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Author: skywalker   |   Latest post: Fri, 23 Jun 2017, 07:33 AM

 

Wall Street Breakfast: Prepare For A Post-Brexit World

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Theresa May has secured permission to begin two years of talks to exit the EU after parliament backed the so-called 'Brexit Bill' without amendments. "We will trigger Article 50 by the end of this month as planned and deliver an outcome that works in the interests of the whole of the UK," Brexit minister David Davis declared. There's still an upcoming hurdle to navigate: Scotland's renewed bid for independence. Sterling -0.7% to $1.2133.

Economy

Turkey is imposing sanctions on the Netherlands, including a ban on the Dutch ambassador and diplomatic flights, but will not include a ban on Dutch tourists or any economic sanctions. National tensions are also running high ahead of tomorrow's election. Far-right candidate Geert Wilders has vowed to "close the Dutch borders," while PM Mark Rutte shot back, "you want Nexit. You know what it will cost... don't do it."

Winter storm Stella has caused German Chancellor Angela Merkel to delay her plans to travel to the U.S. after the White House asked her to postpone her trip. Her first meeting with President Trump will be rescheduled for Friday. Top executives from three German companies, including Siemens (OTCPK:SIEGY) and BMW (OTCPK:BAMXF), will also be coming along for the ride.

China and South Korea will be joining today's trade talks with member states of the now-scuttled Trans-Pacific Partnership, raising fears that Beijing may dominate the meeting as it looks to benefit from Washington's absence. The pow-wow in Chile is expected to have a threefold focus: the possibility of a TPP agreement without the U.S., the Regional Comprehensive Economic Partnership and the Free Trade Area for the Asia-Pacific.

Due to the sometimes skewed results during the Lunar New Year holiday, China released data overnight for the combined January and February period. Retail sales fell below estimates, with growth of 9.5% over the two months, while industrial output - a proxy for economic growth - expanded 6.3%. Fixed-asset investment rose 8.9%, compared with an increase of 8.1% for all of 2016.

Puerto Rico's federal oversight board has certified the government's fiscal turnaround strategy, on condition it be amended to eliminate Christmas bonuses, impose employee furloughs and further reduce pension spending. The agreement will serve as the baseline for the island's looming restructuring talks with creditors, who hold more than $70B of defaulted debt.

The Republican plan to replace the Affordable Care Act would leave 14M more Americans without health insurance by 2018 (and 24M by 2026), according to a long-anticipated report from the Congressional Budget Office. While the plan would lower average premiums after 2020 relative to Obamacare (following a two-year spike), the analysis may rattle some lawmakers who won't support legislation that leaves a large number of people without coverage.

Stocks

Long-time Valeant Pharmaceuticals bull Bill Ackman has apparently waved the white flag. CNBC reports that he sold 27.2M shares for around $11 each, taking a loss of more than $3B after trying to rescue the struggling drug company for some 18 months. Pershing Square said Ackman would remain on the board, but would not stand for re-election. VRX fell 10% in after-hours trading.

Shares of Citrix Systems popped 7% on Monday after Bloomberg reported that the company may be working with advisers on a possible sale. Citrix's (NASDAQ:CTXS) large market valuation means buyout firms may have to team up to fund a bid. Other M&A news... Troubled restaurant chain Ruby Tuesday (NYSE:RT) is considering a sale or merger to "position the business for long-term success." RT +17.8% AH.

Secretary of State Rex Tillerson used email alias "Wayne Tracker" to discuss climate change while he was at Exxon Mobil (NYSE:XOM), according to NY AG Eric Schneiderman, who accused the company of failing to turn over all documents required by a court order. The filing comes in a protracted legal dispute in which Exxon seeks to derail probes about whether it misled shareholders and the public about climate change.

Grappling with construction delays and a multi-billion dollar writedown, Toshiba (OTCPK:TOSYY) is considering the sale of a majority stake in its Westinghouse nuclear unit. The announcement came as it gained approval to delay the release of third-quarter earnings until April 11. Toshiba shares pared losses of as much as 8.8% following the news and closed up 0.5% in Tokyo.

A federal grand jury criminal probe of Fox News Channel's (FOX, FOXA) business practices will begin soon despite the weekend firing of U.S. Attorney Preet Bharara, who headed the investigation. According to the NYT, the probe is "looking at whether Fox executives broke laws by obtaining journalists' phone records or committed fraud by hiding settlements payments to sexual harassment accusers."

In the latest move of a long-running dispute, NYC has sued Verizon (NYSE:VZ) over broken promises to make FiOS connectivity available to all city residents. A new filing has also revealed that Verizon ended up settling for $350M off its $4.52B price to acquire Yahoo (NASDAQ:YHOO), but originally pressed for a $925M discount. It also disclosed that CEO Marissa Mayer will get a $23M "golden parachute" once the merger is completed.

The BofA Merrill Lynch 2017 Consumer & Retail Technology Conference kicks off today and will run through tomorrow. Who's attending and presenting? Executives from Wal-Mart (NYSE:WMT), Kroger (NYSE:KR), Priceline (NASDAQ:PCLN), Whirlpool (NYSE:WHR), Lowe's (NYSE:LOW), Carter's (NYSE:CRI) and others.

Top executives at UPS took home higher pay in 2016 even as the parcel carrier missed many of its performance targets. The reason? A second raise and special stock awards given to senior UPS leaders, including CEO David Abney, toward the end of last year. Abney's total compensation rose 21% to $13.7M, compared to the previous year.

As institutions race to offer digital financial advice, Charles Schwab (NYSE:SCHW) has launched a service that combines its automated investment management technology with human advisors. Schwab has been one of the most aggressive established brokerages to fight back against robo-advisers, but its "Intelligent Advisory" program is seen as a hybrid human-robo financial service.

Facebook has barred software developers from using its data to create surveillance tools, cracking down on a method police departments allegedly used to track protesters and activists. Facebook (NASDAQ:FB) came under fire last year after the ACLU said officers were using location and other user information to track people during protests in Baltimore and Ferguson.

President Trump has given the CIA new authority to conduct drone strikes against suspected terrorists, WSJ reports, changing the Obama administration's policy of limiting the spy agency’s paramilitary role and reopening a turf war between it and the Pentagon. The CIA previously used drones and other intelligence resources to locate suspected terrorists, while the military conducted the actual strikes. Related tickers: NOC, TXT, BA

About 90 aerospace companies have signed a letter to Congress, stating a set of changes Republicans proposed last year will make them more competitive globally and help create U.S. jobs. The plan would cut the U.S. corporate tax rate to 20% from 35%, permit immediate deductions for capital investment and introduce a border adjustment tax system. Related tickers: BA, RTN, LMT, GE, NOC, HON, COL, GD, HRS, IBM, LLL

Volkswagen investors are gathered in Wolfsburg, Germany today for the automaker's annual meeting. "We see good chances of being able to ride the wave of the positive performance last year," CEO Matthias Mueller declared. VW (OTCPK:VLKAY) group revenue for 2017 is anticipated to top last year's €217B by as much as 4%, while deliveries are expected to exceed more than 10.3M vehicles.

Today's Markets

In Asia, Japan -0.1%. Hong Kong flat. China +0.1%. India +1.7%.
In Europe, at midday, London +0.2%. Paris -0.2%. Frankfurt -0.1%.
Futures at 6:20, Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude +0.7% to $48.73. Gold flat at $1203.20
Ten-year Treasury Yield +1 bps to 2.62%

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