• Tag Archives Credit Suisse
  • Dan Loeb Is Now Nestle’s 6th Largest Shareholder; Goes Activist On World’s Biggest Food Company

    Dan Loeb has returned to his earthshaking activist roots, and in a letter released moments ago, Third Point announced it is now targeting the world’s largest food company, with its biggest bet on a public company in its history, amounting to $3.5 billion.
    In the letter, Third Point announced that it currently owns roughly 40 million shares of Nestle, and that its stake, which is held in a special purpose vehicle raised for this opportunity including options, currently amounts to over $3.5 billion. Putting this number in the context of Nestle’s market cap of $264 billion, Loeb may have an uphill battle though that never stopped him before.
    Loeb’s stake of 40 million shares makes him the 6th largest holder of Nestle, above Credit Suisse Asset Management with 38 million shares and below Massachusetts Financial Services Company with 56.8 million. The Top 4 holders are BlackRock, CapRe, Norges Bank, and Vanguard.
    Third Point writes that “despite having arguably the best positioned portfolio in the consumer packaged goods industry, Nestl shares have significantly underperformed most of their US and European consumer staples peers on a three year, five year, and ten year total shareholder return basis. One year returns have been driven largely by the market’s anticipation that with a newly appointed CEO, Nestl will improve.”
    While the problems are clear, why did Third Point go activist? To maximize value of course, as It explains:

    This post was published at Zero Hedge on Jun 25, 2017.

  • “Robots, Drones” Mean Mass Layoffs For Whole Foods Employees

    When describing the logic behind Amazon’s blockbuster acquisition of Whole Paycheck Foods, a deal that made the “greedy bastards” over at Jana Partners $400 million richer in just a few months, Credit Suisse analyst Stephen Ju explained that he views this acquisition as “an offensive expansion move to accelerate its progress in the largest consumer spend category. In other words, Amazon is paying roughly 3% of its enterprise value for an improved position in an addressable segment that amounts to ~$1.6 trillion according to the US Dept. of Agriculture’s ERS, especially as progress at Amazon Fresh (in terms of regional rollout) has been admittedly slower than we expected.”
    He may be correct in the long-run but in the medium-term, Amazon Foods faces major hurdles, including a significant slowdown in how much Americans spend at food and beverage stores…

    This post was published at Zero Hedge on Jun 17, 2017.

  • Quants Dominate The Market; Unexpectedly They Are Also Badly Underperforming It

    Two days ago, JPM’s head quant made a striking observation: “Passive and Quantitative investors now account for ~60% of equity assets (vs. less than 30% a decade ago). We estimate that only ~10% of trading volumes originates from fundamental discretionary traders.” In short, markets are now “a quant’s world“, with carbon-based traders looking like a slow anachronism from a bygone era.
    Bloomberg confirmed as much today, when looking at another divergence between quant funds and traditional, discretionary managers: “systematic strategies have barely budged from near-record participation in U. S. stocks. Meanwhile, fundamental equity long-short managers can’t afford to be anything but picky, considering the market’s narrow leadership. The result: the largest gap on record between humans’ and computers’ gross exposure to U. S. equities, data compiled by Credit Suisse Group AG show.”

    This post was published at Zero Hedge on Jun 15, 2017.

  • Which States Have Suffered The Biggest Retail Losses

    With the great retail bankruptcy tsunami claiming its latest victim on Thursday, when Gymboree announced it wouldn’t make its June 1 interest payment guaranteeing a Chapter 11 bankruptcy filing in the next month, the signs continue to mount that the next “big short” – either in the form of REITs, CMBS, CMBX, or single name stocks as discussed here – is shorting America’s bloated retail sector in general, and that staple of US “bricks and mortar” retailers in particular, the mall.
    As a reminder, last week Credit Suisse made the remarkable prediction that over the next five years, no less than 25% of US mall will close, which in light of the record store closures in just the first five months of the year…

    This post was published at Zero Hedge on Jun 3, 2017.

  • The Internet Helped Kill Inflation In America, Says Credit Suisse

    Whether or not San Francisco Fed President John Williams is right about US inflation and employment being about as close to the central bank’s targets as investors have seen – as he told CNBC two days ago – is irrelevant: The central bank is going to raise interest rates two more times this year no matter what happens to consumer prices, says Credit Suisse Chief Investment Officer for Switzerland Burkhard Varnholt.
    That’s because it’s pointless waiting around for prices to rise when the real reason inflation is low – and will likely remain low – has nothing to do with the Fed, but with a structural shift in the US economy that’s being driven by technology giants like Amazon and Uber. Burkdard says these companies have ‘turned most companies and sectors into price takers rather than price makers.”
    ‘Well look, inflation has been gone for quite some time and what’s really killed inflation clearly isn’t the Federal Reserve’s monetary policy but the Internet – it’s the sharing economy, the network economy it’s the uber-deflationary companies like Uber, Amazon, Airbnb and the like who have transformed most companies and most sectors into price takers rather than price makers.’

    This post was published at Zero Hedge on May 30, 2017.

  • These Eleven Retailers Will File For Bankruptcy Next, According To Fitch

    One month ago, we presented a stunning fact from Credit Suisse: barely a quarter into 2017, [annualized] year-to-date retail store closings have already surpassed those of 2008.
    According to the Swiss bank’s calculations, on a unit basis, approximately 2,880 store closings were announced YTD, more than twice as many closings as the 1,153 announced during the same period last year. Historically, roughly 60% of store closure announcements occur in the first five months of the year. By extrapolating the year-to-date announcements, CS estimates that there could be more than 8,640 store closings this year, which will be higher than the historical 2008 peak of approximately 6,200 store closings, which suggests that for brick-and-mortar stores stores the current transition period is far worse than the depth of the credit crisis depression.

    Another striking fact: on a square footage basis, approximately 49 million square feet of retail space has closed YTD. Should this pace persist by the end of the year, total square footage reductions could reach 147M square feet – or just over 5 square miles – another all time high, and surpassing the historical peak of 115M in 2001.

    This post was published at Zero Hedge on May 20, 2017.

  • The Case of the Missing U.S. Stocks

    In the last 20 years, the U. S. stock market has undergone an alarming change that too few people are aware of or talking about. Between 1996 and 2016, the number of listed companies fell by half, from 7,300 to 3,600, according to a recent report by Credit Suisse. This occurred despite the U. S. economy growing nearly 60 percent over the same period.
    What’s even more flummoxing is that the U. S. seems to be the only developed country that lost so many stocks. Most other countries actually gained around 50 percent.
    This matters because the U. S. stock market accounts for a little over half of the entire global equity market, meaning a huge (and growing) number of investors and fund managers now have fewer options to choose from than they did only a couple of decades ago.
    So why’s the pool of publically-traded companies shrinking? We can point to a few different culprits.
    For one, merger and acquisition (M&A) activity has strengthened in recent years, and when an M&A takes place, a company is consequentially delisted (if it was listed before the deal). The same thing happens, of course, when a company goes out of business.
    Another reason could be the growth of private capital, which allows companies to raise funds without having to go public. Between 2013 and 2015, the amount of private money invested in tech start-ups alone tripled from $26 billion to $75 billion, according to consulting firm McKinsey. As a result, more and more software firms are managing to reach $10 billion in value before their IPO. Think wildly successful companies like Dropbox, Airbnb, Pinterest, Uber – all of which, for now, have avoided selling shares to public investors.

    This post was published at GoldSeek on 10 May 2017.

  • S&P: These Ten Retailers Will File For Bankruptcy Next

    Three weeks ago, we reported that Fitch had put together a list of 8 retailers who were likely next in line to file for bankruptcy. The rating agency speculated that distressed legacy “bricks and mortar” outlets such as 99 Cents Only, rue 21, Gymboree and True Religion would follow what has already been a historic surge in retailers filing for Chapter 11 protection and/or shuttering stores. The Fitch list is below:
    Sears Holdings Corp (roughly $2.5 billion); 99 Cents Only Stores LLC; Charming Charlie LLC; Gymboree Corp.; Nine West Holdings Inc.; NYDJ Apparel LLC; rue21, Inc.; and True Religion Apparel Inc. Putting this list in context, over the weekend we presented a chart from Credit Suisse showing that on an annualized basis, some 8,640 – or more – stores would be closed in 2017, the highest number on record.

    This post was published at Zero Hedge on Apr 26, 2017.

  • “The Retail Bubble Has Now Burst”: A Record 8,640 Stores Are Closing In 2017

    ‘Thousands of new doors opened and rents soared. This created a bubble, and like housing, that bubble has now burst.’
    – Richard Hayne, Urban Outfitters CEO, March 2017
    The devastation in the US retail sector is accelerating in 2017, and in addition to the surging number of brick and mortar retail bankruptcies, it is perhaps nowhere more obvious than in the soaring number of store closures.
    While the shuttering of retail stores has been a frequent topic on this website, most recently in the context of the next “big short”, namely the ongoing deterioration in the mall REITs and associated Commercial Mortgage-Backed Securities and CDS, here is a stunning fact from Credit Suisse:“Barely a quarter into 2017, year-to-date retail store closings have already surpassed those of 2008.”
    According to the Swiss bank’s calculations, on a unit basis, approximately 2,880 store closings were announced YTD, more than twice as many closings as the 1,153 announced during the same period last year. Historically, roughly 60% of store closure announcements occur in the first five months of the year. By extrapolating the year-to-date announcements, CS estimates that there could be more than 8,640 store closings this year, which will be higher than the historical 2008 peak of approximately 6,200 store closings, which suggests that for brick-and-mortar stores stores the current transition period is far worse than the depth of the credit crisis depression.

    This post was published at Zero Hedge on Apr 22, 2017.

  • Credit Suisse bosses slash their bonuses by 40% to head off revolt

    Credit Suisse bosses have cut their bonuses by 40% in the hope of avoiding an embarrassing protest by shareholders and politicians at the bank’s annual meeting.
    The bank’s executives, led by chief executive Tidjane Thiam, had proposed paying themselves bonuses totalling 78m Swiss francs (62m) even though the Swiss bank lost SFr2.7bn last year and has been fined $5.3bn (4.2bn) by the US authorities for its role in the subprime mortgage crisis.
    Institutional investors and Swiss politicians had publicly criticised the bumper payouts – including a total of SFr12m for Thiam – and vowed to vote against the awards at the bank’s AGM later this month.

    This post was published at The Guardian

  • 9 Charts Showing Market Bears Are Waking Up

    Just when you thought it was safe to stride safely through the forest of stock market investing (hey – banks, Trump, hope, reform, stimulus, earnings, and Trump again); the bears are coming out of hibernation…
    The calm in stocks worldwide is giving way to concern, as Bloomberg reports investors in Europe and the U. S. are rushing to hedge against declines and a Credit Suisse index flashing a warning as the list of economic and political obstacles grows. As we detailed earlier,
    ‘While put demand has certainly increased over the past week, the biggest mover actually comes from the call-side,’ Xu said in a report dated Wednesday. ‘Falling call skew indicates investors see less potential for market upside going forward, perhaps in recognition of the increased macro and political headwinds.’

    This post was published at Zero Hedge on Apr 13, 2017.

  • Tax Authorities Still Hunting for More

    Credit Suisse was raided in the hunt for tax money all throughout Europe. They took out ads last Sunday in the Sunday Times, Sunday Telegraph and Observer in London, all saying that they were a ‘response to recent reports about tax probes in various European countries’. The hunt for taxes has continued to target Switzerland which the other governments blame for their own fiscal mismanagement. The prevailing view has embedded that the Swiss banks for years has helped wealthy individuals around the world to hide money. Previously, Credit Suisse, Switzerland’s second-biggest bank, in 2014 pleaded guilty and was fined $2.6 billion by U. S. authorities over charges it helped wealthy Americans evade taxes. It has also settled tax, dodging cases in Italy and Germany. The tax authorities of various government tasted first blood and now they are back for more.

    This post was published at Armstrong Economics on Apr 9, 2017.

  • Is the Global Taxman Coming?

    But who are they really going after?
    Credit Suisse is once again under international investigation for allegedly helping its clients evade the prying eyes of national tax authorities. This comes after the bank was fined $2.6 billion by the U. S. government in 2014 for helping Americans evade taxes.
    Helping high net worth private clients and corporations evade taxes, and then getting caught is not unique to Credit Suisse. Fellow Swiss megabank UBS and UK giant HSBC were fined hundreds of millions of dollars for their troubles.
    The banks are not just helping their clients evade taxes. In a report titled Opening the Vaults, UK-based charity Oxfam International revealed this week that in 2015, Europe’s 20 largest banks registered over a quarter of their profits in tax havens – well out of proportion to the level of real economic activity that occurs there. Once again, Luxembourg was a top destination for funds, while in Ireland the same banks recorded profits that were 76% higher than the global average in 2015. Only the Cayman Islands was found to have a higher profitability rate.

    This post was published at Wolf Street by Don Quijones ‘ Apr 1, 2017.


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    This post was published at Harvey Organ Blog on March 31, 2017.

  • Credit Suisse Offices Raided In Multiple Tax Probes: Gold Bars, Paintings, Jewelry Seized

    Credit Suisse has confirmed that the Swiss bank, some of its employees and hundreds of account holders are the subjects of a major tax evasion probe launched in UK, France, Australia, Germany and the Netherlands, setting back Swiss attempts to clean up its image as a haven for tax evaders.
    According to Bloomberg, Dutch investigators seized jewellery, paintings and even gold bars as part of a sweeping investigation into tax evasion and money laundering in the Netherlands. They added that the sums involved amounted to ‘many millions’ of lost tax revenue.

    This post was published at Zero Hedge on Mar 31, 2017.

  • You Know It’s A Global Debt Bubble When…

    With analysts noting that markets are “taking the Fed’s tightening policy in their stride,” demand for emerging-markets debt is so strong that Bloomberg reports one of Asia’s poorest nations is mulling a debut dollar-bond sale… Papua New Guinea.
    The southwest Pacific nation plans to raise $500 million in five-year bonds, central bank governor Loi Martin Bakani said Tuesday at the Credit Suisse Asian Investment Conference in Hong Kong. The country would join Mongolia among sub-investment grade issuers in 2017. Sales of high-yield bonds total almost $15 billion so far this year, according to data compiled by Bloomberg.
    ‘There is strong appetite for frontier issues — and markets have taken the Federal Reserve tightening policy in their stride,’ Stuart Culverhouse, chief economist at Exotix Partners LLP in London, said by phone. Issuers in the single-B tier — the second-highest in the junk rating scale — have found yields ‘are not prohibitively high for their financing needs,’ he said.

    This post was published at Zero Hedge on Mar 30, 2017.

  • Credit Suisse Shares Tumble On Report It May Sell $3 Billion In Stock

    First Deutsche Bank, now Credit Suisse: according to Bloomberg, the second largest Swiss bank, is also preparing to take advantage of euphoric markets and is considering selling stock valued at more than 3 billion Swiss francs ($3 billion) as it seeks to boost capital levels. The news sent the stock sliding.
    Bloomberg adds that Credit Suisse could seek to raise 10 percent of its market value, or about 3.1 billion francs, through an accelerated stock sale to institutions, which wouldn’t need investors to sign off. The lender is also speaking with advisers about raising as much as 5 billion francs, subject to shareholder approval, the people said.

    This post was published at Zero Hedge on Mar 23, 2017.

  • Deutsche: The Fed Gave Trump Just Enough Rope To Hang Himself With

    There has been no shortage of sellside reactions to last week’s Fed rate hike, which have run the gamut from congratulatory as per BofA and Credit Suisse, to the outright critical, as we showed last week in a note from Goldman Sachs, RBC and SocGen, all of whom accused the Fed of either misleading the market, or soon being being forced to double down on its hawkish message as a result of the dramatic easing in financial conditions as a result of a rate hike.
    A somewhat compromise take was provided by JPM’s quant Marko Kolanovic last week who shared the following reaction to the Fed hike:
    Fed Put and Buying the Dip: Early this month, the Fed surprised the market by telegraphing a March hike. At the time, investors started speculating whether this was a sudden hawkish turn, or even a politically motivated decision. We think it might have been the move of a prudent monetary Dove. Hiking in March, gives the Fed the option to skip June should there be market turmoil (e.g. related to French elections). Indeed, the market-implied probability of a June hike dropped yesterday from 60% to 50%. After the dovish hike yesterday, extreme short positioning in bonds, and the selloff in rate sensitive assets (such as precious metals and REITs) snapped back. The short squeeze in these assets could have some momentum in the next several days. The dovish Fed outcome implies that the ‘Fed Put’ is likely still alive and well…
    Which brings us to the latest, and most whimsical take yet, that of Deutsche Bank credit derivatives expert, Aleksandar Kocic, who usually tends to have some of the more unconvential views on monetary, or any other, policy. He did not disappoint on Monday, when in Deutsche Bank’s latest weekly note, he writes that there are basically two different possible endings to the current economic situation, or as he puts it, “the future is bimodal” with “volatility to be found between politics vs. policy.”

    This post was published at Zero Hedge on Mar 21, 2017.

  • Trump’s Job Approval Rating Drops To Record Low, Breaking Key Correlation

    In the first week of February, a Credit Suisse analysis concluded that there was only one chart that mattered to markets: that of Trump’s approval rating. As the bank’s analyst Lori Calvasina wrote at the time, “US stocks have been trading closely with shifts in Trump’s favorability, as have 10 year Treasury yields…

    …the Dollar, and crude oil.”
    She said that “within US equities, small caps, value, Financials, cyclicals, domestic revenue producers, and high tax payers have been particularly tied to shifts in Trump’s favorability, as has the performance of companies headquartered in states that voted for Trump.”

    This post was published at Zero Hedge on Mar 20, 2017.

  • Credit Suisse “Climbs The Wall Of Worry”, Raises S&P Target To 2,500 From 2,350

    Following bearish reports from Goldman (which tactically downgraded stocks to Neutral for the next three months just hours before the Fed rate hike), RBC and JPM’s head quant Marko Kolanovic over the past week, overnight Credit Suisse decided to take the other side of the trade and hiked its year end forecasts for the S&P500, and pretty much every other risk asset, noting that it is happy to “climb the wall of worry”, and prefers equities to bonds. The reason for the Swiss bank’s optimism, as strategist Andrew Garthwaite explains, is that “following the reaching of our mid-year S&P 500 target, we raise both our mid-year and year-end S&P targets to 2,400 and 2,500, respectively (from 2,350 and 2,300).” He adds that “our clear-cut view is that investors should be overweight equities versus bonds and credit. We now see less chance of a second-half correction in equities and thus raise our mid-year and year-end targets to 2,400 and 2,500, from 2,350 and 2,300, respectively. We stick to our mid-year targets of 3,500 on Euro Stoxx 50 and 20,500 on Nikkei 225.”
    In terms of near-terms moves, CS – unlike Goldman – sees “a clear-cut risk that we get an overshoot to the upside in equities that then reverses later on; more realistically, this reversal is likely to be a very late-2017 or 2018 event.”
    Some more details behind the bank’s revised targets:
    “We leave our mid-year targets on the Euro Stoxx 50 and the Nikkei 225 in place at 3,500 and 20,500, respectively, but on the back of the change to our S&P 500 target, we also increase our year-end targets for the Euro Stoxx 50, the FTSE 100 and Nikkei 225 up to 3,700, 7,500 and 21,000, respectively (from 3,450, 7,000 and 19,800). We also revise our FTSE 100 mid-year target to 7,400 from 7,100.”

    This post was published at Zero Hedge on Mar 20, 2017.