Author: skywalker | Publish date: Thu, 19 Jan 2017, 11:01 AM
The key event for today is the ECB meeting in Frankfurt, where the central bank will deliver its first policy decision since extending the run of QE in December. Since then, eurozone inflation has risen sharply, while Germany has called for the bank to bring its ultra-accommodative bond buying to an end. No changes are expected at a rate decision due at 7:45 a.m. ET, but markets will be closely watching Mario Draghi's press conference 45 minutes later.
"At my core I think we're going to be OK," President Obama said as he concluded his final news conference at the White House. "We just have to fight for it, work for it, and not take it for granted." Obama also said he would avoid weighing in on specific policy matters during his post-presidency, but listed several political and social issues that would lead him to speak out.
The federal control board overseeing Puerto Rico's finances might accept a revised fiscal plan by Feb. 28 and extend a debt moratorium until May 1, which would give the U.S. territory more time to negotiate restructuring deals. Both requests will be taken up "later this month," but would be conditioned on the government agreeing to turn over more financial information and not taking on extra liquidity loans.
Fed Chair Janet Yellen woke up the bond market late Wednesday with a surprisingly hawkish stance, and now traders are looking forward to today's testimony from Donald Trump's Treasury nominee. With only one day left before the inauguration, comments from Steven Mnuchin about the dollar and Treasury will be of interest, as well as remarks about China and its currency.
"The U.K. will step up to a new leadership role as the strongest and most forceful advocate for free markets and free trade anywhere in the world," British PM Theresa May told the World Economic Forum in Davos. Her tone was strikingly different from the speech she made to her Conservative Party conference in October, when she criticized those who see themselves as "citizens of the world."
The International Energy Agency believes that global oil markets were tightening even before cuts promised by OPEC and non-OPEC producers kicked in. While it is "far too soon" to gauge OPEC members' levels of compliance with promised cuts, the IEA said oil stocks in the developed world fell for a fourth consecutive month in November, although they remained more than 300M barrels above the five-year average.
A South Korean court has dismissed a warrant to arrest the head of the Samsung Group, amid a graft scandal that led to the impeachment of President Park Geun-hye. The decision is likely to come as a major relief for the country's largest conglomerate and Lee Jae-yong, who has tried to fill the vacuum in the group's leadership since his father suffered a heart attack in 2014.
Panasonic aims to extend its partnership with Tesla Motors (NASDAQ:TSLA) beyond batteries, as the Japanese conglomerate continues to shift its focus to the automotive business. "We are deeply interested in Tesla's self-driving system," Panasonic (OTCPK:PCRFY) CEO Kazuhiro Tsuga declared. "We are hoping to expand our collaboration by jointly developing devices for that, such as sensors." TSLA +2.8% premarket.
In his first public appearance since being forced to resign 16 months ago, Volkswagen (OTCPK:VLKAY) CEO Martin Winterkorn apologized for breaching the trust of millions of customers, while claiming he didn't know about Dieselgate. "It's incomprehensible why I wasn’t informed early and clearly," he said before a parliamentary committee in Berlin. "I would have prevented any type of deception or misleading of authorities."
Takata shares closed down 17% in Tokyo on reports that bidders Autoliv (NYSE:ALV) and Key Safety Systems have proposed Japanese court involvement in the troubled air bag maker's debt restructuring. Takata (OTCPK:TKTDY) last week admitted to hiding the deadly risks of its inflators for about 15 years and agreed to plead guilty in the U.S. to one criminal charge as part of a $1B settlement.
Becoming a major sponsor of the Olympics, Alibaba (NYSE:BABA) has signed a deal with the International Olympic Committee - that runs until 2028 - to provide cloud and e-commerce services. No financial details were disclosed, but IOC sources have previously told Reuters that major sponsors pay about $100M per four-year cycle, which includes one summer and one winter game.
We are pleased to have "put this legacy matter" behind us, Credit Suisse (NYSE:CS) declared, after agreeing to a $5.3B settlement with the DOJ over toxic crisis-era mortgages. The news comes just days after Deutsche Bank (NYSE:DB) reached a deal with the U.S. authorities. Barclays (NYSE:BCS) is also in talks with the DOJ over the mis-selling of MBSs, but it hopes for a "fair settlement" that correctly reflects the agreements made between the U.S. banks and officials.
A bigger Brexit exodus? Goldman Sachs (NYSE:GS) is considering halving its London staff, and may move 1,000 workers to Frankfurt because of concerns over Britain's vote to leave the EU, Handelsblatt reports. Yesterday, UBS said that about 1,000 of the bank's 5,000 employees based in London may be affected by Brexit, while HSBC announced it could relocate 1,000 staff to Paris.
Netflix added over a third more subscribers than anticipated in the last quarter of 2016, a sign of success for its ambitious global expansion that sent its shares up 7.5% in extended trading. Netflix (NASDAQ:NFLX) signed up 7.1M new subscribers globally, well above its own expectations of 5.2M, marking its largest-ever quarterly subscriber growth in its history.
Highlighting the latest effort to streamline its business, Twitter (NYSE:TWTR) has sold a unit to Google (GOOG, GOOGL) that runs a tool for developers to make mobile apps. The messaging service said it launched the unit, called Fabric, in 2014 and it is now used by more than 580K mobile developers. The Fabric team is moving to Google, though Twitter declined to say how many employees that included.
5G mobile internet technology marks the beginning of the "fourth industrial revolution," Turkcell (NYSE:TKC) CEO Kaan Terzioglu told CNBC. He also said the telecom completed a test in partnership with Ericsson (NASDAQ:ERIC) this week, using the next-generation internet. 5G is largely viewed as a medium that can support the industrial and "Internet of Things" space, while 4G revolutionized the consumer market.
The global head of pharmaceuticals at GlaxoSmithKline (NYSE:GSK), Abbas Hussain, is leaving the company and will be replaced by Luke Miels from AstraZeneca (NYSE:AZN). Hussain had been seen as a potential contender to take over from CEO Andrew Witty, who steps down at the end of March, but the job went to Glaxo's consumer health division boss Emma Walmsley.
Martin Shkreli... whistleblower? The Federal Trade Commission has settled charges against Mallinckrodt (NYSE:MNK) for allegedly creating a monopoly to jack up the price of a drug used to treat infant spasms by 85,000% since 2001, to $34,000 a vial. The twist: the FTC launched the probe shortly after the "pharma bro" filed suit in 2014 alleging anticompetitive tactics by Questcor, a drug company that Mallinckrodt now owns.
BHP Billiton and Vale have struck a preliminary agreement with Brazilian prosecutors, which lays out a path for a future settlement of the largest legal claim emanating from the Samarco dam failure. BHP and VALE will provide an interim security of 2.2B reals ($681M) to support a series of programs, including the appointment of experts to advise prosecutors on the social and environmental impacts of the disaster.
Toshiba could post a ¥700B ($6.1B) loss at its U.S. nuclear reactor business, much bigger than the ¥500B it had earlier flagged to investors, sources told the Kyodo news agency. Shares in Toshiba (OTCPK:TOSYY) plunged 16% in Tokyo on the report, which comes a day after the company said it was considering a spinoff of its chip business to cover financial shortfalls.
The U.S. government's bankruptcy watchdog has objected to certain parts of Peabody Energy's (OTCPK:BTUUQ) plan to slash $5B of debt and exit Chapter 11, calling a proposed $240M in transaction fees "exorbitant." At a court hearing in St. Louis today, Peabody shareholders will seek to be part of a reorganized company, while the U.S. Trustee's objections will be heard at a hearing on Jan. 26.
Overcoming heated objections from a group of U.S. creditors, Hanjin Shipping (OTC:HNJSF) has received the green light for the $78M sale of its stake in a Long Beach, Calif., container terminal operator. "My decision is to approve the sale," U.S. Bankruptcy Judge John Sherwood said, adding he would approve the transfer of the sale's proceeds to South Korea.
The uppermost layer of Israel's three-tier missile shield has become operational, with the first advanced rockets delivered to the Israeli Air Force. The Arrow 3 system, developed by Israel Aerospace Industries and Boeing (NYSE:BA), is designed to strike targets outside Earth's atmosphere. Such high-altitude shoot-downs are meant to safely destroy incoming nuclear, biological or chemical ballistic missiles.
Creating the world's third-biggest aerospace supplier, French aero engine maker Safran (OTCPK:SAFRY) has agreed to buy seats manufacturer Zodiac Aerospace (OTCPK:ZODFY) for €8.5B. The move comes only three months after Rockwell Collins (NYSE:COL) agreed to pay $6.4B to acquire Zodiac's chief rival, B/E Aerospace (NASDAQ:BEAV), in a deal that would unite two of the other largest aerospace suppliers.
The U.S. Department of Defense and Lockheed Martin (NYSE:LMT) are close to a deal for a contract worth almost $9B as negotiations are poised to bring the price per F-35 below $100M for the first time. According to Reuters, talks are still ongoing for the tenth batch of stealth fighter jets with a deal for 90 planes expected to be announced by the end of the month.
Wednesday's Key Earnings
Canadian Pacific (NYSE:CP) -1.2% AH with its CEO stepping down early.
In Asia, Japan +0.9%. Hong Kong -0.2%. China -0.3%. India +0.2%.
Today's Economic Calendar
8:30 Housing Starts
Author: skywalker | Publish date: Wed, 18 Jan 2017, 09:15 AM
A South Korean judge questioned Samsung Group leader Lee Jae-yong behind closed doors today to decide whether he should be arrested over his alleged role in a corruption scandal that led to the impeachment of President Park Geun-hye. The result is likely to be announced in the next few hours and could have significant impacts on the conglomerate and wider economy. Samsung's revenues are equivalent to a fifth of South Korea's GDP.
President-elect Donald Trump's comments suggesting the greenback is "too strong" sent the dollar index tumbling to its lowest level in more than a month, but the currency recovered some of that weakness in trading overnight. Adding to the dollar's weakness was sterling strength, which surged 3% - the biggest one-day climb since 1998 - following Theresa May's Brexit speech. She pledged to walk away from negotiations if Britain didn't get a good deal from Brussels.
India seems set for four consecutive quarters of sub-7% growth for the first time since at least 2011, according to Societe Generale, as the government's demonetization drive triggers a shortage of cash. The program, introduced in November, impacted 86% of India's currency in circulation by replacing existing 500 ($7.35) and 1,000 ($14.70) rupee notes.
"If we don't make a dramatic adjustment, there could be a total collapse in upcoming months," said Elias Sanchez, the governor's representative to a federal control board created last year to oversee Puerto Rico's finances. The Secretaries of the U.S. Treasury and Health and Human Services also called for fast congressional action, saying a bipartisan task force report failed to go far enough on recommending a low-income tax credit for the commonwealth.
Billionaire businessman Wilbur Ross is expected to have more influence over trade policy than many of his predecessors if confirmed as Donald Trump's pick for Commerce Secretary. That's likely to be the No. 1 issue for several members of the Senate Commerce Committee when the private-equity investor seeks their backing at a confirmation hearing scheduled for 10 a.m. ET.
In his final major speech in his post, U.S. Vice President Joe Biden issued a "call to action" to Europe and the U.S. to defend the "liberal world order," decrying a growing impulse in the West toward "isolationism and protectionism." Biden also acknowledged at the World Economic Forum in Davos that he'll hold his post for only another 48 hours, and quipped: "Then I can start to say what I think."
Investors are awaiting Janet Yellen's speech to the Commonwealth Club in San Francisco later today, which could offer clues about the direction of policy. The Fed looks poised to pick up the pace of interest-rate hikes this year, especially if incoming President Donald Trump makes good on his promise to deliver tax cuts and fiscal stimulus that could spur growth.
HSBC will relocate staff generating around 20% of its trading revenue to Paris following Britain's exit from the EU, CEO Stuart Gulliver said on the sidelines of the World Economic Forum. HSBC has all the licenses it needs for such a move and would only need to set up a so-called intermediate holding company in France, a move that should take only a matter of months.
Deutsche Bank expects a negative impact of $1.2B on its Q4 pretax profit from a civil monetary penalty of $3.1B agreed with the DOJ, which came as part of an overall $7.2B settlement. "Our conduct in this matter, which occurred from 2005 to 2007, falls short of our standards and is unacceptable. We apologize unreservedly for it," Deutsche (NYSE:DB) CEO John Cryan said in a statement.
Looking to boost its capital base, Toshiba (OTCPK:TOSYY) is in talks to sell a minority stake of its flash memory business to Western Digital (NYSE:WDC) following a $1.3B accounting scandal and looming multi-billion-dollar writedown. The company had been considering various options for its core semiconductor unit, including a spinoff, but nothing concrete has yet been decided.
Caesars Entertainment has wrapped up the $18B bankruptcy of its main operating unit, allowing the casino company to focus on restoring the tarnished Harrah's, Caesars and Horseshoe brands after two years of Chapter 11 proceedings. "The new Caesars (NASDAQ:CZR) will be a stronger company," CEO Mark Frissora declared after the ruling, calling the approval a "major milestone."
Mark Zuckerberg disclosed that beyond the $2B price tag for Oculus, that was widely reported, Facebook (NASDAQ:FB) paid an additional $700M to retain employees and another $300M earnout for hitting key milestones. Oculus originally wanted $4B. The revelation came in a Dallas courtroom, where Zuck denied an allegation by ZeniMax Media that the VR technology of Oculus was stolen.
Walking away? Amazon (NASDAQ:AMZN) and Flipkart (Private:FPKT) have withdrawn from talks to acquire Dubai-based Souq.com after disagreeing over price, Bloomberg reports. The deal was said to have been worth about $1B. The e-commerce giant is now seeking other potential investors and is negotiating with Majid Al Futtaim, a shopping mall-operator in the Middle East and North Africa.
Qualcomm +1.4% premarket after arguing that a complaint by U.S. regulators was "based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry." Qualcomm (NASDAQ:QCOM) shares tumbled 4% on Tuesday, when the FTC charged the company with using anti-competitive tactics over licensing and claimed it maintained a monopoly on a type of chip used in cellphones.
Hewlett Packard Enterprise has bought notable Nutanix (NASDAQ:NTNX) competitor and storage startup SimpliVity for $650M in cash, although at the time of its last fundraising, the company had declared its value at "more than $1B." HPE's discounted purchase price isn't an encouraging sign for the viability of "unicorn" startups. In 2017, companies like Snap (Private:CHAT), Spotify (Private:MUSIC), and Dropbox (Private:DROPB) will likely have to justify their enormous valuations to Wall Street.
Describing "an unprecedented decline" in its U.S. business, Pearson shares (NYSE:PSO) dived 27% premarket, after the company issued its fifth profit warning in four years, lowered its 2017 dividend and announced plans to sell its stake in publisher Penguin Random House. The education group's stock price has almost halved in the past three years as the company laid off thousands of employees amid trading pressures in key markets.
Theranos has failed a second major U.S. regulatory inspection of its laboratory facilities, WSJ reports, a setback the Silicon Valley blood-testing firm hasn't disclosed to investors or patients. The failed regulatory inspection - at its one active lab at the time - has put Theranos (Private:THERA) at risk of a new round of sanctions and comes after it recruited a new technology advisory board.
President-elect Donald Trump has asked Lockheed Martin (NYSE:LMT) to reduce costs on the $379B F-35 program by "many percent, into double digits", according to the chairman of BAE Systems (OTCPK:BAESY), which is a key subcontractor on the program. "We respect that and we’ll work towards a contribution towards that," Roger Carr said from the World Economic Forum in Davos.
More price cuts... Boeing (NYSE:BA) CEO Dennis Muilenburg had a "very productive" meeting with Trump on Tuesday and was encouraged by progress in talks on the Air Force One replacement fleet and fighter planes. "We made some great progress on simplifying requirements on AF1, streamlining the process... all that is going to provide a better airplane at a lower cost. I'm pleased with the progress there."
An autonomous roadway management system? Amazon (AMZN) recently filed a new patent designed to help self-driving vehicles identify the driving lanes best-suited for their individual needs based on things like speed and destination, or time of day and traffic flow. The new system could also help autonomous cars spot reversible lanes, which let vehicles travel in either direction depending on the displayed overhead signal.
Tuesday's Key Earnings
CSX Corp. (NYSE:CSX) -4% AH on a set of in-line earnings.
In Asia, Japan +0.4%. Hong Kong +1.1%. China +0.1%. India +0.1%.
Today's Economic Calendar
7:00 MBA Mortgage Applications
Author: skywalker | Publish date: Tue, 17 Jan 2017, 08:34 AM
Britain will not seek a Brexit deal that leaves it "half in, half out" of the EU, Prime Minister Theresa May will say today, in a speech outlining her 12 priorities for upcoming divorce talks with the bloc. Those will likely include leaving the EU's single market and regaining full control of Britain's borders, reinforcing fears of a "hard Brexit," which has weighed heavily on the pound. The speech will begin at 6:45 a.m. ET.
The world's political and business leaders, plus the usual smattering of celebrities have gathered in Davos, the Swiss Alpine resort where the World Economic Forum's annual conference begins today. The official theme of the 2017 meeting is "responsible and responsive leadership." In WEF-speak, that means "recognizing that frustration and discontent are increasing in the segments of society that are not experiencing economic development and social progress."
Making the first appearance by a Chinese leader at the forum, President Xi Jinping said the world's most important task is to revive the global economy and pressed his case for free trade. "Protectionism is like locking oneself in a dark room," he declared. "No one will win a trade war." Xi also likened the world economy to a "big ocean that you cannot escape from," adding that any attempt to cut off from the world would simply not be possible.
Oil markets are going to stabilize this year, according to OPEC's Secretary General. Speaking in Venezuela, Mohammed Barkindo also voiced optimism that OPEC economies will improve as a result of last year's producer agreement. It comes after Saudi Arabia said the Kingdom is committed to cutting its output and is prepared to extend the supply deal if necessary.
Global shipping insurers have devised a way to ensure nearly full coverage for Iranian oil exports from next month after striking a deal to provide cover without involving U.S.-domiciled reinsurers. That will provide a boon to Iran, trying to raise oil exports after most sanctions were lifted last year, though banking restrictions that remain in place could cap any major rise in exports.
Trump roundup... The IMF has raised its forecasts for the U.S. economy, reflecting an expected boost from the economic policies of the President-elect. The new outlook sees U.S. growth at 2.3% this year and 2.5% in 2018 (+0.1% and +0.4% from previous estimates), marking an improvement from lackluster American growth of around 1.6% in 2016.
Healthcare: Trump has pledged to provide "insurance to everybody" under his plan to replace Obamacare, The Washington Post reports. He also promised to force pharmaceutical companies to directly negotiate drug prices with the government for Medicare and Medicaid, stating "they're politically protected, but not anymore."
Taxes: One of the cornerstones of the House Republicans' corporate-tax plan that would levy duties on imports and exempt exports is "too complicated," according to the President-elect. "Anytime I hear border adjustment, I don't love it... Because usually it means we're going to get adjusted into a bad deal. That's what happens."
Russia and China: Trump said he would keep intact sanctions against Russia "at least for a period of time," however, "if you get along and Russia is really helping us, why would anybody have sanctions?" The President-elect also said he wouldn't commit to the "One China" policy until he sees progress from Beijing in its currency and trade practices, and won't label China a currency manipulator on his first day in office, but will rather "talk to them first."
South Korean prosecutors are seeking an arrest warrant for Lee Jae-yong, the heir to the Samsung conglomerate and one of the nation's wealthiest and most-powerful executives. If the warrant leads to an indictment, it would be the latest criminal charges in an unprecedented corruption scandal that has rocked the country's political system. Will the company have to rethink its leadership?
More Samsung news... The firm has concluded that the fires and explosions affecting its Galaxy Note 7 were caused by battery problems, not the phone's hardware or software, Reuters reports. The results of the investigation will likely be announced on Jan. 23, as Samsung Electronics (OTC:SSNLF) seeks to put behind it one of the biggest product safety failures in tech history.
Just a day after it opened an augmented reality lab, Baidu (NASDAQ:BIDU) has beefed up on its push into artificial intelligence, announcing the hiring of former Microsoft (NASDAQ:MSFT) executive Qi Lu as group president and COO. Baidu is best known for its search engine, which dominates in China, but over the past two years it has put focus on developing AI, as earnings from its core business continue to wane.
British American Tobacco has agreed on terms to buy Reynolds American (NYSE:RAI) after it increased its offer for the 57.8% of the company it did not already own to $49.4B. Reynolds stockholders will receive $29.44 in cash and 0.5260 BAT (NYSEMKT:BTI) shares for each of their shares, creating the largest listed tobacco firm. BAT previously offered $47B, an offer that was rejected for being too low in November. RAI +3.6% premarket.
Seeing eye-to-eye... Italy's Luxottica (NYSE:LUX) and France's Essilor (OTCPK:ESLOY) have agreed on a €50B merger, FT reports, in one of Europe's biggest cross-border deals. The combination will join the world's leading consumer eyewear group and manufacturer of corrective lenses, and has been described as a "merger of equals." LUX +8.3% premarket.
A SpaceX rocket successfully blasted 10 Iridium Communications (NASDAQ:IRDM) satellites into orbit on Saturday following a fiery launchpad explosion that halted operations since September. This is "the beginning of one of the biggest tech refreshes in history," Iridium CEO Matt Desch declared. The company has a seven-flight contract with SpaceX (Private:SPACE) worth $468.1M and intends to eventually replace its entire global network with 70 new satellites.
Airbus plans to test a prototype for a self-piloted flying car as a way of avoiding gridlock on city roads by the end of the year. In 2016, Airbus (OTCPK:EADSY) formed a division called Urban Air Mobility that's exploring concepts such as a vehicle to transport individuals or a helicopter-style vehicle that can carry multiple riders. The aim would be for people to book the vehicle using an app, similar to car-sharing schemes.
With Donald Trump taking aim at costs in the defense industry, Boeing (NYSE:BA) CEO Dennis Muilenburg will meet with the President-elect today for the second time since the election. They'll talk over Boeing's contract to build the next-generation version of Air Force One, although sources didn't give details about which aspect of the plane would be discussed.
Like many technology entrepreneurs, the founders of Snap Inc. (Private:CHAT) want to retain management control of the ephemeral messaging company, even as they sell shares to the public. In one respect, Evan Spiegel and Bobby Murphy are going further than tech firms typically do: Investors won't get any voting power with shares purchased in Snap's IPO, WSJ reports. The listing could be valued at between $20B-$25B.
Facebook is rolling out measures to fact check and flag fake news for the first time outside the U.S., bringing the tests to Germany in an attempt to control the proliferation of news hoaxes ahead of its election. Users will now be able to report a story as fake and it will be sent to Correctiv, a third-party fact checker. If it's fake, Facebook (NASDAQ:FB) will flag the item as "disputed," with an explanation.
Is CGI still strong with The Force? Walt Disney (NYSE:DIS)-owned Lucasfilm doesn't have plans to digitally recreate film performances of the late actress Carrie Fisher, best known for her role as Princess or General Leia Organa. Such technology was utilized in the newly released Rogue One, in which a digital embodiment of Peter Cushing, who died in 1994, returned for the role of the Grand Moff Tarkin.
Deutsche Bank may withhold bonuses from as many as 90% of its bankers and traders, according to the NY Post. Only the top 10% are expected to receive a bonus for 2016, and those payments may be spread out over the next five years. Deutsche (NYSE:DB) was hit hard last month when it settled a mortgage bond probe with the DOJ for $7.2B, which was only about half of what the government initially wanted.
Amid threats of higher levies on auto imports, Hyundai Motor (OTC:HYMTF) and affiliate Kia Motors (OTC:KIMTF) said they will spend $3.1B in the U.S. over the next five years and may even build a new American factory. The Trump effect? General Motors (NYSE:GM) plans to also announce a $1B investment in U.S. factories today in a development that could create as many as 1,000 new jobs at existing facilities.
The President-elect also said over the weekend that BMW (OTCPK:BAMXF) would face a 35% import duty for cars assembled at a new facility in Mexico and sold in the U.S. A company spokeswoman said the plant in San Luis Potosi would build the BMW 3 Series starting from 2019, with output intended for the world market.
An air bag made by Takata has ruptured in a Honda (NYSE:HMC) vehicle in Japan, resulting in a minor injury to the car's driver. Shares of the automaker closed down 2.7% in Tokyo on the news. Last week, Takata (OTCPK:TKTDY) agreed to plead guilty to criminal wrongdoing and pay $1B to resolve a DOJ air bag probe linked to at least 16 deaths worldwide.
Syngenta expects regulatory approval soon for ChemChina's proposed $43B takeover of the Swiss pesticides and seeds group. "We are working well with the U.S. and the EU regulators now toward finalizing the agreements with them and expect to be finished in the not too distant future," CEO Erik Fyrwald said at the World Economic Forum in Davos. SYT +1.6% premarket.
Clayton Williams Energy +31% premarket after Noble Energy (NYSE:NBL) decided to scoop up its smaller rival for about $2.7B. The cash-and-stock deal for Clayton (NASDAQ:CWEI) will enhance Noble's presence in the Permian Basin, America's hottest shale play. It provides more than 4,200 drilling locations on about 120,000 net acres, with resources of more than 2B barrels of oil equivalent.
In Asia, Japan -1.5%. Hong Kong +0.5%. China +0.2%. India -0.2%.
Today's Economic Calendar
8:30 Empire State Mfg Survey
Author: skywalker | Publish date: Fri, 13 Jan 2017, 07:59 AM
The start of earnings season could test the Trump rally's endurance, at least in the short term. Financials, which have led the market's gains, are the first out of the gate with fourth-quarter results today. JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), PNC Financial (NYSE:PNC), First Horizon (NYSE:FHN) and First Republic (NYSE:FRC) are scheduled to report, as well as BlackRock (NYSE:BLK). The S&P financials sector has soared 17% since Election Day.
China's massive export engine sputtered for the second year in a row in 2016, with shipments dropping in the face of persistently weak global demand. Exports fell 7.7% and imports declined 5.5%, resulting in an annual trade surplus of $510B, below the $594.5B trade surplus in 2015. It may also be tough for trade this year, with President-elect Donald Trump vowing to brand Beijing a currency manipulator and threatening to slap high tariffs on Chinese goods.
Thailand's military-backed parliament has voted overwhelmingly to make amendments to the constitution as suggested by new King Vajiralongkorn, a move likely to delay a general election scheduled for the end of the year. Prime Minister Prayuth Chan-ocha said the changes were related to royal power clauses and it would take up to three months to resubmit a new draft.
The U.S. economy is "doing quite well" and faces no serious obstacles in the short term, with the labor market looking strong, Fed Chair Janet Yellen said in a town hall meeting with educators. But she still fears longer-term issues like widening income inequality, weak growth in labor productivity and a rollback of Dodd-Frank regulatory changes.
The Obama administration is ending the "wet foot, dry foot" policy that allowed Cubans who arrived in the United States without visas to pursue residency after one year. The move comes about a week before President Obama leaves office and is likely the last major change he will make to his overhaul of the U.S. relationship with Cuba.
"Compliance won't be 100%, it never is," OPEC delegates told Reuters, stating the group is unlikely to fully deliver on its target to cut production. According to the officials, 80% compliance would be good, with as low as 50% acceptable. OPEC planned to slash its output by 1.2M barrels per day to 32.5M bpd from Jan. 1, while Russia and other non-members expected to cut about half as much.
Building on yesterday's 10% plunge, shares of Fiat Chrysler (NYSE:FCAU) are down 3% premarket, after the EPA accused the automaker of using software to allow excess diesel emissions. The notice affects over 100K cars, including trucks and SUVs, and the maximum fine that could be imposed would total $4.6B. CEO Sergio Marchionne called the regulator "belligerent" and said if anyone believed the allegation, then "they had been smoking something."
France has launched an investigation into Renault (OTCPK:RNLSY) on suspicion of emissions fraud, with three judges assigned to the case. The stock dropped 4.1% in Paris on the news. In November, the country's Ministry for the Economy and Finance passed a dossier on Renault to state prosecutors to determine whether action should be taken.
Takata shares jumped 16% overnight after the Japanese airbag maker reached an agreement with the DOJ over its faulty airbags. The settlement, which could come as soon as today, includes a $25M criminal fine, $125M in victim compensation and $850M to reimburse automakers who have suffered as a result of Takata's (OTCPK:TKTDY) widespread recalls.
Tesla announced in November it was doing away with unlimited free charging at its Supercharger stations, but it just revealed the new pricing guidelines for those who purchase vehicles after January 15, 2017. Tesla (NASDAQ:TSLA) owners will get 400 kWh of Supercharging credits (about 1,000 miles) for free each year; however, pricing for anything more than that will be dependent on the state or country. A trip from San Francisco to LA would cost about $15, while LA to NY will cost about $120.
Jobs and layoffs... Amazon (NASDAQ:AMZN) intends to create more than 100K jobs in the U.S., from software development to warehouse work, over the next 18 months. Lowe's (NYSE:LOW) plans to eliminate less than 1% of its workforce, or fewer than 3,000 positions, as the home improvement retailer tries to adapt to shifting shopping habits. Layoffs have also hit Morgan Stanley (NYSE:MS). The bank fired a higher number of senior investment bankers last week than in years past and cut bonuses by roughly 15%.
Pandora +9% premarket after saying it expects to beat its earnings and revenue forecasts, thanks to solid ad performance. The company surpassed 4.3M paid subscribers in December, with Pandora Plus generating more than 375K net new subs. As part of a commitment to cost discipline, Pandora (NYSE:P) will also reduce its U.S. employee base, excluding Ticketfly, by about 7% by the end of the first quarter.
With President-elect Donald Trump pushing for American manufacturing, Taiwan's Foxconn (OTC:FXCOF) and its Japanese subsidiary Sharp (OTCPK:SHCAF) are studying the possibility of building an LCD plant in the United States. The plan is "on the table," a company executive told Nikkei. "We will make a decision carefully." Foxconn, a major producer for Apple (NASDAQ:AAPL), is also considering iPhone production in the U.S.
South Korean prosecutors will decide whether to seek an arrest warrant for Samsung Group (OTC:SSNLF) leader Lee Jae-yong within two days, according to a spokesman for the investigation team. The executive left the special prosecutor's office early on Friday, more than 22 hours after arriving for questioning about an influence-peddling scandal that could topple President Park Geun-hye.
The launch of Nintendo's Switch begins a make-or-break period for a company that defined videogame hardware for three decades but now faces tougher competition. Nintendo's (OTCPK:NTDOY) console, which goes on sale March 3 for $299.99, is an innovative hybrid: gamers can play at home by connecting it to their TV sets or using the Joy-Con controllers, or take it on the go via a handheld device.
Marking its second recent billion-dollar deal in Japan, KKR has agreed to buy Hitachi's (OTCPK:HTHIY) power tools unit, Hitachi Koki (OTCPK:HKKIY), for about $1.3B. The firm is taking advantage of a push by Japanese conglomerates to restructure businesses by shedding non-core operations. In November, KKR acquired Calsonic Kansei (OTC:CLKNF), an autoparts maker backed by Nissan (OTCPK:NSANY), for $4.5B.
Anadarko Petroleum will sell its Eagle Ford Shale assets in south Texas for $2.3B to a strategic 50/50 partnership formed by Sanchez Energy (NYSE:SN) and Blackstone (NYSE:BX). CEO Al Walker said the sale would help Anadarko (NYSE:APC) accelerate operations in its more high-return properties such as Texas' Delaware Basin, the DJ Basin in Colorado and the deepwater Gulf of Mexico.
Peabody Energy has announced that a group of banks, including affiliates of Goldman Sachs and JPMorgan, has pledged a combined $1.5B in loans to help the coal producer exit bankruptcy in the coming months. The cash will be used to cover claims by Peabody's (OTCPK:BTUUQ) secured lenders and provide "a strong foundation" for its capital structure when it exits the $8B Chapter 11 bankruptcy it filed last April.
Monte dei Paschi will have to wait another two weeks for a green light on its rescue plan after eurozone finance ministers scheduled a Jan. 26 meeting to discuss the "compatibility" of Italy's bailout with EU rules. Last month, Rome authorized a €20B fund to help distressed lenders - first and foremost BMPS (OTCPK:BMDPY) - that envisages only limited losses for bank creditors and compensation to protect retail investors.
Making their deal official, India's SpiceJet has agreed to buy up to 205 jets from Boeing (NYSE:BA), with a firm order of 155 new aircraft (55 of the jets were announced in a 2014 deal) and an option for 50 more. The Boeing order, worth up to $22B before discounts, is the largest ever placed by an Indian airline as part of its expansion plans in the world's fastest growing aviation market.
Is there a new industry standard? All of JetBlue's (NASDAQ:JBLU) domestic flights now have free WiFi. The Fly-Fi internet system can deliver similar speeds, between 12-15 Mbps, as passengers are accustomed to at home - although those speeds may dip if everyone is streaming Netflix (NASDAQ:NFLX). Another perk... There's no need to reach cruising altitude before connecting.
In Asia, Japan +0.8%. Hong Kong +0.5%. China -0.2%. India flat.
Today's Economic Calendar
8:30 Retail Sales
Author: skywalker | Publish date: Thu, 12 Jan 2017, 07:08 AM
Apple is planning to build a significant new business in original television shows and movies, WSJ reports, in a move that could make it a bigger player in Hollywood and offset slowing sales of iPhones and iPads. Programming would be available to subscribers of Apple Music (NASDAQ:AAPL), which already includes a limited number of documentary-style segments on musicians, but nothing like the premium programming the company is now seeking.
Brexit is no longer the biggest single risk to Britain's financial stability, according to Bank of England governor Mark Carney. "In the run up to the referendum, we felt it was the largest risk because there were things that could have happened which had financial stability implications... Actions were taken to mitigate that, but having got through the day after, the scale of the immediate risks has gone down."
German economic growth accelerated more than analysts forecast last year to its fastest pace since 2011, as falling unemployment and record-low interest rates boosted spending. According to the Federal Statistics Office, GDP growth rose 1.9%, after a gain of 1.7% the previous year. Germany is the first of the world's biggest developed economies to provide preliminary GDP data for 2016.
Global macroeconomic numbers have responded "positively" to the agreement between OPEC and non-OPEC producers to pare output, according to OPEC Secretary General Mohammad Barkindo. Crude-producing countries will decide in May whether to extend their collective output cuts beyond the first half of the year, he added, stating OPEC isn't targeting a specific price for crude.
The U.S. dollar nursed widespread losses overnight after President-elect Donald Trump's long-awaited press conference provided little clarity on future fiscal policies. Most of the discussion centered on Russia and his potential conflicts of interest, but the defense and healthcare sectors ended the day in the red after some notable mentions. Trump again criticized the cost of Lockheed Martin's (NYSE:LMT) F-35 program and argued the drug industry is "getting away with murder" by overcharging for medicines.
After debating seven hours through the night, the Senate narrowly passed a budget resolution early Thursday, clearing the first major hurdle in the GOP effort to repeal Obamacare. House leaders plan to take it up tomorrow amid pressure from President-elect Donald Trump; he said yesterday that the repeal and replacement should happen "essentially simultaneously."
Johnson & Johnson has tentatively agreed with Actelion (OTCPK:ALIOY) on a price to acquire the Swiss biotechnology company, Bloomberg reports, and talks are now focused on valuing what would be a new unit that would house research and development assets. Before the current round of negotiations started in late December, J&J (NYSE:JNJ) had made an offer for Actelion valued at about $260 per share, or more than $28B.
For the seventh consecutive year, Rhode Island lawmakers plan to introduce legislation that would legalize recreational use of marijuana instead of a ballot initiative. Advocates are hopeful that the proposal might finally get a vote this time, because Rhode Island residents can simply buy the drug in neighboring Massachusetts. That state approved recreational use in a November ballot.
Shire has agreed to pay a $350M settlement over U.S. claims that it used "kickbacks and other unlawful methods" to induce doctors to prescribe Dermagraft, a bioengineered human skin substitute. Deputy U.S. attorney-general Benjamin Mizer, head of the DOJ's civil division, said the settlement was "the largest False Claims Act recovery" in a kickback case involving a medical product. SHPG -1.7% premarket.
The U.S. Justice Department is not expected to bring antitrust action against U.S. airlines after finding little proof the four major carriers - DAL, LUV, AAL and UAL - coordinated to raise fares by curbing the supply of seats. Investigators failed to uncover sufficient evidence of collusion among airlines to restrain seats, since the DOJ's probe began in the summer of 2015.
Indian budget airline SpiceJet is set to seal an order for at least 90 new 737 jets from Boeing (NYSE:BA), Reuters reports. At current list prices, the order could be valued at about $10B. The announcement is expected as early as tomorrow when SpiceJet's chairman holds a press event in New Delhi.
United Continental expects to cut some management employees as a part of its larger restructuring program to reduce bureaucracy and boost profit margins. Frontline employees, which include pilots, flight attendants, customer-service and gate agents, will not be affected by United's (NYSE:UAL) impending changes.
Toyota President Akio Toyoda met with Vice President-elect Mike Pence in Washington this week, following criticism from Donald Trump about the company's Mexican production facilities. While a Toyota (NYSE:TM) spokeswoman declined to say what was discussed, Toyoda is believed to have explained the degree of the automaker's contribution to the U.S. economy.
Further individuals could be charged in an ongoing investigation by U.S. authorities into Volkswagen's (OTCPK:VLKAY) diesel emissions cheating, according to the U.S. Attorney General Loretta Lynch. The announcement comes after VW agreed with the U.S. government to pay $4.3B in fines and penalties, while six high-ranking employees were indicted in connection with a conspiracy to cheat emissions tests.
Tesla announced last week that battery production had started at its Nevada Gigafactory, but it didn't mention one exciting detail. According to an investor handout, the Gigafactory will be powered by a 70-megawatt solar array, which is "~7x larger than the largest rooftop solar system installed today." Any generated excess power will be stored by Tesla (NASDAQ:TSLA) Powerpack batteries for use at other times.
Massachusetts Judge Heidi Brieger has refused to excuse Exxon Mobil (NYSE:XOM) from a request by the state's attorney general to hand over decades worth of documents on its views of climate change. "This order affirms our longstanding authority to investigate fraud," she said on Twitter following the decision, adding that Exxon "must come clean." A total of 17 states and territories are cooperating in the investigation.
The Obama administration is expected today to launch a formal complaint with the World Trade Organization against China over subsidies Beijing provides to the country's aluminum industry. The complaint will likely accuse China of granting cheap loans from state-run banks to its aluminum producers, helping companies to enhance their production. Related tickers: AA, BLL, CENX, KALU, CSTM
British Columbia has given the green light to Kinder Morgan's (NYSE:KMI) plan to nearly triple its Trans Mountain oil pipeline, which runs from Canada's oil sands through the province to a marine terminal on the Pacific Coast. The federal government approved the $6.8B expansion in November after the National Energy Board recommended moving ahead with the project based on the fulfillment of 157 conditions.
More trouble in Italy's banking sector? After Monte dei Paschi (OTCPK:BMDPY) failed to raise funds on the market, attention now turns to the nation's biggest bank. UniCredit (OTC:UNCFY) is seeking investor backing for a €13B rights offer - almost as much as its market value - to carry out a turnaround plan. The lender also said today it will book €8.1B in additional provisions for bad loans, as part of a balance-sheet cleanup it unveiled in December.
In Asia, Japan -1.2%. Hong Kong -0.5%. China -0.6%. India +0.4%.
Today's Economic Calendar
8:30 Initial Jobless Claims
Author: skywalker | Publish date: Wed, 11 Jan 2017, 07:53 AM
President-elect Donald Trump will meet the press at 11 a.m. today for his first news conference since the election, and markets are hoping for more topics besides Russia and his potential conflicts of interest. While there isn't a great deal known about the event, investors are looking to get a clearer picture on trade, currencies, tax plans, fiscal stimulus and the new administration's relationship to the Fed.
The world economy is expected to expand 2.7% this year, recovering from a post-crisis low in 2016, thanks to rising commodity prices and Donald Trump's stimulus, the World Bank said in its latest Global Economics Prospects report. However, this growth could be hit by a significant slowdown in investment in emerging markets and political uncertainty in major economies, including the U.S.
The Kremlin said it has no compromising material on Donald Trump or Hillary Clinton and dubbed an unsubstantiated dossier which said it did as "total nonsense." Spokesman Dmitry Peskov further called the allegations "pulp fiction" and said the report had been dreamt up to further damage U.S.-Russia relations.
Italy "will not need" the support of the European Stability Mechanism, Economy Minister Pier Carlo Padoan told La Repubblica, when asked about the possibility that Rome tapped the eurozone bailout fund. He also confirmed that Italy will inject €6.6B of public money into Monte dei Paschi (OTCPK:BMDPY) after the bank's failure to complete a capital boosting plan.
After months without one, Iceland finally has a new government. The catch? The new coalition of the Independence, Reform and Bright Future parties will give parliament a chance to debate whether to hold a referendum on EU membership. Iceland began EU accession talks in 2010, while the country was still reeling from the 2008 financial crash.
Saudi Arabia plans to follow its record-breaking debut on global debt markets with an Islamic bond issue. The sale, which could come as early as February, will help the kingdom finance its budget deficit and invest in economic diversification away from oil. Last year, the country set a record for developing countries with its first sovereign bond sale, attracting $67B in investor bids for a $17.5B issue.
There will be "trouble for equity markets" if the yield on the 10-year U.S. Treasury note moves beyond 3%, warned Jeffrey Gundlach, while another bond king stated 2.6% was the key level to watch. According to Bill Gross, the number is much more important than Dow 20K, the price of oil or dollar strength, as it would signal a bear bond market. The 10-year yield last stood at 2.38%.
Trying to recover from a scandal driven by aggressive sales targets, Wells Fargo (NYSE:WFC) has unveiled a new compensation structure for branch bankers. The plan will create incentives based on customer service rather than sales goals, is longer-term in nature and includes additional monitoring of sales activities.
There is a lively argument going on at the Supreme Court - with justices considering how the First Amendment applies to credit card fees. At issue is a dispute over the "freedom of speech" for merchants, who want to avoid charges by steering customers toward cash, and payment companies, which seek to make the fees invisible. But New York law, similar to ones in nine other states, bars credit card "surcharges," while permitting "cash discounts." Related tickers: AXP, BAC, C, COF, DFS, JPM, MA, V
The de facto head of the Samsung Group (OTC:SSNLF) will be investigated as a bribery suspect by South Korean prosecutors, drawing the country's biggest business group deeper into an unfolding political scandal that led to the president's impeachment. According to a spokesman, Lee Jae-yong was summoned to appear in court on Thursday morning.
Seoul prosecutors have also indicted seven current and former executives of Volkswagen's (OTCPK:VLKAY) Korea operations on charges of fabricating official documents and alleged violation of the Clean Air Conservation Act. The news comes after VW negotiated a $4.3B draft settlement with American regulators over its diesel emission issues in the U.S., pleading guilty yesterday to criminal wrongdoing.
Looking to stoke demand for electric cars, BMW (OTCPK:BAMXF), VW (OTCPK:VLKAF), Ford (NYSE:F) and Daimler (OTCPK:DDAIF) are aiming to build a network of ultra-fast charging stations across Europe. The 400 next-generation 350 kilowatt chargers would be nearly three times as powerful as Tesla's (NASDAQ:TSLA), reloading an electric car in minutes instead of hours.
Elon Musk has famously mocked Apple (NASDAQ:AAPL) as a "Tesla graveyard," hiring engineers that the automaker had fired, but the company just scooped up Apple veteran Chris Lattner. He will head up Autopilot efforts at Tesla (TSLA) after working for the tech giant for 11 years. Lattner's chief contribution was creating Swift, Apple's most recent programming language.
Airbus's productivity surged in December, allowing it to record a full year delivery of 688 planes, but it still fell short of rival Boeing (NYSE:BA), which rolled out 748 jets to customers. But in the race for new business, Airbus (OTCPK:EADSY) recorded 731 net orders in 2016, compared with the 668 of Boeing. Still, the combined book-to-bill ratio of the two giants dipped below 1 for the first time since 2009, placing a dent in record industry order backlogs.
After almost a decade-long absence, Yum China (NYSE:YUMC) is bringing Taco Bell back to China, with a plan to have 1,000 restaurants operating in the country by 2022. But, wary that Chinese consumers may not be clamoring for beans and tortillas, it's hedging its bets with a menu that appeals to local tastes. "Let's be honest: It's not Mexican food; it's Mexican-inspired food," said Greg Creed, chief executive of Yum Brands (NYSE:YUM).
Shortly after the ouster of Roger Ailes as the CEO of Fox News (FOX, FOXA), the company reached a secret settlement of sexual harassment claims against anchor Bill O'Reilly, sources told NYT. Juliet Huddy, who appeared semi-regularly on The O'Reilly Factor, reportedly settled for an amount in the high six figures. The news could add more fuel to stakeholders concerned about reports of a pervasive (and potentially expensive) cultural problem at the network.
U.S. District Judge Jesse Furman has ruled that Alstom (OTCPK:ALSMY) may ask an independent accounting firm to resolve a dispute over the company's $800M purchase of General Electric's (NYSE:GE) train signaling business, rejecting the latter's bid for arbitration. Alstom had sued GE for breach of contract for refusing to let Deloitte Touche Tohmatsu decide whether the purchase price should be adjusted up or down to account for working capital and net debt.
Canada's largest alternative-asset manager has submitted proposals regarding its interest in buying the yieldcos of bankrupt solar company SunEdison (OTCPK:SUNEQ). Brookfield Asset Management (NYSE:BAM) would purchase all of TerraForm Power (NASDAQ:TERP) for $11.50 per share in cash, or a total consideration of $1.6B, and may even raise its offer to $12.50 per share if it can also buy TerraForm Global (NASDAQ:GLBL).
Wal-Mart plans to cut hundreds of jobs before the end of January at its headquarters and regional personnel that support stores, WSJ reports. Many of the layoffs will affect Wal-Mart's (NYSE:WMT) human resources department, which some senior company executives believe should be more efficient or whose duties could be handled by outside consultants.
More reports are mounting to indicate that Apple's (AAPL) next iPhone might be mostly glass. The tech giant has found suppliers for a model featuring two reinforced glass panes connected by stainless steel forging in the middle, DigiTimes reports. The design, supplied by Foxconn (OTC:FXCOF) and Jabil Circuit (NYSE:JBL), would replace the phone's conventional aluminum-backed chassis.
In Asia, Japan +0.3%. Hong Kong +0.8%. China -0.8%. India +0.9%.
Today's Economic Calendar
7:00 MBA Mortgage Applications