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Wall Street Articles

Author: skywalker   |   Latest post: Thu, 21 Feb 2019, 07:23 AM

 

Wall Street Breakfast: Dow Set To Retake Perch Above 26,000

Author: skywalker   |  Publish date: Thu, 21 Feb 2019, 07:23 AM


The Dow Jones Industrial Average is likely to break through the 26,000 level today as futures point to a 36-point advance, marking the next comeback for the stock market since the beginning of 2019. The latest boost comes amid the most significant progress yet toward ending the seven-month U.S.-China trade war, with negotiators drawing up six memorandums of understanding on structural issues: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.

Economy

Stocks edged higher in the previous session after minutes from the Fed's last meeting reaffirmed that the U.S. central bank would be "patient" with respect to further interest rate hikes. Most FOMC officials also indicated they were ready to stop shrinking the central bank's $4.1T asset portfolio this year and believed an action plan should be released soon.

Next up is minutes from the ECB's January policy meeting at which President Mario Draghi stressed downside risks to the region’s economy from a host of factors. Investors are additionally watching if the bank will push ahead with a new round of TLTROs. Chief Economist Peter Praet said the ECB will soon discuss the plans, but hinted any new round of credit may not be as generous as the latest TLTRO facility (which was offered at zero percent interest).

German manufacturing activity dropped to its lowest level since 2012 in February, with IHS Markit's PMI slipping to a record low of 47.6%, leaving the country's resilient services sector to keep the economy afloat. "The uncertainty relating to U.S.-China trade tensions and weakness in the autos industry - were highlighted, although there were also reports of growing competitive pressures within Europe," said Phil Smith, economist at IHS Markit.

With taxpayers rushing to beat a deadline to settle self-assessed liabilities, Britain last month posted a record budget surplus of £14.9B, providing a welcome boost in the wake of a threatened credit-rating downgrade over Brexit. Theresa May's Conservatives suffered a split of their own on Wednesday, with three anti-Brexit MPs from the party becoming the latest recruits of the new Independent Group.

Stocks

Lyft is planning the roadshow for its initial public offering for the week of March 18, according to Reuters, making it the first U.S. ride-hailing company to debut in the stock market. Planning on listing its shares on the Nasdaq, LYFT expects to be valued at between $20B-$25B. Larger rival UBER still needs several more weeks for its roadshow preparations, but its IPO is likely to come shortly after.

At a launch event in San Francisco, Samsung (OTC:SSNLF) unveiled the first consumer-ready foldable smartphone, calling it the Galaxy Fold. The 5G device can work like a traditional 4.6-inch smartphone or morph into a mini-tablet at 7.3 inches. It's still far from clear whether consumers will embrace a phone that retails for $1,980, or that it will provide a new creative catalyst which the market needs.

Several companies, including Nestle (OTCPK:NSRGY), McDonald's (NYSE:MCD) and Disney (NYSE:DIS), have pulled digital advertising spending from YouTube (GOOG, GOOGL) over growing concerns that the site has been facilitating paedophile networks. Users were said to be connecting with each other in the comments section of videos of young children, and sometimes even sharing links to hardcore child pornography. The escalation echoes a similar backlash in 2017, when advertisers pulled their commercials over fears they might be placed next to extremist or inappropriate content.

Johnson & Johnson has received subpoenas from federal agencies for the first time related to litigation involving alleged asbestos contamination in its signature Baby Powder product line. The company intends to "cooperate fully with these inquiries" from the DOJ and SEC, and will "continue to defend J&J (NYSE:JNJ) in the talc-related litigation." JNJ -2.1% premarket.

Newly unsealed court testimony has revealed some details surrounding a healthcare joint venture launched by Amazon (NASDAQ:AMZN), Berkshire Hathaway (BRK.A, BRK.B) and JPMorgan (NYSE:JPM). "One goal is to bolster the importance of primary care... and understand where there's variation in care, quality, where prices don’t match value, where doctors are performing," COO Jack Stoddard said. The business is also looking at pharmacy costs.

The biggest threat to Volkswagen's (OTCPK:VWAGY) 2019 profit is potential American tariffs. "It's becoming tense once again," he told the FT. "You know it's a pity because we can’t solve it from the car industry [alone]. It's more of a tariffs negotiation between Europe and the United States." Analysts at London-based Evercore ISI said tariffs could cost VW €2.5B a year, about 13% of expected earnings.

NASA has warned SpaceX (SPACE) and Boeing (NYSE:BA) of design and safety concerns for their competing astronaut launch systems that aim to return astronauts to the International Space Station for the first time since the Space Shuttle program ended in 2011. The clock is ticking. The U.S. has been paying Russia about $80M per ticket for rides on its Soyuz space vehicles, but there are no seats available for American crew after 2019.

Barclays traded at the top of the London market overnight after saying it would increase investor returns this year amid increasing pressure from activists to boost its bottom line. Full-year earnings were weaker-than-expected, however, and Britain's second-largest bank set aside a Brexit provision of £150M in its 2018 results. "In the course of the year... the strategy we have implemented began to deliver," declared CEO Jes Staley. BCS +3% premarket.

Potentially drawing a line under probes which have dogged the bank for years, Standard Chartered (OTC:SCBFY) has set aside $900M to cover fines resulting from regulatory investigations in the U.S and Britain. The news comes ahead of a strategy update from the lender, as well as its 2018 earnings results on Tuesday - when StanChart CEO Bill Winters is widely expected to outline an overhaul of operations.

Deutsche Bank lost $1.6B over a decade on a bond trade that involved insurance from Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B), WSJ reports. The complex municipal investment was made just before the 2008 financial crisis, and the embattled German lender resisted for years to reduce the value of bonds and related derivatives. "This transaction was unwound in 2016 as part of the closure of our Non-Core Operations" unit," according to a Deutsche (NYSE:DB) spokesperson.

Wednesday's Key Earnings

Bausch Health (NYSE:BHC) -4.5% swinging to a quarterly loss.
CVS Health (NYSE:CVS) -8.1% on profit miss, rebate questions.
Energy Transfer (NYSE:ET) +1.9% AH reporting a strong quarter.
GoDaddy (NYSE:GDDY) -0.9% AH despite higher subscribers.
Realty Income (NYSE:O) +0.8% AH topping expectations.
Southern Co. (NYSE:SO) +1.7% boosted by Q4 beat, tax reform.

Today's Markets

In Asia, Japan +0.3%. Hong Kong +0.4%. China -0.3%. India +0.4%.
In Europe, at midday, London -0.6%. Paris +0.1%. Frankfurt +0.4%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.3%. Crude +0.4% to $57.39. Gold -0.8% to $1337.60. Bitcoin -1% to $3886.
Ten-year Treasury Yield +1 bps to 2.67%

Today's Economic Calendar

7:50 Fed's Bostic: Economic Outlook and Monetary Policy
8:30 Durable Goods
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:45 PMI Composite Flash
10:00 Leading Indicators
10:00 Existing Home Sales
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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Wall Street Breakfast: 'Powell Pivot' Puts Fed Minutes In Focus

Author: skywalker   |  Publish date: Wed, 20 Feb 2019, 08:26 PM


Markets today will be eyeing minutes from the Fed's January meeting, the one where Jerome Powell did an about-face and indicated that the central bank could hold off on raising rates. Next big market catalyst? Balance sheet normalization will likely be discussed, with Wall Street believing the Fed will end its roll-off by the end of the year. More clues will also be sought on what the minutes could mean for yield curve inversion trade, as well as the recent boost to stocks following the wildness of late 2018.

Economy

The U.S. wants China to agree to keep the yuan stable as part of the demands being put forth in current trade talks, while Beijing wants Washington to respect its right to develop and become prosperous. President Trump said on Tuesday that the discussions were going well and suggested he was open to pushing off the deadline to complete negotiations, outlining March 1 was not a "magical" date.

Expectations are low as Theresa May heads back to Brussels today to find a way out of the Brexit impasse, despite clear statements from EU officials that they won't reopen the divorce deal. Even if she secures some kind of assurance over the temporary nature of the Irish backstop, it's not clear if that would placate Brexiteers in her own party who helped defeat her deal in parliament.

Several big companies have begun to prepare for the disruption that could ensue following Brexit, with Britain currently at risk of leaving the EU without a deal on March 29. Kellogg (NYSE:K) is opening new warehouses and loading up on its snacks, cereals and raw materials, while Mondelez (NASDAQ:MDLZ) is increasing transportation capacity in the U.K. and stockpiling all of its European-made products.

The ruble eased slightly overnight, but hovered close to a one-week peak, as Vladimir Putin gave his annual address to parliament. The Russian leader promised tax breaks, mortgage relief and hard cash to support Russian families who produce more children. Earlier this month, Hungarian Prime Minister Viktor Orban announced a similar move, including waivers on personal income tax for women raising at least four children.

Stocks

Hedge funds loaded up on tech stocks at their fourth-quarter bottom, just in time to catch their double-digit rebound and Q1 comeback. Facebook (NASDAQ:FB) was the most-owned stock, followed by Microsoft (NASDAQ:MSFT), Alphabet (GOOG, GOOGL), Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA), according to Citi Research. The bank reviewed the regulatory filings from the largest 50 hedge funds by value of securities that documented their top 10 holdings at the end of December.

Media mogul (and now tech mogul) Barry Diller is weighing in on the media industry topic du jour - whether a tipping point of power has now been reached in the streaming evolution. "Hollywood is now irrelevant," he said on the latest episode of Recode Decode. "Netflix (NASDAQ:NFLX) has won this game. No one can get, I believe, to their level of subscribers, which gives them real dominance."

Qualcomm is urging U.S. trade regulators to reverse a judge’s ruling and ban the import of some iPhones in a long-running patent fight between the companies. Qualcomm (NASDAQ:QCOM) is seeking the penalty in hopes of dealing Apple (NASDAQ:AAPL) a blow before the two begin a major trial in mid-April over the chipmaker's patent licensing practices. The case was brought to the U.S International Trade Commission in 2017.

The German government is leaning toward letting Huawei participate in building its 5G network, the latest blow to Washington's push to ostracize the Chinese tech giant as a national security risk. Britain's intelligence services have also reportedly concluded that risks posed by Huawei equipment could be mitigated, while New Zealand's Prime Minister Jacinda Ardern related a similar decision. Other telecom equipment suppliers: NOK, ERIC

Big investors are pushing natural resource companies to take firmer action on climate change, and Glencore (OTCPK:GLNCY) is the latest to respond. The world's top coal exporter has vowed to cap its production at about 150M tons per year, with further expansion of its coal business largely ruled out. The decision, which aligns to the goals of the Paris climate change agreement, is likely to send shockwaves across the coal industry.

Alberta has signed contracts with Canadian National (NYSE:CNI) and Canadian Pacific (NYSE:CP) railroads to lease 4,400 rail cars, in its latest move to clear a glut of oil sands crude that has depressed prices. Provincial officials say the program will cost C$3.7B over three years and result in C$5.9B in revenues over the same period. Potentially relevant tickers include CNQ, SU, IMO, CVE, ENB, ECA, TRP, CPG, BTE, ERF

The U.S. government has reached a settlement with Teva Pharmaceuticals (NYSE:TEVA) over keeping generic drugs off the market. That includes the FTC dropping claims against Teva and affiliates across three outstanding cases, as well as modifications to some terms from a 2015 consent decree. The agency has said that the deals cost consumers billions annually in higher drug costs. TEVA -1.3% premarket.

As part of a restructuring meant to end losses around the world, Ford (NYSE:F) is closing its oldest factory in Brazil and exiting its heavy commercial truck business in South America. The decision comes months after pursuing viable alternatives. Ford previously said the global reorganization, to impact thousands of jobs and possible plant closures in Europe, would result in $11B in charges.

Self-driving tech timetable... Elon Musk reiterates his expectations that Tesla (NASDAQ:TSLA) full self-driving technology will be available by the end of the year. "Meaning the car will be able to find you in a parking lot, pick you up and take you all the way to your destination without an intervention, this year. I would say I am of certain of that. That is not a question mark."

Nissan and Renault appear to be headed for a clash, just as the two partners hope to salvage an alliance shaken by the ouster of former boss Carlos Ghosn, FT reports. Nissan's (OTCPK:NSANY) independent committee on governance is expected to recommend against the company having the same chairman as Renault (OTCPK:RNLSY): Jean-Dominique Senard. That may require a revision to their alliance agreement, which is likely to be contentious.

President Trump has signed a directive ordering the Pentagon to draft legislation and create a Space Force as the sixth U.S. military branch. If approved by Congress, it would mark the first new military division in 72 years. "Our adversaries are training forces and developing technology to undermine our security in space, and they're working very hard at that," Trump told reporters at the White House. Related: BA, NOC, LMT, AJRD, SPACE, BORGN

Tuesday's Key Earnings

Devon Energy (NYSE:DVN) +7.1% AH beating production estimates.
Herbalife (NYSE:HLF) +1% AH topping earnings expectations.
LendingClub (NYSE:LC) -6.7% AH posting weak guidance.
Medtronic (NYSE:MDT) +0.1% on strength in surgical products.
Walmart (NYSE:WMT) +2.2% topping comp sales view, raising dividend.

Today's Markets

In Asia, Japan +0.6%. Hong Kong +1%. China +0.2%. India +1.1%.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.3%.
Futures at 6:20, Dow -0.2%. S&P -0.1%. Nasdaq -0.1%. Crude -0.6% to $56.14. Gold +0.2% to $1346.90. Bitcoin +1.7% to $3929.
Ten-year Treasury Yield -1 bps to 2.63%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:55 Redbook Chain Store Sales
10:00 E-Commerce Retail Sales
11:30 Results of $13B, 2-Year FRN Auction
2:00 PM FOMC minutes
3:00 PM Farm Prices

 

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Wall Street Breakfast: Retail Sector Watch As Walmart Reports Earnings

Author: skywalker   |  Publish date: Tue, 19 Feb 2019, 07:36 PM


The world's largest retailer reveals Q4 results this morning, providing the latest snapshot on the health of the American economy. Some on Wall Street are expecting Walmart to disclose its weakest profit margins in years - alongside rising sales - as investments it's making to better compete in the digital era weigh on profitability. Rising transport and labor costs are also adding to bottom line pressure, with Walmart currently offering a yearly salary of almost $90,000 to attract truckers for its delivery fleet.

Economy

U.S. stock index futures fluctuated overnight as traders waited for new details to emerge from the latest round of U.S.-China trade talks. A new session of discussions will take place today, with higher level talks due later in the week. While officials have been building up hope for a deal, the Chinese government said yesterday that Washington was inhibiting its industrial development by claiming Huawei equipment could pose a cybersecurity threat.

Where does trans-Atlantic trade stand? European Commission chief Jean-Claude Juncker speaks today in Stuttgart - the hometown of Daimler (OTCPK:DDAIF) - after the U.S. Commerce Department sent a report to President Trump that could unleash steep tariffs on imported vehicles. "Trump has given me his word that there will be no car tariffs for the time being," Juncker declared. "I believe him. However, should he renege on that commitment, we will no longer feel bound by our commitments to buy more U.S. soya and liquid gas."

Pressure towards a different Brexit solution is boosting the pound as the resignation of seven Labour MPs from the U.K.'s main opposition party weigh on the influence of Jeremy Corbyn and his Brexit strategy. The faction will sit in the U.K. Parliament as a new group of MPs, known as "The Independent Group," after citing concerns with the main opposition's "Brexit" position, "bullying" and "anti-semitism."

Australian Trade Minister Simon Birmingham has poured cold water on proposals from the U.K. to swiftly join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) post-Brexit, but did admit the country stands ready to "fast track" some form of trade deal with Britain. U.K. International Trade Secretary Liam Fox has repeatedly set out the goal of joining the CPTPP, an agreement that includes Australia, Japan, Canada, and several other nations.

Germany's current account surplus shrank in 2018, but still remained by far the world’s largest due to strong exports. The measure, which tracks the flow of goods, services and investments, came in at $294B, followed by Japan with $173B, and Russia with a surplus of $116B. The data from the Ifo institute is likely to renew criticism of Chancellor Angela Merkel's fiscal policies.

Saudi Crown Prince Mohammed bin Salman plans to invest a whopping $20B in Pakistan - including in its energy and agriculture sectors - as he begins a swing through Asia at a time when his ties with the West are waning. The news didn't appear to faze investors, with the benchmark Karachi Stock Exchange 100 Index falling yesterday to the lowest level in about three weeks. MBS's stop in Pakistan is the first leg of a broader trip that will take him to India, South Korea and China, where he's set to meet with President Xi.

Stocks

More retail trends... Payless ShoeSource began closing its 2,700 U.S. stores on Sunday and filed for its second bankruptcy in two years. The latest retail victim may point to storm clouds hovering over the industry, or possible positive developments for Caleres (NYSE:CAL) and DSW (NYSE:DSW) due to a narrowed shoe store field. Toys "R" Us, Shopko, FullBeauty Brands, Charlotte Russe, Things Remembered and Gymboree (OTC:GMBEQ) have all filed for bankruptcy in the past year.

Spending the past two years mapping its carbon footprint, Amazon (NASDAQ:AMZN) has announced plans to make half of all its shipments carbon neutral by 2030. To reach that goal, the company said it will use more renewable energy like solar power, have more packages delivered in electric vans and push suppliers to remake their packaging. Amazon is calling its program "Shipment Zero," and plans to publicly publish its carbon footprint for the first time later this year.

U.K. manufacturing is under further pressure after Honda (NYSE:HMC) announced it would close its only British car plant in 2022, facing challenges of declining diesel vehicle demand and Brexit uncertainty. Honda built over 160K vehicles in Swindon, accounting for a little more than 10% of its total British output of 1.52M cars. Nissan (OTCPK:NSANY) recently canceled plans to build its X-Trail SUV in the U.K., and in January, Britain's biggest automaker - Jaguar Land Rover (NYSE:TTM) - said it would cut 10% of its workforce.

Months before the arrest of Carlos Ghosn, the Japanese government intervened in talks about whether to merge Nissan (OTCPK:NSANY) and Renault (OTCPK:RNLSY), WSJ reports. Nissan executives initially asked for help in fending off a proposal to merge the carmakers that Ghosn was championing, but the move threatened to backfire. Japan's Ministry of Economy, Trade and Industry, or METI, responded by drafting an agreement that would allow it to oversee talks between the two auto partners, a role Nissan considered invasive.

EU negotiators have agreed to impose caps on carbon dioxide from trucks for the first time, stepping up the fight against climate change. A 30% CO2-reduction target for 2030 - compared with 2019 levels - is set to be levied on manufacturers, as well as an interim emissions cut of 15% for 2025. In December, EU negotiators reached an accord to tighten caps on CO2 from cars. Related: OTCPK:DDAIF, OTCPK:VWAGY, OTCPK:RNLSY, OTCPK:VOLVY

Trouble at Southwest Airlines? The carrier is under FAA investigation for widespread failure to accurately track the total weight of checked bags loaded onto its flights, WSJ reports. Southwest (NYSE:LUV) has also told its mechanics it was experiencing an "operational emergency." The airline usually plans for having as many as 20 aircraft removed from daily service, but each day last week, the percentage of out-of-service aircraft had been double the daily average.

Earnings overnight... HSBC (NYSE:HSBC) -4.4% premarket as full-year profit missed analysts' expectations, despite higher deposit revenue from Asia. BHP (NYSE:BHP) -1.5% holding its dividend steady as underlying profit fell short of estimates. Danone (OTCQX:DANOY) fell 13.4% as profit and sales slipped during 2018, dragged down by the impact of a consumer boycott in Morocco.

The world's two largest providers of index funds, BlackRock (NYSE:BLK) and Vanguard, together grabbed 57% of global net new inflows into long-term mutual funds in 2018, according to Morningstar. The inflows, however, dropped by almost 70% last year to $606B - from the $2T record set in 2017 - driven by large falls in many stock markets and concerns over the outlook for credit markets.

After a year of trying to find a buyer for the division, Pearson (NYSE:PSO) has agreed to sell its U.S. schools course materials business for $250M to private equity group Nexus Capital Management. "The sale frees us up to focus on the digital first strategy that will drive our future growth," CEO John Fallon declared. The U.S. K12 courseware unit accounted for around £20M of Pearson's operating profit in 2018, when it generated £364M of revenues.

Teva Pharmaceutical expects its generic version of Mylan's (NASDAQ:MYL) EpiPen to have about 25% share of the U.S. market by the end of 2019. The company is already selling its product for adults and plans to start supply of a junior version for young children in 3-4 months, CEO Kare Schultz declared. Mylan also has a generic version of its EpiPen, which is priced at around $300, similar to Teva's (NYSE:TEVA) product. TEVA +1.1% premarket.

A Mongolian regulator is temporarily suspending operations at local KFC restaurants to conduct inquiries, as 42 people were hospitalized and hundreds showed food poisoning symptoms after eating at an outlet in Ulaanbaatar. Contaminated water supply appears to be the source of the issue, according to the city's Metropolitan Professional Inspection Agency. KFC, which is part of Yum Brands (NYSE:YUM), has at least 11 restaurants in the country, according to its website.

Drama at Papa John's... Founder John Schnatter is welcoming the "up to $250M" investment from Starboard Value, which saw the hedge fund's CEO take over as restaurant chairman, and increase the number of directors, diluting Schnatter's influence. Schnatter still filed an updated lawsuit, aiming to undo a new provision of a voting agreement that requires Starboard to vote its company shares in favor of Papa John's (NASDAQ:PZZA) preferred directors.

Facebook said it is "open to meaningful regulation" after U.K. lawmakers lashed out at the tech giant, saying it should be subject to a compulsory code of ethics to tackle the spread of fake news and abuse of user data. Calling the company "digital gangsters," the Digital, Culture, Media and Sport Committee further concluded that Facebook (NASDAQ:FB) founder Mark Zuckerberg failed to show "leadership or personal responsibility." "Democracy is at risk... and big tech companies are failing in the duty of care they owe to their users."

FB also wants to develop its own artificial intelligence chips that go beyond what's currently on the market, according to Yann LeCun, Facebook's (FB) chief AI scientist. While the company is already creating its own custom ASIC (application-specific integrated circuit) chip, the idea is to provide faster computing that Facebook (needs in order to achieve new AI breakthroughs including digital assistants imbued with enough "common sense."

Extending a global effort to bring tech giants into the tax net, New Zealand plans to update its laws so it can tax revenue earned by digital firms like Google (GOOG, GOOGL), Facebook (FB) and Amazon (AMZN). The proposed digital services tax (DST) would tax multinational online companies at about 2 or 3 percent on the revenue they generate in New Zealand. A number of other countries including the U.K., Spain, Italy, France, Austria, Australia and India have enacted or already announced plans for a DST.

Today's Markets

In Asia, Japan +0.1%. Hong Kong -0.4%. China +0.1%. India -0.4%.
In Europe, at midday, London -0.7%. Paris -0.5%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.3%. S&P -0.3%. Nasdaq -0.2%. Crude +0.9% to $56.48. Gold +0.8% to $1332.20. Bitcoin +4.6% to $3867.
Ten-year Treasury Yield flat at 2.66%

Today's Economic Calendar

8:50 Fed's Mester: Monetary Policy and Economic Outlook
10:00 NAHB Housing Market Index

 

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Wall Street Breakfast: Another Brexit Drama In The Making

Author: skywalker   |  Publish date: Thu, 14 Feb 2019, 07:43 PM


Sterling may be on the move later today as Eurosceptic Conservative MPs threaten to vote against Theresa May's Brexit strategy, which is a restating of her current negotiating position, but also contains a rejection of a "no deal" Brexit. If May loses the non-binding vote it would effectively strip her of her mandate from Parliament to secure binding changes to her Brexit deal, sending the wrong signal to the EU and highlighting how little room she has to maneuver.

Economy

U.S. stock index futures advanced 0.4% overnight amid signs of further progress in the U.S.-China trade dispute. China's closely-watched U.S. trade surplus eased to $27.3B, the lowest since May 2018, as imports fell 42% thanks in part to steep declines in soybean purchases. President Trump is also reportedly considering expanding the March 2 deadline by 60 days in order to ensure that a comprehensive trade deal is ultimately agreed to between the world's two biggest economies.

Fewer consumers are celebrating Valentine's Day this year, but those who do are spending more, according to an annual survey by the National Retail Federation. Total spending is expected to be $20.7B, breaking the previous record set in 2016. The increases in spending (an average $161.96 per person) come even though only 51% of Americans plan to celebrate the holiday, down from 55% last year.

Texas oil wells produced more than 1.54B barrels of crude in 2018 - despite a 40% commodity price drop during Q4 - beating the previous record of 1.28B barrels set in 1973, TIPRO disclosed in its annual "State of Energy Report." Natural gas production also grew, reaching 8.8T cubic feet in 2018. "Texas is paving the way for America's energy independence," declared Governor Greg Abbott.

Venezuela's opposition-controlled congress has named new temporary boards to state-oil firm PDVSA, in an effort to wrest the OPEC member's oil revenue from increasingly isolated President Nicolas Maduro. Controlling PDVSA's U.S. refiner Citgo Petroleum, Venezuela’s most valuable foreign asset, would go some way to helping in that, though seizing the reins of PDVSA itself seems improbable while Maduro remains in power.

The German economy narrowly escaped recession in the final quarter of 2018, recording output growth of just 0.02%, following a 0.2% contraction in the previous quarter. Fallout from global trade disputes and Brexit are threatening to derail a decade-long expansion in Europe's economic powerhouse. Morale is also being depressed by weaker demand for German products in China, the eurozone and emerging markets.

Stocks

After a dozen years in service, Airbus (OTCPK:EADSY) said it will stop making the A380 superjumbo jet in 2021 even as it reported record Q4 profits and said it would increase production to take advantage of a boom in air travel. The decision comes after Emirates - the largest A380 customer - decided to cut back its orders of the iconic aircraft in favor of smaller, more nimble jets. Boeing (NYSE:BA) has also signaled it could stop building its 747 jumbo jet around 2022.

The new chairman of Renault said it was not the time to discuss whether he would also take the helm of Nissan (OTCPK:NSANY), as he arrived in Japan to reaffirm an auto alliance rocked by the arrest and ouster of former Chairman Carlos Ghosn. The comment from Jean-Dominique Senard appeared aimed at avoiding putting further strain on a partnership that some in Japan see as unequal, but expected, given Renault's (OTCPK:RNLSY) 43% stake in the Japanese carmaker.

Apple news roundup: The tech giant has sharply increased its efforts to test self-driving cars on public roads, but its disengagement rates (when humans have to take over the wheel) are still well above market leader Waymo (GOOG, GOOGL), according to the California Department of Motor Vehicles. Apple (NASDAQ:AAPL) is also planning to launch its video streaming service in April or early May, but Netflix (NASDAQ:NFLX) won't be there and HBO might not join, CNBC reports.

Rather than paying a standard 21% corporate income tax rate in 2018, Amazon (NASDAQ:AMZN) is actually claiming a tax rebate of $129M, which works out to a rate of negative 1%. That's according to the Institute for Taxation and Economic Policy. Aside from "tax credits," which the company does not have to spell out in its public filings, Amazon is also claiming a tax break for executive stock options.

Deal clinched! The European Union is rewriting two-decades-old copyright rules that will force Google (GOOG, GOOGL) and Facebook (NASDAQ:FB) to share revenue with the creative industries and remove copyright-protected content on YouTube or Instagram. Google, which has lobbied intensively against both features and even suggested that it may pull Google News from Europe, said it would study the text before deciding on its next steps.

Royal Bank of Scotland is among eight global banks being scrutinized in a probe of an alleged euro bond trading cartel, Bloomberg reports. However, the details of RBS's involvement and any potential penalty is unknown. While the bloc's powerful antitrust arm often trails behind financial authorities in the U.S. and the U.K. in punishing collusion between traders, its fines can sometimes be heavy.

Almost 18 months after the biggest consumer data security scandal of the decade, information from the Equifax (NYSE:EFX) breach has still not surfaced or been sold for financial gain. That's leading many to suspect a spy scheme of a foreign government, cybersecurity experts and data "hunters" told CNBC. The hack exposed the data of 143M people, leading to the changing of credit freeze laws and new regulatory oversight for credit ratings agencies.

Deutsche Bank has rebuffed calls for cuts at its struggling investment bank following reported requests from four of the bank's 10 largest shareholders. "We have adjusted our footprint in our Corporate & Investment Bank and in the U.S. already in 2018, including reducing our leverage exposure by more than €100B." A decision on a proposed merger between Deutsche (NYSE:DB) and Commerzbank (OTCPK:CRZBY) is also likely to be made in the next few months.

Alibaba's Ant Financial has agreed to buy British payments group WorldFirst for around $700M, marking the biggest push yet by the Chinese financial services giant into Western markets. The acquisition comes after a thwarted attempt to take over U.S.-based MoneyGram (NYSE:MGI), which was blocked by Washington on security concerns. Last month, WorldFirst closed its U.S. arm to avoid similar problems occurring with its Ant Financial (NYSE:BABA) deal.

A key supplier of talc used in Johnson & Johnson’s (NYSE:JNJ) baby powder has filed for Chapter 11 bankruptcy in the wake of multibillion-dollar lawsuits alleging its products caused ovarian cancer and asbestos-related mesothelioma. Imerys Talc America, the U.S. unit of French group Imerys (OTC:IMYSY), has repeatedly denied the allegations, but said it lacks the financial clout to defend against the nearly 15K lawsuits over its talc mineral product.

Researchers have found that cannabis use during the teenage years was associated with a nearly 40% bump in the risk of depression and a 50% increase in the risk of suicidal thoughts in adulthood, according to a study published in JAMA Psychiatry. Although the increased risk was only moderate, "given the large number of adolescents who smoke cannabis, the risk in the population becomes very big,” said the study's lead author, Dr. Gabriella Gobbi. Related: TLRY, OTC:CRON, OTC:CGC, OTC:ACB, MJ, GWPH

Wednesday's Key Earnings
AIG (NYSE:AIG) -2.1% AH amid a hit to investment income.
Barrick Gold (NYSE:GOLD) -4.1% on expected higher production cost.
CenturyLink (NYSE:CTL) -10.8% AH slashing its dividend.
Cisco (NASDAQ:CSCO) +3.9% AH on a $15B repurchase authorization.
DISH Network (NASDAQ:DISH) -7.7% following a Q4 subscriber shed.
Hilton (NYSE:HLT) +6.8% on Q4 beat, solid guidance.
Teva Pharma (NYSE:TEVA) -7.8% giving a soft outlook.
Yelp (NYSE:YELP) +6% AH on earnings, buyback increase.

Today's Markets

In Asia, Japan flat. Hong Kong -0.2%. China -0.1%. India -0.4%.
In Europe, at midday, London +0.3%. Paris +0.7%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude +1% to $54.46. Gold -0.5% to $1308.70. Bitcoin -0.6% to $3555.
Ten-year Treasury Yield

Today's Economic Calendar


8:30 Initial Jobless Claims
8:30 Producer Price Index
8:30 Retail Sales
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
11:00 Fed's Harker: “Approaches to Leadership”
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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Wall Street Breakfast: Trade Optimism Extends Equity Rally

Author: skywalker   |  Publish date: Wed, 13 Feb 2019, 08:57 AM


Big gains were seen in Asia overnight, with Shanghai climbing 1.8%, as President Trump said he was willing to "let slide" a March 2 deadline for resolving the U.S.-China trade conflict if negotiations were progressing well. The softer tone suggests the two sides are making headway on key issues like intellectual property theft and force technology transfers. Europe is up mildly on the news, while indications from U.S. equity futures signal gains back home, with the DJIA pointing to a 66 point advance.

Economy

The IEA has left its global demand growth forecast of 1.4M bpd for 2019 unchanged from its last report in January, stating the oil market will struggle to absorb fast-growing crude supply from outside OPEC, even with the group's production cuts and U.S. sanctions on Iran and Venezuela. "In 2019 the U.S. alone will grow its crude oil production by more than Venezuela's current output," the IEA added. "In quality terms, it is more complicated."

The U.S. national debt has passed a new milestone, topping $22T for the first time. It stood at $19.95T when President Trump took office on Jan. 20, 2017, but has been rising following the passage of a $1.5T tax cut and spending increases on domestic and military programs. The Trump administration contends that its tax cuts will eventually pay for themselves by generating faster growth, but economists are divided about the projection.

No-deal Brexit off the table? British lawmakers will face a stark choice between Theresa May's Brexit deal or a long extension to the March 29 deadline for leaving the bloc, the U.K.'s chief Brexit negotiator was overheard saying in a Brussels hotel bar. Meanwhile, U.K. inflation in January fell below the Bank of England's 2% target for the first time in two years, giving officials further reason to refrain from raising interest rates as Brexit fears grip the economy.

For all the worries that the trade war between the U.S. and China will knock out their economies, it increasingly looks like Europe is the biggest threat to global growth. The EU saw an annual fall of 2.7% in industrial production in the last month of 2018, according to Eurostat, marking the weakest pace since the financial crisis. Deteriorating demand is on investors' minds as the region finds itself squeezed between international and domestic drags.

Spain aims to close all seven of its nuclear plants between 2025 and 2035 as part of plans to generate all the country’s electricity from renewable sources by 2050. Current facilities are operated by Iberdrola (OTCPK:IBDRY), Endesa (OTCPK:ELEZY), Naturgy (OTCPK:GASNY) and EDP (OTCPK:EDPFY). Under a draft bill prepared last year, the government said it also aims to ban sales of petrol, diesel and hybrid cars from 2040.

Stocks

Today in Congress... T-Mobile (NASDAQ:TMUS) CEO John Legere is set to defend his company's $26B deal to buy Sprint (NYSE:S), highlighting the jobs it will create and how it will benefit the construction of the next generation of wireless networks. The deal to combine the No. 3 and No. 4 U.S. wireless carriers was approved by both companies' shareholders in October and has received national security clearance, but still needs approval from the DOJ and FCC.

The tech crackdown continues as Japan plans to set up a new watchdog to scrutinize big tech companies like Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) amid growing concerns about competitive practices and the handling of personal data. The new body will also draw up new guidelines to evaluate whether mergers and acquisitions will lead to a monopoly on messaging or personal information, as well as make antitrust recommendations.

Publishers are resisting Apple's (NASDAQ:AAPL) subscription news service and the tech giant's plan to keep about 50% of subscription revenue, according to WSJ sources. The "Netflix for news" product is expected to launch later this year as a paid product within the Apple News app. Apple could charge around $10 per month for users to access unlimited content from participating publishers.

"Our goal is to continue to shrink the size of our stores," Sears (OTCPK:SHLDQ) Chairman Eddie Lampert said in his first interview since his rescue plan was approved by a bankruptcy court this week. He also plans to devote more retail space to tools and appliances, and less to apparel. The restructured company, which doesn't yet have a new corporate name, will be composed of 223 Sears and 202 Kmart locations, as well as the Kenmore and DieHard brands.

CVS Health has unveiled three new pilot stores in Houston, called HealthHUBs, that are part of the company's vision for its $70B acquisition of health insurer Aetna. In addition to the pharmacy, each CVS store has an expanded health clinic, with a lab for blood testing and health screenings. There are also wellness rooms for yoga and seminars, dietitians and respiratory specialists.

With an announcement possibly coming later this month, Amazon (NASDAQ:AMZN) and General Motors (NYSE:GM) are in talks to invest in Rivian Automotive, Reuters reports. The deal would value the electric truck manufacturer at $1B-$2B as it aims to be the first in the U.S. consumer market with an electric pickup. "We admire Rivian’s contribution to a future of zero emissions and an all-electric future," GM said in a statement.

Shift in strategy? Carlos Ghosn has replaced his chief defense attorney with hotshot lawyer Junichiro Hironak as he defends himself against accusations of financial misconduct. The former Nissan (OTCPK:NSANY) and Renault (OTCPK:RNLSY) chairman was refused bail on Jan. 11, when he was indicted with new charges, including aggravated breach of trust. He applied for bail again on Jan. 18, but remains in detention after the request was denied.

Brexit fallout... Ford (NYSE:F) is stepping up preparations to move production out of Britain and has alerted Theresa May to the plans, according to The Times. It says it will face a bill of up to $1B if Britain leaves the EU without a deal, echoing warnings from other carmakers. Ford, the top-selling automotive brand in the U.K., operates two engine plants in the country and employs about 13K people.

General Electric booked the most orders for electricity generating gas turbines in 2018 but fell to second place behind Mitsubishi Hitachi Power Systems for the largest and most advanced machines, according to data from McCoy Power Reports. Demand for gas turbines has been tumbling since 2011, stoking fierce competition for deals and factory closures. GE is in the midst of a multi-year restructuring of its power business, which lost $808M last year.

Giving the thumbs-up to dual-class share structures, MSCI has paved the way for Chinese smartphone maker Xiaomi (XI) and Tencent Music (NYSE:TME) to be included in its widely-followed indices. Dual-class structures have proved popular with U.S. and Chinese entrepreneurs, as the unequal split in voting power allows founders to keep a tight grip on the strategic direction of companies when they go public.

Tuesday's Key Earnings

Activision Blizzard (NASDAQ:ATVI) +3.4% AH on buyback, layoffs.
Groupon (NASDAQ:GRPN) -9.6% AH following a profit shortfall in Q4.
Molson Coors (NYSE:TAP) -9.4% hit by a decline in drinking.
Occidental Petroleum (NYSE:OXY) -1.4% AH despite beating estimates.
Shopify (NYSE:SHOP) +1.4% on strong sales growth.
Under Armour (NYSE:UA) +4.5% tightening up on costs.

Today's Markets

In Asia, Japan +1.3%. Hong Kong +1.2%. China +1.8%. India -0.3%.
In Europe, at midday, London +0.6%. Paris +0.3%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.3%. S&P +0.2%. Nasdaq +0.4%. Crude +1.1% to $53.68. Gold flat at $1314. Bitcoin +0.1% to $3574.
Ten-year Treasury Yield flat at 2.68%

Today's Economic Calendar

7:00 MBA Mortgage Applications
7:15 Fed's Bostic: Monetary Policy and Economic Outlook
8:30 Consumer Price Index
8:45 Fed's Mester: Monetary Policy and Economic Outlook
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
12:00 PM Fed's Harker: Economic Outlook
2:00 PM Treasury Budget

 

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Wall Street Breakfast: Stocks Boosted By Deal To Avert Shutdown

Author: skywalker   |  Publish date: Tue, 12 Feb 2019, 07:41 AM


Dow futures are pointing to triple-digit gains as U.S. lawmakers reached a tentative $1.38B border security deal that could help avert another government shutdown. Democrats kept funding for physical barriers along the border far below President Trump's $5.7B request, but Republicans blocked efforts to place certain limits on detention beds, an issue that had derailed the talks over the weekend. The deal still has ways to go before heading to Trump's desk for approval.

Economy

With expectations for a Fed rate hike this year hanging by a thread, market watchers today will be tuning in to further hints on the outlook for monetary policy. Most of the focus will be on Fed Chair Jerome Powell, who will be speaking at the Hope Enterprise Corporation Rural Policy Forum at 12:45 p.m. ET, as well as speeches this afternoon from Fed Presidents Esther George and Loretta Mester.

"We now all need to hold our nerve," Theresa May will tell MPs today, as she pleads for more time to secure changes to her Brexit deal. The EU has refused to reopen the divorce agreement as talks continue in Brussels, though May insists she can get legally binding changes to replace the contentious Irish border "backstop." The British parliament is also set to hold a debate on Brexit on Feb. 14.

Twelve Catalan separatist leaders go on trial in the Supreme Court in Madrid today over their roles in the region's failed independence bid in 2017. The case comes at a delicate time for the minority government of Pedro Sanchez, with a parliamentary vote on Spain's budget due this week. Differences could lead to the collapse of Spain’s ruling coalition and usher in early elections.

Foreign partners of Venezuela's PDVSA are facing pressure from the state-run oil firm to declare whether they will continue as minority stakeholders in Orinoco Belt projects following U.S. sanctions, Reuters reports. France's Total (NYSE:TOT), Norway's Equinor (NYSE:EQNR), Russia's Rosneft (OTCPK:RNFTF) and U.S.-based Chevron (NYSE:CVX) are facing difficulties getting cashflow out of the country, straining their ability to continue their JVs output and exports.

The White House is demanding that Iraq end purchases of energy from Iran after pulling out of the Iranian nuclear accord and reapplying sanctions. However, Baghdad called the demand impossible as the energy-starved nation is reliant on its neighbor for much of its electric and natural gas needs. Last October, the Trump administration scored a multibillion-dollar Iraqi power generation agreement for General Electric (NYSE:GE), after Siemens (OTCPK:SIEGY) had been on the verge of landing the deal.

Stocks

Republican Sen. Marco Rubio, chairman of the Small Business Committee, is backing a new proposal to tackle one of Democrats' favorite talking points: stock buybacks. The plan would raise taxes on capital gains as a way to discourage companies from pursuing share repurchases by reducing the difference between what investors pay compared to dividends, which are taxed at individual income rates.

Another hit to Huawei? Secretary of State Mike Pompeo has cautioned allies against deploying gear from the Chinese telecom equipment giant on their soil, which the U.S. believes could be used for espionage. "If that equipment is co-located where we have important American systems, it makes it more difficult for us to partner alongside them." Bad news for Huawei has generally been seen by investors as an opportunity for Nokia (NYSE:NOK) and Ericsson (NASDAQ:ERIC).

Legislators in Georgia are pushing for a 4% tax on Netflix (NASDAQ:NFLX) and other streaming services, such as digital books and music downloads, that would subsidize construction of high-speed internet lines in rural areas. Price breakdown: If you spend $13 on a Netflix subscription, you could be taxed about 50 cents on your bill. Only a handful of other states - Hawaii, Pennsylvania and Washington - have imposed this kind of tax so far, but similar proposals have been introduced in legislatures nationwide.

With upcoming challenges in mobile gaming, PC-based e-sports and streaming, Sony (NYSE:SNE) is shaking up its flagship games division by appointing Jim Ryan, its London-based deputy president, as PlayStation chief. "This industry is relentlessly fast moving, and to remain the market leader, we must constantly evolve ourselves with a sense of urgency," Sony CEO Kenichiro Yoshida said in a statement.

The CEO of Colgate-Palmolive is leaving the position after almost 12 years, marking the latest changing of the guard at the world's largest consumer goods companies. Ian Cook will be replaced by Colgate (NYSE:CL) chief operating officer Noel Wallace at the start of April. The CEOs of Unilever (NYSE:UL), PepsiCo (NYSE:PEP) and Beiersdorf (OTCPK:BDRFY) have left within the past six months, following departures at Nestle (OTCPK:NSRGY), Mondelez (NASDAQ:MDLZ) and Campbell Soup (NYSE:CPB).

Walmart and logistics firm Deliv have pulled the plug on a key same-day grocery delivery partnership, dealing a setback to the retailer's race against rival Amazon (NASDAQ:AMZN). Sources told Reuters that Deliv drivers had to frequently wait 40 minutes or more to collect grocery orders when they showed up at stores because Walmart (NYSE:WMT) gave priority to customers during regular hours.

Meanwhile, Amazon is acquiring Eero, a developer of easily connected home internet routers. While financial terms were not disclosed, its latest push into the smart home market follows the acquisition of video doorbell maker Ring last year for $1B. Amazon's (AMZN) primary home device is its own Echo smart speaker, powered by Alexa.

Tech crackdown? Online platforms including Google (GOOG, GOOGL), Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL) should be regulated in how they distribute news content and these efforts should be enforced by a state regulator, according to a new U.K. government report. It also said they should sign a "code of conduct" to govern their commercial agreements with publishers and called on the U.K.'s competition authority to investigate online advertising to "ensure fair competition."

Nissan's CEO will meet Renault's (OTCPK:RNLSY) chairman this week in Japan as they look at ways to strengthen their partnership after the ouster of former alliance leader Carlos Ghosn. It comes at an important time... Nissan (OTCPK:NSANY) this morning booked around $84M in charges related to under-reported compensation for Ghosn, and slashed its annual profit outlook on weaker global sales.

The Pentagon is initiating a review of SpaceX's (SPACE) Falcon 9 and Falcon Heavy to determine whether the launch vehicles complied with certain guidelines of the U.S. Air Force. In December, SpaceX completed its first national security space mission for the U.S., breaking into the lucrative market for military space launches dominated by Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT).

Monday's Key Earnings

Aurora Cannabis (OTC:ACB) -5.5% amid lower prices, shrinking margins.
Omega Healthcare (NYSE:OHI) -3.6% AH posting weaker guidance.

Today's Markets

In Asia, Japan +2.6%. Hong Kong +0.1%. China +0.7%. India -0.7%.
In Europe, at midday, London +0.4%. Paris +1.2%. Frankfurt +1.2%.
Futures at 6:20, Dow +0.8%. S&P +0.7%. Nasdaq +0.9%. Crude +1.8% to $53.33. Gold +0.4% to $1316.90. Bitcoin -0.5% to $3568.
Ten-year Treasury Yield +2 bps to 2.68%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
12:45 PM Jerome Powell Speech
5:30 PM Fed's George: "Charting America's Economic Course"
6:30 PM Fed's Mester: Monetary Policy and Economic Outlook

 

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