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Author: skywalker   |   Latest post: Tue, 23 Jul 2019, 12:00 PM

 

Wall Street Breakfast: Equities March Higher

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It looks like there is another session of gains in store for Wall Street, with DJIA futures up by 120 points and the S&P 500 and Nasdaq ahead by over 0.5%. The advance comes despite the latest trade war comments from President Trump, who said that if Chinese President Xi Jinping did not attend the G-20 meeting later this month, there would be additional duties "immediately" levied on Chinese goods. "The China deal is going to work out. You know why? Because of tariffs," he told CNBC. "Right now, China is getting absolutely decimated by companies that are leaving China, going to other countries, including our own, because they don’t want to pay the tariffs."

Big Tech on trial

Congress will begin its scrutiny of America's tech giants this afternoon amid growing discomfort in Washington over the power that the companies wield over the industry and public life. An inaugural hearing by the House Judiciary Committee will analyze anti-competitive practices among Silicon Valley’s biggest names, starting with a look at the impact of their platforms on news content, the media and the spread of misinformation online. The committee has already put Amazon (NASDAQ:AMZN), Google (GOOG, GOOGL), Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL) on alert, and members made clear that the tech titans will go under the microscope.

Tesla annual meeting

Tesla (NASDAQ:TSLA) is gearing up for its annual shareholder meeting - set to kick off today at 5:30 p.m. ET - amid recent wild stock fluctuations driven by sudden sentiment changes on Wall Street. This year, shareholders will consider the re-election of two board members, new equity incentive and employee stock purchase plan, as well as recertification of the company's outside accounting firm, a public policy committee and a proposed simple majority rule to replace the current super majority. After swinging to a loss in Q1, Elon Musk insisted that the company will return to profitability in the second half of 2019, meaning investors will focus on any updates to those predictions.

Amazon Go is loving The Big Apple

Just a month ago, Amazon (AMZN) opened its first cashier-free convenience store in New York. This morning it will open another. 300 Park Avenue in Midtown will also be the second Amazon Go location to serve brewed coffee and espresso drinks, something the company has been testing back in Seattle in a deal with Starbucks (NASDAQ:SBUX). Cameron James, VP of physical stores at Amazon, wouldn't comment on how many stores Amazon ultimately plans to bring to New York, but it's been reported the company could open as many as 3,000 locations across the country by 2021.

Beijing support and PBOC action

China equities outperformed overnight, with the Shanghai Composite jumping 2.6%, after Beijing encouraged local governments to use special bonds for infrastructure projects in a bid to shore up economic growth. That helped offset President Trump's threat to raise tariffs again if President Xi Jinping doesn’t meet with him at the G-20 summit at the end of June. The onshore yuan also bounced off its closing low of the year as the PBOC set its reference rate higher than forecast and announced plans to sell bills this month after the currency was hit in May.

Disciplinary procedures for Italy?

Representatives of the EU's national governments are gathering today to decide whether to start disciplinary procedures over Italy's rule-breaking debt levels. Deputy Prime Minister Matteo Salvini has chosen, for now, to play the stand-off softly, insisting that he didn't want to "pick up a fight with Europe" and that a compromise could be found. Easing concerns about a snap election, heads of the ruling parties are set to meet with finance minister Giovanni Tria to set out a shared budget package acceptable to the EU Commission.

CVS-Aetna deal on the rocks

Federal judge Richard Leon appears to be on track to derail CVS's (NYSE:CVS) $69B plans to buy health insurer Aetna, amid concerns the deal would give the nation's biggest drug store too much power and result in higher drug prices, sources told the New York Post. After sparring with lawyers and witnesses for two days last week, Judge Leon scheduled oral arguments for July 17 and is expected to rule soon after that. A rejection would likely set the stage for an appeal by DOJ, which has recommended that the deal be approved.

Shutterfly taken private

Shutterfly (NASDAQ:SFLY) has reached a deal to be acquired by private-equity firm Apollo Global (NYSE:APO) for $2.7B. The $51 per share cash consideration represents a premium of 31% when compared to Shutterfly’s unaffected closing stock price of $38.91 on April 23, 2019, the last trading day before a media report was published about the transaction. According to the WSJ, Apollo will also buy Snapfish, which it plans to combine with Shutterfly to create a bigger player in online-photo services.

Nissan seeks peace with Renault

Nissan (OTCPK:NSANY) must "make our peace" with Renault (OTCPK:RNLSY), according to CEO Hiroto Saikawa, after a feud threatened to rip apart the 20-year alliance between the two companies. It's not merely a cross-shareholding or board member exchange structure, he added, but a "cradle" for cooperation and value creation. The future of the partnership was thrown into doubt after last year’s arrest of Carlos Ghosn, then chairman of Nissan and chief executive of Renault, and became more difficult after Renault and Fiat-Chrysler (NYSE:FCAU) last week held abortive merger talks.

More Iran sanctions

A European payment system, known as INSTEX, designed to circumvent U.S. sanctions on Iran will be ready soon, German Foreign Minister Heiko Maas announced as he met Iranian officials in Tehran. The deal has the Trump administration weighing additional penalties against the Special Trade and Finance Institute, an Iranian financial body set up as a go-between for humanitarian trade with Europe. Punishing the STFI could doom INSTEX because it raises the possibility of sanctions risk to anyone who's a part of the European mechanism.

Today's Markets

In Asia, Japan +0.3%. Hong Kong +0.8%. China +2.6%. India +0.5%.
In Europe, at midday, London +0.5%. Paris +0.8%. Frankfurt +1.3%.
Futures at 6:20, Dow +0.5%. S&P +0.5%. Nasdaq +0.7%. Crude +0.4% to $53.49. Gold -0.2% to $1326.20. Bitcoin +2.8% to $7936.
Ten-year Treasury Yield +3 bps to 2.17%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:30 Producer Price Index
8:55 Redbook Chain Store Sales
1:00 PM Results of $38B, 3-Year Note Auction

 

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