Monthly Archives: March 2017

Carnival Shareholders Are Having Fun Now, Too

Carnival stock appears to have more upside if bookings hold up and international growth remains strong

The Carnival Vista is seen in Croatia. Cruise operator Carnival Corp. reports results on Tuesday.PHOTO: ANDY NEWMAN/ASSOCIATED PRESS

By Steven Russolillo
March 27, 2017

The smooth sailing should continue for Carnival Shares closed at a record Monday, having fully recovered from last year’s Zika-related concerns The world’s largest cruise-ship company has benefited from higher prices, strong bookings and low fuel costs. Improving consumer confidence and continued success overseas will likely keep buoying results, including on Tuesday when Carnival unveils its fiscal first-quarter report.

Analysts polled by FactSet estimate earnings of 35 cents a share for the period ending in February, down 4 cents from a year earlier. Revenue is expected to have increased 3.6% to $3.8 billion.

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After GOP Bill’s Failure, Health-Law Lawsuit Takes Center Stage

Republicans could undo much of the Affordable Care Act by stepping up challenge to its insurance subsidies

A lawsuit by House Republicans seeks to stop government payments reimbursing insurers for subsidies that lower costs for about six million people who get insurance on the Affordable Care Act’s exchanges.PHOTO: BRENDAN SMIALOWSKI/AGENCE FRANCE-PRESSE/GETTY IMAGES

By Stephanie Armour
Updated March 27, 2017

President Donald Trump and GOP lawmakers, seeking to regroup following the collapse of the effort to repeal the Affordable Care Act, have an option for gutting the health law relatively quickly: They could halt billions in payments insurers get under the law.

House Republicans were already challenging those payments in court as invalid. Their lawsuit to stop the payments, which they call illegal, was suspended as Republicans pushed to replace the ACA, but it could now resume—or the Trump administration could decline to contest it and simply drop the payments. Mr. Trump could unilaterally end the payments regardless of the lawsuit.

Such actions would stop the government payments reimbursing insurers for subsidies that lower the cost of deductibles, copayments and coinsurance for about six million people who obtain insurance on the ACA’s exchanges.

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From Multiplex to Living Room, in 45 Days or Less

Hollywood studios are planning to move ahead with ‘premium’ video-on-demand, making major movies available to home viewers only weeks after they hit theaters. By
Ben Fritz

Audience members wear 3D glasses to watch a movie at the Tennessee Aquarium IMAX Corp. movie theater in Chattanooga in January.PHOTO: LUKE SHARRETT/BLOOMBERG

Hollywood studios are preparing to upend decades of tradition by releasing movies at home less than 45 days after they debut on the big screen, according to people with knowledge of their plans, a goal they have pursued unsuccessfully for years.

The studios and theater owners have long been at loggerheads over the issue, which Hollywood executives consider vital to their long-term survival and cinemas consider a threat to theirs. But now, faced with changing consumer habits fueled by proliferating on-demand entertainment options, the two sides are finally discussing a compromise, people with knowledge of the talks said.

The only question that remains for so-called premium video-on-demand is when and on what terms it starts, not whether it does, the people said. By year-end, it is likely films will start to become available on VOD as soon as a few weeks after their theatrical debut for between $30 and $50. Such a move would transform the economic model of the movie business, while blurring the line that has long made film first and foremost an out-of-home, big-screen experience.

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Barclaycard Sells $1.6 Billion in Risky Credit-Card Balances to Credit Shop

Credit Shop plans on launching its own credit card later this year

Telephone boxes outside a Barclays bank branch in London.PHOTO: LUKE MACGREGOR/BLOOMBERG NEWS

By AnnaMariaAndriotis

Barclaycard is shedding a chunk of its subprime card balances, in a deal that reflects diverging views in the card industry about the future of the U.S. economy and the wisdom of wagering on risky borrowers.

The credit-card issuer, a unit of British bank Barclays PLC, sold $1.6 billion of credit-card balances owed by mostly near-prime and subprime borrowers to privately held personal-loan firm Credit Shop Inc., according to people familiar with the matter.

The deal marks the first time that Austin, Texas-based Credit Shop, which is mostly focused on extending personal loans to near-prime and subprime borrowers, purchased credit-card accounts and balances. The firm, which launched in 2013 and counts Chinese firm Renren Inc. as an investor, is planning on launching its own credit card later this year, according to people familiar with the matter. Several executives at Credit Shop were previously with Barclaycard.

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Auto Lenders Are on a Bad Trip

Warning signs continue to accumulate in the auto-finance industry

Cars for sale at a California Toyota dealership. Prices of used vehicles are sliding.PHOTO: MARIO ANZUONI/REUTERS

By Aaron Back

The auto-finance sector has taken a bad turn. An investor update on Tuesday from auto lender Ally Financial, formerly the auto-lending arm of General Motors, added to building evidence that trend lines are negative in the industry.That ranges from rising defaults to falling used-car prices.

Ally said Tuesday that it now expects growth of between 5% and 15% in adjusted earnings per share this year. This amounts to a soft downgrade in its forecast since, at the end of January, the company predicted 2017 adjusted EPS growth of up to 15%.
One culprit was an accelerating decline in used-car prices. This makes leases less profitable by lowering the residual value of a car when its lease ends. A lender must estimate the eventual price and any error, whether negative or positive, can have a significant effect on its return.

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The Banker-Turned-Seminarian Trying to Save Citigroup’s Soul

Bank takes new approach to cultural issues: hires David Miller as on-call ethicist

David Miller is a Princeton University professor by day and works with Citigroup intermittently to tackle abstract issues about banking and morality.PHOTO: MICHAEL BUCHER/THE WALL STREET JOURNAL

By Christina Rexrode
March 17, 2017

Can a big bank have a conscience? Citigroup hired one.

David Miller is an on-call ethicist the bank consults on weighty questions of right and wrong, supplementing its armies of lawyers and compliance officers. A Princeton University professor by day, Dr. Miller has worked with Citigroup intermittently for the last three years to tackle abstract issues about banking and morality.

Those are squishy topics for Wall Street, where aggression is a virtue and making money a necessity. Dr. Miller, who spent years in banking before going to seminary, acknowledges the dichotomy—and the ribbing from friends and colleagues who thought he had sold his soul when he agreed to work with Citigroup.

“You need banking, just like you need pharmaceuticals,” says the 60-year-old New Jersey native. “And pharma can save lives, or it can kill and cause addictions.”

If the topic is philosophical, the stakes aren’t. As Citigroup’s president James Forese pointed out in a 2015 industry conference, the bank made $1 million in revenue from dubious foreign-exchange trading—and paid roughly $2.5 billion in penalties.

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What is a data scientist, anyway?

Having a facility with numbers helps. But it’s only part of the equation.
By Deborah Gage

Alpine Data co-founder Steven Hillion (left, with T.J. Bay), values data scientists’ diverse skills. PHOTO: TAGGART GORMAN/ALPINE DATA

The path to becoming a data scientist is not a clear one. And that’s by design.Consider the data-science team at Alpine Data, a San Francisco software startup that helps companies analyze their data to make predictions about their businesses. It includes a former marketing manager, a former physicist, a former operations researcher and a former business consultant. Helping the team as well is a former mathematician who was hired as a software engineer.

“We strongly believe that having people from different backgrounds collaborating around a problem is more important than selecting some fancy algorithms,” says Alpine co-founder Steven Hillion.

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Credit Reports to Exclude Certain Negative Information, Boosting FICO Scores

Changes could improve credit scores for millions of consumers, may pose risks for lenders

Good news for consumers: several types of negative information will soon be removed from credit reports. WSJ’s AnnaMaria Andriotis explains on Lunch Break with Tanya Rivero. Photo: Reuters

By AnnaMaria Andriotis

Updated March 12, 2017Many tax liens and civil judgments soon will be taken off people’s credit reports, the latest move to omit negative information from the powerful financial scorecards.

The decision by the three major credit-reporting firms— Equifax Inc. Experian PLC and TransUnion —could help boost credit scores for millions of U.S. consumers, but could pose risks for lenders. The reports and scores often help decide how much consumers can borrow for a new house or car as well as determine their credit-card spending limit.

The unusual move by the influential firms comes partially in response to regulatory concerns. The three reporting bureaus rarely tinker with the information that goes on credit reports and that lenders consult to gauge consumers’ ability and willingness to pay back debts.

Read the full article here.