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Wall Street Articles

Author: skywalker   |   Latest post: Mon, 22 May 2017, 07:25 AM

 

Wall Street Breakfast: Major Shakeup at Ford?

Author: skywalker   |  Publish date: Mon, 22 May 2017, 07:25 AM


The automaker is reportedly considering a major reshuffle of its leadership team following a slump in its stock price. Sources say CEO Mark Fields has been replaced by Jim Hackett, who oversees Ford's (NYSE:F) self-driving cars and ride-sharing unit. The departure, along with other executive changes, comes days after rumors surfaced stating Ford was planning to cut 10% of its global workforce. F +3% premarket.

Economy

The U.S. and Saudi Arabia signed hundreds of billions of dollars' worth of deals during a visit by President Trump over the weekend. Among them: $50B of energy agreements with Saudi Aramco (Private:ARMCO), a $40B U.S. infrastructure fund created with Blackstone (NYSE:BX), and an arms deal worth $350B over a decade (the largest in U.S. history).

The next stop for President Trump is a two-day visit to Israel, where he will separately meet with Benjamin Netanyahu and Mahmoud Abbas after stating their conflict is "maybe not as difficult as people have thought." He'll also visit several holy sites and Holocaust memorial Yad Vashem, following his stop in Riyadh, where he urged Islamic leaders to focus on unity in the fight against "terrorism."

Iranian President Hassan Rouhani won re-election by a wide margin Saturday, getting an endorsement for efforts to seek better ties with the West and attract more foreign investment. In his first term, he negotiated the 2015 nuclear deal to curb Iran's nuclear program and recently pledged to get the remaining sanctions lifted against the Islamic Republic.

Ramping up the pace of its testing, Pyongyang has successfully launched its second ballistic missile in a little more than a week (and the 11th missile it has fired this year). "Many more 'Juche weapons' capable of striking the U.S. will be launched from this land," North Korea's Minju Joson newspaper said in a commentary Sunday, according to the Korean Central News Agency.

The 11 members of the TPP have agreed to pursue their trade deal without the U.S. at a forum of the Asia-Pacific Economic Cooperation. "I believe at some point there will be a series of bilateral agreements with partners in this part of the world," U.S. Trade Representative Robert Lighthizer said at the conference. "Bilateral negotiations are better for the U.S. than multilateral negotiations."

Promising to work on closer eurozone ties in their first official meeting in Paris, Italian Prime Minister Paolo Gentiloni said Emmanuel Macron's election has been an "injection of trust and hope for Europe" and pushed for a common European migration policy. In turn, the French President called for a long-term roadmap to create a common euro area budget and strengthen European institutions.

The U.K. will walk away from Brexit talks unless the EU drops demands to charge it €100B to leave the bloc, Brexit Secretary David Davis told the Sunday Times. Negotiations would otherwise be plunged into "chaos," and even a £1B would be "a lot of money," he added. "We don't need to just look like we can walk away, we need to be able to walk away."

Vowing to remain in power, Brazilian President Michel Temer has asked the Supreme Court to suspend its investigation into allegations he was involved in a giant corruption scandal. "Our country will not go off the rails - I will continue at the front of the government," he declared, claiming an audio recording of him supporting bribery payments was edited afterwards.

Saudi oil minister Khalid al-Falih will visit Iraq today to discuss the extension of an OPEC-led oil output cut. The talks are significant because Iraq, the second largest OPEC producer, has displayed the greatest reluctance to commit to a supply cap. Most expect an extension of the existing output deal by 6 or 9 months when members meet Thursday for a formal OPEC meeting in Vienna.

Stocks

Bitcoin climbed above $2,000 for the first time on Saturday, rising more than 4.5% to an all-time high of $2,062 due to increased demand from Japanese and Chinese investors. According to CoinDesk, the cryptocurrency's market cap - the total price of coins in circulation - gained more than $5B last week to $33.5B. Related tickers: COIN, OTCPK:BTCS

Barclays is hiring 100 new staff in its private bank as it launches its second attempt in the last seven years to win more business from wealthy clients. The push marks a change in direction for the lender after a previous failed expansion ended in 2014 with Barclays (NYSE:BCS) folding its wealth management business back into its retail bank.

A civil trial brought by thousands of RBS investors is due to open today, with plaintiffs alleging that the bank's former executives gave a misleading picture of RBS's financial health ahead of a £12B cash call in 2008. The holdouts include Wells Fargo (NYSE:WFC), the Boeing (NYSE:BA) pension fund, Bank of America Merrill Lynch (NYSE:BAC) and local British council pension funds.

A showdown in Amsterdam is also getting underway as Akzo Nobel (OTCQX:AKZOY) investors, including Elliot Advisers, begin court proceedings over the company's rejection of PPG's €26.3B takeover offer. Elliot will try to convince judges at the Amsterdam Enterprise Chamber to order an investigation into possible mismanagement and force an extraordinary meeting to vote on dismissing Chairman Antony Burgmans.

Battery-making gigafactories are about to arrive in Europe, challenging a lead Tesla (NASDAQ:TSLA) is building at a plant in Nevada. Germany's Angela Merkel is scheduled to break ground today at a €500M plant to assemble lithium-ion energy storage units for Daimler (OTCPK:DDAIF), while large-scale factories are also planned for Sweden, Hungary and Poland.

The purge continues... Fox News (FOX, FOXA) has fired Bob Beckel, a co-host of prime-time program The Five, for making an "insensitive remark" to a black IT worker. The embattled network has already parted ways with top host Bill O'Reilly, co-President Bill Shine and Chairman Roger Ailes, who died Thursday at 77.

Facebook's big push into original video may take longer than expected. It's not entirely clear what's causing the delays, but numerous sources believe they are product-related, meaning Facebook (NASDAQ:FB) is still building the video feature into its app and website. TV efforts could now take until late July or early August, and it's possible it may take even longer.

BP is celebrating the start of production from Quad 204, one of the largest field redevelopments in North Sea history. Output from the project will ramp up to 130K bpd this year and help double the company's output in the area by the end of the decade. BP and its partners budgeted £4.4B for the venture.

Major blow to Big Tobacco? A key lobby group has cut its ties to the industry following criticism over its attempts to influence tax policy in the sector. The International Tax and Investment Center, which has been sponsored by British American Tobacco (NYSEMKT:BTI) and Philip Morris (NYSE:PM), has asked tobacco representatives to resign from its board and will no longer accept sponsorship contributions from tobacco companies.

As part of a continuing drive to spin off non-core assets, AstraZeneca (NYSE:AZN) has sold the European rights to its aging beta-blocker heart drug Seloken to Italy's Recordati (OTC:RCDTF) for $300M. Describing 2017 as a "pivotal" year, AstraZeneca is putting its faith in a series of new drugs in an effort to deliver fresh growth and reverse years of revenue declines.

A merger of equals... Huntsman (NYSE:HUN) and Clariant (OTCPK:CLZNY) have revealed a $20B all-stock tie-up, in the latest high-profile transaction across the diversified chemicals sector. The business, to be called HuntsmanClariant, will create a formidable industry challenger, with headquarters in Switzerland but main operations in Texas. HUN +5.6% premarket.

Amazon could be looking to expand its cashier-free grocery stores to the U.K. and Europe in the future. The company recently filed several trademark applications related to its supermarkets with Britain's Intellectual Property Office and its EU equivalent. Amazon's (NASDAQ:AMZN) Go stores are designed for customers to walk in, take what they want, and leave, all without having to go through a checkout line.

Japan's SoftBank and Saudi Arabia's sovereign wealth fund have launched the world's largest technology fund, a nearly $100B vehicle that will acquire both minority and majority stakes in both private and public companies. Softbank (OTCPK:SFTBY) CEO Masayoshi Son said the Vision Fund "will help build and grow businesses creating the foundational platforms of the next stage of the Information Revolution."

Today's Markets

In Asia, Japan +0.5%. Hong Kong +0.9%. China -0.5%. India +0.4%.
In Europe, at midday, London +0.4%. Paris flat. Frankfurt -0.5%.
Futures at 6:20, Dow flat. S&P -0.1%. Nasdaq flat. Crude +0.9% to $51.10. Gold +0.2% to $1256.10.
Ten-year Treasury Yield flat at 2.25%

Today's Economic Calendar

8:30 Chicago Fed National Activity Index
10:00 Fed's Kashkari speech
7:00 PM Fed's Reserve Gov. Lael Brainard speech

 

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Wall Street Breakfast: Rout Eases As Trump Heads Overseas

Author: skywalker   |  Publish date: Fri, 19 May 2017, 09:13 AM


Oil is over $50/bbl and global equities are flashing green as President Trump embarks on his first overseas trip since taking office, visiting Saudi Arabia, Israel and the Vatican. Major deals are expected to be signed during his visit, as the Saudis look to seal contracts with General Electric (NYSE:GE), Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), National Oilwell Varco (NYSE:NOV), Nabors Industries (NYSE:NBR) and Rowan Companies (NYSE:RDC).

Economy

Japan and other remaining members of the Trans-Pacific Partnership will this weekend decide how to revive the trade agreement ditched by President Trump. Their trade ministers will talk on the sidelines of an Asia-Pacific Economic Cooperation meeting in Vietnam, where newly appointed U.S. Trade Representative Robert Lighthizer is due to give more detail of Washington's trade plans.

Time to renegotiate NAFTA? In a letter to congressional leaders, Robert Lighthizer said the Trump administration would begin talks on the trade agreement with Canada and Mexico by Aug. 16. The 90-day consultation period will give Congress, industries and the American public time to discuss better terms for U.S. workers and manufacturers.

"We do not support a separation of banks from investment banks. We think that would be a very significant problem for financial markets and the economy," Treasury Secretary Steven Mnuchin told the Senate Banking Committee. "There are aspects of it [Glass-Steagall Act] that we think may make sense. We never said before we support a full separation of banks and investment banking."

The release of the European Commission's consumer confidence figure will provide an early indication of what impact Emmanuel Macron's victory could have on the eurozone economy’s near-term growth prospects. The data will be released at 10 a.m. ET. Economists expect the measure to rise to minus 3 from minus 3.6 in April, which would be its highest level since July 2007.

Greece's parliament has approved a raft of fresh austerity measures, including pension cuts and tax hikes sought by the nation's foreign creditors. The step paves the way for eurozone finance ministers to clear the next disbursement of funds to Athens when they meet on Monday to discuss ways to lighten the country's debt burden.

As street protests continue in Venezuela, President Trump called the situation there a "disgrace to humanity" and said the political crisis was possibly the worst of its kind in decades. Shortly thereafter, the U.S. Treasury slapped sanctions on eight members of Venezuela's Supreme Court, charging them with undermining the country's democratic legislature in support of a corrupt government.

It was a chaotic day for Brazil's markets on Thursday as stocks and bonds tumbled, and the real posted its biggest slide since 1999. President Temer declared he won't step down, saying a full investigation would reveal his innocence on allegations of a cover-up. The forces aligned against the president may result in the second impeachment in Latin America's biggest country in just over a year.

Iranians are heading to the polls in a high-stakes presidential election that pits a moderate incumbent who has sought closer ties with the West against a hard-liner suspicious of that agenda. Hassan Rouhani is seeking a second four-year term against challenger Ebrahim Raisi, a cleric who emerged only recently as a serious contender and is close to Supreme Leader Ayatollah Ali Khamenei.

Stocks

Bitcoin is now just $100 away from doubling its price in 2017 as the cryptocurrency gets within striking distance of $2000. One of the reasons for the move is "buying as a hedge against political chaos," said Brian Kelly, CEO of BKCM, which runs a digital assets strategy. Other factors driving the price higher include increased demand from Japan and South Korea. Related tickers: COIN, OTCPK:BTCS

"Our goal - going back to regulatory reform - is should you move the down payment requirement from 20% to 10%? It wouldn't introduce that much risk but would actually help a lot of mortgages get done," Brian Moynihan told CNBC. BofA (NYSE:BAC) was the top U.S. mortgage lender ahead of the 2008 mortgage crisis, causing it to face greater losses, both from defaults and litigation, than any other bank.

Tim Cook has been spotted at the Apple (NASDAQ:AAPL) campus test-driving a device that tracks blood sugar and was connected to his Apple Watch. It follows a report from CNBC last month, which said the company has a team in Palo Alto working on the "holy grail" for diabetes: Non-invasive and continuous glucose monitoring. Current trackers rely on tiny sensors that penetrate the skin.

In an escalating war with Apple Music (AAPL), streaming music market leader Spotify (Private:MUSIC) has announced the acquisition of Niland, its fourth big purchase of the year. The startup offers a product focused on providing accurate search and recommendation options for music, signaling Spotify's strategy of incorporating more AI into its system.

Videogame sales grew for the second straight month - the first time that's happened since November 2015. Overall sales increased 10%, to $636M, the second straight increase after nine straight Y/Y declines, according to NPD Group. Hardware sales again led the way, up 37% to $195M, thanks to the Nintendo Switch (OTCPK:NTDOY). Related tickers: EA, ATVI, GME, GLUU, KING, ZNGA, TTWO

The FCC has voted 2-1 to start a process that would culminate in eliminating the classification of Internet service providers as common carriers, rolling back net neutrality rules formed under the last administration. The agency approved a Notice of Proposed Rulemaking that changes the Title II classification and will take comments until Aug. 16 (with final decisions to come after that). Related tickers: T, VZ, TMUS, S, CMCSA, CHTR, CTL, FTR, CCOI, DISH, NFLX, ELNK

Another notch in Facebook's video belt comes as the company seals a deal to broadcast a live Major League Baseball game each Friday, while Twitter's (NYSE:TWTR) feed will be bumped to Tuesdays. That's a 20-game package; the agreement starts this week, with Colorado at Cincinnati. Facebook (NASDAQ:FB) will also partner with e-Sports league ESL to broadcast content.

Uber has threatened to fire the man at the center of its legal battle with Alphabet (GOOG, GOOGL), telling its top driverless technology engineer to either deny taking files from his former employer or turn them over. Anthony Levandowski is accused of downloaded 14,000 confidential files before he left the company to launch his own self-driving startup, Otto, that was acquired by UBER for $680M.

Volkswagen will likely pick a new chief executive officer from within the carmaker's own ranks, CEO Matthias Mueller told Handelsblatt, saying he's "already in talks with the supervisory board." Mueller's contract is not due to expire until mid 2020, but the process of picking a new VW (OTCPK:VLKAY) leader needs to be initiated with plenty of advance notice.

Shares in Takata closed up 20% in Tokyo after four global automakers said they would pay $553M to settle with vehicle owners for losses linked to the recall of the company's products. In January, Takata (OTCPK:TKTDY) agreed to $1B in criminal penalties, including $975M in restitution paid to carmakers who bought their airbags and consumers who were injured by them.

Jared Kushner personally asked the CEO of Lockheed Martin (NYSE:LMT) to lower the price of a radar system so Saudi Arabia could afford to include it in an arms deal, according to a report by the NYT. It's part of a $110B weapons sale the Trump administration hopes to seal with Saudi Arabia this weekend, which would include U.S.-built planes, ships and precision-guided bombs.

Thursday's Key Earnings

Alibaba (NYSE:BABA) +0.5% on mixed results.
Applied Materials (NASDAQ:AMAT) +0.4% AH on record profits.
Gap (NYSE:GPS) +4.1% AH helped by Old Navy.
McKesson (NYSE:MCK) +8.2% AH on fiscal Q4 beat.
Salesforce (NYSE:CRM) +1.4% lifting its outlook.
Wal-Mart (NYSE:WMT) +3.2% on solid comparable sales.

Today's Markets

In Asia, Japan +0.2%. Hong Kong +0.2%. China flat. India +0.1%.
In Europe, at midday, London +0.5%. Paris +0.5%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.1%. S&P +0.2%. Nasdaq +0.2%. Crude +1.2% to $50.26. Gold +0.1% to $1253.50.
Ten-year Treasury Yield flat at 2.24%

Today's Economic Calendar

9:15 Fed's Bullard: U.S. Monetary and Economic Policy
1:00 PM Baker-Hughes Rig Count
1:40 PM Fed's Williams Speech

 

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Wall Street Breakfast: Push To Repeal Net Neutrality

Author: skywalker   |  Publish date: Thu, 18 May 2017, 08:30 AM


Net neutrality is in focus as the FCC gears up for a vote today that will likely roll back one of the signature Internet policies from the Obama-era. Chairman Ajit Pai maintains that current rules went too far in imposing stifling regulatory burdens on broadband providers, while consumer advocates and tech firms feel they protect Internet users and website owners. Related stocks: CMCSA, CVC, T, VZ, NFLX, CTL, CHTR, FTR, ELNK, DISH, CCOI

Economy

Following Wall Street's worst day of 2017... Global equities took another hit overnight after Reuters reported at least 18 calls between Russian officials and advisers to the Trump campaign (including Michael Flynn) during the last seven months of the presidential election. The DOJ has meanwhile appointed former FBI Director Robert Mueller as special counsel to oversee the Russia investigation, adding pressure on President Trump and turmoil to Capitol Hill.

Looking to calm some of the storm, President Trump on Wednesday met with four candidates to lead the FBI, including Acting Director Andrew McCabe, former Sen. Joe Lieberman, former Oklahoma Gov. Frank Keating and ex-FBI official Richard McFeely. Trump has promised a "fast decision" for a new director, telling reporters on Saturday that he thinks "the process is going to move quickly."

Japan's economy picked up speed in the first three months of 2017, extending its most recent stretch of growth under Shinzo Abe to five quarters and marking the longest expansion in a decade. Stronger global demand, especially for tech-related items, and an improvement in household spending helped GDP beat forecasts and rise 2.2% on an annualized basis.

Details on China's "One Belt, One Road" initiative remain scarce, but Pakistani newspaper Dawn has given a look into how comprehensive it really is. Beijing is set to invest more than $55B in its neighbor, building power plants, roads and railways that connect China to the Arabian Sea. The projects could account for 20% of the country's GDP over the next five years and boost growth by about 3 percentage points.

"I believe profoundly in the overhaul of the Europe," French President Emmanuel Macron told reporters last night, before meeting with the European Council President and stating he was "counting" on him for the revamp. "Europe needs your energy, imagination and courage," Donald Tusk responded. "Hope for a Europe that protects, wins and looks to the future."

A fresh political crisis is hitting Brazil, reminiscent of last year's impeachment saga, following reports that President Temer was secretly recorded discussing hush money pay-offs to a jailed associate. According to O Globo, the tapes were presented to prosecutors as part of a plea bargain by Joesley and Wesley Batista, brothers who run the country's biggest meat-packing firm JBS (OTCQX:JBSAY).

Is the Iran deal still intact? The Trump administration has taken a step to adhere to the nuclear agreement by signing a sanctions waiver for Tehran, as stipulated in the pact. At the same time it's ratcheting up other sanctions related to human rights abuses and the country's ballistic missile program a day ahead of elections across the Islamic Republic.

Stocks

Apple is tapping the debt market again, issuing a dual-tranche euro denominated bond, even as it maintains a cash pile of over $250B. Pricing for the 8- and 12-year note is expected to be finalized today, while order books for the bonds are said to have surpassed €5B. "We intend to use such net proceeds for general corporate purposes," Apple (NASDAQ:AAPL) said in an SEC filing.

Calling it a "proportionate and deterrent fine," the European Commission has slapped Facebook (NASDAQ:FB) with a €110M penalty for providing "misleading information" about its purchase of WhatsApp in 2014. Facebook had said it could not automatically match user accounts on its namesake platform and WhatsApp but two years later launched a service that did exactly that.

Today also marks the five-year anniversary of Facebook's (FB) IPO. In case you don't remember, it didn't go smoothly. Shares began trading late and investors complained their orders weren't confirmed, leading to lawsuits and big banks cutting estimates. While many analysts at the time thought shares were overvalued, Facebook has returned over 256% since its IPO and now has a market cap of nearly $420B.

Plagued by inappropriate behavior and a troubling culture, Fox News (FOX, FOXA) has been making big changes to its upper management, and now it's overhauling its physical newsroom. The network said the redesign will enhance communication and creativity among its programming, news and digital teams and create a much more open space than what currently exists at its Midtown headquarters.

Intel has thrown cold water on rumors stating it's licensing graphics chip technology from Advanced Micro Devices (NASDAQ:AMD). After AMD failed to disclose any such deal yesterday - during its annual analyst meeting - its stock plunged over 12%. AMD is continuing its downward spiral before the open, falling almost 3%, while Intel (NASDAQ:INTC) is unchanged.

Highlights from Google's I/O developer conference: Mobile phone apps took center stage, as well as new features for Google Home (GOOG, GOOGL), a job search tool and even new virtual reality headsets. Google Assistant, which will now be available on iPhone, will soon be able to complete transactions and supply information about objects captured via camera. Android O will come out later this summer.

Pandora Media +8% premarket on the latest report that Sirius XM (NASDAQ:SIRI) is in talks for a takeover of the struggling streamer. One of NY Post's most "optimistic" sources put a bid as high as $12-$13 a share, a price "immediately shot down" by familiar sources. In March, Pandora (NYSE:P) chief Tim Westergren said the company wasn't for sale and would get to profitability this year.

The U.S. Commerce Department will launch an investigation today into Boeing's (NYSE:BA) unfair trade claims against Bombardier (OTCQX:BDRAF). It's a two-track action that could lead to duties on the Canadian firm's new CSeries plane and pits Boeing against Bombardier customer Delta Air Lines (NYSE:DAL). Boeing alleges the jetliners are being dumped below cost in the U.S. market.

Despite strong opposition from the airline industry, the U.S. government met European officials in Brussels yesterday to discuss expanding a ban on laptops in airplane cabins. It comes amid fears a bomb could be concealed in electronic devices. While a decision is not expected this week, the two sides will meet again in Washington next week for more talks about risks to air travel. Related tickers: AAL, DAL, UAL

Legal action against Fiat Chrysler is bubbling over. FCAU shares are down 4.2% premarket after reports emerged that the U.S. Justice Department will sue the automaker over excess diesel emissions. The company maintains that software in its cars wasn't designed to cheat emissions tests, but investigators say Fiat still hasn't fully explained its purpose.

Once the world's biggest car company in terms of sales, General Motors (NYSE:GM) has been retreating from several major and unprofitable markets under CEO Mary Barra. The latest moves? GM will stop selling vehicles in India, but will continue to manufacture and export cars from the country, and sell its operations in South Africa.

Wednesday's Key Earnings

Cisco (NASDAQ:CSCO) -7.7% AH on layoffs, disappointing guidance.
Target (NYSE:TGT) +0.9% after topping expectations.

Today's Markets

In Asia, Japan -1.3%. Hong Kong -0.6%. China -0.5%. India -0.7%.
In Europe, at midday, London -1.4%. Paris -1.2%. Frankfurt -0.9%.
Futures at 6:20, Dow -0.5%. S&P -0.4%. Nasdaq -0.3%. Crude -1.8% to $48.54. Gold +0.4% to $1263.30.
Ten-year Treasury Yield -3 bps to 2.19%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:45 Bloomberg Consumer Comfort Index
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
1:15 PM Fed's Mester speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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Wall Street Breakfast: Concerns Trump Risk Sentiment

Author: skywalker   |  Publish date: Wed, 17 May 2017, 07:21 AM


Concern that President Trump's reform agenda could be slowed down is weighing on markets, with traders worried that political noise will morph into economic risk. Fears of obstruction of justice charges (with regards to Comey-Flynn) and the possible discussion of classified information with Russia are in the spotlight. Along with a sagging dollar, U.S. stock index futures are down 0.5%, while safe havens climb, with gold up 1% to $1248/ounce.

Economy

"It sounds to me like it [NAFTA negotiations] is going to be trilateral unless there's problems that come up with that sort of machinery, then of course they would do it bilaterally," announced Republican Senator Charles Grassley. He made the comments after leaving a Senate Finance Committee meeting with Commerce Secretary Wilbur Ross and new U.S. Trade Representative Robert Lighthizer.

Inflation in the eurozone rebounded to 1.9% in April, in line with the ECB's target of close to, but below, 2% inflation. Higher transport, package holiday and heating oil costs were the biggest drivers of the increase. The euro ticked higher against the dollar following the figures, with the currency climbing above $1.11, its highest level since Nov. 9.

President Tayyip Erdogan touted "outstanding" American relations on Tuesday, but emphasized Turkey will not accept Syrian Kurdish fighters in the region, while stopping short of directly criticizing a U.S. decision to arm them. "We've had a great relationship and we will make it even better," President Trump said in a joint appearance, calling Erdogan a strong ally in the fight against terrorism.

Australia's AAA credit rating is safe for now, as the last of the three major agencies reaffirmed the nation's top investment status following last week's release of the federal budget. S&P's decision had been hotly anticipated in financial markets, because it's the only one to have the rating on a negative watch, meaning it sees a possible downgrade over the next couple of years.

In another step to open up China's capital markets, Hong Kong and Chinese regulators have formally approved a long-awaited scheme to connect China's $9.5T bond market with overseas investors. The so-called Bond Connect program has been in the works since Beijing launched a similar scheme connecting Hong Kong and Shanghai stock markets in 2014.

"The reality is that there is a high possibility of a military conflict at the NLL (Northern Limit Line) and military demarcation line," declared South Korea's newly-elected President Moon Jae-in. He also said Pyongyang's nuclear and missile capabilities seem to have advanced rapidly recently, but Seoul was ready and capable of striking back should the North attack.

Stocks

Amazon is hiring a business lead to figure out how the company can break into the multibillion-dollar pharmacy market, CNBC reports. For the last few years, Amazon (NASDAQ:AMZN) has held at least one annual meeting to discuss whether it should enter the business, but with the rise of high-deductible plans and the trend towards consumers paying for healthcare, it's ready to get more serious. Related tickers: CVS, RAD, WBA, ESRX, UNH

Colgate-Palmolive CEO Ian Cook recently signaled he would be open to selling the company, which has grappled with sluggish demand for its toothpaste, deodorants and food products, for $100 a share. According to the NY Post, the $88B price tag surfaced at a meeting with institutional investors that took place in recent weeks. Among the possible suitors: UL, PG, JNJ and 3G Capital. CL +3.5% premarket.

It's a symbolic step for the country's recovering banking sector. Britain has sold its last remaining stake in Lloyds (NYSE:LYG), making the lender the first to exit state-ownership after the financial crisis of 2007-09. Lloyds said the government will make a profit of about £900M from the bailout, having spent more than £20B rescuing the bank.

The New York Stock Exchange has gotten the green light to introduce a "speed bump" to all trades on NYSE MKT (NYSE:ICE), one of the Big Board's smaller sisters. That will make it the second U.S. exchange to include an artificial delay. Rival IEX Group, made famous by Michael Lewis's 2014 book Flash Boys, pioneered the speed bump as a way to foil high-frequency traders.

Meanwhile, the SEC is putting a recent decision on hold to approve the first quadruple-leveraged ETF. The earlier approval - given by the SEC's staff, not the politically appointed commissioners - has been reconsidered and doesn't allow Intercontinental Exchange's (ICE) ForceShares Daily 4X US Market Futures Long Fund and Short Fund to begin trading.

Twitter climbed 1.4% yesterday, but has given back the gains premarket, on word that co-founder Biz Stone is rejoining the company on a full-time basis. Stone created Twitter (NYSE:TWTR) along with Jack Dorsey, Evan Williams and Noah Glass. "There's something about the personality of a company that comes from the folks who start it," he said in a blog post. "Jack coming back was a big step forward. And now, it's my turn."

Get ready for Google I/O 2017! The annual developer conference starts today, with CEO Sundar Pichai taking the stage for a keynote address at 1 p.m. ET. It's not quite as predictable as Apple's (NASDAQ:AAPL), but it's getting there: There won't be a new phone, machine learning will get plenty of stage time, as well as the next version of Android (GOOG, GOOGL). Other topics could include Google Home and Assistant, and a new VR headset.

Apple will unveil new laptops during its annual developer conference, known as WWDC, next month, sources told Bloomberg. The MacBook Pro will get a new Kaby Lake processor from Intel (NASDAQ:INTC), while the 12-inch MacBook will feature faster Intel chips. Apple (AAPL) is also considering updating the 13-inch MacBook Air, but it isn't clear if the company plans to release it just yet.

It seems that Yum Brands' $130M investment in Pizza Hut (NYSE:YUM) couldn't have come at a better time for the struggling brand. For the last four years, Pizza Hut has been named the "best pizza chain brand of the year" by Harris Poll's EquiTrend study, which analyzes thee factors - familiarity, quality and purchase consideration. However, this year, the chain was usurped by rival Papa John's (NASDAQ:PZZA).

Sotheby's has sold the world's most expensive earrings for $57M, topping the $17.7M price of a pair sold by Christie's last year. The two pear-shaped stones are perfectly similar except for their color: one is pink while the other is blue. "Certainly people who own important colored diamonds are aware that the market is strong," said David Bennett, worldwide chairman of Sotheby's (NYSE:BID) International Jewelry division.

For the second time in a month, the DOJ has sued UnitedHealth (NYSE:UNH), accusing the nation's largest health insurer of obtaining over $1B from Medicare to which it was not entitled. The complaint points to "risk adjustment" payments (based on inaccurate data submissions) and follows a lawsuit brought by former UnitedHealth executive Benjamin Poehling, whose whistleblower case was filed under seal in 2011.

"This airplane will change the face of the single-aisle market," said Boeing (NYSE:BA) Commercial Airplanes CEO Kevin McAllister, following the delivery of the first 737 Max to Lion Mentari Airlines. The hand-off in Seattle was only one day later than first scheduled, after the planemaker quickly recovered from a possible engine manufacturing defect, which had grounded the fledgling Max fleet last week.

Dieselgate 2? After a complaint from the German government over its test results, Handelsblatt has revealed that the European Union will launch a legal action against Italy and, specifically, its transport department. It's frustrated at the lack of cooperation over defeat devices and for not vigilantly policing Fiat Chrysler's (NYSE:FCAU) emissions in the wake of the scandal that engulfed Volkswagen (OTCPK:VLKAY).

Diving into auto security after losing its smartphone dominance, BlackBerry (NASDAQ:BBRY) is working with carmakers to remotely scan vehicles for computer viruses and tell drivers to pull over if they are in critical danger. The service, which would also be able to install security patches to an idle car, could launch as early as next year and generate about $10/month per vehicle for BlackBerry.

Uber CEO Travis Kalanick rang up Tesla's (NASDAQ:TSLA) Elon Musk last summer to propose a partnership on self-driving cars, according to Wild Ride, a book by Fortune magazine's Adam Lashinsky scheduled for release next week. Musk reportedly refused to work with UBER, and a few days later unveiled his own effort to bring an autonomous car-sharing fleet to market in "Tesla MasterPlan Part 2."

Tuesday's Key Earnings

Home Depot (NYSE:HD) +0.6% beating estimates.
Jack in the Box (NASDAQ:JACK) +11.2% AH evaluating alternatives.
Staples (NASDAQ:SPLS) -3.5% on declining comp-sales.
Stratasys (NASDAQ:SSYS) +2.4% after in-line results.
TJX Companies (NYSE:TJX) -4.1% with weak profit guidance.
Urban Outfitters (NASDAQ:URBN) +1.7% AH boosted by online sales.

Today's Markets

In Asia, Japan -0.5%. Hong Kong -0.2%. China -0.3%. India +0.3%.
In Europe, at midday, London flat. Paris -0.4%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.5%. S&P -0.5%. Nasdaq -0.5%. Crude +0.5% to $48.91. Gold +1% to $1248.
Ten-year Treasury Yield -3 bps to 2.29%

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories

 

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Wall Street Breakfast: Movement In The Currency Market

Author: skywalker   |  Publish date: Tue, 16 May 2017, 10:10 AM


As oil prices churn higher, the greenback is down for a fifth day, with the dollar index flirting with its lowest levels since the election of President Trump. The downward movement is giving a boost to the euro, up 0.8% to over $1.10, along with positive eurozone GDP growth and German economic data. Sterling can't seem to decide which way to turn, see-sawing heavily overnight after the release of strong inflation figures.

Economy

The EU's need for deep reforms is so dire that even the idea of changing the EU treaty is "not taboo," French President Emmanuel Macron said during his first joint news conference with Angela Merkel. "First, we need to work on what we want to change, and then if it turns out it needs a treaty change, then we're prepared to do that," the German Chancellor declared. Did Brexit come too early?

According to reports first published in the Washington Post, President Trump allegedly shared highly classified material during last week's meeting with Russia's foreign minister and ambassador. "The story that came out tonight as reported is false," National Security Adviser Lt. Gen. H.R. McMaster said outside the White House. "I was in the room. It didn't happen."

Ukraine is pushing the Trump administration to take a direct role in peace talks over its eastern regions, including possible three-way talks with Moscow and Kiev on ending the violence. The U.S. initially led the charge to impose economic sanctions on Russia for the Kremlin's support of rebels, but left high-level political talks in European hands.

A day that began with largely peaceful protests against Venezuela's socialist government took a violent turn Monday as fierce clashes between state security and demonstrators killed at least two people. Protesters have been on the streets daily since early April to demand elections, freedom for jailed activists, foreign humanitarian aid and autonomy for the opposition-controlled legislature.

The oil market has essentially reached a balance and will continue to accelerate in the near term, the IEA said in its monthly report, just nine days before OPEC's much-anticipated ministerial meeting. The organization kept its global demand growth forecast unchanged at 1.3M bpd for 2017 due to slowdowns in previously robust consumer countries like the U.S., Germany and Turkey.

Following Washington's exit from the TPP, the 11 remaining members have kick-started discussions on how to proceed without the U.S. and recently wrapped up talks in Toronto. "Since we have come thus far, Japan must now take on a leadership role and bring the talks forward," Shinzo Abe told CNBC. "Momentum" should not be lost, he added, but left the door open for a U.S. return to the deal.

Stocks

Businesses that failed to update Windows-based computer systems that were hit by the WannaCry ransomware attack could be sued over their lax cyber security, but Microsoft (NASDAQ:MSFT) likely enjoys protection from such lawsuits. "Using outdated versions of Windows that are no longer supported raises a lot of questions," said Christopher Dore, a digital privacy lawyer at Edelson PC. "It would arguably be knowingly negligent to let those systems stay in place."

Pirates of the box office? Hackers claim to have stolen an upcoming Disney (NYSE:DIS) movie for a ransom, and will release the film if the company doesn't transfer the fee via bitcoin. CEO Bob Iger said he's not paying, but is working with the FBI on the matter. The issue is reminiscent of Netflix's (NASDAQ:NFLX) recent troubles with Orange is the New Black, which had most of its new season released online by hackers.

Facebook is still accessible in Thailand - one of the most Facebook-active countries in Asia - despite concerns that authorities would shut down the social network. Thailand's telecoms regulator said last week it would give Facebook (NASDAQ:FB) until Tuesday to take down 131 web addresses with content deemed threatening to security or which violated strict "lese majeste" laws.

Yahoo has announced plans to buy back $3B of its common stock - a proposal that will expire on June 13. The company said the purpose of the offer, which will see a purchase price of at least $37 a share, is to provide liquidity to stockholders forced to sell their stock. Yahoo (NASDAQ:YHOO) shares have hardly moved on the news, up just 0.5% premarket.

Weighed down by its Indian unit and foreign currency movement, Vodafone (NASDAQ:VOD) posted a full-year loss of €6.1B. The mobile operator expects earnings and cash flow to improve, however, with lower spending and increased customer revenue. "Our confidence in the outlook is demonstrated by another 2% increase in our dividend," CEO Vittorio Colao declared. VOD +4% premarket.

Toshiba plunged over 12% overnight after forecasting a return to profit over the next 12 months, notwithstanding the highly complicated sale of its flash memory business. Unless it can sell the division, Toshiba's (OTCPK:TOSYY) net equity will probably remain at around negative ¥540B ($4.8B) for two straight years through March 2018. Its shares also run the risk of being delisted.

HSBC has settled claims by a group of U.S. bondholders that it conspired with rivals to rig Libor. "We are pleased the matter is resolved," said HSBC spokesman Rob Sherman, but he didn't disclose the terms of the settlement. The benchmark interest rate is used to set rates on hundreds of trillions of dollars of transactions, including for credit cards, student loans and mortgages.

13F filings are rolling in, offering a glimpse into what hedge fund managers are buying and selling. But relying on the filings to develop an investment strategy comes with some risk because the disclosures are backward looking and come out 45 days after the end of each quarter. Click on the link to see Seeking Alpha's coverage.

The Cleveland Cavaliers are joining a group of NBA teams that will feature a corporate logo on their uniforms starting next season. The defending champions have agreed to a multi-year sponsorship agreement with the Akron-based Goodyear Tire & Rubber Co. (NYSE:GT). Financial terms were not disclosed, but the deal, which includes advertising and merchandise sales, could be worth $10M annually.

Another one bites the dust... U.S. retailer Rue21, owned by Apax Partners, has filed for Chapter 11, as shoppers shift their spending online and away from teen fashion trends. Rue21 entered into a Restructuring Support Agreement with certain stakeholders and expects to continue normal operations throughout the Chapter 11 process.

Elliott Management has called for an independent review of BHP's petroleum business, while CEO Andrew Mackenzie rejected the claim that he's not been open to suggestions. "There is extremely broad and deep-rooted support for proactive steps to be taken by management," declared the activist investor, which owns 4.1% of the miner's U.K. listed branch. BHP +0.5% premarket.

SolarCity founder Lyndon Rive (and cousin of Elon Musk), who steered the growth of the biggest U.S. residential solar company before driving its sale to Tesla (NASDAQ:TSLA), is leaving the electric vehicle maker in June. "My skill set and what I love doing is starting and running companies," he told Reuters. "I can hand off the baton and give myself the opportunity to do something that could also have another impact."

Looking to boost profits and its sliding stock price, Ford (NYSE:F) plans to slash its global workforce (currently 200K) by about 10%, WSJ reports. The job cuts are expected to be outlined as early as this week. Ford shares have suffered during CEO Mark Fields's three-year tenure and the company's market value has slipped far behind those of Tesla (TSLA) and General Motors (NYSE:GM).

Happy Anniversary! It's now been twenty years since Amazon (NASDAQ:AMZN) made its public debut on the Nasdaq and in that time shares have gone from $1.50 on a split-adjusted basis to $960. What started as an online book seller has evolved into a retailing giant and dominant provider of cloud technology. Amazon currently has a market cap of $465B, with annual revenues of $136B.

Microsoft's 21st annual CEO Summit kicks off today in Redmond, Washington, where leaders will discuss the ties between business and technology. The summit follows last week's Microsoft (MSFT) Build event, where the company unveiled a new update to Windows, which allows users to jump easily from mobile to desktop, and hand-held controllers for virtual reality.

More big events... JPMorgan (NYSE:JPM) shareholders are gathering in Wilmington, Delaware for the bank’s annual meeting at 10 a.m. Investors are likely to be awaiting what Jamie Dimon will say about the Trump administration's policies and the economy. The SkyBridge Alternatives Conference, or SALT, a three-day event for hedge fund managers, will also begin in Las Vegas.

Today's Markets

In Asia, Japan +0.3%. Hong Kong -0.1%. China +0.8%. India +0.9%.
In Europe, at midday, London +0.6%. Paris -0.4%. Frankfurt -0.1%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq +0.1%. Crude +0.9% to $49.31. Gold +0.3% to $1233.70.
Ten-year Treasury Yield flat at 2.34%

Today's Economic Calendar

8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 E-Commerce Retail Sales

 

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Wall Street Breakfast: Cybersecurity Stocks In Focus

Author: skywalker   |  Publish date: Mon, 15 May 2017, 09:19 AM


Security officials are scrambling to find out who was behind the WannaCry ransomware attack, which struck 200K victims in at least 150 countries, and is believed to have been stolen from the NSA. Shares of cybersecurity stocks are on watch amid fears a second wave could cause more chaos, while Microsoft (NASDAQ:MSFT) pinned blame on the U.S. government for not disclosing more software vulnerabilities. Premarket movement: HACK +10%, FEYE +3% CYBR, +3%, CSCO +2%, PANW +2%, SYMC +2%, QLYS +1%.

Economy

"We are working to strengthen the contribution of trade to our economies," stated a G7 communique issued on Saturday that once again fell short of an explicit promise to avoid protectionism. U.S. Treasury Secretary Steven Mnuchin wrapped up the finance chief gathering with the following statement: "We do not want to be protectionist but we reserve our right to be protectionist to the extent that we believe trade is not free and fair."

Oil prices are up 2.7% to $49.15 a barrel after Saudi Arabia and Russia, the world's top two producers, said that a crude production cut would be extended from the middle of this year until March 2018. While the output cut will initially be on the same volume terms as before, they hope other producers will join in their efforts. OPEC is due to meet in Vienna on May 25.

Emmanuel Macron was sworn in as French president on Sunday, promising to return confidence to a nation that had been "broken" by a spate of terror attacks and a sluggish economy. European equity funds saw record inflows totaling $6.1B in the days after Macron's election win, according to data from EPFR, while BofA analysts feel that flows could increase further in the coming months.

Centrists are well-positioned to be in charge of Europe's two largest economies. Angela Merkel's CDU party won a clear victory in weekend state elections held in North Rhine-Westphalia (home to more than 20% of German voters), while the Social Democrats recorded their lowest share of the region's vote since WW2. It's the last vote before September's general election.

Greece has slashed its 2017 growth forecast to 1.8% from 2.7%, according to a mid-term budget plan, driven by uncertainty caused by delays in concluding its latest review of bailout reforms. The projections are also lower than those of the EU Commission, which cut its growth estimates last week to 2.1%, from 2.7% predicted three months ago.

China managed to rope in the U.S. at the last minute for its weekend Silk Road summit as President Xi hailed his country's initiative as "the project of the century." Matt Pottinger, Special Assistant to the President and senior director for East Asia at the National Security Council, led the American delegation to the forum.

The United States will "continue to tighten the screws" on North Korea, declared Nikki Haley, U.S. Ambassador to the United Nations, after Pyongyang's latest missile test. She also mentioned sanctions and working with the international community. Following the launch, the isolated regime boasted that its new rocket could carry a "large-size heavy nuclear warhead."

However, Pyongyang is willing to have dialogue with the U.S. if "the conditions are there," said Choi Son Hui, North Korea's foreign ministry director general for U.S. affairs. The remarks come days after President Trump said he was willing to meet with Kim Jong Un "under the right circumstances." The last time the two countries sat at the negotiating table was in 2008.

Stocks

JPMorgan has agreed to purchase a building in Dublin with room for 1,000 staff as Ireland continues a major campaign to attract firms in the wake of Brexit. It has been mainly competing with Paris and Frankfurt to attract financial firms. "This new building gives us room to grow and some flexibility within the EU," said JPMorgan's (NYSE:JPM) Carin Bryans.

Google is changing how it enforces its ad policies: AdSense will now remove adverts on a page-by-page basis, instead of targeting entire websites that violate its standards. Since Google (GOOG, GOOGL) and its publishers share ad revenue, the more "surgical" approach will mean more money for the both of them and fewer disruptions.

The FTC kicked off 2017 by targeting Qualcomm (NASDAQ:QCOM) over allegedly anti-competitive behavior, and unsurprisingly, companies the chipmaker competes with agree. Intel (NASDAQ:INTC) and Samsung (OTC:SSNLF) have filed briefs supporting the agency's lawsuit, stating Qualcomm uses its dominant position in the mobile processor industry to squeeze others out.

The WSJ claims that The Legend of Zelda will follow in the footsteps of Animal Crossing, Super Mario and Fire Emblem as the next big name Nintendo (OTCPK:NTDOY) franchise heading to your mobile device. But the titles have yet to add significantly to Nintendo's bottom line. It earned less than ¥20B ($176.4M) from smartphone games in the fiscal year ended March 2017.

Potentially derailing a much-needed capital injection, Western Digital (NYSE:WDC) is seeking international arbitration to stop partner Toshiba (OTCPK:TOSYY) from selling its chips unit without consent. A legal battle could delay or put an end to the auction that could fetch some $18B and has attracted suitors such as KKR, Foxconn (OTC:FXCOF) and Broadcom (NASDAQ:AVGO).

Despite the fresh setback, Toshiba (OTCPK:TOSYY) shares climbed 3.4% in Tokyo, buoyed by news that progress is being made towards capping some of its nuclear liabilities in the U.S. The owners of the unfinished Vogtle plant in Georgia - led by Southern Co. (NYSE:SO) - have come to a preliminary agreement to limit Toshiba's guarantees on the much-delayed power project at about $3.6B.

Scientific instruments maker Thermo Fisher is in talks to buy drug ingredients producer Patheon (NYSE:PTHN). An agreement could be announced as early as this week, Bloomberg reports, but there's no certainty a deal will be reached. Patheon is worth about $3.8B based on its current share price, while Thermo Fisher (NYSE:TMO) has a market value of about $67B.

Escalating a fight with UBER, Alphabet's (GOOG, GOOGL) Waymo has signed a collaboration agreement with LYFT to bring autonomous vehicle technology into the mainstream. The two will work on pilot projects and other product development efforts. The alliance also makes Waymo a GM partner, by way of Lyft's work with (and investment by) the auto giant.

SpaceX is aiming to launch a fourth Inmarsat-5 (OTCPK:IMASY) satellite into space tonight, marking the heaviest load lofted by a Falcon 9 rocket to date. The departure comes two weeks after the last SpaceX (Private:SPACE) mission, matching a three-year-old company record for the shortest time between consecutive launches. It's targeting two per month for all of 2017 and once a week by 2019.

Today's Markets

In Asia, Japan -0.1%. Hong Kong +0.9%. China +0.2%. India +0.4%.
In Europe, at midday, London +0.1%. Paris -0.3%. Frankfurt -0.2%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq flat. Crude +2.7% to $49.15. Gold +0.3% to $1231.90.
Ten-year Treasury Yield flat at 2.33%

Today's Economic Calendar

8:30 Empire State Mfg Survey
10:00 NAHB Housing Market Index
4:00 PM Treasury International Capital

 

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