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Author: skywalker   |   Latest post: Mon, 22 Oct 2018, 09:09 AM

 

Wall Street Breakfast: Fate Of The Iran Nuclear Deal?

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Investors are getting ready for President Trump's big decision today on the Iran nuclear accord, which will affect everything from U.S. alliances to trade partnerships and the oil market. Expectations are high that he will exit the deal, but questions remain on how quickly the administration would reimpose sanctions (leaving more time for negotiations). The announcement will come at 2 p.m. ET.

Economy

The U.S. has announced new sanctions on three Venezuelans and 20 companies with ties to President Maduro, whom it blames for a deep recession and hyperinflation that have caused food shortages across Venezuela. Vice President Mike Pence also called for more nations to increase pressure and urged Caracas to suspend a May 20 election he denounced as a "sham."

The Department of Defense has asked the House and Senate armed services committees to include new restrictions on foreign investment in the U.S. in a defense spending bill that's expected to be unveiled this week. The bipartisan legislation would significantly expand the purview of the CFIUS to review transactions involving non-U.S. parties, specifically China.

"China's top economic adviser, the vice premier [Liu He], will be coming here next week to continue the discussions with the president's economic team," White House spokeswoman Sarah Sanders told reporters. The news came as the country reported trade figures for April. China's surplus with the U.S. expanded to $22.19B - compared with a surplus of $15.43B in March.

New York state Attorney General Eric Schneiderman resigned Monday night after the New Yorker published an article in which four women alleged he physically abused them. Shneiderman had made a name by going after bank settlements in the aftermath of the financial crisis. His office also has significant oversight of the financial and banking industries.

"While global factors play an important role in influencing domestic financial conditions, the role of U.S. monetary policy is often exaggerated," Fed Chairman Jerome Powell said in remarks prepared for a conference in Zurich. "There is good reason to think the normalization of monetary policies in advanced economies should continue to prove manageable for emerging economies."

Stocks

Takeda Pharmaceutical has reached an agreement to buy larger rival Shire (NASDAQ:SHPG) for about £46B ($62B), creating the world’s eighth-largest drugmaker with combined sales of $30B. The deal should help Takeda (OTCPK:TKPYY) pivot away from its home base to more lucrative markets like the U.S. and Europe, and add new drugs to its shrinking pool of patent-protected products.

Spurned in its initial pursuit of 21st Century Fox (NASDAQ:FOXA), Comcast (NASDAQ:CMCSA) is preparing to challenge Disney's (NYSE:DIS) $52.4B deal to acquire most of the studio's film and TV assets, Reuters reports. Comcast has asked investment banks to increase a bridge financing facility by as much as $60B so it can make an all-cash offer, but is waiting for a ruling next month on the AT&T (NYSE:T)-Time Warner (NYSE:TWX) merger before making its move.

Gearing up for an IPO in Hong Kong, Xiaomi (XI) is targeting a valuation of between $70B-$80B, WSJ reports. That's less than the recently suggested $100B, but it's still expected to be the world’s biggest listing for a tech company this year. The IPO will likely be followed up with a listing on the Chinese mainland, becoming one of the first companies to use "Chinese depositary receipts."

Snap is hiring Amazon (NASDAQ:AMZN) veteran Tim Stone as its new chief financial officer, replacing Andrew Vollero, who guided SNAP's transition to a public company. The appointment comes a week after the company's quarterly results disappointed Wall Street and follows several recent high-profile departures, including head of sales Jeff Lucas, engineering boss Tim Sehn and general counsel Chris Handman.

Qualcomm is preparing to give up its push to develop processors for data-center servers, an effort that sought to break Intel's (NASDAQ:INTC) hold on the market, sources told Bloomberg. Qualcomm (NASDAQ:QCOM) is now exploring whether to shutter the unit or look for a new owner for the division, which was based on servers powered by CPUs of ARM Holdings (NASDAQ:ARMH).

Carl Icahn and Darwin Deason have updated their position on Xerox (NYSE:XRX). The activist investors said they will consider a deal price of at least $40 per share for the company (instead of the current $28) or a split with Fujifilm (OTCPK:FUJIY) that leaves it independent. Fujifilm responded saying it was confident it will win an appeal to remove the block on its deal with Xerox.

Activist hedge fund ValueAct Capital Partners has invested $1.2B in Citigroup (NYSE:C) over the last four to five months, sending the lender's shares up 1.5% in after-hours trading on Monday. "The U.S. banking system now has a structurally lower risk profile than any time in our investing lifetimes," ValueAct said in a letter, outlining Citi's consistent revenue and reliable nature.

Bitcoin's decline following a climb to nearly $20,000 was directly tied to the launch of a futures market in December 2017, according to research from the San Francisco Federal Reserve. "It is consistent with trading behavior... The launch of bitcoin futures allowed pessimists to enter the market, which contributed to the reversal of the bitcoin price dynamics."

The Department of Defense has resumed accepting F-35 jet deliveries from Lockheed Martin (NYSE:LMT) after reaching an agreement on covering the costs to fix a production error. Terms of the agreement were not disclosed, but Reuters previously had reported that the price reached $119M. The majority of aircraft will be repaired within two years.

Rumors of a potential NASCAR sale have resurfaced, with the France family - which has been the majority owner of the group since its founding in 1948 - reportedly shopping the company. NASCAR is privately held and therefore does not disclose earnings, but a sale could likely fall between $3B-$5B. Formula 1 was recently sold to Liberty Media (NASDAQ:LMCB) for more than $8B.

Looking to reduce debt, Royal Dutch Shell (RDS.A, RDS.B) is selling its 8% stake in Canadian Natural Resources (NYSE:CNQ) in a $4.3B secondary offering that ranks as one of the largest-ever Canadian share sales. It will be watched closely as an indication of investor appetite for Canadian energy, following a period of negative sentiment that recently dissipated with the improvement in oil prices.

Flipkart will reportedly hold a townhall for its employees on Friday, with Walmart (NYSE:WMT) CEO Doug McMillon likely to attend. Before the event, Walmart will acquire an about 60% stake in the Indian e-commerce player, while Alphabet (GOOG, GOOGL) will get a roughly 15% stake for about $3B. SoftBank (OTCPK:SFTBY), which owns roughly a fifth of Flipkart (FPKT) through its Vision Fund, is expected to completely exit its holdings.

Monday's Key Earnings

AMC (NYSE:AMC) +1.7% AH on recent successful films.
Hertz (NYSE:HTZ) -7.5% AH missing profit estimates.
Zillow (NASDAQ:Z) -6.3% AH hit by guidance, CFO exit.

Today's Markets

In Asia, Japan +0.2%. Hong Kong +1.4%. China +0.8%. India flat.
In Europe, at midday, London flat. Paris -0.6%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.3%. S&P -0.3%. Nasdaq -0.3%. Crude -1.3% to $69.83. Gold -0.3% to $1309.80. Bitcoin -0.6% to $9303.
Ten-year Treasury Yield flat at 2.95%

Today's Economic Calendar
3:00 Fed's Powell Speech
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $31B, 3-Year Note Auction

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