GE To Exit Bulk of GE Capital GE, Alinda Seek Buyer

Transcription

GE To Exit Bulk of GE Capital GE, Alinda Seek Buyer
Market Snapshot*
DJIA
18057.65
+98.92
4995.98
+21.41
S&P 500
2102.06
+10.88
10-Year
1.9537%
1/32
Nasdaq
Friday, April 10, 2015
30-Year
2.5831%
8/32
Euro
$1.06075
-0.0044
$51.64
+0.85
Nymex Crude
Source: SIX Telekurs, ICAP plc
Stocks
U.S. stocks rose Friday, on track for their
second weekly gain in a row, as General
Electric Co.'s plans to exit most of its
lending operations buoyed the Dow
industrials and S&P 500. General
Electric's shares surged 8.6% on Friday,
leading the Dow and S&P higher. GE
has resolved to part ways with the bulk
of finance business GE Capital, and will
sell or spin that part off over the next two
years.
Treasurys
U.S. Treasury bonds perked up Friday
but posted the biggest weekly selloff in
more than a month. The mixed results
suggest investors continue to grapple
with the prospect of a major shift in U.S.
monetary policy and low bond yields permeating in developed countries.
Forex
The dollar pushed higher against the
euro and the British pound on Friday as
investors continued to bet on the U.S.
economy's recovery, and for an interest
rate increase in the second half of 2015.
The euro tumbled 0.6%, to $1.0592, its
lowest level since March 18, the day the
Federal Reserve's policy-making group
met. The pound fell 0.3%, to $1.4650,
approaching its lowest level in almost
five years.
Commodities
Oil prices rose for the fourth straight
week on expectations that production will
soon plateau and amid uncertainty about
Iranian nuclear negotiations. Light, sweet
crude for May delivery settled up 85
cents, or 1.7%, to $51.64 a barrel Friday
on the New York Mercantile Exchange.
Prices rose 5.1% in the week.
*preliminary values subject to adjustments
Tomorrow’s Headlines
GE To Exit Bulk of GE Capital
In the conglomerate’s most significant strategic move in years, General
Electric has resolved to part ways with the bulk of GE Capital, the giant
finance business that long accounted for around half the company’s profits
but whose risks have rattled investors and weighed on its stock.
GE said it would hang on to its aircraft leasing operations, as well as financing for the energy and health-care industries—smaller lending lines that support its core industrial operations. But the bulk of the $500 billion behemoth
would be sold or spun off over the next two years, as the company concluded
the benefits aren’t worth bearing the regulatory burdens and investor discontent.
To punctuate its intentions, the company agreed to sell $26.5 billion worth of
office buildings and commercial real estate debt to Blackstone Group LP,
Wells Fargo & Co. and other buyers. That follows plans to spin off its privatelabel credit cards and retail-finance businesses as a separate company called
Synchrony Financial.
The timing of exits from other large lending businesses wasn’t clear and could
be drawn out.
GE, Alinda Seek Buyer for Gas Utility
GE Energy Financial Services and Alinda Capital Partners LLC are seeking a
buyer for natural-gas utility SourceGas LLC, according to people familiar with
the matter.
The company could fetch more than $1.5 billion in a sale, including debt,
some of the people said. Potential buyers of SourceGas include large utilities
and infrastructure-focused private-equity funds.
SourceGas and its subsidiaries operate more than 18,000 miles of distribution, gathering and transmission pipelines as well as storage facilities in
Colorado, Arkansas, Nebraska and Wyoming, according to its website. The
Golden, Colo.-based company has more than 415,000 customers.
General Electric Co. and Alinda formed SourceGas after buying the U.S. natural gas retail distribution assets of Kinder Morgan Inc. in 2007 for $710 million. The next year, SourceGas made its first acquisition, buying Arkansas
Western Gas Co. from Southwestern Energy Co. for $224 million.
GE explored the sale of its stake in SourceGas two years ago but opted not
to move forward at the time, according to people familiar with the earlier
process.
continued on page 2
Monday’s Calendar
N/A
G24 Committee of the Whole
N/A
World Strategic Forum commences
Copyright © Dow Jones & Company, Inc. All Rights Reserved.
www.dowjones.com
page 1
Friday, April 10, 2015 4 p.m. ET
Tomorrow’s Headlines
continued
Import Prices Fall 0.3% In March
Prices of imported goods fell broadly last month, raising the
likelihood that inflation will remain subdued in coming
months amid a limping global economy.
Since 2013, the CFPB has been looking into PayPal Credit,
a lending service formerly known as Bill Me Later. In
Thursday’s filing, eBay said the probe includes “online credit products, advertising, loan origination, customer acquisition, servicing, debt collection and complaints handling
practices.”
PayPal said it may face fines, payments to customers or be
required to make changes to the lending unit’s operations.
Import prices fell 0.3% in March from February, the eighth
decline in nine months, the Labor Department said Friday.
Prices have fallen 10.5% over the past year, largely reflecting last year’s slide in oil prices that has since stabilized.
A CFPB spokeswoman declined to comment, but said no
lawsuit had been filed as yet. A PayPal spokeswoman
declined to comment.
Last month’s drop came entirely outside of oil, reflecting
lower prices for everything from capital goods such as computers to industrial supplies to automobiles. Nonpetroleum
import prices fell 0.4% last month and are down 2.7% over
the past year—the biggest 12-month drop since fall 2009.
Excel Trust Agrees to Be
Purchased by Blackstone
Even as oil stabilizes, prices in the U.S. are coming under
pressure from stimulus efforts by global central banks that
have weakened foreign currencies against the U.S. dollar.
A stronger dollar makes foreign goods cheaper in the global market.
The purchase price of $15.85 a share is a 15% premium on
Excel’s closing price Thursday. The total transaction, including debt, is valued at about $2 billion.
Ford To Take Controlling Stake
in Russian Venture
Ford Motor Co. on Friday said it would take a controlling
interest in its Russian joint venture with Sollers OJSC, providing additional funding to the venture and opening the
door for further integration at a time when the Russian auto
market is suffering.
The Dearborn, Mich., auto maker’s move contrasts the
strategy of General Motors Co., which last month said it
was closing its plant in Russia and stopping sales of most
of its products in that market, a shift aimed at helping it
meet its European profit targets.
Russian car sales fell 43% in March, the latest in a series
of monthly declines dating back to early 2014. Once seen
as one of the world’s most promising emerging markets,
Russia’s car market has collapsed amid wider economic
problems, political turmoil and a weak ruble.
Dismal market conditions are hitting mass-market auto
makers like Ford and GM hard, and dragging down wider
European operations. Ford, however, has said it is committed to Russia, given what it believes to be strong longerterm prospects for auto sales.
PayPal Says It May Face
Regulator Lawsuit
EBay Inc.’s PayPal payments unit may be sued by a U.S.
regulator over allegedly excessive finance charges for a
same-day lending service.
In a Securities and Exchange Commission filing Thursday,
PayPal said the Consumer Financial Protection Bureau
indicated it may file a lawsuit against the division as soon
as this quarter.
Excel Trust Inc. agreed to be purchased by Blackstone
Property Partners LP for about $1 billion in cash.
San Diego-based Excel is an REIT that mostly targets community shopping centers. Chief Executive Gary Sabin said
the board decided to sell because, “We did not believe the
market accurately reflected the value of the assets,” given
the strong demand for retail real estate.
Under the terms, Excel will pay an additional commonstock dividend in July, but not afterward.
Investors Advised To Vote Against
Barrick Gold Chairman Pay
North America’s biggest proxy-advisory firm has told
investors at Barrick Gold Corp. to vote against chairman
John Thornton’s $13 million 2014 pay package, adding to
growing investor disquiet over governance practices at the
world’s largest gold miner.
Institutional Shareholder Services said that the former
Goldman Sachs president’s 36% pay rise was unwarranted given Barrick’s share price underperformed its peers.
Last year, Barrick’s share price lost over a third of its
value. In recent years, Barrick has been dogged by
investors” concerns that the company was paying Mr.
Thornton too much.
Mr. Thornton was paid $5 million in cash and was given $7
million to buy Barrick shares for the year ended Dec. 31,
2014, according to the company’s annual management circular. A further $913,547 was awarded to Mr. Thornton in
pension and other benefits.
“At a time when shareholder returns have significantly
lagged peer companies, that total compensation for
Thornton .. has nevertheless increased significantly in the
most recent year is seen to be problematic at a minimum
and seemingly unwarranted,” ISS said in a report viewed
by the Wall Street Journal.
Copyright © Dow Jones & Company, Inc. All Rights Reserved.
www.dowjones.com
continued on page 3
page 2
Friday, April 10, 2015 4 p.m. ET
Tomorrow’s Headlines
sonal data within the country’s borders, a person familiar
with the matter said Friday.
continued
As North America’s biggest proxy-advisory firm, Institutional
Shareholder Services, is considered by many the most
influential with institutional investors that rely on these services for voting recommendations.
Iran Prepared to Extend
Nuclear Deal Talks
A representative of Rostelecom told a meeting with the
communications ministry and data centers that Google has
begun placing some of its servers at Rostelecom’s data
centers, said a person who was at the meeting, confirming
a report by the RBC news website.
Another person who works in the industry also said Google
has begun moving some of its servers to Russia.
GM Shuffles Finance Team
Iran will extend talks for a final nuclear deal with world powers beyond a June 30 deadline if the extension is required
to satisfy red lines drawn this week by supreme leader
Ayatollah Ali Khamenei, a senior Iranian official said.
“Iran will work hard to reach an agreement within the specified time of three months or even sooner, but if the deal
doesn’t meet the criteria the Leader has introduced for a
good deal, we would extend the time,” said Deputy Foreign
Minister Abbas Araqchi, a member of the Iranian negotiating team, in televised comments reported Friday by the
Mehr News Agency.
The comments underlined the wide gaps that still exist
between Iran and the group of six world powers who
reached a framework deal last week that would limit Iranian
nuclear activities and mandate international inspections.
EU, Ukraine, Russia Gas
Supply Talks Cancelled
Gas-supply talks scheduled for next week between energy
ministers from Europe, Russia and Ukraine have been cancelled due to still unanswered technical questions, the
European Commission said on Friday.
The commission, the European Union’s executive arm, said
in a statement that “as not all technical questions at expert
level have yet been answered, trilateral expert talks need to
continue next week in Brussels with a view to properly prepare the next trilateral meeting at political level.”
Commission vice-president Maros Sefcovic added he
expects the talks to take place before the end of April.
The talks, which were supposed to take place in Berlin on
Tuesday, are aimed at keeping natural gas from Russia
flowing to Ukraine and on to Europe at least through the
end of next winter. Gazprom, the Russian state-owned
energy giant, in February threatened to cut supplies to
Ukraine, claiming the war-torn country hasn’t paid for shipments.
Google Moves Some Servers
to Russian Data Centers
Russian state-controlled telecommunications company
Rostelecom said Google Inc. has moved some servers to
Russian data centers to comply with a controversial law
that mandates that Internet companies store Russians’ per-
General Motors Co. Chief Executive Mary Barra is shuffling
her finance team, appointing a 35-year-old executive as
treasurer while the company is intensifying plans to invest
in plants, technology and a revamp of its international presence.
Dhivya Suryadevara will take over as treasurer July 1. She
will replace Niharika Taskar Ramdev, 45, who was named
chief financial officer of the auto maker’s international operations.
Ms. Suryadevara will direct GM’s global treasury operations, including capital planning, capital market activities
and world-wide banking. She will also participate in business development, risk management and investor relations.
Ms. Taskar Ramdev will lead the finance team for GM
International, GM’s operating segment which generates $14
billion in revenue and comprises nearly 100 markets outside of China, including India, Africa and the Middle East.
Ms. Suryadevara was a part of the team that handled the
reduction of GM’s pension plans in 2012 and 2013. GM cut
more than $30 billion from its obligations, in part by offering
some retired salary workers to convert their monthly annuity to a lump-sum payout.
Boeing Receives Order From
Panama’s Copa Airlines
Boeing Co. has received a $6.6 billion order from Panama’s
Copa Holdings S.A., the largest deal ever between a
Panamanian and U.S-based company.
The order is for 61 737 MAX 8 and MAX 9 airplanes, which
Copa Airlines will use to replace some of its existing airplanes.
The news came Friday at a signing ceremony during the
Summit of the Americas attended by President Barack
Obama and Panamanian President Juan Carlos Varela
Rodriguez.
Stanley Motta, chairman of Copa, said that the order is “an
important step in strengthening Copa’s leadership in the
region” and will help Panama’s economic growth. Copa will
be the first airline in the region to fly the 737 MAX 9 on
South American routes.
In recent years, Copa has turned its Panama hub into a
profitable fortress linking cities in North, South and Central
America.
Copyright © Dow Jones & Company, Inc. All Rights Reserved.
www.dowjones.com
page 3
Friday, April 10, 2015 4 p.m. ET
Copyright Dow Jones & Co., Inc.
The Week Ahead
Tomorrow's News Today is made
available as a complimentary service
to Dow Jones News Service paying
subscribers. No further redistribution is
permitted without written permission
from Dow Jones. Tomorrow’s News
Today is intended to provide factual
information, but its accuracy cannot
be guaranteed. Dow Jones is not a
registered investment adviser, and
under no circumstances shall any of
the information provided be construed
as a buy or sell recommendation or
investment advice of any kind.
Retail Sales, Inflation Seen Rising
Want to send a co-branded daily
version to your valued clients?
Dow Jones offers subscribing firms the
opportunity to co-brand Tomorrow's
News Today for redistribution to their
clients. If your firm is interested in
co-branding, please contact us at
service@dowjones.com or
1.800.223.2274.
Tuesday’s March retail report may be the one with the biggest market-moving
potential. That’s because sales fell in the previous three months, raising worries
about the consumer sector.
Economists surveyed by the Wall Street Journal say top-line sales finally
increased in March, to the tune of 1.1%. Automakers have already reported a
gain in auto sales last month. The median forecast of economists calls for nonauto sales to be up 0.6%, which would more than offset the 0.1% drop in
February.
If store sales disappoint again, expect more Fed-watchers to forecast the first
interest-rate increase to happen in September rather than in June.
Two price reports are on tap next week. The producer price index, out Tuesday,
and the consumer price index, out Friday, should show that a pickup in energy
prices pushed up headline inflation. The PPI is forecast to rise 0.2% in March
and the CPI is expect to be up 0.3%. Excluding food and energy, the core PPI is
forecast to be up 0.1% and the core CPI up 0.2%.
Factory Data Seen Strong
Factory reports will cover March and April. The Federal Reserve will report on
total U.S. industrial production on Wednesday. The median forecast expects a
0.5% decrease in output. That reflects an expected drop in utility output which
surged 7.3% in frigid February.
Two regional Fed banks will release factory surveys covering April. The New
York Fed and the Philadelphia Fed will release their surveys on Wednesday and
Thursday, respectively.
Should You Invest In Bitcoin?
Is your stomach strong enough to take a flier on bitcoin?
The value of the virtual currency can fluctuate wildly—even in a single day. From
July 2010 to February 2014, its price was 26 times more volatile than the S&P
500, according to Matt Elbeck, a marketing professor at Troy University in
Alabama, who co-wrote a recent study about bitcoin with a colleague, Chung
Baek.
In addition, nearly a half-billion dollars worth of bitcoin disappeared last year
from Mt. Gox, once the dominant exchange for bitcoin trading. And regulators
are paying increasing attention to digital currencies, adding another element of
uncertainty.
For many investors, those kinds of risks are reason enough to stay far away.
Yet bitcoin could have some virtues for certain investors. “It doesn’t trade with
stocks or bonds or gold or any other asset that typically appears in a mass-affluent portfolio,” says Nicholas Colas, chief market strategist at New York-based
brokerage firm ConvergEx Group.
There also is growth potential, given that digital currencies are in their infancy.
Investment firms show growing interest in the currency and in the technology
behind it, which could point to more widespread use.
This year, the value of bitcoin has fallen about 23%, through Thursday, according
to a CoinDesk index. Still, a single bitcoin is worth $243.26, up from less than $5
three years ago, according to the index.
Dedicating a small sliver of your portfolio to bitcoin may make sense for a
younger, affluent investor who won’t get spooked by sharp swings in value.
continued on page 5
Copyright © Dow Jones & Company, Inc. All Rights Reserved.
www.dowjones.com
page 4
Friday, April 10, 2015 4 p.m. ET
The Week Ahead
Most Fed officials expect to begin raising interest rates this
year as the economy improves, though the precise timing
of the first increase remains uncertain.
continued
Mr. Elbeck says such a stake should represent less than
0.5% of your investments.
And investors who will need to tap the money in the near
term—or whose finances would be compromised if the
investment became more or less worthless—should stay
far away, says Mark La Spisa, president of Vermillion
Financial Advisors in South Barrington, Ill.
Banker: Fed Should Wait
Til 2016 For Hikes
The Federal Reserve should wait until the second half of
2016 before beginning to increase its benchmark shortterm interest rate, which has been pegged near zero since
December 2008, Federal Reserve Bank of Minneapolis
President Narayana Kocherlakota reiterated Friday.
“Under my current outlook, I continue to believe that it
would be a mistake to raise the target range for the fed
funds rate in 2015,” Mr. Kocherlakota said in remarks prepared for delivery in Bloomington, Minn.
Mr. Kocherlakota’s speech was largely identical to remarks
he made Tuesday in Bismarck, N.D.
Federal Reserve Bank of Richmond President Jeffrey
Lacker said earlier Friday that he sees a strong case for the
Fed to begin raising rates this summer.
“I expect that, unless incoming economic reports diverge
substantially from projections, the case for raising rates will
remain strong at the June meeting,” Mr. Lacker said.
But after a recent run of weak economic data, “it’d be reasonable to think that the timing of the Fed’s first rate hike
might be a little further off in time,” Federal Reserve Bank
of New York President William Dudley said on Wednesday.
A June rate increase “could still be in play,” he said, but
“now the bar is a little higher.”
Mr. Kocherlakota, on the other hand, has argued that the
Fed should hold off on raising rates for now. On Friday, he
said the Fed can be “both late and slow” because it will
take years for the central bank to achieve its goals of maximum employment and stable prices.
The initial rate increase should be delayed until the second
half of 2016, he said, and the benchmark federal funds rate
should rise to roughly 2% by the end of 2017. In March, the
median of policy makers’ projection for the fed funds rate at
the end of 2017 was 3.125%.
Copyright © Dow Jones & Company, Inc. All Rights Reserved.
www.dowjones.com
page 5