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Author: skywalker   |   Latest post: Tue, 12 Dec 2017, 09:01 AM

 

Wall Street Breakfast: High Stakes For French Vote

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The world is turning its attention to France, where voters will head to the polls on Sunday to choose their next president. It's a close race between the four frontrunners, which include independent Emmanuel Macron, far-right Marine Le Pen, conservative Francois Fillon and far-left Jean-Luc Melenchon. Since an outright majority is unlikely, a run-off between the two leading candidates is expected and scheduled for May 7.

Economy

Security fears have re-emerged in the run-up to the election after a policeman was shot dead and two others were wounded on the Champs Elysees. The alleged ISIS gunman, identified as 39-year-old Karim C., was jailed for 20 years for trying to kill officers in 2001. It would be at least the sixth terror strike on Paris in three years and may boost candidates promising a stronger fight against terrorism.

What does the vote mean for the eurozone's second-largest economy? Both Marine Le Pen and Jean-Luc Melenchon have proposed, via different routes, taking France out of the euro and, like Britain, out of the EU. Other candidates have put a greater focus on domestic issues, such as tax reform, unemployment and the national debt. CAC 40 -0.6% and the euro is on watch.

Business activity in the eurozone hit a fresh six-year high in April, with the bloc's flash composite PMI coming in at 56.7, compared to 56.4 in March. "France's elections pose the highest near-term risk to the outlook, but in the lead-up to the vote the business mood has clearly been buoyant," said Chris Williamson, chief business economist at IHS Markit.

Draft EU negotiating guidelines reveal that Britain will be paying off obligations to Brussels for years after Brexit. According to Reuters, other conditions include the U.K. remaining subject to EU courts and allowing relatives of European immigrants to continue settling in the U.K. During the Brexit transition period, rules would be enforced by the European Court of Justice.

The IMF may finance Greece's current bailout program with a small amount for one year and "end at the same time with the ESM program, in August 2018," government spokesman Dimitris Tzanakopoulos told reporters. Greece wants to conclude the review as soon as possible to receive bailout loans and help the country qualify for inclusion in the ECB's quantitative easing program.

President Trump is expected to sign multiple "financial-related" executive actions today directing the Treasury to reduce tax regulations and re-evaluate parts of Dodd-Frank. Earlier, Steven Mnuchin said he's working on tax reform "day and night" and will unveil a plan "very soon." According to the Treasury Secretary, it will "pay for itself" by boosting economic growth.

Stocks

The Galaxy S8 hits store shelves today, and Samsung (OTC:SSNLF) is hoping sales will make up for last year's disastrous recall of the Note 7. The phone's OLED "infinity" screen has piqued the interest of many, along with its Bixby assistant, new navigation keys and high-end tech. Samsung said last week that pre-orders had surpassed those for the S7.

Big turnaround at Sony? The company has reported preliminary operating profit of ¥285B ($2.6B) for the fiscal year through March 2017, 19% higher than its previous forecast. It also said net income would be about ¥73B, more than twice its prior guidance. That marks the second straight year operating profit has topped $2B, the longest such streak since 2001. SNE +3% premarket.

With the release of its Windows 10 Creators Update, Microsoft (NASDAQ:MSFT) said it will start updating Windows with big feature releases twice a year, each September and March. Microsoft hopes the new change of pace will help its enterprise customers adopt Windows 10. The next version, currently codenamed "Project Neon," is supposed to bring even more sweeping changes.

Accelerating its deregulation push under GOP control, the FCC has voted to ease limits on broadcast TV ownership and prices that large telecom companies can charge businesses and governments. That's likely to have its impact on big station owners, including Sinclair Broadcast Group (NASDAQ:SBGI), which is reportedly considering a bid for Tribune Media (NYSE:TRCO).

Bill O'Reilly will exit Fox News (FOX, FOXA) with a severance package valued at about $25M after he was forced out in the wake of sexual harassment allegations. The O'Reilly Factor host had recently signed a $100M four-year deal, but the contract contained provisions allowing the network to pull the plug should O'Reilly become ensnared in any controversies.

Wal-Mart CEO Doug McMillon received a 13% increase in total compensation to $22.4M in the fiscal year ended Jan. 31, according to a regulatory filing. During that period, Wal-Mart's (NYSE:WMT) operating income fell 5.6% to $22.8B, while its core U.S. operations showed improvement, with sales at existing stores rising 1.3%, excluding fuel.

A group of 11 Republican attorneys general have joined forces in court to help stop an investigation into whether Exxon Mobil (NYSE:XOM) misled investors about the effects of climate change. In their brief, the AGs said their New York and Massachusetts counterparts were abusing their power and violated Exxon's rights to free speech by "using law enforcement authority to resolve a public policy debate."

President Trump on Thursday launched a trade probe against China and other exporters of cheap steel into the U.S. market, raising the possibility of new tariffs and sending shares of some U.S. steel makers up over 8%. He also turned his focus to America's northern neighbor. "We're not going to let Canada take advantage," Trump declared, vowing to get to the "negotiating table" swiftly. Related tickers: AKS, CLF, X, NUE, MT, VALE, SLX

The last orca has been born in captivity at a SeaWorld (NYSE:SEAS) park, just over a year after it decided to stop breeding orcas following opposition from animal rights activists and declining ticket sales. SeaWorld currently has 23 killer whales among its three centers in San Diego, Orlando and San Antonio, which will be "the last generation of orcas" in the company's care.

Confirming plans for his newest company called Neuralink, Elon Musk said he will be CEO of the startup that aims to merge computers with brains and allow for "consensual telepathy." In about four years, Neuralink hopes to market a device that would help treat severe brain injuries, and within eight to 10 years, it would become usable for people with no disability.

U.S. officials are reviewing Venezuela's seizure of General Motors' (NYSE:GM) assets in the country after its plant was appropriated in the industrial hub of Valencia. "We are reviewing the details of the case," State Department spokesman Mark Toner announced, stating the U.S. hoped to resolve the case "rapidly and transparently."

Uber has extended its internal investigation into sexual harassment claims at the company, with a report expected by the end of May. The investigation, led by former U.S. Attorney General Eric Holder, was sparked by charges of sexual harassment by a former female engineer as well as charges of a wider cultural problem across UBER.

A new index fund has launched that will let investors chase the growth potential of ETFs themselves. The ETF Industry Exposure ETF (TETF), which trades on NYSE Arca, will track an index covering companies that directly or indirectly provide services and support to the ETF industry. It comes to market after a record $375B was poured into the funds globally last year.

Deutsche Bank has been hit with the Federal Reserve's first major fine for failing to ensure traders abide by the Volcker Rule. Besides violating the ban on risky market bets, Deutsche (NYSE:DB) will pay even more for letting its currency desks chat with competitors. The simultaneous sanctions, totaling almost $157M, fault lax oversight of traders that persisted into last year.

Thursday's Key Earnings

Blackstone (NYSE:BX) +0.5% after topping expectations.
Mattel (NASDAQ:MAT) -6.8% AH whacked by inventory issues.
Philip Morris (NYSE:PM) -3.5% on an earnings miss.
Verizon (NYSE:VZ) -1.1% losing core subscribers.
Visa (NYSE:V) +2.1% AH boosted by Europe unit, buybacks.

Today's Markets

In Asia, Japan +1%. Hong Kong -0.1%. China flat. India -0.2%.
In Europe, at midday, London -0.1%. Paris -0.6%. Frankfurt +0.1%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.2%. Crude flat at $50.72. Gold flat at $1283.30.
Ten-year Treasury Yield flat at 2.23%

Today's Economic Calendar

9:30 Fed's Kashkari speech
9:45 PMI Composite Flash
10:00 Existing Home Sales
1:00 PM Baker-Hughes Rig Count

 

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