French insurer, AXA, has agreed to buy Bermuda-based, XL Group, for $15.3 billion. The Monday announcement would reportedly make the company the world leader in property and casualty insurance.

AXA offered XL Group $57.60 for each company share, a 33 percent premium to Friday’s closing price of $43.30. Europe’s second-biggest insurer said that the deal would lead property and casualty insurance to rise by half of AXA’s earnings, from 39 percent. The acquisition will reportedly be the biggest insurance deal since 2015 and the biggest European purchase of a US insurer to data.

XL Group has agreed to AXA’s bid, which means that AXA will look to de-list XL’s shares. According to the insurer’s statement on Monday, the insurer plans to finance the deal with 3.5 billion euros of cash at hand, an expected 6 billion euros from the IPO of its US business and 3 billion euros of subordinated debt.

AXA ranks as Europe’s second-biggest insurer when it comes to market capitalization, right behind Germany’s Allianz.

Insurers such as AXA are resorting to large-scale takeovers as to strengthen their business and better prepare for tougher regulations and falling returns from financial market investments. This latest deal comes just a month after American International Group announced it would buy reinsurer Validus for approximately $5.6 billion.

Allianz was also considered as a possible buyer for XL, however, a source close to the German insurer said that Allianz was not rattled after they heard about AXA’s take over.

AXA’s share plunged 6.9 percent to 23.33 euros. According to the insurer’s Chief Executive Officer, Thomas Buberl, the deal will allow AXA to dominate the global property and casualty market, as well as reduce its exposure to the financial markets’ volatility.

“We will be number one in commercial insurance,” Buberl said.

Image Source: WikipediaCommons

Global stock markets managed to lift themselves on Monday after suffering a series of sharp losses last week on Wall Street.

Germany’s DAX index surged 1.7 percent to 12,318.15 and the CAC index in France followed suit with a 1.2 percent increase. On Friday, the DAX shaved off 1.2 percent, while the CAC 40 lost 1.3 percent and London’s FTSE index 100 dropped 1.1 percent. In early trading on Monday, the FTSE 100 was up 1 percent to 7,166.86.

On Wall Street, the Dow Jones industrial average saw an increase by 0.7 percent while the Standard & Poor’s 500 index added 0.6 percent.

In Asia, the Shanghai Composite Index added 0.8 percent to 3,154.13 and Hong Kong’s Hang Seng shed 0.2 percent to close at 29,459.63. Seoul’s Kospi index was up 0.9 percent to 2,385.38. The Japanese market was closed for a public holiday.

Sydney’s S&P-ASX 200 dropped 0.3 percent to 5,820.70 while India’s Sensex index gained 0.6 percent to 34,192.50. Taiwan, Singapore, and Bangkok also reported a stock increase.

Wall Street attempted to recover from its Friday losses and increased the Dow Jones industrial average over 300 points. The Dow was up 1.4 percent to 24,190.90 while the Standard & Poor’s 500 surged 1.5 percent to 2,619.55. The Nasdaq composite rose 1.4 percent to 6,874.49. All three indexes closed lower than 5 percent for the week.

“The severity of the falls globally… suggest we may have already seen the worst, but with bond yields likely to go back up… further weakness cannot be ruled out in the short term,” said Shane Oliver, head of investment strategy and chief economist of AMP Capital.

US legislators have issued a $400 billion budget measure amid conflicts over immigration and other issues that have led to the second temporary government shutdown in almost a month. The budgetary measure was approved Friday and it increases military spending as well as provides $89 billion for disaster relief.

Benchmark US crude was up 81 cents to $60.01 per barrel on the New York Mercantile Exchange. It closed at $59.20 on Friday after dropping $1.95. The international Brent crude gained 82 cents to $63.62 in London.

Image Source: WikipediaCommons

Low-cost airline, Ryanair, registered a 12 percent increase in its third quarter, despite the mounting disruptions caused by the airline’s pilots. The Irish airline warned of possible disruptions in the following months and urged analysts to remain cautious of fare rises on European short-haul routes over the summer.

Ryanair claims it would return 750 million euros to shareholders through a share buyback as it was able to avert a widespread strike over Christmas by recognizing unions in December. The decision was a first in the airline’s 32-year history, however, it has struggled to formalize relations since.

Ryanair shares were down 3.25 due to concerns about further disruption.

The airline expects some localized disruptions and “adverse PR” urging investors to remain cautious as Ryanair finalizes union discussion.

Chief Executive, Michael O’Leary said that the airline is ready to face down other pilots who decide to form unions after the disruptions settle.

“We have some jurisdictions where we are getting…laughable demands for legacy-type inefficiencies,” O’Leary said. “Frankly we will never agree to those… if we have to take strikes or disruptions in those jurisdictions, then we will take those,”

Pilots complained of Ryanair’s toxic work environment and of a lack of trust between staff and management. They said that they will refuse any offer of a pay rise that doesn’t include assurances of other potential talks on pay and conditions.

Ryanair registered 106 million euros in profits after tax for the third quarter, slightly ahead of analyst forecasts of 101 million euros.

The disruption, on the other hand, cost Ryanair 25 million euros in passenger compensation. Pilot salaries are expected to cost about 45 million euros in the six months to the end of March.

Ryanair remains optimistic in its yearly capital, forecasting between 1.4 billion and 1.45 billion euros in its financial year. The estimate has remained unchanged since May and it seems it will remain so until March 31, when the financial year ends.

Image Source: Pexels

The Bitcoin cryptocurrency tumbled below the $8 thousand mark for the first time since November last year, a likely symptom of a potential bubble burst.

Ever since the cryptocurrency reached a record high of $19.511 on December 18 shortly after the introduction of bitcoin futures contracts in the US, Bitcoin was hit with wave after wave of negative news. Such setbacks include rising regulatory threats from around the world including South, Korea, China, India, and the US, Facebook’s ban on cryptocurrency ads and a $500 million theft at Japanese exchange Coincheck Inc. All these setbacks together have caused the cryptocurrency to lose more than a half of its value in just one month.

Nouriel Roubini, chairman of Roubini Macro Associates, and the man responsible for predicting the 2008 economic crash has called the bitcoin bubble “the mother of all bubbles”

“Now bitcoin crashing below 8000, headed towards 7000. Down 60% from the peak, 40% in a month, and over 10% today,” he wrote in a Twitter post.

Japanese authorities raided Coincheck’s offices Friday morning, a week after the $500 million heist, taking hold of documents and computers as evidence. The inspection was reportedly conducted to ensure user’s security, according to Finance Minister Taro Aso.

Bitcoin is arguably the largest and most popular cryptocurrency on the market. Its sudden drop spells disaster for the entirety of the digital currency market. The currency dropped 16 percent to $7.643 in New York. Other cryptocurrencies such as Ripple, Litecoin, and Ether have also fallen an estimated 18 percent.

Roubini, who is an outspoken bitcoin critic, said in an interview that regulators have “fallen asleep at the wheel” when it comes to regulating digital currencies. One of his main points of criticism was the lack of attention to initial coin offerings, an unregulated means of gaining capital for startups. The ICOs have been a target for many hackers due to their low-level security.

More so, Roubini said that regulators have done little to address the obvious fraud and manipulation in the cryptocurrency market.

Image Source: Flickr

Charity confederation, Oxfam, released a report showing how the one percent continue to remain at the top of the economic food chain. According to the charity, 42 people own the same amount of wealth as the poorest 50 percent globally.

The organization expressed concern over the growing inequality gap between the rich and the poor.  Last year saw the richest people on Earth gaining 82 percent of the money generated while the low-tier half didn’t register any change.

Oxfam believes these worrying numbers are due to a significant increase in the influence that companies have on policy decisions. In addition, they also cited the erosion of worker’s rights, tax evasion, and cost-cutting.

These factors have tilted the world’s economy even further towards the one percent. The charity revealed that billionaires saw their wealth gradually increase by 13 percent on a yearly basis from 2006 to 2015. In 2017, billionaires amassed in total an estimated $762 billion. More so, the report found that nine out of 10 of the world’s 2,043 billionaires were male.

The charity suggests that the wealthy became wealthier due to healthy global stock markets, particularly individuals who held financial assets. One example is Jeff Bezos, the founder of Amazon, who became $6 billion richer in the first week of last year.

Chief executive of Oxfam Great Britain, Mark Goldring, is worried that the global economy continues to widen the gap between the rich and the poor. According to him, an economy that concentrates wealth in a single party is nothing more than a “symptom of a system that is failing the millions of hard-working people on poverty wages who make our clothes and grow our food”.

Oxfam based its report on data from financial media company, Forbes, as well as the annual Credit Suisse Global Wealth datebook, which had relayed the world’s wealth distribution since 2000.

A typical survey looks at an individual’s wealth based on the value of his or her’s assets. This includes their property and land, however, the survey does not take into the account any debts they may gold. More so, the data doesn’t include wages and income to determine what the individual is perceived to own.

Image Source: WikipediaCommons

Financial service firm, Morgan Stanley, will be reportedly hit by a $1.25 billion charge in the fourth-quarter of 2018 as part of the recent Republican tax cut. Morgan Stanley is not the first company to be destabilized by the reform.

According to a recent filing, the bank blamed US tax code changes, which were signed into law by President Donald Trump a few days before the holidays. The tax reforms would lead to a gross charge of approximately $1.4 billion, in part for the remeasurement of deferred tax assets. Morgan Stanley expects the net hit to be about $1.25 billion.

Morgan Stanley along with several other US companies who have been affected by the tax reform will shake off the one-off hit once the positive effects of the bill emerge.

Several other banks, including Wells Fargo and Western Alliance Bancorp, already took advantage of the windfall cash and announced they would raise the minimum-wage of their workforce. Analysts at financial service company, Credit Suisse, have bumped 8 percent to this year’s estimates of earnings per share.

Morgan Stanley joined Goldman Sachs, Bank of America and Citigroup who have also put out rough estimates of the new tax reform on their fourth-quarter results.

Bank of America announced prior to the holidays that it would take $3 billion hit mostly from deferred tax assets that had a lower value. Citigroup, on the other hand, expects a hit of approximately $20 billion, consisting of $16 billion in deferred asset write-downs and what’s left for adjusting to the new bill. Goldman Sachs expects to take a $5 billion charge while accommodating to the reform.

The first-quarter earnings seasons will kick off with JPMorgan Chase and Wells Fargo, on January 12.

According to the Joint Committee on Taxation, the accumulated earnings of the one-time hit are expected to raise $339 billion in federal revenues over the next ten years.

Image Source: Flickr

American Multinational company, General Electric, has announced on Thursday that it will be cutting 12 thousand jobs in its power division. The move will reduce the unit’s workforce by 18 percent.

The restructuring aims to make General Electric leaner and save $1 billion in 2018 and was driven by challenges in the power market worldwide, according to the company.

They noted that long-term demand for renewable energy has affected General Electric’s short-term prospects and will aim to accommodate the new branch into its services. The Boston-based company registered a loss of 44 percent in market value this year.

As the company notes, power market “volumes are down significantly in products and services driven by overcapacity, lower utilization, fewer outages, an increase in steam plant retirements and overall growth in renewables.”

General Electric employees in Germany have been notified that about 1.600 people will be laid off, along with another 1.200 in Switzerland. The company states that around 1.100 jobs will be affected. As of 2016, General Electric employed just under 300 thousand people worldwide, according to the company’s website. Union leaders in Germany found the announcement strategically and economically unjustifiable.

The company predicts that a worldwide restructuring will results in the loss of 12 thousand jobs, almost a fifth of its power division workforce. While they did not elaborate which jobs will be cut, they did specify the changes will take place outside the United States.

General Electric shares were at $17.75, and its market value was up 0.5 percent, according to the Dow Jones Industrial Average. The conglomerate has previously said it would abandon its lighting, transportation, industrial solutions and electrical grid businesses. Aside from this, they also plan to axe its 62.5 percent stake in oilfield services company Baker Hughes.

Karen Ubelhart, a Bloomberg Intelligence senior industry analyst, believes the 18 percent cut and its subsequent $1 billion cost reduction are significant steps in General Electric’s recovery.

Image Source: WikipediaCommons

Bitcoin is, once again, smashing records with the cryptocurrency having surged past $12 thousand on Wednesday. While the rise will reassure traders once again of the cryptocurrency’s value, many are still worried about a potential bubble burst.

Bitcoin racked 4.48 percent at $12,200.40 on the Bitstamp exchange after which it made its way to $12,276.00.

On Friday, the main US derivatives regulator announced it would allow CME Group Inc and CBOE Global Markets to list bitcoin futures contracts, which contributed to the recent cryptocurrency boost.

Bitcoin futures contracts will allow traders to buy or sell the cryptocurrency at a predetermined price at a later date. The move is believed by some, to be the starting point of a future financial crisis similar to that of 2008. Others, however, think futures contracts will control the unstable nature of the cryptocurrency.

According to cryptocurrency ranker, CoinMarketCap, the combined market capitalization of all digital currencies values at around $370 billion. As of now, the cryptocurrency market has surpassed JPMorgan’s value which currently sits at $366.8 billion. The bank’s CEO, Jamie Dimon has frequently criticized bitcoin, calling it a „fraud” and that it will eventually fade away. While bitcoin has lifted the market instead, there are lots of analysts who say it’s only a matter of time until the cryptocurrency bubble will burst. Another high-profile bitcoin critic is Nobel Prize-winning economist, Joseph Stiglitz who thinks the digital currency should be made illegal.

„We are in the throes of a bubble market, and one of the characteristics of a bubble market is that there is no way to know when the bubble will burst,” said Mick McCarthy, CMC Market’s chief market strategist in Sydney.

Leonhard Weese, president of the Hong Kong-based Bitcoin Association, states that bitcoin’s market value increase stems from „fear of missing out” and „greed.”

Image Source: Flickr

Chipmaker company, Marvell Technology, announced on Monday it would buy the semiconductor company, Cavium, for $6 billion. The move is part of Marvell Technology’s expansion beyond semiconductors that control hard disk drives.

Premarket trading showed Marvell Technology was up 1 percent in shares while Cavium shares were at 7.7 percent. The deal will see the chipmaker offer $40 per share in cash and 2.1757 of its shares for each Cavium share. The deal value comes to $6 billion, and Cavium shareholders will own about 25 percent of the merged company.

“This combination expands and diversifies our revenue base and end markets, and enables us to deliver a broader set of differentiated solutions to our customers.” Said Matt Murphy, Marvell Technology’s CEO.

Ever since taking charge of Marvell Technologies, Murphy started restructuring the company by cutting jobs and seeking ways of diversifying the company’s business.

Marvell Technology will fund the deal via a combination of available cash from the combined companies and a $1.75 billion in debt financing.

Multinational company, Goldman Sachs, was Marvell Technologies’ financial adviser while Cavium had Qatalist Partners and J.P. Morgan Securities as its financial advisers.

The deal will allow Marvell Technologies to steer away from its storage devices business. They made an agreement with the investment adviser, Starboard Value, to bring in three new directors nominated by the firm to its board.

Cavium is based in San Jose, California and produces network, security, server, and switching processors and systems. The company had acquired  QLogic in 2016, a manufacturer of interface devices for storage area networks, for $1.3 billion.

Marvell Technologies has a market value of $10 billion while Cavium reported earlier this month to hold a $5.2 billion market capitalization.

Companies wanting to merge with their smaller rivals is nothing new. Earlier in November, chipmaker company, Qualcomm, rejected rival Broadcom’s $103 billion bid, one of the biggest deal propositions in the technology sector.

Image Source: Pixnio

Home cooked meals are starting to become more affordable as the price of food keeps plummeting. According to two different sources, food is cheaper by 2.3 percentage points as opposed to last November, a trend that has been going on for over half of year.

The Consumer Price Index that was updated last month by the Bureau of Labor Statistics unveiled that supermarket food items dropped in the last six months at a constant rate. The total registered drop measures a difference of 2.3 percent from last November.

A report made by the American Farm Bureau Federation also shows that the price of a typical Thanksgiving meal for ten people has considerably dropped, especially since milk and turkey are now cheaper.

Since food became cheaper, gasoline got more expensive, the affordable food influencing a 7 percent leap in the total cost of fuel. The BLS reports that the CPI rose to 0.4 percent in October alone.

Over the last year, the CPI rose by only 1.6 percentage points, mainly because the constant drop in food costs aided in reducing the overall inflation.

According to the BLS, October was the 14^th consecutive month in which the price for meats, fish, poultry, and eggs continued to decline.

Chris Christopher, an economist at IHS Global Insight, declared that the constant drop in food item prices aides individuals from the lower and middle-income families handle the increase in energy costs.

The Farm Bureau calculated that the average Thanksgiving dinner for ten people would cost $49.87 in 2016, a few cents cheaper than 2015’s $50.11. The estimates are based on an informal study conducted by volunteer shoppers.

The participants scoured the markets for the usual Thanksgiving treats like the traditional turkey, pre-cooked stuffing, stuffing ingredients, bread, butter rolls, sweet potatoes, veggie assortments, milk, coffee, and pumpkin pie.

Volunteers searched for the lowest priced items while ignoring promotional offers and coupons, both being variables that would have tipped off the average price. However, the Bureau’s menu is rather “modest” as it itself declared. In reality, people choosing to add more dished to the holiday’s menu.

The most obvious price change is the 30-cent fall in the cost of an average 16-pound turkey. Moreover, the Farm Bureau declared that milk prices have not been so low since 2009.

How about your Thanksgiving dinner? How will it look like and how much are you willing to spend on it?

Image source: Flickr