• Zuckerberg Hearing May Be the Start of Next Phase of Tech Battle

    Zuckerberg Hearing May Be the Start of Next Phase of Tech Battle

    (Bloomberg) -- A House hearing scheduled for Wednesday with Mark Zuckerberg as the sole witness will kick off the “next phase” in the battle between big tech companies and the U.S. government, according to Wedbush.“The drum-roll has started” for the Financial Services committee hearing, with Zuckerberg set to defend the Libra cryptocurrency effort, which still faces a “massive regulatory spotlight,” analyst Daniel Ives wrote in a note. The hearing is titled “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors.”“We fully expect politicians to use this forum as another major shot across the bow on broader antitrust concerns for FAANG names,” Ives said. He sees a regulatory and legal focus on Facebook’s WhatsApp and Instagram acquisitions, with “the convergence of Facebook’s messaging platforms likely a hot button issue.”Ives described Facebook’s Libra as a bid to “further penetrate its customer base with a financial currency that enables the company to become more entrenched in the purchasing cycle of its 2 billion-plus users.”Other tech companies are making similar efforts, he said, flagging Apple Inc.’s Apple Card with Goldman Sachs Group Inc. and an “enhanced” Apple Pay tool. On Tuesday, Goldman CEO David Solomon said the Apple credit card was the most successful card launch ever.Several payments companies left Facebook’s cryptocurrency project earlier this month. Analysts said the departures would likely delay the coin’s launch and shift Congress’s attention to other matters. That might give Zuckerberg some breathing room, they said.On Thursday, David Marcus, the Facebook executive leading Libra, said China’s progress toward a digital payments system with global reach could pose a threat to U.S. influence. Marcus had earlier this month said that payments companies exiting Libra was in a way “liberating.”Facebook’s shares declined as much as 1.4% on Friday.To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Debarati RoyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • IHG, SmileDirectClub, Wells Fargo, AT&T and AB InBev: Stocks to Watch
    Yahoo Finance

    IHG, SmileDirectClub, Wells Fargo, AT&T and AB InBev: Stocks to Watch

    IHG, SmileDirectClub, Wells Fargo, AT&T and AB InBev are the stocks to watch

  • Bloomberg

    Walmart Will Take $2.2 Billion Charge for Asda Pension Shift

    (Bloomberg) -- Walmart Inc. plans to offload the cost of a retirement plan for employees of its British subsidiary Asda, incurring a pretax charge to earnings of about $2.2 billion.Under terms of the deal, Rothesay Life Plc will take over managing pension liabilities for about 12,000 members going forward. The transaction will simplify “the business at a cost which is significantly below the expected future cost of funding internally,” the companies said in a statement.Offloading the pension costs at Asda could be a step in preparation for a sale or an initial public offering. The charge will be incurred at the completion of the buyout in late 2020 or early 2021.For Walmart, having a large employee retirement plan sitting on its balance sheet is a problem if it plans to divest the unit, according to James Biggs, a partner at Employee Benefits Collective LLP, a U.K. pension consulting firm.“Rothesay takes responsibility for paying benefits to employees. In essence, it shifts the liability,” Biggs said. “Letting these liabilities rumble on into the future brings risk and potential cost creep, and can be a millstone around the neck of an employer.”Buyer CertaintyAntony Barker, a managing director at the Pension Superfund, a consolidator of British pension plans, said that transferring the pensions will tidy up the company’s balance sheet and give any buyer certainty.“Anyone looking to acquire them knows they are not buying a black hole,” Barker said.Large pension liabilities have weighed on other British retailers, most notably department-store chain BHS. In 2017, retail magnate Philip Green agreed to pay as much as $450 million to compensate 19,000 former BHS workers after months of haggling with the country’s Pensions Regulator. BHS had a massive pension deficit when it failed in 2016, a year after Green sold the chain for a pound to a former race-car driver with no retail experience.Judith McKenna, Walmart’s international CEO and a former Asda executive, said in May that Walmart is “seriously considering” an eventual IPO for Asda. A month earlier, U.K. antitrust regulators blocked J Sainsbury Plc’s bid to buy Asda, saying it would bring higher prices and less choice to shoppers. British supermarket chains have been whipsawed by economic concerns related to Brexit and pressure from German discounters Aldi and Lidl, which continue to grab market share.Walmart shares were little changed, up 0.3% to $120.17 at 10:14 a.m. in New York on Friday. The stock had gained 29% this year through Thursday’s close, outpacing the S&P 500 Index.(Adds context and comment from pension consultants beginning in fourth paragraph)\--With assistance from Benjamin Robertson.To contact the reporters on this story: Matthew Boyle in New York at mboyle20@bloomberg.net;Anne Riley Moffat in New York at ariley17@bloomberg.netTo contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Jonathan Roeder, Lisa WolfsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bank Stock Roundup: Q3 Earnings Season Unfolds, JPMorgan, BofA & Citi Top Estimates

    Bank Stock Roundup: Q3 Earnings Season Unfolds, JPMorgan, BofA & Citi Top Estimates

    Investor sentiment upbeat on banks' Q3 earnings, with the major players displaying top-line strength on the back of higher fee income and loan growth.

  • Is Walmart (WMT) Stock Outpacing Its Retail-Wholesale Peers This Year?

    Is Walmart (WMT) Stock Outpacing Its Retail-Wholesale Peers This Year?

    Is (WMT) Outperforming Other Retail-Wholesale Stocks This Year?

  • Is the Retail Picture Truly Gloomy? ETFs in Focus

    Is the Retail Picture Truly Gloomy? ETFs in Focus

    We need to see some more months of data before being sure about a retail slowdown.

  • The Minority Rule: A Trader’s Guide to Canada’s Tight Election

    The Minority Rule: A Trader’s Guide to Canada’s Tight Election

    (Bloomberg) -- Canada’s dollar is the best-performing major currency this year and the nation’s stocks are going strong. But now isn’t the time for investors to rest on their laurels. The upcoming federal election is the next big event to test the market’s resilience.With less than a week left to the Oct. 21 vote, Liberal Party Prime Minister Justin Trudeau is in a neck-and-neck race with Conservatives leader Andrew Scheer. While the most likely scenario is a government that doesn’t command an absolute majority in its own right, some strategists say that a minority administration led by Scheer could be better for the loonie in the near term than one under Trudeau.“Between a Liberal-led minority and a Conservative-led minority, we expect the first one to be more CAD-negative,” Francesco Pesole, a foreign-exchange strategist at ING Bank, said in an Oct. 17 report. “The balance of risks for the loonie appears tilted to the downside.”The loonie has been in the No. 1 spot among Group-of-10 currencies this year, rising almost 4% against the U.S. dollar amid a sound economy and a low unemployment rate. Canada’s benchmark equity index has rallied 15% in 2019, making it one of the top gainers among developed markets.A Conservative minority government would be better for market sentiment than a Liberal minority administration, according to Pesole. He said this is in part because it would likely exclude smaller parties that oppose more oil pipelines, a subject that has been a focus of political debate.A rebound in housing, solid economic growth and one of the strongest job markets in recent times has helped give Trudeau something positive to talk about during his campaign. While major central banks in other parts of the world have been cutting interest rates, the Bank of Canada has been reluctant to do so thus far -- strengthening the Canadian dollar’s position as one of the highest yielders among G-10 currencies.Michael Hsueh, a currency strategist at Deutsche Bank AG, says a Trudeau-led minority government could be negative for the Canadian dollar given the reduced capacity to pass legislation. It could also potentially hinder growth in oil, a key industry for Canada, one of the world’s largest energy exporters.The Oil FactorStewardship of the energy industry has become a central issue of the elections. The Conservative Party has portrayed itself as a champion of the sector and has promised to remove regulations Trudeau implemented. The Liberals, meanwhile, are trying to strike a balance between developing Alberta’s energy resources and making Canada a leader in combating climate change.From Binge to Bust: Canadian Oil Town Lines Up at the Food BankThe loonie, often seen as a petrocurrency, has benefited from the nation’s massive oil exports. Still, bringing more oil reserves to market has divided Canadians -- with two pipelines being scrapped on Trudeau’s watch.Foreign-exchange strategists are concerned that a Trudeau-led government, propped up by other left-leaning parties, could be an obstacle in passing legislation favorable to business leaders and the country’s energy sector.A Liberal minority government is “likely to push for more regulation and rules on capital inflows into Canada,” which could be negative for the Canadian dollar, Mark McCormick, global head of currency strategy at Toronto-based TD Securities, said in an email.Stock MarketWhile Canadian politics rarely play a significant role in the nation’s equity market, a minority government could be positive for stocks, according to Brian Belski, chief investment strategist at BMO Capital Markets.“Although on average the market has posted relatively strong performance post federal elections, there appears to be little to no performance preference around the outcome,” he said in a September report. “The only potentially meaningful outcome appears to be a minority government versus a majority government.”Since 1935, Canadian stocks have returned on average 12% in the 12 months after the election of a minority government, compared with 8% in the year following a majority victory, according to Belski’s research.For others, volatility is the name of the game. Stripping out the global rout in 2008, National Bank Financial’s Warren Lovely said that Canadian stocks had a “mixed/choppy” performance after a minority government was formed from 2004 to 2011.“In terms of capital markets, the formation of a minority government creates greater potential uncertainty – especially if a coalition government is the end result,” Credit Suisse’s equity analyst Andrew Kuske said in an Oct. 8 report.Still, election-related market moves might be short-lived this month with both the Bank of Canada and the Federal Reserve reporting their monetary policy decisions on Oct. 30. Futures traders are pricing in almost no probability of a rate cut at the BOC meeting, while a quarter point reduction from the Fed is seen as likely by the market. Canadian two-year yields on Wednesday climbed above their U.S. equivalents by the most since 2017 -- a good sign for loonie bulls.Trade deals will also have an impact on the Canadian dollar. The U.S. and China are still working to finalize their trade deal, which is likely to boost investors’ appetite for risk, a positive for the currency. And on Thursday, U.S. President Donald Trump’s economic adviser Larry Kudlow said on CNBC that he expects the U.S.-Mexico-Canada trade agreement to be approved in Congress before the American Thanksgiving holiday.\--With assistance from Divya Balji and Kristine Owram.To contact the reporter on this story: Susanne Barton in New York at swalker33@bloomberg.netTo contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Divya Balji, Rita NazarethFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    South Africans Aren’t Only Ones in Dark as Eskom Rescue Awaited

    (Bloomberg) -- As South Africa enters its third day of blackouts, investors are still awaiting word from President Cyril Ramaphosa’s administration on how it’s going to fix the ailing state power company.The outages are being imposed by Eskom Holdings SOC Ltd., the behemoth utility that’s been without a permanent chief executive officer since August and is so cash-strapped it can’t service its debt and properly maintain aging plants. While the government has said plans to split Eskom into three operating units and reorganize its debt will be announced by the end of October, as will a new CEO, the cabinet didn’t mention the issues in a statement issued Thursday.The cabinet is due to meet again on Oct. 31, two days after Finance Minister Tito Mboweni is scheduled to release his mid-term budget that should spell out how he’ll fund a three-year, 128 billion-rand ($8.6 billion) bailout for Eskom. Investors are looking for greater urgency to be shown in getting the company, considered the biggest threat to Africa’s most industrialized economy, back on track.“The main concern of all foreign investors is to fix Eskom,” said Colin Coleman, CEO of sub-Saharan Africa at Goldman Sachs Group Inc. “We expect a phase of stabilization of Eskom in terms of governance, operations and finances to come in by the end of the year, following which a corporate restructure will start.”Eskom has shed 2,000 megawatts of power from the grid since Wednesday. No more power cuts are expected after Friday, Chairman Jabu Mabuza told reporters late Thursday in Johannesburg.Power shortages in the first quarter contributed to South Africa’s biggest economic contraction in a decade and the central bank expects the growth rate to reach just 0.6% this year -- a forecast that may prove optimistic given the resumption of outages. The cuts could cost South Africa its last investment-grade credit rating from Moody’s Investors Service, which is due to deliver its next assessment on Nov. 1.Eskom has amassed 450 billion rand of debt, and the government needs to work out a mechanism to take as much as 250 billion rand of that off the utility’s balance sheet, according to Coleman. Eskom’s management said in a presentation in August that one option was to move most of the debt onto the government’s balance sheet.The bailouts allocated to Eskom will be sufficient to keep it afloat until the end of next year as work continues on its restructuring, Deputy President David Mabuza told lawmakers in Cape Town on Thursday. Measures to fund the aid include reprioritizing and curbing expenditure, including reducing the state wage bill, he said.Mineral Resources and Energy Minister Gwede Mantashe will on Friday unveil the Integrated Resource Plan, a blueprint that will set out the country’s planned energy mix for the next decade, but won’t address Eskom’s current woes.“The power sector is very big, very complex, and the technology is changing quickly,” said Andrew Canter, chief investment officer at Cape Town-based Futuregrowth Asset Management, South Africa’s biggest specialist fixed-income money managers. “The fact that choices affect jobs and some industries, and that we start with a 450 billion-rand debt hole at Eskom, makes restructuring a challenge. I’d rather the government takes their time to gather research, get a vision and make an executable plan, rather than rush to half-answers.”Even if agreement can be reached on how to stabilize Eskom’s finances and overhaul its organizational structure, a quick fix to the nation’s immediate electricity crisis, which has brought businesses to a standstill and caused traffic snarl-ups, may remain elusive.The company lost more than a quarter of its 47,000-megawatt generating capacity last weekend due to unplanned breakages, including boiler leaks and mechanical problems with a conveyor belt at its new Medupi coal-fired plant. Some of the leaks have already been fixed, while the conveyor belt should be repaired by the end of the month, according to Jan Oberholzer, Eskom’s chief operating officer.“We have a maintenance plan that we are following, and we are actually ahead in terms of our planned maintenance targets,” he said by phone. “It will take 18 to 24 months to fix the system entirely.”Mabuza, the Eskom chairman, said the utility had begun rebuilding emergency diesel and water supplies, which should ease constraints, but not resolve them.The power cuts were needed “to balance supply and demand and protect the system from total collapse,” he said. “The system remains constrained and vulnerable.”(Updates extent of power cuts in fifth paragraph.)\--With assistance from Paul Vecchiatto and Amogelang Mbatha.To contact the reporters on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net;Mike Cohen in Cape Town at mcohen21@bloomberg.netTo contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net, Liezel HillFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • TSMC’s $15 Billion Splurge Galvanizes Hope of 5G-Led Rebound

    TSMC’s $15 Billion Splurge Galvanizes Hope of 5G-Led Rebound

    (Bloomberg) -- Taiwan Semiconductor Manufacturing Co.’s plan to spend as much as $15 billion on technology and capacity in 2019 -- roughly 50% higher than originally envisioned -- is spurring hopes that the dawn of fifth-generation networks will rev up global chip and smartphone demand.The primary chip supplier to Apple Inc. told investors it’s sharply increasing its estimate for 2019 capital expenditure to between $14 billion to $15 billion from as much as $11 billion previously, and Chief Financial Officer Wendell Huang said 2020 spending will be similar. The Taiwanese company also projected current-quarter revenue ahead of estimates, an affirmation that the latest iPhones have proven a hit with consumers.Chief Executive Officer C. C. Wei sketched out hopes that the emergence of 5G, the foundation of future technologies from automated factories and smart homes to blazing-fast consumer electronics, will help underpin its business in coming years. TSMC, which is the world’s largest contract chipmaker, and is seen as a barometer for the tech industry thanks to its heft and place in the supply chain, said the advent of 5G-enabled smartphones will result in more chips in devices than before.“We are much more optimistic than six months ago,” Wei said, adding that the 5G momentum was larger than the company expected. TSMC has increased its forecast of the 5G smartphone penetration rate in 2020 to a percentage in the mid-teens from its previous single-digit estimate. Many countries, especially larger ones, were rapidly pushing ahead with 5G rollout plans, Wei added.TSMC Puts All Its Chips on Capex. That’s a Smart Bet: Tim CulpanTSMC’s capital spending plan and outlook prompted price-target hikes from several analysts including at Goldman Sachs and Morgan Stanley. Its shares, which notched a lifetime high just this month, stood largely unchanged Friday in Taipei. More broadly, suppliers including ASML Holding NV, Applied Materials Inc. and Tokyo Electron Ltd. could stand to benefit from TSMC’s capex increase.In addition to 5G, TSMC’s push is driven by growing demand from tech giants such as Apple and Huawei Technologies Co., said Roger Sheng, a semiconductor analyst with Gartner. Although the outlook remains uncertain for 2020, the global semiconductor market is set to make a gradual recovery on the back of the demand related to 5G, AI and automotive applications, according to a note from TrendForce on Oct. 2.“Everyone is waiting to see a bounce back of global smartphone market next year after Apple adopts 5G. The self-designed Huawei chipsets will also push demand, as will Qualcomm’s 5nm chips for next year and AMD’s server chip demand,” Sheng said.On Thursday, TSMC also underlined expectations that Apple, its largest customer, is riding a bounce-back in demand for the iPhones after a lukewarm 2018 iteration. Lower prices and aging handsets are helping drive demand for the iPhone 11 range, and Apple is said to be asking its assemblers to target the high end of an original forecast for 70 million to 75 million unit shipments in 2019.Read more: Apple’s Lower Prices, Users’ Aging Handsets Drive IPhone DemandThe Taiwanese company foresees revenue of $10.2 billion to $10.3 billion in the pivotal December holiday quarter, surpassing an average projection for about $9.9 billion. TSMC gave that sales outlook after reporting net income of NT$101.1 billion ($3.3 billion) for the September quarter, handily beating estimates as the global chip market recovers.Still, fallout from ongoing trade conflicts could crimp an industry revival. While TSMC doesn’t factor trade conflicts into its capex plans, any international trade war will have a negative effect on the semiconductor sector, Wei said. China is an especially important market for TSMC and the semiconductor industry, he added.TSMC and its industry peers had grappled with a plateauing smartphone market, efforts by Apple to move beyond hardware, and U.S. tech-export curbs on No. 2 customer Huawei. But investors are growing more confident that the emergence of 5G will prop up chip prices and demand, while the latest iPhones are firing up consumers. TSMC is in fact straining against capacity constraints in the current quarter, Sanford C. Bernstein analyst Mark Li said.The “iPhone is driving stronger near-term demand. We believe the competitive pricing of iPhone 11 is garnering good traction and has prompted Apple to place more orders at the supply chain,” Li said in an Oct. 10 note.Read more: Taiwan’s Market Fortunes Are Tied to TSMC Like Never Before(Updates with analysts’ hikes and shares from the fifth paragraph)To contact the reporters on this story: Debby Wu in Taipei at dwu278@bloomberg.net;Gao Yuan in Beijing at ygao199@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    Goldman Explores Sale of Puerto Rico Toll Roads Stake

    (Bloomberg) -- Goldman Sachs Group Inc. is seeking buyers for its 49% stake in a Puerto Rico toll road concession that could value the asset at more than $2 billion, according to people familiar with the matter.Goldman is working with advisers to solicit interest from potential suitors for Autopistas Metropolitanas de Puerto Rico LLC -- known as Metropistas, said the people, who asked not to be identified because the talks are private. A representative for Goldman declined to comment.The infrastructure-investment arm of the New York firm acquired 55% of Metropistas in 2011, alongside Spain’s Abertis Infraestructuras SA. It sold 6% to Abertis in 2014.Toll roads have been an asset favored by infrastructure investors across the globe, in part due to the perceived stability of revenues from drivers dependent on a route.Abertis and Goldman have the right to operate two toll roads until 2061: the 83-kilometer PR-22, which connects San Juan with Arecibo; and the 4-kilometer PR-5, which runs through San Juan. The combined annual earnings of the roads is more than $100 million before interest, taxes, depreciation and amortization, one of the people said. Traffic and revenues have continued to grow despite a challenging economic environment, the person said.In late 2017, Abertis and Goldman donated $1 million toward relief efforts after Hurricane Maria put the toll roads out of operation briefly that September.Last week, Goldman’s infrastructure arm announced the sale of a majority stake in Red de Carreteras de Occidente, one of Mexico’s largest private toll road operators, to Abertis and GIC Pte Ltd.To contact the reporter on this story: Gillian Tan in New York at gtan129@bloomberg.netTo contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, Steve DicksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Hot Online Bank Startup Leaves Customers Without Access to Their Cash

    Hot Online Bank Startup Leaves Customers Without Access to Their Cash

    (Bloomberg) -- Chime, an online banking startup with more than 5 million customers, has been suffering an outage for much of past 24 hours that has left customers without access to their money. The startup blamed the disruption on an unspecified issue with a payments processor and said data was not at risk. The outage took down not only the company’s website and apps, but also temporarily shut off customers’ debit cards, prompting an outpouring of complaints on Twitter. The card services have since been restored.The downtime comes as the digital bank has been growing quickly—the number of customers has almost doubled since March, to about 5 million. Chime is also in the process of raising a new funding round that could value it at more than $5 billion. A person familiar with the matter who asked not to be identified discussing private details said that the outage does not appear to have had an impact on the fundraising talks.“We know our members trust us with their banking needs and our teams are working diligently to fully restore the mobile app,’’ Chime Chief Executive Officer Chris Britt told Bloomberg. “In the interim, we’ve been proactively communicating real-time updates with our members.”San Francisco-based Chime is part of a growing digital banking sector that has seen rising interest from customers and global investors in recent years. Chime’s target market, according to the company, is a younger demographic whose income ranges from $35,000 to $70,000 a year and who are frustrated by the fees charged by larger brick and mortar banks. It’s a group that may be more likely to trust a startup with their money.The downtime this week is not the only problem customers have encountered as banking moves increasingly online. Wells Fargo & Co. experienced a major systems outage in February that prevented many customers from accessing their accounts. “Our payment processor has been experiencing issues today, resulting in our app + website being down,” Chime said in a tweet on Thursday. “We can assure you all account information remains secure, and no personal or financial data is at risk.”(Adds details on card services in second paragraph.)To contact the author of this story: Julie Verhage in New York at jverhage2@bloomberg.netTo contact the editor responsible for this story: Anne VanderMey at avandermey@bloomberg.net, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Wall Street’s Close Ally in Senate Is in Crosshairs of Democrats

    Wall Street’s Close Ally in Senate Is in Crosshairs of Democrats

    (Bloomberg) -- Wall Street banks have found few politicians who will stand up for them in Washington since the 2008 financial crisis turned the industry into a villain. Senator Thom Tillis is an exception.The North Carolina Republican has been an aggressive advocate of de-regulatory policies that would save giant lenders billions of dollars. He once defended Goldman Sachs Group Inc. -- famed for its swashbuckling dealmakers and traders -- as a firm that probably employs “a lot of little guys.”Tillis, 59, is up for re-election in November 2020, meaning he will soon find out whether throwing in his lot with Wall Street will cost him with voters in a state that’s become the biggest banking center in the U.S. outside of New York. That’s making his race, widely expected to be one of the most fiercely contested next year, something of a litmus test on how much of a political punching bag big banks remain a decade after the crisis.Sensing vulnerability, Democrats have targeted Tillis as one of the Republicans they believe they have the best chance of knocking off in their quest to pick up the four seats they need to take control of the Senate. Early polling hints at tough races both in Tillis’s own GOP primary and in the general election. Democrats vying to run against him include a state senator and a former state senator. Already, they are labeling him a pawn of the financial industry.“It’d be hard for the Democrats to get a Senate majority without North Carolina,” said Eric Heberlig, a political science professor at the University of North Carolina, Charlotte. “It’s going to be expensive.”Goldman CashIndeed, campaign cash is expected to flood into the state -- and that’s where Tillis’s Wall Street advocacy could pay off. Though it’s early, Goldman employees are the top donors to his 2020 campaign and several prominent hedge fund executives have also written checks.Tillis’s aides say his pro-bank views are all about helping North Carolina, which is home to Bank of America Corp. and Wells Fargo & Co.’s east coast operations.“Senator Tillis promised North Carolinians that he would go to Washington and end the regulatory nightmare created by the Obama administration, and that’s exactly what he” and President Donald Trump have accomplished, his spokesman, Andrew Romeo, said in a statement.Banking has attracted thousands of people to the state, including Tillis. The former management consultant, whose clients included financial firms, relocated to a Charlotte suburb in 1998. He was first elected to the Senate in 2014, winning by a slim margin of 1.5 percentage points.“It’s a major constituency of Thom’s when he was in the state house and now in the Senate,” former North Carolina governor Pat McCrory, a Republican, said in an interview. “A lot of his neighbors out in north Charlotte work for the banks.”Esoteric RulesStill, some of the regulatory rollbacks Tillis has pushed for are so esoteric that even his constituents who work at banks might not be familiar with them. Also of note: the rule changes would exclusively help megabanks, not small and regional lenders.Issues he’s taken up include the so-called capital surcharge for systemically important financial institutions. The rule supersizes the amount of capital that Goldman, Bank of America, JPMorgan Chase & Co. and other giant lenders have to maintain to protect against losses. In an op-ed published in the American Banker in January, Tillis blamed the surcharge for triggering a stock market rout late last year.He’s also been a vocal critic of a post-crisis regulation that requires Wall Street banks to set aside billions to backstop swaps trades that they make with their own affiliates. While the rule’s defenders say it prevents risk from spreading within banks with federal deposit insurance, Tillis argues it hurts growth by keeping almost $50 billion from being lent out to the economy. Trump-appointed regulators proposed eliminating the margin requirement last month.Read More: Trump Regulators Hand Wall Street Banks a Win on Swaps RuleThe policy positions have won Tillis fans at 200 West Street in Manhattan -- Goldman’s international headquarters. The bank has already held a fundraiser for him in New York, and its employees have contributed $45,900 to his campaign, according to data from the Center for Responsive Politics.The total, which exceeds contributions from the National Republican Senatorial Committee, includes money from individual donors and Goldman’s political action committee. Among those who’ve contributed are John F.W. Rogers, the firm’s chief of staff, top money-manager Jim Donovan and merchant banking head Richard Friedman, according to federal election data. Goldman spokesman Andrew Williams declined to comment.Tillis’s next biggest donors among megabanks are Wells Fargo, whose workers and PAC have contributed $17,000, and JPMorgan at $16,000. Other contributors include Elliott Management’s Paul Singer, billionaire investor Sam Zell, Blackstone Group Inc.‘s Stephen Schwarzman, Third Point‘s Dan Loeb, Citadel‘s Ken Griffin and AQR Capital Management’s Cliff Asness.“Contributions never have and never will impact how Senator Tillis votes or what legislation he supports,” said Romeo, his spokesman. “He makes those decisions based on his deeply held conservative principles and his mission to preserve the American Dream for future generations.”Wall Street didn’t warm to Tillis by accident.In 2018, Congress passed legislation that eased a lot of Dodd-Frank Act burdens on small and regional banks. Big banks got scant relief in the bill, and decided they needed stauncher allies on Capitol Hill who could push their agenda, especially with regulators such as the Federal Reserve, said a person familiar with the matter.The industry zeroed in on Tillis, a business-friendly conservative on the Senate Banking Committee who had a reputation for supporting financial firms, said the person who asked not to be named in discussing internal lobbying strategy. It didn’t hurt that Tillis was expected to need a sizable campaign war chest for his re-election campaign.Bank OwnedPotential Democratic opponents in North Carolina have seized on Tillis’s views.Tillis is “bought and paid for, owned and operated by Wall Street and special interests,” Erica Smith, a state senator running in the Democratic primary, said in an interview. Still, Smith is hesitant to be too hard on banks, considering their outsized role in North Carolina.A Meredith College poll released this week showed Tillis in a statistical dead-heat in general election match-ups with Smith and another Democrat who’s running, former state senator Cal Cunningham. Earlier polling has shown the race to be just as tight, with Tillis’s Democratic challengers ahead of him in some surveys. And on Thursday, a Morning Consult poll indicated Tillis has the lowest approval rating of all U.S. Senators among their constituents.Tillis has also drawn a GOP primary challenger to his right in Garland Tucker III, who co-founded specialty lender Triangle Capital Corp. One of Tucker’s chief criticisms is that Tillis hasn’t been a strong enough supporter of Trump’s, even though the president has endorsed Tillis.Tucker has deep ties to North Carolina banking. His father was a longtime board member of Winston-Salem-based BB&T Corp., serving as chairman for more than a decade.Political MisstepTillis’ banking ties may not be what most impacts his chances at re-election. He made a political misstep earlier this year that had nothing to do with the industry when he said he would vote against Trump’s emergency declaration to fund a wall on the Mexican border. Hard line Republicans were enraged, and Tillis ended up backing the president.But the damage was done. At a September Trump rally in Fayetteville, the announcement of Tillis’s name was met with some boos.(Updates with polling data in twenty-third paragraph.)To contact the reporter on this story: Austin Weinstein in Washington at aweinstein18@bloomberg.netTo contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    Save Some of That Facebook Fury for Policy Makers

    (Bloomberg Opinion) -- Fury is the prevailing feeling of 2019. People are angry much of the time about so many things. Sometimes, though, I wonder whether the anger is misdirected.Often, the targets are companies. There’s pressure on retailers like Walmart Inc. to restrict gun sales. There’s anger at Facebook Inc. for running a misleading political ad from President Donald Trump’s campaign. Some people are furious at oil companies for not doing more to slow climate change, and at Uber Technologies Inc. for taking advantage of drivers or worsening traffic-clogged cities.I get it. Actions of powerful companies or their failures to act can have a profound impact. They are legitimate targets for popular pressure, and companies can’t simply sell potentially harmful products or run their businesses in destructive ways and ignore the consequences.But this rage is not only about those individual companies. It’s also redirected fury about inaction by policy makers.People are mad about government inaction on gun violence, but policy makers are paralyzed and anger gets channeled at Walmart. People are mad about nonsensical political speech rules, failures to make laws on personal data privacy or corporate tax avoidance, but few Americans believe Congress or regulators will do anything. Instead, people are left to vent at companies.Have we gotten to the point where U.S. elected officials are so impotent that the only recourse is to hope profit-minded companies do the right thing — and then get angry when we believe they don’t? There are policies that companies can improve on their own, including employee pay and sexual harassment prevention. There is also a need for clarity from elected officials — either on their own or in concert with big companies.  Rules about political ads are one such example. I don’t want politicians to be able to mislead voters on Facebook, but the company is not solely responsible for the half-truth political attack ads that run on its services. Laws and tough regulation are a better approach than always relying on the wisdom of individual internet companies or television networks to make the tough calls.Gun policy, corporate tax avoidance, labor laws and protecting elections from cyberattacks are also matters policy makers are best placed to tackle. My Bloomberg Opinion colleague Matt Levine wrote about the oddity of members of Congress being angry at failures by the Federal Trade Commission to restrict Facebook’s data collection practices when Congress could impose those restrictions by passing a law.I don’t want policy paralysis to absolve companies of responsibility for doing bad things or preventing harm. And companies are not innocent here, either. They fight against laws and regulation, which effectively gives themselves more responsibility — and they sometimes use government inaction to justify their own.Facebook for years fought to exclude itself from rules that mandate disclosures of who is behind political ads on other media such as broadcast television. And Amazon.com Inc.’s history includes advocating for a national sales tax law — which it knew was unlikely to happen — while it employed aggressive tactics to avoid charging sales tax in many U.S. states. (Amazon gave up fighting state sales taxes around 2012.) Facebook, Google and Amazon are now advocating for federal laws that sometimes feel like self-serving attempts to muzzle state or local rules they don’t like or to pass the buck on controversial company policies. When California recently did act to pass a law that could force Uber and other companies to treat contract workers as employees, Uber vowed to fight it and made a technical legal argument that a law tailor-made for Uber doesn’t apply to the company. Those tactics aside, it is hard to thread the needle between saying companies like Facebook and Amazon are way too powerful and also relying solely on them to always make hard policy decisions. That’s why we have elections and a government.A version of this column originally appeared in Bloomberg’s Fully Charged technology newsletter. You can sign up here.To contact the author of this story: Shira Ovide at sovide@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shira Ovide is a Bloomberg Opinion columnist covering technology. She previously was a reporter for the Wall Street Journal.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Holidays a Litmus Test for Retailers Post September Sales Drop

    Holidays a Litmus Test for Retailers Post September Sales Drop

    Retailers will surely be looking for green shoots of consumer spending in hopes for improved business activities during the festive period.

  • Texas Capital (TCBI) Q3 Earnings Top Estimates, Revenues Up

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    M&T Bank's (MTB) Q3 performance highlights higher provisions and expenses, partly muted by growth in revenues, aided by higher deposit balances.

  • Amazon Charges Brands for Slots On Its ‘Curated’ Holiday Toy Guide

    Amazon Charges Brands for Slots On Its ‘Curated’ Holiday Toy Guide

    (Bloomberg) -- Amazon.com Inc. just released its annual holiday toy guide, telling customers the Lego Disney castle, VTech’s Magical unicorn and more than 1,700 other items were “thoughtfully curated to help shoppers quickly tackle even the lengthiest holiday shopping lists.”What Amazon doesn’t mention are the millions of dollars it charges the toy industry just to be considered for a spot on the popular gift guide.Amazon sells Holiday Toy List sponsorships for as much as $2 million, according to documents reviewed by Bloomberg. The more sponsors pay, the more products they can nominate to be on the list and the more prominently their own products will be featured on the popular website. Amazon aimed to sell at least $20 million in sponsorships for this year’s list, the documents show. Amazon also published a summer toy list with lower sponsorship prices.It’s perfectly legal for Amazon to sell advertising on its site. It becomes a problem when the world’s largest online retailer tells shoppers recommendations are curated by experts but doesn’t disclose the money it gets from the toy industry, said Robert Weissman, president of the consumer advocacy group Public Citizen. Because consumers place more value on recommendations from independent sources, he said, companies prefer to keep their financial involvement hidden.“They don’t write ‘paid ad’ on it because it completely changes how consumers perceive the information,” Weissman said. “If the list is entirely or in part paid advertising, people have a right to know.”Amazon likened the payments it received to the money brands pay stores to be included in advertising circulars or to get prominent shelf space. In an emailed statement, the company said: “Every product on our annual Holiday Toy List, which features family gift ideas from new releases to customer favorites, is independently curated by a team of in-house experts based on a high bar for quality, design, innovation and play experience. We source product ideas from many places, including our selling partners who have an opportunity to nominate their best toys for the season and increase visibility of those toys.”Gift lists are a time-tested way for toy manufacturers to stand out in the critical holiday rush when busy parents are desperate for ideas. Toymakers are eager to appear on these lists because the companies generate about half their annual sales during the holiday season.Walmart Inc. charges toymakers $10,000 monthly per product to appear on its “Buyer’s Picks” toy list in November and December, according to documents reviewed by Bloomberg. The company produces other lists, including “Top Rated by Kids,” which uses feedback from children who test and rate more than 100 toys in July. Walmart and its toy suppliers partner to determine which 100 toys will be tested. Spokeswoman Leigh Stidham said suppliers and brands cannot pay to be included on the latter list, but didn’t comment on “Buyer’s Picks.”Parents looking for independent recommendations can turn to toy lists produced by third-party reviewers such as Toy Insider and Toys, Tots, Pets & More (TTPM). But in an era when customer reviews can be gamed and social-media influencers push products without always disclosing that they’re getting paid, consumers sometimes struggle to distinguish between objective online recommendations and paid promotions.The law is murky about precisely what should be disclosed and when. The Federal Trade Commission, which enforces deceptive advertising laws, issues general guidelines. A full-page magazine photo of a thirsty runner guzzling from a glistening bottle of Fiji water is so obviously an advertisement it doesn’t have to be disclosed. If the same water brand pays the magazine to publish what appears to be a news story about the health benefits of its product, it must be clearly labeled an advertisement so consumers aren’t confused.While federal regulators are taking a closer look at advertising these days, they can’t possibly monitor all the promotional activity out there. So the FTC occasionally cracks down to send a message, as it did in 2017 with letters to more than 90 influencers and marketers reminding them about the need to disclose paid promotions in social media. The spotty enforcement presents a big gray area for the toy industry.The lists are a powerful negotiating tool for retailers, according to industry insiders familiar with the process. Toymakers are led to understand that if they buy marketing space on the lists they will get bigger orders, the people said. Sometimes manufacturers get better visibility if they agree to sell a product exclusively through the retailer, they said. Retailers include only toys on the list that they are actually selling.Lists are a fast-growing part of Amazon’s advertising business. Amazon holiday gift guides promoting toys, electronics and home goods combined to generate more than $120 million in revenue in 2017, up about 40% from the previous year, according to documents reviewed by Bloomberg.What sets Amazon apart from other retailers is how much it charges for space on its toy page over the holidays. A narrow strip across the top of the web page costs $500,000 per month in November and December, up from $150,000 the rest of the year, according to documents reviewed by Bloomberg. A billboard ad atop the toys page runs $300,000 per month, up from $75,000 the rest of the year.Similar spots atop Walmart’s toy page cost $180,000 in November and $132,000 in December. According to Comscore, Amazon generates about twice as much web traffic as Walmart, which could explain the discrepancy in pricing.Public Citizen, the watchdog group, in July lodged a complaint with the FTC about Amazon’s annual summer sale Prime Day, alleging the retailer didn’t do enough to help shoppers differentiate between paid promotions and genuine recommendations. The FTC confirmed receiving the complaint. The annual toy list presents similar concerns, Weissman said.“When Amazon presents a top 100 toy list,” he said, “it’s a mistake to assume that shoppers understand this is just paid billboard space versus a list Amazon curated itself.”To contact the reporters on this story: Spencer Soper in Seattle at ssoper@bloomberg.net;Matt Townsend in New York at mtownsend9@bloomberg.netTo contact the editors responsible for this story: Robin Ajello at rajello@bloomberg.net, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Amazon (AMZN) Q3 2019 Earnings Preview: AWS, Prime & Advertising

    Amazon (AMZN) Q3 2019 Earnings Preview: AWS, Prime & Advertising

    Amazon stock is down 11% in the last three months heading into its Q3 earnings release on Thursday, October 24. So let's see what to expect from the e-commerce giant, including AWS, Prime, and advertising...

  • Morgan Stanley, Union Pacific earnings — What to know in markets Thursday
    Yahoo Finance

    Morgan Stanley, Union Pacific earnings — What to know in markets Thursday

    Earnings will continue as the focal point for investors Thursday, as Morgan Stanley and Union Pacific gear up to report.

  • Solid Start to Q3 Earnings Season

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  • India's Sitharaman: US trade pact a 'good possibility,' should come soon
    Yahoo Finance

    India's Sitharaman: US trade pact a 'good possibility,' should come soon

    As U.S. President Donald Trump hammers out a partial trade deal with China, Washington is moving forward on another front: India.

  • Pinterest Block Trade Prices at Bottom of Range

    Pinterest Block Trade Prices at Bottom of Range

    (Bloomberg) -- Pinterest Inc. shares fluctuated on Wednesday after a large block of shares was said to change hands overnight. The deal probably doesn’t reflect negative sentiment around the stock ahead of earnings this month, two analysts said.A person familiar with the matter said Goldman Sachs was managing the 4.68-million share block trade on behalf of an unknown holder. The share sale launched on Tuesday, the same day that selling restrictions lifted for insiders and other pre-IPO shareholders. The selling shareholder is likely a pre-IPO investor that is broadly shifting away from the internet space, Pivotal Research analyst Michael Levine said Wednesday morning in a phone interview. He upgraded the stock to buy from hold on Wednesday afternoon.“There’s some really early money in this,” Levine said in the interview. “So if you’re no longer involved in consumer internet, you’re gone. If you’ve been in it since 2012, you’re gone.” He named Andreessen Horowitz and Bessemer Venture Partners as possible sellers.Levine thinks other pre-IPO holders are less likely to be selling at this price level.“Based on how much the stock has pulled back, it’s actually gotten pretty attractive,” he said. “I think a lot of people are short and negative on this and I suspect earnings will be a very positive catalyst.” Wednesday’s upgrade did not adjust Pivotal’s $32 price target, which is below the Street average of $34.Read more: Pinterest’s Early Investors Get Chance to Sell After 42% RallyWells Fargo analyst Brian Fitzgerald agreed.“We do not see this as pessimism ahead of earnings, or the fundamentals with regards to this year’s IPOs,” he said in an email interview. Fitzgerald rates Pinterest a market perform with a $34 target.Shares opened as Wednesday’s worst performer in the 21-member Dow Jones US Mid Cap Media Index, before turning positive later in the morning. Pinterest reports third-quarter results on Oct. 31 after the market closes.The share sale priced at $25.00, the bottom of its $25-$25.25 offering range, the person familiar with the matter said Wednesday morning. Shares traded as high as $36.83 in August after the April IPO priced at $19.(Updates with Pivotal upgrade, Wells Fargo comments.)\--With assistance from Ryan Vlastelica.To contact the reporter on this story: Drew Singer in New York at dsinger28@bloomberg.netTo contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Jim Silver, Jeremy R. CookeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Centrica Picks Goldman for $2 Billion Spirit Energy Sale

    Centrica Picks Goldman for $2 Billion Spirit Energy Sale

    (Bloomberg) -- Centrica Plc has picked Goldman Sachs Group Inc. to advise on the potential sale of its controlling stake in exploration and production unit Spirit Energy, people familiar with the matter said.A deal could value the business at more than $2 billion, one of the people said, asking not to be identified because the information is private.Centrica is pursuing a sale of its stake in Spirit as the U.K. utility seeks to recover from a tumultous five-year period under CEO Iain Conn where it lost more than two-thirds of its value and shed millions of customers. It owns 69% of Spirit, while the remaining stake is owned by Bayerngas Norge’s former shareholders, according to the company’s website.Spirit was formed in 2017 after Centrica and Bayerngas Norge AS combined their upstream oil and gas units. The unit produces about 50 million barrels of oil equivalent a year and has an estimated 600 million barrels of resources and reserves across the U.K., Norway, the Netherlands and Denmark. Accounting firm KPMG is also working with Centrica on audit work for the transaction, according to one of the people. Representatives for Centrica and Goldman Sachs declined to comment, while a spokesman for Spirit said the company will “support the sales process as appropriate.” A representative for KPMG didn’t immediately respond to a request for comment.\--With assistance from Laura Hurst.To contact the reporters on this story: Dinesh Nair in London at dnair5@bloomberg.net;Kelly Gilblom in London at kgilblom@bloomberg.netTo contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, ;James Herron at jherron9@bloomberg.net, Rakteem KatakeyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Tap Revenue Growth With These ETFs & Dump Earnings Recession

    Tap Revenue Growth With These ETFs & Dump Earnings Recession

    These sector ETFs could be played to highlight revenue growth in the third quarter.