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Daily Scan: Twitter earnings disappoint; Apple revenue up 22%; Walgreens to buy Rite Aid
Capital Markets
<p>Earnings season is keeping everyone excited, but the major indexes were largely unmoved Tuesday. Oil prices pulled energy shares down, and oil finished the day just above $43/barrel. Brace yourself for Wednesday -- the Federal Reserve will be issuing a monetary policy decision in the afternoon. An interest rate rise doesn't seem likely, but the Fed could give a hint as to when the rates will rise.</p> <p>Here’s what else you need to know:</p> <p>Twitter shares drop 11% after hours. The social media company beat earnings expectations but disappointed with a lower than expected revenue outlook. The company had a net loss of $132 million, compared with a loss of $175 million a year earlier. Twitter expects fourth quarter revenue to be between $695 million and $710 million, below the expected $741 million. MarketWatch</p> <p>Apple revenue up 22%, beating expectations. IPhone sales pushed the company's quarterly earnings up, with net income at $11.12 billion, or $1.96/share. Net sales were up to $51.50 billion from $42.12 billion. The company also reported having $205 billion in cash on hand. Reuters</p> <p>Walgreens to buy Rite Aid for $9.6 billion. The No. 2 and No. 3 drug store chains are joining forces; the price is 48% above Rite Aid's closing price on Monday. Healthcare companies have seen $520 billion in merger activity in 2015. Wall Street Journal (paywall)</p> <p>Iran invited to Syria talks. For the first time, Iran will likely join the U.S. and Russia in international talks about the Syrian conflict. Iran is Syrian President Bashar al-Assad's closest ally, and the country has spent billions of dollars to support Assad's government. The invitation for Iran is less enthusiasm from Washington, and more tolerance and understanding of Iran's involvement. BBC</p> <p>Theranos gets more pressure from FDA. The FDA says that the tiny vials used by startup laboratory Theranos is an "uncleared medical device." Theranos has been shipping the vials across state lines, but stopped using the vials for all but one test after the FDA conducted and inspection. The FDA also said there were deficiencies in Theranos's quality assurance processes. Theranos founder Elizabeth Holmes said the company had decreased their use of the vials, but it was a voluntary move. WSJ</p> <p>UPS surprises with earnings. But revenues disappointed as a result of the strong dollar. Reuters</p> <p>Pfizer, Merck, Bristol-Meyers Squibb show muscle. A series of pricey cancer drugs helped boost profits higher than expected for big pharma. Reuters</p> <p>Ford earnings double but still miss. The stock is off nearly 5% after it posted EPS of $0.45/share vs expectations of $0.46. The car company said higher taxes were to blame. CNBC</p> <p>White House, Republicans reach deal on budget. The deal is one of John Boe</p>
Hedge fund managers stand to win millions from Brexit
Hedge Funds
<p>A group of billionaire hedge fund managers are supporting the drive to take Britain out of Europe, and stand to benefit financially from such a move.</p> <p>Two of the five top hedge fund billionaires in the country already have connections to campaigns supporting a so-called Brexit, writes Michael Bow in The Independent. Others are set to pledge their support in the next few months.</p> <p>Financial community split on Brexit<br /> The financial crisis of 2007 led to strict European rules on hedge fund activity, which would be threatened if the UK left the EU. Hedge funds stand to save around $393 million if the rules are lifted.</p> <p>“There are quite a few hedge fund managers who are anti-EU,” said one Mayfair hedge fund boss, who declined to provide his name. “Many are generally opposed to it.”</p> <p>The Governor of the Bank of England, Mark Carney, has pledged his support for continued UK membership of the EU. Financial firms in the City of London are split on the idea, with multinational investment banks such as Goldman Sachs and Citigroup backing continued membership while the Mayfair-based hedge funds call for an exit.<br /> Hedge fund managers riled by stricter EU regulations<br /> Crispin Odey, founding partner of Odey Asset Management, has been supporting a lobby group called Vote Leave.  “We joined an economic union, not a political union, and you should give voters a say,” Mr Odey said. “This is nothing to do with hedge funds and the EU. My criticism of the EU pre-dates the regulations which have come in.”</p> <p>Sir Michael Hintze, the fourt-richest hedge fund boss in the UK, is also connected to the campaign, although Vote Leave campaign head, Dominic Cummings, said last week that “no hedge funds have bankrolled us so far.”</p> <p>Financiers used to operating in the shadows were ruffled by the Alternative Investment Fund Managers Directive, which called for more transparency and a limit on individual salaries. The directive is estimated to have increased operating costs by 5% per year, according to KPMG.</p> <p>The Independent estimated that these costs are equivalent to around $393 million, but hedge fund trade body the Alternative Investment Management Association did not provide an estimated figure.</p> <p>This article was originally published by ValueWalk. <br /> Photo: Paul</p>
Nerd Alert: Download the NYFed app
Capital Markets
<p>Your Saturday night plans are set. The New York Federal Reserve has its own Economic Research Tracker app for everyone interested in perusing the bank's research in their free time. Brace yourself- there are also "fun" posts from the Liberty Street Economics blog written by NYFed economists.<br /> Photo: Jim Sher</p>
Recently spotted: A unicorn startup that is both profitable and from the Midwest
Venture Capital
<p>&nbsp;</p> <p>Now here's something really different:</p> <p>A unicorn startup that is both profitable and based in the Midwest. Should we call it a uni-unicorn?</p> <p>The rare beast is Chicago-based Uptake, which has raised $45 million from GreatPoint Ventures and other investors, giving it a $1.1 billion valuation, reports The New York Times.</p> <p>Uptake partners with well known companies to create software for gathering and interpreting data. CB Insights reports a total of 139 unicorns.<br /> Photo: yosuke muroya </p>
Alibaba beats expectations on Q3 as marketplace volumes jump 28%
Capital Markets
<p>Alibaba beat expectations on third quarter earnings and the stock is rallying hard,  gaining 7%. Yahoo came along for the ride, gaining 1.58%.</p> <p>Business Insider explains:<br /> The Chinese e-commerce giant posted sales of 22.2 billion yuan ($3.5 billion) for its fiscal second quarter that ended in September, up 32% year-over-year. Analysts had estimated sales of 21.3 billion yuan.</p> <p>Net income came in at 22.7 billion yuan ($3.6 billion).</p> <p>The metric that many analysts watch closely is the total value of transactions made across the Alibaba marketplace, called gross merchandise volume. That rose 28% year-on-year to $713 billion yuan ($112 billion).<br /> And Howard Lindzon chuckled:<br /> Alibaba has dedicated their earnings call to Barron's (negative cover story $64) ... Today's price $84$baba</p> <p>— Howard Lindzon (@howardlindzon) Oct. 27 at 08:46 AM<br /> Photo: leighklotz<br /> &nbsp;</p>
Problem children aren't derailing consumer staples ETFs
Asset Management
<p>Give the Consumer Staples Select Sect. SPDR (ETF) (NYSE: XLP) some credit. The largest consumer staples exchange-traded fund by assets is up 6.6 percent year-to-date despite strong dollar headwinds and the subsequent challenges created by speculation, though now dwindling, that the Federal Reserve will soon raise interest rates.</p> <p>Add to that, XLP has mustered its &gt;6.6 percent gain, one of the better year-to-date showings among the nine sector SPDR ETFs, with no help from Procter &amp; Gamble Co.(NYSE: PG) or Wal-Mart Stores, Inc. (NYSE: WMT).</p> <p>Procter &amp; Gamble, the world's largest maker of household products, and Wal-Mart, the world's largest retailer, are two of just seven members of the Dow Jones Industrial Average down at least 10 percent this year. Procter &amp; Gamble and Wal-Mart are XLP's largest and sixth-largest holdings, respectively, combining for 16.5 percent of the ETF's weight.</p> <p>Full story available on<br /> Photo: Mike Mozart</p>
The global race to win the crown of fintech capital continues apace
<p>The battle is on to create a global fintech center. Top contenders: The U.S. and U.K. Startups around the world (especially Israel) may be idea-machines but they need large markets to scale. In Asia, Hong Kong and Singapore are vying for the startup crown, lagging well behind mainland China.</p> <p>Enter Funding Circle, which Daily Fintech argues could be giving London an edge in the global competition:<br /> Funding Circle looks like it is joining the really big Lending Marketplaces such as Prosper and Lending Club. As this marketplace is in hyper growth phase with maybe 5-10% penetration of a massive market, this is a huge opportunity for Funding Circle. They have one big advantage – Funding Circle focus has always been on small business lending rather than consumer and as our research showed in November 2014, that is were the action is.</p> <p>So it looks like Funding Circle could be one of those big winners that London needs in order to earn its coveted Fintech Capital of the World status. Lots of exciting new ventures is not enough. London needs a couple that scale to be global winners (like Hanson Trust). To do that, they need to win big in America.<br /> The ultimate crown goes to the host of the largest and most numerous IPOs. Where will Funding Circle list when the time comes?<br /> Photo: Christian Bucad</p>
Money can't buy everything for Sanford Weill
Lifestyle, 4:01
<p>Former Citigroup CEO Sanford Weill and his wife Joan are withdrawing their $20 million donation to Paul Smith's College.</p> <p>The tiny school in the Adirondack mountains needs the money, but Weill only wants to hand it over if the school changes its name to Joan Weill-Paul Smith's College, reports BuzzFeed. Unfortunately for the billionairess, that isn't an option. A judge has ruled that the school's founding documents prohibit a name change.</p> <p>"It was a naming gift, so without the court allowing us to go forward there was no money," Bob Bennett, a school spokesman, told the New York Times last week.</p> <p>Joan Weill became interested in the Adirondack's only four-year school as a Weill family vacation home is nearby. Weill has already donated enough money for the school to build a student center and library, both named after Joan.<br /> Photo: David Shankbone</p>
Video: Point72 president discusses big data
Hedge Funds
<p>Big data is helpful, but also needs to be handled carefully, says Doug Haynes, Point72 Asset Management President, in this week's Wall Street Week. Granular data can provide more accurate pictures of what is happening in real time, before reports come out, but needs to be vetted intelligently and responsibly.</p>
Dan Loeb takes on Japan's convenience store giant
Hedge Funds
<p>Dan Loeb’s Third Point has just bought an activist stake in Seven &amp; I Holdings, the Japanese retail giant behind the 7-eleven convenience store franchise and other retail operations including Sogo and Seibu department stores.</p> <p>According  to Reuters, sources says Third Point wants Seven &amp; I to downsize its general merchandise business to improve profitability, and as taken a less than 5% stake to pressurize it into doing so.  </p> <p>The firm is actually not doing too shabby – Seven &amp; I’s  convenience store business in Japan and the U.S. yielded a record operating profit for the March-August half – but Ito-Yokado, its general merchandise chain, dragged it down by makring down a 9 billion yen ($73.6 million) loss for the same period. </p> <p>For now, Seven &amp; I has kept quiet on the deal but Loeb could have a fight on his hands, Japan does not react well to activist investors especially when they come from overseas. Many outside investors have struggled to crack open Japan notoriously conservative corporate giants.</p> <p>But Loeb's track record indicates that he is up to the job, with Third Point previously taking positions in Sony Corp, Suzuki Motors, and robot maker Fanuc Corp and has successfully pushed for reforms.</p> <p>Either way, investors have reacted well. Seven &amp; I saw its stock jump 3.7% when the news first broke yesterday.<br /> Photo: Mike Mozart </p> <p>&nbsp;</p>