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Apr 25, 2019

FX | Dollar Report on April 25, 2019 | Swedish crown falls to 17-year low after central bank delays rate hike

Natasha Turak

Reusable euro coin
Sean Gallup | Getty Images
The Swedish crown plummeted to a 17-year low on Thursday after the country’s central bank delayed its next interest rate hike.
The Riksbank began normalising policy in December due to a strong economy but it has since joined its counterparts in Europe and Canada in adopting a cautious outlook.
Still, its message of restraint and concern about weak inflationary pressure caught some investors off guard.
The crown sank 1.4 percent versus the dollar to 9.55, its lowest since August 2002 and was headed for its biggest daily loss versus the euro since November.
“This extraordinary monetary policy stance continues to whack the crown and the [Riksbank] change in tone seems warranted,” said Societe Generale analyst Kit Juckes.
The central bank said at its previous meeting that it planned to tighten policy in the second half of this year but Nordea Markets Analyst Torbjorn Isaksson said the bank was unlikely to hike until 2020 or possibly later.
Inflation in Sweden has lost steam despite getting a boost from a currency that has weakened steadily over the last six years.
The euro languished near a 22-month low, weighed down by ailing growth in Germany and the spectre of political uncertainty in Spain.
A surprise drop in German business morale has highlighted the divergence between economic data in the United States and the euro zone. The euro has recently traded in a fairly narrow range but expectations of price swings in next month’s elections for the European Parliament have risen according to implied volatility gauges.
The European Central Bank in March pushed out the timing of its first post-crisis rate hike until 2020 and that is impacting the euro. It suffered its worst day in over six weeks on Wednesday, falling 0.6 percent to a 22-month low of $1.1141. It traded flat on Thursday at $1.1154.
“Political uncertainties combined with economic concerns are a rather bad cocktail for the euro,” Antje Praefcke, an analyst at Commerzbank, wrote in a note to clients.
A polarised election in Spain on Sunday could further dampen the euro’s prospects.
The greenback rallied to a 23-month high of 98.189 against a basket of key rivals largely propelled by the euro’s weakness. The index last traded 0.15 percent lower at 98.027.
Investors will watch the release on Friday of U.S. gross domestic product data for the first three months of 2019, for signs of whether the United States remains stronger than other leading economies.

Source: CNBC

Bonds Yields Report on April 25, 2019 | US Treasury yields unchanged after of jobless data

Silvia Amaro

U.S. Markets Overview: Treasurys chart

US 3-MOU.S. 3 Month Treasury2.429-0.0050.00
US 1-YRU.S. 1 Year Treasury2.4250.000.00
US 2-YRU.S. 2 Year Treasury2.3320.0120.00
US 5-YRU.S. 5 Year Treasury2.330.0140.00
US 10-YRU.S. 10 Year Treasury2.5340.0120.00
US 30-YRU.S. 30 Year Treasury2.9440.0030.00
Investors are tracking earnings, with bond traders weighing up whether the Federal Reserve could perhaps return to a more hawkish stance if conditions look to be improving for large businesses in the country.
The number of Americans filing for unemployment benefits rose by the most in 19 months last week, the Labor Department said Thursday.
Initial claims for state unemployment jumped 37,000 to a seasonally adjusted 230,000 for the week ended April 20, according to the government report, the largest increase since early September 2017.
In terms of auctions, the U.S. Treasury is set to sell $32 billion in seven-year notes Thursday, $50 billion in four-week bills and $35 billion in eight-week bills.

Source: CNBC

Wall Street Closing Report on April 25, 2019 | Dow falls more than 100 points as 3M suffers biggest drop in more than 30 years

Fred Imbert

The Dow Jones Industrial Average dropped on Thursday as a sharp decline in 3M shares dragged the 30-stock index.
The Dow fell 109 points as shares of 3M dropped 13.2% after the company reported earnings that were much lower than analysts had expected. The company also slashed its full-year outlook and announced plans to cut 2,000 jobs worldwide. 3M shares were on pace for their worst day since Oct. 19, 1987, also known as Black Monday.
CEO Mike Roman said the quarter was “disappointing,” noting: “We continued to face slowing conditions in key end markets which impacted both organic growth and margins, and our operational execution also fell short of the expectations we have for ourselves.”
The S&P 500 and  Nasdaq Composite fared better than the Dow, however, as Facebook and Microsoft jumped on strong quarterly numbers.
The S&P 500 climbed 0.1%, led by gains in the health care and communications services sectors. The Nasdaq, meanwhile, rose 0.3% and hit an intraday record.
Traders work under monitors displaying 3M Co. signage on the floor of the New York Stock Exchange (NYSE) in New York.
Michael Nagle | Bloomberg | Getty Images
Facebook shares rose more than 5% after its first-quarter numbers showed promising growth in Stories and ads.
“We believe investors will continue to gain comfort with the incremental financial risk created by content and privacy concerns,” Guggenheim Partners analyst Michael Morris wrote in a note. “The company is proactively and definitively addressing these issues while expanding core monetization and new initiatives.”
The analyst also raised his price target on Facebook to $220 per share from $200.
Microsoft, meanwhile, climbed more than 3% as its better-than-expected earnings were driven by a 41% surge in its commercial cloud revenue business. That growth was led by Azure, which saw sales skyrocket by 73%.
Amazon, Ford Motor, Starbucks and Mattel are among the companies scheduled to report after the bell Thursday.
More than 170 S&P 500 companies have reported quarterly results so far, according to FactSet. Of those companies, 78% have posted better-than-expected earnings. “The company is proactively and definitively addressing these issues while expanding core monetization and new initiatives.
“With the earnings season approaching the halfway mark, the news has been good enough to keep bulls committed to their positions and there have been few examples of genuinely troubling news,” said Michael Shaoul, chairman and CEO of Marketfield Asset Management, in a note.
“The worst we could say is that investors are drawing in some cases on hope to a greater degree than normal, particularly in the key semiconductor sector where a strong second half rebound has been priced into many issuers, but this seems unlikely to be a factor over the near term,” Shaoul added.
Wall Street ended Wednesday’s session lower on the back of mixed corporate results. Earlier this week, the S&P 500 notched an all-time closing high and remains about half a percent below its intraday record.
—CNBC’s Silvia Amaro contributed to this report.

Source: CNBC

Table of Spot Prices as of the close of trading in New York on Thursday, April 25, 2019

Spot Prices as of the close of trading in New York
Thursday, April 25, 2019

Oil Price Report on April 25, 2019 | US crude falls 1%, settling at $65.21, as oil prices pull away from 6-month highs

Tom DiChristopher

Reusable: Rusted oil jacks Texas 150326
Rusted out “pump-jacks” in the oil town of Luling, Texas.
Getty Images
Oil prices turned lower heading into Thursday’s settlement, after Brent crude earlier touched $75 per barrel for the first time in nearly six months.
Crude futures earlier drew support as quality concerns halted some Russian crude exports to Europe and the United States prepared to tighten sanctions on Iran.
Wednesday’s report of a bigger-than-expected build in U.S. crude inventories last week to their highest since October 2017 was weighing on the U.S. benchmark, analysts said.
U.S. West Texas Intermediate crude settled 68 cents lower at $65.21 per barrel, down 1% and slipping further from this week’s 2019 high at $66.60.
Brent crude futures were down 17 cents at $74.40 around 2:30 p.m. ET (1830 GMT). They earlier hit a session high of $75.60, their strongest since Oct. 31.
Poland and Germany suspended imports of Russian crude via the Druzhba pipeline due to contamination.
The pipeline can ship up to 1 million barrels per day, or 1 percent of global crude demand. About 700,000 bpd of flow was suspended, according to trading sources and Reuters calculations.
“We consider the quality issues with Russian crude oil as a supply disruption that is happening at the same time sanctions on Iran and Venezuela are impacting supply,” said Andy Lipow, president of Lipow Oil Associates in Houston.
U.S. attempts to drive Iranian oil exports down to zero also boosted prices.
The United States this week said it would end all exemptions for sanctions against Iran.
Iran has been under U.S. sanctions for more than six months, but several major buyers, including China and India, were given temporary exemptions until this week. Beginning in May, those countries have to halt oil imports from Tehran or face sanctions.
The U.S. decision comes amid supply cuts led by OPEC since the start of the year aimed at propping up prices.
Still, Brian Hook, U.S. special representative for Iran and senior policy adviser to the secretary of state, said on Thursday “there is plenty of supply in the market to ease that transition and maintain stable prices.”
Consultancy Rystad Energy said Saudi Arabia and its main allies could replace lost Iranian oil.
“Saudi Arabia and several of its allies have more replacement barrels than what would be lost from Iranian exports,” said Rystad’s head of oil research, Bjoernar Tonhaugen.
“Since October 2018, Saudi Arabia, Russia, the UAE, and Iraq have cut 1.3 million bpd, which is more than enough to compensate for the additional loss,” he added.

Source: CNBC

Gold Price Report on April 25, 2019 | Gold firms as weak data puts focus back on growth risks

Jeff Daniels

Reusable: Gold bars 001
Gold inched higher on Thursday as weak economic data rekindled fears over global growth, while bullion’s recovery from four-month lows and an improved technical picture prompted some investors to cover their short positions.
Spot gold was up 0.1 percent at $1,276.43 per ounce. U.S. gold futures settled $0.30 higher at $1,279.70.
World equity markets slipped as a surprise deterioration in German and South Korean economic data brought back to the fore concerns about a global downturn.
“The correction in (stock) markets has provided some support for gold. But the (gold) market is still looking for catalysts for a significant move and there is not much momentum in either direction,” Capital Economics analyst Ross Strachan said.
“Gold is awaiting bigger developments. We’ve got U.S. GDP and that’s expected to have a significant impact on the dollar.”
U.S. gross domestic product data will be released on Friday, with the economy forecast to have grown by 2.1 percent in the first quarter.
Gold has recovered after hitting a four-month low of $1,265.90 an ounce this week, despite expectations that prices could fall towards the 200-day moving average around $1,251, analysts said.
“Gold prices are showing some resilience here. We haven’t managed to see an extension to the technical breakout we saw this week,” said Ole Hansen, commodity strategist at Saxo Bank.
“The fact that we have managed to recover and find bids is making some shorts nervous and that is providing some support right now. The correction in global markets is also just adding to the equation.”
Data from the U.S. Commodity Futures Trading Commission showed speculators switched to a net short position in COMEX gold in the week to April 16.
The bearish sentiment in gold was also reflected in holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund. Holdings dipped 0.2 percent to 747.87 tonnes on Wednesday, the lowest since Oct. 19.
Spot gold may bounce towards resistance at $1,284, as it has found support at $1,264, Reuters technical analyst Wang Tao said.
Elsewhere, silver was steady at $14.91 an ounce, while platinum too was firm at $878.84.
Palladium dipped 0.1 percent to $1,416 an ounce.

Source: CNBC

Stocks at Last Year's Record High by Paul Rejzak

5-7 minutes

The U.S. stock market indexes lost 0.2% on Wednesday, as investors took some short-term profits off the table following Tuesday's rally. The S&P 500 index retraced almost all of its medium-term downward correction of 20.2%. The broad stock market's gauge is now just 0.5% below September the 21st record high of 2,940.91. Both the Dow Jones Industrial Average and the Nasdaq Composite lost 0.2% on Wednesday.
The nearest important resistance level of the S&P 500 index is at around 2,940, marked by the mentioned record high. On the other hand, the support level is now at 2,920, marked by the recent resistance level. The support level is also at 2,900.
The broad stock market retraced all of its December sell-off and it broke above the medium-term resistance level of around 2,900 recently. So is it still just a correction or a new medium-term uptrend? We may see an attempt at getting back to the record high. There have been no confirmed negative medium-term signals so far. The index got very close to its last October all-time high, as we can see on the daily chart:

Mixed Expectations, Will Uptrend Continue?

Expectations before the opening of today's trading session are mixed, because the index futures contracts trade between -0.5% and +0.2% vs. their Wednesday's closing prices. The European stock market indexes have lost 0.1-0.4% so far. Investors will wait for some economic data announcements: Durable Goods Orders, Unemployment Claims at 8:30 a.m. They will also wait for more quarterly corporate earnings releases. Stocks will likely extend their short-term consolidation along the last year's record high. There have been no confirmed negative signals so far. However, we can see some short-term technical overbought conditions.
The S&P 500 futures contract trades within an intraday consolidation, as it remains close to the record high. The nearest important resistance level is at around 2,940. On the other hand, the support level is at 2,925-2,930, among others. The futures contract is slightly below its recent upward trend line this morning, as the 15-minute chart shows:

Nasdaq at New Record High

The technology Nasdaq 100 futures contract trades along the new record high. The market extended it uptrend yesterday after-hours, as investors reacted to the quarterly earnings releases from Facebook and Microsoft. The tech stocks' gauge got closer to the 7,900 mark. The nearest important resistance level is at around 7,900-8,000. On the other hand, the support level is now at 7,800. The Nasdaq futures contract remains above the short-term upward trend line, as we can see on the 15-minute chart:

Big Cap Tech Stocks Extend Their Gains

Let's take a look at the Apple, Inc. stock (AAPL) daily chart (chart courtesy of The stock accelerated its uptrend recently and it broke above the $200 level. Yesterday the market reached another new medium-term high, but then it closed slightly lower:

Now let's take a look at the daily chart of Microsoft Corp. (MSFT). The stock reached yet another new record high yesterday. The market continues to trade above the three-month-long upward trend line. Today it will likely accelerate the uptrend following yesterday's better-than-expected quarterly earnings release. Then we may see a short-term topping pattern and some profit-taking action:

Dow Jones Going Sideways

The Dow Jones Industrial Average broke above its February local high recently and it extended the medium-term uptrend. The next resistance level is at around 26,800-27,000, marked by the last year's topping pattern and the record high of 26,951.8. On Tuesday the blue-chip stocks' gauge reached another new medium-term high. There have been no confirmed negative signals so far. However, we can see some negative technical divergences:

Nikkei Relatively Weaker

Let's take a look at the Japanese Nikkei 225 index. It accelerated the downtrend in late December, as it fell slightly below the 19,000 level. Then it was retracing the downtrend for two months. In March the market went sideways. Recently it broke above the 22,000 mark. The Japanese stock market remains relatively weak, as it continues to trade well below its last year's local highs:

The S&P 500 index broke above its short-term consolidation on Tuesday and it got very close to the record high of 2,940.91. The broad stock market may reach new record highs, as investors' sentiment remains very bullish ahead of quarterly corporate earnings releases. However, we can see short-term technical overbought conditions that may lead to a downward correction at some point.
Concluding, the S&P 500 index will likely open virtually flat today. We may see an attempt at breaking above the last year's record high. Investors will await more quarterly corporate earnings releases.
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Paul Rejczak
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care

Source: Sunshine Profits

Press Release | SEC Announces Members of Small Business Capital Formation Advisory Committee

4 minutes

Washington D.C., April 25, 2019 —

The Securities and Exchange Commission today announced the inaugural members of the Small Business Capital Formation Advisory Committee. The Committee will hold its first meeting on Monday, May 6, 2019, at the SEC’s headquarters in Washington, D.C.
The Committee was established by the SEC Small Business Advocate Act of 2016, and is designed to provide a formal mechanism for the Commission to receive advice and recommendations on Commission rules, regulations and policy matters relating to small businesses, including smaller public companies.  The Committee replaces the Advisory Committee on Small and Emerging Companies, whose term expired in 2017.
Chairman Jay Clayton and Commissioners Robert Jackson, Hester Peirce, and Elad Roisman said, “We are excited to have this important advisory Committee up and running.  As the Commission continues to focus on facilitating capital-raising opportunities for small- and medium-sized businesses and expanding investment opportunities for retail investors, input and expertise from such an experienced and diverse set of companies, entrepreneurs, and investors will be invaluable.”
Commission-appointed Committee members include:
  • Robert Fox - National Managing Partner, Professional Standards Group, Grant Thornton LLP; Chicago, IL
  • Carla Garrett - Corporate Partner, Potomac Law Group PLLC; Washington, DC
  • Stephen Graham - Co-Chair, Fenwick & West LLP’s Life Sciences Practice; Seattle, WA
  • Sara Hanks - CEO and Co-Founder, CrowdCheck, Inc.; Alexandria, VA
  • Youngro Lee - CEO and Co-Founder, NextSeed; Houston, TX
  • Brian Levey - Chief Business Affairs and Legal Officer, Upwork Inc.; Mountain View, CA
  • Terry McNew - President and CEO, MasterCraft Boat Holdings; Vonore, TN
  • Sapna Mehta - General Counsel & Chief Compliance Officer, Rise of the Rest Seed Fund; Associate General Counsel, Revolution; Washington, DC
  • Karen Mills - President, MMP Group, Inc.; Boston, MA
  • Catherine Mott - Founder and CEO of BlueTree Capital Group, BlueTree Allied Angels, and BlueTree Venture Fund; Pittsburgh, PA
  • Poorvi Patodia - CEO and Founder, Biena Snacks; Allston, MA
  • Jason Seats - Chief Investment Officer, Techstars; Austin, TX
  • Jeffrey M. Solomon - Chief Executive Officer, Cowen, Inc.; New York, NY
  • Hank Torbert - President, AltaMax, LLC; New Orleans, LA
  • Gregory Yadley – Partner, Shumaker, Loop & Kendrick, LLP; Tampa, FL
Committee members will also include the SEC’s Advocate for Small Business Capital Formation, Martha Legg Miller, and three non-voting members appointed by each of the SEC’s Investor Advocate, the North American Securities Administrators Association, and the Small Business Administration.  The Committee will also have an observer appointed by the Financial Industry Regulatory Authority.

Source: SEC

SEC Press Release | SEC Charges Truckload Freight Company With Accounting Fraud

3-4 minutes

The Securities and Exchange Commission today charged Indianapolis-based Celadon Group Inc. with an accounting fraud that allowed the truckload freight company to avoid disclosing substantial losses and misrepresent its financial condition.
In a complaint filed in federal court in Indianapolis, the SEC charged that between mid-2016 and April 2017, Celadon avoided recognizing at least $20 million in impairment charges and losses – almost two-thirds of its 2016 pre-tax income – by selling and buying used trucks at inflated prices from third parties. According to the complaint, as a result of the alleged scheme, Celadon overstated its pre-tax and net income and earnings per share in its annual report for the period ending June 30, 2016, and in its subsequent public filings for the first two fiscal quarters of 2017.
“We allege that Celadon knowingly engaged in a multi-faceted scheme to hide at least $20 million in losses from its investors, and lied to its auditors to conceal the scheme,” said Joel R. Levin, Director of the SEC’s Chicago Regional Office. “We will continue to hold issuers accountable for such serious breaches of trust to the investing public.”
The SEC’s complaint charges Celadon with fraud and with reporting, books and records, and internal control violations. Celadon admitted to those violations and agreed to a permanent injunction and to remediate the material weaknesses in its internal control over financial reporting. Celadon has also agreed to pay $7 million in disgorgement, which will be deemed satisfied by Celadon’s payment of restitution in an action announced today by the Department of Justice. The settlement is subject to court approval.
The SEC’s case against Celadon is the latest in a line of actions brought against companies or their executives for committing accounting fraud, by entering into sham agreements with third-parties, suppliers or customers, including SEC v. Tangoe, Inc. et al., 3:18-cv-01479 (D. Conn. 2018); SEC v. Axesstel, Inc., et al., 3:18-cv-01486-L-AGS (S.D. Cal. 2018); SEC v. Bhushan Dandawate, No. 18-cv-4927 (N.D. Ill., 2018); SEC v. Quadrant 4 System Corp., et al., No. 17-cv-4883 (N.D. Ill., 2017).
The SEC’s investigation, which is continuing, is being conducted by Jaclyn Janssen, Trevor Schumacher, Jonathan Polish, Thomas E. Vincus, and Amy S. Cotter of the Chicago Regional Office. 
The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of Indiana, the Department of Justice, Fraud Section, Criminal Division, the Federal Bureau of Investigation’s Indianapolis Division, and the U.S. Postal Inspection Service.

Source: SEC

Europe Markets Closing Report | European markets close lower amid earnings; Deutsche Bank and Commerzbank merger talks collapse

Chloe Taylor,Sam Meredith

European stocks were trading lower on Thursday as market participants monitored another deluge of corporate earnings.

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European Stoxx 600 closed provisionally down 0.24% during deals, with most sectors and major bourses in negative territory.
Europe’s construction stocks were among those leading the losses, down 0.96%. Britain’s third-largest homebuilder Taylor Wimpey saw its shares lose more than 5%, after research from real estate website Zoopla showed house sales in London had plunged 20% since 2015, with house prices in the U.K. capital at a 7 year low.
British construction firm Balfour Beatty’s stock was down more than 2% on the back of the news.
Market focus is also largely attuned to corporate results, with investors reacting to another flurry of reports.
Nokia plummeted to the bottom of the European benchmark after reporting a surprise quarterly loss on Thursday, citing tough competition in its core networks business. Shares of the Finnish telecom network equipment maker tumbled 9%.
Shares of British bank Barclays were down 3.6% after first-quarter profit fell 10% compared to a year ago. Elsewhere in the sector, UBS reported a $1.14 billion net profit for the first three months of the year as improving market conditions at the end of the quarter helped to soften a hit to trading revenues and client activity. The 27% drop in earnings for Switzerland’s largest bank still beat analysts’ expectations. Shares closed 1.2% higher during afternoon deals.
Merger talks between Germany’s top two lenders, Deutsche Bank and Commerzbank, ended in failure on Thursday. The banks cited the need for extra capital, restructuring costs and execution risks as the reasons why the merger would not be in their best interests. Commerzbank’s shares were down 2.29%, while shares of Deutsche Bank were around 1.5 % lower on the news.
Meanwhile, the proposed merger between Sainsbury and Asda was blocked by the U.K.’s competition watchdog on Thursday. The Competition and Markets Authority said the merger would raise prices for consumers and lead to longer checkout queues. Shares of Sainsbury were down almost 4.7%.
On the data front, Spain’s unemployment rate edged closer to 15% over the first three months of 2019. The official figures continue to underline a weak link in the economy days before a hotly contested election.
The rate rose to 14.7% in the three-month period to March, up from 14.45% in the final three months of 2018.

Source: CNBC

Keiser Report Video | Dead Stocks Walking (E1375).

Company News | Comcast is in talks to sell its 30% stake in Hulu to Disney

Alex Sherman

Comcast has had a frustrating run as a partial owner of video streaming platform Hulu, but that doesn’t make the decision to sell its minority stake in the company any easier.
Disney and Comcast are holding talks about working out a deal for Comcast’s 30% stake, according to people familiar with the matter. Comcast is now weighing the pros and cons of doing a deal now rather than later, said these people, who asked not to be named because the discussions are private. It’s still unclear if a deal will transpire.
The two companies are the last remaining owners of a company that was originally founded as a joint venture between several media giants. Hulu last week bought back a 9.5% stake in itself from Time-Warner owner AT&T, in a deal that values Hulu at $15 billion. That 9.5% stake will be split between Disney and Comcast, unless Disney consolidates the entire company.
“On Hulu, the relationship with NBC, it’s very much in everybody’s interest to maintain,” Comcast CEO Brian Roberts said Thursday during an interview on CNBC’s “Squawk Box.” “And we have no new news today on it, other than it’s really valuable. And we’re really glad we own a large piece of it.”
For years, Comcast was barred from having a say in Hulu’s direction — part of a consent decree Comcast agreed to when it acquired NBCUniversal in 2011. (NBCUniversal is the parent company of CNBC.)
Seven years later, Comcast’s ownership in Hulu switched from passive to active, when the consent decree expired in 2018. That gave Roberts and NBC CEO Steve Burke some say in the company’s future.
But just as Comcast came off the sidelines, 21st Century Fox agreed to sell its 30% stake in Hulu to Disney. That deal, which closed last month, effectively silenced Comcast once again. Instead of being an equal owner with Fox and Disney, Comcast now owns a minority stake to Disney’s 60%.
“Fifty years from now will we be in Hulu? No, I don’t think we will,” Burke told Variety in January. “But I don’t think we’ll sell in five minutes.”
As of today, NBC provides about 17% of Hulu’s content. NBC has no plans to remove content from Hulu, which will continue to serve as NBC’s vessel for same-season shows even after the launch of the company’s new streaming service in 2020, according to people familiar with the matter. (NBC’s streaming service will showcase the company’s library of TV shows and movies.)
There are compelling reasons for Comcast to hold and to sell. Here’s what Comcast is debating, according to people familiar with the company’s thinking.
The case to hold
There are several reasons for Comcast to hold on to its stake.
Valuation. If Comcast believes in Hulu, the biggest reason to hold is valuation appreciation.
Right now, Hulu has 25 million subscribers, less than half of Netflix’s 58 million paying U.S. customers. But Netflix’s valuation, at $167 billion, is more than 11 times that of Hulu. While Hulu’s valuation has expanded from $5.8 billion to $15 billion since August 2016, a gain of 158%, Netflix has gained more than 300% over the same period.
If Comcast expects Hulu’s value to rise as much as Netflix, it would be silly to sell now unless Disney offers an insanely high premium.
Negative controls. While Comcast doesn’t have majority control over Hulu, it does hold so-called negative controls on Hulu. These rights give Comcast certain veto power over different corporate actions associated with the company. While the specifics are private, protective provisions typically include veto power over raising capital, paying dividends, future acquisitions and potentially going public. Three of Hulu’s nine board members are from Comcast/NBCUniversal — Jeff Shell, Linda Yaccarino and Matt Bond.
Future leverage. Keeping control of 30% of Hulu is also leverage for Comcast over Disney. If Comcast ever wants a Disney asset down the road, the minority stake would give Roberts and Burke a bargaining chip.
The case to sell
Valuation. Just as valuation is the main reason to hold, it’s also ultimately the reason to sell.
Comcast and NBC have long been skeptical of the business model behind streaming video. This is why NBC decided to hold back on going whole hog into streaming video like Disney has done with Disney+. Burke has viewed Netflix skeptically over the years, suggesting the company may not be able to live up to its lofty valuation.
“To be worth $150 billion, someday you’ve got to make at least $10 billion in EBITDA,” Burke told CNBC last year. “There’s at least a chance Netflix never makes that.”
If Comcast doesn’t believe in Hulu, especially under Disney’s control, there’s simply no point in dragging this on. Keeping a stake in a company it doesn’t control may not be the best use of Comcast’s funds.
Losses. Hulu will lose $1.5 billion this year, Disney said at its investor day last month. The company won’t turn profitable until about 2024, Disney estimated, and that’s not taking into account potential international expansion, which will come with its own added costs.
If Comcast wants to rid itself of those losses and take the cash from a sale to pay down debt from its $39 billion acquisition of Sky, selling soon may be an appealing option. Comcast also pays a dividend and could use the cash to support it. At a valuation of $15 billion, Comcast would walk away with $4.5 billion from the sale. (Comcast has more than $100 billion in debt).
Strategic reasons. Comcast’s minority control means that Hulu does not always match the company’s long-term strategic plans.
For instance, Hulu would probably be ad supported today if Comcast had an active say in the company’s plans, one of the people said. NBCUniversal’s preference with streaming video is to include ads, as it’s doing with its upcoming service.
Selling the Hulu stake also would remove this strategic uncertainty — and could help right a severely strained relationship with Disney, which bubbled over when the companies battled over 21st Century Fox last year.
Comcast and Hulu declined to comment on this story. Disney did not respond to requests for comment.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.
Watch: What Hulu’s stake buyback from AT&T means for the streaming wars

Source: CNBC

Analysis | The Cybersecurity 202: Cybersecurity proposal pits cyber pros against campaign finance hawks

By Joseph Marks


Democratic presidential candidate Hillary Clinton, center, accompanied by campaign manager Robby Mook. (Andrew Harnik/AP)
The Federal Election Commission could decide today whether nonpartisan groups can offer political campaigns free cybersecurity services, an issue that has made bedfellows of Republicans and Democrats but divided cyber pros and campaign finance hawks.
The proposal’s authors, Hillary Clinton’s 2016 campaign manager Robby Mook and Mitt Romney’s 2012 campaign manager Matt Rhoades, come to the issue from bitter experience. The Romney campaign was targeted by Chinese hackers, and Clinton’s campaign was upended by a Russian hacking and disinformation operation aimed at helping  Donald Trump.
The bipartisan duo want to help presidential and congressional campaigns steer clear of similar hacking operations by allowing nonprofits to provide cybersecurity free of charge. But first they need the FEC to say those services don’t amount to an illegal campaign contribution.
“This is warfare,” Mook told FEC commissioners during a review of the proposal April 11. “People are trying to disrupt our democracy.”
The plan is a hit with many cybersecurity pros who say campaigns aren’t equipped to defend themselves against sophisticated, government-backed hacking operations from Russia and China, and think this might level the playing field.
Good-government advocates, however, say the proposal creates a loophole for cybersecurity and tech companies -- or other nonprofit groups -- to secretly curry favor with politicians. It's not just the bipartisan group that could offer protections for free, but any nonprofit that wants to.
“You can go to a lawmaker and say, ‘Hey, remember the time that the Russians tried to hack your campaign and we caught them and didn’t even charge you for it? You owe us,’ ” Adav Noti, chief of staff at the Campaign Legal Center, told me.
Mook and Rhoades plan to offer the services through a nonprofit corporation called Defending Digital Campaigns and would rely partly on volunteer services from cybersecurity professionals. The project grew out of a separate initiative they helped launch at Harvard University’s Belfer Center about eight months after the Clinton defeat called Defending Digital Democracy.
Cybersecurity assistance would be particularly helpful for first-time congressional candidates and non-incumbents who don’t have large war chests to hire private sector cybersecurity companies, they told FEC commissioners this month.
That’s especially important because foreign hackers could target those campaigns, looking to cut short the careers of rising stars or to stow away compromising information to be deployed later in their careers, they said.
Mook and Rhoades declined through a Belfer Center spokeswoman to comment in advance of today’s hearing.
Their FEC proposal is narrowly tailored to avoid sparking many ethics concerns.
Mook and Rhoades's organization is officially nonpartisan and would provide services to any campaign that meets minimum criteria – including third-party candidates.
For presidential races, campaigns would have to register 5 percent of support in polling from likely voters. House candidates would be eligible once they’d raised at least $50,000 in donations and Senate candidates would have to raise at least $100,000.
That still sparks concern among campaign finance advocates, however, who note that plenty of organizations might be nonpartisan but still seek special treatment from politicians.
“Influence buying is not lessened by the fact a company does it on both sides of the aisle,” Noti said.
Noti’s organization wrote one of at least three advisory opinions the FEC will be mulling today.
Its proposed opinion says it’s legal for the group to provide campaigns free cybersecurity services – but only because the prospect of those campaigns being hacked by foreign governments is far worse than the prospect of cyber pros gaining undue influence. If the threat of election hacking diminishes or the government comes up with a better way to defend campaigns, then the opinion would be invalidated.
Two other proposed opinions – both drafted by the commission itself -- focus more narrowly on whether the cybersecurity assistance is a campaign contribution. One says it’s a contribution (and thus illegal) and the other says it isn’t a contribution (and thus is legal). Other proposed opinions might be submitted in advance of the meeting.
FEC advisory opinions represent the commission’s best judgment about whether something is legal or isn’t -- but they don’t carry the weight of, say, a judge’s ruling.
Other organizations could use the advisory opinion as legal cover if they wanted to offer campaigns free cybersecurity help -- but they’d have less cover the more dissimilar they are from Defending Digital Campaigns. Groups that only wanted to offer assistance to Republicans or Democrats, for example, would not have a good case.
The FEC first received the Rhoades and Mook proposal in October but has deferred ruling on it several times to future meetings. During the April 11 meeting several commissioners praised the proposal’s goals but also fretted about the precedent for campaign contribution rules.
Chairwoman Ellen Weintraub, for example, said she worried the request would “blow a hole through” the ban on corporate contributions.
“I would like to support this endeavor,” she said. “I also have an obligation to protect the law.”
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Rep. Cheri Bustos (D-Ill.) speaks to her constituents from Illinois' 17th District. (Melina Mara/The Washington Post)
PINGED: Congressional Democrats are ratcheting up pressure on their Republican counterparts to pledge not to use hacked emails and other material as campaign fodder.
Rep. Cheri Bustos (D-Ill.), chairwoman of House Democrats’ national campaign committee, asked her Republican counterpart to steer clear of hacked material Wednesday, renewing a claim Democrats have made since 2016, my colleague Mike DeBonis reports.
“There is no question that agents of the Russian government and other bad actors will attempt to infiltrate both the [Democratic Congressional Campaign Committee] and [National Republican Congressional Committee] to steal information for malicious use again in this upcoming election,” Bustos wrote in a letter to Rep. Tom Emmer (R-Minn.).
The request comes after Democratic National Committee Chairman Tom Perez made a similar pledge Monday and called on his Republican counterpart Ronna McDaniel to do the same.
“The pledge that Bustos describes in her letter to Emmer covers several points, including a promise not to ‘participate, aid or encourage hackers or foreign actors,’ not to seek out hacked or stolen materials, not to use or covertly circulate known hacked or stolen materials, not to support any campaign or outside group that uses those kinds of materials, and to contact law enforcement if any related illicit activity is suspected,” Mike reported.
Newsrooms, meanwhile, haven’t created hard-and-fast rules about how to treat information leaked by foreign hackers – but they’re thinking far more seriously about the question than in 2016, CNN Business’s Oliver Darcy and Donnie O’Sullivan report.
As the 2020 campaign kicks off, “most of the news organizations that CNN Business contacted … did not reveal any sweeping changes to [their] rules about publishing hacked materials,” Darcy and O’Sullivan reported. “But they did make a case for publishing with care and context that is valuable to voters who read their stories.”

A sign above the headquarters of Kaspersky Lab in Moscow. (AP Photo/Pavel Golovkin, File)
PATCHED: A government and industry initiative led by the Homeland Security Department is aiming to release its first round of plans for a major effort to secure U.S. industry supply chains against cyberattacks by the end of the summer, officials said Wednesday.
The plan is a shift for DHS, which has typically focused on securing computer networks by finding and rooting out attackers rather than by excluding components that are especially vulnerable to hacking or are manufactured by suspect companies.
The effort was partly sparked by DHS’s 2017 decision to ban federal agencies from using the Russian anti-virus company Kaspersky, which officials feared could be a conduit for Kremlin hacking.
The supply chain plans will include early drafts of a proposal for how and when government and industry can work together to create lists of qualified manufacturers for certain highly sensitive technology systems, Bob Kolasky, who leads DHS’s National Risk Management Center, told reporters in a conference call.
Those plans will likely focus on instances where the component is vital to U.S. cybersecurity but the number of suppliers is large enough that creating qualified manufacturer lists won’t unfairly damage competition, Kolasky told me after the call. Officials haven’t worked out who will write the lists or ensure companies abide by them, he said.
Another work stream is looking at how to retrofit government and industry groups that currently share information about imminent hacking threats to also share information about supply chain threats, Kolasky said.

PWNED: The National Security Agency is recommending that the Trump administration abandon a controversial surveillance program revealed by leaker Edward Snowden that collects information about U.S. phone calls and text messages, the Wall Street Journal’s Dustin Volz and Warren P. Strobel report.
After years arguing the program was vital to national security, officials now say “the logistical and legal burdens of keeping it outweigh its intelligence benefits,” Volz and Strobel report.
“The latest view is rooted in a growing belief among senior intelligence officials that the spying program provides limited value to national security and has become a logistical headache,” the Journal reports, also citing “frustrations about legal-compliance issues [that] forced the NSA to halt use of the program earlier this year.”
NSA’s legal authority to run the program will expire in December unless Congress reauthorizes it.
Cybersecurity news from the public sector:

Reports that Prime Minister Theresa May will let Huawei supply antennas and other “noncore” infrastructure to the UK 5G networks but not to the telecommunications core may prompt an outpouring of muddled speculation. We can consider some of the more confusing issues.

The success of Cyber Command can be measured in actions taken by other government agencies, according to Brig. Gen. Timothy Haugh.

Election tech companies are telling the world they are fixing their cybersecurity issues. Will the changes they make satisfy everyone ahead of 2020?

An executive order renames the Defense Security Service and sets a timeline for the office to take over background investigations for the entire federal community.
Cybersecurity news from the private sector:

The potential fine would represent the largest privacy-related civil penalty the FTC has imposed.
Elizabeth Dwoskin and Tony Romm

It allows users to flag posts that attempt to mislead users about registering to vote or cast a ballot; identification requirements; and the date and time of an election.
Hamza Shaban

Microsoft has proposed scrapping a policy in Windows that requires users to periodically change their login password.
Cybersecurity news from abroad:

Robust internal networks will keep the military and government operating, says Putin’s top IT advisor.
Defense One