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Wall Street Articles

Author: skywalker   |   Latest post: Fri, 15 Dec 2017, 09:58 AM

 

Wall Street Breakfast: Focus Returns To Tax Reform

Author: skywalker   |  Publish date: Fri, 15 Dec 2017, 09:58 AM


U.S. stock index futures are set for a positive open as investors shake off concerns about the progress of U.S. tax reform. In the previous session, U.S. equities fell into the red by the close, with several Republican senators expressing last-minute doubts about the tax overhaul. The reservations come before a compromise plan set to be released by Congress today and final votes planned for early next week.

Economy

Latest NAFTA news: Vice President Mike Pence met with a handful of governors this past week, as well as representatives from automakers, to discuss how proposed changes could affect jobs and manufacturing. The meetings took place as NAFTA negotiators from the U.S., Canada and Mexico met behind closed doors at a downtown Washington hotel to update the decades-old accord.

EU leaders are heading to Brussels for a Euro Summit that will discuss the Economic and Monetary Union and Banking Union. A number of ideas have been explored by the Eurogroup ahead of the meeting, such as putting into operation a common backstop for the Single Resolution Fund, expanding the ESM and further developing the Ecofin Council Roadmap of June 2016.

Russia is not ready to sign up to new sanctions on North Korea that would strangle the isolated country economically, according to Deputy Foreign Minister Igor Morgulov. The news comes as UN Ambassador Nikki Haley showed off missile parts that Iran "indisputably" supplied to Houthi rebels in Yemen in a violation of UN resolutions.

South Africa's ruling ANC party is set to elect a new leader at its five-yearly national conference which begins Saturday. The two frontrunners are current President Jacob Zuma's ex-wife Nkosazana Dlamini-Zuma and Deputy President Cyril Ramaphosa. South Africa has witnessed its fundamentals plummet this year, slashing its economic growth outlook, while S&P cut the BRICS-member's local currency debt to "junk."

Stocks

Bitcoin buyers have been issued a "serious warning" from one of Britain's leading financial regulators. "If you want to invest in bitcoin, be prepared to lose all your money," Financial Conduct Authority CEO Andrew Bailey told BBC's Newsnight. He added that a lack of backing from governments and central banks, as well as similar risks to gambling, are evidence that the cryptocurrency is not a secure investment.

President Trump supports the deal that Walt Disney (NYSE:DIS) has struck to buy the film, television and international businesses from Twenty-First Century Fox (NASDAQ:FOXA), according to a White House statement. It's likely to face an antitrust review by the DOJ, which is run by a Trump appointee. Gabriel Sherman of NYMAG also reported that Trump called Rupert Murdoch ahead of the deal to make sure that Fox News would not be among the assets sold.

Amazon will soon resume selling the Apple TV (NASDAQ:AAPL) and Google Chromecast (GOOG, GOOGL), which were pulled from the e-commerce platform over two years ago for not supporting Prime Video (NASDAQ:AMZN). While the app became available for the Apple TV last month, it remains off the Chromecast. Google recently pulled YouTube from the Fire TV and Echo Show due to a lack of reciprocity.

Delaware's Supreme Court has ruled that a lower court erred in finding that the 2013 buyout of Dell (NYSE:DVMT) was vastly underpriced, which allowed shareholders opposed to the $24.9B deal to ask a judge for a higher value of their stock. The opinion will likely be welcomed by corporate dealmakers who have warned that the prior ruling would encourage hedge funds to seek a quick profit.

A restructuring is on the way... Teva Pharmaceutical (NYSE:TEVA) is cutting more than 25% of its workforce, or about 14,000 employees around the world, closing factories and research centers and suspending its dividend. "Making workforce reductions of this magnitude is difficult," CEO Kare Schultz wrote in a memo. "However, there is no alternative to these drastic steps in the current situation."

Hess shares rose almost 7% after the bell on Thursday after the WSJ reported that Elliott Management, which owns a 6.7% stake in the oil and gas company, called for a major shakeup. The hedge fund hopes to remove CEO John Hess or push him to make a sale. Elliott would also like to see Hess (NYSE:HES) capital returned via stock repurchases and is calling for dividend cuts to fund the buyback.

China's CNPC is considering taking over Total's (NYSE:TOT) stake in a giant Iranian gas project if the French company leaves the nation to comply with any new U.S. sanctions. Total signed the $1B deal to develop the South Pars gas field in July, which was the first major Western energy investment in the Islamic Republic since the lifting of international sanctions.

Due to complications from a recent illness, CSX Chief Executive Hunter Harrison has taken a medical leave of absence. The railway has named Jim Foote, a close confidant of Harrison who was hired in October as chief operating officer, to serve as acting CEO. CSX has scheduled a conference call for this morning to discuss the switch.

Ford is relocating its self-driving and EV units from Dearborn, Michigan to Detroit, marking the automaker's first facility within the city's limits in several years. The team in Corktown will be led by Sherif Marakby, Ford's (NYSE:F) VP of autonomous vehicles and electrification, while the company will begin testing its latest self-driving technology in 2018.

Similarly, BMW said it will spend over €100M on a test track for self-driving and electric cars in the Czech Republic, expanding its foray into alternative driving technologies. BMW (OTCPK:BAMXF) plans to introduce its first highly automated iNEXT model in 2021, and intends to increase battery-powered offerings to 25 models by 2025, about half of which will be fully electric.

Airbus has announced a complete overhaul of its top management as the planemaker grapples with corruption allegations. COO Fabrice Bregier will step down in February 2018, while CEO Tom Enders won't seek a new mandate when his term expires in 2019. Guillaume Faury, CEO of Airbus Helicopters (OTCPK:EADSY), will take over Bregier's role, putting him in line to take over the top job when Enders retires.

Thursday's Key Earnings

Adobe (NASDAQ:ADBE) +0.9% AH on digital media strength.
Costco (NASDAQ:COST) +2.3% AH with strong sales growth.
Oracle (NYSE:ORCL) -6.3% AH issuing weak cloud guidance.

Today's Markets

In Asia, Japan -0.6%. Hong Kong -1.1%. China -0.8%. India +0.7%.
In Europe, at midday, London +0.1%. Paris -0.4%. Frankfurt -0.3%.
Futures at 6:20, Dow +0.2%. S&P +0.1%. Nasdaq +0.2%. Crude +0.7% to $57.44. Gold +0.3% to $1260.30. Bitcoin +7.7% to $17806.
Ten-year Treasury Yield +1 bps to 2.36%

Today's Economic Calendar
8:30 Empire State Mfg Survey
9:15 Industrial Production
10:00 Atlanta Fed's Business Inflation Expectations
1:00 PM Baker-Hughes Rig Count
4:00 PM Treasury International Capital

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Wall Street Breakfast: Mouse Hunts Down The Fox

Author: skywalker   |  Publish date: Thu, 14 Dec 2017, 09:31 AM


Walt Disney's deal to buy assets from Twenty-First Century Fox (NASDAQ:FOXA) will value the latter at over $40 per share, or $75B, Reuters reports. The all-stock transaction expected to come today will include Twentieth Century Fox movie and TV studio, cable networks and international operations, as well as assets focused on news and sports. None of the Murdochs are expected to be given board seats at Disney (NYSE:DIS). FOXA +1.5% premarket.

Economy

Theresa May returns to another European summit today after lawmakers voted Wednesday evening to change her government's planned Brexit legislation. The House of Commons will now have the power to veto Britain's withdrawal treaty if they don't like the terms. Meanwhile, the Bank of England is set to hold rates at a monetary policy meeting today following its first hike in a decade.

Investors will also be eyeing the ECB and a press conference from Mario Draghi. While the central bank is almost certain to keep its policy stance unchanged and reaffirm its October decision to halve asset buys from next year, it will also unveil fresh economic outlooks, including initial forecasts for 2020. How quick will the ECB follow the Fed on the path toward higher rates?

The PBOC unveiled a five basis-point boost to some reverse-repurchase rates overnight, minutes before the country’s release of economic data for November. The indicators suggested little change in the growth rate, with industrial output, retail sales and fixed investment figures close to economists' estimates. Equities declined modestly on the news, with the Shanghai Composite falling 0.3%.

Looking to get relations back on track, South Korean President Moon Jae-in will meet Chinese President Xi Jinping today after a year-long standoff over the deployment the U.S. THAAD system. Curbing Pyongyang's nuclear ambitions will top the agenda, while the two leaders will sign an MOU on restarting negotiations to further open China's service and investment sectors to South Korea companies.

The WTO failed to reach any new agreements at its biennial ministerial conference in Buenos Aires amid stinging U.S. criticism of the group and vetoes from other countries. The stalemate dashed hopes for new deals on e-commerce and curbs on illegal fishing, raising questions about the body's ability to govern increasingly disputed global trade.

President Trump is promising a "giant tax cut for Christmas" as House and Senate Republicans reached a deal that would likely lower the top individual rate to 37% and set the corporate rate to 21% . "We are also simplifying our broken [tax] system... the plan will bring trillions of dollars back into the U.S." Republicans hope to vote on the bill in the next week - before Alabama's Doug Jones is seated - as they could still afford two defections by GOP Senators.

"We see that 2018 might not be quite so happy for OPEC producers," the IEA said in its latest monthly report, as the group cuts back on its output. Amid a recovering oil price, U.S. crude producers are staging a comeback that has allowed many of them to restart operations. "In the first half the surplus could be 200K bpd before reverting to a deficit of about 200K bpd in the second half, leaving 2018 as a whole showing a closely balanced market."

Stocks

The FCC is set to repeal net neutrality rules today requiring internet providers to treat all traffic on the web equally and is also expected to remove the Internet's classification as a utility. Chairman Ajit Pai maintains that current rules went too far in imposing potentially stifling regulatory burdens on broadband providers, while consumer advocates and tech companies feel they protect Internet users and website owners.

IBM has teamed up with major companies including Samsung (OTC:SSNLF), Honda (NYSE:HMC), JPMorgan (NYSE:JPM) and Barclays (NYSE:BCS) to develop quantum computing for commercial use. IBM most recently tested a prototype of a 50-qubit quantum computer, which is approaching a threshold known as "quantum supremacy," or can perform calculations that are beyond the reach of a classical supercomputer

Following a similar deal with Verizon (NYSE:VZ), Ericsson (NASDAQ:ERIC) has been selected by Deutsche Telekom (OTCQX:DTEGY) to provide "5G-ready" network infrastructure across half of Germany. The contract has been hailed as a coup for the struggling Swedish company, which has lost half of its value since the start of 2015, and has pinned its hopes on securing a large portion of the upcoming 5G market.

Target is paying $550M to acquire grocery delivery startup Shipt, moving to match services that have been rolled out by rivals like Amazon (NASDAQ:AMZN) and Wal-Mart (NYSE:WMT). The acquisition is expected to "significantly accelerate" Target's (NYSE:TGT) digital fulfillment efforts, including bringing same-day delivery services to customers at approximately half of its stores by early 2018.

Wells Fargo has laid off about 60 employees in its mortgage division, WSJ reports, as the bank continues to reshuffle parts of its business. The cuts follow disclosures by the bank that it charged some customers improper fees to extend interest-rate commitments they received from Wells Fargo (NYSE:WFC) on their mortgage applications.

"It's a criminal investigation," confirmed the DOJ, regarding its probe into UBER. The suit is over autonomous car technology that Waymo (GOOG, GOOGL) accuses an ex-Uber employee of stealing and using in the company's self-driving effort. Uber is already reportedly facing inquiries into possible violations of the Foreign Corrupt Practices Act.

Ford has told suppliers it plans to shift production of midsize Fusion and Mondeo sedans out of Mexico and Spain in 2020 and move it to China, Reuters reports. But the automaker confirmed it won't ship those cars from China to the U.S. and Europe. The move is part of Ford (NYSE:F) CEO Jim Hackett's ongoing effort to reduce inefficiency and trim costs.

Catching up? Delta Air Lines (NYSE:DAL) is looking to place an order for 100 A321neo jets in a boost for Airbus (OTCPK:EADSY) as it tries to narrow a 2017 order gap against Boeing (NYSE:BA). The deal, first reported by CNN, would be worth $12.7B at list prices, but would typically involve steep discounts.

Airbus will also hold a board meeting today that could determine the future direction of the planemaker as it prepares for hefty fines stemming from bribery allegations. Some are also talking about Tom Enders leaving when his contract expires in 2019, perhaps accompanied by other managers, but the Airbus (OTCPK:EADSY) CEO made clear yesterday that he hasn't taken a position.

Today's Markets

In Asia, Japan -0.3%. Hong Kong -0.3%. China -0.3%. India +0.6%.
In Europe, at midday, London -0.2%. Paris -0.3%. Frankfurt -0.6%.
Futures at 6:20, Dow +0.2%. S&P +0.1%. Nasdaq +0.1%. Crude -0.4% to $56.40. Gold +0.8% to $1259.10. Bitcoin +1.7% to $16688.
Ten-year Treasury Yield +2 bps to 2.37%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Import/Export Prices
8:30 Retail Sales
9:45 Bloomberg Consumer Comfort Index
9:45 PMI Composite Flash
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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Wall Street Breakfast: Fed Decision, Outlook On Watch

Author: skywalker   |  Publish date: Wed, 13 Dec 2017, 08:10 AM


U.S. stock index futures are pausing for breath ahead of what is expected to be the Fed's third interest rate increase of the year, as well as forecasts on the U.S. economy, tax reform and next year's rate hike cycle. Higher interest rates are expected to lift banks stocks, while the pace at which the Fed intends to tighten and normalize monetary policy is seen as a key factor in maintaining the current bull market in 2018.

Economy

GOP negotiators have reached a tentative agreement to raise the corporate rate in their joint House-Senate tax bill from 20% to 21%, according to The Hill. The higher rate could pay for a reduction in the top individual rate, which Republicans are talking about lowering from 39.6% to 37%. It could also pay for keeping more deductions for taxpayers, particularly in high-tax states.

The dollar recovered most of its losses overnight after falling 0.3% against the yen on news that Democrat Doug Jones beat Republican Roy Moore in a bitter U.S. Senate race in Alabama. The upset will trim the GOP's already narrow Senate majority to 51-49, potentially making it harder for President Trump to pass his priorities next year through Congress.

China's economy will grow a bit faster than expected this year on resilient consumption, according to the Asian Development Bank, which sees GDP expanding 6.8%. But growth will stutter in 2018, increasing by 6.4%, due to "controlled moderation" in the economy. That would mark the slowest pace of expansion since 1990, according to the World Bank.

"We're ready to talk whenever they're ready to talk," Secretary of State Rex Tillerson told a Washington think tank, but added that North Korea must first be ready to change course on its weapons programs. "Many people have asked the question, 'Well, why can't you live with a containment strategy?'... The difference is that with the past behavior of North this would become a commercial activity for them."

The Trump administration is encouraging Saudi Arabia to consider bids by Westinghouse Electric (OTCPK:TOSYY) and other U.S. companies to build nuclear reactors in the kingdom and may allow the enrichment of uranium as part of that deal, Bloomberg reports. A meeting to hammer out details of the nuclear cooperation agreement will be held today at the White House.

Stocks

As global regulators worry about a bubble, South Korea will restrictively allow cryptocurrency trading on only qualified exchanges and review a possible capital gains tax on crypto trading. The government will also ban minors from opening accounts on virtual coin exchanges and form a task force to seek "balanced" policies that won't hurt blockchain technology.

Chief Executive Patrick Byrne is exploring options to sell Overstock.com (NASDAQ:OSTK) to fund a global property registry on blockchain. If everything works out, we would "have all the capital we need" to fund the new project, Byrne told the FT. The venture, called De Soto, would include a dozen of Overstock's top talent. OSTK +4.8% premarket.

Despite its products being blocked in the country, Google (GOOG, GOOGL) is opening an artificial intelligence research center in China to target the country's local talent. Chinese policy makers have voiced strong support for AI research and development, but have imposed increasingly strict rules on foreign firms in the past year, including new censorship restrictions.

Removing a key obstacle to the deal, Western Digital (NYSE:WDC) and Toshiba (OTCPK:TOSYY) have agreed to settle a long-running dispute over the latter's plans to sell its prized chip unit. The settlement calls for Western Digital to drop arbitration claims seeking to stop the sale in exchange for Toshiba allowing its U.S. partner to invest in a new production line for advanced memory chips.

Tesla shares rose more almost 4% on Tuesday after PepsiCo (NYSE:PEP) said it had pre-ordered a fleet of 100 Tesla (NASDAQ:TSLA) Semis. It's the largest known pre-order for the trucks, which were unveiled in late November and are scheduled for production in 2019. Several other companies, such as Walmart (NYSE:WMT) and Anheuser-Busch (NYSE:BUD), have also said they are reserving the trucks.

Panasonic is considering jointly developing batteries for electric vehicles with Toyota (NYSE:TM), a move that would cement its position as the world's leading producer of automotive batteries. Panasonic (OTCPK:PCRFF) already supplies lithium-ion assemblies for Toyota's hybrid vehicles, but has also carved out a name for itself as the major battery supplier to Tesla (TSLA).

S&P Global is the latest company to start laying the groundwork for its post-Brexit future, creating a "streamlined legal structure centered on a new EU-based entity" in Dublin, FT reports. CEO Doug Peterson said he believed S&P Global (NYSE:SPGI) had to establish its credit ratings business within the bloc for its ratings to be used for official regulatory purposes there.

Addressing concerns over the alternative route approved last month, TransCanada (NYSE:TRP) is seeking consent from Nebraska regulators to amend its Keystone XL pipeline application. However, a representative of environmental group Sierra Club and a lawyer for landowners argued at a hearing on Tuesday that if the application was never denied, it cannot be amended.

A UAE state-owned oil giant made a positive stock market debut today, a listing likely to resonate through the Middle East as several other companies prepare to go public. The Abu Dhabi National Oil Company listed a stake in its fuel distribution unit, which soared 16% at the open, trading at 2.90 dirhams ($0.79) shortly after the bell vs. an IPO price of 2.50 dirhams per share.

Sears has entered into an agreement with "new and existing lenders" to delay the maturity of its term loan by six months to January 2019. "We have taken further action to provide the cmpany with additional financial flexibility," Sears (NASDAQ:SHLD) CFO Rob Riecker declared. "Looking ahead, we continue to explore alternatives with respect to our debt maturities."

Marking its latest push to offer faster broadband service, AT&T (NYSE:T) has started trials in Georgia and a non-U.S. location to deliver high-speed internet - faster than the 1 gigabit per second - over power lines. "Potentially, it can be a really big deal," said Roger Entner, an analyst at Recon Analytics. "You need the power company to play ball with you. That's the downside."

Teva Pharmaceutical will unveil a restructuring plan tomorrow following the departure of Yitzhak Peterburg, who previously served as interim CEO, from the company's board. According to the Calcalist, the plan includes closing its R&D center in the coastal city of Netanya, selling its logistics center in Shoham and laying off a third of its 6,800 workers in Israel. TEVA +1.1% premarket.

Today's Markets

In Asia, Japan -0.5%. Hong Kong +1.5%. China +0.7%. India -0.5%.
In Europe, at midday, London flat. Paris -0.2%. Frankfurt -0.2%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq +0.1%. Crude +0.7% to $57.54. Gold +0.1% to $1243.30. Bitcoin -1.9% to $16847.
Ten-year Treasury Yield +1 bps to 2.41%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM FOMC Forecast
2:30 PM Chairman Press Conference

 

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Wall Street Breakfast: Investors Ready For FOMC Meeting

Author: skywalker   |  Publish date: Tue, 12 Dec 2017, 09:01 AM


The FOMC will gather today for its last policy meeting of 2017, which many expect will result in interest rates getting bumped up by a quarter point on Wednesday. The wild card for the markets, however, is what the Fed says and does with regard to tax legislation. While many expect the central bank to retain its three-rate-hike forecast for next year, some feel the Fed could add a fourth rate hike based on the improving economy and stimulus from tax cuts.

Economy

Brent oil prices jumped overnight to their highest since mid-2015 after the shutdown of the Forties North Sea pipeline knocked out significant supply from a market already tightening due to OPEC-led production cuts. Brent futures rose 1.5% to top $65 a barrel, while WTI crude futures were up 43 cents to $58.42/bbl, or 0.7%, from their last settlement.

The EU Withdrawal Bill will return to the House of Commons today and Wednesday, continuing its slow journey through the U.K. Parliament. The measure facilitates moving EU-derived rules and regulations into British law. Meanwhile, the U.K. inflation rate increased 3.1% in November, breaching its target and marking the highest level since March 2012

In a statement due to be issued on the sidelines of the WTO's ministerial conference, the EU, Japan and U.S. will announce a new alliance to take on China. The three economies will target "severe excess capacity" in important sectors like steel and commodities, the role of illegal subsidies and abusing intellectual property rules to acquire strategic technologies.

Beijing is also preparing for more immediate threats from Washington, including President Trump's tax overhaul and Fed rate increases. The double whammy could sap money out of country by making the U.S. a more attractive place to invest, WSJ reports. The PBOC is now ready to respond with higher interest rates, tighter capital controls and more frequent currency interventions.

President Trump has asked Congress to enact "urgent" immigration reforms, a day after a blast triggered by an ISIS-inspired man left four people injured in NYC. "Congress must end chain migration," he said, following the attack near the Port Authority Bus Terminal. The suspect, Akayed Ullah, came to the U.S. from Bangladesh in 2011 on a visa for children of U.S. siblings.

Voters in Alabama are heading to the polls in a hard-fought U.S. Senate race between Republican Roy Moore, whose campaign has been clouded by sexual misconduct allegations, and Democrat Doug Jones, who is hoping for an upset victory. Polls open at 7 a.m. in the state special election for the seat vacated by Jeff Sessions, who became U.S. attorney general in the Trump administration.

Stocks

The SEC has issued a warning to investors on the dangers of putting their money into cryptocurrencies. "There are tales of fortunes made and dreamed to be made," said Chairman Jay Clayton. "We are hearing the familiar refrain, 'this time is different.'" The enforcement action also suggests the agency will step in to address ICOs for registration violations even if there are no claims of fraud.

Amazon Web Services is expanding its cloud business in China with a new local partner, Ningxia Western Cloud Data Technology, aiming to win share in an increasingly crowded and highly regulated market. The move comes a month after AWS (NASDAQ:AMZN) said it will sell the hardware assets of its Beijing-registered cloud unit for up to 2B yuan ($302M) to comply with new regulations.

A formal announcement is expected in the next 24 hours, but Western Digital (NYSE:WDC) and Toshiba (OTCPK:TOSYY) have agreed to settle a dispute over the latter's planned $18B sale of its memory chip unit. As part of the deal, Western Digital will be able to invest alongside Toshiba in a cutting-edge chip plant in Japan and receive a guaranteed supply of next-generation memory chips.

Comcast has abandoned its bid for most of the assets of Twenty-First Century Fox (NASDAQ:FOXA), leaving Walt Disney (NYSE:DIS) as the sole suitor in pursuit of the $40B+ deal. "When a set of assets like Fox's becomes available, it's our responsibility to evaluate if there is a strategic fit," Comcast (NASDAQ:CMCSA) declared, but said it "never got the level of engagement needed to make a definitive offer."

In an unprecedented deal with the NFL, Verizon (NYSE:VZ) has sealed an agreement to live-stream all in-market and national games on Yahoo Sports and AOL. It will pay $2.25B for the five-year pact, Reuters reports. Verizon has also awarded Ericsson (NASDAQ:ERIC) a contract to provide networking equipment for its commercial 5G launch.

Boeing is raising its quarterly dividend by 20% to $1.71/share and will replace its existing share buyback program with a new $18B authorization. The decisions were not in response to the GOP tax overhaul, according to the company. BA shares, the best-performing Dow component this year with an 84% surge, rose 1.2% in AH trading on the news.

President Trump has signed "Space Policy Directive 1" aimed at returning Americans to the surface of the moon and onward to Mars. "Space has so much to do with so many other applications, including a military application," he said without elaboration. The event coincided with the 45th anniversary of the last crewed mission - Apollo 17 - to land on the moon. Related tickers: RTN, LLL, LMT, BA, OA, AJRD

European property company Unibail-Rodamco (OTCPK:UNBLF) has agreed to buy shopping mall owner Westfield (OTCPK:WFGPY) for $15.7B, in what would be the biggest takeover of an Australian company on record. It comes on the heels of GGP's rejection of a $14.8B offer from Brookfield Property (NYSE:BPY) for two-thirds of the world's No. 2 retail real estate investment trust it did not already own.

Exxon Mobil will provide more disclosure related to the potential impact of climate change on its business starting "in the near future," according to a new SEC filing. The company's board originally opposed providing shareholders with a report outlining the potential impact of global warming on Exxon's (NYSE:XOM) long-term outlook.

An unofficial committee of Seadrill's (NYSE:SDRL) unsecured bondholders has submitted a binding alternative proposal for the company's restructuring, sources told Reuters. Under the official plan, holders of Seadrill's $2.3B of unsecured bonds would receive 14.3% of stock in the reorganized firm, which was once the largest drilling rig operator by market value.

Saudi Aramco plans to raise its spending to $414B over the next 10 years, including on infrastructure and drilling, as the oil producer expands into new businesses. "We are into so many sectors now," CEO Amin Nasser told reporters. The spending plan is higher than Aramco's (Private:ARMCO) projection last year of around $334B by 2025.

Today's Markets

In Asia, Japan -0.3%. Hong Kong -0.6%. China -1.3%. India -0.7%.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq flat. Crude +0.6% to $58.33. Gold -0.1% to $1245.20. Bitcoin +0.6% to $16792.
Ten-year Treasury Yield flat at 2.39%

Today's Economic Calendar

FOMC meeting begins
6:00 NFIB Small Business Optimism Index
8:30 Producer Price Index
8:55 Redbook Chain Store Sales
1:00 PM Results of $12B, 30-Year Note Auction
2:00 PM Treasury Budget

 

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Wall Street Breakfast: Bitcoin Bull Run Continues Past $15,000

Author: skywalker   |  Publish date: Thu, 7 Dec 2017, 08:52 AM


Despite a major hack on crypto-mining service NiceHash, bitcoin rocketed about 9% overnight past the $15,000 level. Almost 4,700 bitcoins - worth roughly $70M at current prices - were lost in the breach, prompting NiceHash to shut down for at least 24 hours. Boost of confidence? ASX (OTCPK:ASXFF), the main exchange operator in Australia, said it will start using blockchain for transactions, while Lightning Network promised to provide a new way to pay with bitcoin.

Economy

President Trump would sign a stop-gap spending measure funding the government through Dec. 22, according to a statement from the White House. Trump and Congress are facing a deadline of Friday at midnight to pass fresh spending legislation. If they cannot agree on the terms, parts of the federal government could shut down.

Wildfires raging across Southern California have closed Interstate 405, wiped out more than $3B of market value for Edison International (NYSE:EIX) and are threatening some of the state's lucrative crops. Snap Inc. (NYSE:SNAP) has also shut operations, as well as a major conference on microcap stocks, while California Resources (NYSEMKT:CRC) halted production at several small oil fields in the region.

An almost two-year-long study by the IMF found three major tensions that could derail the world's second-largest economy. Among them: China's financial system, the "shadow banking" sector and "excessive risk-taking." The PBOC disagreed with some points in the report, but said the fund's recommendations are "highly relevant in the context of deepening financial reforms" in the country.

Large military drills and U.S. threats of a preemptive strike have made the outbreak of war on the Korean peninsula "an established fact," according to North Korea's foreign ministry. "The remaining question now is: when will the war break out?" White House national security adviser H.R. McMaster said at the weekend the possibility of war with North Korea was "increasing every day."

France and Qatar have signed military and transport contracts worth around €12B, sending a signal to the region's Arab neighbors that cut political and trade ties with Doha in June. The deal includes Rafale fighter jets and hundreds of armored vehicles, as well as 50 Airbus (OTCPK:EADSY) A321neo planes and an award for a French rail consortium, comprised of RATP and SNCF.

German industrial production unexpectedly fell in October, likely due to one-off factors like public holidays and long weekends, in a disappointing start to the fourth quarter. Industrial output decreased by 1.4% after falling by a revised 0.9% in September. The two successive declines came after an increase of 2.6% in August, the biggest rise in more than six years.

Stocks

General Electric +0.6% premarket on more reports surrounding job cuts. According to Bloomberg, the company is planning to slash 12,000 positions in its power business, which will mostly affect professional and production employees outside the U.S. The reductions, accounting for about 18% of GE Power's workforce, could be announced as early as today.

Closely watched for indications of future oil and gas production, Chevron (NYSE:CVX) is budgeting $18.3B for capital projects in 2018, about 4% less than this year and lower for a fourth year in a row. International energy company capital budgets have broadly been shrinking since 2014's oil-price collapse, which slashed earnings and left many with high debt loads.

The Hong Kong Stock Exchange is on track to lose out to the New York Stock Exchange (NYSE:ICE) as the venue of choice for companies undertaking IPOs in 2017, after two consecutive years in the top spot. Data from Dealogic shows that the amount raised by companies listing on the NYSE so far this year has exceeded $32.6B, compared with $24.6B on the SEHK.

Bloomberg has corrected its bombshell report that special counsel Robert Mueller had subpoenaed Deutsche Bank (NYSE:DB) records pertaining to President Trump and his family. The corrected article states the bank records "pertain to people affiliated" with Trump, while the original reported that Mueller "zeroed in" on the president.

Despite H&R Block reporting a loss in its most recent quarter, shares of the tax preparer closed up over 10% yesterday after the CEO's comments on the GOP tax reform bill. "No matter what changes were ultimately made [to the bill], I'm convinced the value of H&R Block (NYSE:HRB) remains our ability to help," Jeffrey Jones said on a conference call.

Citigroup would take a $20B upfront hit from the Republican tax bill should it become law, CFO John Gerspach said at a Goldman Sachs banking conference in New York. Citi (NYSE:C) would get whacked from writing off deferred tax assets it has held on its books, roughly $16B-$17B, as well as a $3B-$4B hit from paying taxes on money it had held overseas.

As reported yesterday, Alibaba (NYSE:BABA) has signed a deal with Ford (NYSE:F) to jointly explore areas such as connectivity, cloud computing and artificial intelligence. "The agreement aims to explore new ways to redefine how consumers purchase and own vehicles, as well as how to leverage digital channels to identify new retail opportunities," Alibaba said in a press release.

Just months after Ford cancelled plans to build a plant in Mexico, the automaker is now planning to shift some vehicle production south of the border. The move aims to free up production space at the automaker's plant in Flat Rock, Michigan so it can build its first self-driving vehicle. Ford (F) has also confirmed plans to partner with Alibaba (BABA) on connectivity, cloud computing and AI.

A U.S.-based Volkswagen manager who oversaw emissions issues has been sentenced to seven years in prison and fined $400K by a judge for his role in the company's Dieselgate scandal. The decision will make VW's (OTCPK:VLKAY) Oliver Schmidt the second employee to face jail time in the U.S. related to the conspiracy to deceive customers and government officials.

Awaiting blastoff... Northrop Grumman (NYSE:NOC) has received a another request from the FTC for more information about its $7.8B deal to buy Orbital ATK (NYSE:OA). A second request is often a burden for companies that have to provide extensive information, but such demands in the past have led to concessions so a merger gains government approval.

According to Channel NewsAsia, Singapore Airlines (OTCPK:SINGY) has taken measures to reroute some flights in response to North Korea's missile tests. News of the change followed a crew on board a Cathay Pacific aircraft seeing a North Korean missile blow up over the Sea of Japan last week. Similar sightings were reported on at least three commercial flights of Korean Air.

AB InBev has officially opened its newest brewery in China, showing the significance of the market to the world's largest brewer. The Putian Brewery in China's Fujian Province will have the capacity to produce 1.5M tons of beer a year, according to AB InBev (NYSE:BUD), making it the largest such facility by capacity in Asia Pacific.

More from the rumor mill... After saying the last one was the "last one," Disney (NYSE:DIS) CEO Bob Iger is likely to take another extension of his term as CEO past 2019, WSJ reports. That would facilitate the integration of Fox (NASDAQ:FOXA) assets into the company assuming the multibillion-dollar deal is done. Comcast (NASDAQ:CMCSA), meanwhile, is continuing to pursue a deal with Fox, as well.

Wednesday's Key Earnings

Broadcom (NASDAQ:AVGO) +4.5% AH following an earnings topper.
Lululemon (NASDAQ:LULU) +6.8% AH with strong comparable sales.

Today's Markets

In Asia, Japan +1.5%. Hong Kong +0.3%. China -0.7%. India +1.1%.
In Europe, at midday, London flat. Paris +0.1%. Frankfurt +0.2%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.6%. Crude +0.4% to $56.16. Gold -0.7% to $1257.60. Bitcoin +9.1% to $15058.
Ten-year Treasury Yield +1 bps to 2.34%

Today's Economic Calendar
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
3:00 PM Consumer Credit
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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Wall Street Breakfast: Holy Sell-Off Hits The Markets

Author: skywalker   |  Publish date: Wed, 6 Dec 2017, 07:57 AM


A holy sell-off appears to be underway as President Trump is set to officially recognize Jerusalem as the capital of Israel and initiate the process of relocating the U.S. embassy to the city from Tel Aviv. Equities were hit hard overnight in Asia, while the losses are now extending to Europe and the U.S. Arab leaders have warned that the momentous shift in foreign policy could spark unrest and violence across the Middle East.

Economy

Lebanon's Prime Minister Saad Hariri has rescinded his resignation after governing partner Hezbollah agreed to remain neutral in regional conflicts in order to preserve the country's "economic and political relations." The militant group plays a key role in Lebanon's government but its armed wing is fighting in Syria to support fellow Iranian ally President Bashar al-Assad.

Seeking to bolster its military capabilities against its nuclear-armed neighbor, South Korea is aiming to create a weaponized drone unit to swarm North Korea in the event of a conflict, FT reports. It comes after Seoul said it would increase its annual military budget by 7% next year - its biggest jump since 2009 - as a result of the "grim security reality."

Australia's economy grew at the fastest annual pace in over a year last quarter, with GDP expanding at a 2.8% annualized rate due to a jump in private business investment. The result will be no surprise to the Reserve Bank of Australia, which yesterday kept interest rates steady at 1.5% in anticipation of faster growth and a gradual revival in inflation.

"I think we will join the [ECB's quantitative easing] program but it's not so crucial for us, as we believed before," Greek Prime Minister Alexis Tsipras told CNBC. The country is currently unable to enroll in the program because its debt doesn't have an investment grade rating, but that may change next year if the nation successfully concludes the end of its third bailout.

European Commission Vice President Valdis Dombrovskis is ready to assist new members wanting to join the eurozone. "We propose [new tools for structural reforms] to support those member states working toward euro accession," he told CNBC. The effort also involves a motion to "transform and strengthen" the ESM by turning it into a European Monetary Fund.

Stocks

Is bitcoin still "a fraud" as Jamie Dimon coined the cryptocurrency in September? Bitcoin has now climbed above the $12,000-level as money keeps pouring into the new asset class. In fact, cryptocurrencies' total market value edged up to another record high, totalling more than $370B and surpassing the market cap of JPMorgan (NYSE:JPM).

While it has put a lot of thought into the idea of cryptocurrency futures contracts, Intercontinental Exchange (NYSE:ICE) has yet to move forward due to the opaque nature of the underlying markets, according to CEO Jeff Sprecher. Rivals CBOE and CME will introduce bitcoin futures contracts on Dec. 10 and Dec. 18, respectively, while Nasdaq (NASDAQ:NDAQ) will launch bitcoin futures next year.

James Murdoch has been suggested as a potential successor to Disney (NYSE:DIS) CEO Bob Iger in deal discussions with the U.S. media company over the sale of 21st Century Fox (NASDAQ:FOXA) assets, FT reports. Rather than continue to jockey for power with his brother and famous father, Rupert Murdoch's younger son is likely eager to establish himself as a media mogul in his own right.

The U.S. government is urging a federal judge to reject the February court date sought by AT&T (NYSE:T) and Time Warner (NYSE:TWX) in a dispute over the firms' proposed merger, which the DOJ feels could raise prices and hamper the development of online video. It has requested that proceedings start on May 7, but AT&T will have to pay Time Warner $500M if the deal is not consummated by April 22.

Xiaomi has asked banks to pitch next Friday for an initial public offering in 2018, sources told Reuters. It's expected to choose either Hong Kong or the U.S. as its listing venue. According to research firm Canalys, Xiaomi (Private:XI) has overtaken Apple (NASDAQ:AAPL) to become China’s fourth-largest smartphone vendor by sales, driven in part by a focus on offline stores.

Tech battles... Microsoft (NASDAQ:MSFT) has shown off new laptops with Qualcomm's (NASDAQ:QCOM) ARM-based Snapdragon 835, although Windows PCs have traditionally used Intel (NASDAQ:INTC) chips. The latter is watching if the inclusion violates its IP rights. In other news, a YouTube (GOOG, GOOGL) spokesperson said the service will no longer be supported on Amazon's (NASDAQ:AMZN) Echo Show and Fire TV due to a lack of reciprocity.

New strategy? Ford (NYSE:F) is expected to sign a deal tomorrow that may allow it to test selling cars in China through Alibaba's (NYSE:BABA) online retail arm Tmall, Reuters reports. The partnership would also include a new retail concept called the "Automotive Vending Machine" - a multi-story parking garage that partly resembles a giant vending machine - to sell directly to consumers.

Looking to take back market share from Domino's Pizza (NYSE:DPZ) and Papa John's (NASDAQ:PZZA), Pizza Hut (NYSE:YUM) is testing beer delivery in Phoenix as a first step in what could become a major push into alcohol. Pizza Hut plans to add wine delivery in January, with alcohol delivery due to be rolled out in other cities in 2018.

Holiday shopping fallout... An "unprecedented" surge in online orders is causing some delays in deliveries as UPS scrambles to keep up with holiday shopping demand. The company has already notified workers at more than 100 delivery centers that it may raise driver work hours to 70 hours over an eight-day period.

General Electric is cutting 4,500 jobs across Europe after reviewing assets it acquired from France's Alstom (OTCPK:ALSMY) in 2015, Les Echos reports. GE will "review its operations to ensure the business is best positioned to respond to our market realities," and has issued a proposal to the European body representing legacy Alstom employees.

Speculation is on the rise... Amazon (AMZN) appears to have canceled a pharmaceutical wholesaler application in Maine, raising further questions about the tech giant's plans to enter the pharmacy space. Pundits and analysts feel Amazon may now be shifting toward selling medical supplies instead, an activity that does not require a license in the state.

Australia's consumer watchdog is taking the subsidiaries of Novartis (NYSE:NVS) and GlaxoSmithKline (NYSE:GSK) located Down Under to court over alleged false marketing of their pain relief gels. The action is part of a crackdown on "misleading representations" across the pharmaceutical sector led by the Australian Competition and Consumer Commission.

Home Depot is set to hold an investor day at its headquarters in Atlanta, GA, where it is likely to announce next year's strategy to investors. In its most recent quarter, the company's same-store sales blew past Wall Street estimates, boosted by repairs after wildfires and Hurricanes Harvey and Irma. HD shares have risen 36% since the beginning of the year.

The U.S. Commerce Department has slapped huge import duties on steel products from Vietnam that originated in China after finding that they evaded U.S. anti-dumping and anti-subsidy orders. The decision marks a victory for U.S. steelmakers, who won steep duties against Chinese steel in 2015 and 2016 only to see shipments flood in from elsewhere. Related tickers: MT, NUE, AKS, X

Toys 'R' Us has won court approval to pay top executives up to $21M in bonuses by arguing that the money will incentivize them to boost sales during the year-end shopping season. The U.S. Trustee, a federal bankruptcy watchdog, blasted the proposal, saying five of the potential recipients just split $8.2M in retention bonuses a week before Toys 'R' Us's bankruptcy filing on Sept. 19.

Today's Markets

In Asia, Japan -2%. Hong Kong -2.1%. China -0.3%. India -0.6%.
In Europe, at midday, London flat. Paris -0.5%. Frankfurt -1%.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.5%. Crude -0.8% to $57.17. Gold +0.4% to $1270.10. Bitcoin +8.6% to $12700.
Ten-year Treasury Yield -1 bps to 2.34%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Productivity and Costs
10:30 EIA Petroleum Inventories

 

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