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There are very many different models and in Latin America specifically, Brazil is learning from the countries Mexico, Colombia and Chile.
As a result of many years of a wary attitude to trade, the comments you hear from Brazilian officials today have a different flavor, a more open flavor. The new rhetoric toward more trade openness in Brazil is important. You cannot really make a straight comparison between what happened in Brazil under the Brazilian Workers' Party and what could happen in the U.S. One of the reasons the Brazilian recession was so deep was this corruption scandal that erupted. It looks like the U.S. has a different level of institutional development that should prevent such widespread practices.
We had adopted during the last years some protectionist measures for some sectors of the economy, and the net result was not positive. At the end of the day, the products became more expensive and Brazil…became less competitive. In Brazil, we are moving toward a more open trade policy.
We expect gold to rise to US$1300/oz by mid-year (over 5% gain), before declining back to current levels by year-end. A dovish Fed will be met by inflation surprises over the coming quarter, which will lead to further decline in real interest rates. Although we agree with consensus that the Fed will deliver only two further rate hikes this year, Fed members may be forced to talk tougher in the second half of the year, which could tighten yields and lead to a stronger US dollar. For now a dovish Fed is likely to support gold.
We had adopted during the last years some protectionist measures for some sectors of the economy and the net result was not positive. At the end of the day the products became more expensive and Brazil...became less competitive, In Brazil, we are moving towards a more open trade policy.
In our view, these fears place an undue emphasis on the role of advertising impression growth for core Facebook and ignore the key drivers of new ad products, better measurement/attribution tools & sustained levels of engagement across the Facebook ecosystem.
Brexit has pushed institutions into two camps. On one side, we've got the 'business as usual' team, and, on the other, we have the institutions that are tired of the government's hemming and hawing and have already begun to move jobs to other EU countries. It's the latter group that's contributed to the quarter drop in jobs available. Large institutions…are currently using up incredible institutional resources to project years out and plan for a future that changes from one day to the next. For many, it's simply proving easier to get ahead of the worst-case scenario and get out of London now.
This is at the low end of the $1-2bn we expected and could imply another raise later if the Model 3 is delayed. If the launch is delayed (note the Model 3 beta prototype is not yet approved by the board), cash burn would be worse, putting them close to the $1bn cushion they need. Liquidity and cash burn remain key near-term risks, and investors may grow weary of continued raises as this is the second capital raise in a year.
This is at the low end of the $1-2bn we expected, and could imply another raise later if the Model 3 is delayed.
In short, although I think that we are seeing something of a pushback against populism in Europe today and that we should feel some relief at the Dutch outcome, populism is far from dead, including in the Netherlands, and we should treat the French election on its own merits.
Initially, futures looked like they were going to sell off and then they shot around and spiked higher, suggesting that the hesitation was tied to the lack of policy details in Trump's wide-ranging address. That left a feeling in some of the guys who were trading that some of the initial buying may have come out of Europe, and that they were perfectly willing, since the speech was much more presidential and somewhat conciliatory, to buy into that.
That's an interesting way to look at it, that if he didn't give you detail, that nobody can stand up and rail against it. And so the absence of opposition may encourage some people. It's a bit of a stretch, but I can understand it.
To get a positive reaction, you need the president to say just the right things, to give enough detail, hope and timing that the market picks up on it. Then you need Congress, both the Democrats and Republicans, to sound like they might be able to work along with it and get it passed. Now, if either of those don't happen, that would raise the possibility of a logical, negative reaction from the market.
Apple appears more interested in AR [augmented reality], which connects people, than VR [virtual reality], which potentially isolates experiences. Apple may be well equipped to lead given its core competencies in hardware design and software/hardware integration as well as its large base of affluent iPhone and iPad owners.
According to some industry sources, the company may have over 1,000 engineers working on a project in Israel that could be related to AR [augmented reality]. Our work suggests that AR could be the next major innovation from Apple and that its competencies could make the company a winner ... Augmented reality is an area where Apple could leapfrog competition in providing a superior user experience. This could result in sustained iPhone retention rates and more switchers.
I think we're really coming to a point where you're going to see things change. I think the president is going to have to give at least some hint of details. If he just gets up and says 'I'm still working on this package and it's wonderful,' the market will be disappointed.
We're building up to a very, very important time here.
Well, we're significantly overbought now. I mean, I think we're really vulnerable in the sense that things like the advanced decline indicator is not keeping up with the rate of the rally. We're above, 8 percent above the 200-day moving average, getting very close to 10 percent above in the S&P. That's usually a warning signal.
It makes no sense for UBS to tie up resources in this business. Even so, Monday's transaction has neither the dimensions nor the strategic significance to have an impact on UBS shares.
We expect Wealth Management's net new money growth rate to remain around the lower end of our 3 per cent to 5 per cent target range for 2017.
We struggle to understand the run-up, particular as Q4 deliveries missed, though positive spin on the Musk-Trump relationship, reconfirmed Model 3 launch timing, and expectations of new reveals (including more autonomous features) are likely factors. We remain cautious with expected accelerated cash burn ahead of the Model 3 launch … [and] negative earnings revisions with the inclusion of SCTY.
It's not a very broad rally as it had been a couple weeks ago. So when it begins to narrow, you do worry about that. The volume was nothing to write home to mother about. So you look at those things and say, How much of this is an illusion and how much of it's real? If they punch through there, they could possibly get a tailwind and ... kind of another minor breakout.
(Tax reduction and infrastructure spending are) going to happen slowly and what we are seeing at the moment is whilst those medium to long-term prospects are good, the tailwinds that we were getting from that are going to materialize at the end of this year. The headwinds that are coming from some of the trade policy are likely to set in earlier, so we could face some period of volatility until actually most of the government is in place, appointments have been confirmed in the hearings.
Political uncertainty is now the name of the game, almost in every country.
In Britain we've seen that over the last summer. I'm pretty sure Marine Le Pen will be one of these candidates (in the final round) but I don't think she will be the winner of the race.
I still continue to think it's undervalued. This is the first time that I felt that Apple has something that would make it so we really could be surprised by what it is.
We consider the installed base and retention rate the primary drivers of device and services value. … If Apple services were valued similarly to PayPal, the stock would be at least 10% higher.
The economy is expected to accelerate a bit this year versus last year but there's not going to be an awful lot of acceleration taking place. You can argue Trump is going to able to bring a huge fiscal stimulus and that's why growth is going to accelerate 4 percentage points. We think that is unlikely to happen; we have yet to see it's going to pass (the U.S.) Congress.
There's a lot of uncertainty here. For the Fed, in the current environment, this means: 'yes guys, we are going to normalize rates but it's going to be slow moving. Give us a little bit of time, let us assess the situation.
You are lending increasingly to the type of person that has cash flow pressures.
Dividend paying stocks should benefit from demographics as aging Baby Boomers seek income growth in a low interest rate environment. Strong balance sheets, solid free cash flow generation, and low dividend payout ratios support corporations' ability to fund continued dividend growth.
That problem is probably going to intensify.
No one thinks that's the best solution here but the opposite – making another change – also doesn't seem like good solution. Facebook and Google are going to continue to grow at very fast rates and continue to innovate and I think that would leave Twitter far behind at this point.
If you have a weaker currency, things that are more exogenous to just the politics of exchange rates begin to work a bit more in favour of (certain outcomes), for example capital flows out of China, which is really what's putting a lot of pressure on the yuan over the last year or so.
What will keep getting attention is what's coming from the new administration. Politics, as opposed to central banks, have become the primary driver of yields in the near term, and the main source of volatility. …It does seem to make a difference when a certain account tweets more or tweets less.
We would have prioritized what the president did in the first two weeks with the things that please us most. Building walls, changing immigration laws on the fly, starting trade wars … all that has the market saying, Wait a minute, you ran on tax cuts.' Whether it's done by reconciliation or done by legislation, it's going to take time. The shift back to focus on fundamentals, it's not going to take us substantially higher. It's taking us back to where we were two weeks ago.
This could keep the Dow above 20,000 this time. Earnings have been pretty good with 72 percent of companies beating.
We continue to think they will converge to our number, which is 5.9 percent, because the legislative process is a long and complex thing. It's clear there are other things higher on the agenda than tax reform. Literally every issue with regard to tax reform is open for negotiation.
The question is, have investors fully factored in this whole idea that the legislative and policy agenda is full enough such that tax reform is going to be very late 2017 or 2018 issue? And for us the most interesting thing sort of below the surface is that earnings estimates which we have believed for months are too high, actually have come down over the last week pretty dramatically.
Our perspective has been that in the very near term, while there's no more 'central bank put,' it's been replaced with a 'Trump put.' The 'Trump put' is reliant on not getting much detail on the eventual policies we're getting, in the near term, which keeps the hope trade alive.
Predicting Donald Trump's tweets is bordering on the impossible. Next week is the last major week of earnings season so that's going to be ongoing, but I think with all the political news, the earnings have taken a back seat. I don't anticipate there being any change. The bottom line for the earnings season is things are pretty good.
My guess is we're kind of running out of tape bombs that come out of the White House, for the short term. It feels as though my guess is we get any glimmer of a shift back to the fundamentals, the market finds a path higher.
The market is beginning to focus on some of the negatives that fall within the policy options. Right now the negatives of border adjustment, losing interest deductions and concern about trade friction … and overall social unrest. People are talking more about that stuff because we're not getting much clarity.
It's a great revenue line... and helps offset the fact margins are coming down on the iPhone. Given we don't know what Trump policies will be it's very difficult to model. We're sticking with iPhone price and modeling from there.
That thousand point move from 19,000 to 20,000 was accomplished in 42 days. And, that's very fast. That's the second fastest thousand point move in the history of the Dow. Most of the traders here think you may get a little bit of a pause or a slowdown. That's happened before. They think we may see a bit of a pullback in February, . That's rather consistent with a first time president, and the pattern that follows him. I think then you can get another leg to the upside that may be multi-month and then you will have a longer correction after that.
Will there be a test from North Korea? Will there a be a test from Russia? You can't get too, too comfortable.
Considering that the ... negatives are to be seen as phasing out in 2017, the results support our buy rating.
Tesco shares soared after it announced plans to merge with Booker Group, a major strategic play for the UK's largest retailer at a crucial moment for the industry and in its turnaround process. At first glance Tesco's merger with Booker makes perfect sense. Tie up the end-to-end wholesale/retail business and make savings in the process.
We must also see that we still earn decent money. That will certainly be the biggest challenge in 2017.
Increased geopolitical risk or an increase in protectionism could just as easily lead to commodity supply disruption, sending prices higher in the near term despite negatively impacting commodity demand, too. Over longer periods, correlation between broad commodity prices and policy uncertainty is low to slightly negative. Exceptions include precious metals with a more pronounced positive correlation, and a strong negative correlation with the energy segment.
I think there is a big mispricing on the euro-dollar right now because the market is actually happily still using the euro as a funding currency for now because Draghi is extremely dovish. By the middle of this year, once the medium-term inflation expectation touches its target of 2 percent, we actually can expect a strong hint that he can reduce the program a lot more. There is a political premium right now on the euro and in fact, we don't think there will be big accident out of those events. So right now the price on the euro, you are getting a good discount.
William Featherston - UBS
Joseph Head - UBS
Incorporating the IEA's (International Energy Agency) baseline demand revisions would, all else equal, bring forward our projected rebalancing from 2Q17 to 1Q17.
We estimate XOM is now trading at 12.4x and 11.6x our 2017 and 2018 DACF [debt-adjusted cash flow] estimates, respectively, well above its historical average of 8.2x and the global integrated average of 7.2x and 6.4x.
The central bank could also use the rate tool, it's also on the table. The central bank's hands are not tied.
The wall of worry which has supported stocks for 8 years has given way to a deep sense of hope and optimism. Such optimism is often seen near the end of bull moves/beginning of corrections rather than at the early or mid-stages.
The laggards will lead in the new year, and there's a lot to choose from, particularly in the beaten-down areas of health care, certain consumer discretionary and software stocks.
Continued issues with user verification, bots and negative social behavior by users could cause any momentum to dampen.
We believe Twitter's ad revenue will likely be pressured (and grow below industry levels of mid-teens CAGR [compound annual growth rate] the next three years) given lackluster advertiser demand (among heightened competition), executive turnovers and challenged ad execution.
We are happy to see that post-elections (in the U.S), we see both people that supported (President-elect Donald) Trump and people that were supporting (Hillary) Clinton becoming more positive about the economic outlook and being willing to consider investments going forward. Now, we need to see them translating that desire into reality.
But it is starting to affect savings, most pension fund systems, insurance companies and the confidence of people who have been saving money thinking that they can leave a little bit out of their income to continue to prosper. It is creating this sense of inequality that goes on in Europe.
I think if the collateral damage of low (interest) rates or negative rates would only affect banks, it would be okay.
We need a higher degree of certainty in order to take action, it will be extremely expensive otherwise.
We have a Frankfurt base where we house our wealth management operations and not just that... We have a framework in place and infrastructure that can be expanded if needed.
In terms of the LBO space, I think there's going to be a ton of activity.
That's going to be very bullish for risk assets. It's going to take a long time for all this to materialize, but it does change the way someone like me looks at the world.
This handoff from monetary to fiscal is a very powerful change in the way capital is being allocated and earned.
I think that the big difference between the last administration and now is that there will be a major shifting of priorities, including certain sectors falling out of favor and others becoming more attractive; and that makes for increased activity and repositioning which fit very well with the sponsored finance universe.
Nobody has enough power to topple this country with economics, terror, unrest or cruelty.
To protect the lira's resistance against the U.S. dollar, investors' perception that the central bank will be unable to raise interest rates must be shattered as soon as possible.
An outright rate hike is the only way the central bank can take action and assure markets it will not let the lira plunge. The longer they go without doing it, the more aggressive action will be needed.
The longer you wait, the more inflation expectations and confidence get contaminated and the harder the problem becomes to arrest. They will need to move at least by 50 bps and indicate more tightening is ahead.
The big upward revision to November and a 2.9 percent increase in average hourly wages are going to be enough to let markets keep their faith in the Trump reflation trade, and the U.S. Federal Reserve plans further interest rate increases.
We believe we are entering a period where earnings power may inflect for bulge bracket investment banks due to lesser regulatory constraints.
Shares appear to largely reflect improved fundamentals and refranchising benefits. Despite confidence in the long-term outlook, we're lowering our rating ... we'll likely wait for greater conviction into traffic and sales acceleration and more upside to consensus estimates before revisiting our recommendation.
First quarter 2017 will be one of our best quarters ever at UBS for leveraged finance.
Despite the uncertain gold price backdrop, looking into 2017 the European gold miners are in good shape from a cost and balance sheet perspective.
Today's focus will be the afternoon's U.S. jobs report, not so much for the notorious volatility-inducing non-farm Payrolls but for accompanying metrics. The unemployment rate is seen ticking up from December's 9-year low, while wage growth accelerates, something which could imply rising inflationary pressures that force the Fed to hike (interest rates) more quickly in 2017.
The response to Trump provided the Fed enough cover to move forward with the process of normalization. There are clear worries about the secondary impact of what a tighter monetary policy is going to do.
A lot of the fixation is clearly on Dow 20,000, and how that reacts, but the idea is that with those numbers, you get roundaphobia. … I just think there's some natural hesitation around this round number. By virtue of the concept of a watched pot seldom boils, if it does boil, there's going to be information on whether crossing 20,000 is met with a buy or a sell. Our inclination is I think it could be met with some resistance.
In our view, at 19-time earnings, we think it's fully priced in now. We think it could be deeper than the conventional wisdom is because of this newfound optimism and belief that [the Trump program's are] generating growth that is going to cushion the downside. Is a test of the 200-day moving average possible in the next couple of weeks? Absolutely. Is it a buying opportunity? Absolutely.
…Prices are starting to go up. That's had an impact going up the chain. I think that was the message we go from that today.
It was mostly oil, but some of it was the Ford Motor Co acquiescing, and that had people worried about global trade. The transports went negative as soon as that came out. But then you got bailed out at the end because there was big market on close buyers.
Janet Yellen said some members built fiscal stimulus into their forecasts. She didn't say how many there were and what it means. How do they look at 2017? How do they view the risks given the new administration and what does that mean for policy response? That was the biggest question I had coming out of the last meeting.
The 'sugar high' stock market rally after the election was entirely warranted because there's a good prospect of stronger GDP growth in the next two years – stimulated by tax reform and reduced regulations. But the legislative process is often glacial: This will not be a 1,000-mile sprint, it will be one step at a time, starting at noon today.
Last year Apple initially provided the supply chain with high numbers only to cut numbers later. Given last year's misread on demand, its clear visibility beyond one quarter is limited causing Apple to play it safe for now. Apple could keep inventory lean through Dec in order to support what could be a difficult Mar.
In the LBO space, 2017 will be, if not a record year, a top two or three year. There's a lot of pent-up dealflow.
It would be great to see new issuers come to market - true new-money, new issuance that could soak up some of that cash that's on the sidelines.
We're not making major portfolio changes based on assumptions about what the new administration will actually be able to get done.
Theoretically, less rules should make it easier and more profitable to lend money out.
It's a combination of record dry powder from financial sponsors, very healthy inflows, and strong 2016 performance from leveraged loan and high yield accounts.
Whether the Affordable Care Act is repealed or reformed, there will be changes and our view is that any changes to that act will be negative for hospitals.
The likelihood is rising that the central bank will consider some FX intervention. It won't be very aggressive but you would expect, given the loss in the reserve funds, that they would look to use the opportunity to lean against this strength in the currency. So you are probably talking of modest intervention rather than a sea change.
Both countries have banks in problems but if you see what is going on in Germany, banks are still lending. As an economist that's what I care about. As individual banks, do what you like, but what I am interested about is do we have credit going into economy? Is this supporting normal activity? Whatever is going on with the German banking system, they are still supporting the economy. Italy is rather depressing to look at.
With this transaction, UBS France strengthens its roots and its ambitions in France.
That could be an additional boost for Asia once the U.S. dollar strength starts to roll over. That should be a boost for corporates, bringing back earnings power. Return on equity should go up and we think Asia will have double-digit earnings growth next year. [It] should be around 11 percent.
We think European companies will have solid earnings growth next year. If you look at valuation on European high-yield spreads, I think they're attractive.
There's still 60 billion euros out that will start to buy corporate bonds, particularly the investment grade side. That should basically also lead to more purchases form market participants in the high yield space.
We actually think the U.S. dollar is highly overvalued at this stage and particularly over the past couple of weeks. The rally is unjustified. We also think inflation in Europe will go up, inflation in Japan will go up and they will start to reduce quantitative easing, which should be positive for these two currencies.
If Mr. Trump wants to spend more, he has to finance it, so fiscal deficits should become more negative. That's historically not something positive for a currency, also not for the U.S. dollar, and I think this will also start to weigh on the currency.
The difference between this year and last year is that people are much more comfortable owning stocks with prospects of higher growth out there this year than they were last year.
The postelection move has been very technical. The market would break above barriers or records, extend and then pullback and the retest would hold. This has been healthy, as those who missed the first, second or third move had some time to position on the slight pullbacks.
Oil might be the sector that brings the Dow over 20,000. It was a broad-based rally that got us over 19,000. It's been a lot of rotation and the same stuff that got us up to 20,000.
The temptation is to say that correlation correlates inversely to equity market direction, and I will say in down markets, correlation tends to rise.
But just because dispersion in the market is as great as it is right now, doesn't imminently say we're due for a pause. In our view, what argues for a potential pause in the market is the fact that we're trading 19.2 times 2016 earnings and consensus expects 2017 earnings to grow by 12.4 percent, so there is a very hopeful case priced into the equities market right now.
We started out the week trying to figure out if the market would hold higher, to have Santa take it to 20,000. The small caps held higher. The techs that broke out last week retested the breakout level. The banks, which everyone says are overbought, haven't pulled in, and oil broke $51/$52, retested it and held.
You're going to see a continued rotation but towards the laggards. You see a lot of them in tech and health care and some of those have lagged since the election in particular. It's probably a less discrete rotation away from the winners and more of a distinct rotation into the laggards.
I think what you're really seeing here is that Trump was, to some degree an unknown quantity. What would he do, shoot from the hip?
He has high expectations and he wants it done and I think the market believes that too.
But the people that he's putting in or nominating for these roles are highly professional. You may not agree with what their status is, but each one is very, very capable, and that has reassured the market in many ways.
There is some relief there has not been an escalation of tensions, unlike what we saw last year with the downing of the Russian plane.
In the medium term it could introduce some downside to expectations of a rebound in Russian tourism next year but for now markets see the risks as contained.
It's not entirely clear they perceive a need to tighten. The central bank has not been incrementally tightening liquidity in recent weeks as the lira has weakened so there is a risk they don't come up with a more hawkish intent.
I'm not concerned for refineries. Diesel for passenger cars is just one part of the demand pool.
I'm of the mind that I think the post-election rally will modify somewhat, but I don't think the correction we'll see go straight down because of all those people who want to buy the dip. You know, the market got away from me, but if I could only get a small selloff, I'll get myself back in.
It's also been a good week for oil and gas producers ... on the back of further gains for oil prices this week, while the weakness of sterling in the last couple of days is also helping.
I think it's good because this is the sign as we call them, buy the dippers. The people who said, My goodness, the rally started without me. I can't get in. I need a pullback.' And this was their first sign of a pullback.
Recall that it was the emerging markets that dragged us down after last December's hike. That will be a danger.
We believe NKE's current headwinds are temporary, but a re-acceleration will likely require reinvestment in more impactful innovation, a price/value equation reset, new pinnacle brand expressions (like the new Soho store) and more marketing.
We're lowering our FY17E EPS based on ongoing heavy markdowns and our view that F2Q revs & GM's [gross margins] are likely trending below plan. We believe NKE's current headwinds are temporary, but a re-acceleration will likely require reinvestment in more impactful innovation, a price/value equation reset, new pinnacle brand expressions (like the new Soho store) and more marketing.
Colour on cost-cutting has been scant at best and they haven't offered anything to make me think there is any recovery potential. No-one knows what Brexit means yet and their clients don't know either, so potentially it's a vicious circle.
They clearly haven't been repositioning to adapt to changes in the market. The reliance on discretionary spend at both Capita and (rival) Mitie (MTO.L) has not just been huge, but a huge surprise.
We see the disposals as a reaction to the balance sheet position rather than having any clear strategic logic.
The active managers that we speak with who've had their head down for the last several years are for the first time showing smiles on their faces. The game in our view has changed for the medium term.
The change in [market] psychology is very profound ... to us, it's essentially getting away from eight years of worrying about zero interest rates as the guiding principle for alpha generation, for searching for yield and for stock selection, which actually has also led to more passive investment.
We think this generous premium could deflate rapidly if investors begin to fear a sharp slowdown in Subscription growth.
Delays of a couple large deals tempered the company's outlook for subscription revenue and billings next quarter and will likely pressure shares tomorrow.
In some ways, given the yield move, the market's doing pretty good in here. I still think the market probably goes higher. It's probably OK with a 2.5 yield but not if it keeps going up 10 basis points a day.
The average [job growth] so far this year has been 180,000. We did 160,000 in October. 200,000 in November just gets us back to that.
What's left to prove at this point? … I think we're down to debating the little nooks and crannies of whether there's 98 percent or 100 percent full employment.
They're just pushing higher and higher and nobody has the conviction to stand before the freight train. At some point it will turn around, either before or after the Fed. I would argue that the level of yields we're getting into now are more consistent with where they should have been.
They're afraid they are going to break out.
That's how far we've gone. That's like the good old days. I remember living through many, many payroll Fridays, where I was holding my breath that we had a weak jobs number. It seems like ancient history, but it's precisely what we fear for tomorrow. It is funny in a way, we're getting back there.
If the [jobs] number is stronger than expected, people may feel, here comes Trump with some stimulus at just the time when the labor market has tightened up, and that is going to say a lot about inflation. That's why higher rates are the fear.
I think this is a huge success when you think about a world that for eight years has been hanging on a deflationary abyss. You've got to at least enjoy this given that we can get some inflation.
We think bundling this digital platform with deposit products is a powerful combo.
It's potentially tougher than people might have imagined.
I think they probably would have wanted the unit to be reasonably well capitalized.
We think 2017 will be a constructive year. However, there are still some uncertainties on the horizon. While we certainly will see a different policy prescription by the Trump administration, we still have to see what they'll be able to deliver on in terms of legislative solutions.
Procurement estimates for F1Q-2Q/17 [Fiscal quarters 1 and 2 in 2017] are down YoY [year over year], putting current consensus estimates for unit shipments growth in Dec and Mar at risk. We still believe the guide for Dec implies at least moderate unit growth.
There's a big rotation out of fixed income. That's huge money and it needs to find a home. The world is looking more like it's on a growth footing.
In the first half of 2017, we will continue to have very strong steel prices because property sales remain very strong at least till October and PPP programme is still in early stage and supply side should remain controlled.
For those reasons you've probably had a big shift in sentiment towards a growth stance rather than a yield stance.
The EC is blessing the callable MREL structure which is good. Banks can get MREL treatment up to the call date provided that there are no incentives to redeem, which paves the way for US style callables in Europe.
The dollar is taking a pause but with good reason - the U.S. is on holiday tomorrow and it's going to be a very light day the day afterwards. Investors will probably end up coming back on Monday to refocus not so much on the dollar and the U.S. story but more what are their expectations for Europe going forward.
Quite often when stocks re-rally into something or commodities re-rally into something like that, you do get a pullback. So, I'll be watching crude here.
Ll be watching what crude does.
We knew that there was an opportunity, we just didn't know how high was high for the accessories business.
The mindset had been that home improvement was a less important category up until the last few years. [Home Depot] has increased their relevancy over the last few years in the holiday season, as they've realized that they can capture a greater share of the spend.
The home improvement cycle still has room to expand further, and Home Depot will benefit from that.
Otherwise you have a bank run.
Cash, as banks offer it, is a subsidised asset because we do not pass on negative interest rates. Therefore for banks, cash is a certain problem. With each million in cash we get, it's a loss-making business for us.
They are the most educated generation we've ever had, and they are the most tech savvy, and that is absolutely deflationary. Because everything that they look at to buy, they can check the price immediately.
That's the thing we have to imagine: In a normalized rate world, equity is a great business [and] stock selection makes a ton of sense.
If you end up making some major change from a tax perspective as it relates to carried interest, think about the M&A boom that could come out of that.
We've almost created a generation of people who've compensated for low interest rates by doing things like buying dividend, going into private equity, seeking leverage in order to juice up returns. It's made equity management a terrible business.
You have a millennial generation that represents 25 percent of the population that is moving into peak spending and earnings years. They are the most educated generation we've ever had, and they are the most tech savvy, and that is absolutely deflationary. Because everything that they look at to buy, they can check the price immediately.
The bigger move has been this huge rotation … into the value names, small caps, the laggards. The irony is these were all trades that were working into Election Day, so they just all got turbo-charged.
People were rotating out of [technology stocks] into sectors that were working just based on that information. Presidents don't dictate economic and profit cycles, they magnify them or they dampen them.
Ultimately families are patient investors. Most of them have been extremely successful in creating and establishing businesses and organizations, so it is quite natural for them to want to be engaged.
We do believe strongly that this is being driven by millennials, in essence those families with children that have been born since 1980. Not only are they keen on seeing and deriving strong financial returns and performance, they're also very concerned about the social impact and the social consequences that that has in the world today.
In the older days, we've got one patriarch. He runs one business. But when families grow to the second and the third generation, we need to create more opportunities ... We need to have more direct investments, so that there are more roles for the naturally more grandchildren.
Secondly, you have to be very pragmatic about where the hedge fund industry is today. It doesn't mean that hedge funds are over, but families are challenged by the fee structures of hedge funds. They are not entirely convinced that there is alpha there at the moment.
The fear of the event was greater than the outcome of the event from a financial markets standpoint. It was an emotional decision.
We have the optionality, we can use the optionality but there is no need to front load using that optionality before we actually know what the outcome of the negotiations (is).
We have a huge presence in London, we just inaugurated our new building...but at the same time we have optionality. We are present onshore in most of the European markets. For us as a European bank, moving staff between London and locations where they need to be to be with their clients is going to be an issue we solve down the road.
There will be adjustment around the edges. I don't expect a full rollback on regulation but I expect much less regulation to come.
We think that calling China a currency manipulator probably has a reasonable chance (of happening), but in itself it does not really carry a lot of sanction. But if they levy a 45 per cent tariff on China then that's basically a violation of WTO agreement.
One is what will the Fed do and the other is Trump's fiscal stimulus – [where] the market is expecting one. The third one is really the trade policy, especially on China.
During the election, many of our large cap names (AMZN, GOOG, FB) were targeted by the President-elect & investors are struggling to determine the ramifications on antitrust policy, privacy/data in enterprise/consumer, net neutrality & taxation.
Among large cap names, we continue to reiterate our top recommendations (in order) for FB, GOOG, BABA, PCLN & AMZN (though fully acknowledge that forward investment curves & the election results may overhang those shares until Q4 earnings season).
It's a little too early to say, but there's an outside chance that it might be our old friends the bond vigilantes who are back, saying, OK, you're going to do tax cuts and you're going to do stimulus spending, what is that going to do to the deficit and where are we going to go from there?
As long as you're seeing these cyclical sectors outperform, the market is saying (expectations of) this recovery is a lot greater than a few weeks ago.
I think this is a turning point in the outlook for growth and inflation to a certain extent.
Even though there's some readjusting, the sectors that are getting hit are relatively small. It shouldn't stand in the way of the market making new highs.
At the end of the day, you're seeing a broadening out of the market – incredibly positive.
I think we are in for a regime of higher volatility, higher volatility of volatility for two reasons. This is a gentleman that markets aren't familiar with.
The Trump reflection … makes the argument much stronger and this has produced the trigger to release the value and the relative value we see in equities versus bonds.
The market has to adjust from a way of thinking that has been correct for the last 20 years to a way of thinking that may not be correct going forward.
A reflating economy, if accompanied by a dovish (Federal Reserve) has historically been one of the most bullish environments for gold. As such, the yellow metal should find support from the current U.S. policy mix.
Looking ahead, we think much would depend on how the latest political developments affect economic growth, inflation/inflation expectations and, in turn, Fed policy and real rates.
But at the same time it is hard to see what is really happening to the value of money. It would be silly to view gold as a portfolio hedge minute by minute.
While perceived higher uncertainty strengthens the case for holding gold in a portfolio as a diversifier and hedge, possible changes in fiscal policy could push real rates higher, offsetting safe haven demand and creating downside risks for gold.
Incoming presidents haven't been critical of past Fed chairman. This is a little bit different here.
What's going to be essential here is how quickly he begins to send out signals. Who does he pick for his Cabinet? What does he want to discuss about the repatriation of the money that's offshore?
That may be the beginning of maybe a little test he is going to give the new president-elect.
I'd like someone that not only give me some relaxation, but [has] enough credibility that foreign powers would say, That's a pretty good choice.
This is a long-term positive for the debt market and may lead to repo rate cut of 50 basis points.
At the top of our priorities is listed company issues. We are particularly concerned about risk posed by corporate fraud and malfeasance.
Corporate fraud and malfeasance pose one of the greatest threats to the integrity of the Hong Kong market. We have received a steady stream of referrals from our corporate finance division.
All of a sudden the market looks nervous. Viriginia, Georgia, those are signs that this is going to be a close race if you're not calling them.
I think a lot of people here are looking into gold. That's one thing people have been looking into with the polls shifting toward Hillary.
I would be wrong to sit here and say there isn't an economic efficiency dimension. In and of itself, that's not the reason to do it. It would fail on that basis. It has to be of value to our staff and our structure in the way we operate. There has to be a value there.
Working together, talking to each other, working in a more agile way. People are probably not so fixed any more in their working environment. They work much more in projects.
The trading desk is our next port of call to achieve user mobility.
For me, it's opening up and allowing people to work in different ways on whatever project, whatever activity they're working on. Being chained to a desk in a singular environment is restrictive.
The market would cheer an 8 percent growth rate, that would be good enough.
To see that starting to improve, it's just a glimmer but it seems we may be at an inflection point there.
We think there's a bit of topline growth that comes through, there's a little bit of operational leverage, you have got some base effect obviously from oil. In Q1, oil will be up dramatically - maybe the banks as well - and both of those will get you to around 8 (percent EPS growth) but we struggle to get to the mid-teens, we think that's too high.
We're very gratified by the way it's growing.
The challenge is (UBS's) decentralised client base. Here we're talking about, yes, huge amounts of capital... but this is distributed across many, many, many people.
Apple is now only five points above Android's retention rate, an important level as it determines net switchers to iOS.
We do need to separate the M&A cycle from the election cycle. Companies will make decisions on what they see as the long-term return opportunities that they see in the market, so what you're seeing now is more strategic M&A.
I think [with] the election, a lot of investors are realizing that we have to see what Congress looks like, we have to see what the first 100 days of policy look like. I think what we're realizing here is that there's a lot of political uncertainty that's going to be with us beyond the election.
We're sort of putting everything into the election box right now.
This time we find higher overall smartphone purchase intentions the next six months with iPhone 7 interest especially strong in the US and rising demand for the Plus. However, China, is exhibiting signs of softness in F17, including lower interest in the 7 than the 6/6s.
The fact [stocks are] holding up here in the face of this suggests the uncertainty out there, and we're going to have to wait until we get closer to Election Day. It's impossible to know. My gut is ... it's pretty close.
The traditional fourth quarter rally may occur at a later date rather than right after the election.
I think the market is telling you, it's not someone that's going to have a blowout win.
When the election is as contentious as this one has been with so much back and forth, and the prevalence of the third-party candidate, what our work has shown is the market has tended to trade very indecisively the month before and several months after.
We delivered a strong performance across our businesses, despite seasonality and continued macroeconomic, geopolitical and market headwinds. Our strong position allows us to focus on helping our clients navigate the current environment. We will continue to execute with discipline and manage risk and resources prudently.
I'm probably not so much on that side of things, but to believe that they shouldn't be [acquiring new companies], you have to believe that the innovation is coming and that there will be some major new products over time, and I think the R&D budget suggests that that's likely.
Our positive thesis remains intact, we think NOW is becoming a true cloud platform and remind investors that if the company delivers on this with consistent execution, shares will see meaningful support beyond current levels. Our ongoing checks w/ NOW customers, prospects and partners remain notably positive.
And that money's definitely going into the kind of risk factor, smart beta passive plays.
Hedge funds have come down over a decade from about 12 percent of our portfolios to about 8 percent, so it's been a disallocation or a reallocation away from hedge funds. Historically hedge fund returns were correlated to higher interest rates so in a low interest rate environment it's just tougher to get the juice out of them.
Most of our members are wealth-creators, first-generation entrepreneurs, so they made their money building small businesses into large businesses. When they sell it, their natural inclination is to roll up their shirtsleeves and invest in another small business because they have the expertise and the tolerance to do that.
Historically hedge fund returns were correlated to higher interest rates so in a low interest rate environment it's just tougher to get the juice out of them.
IPhone 7 interest [is] tepid ... [UBS China] distributor checks find that iPhone 7 sales are weaker than the 6s was out of the box [after launch]. Apple [is] losing share to domestic handsets ... Apple's brand remains strong, but the App Store can be difficult to access and slow.
Apple [is] losing share to domestic handsets ... Apple's brand remains strong, but the App Store can be difficult to access and slow.
The developers might have quickened the pace for investment, to finish the existing projects since sales performance was so great.
Today (Wednesday)'s data showed developers are relatively cautious on new projects, because land has become rather expensive now, and such a strong sales momentum might not be sustainable moving forward.
This is about integrating our historically fragmented infrastructure that we have globally into one platform. So we want to have the same processes, the same way of approaching UBS and we also want to raise synergies and scale in the back office.
A moderate economic growth pickup, fading energy and currency headwinds, and an improving tech sector outlook should help drive a US profit recovery over the next several quarters.
S&P 500 earnings have largely stagnated over the past few quarters, but the outlook is set to improve.
These families all have decisions to be made. Do they want to pass it directly down to the next generation, or what are the other strategies and structures they can put in place?
If you think about the acceleration of billionaire wealth just over the past 10 years alone, we've been through what we call the second gilded age. These families all have decisions to be made. Do they want to pass it directly down to the next generation, or what are the other strategies and structures they can put in place?
We're still likely to see divided government, we're still likely to see division of power, and we're still likely to see only incremental change because we're not going to have a mandate no matter who wins. We're kind of towards the end of the rope in terms of monetary policy. The real issue now is are we going to get some fiscal stimulus, and is it going to be targeting the right spots, for example, like infrastructure?
We need to see what's going to happen with the new administration and Congress in the first 100 days. This economy does need fiscal stimulus, and we might not be getting it.
The Fed is in the process of resetting towards rate normalization. It's a multiyear, multistep process, but they have to continue to follow through on it.
This economy does need fiscal stimulus, and we might not be getting it.
One year doesn't make a trend, but two potentially could.
We have announced a cost-cutting programme where we will basically deliver 2.1 billion (Swiss francs) ($2.15 billion) cost-cutting over the time. Mid-year we were at 1.4 (billion). We will deliver that programme.
If they start tapering now, against the weak fundamentals and the banking system that is still quite fragile, it could be a policy error.
European banks face three long-term headwinds that have impacted their performance over a period of time. These include the Banking Resolution and Recovery Directive, negative interest rates and non-performing loans.
There's going to be a noticeable improvement in the terms of trade and nominal GDP growth. The economy simply doesn't need more stimulus.
The price spike, if sustained, could potentially be large enough to wipe out the country's overall trade deficit by itself.
If you want to lower savings and boost growth, you actually raise interest rates a little bit.
As we've seen the stabilization in commodity markets, as we've seen stabilization in the dollar, I think that sets you up for a much more productive outlook for both emerging market growth and for emerging market earnings.
UBS SmartWealth is a strategically important move for UBS. It enables us to bring our advice and expertise to a much wider audience, at first in the UK, but in time to other geographies too.
There is a fear of closing down markets, of lacking access to other markets, and I think that you saw that on the British pound and you see that affect the markets frequently. And [for] the candidates, that's become a front-burner item about whether or not we are going to participate in open trade.
Whoever it is, Donald Trump or Hillary Clinton, we have to have a leader who is going to be able to work with Congress and work together to move this economy forward.
We continue to see a growing interest in alternative assets from institutional investors globally. We have identified strong demand for Brazilian property investment strategies and are pleased to be expanding our leading global real estate capabilities to meet the needs of our clients.
Most of the larger banks have stepped out of market making. And part of the regulation - basically don't hold proprietary positions - if you don't hold proprietary positions you are not that interested in market making.
Markets have to get used to that.
Investors have been driven into investments where they have very little capability for dealing with what is on their plate and I think that is a sure reminder of where we were in a different asset class in 2007.
So I think the central bankers need to be very careful that they do not continue to produce disturbances in the markets, which they acknowledge - it's a known side effect - but the perception that the underlying impact of monetary policy outweighs the potential side effect in my view is starting to be wrong.
They (central banks) have taken on massive interventions in the market, you could almost say that central banks are now the central counterparties in many markets. They are the ultimate buyer.
I don't think Europe is ready for cross-border consolidation ... I think politically that's not the path right now.
Each bank should really try to figure out, What is my DNA? What is my relevance to clients?
The last two weeks are a testament to that. The same kind of dynamics seven or eight years ago would have created a major fallout.
Central banks can only help transition it from one place to the other. It's not the only medicine available to address the issues we have.
Central banks, on their own, cannot address the structural problems we are facing, particularly in Europe.
From the gold plaintiffs' standpoint, it's a very substantial victory.
We think the next leg of the story will prove more difficult, as investor attention shifts back towards the core workspace services business. While in our view this provides a more favourable outcome than an outright spin, we note GoTo was CTXS' fastest growing segment, and that core CTXS growth is likely to be challenged going forward.
With respect to what we have experienced so far in the third quarter, normal seasonality, underlying macroeconomic uncertainty and heightened geopolitical tensions continue to contribute to client risk aversion and generally low transaction volumes. In some businesses and regions in which our IB (investment bank) operates, conditions have remained challenging through the third quarter.
Housing is first and foremost about homes and not about operating businesses particularly at a time like this when affordability and rentals and housing is at a real crisis point.
We are lowering our EPS estimates by 3 percent to reflect the increased competitive intensity in wireless and incremental costs associated with AT&T's DTV Now rollout.
In a world of low yielding assets, property does continue to look attractive in some instances.
A third impact to focus on is the impact of loose monetary policy globally, especially as we seem to be in a period where that policy appears to be in place for some time. In terms of what categorizes itself as a bubble, it is where we see excessive rises on a number of metrics on this index. Not just prices, we are looking at price-to-income, rents-to-prices and ultimately tracing these back to each cities history.
The market is willing to pay a premium for a cleaner Argentina bond.
The European Central Bank is still buying sovereign bonds and this impacts the whole euro space, so it is not a good idea to use the dollar market as a reference point.
It has become clearer that the pace of fiscal adjustment is going to be more gradual than originally expected and they will continue to need funding next year.
Infrastructure is going to be the buzzword for the next 10 years, not monetary policy,and change the fate of Europe.
What you have in Europe is, I think, an over-reliance on monetary policy to fix problems. Central banks have actually facilitated or at least encouraged other policymakers like finance ministers or those that do structural reforms to somewhat take a relaxed attitude towards acting fast.
The market seems to be pricing in rate hikes down the road but not much change in the short term. Again, the moves (in fed funds futures) are very small, not very large.
The property recovery has helped to stabilize domestic demand and the overall economy, but the recent +30 percent y/y ytd (year-on-year, year-to-date ) price rally across a number of big cities has heightened policymaker concerns that another property bubble is being reflated, especially with leverage rising so sharply.
A stronger property rally lasting into 2017 may increase the risk of another major round of downward adjustments thereafter. Investors should closely monitor property sales, new property starts and property investment for near-term upside risk, which may increase the medium-term downside risk.
The spreading of surging price momentum to more cities alongside an alarming rise in leverage could trigger more aggressive policy tightening, cooling the property rally.
If it's navigated in a such a way that the (positive) spillover to the adjacent tier 3 cities continues to spread further, then maybe that's where you may get a first or second best outcome resulting.
On the one hand, they need to temper the signs of froth that we are seeing in the higher-tier cities. On the other hand, they are still having to rely on the (market's) contribution to headline GDP growth that property investment as the whole–which is still reliant on the lower-tier city recovery–generates…so that 6.5 to 7 percent annual growth target is still met for this year.
There's now a growing consensus that perhaps we're looking at a rising interest rate environment rather than a falling one.
We're just kind of reverting back to a normal level of volatility. We got almost lulled to sleep because things were so unusually quiet in the last six weeks of the summer.
Their role in a portfolio is as a diversifier.
That is really hard right now.
It is an unfair comparison for hedge funds to be compared to the Standard & Poor's 500. Their role in a portfolio is as a diversifier.
Everyone has less time so one of the goals is to help clients ask better questions and then get the right investment opportunities.
This helps uncover biases. You can say, Look, you said your biggest interest is planning for the long term but this artificial intelligence is showing us what you're really excited about are short-term trading ideas.'.
Most family offices can trace their roots back to the growth and success of a single business, and as a consequence you will often find an emotional desire to back entrepreneurs and ideas they believe in.
So, it's a little dangerous.
These guys baffle me. They're supposed to be data dependent and the data isn't all that good, so they're changing their mind again.
The overall picture for platinum in 2016, which has enjoyed a significant rebound in price over the course of the first half of the year, continues to be one of constraint and ultimately deficit in 2016.
There's an interest in more real-asset investments because that's where you still find an acceptable yield.
Health care has consistently outgrown the S&P 500 over the last four years. Every year, high single to low double-digits earnings growth. If you look at 2017, this is the first year where the consensus believes the broader index is going to grow at a faster pace than health care. We think the consensus is wrong that broader earnings are going to grow 14 percent, but it is reasonable for health care earnings to grow by 8 to 10 percent in 2017.
Health care has $167 billion worth of offshore cash, second only to technology. If that cash is coming home, we could see it finding its way in the normal means we've seen in terms of return to shareholders over the last several years, either by buybacks or increased dividends.
Basically what we've seen is a year of position de-risking in a sector that was, given its earnings profile over two of the most choppy years of earnings growth … a very, very consensus trade coming into the end of 2015. Then all of a sudden the political invective started, from all sides.
Some price regulation is priced in. We all know how difficult passing some type of regulatory reform is going to be in such a bitter and partisan environment in Washington. When we look at it, (the market) is not pricing in, for whatever reason, the potential upside which is derived if you could have politicians that steer you toward tax reform next year.
It's at a valuation discount that exceeds the discount we saw in 1993, 1994 when then President Bill Clinton tried to reform the health care industry unsuccessfully. The effort was spearheaded by then first lady Hillary Clinton.
The evidence is no, you don't actually get to that.
The regulator is the same thing. We can automate, we've got computers that help us process demands from the regulators…but the regulator demands continue to go up, so no matter how much productivity we continue to create in that space, it's just keeping up with the consumer demand.
No? The G-20 leaders don't either.
Remember the Brisbane G-20 2 percent extra growth initiative? No? The G-20 leaders don't either.
Clear commitments from China will be needed to make this a success … Timeframes to deepen financial reform and capital account opening. If they squib this, then it will be a non-event. Remember the Brisbane G-20 2 percent extra growth initiative?
While it was fractional given the number of people in the workforce, that wipes out far more than the [151,000] jobs that were added as far as productivity is concerned. That's equivalent to at least a drop of 200,000 jobs.
It really hasn't been supported by an improvement in corporate fundamentals.
So I think heading into the fall we're going to be vulnerable to a pullback here.
A-share earnings growth in H1 has slowed from Q1 but remained solid.
Digital cash is a core component of a future financial market fabric based on blockchain technologies. There are several digital cash models being explored across the Street. The Utility Settlement Coin is focussed on facilitating a new model for digital central bank cash.
The practical use and implementation possibilities of central bank digital currency is rightly becoming a hot topic in the financial service industry. It raises questions, and possibilities, over a fundamental market structure principle: who can have access to central bank money and how.
Recent discussion of digital currencies by central banks and regulators has confirmed their potential significance. The Utility Settlement Coin is an essential step towards a future financial market on distributed ledger technologies.
The difficulty in relying on export growth for Brazil is that it depends on the economy being relatively competitive internationally.
Manik Narain - UBS
Emerging market equities are now up just under 12 percent on the year compared with 3.4 percent for developed markets. LatAm equities are the stand-out performers … Brazil alone has contributed to just over a third of the year-to-date rally.
If you look at recent activities and oversubscriptions of dollar bonds from Asian issuers, it's widely expected that in the second half we'll see quite a number of issuers from China, Hong Kong and the rest of Asia. A lot of pre-funding is going on for (the) greater China market as issuers that have repayment needs in 2017, are thinking about coming to the market earlier.
It's very rare to make new highs in August to begin with, and when you've done that in an election year, whoever won took 30 or more states, so that will lead to the idea that however this comes out, it might be a landslide.
Buyback activity has been disappointing [this] earnings season. The reluctance to pull the trigger on share repurchases suggests corporate leaders are becoming less enthusiastic about what they see ahead.
As much as it sounds silly [considering] we made a trifecta brand new high, there is some risk that we're approaching stall speed here. That they did it in such an incremental fashion [means] it really hasn't swept up everybody's attention.
If you had told people that months ago, no one would have believed it. Of all the central banks with a bazooka, the Bank of England certainly had one.
We're encouraged by the fact that all these indices made highs, but at the same time we think investors are way too complacent about the risks out there right now. Last August, our summer was cut short by two weeks because of China [currency devaluation]. This time, the volatility came meaningfully before the fourth of July, so I think people aggressively seized this vacation season. The true threat coming this fall is the political uncertainty.
The kids don't want to come home from the beach, why should the adults? You come home from the beach and the pricing of the risks are low. The risks themselves have not changed, but summertime complacency has driven the price of risk to near cycle lows. That's in an environment where the risks themselves have only marginally diminished over the last several months and are likely to intensify again as we get closer to the election.
This is not the characteristic of a major top in the market. After two years of very little movement, and we haven't been in a very wide trading range, we think the bull is getting started again.
When we look at VIX under 12, and out-of-the-money call options being priced historically high, reflecting this increased risk of missing out on a rally – after we already had a rally – we think people are being too complacent about risk. We're neither calling for a sell-off or an end to the 7-1/2 year bull market. We just think you have to step back and remember that this is a higher volatility environment.
Contrary to prevailing market wisdom, we believe considerable progress has been made in recognizing and dealing with the problems. Recapitalization and bailouts have started and made unexpected (and under-appreciated) progress. UBS research suggested 2015 was the first year since the early 2000s with sizable bank bailouts.
More surprising is the size of some individual bank bad asset disposals–many were equivalent in size to 4-15 percent of the banks' total loans.
Health care continues to be very strong in terms of hiring, and leisure and hospitality. The areas that have struggled are mining, construction and manufacturing.
I'm sure it will create its own riddles. It always does. I think it's going to be a solid report. I think broad-based growth across industries. Energy will still be laying off. Manufacturing will be flat. Otherwise, I expect a solid report. I expect to see solid growth in health care, professional services, leisure and hospitality.
It will be pretty hard for businesses to fill some positions.
We think that the focus on low/negative yield environments and accommodative central bank policies this year suggests that more BoE easing than anticipated would ultimately be positive for gold.
It's really not a question of 'if,' but rather a question of 'when.
The general millennial taste trends toward light, airy and open as opposed to small square rooms. That tells me that when they do buy [homes], they are going to spend and remodel.
[Millennials are] a lot more focused on bringing some personality into the home.
We're still in a good part of the [housing] cycle. Home Depot could continue to grow at a low- to mid-single-digit clip for a few years.
I think it could absolutely happen again. Especially as we go into what could be the next phase of the great financial crisis over the next 12 to 18 to 24 months.
There is very little visibility about the future on every front, both macro and geopolitical. I don't see any relief in the foreseeable future.
We are not really pushing clients to execute trades because their risk aversion is so high.
It doesn't look like the features are going to be tremendously different. People are already talking about the iPhone 8 the next year. Our work suggests that people in fact are hanging on to phones longer.
There is tremendous uncertainty about the election, but investors expect the winner to affect stock market returns in some way. They're hoping for the best-case scenario, but some are already preparing their portfolios for the worst.
The economy was in good shape coming into this, and it's going to have a little bit of a negative shock.
So far, the reaction on the economy seems to be the right one. On the political front, it remains to be seen in his crackdown of the opposition. …This time around, he had a lot of popular support. The coup largely failed in part because people came out to the street in support of Erdogan.
Right now if you're a businessman thinking about investing, you probably have to wait and see what Erdogan will do. All the assumptions are that he will tighten the grip. He had shown some authoritarian bent already. The coup may reinforce those trends. On the other hand, there's an off chance that reforms could be accelerated to try to offset some of the bad sentiment.
CBS shares have run up this year due to the strength in U.S. national TV advertising and optimism regarding management's long-term forecasts for retransmission consent revenue and CBS All Access and Showtime OTT subscribers. We do not believe the macro backdrop supports continued TV advertising strength and expect decelerating national TV advertising in 2H16 ex-Olympics.
Ultimately, the market leaders have focused aggressively on improving their cost-effectiveness in their operating models in order to weather the storm as best as possible.
I think the allure of Tesla, and the danger of Tesla, is Elon Musk. Elon Musk has made the company what it is today... I think the reality is that Elon Musk is not as interested in execution as he is in telling you that big story.
The world is always going from crisis to crisis. To invest on a regular basis through the cycle is the way to make money.
We think they probably are underpricing [the chances of a rate hike]. We have a 25 percent probability for a hike at the September meeting. So, we don't think it's going to happen but it's possible. Then, we've got 40 percent for the December meeting.
The U.S. is still the engine of growth, or place of greatest certainty.
If that gap narrows, that creates volatility, because I think markets will be more comfortable with a Clinton presidency than a Trump presidency.
Now cooler heads prevail. I was scared to death telling clients to buy last Friday morning, but we had a very high conviction it was the right thing to do, simply because what we saw led us to believe that even with the surprise outcome, investors were completely over-hedged for the situation.
The voters want change. We're not talking about policy change. We're talking about a businessman with no political experience or the first woman president, so there's going to be change. When you look at all those change election years, once the electorate was comfortable with their ultimate selection, the year following the vote was quite positive. Those years have been positive for technology.
After a few volatile days, the market seems to have found a new equilibrium for now, with the euro trading around $1.10 and sterling trading around $1.33.
While presidential election years tend to be positive for equity markets - particularly the second six months - returns in the last year of a two term president's tenure (years including the Tech Bubble burst of 2000 and the Financial Crisis of 2008) have been decidedly less robust.
A sense of uncertainty and worry about risks remain in the markets. I want the BOJ to support financial intermediary functioning by providing ample funds to help Japanese firms operating in Britain and other companies in need of funds.
There is some trouble brewing, though, that we believe could affect Apple's growth. First, Japanese carriers are no longer as aggressively using discounts on handsets to lure subscribers from other carriers, which could affect phone sales.
The Fed has basically postponed its rate hikes, we think, until December so that's a bit less support for the U.S. dollar. UBS now expects just one interest rate hike this year, down from a previous expectation for two.
We think at one point, risk appetite will come back. We will see more coordinated central bank action and probably more fiscal action from the governments and therefore risk appetite should rebound. This was why he didn't think a safe-haven play on gold offered much benefit at this stage.
The U.K. has its largest current account deficit in decades and has been receiving record capital inflows. A pause or sudden stop in these flows will necessarily force the pound to continue to weaken to allow the current account deficit to be reduced.
Don't just run fully into the bunker.
Central bank policy is running on fumes. We're scraping the bottom of the barrel on what other further policy iterations that can be done to help to support the market.
We're not seeing the kinds of excesses that come at the very end part of the cycle that usually trip us into a recession this time. We don't have the huge build-up of debt … within the consumer side that usually winds up in a pullback of consumer spending.
There is no question we're in the mature phase of the business cycle, but I do think we have to be careful because I do think this business cycle is going to be very different than prior cycles.
The ECB is likely to maintain a dovish tone at its meeting on Thursday, holding the door open to further policy loosening later in the year.
People would stop investing and then the stabilization would have to come through currency so what we're talking about is a 30 percent devaluation of sterling on a trade-weighted basis.
Our underlying profitability has declined with pre-tax profits 26% lower than in the first quarter in 2015, a consequence of transaction revenues remaining low as clients sit on the side lines and our invested asset base being impacted by declines in global markets. We believe the outlook remains challenging.
Q1 is normally our strongest quarter and it hasn't been very strong. February was pretty tough. an end of quarter rush would not make up for a slow start.
This is an important victory and confirmation from the UK's highest court that tax avoidance is simply unacceptable. The UK is home to some of the world's most successful banks and we have been clear we expect them and their employees to pay their fair share of tax.
This matter concerns a disagreement over the interpretation of highly technical tax legislation and dates back to a one-off compensation plan for 2003. While we are disappointed with the outcome, we are grateful to the Supreme Court for their careful consideration of the issues.
The numbers were not great, but they were still better than those from UBS and Credit Suisse earlier this week.
We are fulfilling our commitments (to paying at least 50 percent of net profits to shareholders).
It is the kind of volatility that de facto paralyzes a lot of investors. You see a lot of volatility which de facto scares people more than being a constructive element for our businesses.
There also seems to be little investor faith in current or potential new products, which we think might prove too bearish. Consequently, we are inclined to take our short-term lumps and maintain the buy rating given a solid franchise.
I think the young people I've spoken to, former colleagues I have spoken to, are still struggling with the same issues, the same conflicts, the same pressures to achieve no matter what.
If we as a society are more honest and the leaders of these institutions are more honest about culture and systemic risk then we might get a step close to fixing the root cause of the problem.
When you think about how little hiking has been priced in and, to some degree, even (rate) cuts, then is another bit of softer data really going to make a huge difference? The bias of the market is already short sterling and is already looking for the Bank of England to remain very dovish.
The FMSB has a critical role to play in improving standards in wholesale markets and is a real opportunity for industry to show leadership in making markets fair and effective. I am very pleased that Mark Yallop has agreed to take on this challenging role and continue the excellent progress made under Elizabeth Corley in getting the new standards board off the ground.
There's a need for this. It makes us see more, it makes us more intelligent investors.
This behaviour by traders who were very senior, who were acting on behalf of the parent banks, which enriched the parent banks significantly, was so systemic and so egregious that we felt the entire institution had to take responsibility at the highest levels.
This is mainly a confidence issue now of course. Back in 2008 all of these banks across the world, people lost confidence in them, the governments had to bail them out. Now, when we're just starting to think that maybe some of these banks are getting a foothold back, maybe regaining that confidence, which they've had to work very hard to get back, something like this happens.
Like all other banks they're making a gamble and that falls back on the poor clients and people.
There has been some talk that if they do wind up tapering, that they will lower that threshold on the unemployment rate, possibly to 6.0 percent or even 5.5 percent, to signal that they are going to remain extremely accommodative even further out in the path of policy. So there is kind of different tools.
User growth and engagement growth, I think is somewhat called into question at this point. Twitter has pretty much been a momentum story, a momentum stock but it seems like in certain respects the momentum has maybe fallen somewhat when it comes to the fundamentals.
There's been an understanding between the Swiss government and our government over the ongoing litigation concerning UBS. Our governments have worked very hard on this to reach that point, so we're very pleased that the announcement was made this morning.
Believe me, I would rather show you that we have a profit but I think it nevertheless shows significant progress towards returning to profitability and restoring client trust.
They came from the US real estate sector and our problematic positions there. That is what accounts for the greatest losses during this quarter.
This agreement preserves Swiss interests and, in that sense, it is a good agreement. The negotiations have been difficult but they were in the context of the excellent bilateral relations we have with the United States.
As an organisation, we made serious errors. Our control systems particularly completely failed. And what is worse, in certain areas of the bank, we tolerated a culture which did not respect at all a number of foreign countries' laws.
Not all financial markets are like this. Unfortunately, this really is the exception that proves the rule, that despite tight regulations, someone manages to slip through the net – but it has to mean that there has been a certain amount of complicity here.
We ended up buying a lot more shares than our clients wanted, because the Nasdaq made a big error. They have recognised and acknowledged that error. Now we will use legal means to be reimbursed for that loss.
It's a disastrous message we're sending out. And we'll soon be paying the price, because people who still have money here and are afraid of being denounced will take it out.
Today, because of them, we are at a dead end.
Banking secrecy depends on us. If we want that part of our financial system to remain in place, it will.
UBS told me that I must have at least a quarter- million Swiss Francs so that I could keep my account. They said that to me, who's had an account since I was a child.
The image of Switzerland has changed a lot in the last months because of the influence of the media and what they said about the role of Switzerland concerning tax evasion and off-shore societies.
The situation in the US property market continues to dramatically change for the worse. As a result, we've changed our way of looking at things and came to the conclusion, that this is the right way to go. We needed to provide clarity. We do not want to leave things to speculation because that makes our clients and our employees feel insecure.
We're going to go ahead with this very important 54 billion dollar operation. In taking on this portfolio of assets we are taking a risk and we've analysed that risk. There is this portfolio, which lacks liquidity and that is the problem for UBS. It can't sell those assets on the market; there are some that are good and some that are not so good, but our analysis of the situation is that we can cope with this.
And people recognise that an environment where you have no inflation is a powerful driver to get out of the metal.
He was a gamble or two away from destroying Switzerland's largest bank for his own benefit.
He was risking the very existence of the bank by gambling its resources, ultimately for his own benefit. In effect, Mr Adoboli had ceased to act as a professional investment banker and had begun to approach his work as a naked gambler. He had become what is sometimes referred to as a rogue trader.
In Europe and America I can see more bank crashes. In my opinion there is further necessity for write offs. Real Estate prices in the US, which are the trigger for the crisis, keep dropping and that's why I can imagine some institutions in the US and Europe for example UBS will need massive write offs and slide deeper into crisis.
We note that a significant effort has been made to reduce costs, particular at the management level, by eliminating certain privileges which were absolutely not appropriate given the current crisis. So, we welcome that effort without which they would have had to lay off even more people.
The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.