Category: investing.com

Union Pacific Corp (NYSE:UNP) and the Brotherhood of Locomotive Engineers and Trainmen (BLET) have reached a tentative agreement for the U.S. railroad operator’s locomotive engineers. The agreement provides locomotive engineers with 11 days of work and four days off. This comes a week after Norfolk Southern (NYSE:NSC) also reached an agreement, offering additional five days of paid sick leave per year for its engineers.

U.S. rail unions have been in a tussle with the railroad operators demanding better sick leave and attendance policies. BLET National President Eddie Hall said in a joint statement that the change in scheduling will make life better for locomotive engineers and their families, and should help Union Pacific retain and recruit employees.

The agreement is a positive step forward for the railroad industry, and will help ensure that locomotive engineers have the necessary time off to rest and recuperate.

Bank of America has reiterated a Buy rating on Eli Lilly & Co. (NYSE:LLY) and raised their 12-month price target on the stock to $500.00. This follows a proprietary consumer analysis conducted to examine the escalating hype surrounding new obesity medications. The study found that >55% heard about these therapeutics on some form of social media, suggesting the need for targeted advertising. BofA analysts increased revenue forecasts for Mounjaro in Type 2 diabetes and tirzepatide in obesity by an average 19% and 40% respectively for ’23-’30. Shares of LLY are up 0.51% in mid-day trading on Wednesday.

William Blair analysts have identified generative AI (GAI) as a game changer, with near-term beneficiaries likely to be Alphabet (GOOGL), Meta Platforms (META) and Microsoft (MSFT). GAI is fundamentally different from other new technologies, as it has the ability to generate new content on its own after being trained by a machine learning model. This makes it highly applicable to virtually all industry sectors and has the potential to fuel a new wave of productivity and innovation in the global economy. NVIDIA (NVDA) is seen as the most obvious winner on the “picks and shovels” side, given its dominance in GPUs and related AI software.

Abercrombie & Fitch Co (ANF) posted a surprise quarterly profit and lifted its full-year sales forecast, sending its shares up as much as 29%. The apparel retailer has worked to increase its stock across all its labels and lure affluent Americans to purchase for a variety of items including dresses, cargos and formal pants.

The company’s eponymous Abercrombie label posted a 14% increase in sales in the quarter, while the Hollister brand, dropped 7%. Gross margins rose 570 basis points to 61%, benefiting from lower freight costs and its efforts to control promotions.

ANF’s Q1 report suggests brands with good momentum have remained resilient despite macro pressures. The Ohio-based company now expects 2023 net sales to increase 2% to 4%, compared to its previous range of 1% to 3% growth. On an adjusted basis, Abercrombie reported a profit of 39 cents per share, compared with estimates of a loss of 5 cents.

Neil Saunders, managing director of GlobalData, said that while pressures are building in the retail market, they are not anticipating this to create a complete collapse in consumer demand. Abercrombie is fortunately on the right side of trends.

Grupo Mexico, one of the largest mining and infrastructure companies in Mexico, had its railway partially taken over by the government last week. The government said it was necessary to improve the railway infrastructure and services in the country.

The company has since filed a lawsuit against the government, claiming that the takeover was illegal.

Lopez Obrador said that the government is open to dialogue and is willing to reach an agreement with Grupo Mexico. He said that the government is not looking for a financial compensation, but rather a solution that benefits both parties.

The president also said that the government is willing to negotiate with other companies in the same situation. He said that the government is committed to improving the railway infrastructure and services in the country, and that it will continue to work towards that goal.

Shares of PacWest Bancorp (NASDAQ:PACW) fell nearly 3% on Wednesday, reversing course from premarket, as debt ceiling talks impasse overshadowed optimism around the U.S. mid-sized lender’s sale of its property lending unit to bolster its balance sheet. Investors have been on edge as the deadline to raise the government’s $31.4 trillion borrowing limit looms, with President Joe Biden’s administration and congressional Republicans having failed to reach an agreement so far.

PacWest on Tuesday agreed to offload its property lending unit for an undisclosed amount to real estate financing firm Roc360, a day after the sale of $2.6 billion worth of real estate construction loans at a discount. The stock had nearly tripled in value to close at $7.38 on Tuesday since hitting a record low on May 4 on a report that the Los Angeles-based bank was exploring strategic alternatives.

Analysts have signaled it would not take much good news for the sector to see a short squeeze. Meanwhile, investors are also betting that the worst of the crisis is over and that many lenders are fundamentally sound. So far this week, short sellers have lost a combined $98.5 million betting against shares of PacWest, Western Alliance (NYSE:WAL) Bancorp, Fifth Third Bancorp (NASDAQ:FITB) and Comerica (NYSE:CMA) Inc, according to data from analytics firm Ortex.

President Joe Biden and House Republican Kevin McCarthy are in talks to reach a debt-ceiling agreement that could avoid a default as soon as June 1. Discretionary spending, the chunk of the U.S. budget set annually by Congress, is the central pillar of the deal. This spending, which powers a wide swath of military and domestic programs, reached $1.7 trillion in 2022 and accounts for 27% of the overall $6.27 trillion spent.

Biden has offered to hold discretionary spending flat from the current 2023 fiscal year, while House Republicans have proposed capping growth at 1% annually for 10 years. Both sides are also at odds over how long any spending caps should last, with Republicans offering six years and the White House two.

If a general agreement is reached, it could help the U.S. avoid default, but would likely set up another series of budget battles as lawmakers would still have to agree on funding levels for everything from fighter-plane construction to border enforcement.

The Republican-led House Appropriations Committee has unveiled legislation that would boost spending on veterans’ care, border security, and other priorities next year. This could require cuts of more than 13% in other areas like scientific research and environmental protection if they want to keep overall spending at the same level as this year.

The Democratic-controlled Senate is not likely to accept those figures, which could lead to a government shutdown if the two sides do not reach agreement by Sept. 30, the end of the fiscal year.

The U.S. stock market is feeling the pressure of the ongoing debt ceiling talks in Washington, with the Dow Jones Industrial Average, S&P 500, and NASDAQ Composite all down. Investors are also looking ahead to the release of the Federal Reserve’s meeting minutes and the personal consumption expenditures report. Meanwhile, Citigroup Inc and Kohl’s Corp reported quarterly results, with the latter’s shares jumping 10%. Oil prices were rising, while gold futures were down 0.2%. With the debt ceiling deadline looming, investors will be closely watching for any signs of a resolution.

Boeing Co is taking steps to reduce aviation safety risks after two 737 MAX crashes in 2018 and 2019. The company is deploying experienced pilots to airlines that are training their employees to fly Boeing aircraft. A total of 125 so-called “flight operations representatives” worked with more than 60 airlines in 2022. Boeing Chief Safety Officer Mike Delaney said that while it’s up to aviation regulators to ensure airlines are ready to operate new aircraft types, having Boeing pilots on the ground allows the company to address practices that may be concerning.

Boeing is also rolling out its second annual safety report, required by a 2021 legal settlement over the 737 MAX crashes. The company has developed a machine learning algorithm in partnership with the Federal Aviation Administration, which scours “service difficulty reports” that describes aircraft system malfunctions and identifies trends in the data.

The company is also looking to recruit additional flight operations representatives – mostly former retired airline pilots with more than 13,000 flight hours under their belt. However, airlines’ demand for training is high, and the older age of Boeing’s pool of existing representatives leads to natural challenges in recruiting and retaining a workforce.

Boeing is taking steps to ensure aviation safety and reduce the risk of future accidents. The company is deploying experienced pilots to airlines, rolling out its second annual safety report, and developing a machine learning algorithm to identify trends in aircraft system malfunctions.

Bank of Montreal and Bank of Nova Scotia reported lower than expected quarterly profits on Wednesday, as the Canadian banks were forced to set aside more funds due to a weakening housing market and global banking uncertainty. Shares of both banks were down in early trading in Toronto, weighing on the country’s main stock index.

Adjusted income from Scotiabank’s Canadian banking segment fell 10%, while that of BMO’s fell 8%, reflecting higher provisions for credit losses. Provisions for credit losses jumped to C$709 million from C$219 million, due to economic uncertainty and challenging market conditions in Chile and Colombia. BMO’s adjusted provision for credit losses was C$318 million at the end of the second quarter, compared with C$50 million a year ago.

Executives for both banks said they were cautious about broader macroeconomic uncertainty, with BMO assuring investors it was confident that its $16.3 billion Bank of the West acquisition earlier this year would boost earnings in the coming years. Scotiabank said it was prudent as some key markets in Latin America face inflationary pressures.

The Bank of Canada said it was more concerned than it was last year about households being able to pay off their debts and was seeing signs of financial stress among some home buyers. BMO’s net income, excluding one-off items, rose to C$2.22 billion ($1.65 billion), or C$2.93 per share, for the three months ended April 30, compared with C$2.19 billion, or C$3.23 a share. Scotiabank’s net income fell to C$2.17 billion ($1.62 billion), or C$1.7 a share, from C$2.77 billion, or C$2.18 a share, a year earlier.

Overall, the results reflect the current economic uncertainty and challenging market conditions in Canada and abroad. Both banks remain cautious about the macroeconomic outlook, but are confident that their respective acquisitions will boost earnings in the coming years.