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People Moves: Ex-JPMorgan banker to be Argentinian finance minister
Capital Markets
<p>Former JPMorgan banker to be Argentinian finance minister. Alfonso Prat-Gay will likely become the finance minister for the new Argentinian government. Prat-Gay confirmed he will be a member of the cabinet, but did not say which position yet. Prat-Gray previously served as president of the Argentinian central bank, as well as the head of emerging market research at JPMorgan Chase. He also founded asset management firm Tilton Capital. Chicago Tribune</p> <p>&nbsp;</p> <p>&nbsp;<br /> Photo: ©iStock.com/ooyoo<br /> &nbsp;</p>
Does Black Friday still matter?
Capital Markets
<p>The LPL Research Thought Leadership piece “Does Black Friday Still Matter?”  examines how the Black Friday weekend impacts retailers, consumers, the economy and investors?<br /> Some of the highlights are:</p> <p> Sales estimates have fallen over the past few years during the Black Friday weekend.<br /> The lower sales have not negatively affected retailers, because gross profit margins are actually highest during the holiday season.<br /> While Black Friday and Cyber Monday are good predictors of total holiday sales, neither does a good job explaining subsequent stock market returns.<br /> Holiday shopping can correlate with GDP and the additional employment around the holidays can be economic indicators.</p> <p>Lower Black Friday Sales Estimates</p> <p>The day after Thanksgiving, also known as Black Friday, seems to receive more media hype each year, as it is the unofficial kick off of the holiday season. Markets also pay attention, as Black Friday has historically been an early indicator of consumer demand during the important holiday shopping season. But Black Friday sales estimates have fallen for the past two years, leading to the question, is the weekend after Thanksgiving as impactful as it was in the past? And, should investors be worried?</p> <p>The Evolving Consumer</p> <p>The Black Friday weekend has been a draw for consumers since the 1950s, but media coverage has picked up steam in recent years, with people braving cold weather, long lines, and short tempers to find the best deals. Contrary to popular headlines discussing the frenzied madness, sales estimates for the Black Friday weekend have actually decreased over the past couple of years. Does this mean that Black Friday shopping is becoming less relevant for consumers?</p> <p>One driver of lower Black Friday sales relative to history is the wider usage of internet retailers. Online sales have increased over the past decade, so much so that they earned their own discount day — Cyber Monday. This term was originally coined in 2005 when everyone returned to work the Monday after Thanksgiving. Corporate networks used to have much higher speeds than the typical home, and employees still in the Black Friday mindset would go into work and do their holiday shopping online. With broadband internet access widely available now, online sales are no longer dependent on Cyber Monday, though the propensity for online retailers to offer special deals on the day means it continues to be relevant.</p> <p>Online retail has seen stronger growth than traditional retailers in recent years [Figure 1], which is no surprise given that online is starting from a smaller base. Traditional brick and mortar retailers have also turned to the internet and account for at least part of the pickup in online sales. Traditional retailers are working hard to compete in the online world, often leveraging their large distribution and physical store networks by allowing free delivery to a customer’s local store.</p> <p>While Cyber Monday sales have seen strong growth over the past few years, the gains haven’t been enough to offset an overall decline in the four-day weekend (Black Friday through Cyber Monday) [Figure 2]. The recent trend of stores opening on Thanksgiving, as well as additional discounting closer to Christmas (Super Saturday, the Saturday before Christmas, is one such example), indicates customers may be spreading out purchases throughout the holiday season and diminishing the importance of the four-day shopping period. Sales for the holiday season overall have actually increased over the years, despite the drop in Black Friday sales.</p> <p>Discounts Lead To Profits For Retailers</p> <p>Black Friday clearly matters to retailers, as it is among the busiest shopping days of the year. Every year, companies from department stores to electronics retailers —and even home improvement warehouses — advertise heavily discounted items to draw shoppers in. Over time, these tactics have been successful and led to increased sales during the holiday season. Figure 3 shows total quarter
All hepped up about Black Friday? Cyber Monday is even bigger
Capital Markets
<p>The Financial Times reports:</p> <p>&nbsp;</p> <p>The National Retail Federation projects that 135.8m people will shop in stores and online over Black Friday weekend, compared with 133.7m last year.<br /> A total of 183.8m people said they would shop on Cyber Monday, according to an NRF survey.</p> <p>Spending over the entire holiday period is projected to increase 3.7 per cent to $630.5bn this year, with the average family spending $805. That is, however, below the 4.1 per cent increase in spending recorded last year.<br /> Photo: Bossi </p>
Adobe predicts double-digit sales growth for retailers this Thanksgiving as discounts rise
Capital Markets
<p>Discounts appear to be drawing a record number of shoppers. What will this mean for the bottomline of the nation's retailers?</p> <p>It's a record-breaking Thanksgiving for retailers. @AdobeIndex predicts double-digit YoY sales growth of 24%. pic.twitter.com/SzlCwnhsW2<br /> — Marketing Cloud (@AdobeMktgCloud) November 26, 2015</p> <p>Product discounts have averaged 15 percent so far this season and continued to increase since last weekend pic.twitter.com/wKxWwxWdr3</p> <p>— Adobe Digital Index (@AdobeIndex) November 25, 2015</p> <p>Thanksgiving will produce the lowest retail prices of the season #blackfriday https://t.co/HQd7i8j16I pic.twitter.com/I23rGauVPo<br /> — Adobe Digital Index (@AdobeIndex) November 25, 2015</p> <p>If spending continues at this level, Adobe expects $1.65 billion dollars to be spent online today (up 18% YoY) pic.twitter.com/0mQSSAzqRu</p> <p>— Adobe Digital Index (@AdobeIndex) November 26, 2015</p> <p>Featured photo: Mark Hillary</p>
Daily Scan: China markets hemorrhage on crackdown; mining stocks lead Europe decline
Capital Markets
<p>Updated throughout the day</p> <p>November 27, 2015</p> <p>The fresh regulatory crackdown in China and deteriorating profits saw markets tumble on Friday, with the Shanghai Composite index falling 5.48%. The Hong Kong’s Hang Seng Index was down 1.87%, while the most of the rest of the region was also dragged down. In Japan, the Nikkei was down 0.3%, reversing its earlier gains.</p> <p>In Europe, the FTSEurofirst 300 was down 0.7% at the open, falling from Friday’s three-month high. Mining stocks, sensitive to developments in China, are leading the decline dropping 1.5% and erasing Thursday’s gains.</p> <p>Here's what else you need to know:</p> <p>Citic, Guosen subjects of Chinese regulator probe. Citic Securities and Guosen Securities have received formal notice from the mainland’s securities watchdog that they are under investigation for suspected violations of securities law, the two brokerages told the Shanghai Stock Exchange on Thursday night. The companies will operate as normal as the China Securities Regulatory Commission investigates. SCMP (paywall)</p> <p>China’s industrial profits drop for the fifth-straight month. Industrial profits from the Middle Kingdom dipped 4.6% year on year in October, well below the previous month’s 0.1% decline. Falling sales, rising costs, and decreasing margins in the oil, steel, and coal industries all added to the disappointment. Reuters</p> <p>Banks will still pay big bonuses – to the chosen few. Reports may be rife that investment banks will be slashing bonuses, but for the banks’ golden boys – or girls – things are a little different: “The world has changed quite a bit, even if bonuses are down…the best jockeys will be protected.” Financial Times (paywall)</p> <p>Sarko veers right. Speaking to supporters in Alsace, former French president Nicolas Sarkozy blamed multiculturalism for the Paris attacks and called for the return of “eternal France,” saying “there is no French identity, no happy identity in a multicultural society.” Financial Times (paywall)</p> <p>Russia threatens to pull out of coalition. Russia said it will pull out of the US-led coalition fighting Islamic State in Syria if there was any repeat of the shooting down of its fighter jet by Turkey. The Guardian</p> <p>Japanese econ data disappoints. While CPI figures came in better than expected at some points, household spending within the world’s third largest economy remains terribly weak, and could prove to be a major drag on the nation’s economy. Forex Live</p> <p>Japan PM unveils new social programs to boost economy. Prime Minister Shinzo Abe said Thursday he would increase spending on social programs and raise the minimum wage as he tries to jumpstart the flagging economy ahead of an election next summer. Wall Street Journal (paywall)</p> <p>China defends coal use ahead of Paris climate summit. China's special envoy on climate change, Xie Zhenhua, has defended the country's decision to build more coal-fired power plants. With two-thirds of its energy still generated by coal, China produces and consumes almost as much of the fossil fuel as the rest of the world combined. CNN</p> <p>Myanmar hopes U.S. will lift sanctions. Anticipation is high among blacklisted Myanmar companies and American business groups that the U.S. will ease lingering economic sanctions in coming months, following positive reviews of recent elections. Wall Street Journal (paywall)</p> <p>IPOs set to resume in China. China’s securities oversight authorities will resume initial public offerings in the country as early as the start of next week after a hiatus of about five months.Twenty-eight companies are expected to go public by the end of the year. The China Securities Regulatory Commission decided to the ban as the market regains health. Nikkei</p> <p>Four senior KPMG partners arrested in Belfast. KPMG has placed four of its senior partners on administrative leave after they were arrested in Northern Ireland in connection with an investigation into alleged tax evasion. Financial Times (paywall)</p> <p>Fitch places BTG Pactual on negati
Big Pharma's deal obsession
Capital Markets
<p>Another week, another M&amp;A deal by pharmaceutical companies with peculiar names. Here are two takes on Pfizer's $160 billion planned acquisition of Dublin-based Allergan:</p> <p>John Gapper in the Financial Times focuses on their addiction to asset trades and neglect of research:</p> <p>"Pharmaceuticals companies used to be research enterprises that discovered and developed drugs. Then they became marketing giants, skilled at selling as many blockbuster pills as possible. Lately, they have turned into mergers and acquisitions machines, buying and selling medicines invented by others. It is hard to view their evolution as progress." (paywall)</p> <p>Hang on. It's all about cutting the tax bill, points out Tim Worstall at Forbes.</p> <p>"Sure, there’s all sorts of people saying that Pfizer should stay in the US and do its bit. But if to Pfizer the deal looks like a bad one then perhaps we really ought to change the deal on offer. By, say, lowering the US corporate income tax rate to take account of the way that almost all other countries have lowered their?"<br /> Photo: David Goehring</p>
Daily Scan: Asian shares crash; China's industrial profits tank 4.6%
Capital Markets
<p>Updated throughout the day</p> <p>November 27, 2015</p> <p>Asian shares sank like the proverbial rock on Friday after a slew of reports from both China and Japan casted shade once again on the region’s economic outlook. Hong Kong’s Hang Seng Index is down 1.23%, while China’s Shanghai Composite and Japan’s Nikkei Average are down 1.52% and 0.35% respectively. H-shares, Shenzhen, and Singapore didn’t fare much better:</p> <p> Hang Seng China Enterprises Index: -2.01%<br /> Shenzhen Composite: -1.29%<br /> Straits Times Index: -1.02%</p> <p>Commodities meanwhile seem to be taking a beating. Brent is down 0.79%, natty is down 0.62%, while gold, silver, and palladium dip at least 0.33%. Copper however seems to have bounced 0.34%, whether this is the dead cat variety or not I leave up to you.</p> <p>Here’s what else you need to know:</p> <p>China’s industrial profits drop for the fifth-straight month. Industrial profits from the Middle Kingdom dipped 4.6% year on year in October, well below the previous month’s 0.1% decline. Falling sales, rising costs, and decreasing margins in the oil, steel, and coal industries all added to the disappointment. Reuters</p> <p>Russia threatens to pull out of coalition. Russia said it will pull out of the US-led coalition fighting Islamic State in Syria if there was any repeat of the shooting down of its fighter jet by Turkey. The Guardian</p> <p>Japanese econ data disappoints. While CPI figures came in better than expected at some points, household spending within the world’s third largest economy remains terribly weak, and could prove to be a major drag on the nation’s economy. Forex Live</p> <p>Japan PM unveils new social programs to boost economy. Prime Minister Shinzo Abe said Thursday he would increase spending on social programs and raise the minimum wage as he tries to jump-start the flagging economy ahead of an election next summer. Wall Street Journal (paywall)</p> <p>China defends coal use ahead of Paris climate summit. China's special envoy on climate change, Xie Zhenhua, has defended the country's decision to build more coal-fired power plants. With two-thirds of its energy still generated by coal, China produces and consumes almost as much of the fossil fuel as the rest of the world combined. CNN</p> <p>Myanmar hopes U.S. will lift sanctions. Anticipation is high among blacklisted Myanmar companies and American business groups that the U.S. will ease lingering economic sanctions in coming months, following positive reviews of recent elections. Wall Street Journal (paywall)</p> <p>&nbsp;</p> <p>Citic formally notified of Chinese regulator probe. Citic Securities and Guosen Securities have received formal notice from the mainland’s securities watchdog that they are under investigation for suspected violations of securities law, the two brokerages told the Shanghai Stock Exchange on Thursday night. The companies will operate as normal as the China Securities Regulatory Commission investigates. SCMP(paywall)</p> <p>IPOs set to resume in China. China’s securities oversight authorities will resume initial public offerings in the country as early as the start of next week after a hiatus of about five months.Twenty-eight companies are expected to go public by the end of the year. The China Securities Regulatory Commission decided to the ban as the market regains health. Nikkei</p> <p>Four senior KPMG partners arrested in Belfast. KPMG has placed four of its senior partners on administrative leave after they were arrested in Northern Ireland in connection with an investigation into alleged tax evasion. Financial Times (paywall)</p> <p>Fitch places BTG Pactual on negative watch. Following the arrest of its CEO and main shareholder Andres Esteves, BTG Pactual and its related entities have been placed on “ratings watch negative” by ratings agency Fitch. “Fitch acknowledges the importance of Mr. Esteves as an active and charismatic CEO who oversees the operations and expansion of the bank; bringing uncertainty about an uneventful succession, if it should be required.” Fitch<br /> You w
People Moves: OCBC appoints new Corp Fin head; Morgan Stanley hires TMT whiz from Goldman
Capital Markets
<p>OCBC poaches David Cheng from Deutsche. Cheng, an over 20-year veteran of the banking industry, has been appointed head of Corporate Finance by OCBC. He joins the Singaporean firm from Deutsche Bank, where he was most recently head of Corporate Finance Execution for Southeast Asia. OCBC (pdf)</p> <p>Morgan Stanley hires Peter Chu from Goldman. Chu, a telecom, media, and telecommunications heavy, is slated to join Daniel Wetstein as co-head of Asia-Pacific TMT at Morgan Stanley. He joins the firm from Goldman Sachs, where spent 14 years of his career in various roles including head of Asia ex-Japan telecom, media, and internet as well as COO of Asia-Pacific ex-Japan investment banking. Finance Asia<br /> Photo: Wendy</p>
Daily Scan: U.S. markets closed for the holiday; Asia finishes lower as Europe climbs
Capital Markets
<p>U.S. markets are closed for Thanksgiving today. In Asia shares edged mostly lower on Thursday as profit-taking pushed Hong Kong’s Hang Seng Index down 0.04% while IPO fears spooked China’s Shanghai Composite down 0.34%. Japan’s Nikkei Average however climbed 0.49% to finish at a three-month high of 19,944.41 – just a whisker shy off the 20,000 mark. It did so with low volume though, and given the lack of catalysts – save for stimulus bets – people seem to be a little pessimistic about this rally’s strength. Over in Europe, things are playing out quite differently. The FTSE 100 – buoyed once again by mining shares – is currently up 0.25%, while the DAX 30 and the CAC 40 are up 0.60% and 0.26% respectively.</p> <p>Here’s what else you need to know:</p> <p>German prosecutors, California regulators in fresh VW probe. The U.S. environmental authorities and German prosecutors launched new investigations into allegations of cheating, even as volkswagen gave an upbeat presentation of its plan to fix million of tainted cars. Wall Street Journal (paywall)</p> <p>Turing to halve the price of its controversial HIV pill. Martin Shkreli's drug company Turing Pharmaceuticals, which bought the rights to 62-year old drug Daraprim and hiked the price per pill from $13.50 to $750 earlier this year, has agreed to cut the price by 50% for some users. BBC</p> <p>Syria is buying oil from Islamic State group, says U.S.  The Obama administration has accused Syria’s government of buying oil from IS group and has blacklisted a Syrian-Russian businessman suspected of facilitating those transactions. Wall Street Journal</p> <p>President Xi to talk climate change with President Obama. Chinese President Xi Jinping won’t voice any new concessions at the U.N. climate change talk in Paris next week. The White House confirmed that President Barack Obama will meet with Xi and Indian Prime Minister Narendra Modi on the first day of the Paris talks. SCMP</p> <p>Rescued Russian airman vows payback. Navigator Captain Konstanin Murakhin, who was rescued from behind rebel lines by a Russian-Syrian mission, spoke publicly for the first time yesterday. He denied that his aircraft had entered Turkish airspace and has vowed to pay back rebels for shooting his commander dead as he parachuted to earth. Telegraph</p> <p>It was data dump Wednesday in the U.S. Weekly jobless claims came in much better than expected at 260,000, under the 270,000 estimate. Durable good orders surprised, rising 3% in October after declines in August and September. October U.S. personal spending rose a disappointing 0.1% and personal income rose 0.4%. New home sales were mildly disappointing in October with downward revisions in the previous months.</p> <p>Court upholds verdict for jailed Chinese Journalist. A Chinese court has upheld a guilty verdict against a senior journalist accused of leaking state secrets. Instead, Gao Yu, 71, got a reduced sentence from seven years to five years in prison. BBC</p> <p>The two Koreas hold rare talks in DMZ. North and South Korea are meeting for rare talks aimed at improving long-strained ties after a military stand-off in August. The meeting is taking place at the truce village of Panmunjom in the demilitarised zone. BBC</p> <p>You won’t believe this:<br /> Teens find a new way to maim themselves online with “condom challenge.” Move over ice bucket challenge, young people are now going online with videos of themselves dropping water-filled condoms on each other. Don’t ask us why, but its trend. Guardian</p> <p>Rescue hens get knitted sweaters. Hens that have spent their lives in cages to maximize egg laying have trouble adjusting to normal outdoor weather. Nicola Congdon of England has solved the problem. She’s knitting sweaters for the rescue hens. Mashable<br /> Photo: Clayton Browne</p>
Winning Asian hearts and minds
Capital Markets
<p>As the big guys strut around the South China Sea, smaller countries can benefit by playing hard to get.</p> <p>"The usual view of China’s rise is that it presents Asian countries with a tough choice," notes the Financial Times (paywall).  Basically, how should they balance commercial interests with maintaining security ties with the U.S. -- as well as preserving some economic autonomy?</p> <p>The answer as every coquette knows: tease and flirt.</p> <p>"[For] less well-off countries there may be an alternative: play one off against the other for the best possible deal," suggests columnist David Pilling. Pakistan and Indonesia are pretty good at it; the Philippines and Sri Lanka less so.</p> <p>"An on-again, off-again ally of Washington, Islamabad has consistently stuck close to Beijing. It has been rewarded with the promise of huge investments in its rickety power and transport sectors...<br /> Indonesia, too, has been canny. Recently, it played off China against not the US but Japan. After years of talking to Tokyo about a $5bn bullet train, at the last minute Jakarta took the Chinese shilling."</p> <p>"This sort of soft commercial tussle, though less headline-grabbing than scraps over artificial islands in the South China Sea, may turn out to be more significant. If Washington has the TPP, Beijing has the Regional Comprehensive Economic Partnership. The US has the World Bank and Asian Development Bank. Now Beijing has the Asian Infrastructure Investment Bank, which could start funding projects next year."</p> <p>The battle for the hearts and minds of Asia "will be won as much by engineers as by military strategists."<br /> Photo: U.S. Pacific Fleet</p>