E Week's Wrap: News And Markets

The Hallowe’en murderer killed 8 people along the western bike path along the Hudson River. Five were Argentinians celebrating the 20^th anniversary of their graduation as engineers from a Rosario high school. Another victim was a Belgian national. The killer was an Uber driver from Uzbekistan with a thick rough black beard.

The site was near Stuyvesant High School, on of my city’s schools which only admits top students. Now the High Line bike path becomes another place where people were randomly killed by a mass murderer, be it the Federal Building in Oklahoma City or a hotel in Las Vegas. Just as with the Boston Marathon murderers, his being a Muslim is not why he killed. It was because he is crazy. That he was not a native-born American is irrelevant. So were 75% of those he killed.

*Pimco‘s marquee manager and Chief Investment Office, Dan Ivascyn, explained to Citywire how he managed the group’s Pimco income funds this year. He played on the inability of the US Administration to push through major tax, health, or infrastructure reforms to boost absolute and relative returns and generate income despite low-interest rates. Washington gridlock gave the fund group a chance to “play offense” around US interest rates and volatility using derivatives and careful risk management. This matters to us because the largest shareholder in Pimco out in California is Germany’s Allianz SE whose shares we bought when Mr. Ivascyn’s predecessor as “bond king”, Bill Gross, walked out.

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*Brookfield Renewable Partners LP reported that it boosted its hydroelectric generation in North America in Q3 by 6% over the long-term average because of lots of rain. In Brazil, its original home, low rainfull boosted power prices which the Bermuda fund successful gained from and also hedged. Its thinks interest rates are stable as growth resumes. In Colombia, it also beat its average in Q3, by 2% and expects it will also raise prices with the economic recovery during the next quarters and also signed medium-term contracts with distribution firms and industrial consumers at ~$65/megaWatt hour.

Its Q3 revenues were $608 mn (vs prior year $580 mn) and direct operating costs fell from $275 mn last Q3 to $243 mn this Q3, while its interest costs were essentially flat. Its loss per LP share hit 14 cents vs prior year loss of 12 cents. Offsetting this was a boost from adjusted EBITDA at $378 mn this Q3 vs $332 mn last, and funds from operations at $91 mn vs $73 mn. So LP holders were given a bit of the FFO alongside Brookfield the parent.

The result is that the distribution to shareholders for this year came to 47 cents vs last Q3’s 45 cents.

Moreover, the capital backlog it is deploying is $435 mn which will lead to a further 265mW of new commissions on top of the 56 mW constructed in 2017 for $435 mn. By 2020 BIP will gain $45-50 annually from these projects to add to its funds from operations. It has $1.7 bn in liquid assets to invest, from LP partners, from private clients, and from Brookfield itself.