Category Archives: Finance News

Goldman won’t take companies public that don’t have at least one diverse board candidate, CEO says

Goldman Sachs CEO David Solomon told CNBC on Thursday that starting this year, his investment bank wouldn’t help companies go public without at least one “diverse” board member.  

“Starting on July 1st in the US and Europe, we’re not going to take a company public unless there’s at least one diverse board candidate, with a focus on women,” Solomon said on CNBC’s “Squawk Box” from the World Economic Forum in Davos, Switzerland “And we’re going to move towards 2021 requesting two,” he added. 

Solomon has been at the helm of the New York-based bank since October 2018. He is expected to reveal a series of multi-year financial targets at the company’s first ever investor day later this month.

This story is developing. Please check back for updates.

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Stocks making the biggest moves premarket: Comcast, Travelers, American Air, GE & more

Check out the companies making headlines before the bell:

Comcast (CMCSA) – The NBCUniversal and CNBC parent reported quarterly earnings of 79 cents per share, 3 cents a share above estimates. Revenue came in above forecasts as well. The company said its cable division saw record quarterly net additions for customer relationships. Comcast also announced a 10% dividend increase.

Procter & Gamble (PG) – The consumer products giant beat estimates by 5 cents a share, with quarterly profit of $1.42 per share. The company also raised its full-year earnings outlook. Sales missed estimates for the first time in five quarters, however, hurt by a stronger dollar.

Travelers (TRV) – Travelers beat estimates by 3 cents a share, with quarterly earnings of $3.32 per share. Revenue came in just above estimates. The insurance company saw net written premiums increase in all three business segments for the 12th consecutive quarter.

American Airlines (AAL) – The airline beat forecasts by a penny a share, with adjusted quarterly earnings of $1.15 per share. Revenue was essentially in line with estimates. The airline said about 10,000 flights were canceled during the quarter due to the Boeing (BA) 737 Max grounding.

General Electric (GE) – Morgan Stanley upgraded GE to “overweight” from “equal-weight” and raised the price target to $14 per share. Morgan Stanley noted the risks from the power and long-term care businesses, and from pension issues, are declining. It also called GE’s aviation business “best-in-class.”

VF Corp. (VFC) – The parent of North Face and other apparel brands reported adjusted quarterly profit of $1.23 per share, 2 cents a share above estimates. Revenue came in below Wall Street forecasts, however, and VF lowered its full-year guidance amid weak demand for its Timberland brand.

Southwest Airlines (LUV) – The airline reported quarterly profit of $1.16 per share, excluding an item of 18 cents per share from profit-sharing plan contributions related to compensation from Boeing. That compared to a consensus estimate of $1.09 per share. CEO Gary Kelly said more 737 Max-related schedule adjustments are likely to come. Revenue came in slightly above forecasts.

Amazon.com (AMZN) – Amazon asked a court to pause Microsoft’s (MSFT) work on the Pentagon’s “JEDI” contract, which Amazon maintains was unfairly awarded to Microsoft.

PG&E (PCG) – PG&E struck a deal with creditors led by Elliott Management and Pimco that will allow the utility to proceed with its reorganization plan. The creditors group had been pushing for a rival plan, but will now support PG&E’s proposal.

Texas Instruments (TXN) – Texas Instruments reported quarterly profit of $1.11 per share, beating estimates by 9 cents a share. The chipmaker’s revenue was also above Wall Street forecasts. The company forecast better-than-expected current-quarter revenue as demand for microchips stabilizes.

Ford Motor (F) – Ford will see a $2.2 billion pre-tax loss for the fourth quarter due to higher contributions to its employee pension plans.

Kinder Morgan (KMI) – Kinder Morgan reported quarterly earnings of 26 cents per share, missing estimates by a penny a share. The pipeline operator’s revenue also fell short of Wall Street forecasts, as prices for natural gas and crude oil fell.

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Wall Street’s next trading innovation: Airfare derivatives

An Airbus narrow body plane

Nicolas Economou | NurPhoto | Getty Images

European planemaker Airbus is working with Nasdaq to develop a derivatives-based trading platform that will allow airlines to protect against swings in ticket prices.

Just like airline companies use oil futures to hedge against the volatility in fuel costs, they will soon be able to do the same with the swings in ticket fares, which fluctuate drastically during holidays, events and different weather.

The London-based platform Skytra will enable airlines to manage its revenue risks for the first time by trading futures and options contracts based on its proprietary indices. The company said it has been developing benchmarks to track the daily changes in the price of air travel for two years.

Nasdaq will provide technology to ensure functionality including matching, surveillance, risk management and regulatory reporting.

“Skytra has been created in collaboration with the air travel industry and players outside it to enable more financial predictability in a volatile market,” Christian Scherer, Airbus’ chief commercial officer, said in a statement.

Airlines have long been exposed to uncertainties around short-term revenue. Up to 90% of the tickets are booked within 90 days before take-off, and reduced demand or increased seat supply can hurt sales significantly, according to Airbus.

“The creation of Skytra by Airbus represents a dynamically new intersection between aviation and financial marketplaces, where the benefits will extend to companies in both ecosystems and the broader markets economy,” Adena Friedman, president and CEO of Nasdaq, said in a statement.

Financial Times first reported Airbus’ plans to launch such a venue.

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Investors should brace for multiple 5% market pullbacks, Blackstone’s Joe Zidle warns

Blackstone’s Joseph Zidle believes stocks are in vulnerable territory.

He may not be predicting an epic correction, but the firm’s chief investment strategist has reduced exposure to cope with downside risks.

“We might see multiple 5% pullbacks in 2020,” he told CNBC’s “Trading Nation” on Wednesday. “This is a market rally where I think we continue to get extended. And, I think sentiment as a result is getting a little excessive.”

Zidle’s base case calls for volatility to increase this year due to less liquidity.

“Last year’s returns were some of the best on record,” he said. “You had this low-vol/high-return environment fueled by a lot of liquidity. I think some of that liquidity will be at least rolling off. … That’s going to create a more volatile environment.”

A 5% sell-off may not sound too scary. But if one struck the Dow now, it would lose 1,459 points.

To brace for potential trouble, Zidle decided to increase his exposure to cash late last year.

‘We have a 15% cash weight’

“We thought the markets were getting ahead of themselves. And, I acknowledge that we did that a little bit early, clearly,” he said “We have a 15% cash weight.”

Zidle has been considered one of Wall Street’s biggest bulls. In the days following the historic December 2018 plunge, he told investors it was the time to buy. However, now he’s telling investors the opposite because historically the market underperforms at these valuations.

“If you look at the S&P 500 going back to the 1960s, when you’re investing capital at 19 times earnings, your 10-year annualized return is only about 4.3%,” Zidle said. “In other words, it’s telling you that valuation over the long term will be an issue if you were to deploy capital at these levels.”

Zidle doesn’t expect to stay cautious. He still sees stocks hitting fresh highs this year. According to Zidle, the market swings should provide entry points for investors to tactically put new money to work in stocks.

“We could see a number of smaller pullbacks in which we would look to deploy capital,” Zidle said. “Generally, I think these are markets that will head higher.”

His S&P 500 year-end price target of 3,500 is tied for second highest on Wall Street. It reflects a 5% increase from current levels.

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