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BOJ’s Negative Interest Rate Decision Sends Yen Falling

By
Andy Parker
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The USD is trading steeply higher against the Japanese Yen today after the Bank of Japan disclosed its monetary policy decision today. The greenback is up by almost 1.60% against the Yen, breaching one-month high, at 120.73. The strength in the dollar came after the Bank of Japan surprised the markets through its recent negative interest rate policy.

BOJ’s surprise move

The pair’s support is at 118.53 and resistance at 121.55. The BOJ concluded its Friday meet announcing a negative interest rate of 0.1%. The Bank added that it could further cut the policy rates if required. The move reflects the efforts of the Bank to achieve its 2% inflation goal amid the global uncertainties and unstable oil prices. Moreover, the decision is aimed at discouraging the consumers from forming a deflation mindset.

The dollar continues to trade higher than other major currencies as investors are awaiting the U.S. fourth-quarter growth data to come in later today. EUR/USD pared its earlier day gains and were trading substantially lower than the greenback. The pair is trading 0.35% lower at 1.0902 after recording most of the gains yesterday on account of vague Federal Reserve commentary.

Russian Ruble up

The Federal Reserve had left policy rates unchanged yesterday, stating that the growth in the U.S. is moderate and encouraging for a gradual rate increase. A slew of other reports was also published yesterday.

Meanwhile, the U.S. dollar traded lower than the Russian Ruble, down by 0.77% to 75.839. The Ruble gained momentum after reports emerged that the Russian authorities are willing to open a dialogue with OPEC members over oil production cut. The outlook for the Russian economy improved following such reports, which was seen to be edging towards the financial crisis.

On the other hand, GBP/USD traded flat against the dollar at 1.4358 after the U.K. Office for National Statistics reported a 0.5% growth in its fourth quarter gross domestic product, which came in line with the forecasts.

Elsewhere in China, the People’s Bank of China fixed the Yuan rate against the U.S. dollar at 6.5516, higher than the Thursday’s fixing.

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BoJ’s Unexpected Rate Cut Spurred Global Markets

By
Andy Parker
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The Asian markets were in the upward swing after Bank of Japan did the unexpected. The Bank slashed interest rate to minus 0.01 and assured of more such cuts if seen necessary. The news triggered a rally across major Asian indices on the last trading day of the month. China’s Shanghai SE Composite Index gained the most, up by 3.09% or 81.94 to 2,737.60. Hang Seng and Nikkei 25 finished the day by over 2.50% higher at 19,707.16 and 17,518.30 respectively. Taiwan’s TSEC 50 closed 2.22% higher at 8,080.60.

Oil and the U.S. market

Meanwhile, a minor uptick in oil prices and rally in the U.S. markets during the previous day is keeping the European markets in green. Nearly all of the major European indices are trading up by more than 1%.  Switzerland’s Swiss Market Index inched up by 1.46% to 8,272.42, followed by 1.28% gains posted by Germany’s DAX. FTSE 100 and CAC 40 are up by 1.23% and 1.15% respectively. Euronext 100 has so far added 9.62 points or 1.13% to trade near 862.47 level.

The U.S. markets remained buoyant yesterday as the surge in oil prices and better-than-expected earnings from Facebook Inc (NASDAQ:FB)  helped shrug off economic growth concerns. Dow Jones Industrial Average closed the day higher by triple digits, i.e., 125.18 points or 0.79% up at 16,069.64. S&P 500 Index added 0.55% to 1,893.36 during the session.

Growth remains sluggish

The optimism came despite disappointing Durable Goods data released yesterday, which declined by 1.5%, higher than the expectations of below 1% decline. Weekly jobless claims data for the week ended January 22, 2016, stood at 278,000. Pending home sales in December grew by 0.1%. The mixed data have been feeding the expectations that the Federal Reserve will not implement monetary tightening measures as aggressively as it projected.

Up ahead in the day, the market participants will look forward to fourth-quarter GDP numbers alongside international trade and employment cost index reading.

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Oil Prices Nearly Flat As Market Looks for More Firm Indication From Russia

By
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Both Brent Crude and the U.S. Crude Futures remained positive throughout the session before slipping marginally. Brent Crude (LCO.1) is seen trading around $33.69, down by 0.59% while U.S. Crude Oil Futures dipped by 0.36% to $33.10.

Crude finds support above $30 bpd

Crude found support above $30 per barrel after reports that oil producing nations can reach an agreement to co-ordinate supply cut. However, analysts are considering such a possibility too dim to happen in the absence of a more inspiring development. Given the present circumstances, analysts have projected that any upward momentum in the oil prices will be limited.

Conflicting statements from Russia

Meanwhile, a fresh report surfaced today from the Kremlin. Representative, Dmitry Peskov, said that Russia is willing to discuss the current oil scenario with other oil producers. In its bid to improve the oil market, Russia has expressed its interest to reach out to all players in the global oil market. However, there has not been any direct indication that Russia will necessarily agree to output cut.

A day earlier, Russian Energy Minister, Alexander Novak, stated that Russia is interested in attending a scheduled meet between OPEC and non-OPEC countries in February. The agenda of the meeting is said to be centred around oil production cut by 5%. However, another statement from Russia’s Deputy Prime Minister, Arkady Dvorkovich, today, indicating that the state will not interfere in balancing the market is seen contradictory to yesterday’s remarks.

According Jefferies analyst, the probability might be dim but projected that a 5% output cut by both Russia and Saudi Arabia could balance the markets if the talks come through. Meanwhile, Iran’s aggressive oil production remains a concern on the sidelines and can overtake the market sentiment anytime if the latest buzz falls apart.

According to recent information, Tehran is aggressively pumping out more oil each day, which can worsen the current oil glut situation if not addressed on time.

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Ford (NYSE:F) Achieves Highest Sales Level In A Decade

By
Carol Harper
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Ford Motor Company (NYSE:F)

The last few years have been good for the automobile industry and Ford Motor Company (NYSE:F) in particular. Low interest rates and replacement demand ensured that the company achieved its highest sales in a decade last year. Its F-Series pickup vehicle was the best-selling vehicle for the 34th consecutive year in the United States. For the fourth quarter, its earnings and revenues came in well above expectations.

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Profit Doubles

Ford said that its net earnings witnessed more than 100% growth to $1.9 billion in the fourth quarter. Excluding special items, its earnings were 58 cents a share, which was eight cents a share higher than the Street analysts’ expectations of 50 cents a share. Its pre-tax profit, after adjustments, also jumped to by $1.3 billion to $2.6 billion in the December quarter.

The company’s top line advanced 12% to $40.3 billion, which was also more than analysts’ estimations of $36.4 billion. The second biggest automaker indicated that its automotive operating cash flow was $2.1 billion in the fourth quarter and $7.3 billion for the full year.

Breakthrough Year

Ford CFO Bob Shanks, said that he considered the year 2015 as a ‘breakthrough year’ following its heavy spending in the preceding year to establish new plants. The company’s idea was to focus on Asia and bring the F-150 pickup vehicle, which will be new and aluminum-sided, to the American market. Its pretax profit for the full year climbed 48% to $10.8 billion driven by the uptick in market share, as well as international sales. Its recent results benefited from a change in accounting practices to deal with pension costs.

Last year, Ford unveiled 16 vehicles throughout the globe, which was down from 24 in the preceding year. The company’s sales reached 1.1 million in China with the support of the three-row Edge SUV and new products. The automaker’s net income climbed to $7.4 billion in 2015 while adjusted earnings were $1.93 a share, which was above predictions of $1.73 a share. Its revenue grew 4% to $149.6 billion. Shanks indicated that worldwide weak oil prices along with the low interest rates and a rising housing market were good for the current year for the industry.

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Alibaba’s (NYSE:BABA) Net Income Jumps by 108%

By
Carol Harper
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Alibaba Group Holding Ltd (NYSE:BABA)

Alibaba Group Holding Ltd (NYSE:BABA) delivered better than expected numbers for the third quarter. The company’s financial results gained from some solid metrics like its retail marketplace revenue and the growing usage of mobile shopping. Aside from this, the company also gained from its cloud computing, as well as Internet infrastructure business. The results indicated that China’s e-commerce business was growing at a rapid pace.

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Retail Business Growth

Alibaba reported that its net income jumped 108% to RMB 5.98 billion while adjusted net income increased 25% to RMB 13.12 billion this quarter. In US dollar terms, the company’s earnings came in at 76 cents a share while adjusted earnings were 99 cents a share. That was ten cents a share higher than Capital IQ expectations.

The e-commerce firm’s top line advanced 32% to $5.33 billion, which was higher than the $5.13 billion predicted by Capital IQ analysts. The most significant factor was that the company’s revenue from mobile stream jumped 192% on YoY basis. As a result, mobile revenue as a percentage of total revenue jumped to 65% from 30%. The company attributed the better revenue numbers to the continued rapid growth of its retail business. The gain also came from the monetization of its user activity in its marketplaces.

Retail Marketplace Revenue

Alibaba also reported growth in its retail marketplace revenue, which increased 35% to $4.43 billion while mobile revenue came in at $2.89 billion. The company said that active buyers on its retail marketplaces grew to 407 million on an annualized basis. Similarly, its mobile MAUs added 47 million this quarter to 393 million. The Chinese firm said that its cloud computing, as well as Internet infrastructure unit witnessed 126% YoY growth to $126 million while adjusted free cash flow was $3.66 billion at the end of the quarter.

Further, the gross merchandise value (GMV) of its retail marketplaces witnessed 23% growth to $149 billion. The interesting part was that mobile GMV represented 68% of that. Alibaba indicated that it would continue to invest in its tactical priorities.

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Caterpillar (NYSE:CAT) Misses On Revenues, FY16 Guidance EPS Above Consensus, Revenues In-Line

By
Carol Harper
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Caterpillar Inc. (NYSE:CAT)

Caterpillar Inc. (NYSE:CAT) reported adjusted earnings that topped the Capital IQ consensus expectations by five cents a share in the fourth quarter. On a GAAP basis, the company suffered a net loss compared to profit last year. Its revenue dipped 22.6% and fell shy of analysts’ estimations. Looking ahead, the company sees earnings above the consensus for the year 2016. The company indicated that its guidance reflected the continued weakness in commodity prices, as well as the slowdown in economic growth.

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Sales Under Pressure

Caterpillar said that its restructuring actions, operational execution and cost management were helping its bottom line. The company suffered a net loss of $87 million or a loss of 15 cents a share compared to net income of $757 million or $1.23 a share last year. On an adjusted basis, earnings per share dipped to 74 cents from $1.35.

Sales and revenue dropped 22% to $11.03 billion from $14.24 billion. While earnings topped estimates, revenue missed Capital IQ consensus of $11.42 billion. The company blamed it on weak commodity prices, as well as, the slowing economic growth in emerging markets. The mining equipment maker said that it gained traction in market position for the fifth straight year for machines as inventory levels witnessed a fall.

Well-Positioned For 2016

Caterpillar Inc. (NYSE:CAT) said that the company is well-positioned to take advantage of its product quality, which remained high, and safety levels are considered world class. Its Chairman and CEO, Doug Oberhelman, said that the company was already gaining from its recent mvoes, and once the market rebounds, it would gain further in the future.

Going forward, Caterpillar Inc. (NYSE:CAT) expects earnings of $4.00 a share for the fiscal year 2016, which was significantly higher than the Capital IQ consensus estimation of $3.53. However, the company’s revenue projection of $40 – $44 billion fell short of $43.48 billion predictions. The company indicated that its sales in construction industries, energy transportation and resources industries will to fall 5 – 10%, 10 – 15%, and 15 – 20% respectively this year.

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JetBlue (NASDAQ:JBLU) Beats On Revenues and EPS

By
Carol Harper
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JetBlue Airways Corporation (NASDAQ:JBLU)

It could not have been a better time for JetBlue Airways Corporation (NASDAQ:JBLU) to report a doubling in profit. One of the main reasons for it was the significant drop in oil prices. A few other metrics like revenue passenger miles and capacity growth along with load factor also helped to post earnings five cents a share higher than expectations. The company also provided an upbeat forecast for capacity for the first quarter and the full year.

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Yield per Mile Down

JetBlue Airways Corporation (NASDAQ:JBLU) reported net income of $190 million, which was more than double the $88 million a year ago. Similarly, earnings per share also jumped to 56 cents from 26 cents. Its pre-tax margin jumped 9.3 points to 19.0%. Revenue grew 10.2% to $1.59 billion in the fourth quarter, which was also higher than the Capital IQ estimation of $1.57 billion.

The airline firm’s revenue passenger miles advanced 12.4% to 10.6 billion with the help of a 10.4% growth in the capacity. The company indicated that its load factor rose 1.5 points to 83.6% in the December quarter. However, yield per passenger mile slipped 3.6% to 13.62 cents whereas passenger revenue per available seat mile fell 1.9% to 11.39 cents. Similarly, operating revenue per available seat mile slackened 20 basis points to 12.62 cents.

Guidance For Q1 and Full Year

Moving ahead, JetBlue expects capacity to grow in the range of 14% – 16% in the first quarter. For the full year, the airliner sees a growth of 8.5% to 10.5%. The company indicated that severe winter weather was causing a considerable number of cancellations this quarter. As a result, growth pace in capacity as scheduled.

JetBlue also sees change in CASM, which excluded fuel as well as profit sharing. As a result, the company sees a 0 to -2% in the first quarter compared to last year. CASM is likely to witness a growth of 0% – 2% for the full year 2016.

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Eli Lilly (NYSE:LLY) Reports EPS and Revenues In-Line, Reaffirms FY16 Guidance

By
Carol Harper
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Eli Lilly and Co (NYSE:LLY)

Eli Lilly and Co (NYSE:LLY) reported 12% growth in net earnings for the fourth quarter driven by a 5% increase in top line apart from tax gains. The company’s adjusted earnings, as well as revenue came in line with the Capital IQ consensus expectations for the quarter. The drug maker also reaffirmed its guidance for the fiscal year 2016.

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Volume and Price Hike

Eli Lilly and Co (NYSE:LLY)’s net income grew 12% to $478.4 million from $428.5 million while earnings advanced 13% to 45 cents a share from 40 cents a share last year. Excluding adjustments, net income dipped 6% to $828.2 million while earnings per share fell 5% to 78 cents. Adjusted EPS was in line with Capital IQ expectations.

The company’s top line advanced 5% to $5.38 billion from $5.12 billion while non-GAAP revenue remained flat at $5.38 billion. Capital IQ estimated the drug maker to deliver revenue of $5.33 billion. The growth in revenue was attributed to a 7% increase in volume while 3% came due to price hikes. However, unfavorable impact from foreign exchange rates negated benefits by 6%.

America’s Contribution

Eli Lilly also gained from its North American market where it witnessed a 15% increase in revenue to $2.82 billion fueled by price hikes and higher volume. Volume increases for Erbitux, Cyramza, and Trulicity all contributed.

However, revenue from rest of the world saw a 4% drop to $2.56 billion as foreign exchange rates hurt results. Aside from that, it lost exclusivity for Cymbalta in 2014 in Europe though it was partly compensated by the addition of Novartis Animal Health revenue besides higher volumes from other products.

Re-Affirms Outlook

For the current year, Eli Lilly reaffirmed its adjusted earnings outlook of $3.45 – $3.55 a share for the year 2016 while Capital IQ consensus estimated called for $3.55 a share. Similarly, the company expects revenue of $20.2 – $20.7 billion, which was lower than the prediction of Capital IQ’s $20.91 billion. The drug maker indicated that it sees revenue growth, excluding currency impact, from several established products like Forteo, Humalog, Strattera, and animal health products.

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Alphabet (NASDAQ:GOOG) Seeking Sanctions Against Oracle (ORCL) After Information Leak

By
Andy Parker
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Alphabet Inc (NASDAQ:GOOG) is not comfortable with the recent disclosures made by an Oracle Corporation (NYSE:ORCL) lawyer in court. As such, the company has asked the court’s permission to allow it muzzle Oracle to avoid further discussion on what it terms confidential information. Among other things, Oracle’s lawyer discussed how Android has generated $22 billion in profit and how Google paid Apple Inc. (NASDAQ:AAPL) $1 billion to retain its search bar on iPhones.

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The disclosures by Oracle through its lawyer surprised many. It has never been known that Google pays money to Apple to keep its search bar on iPhones. It has also never been made public that Google and Apple have a revenue-sharing agreement whereby the companies split search revenue generated through iPhones. In any case, Apple has been critical of Google’s monetization strategy whereby it sells its user data to advertisers.

Friends or enemies?

Oracle’s court disclosures brought to the fore how Alphabet and Apple appear to antagonize each other on the surface but have secret revenue arrangements built around mobile search.

Oracle’s lawyer further disclosed that Android, which is the most widely used mobile operating system in the world, has generated $31 billion in revenue and at least $22 billion in profits since it was released.

Access to confidential information

Perhaps fearing further disclosure of details of its confidential relationship with Apple, Google wants the court to muzzle Oracle’s lawyer. Google’s letter to seek permission for sanctions against Oracle was sent to Donna Ryu, a U.S. Magistrate judge and William Alsup, a U.S. district judge. The letter specifically seeks to bar Oracle’s lawyer from accessing the now controversial confidential information regarding Google’s revenue arrangement with Apple. What that would accomplish at this point is anyone’s guess, given the information is already public.

Dispute over Java in Android

Alphabet and Oracle are in contest over the use of Java in Android. Oracle wants a share of Android revenue because of its Java language used in the software. Alphabet for its part insists that it doesn’t have to pay Oracle for using Java. Google also fought with Microsoft Corporation (NASDAQ:MSFT) over Android in the past.

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Amazon’s (NASDAQ:AMZN) Prime Music Gets X-Ray Lyrics, Prime Stations In UK

By
Andy Parker
-

Amazon.com, Inc. (NASDAQ:AMZN) has enriched its music offering for its customers in the U.K., a move that brings them at par with U.S. Amazon Prime Music listeners. Amazon has added Prime Stations, of which there are hundreds, and X-Ray Lyrics features to the U.K. version of Prime Music. Amazon’s Prime Music is competing for listener attention with Apple Inc.’s (NASDAQ:AAPL) Apple Music and Spotify.

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Prime Music comes as part of Amazon Prime membership, which costs $99 a year and also includes free shipping of items purchased on Amazon’s website.

Prime Stations

Amazon introduced its Prime Music in the U.K. six months ago, but the service came with certain restrictions that didn’t apply to U.S. listeners. There was no way U.K. Prime Music subscribers could access extra entertainment through Prime Stations. Amazon has music offerings that it calls Prime Stations, which may be genre-based offerings or something else, but normally designed to enhance the listening experience. With the latest move, U.K. Prime Music subscribers can now access Prime Stations, which Amazon says are in the hundreds.

X-Ray Lyrics

The other feature that was lacking in the U.K. version of Prime Music was X-Ray Lyrics. The feature allows people to access text lyrics of the song they are listening to, which means you can listen and read simultaneously.

Amazon’s Prime Stations and X-Ray Lyrics can both be accessed on multiple platforms, including Windows, Android, iOS and Mac devices. Users can also access the features on Amazon’s branded hardware such as Kindle Fire tablets and Fire TV.

The update to the U.K. Prime Music means that listeners there are now on par with their U.S. counterparts.

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