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Author: skywalker   |   Latest post: Thu, 25 May 2017, 11:23 AM

 

Wall Street Breakfast: Apple Valuation Reaches $800B

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Apple's market capitalization crossed the $800B threshold for the first time on Monday, marking another major milestone for the world's most valuable company. With mixed quarterly earnings last week, CEO Tim Cook attributed some of the slowdown to the fact that consumers are holding out for the next iPhone launch, anticipated in September. Wall Street seems to agree, as analysts upped AAPL's 12-month price target nearly 30 times so far this May.

Economy

South Koreans are heading to the polls to elect a new leader - most likely liberal Moon Jae-in - after former President Park Geun-hye was ousted over a sprawling corruption scandal. The vote is being closely watched at a time of economic uncertainty and heightened tensions with North Korea. So far in 2017: The won is up nearly 7% against the dollar, with local shares trading at a record high.

Asia-Pacific's long-term growth outlook remains the strongest in the world, but the medium-term picture is weighed down by an aging population and sluggish productivity, the IMF warned in a new report. Worries about China have been on the back burner for months now, but some recent weaker-than-expected data - PMI manufacturing, trade figures and a metals selloff - has also put the spotlight back on the country's economy.

Nationwide protests are spreading beyond President Maduro's control and risk morphing into civil war, said a retired Venezuelan general who was in charge of suppressing the last wave of unrest three years ago. "We're seeing much larger masses protesting across all major cities, including the working-class neighborhoods," Major Gen. Torres declared. "The government is losing control."

We have "an entire team dedicated to reviewing the financial regulatory rules and will begin reporting our findings to the president in June," a Treasury spokesperson told Reuters. "Given the volume and scope of the issues... we are carefully considering the best options to begin rolling them out." The reach of the project could require several separate reports, as permitted under the executive order.

The CBOE Volatility Index fell to a 24-year low of 9.67 on Monday, likely tied to the result of the French election and the general sideways action of global markets. The VIX, which is built using the implied volatilities of a wide range of S&P 500 index options, is meant to be forward-looking and is calculated from both calls and puts. It's often referred to as the "investor fear gauge."

A meeting of Trump administration advisers that had been set for today - deciding whether to pull the U.S. out of the Paris Climate Agreement - has been postponed due to scheduling conflicts. While the White House didn't say when the meeting would be rescheduled, President Trump has promised to announce a decision before a G7 summit at the end of May.

Stocks

Looking to better compete with Amazon (NASDAQ:AMZN) and Wal-Mart (NYSE:WMT), Target (NYSE:TGT) plans to test a next-day home delivery service called Target Restock in the Minneapolis area. Household essentials ordered online, like laundry detergent, coffee and 8,000 other items, will be packaged at a nearby store and delivered for a flat fee.

Toshiba has told Western Digital to stop interfering in plans to sell its memory chip unit, warning it may take legal action against the U.S. company and ban its employees from its facilities. Western Digital (NYSE:WDC) became Toshiba's (OTCPK:TOSYY) manufacturing partner in the flash-memory business when it acquired SanDisk last year, however, that unit may now pass into the hands of a new owner.

Amazon is due to unveil a new Echo speaker with a screen that will incorporate video calling capabilities, WSJ reports, keeping the tech giant one step ahead of rivals in seeking to control smart homes. The news comes on the heels of a new speaker announced by Microsoft (NASDAQ:MSFT), powered by the company's Cortana voice assistant, which offers similar functionality to Alexa (AMZN).

The U.S. is considering expanding a ban on carry-on electronic devices larger than a cellphone to include American flights departing for Europe. Department of Homeland Security officials are currently weighing the advantages against possible disruptions it will cause. Some passengers and businessmen may live with the restriction for the sake of convenience but others may start to shop around. Related tickers: AAL, DAL, UAL

JPMorgan has some advice for regional banks: A deposit drain is coming, so merge while you can. Those with $50B in assets or less could face a funding problem in coming years as the Fed goes about shrinking its massive balance sheet. Bloomberg obtained a copy of JPMorgan's (NYSE:JPM) confidential presentation, which was entitled "Core Deposits Strike Back."

The combined market capitalization of all public crypto-currencies surged nearly 80% to $49.5B over the last month, as more than $20B worth of new investments flooded the nascent market. The historical leader, Bitcoin, has seen a major boost as a result. Prices for the currency just passed $1,700, according to CoinDesk, and have climbed 45% in the last month. Related tickers: COIN, OTCQB:BTCS

China's mobile payment leaders are ramping up efforts in the land of Apple Pay (NASDAQ:AAPL). Alipay and WeChat Pay (OTCPK:TCEHY) are expanding into North America, seeing a big market in the waves of Chinese traveling abroad. To that end, Ant Financial, operator of Alipay and affiliate of Alibaba (NYSE:BABA), announced a deal with U.S. payment processing company First Data (NYSE:FDC).

California is borrowing up to $500M to pay for the crisis at the Oroville Dam, which was damaged earlier this year following major erosion to its emergency and primary spillways. Guess who's providing the short-term funds? Wells Fargo (NYSE:WFC). It's perhaps a sign the state is ready to move past the sanctions it slapped on the bank in 2016.

Hoping to speed up a review of a deal that was first announced two years ago, Walgreens (NASDAQ:WBA) and Rite Aid (NYSE:RAD) have notified the FTC about their compliance with the agency's request for information. That triggers a 60-day deadline for the commission to clear the merger or sue to block it. "We will continue to work closely with the FTC regarding the pending transaction," Walgreens CEO Stefano Pessina declared.

Janssen Biotech, a unit of Johnson & Johnson (NYSE:JNJ), has received a civil investigative demand from the DOJ regarding an investigation under the False Claims Act related to its arthritis drugs Remicade and Simponi Aria. Meanwhile, the U.S. Attorney's office in Massachusetts is probing co-payment support programs for hepatitis C drug Olysiotm, as well as Simponi and Crohn's disease drug Stelara.

Anthem is making another push to salvage its $48B merger with Cigna (NYSE:CI) by asking a Delaware judge to extend an order blocking its would-be partner from pulling out of the deal for 60 days. A $1.85B break-up fee is on the line. Judge Travis Laster said Anthem's (NYSE:ANTM) case is a "long shot," but he'll consider it and issue a ruling as soon as possible.

Elliott Advisors has launched legal action against Dutch paint maker Akzo Nobel (OTCQX:AKZOY), looking to oust Chairman Antony Burgmans, after the firm rejected a third €26B takeover proposal from U.S. rival PPG. Under Dutch law, shareholders representing a 10% stake have the right to ask the company to call an extraordinary meeting. Elliot has already assembled a group of investors meeting that threshold.

Even agriculture wars are being waged via troll. Monsanto (NYSE:MON) is being accused of hiring, through third parties, an army of Internet trolls to counter negative comments, while citing positive "ghost-written" pseudo-scientific reports which downplay the potential risks of their products. The documents emerged from pre-trial documents on 50 pending lawsuits against the company.

Wendy Walsh, a woman that accused Bill O'Reilly of sexual harassment, is pushing to block Rupert Murdoch from taking full control of Sky (OTCQX:SKYAY). "[We] came to London because we want the British regulator to understand the corporate governance failures at 21st Century Fox (FOX, FOXA)," her lawyer told reporters. A previous attempt to take full control of Sky in 2011 was derailed by a phone hacking scandal at one of Murdoch's British newspapers.

Highlights from the Ira Sohn Investment Conference: Click on the link to read Seeking Alpha's recap of the annual event. It's a marathon of the world's biggest hedge fund managers offering up trading ideas before an audience of professional investors.

Monday's Key Earnings

Hertz (NYSE:HTZ) -17.7% AH on a big earnings miss.
JD.com (NASDAQ:JD) +7.7% following a surprise profit.
Marriott (NYSE:MAR) +3.9% AH beating estimates.
Pandora (NYSE:P) +2.9% AH reviewing strategic options.

Today's Markets

In Asia, Japan -0.3%. Hong Kong +1.3%. China +0.1%. India flat.
In Europe, at midday, London +0.6%. Paris +0.3%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq flat. Crude +0.2% to $46.52. Gold -0.2% to $1224.10.
Ten-year Treasury Yield +2 bps to 2.39%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
10:00 Wholesale Trade
1:00 PM Results of $24B, 3-Year Note Auction

 

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