Peugeot owner in merger talks with Fiat Chrysler - BBC News

PSA Group, the French owner of Peugeot, is exploring a merger with its US-Italian rival Fiat Chrysler, it has confirmed.

A deal between the two carmakers would create a business with a combined market value of nearly $50bn (£39.9bn).

This is Fiat Chrysler's second attempt at a merger this year after it pulled out of an agreement with Renault in June.

Fiat Chrysler shares jumped 7.5% on Wall Street.

The potential merger would face significant political and financial hurdles.

Discussions remain in the early stages and there is no guarantee of a final deal.

However, if the two companies do combine, PSA chief executive Carlos Tavares is expected to lead the enlarged group.

John Elkann, Fiat Chrysler's chairman and the head of Italy's Agnelli industrial dynasty which controls the business, would retain the same position at the new company.

A merger of the two groups would bring a number of brands under one roof including Alfa Romeo, Citroen, Jeep, Opel, Peugeot and Vauxhall.

• Fiat Chrysler withdraws bid for Renault

The talks come months after a proposed tie-up between Fiat Chrysler and French carmaker Renault collapsed.

Fiat Chrysler had described its bid for Renault as a "transformative" proposal that would create a global automotive leader.

Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.

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https://www.bbc.com/news/business-50228611

2019-10-30 08:16:15Z
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Peugeot owner in merger talks with Fiat Chrysler - BBC News

PSA Group, the French owner of Peugeot, is exploring a merger with its US-Italian rival Fiat Chrysler, it has confirmed.

A deal between the two carmakers would create a business with a combined market value of nearly $50bn (£39.9bn).

This is Fiat Chrysler's second attempt at a merger this year after it pulled out of an agreement with Renault in June.

Fiat Chrysler shares jumped 7.5% on Wall Street.

The potential merger would face significant political and financial hurdles.

Discussions remain in the early stages and there is no guarantee of a final deal.

However, if the two companies do combine, PSA chief executive Carlos Tavares is expected to lead the enlarged group.

John Elkann, Fiat Chrysler's chairman and the head of Italy's Agnelli industrial dynasty which controls the business, would retain the same position at the new company.

A merger of the two groups would bring a number of brands under one roof including Alfa Romeo, Citroen, Jeep, Opel, Peugeot and Vauxhall.

• Fiat Chrysler withdraws bid for Renault

The talks come months after a proposed tie-up between Fiat Chrysler and French carmaker Renault collapsed.

Fiat Chrysler had described its bid for Renault as a "transformative" proposal that would create a global automotive leader.

Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.

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https://www.bbc.com/news/business-50228611

2019-10-30 07:28:56Z
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S&P 500 record: How much higher can US stocks go? - CNN

The S&P 500 notched a new closing record on Monday, jumping above 3,039 as hopes for progress on a US-China trade deal sent markets higher.

But fresh highs raise the question: How much longer can the bull market for US stocks go on?

UBS, in a report out Monday, said it believes the US business cycle has transitioned to its late stage, as characterized by decelerating economic growth and Fed monetary policy that's "roughly neutral." The bank reduced the proportion of stocks it recommends wealthy clients hold in their portfolios earlier this year.

From UBS senior economist Brian Rose: "Last year, our main concern was that the economy would overheat, forcing the Federal Reserve to tighten monetary policy and causing the cycle to end. More recently, growth has slowed and the Fed has been cutting rates. The main risk now appears to be that the economy will simply continue slowing until a recession begins."

The good news? UBS points out that the economy can be "late cycle" for a long time.

JPMorgan, meanwhile, is bullish on global equities, but recently moved out of some US stock holdings in favor of international shares. The bank thinks that a resolution to Brexit uncertainty could boost European stocks down the line, and believes it's a good moment to get in on stocks in Japan, which Mislav Matejka, JPMorgan's head of global equity strategy, has called "underowned" and "cheap."

Worth watching: Investors have the money to pump into US stocks, should they desire. US equity funds have seen $96 billion in outflows so far this year, in favor of bond and cash funds, Goldman Sachs pointed out in a recent note to clients.

Their outlook: The investment bank thinks equity allocations will "remain relatively stable" in 2020 as economic growth stabilizes and interest rates start to rise again.

Google's business has gotten complicated

Recent regulatory scrutiny hasn't hit the growth of Google's core advertising business. But the company missed Wall Street's targets when it reported earnings on Monday — raising the question of whether diversification is weighing the company down.

Google parent Alphabet said that revenue for July through September topped $40 billion, an increase of 20%, my CNN Business colleague Clare Duffy reports. But the company missed expectations by a wide margin.

That's due in part to a roughly $1.5 billion knock from equity investments. The company didn't identify any holdings in particular, but its various venture arms have backed companies like Uber and Slack, which have struggled since going public earlier this year. (A report that Alphabet could buy Fitbit sent shares of the fitness tracker up 30% on Monday.)

Ad revenues, meanwhile, grew 17% to nearly $34 billion. That comes even as the company faces an antitrust investigation by attorneys general from 48 states and large antitrust fines from the European Union tied to its dominance in online advertising.

Markets react: Investors aren't thrilled, but also don't seem overly concerned. Shares of the company are down a little more than 1% in premarket trading. Attention now turns to Apple (AAPL) and Facebook (FB), which report earnings later this week.

Earnings watch: We're about halfway through earnings season. Third quarter results have come in 2% above consensus, while fourth quarter estimates have dropped 2% since the beginning of October, per Bank of America Merrill Lynch.

Beyond Meat can't satisfy investors

Beyond Meat (BYND) posted strong earnings on Monday, eking out its first quarterly profit. But investors were unimpressed, my CNN Business colleague Paul R. La Monica reports. Shares of the fake meat company are down nearly 12% in premarket trading.

What gives? The company's lockup period ends Tuesday, allowing corporate insiders to cash out of their positions.

Beyond Meat executives have tried to assure investors that this won't mark the end of the company's public market success. Beyond stock debuted in May at $25 a share. It soared close to $240 before pulling back to its current price, around $105.

But there's obviously some concern, especially amid the ongoing counter-narrative that the company is grossly overvalued. And competition is getting tight, with products from competitor Impossible Foods scoring big wins.

More earnings. BP (BP), GM (GM), Kellogg (K), Pfizer (PFE) and Xerox (XRX) report results before US markets open. Denny's (DENN), Mattel (MAT) and Mondelez (MDLZ) will follow after the close.

Also today:

• US consumer confidence for October arrives at 10 a.m. ET.
• Boeing CEO Dennis Muilenburg testifies about the company's 737 MAX crisis before the Senate Committee on Commerce, Science and Transportation, also at 10 a.m. ET.
• AT&T, CNN's parent company, holds an HBO Max presentation for investors on the Warner Bros. studio lot in Burbank, California at 6 p.m. ET.

Coming tomorrow: How is Facebook's business holding up amid growing political pressure?

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https://www.cnn.com/2019/10/29/investing/premarket-stocks-trading/

2019-10-29 12:04:08Z
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Saudi woos back top bosses despite Khashoggi murder - BBC News

Saudi Arabia has attracted high-profile business and political figures to its "Davos in the Desert" event, including some who stayed away last year over the killing of journalist Jamal Khashoggi.

The event, under way in Riyadh, features US Treasury Secretary Steven Mnuchin, who pulled out last time.

Others who have changed their minds since then include the bosses of Credit Suisse, Blackstone and BlackRock.

HSBC's John Flint dropped out in 2018, but interim boss Noel Quinn is there.

The event, officially known as the Future Investment Initiative, is being held for the third time and is viewed as the kingdom's key annual investment event.

It is organised by Saudi Arabia's Public Investment Fund and despite its nickname, has no connection with the World Economic Forum's annual event in the Swiss resort of Davos.

It became mired in controversy last year amid a wave of revulsion after Mr Khashoggi, a prominent critic of Saudi Arabia's government, was killed inside the kingdom's consulate in Istanbul by a team of Saudi agents.

Saudi prosecutors have put on trial 11 people who they say were involved in the "rogue operation" that led to Khashoggi's death. They are seeking the death penalty for five of them.

But Human Rights Watch says the trial does not meet international standards and that Saudi authorities have "obstructed meaningful accountability".

Oil flotation

On Tuesday, the first day of the three-day event, participants include three people who pulled out at the last minute last year:

• Stephen Schwarzman, chairman and chief executive of the Blackstone Group
• Tidjane Thiam, chief executive of Credit Suisse
• Larry Fink, chairman and chief executive of BlackRock.

Other big names due to speak on Tuesday were Indian Prime Minister Narendra Modi, World Bank President David Malpass and US President Donald Trump's son-in-law Jared Kushner.

Not all business sectors have returned to the Saudi fold. Uber chief executive Dara Khosrowshahi was one of last year's dropouts and big tech firms are absent from this year's line-up.

The forum is taking place as uncertainty continues over the timing of plans to float part of Saudi state oil giant Aramco.

The latest reports carried by al-Arabiya television suggest that shares in Aramco will begin trading on the Riyadh stock exchange on 11 December, but there has been no official confirmation.

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https://www.bbc.com/news/business-50219035

2019-10-29 10:51:28Z
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Australia Says Google Misled Consumers Over Location Tracking - The New York Times

SYDNEY, Australia — Australian regulators on Tuesday accused Google of misleading consumers about its collection of their personal location information through its Android mobile operating system, the latest government action against a tech company over its handling of vast quantities of user data.

The Australian Competition and Consumer Commission alleged in a lawsuit that Google falsely led users to believe that disabling the “Location History” setting on Android phones would stop the company from collecting their location data. But users were actually required to also turn off a second setting, “Web and App Activity,” that was enabled by default.

Google did not properly disclose the need to disable both settings from January 2017 until late 2018, the suit alleges. The company changed its user guidance after The Associated Press revealed in August 2018 that it was continuing to collect the data even after the Location History setting was switched off.

The commission also said that while Google made it clear to users what features they would lose by turning off location services, the company did not inform them adequately about what it would do with the data collected.

“This is part of a system of not being able to make informed choices about what’s being done with your data,” said Rod Sims, the commission’s chairman.

Mr. Sims called the lawsuit the first of its kind by a national government against a tech company over its use of personal data. The agency is seeking what he called significant financial penalties against Google, among other corrective measures. He added that he hoped the case would raise awareness among consumers over how much data is being collected.

“We need to be getting ahead of them, because this is a whole new world,” he said of data collection issues.

A Google spokeswoman said in a statement that the company was reviewing the allegations. She said Google would continue to engage with the commission over its concerns but intended to defend itself.

The action by Australian regulators comes as governments and consumer groups around the world have expressed growing concern about the power of tech companies, including their collection of personal data from devices that are indispensable to the lives of billions of people.

Consumer groups from several European countries had already sued Google over the location tracking issue under a comprehensive data privacy law adopted in Europe last year. Under that law, a French agency fined Google 50 million euros, or about $55 million, in January for not properly disclosing to users how it collected data to create personalized ads.

In the United States, regulators approved a $5 billion fine against Facebook this year over its role in allowing Cambridge Analytica, a political data firm hired by President Trump’s 2016 election campaign, to gain access to private information on more than 50 million Facebook users.

While Google has made changes to Android in later iterations that limit the location data it gathers, the business incentives for collecting as much personal data as possible remain great. Location-targeted advertising is worth an estimated $21 billion a year, and Google, along with Facebook, dominates the mobile ad market.

The Australian lawsuit is in part the product of a 19-month investigation by the consumer commission into the market power of Google and Facebook. It issued 23 recommendations, including an overhaul of privacy laws, to limit their reach and force them to take more responsibility for the content they disseminate.

The Australian government has also passed legislation challenging the power of tech companies, including a law in 2018 that compelled tech-industry giants to disable encryption. And under a new law criminalizing “abhorrent violent material” online, Australia is using the threat of fines and jail time to pressure platforms like Facebook to block such content, and it is moving to take down websites that hold any illegal content.

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https://www.nytimes.com/2019/10/29/world/australia/australia-google-location.html

2019-10-29 10:07:00Z
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Aramco hoping to begin its planned IPO this Sunday, report says - CNBC

Storage tanks are seen at the North Jiddah bulk plant, an Aramco oil facility, in Jiddah, Saudi Arabia, Sunday, Sept. 15, 2019.

Amr Nabil | AP

DUBAI — Saudi state-owned oil giant Aramco is planning to announce the start of its long-anticipated public offering on Sunday November 3, Reuters reported Tuesday, citing three sources with direct knowledge of the matter.

State broadcaster Al Arabiya reported that shares of the company will begin trading on the Tadawul, Saudi Arabia's stock exchange, on December 11. The local outlet also said Aramco aims to announce the transaction price on November 17 with a final IPO price announcement planned for December 4.

Aramco and the Tadawul did not immediately reply to CNBC requests for comment. In a comment to Reuters, Aramco said it "does not comment on rumor or speculation. The company continues to engage with the shareholders on IPO readiness activities. The company is ready and timing will depend on market conditions and be at a time of the shareholders' choosing."

The reports come as the kingdom kicks off its Future Investment Initiative (FII), an annual showcase of its investment opportunities, attended by major international investors and state officials.

Speculation and delayed announcements on the public listing of the world's largest company have riveted investors and market watchers since plans for the float were first disclosed three years ago. The oil giant has delayed the IPO — originally scheduled for 2018 — multiple times, reportedly over Saudi concerns about public scrutiny over its finances and because of the complexity of its corporate structure. The listing would be the largest public offering in history.

The kingdom reportedly plans to list 1% of Aramco on its local stock exchange before the end of this year and another 1% in 2020, as first steps ahead of a public sale of roughly 5% of the company.

Speaking at the FII on Tuesday, Saudi Public Investment Fund Governor Yasir al-Rumayyan said that the prior separation of Aramco from the kingdom's sprawling energy ministry was to avoid a conflict of interest, and told attendees that Aramco will have more institutional shareholders "soon."

The Aramco listing would aim to drum up cash for a government looking to significantly reduce its budget deficit and diversify its economy beyond oil as part of Crown Prince Mohammed bin Salman's Vision 2030.

—CNBC's Emma Graham contributed to this article.

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https://www.cnbc.com/2019/10/29/aramco-hoping-to-begin-its-planned-ipo-this-sunday-reuters.html

2019-10-29 09:50:43Z
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Google joins in Amazon’s spending spree, but to a lesser degree - MarketWatch

MarketWatch First Take

By Therese Poletti

Published: Oct 28, 2019 8:51 pm ET

Earnings from two of tech’s biggest names are hit by return to investing in the future of the businesses

The cost of new hires and real estate added up for Google last quarter.

Alphabet Inc.’s big earnings shortfall was not just the result of its equity investment losses: Continued heavy spending on hiring and real estate by the internet search and advertising behemoth also played a role.

Google’s parent company reported third-quarter profit far lower than Wall Street’s estimates Monday afternoon. Alphabet GOOG+1.97% GOOGL+1.95%  reported net income of $7.07 billion, or $10.12 a share, a year-over-year profit decline of more than 22% that missed estimates by nearly 18%. The stock fell by more than 1% in after-hours trading following the results.

Full earnings results: Alphabet earnings miss estimates, driving shares down

Alphabet executives blamed the profit decline on free spending, a longtime habit for Google that has declined since Chief Financial Officer Ruth Porat arrived from Wall Street. That is the same reason another big name in tech, Amazon.com Inc. AMZN+0.89% gave for its earnings downturn this year, as the two companies battle in new arenas — such as Amazon’s growing ad business and Google’s rising enterprise-cloud offering — for a more promising future.

Hiring was a big part of Google’s spending, Porat said in Monday’s conference call, along with investments in cloud data centers and offices to house all the new employees. Alphabet added 19,724 workers in the past year, and 6,450 in the third quarter.

“Head-count growth on an absolute basis in the third quarter was unusually high, reflecting the addition of new college hires,” Porat said, while promising that employee count will “be in line with growth in 2018.”

The company also said it spent $7.2 billion on capital expenditures, up from $5.3 billion a year ago. The spending this quarter included building out data centers and spending on new offices and campuses in the Bay Area and in Seattle. Technical infrastructure, such as data-center technology, accounted for only 60% of capex in the quarter, Porat said.

“Investments in office facilities included the $1 billion acquisition of a portfolio of buildings in Sunnyvale and in the purchase of two buildings to expand our presence in the Seattle area,” the CFO said.

Going forward, however, Porat said she expects that the primary driver of its capital expenditures will continue to be expanding its data centers and increasing the compute requirements to support machine learning, cloud search and YouTube.

Compared with Google’s rival in Seattle, Alphabet’s spending still seems anemic. Amazon added nearly 100,000 employees in the third quarter, which means that it hired roughly as many people every week as Alphabet did in the entire quarter. It also said it spent $4.7 billion in the quarter on purchases of property and equipment, which ostensibly includes its data center and warehouse build-outs.

Neither company has made a big splash in acquisitions recently, though Alphabet is reportedly eyeing a well-known name: Fitbit Inc. FIT+30.86%  . Reuters on Monday reported that Alphabet was considering purchasing the wearables company to round out its growing hardware offerings, which could lead to a lot more money heading out the door.

Alphabet definitely was on a big spending spree last quarter, and it is worthwhile to keep an eye on Google’s costs as potential antitrust litigation becomes a bigger factor in the next year or two. But if the tech titans are going to keep spending amid tariff fears and whispers of the end of the current tech boom, investing in the future is a much better target than even more stock repurchases.

See original version of this story

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https://www.marketwatch.com/amp/story/guid/5DD68FCC-F9D0-11E9-8CE0-D87A385750D5

2019-10-29 01:51:00Z
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