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Author: skywalker   |   Latest post: Mon, 20 Aug 2018, 11:31 AM

 

Wall Street Breakfast: Non-Farm Payrolls In Focus

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Investors are getting ready for the monthly snapshot of the nation's labor market, which comes today at 8:30 a.m. ET. Expectations are for a gain of 192,000 jobs in April, with the unemployment rate falling to 4% for the first time since December 2000. Wage growth is further anticipated at 0.2%, and anything higher than that could ramp up forecasts for more inflation and additional Fed rate hikes.

Economy

Trade talks between the U.S. and China ended after a second day as reports surfaced on American demands in the negotiations. The U.S. requested China reduce the bilateral trade deficit by at least $200B by the end of 2020, as well as halting all government support for advanced technologies. Chinese officials believe the proposal is "unfair," according to sources at the WSJ.

Theresa May's Conservative Party has avoided widespread losses in 150 local council elections across England. Some key seats were ceded, however, presenting a mixed picture for the British leader since losing her party's parliamentary majority last year. May has also been struggling to reach a consensus within her government over the shape of the U.K.'s future relationship with the EU bloc.

Venezuela is taking over the country's leading private bank Banesco for 90 days and announced the arrest of 11 top executives for "attacks" against the rapidly depreciating bolivar. The nation's inflation rate spiked from 4,966% to nearly 18,000% through March and April, a result President Maduro has attributed to an "economic war."

"Iran will not renegotiate what was agreed years ago and has been implemented,” Foreign Minister Mohammad Javad Zarif said in a video message on YouTube. It comes as President Trump warns that unless European allies rectify the 2015 nuclear deal's "terrible flaws" by May 12, he will refuse to extend U.S. sanctions relief for the oil-producing Islamic Republic.

Stocks

Berkshire Hathaway bought 75M additional Apple (NASDAQ:AAPL) shares in Q1, with Warren Buffett outlining that the company "earns almost twice as much as the second most profitable company in the U.S." The announcement, which comes ahead of Berkshire's (BRK.A, BRK.B) annual shareholder meeting on Saturday, brings its total stake in the tech giant to 240.3M shares worth $42.5B.

Seeing regulatory risk in a deal with Amazon (NASDAQ:AMZN), India's Flipkart (FPKT) has approved a 75% equity stake sale in the company to a group led by Walmart (NYSE:WMT), Bloomberg reports. Closing of the approximately $15B deal is expected within 10 days. SoftBank (OTCPK:SFTBY) will sell its 20%+ stake as part of the transaction, while Alphabet (GOOG, GOOGL) is likely to participate in the investment.

European bank earnings: HSBC -4% premarket after profit missed estimates, although the bank unveiled a new $2B buyback. Highlighting "lackluster" trading activity in Europe, BNP Paribas (OTCPK:BNPZY) reported a 17% drop in net income during Q1, while Societe Generale (OTCPK:SCGLY) beat expectations, shaking up its leadership team following the resignation of deputy CEO Didier Valet over a Libor rate rigging scandal.

JPMorgan is doubling down on AI. The bank has hired Manuela Veloso, Carnegie Mellon University's head of machine learning, as JPMorgan's (NYSE:JPM) first head of artificial intelligence research. Finance is focusing on the technology, which could eventually be used for services ranging from fraud detection and loan approval to streamlining processes and cost management.

Amid an escalation in U.S.-China trade tensions, China's antitrust authority has approved Qualcomm's (NASDAQ:QCOM) joint venture with a unit of state-owned Datang Telecom Technology aimed at designing smartphone chipsets, WSJ reports. Qualcomm is still waiting for the regulator to approve its planned $44B purchase of NXP Semiconductors (NASDAQ:NXPI) - a deal widely seen as critical to the U.S. chipmaker's future.

Twitter fell 1.6% in after-hours trading after the company found a bug tied to password storage, but said an investigation showed no indication of a breach. Twitter (NYSE:TWTR) uses a common technology that masks passwords so no one within the organization can view them, but a glitch was discovered in the system. The company is now urging all users to change their logins.

An indictment against former Volkswagen (OTCPK:VLKAY) CEO Martin Winterkorn has been unsealed in federal court in Detroit. The executive left the automaker shortly after the diesel emissions cheating scandal was first uncovered in 2015. "If you try to deceive the United States, then you will pay a heavy price," declared U.S. Attorney General Jeff Sessions.

Xerox's current board and management team, which includes CEO Jeff Jacobson, will stay in place after a settlement agreement it had reached with dissenting shareholders to oust them expired. Meanwhile, the New York Supreme Court held a hearing on Thursday on an objection to the Xerox (NYSE:XRX)-Fujifilm (OTCPK:FUJIY) merger, but held off on a decision and did not schedule a follow-up hearing.

AT&T told a federal judge late Thursday it should reject any request by the DOJ forcing it to divest DirecTV or Turner for approval of its Time Warner (NYSE:TWX) deal, stating it "would destroy the very consumer value this merger is designed to unlock." The DOJ has demanded divestitures, arguing that AT&T (NYSE:T) would have the ability to raise prices on Time Warner content for pay TV rivals.

Making a statement... Allianz (OTCPK:AZSEY), Europe's biggest insurance company, has pledged to stop selling policies to coal companies in an effort to cut back on the use of fossil fuels. Tobacco firm Altria (NYSE:MO) and scope maker Nikon (OTCPK:NINOY) are also staying away from the NRA's annual meeting in Dallas this weekend, which is expected to draw 80,000 visitors.

Thursday's Key Earnings

Activision (NASDAQ:ATVI) -1.6% AH with an incorrect earnings release.
CBS (NYSE:CBS) +2.2% AH on broad subscriber growth.
DowDuPont (NYSE:DWDP) flat on beat, big drop in ag sales.
EOG Resources (NYSE:EOG) -1.7% AH despite a Q1 beat.
GoPro (NASDAQ:GPRO) -1.4% AH after an earlier stock jump.
Pandora (NYSE:P) +8.5% AH with a strong quarter in advertising.
Regeneron (NASDAQ:REGN) -1.3% on in-line revenues.
Shake Shack (NYSE:SHAK) +10.6% AH amid strong comparable sales.
Teva Pharma (NYSE:TEVA) -4.4% following weaker profits.

Today's Markets

In Asia, Japan closed. Hong Kong -1.3%. China -0.3%. India -0.5%.
In Europe, at midday, London +0.4%. Paris -0.1%. Frankfurt +0.4%.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.2%. Crude +0.3% to $68.66. Gold -0.1% to $1311. Bitcoin -0.5% to $9689.
Ten-year Treasury Yield -1 bps to 2.93%

Today's Economic Calendar
8:30 Non-farm payrolls
12:45 PM Fed's Williams Speech
1:00 PM Baker-Hughes Rig Count
8:00 PM Fed's Kaplan speech
8:00 PM Fed's Bostic speech
8:00 PM Fed's George speech

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