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Author: skywalker   |   Latest post: Thu, 19 Jul 2018, 07:42 AM


Wall Street Breakfast: Bank Of England's 'Super Thursday'

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It's data deluge day in London. In addition to a press conference from Mark Carney, the Bank of England will release its monetary policy decision, the minutes from its last meeting and a quarterly inflation report. It's been a roller-coaster ride of late for anyone trying to predict the next BoE policy move, but the MPC is expected to narrowly vote to keep rates on hold. Sterling +0.2% to $1.3243. FTSE 100 +0.2% to 7,424.


The Dow Jones industrial average topped 22,000 in the previous session, with Boeing (NYSE:BA) contributing much of the latest leg upward, and Apple (NASDAQ:AAPL) providing the final push. It's been a record year! The benchmark has recorded three 1,000-point milestones in 2017. While earnings season contributed to the latest sentiment, Dow industrials are up 20% since Election Day.

Watch today's ISM non-manufacturing report, a gauge of services sector, which makes up 70% of the U.S. economy. The data is critical as it gives a strong forecast of the non-farm payrolls number due tomorrow. Economists are expecting a reading of 56.9, which comes in lower than last month's figure of 57.4.

President Trump has embraced a Senate proposal to cut the number of green cards issued annually in half by reducing immigration based on family ties, as well as lotteries for underrepresented countries. Instead, the application process would focus on merit, with a preference for people with higher education or job skills. The U.S. issues about a million green cards a year under current law.

"Incoming data, notably survey results, continue to point to solid, broad-based growth in the euro area in the near term," the ECB said in its economic bulletin. "Looking ahead, the Governing Council confirmed that a very substantial degree of monetary accommodation is needed for euro area inflation pressures to gradually build up and support headline inflation developments."

President Trump is getting some rare bipartisan support as he prepares to order an investigation into China's trade practices. Senate Democratic leader Chuck Schumer is taking it one step farther, saying the U.S. should skip the probe and take action against Beijing. Trump is expected to issue a presidential memo on the matter within days.

Vice President Mike Pence has rejected the notion of holding direct talks with Kim Jong Un, saying the right strategy doesn't involve "engaging North Korea directly." Meanwhile, the State Department has announced that travel by U.S. passport holders to North Korea will be banned from September, citing the risk of "long-term detention."

New sanctions on Russia which President Trump signed into law are tantamount to a "full-scale trade war," Russian Prime Minister Dmitry Medvedev wrote on Facebook. "The hope that our relations with the new American administration would improve is finished," he added. The measure marks some of the strongest action Congress has taken against Russia since the Cold War.

Brazilian President Michel Temer has survived a critical vote in the country's lower house of Congress, saving him from a potential Supreme Court trial for corruption that could have removed him from office. Temer will now continue with economic reforms aimed at relieving Brazil's fiscal crisis, but corruption watchdogs maintain that it's setback for the country's institutions.


Tesla reported a narrower than expected loss in Q2, while revenues climbed to $2.8B, up from $1.3B a year ago. Speaking on the conference call, CEO Elon Musk said Tesla (NASDAQ:TSLA) was on track to achieve a "10-thousand unit production week" by the end of 2018, sending shares up 7% AH. Executives also discussed a Model 3 ramp up and talked down any indications of Model S and Model X cannibalization.

Over 5M German diesel cars are getting new software. Automakers including BMW (OTCPK:BAMXF), Daimler (OTCPK:DDAIF) and Volkswagen (OTCPK:VLKAF) have agreed with the government to upgrade technology, which will filter out harmful emissions. Daimler chairman Dieter Zetsche said the move was needed to restore faith in the industry.

Amazon has put down roots in Australia, unveiling the location of its first local warehouse - outside Melbourne - and started hiring "hundreds" of new staff to get it up and running. In April, Amazon (NASDAQ:AMZN) confirmed plans to start operations Down Under, without saying when it would begin the service or where it would locate its fulfillment centers.

From mobile to AI... Microsoft's (NASDAQ:MSFT) latest SEC filing indicates that "mobile-first" is no longer an important part of the software giant's outlook. "Our strategic vision is to compete and grow by building best-in-class platforms... for an intelligent cloud and an intelligent edge infused with AI." It also included six references to AI, up from zero in the previous annual report.

Bitcoin derivatives? CBOE Holdings (NASDAQ:CBOE) and Gemini Trust, the Winklevoss brothers' digital currency exchange, have agreed to use the latter's market data to create bitcoin trading products. Pending review from the CFTC, the CBOE Futures Exchange plans to offer cash-settled bitcoin futures in the fourth quarter of this year or sometime in early 2018.

Any legal decision on whether MetLife (NYSE:MET) should be labeled "too big to fail" will probably come after the Trump administration defines its stance on the designation. A U.S. appeals court said on Wednesday that a government appeal of a ruling last year - stating the label was wrongly applied to the U.S. life insurer - would remain in abeyance until further court order.

Toshiba will invest in a new memory chip production line without joint venture partner Western Digital (NYSE:WDC), in a counter-punch against the U.S. firm which has opposed a planned auction of the business. Toshiba (OTCPK:TOSYY) said earlier it would go ahead with a $1.8B investment to build the Fab 6 equipment by itself after the two failed to reach an agreement.

Apple is looking to hire a bunch of map tech experts. More than 70 job listings went live in the past month on the company's site relating to its maps team, or requiring skills around things like: "geospatial information services," "navigational aids" and "fleet management." The new hires could help Apple (AAPL) deliver on two big promises: becoming an important player in augmented reality and "autonomous systems."

Wednesday's Key Earnings

AIG (NYSE:AIG) +1.1% AH following an earnings beat.
Fitbit (NYSE:FIT) +3% AH with smaller than expected loss.
Groupon (NASDAQ:GRPN) +9.3% on "growing marketplace strength."
Mondelez (NASDAQ:MDLZ) +1.1% appointing a new CEO.
Southern Co. (NYSE:SO) +2.6% beating estimates.
Square (NYSE:SQ) -1.4% AH despite raising guidance.
Tesla (TSLA) +6.4% AH with Model 3 seen on track.

Today's Markets

In Asia, Japan -0.3%. Hong Kong -0.3%. China -0.4%. India -0.7%.
In Europe, at midday, London +0.3%. Paris +0.5%. Frankfurt -0.2%.
Futures at 6:20, Dow flat. S&P -0.1%. Nasdaq flat. Crude +0.3% to $49.76. Gold -0.7% to $1269.10.
Ten-year Treasury Yield flat at 2.26%

Today's Economic Calendar

Chain Store Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Gallup Good Jobs Rate
9:45 Bloomberg Consumer Comfort Index
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
10:00 Factory Orders
10:30 EIA Natural Gas Inventory
4:30 Money Supply
4:30 Fed Balance Sheet


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