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

 

Wall Street Breakfast: Rout Eases As Trump Heads Overseas

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Oil is over $50/bbl and global equities are flashing green as President Trump embarks on his first overseas trip since taking office, visiting Saudi Arabia, Israel and the Vatican. Major deals are expected to be signed during his visit, as the Saudis look to seal contracts with General Electric (NYSE:GE), Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), National Oilwell Varco (NYSE:NOV), Nabors Industries (NYSE:NBR) and Rowan Companies (NYSE:RDC).

Economy

Japan and other remaining members of the Trans-Pacific Partnership will this weekend decide how to revive the trade agreement ditched by President Trump. Their trade ministers will talk on the sidelines of an Asia-Pacific Economic Cooperation meeting in Vietnam, where newly appointed U.S. Trade Representative Robert Lighthizer is due to give more detail of Washington's trade plans.

Time to renegotiate NAFTA? In a letter to congressional leaders, Robert Lighthizer said the Trump administration would begin talks on the trade agreement with Canada and Mexico by Aug. 16. The 90-day consultation period will give Congress, industries and the American public time to discuss better terms for U.S. workers and manufacturers.

"We do not support a separation of banks from investment banks. We think that would be a very significant problem for financial markets and the economy," Treasury Secretary Steven Mnuchin told the Senate Banking Committee. "There are aspects of it [Glass-Steagall Act] that we think may make sense. We never said before we support a full separation of banks and investment banking."

The release of the European Commission's consumer confidence figure will provide an early indication of what impact Emmanuel Macron's victory could have on the eurozone economy’s near-term growth prospects. The data will be released at 10 a.m. ET. Economists expect the measure to rise to minus 3 from minus 3.6 in April, which would be its highest level since July 2007.

Greece's parliament has approved a raft of fresh austerity measures, including pension cuts and tax hikes sought by the nation's foreign creditors. The step paves the way for eurozone finance ministers to clear the next disbursement of funds to Athens when they meet on Monday to discuss ways to lighten the country's debt burden.

As street protests continue in Venezuela, President Trump called the situation there a "disgrace to humanity" and said the political crisis was possibly the worst of its kind in decades. Shortly thereafter, the U.S. Treasury slapped sanctions on eight members of Venezuela's Supreme Court, charging them with undermining the country's democratic legislature in support of a corrupt government.

It was a chaotic day for Brazil's markets on Thursday as stocks and bonds tumbled, and the real posted its biggest slide since 1999. President Temer declared he won't step down, saying a full investigation would reveal his innocence on allegations of a cover-up. The forces aligned against the president may result in the second impeachment in Latin America's biggest country in just over a year.

Iranians are heading to the polls in a high-stakes presidential election that pits a moderate incumbent who has sought closer ties with the West against a hard-liner suspicious of that agenda. Hassan Rouhani is seeking a second four-year term against challenger Ebrahim Raisi, a cleric who emerged only recently as a serious contender and is close to Supreme Leader Ayatollah Ali Khamenei.

Stocks

Bitcoin is now just $100 away from doubling its price in 2017 as the cryptocurrency gets within striking distance of $2000. One of the reasons for the move is "buying as a hedge against political chaos," said Brian Kelly, CEO of BKCM, which runs a digital assets strategy. Other factors driving the price higher include increased demand from Japan and South Korea. Related tickers: COIN, OTCPK:BTCS

"Our goal - going back to regulatory reform - is should you move the down payment requirement from 20% to 10%? It wouldn't introduce that much risk but would actually help a lot of mortgages get done," Brian Moynihan told CNBC. BofA (NYSE:BAC) was the top U.S. mortgage lender ahead of the 2008 mortgage crisis, causing it to face greater losses, both from defaults and litigation, than any other bank.

Tim Cook has been spotted at the Apple (NASDAQ:AAPL) campus test-driving a device that tracks blood sugar and was connected to his Apple Watch. It follows a report from CNBC last month, which said the company has a team in Palo Alto working on the "holy grail" for diabetes: Non-invasive and continuous glucose monitoring. Current trackers rely on tiny sensors that penetrate the skin.

In an escalating war with Apple Music (AAPL), streaming music market leader Spotify (Private:MUSIC) has announced the acquisition of Niland, its fourth big purchase of the year. The startup offers a product focused on providing accurate search and recommendation options for music, signaling Spotify's strategy of incorporating more AI into its system.

Videogame sales grew for the second straight month - the first time that's happened since November 2015. Overall sales increased 10%, to $636M, the second straight increase after nine straight Y/Y declines, according to NPD Group. Hardware sales again led the way, up 37% to $195M, thanks to the Nintendo Switch (OTCPK:NTDOY). Related tickers: EA, ATVI, GME, GLUU, KING, ZNGA, TTWO

The FCC has voted 2-1 to start a process that would culminate in eliminating the classification of Internet service providers as common carriers, rolling back net neutrality rules formed under the last administration. The agency approved a Notice of Proposed Rulemaking that changes the Title II classification and will take comments until Aug. 16 (with final decisions to come after that). Related tickers: T, VZ, TMUS, S, CMCSA, CHTR, CTL, FTR, CCOI, DISH, NFLX, ELNK

Another notch in Facebook's video belt comes as the company seals a deal to broadcast a live Major League Baseball game each Friday, while Twitter's (NYSE:TWTR) feed will be bumped to Tuesdays. That's a 20-game package; the agreement starts this week, with Colorado at Cincinnati. Facebook (NASDAQ:FB) will also partner with e-Sports league ESL to broadcast content.

Uber has threatened to fire the man at the center of its legal battle with Alphabet (GOOG, GOOGL), telling its top driverless technology engineer to either deny taking files from his former employer or turn them over. Anthony Levandowski is accused of downloaded 14,000 confidential files before he left the company to launch his own self-driving startup, Otto, that was acquired by UBER for $680M.

Volkswagen will likely pick a new chief executive officer from within the carmaker's own ranks, CEO Matthias Mueller told Handelsblatt, saying he's "already in talks with the supervisory board." Mueller's contract is not due to expire until mid 2020, but the process of picking a new VW (OTCPK:VLKAY) leader needs to be initiated with plenty of advance notice.

Shares in Takata closed up 20% in Tokyo after four global automakers said they would pay $553M to settle with vehicle owners for losses linked to the recall of the company's products. In January, Takata (OTCPK:TKTDY) agreed to $1B in criminal penalties, including $975M in restitution paid to carmakers who bought their airbags and consumers who were injured by them.

Jared Kushner personally asked the CEO of Lockheed Martin (NYSE:LMT) to lower the price of a radar system so Saudi Arabia could afford to include it in an arms deal, according to a report by the NYT. It's part of a $110B weapons sale the Trump administration hopes to seal with Saudi Arabia this weekend, which would include U.S.-built planes, ships and precision-guided bombs.

Thursday's Key Earnings

Alibaba (NYSE:BABA) +0.5% on mixed results.
Applied Materials (NASDAQ:AMAT) +0.4% AH on record profits.
Gap (NYSE:GPS) +4.1% AH helped by Old Navy.
McKesson (NYSE:MCK) +8.2% AH on fiscal Q4 beat.
Salesforce (NYSE:CRM) +1.4% lifting its outlook.
Wal-Mart (NYSE:WMT) +3.2% on solid comparable sales.

Today's Markets

In Asia, Japan +0.2%. Hong Kong +0.2%. China flat. India +0.1%.
In Europe, at midday, London +0.5%. Paris +0.5%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.1%. S&P +0.2%. Nasdaq +0.2%. Crude +1.2% to $50.26. Gold +0.1% to $1253.50.
Ten-year Treasury Yield flat at 2.24%

Today's Economic Calendar

9:15 Fed's Bullard: U.S. Monetary and Economic Policy
1:00 PM Baker-Hughes Rig Count
1:40 PM Fed's Williams Speech

 

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