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Author: skywalker   |   Latest post: Fri, 17 Nov 2017, 06:53 AM

 

Wall Street Breakfast: Markets On Edge With Comey Out

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Following the abrupt firing of FBI Director James Comey, U.S. stock index futures have taken a dip, as the news is likely to soak up oxygen in Washington and make tax and healthcare reform more difficult. Safe havens are getting a bid, with gold up $0.8% to $1225/ounce. "It is essential that we find new leadership for the FBI that restores public trust and confidence in its vital law enforcement mission," read a letter from the White House.

Economy

The action is causing additional turmoil on Capitol Hill as Comey had been the one leading an investigation into possible Trump campaign ties to Russia. It also comes as Trump meets with Russian Foreign Minister Sergei Lavrov today, marking the highest level in-person meeting between the President and the Russian government since he took office.

The Trump administration will "certainly" not be able to achieve the 3% GDP growth it hoped for in 2017, according to Commerce Secretary Wilbur Ross, citing economic policies that have yet to be implemented as the reason for the delay. "The Congress has been slow-walking everything," he told Reuters in an interview. "We don't even have half the people in place."

Consumer inflation in China remained mild in April, edging up 1.2% on higher nonfood items, while producer prices rose 6.4%, marking a slower pace that signals weak demand. It's the latest sign that manufacturing activity may be losing momentum, along with other sectors of the economy, as commodity prices continue to decline and the government cracks down on financial risks.

Moon Jae-in has been sworn in as president of South Korea as Pyongyang's ambassador to the U.K. said the country is preparing for its sixth nuclear test. The liberal human rights lawyer took 41.1% of the vote, promising to shore up the nation's fragile economy, improve relations with the North and seek more balanced diplomacy towards the U.S. and China.

In a decision bound to infuriate Turkey, President Trump has approved plans to directly arm Kurdish fighters battling ISIS, as they close in on their capital of Raqqa. Turkey, a NATO ally, considers the YPG to be a terrorist group that threatens its borders. The move also comes ahead of President Erdogan's first meeting next week with Trump in Washington.

"It seems to me that yes, finally [the IMF will provide funding to Greece]," Slovakia's finance minister said at the EBRD's annual meeting in Nicosia. "We have to congratulate Christine Lagarde." According to Tradeweb data, the current yield on Greek 10-year government debt (5.633%) has fallen to its lowest level since the nation's debt restructuring in March 2012.

Stocks

Walt Disney fell 2.4% AH following a mixed report where profits came in ahead of expectations, but revenues were fairly short. The Parks business was a bright spot, with sales up 9% and operating income up 20%. Operating income in Disney's (NYSE:DIS) film business rose 21% despite a decrease in revenue, while ESPN was hit by higher programming costs.

"Tesla solar glass roof orders open this afternoon. I think it will be great. More in about 10 hours..." Elon Musk tweeted overnight. "Solar roof can be ordered for almost any country. Deployment this year in the US and overseas next year." Tesla's (NASDAQ:TSLA) glass roof panels were announced in 2016 and come in four styles: smooth, textured, slate and Tuscan.

The board meetings this week at Ford (NYSE:F) have been extended to give directors more time to press CEO Mark Fields on strategy, WSJ reports. He has the carmaker on a path to spend heavily on autonomous vehicle R&D and ride sharing ventures to reverse its shrinking U.S. market share. Shares of Ford are down 16% over the last 52 weeks, compared to GM's 11% gain and Tesla's (TSLA) 53% rip.

Cutthroat competition in the razor wars is having Procter & Gamble (NYSE:PG) and Unilever (NYSE:UL) sharpening their blades. Going after the Dollar Shave Club, Gillette has revamped its subscription-based service, which will now be called "Gillette on Demand." It will allow customers to either text for a shipment or subscribe to get every fourth order free.

Abercrombie & Fitch is working with investment bank Perella Weinberg Partners to field takeover interest from other retailers, sources told Reuters. The company has struggled as its logo-stamped t-shirts and sweaters, once popular among teenagers, have lost their fashion appeal. It's a vulnerable acquisition target: ANF shares are trading at a 17-year low.

Looking to settle... Wal-Mart (NYSE:WMT) is preparing to pay about $300M to end a probe of bribery by its employees in markets including Mexico, India and China. The deal would mark a significant concession by the U.S. government, Bloomberg reports. In October 2016, Wal-Mart rebuffed a proposal by U.S. prosecutors to pay at least $600M to settle the same corruption probe.

Barclays CEO Jes Staley will come under the spotlight at the bank's annual general meeting today as shareholders get the chance to vote on his re-election to the board. The Financial Conduct Authority is already probing his role in a whistleblower scandal and he reportedly intervened in a recent row between his brother-in-law and one of Barclays' (NYSE:BCS) biggest customers.

Qatar's royal family has asked approval from Germany's financial regulator to boost its stake in Deutsche Bank (NYSE:DB) to more than 10%, sources told Bloomberg, stating the request was made several months ago. Should the increase take place, they would become the bank's largest shareholder, ahead of Chinese conglomerate HNA Group which holds just less than 10% of the lender.

French insurance company AXA (OTCQX:AXAHY) plans to take its large U.S. life-insurance operations public, selling shares in a company that also will be home to AllianceBernstein's (NYSE:AB) asset-management business. The offering caps a tumultuous two weeks. On the last Friday of April, then-AllianceBernstein CEO Peter Kraus was fired along with the majority of the money manager's board of directors.

Using smart glasses to stay healthy? Microsoft (NASDAQ:MSFT) has been granted a patent for augmented reality headwear that can monitor what one eats, warn about calorie content and makes food recommendations based on nutritional needs. It might also be used to help guide decisions around food preparation, shopping and choosing restaurants. Shazam for food?

Apple has sent official press invites for its upcoming Worldwide Developers Conference, confirming plans to hold a keynote event on June 5. "Technology must intersect with the liberal arts and the humanities, to create new ideas and experiences that push society forward." Expect to see new versions of OS, and possibly new hardware like updated iMacs and Apple's (NASDAQ:AAPL) rumored Siri speaker.

Snap will report earnings for the very first time today, likely using the opportunity to show that it can grow its user base and ad money. But competition is quickly heating up, with Facebook (NASDAQ:FB) copying similar offerings and functions on its platform. SNAP's stock has also been on a roller-coaster ride for the last couple of months, following its blockbuster IPO on March 2.

Tuesday's Key Earnings

Allergan (NYSE:AGN) -1.4% despite beating estimates.
Electronic Arts (NASDAQ:EA) +6.7% AH after a big rise in revenues.
Nvidia (NASDAQ:NVDA) +11% AH riding an AI and gaming boom.
Plug Power (NASDAQ:PLUG) -7.5% missing estimates.
Valeant (NYSE:VRX) -2.2% as analysts remain wary.
Priceline (NASDAQ:PCLN) -3.8% on sluggish sales.
Walt Disney (DIS) -2.4% AH with concerns at ESPN.
Whole Foods (NASDAQ:WFM) -0.4% after a downbeat quarter.
Yelp (NYSE:YELP) -28% AH chopping guidance for 2017.

Today's Markets

In Asia, Japan +0.3%. Hong Kong +0.5%. China -0.9%. India +1.1%.
In Europe, at midday, London +0.3%. Paris -0.2%. Frankfurt -0.1%.
Futures at 6:20, Dow -0.3%. S&P -0.2%. Nasdaq -0.1%. Crude +1.1% to $46.43. Gold +0.8% to $1225.20.
Ten-year Treasury Yield -3 bps to 2.37%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Import/Export Prices
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $23B, 10-Year Note Auction
2:00 PM Treasury Budget

 

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