Oil falls as U.S. crude stocks hit record for seventh week in a row

Oil futures fell in Asian trade on Thursday, with U.S. crude hitting the lowest level in more than two weeks, amid renewed worries of global oversupply after U.S. crude inventories rose to a record high.

That increase came despite seasonal refinery utilisation hitting an 11-year high, while a rise in the dollar index put further pressure on oil prices.

Brent crude futures fell 36 cents to $38.90 a barrel as of 0331 GMT. It ended up 12 cents in the previous session after touching a session peak of $40.61.

The front-month contract for U.S. crude futures dropped 46 cents to $37.86 a barrel, after dropping to $37.74 earlier, the lowest since March 16. It settle up 4 cents in the previous session following a gain of 3 percent earlier in the session.

Prices will "zig-zag" for the rest of the year, said Tony Nunan, oil risk manager at Japan's Mitsubishi Corp.

U.S. crude stockpiles rose by 2.3 million barrels to 534.8 million barrels in the week to March 25, the seventh week at record high levels, data from the U.S. Energy Information Administration shows.

But the increase was less than analysts' expectations of a 3.3 million barrel build after crude imports fell 636,000 barrels per day to 7.4 million bpd.

Refinery crude runs rose by 414,000 barrels per day (bpd) and refinery utilisation rates rose 2 percentage points to 90.4 percent of total capacity, the highest seasonal rate since 2005.

Crude prices, which have risen about 50 percent since mid-February, have started to track lower in the past week.

"Oil prices will trend down again ... $35 a barrel will be the support level. Low prices are not sustainable in the long-run," Nunan said.

But with OPEC flagging a price of $50 a barrel and oil producers scheduled to meet in Doha on April 17 to discuss a possible output freeze, prices are likely to remain range-bound.

"Anytime prices get close to $45-$50 a barrel, funds that have taken long positions are likely to take profits. Unless things really ignite the global economy, then people will sell-off at that level," Nunan said.

In Asia, sustained weakness in oil prices is continuing to supress upstream oil and gas production activity, consultancy BMI Research said in a report on Thursday.

Weaker oil prices are "limiting opportunities to stem natural declines in ageing assets and bringing new production sources online," the report added.

Concerns over global oversupply were further fuelled after crude output from the Organization of the Petroleum Exporting Countries (OPEC) rose in March to 32.47 million bpd from 32.37 million bpd in February, according to a Reuters survey based on shipping and other data.

Iran is expected to add half a million barrels of oil supply a day within a year from existing oilfields after sanctions were lifted in January, Fatih Birol, the head of the International Energy Agency told Reuters on Wednesday.

Source: www.reuters.com

Wells Fargo plans quiet assault on Wall Street from glass tower

As Wall Street remakes itself on a former rail yard in the far west of Midtown Manhattan, one surprising name is leading the way. Wells Fargo & Co (WFC.N), the San Francisco-based lender known for its retail banking business, has picked out space for a trading operation to use as a base for a stealth attack on the investment banking world.

The bid for more capital markets business - from advising on deals and security issues to trading derivatives - is a potentially risky move by the third-largest U.S. bank by assets. The boom-and-bust of Wall Street offers lucrative fees if Wells Fargo can pick up business left behind by rivals in the wake of the financial crisis of 2008, but trading brings extra risks and volatility.

Jonathan Weiss, who runs Wells Fargo's investment banking and trading division, said the bank's plans were deliberately low-key. "We're not getting into things that are going to rapidly or dramatically change our business," he told Reuters in a phone interview earlier this month. "It's just a consistent, slow build-out. Add a person here, add a person there." Despite Weiss's muted tone, Wells Fargo has made some headline-grabbing moves.

In December it announced a deal to buy 500,000 square feet - or 10 football fields - of trading and office space at Manhattan's Hudson Yards development. Its neighbors will include private equity firm KKR & Co and media titan Time Warner Inc. 

Earlier this month it clinched what is expected to be its most lucrative mergers and acquisitions (M&A) assignment in at least a decade. And it has acquired a license to trade credit derivatives, so it can take advantage of revival in demand for a product starting to overcome its association with the last financial crisis.

Wells Fargo built itself into the world's most valuable bank - with a market value of $243 billion - in the wake of the financial crisis partly because it did not rely on risky trades or complex derivatives to turn a profit. 

Its quiet approach may be an acknowledgement that investors are wary of potentially risky Wall Street business and may mark down its shares, which currently trade at a premium to other big U.S. banks such as JPMorgan Chase & Co (JPM.N).

"If I felt the bank were making a big investment banking push, they would need to do a good job of explaining why it has not made them riskier," said Thomas Russo, managing member at Gardner, Russo & Gardner, the bank's 43rd largest shareholder. 

"Otherwise, I would have to revisit the holdings." Weiss said there was no cause for alarm. "Our pace of growth is not so significant relative to the overall growth the bank has experienced that shareholders need be concerned that somehow we're growing some massive set of risks," he said.

Wells Fargo's largest shareholder, Warren Buffett - who has criticized the financial system's excessive use of derivatives - seems to be on board with the bank's plans. His Berkshire Hathaway Inc has increased its stake to 10 percent according to regulatory filings on Monday. Buffett declined to comment on whether he thinks the bank will become a riskier investment.

OLD-SCHOOL, NEW BUILDING

Wells Fargo is still focused on its traditional business of lending to consumers and corporations and managing people's money. Trading and investment banking accounted for just 4.6 percent of Wells Fargo's 2015 revenues, with part of the trading coming from outside the securities division, according to a spokeswoman. 

That compares to about 26 percent for JPMorgan, counting only trading in its investment bank unit, according to its year-end earnings. Wells Fargo sees market share up for grabs as lenders such as Deutsche Bank AG (DBKGn.DE) and Barclays Plc (BARC.L) cut back their investment banking business in response to tough post-crisis regulations.

Buying offices in a 90-story, glass-and-steel tower overlooking New York's Hudson River - with a move-in scheduled for 2020 - is a symbolic move that shows the bank is intent on growing rather than making cuts like many Wall Street firms.

Nearly one-third of the bank's office space is to be taken up by two trading floors, according to the developer's news release in December, but Weiss said it was not yet clear how big the dealing operation would be.

"It was important to have the space that can be built out into a trading operation in the hope that we continue to grow," he said. Wells Fargo's investment banking and trading operations are currently housed in 350,000 square feet spread across four separate buildings in New York. 

That represents a big leap for a bank seen as a sleeping giant in the U.S. investment banking industry. It has the balance sheet and lending relationships to be a top player, but a culture more in touch with Main Street than Wall Street.

Wells Fargo's bosses have made fun of Wall Street's self-importance. Chief Executive John Stumpf, a farmer's son from Minnesota, likes to say he prefers kitchen tables to "league tables" - the rankings used by investment banks to measure their standing. But as Wall Street rivals exit and low interest rates force banks to look for more sources of revenue, Wells Fargo's current and former executives see more opportunities. 

"I had been very vocal in saying I didn't believe investment banking was culturally compatible with our ethics and our business model," said former Wells Fargo CEO Richard Kovacevich. 

"But as a result of the financial crisis, with investment banks becoming banks or being bought by them, the culture has changed," said the 72-year-old banker, who retired in 2009 but still has an office at Wells Fargo and meets with big investment bank clients.

AGGRESSIVE COMPETITION

Rivals have noticed the bank's ramped-up presence. JPMorgan CEO Jamie Dimon told Bloomberg earlier this month Wells Fargo was "very actively, very aggressively, and very successfully building its U.S. investment bank."

This month, Wells Fargo was named sole adviser to TransCanada Corp on its acquisition of Columbia Pipeline Group, a deal worth $13 billion including debt, putting it on track for its biggest fees from a single deal since at least 2000, according to data from Thomson Reuters and Freeman Consulting Services.

Wells Fargo broke into the top 10 for global investment banking fees in 2013 and has stayed there since, according to Thomson Reuters data. It is looking to juice its growth further by hiring a new rainmaker to head its M&A franchise, leading a team of bankers that has grown by 40 percent over the past five years, outstripping rivals even as M&A surged across the board.

Wells Fargo is also expanding in prime brokerage, a lucrative business offering loans, trading, cash management and other services to hedge funds. It bought mid-sized prime broker Merlin Securities in 2012, expanded it to target larger hedge funds, and still has room to grow, according to Weiss.

The bank is also expanding in derivatives that allow investors to bet against companies' debt, recently getting regulatory approvals to trade single-name and indexed credit default swaps, as well as swaps based on indexes.

Such derivatives were blamed for spreading mortgage-related losses during the financial crisis, but they are enjoying a revival as corporate bonds dip on tumbling energy prices and companies look for a way to manage interest rate, commodity price and currency risk.

"That has been a big addition and a thoughtful way to take the derivatives question into the board room or into the 'C-Suite' as something more than just a trade that you do on a desk," said Weiss.

Source: wwwreuters.com

SunEdison at risk of bankruptcy, unit says; shares plummet 60 percent

U.S. solar energy company SunEdison Inc (SUNE.N), whose aggressive acquisition strategy has saddled it with almost $12 billion of debt, is at "substantial risk" of bankruptcy, one of its two publicly listed units warned on Tuesday.

A bankruptcy would rank among the largest involving a non-financial company in the past 10 years, according to bankruptcydata.com. SunEdison declined to comment.

SunEdison's shares - already reeling from a Wall Street Journal report on Monday that the company was being investigated for overstating its cash position - fell as much as 60 percent to a record low of 50 cents.

TerraForm Global Inc (GLBL.O), one of two SunEdison "yieldcos", said in a regulatory filing that it would join its parent and fellow yieldco TerraForm Power Inc (TERP.O) in delaying its annual report for the year ended Dec. 31. (1.usa.gov/22X8xDu)

However, the company said it did not rely substantially on SunEdison for funding or liquidity and that it would have sufficient liquidity to support its operations even if its parent sought bankruptcy protection.

TerraForm Global's annual report was due by March 30.

Yieldcos are publicly traded subsidiaries that hold renewable energy assets, including assets bought from their parents. They are backed by long-term power purchase contracts with utilities, allowing them to pay regular dividends.

TerraForm Global, whose shares fell as much as 23 percent to a record low of $1.92, said SunEdison may not transfer to it some solar energy projects in India, for which TerraForm Global has paid $231 million, and also may not complete other deals.

"If SunEdison does not perform under these agreements, it could have a material adverse effect on TerraForm Global," TerraForm Global said.

TerraForm Global's chief executive, Brian Wuebbels, is also SunEdison's chief financial officer.

Although solar project developers such as SunEdison continue to benefit from robust demand for solar energy, their shares along with those of other solar companies have been hit by investor concerns - largely dismissed by analysts - that demand could fall due to weak oil prices.

MATERIAL WEAKNESSES

SunEdison, which is run out of Belmont, California, has problems of its own, however.

The company, which has delayed filing its annual report twice, said this month it had identified material weaknesses in its financial reporting controls.

According to a loan agreement filed with regulators, SunEdison could breach a covenant if it does not file its annual report within 90 days after the end of each fiscal year - in this case, March 30.

"The delivery of annual financials is required under their first lien credit facility as well as their second lien term loan," said Ian Feng, an analyst at credit research firm Covenant Review.

The company has at least $1.4 billion in first-lien and second-lien debt, according to filings.

SunEdison is also being investigated by the U.S. Securities and Exchange Commission to see if it had exaggerated its liquidity position, the Journal reported on Monday.

Vivint Solar Inc (VSLR.N) scrapped a deal to be bought by SunEdison this month, citing concerns about SunEdison's finances.

SunEdison had debt of $11.67 billion as of Sept. 30. Excluding its yieldcos, the company had $7.9 billion of debt, and cash and cash equivalents of $1.3 billion.

"At this point, SunEdison has really kinda run out of options," S&P Global Intelligence analyst Angelo Zino told Reuters.

Raymond James analyst Pavel Molchanov said TerraForm Power and TerraForm Global were legally separate companies and would not follow SunEdison into bankruptcy.

"However, there is a close historical relationship between the parent company and these yieldcos and therefore some dislocation in the event of parent bankruptcy should be expected," he said in an email.

TerraForm Power's shares fell as much as 14 percent before recovering to be down 0.6 percent at $8.41 in afternoon trading. SunEdison's shares were down 54 percent at 57.5 cents while TerraForm Global's were down 20.4 percent at $1.99.

TerraForm Global said it was in talks with lenders of its revolving credit facility to obtain an extension on a covenant that requires it to file its annual report on time.

TerraForm Global said the credit facility was not critical to the continuation of its business.

The company had about $1 billion in cash and $500 million available under its revolving credit facility, according to a presentation posted on SunEdison's website on Nov. 10.

Up to Monday's close, SunEdison's shares had dropped about 95 percent in the past 12 months, valuing the company at about $400 million.

TerraForm Power and TerraForm Global did not respond to requests for comment.

Source: www.reuters.com

How to Start a Business With (Almost) No Money

You’re excited to start a business. Maybe you have an idea, or you’re just fascinated with the idea of launching and growing your own enterprise. You’re willing to take some risks, like leaving your current job or going without personal revenue for a while. But there’s one logistical hurdle stopping you: You don’t have much money.

On the surface, this seems like a major problem, but a lack of personal capital shouldn’t stop you from pursuing your dreams. In fact, it’s entirely possible to start and grow a business with almost no personal financial investment whatsoever -- if you know what you’re doing.

Why a business needs money

First, let’s take a look at why a business needs money in the first place. There’s no uniform “startup” fee for building a business, so different businesses will have different needs. It’s important to first estimate how much you need before you start finding alternative methods to fund your company.

Consider the following uses:

Licenses and permits. Depending on your region, you may need special paperwork and registry to operate.

Supplies. Are you buying raw materials? Do you need computers and/or other devices?

Equipment. Do you need specialized machinery or software?

Office space. This is a huge expense, and you can't neglect things like Internet and utilities costs.

Associations, subscriptions, memberships. What publications and affiliations will you subsribe to every month?

Operating expenses. Dig into the nooks and crannies here, and don’t forget about marketing.

Legal fees. Are you consulting a lawyer throughout your business-development process?

Employees and contractors. If you can’t do it alone, you’ll need people on your payroll.

With that said, you have two main paths of starting a business with less money: lowering your costs or increasing your available capital from outside sources. You have three options here:

Option one: Reduce your needs

Your first option is to change your business model to demand fewer needs as listed above. For example, if you were planning on starting a company of personal trainers, you could reduce your “employee” expenses by being the sole employee at the start. Unless you need office space, you can work from home. You can even do your homework to find cheaper sources of supplies, or cut out entire product lines that are too expensive to produce at the outset.

There are a few expenses that you won’t be able to avoid, however. Licensing and legal fees will set you back even if you cut back on everything else. According to the SBA, many microbusinesses get started on less than $3,000, and home-based franchises can be started for as little as $1,000.

Option two: Bootstrap

Your second option invokes the idea of a “warmup” period for your business. Instead of going straight into full-fledged business mode, you’ll start with just the basics. You might launch a blog and one niche service, reducing your scope, your audience and your profit, in order to get a head-start. If you can start as a self-employed individual, you'll avoid some of the biggest initial costs (and enjoy a simpler tax situation, too).

Once you start realizing some revenue, you can invest in yourself, and build the business you imagined piece by piece, rather than all at once.

Option three: Outsource

Your third option is all about getting funding from outside sources. I’ve covered the world of startup funding in a number of different pieces, so I won’t get into much detail, but know there are dozens of potential ways to raise capital -- even if you don’t have much yourself. Here are just a few potential sources for you:

- Friends and family. Don’t rule out the possibility of getting help from friends and family, even if you have to piece the capital together from multiple sources.

- Angel investors. Angel investors are wealthy individuals who back business ideas early in their generation. They typically invest in exchange for partial ownership of the company, which is a sacrifice worth considering.

- Venture capitalists. Venture capitalists are like angel investors, but are typically partnerships or organizations and tend to scout businesses that are already in existence.

- Crowdfunding. It’s popular for a reason: with a good idea and enough work, you can attract funding for anything.

- Government grants and loans. The Small Business Administration (and a number of state and local government agencies) exist solely to help small businesses grow. Many offer loans and grants to help you get started.

- Bank loans. You can always open a line of credit with the bank if your credit is in good standing.

With one or more of these three options, you should be able to reduce your personal financial investment to almost nothing. You may have to make some other sacrifices, such as starting small, accommodating partners or taking on debt, but if you believe in your business idea, none of these losses should stand in your way. Capital is a major hurdle to overcome, but make no mistake -- it can be overcome. 

Source: www.entrepreneur.com

The 'Internet of Things' Is Changing the Way We Look at the Global Product Value Chain

The traditional product value chain has been shaken up with the unstoppable spread of globalization and the universal commodification of goods and services. Globalization has forced companies to adjust and respond.

In fact, Internet of Things (IoT) products are playing a pivotal role in the alteration of B2C relationships, delivery channels and product pricing, and their continued proliferation is shaping the very nature of how we look at the product value chain.

The "Internet of things" refers to objects that can communicate among one other through a network. IoT is becoming prolific and commonplace in everyday objects. And, with experts predicting that the IoT network will consist of some 50 billion devices by 2020, those devices will only become more and more ubiquitous. The IoT revolution is truly just beginning, and it will most certainly will be televised!

Here are four changes coming:

1. IoT allows for unprecedented interactions between manufacturers and consumers.

Credit the interconnectedness of IoT products, letting them, in turn, connect the buyer with the seller. By opening new channels for B2C communication, IoT products are providing manufacturers an invaluable opportunity to reshape a dusty and outdated product value chain. Interacting directly with consumers gives us valuable insights on products; and consumer feedback will help us mold future business and product strategies.

Coffee giant Starbucks put this idea to action when it launched My Starbucks Idea. "Idea" is an outreach website where customers can submit ideas on how to improve the overall Starbucks experience. To date, the site has received more than 200,000 suggestions, and the company has implemented several, from energy-saving LED bulbs to convenient lunch wraps.

While this idea is a bit grandiose and presumably difficult to scale, the intent (and resulting customer satisfaction) is certainly worth consideration, and with help from the IoT's proliferation, it can be more effectively implemented.

2. Improved B2C communications won't benefit just manufacturers. 

Improving and prioritizing B2C communications is also a critical component to boosting loyalty and repeat business from consumers. According to IBM, 80 percent of consumers surveyed said they felt that brands didn't know them as individuals.

That statistic suggests that considerable opportunity exists to capitalize on increased communication -- and that brands that succeed in this regard will enjoy a considerable advantage over those who don't.

3. IoT products allow for a unique and modern approach to both cross-selling and upselling.

At our IoT product development company, TikTeck, for example, we sell LED smart bulbs for $9.99 apiece. A smart bulb is just one component in the IoT-populated landscape of automated homes, and it's a fantastic first step to drawing in curious consumers interested in IoT products because of their low-cost barrier.

Once those cosumers have tried (and hopefully enjoyed) our bulb, they're much more likely to come back and try our other IoT offerings, and they're much more likely to create a fully functioning and streamlined "smart" environment in their homes. Meanwhile, we can gather data on usage metrics and consumer behavior, to predict what kind of products people may need; and we can offer them directly through the cloud or our IoT apps.

That's a fantastic cross-selling opportunity, and it's considerably simpler, thanks to the new IoT product value chain.

Also, there's more than just cross-selling possible here: There's also plenty of simplified upselling possible with IoT products. We can sell a fully functioning, feature-heavy product for a very affordable amount, but we can also offer premium features that are restricted behind a pay wall or subscription requirement. That way, consumers can try our products at a low upfront cost, and if they like what we're offering, they'll pay more to access more.

This consumer-direct relationship isn't possible without a low-cost barrier and direct communication tools through apps or cloud computing.

4. Upselling and IoT proliferation can lead to a 'free-mium' business model.

Given this promise of recouping capital through alternative revenues, manufacturers will be able to deliver their product directly to consumers at a very low (potentially zero) cost. This "free-mium" model means that value isn't inherently attached only to the product itself, but to the actual, real-world use of the product. Monetization will come in the form of upgrades, subscriptions, product services or native (in-app) advertising. This will allow manufacturers to innovate by focusing on intangible features, products and applications.

Conclusion

Challenges will arise as the product value chain shifts toward the future. Product differentiation will be crucial for manufacturers, and they will need cost-effective and proven development capabilities, with fast turnaround.

Consumers, remember, are impatient: They want instant gratification, and that patience is only going to grow thinner as processing, handling and shipping becomes automated and streamlined. Manufacturers will need a supply chain that can handle both big and small orders. Those who can't handle these things will be replaced by those who can.

Overall, a revamped product value chain will not eliminate the importance of digital and social media marketing. In fact, it will most likely increase it. It's one thing to develop a good product. But getting consumers to take notice is a whole other beast.

Source: www.entrepreneur.com

Wall Street ends flat after choppy session

Wall Street was mixed on Monday as weaker-than-expected U.S. economic data reduced concerns about potential interest rate hikes and a dip in oil prices pushed down energy shares.

U.S. consumer spending barely rose in February and inflation retreated, suggesting the Federal Reserve could remain cautious about raising interest rates this year even as the labor market rapidly tightens.

Trading was choppy and volume was low, with markets closed in Europe.

The S&P has mostly recovered from a 10-percent loss at the start of 2016 but many investors remain wary of potential interest rate hikes, the impact of volatile oil prices and an anemic global economy.

"I don't think we're out of the woods," said Frank Gretz, a technical analyst at Wellington Shields & Co, a brokerage in New York. "I've noticed some loss of momentum in the last week."

Investors will pay close attention to Fed Chair Janet Yellen's speech in New York on Tuesday for clues about when the central bank might raise interest rates.

"We'll be watching her to see if there is any change in her language or views, but the Street does not expect her to do anything to surprise the markets," said Warren West, principal at Greentree Brokerage Services in Philadelphia.

The S&P consumer discretionary .SPLRCD and consumer staples .SPLRCS sectors rose 0.51 percent and 0.43 percent respectively. The utilities sector .SPLRCU lost 0.36 percent and energy .SPNY lost 0.34 percent.

Crude prices moved lower, with U.S. crude below $40 a barrel. The Dow Jones industrial average .DJI rose 0.11 percent to finish at 17,535.39 points and the S&P 500 .SPX edged up 0.05 percent to 2,037.05. The Nasdaq Composite .IXIC dropped 0.14 percent to 4,766.79.

Starwood Hotels & Resorts Worldwide (HOT.N) rose 1.97 percent after China's Anbang Insurance Group Co raised its offer for the U.S. hotel operator to almost $14 billion, the latest challenge to its merger with Marriott International Inc (MAR.O). Noble Energy (NBL.N) dropped 8.19 percent after the company warned of a possible delay in the development of a key natural gas field in Israel.

Pandora Media (P.N) fell 12.17 percent after the music streaming company said its founder Tim Westergren was coming back as chief executive. Cal-Maine Foods (CALM.O) jumped 8.76 percent after reporting higher-than-expected quarterly profit. Advancing issues outnumbered decliners on the NYSE by 1,738 to 1,287. On the Nasdaq, 1,531 issues fell and 1,265 fell.

The S&P 500 index showed 29 new 52-week highs and one new low, while the Nasdaq recorded 27 new highs and 42 new lows. About 5.1 billion shares changed hands on U.S. exchanges, below the 8 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Source: www.reuters.com