banks to luxury firms -- were battered. Salvatore Ferragamo SpA declined as much as 10% and Juventus Football Club SpA lost as much as 12%.Goldman’s chief global equity strategist Peter Oppenheimer said last week that a 1% drop in global sales-weighted gross domestic product would cut European earnings by about 10%, turning them negative.The U.S. stock market extended the global slump, with the S&P 500 falling as much as 3.2% and the Nasdaq 100 losing up to 4.4%.However, continuous monetary easing by major global central banks and China’s efforts to support its economy are making some investors optimistic that the sell-off in risk assets won’t last for long. The London-based wealth manager Kingswood is currently neutral on stocks and looking to increase equity positions in case of a significant market correction.“The disruption caused by the virus will hit economic activity significantly in the first quarter, with global growth very likely to grind to a halt,” said Rupert Thompson, chief investment officer at Kingswood, which has about 2.5 billion pounds ($3.2 billion) under management. “But we continue to believe that the outbreak is likely to follow the path of previous such health scares with growth rebounding in the second and third quarters.”To contact the reporter on this story: Ksenia Galouchko in London at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, Jon Menon, Paul JarvisFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Huawei Technologies Co. reaffirmed its bet that expensive folding smartphones will excite consumers into upgrades, and that Apple Inc.’s iPad Pro is a design worth imitating for a new line of tablet computers. The Chinese company on Monday announced a second-generation version of its Mate X folding phone, which up to now has been sold mostly in its home country. This time Huawei’s bringing it to Europe, and said the product’s more durable than the first version and has a faster processor and 3D graphics.When folded, the Mate Xs has a 6.6-inch display, which is just slightly larger than Apple Inc.’s iPhone 11 Pro Max. But when opened out, Huawei’s device becomes an 8-inch tablet computer. It has three rear-facing Leica Camera AG-branded lenses, which double as selfie cameras when flipping the phone around in its folded form.It’ll cost 2,499 euros ($2,704) when it goes on sale worldwide in March.The market for smartphones is slowing, and manufacturers are trying to find new ways to convince consumers they should upgrade their devices. Bendable products are an increasingly popular strategy being tried out by some of the world’s biggest device makers.Samsung has been selling a foldable smartphone for as many months as Huawei, and at the Consumer Electronics Show in Las Vegas in January, Lenovo Group Ltd. showed off an updated prototype of a folding ThinkPad computer. The Motorola Razr brand is also due to make a comeback later this year, and it too will bend.Huawei also showed off a new line of tablet computers for Europe -- the MatePad Pro 5G -- aimed at the same buyers of products like Apple’s iPad Pro. It’s not without its physical similarities, either.The MatePad Pro has a 10.8-inch display compared to the iPad’s 11 inches; it includes a stylus that, like the Apple Pencil, connects magnetically to the outer edge of the tablet for recharging, and is dubbed the Huawei M-Pencil. The bezel around the screen is slimmer than that of Apple’s, but uses the same rounded screen corners that differentiate the iPad Pro from its cheaper brethren. At a briefing with reporters ahead of the launch on Monday, Huawei championed the MatePad Pro’s use of split-screen multitasking to run apps side-by-side and its optional magnetic keyboard case.It does have innovations of its own, however. The tablet can mirror the display of certain Huawei smartphones if they’re nearby, letting you control the phone virtually -- a bit like using a remote desktop app to use a PC from another computer. The tablet also has fifth-generation 5G wireless -- something no iPhone or iPad offers yet -- and it can be used to wirelessly charge other products, such as phones, headphones or computer mice.Prices will start at 549 euros for a Wi-Fi-only version from April.However, due to the U.S. government blacklisting Huawei -- which it accuses of aiding Beijing in espionage -- last year, the company’s new Mate Xs and MatePad run on versions of Android that’s free and open-source, meaning they don’t have apps such as Google Maps, YouTube or the Google Play Store. Samsung’s Android-powered tablets do not suffer such restrictions.Huawei’s been battling global scrutiny over its telecom equipment, but often overlooked is the company’s rapid growth as a smartphone manufacturer. In 2018, it surpassed Apple to become the world’s second-largest maker of smartphones, according to data from market research firm IDC. (Updates with MatePad Pro pricing)To contact the author of this story: Nate Lanxon in London at email@example.comTo contact the editor responsible for this story: Giles Turner at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Anyone paying attention to finance, markets and the economy doesn't have to look very hard to find complaints that we are on the cusp of a bubble of one type or another.Perhaps the area most often targeted by the bubble believers is tech. I was curious about just how widespread this belief is: “Tech bubble” has doubled on Google Trends this year alone; Google News generates more than 3.6 million hits for the phrase.(1)Defining a bubble isn't too hard and one will do as good as another. “A market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset. Bubbles are often hard to detect in real time because there is disagreement over the fundamental value of the asset,” Nasdaq says. So let's turn to the pro-bubble argument: It has been a decade since the financial crisis and two decades since the dot-com implosion. That's enough time for people to have forgotten the trauma of that disaster. Since the Great Recession ended, there has been too much capital sloshing around, leading to excessive tech valuations. And not just in public equities, but in private markets, too. Unicorns and other SoftBank Vision Fund debacles have imploded, an early warning sign for publicly traded companies, the argument goes.Central banks have made the bubble worse, providing cheap capital that has artificially inflated profits. The bubble advocates also urge us not to overlook the impact of these low borrowing costs on the surge in share buybacks; reducing the total amount of a public company’s shares outstanding has the effect of making earnings per share look better.Then there are the anecdotes: Tesla’s stock has more than doubled in the past three months, and the company now has a market value of more than $165 billion -- higher than Volkswagen, General Motors and Ford combined. This is to say nothing of the companies valued at more than $1 trillion, such as Apple, Microsoft, Amazon and Google parent Alphabet. But let's also be generous and acknowledge that some things do look overvalued, whether it's Bitcoin (maybe), WeWork (obviously) or Tesla (I'm not getting in the middle of that one).But here's the thing: None of that is proof of a stock-market bubble. Let's look at some themes and issues to demonstrate why this is so:Business models: In the 1990s, the internet captivated the collective imagination of investors, too many of whom indiscriminately threw cash at anything with dot-com attached to it. The 2000 collapse taught investors that it took more than a high-concept idea to make a stock worth buying: growth and future cash flow matter a lot, too. The collapse of WeWork’s initial public offering last year brought this home once again. Investors realized that renting out office space short term while locking the company into long-term, expensive real-estate leases was a terrible business model. Public investors grasped this flaw -- something private investors seemingly failed to understand -- and the market worked the way it's supposed to. Revenue and earnings: Unlike the dot-coms of the '90, today's tech businesses are gigantic cash machines. Apple posted fourth-quarter revenue of $91.8 billion and net income of $22.2 billion. Without much fanfare, Microsoft's revenue grew 14% in the latest quarter, to $36.9 billion, while net income surged 38% to $11.6 billion. Alphabet, Amazon, Facebook all continue to mint revenues and profits. These companies also have accumulated hundreds of billions of dollars in cash. This is not the profitless tech boom of the 1990s.Sentiment: Maybe there is some excessive optimism. But that isn't the same as the full-blown delusion that bubbles produce. Talk of bubbles is offset by chatter about recession: Remember that less a year ago investors were anticipating a downturn and in the fourth quarter of 2018 major market indexes fell 20%, meeting the normal definition of a bear market, however brief. Meanwhile, the American Association of Individual Investors Bullish Readings index is 40.6, which is just a hair above the average reading of 39.5 for the past 25 years.Performance: Broad market performance is robust, but not crazy. Last’s year's 31% gain in the S&P 500 is misleading: most of that simply reflected the rebound from the 2018 fourth-quarter tumble cited above.So let's take a step back and consider the S&P 500 since 2015: It has had annual gains of 11.8%, for a total cumulative five-year return of 75%. Before fintwits howl “Now do the Nasdaq,” here it is: 17.6% annually and cumulative total returns of 125%. Fine, good, but not bubble material.Now compare those figures with the five years before the market peaked in March 2000: The Nasdaq generated annual returns of 60% and a five-year total return of 946% during that period, while the S&P 500 gained 25% annually and 211% for the five years. This is obvious, right?Sure, there are pockets of excessive optimism and foolishness in markets. There always are. But there also are lots of companies that are not participating in this bull-market rally. Those who were around in the 1990s know what a real bubble looks like: This isn't it.(1) Some recent examples:Barron’s:"Tesla’s Manic Rally Isn’t the Only Sign of a Market Bubble. What You Need to Know"CCN:"An Epic Stock Market Crash Is Looming, Analysts Warn"Yahoo:"The stock market is on steroids and it could end up like the dot com bubble"Barron’s (again): "Is the Fed Building Another Stock Bubble?"Bloomberg: “Mom and Pop Are On Epic Stock Buying Spree Fueled by Free Trades”To contact the author of this story: Barry Ritholtz at email@example.comTo contact the editor responsible for this story: James Greiff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- One of the trendiest ideas in finance is something called “social impact investing,” which is the idea that people should put more money into socially beneficial companies and products, and less into socially harmful ones. That hardly sounds objectionable, but I am skeptical about how much good social impact investing can do.The first risk is that social impact investing will be used to “whitewash” various harmful policies. By divesting from a particular set of companies, an investment fund loses at most a very small benefit from an additional degree of broader market diversification. The fund still is likely to earn the market rate of return on its other investments, and in the meantime it can claim virtuousness. At the same time, the funds can pursue socially harmful policies elsewhere: investing in companies that lobby for tariff protection, say, or emit less visible forms of pollution, or how about refined sugar?A second risk is that social impact investing simply redistributes wealth from investments — maybe to less socially conscientious individuals. Imagine a socially conscious investment firm that declines to participate in the initial public offering of a company that pollutes the ocean. That might create downward pressure on the price of the IPO. But there is a problem: The value of the actual investment has not declined, so at a potentially lower IPO price other investors will step in to fill the demand. In fact, those investors may have the chance to buy at a discount and earn a higher return than otherwise.The net result is that conscientious investors have missed out on a profitable opportunity, while less socially aware investors have earned more. Over time, the less socially aware investors will become richer, and their greater wealth may translate into greater political and economic influence.Maybe this effect isn’t large, but it is negative, and it will become correspondingly larger to the extent social impact investing becomes more popular (in 2018, the money pouring into sustainable investment funds quadrupled, rising to about $21 billion). That doesn’t sound like an appealing trade-off.But put that worry aside and assume that social impact investing simply makes it easier to get a solar power company off the ground with an IPO or an expansion. It’s still not clear that much has been gained. At that late point in the process, the company will succeed or it won’t, no matter what the socially conscious funds do.If anything, it would be more useful to have socially conscious research and development at the very early stages of projects. To some extent there are such investments, and I am more sanguine about being conscientious then than when companies already exist and funds are making investment decisions.It is also difficult to monitor the performance and social efficacy of the funds focused on doing good. In actively managed sustainable equity funds, for example, the most commonly held stocks are estimated to be Microsoft, Alphabet, Visa, Apple and Cisco. I have nothing against those companies, but you have to wonder exactly how much social improvement those investment funds are buying.Norway’s fossil fuel divestment is well-publicized. Less well known is that it exempted Shell and Exxon. There simply aren’t clear benchmarks for which investments to avoid, and of course some critics will portray technology companies as the embodiment of evil.Too many of the empirical arguments for social impact investing stem from a single example: South Africa under apartheid. In that case, a coordinated campaign of divestment and international economic and social pressure did hasten the end of apartheid, all for the better. But most sanctions are not very effective at achieving their stated political goals, or their effectiveness may be unclear. South Africa may have been a special case because it was relatively small and isolated, and because so many South Africans had ceased to believe in apartheid.Investment in socially beneficial activities can be worthwhile. But it ignores the question of who decides what is “beneficial,” and it is yet another example of how politics and media are becomingly increasingly performative. Everything is about looking good instead of substance. It is increasingly difficult for businesses and investment funds to perform their proper work under the glare of perpetual debate and periodic condemnation.The notion of extending that same glare to economic investments makes is hardly reassuring. I’ve yet to see a conception of social impact investing that I find convincing.To contact the author of this story: Tyler Cowen at email@example.comTo contact the editor responsible for this story: Michael Newman at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "Big Business: A Love Letter to an American Anti-Hero."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- China is trying to get people back to work, risking a renewed spread of the coronavirus.Central and local governments are loosening the criteria for factories to resume operations as they walk a tightrope between containing a virus that has killed almost 2,600 people and preventing a slump in the world’s second-largest economy.The rush to restart has been propelled by China’s leader Xi Jinping and top leaders, who are urging companies to resume production so the country can continue to meet lofty goals for growth and economic development in 2020. At stake are the fates of millions of Chinese businesses facing collapse because of the shutdowns, and the ability of companies across the globe from Apple Inc. to Nissan Motor Co. to access crucial components.Officials in China’s provinces have taken up Xi’s call, with one region after another relaxing rules that had kept more than half the nation’s industrial base idle following the Lunar New Year holiday. After weeks of empty streets and shuttered shops, signs of life are emerging along the manufacturing belt in the country’s coastal regions.On Monday, at least six provinces lowered their emergency response levels from the highest rating.Conflicting MessagesChinese authorities, however, reiterated that Wuhan -- the epicenter of the outbreak -- will stay locked down, retracting a statement sent earlier in the day that had announced partial easing of travel curbs. The conflicting messages underscore the dilemma China faces on how to spur its ailing economy and curb the deadly virus.About 600 kilometers east of Wuhan, vendors and customers at the Yiwu wholesale market in Zhejiang province are having their body temperatures tested at the entrances after the vast complex that wholesales manufactured goods reopened last Tuesday, three days earlier than expected. Power demand has also started to pick up in China, with six major generators reporting that coal consumption -- while still below pre-holiday levels -- rose 7% on Feb. 20 from the previous day.But labor is still a big issue for many.“Our factory is still missing quite a lot of workers, so we can only resume limited production,“ said Dong Liu, vice president of a textile manufacturer in Fujian, southeastern China, that employs more than 400 workers. Dong said he applied to the government on Feb. 17 to restart and the inspector came the next day and gave permission. “More and more factories are allowed to reopen this week,” he said.The push to get production rolling again risks a renewed spread of the virus, about which much is still not yet known. While more than 79,000 people have been infected worldwide, the vast majority of those cases are in seven Chinese provinces, and mostly in the central province of Hubei, where restrictions on movement were imposed in a number of cities, but not before a lot of people had already left the region for the New Year break.“A peak may come at the end of this month for the whole country but it won’t necessarily indicate a turning point,” Zhong Nanshan, a respiratory disease expert who led research into a treatment for SARS, told reporters in Guangzhou. “The epidemic could have a new peak after people travel back to work.”China’s economy was likely running at about 50% to 60% capacity in the week to Feb. 21, according to a Bloomberg Economics report. Official statistics showed that more than 70% of plants in provinces such as Shandong and Jiangsu have now restarted, with the rate above 90% in Zhejiang, though most are running below capacity with many workers still missing. In Hunan, the province just south of Hubei, the restart rate was only 46% on Feb. 17 with fewer than a third of staff returning.Cities that rely heavily on manufacturing such as Dongguan and Zhongshan are now saying they won’t require workers to be quarantined as long as they are healthy, and factories that meet new safety rules don’t need to wait for government approval to resume.Extremely Important“It is extremely important to get factories back to operate at their normal capacity, otherwise, it will hurt workers’ wages, companies’ cash flows, and therefore external exports,” said Iris Pang, an economist with ING Bank NV in Hong Kong.But it’s a risk.“Imagine if a factory resumes work today but has a worker found to be a confirmed case a week later, then the factory has to close for another two weeks,” she said.That’s making local governments and plant owners wary of how they proceed.In Dongguan, a key manufacturing city in the Pearl River Delta, a government document sighted by Bloomberg requires manufacturers to carry out a checklist to ensure facilities are clean and staff are healthy. Plants can then restart after posting notices of resumption inside and outside the plant. The document warns that the companies are responsible for handling significant risks to controlling the virus and may face punishment if they fail to do so. Healthy workers with a temperature lower than 37.3 Celsius from outside Hubei and other badly affected regions can work immediately after they return to Dongguan.But granting permission to restart is only the first hurdle in getting back to full production. Workers from heavily infected areas are still barred from returning to work in big industrial cities. Manufacturers must also wait for suppliers to begin shipping, villages to dismantle roadblocks and transport companies to restart distribution.“As the requirements to resume production in each region are rather different, even if we restart our factory, we still need to figure out a slew of issues ranging from upstream and downstream materials, to logistics, packaging, and storage,” said Jacky Han, owner of a car parts factory in Qingdao, a city in Shandong province. “Basically, every enterprise is freelancing on their own and using their own resources and networks to solve the puzzle.”Reducing RiskSince the Lunar New Year holiday began in late January, only about 20% as many trips have been taken each day compared to the previous year, meaning millions of people still haven’t traveled back to the cities where they work and live. Long-distance buses were only allowed to operate at 50% of capacity to reduce the risk of viral transmission.China’s central and local governments are taking other steps to try to reduce the economic effects to the outbreak. President Xi told U.K. Prime Minister Boris Johnson in a phone call last week that China is confident in achieving its growth targets set for this year, according to China Central Television.The government is considering direct cash infusions or mergers to help the airline industry, including a proposal for a provincial government to take over indebted conglomerate HNA Group Co.Read more: China Nears Takeover of Troubled HNA as Virus Rocks EconomyAbout 80 million migrant workers have returned to where they work, and 120 million more will return by the end of February, according to a transport ministry official, Liu Xiaoming. Another 100 million will return from March onwards, Liu said.Even if factories can get all their employees back to work, restrictions on work practices may mean that they aren’t able to resume full employment anyway.In Zhenjiang, a city in Jiangsu province, an LED car lighting factory recently resumed production, but only after finally getting enough supplies to fulfill local government requirements to provide five masks per worker, along with disinfectant and protective suits.Spot Checks“Every day several government departments send representatives to spot check our efforts to curb the virus,” said Melissa Shu, the company’s export manager. “They come from the district government, the center for disease control, the city government, at different times of day and check if we disinfect in time, whether we test the temperature of workers, whether workers have masks, whether one person has a separate lunch seat, whether lunch is properly arranged, etc, etc.”Shu said at lunchtime, workers need to sit at least one meter apart (about three feet).“As a result, we can’t ask all the workers to come to work even when they’re in town ready to work,” she said, adding that the plant has about 40-50 staff working in rotation, about half the number employed before the virus.Ironically, some Chinese factories already have plenty of space, thanks to the long-running trade war with the U.S.“Compared with the virus, that was much worse” said Hui Zhuo, founder of a wooden furniture manufacturer in Zhongshan, in the Pearl River Delta. “We’ve cut a lot of workers in the last two years -- so I’m not too worried this time because the space in my factory is big enough to avoid being crowded.”Delegated ShopperLike nearby Dongguan, the government in Zhongshan has relaxed restart rules. Zhuo has been studying the government checklist carefully, preparing sanitizer, masks and thermometers.Factories must disinfect facilities and check workers’ temperatures every day. Each worker dormitory must delegate one person to shop for them every other day, and the others are not allowed to leave the factory. Zhuo’s confident that if he sticks to the rules, he won’t have a problem with the virus.In the longer term, the outbreak is likely to exacerbate the damage wrought on China’s factories by the trade war. For some overseas customers in fast-moving industries like fashion, the factory shutdown amid the virus has been another wake-up call that may spur them to reduce their reliance on Chinese suppliers.“I think for the next season or the next year’s goods, retailers would be looking at sourcing more from other countries,” said AJ Mak, CEO of Chain of Demand, which provides artificial-intelligence systems to retailers in Asia and the U.S. to predict product demand. “I think those conversations which started from the trade war would be definitely accelerated.”Meanwhile China’s push to salvage its growth targets won’t be complete until the virus is fully under control -- something that is impossible to predict.“When can everyone come back to work? No one knows,” said Shu at the Zhenjiang LED factory. “Logistics is still not yet fully resumed, inter-city transportation is still restricted. Only after the epidemic is fully controlled, we can truly return to normal work and life.“(Updates with China continuing Wuhan’s quarantine measures in the sixth paragraph.)\--With assistance from Dong Lyu and Rachel Chang.To contact Bloomberg News staff for this story: Daniela Wei in Hong Kong at email@example.com;Miao Han in Beijing at firstname.lastname@example.org;Jinshan Hong in Hong Kong at email@example.comTo contact the editors responsible for this story: Emma O'Brien at firstname.lastname@example.org, Adam Majendie, Bhuma ShrivastavaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Emerging-market currencies had their worst week since August last week and stocks fell on mounting evidence that the coronavirus outbreak is taking a toll on corporate earnings and the global economy. The dollar surged and most developing-nation currencies weakened, led by Brazil’s real and South Korea’s won. Turkey and Indonesia cut interest rates, while Egypt kept borrowing costs on hold.Following is a roundup of emerging-markets news and highlights for the week ending Feb. 23.Read here our emerging-market weekly preview, and listen here to our weekly podcast.Highlights:Asia’s biggest economies are already feeling the brunt of the coronavirus shock. Key gauges for manufacturing in Australia and Japan fell while early export orders for South Korea showed a slump in Chinese demandSouth Korea’s early trade data suggested the outbreak has started to disrupt the region’s supply chainsIndonesia’s Finance Minister Sri Mulyani Indrawati called for a coordinated global response to the virus outbreak. In an interview with Bloomberg TV, she warned that policy makers may be underestimating its impact on trade and economic growthChina provided medium-term funding to banks and cut the interest rate it charges for the money as officials seek to cushion the economy from the virus spreadChina’s banks lowered the one-year loan prime rate, the benchmark for new corporate and household loans, to 4.05% from 4.15%Country is said to be considering measures such as direct cash infusions and mergers to bail out the airline industryA growing number of China’s private companies have cut wages, delayed paychecks or stopped paying staff completelyHSBC Holdings Plc and Royal Dutch Shell Plc are sending staff home in Hong Kong and Singapore after contact with people infectedChina’s central bank set its daily yuan fixing weaker than 7 per dollar for the first time in almost two months on WednesdayNew coronavirus cases reported by Hubei province dropped sharply after China changed the way it officially reports the numbers for the second time in a monthChina is considering delaying its most high-profile annual political meeting for the first time in decadesThe head of a Wuhan hospital said a turning point has been reached, but the outlook was more cautionary outside of ChinaJapan reported two more fatalities from the virus, who were on the cruise ship off Yokohama, while South Korea recorded its first confirmed death. South Korea said it will raise the infectious disease alert to the highest level “red”NOTE: Everything China Is Doing to Support Its Virus-Hit MarketsREAD: Apple Won’t Meet Quarterly Revenue Target Due to Coronavirus Click here for coronavirus updateChina is said to be considering making some purchases of U.S. agricultural goods by early March as a way to show it’s still committed to its phase-one trade dealPresident Donald Trump has intervened to stop his own administration’s developing plans to block sales of General Electric-made jet engines to China and other proposed restrictions on American exportsGovernments across the world are starting to use more fiscal firepower to boost economies, though the shift may not be happening fast enough to appease central bankers who say they’re sick of carrying the burden of stimulus aloneThe coronavirus outbreak presents another reason for nations with fiscal surpluses to boost their spending and support the global economy, the head of the Organisation for Economic Cooperation and Development saidFinance chiefs and central bankers from the world’s largest economies say they see downside risks to global growth persisting as the coronavirus raises uncertainty and disrupts supply chainsIndonesia’s central bank cut its benchmark interest rate to 4.75% from 5% after a three-month pause as the spread of the coronavirus threatens growth in Southeast Asia’s biggest economyThe monetary authority lowered its 2020 economic growth forecast to 5%-5.4% from 5.1%-5.5% rangeIndia is open to greater market access for American farm and dairy products and lower duties on Harley-Davidson Inc. motorcycles as it seeks to conclude a trade deal with the U.S. in time for Trump’s scheduled visit this month, according to people with knowledge of the matterTurkey’s central bank cut interest rates again, delivering the smallest decrease of its seven-month easing cycle but still risking a backlash as investor tolerance of lower borrowing costs starts to waneLebanon was downgraded by two rating firms, each cutting the country to 10 steps below investment grade and saying a default was almost inevitable; Moody’s cut the grade by two steps to Ca, the second-lowest non-default score, and S&P reduced the rating to CC from CCCLebanon’s $1.2 billion Eurobonds due on March 9 fell to a record low of 54 cents on Wednesday, sending the annualized yield to 1,600%The country is said to be investigating the sale of Eurobonds by local banks to foreign investors including Ashmore Group PlcArgentina’s debt load is “unsustainable” and private creditors would need to make a “meaningful contribution” for the country to regain its footing, the International Monetary Fund saidIMF won’t offer a haircut on its Argentina loan, Managing Director Kristalina Georgieva saidArgentine Economy Minister Martin Guzman and Georgieva had a “fruitful exchange” in Saudi Arabia on Saturday during the G-20 meetings, according to the IMF. Argentina will allow the IMF to conduct an Article IV review, a preliminary step that could eventually allow for a new program with the Washington lenderMalaysian politics is set for another shakeup, but with a familiar script: Prime Minister Mahathir Mohamad refusing to hand power to Anwar IbrahimAsia:Market chatter that China’s central bank is planning to adjust property-loan quotas in its macro prudential assessment is untrue, according to a statement from the People’s Bank of ChinaChina’s economy is likely to pick up quickly after the coronavirus is contained and stage a “V-shaped” recovery, according to a senior official with the nation’s central bankChina plans to take over indebted conglomerate HNA Group Co. and sell off its airline assetsThe country will delay the trial trading of interest-rate options to March 23 due to the coronavirus epidemic, National Interbank Funding Center saidSouth Korea’s Foreign Minister Kang Kyung-wha said Japan should take faster measures to lift export curbs on key semiconductor componentsPresident Moon Jae-in called for “extraordinary” steps to minimize the impact of the coronavirus on South Korea’s economyThe government will provide an emergency loan program for budget airline carriers which have been hit by falling demand following the novel coronavirus outbreak, Yonhap News said, citing Finance Minister Hong Nam-kiIndonesia’s exports decreased in January just as the coronavirus began spreading, with Finance Minister Sri Mulyani Indrawati warning of a hit to global tradePresident Joko Widodo’s approval rating has climbed early in his second term, with the majority of the voters satisfied with the performance of his top ministers, according to a surveyThailand lowered its growth outlook for this year as its tourism-reliant economy takes a knock from the spread of the coronavirus. Growth is seen in a range of 1.5%-2.5%, down from a previous projection of 2.7%-3.7%The Bank of Thailand next month will review its 2020 economic growth forecast, currently estimated at 2.8%, as the coronavirus outbreak hurts tourism and may affect supply chains, Governor Veerathai Santiprabhob said. Separately, Veerathai declined to comment on whether a rate cut in February was enoughMinutes from the latest Bank of Thailand meeting show that it’s mulling more steps to spur outflows. The monetary policy committee remained “concerned that the baht might not be consistent with economic fundamentals,” according to the minutesInvestment of 400 billion baht ($13 billion) is expected to be injected into the economy once the fiscal year 2020 budget bill comes into effect, the Budget Bureau’s Director-General Dechapiwat Na Songkhla saidIndia is considering closer scrutiny of foreign direct investment in sectors crucial to national security, a top government official saidThe Reserve Bank of India on Feb. 17 got bids worth 1.9 trillion rupees ($27 billion), eight times more than the 250 billion rupees it offered banks in three-year money. The second issuance on offer for a similar amount on Feb. 24 will have a one-year tenorFilipinos overseas sent home $30.1 billion in 2019, up 4.1% from a year ago the central bank said in a statementThe Philippines will allow citizens employed in Hong Kong and Macau to return to their jobs, partially lifting a ban imposed earlier this month to prevent the spread of the novel coronavirusThe nation posted a balance of payments deficit of $1.36 billion in January, reversal from $1.57 billion surplus in DecemberTaiwan said the outbreak of coronavirus to reduce export orders by $3 billion-$3.5 billion in February as data showed orders fell 12.8% on year in January, more than median estimate of 6.7% declineCurrent-account surplus widened to $17 billion in the fourth quarter from revised $13 billion in third quarterEMEA:Dubai will take its port operator private after a dozen years to alleviate its debt burden and avoid a repeat of the economic crisis that forced a bailout in 2009Nasdaq Dubai is about to lose its most valuable stock after DP World Ltd. announced plans to go privateSouth Africa’s rising country risk is putting upward pressure on interest rates, even as inflation expectations decline, with credit-rating companies contributing to the negative sentiment, according to the central bankMoody’s Investors Service could cut its rating for South Africa if the nation can’t rein in spending, boost growth and improve tax compliance to stabilize its debt ratios, said Lucie Villa, the firm’s lead sovereign analyst for South AfricaThe nation’s inflation rate rose to a seven-month high in January driven by higher fuel prices; consumer-price growth quickened to 4.5% from 4% in DecemberThe chief restructuring officer of South Africa’s power utility Eskom Holdings has “virtually” completed his report on options for its finances, and it should be released by the end of the month, Chief Executive Officer Andre de Ruyter saidZambia was downgraded one level to CCC by S&P Global RatingsThe Bank of Zambia held its key rate at 11.5%, even as inflation accelerated for a 10th straight month, to allow a November increase to filter through to the economyPlunging oil prices led the International Monetary Fund to cut its estimate for Nigerian economic growth, highlighting the difficulties Africa’s top crude producer faces in reviving and diversifying its economyInflation quickened to a 21-month high in January as food shortages caused by border closures continued to drive up the price of staples. Consumer prices rose 12.1% from a year earlier, compared with 12% in DecemberZimbabwe’s central bank maintained its key rate at 35% and said it sees annual inflation dropping to 50% by the end of the year from around 500%; its currency is plunging on the black market, causing chaos in the equity marketEgypt held its base rate at 12.25% on Thursday, in line with what most economists expectedThe government chose Deutsche Bank, Citigroup, HSBC and Credit Agricole to arrange its first international sale of green bonds; the issuance is expected to happen by the end of JuneTurkey issued its harshest warning yet to Russia in the standoff over Syria’s last rebel stronghold, where their battle for control threatens to destroy a fragile understanding that’s kept a refugee crisis from exploding at full forceTurkey has asked the U.S. to deploy two Patriot missile-defense batteries on its southern border to free it to punish any future attacks by Russian-backed Syrian troops, according to a senior Turkish official in AnkaraThe Turkish side has suffered several casualties in Libya, President Recep Tayyip Erdogan said, in what could be Turkey’s first direct losses since intervening in the war on behalf of the internationally recognized Libyan governmentA state-owned development bank in Belarus is planning a return to international debt markets in a test of investor appetite toward exotic securitiesDemand for Serbian dinar bonds reached a record as the government extended maturity on its borrowing ahead of the expected inclusion of some of its notes in a key bond indexThe U.S. sanctioned a unit of Russia’s largest oil producer, Rosneft PJSC, for maintaining ties with Venezuela’s Nicolas Maduro and state-run oil company PDVSAHungary’s interbank rates climbed further and the central bank continued to cut liquidity injected into the economy on Feb. 17, after a top policy maker signaled efforts to rein in accelerating inflationLatin America:Brazil’s central bank cut reserve requirements on time deposits to 25% from 31%, freeing up some 49 billion reais ($11 billion) into the financial systemInflation eased slightly more than expected in mid-February on the back of a drop in food and beverage costsREAD: Brazil Government Resists Bid to Make Central Bank Target GrowthCurrent account deficit widened to $11.9 billion in January versus $5.7 billion gap previouslyArgentina is loosening its grip on the peso, as the currency weakened against the dollar in the first half of February -- more than any full month since the controls were further tightenedCentral bank cut the key rate floor -- the minimum level that rates are allowed to fall -- to 40% from 44%Argentina sold 3.6 billion pesos ($58 million) in local currency-denominated notes, known as Lebads, and 9 billion pesos in floating-rate Badlar bonds, according to a statement from the Economy MinistryEconomic activity dropped 0.3% y/y in DecemberMexico will hold investor meetings to debut its SDG Sovereign Bond Framework, which would be used to issue green euro-denominated debtThe murder rate fell in the first month of the year as President Andres Manuel Lopez Obrador pledges to improve security amid protests over recent brutal killings of womenPeru’s economic expansion lost steam in the fourth quarter as infrastructure delays hit the construction industry\--With assistance from Colleen Goko, Selcuk Gokoluk, Carolina Wilson and Paul Wallace.To contact Bloomberg News staff for this story: Yumi Teso in Bangkok at email@example.com;Netty Ismail in Dubai at firstname.lastname@example.org;Aline Oyamada in Sao Paulo at email@example.comTo contact the editors responsible for this story: Tomoko Yamazaki at firstname.lastname@example.org, ;Carolina Wilson at email@example.com, Karl Lester M. YapFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Good morning. Stocks are tumbling on the latest virus updates, Warren Buffett released his annual letter to shareholders and hard-liners are celebrating in Iran. Here’s what’s moving markets.Shares TumbleStocks are starting the week with a drop. European and U.S. equity futures sank alongside Asian shares as China announced it would ease some restrictions in Wuhan, even as the deadly novel coronavirus spreads further in Asia and parts of Europe. Non-local residents will be allowed to leave the city at the center of the outbreak, Beijing says. Closer to home, the Venice Carnival will end early and Milan’s Fashion Week have limited access after authorities canceled all public events in both cities in a bid to contain a surge in cases of the illness in northern Italy.Buffett’s LetterFamed investor Warren Buffett used his annual letter to shareholders of Berkshire Hathaway Inc. to attempt to justify his $248 billion stock portfolio, arguing that earnings retained by investees are still adding value. While rallies in shares like Apple Inc. and Coca-Cola Co. have helped returns, the 89-year-old has been hunting for ways to deploy a $128 billion cash pile, but struggled to find a massive deal amid “sky-high” prices. Buffett stayed quiet on politics in the letter, not mentioning the words “election,” “Trump,” or any Democrat running for president. Iran, Germany ElectionsIranian hard-liners are celebrating as they head for victory in parliamentary elections, sweeping Tehran and other cities in a repudiation of President Hassan Rouhani’s engagement with outside powers. The widely predicted outcome is set to hand control of the legislature to conservatives empowered by the country’s revived standoff with the U.S. Back in Europe, German Chancellor Angela Merkel’s Christian Democratic Union party is trying to pick up the pieces after a state election defeat in Hamburg drove home public alarm over divisions in the country’s leading party.Bank LeadersThere’s yet more news on leadership at top European banks. Jean-Pierre Mustier, the chief executive officer of UniCredit SpA, pulled out of the running to take the helm at HSBC Holdings Plc, just days after he was speculated as a potential rival to interim boss Noel Quinn to run the bank that announced a major restructuring last week. Meanwhile, Barclays Plc Chief Executive Jes Staley has told colleagues he expects to leave the group by the end of next year, the Financial Times reports. This month alone, three of the continent’s largest lenders have announced their bosses are leaving. Here’s a breakdown of the movements so far. Coming Up…British politicians are back in Parliament following a short recess, with Prime Minister Boris Johnson’s plan for a points-based immigration system high on the agenda ahead of formal negotiations with the European Union on a trade deal starting in a week’s time. The European earnings slate is light today, but fear not: big names like Stella Artois brewer Anheuser-Busch InBev NV and ailing luxury-car maker Aston Martin will be keeping us busy later in the week.What We’ve Been ReadingThis is what’s caught our eye over the weekend. There’s a new Cold War feel to Bulgaria. Prada brings in star designer. Pistachio war heats up. Pessimism at the G20 meeting in Riyadh. Super-size solar fans take over the world. Gold surge gives mining firms a dilemma. Pricey beef lasagne among Brexit red tape risks.To contact the author of this story: Joe Easton in London at firstname.lastname@example.orgTo contact the editor responsible for this story: Phil Serafino at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Warren Buffett sought to justify the importance of his $248 billion stock portfolio, saying the investments are more than just “dalliances” with the companies he takes stakes in.The billionaire investor spent a portion of his annual shareholder letter, released Saturday, detailing how an accounting difference between his stock picks and his outright business takeovers creates a “standout omission” in Berkshire Hathaway Inc.’s financial results. The conglomerate’s equity investments will produce capital gains that are at least equal to Berkshire’s share of the individual companies’ retained earnings, Buffett argued.“Overall, the retained earnings of our investees are certain to be of major importance in the growth of Berkshire’s value,” Buffett said in the letter. For its equity investments, “only the dividends that Berkshire receives are recorded in the operating earnings we report. The retained earnings? They’re working hard and creating much added value, but not in a way that deposits those gains directly into Berkshire’s reported earnings.”The value of Buffett’s equity portfolio last year increased about 44%, helped by the best year for Apple Inc. stock since 2009 and gains on holdings such as Bank of America Corp. and Coca-Cola Co. His own Berkshire shares didn’t fare quite as well, posting their worst annual underperformance relative to the S&P 500 Index in a decade.Buffett has been hunting for ways to deploy his $128 billion cash pile to generate higher returns, but has struggled to find a massive deal amid “sky-high” prices. He ended up taking another path in 2019, spending a total of $5 billion on repurchases and being an overall net buyer of the stocks of other companies.Berkshires stock investments shouldn’t be seen as “dalliances to be terminated because of downgrades by ‘the Street,’ an earnings ‘miss,’ expected Federal Reserve actions, possible political developments, forecasts by economists or whatever else might be the subject du jour,” Buffett said in the letter. The equity stakes represent “an assembly of companies that we partly own and that, on a weighted basis, are earning more than 20% on the net tangible equity capital required to run their businesses.”Click here for live commentary and analysis of Buffett’s television interview with CNBC, starting Monday at 6 a.m. ETHere are five other takeaways from Buffett’s annual letter and Berkshire’s fourth-quarter earnings report:1\. Berkshire Gives Preview of Life After BuffettBuffett waited until the very last page of his annual letter to reveal a big change: Investors will be hearing more from top lieutenants Ajit Jain and Greg Abel. The pair, seen as the top contenders to eventually replace Berkshire’s 89-year-old CEO, have often remained behind the scenes, tending to Buffett’s vast collection of businesses. But a quirk of last year’s annual Berkshire meeting, during which Jain and Abel both answered some shareholder questions, will become more formalized at the 2020 event.Buffett said in the letter that he had received suggestions that Jain and Abel “be given more exposure at the meeting. That change makes great sense.” He gave no further clues about his eventual replacement, and no indication that he or Charlie Munger, his 96-year-old business partner, would step away any time soon.Jain and Abel are “the clear-cut front-runners,” said Matthew Palazola, an analyst at Bloomberg Intelligence.2\. Buffett Spends Record $2.2 Billion on BuybacksThe Oracle of Omaha kicked his stock-buyback program into high gear, spending $2.2 billion on repurchases in the last three months of 2019, the most ever in a single quarter -- and said he’s looking to buy even more.Berkshire, which loosened its repurchase policy almost two years ago after being stymied on the dealmaking front, has since taken a cautious approach to buybacks, acquiring only $6.3 billion of stock. Even with the increase in repurchases, Berkshire’s pile of cash hovered close to a record.The repurchases should make it easier for Buffett’s eventual successor to make additional buybacks, according to Tom Russo, who oversees more than $10 billion, including Berkshire shares, at Gardner Russo & Gardner LLC. “I wanted them to have no uncertainty, for whoever succeeds both Charlie and Warren, that the share buyback is a perfectly legitimate and highly valued tool to deliver growth in intrinsic value on a per-share basis,” Russo said.3\. Berkshire’s Earnings Hurt by Insurance LossesBerkshire’s operating earnings fell to $4.42 billion in the fourth quarter, down 23% from a year earlier, driven by underwriting losses at its namesake reinsurance group, which was hurt by typhoons in Japan, wildfires in California and Australia, and widening losses at its business writing retroactive reinsurance contracts.Buffett’s company did better with its BNSF railroad, which posted a 3.8% gain in profit, just shy of record earnings in the previous three months, as a decline in expenses helped counter falling revenue across shipments of products such as coal, consumer items and agricultural goods.A bigger problem for the conglomerate is Kraft Heinz Co., which counts Berkshire as its largest shareholder and had a tumultuous 2019, with writedowns, management shakeups and downgrades to junk. Berkshire carries its Kraft Heinz investment on its balance sheet at $13.8 billion, a figure unchanged since 2018’s fourth quarter, even as the market price of the stake dropped to $10.5 billion at the end of last year.4\. Buffett Chides CEOs for Wanting Cocker SpanielsBuffett often uses his annual letter to talk not just about Berkshire, but also the wider corporate environment. This year, Buffett, who’s served as a director at 21 publicly traded firms over the years, used a portion of his missive to complain that too many companies seek board members who won’t challenge a CEO’s decisions.“When seeking directors, CEOs don’t look for pit bulls,” Buffett said in Saturday’s letter. “It’s the cocker spaniel that gets taken home.”Buffett’s discussion of corporate-governance issues also touched on board diversity. Goldman Sachs Group Inc., which counts Berkshire as an investor, said last month that it won’t take a company public unless there’s at least one board member who’s not a white male. Adding female directors “remains a work in progress,” Buffett said in this year’s letter. At his company, three of the board’s 16 members are women.5\. Buffett Avoids U.S. Politics in Letter to InvestorsBuffett stayed out of the political fray in this year’s letter. He didn’t mention the words “election,” “Trump,” or any Democrat running for president.The billionaire has trod carefully over the years as the U.S. has become more politically polarized. His 2019 letter focused on overall prosperity in the U.S., saying that America’s success over the decades has been achieved in a bipartisan manner.Buffett has been known to campaign for candidates, including Democrat Hillary Clinton in the 2016 presidential election. He’s said more recently, though, that he prefers not to use his position at Berkshire to promote his political views -- or to impose his political opinions on Berkshire’s business activities.To contact the reporter on this story: Katherine Chiglinsky in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Michael J. Moore at email@example.com, Daniel Taub, James LuddenFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.