Author Archives: Blanco

Saudis’ Biggest Oil Surge in 5 Years Barely Steadies OPEC

02 Jul 18
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Saudi Arabia’s biggest oil-production surge in five years was only enough to keep OPEC’s output steady last month, as losses elsewhere in the group piled up.

The kingdom is delivering on its promise to try and tame crude prices, boosting output by 330,000 barrels a day in June to 10.3 million a day, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. That’s the biggest monthly jump in production since July 2013.

But disruptions in Libya, coupled with ongoing supply losses in Venezuela and Angola, meant overall output from the Organization of Petroleum Exporting Countries rose only 30,000 barrels a day to 31.83 million a day.

With oil prices at their highest in more than three years, Saudi Arabia — OPEC’s biggest member — is under intense political pressure from U.S. President Donald Trump to cool the rally and ease the strain on the global economy. That pressure is set to grow as Trump hits the Saudis’ political nemesis, Iran, with sanctions and urges the kingdom to fill the gap in supply.

The survey shows the scale of the challenge the Saudis face. Even before sanctions make a dent in Iranian exports, losses are accumulating in OPEC’s other troubled members.

Venezuela’s output has sunk to the lowest in decades as a spiraling economic crisis engulfs the country’s oil infrastructure. In Libya, renewed political clashes have led to control of oil ports passing to a faction that opposes the state oil company. On Thursday, the North African producer said it may suspend loadings at two key ports.

The question now is how much more the Saudis will need to produce to keep markets in balance. Forecasts from the International Energy Agency suggest that simply satisfying higher demand in the second half of this year will require more supply, and that cutbacks to Iranian or Venezuelan production would only add to Saudi Arabia’s burden.

That could require the kingdom to pump at maximum capacity of 12 million barrels a day for the first time ever. President Trump said in a tweet at the weekend that King Salman bin Abdulaziz had assured him the kingdom would do so, though the White House subsequently moderated that assertion.

Export data for Saudi Arabia also shows the kingdom is pushing more barrels onto world markets. Shipments climbed to a 15-month high of 7.47 million barrels a day last month, up 320,000 barrels from May, according to preliminary Bloomberg calculations from vessel-trackingand ship-fixture data.

The Saudis’ resolve to fill in the supply gap is creating friction within the organization. Iran — which faces the prospect of losing customers to their political rivals in Riyadh — has said the kingdom has no right to increase production much further, as individual country production limits set in late 2016 still apply.

Based on those quotas, Saudi Arabia produced about 240,000 barrels a day over its limit in June.

“Saudi Arabia will increase production,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “Iran is likely to see any further increase as a grab on its market share.”

U.S. Factory Gauge Jumps, Inflated by Longer Delivery Times

02 Jul 18
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U.S. manufacturing expanded more than forecast last month as a gauge of supplier-delivery times shot up amid robust orders and production, data from the Institute for Supply Management showed on Monday.


  • Factory index climbed to 60.2 (est. 58.5), matching the second-highest since 2004, from 58.7; readings above 50 indicate expansion
  • Gauge of supplier deliveries jumped to 68.2, the second-highest since April 1979, from 62; figure shows lead times increasing as producers have trouble meeting demand
  • Measure of new orders little changed at 63.5 after 63.7
  • Index of production increased to 62.3 from 61.5

Key Takeaways

While indexes of orders, production and factory employment remained elevated, the ISM’s main gauge of June factory activity was inflated by a surge in the group’s measure of supplier deliveries, indicating lengthening lead times.


The delays potentially reflect purchasing managers’ efforts to acquire materials ahead of President Donald Trump’s planned tariffs on Chinese products, which would follow levies on steel and aluminum from around the world. Such demand, coming on top of steady consumption and business investment, is testing capacity limits of both manufacturers and the transportation sector.


“Lead-time extensions, steel and aluminum disruptions, supplier labor issues and transportation difficulties continue,” Timothy Fiore, chairman of the ISM Business Survey Committee, said in a statement. “Demand remains robust, but the nation’s employment resources and supply chains continue to struggle. Respondents are overwhelmingly concerned about how tariff related activity is and will continue to affect their business.”

Supply-chain disruptions are also helping to push up input prices. The ISM’s latest measure of costs of raw and other materials used in manufacturing fell in June but remained close to a seven-year high.

We welcome the new company in the family “SeaTrade Aviation”

27 Jun 18
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Sea Trade Financial Corp. is proud to present the newest company in the “Sea Trade Family”:

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The weird reason that mighty Amazon isn’t in the Dow

27 Jun 18
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1. Amazon is too expensive for the Dow: Amazon and Jeff Bezos might be conquering the world, but there’s at least one exclusive club they haven’t gained entry to: The Dow Jones Industrial Average.

BY Matt Egan, Danielle Wiener-Bronner and Jill Disis


Amazon (AMZN) is one of the most consequential companies on the planet, so it stands to reason that it’d be in the world’s most famous stock market index.

Yet Bezos shouldn’t be waiting by the phone for an invite to the iconic yet quirky Dow. That’s because the 122-year-old index is price-weighted, meaning the influence of each stock is based on its price tag. Cheaper stocks have little sway, and vice versa.

Unless Amazon executed a rare stock split, its share price of $1,700 would give the e-commerce giant too much power in the index. That’s 46 times the price of Pfizer (PFE), the cheapest stock in the 30-stock index after General Electric gets the boot on Tuesday. GE’s puny stock price of $13 made the storied company nearly irrelevant in an index of which it was a founding member.

The rules that govern the Dow have also made it impossible for other extremely important companies to join the index. That includes Google owner Alphabet (GOOGL) and its stock price of nearly $1,200. And then there’s Warren Buffett’s Berkshire Hathaway (BRKA), whose Class A shares weigh in at $287,000 apiece.

“If you put in Berkshire Hathaway, everything in the Dow could go to zero and we’d still be up that day,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, which owns the Dow.

Silverblatt conceded that it’s possible an adjustment will be made in the future to open the Dow up to Amazon. However, he cautioned against radically changing an index that’s been around since 1896.

“This thing has worked for over 120 years. You don’t mess with it,” Silverblatt said.

The problem is that it used to be commonplace for companies to split their stocks when they got above $100, to make them cheaper for individual investors. That practice mostly stopped a decade ago due to the rise of ETFs, which allow investors to pool their money together to buy stocks. Individual stock prices don’t matter as much anymore.

“The pressure on companies to split their stock has gone down dramatically,” said Nicholas Colas, co-founder of DataTrek Research.

Still, the fact that Amazon, an $800 billion behemoth that has disrupted bookselling, department stores, cloud computing and groceries, can’t be in the Dow speaks to the limitations of the index.

That’s why sophisticated investors like hedge fund and mutual fund managers pay way more attention to the broader S&P 500. The 500-stock index is weighted by market capitalization, not stock price.

But don’t expect the quirks of the Dow to change its relevance with the average investor.

“The Dow is still the primary measure that Main Street uses to measure Wall Street. I don’t see that changing for a long time,” said Colas.

2. Goodbye, GE: Walgreens (WBA) will officially replace General Electric (GE) on the Dow on Tuesday before the market opens, ending its 110 year membership.

Last year, GE was the worst-performing stock in the Dow, losing almost half of its value. GE is down by another 26% this year.

S&P DJI said that Walgreens will help the index represent the consumer and health care sectors.

Being ousted from the Dow is the latest indignity for GE, which is dealing with a cash crisis caused by years of bad deals. GE has replaced its CEO, slashed thousands of jobs and cut its coveted stock dividend in half.

3. It’s halftime for Corporate America: The second quarter of the year wraps up on Friday.

Overall, companies had a strong first half, boosted by changes to the tax law. But it was a rocky time for the markets, including two 1,000-point plunges in the Dow and increased volatility because of tariff jitters.

Much of the shockwave was set off by Washington, including the Federal Reserve’s rate hikes and President Trump’s trade crackdown.

4. Chinese investment restriction details: The White House plans to announce proposed restrictions on Chinese investments in the United States by Friday. They will take effect at a later date.

Corporate America could suffer if the restrictions significantly cut off foreign capital. And American companies operating in China are preparing for business conditions to get worse.

Chinese investment in the United States has already fallen significantly. It totaled just $1.8 billion between January and May, a 92% drop compared to the same period last year, according to a report from Rhodium Group, a research firm that tracks Chinese foreign investment.

5. The battle for Fox: The ball is in Comcast’s (CCZ) court this week. The NBCUniversal owner tried to usurp Disney’s deal for most of 21st Century Fox’s (FOXA) TV and movie assets earlier this month, but was bested last week when Disney (DIS) raised its offer to $71 billion.

Comcast hasn’t yet said anything publicly, but Wall Street thinks it will still try to counter — CEO Brian Roberts badly wants Fox, which he thinks will better position the company to take on digital competitors like Netflix (NFLX).

Even so, many observers think Disney has the upper hand, in part because it offered a mix of cash and stock to Fox investors. Comcast has only bid cash so far.

Brexit is killing investment in UK car industry

27 Jun 18
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Investment in the UK auto industry has halved because of concerns that Brexit could cripple carmakers and force them to close factories.

BY Charles Riley


The Society of Motor Manufacturers and Traders said Tuesday that investment in new models, equipment and facilities in the United Kingdom was £347 million ($460 million) in the first half of the year, compared to £647 million ($860 million) in the same period of 2017.

The dramatic decline underscores fears that customs checks resulting from Britain’s departure from the European Union could hold up parts shipments needed to keep auto factories running smoothly.

BMW, which makes the iconic Mini at a factory near Oxford, warned on Monday that delays would result in plant closures.

“We always said we can do our best and prepare everything, but if at the end of the day the supply chain will have a stop at the border, then we cannot produce our products in the United Kingdom,” BMW customs manager Stephan Freismuth told the Financial Times.

A spokesperson for the German company confirmed the accuracy of the comments, but said that BMW (BMWYY) remained committed to its manufacturing operations in Britain as it works through “a range of possible Brexit outcomes and their potential impact on our business.”

“Clearly if parts cannot physically get to a factory at the expected time, that factory will not run as smoothly and reliably as is desirable,” the spokesperson said in a statement.

Big businesses are beginning to go public with stark warnings about the dire consequences of a messy Brexit as the clock ticks down to March 2019.

Airbus (EADSF) said last week that it could be forced to quit the country if there’s no deal on EU trading arrangements. Earlier in June, the head of Britain’s top business lobby group said the country’s car industry could be wiped out.

“If we do not have a customs union, there are sectors of manufacturing society in the UK which risk becoming extinct,” said Paul Drechsler, president of the Confederation of British Industry. “That is the reality.”

Car manufacturers, which rely on complicated global supply chains, are worried that Brexit will lead to new trade barriers and delays at the borders. About 45% of the cars made in Britain are exported to the European Union.

BMW employs 8,000 people in the United Kingdom, its fourth largest market. Nissan (NSANF), Toyota (TM), Honda (HMC) and Jaguar Land Rover also have major production facilities in Britain.

There are just over nine months to go before Brexit, but Britain has not yet secured a deal that eliminates the risk that goods will be subject to checks at the border, or even import tariffs.

Industry wants government to rethink Brexit

The British government has yet to agree a proposal for how to avoid customs checks at the UK-EU border, let alone win EU approval.

SMMT said it wanted “swifter progress on Brexit and a deal that, as a minimum, maintains customs union membership and delivers single market benefits.”

Avoiding delays at the border is particularly crucial for auto manufacturers, which rely on the timely delivery of parts from across the European Union. According to SMMT, more than 1,100 trucks bring components to Britain from the European Union each day.

“Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don’t change it,” SMMT chief executive Mike Hawes said in a statement.

Nearly half of EU business executives have already reduced investment in the United Kingdom following the Brexit referendum in June 2016, according to a survey published Monday by law firm Baker McKenzie. Some 46% of respondents have already seen disruptions to their supply chains.

Fujifilm is suing Xerox for more than $1 billion over failed merger

19 Jun 18
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BY Rishi Iyengar


Fujifilm wants more than $1 billion from Xerox for backing out of a merger between the two companies.

The Japanese firm filed a lawsuit in a district court in New York on Monday seeking “punitive damages for Xerox’s intentional and egregious conduct” in canceling the deal.

Xerox (XRX) was set to merge with Fuji Xerox, an existing joint venture between the two companies, in a deal that would have given Fujifilm (FUJIF) control of the combined entity.

But activist investors Carl Icahn and Darwin Deason, who own 15% of Xerox between them, bitterly opposed the deal, saying it undervalued the iconic American printer and copier firm.

Xerox said last month it had reached a new agreement with Icahn and Deason, which also saw CEO Jeff Jacobson and five other board members step down.

Xerox said in a statement that it was “extremely confident” about its right to back out of the deal. It said it would seek remedies for Fujifilm’s “mismanagement and misconduct.”

The amount Fujifilm is seeking is significantly higher than the $183 million “termination fee” the companies agreed upon if one of them walked away from the agreement. The Japanese firm argues Xerox has deprived it of the benefits of the deal they struck.

Fujifilm is also demanding that Xerox be ordered to pay the termination fee.

It said in a statement that it continued to believe that its takeover of Xerox was the “only correct solution” for investors in both companies.

“It is inconsistent with shareholder democracy to allow Carl Icahn and Darwin Deason, minority shareholders with only 15% of Xerox’s shares, to dictate the fate of Xerox,” the company added.

How a positive statement made millions for this T-shirt company

19 Jun 18
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BY Andrea Lo



In 1990, Bert and John Jacobs joked that they would “go where no T-shirt guys had gone before.”

The brothers embarked on a road trip along the East Coast of the United States, selling colorful T-shirts with abstract designs door to door.

It didn’t go well. Four years later, business was so bad they had just $78 between them.

“We were considering giving up,” Bert Jacobs told CNNMoney. But a “recurring conversation about the daily flood of negative news” made them wonder if a positive message could turn things around.

The brothers came up with the slogan “Life is Good” and printed it on their T-shirts.

It was a game-changing move. Within three years, the business had generated $1 million in sales.

Today, Life is Good is a lifestyle brand that makes roughly $100 million in annual revenue, selling products ranging from T-shirts and sleepwear to accessories and home decor items.

The Jacobs grew up in Needham, Massachusetts. In 1989, they co-designed their first T-shirt and sold it on the streets of Boston. Bert and John were aged 24 and 21, respectively.

“We were both looking for a way to make a living by creating art,” Bert Jacobs said. The world of fine art felt intimidating whereas “putting art on t-shirts was more down to earth,” he added.

In 1994, they created a smiley character called Jake and put him on T-shirts along with the “Life is Good” slogan. At a street fair in Cambridge, Massachusetts, all 48 T-shirts sold out within an hour.

“It confirmed everything we had hoped: people want to rally around something positive,” Jacobs said.

05 life is good
Life is Good has developed into a lifestyle brand that sells products ranging from T-shirts and sleepwear to accessories and home decor items.

Once the Jacobs found a design that resonated with customers, the business took off. It hit the $100 million sales mark in 2007.

Life is Good declined to disclose how much it made last year, only saying that the business is in “healthy shape.” It donates 10% of its annual profits to charities that help children in need.

The Jacobs still own and run the company, which is headquartered in Boston and has 178 employees. Its products sell in more than 2,500 stores in the US and Canada and ship internationally.

Even though the business is far bigger now, Bert Jacobs says the aim is the same as it was when it started out — to spread optimism.

“It’s a mission that feels more vital today than ever,” he said.

Australian company loses $1 billion on UK retail investment

25 May 18
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By Daniel Shane


A badly timed bet on the UK retail sector has cost one big Australian company $1 billion.

Wesfarmers (WFAFFsaid Friday that it was selling British home improvement chain Homebase at a huge loss, just over two years after it bought it.

Wesfarmers — which owns supermarkets, hotels and chemicals plants — paid £340 million pounds (about $470 million at the time) for Homebase in February 2016. It’s now offloading it for a “nominal amount” to Hilco Capital, an investment firm that specializes in restructuring struggling companies.

Wesfarmers Managing Director Rob Scott admitted during briefings with reporters and analysts Friday that the disastrous foray into UK retail had cost it about $1.3 billion Australian dollars ($1 billion) when all the losses from Homebase were added up.

Scott blamed Britain’s flagging retail sector.

“From the point we bought Homebase to where we sit now, there has been a dramatic deterioration in the UK macro and retail environment,” he said.

Bricks-and-mortar retailers in the UK have struggled since the country’s vote to leave the European Union almost two years ago.

The British pound dropped dramatically following the vote, making it more expensive for retailers to purchase goods from abroad. That has translated into higher prices for consumers, and growth in the wider economy has slumped.

The industry has been rocked by the collapse of household names like Toys “R” Us and electronics chain Maplin, and thousands of retail jobs have been lost.

Homebase currently has about 230 stores across the United Kingdom and employs 12,000 people.

homebase store RESTRICTED

But some analysts accused Wesfarmers of failing to adequately assess the risks before entering the UK market.

During a conference call with executives from the Australian company on Friday, Bank of America Merrill Lynch analyst David Errington called Homebase “a very poor investment” and called for Wesfarmers’ board to be held accountable.

“There’s got to be penalties for losing such a large amount of money in such a short space of time,” he added.

In response, Scott said that the company had been transparent about the problems with the deal and that managers’ pay would be affected by the losses.

The company admitted in its statement that “poor execution” of the Homebase deal was a key part of the problem.

Wesfarmers may at least get the opportunity to claw back some of its losses one day. The deal with Hilco Capital includes a clause that the Australian company gets 20% of any proceeds from a future sale of Homebase.

— Ivana Kottasová contributed to this report.

These companies are getting killed by GDPR

25 May 18
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By Ivana Kottasová


Europe’s new data protection law is coming into effect on May 25. For some companies, that means closing up shop.

The cost of complying with the new law has already forced an online game producer, a small social network and a mobile marketing firm to close key businesses or shut down entirely.

The EU General Data Protection Regulation (GDPR) applies to any organization that holds or uses data on people inside the European Union, regardless of how big they are or where are they based.

Google (GOOGL), Facebook (FB) and other big tech companies will be affected by the changes, but experts say that smaller competitors are finding it much harder to comply.

Julie Bernard, chief marketing officer at Verve, said that the mobile marketer would shutter its operations in Europe because “the regulatory environment is not favorable to our particular business model.”

She said that while the new law would benefit consumers, it may also advantage large companies with the resources — lawyers, data experts and programmers — needed to make the transition.

“The implications and ramifications of GDPR compliance will challenge numerous organizations … with resources on scales smaller than, say — and in particular — Facebook and Google,” said Bernard.

The new rules give Europeans more control over their personal data.

In many cases, companies need consent to process that information. They won’t be allowed to store the data for longer than necessary, and they must respond to requests from customers who want their data deleted. Data breaches must be promptly reported.

Companies may also have to prove they are handling data correctly, meaning increased monitoring and documentation. Some may have to hire data protection officers.

Complying with the new regulations isn’t cheap, and experts say the world’s biggest companies are spending tens of millions of dollars to prepare. Smaller companies that do not have the same resources are struggling.

“[They] don’t have the apparatus and the team in place to actually really continuously support this kind of compliance,” said Chris DeRamus, the chief technology officer at DivvyCloud.

Related: Under 16? You’re banned from WhatsApp in Europe

Uber Entertainment, which makes online games, will shut down its Super Monday Night Combat game on May 23 because of GDPR.

The company said it would cost too much to rewrite the game, or migrate it onto a different platform. The current design, which was built in 2009, makes it difficult to delete data from user accounts.

“We’ll keep playable for as long as we are legally allowed to, but the day GDPR hits, we’ll pull it down so as to be in compliance,” said Jeremy Ables, CEO of Uber Entertainment.

Gravity Interactive, the maker of Ragnarok and Dragon Saga games, is taking a different approach: It will block Europeans from accessing its games.

Czech internet company has said it will shutter its social network for classmates because of the regulation. It said the platform, which has 20,000 daily active users, would have to change completely in order to comply with the regulations.

Related: Your inbox is being flooded with emails about privacy. Here’s why

European lawmakers have pushed back on suggestions that GDPR could give the biggest tech companies an advantage over smaller rivals.

Giovanni Buttarelli, the European Union’s data protection supervisor, said that the biggest companies will also face the largest fines if they violate the rules.

The regulators can impose penalties on companies of up to €20 million ($25 million) or 4% of annual global sales, whichever is bigger.

“Accountability and obligations in the GDPR are scalable, with data protection authorities empowered to enforce the law with rigor proportionate to the scale of the violation,” Buttarelli said in a statement.

Experts say some smaller companies outside Europe might not yet realize that they have to comply with GDPR, because similar rules don’t exist in their home market.

As Gasoline Nears $3 a Gallon, U.S. Economy Likely to Motor On

25 May 18
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By  and 


Consumer spending in the U.S. is probably well-equipped to ride out near-$3 gasoline that’s made for the costliest driving in four years, though an extended and more pronounced increase could prove more challenging for the economy.

The price of regular-grade fuel has climbed 47 cents a gallon, or 19 percent, since the start of 2018, according to motoring group AAA. Pricier seasonal fuel blends and increased summer demand as families go on vacation have pushed the cost of gasoline to its highest since 2014. Nonetheless, the movement in prices from January through May is about in line with the average over past five years.

Prices typically peak each year in the traditional summer driving season kicked off by the upcoming Memorial Day weekend — when about 37 millionpeople are expected to be on the road, up almost 5 percent from 2017 — and taper off through the rest of the year.

While bigger fuel bills leave Americans with less to spend on other goods and services, there’s no sign yet the costlier fill-ups are altering overall shopping habits. Government figures last week showed that retail sales posted a broad-based advance in April, spurred by higher receipts at clothing stores, furniture merchants, building-materials outlets, non-store retailers and department-store chains. Analysts surveyed by Bloomberg News see economic growth rebounding to a 3.1 percent annualized pace in the second quarter and 3 percent in the following three months, following 2.3 percent in the January-March period.

What’s more, the last time gasoline exceeded $3 a gallon, in 2014, inflation-adjusted consumer spending actually kicked into a higher gear. During the first five months of that year, the nationwide average price rose from $3.33 to $3.67 a gallon. Rather than cutting back, households boosted inflation-adjusted outlays at a 3.5 percent annualized rate. As gasoline’s seasonal effects faded and prices retreated, real purchases accelerated even more throughout the remainder of the year.

For consumers, it all boils down to how they perceive the increase, and most measures of sentiment have held up fairly well as gas-price gains mounted. Rather than dwell on the pinch to their wallets, Americans are instead responding favorably to tax cuts, the lowest unemployment rate since 2000 and a moderate wage pickup.

Still, higher fuel bills matter over time. Every one-cent change in retail gasoline prices translates into about $1 billion in annual energy spending, so a $1 increase in costs would be equivalent to a $100 billion tax increase, according to calculations by Joseph LaVorgna, chief economist for the Americas at Natixis SA.

Fuel prices haven’t gained nearly that much this year, and overall inflation is moving up only gradually. Disposable incomes — earnings adjusted for taxes and price changes — have been growing in 2018, though at a cooler pace the past two months. One thing to watch is whether the saving rate comes under pressure; it has picked up slightly since dropping in December to a 13-year low.

— With assistance by Catarina Saraiva