Wall St Week Ahead Recession fears loom over U.S. value stocks

Wall St Week Ahead Recession fears loom over U.S. value stocks

A screen displays trading informations for stocks on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 27, 2022. REUTERS/Brendan McDermidRegister now for FREE unlimited access to Reuters.comRegisterNEW YORK, July 15 (Reuters) – Fears of a potential economic slowdown are clouding the outlook for value stocks, which have outperformed broader indexes this year in the face of surging inflation and rising interest rates.Value stocks – commonly defined as those trading at a discount on metrics such as book value or price-to-earnings – have typically underperformed their growth counterparts over the past decade, when the S&P 500’s (.SPX) gains were driven by tech-focused giants such as Amazon.com Inc (AMZN.O) and Apple Inc (AAPL.O).That dynamic shifted this year, as the Federal Reserve kicked off its first interest rate-hike cycle since 2018, disproportionately hurting growth stocks, which are more sensitive to higher interest rates. The Russell 1000 value index (.RLV) is down around 13% year-to-date, while the Russell 1000 growth index (.RLG) has fallen about 26%.Register now for FREE unlimited access to Reuters.comRegisterThis month, however, fears that the Fed’s monetary policy tightening could bring on a U.S. recession have shifted the momentum away from value stocks, which tend to be more sensitive to the economy. The Russell value index is up 0.7% in July, compared with a 3.4% gain for its growth-stock counterpart.”If you think we are in a recession or are going into a recession, that does not necessarily … work to the advantage of value stocks,” said Chuck Carlson, chief executive at Horizon Investment Services.The nascent shift to growth stocks is one example of how investors are adjusting portfolios in the face of a potential U.S. economic downturn. BofA Global Research on Thursday cut its year-end target price for the S&P 500 to 3,600 from 4,500 previously and became the latest Wall Street bank to forecast a coming recession. read more The index closed at 3,863.16 on Friday and is down 18.95% this year.Corporate earnings arriving in force next week will give investors a better idea of how soaring inflation has affected companies’ bottom lines, with results from Goldman Sachs , Johnson & Johnson (JNJ.N) and Tesla among those on deck.For much of the year, value stocks benefited from broader market trends. Energy shares, which comprise around 7% of the Russell 1000 value index, soared over the first half of 2022, jumping along with oil prices as supply constraints for crude were exacerbated by Russia’s invasion of Ukraine.But energy shares along with crude prices and other commodities have tumbled in recent weeks on concerns that a recession would sap demand.A recession also stands to weigh on bank stocks, with a slowing economy hurting loan growth and increasing credit losses. Financial shares represent nearly 19% of the value index. read more An earnings beat from Citigroup, however, buoyed bank shares on Friday, with the S&P 500 banks index (.SPXBK)gaining 5.76%.At the same time, tech and other growth companies also tend to have businesses that are less cyclical and more likely able to weather a broad economic slowdown.”People pay a premium for growth stocks when growth is scarce,” said Burns McKinney, portfolio manager at NFJ Investment Group.JPMorgan analysts earlier this week wrote they believe growth stocks have a “tactical opportunity” to make up lost ground, citing cheaper valuations after this year’s sharp sell-off as one of the reasons.Value stock proponents cite many reasons for the investing style to continue its run.Growth stocks are still more expensive than value shares on a historical basis, with the Russell 1000 growth index trading at a 65% premium to its value counterpart, compared to a 35% premium over the past 20 years, according to Refinitiv Datastream.Meanwhile, earnings per share for value companies are expected to rise 15.6% this year, more than twice the rate of growth companies, Credit Suisse estimates.Data from UBS Global Wealth Management on Thursday showed value stocks tend to outperform growth stocks when inflation is running above 3% – around a third of the 9.1% annual growth U.S. consumer prices registered in June. read more Josh Kutin, head of asset allocation, North America at Columbia Threadneedle, believes a possible U.S. recession in the next year would be a mild one, leaving economically sensitive value stocks primed to outperform if growth picks up.”If I had to pick one, I’d still pick value over growth,” he said. “But that conviction has come down since the start of the year,” Kutin said.Register now for FREE unlimited access to Reuters.comRegisterReporting by Lewis Krauskopf, additional reporting by David Randall and Ira Iosebashvili; Editing by Ira Iosebashvili and Richard ChangOur Standards: The Thomson Reuters Trust Principles. .

DAZN introduces premium accounts, tightens device rules in Italy

DAZN introduces premium accounts, tightens device rules in Italy

Internet streaming service DAZN’s logo is pictured in its office in Tokyo, Japan March 21, 2017. Picture taken on March 21, 2017. REUTERS/Kim Kyung-HoonRegister now for FREE unlimited access to Reuters.comRegisterMILAN, June 9 (Reuters) – Sport streaming app DAZN will introduce a premium subscription service and tighten rules on access to its services as it strives to boost revenue after a multi-billion euro deal to show top soccer games in the country.Backed by billionaire Len Blavatnik, DAZN last year won the right to screen Serie A live matches in Italy for three seasons with a 2.5 billion euro ($2.7 billion) bid, in one of the largest deals for the video-streaming service in Europe.But the contract has proved challenging for DAZN, with the service experiencing technical outages at the start of last season while the company itself also complained about abuses of its password sharing policy and piracy.Register now for FREE unlimited access to Reuters.comRegisterDAZN said under its new standard subscription, entailing a 29.99 euro monthly fee, access to its video app will be limited to two devices.Concurrent watching of the same live event will be allowed only if devices are connected to the IP address of the same household.DAZN also said it would also introduce a 39.99 euro premium subscription, called DAZN Plus, which would allow up to two devices connect to the same live event from any location.Premium subscribers would also be allowed to register up to six devices to the app.DAZN’s announcement comes when Italy’s biggest phone group Telecom Italia (TIM) (TLIT.MI) is also seeking to cut the cost of its 1 billion euros distribution deal with the sport streaming service.Register now for FREE unlimited access to Reuters.comRegisterReporting by Elvira Pollina
Editing by Keith Weir and David Evans
Our Standards: The Thomson Reuters Trust Principles. .

WhatsApp to launch cloud-based tools, premium features for businesses

WhatsApp to launch cloud-based tools, premium features for businesses

A 3D-printed Whatsapp logo is placed on the keyboard in this illustration taken April 12, 2020. REUTERS/Dado Ruvic/Illustration/File PhotoRegister now for FREE unlimited access to Reuters.comRegisterMay 19 (Reuters) – WhatsApp is introducing free cloud-based API services in a push to get more businesses using the app, Meta Platforms (FB.O) CEO Mark Zuckerberg announced at the company’s messaging event on Thursday.The messaging service, which has increasingly courted business users, is one of several platforms where Facebook-owner Meta has launched more shopping and business-focused features.Zuckerberg, speaking at Meta’s “Conversations” event, said the offering would mean “any business or developer can easily access our service, build directly on top of WhatsApp to customize their experience and speed up their response time to customers by using our secure WhatsApp Cloud API hosted by Meta.”Register now for FREE unlimited access to Reuters.comRegisterWhatsApp already has an API, or type of software interface, for businesses to connect their systems and engage in customer service chats on the service, which generates revenue for Meta.Meta, which bought WhatsApp for $19 billion in a landmark 2014 deal, said that businesses would not be able to message people on WhatsApp unless they have requested to be contacted.WhatsApp also said on Thursday it was planning to provide optional paid features as part of a new premium service for users of its specialized business app, which is geared at small businesses.Those features, which are still being developed, will include options to manage chats across up to 10 devices and customized click-to-chat links that businesses can post on their websites and share with customers.Uber (UBER.N) CEO Dara Khosrowshahi, speaking in a session with Meta Chief Operating Officer Sheryl Sandberg at the conference, said a third of the users ordering rides via WhatsApp in India are new customers.The ride-hailing company, which launched its WhatsApp chatbot in December, is now planning to further customize the service starting for users in and around Delhi and expanding to markets like Brazil, he said. read more Register now for FREE unlimited access to Reuters.comRegisterReporting by Elizabeth Culliford in New York and Katie Paul; Editing by Lisa ShumakerOur Standards: The Thomson Reuters Trust Principles. .

Twitter set to accept Musk’s $43 billion offer

Twitter set to accept Musk’s $43 billion offer

Elon Musk’s twitter account is seen through the Twitter logo in this illustration taken, April 25, 2022. REUTERS/Dado Ruvic/Illustration Register now for FREE unlimited access to Reuters.comRegisterNEW YORK, April 25 (Reuters) – Twitter Inc (TWTR.N) is poised to agree a sale to Elon Musk for around $43 billion in cash, the price the CEO of Tesla has called his “best and final” offer for the social media company, people familiar with the matter said.Twitter may announce the $54.20-per-share deal later on Monday once its board has met to recommend the transaction to Twitter shareholders, the sources said, adding it was still possible the deal could collapse at the last minute.Musk, the world’s richest person according to Forbes, is negotiating to buy Twitter in a personal capacity and Tesla (TSLA.O) is not involved in the deal.Register now for FREE unlimited access to Reuters.comRegisterTwitter has not been able to secure so far a ‘go-shop’ provision under its agreement with Musk that would allow it to solicit other bids once the deal is signed, the sources said. Still, Twitter would be allowed to accept an offer from another party by paying Musk a break-up fee, the sources added.The sources requested anonymity because the matter is confidential. Twitter and Musk did not immediately respond to requests for comment.Twitter shares were up 4.5% in pre-market trading in New York at $51.15.Musk, a prolific Twitter user, has said it needs to be taken private to grow and become a genuine platform for free speech.The 50-year-old entrepreneur, who is also CEO of rocket developer SpaceX, has said he wants to combat trolls on Twitter and proposed changes to the Twitter Blue premium subscription service, including slashing its price and banning advertising.The billionaire, a vocal advocate of cryptocurrencies, has also suggested adding dogecoin as a payment option on Twitter.He has said Twitter’s current leadership team is incapable of getting the company’s stock to his offer price on its own, but stopped short of saying it needs to be replaced.”The company will neither thrive nor serve this societal imperative in its current form,” Musk said in his offer letter last week.Up to the point Musk disclosed a stake in Twitter in April, the company’s shares had fallen about 10% since Parag Agrawal took over as CEO from founder Jack Dorsey in late November.The deal, if it happens, would come just four days after Musk unveiled a financing package to back the acquisition.This led Twitter’s board to take his offer more seriously and many shareholders to ask the company not to let the opportunity for a deal slip away, Reuters reported on Sunday. Before Musk revealed the financing package, Twitter’s board was expected to reject the bid, sources had said. read more The sale would represent an admission by Twitter that Agrawal is not making enough traction in making the company more profitable, despite being on track to meet ambitious financial goals the company set for 2023. Twitter’s shares were trading higher than Musk’s offer price as recently as November.Musk unveiled his intention to buy Twitter on April 14 and take it private via a financing package comprised of equity and debt. Wall Street’s biggest lenders, except those advising Twitter, have all committed to provide debt financing.Musk’s negotiating tactics – making one offer and sticking with it – resembles how another billionaire, Warren Buffett, negotiates acquisitions. Musk did not provide any financing details when he first disclosed his offer for Twitter, making the market skeptical about its prospects.Register now for FREE unlimited access to Reuters.comRegisterReporting by Greg Roumeliotis in New York, additional reporting by Krystal Hu;
Editing by Mark Potter
Our Standards: The Thomson Reuters Trust Principles. .

Analysis: Samsung’s reputation hit as prices slashed at home for new premium phone

Analysis: Samsung’s reputation hit as prices slashed at home for new premium phone

SEOUL, April 8 (Reuters) – Samsung Electronics’ (005930.KS) flagship Galaxy S22 smartphone has taken a battering from reports of hobbled performance and has seen its price halved at home in South Korea just weeks since its launch, hurting its image as an iPhone rival.Consumers have complained – and even filed a class-action lawsuit – about the handset maker advertising what it called its most powerful smartphone yet with scant detail about performance management software that they say drastically slows the premium device when using processor-intensive applications.Such are the complaints that the Korea Fair Trade Commission last month began investigating the world’s biggest phone vendor.Register now for FREE unlimited access to Reuters.comRegisterThe controversy represents a blow to Samsung’s reputation for high-end handsets – and potentially its finances – as it tries to make up for two years of premium sales that missed analyst estimates and reverse a decline in market share.”The dispute will inevitably be a big hit to Samsung’s credibility,” said analyst Lee Seung-woo at Eugene Investment & Securities.At the heart of complaints is Samsung’s Game Optimising Service (GOS) which manages device performance during gaming to prevent overheating and preserve battery life. The manufacturer introduced the software in 2016, just months before it pulled its premium Galaxy Note 7 following a series of battery fires.GOS automatically limits handset performance during gaming but also during use of other performance-intense applications, said Geekbench, a widely used performance scorer, which found the software slowed the S22’s processor by as much as 46%.The extent to which GOS slows the S22, lack of details about the software in marketing materials, and the inability to disable it set social media alight.”This is an unprecedented, crazy issue that can’t be excused in any way,” ITSub, a YouTuber with 2.1 million subscribers who specialises in gadgets, said in a YouTube post.Samsung said it issued an update to allow users to disable the software with no risk to safety. It also said it would continue to invest to innovate in both hardware and software.PRICE DROPThe S22 series hit sales of 1 million handsets in South Korea within six weeks of release, reaching the mark two weeks faster than its predecessor, Samsung said.”The intentional performance downgrade surely had a negative effect, but its actual impact on Samsung’s sales seems limited. Data shows that sales are not much affected,” said analyst Kim Ji-san at Kiwoom Securities.Still, South Korea’s three major telecom providers have nearly doubled subsidies for the S22, pushing its price as low as 549,000 won ($451) from a launch of 999,000 won. Apple Inc’s (AAPL.O) iPhone 13, released in October, starts at 1,090,000 won with carriers offering smaller subsidies of around 150,000 won.”When subsidies go up simultaneously at all three telcos, it’s typically the manufacturer making up the contributions,” said an official at carrier LG Uplus Corp (032640.KS), declining to be identified due to the sensitivity of the matter.Samsung’s 2021 market share in devices over $400 shrank 3 percentage points to 17% from a year prior, while Apple’s rose 5 percentage points to 60%, showed data from market researcher Counterpoint. The data also showed sales of both the S20 and S21 fell short of the S series’ first-year norm of 30 million units.Early shipments of the S22, launched late February, indicate Samsung will move over 6 million handsets by March-end, broadly in line with expectations, said Counterpoint Associate Director Sujeong Lim.Still, Lee at Eugene Investment & Securities, expects the GOS furore to combine with increased component costs to leave April-June operating profit at Samsung’s mobile arm at 3 trillion won, down from a previous forecast of 3.4 trillion won.IBK Investment & Securities analyst Kim Un-ho also downgraded his forecast to 3 trillion won from 3.5 trillion won.Samsung on Thursday said it expects to report an estimated 50% jump in overall January-March operating profit on April 28, as demand for its memory chips remained solid. read more SPEED LIMITTeardowns of the lowest-priced S22 showed the handset lacked a cooling component called a vapour chamber, implying increased reliance on software to manage overheating, reviewers said.Analysts said the lean toward software solutions stems from a renewed policy to cut costs – a strategy they said erodes a reputation as an innovator based on hardware strength.Lee said Samsung “is putting too much emphasis on cutting costs, which led to this unfortunate case.”One consequence of the switch is a class-action lawsuit from 1,885 consumers arguing Samsung’s marketing inflates the S22’s performance.”If Porsche has a speed limit of 100 kilometres (62 miles)per hour, would you still buy it?” said Kim Hoon-chan, the lawyer representing the consumers, adding that some 1,500 people have joined to file a second class-action suit.($1 = 1,218.4000 won)Register now for FREE unlimited access to Reuters.comRegisterReporting by Byungwook Kim; Additional reporting by Joyce Lee; Editing by Miyoung Kim and Christopher CushingOur Standards: The Thomson Reuters Trust Principles. .