Archive for February, 2022

• Morning News: February 8, 2022
  Eddy Elfenbein, February 8th, 2022 at 6:24 am

  The U.S. and Japan Strike a Deal to Roll Back Trump-era Steel Tariffs.

  What the BOJ Can Do About Rising Japanese Bond Yields

  Goldman, Citigroup See Winning Bets Against Super-Sized Fed Hike

  Singapore’s $744 Billion Fund Eyes Deals in Low-Return World

  Amazon Is Raising Base Salary Cap to $350,000 From $160,000

  Indian Billionaire Gautam Adani Overtakes Mukesh Ambani as Asia’s Richest Person

  Why the Metaverse Will Change the Way You Work

  Nvidia to Withdraw From Acquisition of SoftBank’s Arm

  We’re Fine Without Facebook, German and French Ministers Say

  Tiny Chips, Big Headaches

  Frontier to Buy Spirit Airlines in $2.9 Billion in Budget Carrier Deal

  Tyson Says Higher Meat Prices Haven’t Cooled Demand

  Thousands of Dutch Vow to Pelt Jeff Bezos’ Superyacht with Rotten Eggs

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• Troubled Toshiba Sells Stake in Joint Venture with Carrier
  Eddy Elfenbein, February 7th, 2022 at 9:16 am

  A good way to find bargains is when another company is holding a fire sale. That’s sort of what’s happening with Toshiba. The company is a bit of a mess right now and they’re taking bold action to change course.

  The original plan was to split up into three different companies. The problem was that shareholders hated the idea. Now the plan is to split into two companies and sell off “non core assets.”

  One business will be their devices business (semiconductors). The other will be its infrastructure business which will carry the Toshiba name. The rest will be called Toshiba Tec Corp. which is their electronic equipment business.

  For us, the important news is that Toshiba will sell its stake in a joint venture with Carrier Global back to Carrier for around 100 billion yen ($870 million). Toshiba now owns a 60% stake in the venture, and they’re going to sell 55% of it to Carrier.

  The planned acquisition will strengthen Carrier’s position in one of the fastest-growing HVAC segments, as well as scale its global VRF product platform with leading and differentiated technology and the addition of a renowned brand to its portfolio.

  Established in 1999, TCC designs and manufactures flexible, energy-efficient and high-performance VRF and light commercial HVAC systems utilizing its own proprietary inverter technology, as well as commercial products, compressors and heat pumps. VRF delivers high-performance heating and cooling through systems that are typically all-electric and highly efficient, consistent with Carrier’s sustainability goals to reduce its customers’ carbon footprint by more than one gigaton by 2030.

  Carrier’s acquisition will include all of TCC’s advanced research & development centers and global manufacturing operations, strong product pipeline, and the long-term use of Toshiba’s deeply respected and iconic brand.

  “Carrier sees significant growth potential in the global VRF, light commercial and heat pump segments and is excited by the opportunity to expand our business through this strategic acquisition. TCC’s proven R&D expertise, strong global brand and talented employees will be tremendous additions to Carrier’s multi-brand channel strategy,” said Dave Gitlin, Chairman & CEO, Carrier. “We look forward to offering complementary, high-performance and sustainable solutions to our customers that will help them achieve their environmental goals.”

  The global market for VRF and light commercial equipment is the fastest growing HVAC equipment segment. Upon close, the acquisition will position Carrier as a VRF leader, more than doubling its sales in the market segment.

  “We are pleased that TCC employees will continue the growth and innovation journey of Toshiba’s HVAC business as part of Carrier, benefiting from its unparalleled global reach, strong dealer network and shared history of innovation,” said Satoshi Tsunakawa, President & CEO, Toshiba. “This is a value-enhancing opportunity for investors, customers and employees.”

  Today’s announcement builds on Carrier’s recent acquisition of Guangdong Giwee Group, a China-based manufacturer of HVAC products, offering a portfolio of high-quality products including VRF and light commercial air conditioners.
  Combined with Carrier’s existing partnerships, the acquisition strengthens Carrier’s portfolio of innovative, environmentally responsible solutions with a broader range of highly efficient, all-electric products, positioning Carrier to lead the world’s heating and cooling sustainability transformation.

  The acquisitions also demonstrate the company’s commitment to investing in growth, while delivering on Carrier’s commitment to increase product extensions and broaden geographic coverage. In addition, the acquisition is also another step in Carrier’s continuing efforts to simplify its HVAC joint venture structure.

  The acquisition is expected to close by the end of Q3, subject to customary closing conditions, including regulatory approvals. Upon closing, Toshiba will retain a 5% ownership stake in TCC, and Carrier will consolidate over $2 billion in unconsolidated revenue.

• Morning News: February 7, 2022
  Eddy Elfenbein, February 7th, 2022 at 6:14 am

  Time For a Victory Lap*

  Samsung, Blue Ocean Launch U.S. Stock Trading During South Korean Business Hours

  How China’s Communist Officials Became Venture Capitalists

  Adults Back in Charge of Stock Market as Fed Awakens Big Money

  Earnings Are Driving the Market but It’s Not Clear Where

  An American Labor Market Mystery

  Counting on ‘Endemic’: The Travel Industry Readies for a Potentially New Phase

  Peloton Deal May Pose Regulatory ‘Headache’ for a Tech Giant

  Spotify’s CEO Is ‘Deeply Sorry’ But Won’t Drop Joe Rogan

  Credit Suisse, a Coke-Smuggling Wrestler and Stashes of Cash

  A Side-Effect of China’s Strict Virus Policy: Abandoned Fruit

  Toshiba Now Plans To Split Into Two, Hikes Shareholder Return Targets

  Worker Absences From Covid-19 Hold Back Companies’ Growth

  Kohl’s Adopts ‘Poison Pill’ To Ward Off Hostile Takeover Bids

  The New Post-60 Career Paths

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• January NFP = +467,000
  Eddy Elfenbein, February 4th, 2022 at 9:12 am

  The January jobs report is out and the U.S. economy added 467,000 net new jobs last month. The numbers for November and December were also revised much higher. The unemployment rate rose 0.1% to 4.0%.

  December, which initially was reported as a gain of 199,000, went up to 510,000. November surged to 647,000 from the previous reported 249,000. For the two months alone, the initial counts were revised up by 709,000. The revisions came as part of the annual adjustments from the BLS that saw sizeable changes for many of the months in 2021.

  “The benchmark revisions helped the numbers a bit just because it moved out some of the seasonal factors that have been at work. But overall the job market is strong, particularly in the face of omicron,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “It’s hard to find a weak spot in this report.”

  For January, the biggest employment gains came in leisure and hospitality, which saw 151,000 hires, 108,000 of which came from bars and restaurants. Professional and business services contributed 86,000, while retail was up 61,000.

  There was more good jobs news: The labor force participation rate rose to 62.2%, a 0.3 percentage point gain. That took the rate, which is closely watched by Fed officials, to its highest level since March 2020 and within 1.2 percentage points of where it was pre-pandemic.

  A more encompassing level of unemployment that counts discouraged workers and those holding part-time jobs for economic reasons dropped to 7.1%, 0.2 percentage point decline and to just above its pre-pandemic level.

  The job gains brought employment back to about 1.7 million below where it was in February 2020, a month before the pandemic declaration.

  The broader U-6 unemployment rate is nearly back to where it was pre-Covid. It’s now at 7.1%. The last pre-Covid low was 6.8% in December 2019.

  The Labor Force Participation Rate is down but it’s not quite as dire as some people think. The LFPR for prime working age (25 to 54) is back to 82.0% which is higher than where it was in 2017 and much of 2018.

• Morning News: February 4, 2022
  Eddy Elfenbein, February 4th, 2022 at 7:04 am

  Central Bank Balance of Power Shift Raises Policy Error Risk

  Flatter U.S. Yield Curve Dominates Emerging-Market Trader Minds

  Why the World’s Biggest Ocean Shipping Lines Are Buying Cargo Planes

  Automakers, Chip Firms Differ on When Semiconductor Shortage Will Abate

  America Is Facing a Great Talent Recession

  Amazon Set to Add More Than $150 Billion in Wild Value Swing

  Meta Erases $251 Billion in Value, Biggest Wipeout in History

  6 Reasons Meta Is in Trouble

  A Change by Apple Is Tormenting Internet Companies, Especially Meta

  Snap Stock Is Soaring on a Surprise Profit. It Doesn’t Have All of Facebook’s Problems.

  Microsoft’s Videogame Boss and the Long Battle to Reinvent the Company

  World’s Most Influential Money Manager Enters the TikTok Sphere

  NBC Opens Olympics With ‘Worst Hand Imaginable’

  Why the Beijing Olympics Are Awkward for Corporate Do-Gooders

  More Thoughts on America’s Feel-Bad Boom

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• Earnings from Hershey and ICE
  Eddy Elfenbein, February 3rd, 2022 at 9:04 am

  It’s a busy morning today. First, we had the jobless claims report. Weekly jobless claims were 238,000. That was a little below expectations of 245,000. This data series has crept higher over the past two months. The government will release its jobs report for January tomorrow.

  We also had two Buy List earnings reports. Intercontinental Exchange (ICE) said it made $1.34 per share. That was two cents more than expectations. ICE also raised its quarterly dividend by 15%, from 33 to 38 cents per share. The first quarter cash dividend is payable on March 31 to stockholders of record as of March 17.

  Hershey (HSY) reported earnings of $1.69 which topped the consensus estimate of $1.61 per share. Hershey said it expects 2022 earnings of $7.84 to $7.98 per share. The consensus on Wall Street had been for $7.57 per share.

• Morning News: February 3, 2022
  Eddy Elfenbein, February 3rd, 2022 at 7:03 am

  Eurozone Inflation Rises to Fresh Record, Against Expectations

  Turkey’s Inflation Hits Nearly 50%, Highest in Two Decades

  BOE Hikes Rates as Four Officials Vote for a Bigger Increase

  Biden’s Pick for Bank Cop Faces a Contentious Senate Hearing

  What Does a Federal Reserve Governor Do?

  Meta’s ‘Unmitigated Disaster’ of a Quarter

  Facebook Owner Meta Set for $195 Billion Wipeout, Biggest in Market History

  Never Mind the Metaverse. Facebook Must Solve Its TikTok Problem

  Apple Makes Progress in India as iPhone Sales Rise 34% to Record

  Hershey’s Quarterly Profit Rose, Helped by Price Increases

  The Rise of the $2.5 Billion Ugly-Shoe Empire

  Jeff Zucker Leaves CNN In Limbo With Streaming Launch Weeks Away

  Carlyle’s Q4 Earnings Jump Nearly Fourfold on Record Asset Sales

  Spotify, Facing Pushback Against Joe Rogan, Reports Jump in Users

  Cremation Borrows a Page From the Direct-to-Consumer Playbook

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• AFLAC Earned $1.28 per Share for Q4
  Eddy Elfenbein, February 2nd, 2022 at 4:21 pm

  After the bell, AFLAC (AFL) reported Q4 earnings of $1.28 per share. That’s an increase of 19.6%. The weaker exchange rate pinged earnings by five cents per share.

  Q4 revenues were $5.4 billion. That’s down from $5.9 billion in the fourth quarter of 2020.

  During Q4, Aflac spent $625 million to repurchase 11.1 million of its common shares. For the full year, Aflac deployed $2.3 billion in capital to repurchase 43.3 million of its common shares. At the end of December 2021, the company had 55.8 million remaining shares authorized for repurchase.

  Shareholders’ equity was $33.3 billion, or $50.99 per share, at December 31, 2021, compared with $33.6 billion, or $48.46 per share, at December 31, 2020. The annualized return on average shareholders’ equity in the fourth quarter was 12.4% and 12.9% for the full year.

  For the full year of 2021, total revenues were down 0.2% to $22.1 billion, compared with $22.1 billion for the full year of 2020. Adjusted earnings for the full year of 2021 were $4.0 billion, or $5.94 per diluted share, compared with $3.6 billion, or $4.96 per diluted share, in 2020. Excluding the negative impact of $0.06 per share from the weaker yen/dollar exchange rate, adjusted earnings per diluted share increased 21.0% to $6.00 for the full year of 2021.

  DIVIDEND

  The board of directors declared the first quarter dividend of $0.40 per share, payable on March 1, 2022 to shareholders of record at the close of business on February 16, 2022.

  OUTLOOK

  Commenting on the company’s results, Chairman and Chief Executive Officer Daniel P. Amos stated: “The company generated strong earnings for the year, largely supported by the continuation of low benefit ratios associated with pandemic conditions and better-than-expected returns from alternative investments. While we saw improvements in the quarter for both the United States and Japan, we continue to remain cautiously optimistic in the face of ongoing pandemic conditions.

  “Looking at our operations in Japan, I am encouraged by the 7.7% sales increase for the year, which included the first quarter introduction of our medical product EVER Prime and the September launch of our new nursing care product. However, we continued to navigate evolving pandemic conditions in Japan, including various states of emergency that may impact our ability to meet face-to-face with customers, which continues to be key to a recovery in sales.

  “In the U.S., I am pleased with the 16.9% sales increase for the year. At the same time, I am encouraged by reports of new small business formation and the resiliency of larger businesses. Our sales in the fourth quarter reflect increased face-to-face sales opportunities. We continue to work toward reinforcing our position and generating stronger sales in 2022, realizing we may face headwinds from pandemic conditions.

  “As always, we are committed to prudent liquidity and capital management. This includes maintaining strong capital ratios on behalf of our policyholders in both the U.S. and Japan. It goes without saying that we treasure our record of dividend growth. Coming off our 39th consecutive year of dividend increases, I am pleased with the board’s decision to increase the quarterly dividend by 21.2% in the first quarter, as we announced in November. Our dividend track record is supported by the strength of our capital and cash flows. At the same time, we remain in the market repurchasing shares with a tactical approach and focused on integrating the growth investments we have made in our platform. By doing so, we look to emerge from this period in a continued position of strength and leadership.”

• Thermo Fisher Beats Earnings
  Eddy Elfenbein, February 2nd, 2022 at 9:00 am

  This morning, Thermo Fisher Scientific (TMO) reported Q4 earnings of $6.54 per share which was much more than Wall Street’s forecast of $5.27 per share. I said I was expecting a big earnings beat and I was right.

  For the entire year, Thermo made $25.13 per share. That was an increase of 28% over 2020. Thermo’s revenue grew 22% to $39.21 billion. The company’s most recent guidance had been for $23.37 per share.

  TMO’s quarterly revenue rose by 1% to $10.70 billion. The company had Covid revenue of $2.45 billion.

  For 2022, Thermo sees revenue of $42 billion. Wall Street had been expecting $40.7 billion. The company sees 2022 earnings of $22.43 per share. Wall Street had been expecting $21.87 per share.

  One other news item. The big jobs report is due out on Friday, but this morning we got a possible preview. ADP said that private payrolls fell by 301,000 last month. This was the first jobs loss since December 2020.

  According to ADP, Omicron wreaked havoc on the jobs market. The leisure and hospitality sector lost 154,000 jobs. The jobs gain number for December was revised downward to 776,000.

  Trade, transportation and utilities cut 62,000 while the other services category declined by 23,000.

  Manufacturing also lost 21,000 positions, while education and health services reported a drawdown of 15,000 and construction fell by 10,000.
  Service-providing industries were responsible for 274,000 of the job losses, with goods producers falling by 27,000.

  “The labor market recovery took a step back at the start of 2022 due to the effect of the omicron variant and its significant, though likely temporary, impact to job growth,” ADP chief economist Nela Richardson said.

  For Friday’s official government report, Wall Street expects to see a gain of 150,000 net new jobs.

• Morning News: February 2, 2022
  Eddy Elfenbein, February 2nd, 2022 at 7:09 am

  Euro-Zone Inflation Unexpectedly Hits Record, Pressuring ECB

  Japanese Banks Sound Caution for Earnings As Omicron Highlights Bad Loan Risks

  Why Are Oil Prices So High and Will They Stay That Way?

  A Normal Supply Chain? It’s ‘Unlikely’ in 2022.

  Warehouse Space Is the Latest Thing Being Hoarded

  Consumers Are Pivoting Spending to Services Like Dining and Travel

  Wall Street Bankers Heading for Biggest Bonus Payday in Decade

  U.S. Job Openings, Quits Remained Elevated at End of Last Year

  First Black Woman Picked for Fed Draws GOP Fire Over Research

  Zuckerberg’s Plan to Overcome Washington’s Aversion to Metaverse

  Alphabet Stock Split Aimed at Bringing Google Shares to Masses

  Google Vanquished a Rival in Prague. Payback Could Hurt.

  GM Earnings Rose Sharply in 2021

  Where Olympic Sponsor Coca-Cola Stands With China

  Cathie Wood’s True Believers Are Sticking With Her

  A Year On, GameStop Champion Roaring Kitty Is Quiet — Yet Much Richer

  Why Is Matt Damon Shilling for Crypto?

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