• Ford Foundation president praises CEOs like Benioff who have criticized capitalism
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    In recent months, top chief executives like JPMorgan Chase CEO Jamie Dimon and Salesforce Co-CEO Marc Benioff have advocated economic or business reforms of their own.

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  • Is Target (TGT) Stock a Buy After Strong Q3 Earnings?

    Is Target (TGT) Stock a Buy After Strong Q3 Earnings?

    Target (TGT) shares soared over 14% Wednesday to hit a new all-time high after the retailer posted a strong third quarter performance.

  • Schwab-Ameritrade Faces Tough Antitrust Scrutiny, Analysts Say

    Schwab-Ameritrade Faces Tough Antitrust Scrutiny, Analysts Say

    (Bloomberg) -- A potential acquisition of TD Ameritrade Holding Corp. by Charles Schwab Corp. may draw fierce antitrust scrutiny, analysts said.Shares of the two companies rallied on Thursday, with Schwab rising as much as 14% and TD Ameritrade jumping as much as 26%. Even with such a gain, TD Ameritrade shares would still fail to return to levels they’d traded at earlier this year, before a wave of commission cuts roiled the industry. Other companies in the space didn’t fare as well on Thursday, with E*Trade Financial Corp. tumbling as much as 10% as hopes for a deal for that company faded.Here’s a sample of some of the latest commentary:UBS, Brennan HawkenThe very large and surprising deal “carries a lot of execution risk,” particularly regarding legal and regulatory issues, Hawken warned in a note.Hurdles include the “size the combined entity would represent in the discount brokerage space,” even if regulators were to take into account full-service wealth management firms like Morgan Stanley and Bank of America Corp., he said. Schwab cutting commissions and then bidding for its “most hindered” competitor might also draw legal challenges and further anti-competitive scrutiny, Hawken said.Hawken added that E*Trade was “left out in the cold,” and appears vulnerable as it had begun to reflect an M&A premium and the Schwab-Ameritrade tie-up would reduce the number of potential buyers.BofA, Michael CarrierTD Ameritrade’s relationship with holder Toronto-Dominion Bank “creates some complications,” Carrier wrote, including “dis-synergies and a bit tougher regulatory approvals.”Carrier expects merger discussions and activity in the sector in the near term, which is likely to benefit online broker stocks. He sees the Schwab-Ameritrade deal making “strategic sense” as the two have similar business models, particularly regarding retail and registered investment adviser, or RIA, platforms, and TD Ameritrade lacks a permanent CEO.Most firms in the sector, including E*Trade, will likely conduct merger talks given the “pressures on the business, this transaction, game theory, as well as the attractive synergies and accretion,” he said. Shares of companies that get left out may face pressure.KBW, Kyle VoigtThe deal “makes strong strategic sense and provides room for revenue and cost synergies, but a key focus for investors will be the potential for antitrust hurdles,” KBW’s Voigt wrote.Schwab is the number one player in the RIA business, followed by Fidelity, he said, and may hold about half of the market share of RIA custody assets, while TD Ameritrade may have around 15% to 20%. He flagged E-Trade, Fidelity and larger bank brokers like BofA and JPMorgan Chase & Co. in the self-directed retail asset space.Voigt expected E*Trade might drop “meaningfully,” as TD Ameritrade and Schwab were the two most likely acquirers and the stock may have been the “most crowded long in the space, mostly on a takeout potential.”Cowen, Jaret Seiberg“We expect antitrust regulators will approve this deal though it could take until summer,” Seiberg wrote. He sees the biggest risks as “political push-back during the election and a bigger spotlight on payment for order flow.”He noted the deal would come as “intense competition is driving down costs for consumers without apparent harm to the fiscal health of the industry.” Though antitrust regulators “will ask lots of questions and demand significant analysis to ensure the merger does not disrupt this ideal state,” they’ll probably okay the transaction as they’ll have a hard time proving it will harm consumers.Cowen sees no risk of approval going past the 2021 inauguration and becoming an issue for a new administration if President Donald Trump doesn’t win. However, he added that it’s easy to see how the deal might get drawn into an “anti-big business campaign” among Democratic candidates including Senator Elizabeth Warren. “No company wants to become the target of political attacks especially from a potential new president,” he said.Vital Knowledge, Adam CrisafulliNews of Schwab potentially buying TD Ameritrade may weigh on some asset managers as the combined company would be able to exert even more pressure on industry fees, Crisafulli wrote.Bloomberg Intelligence, David Ritter“A sale to Schwab makes strategic sense for TD Ameritrade, but the reported price -- essentially the level before online brokers adopted free stock commissions in October -- indicates the industry’s difficult revenue outlook. TD Bank, owner of more than 40% of Ameritrade, likely endorsed the deal.”National Bank, Gabriel DechaineA Schwab deal to acquire TD Ameritrade may be helpful for Toronto-Dominion Bank’s long-term U.S. strategy, according to Dechaine.Toronto-Dominion may end up with 10% to 15% stake in the combined entity, assuming an “all-stock transaction and no additional deal twists,” he said in a note to clients.“Assuming a smaller stake in a bigger player situation, TD could have a more liquid asset that it could potentially sell to finance a future U.S. regional bank acquisition,” Dechaine said. “As such, it would make it easier for TD to make future acquisitions accretive.”\--With assistance from Doug Alexander and Joshua Fineman.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, Divya BaljiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Oil Price Gains 3.4% for the Day: What's Behind the Rise?

    Oil Price Gains 3.4% for the Day: What's Behind the Rise?

    The federal government's EIA report revealed that crude inventories rose by 1.4 million barrels, compared to the 1.6 million barrels increase that energy analysts had expected.

  • Buffett is Buying Energy and Retail: Should You?

    Buffett is Buying Energy and Retail: Should You?

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  • Amazon Ups Retail Game With Cashierless Supermarket Plans

    Amazon Ups Retail Game With Cashierless Supermarket Plans

    Amazon (AMZN) intends to open Amazon Go supermarket next year, which is likely to intensify competition in retail space.

  • TC PipeLines (TCP) Q3 Earnings Beat Estimates, Fall Y/Y

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    Steady natural gas flows, primarily out of the Western Canadian Sedimentary Basin, contribute to TC PipeLines' (TCP) solid Q3 earnings.

  • Applied Materials, Warrior Met Coal, Alibaba and Amazon highlighted as Zacks Bull and Bear of the Day

    Applied Materials, Warrior Met Coal, Alibaba and Amazon highlighted as Zacks Bull and Bear of the Day

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  • It May Already Be Too Late for Macy’s

    It May Already Be Too Late for Macy’s

    (Bloomberg Opinion) -- It is hard to think of a retailer that is doing so much to save itself, and has so little to show for it, as Macy’s Inc.The department store giant reported Thursday that comparable sales sank 3.9% from a year earlier in the quarter, or 3.5% including licensed departments, a sharp retreat from meager gains it had recorded on this measure in the first half of the year. It was such a weak showing that the company cut its profit forecast and now expects declining comparable sales for the full year.Of course, department stores have been challenged for years because they rely on an older customer and are often tethered to the types of malls that are withering in the e-commerce era. These latest results from Macy’s, though, coupled with a disappointing earnings report from Kohl’s Corp. earlier this week, increase skepticism that the giants of the category can find a formula for success before it’s too late.Macy’s has tried plenty of tactics to boost sales. It has an off-price segment. It is renovating its top-performing stores. It has dramatically expanded its selection online. But the steep decline in sales is a signal that it has not been enough.The company’s press release points to several reasons for the dismal results, including the weather (a go-to excuse for apparel retailers when things go off track) and soft international tourism (which affects sales at its big-city flagships). It also called out “weaker than anticipated performance in lower tier malls.”That third factor is noteworthy because it highlights the trouble with a major component of Macy’s turnaround strategy: The company is currently working to revamp about 150 stores while transforming its weaker locations into so-called “neighborhood stores” that are smaller in size and have fewer employees.The results raise the question of why Macy’s is clinging to these stores in dumpy malls. Macy’s needs to give more serious consideration to closing some of these locations.In other words: Macy’s may be doing a lot of things to salvage its business, but that doesn’t mean they’re the right things.The company said Thursday it will hold an investor day in February to discuss its three-year growth strategy. Any presentation that does not include a roadmap for additional store closures — and a clear plan for improving its actual merchandise — should be dismissed as unlikely to restore Macy’s to health.Kohl’s, a rival, is in a slightly better position than Macy’s, since its stores are typically not located in malls. But its third-quarter results also raised fresh doubts that it has carved a path to long-term relevance.Its new partnership with Amazon appears to be going largely as planned, with executives saying on an analyst conference call that it was “meeting expectations” and that conversion rates were on par with what it saw in pilot markets.But the Amazon arrangement is a creative move that should be providing new, young customers to Kohl’s. If all the retailer can deliver under those circumstances is a 0.4% increase in comparable sales, should that really excite investors about the program’s potential?It’s also discouraging that Kohl’s women’s business is adrift, recording declining sales in the quarter that offset more upbeat sales in departments such as men’s and footwear.Macy’s and Kohl’s shouldn’t delude themselves into thinking their would-be customers are simply sitting on the sidelines. TJX Cos., the corporate parent of Marshalls and TJ Maxx, recorded healthy comparable sales in the quarter. Target Corp. reported Wednesday that its apparel and accessories department saw a “double-digit” increase in sales in the period. It’s clear those better-run retailers are benefiting from Macy’s and Kohl’s stumbles.Building a vibrant 21st-century department store was always going to be a tall order. But Macy’s and Kohl’s latest reports raise the question of whether, for them, that goal is now out of reach.To contact the author of this story: Sarah Halzack at shalzack@bloomberg.netTo contact the editor responsible for this story: Michael Newman at mnewman43@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Gulfport Energy Slashes Workforce, Pauses Share Buybacks

    Gulfport Energy Slashes Workforce, Pauses Share Buybacks

    Gulfport Energy (GPOR) reduces workforce by 13% in order to cope up with the current weak pricing environment.

  • Why Is UPS (UPS) Up 3.4% Since Last Earnings Report?

    Why Is UPS (UPS) Up 3.4% Since Last Earnings Report?

    UPS (UPS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

  • Travelers (TRV) Up 2.5% Since Last Earnings Report: Can It Continue?

    Travelers (TRV) Up 2.5% Since Last Earnings Report: Can It Continue?

    Travelers (TRV) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

  • Gol Airline Seeks Closer Ties to American and United After Split With Delta

    Gol Airline Seeks Closer Ties to American and United After Split With Delta

    (Bloomberg) -- Gol Linhas Aereas Inteligentes SA, Brazil’s largest airline, is holding talks about expanding ties with American Airlines Group Inc. and United Airlines Holdings Inc. after parting ways with longtime U.S. partner Delta Air Lines Inc.The carriers are discussing whether to establish codeshare deals, which enable airlines to book passengers on each other’s flights, Gol Chief Financial Officer Richard Lark said Tuesday. That would be a step up from Gol’s existing interline agreements with American and United, which allow airlines to handle passengers on trips that involve multiple carriers.“We are in discussions with both United and American about converting those interlines into codeshares, and we may have both of those as codeshare partners,” Lark said in an interview at Bloomberg’s New York headquarters. An agreement could be reached with one or both of the U.S. airlines “over the next couple of months,” he said.Gol is eyeing deeper ties with American and United after Delta said in September that it would sell its stake in the Brazilian airline and buy 20% of Latam Airlines Group SA. An expanded relationship with Gol would be especially beneficial to American, which was left without a South American partner after its proposed partnership with Latam ran into legal trouble and prompted the Chilean company to join forces with Delta.United already has a partnership with Azul SA, the third-largest domestic airline in Brazil after Gol and Latam. United holds an 8% stake in Azul and is is also in talks to form a joint venture with Avianca Holdings SA and Copa Holdings SA.American said it didn’t have “anything to confirm at this time.” United declined to comment.Delta has not indicated when or how it intends to sell its Gol stock, Lark said. The U.S. carrier owns a 9% stake, according to Gol. The Sao Paulo-based company isn’t discussing deals in which American or United would take equity stakes in Gol, he said.“The company doesn’t have a need today for any financing from that source,” Lark said.Gol’s fleet is made up entirely of Boeing Co. 737 jets, and the airline has been hurt by the March grounding of the planemaker’s Max models following two deadly crashes. Gol expects the U.S. Federal Aviation Administration to clear the aircraft to fly next month with Brazilian regulators following suit soon afterward, Lark said. Gol anticipates returning the planes to service in January, he said.That’s a more optimistic outlook than at American, United and the Max’s largest operator, Southwest Airlines Co., which have all removed the model from their flight schedules through early March. Even after the FAA lifts the flying ban, regulators would still need to sign off on updated training materials for pilots in January, Boeing said last week.Pickle ForkGol has also taken some older 737 NG models out of service after regulators ordered inspections of the so-called pickle fork, part of the structure that helps attach the wings.The company’s fleet has been more affected than average by the pickle-fork issue, in part because of conditions at Brazilian airports that include shorter runaways and a different type of asphalt, Lark said. Gol leased the aircraft from third parties and not from Boeing, which customizes planes for specific conditions.Those factors, combined with Gol’s operational model of intensive use of the planes, led to 11 jets being taken out of service, Lark said. About 9% of Gol’s fleet of 125 aircraft has been affected by the pickle-fork inspections, according to the company. Boeing said last week that less than 5% of NG planes subject to initial inspections had cracks.Looking ahead to 2020, Lark is bullish on both oil prices and the Brazilian real, both of which figure prominently into the company’s business outlook.‘Signs of Life’Gol sees a barrel of West Texas Intermediate crude fetching a price in the high $60s next year, with Brent, a global benchmark, in the low $70s.Lark said he expects the Brazilian currency, which fell 7.8% against the dollar this year through Wednesday, to hold steady or appreciate over the next six to 12 months. By the end of next year, Lark said the real could potentially be in the range of 3.6 to the dollar. That would be a much stronger level than the median analyst estimate compiled by Bloomberg, which is about 4 reais to the dollar.Gol is already seeing an uptick in travel as Brazil’s economy continues to recover from a deep slump in 2015 and 2016.“The business customer has been the main driver over the last couple of years in terms of the consumption of air travel and absorbed a lot of the fare increases,” Lark said. But in September, Gol started “to see signs of life in the Brazilian consumer, the non-business traveler, the leisure traveler in a variety of sectors, including ours.”\--With assistance from Mary Schlangenstein and Justin Bachman.To contact the reporters on this story: Richard Richtmyer in New York at rrichtmyer@bloomberg.net;Jessica Summers in New York at jsummers24@bloomberg.net;Fabiola Moura in Sao Paulo at fdemoura@bloomberg.netTo contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Richard RichtmyerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • VMware (VMW) to Report Q3 Earnings: What's in the Cards?

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  • Phillips 66 Partners to Slash Gray Oak Tariff Rates in Texas

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    Phillips 66 Partners (PSXP) expects to commence full service of the Gray Oak crude oil pipeline in first-quarter 2020.

  • No, Amtrak Isn’t About to Turn a Profit

    No, Amtrak Isn’t About to Turn a Profit

    (Bloomberg Opinion) -- Earlier this month, Amtrak announced a smallest-ever “adjusted operating loss” of $29.8 million in the 2019 fiscal year, which ended in September, and said it is on a “path to achieve operational breakeven in fiscal year 2020.” Along with the news that Amtrak ridership had hit an all-time high of 32.5 million, this garnered some nice headlines.There are some other, less-impressive numbers, though, that the government-owned passenger railroad disclosed this week with no fanfare. Amtrak’s net loss according to Generally Accepted Accounting Principles was $874.8 million, up from $817.2 million in FY 2018. Amtrak also reported receiving $234 million in support from the governments of states through which some of its trains run; without that money, losses would have been well over $1 billion.These results did not, as “anti-transit transit expert” Randal O’Toole suggested with tongue somewhat in cheek before they were even released, amount to “securities fraud.” Amtrak is not a publicly traded corporation, plus there’s no secret as to what accounts for the difference between net loss and operating loss: depreciation of assets and spending on new capital projects. Amtrak management is also up-front about an infrastructure investment backlog that it pegs at somewhere around $40 billion. The shrinking operating loss, says Amtrak, merely “represents ... cash funding needs and is a reasonable proxy for Federal Operating Support needed.”Amtrak also released operating loss (or profit!) estimates for every single route it runs. Here it is broken down by the railroad’s main service lines.(1)From the looks of it, the Northeast Corridor — especially the high(ish)-speed Acela, which had an operating profit of $334 million on $662 million in revenue in FY 2019 — is doing great, and the state-supported services such as the Pacific Surfliner in Southern California and the Hiawatha between Chicago and Milwaukee are doing OK, thanks in large part to that $234 million in state support. The overnight long-distance trains, on the other hand, appear to be kind of a disaster.Amtrak Chief Executive Officer Richard Anderson, previously the CEO of Delta Air Lines, has been addressing these long-distance woes with an unheard-of aggressiveness, and Devin Leonard has a highly entertaining and illuminating article in the new Bloomberg Businessweek about all the feathers that’s ruffling. But as I learned when I wrote a column about Amtrak’s financial situation in July (after a mostly wonderful but much-delayed trip across the country on the California Zephyr and Lakeshore Limited), there are those who believe Amtrak’s adjusted operating numbers give an entirely misleading picture of where its strengths and weaknesses lie.One issue, the Rail Passengers Association argued in a 37-page white paper issued last year, is that Amtrak’s method for allocating operating costs allows it “to continue its false narrative that the NEC is more ‘profitable’ than it is and that the long-distance trains cost more than they do.”  The World Bank’s 2017 “Toolkit for Improving Railway Sector Performance” recommends using long-run variable costs, aka avoidable costs, as the metric for guiding railway commercial decisions. In other words: How much would shutting down a money-losing service save you? Well, in May 2017 then-Amtrak-CEO Charles “Wick” Moorman responded to a proposal by President Donald Trump’s Office of Management and Budget to zero out federal funding for long-distance trains with an estimate that eliminating the service “would result in an additional cost of approximately $423 million in FY 2018 alone.” So it sure doesn’t seem like the long-distance operating loss of $543 million that Amtrak subsequently reported for FY 2018 really reflects avoidable costs.That said, a lot of that $423 million in shutdown costs would presumably be one-time expenses. In Asia and Europe, high-frequency, high-speed passenger trains between big cities are reliably more profitable than low-frequency, low-speed trains through rural areas. So while better accounting might reduce the operating-results disparity between the Northeast Corridor and the long-distance trains, that disparity surely wouldn’t go away.There’s another financial issue, though, that is harder to get one’s head around and probably more important to understanding the challenges facing U.S. passenger rail. Amtrak was created in 1971 out of the passenger operations of the country’s private railroads, which Congress simultaneously released from the obligation to carry people as well as freight. The plan was that Amtrak trains would travel on tracks owned and maintained by the freight railroads, and in most of the country they do. But a rash of railroad bankruptcies in the Northeast and Midwest in the 1970s, followed by the nationalization and reorganization of some of those railroads, gave Amtrak possession of 363 of the 457 miles of track its trains use between Boston and New York (the states of Connecticut and Massachusetts own most of the rest) and control of an even larger portion, with the main exception being the stretch between New York and New Haven that is managed by Metro North.Because it controls the tracks and the dispatching, Amtrak can run trains at much higher frequency and speed along the Northeast Corridor than it does anywhere else in the country, and compete effectively with airlines (cars are still the dominant mode of intercity travel in the region). Yet ownership leaves Amtrak on the hook for upkeep. And because much of the crucial infrastructure along the Northeast Corridor is more than a century old, and was already being neglected by its struggling owners long before Amtrak took over, there’s a big backlog of needed capital investments. For example:The 1910 swing-span drawbridge over the Hackensack River near Secaucus station in New Jersey is said to be the busiest rail bridge in the Western hemisphere, but workers sometimes have to smack it with a sledgehammer after it’s been opened to get the rails back in place. The price tag in Amtrak’s FY 2020 funding request for replacing it with a taller bridge that wouldn’t need to be opened for passing boats: $1.8 billion. The rail tunnels under the city of Baltimore south of the Amtrak station were built in 1873 (!) and have curves and a grade that necessitate slow train speeds. Estimated cost of a straighter, flatter replacement: $5 billion. The two tunnels under the Hudson River that Amtrak and commuter trains use to travel between New Jersey and New York City have been in use since 1910, were damaged by flooding from Hurricane Sandy in 2012 and may not be usable for much longer without major repairs. The latest estimate of the cost to fix them and dig a new tunnel to allow trains to keep rolling during the repairs and add capacity when they’re done is $11.3 billion.The Hudson tunnel project is of course something of a legend by this point. New Jersey’s then-Governor Chris Christie derailed it in 2010, saying it was going to cost his state too much. Now the Trump administration is holding it up, possibly out of presidential pique. The bill for the tunnel would be footed mostly by state and federal taxpayers. But it and the rest of the infrastructure spending backlog are part of the overall financial picture for the Northeast Corridor that Amtrak’s operating numbers ignore. “If you followed a GAAP or more GAAP-like approach, the Northeast Corridor would be showing a deficit of more than a billion a year,” asserts Andrew Selden, a retired Minneapolis lawyer and frequent Amtrak critic.Almost all of Amtrak’s other routes, as noted, run on tracks that freight railroads are responsible for maintaining. Amtrak has to pay for this privilege, but not much. A bigger issue is that although the freight railroads are supposed to give passenger trains priority, there’s been no practical way to force them to do so (federal courts partially thwarted a 2008 Congressional attempt to remedy this). Frequent delays are the result. Also, most freight tracks are built to a standard that limits passenger train speeds to no more than 80 miles an hour. It’s not an optimal situation! Still, if your goal was to minimize taxpayer spending on passenger railroads, you’d shut down the Northeast Corridor, not the routes that run on tracks owned by freight railroads.That doesn’t seem like the right goal at all, of course. Passenger trains bring with them positive externalities such as reduced road traffic and pollution, and more livable, pedestrian-oriented cities. Along the Northeast Corridor they’re crucial to the functioning of a regional economy that accounts for 25% of U.S. gross domestic product.(2) More, faster and in some cases entirely new train services along other densely populated corridors in California, Texas, Florida, the Great Lakes, the Southeast and elsewhere could be an economic and environmental boon. That will take a lot of investment. Some may come from private sources, and private train operators may be a better choice than Amtrak for many of the routes. But the evidence from around the world — the bullet-train services on the Japanese main island of Honshu seem to be the lone major exception — is that continued public infrastructure investment is required to make passenger rail work.(1) Amtrak's infrastructure access service line provides "access to Amtrak-owned or controlled infrastructure and facilities" for "rail operators and other public and private sector entities," while its ancillary services involve providing passenger transportation, maintenance and other services to commuter rail agencies and freight operators, as well as real estate activities.(2) I included Virginia's GDP in that accounting, because it seemed like the right thing to do.To contact the author of this story: Justin Fox at justinfox@bloomberg.netTo contact the editor responsible for this story: James Gibney at jgibney5@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Bets on a Strong Pound Are Getting in the Way of a Strong Pound

    Bets on a Strong Pound Are Getting in the Way of a Strong Pound

    (Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Investor optimism on the pound hasn’t been this high for quite some time, yet that may have landed the currency in something of a Catch-22.Unlikely as it sounds, one reason why sterling is struggling to extend October’s sizzling run is probably an overwhelmingly bullish option-market bias.For one, traders already positioned for a stronger U.K. currency via derivatives may wait to get past the uncertainty around the Dec. 12 election before adding to allocations. Also, investors long on options tend to sell the currency in the spot market every time it rallies, in order to protect the value of their contracts -- a practice known as delta hedging.Option bets for a stronger pound have climbed to levels unseen earlier this year after Prime Minister Boris Johnson’s success last month in securing a Brexit deal and winning preliminary approval from lawmakers. Demand for vanilla sterling calls now outweighs that for puts by 50% since October, after remaining almost perfectly balanced on average through the first nine months of the year, data from the Depository Trust & Clearing Corporation show.The median forecast of strategists for sterling’s year-end level has jumped almost 6% from October’s lows to $1.29, according to Bloomberg surveys. The currency was around $1.2940 Thursday, little changed in November after last month’s 5.3% gain that was the biggest since 2009.To be sure, the pound’s listlessness also has a more straightforward reason -- the currency has already had a stellar rally of more than 8% from September’s three-year low, and that means most short-term traders are probably satisfied with returns for now.While the fear of a no-deal Brexit has faded, some analysts remain concerned that a floundering U.K. economy and the prospect of fraught trade talks with the European Union could rein in the pound. The risks surrounding next month’s vote -- particularly the prospect of a hung parliament or a coalition led by the Labour Party -- are also seen as headwinds for the currency.Still, most potential election outcomes point to a stronger sterling -- Bank of America Merrill Lynch sees a rally of almost 8% in 2020 on the prospect of a win for the ruling Conservative Party that would put an end to the Brexit deadlock. However, for any significant gains to materialize, some of the outstanding options need to expire or be rolled over to make room for fresh momentum to emerge. Thursday alone, 3.38 billion pounds ($4.4 billion) are due to expire at strike prices ranging from $1.2945 to $1.3000.NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment adviceTo contact the reporter on this story: Vassilis Karamanis in Athens at vkaramanis1@bloomberg.netTo contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Anil Varma, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Disney: Streaming Hero or Supervillain?

    Disney: Streaming Hero or Supervillain?

    (Bloomberg Opinion) -- The latest buzz in Hollywood is that the U.S. Justice Department wants to abolish an outdated rule known as the Paramount consent decree, which would allow studio giants to own movie theaters — something that hasn’t been permitted since the 1940s. My first thought was that it's a bit of a nothingburger. Studios like Warner Bros. and Universal probably aren’t eager to scoop up debt-laden cinema operators when their top priority is investing in streaming-TV content and services. And while mom-and-pop theaters may fear the change will breed anti-competitive behavior, that’s not as big of a concern for the big multiplex chains, nor does it signal an end to antitrust oversight. But that doesn’t mean everything is hunky-dory in the industry.Take a look at the U.S. box office this year. The content uniformity aside — four of the top seven movies descended from comic books, and the other three from cartoon franchises — most of the year’s leading films are Walt Disney Co. productions. There are more to come, with “Frozen 2” set to hits theaters on Friday, followed by the December release of “Star Wars: The Rise of Skywalker.” It has me wondering, is this healthy? Disney films account for nearly a third of the $9.5 billion of cinema tickets sold so far in 2019. Warner Bros., owned by AT&T Inc., lags far behind with a 16% share, trailed by Comcast Corp.’s Universal and Sony Corp.’s namesake distribution business; 20th Century Fox would normally be high in the ranking, too, but Disney acquired it earlier this year as part of an $85 billion deal with Rupert Murdoch.Look, I get it. Lots of people love Disney’s Marvel and animated features, and the box office is simply reflecting that. The situation is more complicated than just looking at the data and determining that the company has too much power; there’s nothing about the industry structurally that would give it an unfair advantage. Disney has just done a really good job of consistently giving fans what they want, and CEO Bob Iger made a series of smart acquisitions that continue to pay off: Pixar in 2006; Marvel in 2009; and Lucasfilm (home of “Star Wars”) in 2012. They’ve all absolutely flourished within Disney, with each bringing with it beloved franchises and story lines just waiting to be further developed and amplified for the big screen.It’s not like Warner Bros., Universal and Sony haven’t had the same opportunities. Warner Bros. has DC Comics, “Harry Potter” and “Lord of the Rings,” and the studio shares a home with HBO and “Game of Thrones.” Sony owns the rights to Spider-Man; it even had the chance to buy the entire Marvel roster in the late 1990s (for pennies compared to what Disney paid). It's hard, though, to imagine Marvel would have become what it is today had it landed at Sony instead of Disney. And that’s kind of my point.Matthew Ball, the former Amazon Studios executive, made a similar argument recently: “Disney isn’t a monopoly,” he tweeted Nov. 5. “Its competitors just need to do better. ... You make success. No one believed in comics being huge 20 years ago.”It's conceivable that Disney may end up atop the streaming world, too. Apple TV+ hasn't lived up to the hype, while AT&T’s HBO Max may suffer for its delayed arrival to the market (in May 2020). In very Comcast fashion, the cable giant isn’t so much plunging into streaming as it is dipping a toe into the waters with its Peacock app next year. And Sony’s PlayStation Vue service has already thrown in the towel. Meanwhile, Disney+ had a wildly successful launch on Nov. 12, signing up 10 million subscribers on the first day, despite widespread technological glitches and shortcomings in app functionality. Disney is also the first to experiment with bundles, a relic of the cable-TV market that I’ve argued will help ease one of the worst consumer pain points of streaming: the inability to access all your favorite content through a single subscription.But when people are rooting for Disney to be the “Netflix killer,” they’re rooting against themselves. Netflix Inc.’s innovation brought us affordable TV entertainment that didn't require a cable subscription or patience for commercial breaks. Its success forced other more complacent companies to rethink their businesses. By contrast, the box office shows what happens when a single company winds up with outsize influence.The Justice Department’s move to terminate the Paramount consent decree may not mean much (Disney wasn’t even one of the studios bound by it). But Disney doesn’t need to buy a theater anyway — it already owns the box office. Other media and tech giants should take that as a warning to step up their streaming game. Healthy competition ensures better content, more choice and further Netflix-like advances. Plus, the world needs only so many superhero flicks.To contact the author of this story: Tara Lachapelle at tlachapelle@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.