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Author: skywalker   |   Latest post: Wed, 29 Mar 2017, 07:28 AM

 

Wall Street Breakfast: March Madness In The Markets

Author: skywalker   |   Publish date: Mon, 13 Mar 2017, 09:49 AM


Another turbulent period may be in the making following a week that saw a strong jobs report, while the Dow, S&P and Nasdaq closed in the red. On the calendar this week: Monetary decisions due from the Fed, BOJ, BOE and SNB. Theresa May is also likely to trigger Article 50, Dutch elections will take place, the U.S. debt ceiling limit expires and G20 finance ministers will hold a gathering in Germany.

Economy

Turkey's quarrel with Europe worsened over the weekend after President Erdogan accused the Dutch government of Nazism and threatened to retaliate in the "harshest ways." He made the comments after two Turkish politicians were denied entry into the country to take part in a constitutional referendum campaign rally. Four planned rallies in Austria and one in Switzerland have also been canceled on public order and security concerns.

Sterling is trading higher against the dollar as Britain starts to prepare for Brexit. The U.K. government could trigger Article 50 as soon as tomorrow, if its Brexit bill passes through both houses of parliament this evening. However, a small number of Conservative rebels - along with a band of opposition MPs - are expected to try and secure amendments to the legislation.

Easing restrictions on households and businesses, Iceland's finance ministry said in the coming week it would lift the remaining capital controls that have been in place since the financial crisis in 2008. The changes will affect individuals, companies and pension funds. The government started to dismantle capital controls last year by easing restrictions for local residents.

South Korea's Park Geun-hye left the presidential Blue House on Sunday, two days after the Constitutional Court's decision to uphold her impeachment by the National Assembly over a corruption scandal, which also involves Samsung's (OTC:SSNLF) de facto chief Jay Y. Lee. With political turmoil subsiding, South Korea's Kospi closed up 1%. An election to replace the former leader will be held by May 9 at the latest.

A barrel of WTI for April delivery dropped below $48 in overnight trading as the U.S. oil rig count rose by eight to 617 last week, the highest level since September 2015. Investors had cut bullish bets on the commodity just prior to the dive below $50, with some analysts saying things will get worse from here.

The federal board overseeing Puerto Rico's finances will meet today in New York, where it must decide on a plan for ending its chronic deficits. The island hopes to restructure more than $110B of debt and pension obligations, but it must first produce a credible fiscal plan. Last week, the board told Gov. Ricardo A. Rossello his proposal was unrealistic and asked him to make revisions.

Stocks

The biggest deal in the history of Israel's high-tech industry will be announced in the coming hours, according to TheMarker, one of Israel's leading financial newspapers. Intel (NASDAQ:INTC) has reportedly agreed to buy Mobileye (NYSE:MBLY), a leading manufacturer of software for autonomous vehicles, for $14B-$15B. MBLY +34% premarket.

Momentum on Chinese investment into U.S. entertainment is slowing, with the latest example coming in the death of Dalian Wanda's $1B deal for Dick Clark Productions. Owner Eldridge Industries kiboshed the agreement after it said Wanda, owner of theater chain AMC Entertainment (NYSE:AMC) and production company Legendary Entertainment, failed to honor its contract.

Dashing years of hopes, the SEC rejected the Winklevoss Bitcoin ETF (Pending:COIN) on Friday. The digital currency's price plunged on the news, losing some 18% to under $1,100 immediately after the decision. "Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated," the SEC said in a statement.

Suspected fraud at its South Korean subsidiary has led ABB to cut its 2016 net income by $64M, revising the full-year figure down to $1.89B. ABB "did not maintain effective internal controls over its financial reporting," according to a report from auditors Ernst & Young. The pre-tax impact was $73M, less than the roughly $100M previously reported, due to insurance recoveries.

Breaking with tradition, HSBC has tapped AIA Group (OTCPK:AAGIY) boss Mark Tucker as its next chairman, the first time the bank has hired an outsider for the role in its 152-year history. HSBC shares rose 1.2% premarket on news of the appointment, which market-watchers said signaled the bank's ongoing pivot towards Asia and steadier, lower-risk income streams.

Lloyds is set to agree on a £1.3B contract with IBM to outsource many of its computer systems and shift more than 1,900 jobs to the IT services provider. The deal, which will see most of the transferred employees lose their jobs after four years, is designed to cut almost £760M of costs while making Lloyds (NYSE:LYG) more nimble and responsive to changes in technology.

Vodafone will create 2,100 new customer service jobs across Britain in the next two years. The "onshoring" is crucial for Vodafone UK (NASDAQ:VOD), which has been losing market share following a botched IT overhaul that caused major billing errors and a sharp increase in complaints. Ofcom hit the operator with a £4.6M fine in October for "serious and sustained" failings.

Advertising is changing at eBay. The firm is in the process of building up its own internal ad sales team, eliminating product ads that link to other websites and replacing them with options that help drive sales directly on EBAY. The company generated $313M in marketing services revenue on its marketplace in Q4, a 4% drop from the same quarter in the prior year.

Google is still in talks with Beijing over its plans to return to the mainland Chinese market, according to Liu Binjie, a standing committee member of the National People's Congress and former head of the General Administration of Press and Publication. Google Scholar is among the services on Beijing's priority list for re-entry, and there is hope that a part of Google's (GOOG, GOOGL) business would return to China first, gradually followed by others.

The striking union at BHP Billiton's (NYSE:BHP) Escondida copper mine in Chile, the world's largest, said it will not accept the company's offer to return to the negotiating table, and called on BHP to clarify its negotiating positions. During the strike, which started on Feb. 9, Escondida's 2,500-member Union No. 1 has repeatedly said it has three non-negotiable demands the company must commit to before starting discussions.

Results from a YouGov BrandIndex survey suggesting a Starbucks (NASDAQ:SBUX) boycott campaign has dented the brand, "do not reflect the customer satisfaction and perception trends we are seeing so far in 2017," said Matt Ryan, Starbucks' chief strategy officer. The boycott started in response to the chain's promise to hire 10,000 refugees globally over the next five years following President Trump's first travel ban on seven mostly Muslim nations.

A major nor'easter threatens to shut down travel due to heavy snow and strong winds from Washington, D.C. to NYC and Boston early this week. The storm comes as brutal payback for a mild winter and a particularly toasty February that ushered in early buds on trees and flowers. Related tickers: JBLU, SAVE, UAL, AAL, LUV, DAL

Today's Markets

In Asia, Japan +0.2%. Hong Kong +1.1%. China +0.8%. India closed.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.1%.
Futures at 6:20, Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude -0.7% to $48.11. Gold +0.6% to $1208.
Ten-year Treasury Yield flat at 2.57%

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