Coca-Cola quickly brews up Costa ‘Del Sol’ deal with Whitbread

LONDON (Reuters) – The 3.9 billion-pound ($5.1 billion) sale of the Costa coffee chain to Coca-Cola (KO.N) began brewing when Whitbread’s boss Alison Brittain crossed paths with the chief executive of the soft drinks giant at a conference in May.

FILE PHOTO: A woman walks past a Costa Coffee in Loughborough, Britain April 25, 2018. REUTERS/Darren Staples/File Photo

Brittain, who has led Costa-owner Whitbread (WTB.L) since December 2015, didn’t know James Quincey before the Microsoft CEO Summit in Seattle.

“I hadn’t met him before that,” Brittain said on Friday. “It has been a very fast deal.”

The deal was codenamed “Project Del Sol” – a pun on Spain’s Costa del Sol holiday coast – by Coca-Cola and “Project Crimson” – an allusion to Costa’s red branding – by the Whitbread team, according to a person familiar with the matter.

It completes a years-long streamlining of FTSE 100 leisure group Whitbread that will leave it focused on its Premier Inn hotel chain.

It comes at a time when investor pressure had been mounting on one of Britain’s oldest companies and the business had already been actively working on a demerger.

In December 2017, U.S. activist investor Sachem Head disclosed it had built a stake in Whitbread and the following month Reuters reported that the fund was pushing Brittain to consider splitting Costa from Premier Inn.

Elliott, another U.S. activist firm, then emerged as Whitbread’s biggest shareholder in April with a stake of more than 6 percent and also began calling for a break-up of the group. The hedge fund was engaging with the leisure group in a “combative way,” said a source familiar with the situation.

DEMERGER PLAN

Less than a fortnight after Elliott announced its stake and before Brittain met Quincey in Seattle, Whitbread announced it would spin off Costa into a separately listed company in a demerger that was planned to take up to 24 months.

That triggered interest in the coffee chain from potential buyers, Brittain said.

“Costa is a lovely company and therefore there were clearly suitors for that company and we didn’t think any of them were wearing the right suit and driving the right car,” she said, declining to identify the firms.

“We had always determined at the start, when we announced the demerger, that we would not be interested in a sale to financial companies but we would remain open to a strategic buyer such as Coca-Cola who could bring additional value for our shareholders, because of the synergies that they have.”

Coca-Cola will be able to use its distribution network to considerably extend the reach of Costa brand.

While Costa has about 7,000 self-service machines in Britain and about 1,000 overseas, as well as its coffee shops, the U.S. giant has millions of vending machines around the world that it could use to sell Costa products.

Coca-Cola made its first formal approach to Whitbread in late June and the negotiations progressed quickly, with a deal signed at 6.52 on Friday morning, eight minutes before it was announced to the stock market, Brittain said.

She kept pushing for a higher price even after entering exclusive talks with the soft drinks giant and wouldn’t surrender to a low-ball bid, a source close to the company said.

The U.S. group’s interest in Costa pre-dated the demerger announcement and the fact that Quincey, who took charge of Coca-Cola in May last year, is British would have helped to put the coffee chain on the soft drinks company’s radar, the Whitbread boss added.

“They have been scanning for a coffee acquisition and they have been doing work on Costa for quite some time,” she said.

SHARES JUMP

Whitbread shares closed up 14.3 percent on Friday in London as analysts praised the price tag that Costa had fetched, which values the chain at 16.4 times its latest annual earnings.

Elliott said that it “congratulates the board of Whitbread on this proposed transaction and looks forward to continuing to engage with them to maximize the value of the remaining businesses.”

Scott Ferguson, managing partner and portfolio manager at Sachem Head, said that his fund was “very pleased with the transaction and credit management and the board for thoughtfully maximizing value for shareholders.”

The deal brings to an end Whitbread’s history as a conglomerate in the leisure sector.

While the bulk of the proceeds will be returned to shareholders, it will use some of the cash to pay down debt and address its 350 million-pound pension deficit, to give it the flexibility to continue expanding its Premier Inn hotels in the UK and Germany, which will become its main business.

Founded 276 years ago as a brewery by Samuel Whitbread and Godfrey and Thomas Shewell, Whitbread grew into a sprawling group that had interests spanning pubs, fitness clubs, casual dining chains and Costa, which it bought for 19 million pounds in 1995.

But it has slimmed down in recent years, exiting brewing in 2000 and David Lloyd Leisure clubs, the luxury Marriott hotel brand, TGI Fridays and Pizza Hut between 2006 and 2007.

As well as hotels, its remaining Premier Inn business also runs the Brewers Fayre and Beefeater pub and restaurant brands.

($1 = 0.7711 pounds)

Additional reporting by Martinne Geller and Maiya Keidan; Editing by Adrian Croft

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Asia stocks slip; weakness in China outweighs NAFTA trade optimism

TOKYO (Reuters) – Asian stocks surrendered earlier gains and dipped on Thursday,

FILE PHOTO: A man looks at an electronic stock quotation board outside a brokerage in Tokyo, Japan February 9, 2018. REUTERS/Toru Hanai

with Chinese markets fixed firmly on risks from the Sino-U.S. trade war and taking little comfort from an apparent easing in business tensions in North America and Europe.

The leaders of the United States and Canada expressed optimism on Wednesday that NAFTA negotiations would meet a Friday deadline for a deal, days after the U.S. and Mexico reached a bilateral agreement.

But MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.2 percent, with broad gains across the region offset by losses in China.

The Shanghai Composite Index slid 0.8 percent and Hong Kong’s Hang Seng fell 0.7 percent.

“Investors are relatively pessimistic and cautious for now amid low levels of trading volume, as there are still concerns over the development of the Sino-U.S. trade spat,” said Yan Kaiwen, an analyst with China Fortune Securities.

U.S. tariffs on another $200 billion of Chinese goods are expected to take effect later next month.

Australian stocks rose 0.1 percent. Japan’s Nikkei initially touched a three-month high following gains on Wall Street but pared gains and was last up a modest 0.05 percent.

South Korea’s KOSPI was 0.1 percent higher.

Major South Korean steelmakers such as POSCO and Hyundai Steel gained after news that President Donald Trump signed a proclamation permitting targeted relief from steel and aluminium quotas from countries including South Korea.

U.S. shares extended their rally on Wednesday, with the S&P 500 and the Nasdaq hitting record highs for a fourth straight session as technology stocks pushed indexes higher and promising NAFTA negotiations boosted investor confidence.

Canada rejoined the talks to modernise the 24-year-old NAFTA after Mexico and the United States announced a bilateral trade deal on Monday, which had helped global equities begin the week on stronger footing.

The White House has said it wants to settle NAFTA before negotiating with China.

The pound surged as fears of a ‘hard Brexit’ eased after the European Union’s chief exit negotiator signalled an accommodative stance towards London in ongoing talks.

Sterling rose to a 3-1/2-week high $1.3039, extending its gains after surging more than 1 percent overnight.

The dollar index against a basket of six major currencies struggled near a four-week low of 94.434 plumbed on Tuesday, weighed by the pound’s rally.

The greenback has also been on the defensive this week with safe-haven demand for the currency diminishing in the wake of improving risk sentiment in broader markets.

The euro was a shade lower at $1.1699 after edging up 0.1 percent the previous day. The dollar was nearly flat at 111.62 yen after rising 0.4 percent overnight.

The Chinese yuan dipped 0.15 percent to 6.8301 per dollar in early onshore trade on Thursday.

Investors kept a wary eye on the Turkish lira, which retreated to a two-week trough on Wednesday after Moody’s downgraded 20 Turkish banks in a further blow to a country already gripped by a financial crisis and stuck in a diplomatic row with the United States.

Other struggling emerging market currencies in focus included Argentina’s peso. The peso tumbled overnight to a record low against the dollar after Argentine President Mauricio Macri asked the International Monetary Fund (IMF) for early assistance, alarming investors.

The IMF said it was studying the request from Argentina to speed up disbursement of the $50 billion loan programme.

In commodities, Brent crude futures rose 0.1 percent to $77.20 per barrel and U.S. crude futures climbed 0.2 percent to $69.64 per barrel.

Oil contracts had risen more than 1 percent on Wednesday, supported by a drawdown in U.S. crude and gasoline stocks and as U.S. sanctions reduced Iranian crude shipments.

Reporting by Shinichi Saoshiro; Additional reporting by Luoyan Liu; Editing by Sam Holmes and Kim Coghill

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Fast-food chain Yum China rejects $17.6 billion Hillhouse buyout offer: source

HONG KONG (Reuters) – Fast-food chain operator Yum China Holdings Inc (YUMC.N) has rejected a $17.6 billion buyout offer from a consortium led by Chinese investment firm Hillhouse Capital Group, quashing what would have been one of Asia’s biggest deals this year, a person with direct knowledge of the matter said.

FILE PHOTO: Customers walk into a KFC store in downtown Shanghai July 31, 2014. REUTERS/ Carlos Barria/File Photo

The Hillhouse-led consortium, which would also include regional investment house Baring Private Equity Asia, expressed an interest to offer $46 per share, or nearly 24 percent above Tuesday’s closing price, for the biggest fast-food chain in China, the person said.

Hillhouse has been tapping lenders to finance the deal, Reuters reported earlier this month, citing sources.

Former Yum China chairman and CEO Sam Su, who was pivotal in the company’s expansion in the world’s second-largest economy, now serves as an operating partner at Hillhouse.

The booth of fast food restaurant company Yum China Holdings Inc. is seen at an investment and trade fair in Hefei, Anhui province, China May 17, 2017. Picture taken May 17, 2017. REUTERS/Stringer

The company is the exclusive licencee of the KFC, Pizza Hut and Taco Bell brands in China with over 8,100 restaurants in more than 1,200 cities.

The board decided not to pursue the offer, which did not include detailed terms or the structure of the investor consortium, the person added, requesting anonymity as the information is confidential.

Yum China, spun off from owner Yum Brands! Inc (YUM.N) in 2016 and later listed on the New York Stock Exchange, did not have any immediate comment. Hillhouse and Baring did not immediately respond to a request for comment.

It was not immediately clear why Yum would have rejected the offer.

Chinese investment firm Primavera Capital and Ant Financial Services Group bought a minority stake in Yum China for $460 million as part of the spin-off deal in September 2016. Both are still shareholders in the company.

Fred Hu, chairman of Primavera who is also the independent chairman of the Yum China board, did not immediately respond to a request for comment. Primavera has two Yum China board seats after the spin-off.

Wall Street Journal first reported about the rejection, citing an unidentified person familiar with the matter.

Global investment house KKR & Co (KKR.N) had also considered investing in the buyout, Reuters reported earlier.

Stock of Yum China rose as much as 12 percent on Tuesday before closing 3.86 percent higher.

In addition to KFC, Pizza Hut and Taco Bell brands, Yum China also runs Chinese fast-food chain First East Dawning and hotpot restaurant Little Sheep which it acquired in 2012.

Yum was the first major Western fast-food company to enter China, opening a KFC store in central Beijing in 1987. Parent Yum Brands! currently collects 3 percent of KFC, Taco Bell and Pizza Hut China sales as royalties.

Reporting by Kane Wu; Editing by Miyoung Kim and Stephen Coates

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China considers measures to curb workplace harassment: Xinhua

BEIJING (Reuters) – China is considering introducing measures to tackle sexual harassment in the workplace in a civil code draft submitted to the country’s top legislature on Monday, state news agency Xinhua reported.

Office workers gather inside at the lobby of a commercial tower at the financial Central district in Hong Kong, China November 23, 2017. REUTERS/Bobby Yip

In recent weeks, the #MeToo movement has escalated in China with accusations of sexual assault spreading across social media in a country where such problems regularly have been brushed under the carpet.

The draft code put forward “clear rules” focused on the “intense problem of sexual harassment” reflected throughout society, Xinhua said on Tuesday.

Victims can demand perpetrators “assume civil liability” according to law for committing sexual harassment through words or actions, or by exploiting someone’s subordinate relationship, Xinhua said, citing the draft rules.

The measures would also require employers to take reasonable measures to prevent, stop, and deal with complaints about sexual harassment, the report added.

The news agency cited a state legal scholar as saying the rules would hold employers responsible to victims if they did not establish mechanisms to prevent sexual harassment, but it did not give more details.

The draft, which is part of a wider civil code, was presented to the National People’s Congress (NPC) Standing Committee, which is expected to run until Friday, according to Xinhua.

The formulation of this part of China’s civil code is expected to run until 2020, the report said, citing Shen Chunyao, who heads the Legislative Affairs Commission under the NPC Standing Committee, meaning the rules, pending revisions, would not become law for more than a year.

The catalyst for a Chinese #MeToo-style movement came in December last year when a U.S.-based Chinese software engineer published a blog post accusing a professor at a Beijing university of sexual harassment.

The fledging movement in China speaks to a changing mindset among the country’s younger generation, and millions of social media users have ensured that any news, scandals and grievances spread quickly, stoking heated online debate about sexual misconduct and what constitutes consensual sex or rape.

Accusations about prominent Chinese figures also present a challenge for the government, which has censored some but not all of the social media posts.

Reporting by Michael Martina in Beijing, and Kanishka Singh and Philip George in Bengaluru; Editing by Shailesh Kuber and Michael Perry

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Mexico, U.S. likely ‘hours’ away from NAFTA agreement: minister

WASHINGTON (Reuters) – U.S. and Mexican trade negotiators are “hours” away from squaring away bilateral differences on the North American Free Trade Agreement (NAFTA) but work with Canada is likely to stretch into September, a top Mexican official said on Sunday.

FILE PHOTO: Mexico’s Economy Minister Ildefonso Guajardo at a news in Mexico City on May 1, 2018. REUTERS/Henry Romero/File Photo

Mexican Economy Minister Ildefonso Guajardo told reporters that work with Canada, which has sat out the latest phase of NAFTA talks, would take at least a week, though he was optimistic Mexico and the United States were close to agreement.

“I would say that we’re practically in the final hours of this negotiation,” he told reporters as he entered talks at the offices of U.S. Trade Representative (USTR) Robert Lighthizer.

After the talks broke for lunch a couple of hours later, Guajardo said he could not declare victory yet.

The Mexico-U.S. discussions have focused on crafting new rules for the automotive industry, which U.S. President Donald Trump has put at the heart of his drive to rework the 24-year-old pact he says has been a “disaster” for American workers.

The two sides have been gradually nearing a common position, and one source close to the negotiations said at the weekend there was now “little” separating the two on autos.

Industry sources say they are close to agreeing on raising the regional automotive content threshold for tariff-free access under NAFTA to around 75 percent from 62.5 percent.

Still, the Trump administration has been seeking to impose a cap on Mexican car and SUV exports to the United States that could be sent duty-free or at a 2.5 percent tariff, complicating the auto talks, three people with knowledge of the matter said.

Two automakers say the proposal aims to set a cap of about 2 million cars and SUV exports from Mexico to the United States, up from some 1.77 million exported in 2017, excluding pickup trucks. Including pickups, Mexico exported more than 2.3 million vehicles to the United States last year.

Mexico’s economy ministry declined to comment. A USTR representative did not immediately respond to a request for comment.

Trump said on Saturday that Washington could reach agreement with Mexico “soon” as the chief trade negotiator of Mexico’s incoming president signaled possible solutions to energy rules and a contentious U.S. “sunset clause” demand.

Since Mexico’s July 1 presidential election, the bilateral talks have been complicated by divisions between the incoming and outgoing Mexican administrations over energy policy.

The team of leftist Mexican President-elect Andres Manuel Lopez Obrador has resisted enshrining the 2013-14 opening of the oil and gas sector enacted by outgoing President Enrique Pena Nieto in the new NAFTA, people close to the talks say.

Long skeptical of foreign companies entering the Mexican oil industry, Lopez Obrador opposed Pena Nieto’s energy reform.

Jesus Seade, the incoming Mexican government’s chief NAFTA negotiator, said the issue had been “ironed out” at the NAFTA talks, without going into detail. He said this week it was not a “substantive” matter and that Lopez Obrador’s team had wanted to check the terms were consistent with the Mexican constitution.

If three-way talks run into September, final approval of the deal in Mexico will likely pass to Lopez Obrador, because under fast track authority, the U.S. Congress needs 90 days’ notice to vote on a new NAFTA once the renegotiation is finished.

Lopez Obrador is due to take office on Dec. 1.

Canadian Foreign Minister Chrystia Freeland said on Friday her government’s return to the talks would depend on how quickly the United States and Mexico could resolve their differences.

Reporting by Sharay Angulo; Additional reporting by David Shephardson and Dave Graham; Editing by Dave Graham, Lisa Shumaker and Chris Reese

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Tesla CEO Musk drops pursuit of $72 billion take-private deal

(Reuters) – Tesla Inc Chief Executive Elon Musk said late on Friday he would heed shareholder concerns and no longer pursue a $72 billion deal to take the luxury electric car maker private, abandoning an idea that stunned investors and drew regulatory scrutiny.

The decision to leave Tesla as a publicly listed company raises new questions about its future. Tesla shares have been trading well below their Aug. 7 levels, when Musk announced on Twitter that he was considering taking Tesla private for $420 per share, as investors wondered what this meant for Musk’s ability to steer the company to profitability.

Musk and Tesla also face a series of investor lawsuits and a U.S. Securities and Exchange Commission investigation into the factual accuracy of Musk’s tweet that funding for the deal was “secured.”

Musk said on Friday that his belief that there is more than enough funding to take the company private was reinforced during the process, but said he abandoned the bid based on feedback from shareholders and because the effort was proving to be more time-consuming and distracting than anticipated.

“Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this,’” Musk wrote in a blog post.

Musk, who owns about a fifth of Tesla, said previously that he envisioned taking the company private without the standard method of a leveraged buyout, in which all the other shareholders would cash out and the deal would be funded primarily with new debt.

Musk estimated that two-thirds of Tesla shareholders would have chosen an option of “rolling” their stakes into a private company. That would significantly reduce the amount of money needed for the deal and avoid further burdening Tesla, which has a debt pile of $11 billion and negative cash flow.

However, Musk said on Friday that a number of institutional shareholders explained that they have internal compliance issues that limit how much they can invest in a private company. He also said there was no proven path for most retail investors to own shares were Tesla to go private.

That contrasts sharply with an Aug. 7 tweet, when Musk said: “investor support is confirmed.”

T. Rowe Price Group, Fidelity Investments and Scotland’s Baillie Gifford, which are top Tesla shareholders, declined to comment.

Musk also said previously that Saudi Arabia’s PIF, which bought a stake in Tesla earlier this year of just under 5 percent, could help fund the cash portion of the deal, though sources close to the sovereign wealth fund had played down that prospect. PIF is in talks to invest in aspiring Tesla rival Lucid Motors Inc, Reuters reported last Sunday.

FILE PHOTO: Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo September 8, 2014. REUTERS/Toru Hanai/File Photo

Six members of Tesla’s board of directors said in a separate statement that they were informed on Thursday by Musk that he was abandoning his take-private bid. The board then disbanded a special committee of three directors it had set up to evaluate any offer that Musk submitted.

“We fully support Elon as he continues to lead the company moving forward,” the board said.

However, some corporate governance experts said Musk’s handling of the take-private bid could pressure the board to assert its independence and consider ways to rein him in by, for example, bringing in a chief operating officer.

“They have someone in charge who has raised serious doubts in the financial and public community about his ability to take the company forward. This will make it harder to invest” in Tesla, said Charles Elson, director of the corporate governance center at the University of Delaware.

SHORT SELLERS EMBOLDENED

In explaining his reasons to take Tesla private earlier this month, Musk cited pressure from short sellers – investors who look to profit on bets that a company’s stock will decline.

Some short sellers were emboldened by his U-turn. Christopher Irons, founder of investigative research website quoththeravenresearch.com, said it showed Musk was nowhere near as close to taking the company private as he had claimed.

“Personally, I’m going to look to see how the stock opens on Monday. If it does not drop precipitously based on this, I will personally view it as an opportunity to add to my short position,” said Irons, whose out-of-the money put options make money if Tesla’s stock declines.

Jim Chanos of Kynikos Associates, which has been shorting Tesla, said on Saturday: “The corporate governance disaster that is Tesla continues. Keep in mind that Musk informed the board on Thursday, according to his Friday night post.”

Tesla shares closed at $322.82 on Friday.

One of Tesla’s biggest challenges is ramping up production of its latest vehicle, the Model 3, which is critical to its profitability goals.

Musk has said repeatedly since April that Tesla has no need to raise new capital and has promised the company will be profitable and cash-flow positive in the third and fourth quarters.

FILE PHOTO: A Tesla sales and service center is shown in Costa Mesa, California, U.S. June 28, 2018. REUTERS/Mike Blake/File Photo

However, Citigroup Inc analysts said earlier this month that if a go-private transaction is looking less likely, “It would be wise for Tesla to at least try to raise significant new equity capital sooner rather than later,” so it can inspire investor confidence.

Reporting by Alexandria Sage in San Francisco and Jessica DiNapoli in New York; Additional reporting by Kate Duguid, Saqib Ahmed and Jennifer Ablan in New York, and Ross Kerber in Boston; Editing by Leslie Adler

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U.S. stock fund investors show no fear of King Dollar

NEW YORK (Reuters) – U.S. fund investors are in no rush to shore up defenses against the strong dollar.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 23, 2018. REUTERS/Brendan McDermid

The greenback’s 6 percent leap over the past six months has flummoxed markets from Turkey to Argentina, whose governments have to repay debt in dollars.

The stronger currency, which makes U.S. exports more expensive to foreign buyers, has also frustrated President Donald Trump, who is trying to reduce U.S. trade deficits.

Yet among the least popular exchange-traded funds (ETFs) this year are “currency hedged” funds, which invest in stocks abroad but strip out the effect of a foreign currency’s performance using derivatives. That makes the funds more resilient in a “King Dollar” world, when the greenback is dominant, which hurts U.S. investors converting foreign stock gains back into dollars.

Some investors are betting that the dollar’s run has gone too far given the risk of seismic U.S. congressional elections in November or the potential for the U.S. Federal Reserve to slow down the pace of interest rate hikes.

“We’re not really hedged right now even though the consensus is for a strong dollar,” said Komson Silapachai, vice president of research and portfolio strategy at Sage Advisory Services Ltd. “We think there’s a bigger chance that the market is underpricing the chance for a weaker dollar.”

U.S.-based currency-hedged funds have logged $10.2 billion in withdrawals this year, while their unhedged counterparts have attracted $30.7 billion, according to FactSet Research Systems Inc. That is a break from past practice, when investors rewarded currency-hedged funds as the dollar gained.

Hedged funds took in $51.9 billion in 2014 and 2015 as the dollar leapt by more than a fifth, FactSet data shows. Currency-hedged ETFs nearly tripled in number from 20 to 58 from 2014 to 2016 in the United States. The figure has not grown since 2017.

In the more than eight months of the year-so-far, the dollar has depreciated about 2 percent against the yen JPY= but gained more than 3 percent against both the euro EUR= and a basket of top trading partners’ currencies .DXY.

The euro’s decline helped the WisdomTree Europe Hedged Equity Fund (HEDJ.P), up 5.2 percent this year, significantly outperform the nearly flat 0.4 percent return of the unhedged Vanguard FTSE Europe ETF (VGK.P), according to Thomson Reuters’ Lipper research unit.

Nonetheless, the hedged WisdomTree Europe fund hemorrhaged $2.2 billion because of withdrawals this year, far higher than the $755 million investors pulled from the unhedged Vanguard Group Inc product, Lipper said.

Fast-trading investors are playing a risky game.

Morningstar Inc analyst Daniel Sotiroff studied the performance of the currency-hedged funds from 2010 to 2018 and found investors typically underperformed the market by attempting to time the currency market.

Still, the dollar tends to falter later in the year, especially ahead of U.S. midterm elections, Silapachai said. The November elections could hand control of the U.S. Senate or House of Representatives to Democrats, who are currently in the minority, opinion polls show.

The dollar could also falter if rates do not keep rising.

Rising rates attract yield-hunting foreign investors, but the Fed could delay hikes if inflation stays tame or the economy deteriorates. Short-term rates controlled by the Fed are getting closer to topping long-term rates set by the market, an omen for recession.

RiverFront Investment Group LLC, which along with Sage is among the biggest ETF investment advisers, is no longer using currency-hedged ETFs, according to its chairman, Michael Jones. He said Trump might resolve trade rifts in Europe and North America, giving a boost to foreign currencies, such as the euro.

“We believe that Trump really wants to resolve the trade conflict with the EU and NAFTA before the midterm elections,” said Jones. The United States, Mexico and Canada have been renegotiating the 24-year-old North American Free Trade Agreement.

Even investors prepared for an end to the dollar rally disagree on whether emerging markets have bottomed. Either way, the result could be a weaker dollar.

If the Fed holds off on hiking rates because of a brewing emerging market crisis, the greenback could falter. Conversely, if emerging markets rebound, U.S. investors could sell dollars to buy foreign stocks.

Jeremy Schwartz, WisdomTree Investments Inc’s (WETF.O) director of research, warned that investors have significant assets in funds with dollar exposure, including domestic multinational companies that will find it harder to export their goods as the dollar rises.

Schwartz said his company’s models are more hedged than usual on both developed and emerging markets, meaning they are on guard for further declines against the dollar.

Yet, he said, investors “largely have defaulted to the status quo.”

Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Leslie Adler

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SEC to review decision rejecting bitcoin ETFs

NEW YORK/WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission said on Thursday it will review a decision by its staff to block nine bitcoin-based exchange-traded funds from coming to market.

Representation of the Bitcoin virtual currency standing on the PC motherboard is seen in this illustration picture, February 3, 2018. REUTERS/Dado Ruvic/Illustration

Staff at the SEC on Wednesday rejected applications for new funds from three companies, suggesting they were not yet convinced that the products would not be subject to fraud or manipulation.

But the SEC’s four commissioners will review those decisions, according to letters the SEC posted on its website.

SEC staff have delegated authority to make a decision on such applications, meaning the commissioners and the SEC chairman have the power to review the decision if they desire.

The commissioners had previously voted 3-1 to reject another bitcoin ETF application, with Republican commissioner Hester Peirce dissenting on the basis she felt doing so stifled innovation.

The virtual currency can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government. A fund holding the currency could attract more investors and push its price higher.

Bitcoin BTC=BTSP was trading up nearly 2 percent at $6,480 on the Luxembourg-based Bitstamp exchange on Thursday after the SEC posted the letters.

Reporting by Trevor Hunnicutt in New York and Michelle Price in Washington; Editing by Dan Grebler

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