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Author: skywalker   |   Latest post: Wed, 23 May 2018, 07:43 AM

 

Wall Street Breakfast: Super Thursday At The Bank Of England

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It's data deluge day in London. In addition to a press conference from Mark Carney, the Bank of England will release its monetary policy decision, the minutes from its last meeting and a quarterly inflation report. Until a few weeks ago, a 25 basis point rate hike was anticipated with near certainty, but dovish comments from Carney have dashed those expectations, along with a softer GDP print and weakening pound.

Economy

California has become the first U.S. state to require solar panels on nearly all new homes built after Jan. 1, 2020, as part of new energy efficiency standards adopted by the California Energy Commission. While the move is a boost for the solar industry, critics say it will add $8K-$12K to the cost of buying a house in the state. Solar already provides 16% of California's electricity.

Mirroring a surge in crude oil, gasoline futures on the New York Mercantile Exchange rose as high as $2.169, touching their highest levels since late August, when Hurricane Harvey knocked out a quarter of U.S. refining capacity. The average price at the pump is now about $2.83, according to AAA, with drivers in nine states paying $3 a gallon for regular gasoline.

Iranian forces in Syria shelled Israeli army outposts in the Golan Heights overnight, prompting one of the heaviest Israeli strikes in Syria since its civil war began in 2011. This "is just further demonstration that the Iranian regime cannot be trusted and another good reminder that the president made the right decision to get out of the Iran deal," White House press secretary Sarah Sanders told Fox News.

Yemen's Houthi rebels also fired a salvo of ballistic missiles at Saudi Arabia yesterday, bringing to 136 the number of missiles fired by the Iran-allied group against Riyadh. It comes after Saudi Arabia approved a development program for its financial sector, the main part of its massive economic reform plan known as Saudi Vision 2030.

Returning to power after a previous two-decade rule, Malaysia's Mahathir Mohamad will be sworn in as the world's oldest elected leader after pulling off a shocking election win. Current Prime Minister Najib Razak's popularity had recently plunged over rising living costs and the graft scandal at 1MDB. While the national stock market will be closed today, Malaysia's ringgit weakened in offshore trading, while U.S.-traded iShares MSCI Malaysia ETF (NYSEARCA:EWM) fell 6%.

Stocks

Comcast will include a $2.5B breakup fee in any new offer for the entertainment assets of 21st Century Fox (NASDAQ:FOXA) after an earlier proposal was rejected by the media giant, FT reports. Disney (NYSE:DIS) included a similar fee in its own offer, which was ultimately recommended by the Fox board, but Comcast (NASDAQ:CMCSA) - which is in talks for up to $60B in financing - is pitching its bid as a significant premium.

Due to delays in the approval process, Apple (NASDAQ:AAPL) is dropping a plan to open a $1B data center in Athenry, Ireland, RTE reports. Apple first announced the facility in February 2015. It would have been built in the rural Irish location to take advantage of green energy sources nearby, but the project has faced a two-year delay amid planning objections.

The U.S. Transportation Department has announced winners for its drone pilot project, which aims to produce data and assist the FAA in establishing safety regulations for UAVs. Among them: Alphabet (GOOG, GOOGL), Airbus (OTCPK:EADSY), Apple (AAPL), Dominion Energy (NYSE:D), FedEx (NYSE:FDX), Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT), Qualcomm (NASDAQ:QCOM) and Uber (UBER). Missing from the list were Amazon (NASDAQ:AMZN) and China's DJI (DJI), but the DoT could announce more projects in the coming months.

Following delays in getting the service off the ground in Dubai, UBER has re-opened a contest to select the first international city to launch its proposed flying taxi project. Last year, the company named Dallas and Los Angeles as its first launch cities and is now looking for a third. UberAIR aims to launch demonstrator flights starting in 2020 and begin intra-city operations in 2023.

BT Group -7.8% premarket after posting weaker-than-anticipated figures over the first three months of the year and announcing plans to cut 13,000 managerial and back-office jobs. Britain's largest telecoms group also said it would leave its London headquarters in its latest attempt to regroup after an accounting scandal, while placating BT shareholders by maintaining its dividend.

Royal Bank of Scotland has agreed to pay a $4.9B civil penalty to settle a DOJ investigation about the mortgage-backed securities the bank issued during 2005-08. The bank secured a far lower than expected settlement with U.S. authorities, paving the way for a long-awaited return of cash to U.K. taxpayers who bankrolled its post-crisis survival. RBS +4.2% premarket.

Fresh criticism is falling on the Samsung Group about its ownership framework, with South Korea's antitrust regulator saying it was unsustainable and urging Chairman Jay Y. Lee to make a structural decision. Korea Fair Trade Commission chief Kim Sang-jo specifically took aim at the group's circular shareholdings between companies such as Samsung C&T, Samsung Life Insurance (OTCPK:SSMMF), and Samsung Electronics (OTC:SSNLF).

Alstom has signed an agreement with General Electric (NYSE:GE) to exit three joint ventures - covering grid, nuclear and renewable assets - in return for a payment of approximately €2.6B ($3.1B). The businesses were created as part of Alstom's €12.4B energy sale to GE in 2015. Alstom (OTCPK:ALSMY) also agreed to merge its rail operations with Siemens to withstand the international advance of China's CRRC (OTCPK:CRCCY).

Sears shares soared 16% on Wednesday after the company announced a tire service partnership with Amazon (AMZN). "Let me be the first one to acknowledge we are on the right path but we haven't gotten over the hump. We need to convert our vision into reality," CEO Eddie Lampert declared. Under the deal, Sears (NASDAQ:SHLD) will install tires sold by Amazon at its U.S. auto centers.

Terms of its rescue agreement... General Motors (NYSE:GM) will stay in South Korea for at least 10 years and set up its Asia-Pacific headquarters in the country. The U.S. carmaker's Korean unit averted a bankruptcy filing with a wage deal clinched last month, but many had doubts about GM's commitment and about how long the loss-making company would remain in business.

A majority of Sturm Ruger investors have voted to support a call for the gunmaker to produce a product safety report, in what shareholder activists called the first victory for such a proposal. It calls for a report by next year on how Ruger (NYSE:RGR) monitors the use of its products in violent crimes, on research to produce safer firearms and on risks gun violence could pose to its reputation and finances.

Confirming a $1.2M contract with President Trump's personal lawyer Michael Cohen, Novartis (NYSE:NVS) said the deal was part of efforts to learn about the new administration. While it regretted the decision, the company had not been able to stop payments until the pact ended. AT&T (NYSE:T) also confirmed it paid $200K for "insights," but reports suggest the figure may have included "actual work" and totaled $600K.

Wednesday's Key Earnings

21st Century Fox (FOXA) +0.8% AH on rising cable revenues.
Centurylink (NYSE:CTL) +2.8% AH beating profit estimates.
Mylan (NASDAQ:MYL) +3.8% reaffirming guidance.
Roku (NASDAQ:ROKU) +4.5% AH following heavy platform growth.

Today's Markets

In Asia, Japan +0.4%. Hong Kong +0.9%. China +0.5%. India -0.2%.
In Europe, at midday, London -0.3%. Paris -0.1%. Frankfurt +0.3%.
Futures at 6:20, Dow -0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +0.6% to $71.57. Gold +0.3% to $1316.80. Bitcoin +0.7% to $9368.
Ten-year Treasury Yield -1 bps to 2.98%

Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Consumer Price Index
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
1:00 PM Results of $17B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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