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Wall Street Articles

Author: skywalker   |   Latest post: Thu, 14 Feb 2019, 07:43 PM

 

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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Wall Street Breakfast: U.S.-China Trade Talks Resume

Author: skywalker   |  Publish date: Mon, 11 Feb 2019, 08:39 AM


U.S. stock index futures are pointing to gains at the start of the week, up 0.5%, despite the collapse of border security talks as the federal government barreled towards another shutdown. Investors appear to be banking on a new round of U.S.-China trade talks that begins today, with Chinese Foreign Ministry spokeswoman Hua Chunying telling reporters that Beijing hopes to see good results. About 60 companies listed on the S&P 500 are also set to report quarterly figures in what will be the last big week of the Q4 earnings season.

Economy

The Shanghai Composite index rose 1.4% overnight as markets in China reopened after a week-long Lunar New Year break. China's retailer and catering enterprises earned over 1T yuan ($148.3B) during the holiday, defying an economic slump to rise 8.5% from last year. Domestic tourism over the week further generated total revenues of 513.9B yuan, up 8.2% Y/Y, with the number of trips rising 7.6% to 415M.

With just 47 days to go until Brexit, the British government has asked lawmakers to give Theresa May more time to rework her divorce deal with the EU. The news could mean a vote scheduled for Valentine's Day - which would decide on Britain's Brexit options - could be shelved. Data this morning also showed the British economy grew just 0.2% in the final quarter of 2018 against a background of Brexit-related uncertainty.

Italy's populist government lashed out at the country's central bank over the weekend, saying its top brass should be replaced because they had failed to supervise the nation's troubled banking sector. The government can't impose new management on the independent Bank of Italy - a member of the ECB - but it can withhold approval for the bank's own senior appointments, creating the potential for an institutional standoff.

Paying more... South Korea will shell out $920M this year for the 28,500 U.S. military personnel stationed in the country, representing an increase of about 8% from what Seoul paid in 2018 and about half of the overall cost. "Most of our contributions for the cost-sharing is returned to the Korean economy by helping create jobs, boost domestic consumption and develop regional economy," according to the Ministry of Defense.

Looking for alternative payment mechanisms after the latest U.S. sanctions, Venezuela said it is open to barter-like payments from India - like oil for medicine - to boost sales to the world's third-largest crude consumer. State-run oil company PDVSA is also reportedly telling customers of its joint ventures to deposit oil sales proceeds in an account recently opened at Russia's Gazprombank.

Stocks

Netflix's Roma won Best Film at the British Academy of Film and Television Arts (BAFTA) awards on Sunday, scooping up the top prize at the star-studded event in London. The black and white drama, a cinematic love letter to director Alfonso Cuaron's childhood in Mexico City, is also nominated for Best Picture at the Oscars, further propelling Netflix (NASDAQ:NFLX) into the Hollywood club of elite filmmakers.

There might be some more pain coming to the video game sector, whose top stocks suffered double-digit declines last Wednesday. A report from Bloomberg suggests Activision Blizzard (NASDAQ:ATVI), the publisher behind blockbuster franchises like Call of Duty, Diablo and Warcraft, plans to announce a round of jobs cuts tomorrow "that could number in the hundreds." The layoffs would be part of a restructuring effort as the company faces sluggish sales.

As governments around the world try to figure out how to regulate technology from data and privacy to taxation, some big tech giants are making their own recommendations on how to run the internet economy. While a one-size-fits-all approach would "not work," Google's (GOOG, GOOGL) top policy chief is now calling for "common rules of the road" globally when it comes to the regulation of technology. "It would be extremely helpful if there was some convergence," Karan Bhatia told the World Government Summit in Dubai.

Looking to become a force in U.S. broadcasting, Apollo Global Management (NYSE:APO) is nearing a roughly $3B deal to acquire Cox Enterprises' 14 regional TV stations, Reuters reports. Apollo also has an agreement to acquire Northwest Broadcasting and is a bidder for a portfolio of local TV stations worth about $1B that Nexstar (NASDAQ:NXST) plans to shed following its takeover of Tribune Media (NYSE:TRCO). The TV industry has been going through a wave of consolidation amid the rise of online streaming and shift of ad dollars to the internet.

Tesla's delivery team was gutted during the EV maker's recent job cuts, according to a Reuters exclusive. Some 150 employees out of a group of about 230 were let go in January at the Las Vegas facility that gets tens of thousands of Tesla (NASDAQ:TSLA) Model 3s into the hands of U.S. and Canadian buyers, in a sign that the company expects the pace of deliveries to significantly slow in the near term.

The bidding war for Norway's Oslo Bors (OTC:OSBHF) is heating up. Pan-European stock market operator Euronext (OTCPK:EUXTF) has raised its offer for Norway’s main exchange to €700M, topping the deal the Oslo board has agreed to with New York-based Nasdaq (NASDAQ:NDAQ). While both suitors have significant shareholder support for their bids, neither has an overwhelming majority.

Shifting away from variable bonuses, UBS is overhauling its pay policy for 10,000 "corporate center" employees, in a bid to "reduce uncertainty" and cut how much time managers spend on allocating them. The change is not an attempt to "cut costs," according to UBS, which swung to a $47M loss in Q4 and said it doesn't have plans to extend the new policy to other parts of the company.

Stringent corporate governance rules will likely see the departure of Imperial Brands (OTCQX:IMBBY) Chairman Mark Williamson, who has led one of the world’s biggest tobacco companies for almost a decade, The Times reports. At last week's annual meeting, a significant percentage of shareholders voted against his re-election, though much of the opposition is believed to have been due to fears of Williamson taking on too many other boardroom posts.

As products by Impossible Foods, Beyond Meat (BYND) and other startups go mainstream, ranchers, farmers and industry groups are trying to slow the momentum of lab-grown and plant-based meat substitutes, NYT reports. In recent weeks, legislators in more than a dozen states have introduced laws making it clear that only food derived from animal products can use the "meat" label, although it remains to be seen if the efforts will succeed.

Today's Markets

In Asia, Japan closed. Hong Kong +0.7%. China +1.4%. India -0.4%.
In Europe, at midday, London +0.7%. Paris +0.3%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude -1% to $52.21. Gold -0.6% to $1311.10. Bitcoin -0.4% to $3589.
Ten-year Treasury Yield +1 bps to 2.64%

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Wall Street Breakfast: Subaru Slashes Profit Guidance

Author: skywalker   |  Publish date: Thu, 7 Feb 2019, 10:53 AM


A spate of production problems has spurred Subaru (OTCPK:FUJHY) to cut profit guidance for the coming year by 16%. The automaker now expects operating profit of ¥185B (about $1.68B), down from ¥220B. In the December quarter, profits had risen nearly 5% to ¥98.7B amid higher sales. After the new guidance, shares made their best intraday gain in Tokyo in a month.

Economy

Theresa May heads to Brussels today for meetings with EU leaders about potential Irish backstop concessions. The backstop allows Northern Ireland to remain tied to EU trading laws. If the talks aren't successful, the U.K. could be one step closer to a hard Brexit.

The European Commission could cut Italy's growth estimate today from the 1.2% forecast in November to 0.2%. The populist government took office last summer and pushed an expansive spending program, but now says it's committed to reducing debt.

India's central bank unexpectedly cut its benchmark interest rate by 25bps to 6.25%. More cuts could follow as the new government focuses on growth with inflation slowing to an 18-month low in December.

German industrial output unexpectedly dropped in December with a 0.4% decrease compared to the 0.7% increase expected by analysts. The construction sector fell 4% while auto rebounded with a 7% growth. Analysts say the output miss could mean recession after Q3's GDP drop.

Stocks

When it comes to fighting higher drug prices, Novartis' (NYSE:NVS) CEO puts the blame on middlemen and has joined government calls to end rebate payments to pharmacy benefit managers, insurers and others to get drugs covered. Novartis' prices have been "flat to negative" for three years, Vas Narasimhan says, but he claims the company pays almost 50% of U.S. gross revenues to rebates. The government proposal would end rebates and pass along savings to patients covered by government health plans.

Cable mogul John Malone has a plan for his Liberty Media (NASDAQ:FWONA) to get hold of the Fox regional sports networks, and it's opposite one pursued by Major League Baseball, the New York Post says. Malone already has the Atlanta Braves (NASDAQ:BATRA) in his corner, along with big stakes in Charter (NASDAQ:CHTR) and Sirius XM (SIRI, LSXMA). He's reportedly adding team owners with a plan to keep selling games to local broadcasters, vs. MLB's plan to centralize and repackage games. Disney (NYSE:DIS) must divest the Fox nets (FOX, FOXA) to wrap their $71B media asset deal.

Amazon has cut its stake in Indian e-commerce company Cloudtail to allow 300K of its products to return to Amazon's (NASDAQ:AMZN) platform. The reorganization follows new foreign direct investment regulations in the region.

Inline guidance: Sanofi (NASDAQ:SNY) guides net income growth of 3% to 5% for 2019 after reporting Q4 income growth of 4.3%. Q4 revenues rose 4% on the strength of rare disease unit Genzyme. The company cites new drugs and reorganization as this year's income drivers.

Wednesday's Key Earnings

Chipotle Mexican Grill (NYSE:CMG) +10.4% AH on 66% digital sales growth.
FireEye (NASDAQ:FEYE) -9.4% on downside 2019 guidance.
GoPro (NASDAQ:GPRO) +2% PM after topping Q4 consensus.
NXP Semiconductors (NASDAQ:NXPI) -2.7% PM on Q4 earnings.
National Oilwell Varco (NYSE:NOV) +4.6% AH on Q4 revenue beat.
Zynga (NASDAQ:ZNGA) rises +2.4% PM on strong Q4 bookings growth.
Two Harbors Investment (NYSE:TWO) -2.8% AH due to fall in Q4 total return book value.
MetLife (NYSE:MET) -1.9% AH as Q4 revenue disappoints.
iRobot (NASDAQ:IRBT) +12.6% AH on strong Q4 earnings beat.
Apollo Investment (NASDAQ:AINV) +0.7% AH on Q3 NII beats, authorizing $50M stock buyback.
Fortinet (NASDAQ:FTNT) +4% PM on upside FY outlook.
O'Reilly Automotive (NASDAQ:ORLY) +2.5% AH despite Q4 miss.
Prospect Capital (NASDAQ:PSEC) -1.3% AH on Q2 NAV fall.
Nutrien (NYSE:NTR) -1% AH on 2019 guidance below consensus.
Just Energy (NYSE:JE) +2.9% AH on Q3 revenue beat.

Today's Markets

In Asia, Japan -0.59%. Hong Kong closed. China closed. India +0.06%.
In Europe, at midday, London -0.07%. Paris -0.54%. Frankfurt -0.97%.
Futures at 5:45, Dow -0.45%. S&P -0.49%. Nasdaq -0.56%. Crude -0.48% to $53.75. Gold -0.28% to $1,310.70. Bitcoin +0.4% to $3,457.
Ten-year Treasury Yield -2.7bps to 2.677%

Today's Economic Calendar

8:30 Initial Jobless Claims
9:15 Fed's Kaplan Speech
9:30 Fed’s Clarida: “The Global Factor in Neutral Policy Rates”
10:30 EIA Natural Gas Inventory
1:00 PM Results of $19B, 30-Year Note Auction
3:00 PM Consumer Credit
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:30 PM Fed's Bullard: U.S. Monetary and Economic Policy

 

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Wall Street Breakfast: State Of The Markets

Author: skywalker   |  Publish date: Wed, 6 Feb 2019, 11:15 PM


President Trump delivered the State of the Union address to Congress last night. Trump said the administration is seeking fair trade, cheaper prescription drug prices, and an improvement in the nation's infrastructure. Trump also disclosed that he plans to meet with North Korean leader Kim Jong Un on February 27-28 in Vietnam. Illegal immigration was a major topic as expected, with Trump announcing that he's ordered an additional 3,750 troops to the southern border. "Congress has 10 days left to pass a bill that will fund our government, protect our homeland, and secure our Southern Border," he stated without directly threatening another shutdown. No great surprise, but Trump also maintained that the unfair trade practices of China must end. While maintaining his prior positions, there didn't appear to be any ratcheting up of the trade rhetoric. U.S. stock futures were up slightly going into the address and barely budged during the speech.

Economy

Asian markets registered gains today after President Trump's State of the Union address didn't contain any surprises. Japan's Nikkei increased 0.14% and India's Nifty 50 rose 1.17%, while Australia's ASX 200 finished 0.5% higher after Reserve Bank of Australia Governor Philip Lowe suggested a more "balanced" outlook for interest rates. Markets in China and other parts of Southeast Asia remain closed for the Chinese New Year. Meanwhile, the European stocks have started the day off in negative territory, with the Stoxx 600 Index posting a 0.1% loss at midday. U.S. stock futures are pointing slightly lower, while today's earnings lineup includes Chipotle (NYSE:CMG), GoPro (NASDAQ:GPRO), FireEye (NASDAQ:FEYE), Spotify (NYSE:SPOT), MetLife (NYSE:MET) and General Motors (NYSE:GM).

The Trump administration is reportedly sending U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing early next week to continue trade talks. A meeting between the two officials with their Chinese counterparts is seen as a step toward bringing President Trump and Chinese President Xi Jinping together to close a deal. The trade war truce between the U.S. and China expires on March 1.

Oil traders have plenty to digest as the market continues to shift under their feet. Cargo-tracking firm Kpler reported crude shipments to the U.S. from OPEC and its partners fell to a five-year low of 1.41M barrels a day in January. The firm noted shrinking Iraqi imports and deep output cuts by Saudi Arabia contributed to the decline. Meanwhile, the American Petroleum Institute is reported to have said that a U.S. crude supply build of 2.51M barrels of oil is expected for the week ending February 1. The weekly U.S. crude stock build would be the third consecutive if EIA data confirms it later today. In early action, WTI crude oil futures -1.36% to $52.93/bbl and Brent crude -1.34% to $61.15/bbl.

The international trade numbers are due out today, with economists projecting the U.S. trade balance for November will be reported at -$53.9B. The mark would be a slight improvement from the -$55.5B tally from October, but considerably worse than the average over the last five years. Keep an eye on the U.S.-China merchandise trade gap after it widened to a record level in the previous report.

Fedspeak watch: Federal Reserve Chairman Jerome Powell is hosting a town hall meeting today with educators from across the U.S. and Federal Reserve Board Vice Chairman Randal Quarles is scheduled to deliver a speech about the Federal Reserve Stress Testing Conference at the Council for Economic Education Vantage Point Reception in New York City. Quarles will also take some Q&A. The two Fed officials step up to the microphone with the CME FedWatch Tool currently showing a 3.9% rate hike probability for March through April and 9% odds for a rate hike in June through October.

Stocks

Strong results at ABC TV and the company's reliable theme parks business lifted Walt Disney (NYSE:DIS) to top consensus in its first-quarter earnings, its first under a new reporting structure made to shift focus toward its direct-to-consumer future bets. TV operations saw broad gains and parks reflected higher occupancy and higher spending; studio revenues were down 27% but are typically highly variable, and faced tough comps without a Star Wars release in the quarter. On its call, the company said streaming ESPN Plus had signed up 2M paying subscribers and operating income would take a $150M licensing hit as Disney shifted content to its own platforms.

The deep freeze in the U.S. last week exposed some of the limitations of electric vehicles. Owners of Tesla (NASDAQ:TSLA), Nissan (OTCPK:NSANY) and Jaguar (NYSE:TTM) EVs reported a loss of range of as much as 30% amid the recording-setting low temperatures associated with the Polar Vortex. The problem is that lithium-ion batteries, in general, are most efficient at about 70 degrees. Still, there is optimism that the next generation of EV batteries will dramatically improve performance, although "solid state" batteries aren't expected to be mass produced until 2022 at the earliest.

There is a change in the C-suite at Apple (NASDAQ:AAPL) with retail chief Angela Ahrendts due to leave in April after about five years on the job. Ahrendts came to Apple from Burberry and redesigned the tech giant's retail spaces to have open floor plans with a more casual environment for the customer service representatives. Outside of Apple, she has been included in lists of potential successors to CEO Tim Cook. VP of People Deirdre O'Brien will step into the high-profile retail role at Apple following the departure of Ahrendts. Wall Street analysts seem relatively unconcerned about the development. "A major focus of Apple with O'Brien now running the show will be catalyzing demand in China with the store experience a major factor in this region as well as other regions with consumers getting the 'Apple experience' when they look to test drive new technology in the store, a key ingredient in Cupertino's recipe for success," stated Wedbush analyst Dan Ives.

Heavy cuts to guidance pushed shares of Electronic Arts (NASDAQ:EA) down 17.5% by the end of an after-hours session Tuesday that saw volume higher than the stock's full-day averages. The company swung to a gain but fell short on bookings and adjusted profit in its Q3 report (a "difficult quarter," its CEO said) amid hot competition from the usual suspects as well as Epic Games phenomenon Fortnite. It slashed Q4 bookings guidance to $1.17B (vs. consensus $1.75B). Also moving lower late Tuesday were big-publisher rivals Activision Blizzard (ATVI, down 3% postmarket) and Take-Two (TTWO, fell as much as 2.9% postmarket but rallied back to end flat).

The expectation in Macau is that the Chinese New Year will see visitor arrivals increase 8% to 9% this year. The opening of the Hong Kong-Zhuhai-Macau Bridge is seen as a major factor in the traffic boost to the gambling mecca. Hotel operators in the region hope to at least match last year's occupancy rate of 95% across all properties and 96% for five-star resorts. After seeing some bumps in 2018, casino owners Melco Resorts & Entertainment (NASDAQ:MLCO), Wynn Resorts (NASDAQ:WYNN), MGM Resorts (NYSE:MGM) and Las Vegas Sands (NYSE:LVS) hope the holiday boosts EBITDA tallies.

General Motors is due to report earnings this morning, with analysts expecting the automaker to report revenue of $36B and EPS of $1.24. The earnings release arrives with sentiment turning a bit more positive on the Detroit automaker. "We continue to believe that GM's core business is well managed, while the company continues to take decisive action on addressing underperforming segments (GME sale, the potential future exit of Korea), which is encouraging," previews a Bank of America Merrill Lynch analyst. Listen for updates during GM's conference call on the progress of the Cruise Automation autonomous driving program. Shares of GM are up 17% YTD.

Tuesday's Key Earnings

Disney (DIS) +2% AH as parks, networks lead to Q1 beat.
Snap (NYSE:SNAP) +23% AH after record revenue tops expectations.
Skyworks Solutions (NASDAQ:SWKS) +5% AH on in-line Q1, $2B buyback.
Anadarko (NYSE:APC) -2% AH after Q4 earnings miss; reaffirms 2019 capex program.
Digital Realty (NYSE:DLR) -1% AH after topping FFO forecasts, reiterating 2019 guidance.
Electronic Arts (EA) -16% AH after Q3 miss, trimmed guidance.
Hi-Crush Partners (NYSE:HCLP) +3.8% AH after Q4 results not as bad as expected.
Vertex Pharmaceuticals (NASDAQ:VRTX) +2.9% AH on strong Q4 beat.
Tableau (NYSE:DATA) -4% AH despite Q4 beats.
Genworth (NYSE:GNW) -1.7% AH after posting Q4 adjusted operating loss.
Microchip (NASDAQ:MCHP) +4.1% AH on Q3 beats, mixed guidance.
Paycom (NYSE:PAYC) +8.2% AH on Q4 beats, upside guide.
Spirit Airlines (NASDAQ:SAVE) -3.1% AH after Q1 unit revenue forecast disappoints.
Viavi (NASDAQ:VIAV) +10% AH as strong revenues lead to Q2 beat.

Today's Markets

In Asia, Japan +0.14%. Hong Kong +0.21%. China closed. India +1.17%.
In Europe, at midday, London -0.18%. Paris -0.14%. Frankfurt -0.35%.
Futures at 5:30, Dow -0.19%. S&P -0.17%. Nasdaq -0.17%. Crude -1.36% to $52.93. Gold -0.09% to $1,318. Bitcoin -2% to $3,440.
Ten-year Treasury Yield -2 bps to 2.684%.

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 International Trade
8:30 Productivity and Costs
10:30 EIA Petroleum Inventories
1:00 PM Results of $27B, 10-Year Note Auction
6:05 PM Fed's Quarles Speech
7:00 PM Jerome Powell Speech

 

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