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Wall Street Articles

Author: skywalker   |   Latest post: Wed, 4 Sep 2019, 10:34 AM

 

Wall Street Breakfast: Fading Political Risks Boost Markets

Author: skywalker   |  Publish date: Wed, 4 Sep 2019, 10:34 AM


The Hang Seng index soared nearly 4% during Wednesday afternoon trade after leader Carrie Lam announced the withdrawal of a contentious extradition bill. The measure sparked a nearly three-month-long protest crisis that has roiled the city's economy, with last weekend seeing some of the fiercest battles between police and protesters. Railway operator MTR (OTCPK:MTRJY), which has been hit by disruptions in its operations and damage to its infrastructure, jumped 6.4%, while embattled airliner Cathay Pacific's (OTCPK:CPCAY) shares surged 7.2%.

Brexit rebels seize control

Sterling has found some footing, climbing another 0.5% overnight to $1.2142, as U.K. lawmakers delivered a blow to Boris Johnson's Brexit strategy with a vote aimed at delaying the country's exit from the EU. That prompted the British leader to call for a general election, though it seems unlikely to succeed after the opposition said they wouldn't back the maneuver until a no-deal exit on Oct. 31 was ruled out. Investors are attempting to figure out how to play the latest developments, watching sectors including banks, exporters, utilities and homebuilders.
 

Futures rebound

With political risks receding across the globe, Wall Street is pointing to broad opening gains. DJIA futures are up 209 points, while S&P 500 and Nasdaq futures are ahead by 0.9% and 1.2%, respectively. Bets on deeper Fed rate cuts are also growing following yesterday's grim ISM reading of factory activity in the U.S., which showed the first contraction for the manufacturing sector in three years.

Dorian update

As wind speeds continued to slow as it inches "dangerously" along Florida's northeast coast, the National Hurricane Center has downgraded Dorian to a Category 2. While it is expected to weaken further over the next two days, Dorian is still considered a "powerful hurricane" capable of leaving billions of dollars in damages in its wake. The long road to recovery has already started in the Bahamas as rescue teams begin to assess the damage left behind by the monster storm.

Walmart reacts to shootings

The big-box retailer is discontinuing all sales of handgun ammunition and sales of short-barrel rifle ammunition that can be used with military-style weapons following two "horrific" shootings at Walmart (NYSE:WMT) stores this summer. The company will also stop all handgun sales in Alaska, marking its complete exit from the handguns category. Separately, Kroger (NYSE:KR) is joining Walmart in asking shoppers not to openly carry guns in any of its stores unless they are authorized law enforcement officers.
 

Below 6%

As a result of escalating tariff war risks, Oxford Economics, Bank of America Merrill Lynch, and Bloomberg Economics have all cut their forecasts for Chinese GDP growth in 2020 to below 6%. In addition, BofA's Helen Qiao and others are warning that the government's current approach to stimulus is proving insufficient. "The key reason for delayed policy response is policy agencies are waiting for the instruction from top decision makers to shift policy stance towards easing," she wrote in a note.

State AGs target Google

Attorneys general from more than half of the U.S. states will announce their antitrust investigation into Google (GOOG, GOOGL) next week, the Washington Post reports. A smaller group of state AGs will unveil the investigation during a press conference in Washington on September 9, but sources caution that plans could change. The states are reportedly concerned about Google's user data practices and search results algorithms.

Hand-scanning payments

You soon may be able to walk out of Whole Foods without having to pay cash or swiping your card. Amazon (NASDAQ:AMZN) engineers are quietly testing scanners that can identify an individual human hand as a way to ring up store purchases, according to the New York Post. Unlike fingerprint scanners found on mobile devices, the system uses vision and depth geometry to identify the shape and size of each hand before charging a credit card on file. The technology is hoped to be rolled out by the beginning of next year.
Today's Markets

In Asia, Japan +0.2%. Hong Kong +3.9%. China +0.9%. India +0.4%.
In Europe, at midday, London +0.3%. Paris +1%. Frankfurt +0.9%.
Futures at 6:20, Dow +0.8%. S&P +0.9%. Nasdaq +1.2%. Crude +0.6% to $54.25. Gold -0.5% to $1547.90. Bitcoin +1.6% to $10471.
Ten-year Treasury Yield +3 bps to 1.49%

Today's Economic Calendar

Auto Sales
7:00 MBA Mortgage Applications
8:30 International Trade
8:55 Redbook Chain Store Sales
9:30 Fed's Williams Speech
10:00 Fed's Kaplan: Monetary Policy
12:30 PM Fed's Bowman Speech
12:30 PM Fed's Bullard Speech
1:00 PM Fed's Kashkari: Economic Outlook
2:00 PM Fed's Beige Book
3:15 PM Fed's Evans: "North American Trade: The Auto Sector"

 

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Wall Street Breakfast: Showdown Over No-Deal Brexit

Author: skywalker   |  Publish date: Tue, 3 Sep 2019, 9:09 PM


Sterling fell below $1.20 overnight, hitting its lowest level since the October 2016 flash crash, as U.K. lawmakers returned from their summer recess. A cross-party group is expected to apply for an emergency debate and seize control of the Brexit agenda in the House of Commons, marking the first effort to stop a no-deal Brexit on October 31. If parliament votes in favor of the opposition's amendment and allows it to go ahead, Boris Johnson will call a snap general election for October 14.

Uncertainty weighs on futures

Trade war gloom is pointing to a 200-point decline for the DJIA at the open as China lodged a tariff case against the U.S. at the WTO, a day after the world's two largest economies imposed new duties on each other's goods. The Chinese yuan also fell to its lowest level in more than a decade in offshore trading, nearing 7.2 versus the greenback. More trouble? Sources told Bloomberg that Chinese and U.S. officials are struggling to agree on scheduling for a planned meeting later this month.
Go deeper: Is the stock market in a precarious position?

Hurricane Dorian

The storm has been downgraded to a Category 3 as it remained stationary over the Bahamas, prolonging the islands' battering and killing at least five people. It's forecast to approach dangerously close to Florida late Tuesday through Wednesday, and then turn north, skirting the coast and coming perilously near Georgia and South Carolina Wednesday night and Thursday. UBS analysts have updated their model to reflect a wider potential industry insured loss range of $5B-$40B and raised their base case to $25B from $15B, with solvency capital at risk.
Go deeper: Regional property insurers include UIHC, HCI, HRTG, FNHC and UVE.

Italian parties agree on agenda

Italy's 5-Star Movement and Democratic Party have unveiled a shared policy program for their mooted coalition, putting an expansionary 2020 budget at the top of their platform. Supporters of 5-Star are meanwhile holding an online ballot on whether to support the proposed coalition and results are due by 1:30 p.m. ET. Italian benchmark 10-year bond yields hit record lows on the news as investors believed the new administration would take office and head off the risk of an early election.

Currency controls

The spiraling economic crisis in Argentina has prompted the central bank to slap capital controls on businesses as the peso lost more than a quarter of its value since primary elections last month. Exporters will face limits of five days to repatriate foreign currency, while institutions will need authorization of the bank to buy dollars in the forex market, except in the case of foreign trade. The decision reverses one of the first big achievements of President Macri who removed strict capital controls after taking power in December 2015 (the restrictions had prompted the MSCI index to strip Argentina of its status as an emerging market, demoting it to a frontier market).

Aramco chairman replaced

Saudi Arabia has removed its energy minister, Khalid Al-Falih, as chairman of Saudi Aramco (ARMCO) and replaced him with Yasir al-Rumayyan, head of the country's sovereign wealth fund. Separating the Ministry of Energy from Aramco will avoid conflicts of interest as the company prepares for a blockbuster stock market listing. The IPO has been a centerpiece of Vision 2030, a plan to diversify the Saudi economy away from oil, championed by Crown Prince Mohammed bin Salman.

MAX cancellations

American Airlines (NASDAQ:AAL) is extending cancellations of Boeing (NYSE:BA) 737 MAX flights through Dec. 3, but remains confident that the aircraft will be cleared to fly again for the Christmas travel season. It follows a similar step by United Airlines (NASDAQ:UAL), which on Friday said it would take the planes out of its schedule until Dec. 19, while Southwest Airlines (NYSE:LUV) - the largest 737 Max customer in the U.S. - has removed the planes from its schedules until early January. Regulators haven't said when they expect the planes to take to the skies, but even after they sign off, airline executives have said it will take more than a month for them to make Boeing’s software changes and to train their pilots.
Go deeper: Underlying metrics of BA.

No. 1 in 5G?

Huawei has scored more than 50 commercial 5G contracts globally despite being blocked from some major markets amid continued pressure from the U.S. This puts the company ahead of its closest competitors, with Nokia (NYSE:NOK) in July saying it had 45 commercial 5G deals, while Ericsson's (NASDAQ:ERIC) latest published number was 24. Europe has become a key battleground with several countries still weighing up their 5G position on Huawei, which is already blocked in the U.S., Japan and Australia.
Go deeper: Compare Nokia and Ericsson side by side.

Fight for speedy shipping

The latest move will see Walmart's (NYSE:WMT) Mexico unit offer delivery within three hours for about 12,000 products ordered online after it opened two local distribution centers in its largest overseas market. Rival Amazon (NASDAQ:AMZN), which launched in Mexico in 2015, offers same-day delivery within Mexico City for some items. The delivery wars have already prompted Walmart to offer free next-day delivery in the U.S. in May, shortly after Amazon announced a similar offer.
Go deeper: Growth report card of WMT.

Today's Markets

In Asia, Japan flat. Hong Kong -0.4%. China +0.2%. India -1.7%.
In Europe, at midday, London flat. Paris -0.4%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.8%. S&P -0.7%. Nasdaq -0.9%. Crude -1.1% to $54.52. Gold +0.7% to $1540.20. Bitcoin +5.7% to $10348.
Ten-year Treasury Yield -3 bps to 1.48

Today's Economic Calendar
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
5:00 PM Fed's Rosengren Speech

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Wall Street Breakfast: Trade Optimism Resurfaces

Author: skywalker   |  Publish date: Thu, 29 Aug 2019, 10:27 AM


U.S. stock index futures are continuing a pre-Labor Day rally, with the DJIA up by 228 points, as China indicated it wouldn't immediately retaliate against the latest U.S. tariff increases set for Sept. 1. The two countries are also discussing face-to-face talks to be held in the U.S. in September, according to China's Commerce Ministry, which said it's willing to resolve the trade war with a "calm attitude." On the economic calendar, a second reading of U.S. GDP growth will be released this morning that's expected to be revised down slightly to 2.0%, after showing a 2.1% growth in its earlier estimate.

Ultra-long bonds

The 30-year U.S. Treasury yield surged almost 8 basis points to 2.048% late Wednesday on news that the Treasury Department was assessing market demand for 50-year or 100-year bonds. Issuing the long-term debt would limit the cost to taxpayers of plugging the almost $1T annual budget deficit and could provide returns to pension funds despite falling yields. "If the conditions are right, then I would anticipate we'll take advantage of long-term borrowing," Treasury Secretary Steven Mnuchin told Bloomberg.

Reprieve on methane rules

A sweeping proposal from the Trump administration would erase Obama-era rules on methane emissions from the oil-and-gas industry, marking the latest attempt to further boost record crude and natural gas production by easing regulations. Some companies have asked for the rollback, while others, including Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (RDS.A, RDS.B), have warned that a lack of government-backed minimum requirements to curb emissions could undermine the argument that natural gas is a cleaner fuel. Legal wrangling could lead to years of uncertainty before deregulation would lower costs.
Go deeper: Williams Equity Research makes the case for buying XOM.

New coalition in Italy

Italian Prime Minister Giuseppe Conte has been given a mandate to form a new government as the opposition Democratic Party set aside its differences with the anti-establishment 5-Star Movement to form a coalition. In an early, basic draft of a coalition policy platform, the two sides would ask the EU for flexibility on the 2020 budget deficit to "reinforce social cohesion" in the country, according to Il Sole 24 Ore. It caps an extraordinary three weeks that could mark a turning point in Italy's frayed relations with the EU.
Go deeper: Holdings of iShares MSCI Italy Capped ETF (NYSEARCA:EWI).

Ninth sovereign default?

Argentina is looking to restructure its debt with the IMF and bondholders in an effort to stem a confidence crisis that has upended the country’s financial markets. The nation will now delay $7B of payments on short-term local debt due this year and will seek a "voluntary reprofiling" of $50B of longer-term debt, as well as postponement on the repayment of $44B of loans from the IMF. The move will probably be judged as another sovereign default, although Argentina is at the moment only seeking a voluntary extension of repayment times, rather than "haircutting" interest payments or the size of its debt.

Options to save Iran deal

Europe should either ask Washington to restore sanctions waivers for Iran's oil or provide a credit line to the Islamic Republic if it wants to save the nuclear deal, the country’s deputy foreign minister, Abbas Araghchi, said in an interview to state TV. Iran has previously said a "third step" of fresh nuclear deal breaches will be taken on Sept. 6 unless a new understanding between Tehran and the European sides is achieved.

Tesla insurance

Model X, Model 3 and Model S owners in California will now have the option of taking out auto insurance through Tesla (NASDAQ:TSLA), an alternative the company declared will "expand to additional U.S. states in the future." Although it did not provide specific costs, Tesla said its offering may be as much as 30% less than other insurance plans. Warren Buffett has criticized the venture, and predicted that the EV maker will struggle as it heads into auto insurance, a field in which Berkshire Hathaway (BRK.A, BRK.B) thrives.
Go deeper: Michael Murphy discusses the Tesla bulls and bears.

Retail roundup

Things are getting harder in the retail landscape as Forever 21 reportedly considers filing for bankruptcy, in a move that could put pressure on mall owners Simon Property Group (NYSE:SPG) and Brookfield Property Partners (NASDAQ:BPY). Struggles also saw Hudson's Bay (OTCPK:HBAYF) offload Lord & Taylor on Wednesday to clothing rental startup Le Tote for $100M. Not everything is so bleak, however, as sneaker retailer Puma (OTCPK:PUMSY) opened its first U.S. flagship store today on the corner of Fifth Avenue and 49th Street in Manhattan.
Go deeper: Historical performance of Simon Property Group.

Tightening privacy rules

Apple (NASDAQ:AAPL) will no longer automatically save audio recordings of customers' interactions with Siri after temporarily suspending the practice following a Guardian report that contractors frequently heard personal information. "We realize we haven’t been fully living up to our high ideals, and for that we apologize," the company wrote in a blog post. Siri audio review will be strictly opt-in in an upcoming software update and only Apple employees (not contractors) will be able to review the recordings.
Go deeper: Quant, SA, Sell Side ratings of Apple.

Political ads

Facebook (NASDAQ:FB) is continuing to get ready for the 2020 U.S. election with new rules for political advertising. The company said it's strengthening the authorization process for U.S. advertisers, showing more info about each advertiser and updating its list of social issues. An update to social issues will also bring Facebook's U.S list to 10 categories rather than 20 distinct subject areas - a change in line with its lists for countries that have recently held elections.

Wednesday's Key Earnings
Box (NYSE:BOX) -7.9% AH despite beats, in-line outlook.
Brown-Forman (NYSE:BF.B) -0.2% on mixed results.
Coty (NYSE:COTY) +6% selling its stake in Younique.
Nutanix (NASDAQ:NTNX) +19.3% AH following a Q4 surprise.
PVH Corp. (NYSE:PVH) -0.9% AH cutting full year guidance.
Tiffany & Co. (NYSE:TIF) +3% posting a profit beat.

Today's Markets

In Asia, Japan -0.1%. Hong Kong +0.3%. China -0.1%. India -1%.
In Europe, at midday, London +1.2%. Paris +1.5%. Frankfurt +1.2%.
Futures at 6:20, Dow +0.9%. S&P +0.8%. Nasdaq +1.1%. Crude +0.6% to $56.06. Gold -0.2% to $1546.10. Bitcoin -6.6% to $9473.
Ten-year Treasury Yield +3 bps to 1.47%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 GDP Q2
8:30 International Trade in Goods
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
8:30 Corporate profits
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
1:00 PM Results of $32B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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Wall Street Breakfast: J&J Gains After Favorable Opioid Ruling

Author: skywalker   |  Publish date: Tue, 27 Aug 2019, 8:59 PM


An Oklahoma district court ordered Johnson & Johnson (NYSE:JNJ) to pay $572M over its role in the opioid epidemic there. One-time co-defendants Purdue Pharma and Teva Pharmaceutical Industries (NYSE:TEVA) settled earlier for $270M and $85M, respectively. Shares are up 2% in premarket action as some had been imagining a fine of $5B or more. The three major drug wholesalers - McKesson (NYSE:MCK), AmerisourceBergen (NYSE:ABC) and Cardinal Health (NYSE:CAH) - should see some action now that J&J's exposure is clarified (J&J has indicated its plan to appeal).

Philip Morris-Altria merger talk makes the rounds

Wells Fargo analyst Bonnie Herzog offered the following on Monday’s unusual drop in shares of Philip Morris International (NYSE:PM) -4% when Altria (NYSE:MO) was showing a cool 1.45% gain. "While we haven't heard any specific news to explain the moves, we believe it could have to do with renewed speculation about a PM/MO combo – a call we first made in December 2016 and we still very much believe will happen especially considering MO's stake in JUUL and iQOS. Also, we find it curious that PM recently announced they will no longer be presenting at the upcoming Barclays consumer conference next week." Neither company has commented on today's action and chatter despite media coverage.
Go Deeper: Seeking Alpha contributors and Sell Siders rate Altria highly.

AstraZeneca's Farxiga Fast Track'd for delaying renal failure in CKD

The FDA designates AstraZeneca's (NYSE:AZN) Farxiga (dapagliflozin) for Fast Track review to delay the progression of renal failure and prevent cardiovascular (CV) and renal death in patients with chronic kidney disease (CKD). Fast Track status provides for more frequent interaction with the FDA review team and a rolling review of the marketing application. Shares are down 1% premarket on light volume. The announcement is available on the company website.
Go Deeper: AZN shares have been climbing all year.

AT&T No. 2 exit paves way for woman executive

The surprise exit of AT&T's (NYSE:T) No. 2 executive clears the way for a woman to ascend to the biggest role for a female executive in the company's history. John Donovan said yesterday that he'd retire from his role as CEO of AT&T Communications - the company's biggest business unit with phone, broadband and pay TV - as of Oct. 1 after leading that operation for two years. Insiders and observers think he's likely to be replaced by Lori Lee, the company's CEO of Latin America and global marketing officer. Mentioned second-most in an informal Bloomberg survey: Susan Johnson, executive VP of global connections and supply chain. (Others named were WarnerMedia chief John Stankey and AT&T Business lead Thaddeus Arroyo).

Monday's Key Earnings
Bilibili (NASDAQ:BILI) +1.4% PM on Q2 earnings beat.
Caleres (NYSE:CAL) +10.2% PM on Q2 earnings beat and comp store sales growth.
Standex International (NYSE:SXI) +14% AH on Q4 earnings beat, CFO resignation.

Today's Markets

In Asia, Japan +0.96%. Hong Kong -0.06%. China +1.35%. India +0.43%.
In Europe, at midday, London -0.09%. Paris +0.29%. Frankfurt +0.49%.
Futures at 7:15, Dow flat. S&P flat. Nasdaq +0.07%. Crude +1.1% to $54.23. Gold +0.16% to $1,539.60. Bitcoin -1.88% to $10,164.
Ten-year Treasury Yield -3.3bps to 1.513%.

Today's Economic Calendar
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg.
1:00 PM Results of $40B, 2-Year Note Auction

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Wall Street Breakfast: Trump Says China 'Wants To Make A Deal'

Author: skywalker   |  Publish date: Mon, 26 Aug 2019, 10:53 AM


Stock futures rebounded from early overnight losses of as much as 1.6% after Pres. Trump said Chinese officials had called him to say they want to restart trade talks. China "wants to make a deal," Trump said at the G-7 summit meeting, adding he had received "two calls from China." The Chinese government did not directly address Trump's comments, but Vice Premier Liu He said his side wants to "resolve the problems through negotiation and cooperation in a calm manner." The conciliatory tone follows additional threats over the weekend, including a White House statement that the president had regretted not escalating tariffs further on Chinese goods. However, the editor of China's Global Times said the country is preparing for a "scenario in which China-U.S. trade relations deteriorate further, even much worse than now."

Trump 'ordered' U.S. firms to leave China, but his authority is limited

The most worrisome - and confusing - part of President Trump's Friday tweetstorm may have been his declaration that U.S. businesses operating in China were "hereby ordered" to look for alternative locations. Trump claimed he could use the International Emergency Powers Act of 1977 to force companies to move their supply chains out of China, but he later said he has no plans to do so for now, a point emphasized on the Sunday TV talk shows by U.S. Treasury Secretary Mnuchin and economic advisor Kudlow. The president has no authority to simply order companies out of China, but the Act could allow him to block imports and freeze Chinese assets; such action would trigger an automatic override vote in Congress and prompt challenges in the courts. The tariff escalation already is a negative overhang for overall markets, particularly shares of semiconductor and retail companies, and an emergency declaration would further weigh on the markets.

Yuan slumps to historic lows as investors flee trade war risk

China's yuan plunged to an 11-year low against the dollar in onshore trade and tumbled to a record low in offshore trade, as the U.S.-China trade war sparks wild swings with a resolution unlikely to be reached soon. The onshore yuan fell 0.9% to 7.1448 vs. the dollar, its weakest point since February 2008, while the offshore yuan - which trades more freely - dropped to as low as 7.1858 vs. the dollar, its weakest in the nine years since the Chinese government allowed the currency to trade in Hong Kong and elsewhere outside mainland China. "China's economy is slowing, so the yuan will only fall further unless authorities take steps to stop it," according to Takuya Kanda of Gaitame.com Research Institute in Tokyo.

U.S., Japan reach trade deal in principle

The U.S. and Japan have reached a trade agreement in principle that would pave the way for more U.S. farm exports to Japan, President Trump announced after meeting with Japanese Prime Minister Abe at the G-7 summit in France. As part of the deal, Japan agreed to buy a significant portion of the U.S. corn surplus. U.S. tariffs on imported Japanese cars would remain but not increase, and other U.S. tariffs would be dropped. The deal also covers industrial tariffs and digital trade. Trump said a formal agreement could be signed next month at the United Nations General Assembly. It is not clear if an agreement would require ratification by Congress.

UBS stays long gold, hikes price outlook to $1,600

Gold will extend its recent gains as the U.S.-China trade dispute slows growth, risking a deeper slowdown and inviting more central bank easing, UBS analysts say in predicting the yellow metal may hit $1,600 per ounce within three months. "Gold has demonstrated its safe-haven qualities and we stay long the metal, a trade we initiated in mid-May," according to the latest report from UBS's wealth management unit. UBS has a three-month trading range of $1,450-$1,600, plus a six-month forecast of $1,600 and 12-month view of $1,650, after both the half-year and 12-month outlooks previously were set at $1,500 per ounce.

Disney to open stores in 25 Target locations, plans 40 more by late 2020

Walt Disney (NYSE:DIS) and Target (NYSE:TGT) have unveiled a collaboration that will open 25 Disney stores inside select Target stores across the U.S. on October 4, with plans for 40 additional locations by October 2020. The new Disney "shop-in-shop" stores will be operated by Target employees and carry more than 450 items, including toys, games and clothing. The move helps extend Disney's reach beyond its mall locations, says Bob Chapek, the company's chairman of parks, experiences and products. The new partnership with Target will boost Disney's total store count of 300 locations by about 22%.

Deutsche Bank, UBS explored European banking alliance

Deutsche Bank (NYSE:DB) and UBS (NYSE:UBS) have explored ways to combine their businesses, including talks as recently as June to form an unusual alliance of investment banking operations, the Wall Street Journal reports. A deal never coalesced, as the two sides failed to sort out difficult issues such as how to structure and allocate capital to any joint operations, according to the report. But the talks between Germany and Switzerland's biggest lenders show how far European lenders are willing to go to address a punishing banking environment where European banks are struggling amid negative interest rates and slowing economic growth.

Johnson & Johnson opioid ruling expected today

Johnson & Johnson (NYSE:JNJ) is bracing itself for a ruling today from an Oklahoma judge over whether it should be held liable in a lawsuit by the state's attorney general who argues the company sowed the seeds of the U.S. opioid crisis. The verdict, expected at around 4:00 p.m. Eastern Time will be the first on whether J&J's sales of opioids contributed to an epidemic described by the Oklahoma AG in his opening remarks as the "worst man-made public health crisis in the history of this country and this state." The state has asked for more than $17 billion to fix the epidemic over a 30-year plan; if the judge sides entirely with the state, the verdict would be the biggest monetary award handed down in a bench trial in U.S. history.

No reply to lenders from Ascena Retail

Faltering Ascena Retail Group (NASDAQ:ASNA) is raising new bankruptcy worries alongside a New York Post report that the company has not returned calls or emails for at least a month to a group of lenders who are collectively owed more than $1.4 billion. The group — owner of brands including Dressbarn, Ann Taylor, Loft, Lane Bryant and Justice — has not yet missed any payments, but "It's been radio silence from Ascena, and the lenders [are] just spooked at this point," a source told the Post. Also, there has been no new information about the company's attempts to shutter Dressbarn by demanding landlords release 650 stores from their lease obligations, which could come to $302 million if the landlords balk.

Tesla inspecting sites for possible factory in Germany

Tesla (NASDAQ:TSLA) is scouting out locations for a possible factory in Germany's North Rhine-Westphalia state, and first inspections have taken place, the Rheinische Post reports. NRW, Germany’s most populous state, shares borders with the Netherlands and Belgium, and CEO Elon Musk said last year that Germany was a leading choice to build a new Gigafactory, adding "the German-French border makes sense, near the Benelux countries." Tesla is also looking at Germany's Lower Saxony state, which shares a border with the Netherlands, its economy minister said last week.

Today's Markets

In Asia, Japan -2.17%. Hong Kong -1.91%. China -1.17%. India +2.1%.
In Europe, at midday, London Closed. Paris +0.49%. Frankfurt +0.27%.
Futures at 6:20, Dow +1.1%. S&P +1%. Nasdaq +1.5%. Crude +1.20% to $54.82. Gold flat at to $1,573.30. Bitcoin +2.1% to $10,372.
Ten-year Treasury Yield -7.8 bps to 1.449%.

Today's Economic Calendar

8:30 Chicago Fed National Activity Index
8:30 Durable Goods
10:30 Dallas Fed Manufacturing Survey

 

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Wall Street Breakfast: Powell Takes The Stage

Author: skywalker   |  Publish date: Fri, 23 Aug 2019, 10:18 AM


The annual Jackson Hole symposium is in the spotlight again today. While the gathering in the Grand Tetons typically gravitates toward academic discussions on policy, this year's meeting has heightened political, trade and rate considerations swirling around it. Federal Reserve Chairman Jerome Powell will make his first public remarks since the Fed cut interest rates for the first time in over a decade. The stakes are high for Powell with disagreement within the Fed over the strength of the U.S. economy and the pace of rate cuts.

G7 drama

World leaders will start arriving in Biarritz, France today for the G7 summit scheduled for August 24-26. The summit takes place amid growing concerns of a global economic slowdown and an escalation of the U.S.-China trade war. Expectations are running low that any sort of official coordinated statement will be issued from the event, although some of the one-on-one meetings could be dramatic. The meeting marks a changing of the guards of sorts. German Chancellor Angela Merkel has lost influence ahead of her departure, while Italy just saw its prime minister resign. Boris Johnson will rep Britain amid the Brexit turmoil, and Donald Trump strolls in looking for allies in the fight against China's trade practices.

Tesla turns to LG Chem

Tesla (NASDAQ:TSLA) plans to buy batteries from South Korea's LG Chem Ltd. (OTCPK:LGCLF) for the electric vehicles it manufactures at its Shanghai plant, sources told Bloomberg. The LG Chem batteries are expected to be used initially in Model 3 cars. Shares of Tesla are up 0.83% in premarket trading to $224.00, while LG Chem rose 2.97% earlier in Seoul trading.

All things Disney

Disney's (NYSE:DIS) high-profile D23 media event begins today. Studios will be front and center, as Disney, Pixar, Lucasfilm, and Marvel all have an extensive film slate that could be previewed in detail. New content plays from Disney+, ESPN+ and Hulu are expected to be discussed and the next trailer for Star Wars: Episode 9 is likely to be unveiled. There could also be some theme park news from the company on the integration of Marvel attractions and the East Coast launch of Star Wars: Galaxy's Edge at Disney's Hollywood Studios.
Go deeper: See a breakdown of Disney's profitability grade.

Low inflation in Japan

Consumer prices in Japan rose 0.6% in July compared to a year ago to match the expectation of analysts. The low rate is another miss by the Bank of Japan in hitting its 2% inflation target rate. Economists expect consumer price inflation to slow even more in the months ahead due to low oil prices and government support for pre-school education costs. The tepid pace of inflation adds to the speculation that the Bank of Japan will fire off stimulus as early as next month.
Go deeper: Check out the performance of the iShares MSCI Japan ETF.

YouTube disables 210 channels linked to Hong Kong

YouTube (GOOG, GOOGL) became the latest social media company to disable content related to the Hong Kong protests, disabling 210 video channels linked to coordinated disinformation. The company say it found the use of virtual private networks and other hallmarks of accounts trying to hide their origin. The move follows similar China-related actions by Twitter (NYSE:TWTR) and Facebook (NASDAQ:FB) this week.

Toy deal

Hasbro (NASDAQ:HAS) struck a deal to acquire Entertainment One (OTCPK:ENTMF) in an all-cash transaction valued at approximately $4.0B. The company said the acquisition of eOne adds story-led global family brands that deliver strong operating returns to its portfolio and provides a pipeline of new brand creation. Hasbro expects to realize in-sourcing and other global annual run rate synergies of ~$130M per year by 2022.
Go deeper: Read the latest opinion articles on Hasbro.

Japan, U.S. stretch talks after falling short of trade deal

Negotiators for Japan and the United States fell short of a bilateral trade deal after marathon talks, but the two countries will extend the talks Friday. That's in hopes of bringing more concrete issues to the big table when U.S. President Trump and Japanese Prime Minister Shinzo Abe gather on the sidelines of the Group of Seven summit this weekend in France. Gaps remain between the two on automobiles and agriculture.

Boeing ramps up

Boeing (NYSE:BA) told suppliers it will resume production of its best-selling 737 jets at a rate of 52 per month by February 2020 and step up to a record 57 per month in June. Suppliers were told that the new schedule depends upon regulators approving the 737 MAX to fly again commercially in Q4. Rate changes by major manufacturers are usually incremental and communicated months or even years in advance, but the unprecedented challenge to the 737 program is said to have forced Boeing to scramble.

New leadership at Overstock.com

Overstock.com (NASDAQ:OSTK) rallied after CEO Patrick Byrne stepped down from his position and severed ties with the company. Earlier this month, shares of Overstock.com fell sharply when Byrne referred to federal agents as the "Men in Black" and detailed his involvement with investigations related to the Clintons and Russian election interference.
Go deeper: See how the Quant rating on Overstock.com stacks up.

Thursday's Key Earnings
Salesforce (NYSE:CRM) +6.8% PM on beat-and-raise.
HP (HPQ) -6% PM after Q3 earnings beat, in-line Q4 guidance and new CEO.
VMware (VMW) -5.4% PM on earnings beat, Carbon Black and Pivotal acquisition.
Ross Stores (NASDAQ:ROST) -1.8% AH despite topping comp sales expectations.
The GAP (NYSE:GPS) -3% AH on comp store sales miss, guidance trim.
Intuit (NASDAQ:INTU) +5.3% AH on Q4 beat, in-line guidance.

Today's Markets

In Asia, Japan +0.40%. Hong Kong +0.50%. China +0.49%. India +0.81%.
In Europe, at midday, London +0.74%. Paris +0.53%. Frankfurt +0.45%.
Futures at 6:20, Dow +0.33%. S&P +0.37%. Nasdaq +0.51%. Crude -0.13% to $55.28. Gold -0.21% to $1,505.30. Bitcoin +1.8% to $10,177.
Ten-year Treasury Yield +3.4bps to 1.644$

Today's Economic Calendar
10:00 New Home Sales
10:00 Jerome Powell Speech
1:00 PM Baker-Hughes Rig Count

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