Bloomberg
“Amazon Slides With Another ‘Long Day’ for Tech Traders.”
Tech stocks are in for another volatile day as Tuesday’s selloff gave way to a pre-market roller coaster.
Facebook Inc. initially led peers higher in early trading after unveiling new privacy settings in response to criticism about its handling of millions of users’ personal data. But the sector soon took a downturn after Axios reported that President Donald Trump is said to be looking at whether to go after Amazon.com Inc. with antitrust or competition law. Amazon fell as much as 6.2 percent, its worst day in more than six weeks. Other megacap peers including Apple Inc. and Alphabet Inc. also saw their early gains vanish.
“For the first time in a while, traders have no idea what’s going on,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co., in a phone interview. “What usually happens is a panic selloff one day precedes a pick-up in futures the next morning. That was the case earlier today, but the dip buyers are gone.”
Facebook rose 1.2 percent at 9:55 a.m. in New York, the second-best performer in the 10-member NYSE FANG+ Index after Twitter Inc. The index had its worst drop in more than three years Tuesday and looks to extend those losses.
“The story around Facebook hasn’t played out yet,” said Michael O’Rourke, JonesTrading’s chief market strategist, by phone. “It’s going to be a long day.”
Reuters
“China says North Korea’s Kim pledged commitment to denuclearization.”
North Korean leader Kim Jong Un pledged his commitment to denuclearization and to meet U.S. officials, China said on Wednesday after his meeting with President Xi Jinping, who promised China would uphold friendship with its isolated neighbor. After two days of speculation, China and North Korea both confirmed that Kim had traveled to Beijing and met Xi during what China called an unofficial visit from Sunday to Wednesday.
The visit was Kim’s first known trip outside North Korea since he assumed power in 2011 and is believed by analysts to serve as preparation for upcoming summits with South Korea and the United States. North Korea’s KCNA news agency made no mention of Kim’s pledge to denuclearize, or his anticipated meeting with U.S. President Donald Trump that is planned for some time in May.
China has traditionally been secretive North Korea’s closest ally but ties have been frayed by its pursuit of nuclear weapons and China’s backing of tough U.N. sanctions in response.
China’s Foreign Ministry cited Kim in a lengthy statement as telling Xi the situation on the Korean peninsula was starting to improve because North Korea had taken the initiative to ease tension and put forward proposals for talks.
Kim Jong Un’s predecessors, grandfather Kim Il Sung and father Kim Jong Il, both promised not to pursue nuclear weapons but secretly maintained programs to develop them, culminating in the North’s first nuclear test in 2006 under Kim Jong Il.
The North had said in previous, failed talks aimed at dismantling its nuclear program it could consider giving up its arsenal if the United States removed its troops from South Korea and withdrew its so-called nuclear umbrella of deterrence from South Korea and Japan.
BBC News
“Google’s tax bill rises to £50m.”
Google will pay nearly £50m in tax to the Treasury this year. The technology giant’s annual accounts show that the company will pay corporation taxes of £49.3m on UK profits of £202.4m. Although the tax figure is the highest the company has paid – and up on the £36.4m it paid last year – it will be likely to reignite the debate about taxation and digital firms.
The total value of Google’s sales in the UK is about £5.7bn a year. It only makes a profit on a small proportion of that activity because most of the intellectual value of its business – the software engineering – is created in America, where Google pays the vast bulk of its taxes.
Google UK also operates as a marketing and sales arm of its European operation which is headquartered in Dublin, where corporation taxes are lower. It pays a substantial «administration fee» to its European parent to operate across Britain. «As an international business, we pay the majority of our taxes in our home country, as well as all the taxes due in the UK,» a spokesman said. «We are investing significantly in the UK, including starting work on new offices in King’s Cross [London] for 7,000 staff.»
The accounts say that at present, Google employs 3,280 people in the UK, an increase of 340. The government and the European Union are both looking at increasing the amount of tax that companies such as Facebook and Google pay.
Pierre Moscovici, the European Commissioner for tax affairs, told me last week that digital giants did not pay enough tax. A Commission proposal published at the same time said that a new tax on revenues should be levied, raising up to £4bn across the EU. A substantial proportion of that could come to Britain, which has one of the highest usage rates of digital companies. A tax on those revenues would raise substantially more in the UK than the present £50m tax bill on its UK profits.
Bloomberg
“Deutsche Bank Is Considering More Cuts at Investment Bank.”
Deutsche Bank AG is conducting a fresh review of its investment bank that could lead to deeper cuts across the trading businesses, according to people familiar with the matter.
The bank’s U.S. operations are a particular focus, though the review stretches across the firm’s global trading unit, according to the people, who asked not to be identified because the discussions are confidential. Europe’s largest investment bank is examining businesses where it’s trailing competitors to determine if it should try to win back market share or exit, the people said.
Senior executives plan to complete the review, dubbed “Project Colombo,” within weeks, before deciding where to cut and where to invest, said two people. A spokeswoman for Deutsche Bank declined to comment.
The future of the investment bank, the lender’s largest unit by revenue, has been a central point of contention at the company as Chief Executive Officer John Cryan struggles to turn the business around since he took over in mid-2015. Investors’ frustration with the lack of growth at Deutsche Bank have prompted Chairman Paul Achleitner to search for a successor to Cryan, people familiar have said.
As part of the investment bank review, cuts are being discussed at both big trading businesses — equities as well as fixed income, currencies and commodities — because they are expensive and haven’t performed well, said one person. However, the extent of a potential retrenchment is unclear because many traders just got big bonuses in an effort to retain top performers, this person said.
Much of the prior cutbacks at the investment bank affected fixed-income trading, though revenue at the equities unit declined as well. The bank lost clients in late 2016 amid concerns about its financial strength. Revenue from trading has declined by about a third in the past two years.
Deutsche Bank’s trading revenue has shrunk from 12.7 billion euros in 2010 — or about 44 percent of total income — to 8.7 billion euros or 33 percent last year as Cryan pivoted away from the bank’s former focus on institutional clients toward corporate clients.
The CEO last year merged the global markets division with the corporate and investment bank, reversing the decision from 2015 to split the businesses. In the 2017 overhaul, the bank named former finance chief Marcus Schenck to help oversee the new unit, while Cryan himself assumed oversight for the lender’s U.S. operations. The bank recently hired a former Goldman Sachs executive, Peter Selman, in a bid to revive the equities business
“I am focused on growing revenue and prudently managing expenses to improve profitability,” Selman said in an interview earlier this year. Along with hiring graduates, Selman said he will invest in Deutsche Bank’s technology to build a “best-in-class electronic platform” over the long term. The bank already has good products for derivatives clients, he said.
Chief Financial Officer James von Moltke said at a conference in London last week that any cuts to the investment bank would probably be gradual. “We will take actions to prune the business this year,” Von Moltke also said at the conference. Radical cuts are “not something we think is advisable and the right thing either for the franchise or for shareholders,” he said.