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Mon, 20th February 2017

Anirudh Sethi Report

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Archives of “February 2, 2017” Day

Apple readies to sell up to $8bn in new bonds

Apple was finalising plans to borrow between $6bn and $8bn on Thursday after the iPhone maker reported a rebound in revenue growth in its latest quarter, according to two investors and a banker with knowledge of the bond sale.

The funds will be used for general corporate purposes, including share buybacks and the issuance of dividends, according to a filing with US securities regulators

Apple, which has $246bn of cash on its balance sheet, has turned to debt markets to finance an expanding shareholder return programme. More than 90 per cent of its cash is held overseas by foreign subsidiaries, as it seeks to avoid taxes tied to repatriating that money to the US.

The company was planning to offer notes across nine tenors, including three floating rate notes that mature in 2019, 2020 and 2022. The fixed rate notes span two- to 30-year maturities. Initial price talk on the company’s new 10-year bonds was set at 110 basis points above Treasuries, for a yield of roughly 3.56 per cent.

Apple’s 2026 maturing notes, which it sold last year with a yield of 2.48 per cent, traded hands with a yield of 3.29 per cent on Thursday.

Deutsche Bank, Goldman Sachs and JPMorgan led the offering.

Cable slips to a fresh session low, what’s next

GBP/USD back under pressure

The ebb in selling after the Bank of England decision has ended and the pound is back under pressure.

The latest round of selling took out the important short-term support at 1.2540. If we close at these levels it would leave an outside bearish day on the chart and highlight the failure to break 1.27.

Cable has had a nice rebound but it will be tough to sustain anything but short covering until after the Article 50 announcement comes.

Amazon Signs 50-Year Lease On 900-Acre Air Cargo Hub To House 40 “Prime Air” Jets

Watch out FedEx, here comes Amazon Prime Air.  And, if history is any guide, Amazon may be quite happy to provide your cargo services at a discount to costs, which we suspect your shareholders, unlike Amazon’s, will find to be sub-optimal. 

According to the Consumerist, Amazon has signed a 50-year lease on a 900-acre cargo hub at the Cincinnati/Northern Kentucky International Airport intended to house a fleet of 40 Prime Air jets.  Amazon is expected to invest $1.5 billion in the facility in return for $40 million in tax incentives from the State of Kentucky.  

The facility is located at the Cincinnati/Northern Kentucky International Airport, less than 100 miles away from the 1,200-acre UPS Worldport in Louisville. That’s right near the massive Amazon fulfillment center in Hebron, KY, and the e-commerce behemoth has signed a 50-year lease on 900 acres of property from the airport. Amazon is investing $1.5 billion in the hub, which will receive $40 million in tax incentives from the state of Kentucky over ten years if Amazon meets job targets.

Only 16 of the 40 Prime Air cargo jets that Amazon has leased are in service now, and the Cincinnati/Northern Kentucky hub is meant to serve as their home once they’re all in the air. Amazon began its air operation at what used to be the DHL domestic hub at a decommissionedd Air Force base in Ohio, northeast of Cincinnati.

Prime Air

The world is in trouble but don’t worry, I’ll fix it

  • When you hear about the tough phone calls I’m having, don’t worry about it. Just don’t worry about it.”
  • “The world is in trouble, but we’re gonna straighten it out. That’s what I do, I fix things.”
  • “When I left the Apprentice, they hired a big, big movie star to take my place, Arnold Schwarzenegger, and we know how that went; the ratings went right down the tubes, it’s been a total disaster”
  • “I just want to just pray for Arnold, if we can, for those ratings” he jokes about The Apprentice.
  • Says will do everything possible to protect religious freedoms
  • All nations have a duty to confront violence against Christians by Islamic State

Just another day in Trump-land.

Maran brothers, other accused discharged in Aircel-Maxis case

In a surprising turn of events, a special Central Bureau of Investigation (CBI) court on Thursday dropped all charges brought by both CBI and the Enforcement Directorate against former telecom minister Dayanidhi Maran and others accused in the Aircel-Maxis case.

“All the accused stand discharged,” said special CBI judge O.P Saini, while pronouncing the order.

The court gave Dayanidhi Maran, his brother Kalanithi and others a clean chit. It did not find them guilty of the charges made out in the chargesheet.

The Aircel-Maxis case is related to allegations that as telecom minister, Dayanidhi Maran used his influence to coerce Aircel owner, C. Sivasankaran, into parting with his stake in the company to T. Ananda Krishnan-led Maxis Communications Berhad.

This was allegedly done in lieu of investments by the Malaysian company through an arm in Sun Direct TV Pvt. Ltd. Dayanidhi Maran is one of the promoters of Sun Direct and was telecom minister between 2004-07.

The CBI had filed a chargesheet against the Maran brothers, Ralph Marshall, Maxis owner T. Ananda Krishnan, and four companies—Sun Direct TV, Astro All Asia Networks Plc, Maxis Communications Berhad, and South Asia Entertainment Holdings Ltd, Malaysia. Marshall was the CEO of Astro All Asia Networks.

SEBI asks brokers to liquidate all futures and options positions of Vijay Mallya

Markets regulator Sebi has directed brokers to square off all existing open positions in the equity derivatives segment they hold for Vijay Mallya and the six former officials of United Spirits who were banned from the market last week.

The fresh directive by the capital market regulator has been made through an e-mail to stock exchanges yesterday.

“The trading members are advised to square off existing open positions in the futures and options segment, if any, for the persons/entities mentioned in the above order and also ensure that no fresh positions are created for the said persons/entities,” an NSE circular said quoting the Sebi directive.

However, the regulator has not given them a time-line to do so.

Sebi had last week through an interim order, barred Mallya and six former officials of USL from entering the market, after the CBI charge-sheeted them in a money laundering case involving a loan IDBI Bank.

The CBI also charge-sheeted and arrested eight IDBI Bank officials, including its former chairman Yogesh Aggrawal in the case for their role in bypassing lending norms to extend Mallya Rs 950 crore loan in 2010.

Narendra Modi is doing everything he can to get votes: Jim Rogers

What is your interpretation of the Budget proposals?

It was certainly a populist budget. Mr Narendra Modi knows that he has an election coming up. He certainly has heard from a lot of people and is trying to make those people feel better. The demonetisation move, even if it was a good, it was badly done. He has surely hurt a lot of people and is now trying to appeal to them. Mr Modi is doing everything he can to get votes.

Having said that, I am always in favour of tax cuts, but unfortunately in India’s case, tax cuts will make the debt situation much worse. India already has very high debt-to-GDP (gross domestic product) ratio. This is one reason that India hasn’t been able to do as well as it could have otherwise. So, yes everybody is in favour of infrastructurespending, and India desperately needs it, everyone is also in favour of tax cuts – including me, unfortunately the overall economic picture does not look good.

What more would you have liked to see in terms of policies for specific sectors?

Mr Modi will seek a re-election and a new term at the helm in two years from now. A big debt problem will not impact the outcome in 2019 too much. However, a big debt problem will be a problem for the Indian economy. I was very pleased to see that he is privatising the railroads more, which is a good move for the country and its economy – if it actually happens. As a result, the infrastructure will improve, and I am all for it. He should also free up the economymore and also the investment markets. It is still difficult for foreigners to invest in India. The government must realise that we do not live in 1917, but in 2017! The government does need to open up the economy more.

Do you think that the Budget has been able to assuage / calm the nerves of foreign investors, especially after the sudden demonetisation move last year?

Well, the budget will certainly appeal to investors if you cut a lot of taxes and increase infrastructure spending. More spending by the government will make the economy better – at least in the short-to-medium term. So from that point of view, investors will like it.

Would you look to invest in India now?

Shell earnings up 14% in fourth quarter

Image result for shellRoyal Dutch Shell reported a 14 per cent increase in fourth quarter earning and said it was making progress towards recovery from a two-year downturn.

Earnings on a current cost of supply basis, the measure most closely watched by investors, were $1.8bn excluding exceptional items. This compared with $1.6bn in the same period last year but was well below analysts’ consensus forecast for $2.79bn. Shell said deferred tax reassessments had weighed on the results.

The worse-than-expected results will disappoint investors who had hoped for a stronger show of momentum on the back of recent recovery in oil prices.

Earnings from upstream production and exploration were $35m, a fraction of the $223m expected by analysts. Downstream earnings were $1.58bn, compared with a consensus forecast for $1.71bn.

Mr van Beurden said: