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Author: skywalker   |   Latest post: Wed, 18 Jul 2018, 07:33 AM

 

Wall Street Breakfast: Market Attempts to Regain Footing

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Market watchers are steeling for Tuesday trade after U.S. stocks started off the second quarter with considerable and broad-based losses. S&P futures were recently ticking slightly higher after Monday's tumble to the index's lowest level since mid-November and a close below its 200-day simple moving average (2,589) for the first time since June 2016. “It’s more a political concern regarding Trump now. And investors are unclear about how the situation will pan out,” says Takashi Hiroki, chief strategist at online brokerage Monex Securities, referring to investor worries over the potential for a trade war and regulatory concerns around the U.S. tech sector.

Economy

China's ambassador to Washington has warned the U.S. not to levy any further tariffs on Chinese products. “If they do, we will certainly take countermeasures of the same proportion, and the same scale, same intensity,” said Cui Tiankai in an interview broadcast on China state television Tuesday. In response to recently imposed U.S. tariffs on Chinese aluminum and steel, China on Monday enacted its own tariffs on $3 billion worth of U.S. food imports.

Bloomberg reports that President Trump "is pushing for a preliminary NAFTA deal" by late next week, according to three people familiar with the matter. The White House wants the deal prepared for announcement at a summit in Peru that begins April 13, and "will host cabinet ministers in Washington to try to achieve a breakthrough," per the sources.

The Reserve Bank of Australia has kept its benchmark rate unchanged at 1.5%, bringing its no-change streak to 20 consecutive months. The inaction was widely anticipated given repeated prior statements to that effect from the central bank, and futures point to low chances for a hike for the remainder of the year. In a statement, RBA Governor Philip Lowe cited low inflation and said the low interest rates are "continuing to support the Australian economy."

Stocks

21st Century Fox, which is attempting to acquire U.K. broadcaster Sky (OTCQX:SKYAY), said it might sell Sky's news unit to Disney (NYSE:DIS) in order to satisfy regulators. Another possibility Fox (FOX, FOXA) proposed was legally separating Sky News from the remainder of the business and allowing the channel to run independently. In December, Disney agreed to buy most of Fox, including the latter's sizable current stake in Sky.

The NYSE has published the so-called reference price for Spotify's (Pending:SPOT) Tuesday IPO, setting it at $132 per share. The reference price will inform the stock's pricing, but largely it is a "placeholder figure," potentially to be used to calculate price moves after the stock begins trading. In an unusual move for a company as large as Spotify, the IPO is a "direct listing" with no underwriters and an uncertain price range, and trade is expected to be more volatile than usual as a result.

General Motors said overnight that it will do away with monthly U.S. vehicle sales reports - an industry standard - and switch to quarterly reporting. “Thirty days is not enough time to separate real sales trends from short-term fluctuations in a very dynamic, highly competitive market,” said Kurt McNeil, U.S. vice president, Sales Operations, in a GM press release. “The move may clear the way for GM peers to drop monthly reporting as well.

Late Monday, Celgene unexpectedly announced that COO Scott Smith would be leaving the company "effective immediately" after about a year in the role. The company said Smith's primary duties would be assumed by CEO Mark Alles. "Celgene (NASDAQ:CELG) is modifying its executive team structure to enhance leadership focus on building Celgene for continued long-term success," said the company in connection with the departure.

Australian gas producer Santos has received a buyout offer of $4.98 per share ($A6.50), or $10.3 billion, from Harbour Energy, a U.S.-based energy investment vehicle led by EIG Global Partners. Santos (OTCPK:STOSF, OTCPK:SSLZY) has allowed Harbour to undertake due diligence following the offer, which is a 28% premium to Santos's prior close. “We do see this latest Harbour Energy approach as a knock-out bid, one which the board of Santos will struggle to turn down,” says RBC Capital Markets Analyst Ben Wilson, per Bloomberg.

Bloomberg reports that Allergan (NYSE:AGN) has had discussions with advisors on strategic alternatives for its women's health business, including a possible sale. The unit, which includes birth control pill Lo Loestrin Fe and menopause treatment Femring, generated $285.8M last quarter, down almost 9%. The company is evaluating a full range of options to boost market share and shareholder value considering the looming competitive threats to its skin and eye drugs.

CBS is planning to make an all-stock bid for Viacom (VIA, VIAB) at a number below Viacom's current valuation, according to Reuters. As part of the bid, CBS CEO Les Moonves will propose staying in charge for at least two years after the merger.

Tesla CEO Elon Musk is taking over responsibility for Model 3 production at the company, sources told tech news website The Information. Musk reportedly has pushed aside Tesla (NASDAQ:TSLA) Senior VP of Engineering Doug Field to handle the crucial Model 3 production ramp.

In an update of its disposition program, ConocoPhillips (NYSE:COP) says it closed or entered definitive agreements for ~$250M of proceeds from the sale of non-core assets during Q1. COP says it closed several small packages in the Permian Basin during the quarter and expects to close a package of largely undeveloped acreage in south Texas during Q2; it expects to complete its previously announced disposition program during the current quarter.

Walmart is in talks to acquire online pharmacy start-up PillPack for less than $1B, CNBC reports. PillPack's focus on making it easier for customers to order and fulfill medications is an attractive proposition for Walmart (NYSE:WMT) and other e-commerce companies that are looking to enhance their health care offerings, according to the report, which also says Amazon (NASDAQ:AMZN) at one point held discussions with the company.

Two major shareholders in lithium producer SQM (NYSE:SQM) have proposed to change the company’s governing statutes in a way that could block other shareholders from gaining control. Pampa Calichera and Potasios de Chile, both controlled by businessman Julio Ponce, call for an extraordinary meeting of shareholders to approve the proposal, according to a filing with Chilean securities regulator SVS.

Monday's Key Earnings

Cancer Genetics (NASDAQ:CGIX) -33.3% AH on Q4 earnings miss.
CVD Equipment (NASDAQ:CVV) +11% AH on Q4 earnings.

Today's Markets

In Asia, Japan -0.45%. Hong Kong +0.29%. China -0.84%. India +0.33%.
In Europe, at midday, London -0.66%. Paris -0.80%. Frankfurt -1.36%.
Futures at 6:20, Dow +0.18%. S&P +0.33%. Nasdaq +0.37%. Crude +0.41% to $63.27. Gold -0.42% to $1,341.30.
Ten-year Treasury Yield +2.3 bps to 2.755%

Today's Economic Calendar
Auto sales
8:55 Redbook Chain Store Sales

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