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From: Bill Wolf6/12/2019 7:31:15 AM
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Mary Meeker’s most important trends on the internet
Here are all the slides, plus analysis.
By Rani Molla@ranimolla Jun 11, 2019, 12:08pm EDT

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From: Bill Wolf6/12/2019 8:15:37 AM
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From: Bill Wolf6/13/2019 8:00:02 AM
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The trade war is hurting U.S. tourism
The Trump administration’s dispute with Beijing has affected tech giants and industrial conglomerates. Now it has started to pinch another industry: the $1.6 trillion tourism business, Martha White reports in the NYT.
The number of tourists coming to the U.S. from China dropped last year, according to data from the Commerce Department. Industry professionals are worried that the trade fight will accelerate that trend.
Spending by Chinese tourists in New York City fell 12 percent in the first quarter. That’s an issue because visitors from China tend to spend twice as much as those from other countries.
Chinese travel to the U.S. could drop as much as 50 percent, Bank of America analysts warned last week. That could mean an $18 billion hit to the American travel industry.
It reflects how China “has essentially weaponized tourism,” according to Adam Sacks, an industry consultant. Beijing has issued a travel advisory for its citizens about visiting the U.S. And in the past, it has dissuaded tourists from visiting countries that it was fighting politically, like South Korea.
More: Google and Nintendo are moving production of some products out of China to avoid tariffs. But Wall Street banks are still working with China’s biggest tech start-ups.

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From: Bill Wolf6/13/2019 8:10:30 AM
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CFOs Think Recession Will Happen Sooner

Almost half of U.S. chief financial officers believe a recession will strike the U.S. economy in the second quarter of 2020, according to the latest Duke University/CFO Magazine Global Business Outlook Survey.

That’s a quarter sooner than predicted by the previous survey, which reported that two-thirds of CFOs expect a recession to hit by the third quarter of 2020. The quarterly survey, released Wednesday and based on responses from 238 U.S. companies, showed for the third consecutive quarter that U.S. CFOs anticipated a recession in 2020.

“For the first time in a decade, no region of the world appears to be on solid enough economic footing to be the engine that pulls the global economy upward,” John Graham, a finance professor at Duke’s Fuqua School of Business and director of the survey, said in a statement. “Trade wars and broad economic uncertainty are hurting the economic outlook.”

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From: Bill Wolf6/13/2019 8:17:35 AM
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Big Banks Are Expected to Offer Up Higher Dividends
By Lawrence C. Strauss
June 13, 2019 6:00 a.m. ET Order Reprints Print Article

Photograph by Keystone/Getty Images

Most of the largest U.S. banks subject to the annual Comprehensive Capital Analysis and Review should notch double-digit dividend increases over the next 12 months, according to Keefe, Bruyette & Woods.

However, “we really haven’t seen much fluctuation in the dividend payout ratio, which we expect to go up modestly year over year,” says Brian Kleinhanzl, a managing director and bank analyst at the firm. The dividend payout ratio is the percentage of earnings paid out as dividends.

He expects the median payout ratio to climb slightly to 32% from 31% for the 12 banks subject to the review, although a few are expected to be at least 35%.

Since the financial crisis of a decade ago, regulators have scrutinized banks’ capital planning, including share buybacks and dividends, with a lot more rigor. More recently, they have loosened the reins in terms of how much capital these banks can return to their shareholders.

However, the payout ratio for the banks remains lower than the overall market’s, which was about 40% at the end of last year, suggesting that the banks have more room to pay out higher dividends.

The Comprehensive Capital Analysis and Review, or CCAR, process grew out of the major disruptions from the financial crisis, when liquidity seized up and some banks didn’t have enough capital to survive.

The annual review, administered by the Federal Reserve, involves two parts. There is a so-called stress test to see whether these banks have enough “capital to absorb losses and support operations during adverse economic conditions,” according to an explanation on the Fed’s website.

There is also the CCAR, under which the Fed analyzes whether banks “have robust, forward-looking capital-planning processes that account for their unique risks.” The stress-test results are expected to be released on June 21 after the closing bell, Kleinhanzl says. The CCAR reviews are due the following week.

Because of legislation passed in 2018, the Fed has exempted smaller regional banks from the forthcoming CCAR cycle, which extends from July 1 through June 30 of next year. As a result, there are 12 banks officially being tested in this round, according to Keefe, Bruyette & Woods. Those banks are included in the accompanying table.

Awaiting Approval The reviews of capital plans for the largest U.S. banks are expected to be released later this month.

Company / TickerRecent PriceDividend Per Share 2018EDividend Per Share 2019EPayout Ratio 2018EPayout Ratio 2019ERecent Yield

Bank of America / BAC$28.24 $0.60 $0.80 21%26%2.1%
Bank of New York Mellon / BK44.51.121.3629322.5
Capital One Financial / COF91.341.601.6014151.8
Citigroup / C67.881.802.2025272.7
Goldman Sachs Group / GS194.733.303.6014151.7
JPMorgan Chase / JPM110.683.203.6833352.9
Morgan Stanley / MS43.671.201.4026272.7
Northern Trust / NTRS87.782.302.6034352.7
PNC Financial Services/PNC135.183.804.2034362.8
State Street/STT55.111.882.234333.4
U.S. Bancorp/USB53.181.481.6835372.8
Wells Fargo/WFC46.261.762.0437423.9

2019 and 2019 estimates are based on on Comprehensive Capital Analysis and Review annual cycles, which begin July 1. Prices and yields as of June 11. E=estimate

Sources: Keefe, Bruyett & Woods and FactSet

For these banks, credit quality remains sound, but there is uncertainty as well, partly because interest rates have been falling, likely pressuring net-interest margins. Still, many of them have been declaring double-digit dividend increases, and that trend is likely to continue.

Not everyone is penciled in for a big dividend increase, however.

Keefe, Bruyette & Woods has the dividend at Capital One Financial (ticker: COF) staying at $1.60 a share in the coming CCAR year. The consensus estimate is $1.71 a share, according to FactSet. Its payout ratio in 2018 was 15%.

Pressed about the company’s plans for buybacks and dividends during a conference call in April, CFO Richard Blackley declined to offer specifics. He told analysts that he felt “pretty good” about “a capital distribution that is quite higher than we had last year in our CCAR plan.”

On another measure, Goldman Sachs Group (GS) has the lowest dividend yield, at 1.7%. In April the company announced a quarterly dividend of 85 cents a share, up from 80 cents, for a 6% increase.

During the company’s annual shareholders meeting in early May, CEO David Solomon said that “we worked hard to continue to grow our dividend over the course of the past decade and have consistently grown our dividend.”

The stock has among the lowest dividend payout ratios of these dozen firms. It was 12.5% in 2018, but it has bounced around in recent years. It was 32% in 2017 and 16% the preceding year. The company has preferred share buybacks because they offer more flexibility than dividends.

Morgan Stanley (MS) has a fairly low payout ratio as well, at 24% in 2018. The quarterly dividend is 30 cents a share. CEO James Gorman discussed the dividend last October during the firm’s third-quarter earnings call and said the company was making too much money to hold the dividend at that level. “It’s shareholder-friendly to have a strong dividend, have a strong buyback, and make the appropriate investments to build growth into the business,” he said. “But we can kind of do all three when you’re producing nearly $7 billion in net income in 9 months.”

Gorman has pushed the company to rely more heavily on its wealth-management arm, where revenue is generally considered more stable than those of many capital-markets businesses.

The consensus of analysts polled by FactSet is for Morgan Stanley’s dividend to jump to 35 cents a share in the third quarter. That would be a 17% boost.

The biggest yield on the list belongs to Wells Fargo (WFC), at 3.9%. That is the highest it has been since the financial crisis, according to FactSet. The bank slashed its dividend in 2009.

Wells’ attempt to recover from a scandal involving the creation of phony customer accounts has weighed on the stock, which has returned about minus 15% over the past 12 months. However, the company has increased its dividend twice in the past 12 months. The most recent boost was announced in January, when the firm declared a quarterly disbursement of 45 cents a share, up from 43 cents.

Keefe, Bruyette & Woods expects Wells Fargo’s dividend payout ratio to top 40% over the next 12 months. That would give shareholders more income while they wait for the company’s fortunes to improve.

Write to Lawrence C. Strauss at

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From: Bill Wolf6/13/2019 8:39:11 AM
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From: Bill Wolf6/14/2019 7:39:15 AM
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600 companies team up to fight the Trump tariffs
A slew of manufacturers, tech companies and retailers signed a letter to President Trump arguing that the trade war with China will lead to job losses and hurt millions of consumers.
Among the signatories: Walmart, Target, Levi Strauss and NetApp, as well as trade groups like the National Restaurant Association, the Consumer Technology Association and the U.S. Council for International Business.
They were organized by a group called Tariffs Hurt the Heartland ahead of public hearings on potential tariffs on $300 billion worth of Chinese goods, as the Trump administration weighs escalating its fight with Beijing.
“The additional tariffs will have a significant, negative and long-term impact on American businesses, farmers, families and the U.S. economy,” the letter read. “We urge your administration to get back to the negotiating table while working with our allies to develop global, enforceable solutions.”
They’re not the only ones worried about the next stage of the trade fight. Strategists at JPMorgan Chase warned that the S&P 500 could fall 13 percent from its current level if the additional tariffs go into effect.
More: The semiconductor maker Broadcom cut its annual forecast for this year, citing the trade fights. And Beijing’s top trade negotiator, Liu He, said yesterday that unnamed external pressures are helping China overhaul its economy for the better.

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From: Bill Wolf6/14/2019 7:42:54 AM
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Big businesses paying even less than expected under GOP tax law

Though profits remain up and the economy is strong, total corporate taxes are at the lowest levels seen in more than 50 years.


06/13/2019 05:12 PM EDT

Federal tax payments by big businesses are falling much faster than anticipated in the wake of Republicans’ tax cuts, providing ammunition to Democrats who are calling for corporate tax increases.

The U.S. Treasury saw a 31 percent drop in corporate tax revenues last year, almost twice the decline official budget forecasters had predicted. Receipts were projected to rebound sharply this year, but so far they’ve only continued to fall, down by almost 9 percent or $11 billion.

Though business profits remain healthy and the economy is strong, total corporate taxes are at the lowest levels seen in more than 50 years.

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From: Bill Wolf6/14/2019 8:05:56 AM
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Nazis Killed Her Father. Then She Fell in Love With One.

Their billionaire descendants, who control Krispy Kreme, Stumptown and other iconic brands, are grappling with the exposure of an unspeakable secret.

By Katrin Bennhold

June 14, 2019

1. Such appalling events

Emilie Landecker was 19 when she went to work for Benckiser, a German company that made industrial cleaning products and also took pride in cleansing its staff of non-Aryan elements.

It was 1941. Ms. Landecker was half Jewish and terrified of deportation. Her new boss, Albert Reimann Jr., was an early disciple of Adolf Hitler and described himself as an “unconditional follower” of Nazi race theory.

Somehow, inexplicably, they fell in love.

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From: Bill Wolf6/14/2019 8:11:31 AM
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UBS Economist’s ‘Chinese Pig’ Comment Hits a Nerve
Chief economist Paul Donovan made a reference to Chinese pigs in a discussion about rising consumer prices in the country
By Shen Hong and Mike Bird
June 14, 2019 2:30 a.m. ET

An errant comment from a London-based economist at UBS UBS -0.43% Group AG has sparked furor among Chinese securities professionals, even after the economist apologized and said he didn’t intend to offend anyone with his remarks.

Paul Donovan, chief economist at UBS Global Wealth Management, in a podcast earlier this week discussed rising consumer prices in China and attributed part of the increase to sick pigs, referring to the impact of African swine fever on pork prices in the country.

“Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China. It does not really matter to the rest of the world,” he said in the podcast, adding that China doesn’t export a lot of food it produces. The comments were also in an emailed summary of Mr. Donovan’s podcast that was sent to media outlets and UBS clients on Wednesday.

While pork is widely consumed in China, calling someone “a pig” in the country is derogatory because it connotes laziness and stupidity.

UBS and Mr. Donovan issued an apology for his comments the following day and said the podcast had been removed from circulation. “I apologize unreservedly for any misunderstanding caused by my innocently intended comments,” Mr. Donovan said on Thursday, adding that he made the remarks in the context of pork-price inflation.

Almost everyone I know who has read this comment is offended.
—Hao Hong, head of research at Bocom International

An open letter dated Thursday from the Chinese Securities Association of Hong Kong to UBS’s board of directors called on the firm to terminate Mr. Donovan. It also demanded a public apology and a pledge that similar events wouldn’t happen again. The group’s president is Lin Yong, chief executive of Haitong International, and it represents branches of Chinese securities firms in Hong Kong.

On Thursday night, Lu Ying, a Shanghai-based director of research at Haitong Securities, China’s third-largest brokerage by assets, said in a post on Chinese social media WeChat that the firm’s international arm has stopped “all cooperation with UBS” as a result of the comment. She also recommended that others boycott the institution.

“Action speaks louder than words,” Ms. Lu said in the post. By late morning Friday, the post had been deleted, according to a person close to Ms. Lu. Ms. Lu couldn’t be reached for comment.

A Haitong International spokeswoman on Friday confirmed that the firm has “suspended all activities with UBS.”

It is unclear how much business Haitong does with UBS. According to the Chinese firm’s banking website, Haitong’s investment-banking arm was a financial adviser to UBS Global Asset Management on an acquisition of an energy distributor in Portugal earlier this year.

A UBS spokesman declined to comment on Haitong.

Mr. Donovan’s comment also sparked a debate between Chinese financial professionals on Twitter , over whether the phrasing should be construed as racist.

“Almost everyone I know who has read this comment is offended,” wrote Hao Hong, head of research at Bocom International, a subsidiary of Bank of Communications Co., one of China’s largest banks.

UBS last year was the first foreign bank to get approval from regulators in China to become the majority owner of a domestic securities firm. The Swiss bank has since upped its stake in its Beijing-based UBS Securities Co. joint venture to 51% and has been adding staff to the business, which is licensed to handle stock and debt offerings and provide asset management, trading, research and other services in the country.

Write to Shen Hong at and Mike Bird at

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