Bloomberg
“Comcast Drops Out of Bidding War for Fox to Focus on U.K.’s Sky.”
Comcast Corp. will no longer seek to compete with Walt Disney Co.’s for a swath of 21st Century Fox Inc.’s entertainment assets, choosing to focus instead on winning control of the British pay-TV service Sky Plc.
Following a bidding war with Disney, Comcast concluded that the price for the Fox assets was too high, according to a person familiar with the matter who asked not to be identified because the decision process was private. Another hurdle was the regulatory requirement to divest Fox’s regional sports networks as part of any deal, the person said.
Disney can now go ahead with its offer of $71.3 billion for Fox’s properties, which include a 39 percent stake in Sky. Comcast has offered about $34 billion for the U.K. pay-TV provider, including Fox’s stake, though it’s unclear if Disney will be willing to part with it.
While Comcast is dropping its pursuit of much of Rupert Murdoch’s empire, it did force Disney to pay a higher price for the Fox assets, which also include a movie studio and cable networks FX and National Geographic. Comcast had made a $65 billion offer, forcing Disney to sweeten its $52.4 billion deal.
Comcast shares jumped 2.7 percent to $34.95 at 9:35 a.m. in New York, a sign investors are relieved the bidding contest over Fox is over. Disney gained 1.3 percent and Fox dropped 1.3 percent. In the U.K., Sky fell 1.7 percent.
Reuters
“Putin accuses U.S. forces of trying to ruin Trump summit outcome.”
Russian President Vladimir Putin on Thursday accused forces in the United States of trying to undermine the success of his first summit with U.S. President Donald Trump, but said the two leaders had begun to improve U.S.-Russia ties anyway.
Putin and Trump sat down for their first summit in Helsinki on Monday, an event that sparked a storm of criticism in the United States after Trump refused to blame the Russian leader for meddling in the 2016 U.S. election, something Putin denies.
Trump later said he had misspoken and accused “some people” of hating the fact that he got along with Putin. The White House has been struggling to contain a political outcry and confusion over the summit ever since. Putin, speaking to Russian diplomats from around the world assembled in Moscow, said on Thursday the Helsinki summit had been successful.
“It was successful overall and led to some useful agreements. Of course, let’s see how events will develop further,” he said, without disclosing the nature of the agreements he referred to.
However, Putin said “powerful” U.S. forces were trying to sabotage what the summit had achieved. Those same forces appeared ready to sacrifice hundreds of thousands of U.S. jobs and hurt U.S. business and security while waging their divisive political battle, Putin said.
Putin did not name names, but spoke of U.S. politicians who put their “narrow party interests” above the best interests of the United States and were powerful enough to be able to foist their questionable “stories” on millions of Americans. He said it would have been naive to expect that the Helsinki summit could have resolved problems that had built up over many years in the space of a few hours.
BBC News
“Jewish nation state: Israel approves controversial bill.”
Israel’s parliament has passed a controversial law characterising the country as principally a Jewish state, fuelling anger among its Arab minority. The «nation state» law says Jews have a unique right to national self-determination there and puts Hebrew above Arabic as the official language. Arab MPs reacted furiously in parliament, with one waving a black flag and others ripping up the bill.
Israel’s prime minister praised the bill’s passage as a «defining moment». «A hundred and twenty-two years after [the founder of modern Zionism Theodore] Herzl made his vision known, with this law we determined the founding principle of our existence,» Benjamin Netanyahu said. «Israel is the nation state of the Jewish people, and respects the rights of all of its citizens.»
However, the law risks further alienating Israel’s large Arab minority, who have long felt discriminated against. Called The Basic Law: Israel as the Nation State of the Jewish People, the legislation essentially defines Israel first and foremost as a Jewish state. Among its 11 provisions, it describes Israel as «the national home of the Jewish people» and says the right to exercise national self-determination there is «unique to the Jewish people». It also reiterates the status of Jerusalem under Israeli law, which defines the city – part of which is claimed by the Palestinians as the capital of a future state – as the «complete and united… capital of Israel»
Bloomberg
“Hate ETFs? Quants Say They Found Anomaly to Profit on Their Flows.”
Stock managers sick of being steamrolled by the onslaught of passive funds may have a new weapon to wield, one that was born of the very success their enemies had in overrunning the market.
According to quant strategists at Deutsche Bank, investors can beat equity benchmarks by building portfolios out of stocks that get whipped around the most when exchange-traded funds rebalance.
Bet against the ones they buy, and buy the ones they sell, is what they recommend. If all you did was go long stocks with the most negative ETF flows over the last 12 years, you would’ve topped the Russell 3000 Index by 2 percentage points annually. Buying and shorting returned 7.2 percent a year, the firms says. That’s more than double the best-performer among 10 factors tracked by Bloomberg over the period.
So enamored are they with their findings that Deutsche Bank strategists led by Ronnie Shah are treating it as the discovery of a new investment anomaly, a systematic way of profiting from errors in investor thinking.
In this case, they say, the error is when traders sense price trends being created by ETF flows, jump in and make them bigger. Since buying and selling by ETFs doesn’t reflect any company-specific knowledge, the trends later reverse, the study holds.
“The proliferation of passive investments is causing distortions,” said Shah, the firm’s head of U.S. quantitative equity strategy. “It’s a new anomaly associated with ETF flows that active managers can take advantage of.”
His team is among a growing group of market watchers who seek an edge by studying ETF behavior at a time when indexes outnumber stocks and passive vehicles control more than one fifth of the market cap of the S&P 500 and Russell 2000 indexes.
While hedge funds and other speculators have devised any number of strategies to front-run and otherwise exploit passive flows, Shah is among the first to publish a model for doing so over time using rule-based inputs. The success of the strategy relies on the popularity of passive investing, he said.