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Wall Street Articles

Author: skywalker   |   Latest post: Fri, 16 Aug 2019, 7:18 PM

 

Wall Street Breakfast: Investors Climb Back Into Risk Markets

Author: skywalker   |  Publish date: Fri, 16 Aug 2019, 7:18 PM


Equities somewhat stabilized yesterday after days of wild swings, with DJIA futures now up by 260 points and S&P 500 and Nasdaq futures ahead by 1% and 1.4%, respectively. After threatening retaliation against incoming American tariffs, China urged the U.S. to meet it "half way," while President Trump talked up formal negotiations and said he expected the trade dispute to be short-lived. The yield curve has also righted itself by about 4 bps, while July retail sales surprisingly picked up - though industrial production numbers disappointed again - in the face of trade war fallout.

Boost from Walmart, Nvidia

Walmart (NYSE:WMT) was easily the biggest gainer on both the S&P and Dow on Thursday, jumping 6.1% for its largest advance in a year, after reporting a nearly 2% rise in Q2 revenues to $130B and raising full-year earnings guidance. Walmart has now racked up a 20-quarter, or five-year, streak of U.S. growth, unmatched by any other retail chain. Shares of Nvidia (NASDAQ:NVDA) are giving tech shares an extra boost premarket as the chipmaker soared more than 5% after gaming strength saw sales and profits top estimates.
 

Stimulus bazooka

A day after Hong Kong unveiled a stimulus package worth $2.4B, China's state planner said Beijing would roll out a plan to boost disposable income, though details were lacking. Europe is also prepping a major stimulus injection, according to Olli Rehn, who sits on the ECB's rate-setting committee. That could include "substantial and sufficient" bond purchases, cutting rates deeper into negative territory and purchasing equities under the QE program. Not much more needs to be said about the Federal Reserve, which is facing trade war problems and the inversion of the U.S. yield curve.

Culpability

"This is market manipulation - pure and simple" declared GE (NYSE:GE) CEO Larry Culp in response to allegations of financial misconduct, scooping up another $2M worth of stock after spending $3M on shares earlier this week. The fraud report came from Madoff whistleblower Harry Markopolos, who alleges GE's accounting problems amount to $38B, or 40% of the conglomerate's market value. Disclaimer: Markopolos and his colleagues are working with an undisclosed hedge fund, which is betting GE's stock price will decline (it plunged 11.3% yesterday to $8.01 per share).
 

Space tourism

At Spaceport America, Virgin Galactic's "Gateway to Space" building is now functionally operational, ready to host remaining test flights before welcoming its very first future astronauts. In addition, VMS Eve - the carrier mothership and launch platform for Virgin SpaceShips - arrived at the facility this week, bringing the company closer to starting commercial service. In July, Virgin Galactic said it would go public by merging with Social Capital Hedosophia (NYSE:IPOA).
 

New largest creditor

Japan has again surpassed China as America's largest overseas creditor, a record it last held in 2016. After adding about $21B since May, Tokyo now holds $1.12T of Treasurys vs. Beijing's $1.11T. Market players have speculated that one trade war retaliatory action China could take is to unload its U.S. holdings, and while there are no signs that is happening, it has been a less aggressive buyer of U.S. sovereign debt.

Hong Kong protest fallout

The territory's economy contracted more than originally estimated in the second quarter after escalating protests dampened activity. Gross domestic product contracted by 0.4%, more than the 0.3% contraction released in the first estimate on July 31. Other big news overnight saw Cathay Pacific (OTCPK:CPCAY) CEO Rupert Hogg resign as the Hong Kong flag carrier reels from a series of controversies over the involvement of its employees in the city's simmering anti-government protests.
 

Thursday's Key Earnings
Alibaba (NYSE:BABA) +3% posting beats, core commerce strength (earnings call transcript).
Applied Materials (NASDAQ:AMAT) -0.3% amid chip recovery lag (earnings call transcript).
J.C. Penney (NYSE:JCP) +2.2% on smaller-than-expected loss.
Nvidia (NVDA) +5.6% AH as gaming strength offset data center revenues.
Walmart (WMT) +6.1% hiking profit guidance (earnings call transcript).

Today's Markets

In Asia, Japan -0.2%. Hong Kong +0.9%. China +0.3%. India +0.1%.
In Europe, at midday, London +0.6%. Paris +1%. Frankfurt +1%.
Futures at 6:20, Dow +1%. S&P +1%. Nasdaq +1.4%. Crude +1.8% to $55.43. Gold -0.7% to $1520. Bitcoin -0.1% to $10063.
Ten-year Treasury Yield +4 to 1.56%

Today's Economic Calendar

8:30 Housing Starts
10:00 Quarterly Services Report (Advance)
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count

 

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Wall Street Breakfast: All About That Yield Curve

Author: skywalker   |  Publish date: Thu, 15 Aug 2019, 9:12 PM


Recession fears took hold yesterday as short-term Treasurys paid more than long-term notes, a warning sign that investors are rapidly shifting their money into bonds to shield against potential losses they could incur by holding equities. No trouble? A brief inversion could be just an anomaly (others have not preceded recessions), but it may depend on how long the condition lasts. Others say the inversion occurred because of the Federal Reserve, which has kept its base short-term rate "too high," while some maintain the yield curve has been distorted by more than $15T worth of foreign bonds that pay negative interest rates.

Selloff continues

The inversion sent all three major U.S. indexes down about 3% on Wednesday, with the Dow plunging 800 points and suffering its largest decline of the year. The yield on the 30-year Treasury also went into uncharted territory: below 2%. Despite the market meltdown, U.S. stock index futures posted solid gains overnight, before turning around on events in Asia. China's finance ministry said it must take necessary measures to counter the latest U.S. tariffs on $300B of Chinese goods, while Hong Kong cut its GDP growth forecast to potentially flat for the rest of the year.
 

Data dump

A slew of U.S. economic data this morning will be closely watched for signs of a slowdown and how much substance there is to recession fears. The releases at 8:30 a.m. include retail sales for July, the Philly Fed manufacturing survey, the Empire State manufacturing index and initial jobless claims. Numbers on industrial production will come 45 minutes later, as well as the National Association of Home Builders' Housing Market Index at 10 a.m.

Retail reality

The sector was walloped yesterday by weak guidance from Macy's (NYSE:M) as department stores continued to lose shoppers to newer forms of retailing. Shares tumbled 13% after the company lowered its full-year earnings outlook and missed profit expectations. Worries were also seen after Cisco's (NASDAQ:CSCO) Q2 results, which showed struggles in China amid a continuing trade war. Today brings more insight into the retail industry, with quarterly figures from Alibaba (NYSE:BABA), Walmart (NYSE:WMT) and J.C. Penney (NYSE:JCP).
 

Buffett bets on Amazon; Ackman bets on Buffett

Berkshire Hathaway (NYSE:BRK.A) boosted its stake in Amazon (NASDAQ:AMZN) by 11% during the second quarter, increasing its bet on the online retailer even as stocks traded near record highs. It ended June with 537,300 AMZN shares worth about $1.02B, up from 483,300 shares three months earlier. Meanwhile, Pershing Square Capital Management, run by Bill Ackman, has taken a Berkshire stake of 3.5M class B shares (NYSE:BRK.B), according to its 13F filing.
 

Testing IPO appetite

WeWork owner, The We Company, has published detailed financial statements for the first time, disclosing breakneck revenue growth and soaring losses, as it prepares for an IPO as early as next month. The company will list under ticker "WE," and could raise several billion with the offering. Other high-profile IPOs this year, like Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT), have fared poorly after their launch, amid skepticism over their lack of a concrete plan to profitability.
 

The SNC-Lavalin affair

Prime Minister Justin Trudeau violated the country's Conflict of Interest Act, according to Canada's ethics watchdog. He attempted to influence former Justice Minister Jody Wilson-Raybould to overrule a decision not to grant a deferred prosecution agreement to SNC-Lavalin (OTCPK:SNCAF), a major employer in the politically important province of Quebec. The findings are a blow to Trudeau and his incumbent Liberal government before October's general election.
 

Wednesday's Key Earnings
Canopy Growth (OTC:CGC) -10.9% despite harvest gains.
Cisco (CSCO) -7.7% AH giving a soft outlook.
Embraer (NYSE:ERJ) -7.8% seeing a loss in 2019.
Macy's (M) -13.2% dinged by light guidance.

Today's Markets

In Asia, Japan -1.2%. Hong Kong +0.8%. China +0.3%. India +1%.
In Europe, at midday, London -1.1%. Paris -0.9%. Frankfurt -1%.
Futures at 6:20, Dow -0.4%. S&P -0.3%. Nasdaq -0.5%. Crude -1.5% to $54.38. Gold +0.1% to $1528.70. Bitcoin -5.1% to $9931.
Ten-year Treasury Yield -3 bps to 1.55%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Retail Sales
8:30 Empire State Mfg Survey
8:30 Productivity and Costs
9:15 Industrial Production
10:00 NAHB Housing Market Index
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
4:00 PM Treasury International Capital
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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Wall Street Breakfast: Trade War Blink Or U.S. Consumer Wink?

Author: skywalker   |  Publish date: Wed, 14 Aug 2019, 9:50 PM


Tariff relief led to big gains for Wall Street on Tuesday, though U.S. stock index futures are now pointing to losses of 0.6% as weaker-than-expected data from China and Germany dimmed the global outlook. Yesterday, the U.S. Trade Representative announced that fresh 10% tariffs, originally scheduled to go into effect Sept. 1, would be delayed until Dec. 15 for some consumer items, while other products were removed from the new tariff list altogether due to "health and security factors." President Trump later told reporters that his decision to delay the duties was to avoid impacts on Christmas shopping.

Negative yield talk as curve inverts

Nothing is stopping the U.S. from getting sucked into the global trend of negative yielding debt, former Fed Chairman Alan Greenspan told Bloomberg, adding that "zero has no meaning, beside being a certain level." With global central banks engaging in unprecedented monetary easing, a record $15T of government bonds worldwide now trade at negative yields. The U.S.-China trade war is further putting pressure on the 10-year Treasury note, which inverted overnight with the 2-year Treasury rate, a historic recession indicator.
Go deeper: 'The Stock And Bond Divide' by Real Vision.

Earnings season not over yet

90% of S&P 500 companies have already reported Q2 results, but there is still plenty to watch this week, particularly retail and e-commerce players. After surprisingly strong earnings from JD.com (NASDAQ:JD) on Tuesday, Macy's (NYSE:M) will release quarterly figures today, while Walmart (NYSE:WMT), J.C. Penney (NYSE:JCP) and Alibaba (NYSE:BABA) will report tomorrow. Analysts expect consumer discretionary and consumer staple profits to fall this quarter, with categories like multi-line retailers and food products likely among the biggest decliners.
Go deeper: Dividend scorecard of Macy's.

Weakest in 17 years

A seasonal slowdown and trade tensions saw China post its weakest industrial output growth since 2002, which rose 4.8% in July from a year earlier, adding to the case to roll out more stimulus. Retail sales also slumped, while fixed-asset investment slowed further. Push for trade talks? Following the data - and a delay to the next tranche of U.S. tariffs - Chinese officials stuck to plans to visit Washington in September for face-to-face meetings.

Volume up on Hong Kong ETF

Trading in the iShares MSCI Hong Kong ETF (NYSEARCA:EWH), the largest fund tracking Hong Kong stocks, jumped to a five-year high on Tuesday, with 25M shares trading hands in New York. As riot police clashed with pro-democracy protesters and the Hong Kong airport returned to calm, EWH ended the session in the green, though the $1.4B fund has lost about 40% of its assets since June. Tensions are still running high, with President Trump stoking fears yesterday about a possible intervention from Chinese troops massing at the border.
Go deeper: Explore other iShares country ETFs.

Germany halfway to recession

Europe's largest economy contracted by 0.1% in the second quarter as global tensions put pressure on its export-driven manufacturing sector. Speaking before the widely-anticipated fall was published, Chancellor Angela Merkel said the economy was entering a "difficult phase," adding, "we will react depending on the situation." A closely-watched survey of investors yesterday found German economic sentiment had plummeted to its lowest level since the eurozone crisis in 2011.

Merger sees CBS, Viacom reunite

The newly combined ViacomCBS will invest in more movies and TV shows as it seeks to challenge Disney (NYSE:DIS) and Netflix (NASDAQ:NFLX) to become a bigger player in the growing streaming business. Viacom (NASDAQ:VIA) owns Paramount Pictures and pay TV channels such as Comedy Central, MTV and BET, while CBS (NYSE:CBS) has a broadcast network, television stations, Showtime and a stake in The CW over-the-air network. The two companies have also been major content spenders, having spent more than $13B combined in the past year (or close to the estimated $15B Netflix intends to spend in 2019). VIA -1.5%; CBS -2% premarket.

Privacy concerns

Facebook (NASDAQ:FB) confirmed that it has been transcribing audio clips of its users in Messenger, but stopped using human review "more than a week ago." Only those who opted in to the feature had their audio clips reviewed by third-party contractors, according to the company, but its support page states that even if one person in a chat consented to Facebook transcribing the conversation, any audio in the thread would have been transcribed, regardless of who sent it.
Go deeper: Quant, SA, Sell Side ratings of Facebook.

Breaking up is hard to do

Dissolving tech giants will be challenging, but it might be the best action to restore market competition, according to FTC Chairman Joe Simons, who is leading the agency's broad review of the tech sector for potential antitrust violations. Amazon (NASDAQ:AMZN) and Alphabet (GOOG,GOOGL) are common targets of antitrust investigations both domestically and overseas. The FTC is also investigating Facebook (FB) for violations.
Go deeper: Latest tech news.

Tuesday's Key Earnings

JD.com (JD) +12.9% smashing expectations.
Tilray (NASDAQ:TLRY) -10.3% AH posting big quarterly loss.

Today's Markets

In Asia, Japan +1%. Hong Kong +0.1%. China +0.4%. India +1%.
In Europe, at midday, London -0.6%. Paris -1%. Frankfurt -1.2%.
Futures at 6:20, Dow -0.6%. S&P -0.6%. Nasdaq -0.6%. Crude -1.3% to $56.38. Gold -0.2% to $1511.70. Bitcoin -7.4% to $10465.
Ten-year Treasury Yield -4 bps to 1.64%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Import/Export Prices
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories

 

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Wall Street Breakfast: Finding A Floor After Wild Swings

Author: skywalker   |  Publish date: Thu, 8 Aug 2019, 9:09 PM


Following a bout of market volatility, stocks across the world are attempting to stabilize amid stronger-than-expected Chinese trade data that eased concerns about a sharp deterioration in the global economic outlook. U.S. stocks whipsawed yesterday, with the DJIA swinging more than 600 points at its widest span, while Chicago Fed President Charles Evans said trade headwinds could justify additional rate cuts. Ahead of the open, the Dow and S&P 500 are up 0.4%, while the Nasdaq is ahead by 0.7%. Bond yields have also rebounded from significant lows, with the 10-year advancing 4 bps to 1.73% after tumbling as low as 1.53% on Wednesday.

Crude comeback

Saudi Arabia has reportedly phoned other oil producers to discuss possible policy responses following crude's 4.7% plunge on Wednesday to seven-month lows. The kingdom, which has already cut production more than required under the OPEC+ agreement, said it won't tolerate a continued slide in prices and is considering all options. The U.S. benchmark crude rose 3.2% to $52.72/bbl after the Saudi efforts were revealed. Planned OPEC+ gatherings are also set for the week starting Sept. 9 in Abu Dhabi.

Suspending trade ties

Pakistani stocks dropped for a sixth straight day after the government suspended bilateral trade with India in a deepening spat over the disputed Kashmir region. The benchmark KSE-100 Index fell 2.2%, sliding to a new four-year low. On Monday, India said its central government would scrap Article 370, a constitutional provision that allowed the state of Jammu and Kashmir to make its own laws and granted special rights and privileges to permanent residents.

Uber vs. Lyft

Uber (NYSE:UBER) is in the hot seat as it gears up to report financial results after the market close. Expectations are for a rise in second-quarter revenue as growth in Uber Eats offsets a decrease in riders. Investors will also look for comments on the company's timeline on turning a profit and updates on the recent protests by drivers against low pay and working conditions. On Wednesday, rival Lyft (NASDAQ:LYFT) boosted its outlook for the year, as the company gained more riders and amid new signs that the once-raging price war with Uber is abating.
Go deeper: Compare Uber and Lyft side by side.

Meatless craze

Burger King (NYSE:QSR) will bring the Impossible Whopper to all of its 7,200 U.S. locations today after a successful test run in seven markets. The nation's second-largest burger chain began testing the plant-based burger from Impossible Foods at locations in St. Louis in April. Those outlets saw traffic outperform national averages by 18.5% that month, according to a report from inMarket.

Salesforce wallet still open

Just a week after Salesforce (NYSE:CRM) completed the $15.3B purchase of big data firm Tableau - its biggest deal ever - the company is again in the M&A groove. It has agreed to buy Israeli field service company ClickSoftware for $1.35B in cash and stock. Salesforce hopes the purchase will accelerate the growth of its Service Cloud platform and it expects to close the deal during its fiscal quarter ending Oct. 31.
Go deeper: Building A Long-Term Position In Salesforce by Cestrian Capital Research.

Gun purchases

Unlike PayPal (NASDAQ:PYPL) and Square (NYSE:SQ), Visa (NYSE:V) will continue to facilitate gun purchases as long as it is legal for people to buy guns. "We are guided by the federal laws in a country, and our job is to create and to facilitate fair and secure commerce," said CEO Alfred Kelly, the latest corporate leader to address the issue of gun control after the weekend mass shootings in Texas and Ohio. "We shouldn't tell people they can't purchase a 32-ounce soda. We shouldn’t tell people they can't buy reproductive drugs."

Internet companies to the White House

The Trump administration has invited internet and technology companies to a roundtable discussion on violent online extremism tomorrow after coming under growing pressure to deter mass shootings tied to internet-fueled racism. It wasn’t immediately clear, though, which companies would be involved in the meeting. A Twitter (NYSE:TWTR) spokesperson declined to comment, while Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) did not immediately respond to requests.

Wednesday's Key Earnings
AIG (NYSE:AIG) +3.6% AH blowing out expectations.
CenturyLink (NYSE:CTL) -0.7% AH missing revenue estimates.
CVS Health (NYSE:CVS) +7.5% beating Q2 consensus.
Energy Transfer (NYSE:ET) +2.6% AH as EBITDA hit record.
Lyft (LYFT) +4% AH adding more riders, lifting outlook.
New York Times (NYSE:NYT) -12.3% amid ad revenue scare.
Roku (NASDAQ:ROKU) +12.4% AH sailing over Street's Q2 bar.
Skyworks Solutions (NASDAQ:SWKS) -7.4% AH on downside forecast.
Teva Pharma (NYSE:TEVA) +3.3% amid Q2 beat, CFO resignation.

Today's Markets

In Asia, Japan +0.4%. Hong Kong +0.5%. China +0.9%. India +1.7%.
In Europe, at midday, London +0.2%. Paris +1.3%. Frankfurt +0.9%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.7%. Crude +2.3% to $52.28. Gold -0.8% to $1508.10. Bitcoin +1.5% to $11848.
Ten-year Treasury Yield +4 bps to 1.73%

Today's Economic Calendar
8:30 Initial Jobless Claims
10:00 Wholesale Trade
10:30 EIA Natural Gas Inventory
1:00 PM Results of $19B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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Wall Street Breakfast: Market Recovery, Disney Earnings, Rate Cuts

Author: skywalker   |  Publish date: Wed, 7 Aug 2019, 7:09 AM


Markets are getting some more relief as the PBOC set its official midpoint reference for the yuan at 6.9996 on Wednesday, weaker than the 6.9683 set Tuesday but still stronger than the key 7 per dollar level. Dow and S&P 500 futures are up 0.4% on the news, while the Nasdaq points to a rise of 0.7%, as President Trump further dismissed fears of a protracted trade war with China. A downbeat session was seen in Asia overnight, although European gains were led by Germany, where the DAX climbed 1.5% boosted by a $3.9B chemical deal from Bayer (OTCPK:BAYRY) and Lanxess (OTCPK:LNXSF).

Trade, currency... is energy war next?

China is expected to start avoiding U.S. crude oil imports as trade tensions ratchet up, according to traders and analysts, ensnaring a key commodity that has largely escaped the tit-for-tat trade war. The U.S. surpassed Saudi Arabia and Russia to take the top energy producer spot last year, while Beijing became the world's largest oil buyer in 2017. Tariffs have already seen the U.S. collect $63B from China in the 12 months through June, according to new U.S. Treasury data, and that bounty is set to rise.
Go deeper: 'Getting Past The Headlines For Gold And Energy' by SA Marketplace.

Short-term pain for Disney?

Walt Disney (NYSE:DIS) shares dropped as much as 5.8% after heavily missing expectations with fiscal Q3 earnings despite revenues that grew by a third (including Hulu and Fox). Shares then pared some losses during a conference call with CEO Bob Iger. He nodded to the heavy investment going into the Mouse House's nascent direct-to-consumer business, but said that a three-service bundle of Disney Plus, ESPN Plus and Hulu would come at $12.99/month, notably undercutting Netflix (NASDAQ:NFLX) pricing.
Go deeper: Latest analysis on Disney.

Rate cuts back in style

New Zealand's central bank is the latest to reduce interest rates as the country faces sluggish growth conditions due to simmering trade tensions and a global economic slowdown. A 50 basis point cut to 1.50% caught markets off guard, prompting the Kiwi to plunge as much as 2.1% against the U.S. dollar, its lowest level since January 2016. More easing? The Reserve Bank of India also cut interest rates overnight for a fourth straight meeting, reducing its repo rate by 35 basis points to 5.40%.

'Refusing to negotiate'

The Brexit political standoff is deepening less than three months before the U.K. is due to leave the European Union. Michael Gove, the minister in charge of planning for a no-deal departure, is blaming the bloc for "refusing to negotiate and failing to engage on a new agreement." It comes after the EU said British demands to remove the Irish backstop from Theresa May's deal were unacceptable.
Go deeper: Historical performance of Invesco's Sterling ETF.

More store closing for Walgreens

As part of a wide-ranging cost management program it undertook late last year, Walgreens (NASDAQ:WBA) plans to close 200 U.S. stores and record $1.9B-$2.4B in related pre-tax charges. It follows a disclosure by the drugstore chain in May that it would shutter 200 stores in the U.K. Walgreens expects minimal disruption to customers and patients due to the closings, but anticipates annual cost savings of at least $1.5B by 2022.
Go deeper: Picking Through Pharma Pressures, With Ed Silverman (Podcast).

C919 certification target

Commercial Aircraft Corp of China now expects to obtain Chinese certification for its C919 jet in 2021. It originally aimed to obtain the approval by the end of 2020, but analysts had considered the target ambitious given the test planes have flown relatively few hours since the first C919 flew in 2017. China's first national passenger jet aims to challenge the dominance of Boeing's (NYSE:BA) 737 and Airbus's (OTCPK:EADSY) A320, bringing the Asian nation a step closer to its goal of becoming a global civil aerospace player.
Go deeper: 'Boeing Sinks As Trade War Escalates' by Dhierin Bechai.

Tuesday's Key Earnings
Allergan (NYSE:AGN) -0.7% despite Q2 beat, guidance boost.
Bausch Health (NYSE:BHC) -3.2% missing EPS forecasts.
Chesapeake Energy (NYSE:CHK) -10.9% on wider Q2 loss.
Disney (DIS) -3.3% AH as Q3 growth fell short.
Devon Energy (NYSE:DVN) +0.3% AH raising production view.
Duke Energy (NYSE:DUK) +2.3% on higher base rates.
Regeneron Pharma (NASDAQ:REGN) +0.2% beating Q2 consensus.

Today's Markets

In Asia, Japan -0.3%. Hong Kong +0.1%. China -0.3%. India -0.8%.
In Europe, at midday, London +0.9%. Paris +1.4%. Frankfurt +1.5%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.7%. Crude -0.4% to $53.43. Gold +1% to $1499.10. Bitcoin -5% to $11619.
Ten-year Treasury Yield -6 bps to 1.68%

Today's Economic Calendar
7:00 MBA Mortgage Applications
9:30 Fed's Evans Speech
10:30 EIA Petroleum Inventories
1:00 PM Results of $27B, 10-Year Note Auction
3:00 PM Consumer Credit

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Wall Street Breakfast: Futures Rebound After Dramatic Stock Rout

Author: skywalker   |  Publish date: Tue, 6 Aug 2019, 9:49 AM


Wall Street is pointing to positive territory for the session ahead, with Dow and S&P 500 futures up 0.8% and the Nasdaq ahead by 1%, following the worst trading day of 2019. Traders may have been buoyed after the People's Bank of China took steps to stabilize the yuan, setting the currency's reference point higher than the key 7 per dollar level. Late Monday, the U.S. Treasury Department labeled China a currency manipulator for the first time since 1994, opening the door to new sanctions and ratcheting up already high tensions.

Suspension of agriculture purchases

The intensifying U.S.-China trade war still pushed the Shanghai Composite down 1.6% overnight as Beijing confirmed its suspension of U.S. agricultural product purchases in response to new American tariffs. China, one of the largest buyers of U.S. agriculture, also did "not rule out" duties on newly purchased agricultural goods after August 3. China's official Communist Party newspaper further said that the U.S. was "deliberately destroying international order" and holding its own citizens to ransom.
Go deeper: Global investing analysis of China vs. peers.

Fed Op-Ed

The four living former Federal Reserve chairs have banded together to emphasize the importance of a Fed chair who's "permitted to act independently and in the best interests of the economy, free of short-term political pressures and, in particular, without the threat of removal or demotion," in an Op-Ed piece in the WSJ. Even the perception that monetary-policy decisions are politically motivated "can undermine public confidence that the central bank is acting in the best interest of the economy," wrote Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen. "This can lead to worse economic performance in the long run, including higher inflation and slower growth."

Shipping protection through Hormuz

Britain is joining the U.S. in forming an international mission to protect shipping through the Strait of Hormuz from Iranian threats after struggling to build a European maritime coalition to safeguard ships in the region. The U.K. said details of the cooperation had yet to be completed, but that it had offered to lead one of the mission's maritime task groups. A third of the world's seaborne oil is transported through the strait.

Embargo against Venezuela

Crude traded above $55/bbl after the Trump administration imposed a total economic embargo against the government of Venezuela, freezing all its U.S. assets and sharply escalating a campaign aimed at removing President Maduro from power. The executive order goes well beyond the sanctions imposed in recent months against Venezuela's state-run oil company PDVSA and the country's financial sector, as well as measures against dozens of Venezuelan officials and entities.
Go deeper: Latest energy news.

Barneys New York bankruptcy

Barneys, a nearly century-old icon of New York retail, has filed for bankruptcy protection and secured a $75M financing package to support a sale process that will see the company close 15 of its 22 locations. It's just one of many department stores that's struggling as shoppers buy online or from brands directly. Nordstrom (NYSE:JWN) is trading nearly $20 a share lower than a $50/share buyout offer it rejected two years ago as too low, Saks-owner Hudson's Bay (OTCPK:HBAYF) is considering going private after its stock fell nearly 50% in the year through June, while shares of Macy's (NYSE:M) are down 34% YTD.
Go deeper: Compare retail names side by side.

Bezos unloads Amazon stock

Jeff Bezos sold roughly $2.8B worth of Amazon (NASDAQ:AMZN) shares in the past week, prior to losing $3.4B on Monday as shares of his online retailer tumbled 3.2%. Bezos hasn't provided an explanation as to why he's accelerating stock sales, but he's currently selling about $1B in Amazon stock each year to fund his space exploration company, Blue Origin, and is also deploying capital for the "Day One Fund," which was announced in 2018 to help homeless families and create preschools.

Tencent in talks for Universal Music

Tencent (OTCPK:TCEHY) is negotiating a €3B deal with Vivendi (OTCPK:VIVHY) to buy 10% of Universal Music, one of the world's largest music labels. Tencent is known primarily for its gaming and social network business - it owns China's powerful WeChat platform, which has 900M daily users. But the company also has its own music unit, Tencent Music Entertainment (NYSE:TME), which raised more than $1B in an IPO late last year that valued the division overall at $21.3B.
Go deeper: Sell Side has Tencent Music at Outperform.

Videogame makers down, gun stocks up

Videogame maker shares came under heavy selling pressure on Monday after President Trump referenced the industry after two mass shootings that shook the country over the weekend. "We must stop the glorification of violence in our society," he said during a press briefing. "This includes the gruesome and grisly video games that are now commonplace." Activision Blizzard (NASDAQ:ATVI) tumbled 6% on the news, while Electronic Arts (NASDAQ:EA) dropped 4.6% and Take-Two (NASDAQ:TTWO) slipped over 5%. Firearm stocks saw gains on gun control fears, however, with American Outdoor Brands (NASDAQ:AOBC) and Vista Outdoor (NYSE:VSTO) rising over 2%.

Monday's Key Earnings
Realty Income (NYSE:O) +0.2% AH reaffirming outlook for 2019.
Marriott (NASDAQ:MAR) -2.8% AH on $126M data breach charge.
Shake Shack (NYSE:SHAK) +2.2% AH raising revenue forecast.
Tyson Foods (NYSE:TSN) +5.1% updating on next-gen protein initiatives.

Today's Markets

In Asia, Japan -0.7%. Hong Kong -0.7%. China -1.6%. India +0.8%.
In Europe, at midday, London +0.1%. Paris +0.9%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.8%. S&P +0.8%. Nasdaq +1%. Crude +0.6% to $55.01. Gold flat at $1476.30. Bitcoin +4.6% to $12246.
Ten-year Treasury Yield +1 bps to 1.75%

Today's Economic Calendar
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $38B, 3-Year Note Auction
1:05 PM Fed's Bullard: U.S. Monetary and Economic Policy

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