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Kamis, 02 Mei 2019

VW profits meet expectations, warns of rising economic risks - CNBC

The Volkswagen logo is displayed at Serramonte Volkswagen on November 18, 2016 in Colma, California.

Justin Sullivan | Getty Images

Volkswagen reported first-quarter earnings in line with expectations on Thursday, as the automaker attempts to increase the pace of its transformation.

The German firm posted operating profit of 3.9 billion euros ($4.4 billion) for the first three months of the year. That compared with operating profit of 4.2 billion euros a year earlier. Analysts polled by Reuters had expected first-quarter operating profit to come in at 3.9 billion euros.

Volkswagen, which is still battling to recover from a 2015 scandal over emissions test cheating, also said it had decided to take a 1 billion euro charge in the first quarter, as a result of legal risks.

"It is certainly very unfortunate that we had to book more provisions but we assess every single risk and exposure we have continuously and it was the point in time to make those provisions," Frank Witter, chief financial officer of Volkswagen, told CNBC's "Squawk Box Europe" on Thursday.

The company confirmed its full-year guidance and said it expected sales to increase as much as 5%. It projected an operating return on sales between 6.5% and 7%.

Revenue advanced 3.1% to 60 billion euros for the first three months of 2019, despite a drop in deliveries.

The company did not provide a net profit figure.

'Optimistic but realistic' over potential US tariffs

Earlier this year, Volkswagen CEO Herbet Diess said the carmaker would need to redouble its efforts in 2019 in order to meet its ambitious annual targets.

Diess told the Financial Times in February that the biggest risk to Volkswagen's 2019 profit would be potential tariffs from President Donald Trump's administration.

At the time, he estimated the worst-case scenario regarding potential U.S. tariffs could cost around 2.5 billion euros a year — roughly 13% of expected earnings.

"We certainly hope that the trade disputes can be resolved but it is no secret that 100% of the Porsche cars are being exported from Europe to the United States," Witter said.

He explained that approximately 70% of all Audi products were sold in the U.S., while for Volkswagen passenger cars it was a very small percentage being exported from Europe to the U.S. since most of their cars were built in North America.

"So, we still hope for the best, we do whatever we can but we are not party to the negotiations … We continue to be optimistic but also realistic," Witter said.

In February, Trump said he would impose tariffs on cars imported from the European Union if U.S. talks with the bloc can't produce a new deal. The EU has since threatened to tax 20 billion euros ($22 billion) worth of U.S. goods.

Both sides have cautiously hung on to existing agreements, promising to take no action until talks are concluded.

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2019-05-02 05:56:08Z
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Rabu, 01 Mei 2019

Here's the one word from Jerome Powell that has people raising their eyebrows - CNBC

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., Sept. 26, 2018.

Andrew Harrer | Bloomberg | Getty Images

It only took one word from Fed Chair Jerome Powell on inflation to send the markets reeling, and that word was "transitory."

Traders have been speculating that recent weaker inflation readings would concern the Federal Reserve so much that it would cut interest rates later this year. Powell knocked that idea, by explaining that the central bank still sees the weakness as the result of "transitory" factors, such as portfolio management services, lower apparel prices and airfares.

The Fed's target on inflation is 2%, and the core PCE rate watched by the Fed fell to a surprising 1.6% in the first quarter.

"We suspect transitory factors may be at work," Powell said, adding inflation should return to the Fed's target over time, and then be symmetric around its objective. Powell was commenting at a news briefing, following the Fed's two-day meeting.

"If we did see inflation running persistently below, that is something the committee would be concerned about and something we would take into account when setting policy," he said.

Powell said the Fed believes a number of issues were holding back inflation but it's likely they are transitory like the change in cell phone rates that impacted inflation several years ago. "We're going to be watching these things carefully to see if that's the case," Powell said.

Treasury yields fell, the dollar strengthened and stocks sold off after Powell's comment, and also after he described some of the risk factors impacting the economy as moderating.

"Transitory was word of the day," said Michael Schumacher, director rates at Wells Fargo. "If you look at pricing for fed funds futures for the end of 2019, it moved by about nine basis points. The market is looking a lot more reasonable."

Prior to the Fed briefing, the fed funds futures were pricing 25 basis points of easing by December.

Schumacher said the market also reacted to the fact that Powell stressed that the Fed is not moving in either direction at this point, though it sees improvement in the global economy and less threat from risk factors, like trade and Brexit.

"They're in the middle at this point, not sitting on either end of the teeter totter, which is what they had been telling people, but the market didn't really believe it," he said.

Stocks were flattish before the Fed statement, and turned negative when Powell began to speak about inflation.

The yield on the 2-year Treasury note jumped to 2.30%. The 2-year correlates closely to expectations for Fed policy, and its low before the Fed's 2 p.m. statement was 2.20%.

"The market was pricing in this rate cut. They want a rate cut and this was basically Powell saying, 'sorry but we're not.' You have gold down, the dollar rallying and Treasurys selling off," said Peter Boockvar, of Bleakley Advisory Group

On Tuesday, President Donald Trump criticized Fed policy, saying it was holding back the U.S. economy. He said the Fed should cut by one percentage point and restart a program of quantitative easing, a policy tool used during the financial crisis.

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2019-05-01 19:46:23Z
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ADP private-sector job growth surges by 275,000 – as its own economist downplays report - MarketWatch

A job seeker talks with a recruiter during a job fair for veterans.

The numbers: Private-sector employers hired 275,000 people in April, payroll-processor ADP said Wednesday. That topped economists’ consensus surveyed by Econoday for 180,000 jobs added.

What happened: ADP’s estimate of job gains is designed to give investors an early read on the more closely followed nonfarm-payrolls report from the Labor Department on Friday. However, Mark Zandi, Moody’s Analytics chief economist and architect of the ADP report, cautioned that market participants shouldn’t get too ebullient based on the U.S. employment figures.

“This number overstates the case,” Zandi said on CNBC.

ADP’s increases in April were concentrated in the service sector: it accounted for 223,000 of the jobs added. In fact, only natural resources and mining, and information sectors lost jobs during the month.

Small businesses added 77,000 jobs, medium-size companies added 145,000, and big business accounted for 53,000 of the job gains.

ADP’s number for March, which was much lower than the Labor Department’s, was raised by 22,000 jobs.

Big picture: If the consensus forecast for Friday’s Labor Department release is correct – the MarketWatch consensus is for a gain of 210,000, while other forecasts are a bit lower – “that would be consistent with slowing job growth,” Zandi said Wednesday. “Job growth is still strong, but it is definitively slowing, consistent with a broad slowing in the economy.”

What they’re saying: “This is a big surprise, and very hard to square with survey evidence; all the private sector indicators we follow suggest labor demand is running at about 175-to-200K per month,” said Ian Shepherdson, chief economist for Pantheon Macro.

“The ADP report this month appears to be free of obvious distortions – though temperatures were a bit milder than usual – so we can’t just ignore it. The survey is not a reliable indicator of the official payroll numbers every month but the error against our ADP forecast is big enough to move the needle on our estimate for Friday’s official report; we now expect the BLS to report a 240K increase in April payrolls.” That was an increase of 40,000 jobs.

See: Americans say it’s easier to find a job now than at any time in the past 18 years

Market reaction: The 10-year Treasury note TMUBMUSD10Y, -1.94% slid earlier this week despite strong economic reports, likely because investors are betting tepid inflation will keep the Federal Reserve’s hands tied. U.S. stocks DJIA, +0.10% opened higher.

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2019-05-01 17:49:00Z
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Apple surges 6% day after earnings beat—here's what 4 experts predict will come next - CNBC

Wall Street's coming around on Apple.

Shares of the iPhone maker soared more than 6% on Wednesday after reporting earnings the previous evening, topping $1 trillion in market capitalization. Apple beat analysts' expectations on earnings and revenue for the fiscal second quarter, as well as their outlook for the company's third quarter.

The results empowered Apple bulls, particularly those who believe in the company's mission to tilt its business more toward services like iCloud and Apple Music, which grew 16% year over year.

Here are four Wall Street experts' reactions to the quarter:

Gene Munster, managing partner at Loup Ventures, saw several things that made him bullish:

"This company is an earnings powerhouse, and I want to put that into perspective. We just usually gloss over that [earnings per share] number. They're going to earn more money over the next five years — this is what we estimate — compared to overall FANG combined, or call it equal amount. So this is underappreciated, I think, by investors, and an important part: GAAP earnings powerhouse. The second is I want to put a finer point on China. It did improve. Specifically, the iPhone was the pain point last quarter. We estimate that the iPhone – this is not a reported number – was down 40%, 4-0, in the December quarter, and it was likely down 28% in the March quarter, so that was kind of the magnitude of improvement. And the last is the significance of the buyback. [...] This buyback … is a huge deal. And just to put it into perspective, if they make good on their promise — we're going to be listening on the call for the timing on this — to be net cash neutral, if they make good on that promise over the next five years, that theoretically should raise the stock price by about 25%. I won't go through the details and the math on that, but those are my three biggest takeaways. They're less about this quarter. If I had to add a fourth, which is an important one, it's this is probably the best play on 5G, and we're going to get tired of hearing about Apple and 5G, but stay tuned for more on that."

Guy Adami, director of advisor advocacy at Private Advisor Group and a trader on CNBC's "Fast Money," said the latest quarter should push market watchers to reevaluate Apple's valuation:

"I'm not going to pretend to be disingenuous. For me to pretend I've been some raging Apple bull — I have not. Most of the people on the desk have; I haven't. But one thing we've said is as revenues continue to grow in services, and now they're 19.7%, the valuation of Apple has to get better, and that [is], I think, what's happening now. The question you have to ask yourself is, as that number of services goes from 20% to 25[%], what is the right multiple for Apple? I would submit it's close to a market multiple, maybe 18 times. That gets you to a $235 stock, thereabouts. If you want to give them a bit of a discount, 16, 16.5 [times], it's fairly priced here. But I think that's the calculus that you have to do going out of these numbers now."

Chatham Road Partners' director of research, Colin Gillis, wasn't as impressed as others:

"[Apple CEO] Tim Cook lacks founder's flame, and he's going to be known, at least in my book, as the buyback king. He's a buyback CEO. His No. 1 accomplishment has been returning that $300 billion to shareholders. And fine, that's quite an accomplishment, but it also means you had no ideas. You had no ideas to better deploy that cash. And I think in 10 years from now, we may look at this cycle and the cash flow that has been generated from the iPhone and the lack of innovation to be able to deploy that cash and be regretful that Apple wasn't able to come up with new revenue streams."

Jeremy Bryan, senior portfolio manager at Gradient Investments, remained strategic:

"The thesis is still right for us. It's up 30% year to date. It's back to about a five-year high in valuation, so we think it was just prudent to take some off the table. The report looks good. We think the numbers look good. We still own a portion of it. But I think it was still prudent to take some off."

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2019-05-01 15:49:46Z
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S&P 500 soars to record as Apple becomes $1T company - Fox Business

The S&P 500 hit an all-time high Wednesday as surging Apple shares turned the iPhone maker into a $1 trillion corporation.

Apple reached that milestone when, in intraday trading, shares reached $212.07.

Ticker	Security	Last	Change	%Chg
AAPL	APPLE INC.	214.08	+13.41	+6.68%

Stocks also got a boost from a surprisingly strong ADP report on April job creation. ADP said U.S. employers created 275,000 jobs, far higher than the 180,000 analysts had expected.

Wall Street's gains came ahead of an interest rate announcement by the Federal Reserve, which is expected to hold the cost of money steady.

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Without Apple, which had added about 100 points to the Dow Jones Industrial Average in midday trading, the index would be slightly negative.

Energy companies and Google were weighing on indexes.

Ticker	Security	Last	Change	%Chg
GOOGL	ALPHABET INC.	1,174.18	-24.78	-2.07%
XOM	EXXON MOBIL CORPORATION	79.41	-0.87	-1.09%
CVX	CHEVRON CORP.	118.73	-1.33	-1.11%
OXY	OCCIDENTAL PETROLEUM CORPORATION	58.26	-0.62	-1.05%

Crude oil fell to $62.94 per barrel as U.S. inventories rise sharply. The Energy Information Administration said the nation's crude oil inventory jumped by 9.9 million barrels last week to 470.6 million barrels.

Treasury yields were fractionally lower ahead of the Fed's announcement on interest rates, which was set for 2 p.m. ET.

Ticker	Security	Last	Change	%Chg
I:DJI	DOW JONES AVERAGES	26606.72	+13.81	+0.05%
SP500	S&P 500	2945.23	-0.60	-0.02%
I:COMP	NASDAQ COMPOSITE INDEX	8123.050188	+27.66	+0.34%

Investors are coming off a big trading day: The S&P 500 on Tuesday notched a record high for the third straight session on unexpectedly strong quarterly results from General Electric and biopharmaceutical company Pfizer.

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Many bourses outside the U.S., including those in China, Korea and Japan, as well as continental Europe, were closed Wednesday for May Day observances.

One exception is Britain’s FTSE 100, which slipped 0.03 percent.

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2019-05-01 15:44:32Z
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CVS Health raises full-year profit forecast on Aetna strength - Yahoo Finance

FILE PHOTO: Logos of CVS and Aetna are displayed on a monitor above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., December 5, 2017. REUTERS/Lucas Jackson/File Photo

By Manas Mishra and Caroline Humer

(Reuters) - CVS Health Corp on Wednesday raised its full-year profit forecast and reported first-quarter earnings that topped Wall Street estimates due to growth in its Aetna health insurance business, and as drug prices fell within its expectations.

Shares rose more than 5 percent to $57.35. They had fallen 17 percent this year, hurt by a weak forecast in February and a cut to rival Walgreen Boots Alliance's full-year outlook last month due to lower generic drug prices.

Aetna, CVS's health insurance unit, beat analysts' consensus by more than a billion dollars in the quarter, helped by its accounting for lower medical costs than anticipated during the fourth quarter.

The company, which bought Aetna for $69 billion in November, said 2019 cost savings from the deal were tracking near the high end of its $300 million to $350 million range, and that 2020 savings would likely exceed its $750 million target.

The company said a handful of new "HealthHub" pharmacies launched in Houston this year that provide healthcare services, such as chronic care management for diabetes, have drawn more customers than expected. It plans to launch more such stores in Houston and plans to provide details of a national roll-out next month.

"Consumerism in healthcare is here to stay," CVS Chief Executive Larry Menlo said. "We are beginning to see this evolution through the HealthHubs. We are not just selling hundreds of products, it's a combination of products and services."

Menlo also said the company would take part in a pilot project announced by the U.S. Center for Medicare and Medicaid Services to expand point-of-sale rebates to patients in Medicare plans. The government has also proposed a rule that would require health plans to pass on all rebates, but it is not clear if it will be finalized for 2020.

Sales in its health care benefits unit rose by $16.55 billion to $17.78 billion with the addition of Aetna to its operations.

Sales of prescription drugs at its pharmacies were hurt as the company gets paid less for filling prescriptions. That was offset by higher volumes and higher prices of brand name drugs.

CVS in February had cautioned that rebate payments it guaranteed to customers were larger than what it has received from drugmakers due to lower-than-expected increases in drug prices.

"Considering that expectations have been low, we see this as the first positive catalyst that restores investor confidence in this management team," SVB Leerink analyst Ana Gupte said of the first-quarter profit and raised 2019 forecast.

CVS said it now expects full-year adjusted profit of $6.75 to $6.90 per share, compared with its prior forecast of $6.68 to $6.88.

Overall sales at its retail unit, which also sells over-the-counter-drugs and consumer health products, rose 3.3 percent to $21.12 billion.

The drugstore chain operator and pharmacy benefits manager said it earned $1.62 per share excluding items, beating analysts' average estimate by 12 cents per share, according to IBES data from Refinitiv.

Net income rose 42.4 percent to $1.42 billion in the first quarter. Revenue rose 34.8 percent to $61.65 billion.

(Reporting by Manas Mishra in Bengaluru and Caroline Humer in New York; Editing by Saumyadeb Chakrabarty and Bill Berkrot)

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2019-05-01 15:24:00Z
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Why that strong ADP jobs number could be painting an inaccurate picture - CNBC

A store front window in Miami Beach.

Joe Raedle | Getty Images

Moody's Analytics chief economist Mark Zandi said technical issues may have made ADP's report on the April job market look much stronger than it actually was.

Earlier Wednesday, ADP's report with Moody's said private sector hiring hit an eye-popping 275,000 in April, just about 100,000 more than expected.

But Zandi said on CNBC shortly after the release that technical factors may have inflated the number. He also said, in the ADP release, that the number overstates the strength of the economy.

"Bottom line, I don't think it's going to come in at 275,000. My sense is its going to come in pretty close to consensus 175,000 to 200,000," he later said in a telephone interview.

ADP's payroll number sometimes tracks close to the actual government nonfarm payroll report, and sometimes not. Still, it is monitored by Wall Street as one metric to watch ahead of the monthly jobs report, typically released two days later.

Zandi said he doesn't normally qualify the number. "I did that because there are three technical issues going on that conspired to pump it up," he said.

"We take the ADP number, other economic variables and use that to estimate the BLS number. The ADP number came in unusually soft compared to what we've been seeing in recent history. Relative not only to last couple of months but last couple of years," he said.

At the same time, very low jobless claims in the survey week counterbalanced the weak ADP payroll number. And that inflated the number. Another factor is the 275,000 ADP number includes some actual history of the government reports.

"When trying to predict this months' change we also look at recent history. If you're in a period of strong job growth, that will affect your estimate. If you're in a period of weak job growth, that will affect your estimate. And if you have a period of extraordinary volatility, that's also going to show up in the number, and that pumped up the [ADP] number," he said.

Zandi said there are often technical factors surrounding the number, but this was an extreme case.

"It's an estimate. I could adjust it, but I didn't' want to do that. I didn't' think that was appropriate," he said. "I thought it was important to provide context."

Nonfarm payrolls, released by the government, have been extremely volatile this year. January job gains totaled 312,000; February was 33,000 and there were 196,000 jobs created in March.

As for the government's report Friday, Zandi said it may contain its own quirks. For instance, the government report theoretically could be inflated by census workers added to the government payrolls in April or May.

"That could be a couple hundred thousand people," he said.

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2019-05-01 14:43:49Z
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