US Gas Rises After Explosion
The largest oil pipeline in the US suffered an explosion killing one person and hospitalising five.
Editor’s Remarks: Gas rose to its highest value since 2008 by around 11% after the pipeline run by Colonial Pipeline Co. suffered yesterday’s tragedy. There is now a rush to purchase cargo from Europe and December offerings. There is sure to be a sting felt across the South as shortages will cause prices to rise. The pipeline predominantly services motor fuel, but due to the South’s access to oil, prices of gasoline should not rise substantially. Regardless, it does highlight the importance of American consumption to the global economy, particularly in the oil and gas industry.
What to watch: Gasoline Futures, Brent Crude, WTI, Colonial Pipeline Company
Yum China Begins Trading
The spin-off from Yum Brands, Yum China, started trading on the NYSE and saw a rise of almost 10%.
Editor’s Remarks: Activist investors successfully pushed Yum Brands to focus on a struggling Pizza Hut and spin off its Chinese division. So far, this looks like a wise decision as Domino’s continues to perform exceptionally well this year, hitting around 50% growth so far. Yum, itself has risen by around 20%, but this is primarily due to KFC and Taco Bell performing well. The split highlights how US investors do not trust the Chinese market and want to narrow the risk of foreign dynamics affecting their investments.
What to watch: Yum Brands, Yum China, Domino’s, Papa John’s, McDonald’s, Wendy’s
Reuters To Cut Jobs
Thomson Reuters announced plans to streamline its business by cutting around 2000 jobs to save around $225m as it announced higher expected earnings.
Editor’s Remarks: Thomson Reuters gave investors cause for joy after announcing plans to streamline its business, particularly in its Financial and Risk division. Thomson Reuters already had unveiled they beaten analyst figures despite a small drop in earnings compared to this time last year. Reuters apparently expects difficult times ahead as it lowered its profit margin forecast for next year by 2 percentage points and is hoping to streamline the biggest aspect of its business. Reuters already this year sold its science and intellectual property division to focus on Finance. Financial media is looking forward to slow growth in the US and Europe and must prepare for what will be a difficult 2017.
What to watch: Thomson Reuters, News Corp, Bloomberg LP
BP Profits Halves
BP reported a drop of almost 50% compared to this time last year which it claims is due to the continued oil price slump.
Editor’s Remarks: BP has suffered in recent years, primarily due to the Deepwater Horizon disaster highlighted in the recent film of the same name. Things do not seem to be improving for the firm as it reported poor numbers compared to Royal Dutch Shell. Shell profits rose compared to Q3 last year while it still looks to complete its purchase of BG. Shell clearly has managed to slim down and streamline operations at the new price while BP still looks to recover at a higher oil price, closer to the $55 mark.
What to watch: BP, Royal Dutch Shell, Total, BG, Brent Crude, WTI
Irelandia To Focus On South America
Irelandia Aviation sold its near 50% stake in Mexico’s VivaAerobus to IAMSA for approximately $250m.
Editor’s Remarks: The co-founder of Ryanair, Declan Ryan, owns Irelandia Aviation which owns Allegiant in America and Tiger Airways in Asia. He aims to bring the low-cost airline model to South America, one of the two major growth regions for the aviation industry. Colombia appears to be the key starting point for Ryan as he purchased a majority stake in VivaColombia. The airline industry is slowly opening up in South America with Mexico recently signing an agreement to allow for more routes and increase competition. Argentina, Colombia and Costa Rica look like the next major hubs of growth with Brazil the farthest behind.
What to watch: VivaAerobus, VivaColombia, IAMSA, Ryanair, Irelandia Aviation, EasyJet