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Author: skywalker   |   Latest post: Fri, 24 Feb 2017, 08:48 AM

 

Wall Street Breakfast: Future Of The American Auto Industry

Author: skywalker   |   Publish date: Tue, 10 Jan 2017, 07:33 AM


At a Deutsche Bank conference coinciding with the Detroit Auto Show, General Motors (NYSE:GM) will tell investors today what they can expect from the No. 1 U.S. carmaker in 2017. Ford (NYSE:F) CEO Mark Fields is also expected to outline forecasts for financial performance. Global automakers yesterday continued talking up their American production, as Toyota (NYSE:TM) announced a $10B investment in the U.S., following sharp criticism from President-elect Donald Trump.

Economy

China is vowing to contain high corporate debt levels and further cut excess coal and steel capacity, as investors scrutinized inlation data for signs of improved demand in the world's second-largest economy. The consumer price index for December climbed about 2.1%, on higher pork and fuel prices, while the producer price index jumped 5.5%, the fastest pace since September 2011.

Ban Ki-moon is due to return to South Korea on Thursday, where political parties will lock horns to recruit him. Having stepped down last month as the secretary-general of the United Nations, Ban is leaving New York and moving back to Seoul to presumably seek the presidency as his home country grapples with its worst-ever political crisis.

Mexico's new foreign minister has pledged to negotiate with the United States "without fear" and is looking to support trade ties with Donald Trump, despite his threats to penalize companies shifting jobs south of the border. "We will negotiate with great confidence in ourselves... knowing how important Mexico is for the U.S. in economic, social and political terms," Luis Videgaray told Mexican ambassadors.

President-elect Trump has named his son-in-law as a senior adviser, who will work with incoming Chief of staff Reince Priebus and chief strategist Stephen Bannon on Middle East issues and trade negotiations. Jared Kushner will not receive a salary while serving in the Trump administration, which could help alleviate legal problems stemming from federal anti-nepotism law.

Before handing over power next week, President Obama will give his farewell address in Chicago. Reflecting upon his eight years in office, the speech will likely be Obama's final appeal to preserve his achievements as President, discuss the nation's economic growth during his tenure and "offer some thoughts on where we all go from here." Tonight's event will begin at 6 p.m.

Stocks

Amid pressure to build products at home, Apple (NASDAQ:AAPL) is seeking to conduct "high-tech manufacturing" and assemble data center server gear at one of its plants in Mesa, Arizona. "The nature of the product is not for end users but for other global data centers what will be supported from the site," according to a notification published by the Federal Register.

Donald Trump had a "great meeting" with Alibaba's (NYSE:BABA) Jack Ma on Monday, when they discussed creating 1M new American jobs in five years. Some are calling the assertion a stretch, however, based on the company's definition of the goal. "Alibaba will create 1M U.S. jobs by enabling 1M American small businesses and farmers to sell American goods to China and Asian consumers on the Alibaba platform."

Facebook will begin testing "mid-roll" ads in videos on its platform, a move aimed to help media companies and the social network generate revenue from their growing video audiences. The firm has been testing the ads that run in the middle of clips for its live-streaming product, Facebook Live (NASDAQ:FB), but the new effort would extend that program into regular videos.

In a post-Brexit win for the U.K., Snap (Private:CHAT) has established its international headquarters in Britain, where it will book all sales made outside the U.S. The move by the owner of Snapchat is an unusual one among top American tech companies. Most have chosen the the U.K.'s neighbors to take advantage of lower-tax regimes, but pressure may be building following illegal state aid rulings by the European Commission.

After inking a deal to sell its Dendreon cancer business for $820M, Valeant (NYSE:VRX) is continuing to shed non-core assets to repay debt. The drugmaker has just sold three skincare brands - CeraVe, AcneFree and Ambi - to L'Oreal (OTCPK:LRLCY) for $1.3B. According to the French cosmetics maker, the acquisitions "will nearly double the revenue of our Active Cosmetics Division in the U.S." VRX +12.4% premarket.

Japan's Takeda Pharmaceutical is willing to bolster its drug portfolio through fresh acquisitions after agreeing on Monday to buy Ariad Pharmaceuticals (NASDAQ:ARIA) for $5.2B. "Should the right deal come along we have the capacity," CEO James Kehoe declared. At the end of its last business year that ended on March 31, Takeda (OTCPK:TKPYY) had ¥438B ($3.8B) in cash and cash equivalents.

Deepening its integration with brick-and-mortar stores, Alibaba (BABA) is leading a $2.6B bid to privatize Intime Retail Group (OTC:INTIY), a leading department store chain with 29 outlets and 17 shopping malls across China. In 2015, Alibaba acquired a 20% stake in Suning, which operates over 1,600 Chinese stores that sell consumer electronics and appliances.

In a response that usually includes divestments or product pricing commitments, ChemChina and Syngenta (NYSE:SYT) have submitted proposed remedies to the EU's antitrust watchdog to address concerns over their $43B merger. The European Commission opened an in-depth investigation into the takeover in October, saying the companies had not allayed concerns over the deal.

Wall Street's largest back-office processing service is partnering with IBM (NYSE:IBM) to upgrade how payments and record-keeping for credit-default swaps are handled by putting the system on a blockchain by early next year. "This will be one of the first globally where we are using distributed ledger technology to become a piece of the infrastructure in a very critical market," said Depository Trust & Clearing Corp. CEO Michael Bodson.

Continuing to shed some of its bolder ventures, Google (GOOG, GOOGL) is mulling over the sale of its SkyBox Imaging satellite business, now called Terra Bella, which it had acquired for $500M in 2014. The most likely suitor is said to be Planet Labs, a startup that provides high-definition satellite images and videos of the Earth for commercial purposes.

Pokemon Go and other augmented reality games are unlikely to be rolled out in China any time soon, after the state censor said it would not license them until potential security risks had been evaluated. Although not yet available in the world's largest smartphone gaming market, the game - developed by Niantic and Nintendo (OTCPK:NTDOY) - took the world by storm when it was released last year.

Yahoo will whittle down its board after completing its $4.8B deal with Verizon (NYSE:VZ), as CEO Marissa Mayer, co-founder David Filo and others step down as directors. Following the sale of its core internet business, Yahoo's (NASDAQ:YHOO) RemainCo, which will hold $36B in Alibaba (BABA) shares, will change its name to Altaba (a combination of the words "alternate" and "Alibaba").

According to Bloomberg, Blackstone (NYSE:BX) is no longer in talks to buy a $5B stake in assets owned by Energy Transfer Partners (NYSE:ETP), the company building the controversial Dakota Access Pipeline. The discussions fell through after WSJ disclosed them last month, as ETP shares jumped as much as 5% on the report, hurting the economics of the deal.

ExxonMobil did business with Iran, Syria and Sudan through a subsidiary while Rex Tillerson was a top executive of the oil giant and those countries were under U.S. sanctions as state sponsors of terrorism. ExxonMobil (NYSE:XOM) said the transactions were legal because Infineum was based in Europe and the transactions didn't involve any U.S. employees, but the connection is still likely to surface at Senate confirmation hearings tomorrow.

Today's Markets

In Asia, Japan -0.8%. Hong Kong +0.8%. China -0.3%. India +0.7%.
In Europe, at midday, London +0.4%. Paris flat. Frankfurt +0.1%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude +0.5% to $52.24. Gold -0.1% to $1184.30.
Ten-year Treasury Yield flat at 2.38%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
10:00 Wholesale Trade
1:00 PM Results of $24B, 3-Year Note Auction

 

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