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Author: skywalker   |   Latest post: Fri, 21 Jul 2017, 07:48 AM

 

Wall Street Breakfast: Movement In The Currency Market

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As oil prices churn higher, the greenback is down for a fifth day, with the dollar index flirting with its lowest levels since the election of President Trump. The downward movement is giving a boost to the euro, up 0.8% to over $1.10, along with positive eurozone GDP growth and German economic data. Sterling can't seem to decide which way to turn, see-sawing heavily overnight after the release of strong inflation figures.

Economy

The EU's need for deep reforms is so dire that even the idea of changing the EU treaty is "not taboo," French President Emmanuel Macron said during his first joint news conference with Angela Merkel. "First, we need to work on what we want to change, and then if it turns out it needs a treaty change, then we're prepared to do that," the German Chancellor declared. Did Brexit come too early?

According to reports first published in the Washington Post, President Trump allegedly shared highly classified material during last week's meeting with Russia's foreign minister and ambassador. "The story that came out tonight as reported is false," National Security Adviser Lt. Gen. H.R. McMaster said outside the White House. "I was in the room. It didn't happen."

Ukraine is pushing the Trump administration to take a direct role in peace talks over its eastern regions, including possible three-way talks with Moscow and Kiev on ending the violence. The U.S. initially led the charge to impose economic sanctions on Russia for the Kremlin's support of rebels, but left high-level political talks in European hands.

A day that began with largely peaceful protests against Venezuela's socialist government took a violent turn Monday as fierce clashes between state security and demonstrators killed at least two people. Protesters have been on the streets daily since early April to demand elections, freedom for jailed activists, foreign humanitarian aid and autonomy for the opposition-controlled legislature.

The oil market has essentially reached a balance and will continue to accelerate in the near term, the IEA said in its monthly report, just nine days before OPEC's much-anticipated ministerial meeting. The organization kept its global demand growth forecast unchanged at 1.3M bpd for 2017 due to slowdowns in previously robust consumer countries like the U.S., Germany and Turkey.

Following Washington's exit from the TPP, the 11 remaining members have kick-started discussions on how to proceed without the U.S. and recently wrapped up talks in Toronto. "Since we have come thus far, Japan must now take on a leadership role and bring the talks forward," Shinzo Abe told CNBC. "Momentum" should not be lost, he added, but left the door open for a U.S. return to the deal.

Stocks

Businesses that failed to update Windows-based computer systems that were hit by the WannaCry ransomware attack could be sued over their lax cyber security, but Microsoft (NASDAQ:MSFT) likely enjoys protection from such lawsuits. "Using outdated versions of Windows that are no longer supported raises a lot of questions," said Christopher Dore, a digital privacy lawyer at Edelson PC. "It would arguably be knowingly negligent to let those systems stay in place."

Pirates of the box office? Hackers claim to have stolen an upcoming Disney (NYSE:DIS) movie for a ransom, and will release the film if the company doesn't transfer the fee via bitcoin. CEO Bob Iger said he's not paying, but is working with the FBI on the matter. The issue is reminiscent of Netflix's (NASDAQ:NFLX) recent troubles with Orange is the New Black, which had most of its new season released online by hackers.

Facebook is still accessible in Thailand - one of the most Facebook-active countries in Asia - despite concerns that authorities would shut down the social network. Thailand's telecoms regulator said last week it would give Facebook (NASDAQ:FB) until Tuesday to take down 131 web addresses with content deemed threatening to security or which violated strict "lese majeste" laws.

Yahoo has announced plans to buy back $3B of its common stock - a proposal that will expire on June 13. The company said the purpose of the offer, which will see a purchase price of at least $37 a share, is to provide liquidity to stockholders forced to sell their stock. Yahoo (NASDAQ:YHOO) shares have hardly moved on the news, up just 0.5% premarket.

Weighed down by its Indian unit and foreign currency movement, Vodafone (NASDAQ:VOD) posted a full-year loss of €6.1B. The mobile operator expects earnings and cash flow to improve, however, with lower spending and increased customer revenue. "Our confidence in the outlook is demonstrated by another 2% increase in our dividend," CEO Vittorio Colao declared. VOD +4% premarket.

Toshiba plunged over 12% overnight after forecasting a return to profit over the next 12 months, notwithstanding the highly complicated sale of its flash memory business. Unless it can sell the division, Toshiba's (OTCPK:TOSYY) net equity will probably remain at around negative ¥540B ($4.8B) for two straight years through March 2018. Its shares also run the risk of being delisted.

HSBC has settled claims by a group of U.S. bondholders that it conspired with rivals to rig Libor. "We are pleased the matter is resolved," said HSBC spokesman Rob Sherman, but he didn't disclose the terms of the settlement. The benchmark interest rate is used to set rates on hundreds of trillions of dollars of transactions, including for credit cards, student loans and mortgages.

13F filings are rolling in, offering a glimpse into what hedge fund managers are buying and selling. But relying on the filings to develop an investment strategy comes with some risk because the disclosures are backward looking and come out 45 days after the end of each quarter. Click on the link to see Seeking Alpha's coverage.

The Cleveland Cavaliers are joining a group of NBA teams that will feature a corporate logo on their uniforms starting next season. The defending champions have agreed to a multi-year sponsorship agreement with the Akron-based Goodyear Tire & Rubber Co. (NYSE:GT). Financial terms were not disclosed, but the deal, which includes advertising and merchandise sales, could be worth $10M annually.

Another one bites the dust... U.S. retailer Rue21, owned by Apax Partners, has filed for Chapter 11, as shoppers shift their spending online and away from teen fashion trends. Rue21 entered into a Restructuring Support Agreement with certain stakeholders and expects to continue normal operations throughout the Chapter 11 process.

Elliott Management has called for an independent review of BHP's petroleum business, while CEO Andrew Mackenzie rejected the claim that he's not been open to suggestions. "There is extremely broad and deep-rooted support for proactive steps to be taken by management," declared the activist investor, which owns 4.1% of the miner's U.K. listed branch. BHP +0.5% premarket.

SolarCity founder Lyndon Rive (and cousin of Elon Musk), who steered the growth of the biggest U.S. residential solar company before driving its sale to Tesla (NASDAQ:TSLA), is leaving the electric vehicle maker in June. "My skill set and what I love doing is starting and running companies," he told Reuters. "I can hand off the baton and give myself the opportunity to do something that could also have another impact."

Looking to boost profits and its sliding stock price, Ford (NYSE:F) plans to slash its global workforce (currently 200K) by about 10%, WSJ reports. The job cuts are expected to be outlined as early as this week. Ford shares have suffered during CEO Mark Fields's three-year tenure and the company's market value has slipped far behind those of Tesla (TSLA) and General Motors (NYSE:GM).

Happy Anniversary! It's now been twenty years since Amazon (NASDAQ:AMZN) made its public debut on the Nasdaq and in that time shares have gone from $1.50 on a split-adjusted basis to $960. What started as an online book seller has evolved into a retailing giant and dominant provider of cloud technology. Amazon currently has a market cap of $465B, with annual revenues of $136B.

Microsoft's 21st annual CEO Summit kicks off today in Redmond, Washington, where leaders will discuss the ties between business and technology. The summit follows last week's Microsoft (MSFT) Build event, where the company unveiled a new update to Windows, which allows users to jump easily from mobile to desktop, and hand-held controllers for virtual reality.

More big events... JPMorgan (NYSE:JPM) shareholders are gathering in Wilmington, Delaware for the bank’s annual meeting at 10 a.m. Investors are likely to be awaiting what Jamie Dimon will say about the Trump administration's policies and the economy. The SkyBridge Alternatives Conference, or SALT, a three-day event for hedge fund managers, will also begin in Las Vegas.

Today's Markets

In Asia, Japan +0.3%. Hong Kong -0.1%. China +0.8%. India +0.9%.
In Europe, at midday, London +0.6%. Paris -0.4%. Frankfurt -0.1%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq +0.1%. Crude +0.9% to $49.31. Gold +0.3% to $1233.70.
Ten-year Treasury Yield flat at 2.34%

Today's Economic Calendar

8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 E-Commerce Retail Sales

 

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