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

 

Wall Street Breakfast: Next Trigger For Shale Expansion?

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Surpassing a crucial threshold for spurring new shale drilling, WTI crude is approaching $62 a barrel for the first time in three years as the API reported a major draw in crude inventories and political unrest grows in Iran. In last month's survey of more than 100 oil industry executives, the Dallas Fed found 42% would expand drilling with prices between $61 to $65. An additional 31% would increase investment when prices top $66.

Economy

Major Asian markets traded mostly higher overnight on the back of a stronger lead from Wall Street, with solid manufacturing data from the U.S. and China reinforcing optimism about the world economy. Catching up to overseas gains, the Nikkei finished up 3.3% to 23,506, its highest level since January 1992. Tokyo markets were closed from Monday to Wednesday for the New Year holidays.

China's financial authorities have published new guidelines to regulate bond trading, with a focus on restricting leverage and banning under-the-table deals designed to skirt regulations, sources told Reuters. The rules, jointly issued by the PBOC and China's banking, securities and insurance regulators, come as Beijing launches a series of coordinated initiatives designed to reduce leverage in the financial system.

Just 24 hours after President Trump took aim at Pakistan, the nation already appears to be cozying up to the world's second-largest economy. Pakistan's central bank announced that it will be replacing the dollar with the yuan for bilateral trade and investment with China. Islamabad is home to Beijing's near $60B collection of infrastructure projects known as the China-Pakistan Economic Corridor - a centerpiece of the Belt and Road initiative.

Closing the gender gap? Starting this week, companies in Iceland with at least 25 full-time employees will be required to demonstrate that they pay male and female workers equally. The law is believed to be the first of its kind in the world and covers both the private and public sectors. Failing to do so can result in fines set at around $500 per day.

Australia plans to become the fourth country in the world to legalize medicinal marijuana exports in a bid to score a piece of the estimated $55B global market. Despite growing demand, only Uruguay, Canada and the Netherlands have so far legalized the export of medicinal cannabis. Israel has said it intends to do so within several months.

Besides the "cryptoruble," Venezuela is getting ready to release its own new digital currency, called the Petro. The government claims it will launch "in a matter of days," backed by 5.4B barrels of oil reserves valued at $267B, as well as gold and diamonds. According to President Maduro, 860K people have already registered to create Petro mining farms.

Stocks

CEO Brian Krzanich sold off a large chunk of his stake in Intel (NASDAQ:INTC) last year - after the chipmaker was already aware of security flaws in its computer processors, but before it was publicly disclosed on Wednesday. While a spokeswoman said the sale was "unrelated," the move brought down the total number of shares he owned to 250K, which is the minimum number of shares that the CEO of Intel is required to own. INTC -1% premarket.

Need for speed... AT&T (NYSE:T) said it will launch 5G mobile network service in a dozen cities in the U.S. by late 2018 after international wireless standards for the network were finalized last month. The carrier had already been conducting 2017 5G trials across the nation. Verizon (NYSE:VZ) also plans to offer 5G residential broadband in up to five markets this year.

Spotify has confidentially filed for an IPO with U.S. regulators and is targeting a direct listing in the first half of 2018, sources told Reuters. If Spotify (Private:MUSIC), which was valued at as much as $19B last year, goes ahead with the plans, it would be the first major company to carry out a direct listing, an unconventional way to pursue an IPO without raising new capital.

Signing a deal to jointly develop self-driving technology with Baidu (NASDAQ:BIDU), BlackBerry (NYSE:BB) shares closed up almost 13% on Wednesday. The deal follows similar agreements with Qualcomm (NASDAQ:QCOM), Denso (OTCPK:DNZOY) and Aptiv (NYSE:APTV) to develop autonomous technology with BlackBerry's QNX software, which are expected to start generating revenue in 2019.

Tesla -3.2% premarket after breaking another production promise with its Model 3, pushing back an output target for the new vehicle after shipping fewer of the sedans than expected. "As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time... We intend to achieve the 5,000 per week milestone by the end of Q2," Tesla (NASDAQ:TSLA) said in a statement.

The judge overseeing the bankruptcy of Takata's (OTCPK:TKTDQ) U.S. unit has cleared the way for the company's creditors to vote on its Chapter 11 plan. However, critics say the arrangement limits the legal rights of those hurt by its faulty airbags, which have been linked to at least 180 injuries and 18 deaths. Takata filed for bankruptcy last June, stating it would sell its viable operations to Key Safety Systems.

Ratcheting up its war against UBER, Didi Chuxing (Private:DIDI) has confirmed the acquisition of Brazilian ride-sharing company 99, as it expands its service into Latin America. While terms of the deal were not disclosed, it's expected to value 99 at around $1B. That includes $600M to buy out investors and $300M into expanding the business, as well as Didi's original $100M investment in January.

Citing concerns over bitcoin's suitability as an investment, Merrill Lynch (NYSE:BAC) has banned clients and financial advisers who trade on its behalf from buying the cryptocurrency, WSJ reports. The U.S. brokerage arm of UBS already bars its advisers from dealing in bitcoin-related products, and several firms have told clients they wouldn't offer access to the bitcoin futures market when it went live on Dec. 10.

American Express expects to report a Q4 loss due to a $2.4B hit from the recent U.S. tax overhaul - which makes it cheaper for American firms to repatriate profits. That would mean full-year 2017 earnings would be below its $5.80-$5.90 per share forecast. But like other companies, AmEx (NYSE:AXP) predicts the lower corporate tax rate to be a significant benefit in the long run.

Battling slowing sales and online competition, Macy's (NYSE:M) will announce another round of store closures this week, Business Insider reports. The eleven closures are part of a plan announced in August 2016 to shut down 100 locations, or about 15% of Macy's store base at the time. Shares of the department store chain have fallen more than 25% over the past 12 months.

Thank you, Alexa! Echo owners are Amazon's (NASDAQ:AMZN) most loyal and frequent shoppers, according to a report by Consumer Intelligence Research Partners. CIRP states that Echo owners spend an average of $1,700 a year on Amazon, more than the $1,300 Prime members are estimated to be spending annually on the e-commerce site. That's also 66% more than the average spend by all Amazon customers.

Today's Markets

In Asia, Japan +3.3%. Hong Kong +0.6%. China +0.5%. India +0.5%.
In Europe, at midday, London flat. Paris +1.1%. Frankfurt +1%.
Futures at 6:20, Dow +0.3%. S&P +0.1%. Nasdaq +0.2%. Crude +0.4% to $61.89. Gold -0.3% to $1314.10. Bitcoin -4% to $14524.
Ten-year Treasury Yield +2 bps to 2.46%

Today's Economic Calendar

Chain Store Sales
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
8:30 Initial Jobless Claims
9:45 PMI Services Index
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:30 PM Fed's Bullard: U.S. Monetary and Economic Policy
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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