GE reports smaller loss as business recovers from pandemic lows

GE reports smaller loss as business recovers from pandemic lowsCash flow for its industrial operations was $514 million in the third quarter, compared with the average analyst estimate of an outflow of $876 million. GE has laid out plans to cut $2 billion in costs, a great deal of which is at the aviation unit. Revenue at GE's aviation unit fell 39% in the quarter compared with last year, while in the power business it rose 3%.

Oil Slumps With Europe’s Coronavirus Restrictions Growing

Oil Slumps With Europe’s Coronavirus Restrictions Growing(Bloomberg) -- Oil fell sharply with broader markets as renewed restrictions on movement in Europe clouded the outlook for consumption once again.Crude futures in New York fell 4.6%, while those in London retreated below $40 a barrel, the lowest since Oct. 5. Germany is proposing widespread curbs for a month, while France is preparing tougher restrictions that may include a lockdown in the latest round of measures to limit the spread of Covid-19. That weighed on European and U.S. equity markets, while the dollar was stronger, souring oil market sentiment.Adding to the gloom, the American Petroleum Institute reported crude inventories expanded by 4.58 million barrels last week, while gasoline stockpiles rose for a second straight week, according to people familiar with the data. Official government figures are due later on Wednesday.Crude has come under renewed pressure as the virus leads to a more fragile demand outlook, and the head of Saudi Aramco’s trading unit said traders are cautious given the uncertainty in consumption. The market is also facing rising supply from Libya, which is eroding some of the stock draws that were expected in the fourth quarter. It means OPEC+ has some tough decisions to make on the path forward for its output curbs next month.“With hefty stock builds across the board in the headline API numbers, it is not all that surprising the oil price is moving lower this morning,” said Harry Tchilinguirian, oil strategist at BNP Paribas SA. “With equities lower and a stronger dollar reflecting a retreat in risk appetite, oil also came under pressure.”U.S. gasoline inventories expanded by 2.25 million barrels last week, while crude supplies at the key storage hub of Cushing climbed by 136,000 barrels, according to the API. The median estimate in a Bloomberg survey forecast nationwide crude stockpiles increased by 1.5 million barrelsThe oil market’s structure has also weakened markedly in recent days. Brent’s nearest futures contract is at its biggest discount to the next month in about two weeks, as concerns about the market’s health in the near-term grow.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Deutsche Bank Boosts Securities Unit Outlook on Trading Boom

Deutsche Bank Boosts Securities Unit Outlook on Trading Boom(Bloomberg) -- Deutsche Bank AG signaled the trading boom that helped it beat Wall Street rivals will continue through the end of the year, boosting investment banking revenue and compensating for headwinds at its lending businesses.Income from trading fixed-income securities and currencies rose 47%, beating all but one of the large investment banks so far and snapping a long streak of market share losses. That propelled Deutsche Bank to a 182 million-euro ($214 million) profit in the third quarter, compared with a loss that analysts had predicted.“We not only demonstrated continued cost discipline, but also our ability to gain market share,” Chief Executive Officer Christian Sewing said in a statement Wednesday. The securities unit continues to perform well so that revenue there will be “significantly higher” for the full year, the lender said, raising a previous guidance for higher revenue at the business.Five quarters into a historic restructuring that aimed to emphasize lending and reduce reliance on trading, Sewing is increasingly dependent on the securities unit as the corporate bank keeps shrinking. While the market bonanza prompted Deutsche Bank to raise its forecast for the investment bank, questions about the sustainability of the rally and the pandemic’s second wave weighed on the shares.Deutsche Bank fell 3.3% at 9:57 a.m. in Frankfurt, declining along with the broader market. The stock is still one of the best performers this year among European lenders.It’s “a good set of results,” Citigroup Inc. analysts including Andrew Coombs wrote in a note. Still, the investment banking “industry backdrop is unlikely to be as supportive for Deutsche Bank in 2021.”The debt trading result compares with gains of about 25% for the biggest Wall Street banks. Only Goldman Sachs Group Inc. did better, with a 49% increase. Sewing said earlier this year that trading would slow in second half, but some of those predictions haven’t come to pass.So far this year, growth at Deutsche Bank had trailed the competition even as it benefited from the rally, though the third quarter snapped that streak. Sewing, who also heads the investment bank, has said the division’s growth is only partly driven by the buoyant market and partly the result of changes made under his leadership.Debt trading “has continued a moderation in October but the environment is still supportive,” James von Moltke, Deutsche Bank’s chief financial officer, said in an interview. “In the other businesses we are expecting stable conditions in the fourth quarter relative to the third.”Key figures from Deutsche Bank’s third quarterThe gains for now have alleviated concerns the business may be too damaged after years of piecemeal cuts under Sewing’s predecessors. The bank last year unveiled its biggest restructuring in two decades, exiting equities trading and trimming the larger fixed-income operation. Sewing, a former corporate banker, had initially planned more aggressive cuts to debt trading but reversed course when it became clear that negative interest rates would weigh on the bank’s other businesses for longer.Before today, shares of Deutsche Bank had rallied 14% this year, the best performance among European lenders. That also reflects the fact that other banks were hit hard by a de-facto ban in Europe on dividend payments, whereas Deutsche Bank hadn’t planned a payout while it’s going through the restructuring.What Bloomberg Intelligence Says:There’s greater confidence in Deutsche Bank’s restructured franchise, we believe, following FICC trading revenue gaining an adjusted 43% year-over-year, along with a 15% growth in origination and advisory fees that outpaced consensus. There was also progress in capital, costs and more-modest noncore asset reductions. A 49% surge in FICC trading revenue (dollar terms) matches Goldman Sachs’ leading increase, exceeding the aggregate 25% jump for U.S. peers.Deutsche’s FICC Blowout, Fee-Gain Boost Needed Momentum: ReactAlison Williams, financials analystLenders including UBS Group AG, Banco Santander SA and HSBC Holdings Plc have signaled they’re ready to resume dividends or share buybacks once regulators lift restrictions. Their optimism contrasts with warnings by European governments that renewed lockdowns could become inevitable if they can’t stem the rise in infections. European banking regulators, who had been moving closer to lifting a de-facto dividend ban, are increasingly worried about the worsening economic outlook.Deutsche Bank set aside 273 million euros for bad loans in the quarter, slightly less than a previous guidance of 300 million euros. The lender in previous quarters provisioned less than many competitors for the pandemic, citing the quality of its loan book and its exposure to Germany, which has released enormous government aid to support its economy.That quality may be tested over the coming months as Chancellor Angela Merkel is pushing for tougher curbs on movement and contact, including closing bars, restaurants and leisure facilities, according to a draft federal government briefing paper obtained by Bloomberg. The paper will form the basis for discussions with regional premiers later on Wednesday, before Merkel holds a news conference to announce the measures agreed.(Updates with shares in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

S&P 500 Tumbles in Worst Rout in Almost Two Months: Markets Wrap

S&P 500 Tumbles in Worst Rout in Almost Two Months: Markets Wrap(Bloomberg) -- Stocks tumbled in the U.S. and Europe as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from the pandemic.The S&P 500 Index fell about 3%, headed for the biggest drop since early September, amid a surge in Covid-19 hospitalizations, especially in the Midwest. Energy shares sank with oil prices, and technology stocks were also among the worst performers.Boeing Co. slumped to a one-month low as it announced plans for more job cuts. Microsoft Corp. was among the biggest drags on the S&P 500 as investors focused on a forecast that fell short of analysts’ highest projections, looking past a decisively upbeat profit and sales report. General Electric Co. gained after reporting a surprise profit.The Stoxx Europe 600 Index fell to a five-month low and sank more than 3% after German Chancellor Angela Merkel reached a deal for a one-month partial lockdown to curb the spread of the virus. Auto and real-estate shares saw the steepest declines.Haven assets, such as Treasuries and German bunds, rose. The VIX Index, a measure of U.S. equity volatility, climbed to the highest level since June.Markets in the U.S. and Europe have retreated sharply this week as virus cases surge and American lawmakers fail to agree on an economic aid package before the Nov. 3 election. Analysts are also warning about increased volatility in markets ahead of the presidential vote and in its aftermath, with some saying that a contested outcome is still a possibility.“As you see cases rise and reduced activity across the country, that directly translates into an impact on GDP growth,” said Phil Toews, chief executive officer of asset manager Toews Corp. “The lack of a fiscal stimulus means people who were unemployed who were able to continue to purchase things are no longer going to be able to do that.”Elsewhere, oil fell sharply on concern lockdowns will sap demand. Bitcoin headed to its biggest drop in almost two months after reaching the highest since January 2018.In Asia, stocks fared better. The MSCI Asia Pacific Index edged lower on Wednesday, and markets in South Korea and Shanghai posted modest gains. In China, indicators tracked by Bloomberg showed the recovery continued to display mixed signals while remaining broadly steady in October.These are some events to watch this week:Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Haruhiko Kuroda and President Christine Lagarde.The Chinese Communist Party’s Central Committee holds its plenum through Friday, where it’s expected to chart the course for the economy’s development for the next 15 years.Brexit negotiating teams have started intense daily talks, and these are likely to continue as both sides push to finalize a deal by the middle of November.The first reading of U.S. third-quarter GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.Here are the main moves in markets:StocksThe S&P 500 Index dropped 2.9% as of 11:06 a.m. New York time.The Stoxx Europe 600 Index decreased 3.3%.The MSCI Asia Pacific Index fell 0.5%.CurrenciesThe Bloomberg Dollar Spot Index increased 0.6%.The British pound declined 0.4% to $1.2995.The Japanese yen gained 0.1% to 104.27 per dollar.BondsThe yield on 10-year Treasuries fell one basis point to 0.76%.Germany’s 10-year yield dipped one basis point to -0.63%.Britain’s 10-year yield decreased one basis point to 0.22%.CommoditiesWest Texas Intermediate crude sank 5.3% to $37.47 a barrel.Gold weakened 1.6% to $1,876.79 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Is Apple Stock a Buy Ahead of Earnings? This Is What You Need to Know

Is Apple Stock a Buy Ahead of Earnings? This Is What You Need to KnowApple (AAPL) will report FQ4 earnings on Thursday evening in what will as per usual be one of earnings season’s highlights. This September quarter’s results, however, will have a different flavor, due to the well-publicized delay to the new iPhone’s release. An issue Deutsche Bank analyst Jeriel Ong believes will be on investors’ minds when Apple releases its quarterly financial results.“We expect a solid Sept-qtr report from AAPL, but see investors overlooking any recent strength/weakness and focusing on the Dec-qtr given the recent iPhone release and impact on guidance and the Mar-qtr beyond, as this is the first time that all new iPhone products are a month or more delayed. With only a week of new iPhone sales by the time earnings are reported on 10/29, we are unsure that AAPL will feel comfortable with guidance,” Ong wrote. In fact, Apple has not provided any official guidance since January, while for the December quarter, the tech giant usually has 1.5 months of sales data to base the guidance on, it is a luxury the company does not have this time around.As for the September quarter’s results, Ong expects revenue of $62.7 billion, indicating a 5% quarter-over-quarter uptick yet down by 2% year-over-year. The Street’s forecast calls for $63.8 billion. Ong’s EPS estimate stands at $0.69 compared to the Street’s $0.70 estimate.In contrast to Apple, Ong does provide guidance for the next quarter and expects revenue to increase by 9% year-over-year and 60% quarter-over-quarter to $100.1 billion, slightly below the Street’s call for $100.6 billion. On the bottom line, Ong expects EPS of $1.37, the same as the Street’s estimate.As a side note, the 5-year average quarter-over-quarter increase for revenue in the Dec Quarter stands at 52%. “Given the lack of 1 week of new iPhone revenues in the Sept-qtr due to the delayed release, we would expect AAPL to beat seasonality comfortably in the Dec-qtr,” Ong added.All in all, ahead of the print, Ong reiterates a Buy rating on AAPL shares along with a $140 price target. This figure suggests a 20% upside potential from current levels. (To watch Ong’s track record, click here)Apple has decent support on the Street with 26 Buys, 8 Holds and 1 Sell coalescing to a Moderate Buy consensus rating. At $125.81, the average price target suggests room for an 8% uptick. (See Apple stock analysis on TipRanks)To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

American Airlines (AAL) Stock Still Worth $18, Says Analyst

American Airlines (AAL) Stock Still Worth $18, Says AnalystBack in April, Deutsche Bank analyst Michael Linenberg forecast that by 4Q20, American Airlines (AAL) will be will generating 65% of 4Q19’s revenue – i.e. a year-over-year revenue decline of 35%. But making any forward predictions in 2020 has been a thankless task, as Linenberg now admits: “What did we really know in April as we were attempting to make a fair assessment of the industry at the depths of the downturn?”Since then it has become clear that this target was too optimistic. Linenberg now expects December quarter revenue to contract by as much as 65%.Although the figure is a significant improvement on the September quarter’s 73% year-over-year downturn and better still on the June quarter’s 86% decline, it is still far below the original April estimation.It’s not as if AAL is unique in this respect. Linenberg estimates the slow revenue recovery will result in most airlines only achieving break even cash flow by 2021, and American, specifically, by the June quarter.That said, Linenberg notes the “fundamentals continue to improve.” It is notable too that the daily cash burn rate is getting steadily reduced. From $58 million in the June quarter to $43 million in the September quarter, and estimated to be between $25 - $30 million in the current quarter.And while Linenberg acknowledges the risks at play, the analyst believes it all bodes well for when consumers are ready to confidently travel once again.“The improvement in cash burn combined with a record level of liquidity ($15.6 billion, which includes the full amount available under the CARES Act Loan Program) gives us a confidence that not only will American be able to ride out the downturn, but is well-positioned to participate in the recovery once demand bounces back,” Linenberg said. “"We are reiterating our Buy rating on American's shares, but acknowledge the fact that the company is the most financially leveraged name in our coverage universe (net debt of $33 billion at September quarter-end). That said, and combined with the company's operating leverage, we would expect AAL's shares to outperform once an industry recovery gains momentum,” the analyst concluded. The Buy rating is accompanied by an $18 price target, implying shares will rise by 60% over the next 12 months. (To watch Linenberg’s track record, click here)The rest of the Street, however, is not as optimistic. Based on 2 Buys, 1 Hold and 4 Sells, the stock has a Moderate Sell consensus rating. At $9.33, the average price target suggests shares will drop by another 17% over the next 12 months. (See AAL stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Boeing Earnings Are Coming; Here’s What Matters

Boeing Earnings Are Coming; Here’s What MattersMany companies will be eager to put 2020 behind them and surely so will Boeing (BA). The A&D giant had issues to contend with prior to the viral outbreak, but these were exacerbated by COVID-19’s ruinous impact on the airline industry.Reduced long-term commercial jet demand, aircraft delivery cancellations, terrible earnings and a scathing verdict from Congress for the design mistakes that led to the two deadly crashes of Boeing's grounded jetliner, the 737 Max, have all been on the agenda in 2020.As a result, BA shares are down by a massive 52% so far this year.Heading into Wednesday’s Q3 earnings, RBC analyst Michael Eisen is not expecting a surprising turnaround.In fact, the analyst reduced his consolidated revenue forecast by 18%, due to a 48% cut to his Commercial Airplane estimates; In Q3, BA has already reported it made 28 commercial deliveries vs. Eisen’s prior forecast for 51 aircraft deliveries.Eisen now expects revenue of $3.3 billion compared to the $6.4 billion he previously forecasted. Street is calling for $4.3 billion.As far as gaining insights into the overall state of Boeing’s operations, Eisen believes investors will be focused on several key issues, especially “updated expectations on the MAX.”“This should include comments regarding customers’ willingness to accept the plane, how investors should think about the cadence of production ramps towards 31/month by ’22, and the cash flow profile of the growing MAX inventory,” Eisen said.Other key areas Eisen expects investors’ to home in on include how Boeing fares compared to other major defense competitors’ lowered 2021 growth expectations. Boeing, says Eisen, should “benefit from ramping development programs and improved production on the KC-46, and should be able to deliver LSD/MSD growth.”Lastly, investors will be keen to find out Boeing’s cash flow position – “when FCF could inflect positively and what “normalized” cash flows could look like beyond ’21.”All said, though, Eisen sees better days ahead. The analyst rates BA shares an Outperform (i.e. Buy), along with a $194 price target. The implication for investors? Upside of 25%. (To watch Eisen’s track record, click here)Amongst Eisen’s colleagues, BA has mixed reviews with a slightly bullish tilt. Based on 8 Buys, 9 Holds and 1 Sell, the stock has a Moderate Buy consensus rating. The average price target hits $188.06 and suggests shares will rise by 21% over the coming months. (See Boeing stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Callaway to Buy the Rest of Driving-Range Chain Topgolf

Callaway to Buy the Rest of Driving-Range Chain Topgolf(Bloomberg) -- Callaway Golf Co. plans to buy the remainder of driving-range chain Topgolf Entertainment Group, providing the golf-club giant with a new source of growth.The deal values closely held Topgolf at about $2 billion, the companies said in a statement after Tuesday’s market close. Callaway, the maker of Big Bertha drivers and other equipment, already owns 14% of Topgolf. The Wall Street Journal reported earlier Tuesday that the acquisition was in the works.Topgolf driving ranges -- which feature food, drinks and electronic games -- are seen as a way to bring younger players to golf, which has suffered from aging demographics and the closing of hundreds of courses in recent years. They also have held up during the pandemic because golfers can practice their swing while remaining socially distant.With the merger, Callaway hopes to acquire new customers and add a stronger digital component to golfing, Chief Executive Officer Chip Brewer said in an interview.“We have thoughts about being the Peloton of golf,” Brewer said. He added that the company could offer more microtransactions in the future, charging for personalized golf content.The companies said they expect pro forma revenue of about $2.8 billion and see it growing to $3.2 billion by 2022, projecting 10% annual growth thereafter. They predict that the deal will close early next year.Callaway shares closed down 3.1% after briefly climbing as much as 8.9%. They’re down 9% this year through Tuesday’s close.Callaway, located in Carlsbad, California, first invested in Dallas-based Topgolf in 2006.Topgolf CEO Dolf Berle, meanwhile, plans to leave the company to start his own business after the transition period, he said in an interview.(Updates with executive comments starting in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.