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

 

Wall Street Breakfast: Fed, Taxes, Bitcoin

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The Fed is expected to keep interest rates unchanged today as speculation swirls on who will be its next leader. With no updated economic projections or a press conference by Janet Yellen, investors will look to any change in the statement language for confirmation of a December rate hike. The Fed has already raised rates twice since January, and currently forecasts one more increase by the end of the year.

Economy

House Republicans spent all day Tuesday trying to iron out last-minute disagreements on their tax reform proposal, but with a number of issues still unresolved, a bill is now expected to be released Thursday. Some details are already starting to leak out. It would lower the corporate tax rate to 20%, keep the current top 39.6% tax rate on the wealthiest individuals and delay a planned repeal of the estate tax.

Power in Puerto Rico? Following a canceled deal with Whitefish Energy, Fluor (NYSE:FLR) is now the primary contractor to restore electricity on the island, nearly six weeks after Hurricane Maria knocked out the territory's grid. The U.S. Army Corps of Engineers plans to boost the size of a contract awarded to Fluor by $600M, to $840M, pending available funds.

Insured losses from this month's wildfire disaster in Northern California topped $3.3B, and the figure will rise, according to the California Department of Insurance. That's a three-fold jump from figures released two weeks ago by the state agency. Insurers affected include Farmers Insurance (OTCQX:ZURVY), CSAA Insurance Group, Travelers (NYSE:TRV), Allstate (NYSE:ALL) and Chubb (NYSE:CB).

Saudi Arabia is planning to become "self-sufficient" in producing nuclear fuel and intends to begin extracting uranium domestically. The Kingdom has also sent a request to international suppliers to build two nuclear power plants as it looks to reduce the amount of crude it burns to generate electricity so it can sell more of it overseas.

The Nikkei surged almost 2% overnight after Shinzo Abe was re-elected prime minister. It follows his ruling bloc's big election win last month, which reinforced support for his economic reforms, popularly known as "Abenomics." The decision also comes just days before President Trump's visit to Japan, which is expected to be dominated by concerns over a volatile North Korea.

President Trump has ordered the Department of Homeland Security "to step up our already Extreme Vetting Program" following the truck rampage along an NYC bike path that killed at least eight people and left a dozen injured. Suspect Sayfullo Habibullaevic Saipov, an Uzbek national who entered the U.S. in 2010, shouted "Allahu akbar" as he was confronted and shot by police. He was also an UBER driver that passed the app's background check.

Stocks

Bitcoin has smashed through the $6,500 barrier to hit a new record level after the CME announced plans to launch bitcoin futures later this year. Prices hit a high of $6,550.14, according to CoinDesk, resulting in a bitcoin market capitalization of $109B. The introduction of such a product could bring more institutional investors into the market, boosting bets the cryptocurrency could enter the financial mainstream.

Wal-Mart plans to hold more than 20,000 parties at its stores over the next two months, with the first event, called "Toys That Rock," taking place nationwide this Saturday. It's part of the retailer's marketing strategy for the holiday season. Wal-Mart (NYSE:WMT) also plans to triple its online selection to 60M items, and will provide free two-day shipping when an order size exceeds $35.

HP has completed its purchase of Samsung Electronics' (OTC:SSNLF) printer business in a deal valued at $1.05B, while the latter will make a $100M-$300M equity investment in the U.S. company through open market purchases. HP (NYSE:HPQ) will now have access to more than 6,500 print patents from Samsung and a workforce of nearly 1,300 researchers and engineers that are experts in laser technology and imaging electronics.

Marking its first foray into AI chips, Microsoft (NASDAQ:MSFT) is working on a prototype for its next-generation HoloLens headset, allowing it to do things like recognize objects in its line of sight. The U.S. technology giant could also take it to other products in its hardware range, said Panos Panay, corporate vice president of devices at Microsoft.

How did the cable news wars finish October? Back in his original 9 p.m. slot, Fox News Channel's (FOX, FOXA) Sean Hannity hosted the most-watched program of the month, delivering 3.2M total viewers and 686K in the 25-54 news demographic. October's stats for MSNBC's (NASDAQ:CMCSA) Rachel Maddow - 2.5M viewers and 558K news demo viewers - put her in third place, also behind Fox's 8 p.m. Tucker Carlson Tonight (2.82M viewers, 581K news demo viewers).

Orbital ATK's newly redesigned Taurus XL rocket, now renamed the Minotaur-C, has returned to flight with a commercial mission deploying ten satellites for Planet Labs. Liftoff took place from Vandenberg Air Force Base in California. Orbital's (NYSE:OA) rocket last flew in March 2011, when it suffered the second of two consecutive and near-identical launch failures.

The U.S. International Trade Commission has recommended the Trump administration impose an import tariff of up to 35% on solar panels to protect U.S. manufacturers. "That's below the price that people have been hoarding panels for," said Cowen analyst Jeffrey Osborne. "On the demand side, job cuts won't be as bad as feared, but on the manufacturing side, job creation won't be as big. This would have a limited effect."

Modernizing and maintaining the U.S. nuclear arsenal over the next 30 years will cost more than $1.2T, according to a report from the Congressional Budget Office. President Trump in January directed Secretary of Defense James Mattis to conduct his own review of the U.S. nuclear forces. The results could be published in the coming months. Related tickers: BW, HON, ACM, JEC, SAIC, OA, COL, LMT, BA, NOC, GD, AJRD, HII

Tuesday's Key Earnings

3D Systems (NYSE:DDD) -15.1% AH after an unexepected loss.
Electronic Arts (NASDAQ:EA) -2.9% AH on light holiday guidance.
MasterCard (NYSE:MA) -0.1% warning on European fines.
Pfizer (NYSE:PFE) -0.2% challenged by legacy medicines.
U.S. Steel (NYSE:X) +7.5% AH following a strong Q3.
Under Armour (NYSE:UAA) -23.7% slashing its full-year outlook.

Today's Markets

In Asia, Japan +1.9%. Hong Kong +1.2%. China +0.1%. India +1.2%.
In Europe, at midday, London +0.2%. Paris +0.5%. Frankfurt +1.6%.
Futures at 6:20, Dow +0.6%. S&P +0.4%. Nasdaq +0.5%. Crude +1.2% to $55.03. Gold +0.7% to $1279.60.
Ten-year Treasury Yield +1 bps to 2.39%

Today's Economic Calendar

Auto Sales
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Treasury Refunding Quarterly Announcement
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement

 

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