Morning News: June 14, 2019
Posted by Eddy Elfenbein on June 14th, 2019 at 7:04 am

As Trade War Hits, China Factories See Slowest Growth Since 2002

How Tanker Attacks in the Strait of Hormuz Could Affect Oil Prices

Boeing’s Decision on New Jet Is Critical in Rivalry With Airbus

Facebook’s New Cryptocurrency, Libra, Gets Big Backers

PetSmart’s Chewy Gets Wall Street Tails Wagging with $1 Billion IPO

Broadcom Falls After Cutting Its Chip Sales Guidance: 6 Key Takeaways

Who Are You Calling Chicken? Tyson Foods is Getting into the Business of Plant-Based Meat

Does Amazon Really Pay No Taxes? Here’s the Complicated Answer

Manhattan’s Newest Flagship Department Stores Are Ignoring the Retail Apocalypse

Stanford Team Aims at Alexa and Siri With a Privacy-Minded Alternative

Volkswagen to Float 10% of Truck Unit, Seeks to Raise 1.9 Billion Euros

Hey, Raptors Fans, You Want Fries With Those 3-Pointers?

Roger Nusbaum: Putting a Price Tag on Happiness

Jeff Miller: Do You Evaluate Your Trading Mistakes?

Ben Carlson: David Swensen & a Target Date Fund Walk Into a Bar

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Morning News: June 13, 2019
Posted by Eddy Elfenbein on June 13th, 2019 at 7:56 am

Oil Surges as Tankers in Gulf Suffer Another Suspected Attack

Is Bitcoin Growing Up? Regulated Futures Boom as Investors Seek a Safer Ride

Hong Kong’s Financial Elite Grow Uneasy as China Tensions Rise

The Fed Needs to Be the Adult in the Economy

As Trade War With U.S. Grinds On, Chinese Tourists Stay Away

Social Security Is Staring at Its First Real Shortfall in Decades. Big Cuts Could Follow.

Alibaba Files for a Hong Kong Mega-Listing

Huawei Files to Trademark Mobile OS Around the World After U.S. Ban

Mitsubishi Envisions More Comfortable Regional Flights on its New ‘SpaceJet’

Here’s What FedEx’s Breakup With Amazon Means

Investors Pumped Billions Into Suburbs That Never Got Built

Store’s Bid to Shame Customers Over Plastic Bags Backfires

Petrobras Ignored Warnings About Fuel Broker Implicated in Graft Probe

Joshua Brown: The Big Kickoff & A 2% Tax on America’s 75,000 Wealthiest Families Would Raise $2.75 Trillion

Michael Batnick: More Art Than Science, Dad Cat Bounce & Operational Momentum

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Another Tame Inflation Report
Posted by Eddy Elfenbein on June 12th, 2019 at 12:55 pm

The CPI report came out this morning and it was another tame report. For May, consumer prices rose just 0.1%. That matched Wall Street’s expectations. That’s after a 0.3% rise in April. In the last year, consumer prices are up 1.9%.

The core rate, which excludes food and energy, was also up 0.1%. In the last year, the core rate is up 2.0%.

Gasoline prices fell 0.5% in May after rising 5.7% in April. Food prices rebounded 0.3% in May after dipping 0.1% in the prior month. Food consumed at home increased 0.3% last month.

Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3% in May after rising 0.3% in April.

Healthcare costs increased 0.3%, matching April’s rise. The solid increase in healthcare costs at both the consumer and production levels last month suggests a pickup in the core PCE price index in May.

The cost of hospital services increased 0.5% in May and the cost of doctor visits ticked up 0.1%. But the prices for prescription medication fell 0.2%.

Apparel prices were unchanged in May after tumbling 0.8% in the prior month. They had declined for two months in a row after the government introduced a new method and data to calculate apparel prices.

Prices for used motor vehicles and trucks tumbled 1.4%. That was the largest drop since last September and marked the fourth straight monthly decrease. The cost of motor vehicle insurance fell 0.4%, the most since May 2007. There were also decreases in the cost of recreation.

But prices for airline tickets, household furnishings and new vehicles rose last month. Household furnishings are likely to trend higher in the coming months because of U.S. President Donald Trump’s decision in early May to slap additional tariffs of up to 25% on $200 billion of Chinese goods.

Here’s the real Fed funds rate based on core inflation.

Morning News: June 12, 2019
Posted by Eddy Elfenbein on June 12th, 2019 at 7:13 am

Hong Kong Markets Roiled by Interbank Rate Squeeze Amid Protests

Iran Scrambles to Lift Petrochemical Sales as Sanctions Hammer Oil

Ten U.S. States Sue to Stop Sprint-T-Mobile Deal, Saying Consumers Will Be Hurt

House Opens Tech Antitrust Inquiry With Look at Threat to News Media

Dassault to Buy Medidata in $5.7 Billion Health Data Push

Highlights from Tesla’s Annual Meeting

Your iPhone Is Already Made in America

Facebook’s New Study App Pays Adults for Data After Teen Scandal

Grubhub Stock Gets a Boost on Amazon’s Exit From Food Delivery

GE’s Larry Culp Faces Ultimate CEO Test in Trying to Save a Once-Great Company

A Krispy Kreme in Times Square Will Have Stadium-Style Seats and a Glaze Waterfall

Kraft Introduces ‘Salad Frosting’ to Help Trick Your Kids Into Eating More Vegetables

Nick Maggiulli: Being Wrong When You Get It Right

Cullen Roche: Three Charts I Think I’m Thinking About

Jeff Carter: If You Immigrate, You Can’t Bank

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Morning News: June 11, 2019
Posted by Eddy Elfenbein on June 11th, 2019 at 7:18 am

U.S. Job Openings Outnumber Unemployed by Widest Gap Ever

Trump Says Mexico Tariffs Worked, Emboldening Trade Fight With China

China Says Will Respond if U.S. Escalates Trade Tension

Chinese Tech Giant Huawei Hints That U.S. Pressure Is Hurting Sales

Top Japanese Chip Gear Firm to Honor U.S. Blacklist of Chinese Firms

Apple’s U.S. iPhones Can All Be Made Outside of China If Needed

Expedia Is Undervalued In A Recession Resistant Industry

Salesforce Dreams of Being Microsoft or Oracle

Amazon: Impact Of Increasing Rivalry With FedEx

Nissan and Renault Lock Horns as Relationship Sours Further

Deutsche Bank Tax Probe Targets About 80 Current, Former Staff

Howard Lindzon: Momentum Monday – We Don’t Need No Stinking Tariffs

Ben Carlson: Managing Money vs. Managing Wealth & Talk Your Book: The Net Lease REIT ETF

Joshua Brown: Get Used To It & Trump on the Fed: They’re Disruptive

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CNBC’s Interview with Raytheon’s and UT’s CEOs
Posted by Eddy Elfenbein on June 10th, 2019 at 12:06 pm

Watch CNBC’s full interview with the CEOs of United Technologies and Raytheon from CNBC.

Trump Is Concerned about the Raytheon Deal
Posted by Eddy Elfenbein on June 10th, 2019 at 12:02 pm

From CNBC:

President Donald Trump on Monday said he has concerns that a merger between United Technologies and Raytheon would harm competition and make it more difficult for the U.S. government to negotiate defense contracts.

“I’m a little concerned about United Technologies and Raytheon,” Trump said in an exclusive interview with CNBC. Aerospace companies have “all merged in so it’s hard to negotiate” with them, he added, suggesting the defense industry could be heading in the same direction.

Asked whether he would have problems with the merger, Trump replied, “Only if they have the same products. That would be the thing that bothers me most.”

(…)

“We are complementary, not competitive,” Raytheon CEO Tom Kennedy told CNBC in an interview. “I don’t know the last time we competed against United Technologies.”

Greg Hayes, United Technologies’ CEO and chairman who is slated to be CEO of the new company, once the merger closes, said he looked forward “to talking to the president later today,” about potential job growth under the deal.

Still, the president repeatedly expressed concerns about dwindling competition in aerospace.

“When I hear United and I hear Raytheon, when I hear they’re merging, does that make it less competitive? It’s already not competitive,” Trump said.

“I just want to see competition. They’re two great companies, I love them both. But I want to see that we don’t hurt our competition.”

Morning News: June 10, 2019
Posted by Eddy Elfenbein on June 10th, 2019 at 7:07 am

U.K. Economy Shrinks as Factory Output Falls Most Since 2002

Argentina’s Economic Misery Could Bring Populism Back to the Country

China Summons Tech Giants to Warn Against Cooperating With Trump Ban

Mnuchin Dashes Investor Dreams of Quick Fannie-Freddie Windfall

Wall Street Asks When, Not if, the Fed Will Cut Interest Rates

United Technologies, Raytheon to Combine as Defense Giant

Some Big Tech Firms Cut Employees’ Access to Huawei, Muddying 5G Rollout

A Billboard No. 1 Is at Stake, So Here’s an Album With Your Taylor Swift Hoodie

Renault Rift with Nissan Widens Over Governance, Casts Shadow on Alliance

Employees Sour on Tesla Amid Cost-Cutting, Layoffs

3 Reasons to Retire as Early as You Can

‘Trade of Our Lives’: After Mueller, UBS Banker Faces Questions

Michael Batnick: Talk Your Book: The Net Lease REIT & Ackshually…

Jeff Carter: Network Effects and Venture Capital & SEC and Kik

Jeff Miller: Weighing the Week Ahead: Should Investors Bank on the Fed?

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It’s Official: Raytheon and United Technologies to Merge
Posted by Eddy Elfenbein on June 10th, 2019 at 6:09 am

The deal is expected to close in the first half of next year. The combined company will be called Raytheon Technologies. The deal is all cash. RTN shareholders will get 2.3348 shares of the new company for every one they own now.

Here’s the press release:

Raytheon Company (NYSE: RTN) and United Technologies Corp. (NYSE: UTX) have entered into an agreement to combine in an all-stock merger of equals. The transaction will create a premier systems provider with advanced technologies to address rapidly growing segments within aerospace and defense. The merger of Raytheon, a leading defense company, and United Technologies, a leading aerospace company, comprised of Collins Aerospace and Pratt & Whitney, will offer a complementary portfolio of platform-agnostic aerospace and defense technologies. The combined company, which will be named Raytheon Technologies Corporation, will offer expanded technology and R&D capabilities to deliver innovative and cost-effective solutions aligned with customer priorities and the national defense strategies of the U.S. and its allies and friends. The combination excludes Otis and Carrier, which are expected to be separated from United Technologies in the first half of 2020 as previously announced.

The combined company will have approximately $74 billion in pro forma 2019 sales. With a strong balance sheet and robust cash generation, Raytheon Technologies will enjoy enhanced resources and financial flexibility to support significant R&D and capital investment through business cycles.

Under the terms of the agreement, which was unanimously approved by the Boards of Directors of both companies, Raytheon shareowners will receive 2.3348 shares in the combined company for each Raytheon share. Upon completion of the merger, United Technologies shareowners will own approximately 57 percent and Raytheon shareowners will own approximately 43 percent of the combined company on a fully diluted basis. The merger is expected to close in the first half of 2020, following completion by United Technologies of the previously announced separation of its Otis and Carrier businesses. The timing of the separation of Otis and Carrier is not expected to be affected by the proposed merger and remains on track for completion in the first half of 2020. The merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

“Today is an exciting and transformational day for our companies, and one that brings with it tremendous opportunity for our future success. Raytheon Technologies will continue a legacy of innovation with an expanded aerospace and defense portfolio supported by the world’s most dedicated workforce,” said Tom Kennedy, Raytheon Chairman and CEO. “With our enhanced capabilities, we will deliver value to our customers by anticipating and addressing their most complex challenges, while delivering significant value to shareowners.”

“The combination of United Technologies and Raytheon will define the future of aerospace and defense,” said Greg Hayes, United Technologies Chairman and CEO. “Our two companies have iconic brands that share a long history of innovation, customer focus and proven execution. By joining forces, we will have unsurpassed technology and expanded R&D capabilities that will allow us to invest through business cycles and address our customers’ highest priorities. Merging our portfolios will also deliver cost and revenue synergies that will create long-term value for our customers and shareowners.”

WSJ: “Raytheon, United Technologies in Talks to Merge”
Posted by Eddy Elfenbein on June 9th, 2019 at 6:27 am

This is big. From the WSJ:

United Technologies and Raytheon are in talks to combine in an all-stock deal that would create a giant in the aerospace and defense industries, according to a person familiar with the matter.

The companies, which together have a market value of roughly $166 billion, could announce a deal in the coming days assuming talks don’t fall apart at the last minute, the person said.

Exact terms couldn’t be learned but United Technologies shareholders are likely to own a majority of the combined company.

The tie-up, expected to be billed as a merger-of-equals, wouldn’t affect United Technologies’ existing plans to spin off its Otis elevator and Carrier building-systems businesses into separate companies. Raytheon would be combining with United’s remaining aerospace business, and all transactions would take place at the same time. United Technologies has said the spinoffs will take place in the first half of next year.

Adjusting for the spinoffs, the companies’ combined market value would likely still be north of $100 billion. The new entity would be the world’s second-largest aerospace-and-defense company by sales after Boeing, with annual revenue of more than $70 billion last year.

In addition to other benefits from increased scale, the proposed deal could help the enlarged company weather any slowdown in the commercial aerospace and defense markets.

United Technologies Chairman and Chief Executive Greg Hayes is expected to lead the combined company, while Raytheon Chairman and CEO Thomas Kennedy would be chairman, the person said.

United Technologies has a market value of roughly $114 billion, while Raytheon’s is about $52 billion.

The deal would be one of the largest in a year that has included some big mergers but otherwise has been lackluster. Right now the biggest proposed acquisition is Bristol-Myers Squibb Co.’s $74 billion purchase of rival drugmaker Celgene Corp.

A United Technologies-Raytheon combination has long been speculated on by analysts and investors, given that the two companies operate in mainly different segments and could benefit from sharing technology.

It would unite the maker of Pratt & Whitney engines—used on commercial airliners such as the Airbus SE A320neo—and the F-35 combat jet, with Raytheon, the fourth-largest U.S. defense contractor by revenue.

(…)

Waltham, Mass.-based Raytheon, whose sales rose 6.7% last year to $27.1 billion, produces missiles such as the Tomahawk together with radars and other electronic-warfare systems. It has invested heavily in recent years ahead of the recent uptick in Pentagon spending, and has the biggest export business among the five largest U.S. defense contractors.

(…)

The U.S. defense industry has morphed from about 60 big companies at the start of the 1980s to only five prime contractors today. Pentagon leaders have indicated they wouldn’t allow further mergers between the main players— Lockheed Martin Corp. , Boeing, Northrop Grumman, General Dynamics and Raytheon.