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Author: skywalker   |   Latest post: Thu, 19 Jan 2017, 11:01 AM

 

Wall Street Breakfast: Still Searching For Dow 20,000

Author: skywalker   |   Publish date: Wed, 21 Dec 2016, 11:09 AM


The Dow Jones industrial average is within striking distance of 20,000 and some investors believe that piercing that level would signal the recent rally may continue. The U.S. stock market as a whole has added $1.6T since the election of Donald Trump on bets that his plans for deregulation, tax cuts and infrastructure spending will boost the economy. The Dow first hit 10,000 in 1999.

Economy

Relief could be in sight for areas across northern China that have been choking under a blanket of thick smog for days. Over 400M people have been affected by a "red alert," the highest level in China's pollution warning system, but the threat may be lifted tonight in Beijing and elsewhere. The haze has spurred authorities to cancel flights, close some highways and enact other emergency measures to cut down on air pollution.

Theresa May is planning to negotiate both Brexit and Britain's future relationship with the EU by 2019, but a transition period may be required after that. Appearing before a parliamentary committee on Tuesday, the prime minister said she wants an "implementation phase" - her first comments explicitly evoking a possible transitional deal.

Ukraine's parliament has approved a budget for 2017 with a deficit of 3% GDP, raising its chance of securing more aid from the IMF under a $17.5B loan package. Earlier this week, the government declared the country's largest lender insolvent and took it under state control, part of an IMF-backed crackdown on lenders with shaky balance sheets.

Turkey and international aid officials said evacuations from the last rebel areas of Aleppo could be completed as early as today while negotiations to secure access for U.N. monitors to supervise the operation hit a snag. The evacuations are part of a deal brokered last week by Turkey and Russia that will return the entire city of Aleppo to full regime control for the first time since 2012.

German police are still searching for the driver of the truck which ploughed into a Christmas market in Berlin after officials released a suspect due to insufficient evidence. ISIS has claimed responsibility for the deadly attack. Meanwhile, Turkey has detained six people over the assassination of Russia's ambassador and confirmed that the killing won't alter the countries' recently improved relations.

Stocks

InvenSense +16.7% premarket after TDK Corp. (OTCPK:TTDKY) agreed to acquire the company for $13 a share (20% higher than yesterday's close), or a total of $1.3B. "We aim to become a strong player in the sensor business with InvenSense (NYSE:INVN) as our perfect partner," TDK Chief Executive Shigenao Ishiguro declared. Completion of the transaction is expected in Q2 of the fiscal year ending March 2018.

Joining the exodus of staff leaving the company, Twitter (NYSE:TWTR) CTO Adam Messinger has said his farewells to "take some time off." The shift comes as Twitter "streamlines" its organizational structure, with more teams, including engineering and design, reporting directly to CEO Jack Dorsey. Messinger was responsible for engineering, product development and design.

Takeover talks between Actelion and Sanofi (NYSE:SNY) are making progress, despite concerns the boss of the Swiss biotech firm may be against the idea of selling. According to Reuters, Actelion (OTCPK:ALIOY) has reached a point where it can't call off negotiations without triggering an investor rebellion demanding the overthrow of its board. SNY +1.1% premarket; Actelion shares +5.5% in Zurich.

Coca-Cola has agreed to buy AB InBev's (NYSE:BUD) 54.5% stake in Coca-Cola Beverages Africa for $3.15B and several of its bottling operations across Africa and Central America for an undisclosed amount. The beverage giant plans to hold all of the interests temporarily until they can be refranchised to other partners. Coke (NYSE:KO) expects the deals to close by the end of 2017.

Stanley Black & Decker is selling the majority of its door-locks business to Switzerland's Dormakaba for $725M in cash, as it seeks to raise money for potential upcoming transactions. CEO James Loree is refocusing Stanley (NYSE:SWK) on growth opportunities in the tool industry after ending a self-imposed deal-making hiatus with the $1.95B acquisition of Newell Brands' (NYSE:NWL) tools business in October.

Two environmental groups have filed for a judicial review of Canada's decision to approve Kinder Morgan's (NYSE:KMI) Trans Mountain pipeline expansion, the first legal challenge to the project since it received the green light last month. Prime Minister Justin Trudeau's Cabinet cleared trebling capacity on the pipeline despite fierce opposition from environmental and aboriginal groups.

Monte dei Paschi's liquidity is expected to run out in four months instead of 11 months as previously forecast, according to an updated document on the bank's website. The headline doesn't help as the clock is ticking to the last attempt to try and save BMPS (OTCPK:BMDPY) from a bailout. In terms of a deadline, the lender apparently has until 2 p.m. local time to convert investors' debt to equity in its latest swap.

Top French lenders are suing the ECB to get an exemption from holding capital against certain deposits parked with state-owned fund CDC. Lawsuits have been brought forward over the past month by BNP Paribas (OTCQX:BNPQF), Societe Generale (OTCPK:SCGLY), Credit Agricole (OTCPK:CRARY) and three other banks. It's the first major case by top eurozone lenders, pointing to tensions between the banks and the monetary authority.

Blackstone is winding down its "big bet" Senfina Advisors after the two-year-old hedge fund lost 24% in 2016. It's a rare setback for the private equity titan, which invests roughly $70B in hedge funds. Other "multi-manager" funds have also suffered this year after being wrong-footed by the pace of interest rate hikes and the post-election rally in the U.S. BX -0.4% premarket.

The Swiss Competition Commission has fined several European and U.S. banks almost 100M Swiss francs ($97.3M) over interest rate cartels, the latest punishment dished out in connection with rate-rigging scandals. The largest was a 33.9M Swiss franc ($32.9M) penalty for JPMorgan (NYSE:JPM). Other banks that were fined include RBS, Deutsche Bank (NYSE:DB), Citigroup (NYSE:C), Barclays (NYSE:BCS), Credit Suisse (NYSE:CS) and SocGen (OTCPK:SCGLY).

Igor Oystacher, head of proprietary trading firm 3Red Trading, has agreed to pay $2.5M to settle spoofing claims and consented to having his trading monitored by an independent party for three years. Regulators and exchanges have increased their scrutiny of the bluffing tactic since Dodd-Frank officially outlawed the practice. Another futures trader accused of spoofing, Michael Coscia, was sentenced in July to three years in prison.

Volkswagen has added another $1B to its U.S. settlement bill with a deal to fix or buy back another 80,000 diesel vehicles. The settlement covers 3-liter Volkswagen (OTCPK:VLKAY), Porsche (OTCPK:POAHF) and Audi (OTCPK:AUDVF) models sold in the U.S. and brings the German carmaker's total spend in America to around $17.5B. VW still faces the possibility of further pay-outs to resolve a DOJ criminal investigation.

In other auto news, Ford (NYSE:F) is closing its Kansas City, Mo., pickup truck and van plant for a week early next month to match production and demand. The move comes after General Motors (NYSE:GM) said yesterday it would close five U.S. plants in January from one to three weeks, lay off 1,300 plant workers in March and cut the second shift at its Detroit-Hamtramck facility.

More restructuring costs at GoPro... The action camera maker will spend an extra $7M on an overhaul, in addition to the approximately $24M-$33M previously disclosed by the company, with most of the costs being recognized in Q4. GoPro's (NASDAQ:GPRO) flagship holiday product, the Karma drone, was plagued by delays and a recall this year.

Federal regulators are still working on rules to govern commercial drone flights in the U.S., but that isn't stopping businesses from pushing forward with their own plans. 7-Eleven (OTCPK:SVNDY) already completed 77 deliveries by drone this month to customers in Reno, Nev. The company partnered with drone delivery service Flirtey for the trials, which delivered items like over-the-counter medicines, as well as hot and cold food items.

The Northern Hemisphere's Winter Solstice occured at 5:44 a.m. ET, marking the shortest day of the year and first day of winter. As Jack Frost makes his way into town, investors could be looking for some stocks that may help warm up their portfolios. Cold-weather related tickers: ACAT, COLM, CMP, GNRC, MTN, PEG, PLOW, TTC, VFC

Tuesday's Key Earnings

BlackBerry (NASDAQ:BBRY) -2.9% amid concerns about revenue growth.
CarMax (NYSE:KMX) +6.1% boosting used vehicle sales.
Carnival (NYSE:CCL) +2.3% following strong bookings.
FedEx (NYSE:FDX) -3.9% AH missing estimates, light guidance.
General Mills (NYSE:GIS) -2.6% cutting its sales outlook.
Nike (NYSE:NKE) +2.3% AH with a rebound at its basketball unit.

Today's Markets

In Asia, Japan -0.3%. Hong Kong +0.4%. China +1.1%. India -0.3%.
In Europe, at midday, London -0.2%. Paris -0.6%. Frankfurt -0.1%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq flat. Crude +0.6% to $53.64. Gold +0.1% to $1135.
Ten-year Treasury Yield flat at 2.56%

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:00 Existing Home Sales
10:30 EIA Petroleum Inventories

 

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