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Wall Street Articles

Author: skywalker   |   Latest post: Wed, 19 Sep 2018, 10:13 AM

 

Wall Street Breakfast: Stocks Track Higher As Trade Anxiety Fades

Author: skywalker   |  Publish date: Wed, 19 Sep 2018, 10:13 AM


Equity markets are starting to regroup again as traders remain unflustered by the latest phase of the U.S.-China trade war. "There was relief as the United States set the initial tariffs at 10 percent, rather than the expected 25 percent, seen by some as a gesture that it was buying time for further negotiations," said a senior strategist at Sumitomo Mitsui Asset Management. China also hit back against the U.S. with a softer punch than anticipated, indicating the nation will not engage in competitive currency devaluations. In Asia, Japan's Nikkei shot up 1.1% and Hong Kong's Hang Seng Index rose 1.2% on the day. The Shanghai Composite Index and Australia's ASX 200 Index both registered a gain of 0.5%. Meanwhile, the European Stoxx 600 Index is showing a 0.1% bump, and U.S. stock futures are mixed in early action.

Economy

Keep an eye on interest rates as the China-U.S. trade battle ratchets up. Some analysts think the recent selloff in the bond market could be partially tied to concerns that China could use other measures to retaliate against the U.S. With Beijing seen as having limited room to match tariffs over the long term, some say China could attempt to dump the bonds to drive up borrowing costs in the U.S. The 10-year Treasury yield currently stands at 3.059%.

The Bank of Japan stood pat with plans to keep its benchmark rate very low "for an extended period," voting 7-2 to maintain short-term rates at -0.1%. It also reiterated an easing pledge to buy about ¥80T in government bonds per year (about $712B). Sitting below 1%, Japanese inflation is still below the bank's 2% target.

Retail prices in the U.K. rose 3.5% in August to match the consensus estimate for a 3.2% rise, according to data from the U.K. Office for National Statistics. Retail prices haven't slipped below a 3.0% pace in the U.K. since January of 2017. Core CPI was up 2.1% to top the 1.8% consensus mark. "Rising prices for a range of recreational and cultural goods and services, transport services and clothing produced the largest upward contributions to the change in the rate between July and August 2018," reports the agency.

Japan's trade deficit increased to ¥444.6B in August, almost double the gap in July. Imports rose 15.4% during the month, led by a 21.5% increase in U.S. imports on strong demand for airplane parts, LNG and coal. Exports out of Japan were up 6.6% during the month to top the expectation for a 5.3% rise.

In a move to shore up a rupee that's slipped to record lows, India is considering raising the effective import duty on some steel products to 15%, according to reports. India had become a net steel importer for the first time in two years in the June quarter, and it may focus on promoting domestic production to change up currency flows out of the country.

The housing market is expected to show a little bounce when the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly update on August starts and permits. Economists forecast housing starts will increase to a 1.24M SAAR from 1.17M in July, and permits will move to 1.32M from 1.31M. Home Depot (NYSE:HD), Lowe's (NYSE:LOW) and Sherwin-Williams (NYSE:SHW) have all showed a strong correlation between their same-store sales marks and the pace of housing starts growth over the last ten years.

Stocks

Chipping away: Alibaba (NYSE:BABA) announced at an event in Hangzhou that it plans to set up a new chip subsidiary to make customized artificial intelligence chips and embedded processors for the cloud and Internet of Things businesses. The company hopes to launch its first self-developed AI inference chip out of the Alibaba DAMO Academy in the second half of 2019. The new chip could be used for autonomous driving, smart cities and logistics. R&D spending at Alibaba is projected to double to $15B over the next three years.

U.S. videogame sales increased year over year for the fifth straight month in August, with hardware and accessories again pacing spending increases. The PlayStation 4 (NYSE:SNE), Xbox One (NASDAQ:MSFT) and Nintendo Switch (OTCPK:NTDOY) all saw spending gains, and Electronic Arts' (NASDAQ:EA) Madden NFL 19 had that football franchise's best launch month since Madden NFL 13. Meanwhile, Grand Theft Auto V (NASDAQ:TTWO) hung around the top five in software; it's been on the chart for 59 of its 60 months in release.

Split decision: Citi Research estimates that Amazon's (NASDAQ:AMZN) retail business would be worth $400B if the company was divided in two, while the valuation on the cloud computing division would be around $600B. The firm sees considerable upside from an Amazon separation, including a reduction in regulatory risk and a removal of the conflict of interest of AWS bidding for certain retail business. The Jeff Bezos succession issue and the company's stock-based incentive compensation packages could also be cleaner if Amazon pulled the trigger on a split.

Sterling Suffolk Racecourse filed a $3B lawsuit in federal court against Wynn Resorts (NASDAQ:WYNN) over how the company secured its license in Massachusetts. The owner of the Suffolk Downs racetrack near Boston alleges that Wynn conspired to fix the application process, citing racketeering laws in its complaint. Sterling lost out to Wynn on the only casino license awarded for the eastern part of Massachusetts. Wynn says it plans to mount a vigorous defense.

The mayor of Renton, Washington, tipped that Boeing (NYSE:BA) is developing plans to raise its 737 production rate to a record 63 per month, even as suppliers struggle to keep up with the current pace. The mayor refused to name the local Boeing managers who told him about the plan for each of the factory's three assembly lines to produce 21 jets, saying he wants to protect relationships with his city's largest employer.

The tension continues to build at Tesla (NASDAQ:TSLA) as a DOJ probe runs alongside a wide-ranging SEC investigation. Subpoenas have already been received by Goldman Sachs and Silver Lake, the two firms hired by Tesla to help the company explore Elon Musk's go-private plan. Shares of Tesla are down 0.86% in premarket trading following a 3.35% decline yesterday.

Things are starting to get interesting in the IPO market. Bank7 (OTC:BSVN) and Elanco Animal Health (ELAN) are scheduled to debut today, while Farfetch (FTCH), Y-mAbs Therapeutics (YMAB), Zekelman Industries (ZEK), Eventbrite (EB) and Remora Royalties (RRI) have IPOs scheduled for Thursday. The largest IPO of the bunch is expected to be Elanco Animal Health, with proceeds of $1.35B anticipated. Eli Lilly (NYSE:LLY) holds a controlling stake of 80% in the animal health company. Meanwhile, after planning the biggest U.S. IPO by a Chinese company this year, Tencent Music (OTCPK:TCEHY) has halved the listing to $2B, Reuters reports. The company reportedly filed confidentially with the SEC on Sept. 7.

One giant leap: While Japanese billionaire and online fashion tycoon Yusaku Maezawa said he's excited to be part of the first mission to the Moon since 1972, the rocket to take him there still hasn't been built yet. "It's not 100% certain we can bring this to flight," cautioned SpaceX CEO Elon Musk. If the new SpaceX (SPACE) Big Falcon Rocket is ready to go in 2023 as planned, Maezawa wants to bring a group of artists on the "free return trajectory" voyage that doesn't involve an actual lunar landing. The billionaire founded online retailer Start Today (OTCPK:SATLF, OTC:SRTTY) in 1998. Interestingly, shares of Start Today are down almost 5% for the week in Tokyo amid the news of a potential moonshot for the company's CEO.

A dramatic call is out from Thomas Crown Art on the cryptocurrency market. The art industry upstart thinks advancements with the Ethereum (ETH-USD) blockchain will lead to a large bite into Bitcoin's (BTC-USD) dominance over the next five years. Thomas Crown sees a rapid reversal in the price of Ether as the utility of the "immutable ledger" grows. "I think we can expect Bitcoin to lose 50 percent of its cryptocurrency market share to Ethereum, its nearest rival, within five years," advises the firm.

The first-ever partnership between an NHL team and a sports book operator was announced yesterday with an advertising deal between William Hill (OTCPK:WIMHF, OTCPK:WIMHY) and the Vegas Golden Knights inked. The partnership will feature a TV-visible dasher board, in-arena signage, updated odds during games and recognition on the LED ribbon board of the William Hill Line Change when the Golden Knights make a line change during the game. Las Vegas-based William Hill has 108 race and sportsbooks in Nevada.

Today's Markets

In Asia, Japan +1.08%. Hong Kong +1.19%. China +1.14%. India -0.34%.
In Europe, at midday, London +0.03%. Paris +0.28%. Frankfurt +0.19%.
Futures at 6:20, Dow +0.04%. S&P -0.05%. Nasdaq +0.03%. Crude -0.03% to $69.57. Gold +0.40% to $1,207.80. Bitcoin +1% to $6,329.
Ten-year Treasury Yield +1.1 bps to 3.059%.

Today's Economic Calendar

7:00 MBA Mortgage Applications
7:00 Housing Starts
7:00 Current Account
10:30 EIA Petroleum Inventories

 

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Wall Street Breakfast: Markets Shrug Off Fresh Trade Salvo

Author: skywalker   |  Publish date: Tue, 18 Sep 2018, 09:31 AM


China has no choice but to retaliate against the latest round of U.S. tariffs, the country's Commerce Ministry said as Vice Premier Liu He convened a meeting in Beijing to discuss the government's response. Stocks across the globe are shaking off the news, with some considering the announcement baked into prices, while others expect the U.S. economy to ride out the impact for now. "Tariffs on another $200B will mean about 12% of U.S. imports have seen a tariff hike. That means an average tariff increase of 1.6% across all imports, so tiny compared to the 1930s, when they were 20%," said Shane Oliver, chief economist at AMP Capital Investors.

Economy

The new round of tariffs, which will impose 10% duties (set to rise to 25% at the end of the year), seemed to spare some key consumer products. Merchandise codes that covers Apple's (NASDAQ:AAPL) Watch and AirPods, as well as smartwatches made by Fitbit (NYSE:FIT), were not on the American government's list. Safety items made in China, such as bicycle helmets sold by Vista Outdoor (NYSE:VSTO) and baby car seats and playpens from Graco (NYSE:GGG), were also taken off.

Property damage and disruption from Hurricane Florence is expected to total at least $17B-$22B, according to Moody's Analytics, but the estimate could end up being conservative as the Carolinas continue to face historic rainfalls and flooding. The anticipated loss to economic output is $1B-$2B, amounting to about a 0.2 percentage point hit to GDP, said Mark Zandi, chief economist at Moody's Analytics.

South Korean President Moon Jae-in has arrived in Pyongyang for a three-day summit with Kim Jong-un aimed at reviving inter-Korean relations and stalled nuclear negotiations between the U.S. and North Korea. Underscoring the emphasis on trade and economic engagement, several prominent business leaders accompanied Moon, including Lee Jae-yong, the heir to the Samsung conglomerate (OTC:SSNLF).

Urging lenders to venture out beyond their home country, Mario Draghi advised eurozone governments today to shore up the region's banking sector, including creating a common insurance plan for bank deposits. It comes after the ECB president said the central bank has no plans for a crypto euro. Such technologies "require substantial further development," he added, and there is no "concrete need."

Stocks

For the first time, a streaming service has claimed top honors at the Emmys, as Netflix (NASDAQ:NFLX) tied HBO (NYSE:T) for the overall awards lead. The streaming era has already turned the TV business upside down, with each outlet taking home 23 of the television industry's top honors. Amazon Prime Video (NASDAQ:AMZN) also collected eight statuettes - all for outstanding comedy series winner The Marvelous Mrs. Maisel.

The Windy City is getting the next Amazon Go (AMZN) checkout-free store, the first outlet to open outside a trio of Seattle locations. It's part of the online retail giant's push into brick-and-mortar, which includes last year's acquisition of Whole Foods. Besides Chicago, Amazon plans to open five more cashierless stores by the end of 2018.

Deepening its smart home ecosystem, Amazon (AMZN) plans to additionally release at least eight new Alexa-powered devices, according to CNBC sources. The devices - which can easily connect to the voice assistant or have Alexa built in - include a microwave, amplifier, receiver, subwoofer and in-car gadget that may be revealed at an event later this month.

The CEO of JD.com (NASDAQ:JD), Richard Liu, will no longer appear at a high-profile state-run tech forum in Shanghai this week hosted by China's National Development and Reform Commission. Other speakers at the event include Alibaba's (NYSE:BABA) Jack Ma, Tencent's (OTCPK:TCEHY) Pony Ma and Baidu's (NASDAQ:BIDU) Robin Li. Liu was arrested in Minnesota on Aug. 31 after an allegation of rape, but was released the following day and remains under investigation by U.S. police.

Following reports of talks with Aurora Cannabis (OTCQX:ACBFF) Coca-Cola (NYSE:KO) said it was closely watching the fast-growing marijuana drinks market for a possible entry. Molson Coors (NYSE:TAP) has already announced a joint venture with Hydropothecary to develop cannabis drinks, while Diageo (NYSE:DEO) is in talks with at least three Canadian cannabis producers about a possible deal.

Carmakers have been reluctant to hand control of their infotainment systems to tech rivals, but the Renault-Nissan-Mitsubishi Alliance (OTCPK:RNLSY, OTCPK:NSANY, OTC:MMTOY) - which sells more vehicles than any other automaker - just picked Google's (GOOG, GOOGL) Android to power its next-generation media system. The new interface will debut in 2021, giving drivers better integration of Google's maps, app store and voice-activated assistant from the vehicle’s dashboard.

Taking aim at the home turf of rival Tesla (NASDAQ:TSLA), Audi (OTCPK:AUDVF) has unveiled its e-tron midsize SUV, which will be offered in the U.S. next year at a starting price of $75,795 (before a $7,500 tax credit). A range wasn't disclosed, but the EV is expected to get more than 295 miles when fully charged. Audi is also partnering with Amazon (AMZN) to sell and install the e-tron's home charging systems as the latter expands its reach into consumers' homes.

Calling it a "new era in emission-free rail transport," European railway manufacturer Alstom (OTCPK:ALSMY) has launched the world's first hydrogen fuel cell train. The Coradia iLint, which enters commercial service in Germany this week, can run for around 1,000 kilometers on a single tank of hydrogen, similar to the range of diesels. Alstom plans to deliver another 14 of the zero-emissions trains to Lower Saxony by 2021.

President Trump's planned creation of a Space Force could cost nearly $13B in its first five years, according to an internal document written by Air Force Secretary Heather Wilson. She proposes pushing ahead with the transition to a Space Force - a separate military branch that would require congressional approval - whose main focus would be competition with Russia and China. Related: BA, NOC, LMT, AJRD, SPACE, BORGN

The first private passenger that will voyage around the moon has been named as Japanese billionaire Yusaku Maezawa, the founder and CEO of online fashion retailer Zozo. He'll be riding aboard SpaceX's (SPACE) forthcoming Big Falcon Rocket spaceship for a flight tentatively planned for 2023. The launch is expected to take the race to commercialize space travel to new heights.

Monday's Key Earnings

FedEx (NYSE:FDX) -2.8% AH following a sharp earnings miss.
Oracle (NYSE:ORCL) -4.6% AH on soft Q2 revenue guidance.

Today's Markets

In Asia, Japan +1.4%. Hong Kong +0.6%. China +1.8%. India -0.8%.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude +0.9% to $69.51. Gold -0.2% to $1203.20. Bitcoin +0.1% to $6258.
Ten-year Treasury Yield flat at 3%

Today's Economic Calendar

8:55 Redbook Chain Store Sales
10:00 NAHB Housing Market Index
4:00 PM Treasury International Capital

 

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Wall Street Breakfast: Next Phase To Trade War

Author: skywalker   |  Publish date: Mon, 17 Sep 2018, 11:07 PM


The Trump administration is reportedly set to announce a new round of tariffs on as much as $200B in Chinese goods, while Beijing considers scrapping upcoming trade talks in response. The duties will be set at 10%, below the 25% level announced in early August, to diminish the impact on U.S. consumers ahead of the holiday shopping season and before midterm elections. Global shares are edging down on the news, while the Shanghai Composite closed at its lowest level since 2014.

Economy

China will not be content to only play defense in an escalating trade war with the U.S., according to the Global Times, which is published by the ruling Communist Party's People's Daily. Besides retaliating with tariffs, China could also restrict export of goods, raw materials and components core to U.S. manufacturing supply chains, former finance minister Lou Jiwei told a forum on Sunday. There are also worries Beijing may be plotting a currency devaluation.

Christine Blasey Ford, a California university professor, has gone public with her allegations against Supreme Court nominee Brett Kavanaugh, who she claims sexually assaulted her when they were teenagers in the 1980s. A spokesman for the Senate Judiciary Committee chairman, Sen. Chuck Grassley, said Kavanaugh's confirmation vote would still proceed this week as scheduled, but hours later, Sen. Jeff Flake, who sits on the committee, said he wouldn't vote until they had heard from Mrs. Ford.

London Mayor Sadiq Khan has called for another referendum on Britain's EU membership, saying Theresa May's handling of Brexit negotiations had become "mired in confusion and deadlock." While MPs will get a vote on whether to accept any final deal, the prime minister is also feeling heat about her Chequers Plan from euroskeptic Tories. Rumors are swirling about a formal attempt to oust her if she doesn't back down.

Shares in Australia's largest listed aged-care operators plunged to record lows overnight after the government announced investigations into abuse and mistreatment of the elderly. The public inquiry is similar to one that hammered Australia's biggest financial firms late last year after examining wrongdoing in that sector.

Greece plans to further loosen capital controls "very soon" and is on track to lift all restrictions, Finance Minister Euclid Tsakalotos said in an interview with Naftemporiki. The measures were imposed in July 2015, when, at the height of its debt crisis, it faced bankruptcy and a euro exit, but last month it emerged from its final of three international bailouts and almost nine years of austerity.

Argentina's economy minister will present austerity-driven budget measures to congress today, including toughening fiscal targets and eliminating its primary deficit next year. Allies of President Mauricio Macri said they were confident the plans would be backed, including by some moderates in the opposition, as the country tries to shore up support from the IMF and calm investors after a plunge in the peso.

U.S. companies expect to begin delivering LNG to Germany in four years at the latest, according to deputy U.S. energy secretary Dan Brouillette, and will challenge Russia which now accounts for 60% of German gas imports. In July, President Trump accused Germany of being a "captive" of Russia due to its energy reliance and urged it to halt work on the $11B, Russian-led Nord Stream 2 gas pipeline.

South African President Cyril Ramaphosa has shared parts of a reform package - already adopted by the cabinet - that will “secure confidence in sectors affected by regulatory uncertainty” and cover mining, telecommunications, tourism and transport. The nation's economy has shrunk for two straight quarters and business confidence has slipped to levels last seen when Jacob Zuma was president.

Stocks

Florence was downgraded to a Tropical Depression as it trudged inland early Sunday, knocking out power to almost 1M Carolina residents and causing seventeen deaths. Duke Energy (NYSE:DUK) said the heavy rains caused the collapse of a slope at a coal ash landfill, while early estimates suggest that as much as 20% of tobacco plants were damaged by the high winds. Altria (NYSE:MO) hasn't updated yet on any loss to its crops.

Boeing's South Carolina plant, where it assembles 787 widebody jetliners, was set to reopen Sunday night following a lifting of evacuation orders for coastal areas threatened by Florence. Boeing (NYSE:BA) had suspended the operations on Tuesday and flown several Dreamliners from the factory across the country to an airport near its widebody plant in Everett, Washington.

Meanwhile, Super Typhoon Mangkhut made landfall in China's Guangdong on Sunday, the country's most populous province with over 100M residents, after barreling past Hong Kong and killing at least 64 people in the Philippines. Gambling was halted in Macau late Saturday, but casinos are now open. It appears that the region fared better than it did last year during Typhoon Hato. Related: OTCPK:WYNMY, OTCPK:SCHYY, OTCPK:MCHVY, OTCPK:GXYEF, OTCPK:SJMHY, MLCO

BMW is open to forming alliances to share the costs of developing self-driving systems and plans more deals with mining companies to secure EV battery materials. It comes as BMW (OTCPK:BMWYY) showed off its "Vision iNext" SUV in Beijing that has gas and brake pedals which sink into the floor during autonomous driving. On Friday, Volkswagen (OTCPK:VWAGY) said it was also interested in an industry alliance to standardize self-driving vehicle systems.

Tesla roundup: "Sorry, we've gone from production hell to delivery logistics hell, but we're making rapid progress," CEO Elon Musk tweeted in response to a customer complaint. He also said that "Tesla (NASDAQ:TSLA) is bringing most collision repairs in-house, as outside firms take weeks to months for repairs, driving Tesla owners (and us) crazy." Meanwhile, a fire broke out at the Gigafactory in Nevada over the weekend, but Model 3 production has since resumed.

Joining a handful of major oil companies that have made similar pledges, Royal Dutch Shell (RDS.A, RDS.B) plans to limit emissions of methane, a potent greenhouse gas, across its oil and gas operations. Methane is released into the atmosphere mostly through leaks in gas infrastructure. It has a bigger impact than carbon dioxide, but has a shorter lifetime.

Following its $2.8B purchase of Time Inc. in January, Meredith Corp (NYSE:MDP) is selling its Time media brand to Marc and Lynne Benioff for $190M in cash. The sale is unrelated to Salesforce.com (NYSE:CRM), where Marc is founder and co-CEO. He also won't be involved in day-to-day operations and will leave those and editorial decisions to Time's current leadership team.

EU antitrust regulators have set an Oct. 19 deadline for their ruling on Walt Disney's (NYSE:DIS) $71.3B bid for Twenty-First Century Fox (NASDAQ:FOXA) entertainment assets, according to the European Commission. The competition enforcer will also decide whether to clear Microsoft's (NASDAQ:MSFT) $7.5B acquisition of privately held coding website GitHub by that date.

Rooting out fake reviews and other seller scams, Amazon (NASDAQ:AMZN) is investigating suspected data leaks and bribes of its employees, which are particularly pronounced in China, WSJ reports. In exchange for payments ranging from about $80 to more than $2,000, brokers for Amazon employees in Shenzhen are offering internal sales metrics and reviewers’ email addresses, as well as a service to delete negative reviews and restore banned Amazon accounts.

A year after announcing AirPower - Apple's (NASDAQ:AAPL) wireless charging pad that can charge an iPhone, Apple Watch and AirPods simultaneously - the company has fallen silent on the technology. A spokesperson further told CNBC that if a product wasn't announced on stage last week at Apple's fall event, the company has nothing else to add. All mentions of AirPower have been additionally scrubbed from Apple.com despite a promised 2018 deadline.

What if Netflix added ads? Almost one-quarter (23%) of consumers said they would drop their subscription, while less than half (41%) said they would definitely or probably keep the service, according to a study by Hub Entertainment Research. A Netflix (NASDAQ:NFLX) experiment with ads captured headlines in August after a trial in the U.K., but the company said it conducts "hundreds of tests" every year to make browsing more efficient.

The asset management arm of insurer Aviva (OTCPK:AVVIY), the ninth-largest holder of Unilever (NYSE:UL), is warning of plans to vote against the company's proposal to move its headquarters to the Netherlands in a sign of growing unrest among British investors. In separate votes next month, Unilever must convince 75% of U.K. shareholders for the proposal to pass, as well as 50% of Dutch investors.

Looking to meet demands from European regulators, Deutsche Bank (NYSE:DB) has scaled up plans to move about three-quarters of its estimated €600B in capital from London to its Frankfurt headquarters following Britain's planned exit from the EU in 2019. Deutsche will also transform its U.K. arm into a ringfenced subsidiary post-Brexit and reduce the size and complexity of its British operations.

Today's Markets

In Asia, Japan closed. Hong Kong -1.3%. China -1.1%. India -1.3%.
In Europe, at midday, London -0.2%. Paris -0.3%. Frankfurt -0.5%.
Futures at 6:20, Dow -0.2% (+0.9% W/W). S&P -0.2% (+1.2% W/W). Nasdaq -0.2% (+1.4% W/W). Crude +0.8% to $69.54. Gold +0.1% to $1202.30. Bitcoin -0.2% to $6482.
Ten-year Treasury Yield flat at 3%

Today's Economic Calendar

8:30 Empire State Mfg Survey

 

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Wall Street Breakfast: Carolinas Brace For Hurricane Florence

Author: skywalker   |  Publish date: Fri, 14 Sep 2018, 11:01 AM


Florence was downgraded to a Category 1 storm on Thursday evening, but its sheer size and predicted deceleration means it could batter the U.S. East Coast with hurricane-force winds for nearly a full day. Over 150K people in North Carolina are already without power, while about $30B-60B in economic impact and damage is expected. Sectors on watch include insurers, agriculture, healthcare, electricity providers and building supplies. Related tickers: LPNT, CYH, THC, HCA, HD, LOW, DUK, D, ALL, CB, AIG, TRV, PGR, GNRC, CORN, WEAT, SGG, SOYB, JJG, BALB, COW, CANE, GRU, UBC

Economy

Another storm is raging in the Pacific called Mangkhut, which is predicted to be one of the strongest systems on record. The Super Typhoon has already dwarfed Hurricane Florence, and is set to break records as it howls towards Hong Kong and the Philippines. It tore through Guam and the Marshall Islands earlier this week with wind speeds of up to 180 miles per hour.

"The Wall Street Journal has it wrong, we are under no pressure to make a deal with China, they are under pressure to make a deal with us," President Trump tweeted on Thursday. He also took note of "surging" U.S. markets vs. "collapsing" Chinese markets. The S&P 500 is up 4.5% over the past three months vs. a 12% decline for the iShares China Large Cap ETF (NYSEARCA:FXI).

An economic data cluster is on tap this morning. U.S. retail sales and import prices will come out at 8:30 a.m. ET, followed by industrial production figures at 9:15 a.m. ET, and consumer sentiment and business inventories data at 10:00 a.m. ET. U.S. stock index futures are edging higher ahead of figures, with the Dow and S&P 500 up 0.2%, and the Nasdaq up 0.4%.

British business is responding to yesterday's comments made by BOE Governor Mark Carney, who said a "no-deal" Brexit would result in a 35% crash in home prices and the unemployment rate more than doubling. Major U.K. companies have warned of the risk of border delays and additional charges, but some Brexiteers are calling Carney's predictions "completely wrong." J.D. Wetherspoon (OTCPK:JDWPY) founder Tim Martin said he's got a "terrible record for making these sort of predictions."

It's just been a few weeks since the rollout of Venezuela's new money, which stripped five zeros off the bolivar, but inflation of the new currency is already 100%. That would push annual inflation above 100,000%, according to Bloomberg's inflation scale. It comes as Venezuela's Nicolas Maduro meets with President Xi of China, one of his ailing country's biggest creditors, which has reportedly agreed to extend a $5B credit line.

Stocks

NiSource -7.4% premarket after dozens of gas explosions killed at least one person, injured 12 more and forced thousands to evacuate from three communities north of Boston. Some 70 fires, explosions or investigations of gas odor were reported, according to Massachusetts State Police. NiSource's (NYSE:NI) Columbia Gas unit had said earlier that it would be upgrading gas lines in neighborhoods across the state.

Taking a giant leap toward commercializing space travel, SpaceX (SPACE) has signed up its first passenger for a flight around the moon, with the person's identity to be revealed on Sept. 17. Asked whether he'd be the first passenger, CEO Elon Musk - who's also the head of Tesla (NASDAQ:TSLA) - posted an emoji of a Japanese flag. SpaceX's valuation has climbed to about $28B, making it the third-most valuable venture-backed startup in the U.S. after UBER and Airbnb (AIRB).

Next frontier in 5G... AeroVironment (NASDAQ:AVAV) and SoftBank (OTCPK:SFTBY) have disclosed details of their joint venture HAPSMobile. In the initial phases of the project, the companies will develop a stratospheric airplane that is powered 100% by solar energy. "It's going to fly on the edge of the atmosphere and bring 5G connectivity to the entire world."

Volkswagen is halting production of its iconic Beetle next year, ending an 80-year run for a car that introduced many Americans to the German brand in the 1960s. It's one of the longest-lived and best-selling vehicles of all time, with 22.7M sold worldwide. VW (OTCPK:VLKAY) said the move comes as it focuses on other models and its EV lineup, but left the door open for a potential return of the nameplate.

Following many rumors, 16 bipartisan members of the U.S. House of Representatives have asked Google (GOOG, GOOGL) if it will re-enter the Chinese search engine market and if it would comply with local censorship policies upon its return. While the tech giant didn't comment, discontent over the controversial effort is circulating at the company. Seven Google employees have reportedly quit their jobs over the endeavor that's codenamed Dragonfly.

Facebook is expanding its fact-checking efforts in a move that will delve into the world of memes. A new machine learning model uses various signals (including user feedback) to find potentially false content in photos and videos. The flagged items will then be sent to fact-checkers, helping Facebook (NASDAQ:FB) "identify and take action against more types of misinformation, faster."

Jeff Bezos sidestepped a question on Thursday about the winner of Amazon's (NASDAQ:AMZN) second headquarters, but said the decision will be announced "before the end of the year." The company previously selected 20 finalists in North America for HQ2, a recipient that will receive investment of $5B and 50K jobs. Amazon's primary headquarters is located in Seattle, WA, a move partly inspired by Microsoft (NASDAQ:MSFT).

Transformation? UPS is bolstering services to boost shipments between businesses as part of a $20B push to automate its network. The move, which is hoped to result in an incremental EPS increase to $1.00-$1.20 by 2022, would offset lower-profit home deliveries from Amazon (AMZN) and other online retailers. UPS also called out further penetration of the Healthcare and Life Sciences logistics market.

"When it comes to (cryptocurrency) fraud and manipulation, we need to be strong. When it comes to policymaking, I think we need to be slow and deliberate and well informed," said U.S. Commodity Futures Trading Commission Chairman J. Christopher Giancarlo. Speaking to CNBC at the annual Singapore Summit, he added that the internet flourished because the government did not step in too heavily, and applied a "do no harm" approach.

Nike's stock closed at an all-time high on Thursday, hitting a record $83.47 per share. The company has been at the center of controversy after last week's choice to make former NFL quarterback Colin Kaepernick the face of its 30th anniversary "Just Do It" campaign. At the time, some predicted the marketing move would tank Nike's (NYSE:NKE) stock valuation, while others claimed it was a genius business decision.

Bringing it closer to becoming a global top 10 drugmaker, Takeda Pharmaceutical (OTCPK:TKPYY) has received approval from China's market regulator for its $62B acquisition of Shire (NASDAQ:SHPG). The deal - which will be the largest overseas purchase by a Japanese company - has already received unconditional clearance from regulators in the U.S. and Brazil, and awaits approval from Japan and the EU. SHPG +2.2% premarket.

Cannabis-related stocks tumbled after-hours on Thursday following a Politico report that the U.S. may bar Canadians who work in the marijuana industry or invest in the companies from entering the U.S.: TLRY -9.2%, OTC:CGC -2.4%, OTC:CRON -4.6%. Canada is set to become the world’s only major industrialized nation to legalize retail marijuana sales, starting Oct. 17.

Thursday's Key Earnings

Adobe (NASDAQ:ADBE) -0.9% AH despite an earnings beat.
Kroger (NYSE:KR) -9.9% on disappointing guidance.
Sears (NASDAQ:SHLD) +21.5% AH slowing a sales decline.

Today's Markets

In Asia, Japan +1.2%. Hong Kong +1%. China -0.2%. India +1%.
In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.4%. Crude +0.3% to $68.77. Gold +0.2% to $1210.70. Bitcoin -0.6% to $6447.
Ten-year Treasury Yield +2 bps to 2.98%

Today's Economic Calendar

8:30 Retail Sales
8:30 Import/Export Prices
9:00 Fed's Evans: Monetary Policy and Economic Outlook
9:15 Industrial Production
10:00 Business Inventories
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count

 

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Wall Street Breakfast: Trio Of Central Bank Decisions

Author: skywalker   |  Publish date: Thu, 13 Sep 2018, 09:40 AM


The European Central Bank, Bank of England and Turkey's central bank are set to announce policy decisions within an hour of each other today, between 7 a.m. and 8 a.m. ET. The first two are likely to signal caution, reinforcing a policy lag behind the Federal Reserve, while the CBRT is expected to act vigorously to tame soaring inflation. Investors see Turkey's interest rates being hiked again, but President Erdogan called them "tools of exploitation" ahead of the decision.

Economy

The Trump administration has invited Chinese officials to restart trade negotiations, according to Larry Kudlow, as Washington prepares another $200B worth of tariffs on Chinese goods. "There's some information that we received... the top of the Chinese government wished to pursue talks," he said. Mid-level U.S. and Chinese officials held inconclusive discussions on Aug. 22 and 23.

Officials need to do more work before Canadian Foreign Minister Chrystia Freeland holds further talks with the U.S. on renewing NAFTA. "We decided that in order to have another productive conversation," she told reporters. Asked whether the talks had hit a stalemate, Freeland replied: "Absolutely not."

The center of Florence, no longer classified as a major hurricane after being downgraded to a category 2, is expected to strike North Carolina's southern coast tomorrow. Warnings from the National Hurricane Center still proclaim the storm surge and rainfall pose a grave threat to life and property. On watch are insurers, power providers, hospitals, livestock and crop producers, generator manufacturers and building stocks.

Outgoing Chicago Mayor Rahm Emanuel is forming a task force that will consider implementing a so-called "universal basic income" program in the city. Although it won't be used as a starting point, an initial pilot proposal would see the city give 1,000 residents $500 a month to help pay bills. It's not alone. Stockton, California, will begin a similar UBI project in 2019.

The U.K. government is meeting this morning for three hours to discuss the eventuality of a "no-deal" Brexit. It's already readying a second set of documents outlining further preparations in case it leaves the EU without an agreement in March 2019. Brexit chief Dominic Raab warned yesterday that the U.K. will not pay the so-called £39B divorce bill if there is no final Brexit deal.

Global oil supply was firing on all cylinders in August, reaching a record 100M barrels per day, but output may be tested in coming months amid Iranian and Venezuelan fallout. "We are entering a very crucial period for the oil market," the IEA said in its closely watched monthly report. "It remains to be seen if other producers decide to increase their production... Things are tightening up."

Stocks

One for the record books? Bloomberg's Michael Patterson notes the "Great Crypto Crash of 2018" has extended its collapse from a January high to 80% - worse than the 78% plunge in Nasdaq following the bursting of its bubble in 2000. Fortunately for the global economy, the actual dollar amounts in crypto are of far smaller measure than the trillions wiped out in the tech crash.

Deutsche Bank is considering loosening the bond between retail and investment banking, Reuters reports, in a move that would perhaps make it easier to merge some or all of the group with rivals. The holding company structure, which would act as an umbrella over separate entities, would see Deutsche (NYSE:DB) following the example of U.S. peers like Citigroup (NYSE:C) and JPMorgan Chase (NYSE:JPM).

"I think I could beat Trump, because I'm as tough as he is, I'm smarter than he is," JPMorgan's (JPM) Jamie Dimon said of a hypothetical run for president. "And by the way this wealthy New Yorker actually earned his money....It wasn't a gift from Daddy." He soon dialed back the remarks, saying he shouldn't have said them. "I'm not running for President... I get frustrated because I want all sides to come together to help solve big problems."

The EU's general court has upheld the bloc’s sanctions against Russian banks and oil and gas companies over their involvement in the Ukraine crisis. Rosneft (OTCPK:RNFTF), Gazprom (OTCQX:GZPFY), Sberbank (OTCPK:SBRCY) and other financial institutions challenged the penalties, which restrict their access to transactions involving certain sensitive goods and technologies, as well as capital markets in the EU.

Tesla roundup: The automaker's largest institutional investor, Baillie Gifford, has confirmed it talked to the SEC in August about Elon Musk's plan to take the company private and conceded that he needs some assistance in the C-Suite. Tesla's (NASDAQ:TSLA) VP of Worldwide Finance, Justin McAnear, is also the latest to depart the company, while Musk tweeted that a delivery crush is affecting Tesla response times.

Shares of Chinese electric carmaker NIO recovered sharply from a 15% fall in their market debut on Wednesday, rising 11% in afternoon trade, after the company's IPO was priced at the lower end of its expected range. The rebound was a welcome relief for NIO, whose offering came under pressure by investors who have turned wary about EV makers due to struggles at Tesla (TSLA).

Hershey is plundering Pirate's Booty in a $420M deal. The chocolate-making icon has entered a definitive deal with B&G Foods (NYSE:BGS) to acquire the snack line, including Pirate's Booty cheese puffs, Smart Puffs and Original Tings. The transaction is expected to be accretive to Hershey's (NYSE:HSY) growth targets due to a strong trajectory and solid margin structure. BGS +1% premarket.

Upping the competition against Amazon (NASDAQ:AMZN), Jet.com is redesigning its website with more merchandise, faster delivery and a slew of other upgrades. Shoppers will see more local brands and personalized experiences that takes into account their zip code or suggests items based on past purchases. The Walmart-owned (NYSE:WMT) site is further courting urban millennial customers through grocery initiatives.

Media news: Jeff Fager, the executive producer of 60 Minutes and one of the most powerful figures in television news, is leaving CBS amid reports of inappropriate behavior. Verizon's (NYSE:VZ) head of media and advertising, Tim Armstrong (ex-CEO of AOL), will leave at the end of the year and Meredith (NYSE:MDP) will lay off some 200 workers and merge magazines as it continues to adjust its portfolio after digesting Time Inc.

The FDA has threatened to pull e-cigarettes from shelves if manufacturers do not make changes to help control teenager usage. Commissioner Scott Gottlieb: "The disturbing and accelerating trajectory of use we're seeing in youth, and the resulting path to addiction, must end. The FDA cannot tolerate a whole generation of young people becoming addicted to nicotine as a trade off for enabling adults to access these products." Related: MO, BTI, PM, TPB, VGR, OTCQB:GLLA, OTCQX:IMBBY, OTC:AHII

Today's Markets

In Asia, Japan +1%. Hong Kong +2.5%. China +1.2%. India +0.8%.
In Europe, at midday, London -0.3%. Paris +0.2%. Frankfurt +0.5%.
Futures at 6:20, Dow +0.2%. S&P +0.3%. Nasdaq +0.6%. Crude -1.3% to $69.45. Gold -0.1% to $1210.30. Bitcoin +1.7% to $6434.
Ten-year Treasury Yield flat at 2.97%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Consumer Price Index
10:30 EIA Natural Gas Inventory
12:30 PM Fed's Bostic: Economic Outlook and Monetary Policy
1:00 PM Results of $15B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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Wall Street Breakfast: Big Display At Apple Product Event

Author: skywalker   |  Publish date: Wed, 12 Sep 2018, 07:10 AM


Apple is expected to unveil its biggest and most expensive iPhone today at its fall launch event, with most of the buzz swirling around a rumored phablet (iPhone Xs Max?) that's supposed to boast a 6.5-inch OLED screen. Two other models will likely be called the iPhone Xs (5.8-inch OLED) and Xr (6.1-inch LCD). More products anticipated include the Watch Series 4, third-gen iPad Pro, budget MacBook, and updated AirPods with a long-delayed charging mat. AAPL +0.6% premarket.

Economy

Canada is reportedly ready to offer the U.S. limited access to the Canadian dairy market as a concession in negotiations to rework NAFTA. American dairy farmers have long demanded more access to Canada’s market and are also unhappy about a Canadian decision to allow farmers to sell milk protein products to the country's processors at a lower price.

More than 60 U.S. industry groups - ranging from retailing, toy manufacturing, farming and tech - will launch a coalition today, called Americans for Free Trade, taking the fight public over billions of dollars of U.S. tariffs. The U.S. Chamber of Commerce, the National Association of Manufacturers, the Business Roundtable and Koch brothers are running separate lobbying efforts to promote free trade.

Hurricane Florence is on track to become the first Category 4 storm to make a direct hit on North Carolina in six decades, with more than 1M people ordered to evacuate the coasts of the state, South Carolina and Virginia. Preparations? Boeing (NYSE:BA) has suspended local operations of 787 jetliner assemblies, while nuclear power operators Duke Energy (NYSE:DUK) and Dominion Energy (NYSE:D) prepare for the "monster" storm. Insurers Hartford Financial Services (NYSE:HIG) and FM Global are also sending additional staff to the region help with anticipated claims.

A California bill that would allow investor-owned utilities to pass on wildfires-related costs to ratepayers via "recovery bonds" could be signed as early as this week by Gov. Jerry Brown. But some consumer groups are calling it a "bailout" for the state's largest electric utility PG&E (NYSE:PCG). Cal Fire has blamed the company for at least 16 of last year's devastating wildfires in Northern California, including some with fatalities.

"Here we are doing something that almost seems like a suicide mission," Jeffrey Gundlach said in a fresh webcast about his DoubleLine Total Return Bond Fund (MUTF:DBLTX). "We are increasing the size of the deficit while we’re raising interest rates... so late in an economic cycle." The rest of the "Bond King's" views: The dollar is going down, oil is headed for $80 to $90 a barrel, and it is now a good time for emerging-market or high-yield bonds.

A day after Russia and China kicked off their largest ever war games, the two countries vowed to stand together against protectionism. "We see a serious challenge for all of the global economy, especially for the dynamically-growing Asia-Pacific and its leadership," Vladimir Putin declared. Both countries are further looking into using national currencies in their transactions, sidelining the dollar.

A group of about 50 lawmakers in Theresa May’s government who oppose her proposals for a post-Brexit deal with the EU have met to discuss how and when they could force her out of her job, the BBC reports. A leadership contest could ensue if 15% of Conservative lawmakers, currently 48, demand a vote of no confidence. Meanwhile, Bank of England Gov. Mark Carney has postponed his departure again - until 2020 - to help steer the U.K. economy past Brexit.

Stocks

Members of the European Parliament are set to vote today on the EU's new copyright directive, which has sparked a backlash from tech giants over its so-called "link tax." Article 11 could force Google (GOOG, GOOGL), Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and others to pay publishers for showing news snippets, while Article 13 would require online platforms like YouTube, Instagram and eBay (NASDAQ:EBAY) to install filters to prevent users from uploading copyrighted materials.

Meanwhile, Attorney General Jeff Sessions is exploring a potential investigation of social media companies and will be briefed on Sept. 25 by Republican state attorneys general who are already examining the firms' practices, Bloomberg reports. At least one of the attorneys general participating in the meeting has indicated he seeks to break up the companies for violating consumer-protection or antitrust laws.

Win for crypto regulation. The SEC has taken its first action against a hedge fund for cryptocurrency investments, while penalizing brokers who ran an "ICO superstore." FINRA also issued its first disciplinary action involving digital currencies, filing a complaint against a distributor of HempCoin. Regulators further scored a victory in their crypto crackdown as a judge ruled that ICOs are subject to U.S. securities-fraud laws.

"In many cases, I'm more like the coach now," Jamie Dimon told the FT, after JPMorgan (NYSE:JPM) named two co-presidents in January - Daniel Pinto and Gordon Smith. According to Pinto: "Jamie is a great CEO but he's human. He has a lot of external engagements, and he travels a lot. So essentially now we share among the three of us."

U.S. regulators have reportedly rejected Wells Fargo's (NYSE:WFC) plan to repay customers who were pushed into unnecessary auto insurance, the latest wrinkle in the bank's list of sales scandals. After reviewing the plan - which could involve contacting 600K drivers - the Office of the Comptroller of the Currency said it needed more assurances that Wells would find and repay everyone who was overcharged.

Big moves for Carlyle Group... The private equity firm is in talks to acquire Sedgwick Claims Management Services, the largest U.S. insurance claims service provider, for more than $6B, sources told Reuters. Carlyle (NASDAQ:CG) and Investindustrial have also signed a joint venture to create a new holding company for high-end interior design brands, in a bid to create an "LVMH of things."

Tesla is eliminating some color options for its electric cars to "simplify manufacturing" as the automaker intensifies its efforts to ramp up production. Obsidian Black & Metallic Silver will still be available as special requests, but at a higher price. There's also word that Tesla's (NASDAQ:TSLA) Semi, which was supposed to hit production lines sometime in 2019, will "earnestly" begin manufacturing by 2020.

Successfully pinging data across a 1,000-kilometer span, Alphabet's (GOOG, GOOGL) Project Loon just passed a big test in its plan to beam internet to Earth from giant balloons. Amazon Web Services (NASDAQ:AMZN) may also be heading to space. While job postings for the program have been recently seen, the roles for a spacecraft product manager and data processing engineer have been taken down.

Twitter has struck a host of new media partnerships, bringing "hundreds of hours" of entertainment to audiences in the Asia Pacific region. The deal includes game highlights from the UEFA Champions League, live-streaming from Formula One and live Red Carpet events. Twitter (TWTR) has seen double-digit audience growth in Asia Pacific and is "projecting by about 2020, we'll be at about a billion views here in (Asia Pacific) alone."

The FCC is pausing its 180-day "shot clock" (now at day 55) on reviewing the proposed merger between T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) as additional time is needed for a thorough review of recently submitted and anticipated modeling from the companies. The $26B deal, which would shrink the U.S. wireless market to three big players from four, is also being reviewed by the Justice Department. S -1.4% premarket.

Today's Markets

In Asia, Japan -0.2%. Hong Kong -0.3%. China -0.3%. India +0.8%.
In Europe, at midday, London flat. Paris +0.6%. Frankfurt +0.2%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq +0.2%. Crude +0.8% to $69.79. Gold flat at $1201.70. Bitcoin -0.7% to $6279.
Ten-year Treasury Yield -1 bps to 2.96%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Producer Price Index
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
12:45 PM Fed's Reserve Gov. Lael Brainard: Economic and Monetary Policy Outlook
1:00 PM Results of $23B, 10-Year Note Auction
2:00 PM Fed's Beige Book

 

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