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Author: skywalker   |   Latest post: Fri, 15 Dec 2017, 09:58 AM

 

Wall Street Breakfast: Earnings Season Gets Underway

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A light week of economic news is being overshadowed by a flurry of corporate results. Nearly a third of the Dow 30 companies will kick-start earnings season this week and hopes are high for a profitable first quarter. American Express (NYSE:AXP) will report today, while Visa (NYSE:V), Verizon (NYSE:VZ), Travelers Cos. (NYSE:TRV) and General Electric (NYSE:GE) will announce results tomorrow and Friday.

Economy

President Trump is "absolutely not" trying to talk down the strength of the U.S. dollar, Treasury Secretary Steven Mnuchin was quoted as saying in today's edition of the FT. He also talked about currency manipulation. "To the extent you manipulate a currency that advantages the U.S., it's not currency manipulation. This is a defined term."

Despite the announcement, Goldman Sachs has dumped the dollar. The investment bank closed one of its top trade recommendations for 2017 - long-dollar positioning against the euro, sterling, and yuan - citing a slowdown in the reflationary momentum in the U.S. economy. "The greenback still has a number of things going for it... however, a number of fundamentals have changed on the margin."

British MPs are set to vote on Theresa May's decision to call a snap general election for June 8. In a major U-turn, May said the vote was necessary to secure a mandate for the upcoming Brexit negotiations, adding that Westminster was too divided to tackle what she called a "moment of enormous national significance." Sterling is flat after surging to 6-month highs, while U.K. gilt values are on the decline.

Turkey's High Electoral Board will evaluate complaints and appeals today regarding the annulment of Sunday's referendum that boosted powers of the presidency. The main opposition is leading the charge against Recep Tayyip Erdogan, while the bar association and international observers said an illegal move by authorities may have swung the vote.

In a letter to House Speaker Paul Ryan, Secretary of State Rex Tillerson said Iran remains compliant with the terms of the 2015 nuclear deal that allowed the lifting of sanctions against the country. President Trump has still ordered a review on whether the suspension was in the national security interest, as Iran remains a "leading state sponsor of terror."

Venezuela is bracing for the "mother of all protests" against President Maduro following two weeks of violent demonstrations that have escalated the country's economic crisis. It comes after his allies moved to strip the power of the opposition-majority legislature - the only lever of government they do not control - and banned opposition leader Henrique Capriles from politics.

March's compliance data shows "higher conformity" with the OPEC, non-OPEC supply cut pact reached late last year, OPEC Secretary-General Mohammad Barkindo told a conference in Abu Dhabi. "Our collective action will continue to prove effective," he declared, adding that the group will decide at its May 25 meeting whether to extend output cuts beyond June.

The IMF and the World Bank are kicking off their spring meetings with a slew of speeches from monetary leaders. The fun will start this morning at 9 a.m. with a press briefing on the World Economic Outlook. Optimism about a global recovery could be clouded by worries over protectionism in advanced economies.

Stocks

Verizon is considering merger possibilities as a result of the M&A arms race in telecom industry. "Given what I know about architecture, financial requirement, cultural fit, there's never a dream deal," CEO Lowell McAdam declared, adding that Verzion (VZ) would be open to talks with Comcast (NASDAQ:CMCSA), Disney (NYSE:DIS) or CBS.

Bill O'Reilly's fate at Fox News (FOX, FOXA) may be in jeopardy according to multiple reports. It follows revelations that he and Fox parent 21st Century Fox settled multiple sexual harassment complaints, which led to an exodus of advertisers from his show and mounting pressure on the network. A board meeting to decide his future is set for tomorrow.

Facebook has unveiled a new feature called "Spaces," which allows users to create 3-D avatars for video calls and Oculus Rift. It's an amped-up version of Bitmojis or Bitstrips, owned by rival Snapchat (NYSE:SNAP). Mark Zuckerberg is also betting big on augmented reality, calling the technology "Act 2" for the company as he announced its new camera-based AR platform.

"Canada does not accept the contention that Canada's dairy policies are the cause of financial loss for dairy farmers in the U.S.," Ambassador David MacNaughton said in rebuttal to President Trump's surprise criticism on Tuesday. Trump leveled the trade threats during an event in Wisconsin where he unveiled his "Buy American-Hire American" executive order. Related tickers: WWAV, DF, LWAY, KHC

More than three years after its flight MH370 vanished with 239 people aboard, Malaysia Airlines has become the first to sign up for a service that will track its entire fleet from space. The new partnership - with Aireon, FlightAware and SITAONAIR - works with a new satellite network from Iridium Communications (NASDAQ:IRDM) that can monitor air traffic around the globe.

The Chevrolet Volt is finally headed to China, but it won't be wearing the iconic bow tie badge that identifies Chevy (NYSE:GM) products - it will instead be sold as a Buick. The Velite 5 travels about 70 miles on an electric charge before a gas engine takes over to extend the range by several hundred miles. Prices will start at 265,800 yuan ($38,600).

Hoping to get autonomous vehicle companies to share a common platform, Baidu (NASDAQ:BIDU) will share its self-driving technology, while partnering in the sourcing of components and hardware. The project, named Apollo after the lunar landing program, will launch for the restricted environment in July before gradually introducing capabilities on city roads by 2020.

A Japanese government-backed fund and policy bank are considering a joint bid with Broadcom (NASDAQ:AVGO) for Toshiba's (OTCPK:TOSYY) semiconductor business, sources told Asahi. An offer by INCJ and the Development Bank of Japan would vault the group into the lead to buy the prized chip unit and prevent it from going to rivals in China or South Korea.

Unveiling a new strategy to accelerate value, Akzo Nobel (OTCQX:AKZOY) plans to return €1.6B to shareholders in 2017, along with a dividend increase. It's also separating its specialty chemicals division - returning the proceeds to shareholders - and will invest €1B in R&D by 2020. Suitor PPG Industries (NYSE:PPG) is watching closely.

Tuesday's Key Earnings

BofA (NYSE:BAC) -0.4% despite a surge in trading revenue.
Goldman Sachs (NYSE:GS) -4.7% missing estimates.
IBM (NYSE:IBM) -4.4% AH as revenue dropped again.
J&J (NYSE:JNJ) -3.1% posting sluggish sales.
UnitedHealth (NYSE:UNH) +0.8% topping expectations.
Yahoo (NASDAQ:YHOO) +0.4% AH with beat ahead of VZ merger.

Today's Markets

In Asia, Japan +0.1%. Hong Kong -0.4%. China -0.8%. India +0.1%.
In Europe, at midday, London -0.1%. Paris +0.3%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.1%. S&P +0.3%. Nasdaq +0.3%. Crude +0.2% to $52.96. Gold -0.7% to $1284.60.
Ten-year Treasury Yield +3 bps to 2.21%

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
12:30 PM Fed's Rosengren speech
2:00 PM Fed's Beige Book

 

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