Wall Street Breakfast: The Unraveling Of Dodd-Frank
Author: skywalker | Publish date: Fri, 3 Feb 2017, 07:45 AM
Removing some of the regulatory burdens on banks, President Trump plans to sign executive actions today seeking a review of the 2010 Dodd-Frank law and a rollback of the so-called fiduciary rule - set to take effect in April. Trump is scheduled to issue the directives at a signing ceremony around noon following a meeting of more than a dozen top corporate executives led by Blackstone (NYSE:BX) CEO Steve Schwarzman.
Who else is Trump set to meet? Indra Nooyi (NYSE:PEP), Ginni Rometty (NYSE:IBM), Doug McMillon (NYSE:WMT), Mark Weinberger (Ernst & Young), Mary Barra (NYSE:GM), Paul Atkins (former member of the SEC), Laurence Fink (NYSE:BLK), Adebayo Ogunlesi (Global Infrastructure Partners) and Jamie Dimon (NYSE:JPM). They are expected to speak about economic issues, including regulation, women in the workforce, taxes, trade and infrastructure.
Investors are eyeing today's non-farm payrolls report, which will offer a broad snapshot of the labor market as the Trump administration took office. Economists project employers added 175,000 jobs - not far off from last year's monthly average - following an increase of 156,000 in December. The jobless rate is expected to remain at 4.7%, a level the Fed considers at or near full employment, with a smaller pickup in wages of 0.3%.
On the first day of trading following a week-long Lunar New Year, Chinese equities fell and the yuan weakened as the PBOC raised interest rates on open market operations by 10 basis points. It's yet another lever to slow down a rampant build-up in debt among Chinese corporates. Meanwhile, China's Caixin manufacturing PMI for January slowed from December, with the reading coming in at 51.0, down from 51.9 the previous month.
European Council president Donald Tusk has delivered a stark warning about the threat Donald Trump poses to the future of the EU. On the eve of the latest summit of EU leaders in Malta, he criticized the "worrying declarations" made by the new American administration. He also called for European solidarity in the face of external threats from Russia, China and radical Islam.
Conservative candidate Francois Fillon's bid for the French presidency plunged into further chaos after The Telegraph posted an old video interview of his wife saying she has never been his assistant. That follows allegations that she was paid over €800,000 for a fake job as his parliamentary aide. In other French news, a man wielding a machete was shot by authorities outside the Louvre after shouting "Allahu Akbar."
Yields on U.K. bonds are ticking higher after disappointing PMI data, which showed a January composite reading of 55.2 versus 56.5, while the services figure recorded a four-month low. Meanwhile, the eurozone's final January composite PMI reading was 54.4, matching December's number, while the new business PMI rose to 54.3, the highest since November 2015.
Oil prices are on the rise on news that President Trump will impose new sanctions on dozens of Iranian entities for their alleged role in missile development and terrorism. He further insisted that "nothing is off the table," including military action, following the nation's recent missile test. Comments by Russia's energy minister stating oil producers had cut their output in accordance with a pact agreed upon in December are also helping to support crude.
Amazon shares fell 3.5% after hours on disappointing operating profit guidance for the current quarter due to costly investments into video and warehouses. "The story is an investment story," CFO Brian Olsavsky said on a conference call, noting "stepped-up" spending levels have continued into 2017. Amazon's (NASDAQ:AMZN) cloud computing division saw revenue jump 47% to $3.5B; however, that still missed expectations.
Apple will begin assembling iPhones in India by the end of April, heightening its focus on the world's fastest-growing major smartphone market. The tech giant tapped Taiwan's Wistron Corp. (OTC:WICOF) to put together its phones in the tech capital of Bangalore, Karnataka, said Priyank Kharge, the state's IT minister. Apple (NASDAQ:AAPL) CEO Tim Cook also announced on an earnings call this week that India is "the place to be."
Bowing to heated political pressure, UBER CEO Travis Kalanick has pulled himself off of the president's advisory council. "Joining the group was not meant to be an endorsement," he said, "but unfortunately it has been misinterpreted to be exactly that." Kalanick had already faced plenty of criticism, and the #DeleteUber campaign pressed even harder after Trump's immigration order late last week.
Nordstrom won't be selling Ivanka Trump's merchandise in its stores for the spring season, but the department store denied any political motivation or connection with anti-Trump activist group called "Grab Your Wallet." "Each year we cut about 10% [of brands] and refresh our assortment with about the same amount," Nordstrom (NYSE:JWN) said. "In this case, based on the brand's performance we've decided not to buy it for this season."
Leading U.S. exporters have launched an "American Made Coalition" in support of a House Republican plan for a "border adjustment" tax on all imports. It includes more than 25 companies, like General Electric (NYSE:GE), Boeing (NYSE:BA), Dow Chemical (NYSE:DOW), Eli Lilly (NYSE:LLY), Pfizer (NYSE:PFE) and Oracle (NASDAQ:ORCL). "American workers and businesses are not competing today on a level playing field with foreign competitors because of an outdated and unfair tax system," said a spokesperson for the group.
Following a likely exit in the U.S., Toshiba (OTCPK:TOSYY) plans to withdraw from its lead role in projects to build nuclear plants in Britain and India as it wrestles with an imminent multi-billion dollar writedown. Such a move would leave its Westinghouse unit focused on the much narrower field of nuclear reactors and services, rather than civil engineering for nuclear power plants or their construction.
Honda has lifted its annual profit forecast for the second time in as many quarters due to cost-cutting and the impact of a weakening yen, while sales in China remained strong. Japan's third-largest automaker said it expected net profit for the year through March at ¥545B ($4.82B), up from previous guidance upgraded in November, and 58.2% more than a year earlier. HMC +1.1% premarket.
CEOs of the three largest U.S. airlines have asked to meet with Secretary of State Tillerson to discuss allegations that Gulf states are unfairly subsidizing their carriers, driving down prices and crowding out competition on key routes. The leaders of American Airlines (NASDAQ:AAL), United Continental (NYSE:UAL) and Delta (NYSE:DAL) asked for the meeting in a letter posted on the website of the U.S. airlines-backed Partnership for Open & Fair Skies.
Oh Snap! Snap (Private:CHAT) has officially filed to go public, looking to raise up to $3B, but warned it may never achieve or maintain profitability as it outlined a loss of over $500M for 2016. Founders Evan Spiegel and Bobby Murphy own about 20% each and said they plan to be the first public offering in the U.S. to issue only non-voting shares, meaning they will control all stockholder decisions.
Super Bowl 51 will bring the country to a standstill Sunday night, but lots of money will have already moved around. This year the cost of a 30-second spot exceeds $5M, more than double what it was 10 years ago, while viewers are expected to spend an average of $75 on food, décor and team apparel, according to the National Retail Federation. The Super Bowl is also traditionally the most bet-upon sporting event of the year. Related tickers: NKE, UAA, DKS, BBY, BUD, DEO, KO, PEP, DPS
Thursday's Key Earnings
Amazon (AMZN) -3.5% AH amid revenue miss, weak guidance.
In Asia, Japan flat. Hong Kong -0.2%. China -0.6%. India +0.1%.
Today's Economic Calendar
8:30 Non-farm payrolls
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