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Author: skywalker   |   Latest post: Fri, 15 Jun 2018, 07:57 AM

 

Wall Street Breakfast: Eyes On Tesla's Shareholder Meeting

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Tesla shareholders are expected to hold a vote today on a number of executive decisions that can affect the course of the company, including splitting Elon Musk's chairman and CEO roles, and the reappointment of three board members (one of whom is Musk's brother Kimbal). The annual meeting, which is set to begin at 11:30 a.m. ET, comes as Tesla (NASDAQ:TSLA) fights negative press over production bottlenecks for its Model 3, crashes involving its cars and doubts raised by Wall Street over its cash position.

Economy

Responding to President Trump's tariffs on steel and aluminum, Mexico is set to impose steep duties on U.S. pork imports, in a move that will likely complicate NAFTA negotiations. "It's a 20% [tariff] on legs and shoulders, fresh and frozen... with bones and without bones,” said Heriberto Hernandez, president of Mexico's leading pork producers association OPORPA. Related tickers: TSN, HRL, SEB

The battle for control of Congress is on the radar today as voters across eight states choose nominees in a slew of hotly contested primaries. The California races have garnered the most attention because of that state's open primary system, in which the top two vote-getters advance regardless of party affiliation. An oversupply of Democratic candidates could result in a splintered electorate, allowing two Republicans to advance to November's midterm election.

Italy's new populist government, made up of the anti-establishment League and Five Star Movement, will face its first test today during parliamentary votes of confidence on its new cabinet and government program. The coalition has promoted tax cuts, the mass deportation of illegal migrants, a guaranteed basic income and an overhaul of recent labor and pension reforms.

Citing lukewarm inflation and wage growth, Australia's central bank held rates overnight at 1.5% for a 22nd straight meeting, but said it expects the country’s average GDP growth to accelerate to "a bit above" 3% in 2018 and 2019. "Financial markets have been affected by political developments in the eurozone, particularly in Italy," RBA Governor Philip Lowe declared. "There are also concerns about the direction of international trade policy in the U.S."

Iran is set to inform the IAEA today over its start of a process to increase the country's uranium enrichment capacity following the U.S. withdrawal from a 2015 nuclear accord with world powers. European signatories still back the deal despite concerns over Iran's ballistic missile program and its influence in the Middle East, but Tehran says the two issues are non-negotiable.

Crude oil is back near two-month lows at $64/bbl as investors continue to sell in the face of growing U.S. production, possible global supply growth and nagging trade tensions. There are also growing expectations that OPEC will decide to curb crude production cuts when it meets later this month. The group, along with Russia and other producers, have been cutting output by roughly 1.8M bpd since the start of 2017.

Stocks

Apple shares hit an all-time high of $193.42 on Monday as tens of thousands of developers flocked to its annual developer conference. The company announced several features and upgrades at WWDC, including a new operating system iOS 12, which won't become painfully slow on updated older devices. Apple (NASDAQ:AAPL) also unveiled voluntary app limits to curb iPhone addiction and a group chat feature for FaceTime.

While the tech giants hope to resolve the suit with transparency tools, Washington state has sued Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) for allegedly violating state campaign finance law by failing to maintain information about who buys election ads. Federal law requires that political ads in print and on TV indicate who purchased them, but digital ads don't yet require the same disclosures, except in Washington state.

Twitter will join the S&P 500 before trading opens this morning as the social-media platform replaces Monsanto (NYSE:MON), which is due to be acquired by Bayer (OTCPK:BAYRY). The move is unusual because companies are supposed to have four straight quarters of positive as-reported profits before joining the index. In April, Twitter (NYSE:TWTR) reported its second consecutive profitable quarter after 16 straight quarters of losses.

It's the latest in a string of deals for Toshiba (OTCPK:TOSYY), which has been forced to divest units to repair a balance sheet following the bankruptcy of its nuclear energy subsidiary Westinghouse. The Japanese company is selling 80% of its PC business to Sharp (OTCPK:SHCAY) - controlled by Foxconn Technology (OTC:FXCOF) - for ¥4B ($36M), as the latter seeks to expand beyond contract manufacturing and build a brand of its own.

British taxpayers are set to lose billions as the government unloaded a 7.7% holding in the Royal Bank of Scotland (NYSE:RBS) for £2.5B, reducing its overall stake to 62%. The same number of shares were worth around £2B more when the U.K. rescued the bank at the height of the 2008 financial crisis. "The cost of that intervention is now starting to emerge," said Laith Khalaf, senior analyst at Hargreaves Lansdown.

Australian authorities have charged the former local bosses of Citigroup (NYSE:C) and Deutsche Bank (NYSE:DB) with "criminal cartel offenses" over a $2.3B stock sale by the ANZ in 2015. The case - one of the country’s biggest cases of alleged white collar crime - centers on how the underwriters disposed of about 25.5M shares they had to soak up in the issue. The third underwriter, JPMorgan (NYSE:JPM), hasn't been charged.

Blasting the deal as "the height of madness," a group of shareholders including several founding family members of Takeda Pharmaceutical (OTCPK:TKPYY) have joined forces to derail the Japanese group's £46B acquisition of Shire (NASDAQ:SHPG), FT reports. The dissidents hold just over 1% of Takeda’s stock, but their campaign has drawn outsized attention in a country where founding family voices can hold emotional sway over the votes of mom-and-pop investors, who account for one-quarter of Takeda's shareholders.

The U.K. government will reportedly give its verdict on Rupert Murdoch's pursuit of European pay-TV group Sky (OTCQX:SKYAY) later today in a move that could see him go up against a rival offer from Comcast (NASDAQ:CMCSA). Twenty-First Century Fox (NASDAQ:FOXA) launched the bid to buy the 61% of Sky it didn't own in December 2016, but the takeover was held up by regulators who feared it would grant the media giant too much influence in Britain.

Better known for its home-sharing, Airbnb (AIRB) is now expanding its product offerings to give travelers the "best trip." "There might be some experiences that you take... You might even want to... attend a concert or a restaurant as well," said Parin Mehta, APAC trips operations director for Airbnb. "We're trying to build really local and authentic experiences in every city."

Howard Schultz is leaving his role as executive chairman of Starbucks (NASDAQ:SBUX), effective June 26, sparking speculation about his potential political plans. He'll also step down from the board and will be replaced by Myron Ullman, former chairman and CEO of J.C. Penney (NYSE:JCP). Starbucks grew from 11 stores to over 28,000 under Schultz's leadership, which spanned over three decades.

Today's Markets

In Asia, Japan +0.3%. Hong Kong +0.3%. China +0.7%. India -0.3%.
In Europe, at midday, London -0.4%. Paris +0.6%. Frankfurt +1%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.3%. Crude -0.4% to $64.52. Gold -0.2% to $1294.90. Bitcoin -1% to $7418.
Ten-year Treasury Yield -2 bps to 2.92%

Today's Economic Calendar

8:55 Redbook Chain Store Sales
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
10:00 Job Openings and Labor Turnover Survey

 

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