U.S. Bancorp to Pay More Than $600 Million to Resolve Anti-Money Laundering Failures

11:58 AM, Feb 15, 2018 — U.S. Bancorp (USB), the parent company of the fifth-largest bank in the US, said it will pay $613 million for failing to have adequate anti-money laundering programs in place and for not filing a report on suspicious activity.

The company will pay penalties assessed by the US Attorney’s Office for the Southern District of New York, the Office of the Comptroller of the Currency, the Federal Reserve Board and the Financial Crimes Enforcement Network or FinCEN, it said in a statement Thursday.

U.S. Bank operated an anti-money laundering, or AML, program “‘on the cheap’ by restricting headcount and other compliance resources and then imposed hard caps on the number of transactions subject to AML review in order to create the appearance that the program was operating properly,” said Manhattan US Attorney Geoffrey Berman in a separate statement.

The Minneapolis-based lender hid its “wrongful approach” from the Office of the Comptroller of the Currency, or OCC, and it “failed to detect and investigate large numbers of suspicious transactions,” Berman said.

The bank also failed to report suspicious activity related to a client who was convicted last year for offences linked to a fraudulent payday lending scheme, Berman said.

U.S. Bank’s president and chief executive officer, Andy Cecere, said the company regrets and has “accepted responsibility for the past deficiencies in our AML program. Our culture of ethics and integrity demands that we do better.”

The bank has different AML leadership since 2014, more transparent reporting and escalation processes, improved controls and training and expanded transaction monitoring to “identify potentially suspicious activity.”

Companies: U.S. Bancorp
Price: 55.13 Price Change: -0.18 Percent Change: -0.33

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Digital Currencies Could Use Self Regulation to Prevent Fraud, CFTC Commissioner Says

12:52 PM, Feb 14, 2018 — The burgeoning asset class of virtual currencies could use a self-regulatory organization to enforce standards that would protect investors and prevent fraud in the sector, according to Brian Quintenz, a commissioner with the US Commodity Futures Trading Commission.

There’s an ongoing debate about whether currencies are a security or a commodity, and the regulator of futures and swaps markets shouldn’t “make value judgments about which new products are worthwhile and which are not — the markets, investors, and consumers need to decide that for themselves,” Quintenz said.

“The proliferation of virtual currencies over the course of the past year, while exciting from an innovation standpoint, raises a multitude of legal and regulatory questions and challenges,” he said in comments at the opening of the CFTC’s technology advisory committee meeting on Wednesday.

The popularity of trading in virtual currencies such as bitcoin has surged in recent years, with prices surging and companies looking to jump on the trend. Trading in futures of bitcoin began last year but regulators globally have been debating how to handle the digital assets.

Regulations currently are a “patchwork of state and federal jurisdictions,” Quintenz said. “As the markets for virtual currencies mature, the commission, along with its fellow state, federal, and international regulators, should ensure a rational approach to regulatory oversight, not one based on fear or inexperience.”

Financial technology is having a transformative impact on US derivatives markets,” said CFTC Chairman J. Christopher Giancarlo. “The landscape is changing for trading, markets and the entire financial structure, domestic and global, with far ranging implications for capital formation and risk transfer.”

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Pepsico Fourth Quarter Revenue Beats Estimates Despite Jump in Cost of US Raw Materials

7:21 AM, Feb 13, 2018 — Pepsico (PEP) unveiled full year guidance which was ahead of analysts’ expectations on Tuesday morning as it reported a jump in both its core earnings and revenue for the fiscal fourth quarter helped by rising sales in its Europe and Sub-Saharan Africa business segments.

The food and beverage company, whose brands include Pepsi-Cola, Quaker and Tropicana (pictured, left), generated revenue worth $19.53 billion in the period, up from $19.52 billion in the same quarter last year. The Street view was for revenue of $19.4 billion.

Core earnings rose by 9% year-on-year to of $1.31 per share compared to $1.20 in the prior-year period. The result also surpassed analysts’ expectations for earnings per share of $1.30.

Broken down by segment, the largest portion of revenue came from Pepsico’s North American beverages in the fourth quarter, which contributed $5.90 billion to the total revenue. This was, nevertheless, down 6% year-on-year which the company attributed in part to the negative impacts of higher raw material costs, operating cost inflation and restructuring charges.

Frito-Lay North America’s revenue accounted for the second largest chunk of overall sales, worth $4.83 billion, down by 1% year-on-year which was partly the result of a 53rd reporting week in the prior-year period as well as higher raw material costs. Revenue from Europe, Sub-Saharan Africa was up 11% year-on-year at $3.70 billion.

Pepsico added that the quarterly results had also been impacted by a provisional net tax expense of $2.5 billion associated with the enactment of the new tax reform as well as restructuring charges of $226 million which included an expansion of the company’s multi-year productivity plan.

“We met or exceeded most of the financial goals we set out at the beginning of the year. We delivered these results in the midst of a dynamic retail environment and rapidly shifting consumer landscape,” Chief Executive Officer Indra Nooyi said.

For the fiscal year 2018, the company is targeting core earnings per share of $5.70, just ahead of the Street’s estimate for $5.67 per share.

Price: 112.83 Price Change: +0.90 Percent Change: +0.80

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Expedia Shares Plunge After Fourth Quarter Earnings Miss Expectations As Costs Rise

8:21 AM, Feb 9, 2018 — Shares in travel operator Expedia (EXPE) were sharply lower in early trade on Friday, the morning after the company posted fiscal fourth-quarter earnings that missed the Street’s estimate as marketing expenses surged.

Expedia’s shares were trading 15.1% lower recently after an 11% revenue increase to $2.32 billion during the three months that ended December 31 from $2.09 billion a year ago, according to a statement published on Thursday. This was, nevertheless, below the $2.35 billion analyst estimate compiled by Capital IQ. Adjusted earnings per share slumped to $0.84 from $1.17, also missing a market consensus of $1.15.

The drop in earnings came as selling and marketing expenses surged 16% to $1.12 billion and the cost of revenue generation jumped by almost a fifth, the company said in its earnings statement. Expenses rose due to a $121 million increase in direct costs, with Trivago, Brand Expedia, EAN and HomeAway accounting for a major chunk of it. Indirect costs also climbed by $34 million.

The total cost of Expedia’s revenue climbed 18% as $39 million more was ploughed into its data center and cloud-related costs, as well as $19 million additionally spent on customer operations expenses.

“Over the past several months, we have made key organizational changes, aligned our company around common objectives and began executing on a new direction aimed at accelerating the geographic expansion of our global travel platform,” Expedia Chief Executive Officer Mark Okerstrom said in the statement.

The company is targeting full-year 2018 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) growth of 6%-to-11%.

Companies: Expedia, Inc.
Price: 103.00 Price Change: -20.03 Percent Change: -16.28

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Yum! Buys $200 Million in Grubhub Shares in Drive to Push KFC, Taco Bell Sales

11:22 AM, Feb 8, 2018 — Yum! Brands (YUM) announced plans to buy stock worth $200 million in online food-ordering company Grubhub (GRUB), giving a liquidity injection as the firms also outlined a partnership to drive sales at Yum’s KFC and Taco Bell restaurants.

Chicago-based Grubhub will expand its board of directors by one to 10, adding Artie Starrs, the president of Pizza Hut US which is another Yum property, the companies said in a statement on Thursday.

“We are committed to making our iconic brands easier to access through online ordering for pickup and delivery, and aggressively pursuing delivery as a strategic global growth opportunity,” Yum’s chief executive officer, Greg Creed, said in the statement. Nearly half of the company’s 45,000 restaurants are already offering the online service, he said.

KFC, Taco Bell and Grubhub will work with owners of the fast-food franchises to test online ordering for pickup and delivery. The initial phase will be rolled out over the coming months, the companies said.

Grubhub will use the liquidity from the Yum stock purchase to grow its US delivery network, drive more orders to Yum restaurants and improve ordering and delivery services.

Grubhub has about 80,000 restaurant partners in more than 1,600 US cities and London, the company said. It separately reported Thursday fourth quarter earnings and sales that came in better than analysts expected, with an outlook on sales in the first quarter and all of 2018 that was in line with Wall Street’s expectations.

Louisville, Kentucky-based Yum’s fourth quarter adjusted earnings rose year-on-year, while revenue in the three months was just shy of what analysts were predicting.

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Equities Back in Selling Mode as Dow, S&P 500 Swing Widely Between Gains and Losses

10:29 AM, Feb 6, 2018 — Markets in the US swung widely between gains and losses on Tuesday, heading briefly into the green after Monday’s sharp selloff as materials and information technology led the recovery attempt before the gains were eroded.

The Dow Jones Industrial Average was up more than 200 points at one point in the session before selling pressure reignited following the nearly 1,200-point plunge that started the week as investors were spooked by the prospects of higher interest rates prompted by signs of strength in the world’s biggest economy.

Asian and European markets early on took their cue from US indices, and futures pointed to a weaker day. But the markets turned ahead in early trading as tech gained 1.1% on the Standard & Poor’s 500, keeping the Nasdaq Composite in the green, while financials rose 0.8%.

Energy shares were firmer as oil prices pared some of their losses and Chevron (CVX) rose 1.6% to join Apple (AAPL) as the Dow’s best gainers.

“Markets are oversold on a short-term basis and are currently testing initial levels of support,” Janney Montgomery Scott’s Dan Wantrobski said in an e-mailed note Tuesday. “We would expect a counter-trend move/rally to commence soon — however, our belief is that we have not yet seen ultimate exhaustion of selling pressures.”

In company news, Lumentum Holdings (LITE) surged 14% after reporting better-than-expected fiscal second quarter results. Micron Technology (MU) gained 4% after raising its second quarter outlook above analysts’ expectations.

In morning trading, the Dow was down 0.5%, the S&P 500 fell 0.4% and the Nasdaq lost 0.2%.

Globally, the FTSE 100 fell 1.5%, the Nikkei 225 lost 4.7%, the Hang Seng dropped 5.1% and the Shanghai Composite shed 3.4%.

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Alphabet Fourth Quarter Earnings Miss Street’s Forecast While Better-Than-Expected Sales Gain Traction

8:15 AM, Feb 2, 2018 — Google parent Alphabet (GOOGL) posted fourth-quarter earnings that missed analysts’ expectations late on Thursday even after excluding an additional tax expense of $9.9 billion from the result but sales advanced.

Total revenue climbed to $32.32 billion during the three months that ended December 31 from $26.06 billion a year ago, according to a statement published by the company, beating the $31.88 billion analyst estimate compiled by Capital IQ.

But while the company’s sales increased, its total traffic acquisition costs rose, increasing to 24% of Google’s advertising revenues from 22% a year earlier. And even though the aggregate cost-per-click slumped 14% from a year ago, the company’s total costs and expenses including research and development charges surged to $24.66 billion from $19.43 billion, eating up a vast chunk of the growth in its quarterly revenue.

As a result, Google swung to a loss of $4.35 per share, which includes the negative impact of the change in US tax laws, from a profit of $7.56 per share in the prior-year period. Excluding the impact, which was primarily due to the one-time transition tax on accumulated foreign subsidiary earnings and deferred tax impacts, earnings stood at $9.70 per share, which was still below the Street’s forecast for a profit of $10.07 per share, excluding items.

Companies: Alphabet Inc.
Price: 1143.20 Price Change: -38.39 Percent Change: -3.25

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Boeing Sees New Highs in 2018 Plane Deliveries After Record Year as Results Beat Expectations

11:05 AM, Jan 31, 2018 — Boeing (BA) reported a surge in revenue for 2017 and a record number of commercial airplane deliveries while offering guidance for this year that would see both figures increase further.

The Chicago-based manufacturer said fourth quarter core earnings per share rose to $4.80 from $2.47 a year earlier, well ahead of the consensus among analysts polled by Capital IQ who were expecting $2.88. Boeing said the bump came from “strong deliveries, performance and tax reform.” Revenue climbed 9% in the three months to $25.4 billion compared with expectations for $24.8 billion.

“Although the headline numbers for both Q4 and 2018 look great, there is of course a big impact from the recent US tax reform which we think investors have tried to anticipate,” Vertical Research Partners aerospace and defense analyst Rob Stallard said in an e-mailed note.

Boeing, with the best performing stock on the Dow Jones Industrial Average in 2017 that hit an intraday record high on Wednesday, reported commercial plane deliveries last year of a record 763. For 2018, Boeing sees 810 to 815 deliveries.

The company is guiding revenue of $96 billion to $98 billion for 2018, ahead of 2017’s results of $94 billion, which were restated according to accounting principles that are being adopted this year. And Boeing is looking for core EPS of $13.80 to $14, up from last year’s $12.33.

Chief Executive Officer Dennis Muilenburg said 2017 saw Boeing’s first deliveries of its 737 MAX airplanes and it flew the first KC-46 tanker that will be delivered to the US Air Force. The firm was also “awarded an initial contract for the Ground Based Strategic Deterrent program, and a contract to provide 36 F-15 fighters to Qatar,” he said.

While Vertical’s Stallard said the anticipated cash benefit from lower corporate taxes isn’t as large as thought, “there were no execution issues in the quarter, and Boeing continues to successfully improve margins and generate operating cashflow.”

Companies: Boeing Company (The)
Price: 357.40 Price Change: +19.69 Percent Change: +5.83

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Pfizer Fourth Quarter Earnings Beat Expectations Amid Rising Sales of Pneumonia Vaccine

9:45 AM, Jan 30, 2018 — Biopharmaceutical major Pfizer (PFE) posted top and bottom lines which beat analysts’ expectations in its fourth quarter, helped by strong sales growth of the pneumonia vaccine Prevenar 13 and the blood thinner treatment Eliquiz.

The New York-headquartered company generated revenue of $13.70 billion in the fourth quarter, up 1% from $13.63 billion in the prior-year period, according to a statement published on Tuesday. This was ahead of the consensus estimate of analysts polled by Capital IQ for $13.67 billion.

Sales were bolstered by revenue in the company’s Innovative Health division, which rose by 6% from the prior-year quarter and was up by 5% on an operational basis. This helped to offset a 7% decline in revenue – or an 8% decline on an operational basis – in the Essential Health division.

The quarterly revenue gain in Innovative Health was bolstered by a 46% increase in revenue from Eliquis to $710 million, a 47% jump in revenue from arthritis treatment Xeljanz to $410 million and a 7% rise in revenue from the pneumonia vaccine Prevenar 13 to $1.53 billion. Global Ibrance revenues rose by 11% to $716 million. The division’s growth was, however, negatively impacted by lower revenues for Viagra in the US which the company said was primarily due to generic competition that began in December 2017.

Adjusted diluted earnings per share rose 32% to $0.62 in the quarter from the prior-year period, beating the Street’s estimate of $0.56 per share on an adjusted, diluted basis.

For the 2018 year, the company is forecasting for revenue of $53.5 billion-to-$55.5 billion, compared to analysts’ estimates of $53.82 billion and Pfizer is guiding for adjusted diluted earnings per share of $2.90-to-$3 compared to analysts’ forecasts for $2.78 per share on an adjusted basis.

The company added that as a result of the enactment of the US tax reform, its fourth-quarter and full-year 2017 provision for taxes on reported income was favorably impacted by approximately $10.7 billion.

Price: 38.64 Price Change: -0.39 Percent Change: -0.99

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Colgate-Palmolive Fourth Quarter Sales Miss Expectations Despite Year-on-Year Gain

9:24 AM, Jan 26, 2018 — Colgate-Palmolive (CL) posted revenue which fell short of analysts’ expectations for its fourth quarter on Friday despite the metric rising year-on-year buttressed by growth in Latin America and North America, its two biggest markets.

The consumer goods company, whose products include toothpastes, shampoos and pet nutrition, generated net sales of $3.89 billion in the quarter, up 4.5% from $3.72 billion in the prior-year period, according to the statement. This was just shy of the consensus estimate of analysts polled by Capital IQ for $3.92 billion.

Adjusted diluted earnings per share were flat year-on-year a $0.75 and in line with analysts’ estimates. On an unadjusted basis, diluted earnings per common share fell to $0.37 from $0.68. This included $0.07 per diluted share of aftertax charges resulting from the company’s global growth and efficiency program and a provisional charge of $0.31 per diluted share related to US tax reform.

The largest portion of revenue in the company’s oral, personal and home care segment came from Colgate-Palmolive’s operations in Latin America, where sales rose to $976 million from $940 million a year earlier. In North America, sales rose to $798 million from $790 million. Revenue also rose in all of the company’s other geographical regions, including Asia Pacific, Europe and the area the company refers to as ‘Africa/Eurasia’.

Sales from the pet nutrition segment rose to $593 million from $579 million in the prior-year period.

“Based on current spot rates, we expect a mid-single-digit net sales increase and low to mid-single-digit organic sales growth in 2018, with improvement in organic sales growth versus the second half of 2017,” Ian Cook, chief executive of Colgate-Palmolive, said.

Price: 74.32 Price Change: -2.99 Percent Change: -3.87

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