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

 

Wall Street Breakfast: Dollar In The Doldrums

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The greenback is losing ground against both the yen and euro as a combination of factors weigh on investors' minds. These include the impending landfall of Hurricane Irma, tensions over North Korea, the ECB's indication it may taper its QE program, as well as a Fed rate hike that's likely off the table for December. The U.S. dollar index is now at its lowest level since January 2015, slipping 0.4% to 91.08 in overnight Asia trading.

Economy

French President Emmanuel Macron has vowed to lead a "rebuilding" of the EU, proposing a "new deal" according to which deficit countries will repair their finances and overhaul their economies. "In order not to be ruled by bigger powers such as the Chinese and the Americans, I believe in a European sovereignty that allows us to defend ourselves and exist," he said during a visit to Greece.

China's economic data has been showing robust growth ahead of leadership changes and a key Communist Party meeting in October. August exports from the nation rose 5.5% from a year earlier, while imports expanded 13.3%, resulting in a trade surplus of nearly $42B. Trade tensions? The country's trade surplus with the U.S. jumped to $26.2B, the highest in almost two years.

Hartford's debt problem is getting serious. The capital city will likely file for bankruptcy in 60 days unless Connecticut provides help in the midst of a fiscal emergency. "Our bondholders understand that our debt burden is unmanageable," city officials in a letter. "They will need to be part of the solution, through a serious, sustainable, long-term debt restructuring."

The Senate has approved more than $15B in aid funding for Hurricanes Harvey and Irma, attached to a debt ceiling extension and temporary government funding, by a vote of 80-17. If the House passes the bill and President Trump signs it, Congress will knock out an end-of-September deadline to raise the debt limit and avoid risking a default or government shutdown.

A massive 8-magnitude earthquake hit off the coast of southern Mexico late last night, causing buildings to sway violently and people to evacuate as far away as the capital city. According to the Pacific Tsunami Warning Center, the quake is a potential tsunami threat to several countries in Central America, including Guatemala, Honduras, El Salvador and Costa Rica.

Stocks

A massive cyberattack! Equifax (NYSE:EFX) has disclosed a data breach that could have potentially affected 143M consumers in the U.S. Intruders accessed names, Social Security numbers, birth dates, as well as some credit card numbers. Reports also suggest that three senior executives sold shares in the days after the historic hack was discovered but before it was widely reported. EFX -14% premarket.

Amazon is looking to build a $5B second headquarters in North America, kicking off a competition between cities and states to offer tax cuts and incentives that could bring 50,000 new jobs. The new location would be a "full equal" to its Seattle office. Amazon (NASDAQ:AMZN) wants a metropolitan area of more than a million people with an international airport, good education and mass transit.

A group including Western Digital (NYSE:WDC) is seeking around ¥50B ($464M) from Apple (NASDAQ:AAPL) to help finance a bid for Toshiba's (OTCPK:TOSYY) memory chip unit, Kyodo news agency reports. Sources said earlier in the week that the U.S. firm offered to step back from the consortium's financing in return for a stronger position in their joint venture, and was roping in Apple for funding.

Nelson Peltz's plan to boost shareholder value would result in higher costs, lower profits and another restructuring that could lead to a breakup of the company, according to Procter & Gamble (NYSE:PG). In July, Peltz made public his frustrations with the company’s lagging stock price and its "suffocating bureaucracy," stating he was seeking a board seat and serious changes.

RadioShack is moving ahead with a reorganization. The new business will be comprised of online operations, a network of independent dealers and "between zero and 28" company-owned brick-and-mortar stores, as detailed in a Chapter 11 exit plan that cleared preliminary court review. RadioShack (OTCPK:RSHCQ) filed for bankruptcy protection in March, its second filing in two years.

Just weeks after Canada's National Energy Board announced a tougher review process, TransCanada (NYSE:TRP) said it will seek to suspend the application of its Energy East pipeline for 30 days and may abandon the project. The company will do a "careful review" of the new assessment process to gauge its effect on the costs, schedules and viability of the pipeline to the Atlantic coast.

Dutch chemicals group AkzoNobel has issued a profit warning just weeks after settling a feud with Elliott Advisers over a decision to reject a takeover bid from PPG Industries (NYSE:PPG). The shortfall raises questions about a defense strategy it used to thwart the €26B proposal. Adding to the sense of disarray, Akzo (OTCQX:AKZOY) said its chief financial officer was stepping aside for health reasons.

Meddling? Google (GOOG, GOOGL) hasn't seen evidence on its advertising platforms regarding the kind of suspected Russian propaganda that Facebook (NASDAQ:FB) said appeared on its network before and after last year's U.S. presidential election. The announcement comes as FBI Director Christopher Wray declared that he hadn't "detected any whiff of interference" by the White House into the ongoing Russia probe.

Massachusetts Attorney General Maura Healey has announced a settlement in which DraftKings (Private:DRAFT) and FanDuel (Private:DUEL) will pay a combined $2.6M to resolve a probe into allegations of unfair practices by the firms prior to 2016. "We have since implemented a set of comprehensive regulations that provide consumers with broad-ranging protections and that have served as a model for many other states."

With its ad sales team honing in on the drug industry, Facebook's (FB) health unit hosted an invite-only breakfast for pharmaceutical marketers yesterday to learn about targeting users for their clinical trials. Research firm eMarketer estimates that healthcare marketers will spend $3.1B on digital advertising by 2020, up from $1.9B last year.

A reusable Falcon 9 rocket carrying a secretive space drone blasted off from Cape Canaveral on Thursday as Hurricane Irma barreled towards Florida. SpaceX (Private:SPACE) won the launch contract in May 2015, breaking a lock long-held by United Launch Alliance (BA, LMT). The X-37B looks like a miniature version of the space shuttle, but it orbits the Earth for months, even years, at a time.

Whirlpool has called on the U.S. International Trade Commission to impose "global safeguard" restrictions on imported washing machines to stop its South Korean rivals from flooding the American market with cheap appliances. Testifying to the trade body, Whirlpool (NYSE:WHR) CEO Jeff Fettig accused Samsung (OTC:SSNLF) and LG (OTC:LGEAF) of moving operations around the world to avoid paying U.S. duties.

Police and emergency workers are suing Arkema (OTCPK:ARKAY), claiming they were injured after it failed to take adequate steps to avoid a fire at its Texas plant during Hurricane Harvey. The federal Chemical Safety Board has launched an investigation into the incident, and the Environmental Protection Agency has been monitoring the Arkema site for pollutants.

Property and casualty players, as well as reinsurers, have suffered in the wake of Harvey and ahead of Irma. Thoughts that all that trouble was more than priced in led to a modest bounce on Wednesday, but that reversed yesterday and more losses are in store premarket: HCI Group (HCI -5%), United Insurance (UIHC -3%), Travelers (TRV -1%), Aspen Insurance (AHL -1%).

Today's Markets

In Asia, Japan -0.6%. Hong Kong +0.5%. China -0.1%. India +0.1%.
In Europe, at midday, London -0.5%. Paris -0.3%. Frankfurt flat.
Futures at 6:20, Dow -0.4%. S&P -0.3%. Nasdaq -0.3%. Crude -0.3% to $48.96. Gold +0.7% to $1359.10.
Ten-year Treasury Yield -3 bps to 2.02%

Today's Economic Calendar

8:45 Fed's Harker: “Consumer Finance”
10:00 Wholesale Trade
1:00 PM Baker-Hughes Rig Count
3:00 PM Consumer Credit

 

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