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Author: skywalker   |   Latest post: Mon, 16 Oct 2017, 08:07 AM

 

Wall Street Breakfast: Hurricane Impacts On The Economy?

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A raft of data this week will offer more clues about the effects of Hurricanes Harvey, Irma and Maria on the economy. Today, reports from auto manufacturers are expected to show the annual pace of motor vehicle sales rising to a seasonally adjusted 16.23M units last month from 16.14M in August. We will also get figures on ISM non-manufacturing data, the U.S. trade deficit and non-farm payrolls for September.

Economy

Puerto Rico will need "tens of billions" of dollars in aid from Washington as it struggles to stabilize a humanitarian crisis in the wake of Hurricane Maria, according to the island's treasury secretary. The estimate comes as President Trump arrives in San Juan to receive updates on relief and rescue efforts. He will then meet with Governor Ricardo Rossello for a "briefing with senior military personnel."

The U.S. is planning to expel nearly two-thirds of Cuba's diplomatic personnel after months of mysterious "attacks" that have damaged the health of U.S. embassy staff in Havana. The State Department is expected to announce the expulsions as soon as today, following a warning on Friday that U.S. citizens should not visit the island. Closed-end fund CUBA is on watch.

Police are still seeking clues to explain why Stephen Paddock, a retiree with a penchant for gambling but no criminal record, set up a sniper's nest in a Las Vegas hotel and committed the deadliest mass shooting in modern U.S. history. The gunman had two "bump-stocks" that could have converted semi-automatic firearms into fully automatic ones, according to officials. Gun-related shares soared on the news yesterday, while casino stocks headed in the opposite direction.

President Trump wants to reduce another U.S. trade deficit - this time with Thailand. "I think we're going to try to sell a little bit more to you, if that's possible," he said during a conference with Prime Minister Prayuth Chan-ocha at the White House. The meeting was a sign of improved ties after the nations' relationship cooled under the Obama administration, which had been deeply critical of the Thai military coup in 2014.

Catalan leader Carles Puigdemont is calling for international mediation in the region's dispute with Madrid, stating its independence referendum was valid and must be implemented. He also wants Spanish security forces to leave the area. The euro extended losses on the news overnight, falling 0.2% to $1.1705, following weakness in Spanish stocks and bonds a day earlier.

Stocks

The House Energy and Commerce Committee is due to question former Equifax (NYSE:EFX) CEO Richard Smith at a hearing today that could shed light on how hackers accessed the personal data of millions of Americans. There will be three more such hearings this week. Late Monday, Equifax said an independent review had boosted the number of U.S. consumers potentially affected by the cyber breach by 2.5M to 145.5M.

AIG poses less of a threat to financial stability because it shrank its assets by more than $500B, said Fed Chair Janet Yellen, explaining why she voted in favor of declassifying the company as a SIFI on Friday. "Since the financial crisis, AIG has largely wound down its capital markets businesses... the possibility of de-designation provides an incentive for designated firms to significantly reduce their systemic footprint."

Wells Fargo has hired back nearly 2,000 workers who had quit or were fired over the bank's phony accounts scandal, according to prepared testimony CEO Tim Sloan will present to the Senate Banking Committee today. New scandal on the horizon? The Office of the Comptroller of the Currency is currently weighing whether to sanction Wells (NYSE:WFC) over improperly charging customers for car insurance and mortgage loans.

Another blue-chip Wall Street outfit is taking the other side of the trade from Jamie Dimon, WSJ reports, as Goldman Sachs (NYSE:GS) is in the early stages of perhaps setting up a trading operation for bitcoin and other cryptocurrencies. Morgan Stanley (NYSE:MS) hasn't gone that far, but last week its CEO James Gorman called cryptocurrencies neither a fad nor inherently bad.

Key Safety Systems has agreed to terms on the $1.6B purchase of assets of Takata (OTCPK:TKTDY), stricken by a recall of its faulty vehicle air bags, while final documents will be signed in less than two weeks. Takata and its U.S. unit, TK Holdings, filed for bankruptcy in June and its sale to KSS is the cornerstone of its plan to raise funds to compensate automakers and drivers.

With shares down 11% this year, Ford's (NYSE:F) new CEO Jim Hackett has scheduled an investor meeting for today in New York. He previously told investors he would outline a new strategy for the automaker after about 100 days in charge. Doubts are circling about the company's strategy to weather a downturn in the U.S. market, as well as longer-term challenges from EVs and self-driving cars.

Ramping up production of its new Model 3 has been more challenging than Tesla (NASDAQ:TSLA) expected. Citing bottlenecks as a drag, the automaker delivered just 220 of its new entry level electric cars in Q3, but it's confident the issue will be fixed in the near term. Other guidance? "We expect to deliver about 100,000 Model S and X vehicles in 2017, which would be a 31% increase over 2016." TSLA -2.1% premarket.

Prominent mobile phone leaker Evan Blass (aka @evleaks) just revealed pictures of Google's (GOOG, GOOGL) new handsets ahead of their unveiling tomorrow. Images of the Pixel and Pixel XL show a new homescreen that has been developed for Android phones. Manufactured by HTC (OTC:HTCXF) and LG (OTC:LGEAF), the handsets are codenamed Walleye and Taimen, and will begin retailing at $649 and $849, respectively.

The head of Sony's videogame division, who steered PlayStation 4 sales to the top spot globally, is leaving the Japanese conglomerate. Andrew House has passed the baton to Tsuyoshi "John" Kodera, deputy president of the Sony (NYSE:SNE) unit, but will remain as chairman until the end of the year. "Now seemed to be the right time for me to pursue new challenges," he said in a statement.

Wal-Mart will soon begin offering same-day delivery to some customers in NYC, purchasing a local startup to help it with the logistics. Parcel already handles delivery services in the city for online retailers like Bonobos and meal-kit companies like Chef'd and Martha & Marley Spoon. A source told Recode that Wal-Mart (NYSE:WMT) spent less than $10M on the acquisition.

Taking full ownership of its bankrupt U.S. unit, Toshiba (OTCPK:TOSYY) is buying back a 10% stake in Westinghouse from minority shareholder Kazatomprom. The move comes as the nuclear subsidiary explores selling itself, with a deal likely valued at close to $4B. Who's eyeing the company? Reports suggest private equity firms Blackstone (NYSE:BX) and Apollo Global (NYSE:APO), as well as Cerberus Capital and BWX Technologies (NYSE:BWXT).

General Electric's Jeff Immelt has retired as director and chairman of the company's board of directors, about two months earlier than expected. The board has replaced him with John Flannery, who became CEO of the company in June. "Jeff feels John is prepared to be chairman and CEO now and leaving GE allows him to look at opportunities outside the company," a GE spokeswoman told CNBC.

Total CEO Patrick Pouyanne was aware it would be a "bumpy" road when he signed a multibillion-dollar deal in July to develop Iran's South Pars gas field - the world’s largest - but he's sticking to the plan. Besides a U.S. administration that may reimpose sanctions, Total (NYSE:TOT) faced restrictions on finance and was forced to switch capital expenditure costs from dollars to euros and to turn to Chinese investors to replace Western ones.

A fractured U.S. solar industry will present differing proposals today to the U.S. International Trade Commission, which is considering measures to prop up domestic solar panel makers, who say cheap imports have left them on the verge of collapse. After hearing different ideas, the commission will decide what trade remedies to recommend to President Trump, who will make a final decision later this year. Related tickers: ASYS, AXTI, CSIQ, CSUN, CVV, DQ, EMKR, ENPH, FSLR, GEX, GLBL, HQCL, JASO, JKS, RGSE, RUN, NRG, SEDG, SOL, SKYS, SPWR, TAN, TERP, TSL, TSLA, VSLR, YGE

Today's Markets

In Asia, Japan +1.1%. Hong Kong +2.3%. China closed. India +0.7%.
In Europe, at midday, London +0.1%. Paris +0.2%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.2%. S&P +0.1%. Nasdaq +0.1%. Crude -0.1% to $50.53. Gold -0.2% to $1273.90.
Ten-year Treasury Yield +2 bps to 2.35%

Today's Economic Calendar

Auto Sales
8:30 Gallup US ECI
8:55 Redbook Chain Store Sales

 

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