David Fuller and Eoin Treacy's Comment of the Day
Category - Autonomies

    Bigger U.S. Auctions in Shorter Time Seen Boosting Yields

    This note by Brian Chappatta for Bloomberg may be of interest to subscribers. Here is a section:

    Bond traders have to contend with both larger auction sizes and a condensed schedule when the U.S. Treasury sells $28 billion of three-year notes and $21 billion of 10-year notes on March 12. To JPMorgan Chase & Co. strategists, that combination signals a weak reception. Last month’s offerings, the first since 2009 to increase in size, priced at yields higher than the market was indicating heading into the sales. The 3- and 10-year auctions are usually spaced out over two days, but when they came on the same day in December, yields also missed higher.

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    Autodesk's results

    This note from Bloomberg research may be of interest to subscribers. Here is a section:

    Autodesk continues to show steady progress in shifting to a subscription model, which has boosted its recurring sales. Subscriber additions continued to be aided by its discounting and other promotions for converting legacy license users to subscription offerings. The company has bundled its products to boost annual recurring revenue (ARR) and average revenue per subscriber (ARPS). While upsell of subscription products to its maintenance subscribers is aiding sales momentum, new cloud products are unlikely to be a growth driver in the near term.

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    Email of the day on lead indicators

    Email of the day on the potential for downtrends

    Your recent assessments of the markets appear to be that a period of ranging is likely to be followed by markets going up again. Of course, whilst no one knows what the future will be, I wonder why you don't see the greater likelihood of markets turning down after some consolidation. With the amount of US debt increasing, interest rates increasing, and stock market levels already high by historical standards, are you not more concerned that markets, being forwards looking, might be more likely to head down than up? Esp. since markets struggle when interest rates go above 3%? I appreciate your talk of share rotation, but a rising tide lifts all boats and surely the opposite is true when markets tank?

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    Walmart Tumbles After Slowing Online Growth Jolts Investors

    This article by Matthew Boyle for Bloomberg may be of interest to subscribers. Here is a section:


    At the same time, Walmart Chief Executive Officer Doug McMillon is trying to convert the company’s brick-and-mortar shoppers into online customers, who spend almost twice as much overall and seek out higher-priced items.

    At Walmart’s e-commerce unit, sales rose 23 percent last quarter. That’s less than half the pace of previous periods. The Bentonville, Arkansas-based company had been getting a tailwind from its acquisition of Jet.com, an online upstart that it bought in 2016. Still, the company maintained its full-year forecast for online sales growth of about 40 percent.

    The company needs to widen its e-commerce base, especially among younger and professional demographics, said Neil Saunders, managing director of research firm GlobalData Retail.

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    Reckitt Benckiser Sees Pricing Squeeze After Worst Year Ever

    This article by Thomas Buckley for Bloomberg may be of interest to subscribers. Here is a section:

     

    In an effort to sharpen Reckitt Benckiser’s focus on brands such as Strepsils and Mucinex cold remedies, Kapoor has moved to separate the company’s home-care and health businesses. Reckitt also became a leader in infant nutrition with the acquisition of Mead Johnson Nutrition Co. last year.

    On Monday, it increased its forecast for synergies from the deal to about $300 million from $250 million. This year’s savings will only “slightly exceed” additional infrastructure expenses associated with the new health and home-and-hygiene business units, the company said.


    Morgan Stanley analysts led by Richard Taylor described the company’s outlook as conservative.

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    Silicon Valley's Tax-Avoiding, Job Killing, Soul-Sucking Machine

    Thanks to a subscriber for this article by Scott Galloway for Esquire which may be of interest. Here is a section:

    content machine, dominating the majority of phones worldwide. Now “what’s on your mind?”

    Four hundred hours of video are uploaded to YouTube every minute, which means that Google has more video content than any other entity on earth. It also controls the operating system on two billion Android devices. But AT&T needs to divest Adult Swim?

    Perhaps Trump is right that the merger of AT&T and Time Warner is unreasonable, but if so, then we should have broken up the Four ten years ago. Each of the Four, after all, wields a harmful monopolistic power that leverages market dominance to restrain trade. But where is the Department of Justice? Where are the furious Trump tweets? Convinced that the guys on the other side of the door are Christlike innovators, come to save humanity with technology, we’ve allowed our government to fall asleep at the wheel.

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    South Korea's Economy Shudders After Growth Spurt

    This article by Kwanwoo Jun for the Wall Street Journal may be of interest to subscribers. Here is a section:

    South Korea’s surprisingly weak economic performance in the last three months of 2017 isn’t cause for concern but does support the case for a cautious stance on central bank policy, according to economists and bank officials.

    The economy ended its streak of outperforming expectations in the last quarter by recording its first quarter-on-quarter contraction since the global financial crisis.

    That resulted in growth for the year—at 3.1%—coming in just below the government’s 3.2% target, but above 2016’s expansion of 2.8%. Markets on Thursday brushed aside the result, with the Kospi jumping 1% to reach record highs.

    Still, the result will temper recent optimism about the economic outlook, while likely dispelling any idea at the Bank of Korea about raising rates until much later in the year. In November, the central bank raised rates for the first time in more than six years.

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    Snap Bulls Bring on Bevy of Upgrades After Its First Beat

    This article by Beth Mellor and Jeran Wittenstein for Bloomberg may be of interest to subscribers. Here is a section:

    Snap Inc.’s first earnings beat as a public company, prompted at least five upgrades from analysts after the social-media company reported fourth-quarter revenue and daily active users ahead of estimates. The results blindsided short sellers who prompted upgrades from at least five analysts, and garnered a Street-high price target of $24 from Bank of America Merrill Lynch.

    Analysts lauded the reacceleration of daily active user growth and advertising revenue growth, better-than-expected average revenue per user and the impact of the app redesign.

    Still, some remained skeptical, with Morgan Stanley noting the potential that revenue trends could slow in 2018, while Susquehanna downgraded the stock amid competitive pressures from Facebook Inc.’s Instagram.

    Snap climbed as much as 33 percent at 9:45 a.m. in New York, trading above its $17-per share IPO price for the first time since July. Here’s a roundup of what analysts are saying about Snap’s results.

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    iPhone 'Super Cycle' Pronounced Dead as Handset Market Tumbles

    This article by Alistair Barr for Bloomberg may be of interest to subscribers. Here is a section: 

    “The super cycle is dead,” Steven Milunovich, an analyst at UBS, wrote in a note to investors on Friday. Apple shares slipped 2.9 percent to $163 at 12:18 p.m. in New York, leaving the stock down 3.7 percent so far, this year.

    To adjust, Apple is now focusing on its huge installed base of devices and how to make more money from that -- rather than selling a lot more phones each year, Milunovich added.

    Indeed, Chief Executive Officer Tim Cook highlighted late Thursday that Apple has 1.3 billion devices in use now, an increase of 30 percent in two years. The company is trying to sell more services through these devices, along with more accessories and related gadgets. Apple services revenue jumped 18 percent in the fourth quarter, while sales of other products, like the Watch and AirPods, jumped 36 percent.

    Milunovich and other analysts quizzed Apple executives on the slowing phone upgrade cycle, during a conference call late Thursday.

    “You have an installed base that’s 20 percent-plus higher, and a unit growth that’s relatively flat, which would suggest that your upgrade rate is going down, or your replacement cycle is elongating. And I’m wondering whether you agree with that,” said Toni Sacconaghi, an analyst at Sanford C. Bernstein.

    Cook advised against looking at 90 days of sales. “The far bigger thing is to look over a longer period of time and customer satisfaction and engagement and number of active devices are all a part of that.”

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