Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Mon, 6 Apr 2020, 8:53 AM

 

Wall Street Breakfast: Coronavirus Threat Prompts More China Stimulus

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The Shanghai Composite Index closed up 1.8% overnight as the PBOC lowered its benchmark lending rates, cutting its one-year loan prime rate from 4.15% to 4.05% and the five-year rate from 4.80% to 4.75%. The move follows the central bank's decision on Monday to lower interest rates on its one-year medium-term lending facility - funds the PBOC lends to financial institutions - from 3.25% to 3.15%. "The ten basis point reduction will help companies weather the damage from the coronavirus at the margins," said Julian Evans-Pritchard, senior China economist at consultancy Capital Economics.

World's biggest shipper sees coronavirus peak

"Over the last two and a half weeks we have seen a steady decline in the number of new [coronavirus] cases" and "that is positive," A.P. Møller-Mærsk (OTCPK:AMKAF) CEO Søren Skou told Bloomberg, after soft Q4 results. "It means, very well, we could be set for a peak within the next two weeks," he added. "If that were to be the case, then we would expect a very weak March and a rebound in April, a sharp rebound in April... but there is still a lot of uncertainties out there."
Go deeper: Sunset Analysis flags 'great entry point' for Maersk's turnaround.

Fresh record highs

Markets continue to discount potential coronavirus impacts on the belief that the virus will be largely controlled by the quarter-end and as China continues to loosen its macro policy purse strings. That sent the S&P 500 and Nasdaq to new closing highs on Wednesday, though stock index futures are now debating direction after inching between gains and losses overnight. The release of weekly jobless claims today will also give us a read on the health of the labor market, while earnings season continues with results from Domino's Pizza (NYSE:DPZ), ViacomCBS (NASDAQ:VIAC), Dropbox (NASDAQ:DBX) and Fitbit (NYSE:FIT).
Go deeper: Damon Verial says to drop Dropbox before earnings.

Fed minutes

The FOMC viewed "current stance of monetary policy" as "appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the committee’s symmetric 2% objective," according to the minutes of its Jan. 28-29 meeting. Still, uncertainties remain, "including those posed by the outbreak of the coronavirus," which warrants "close watching." The monetary policy-setting committee also indicated the central bank could slow its $60B-per-month pace of Treasury bill purchases in Q2 and most Fed officials were comfortable with this proposal.

Victoria's Secret to go private

L Brands (NYSE:LB) is nearing a deal to sell control of Victoria's Secret in a transaction that values the lingerie brand at about $1.1B, WSJ reports. Private-equity player Sycamore Partners is expected to buy 55% of the struggling business and take it private, while L Brands will retain a 45% stake that will include the Pink chain. Alongside, L Brands Chairman and CEO Leslie Wexner, the embattled billionaire who has run the retail company for more than 50 years, will step down from both roles (but remain on the board).
Go deeper: 'The Importance Of The Victoria's Secret Sale' by Robbe Delaet.

FrownDirectClub

The top dentist and public face of SmileDirectClub (NASDAQ:SDC) is at risk of losing his California license following a two-year state dental board investigation, according to records reviewed by Reuters. Shares closed down 5.4% to $12.37 following the news on Wednesday. The 24-page complaint by the state AG's office accuses Jeffrey Sulitzer of violating state law, defrauding state dental regulators and acting with gross negligence toward patients while helping the company grow its business.

'Copyright case of the decade'

The DOJ has thrown its weight behind Oracle (NYSE:ORCL) in a pivotal Supreme Court case against Google (GOOG, GOOGL). At issue is the way Google used Java in Android. Oracle argues the tech giant copied 11,500 lines of its code more than 10 years ago, though Google posits it was legal under the fair use doctrine. The entire case hinges on whether it's possible to copyright APIs and could have significant consequences as the high court weighs the limits of copyright law in the digital age.
Go deeper: Oracle valuation could have hit a floor, writes The Software Side of Life.

Data breach at MGM Resorts

MGM Resorts (NYSE:MGM) has confirmed the personal information of more than 10.6M guests who have stayed at its hotels, including celebrities and tech CEOs, that was published on a hacking forum earlier this week. While the leaked files contained "full names, phone numbers, addresses, emails and dates of birth... no financial, payment card or password data was involved in this matter." MGM's hotels include Bellagio, Aria, MGM Grand, Mandalay Bay, Park MGM, Mirage, New York New York, Luxor and Excalibur in Las Vegas.

Europe unveils ambitious tech blueprint

By creating a single European market for data, the European Commission is hoping to pool the region's expertise and challenge the dominance of Silicon Valley and China in artificial intelligence and technology. There's also a big focus on industrial data and the next wave of connected innovation via the so-called "Internet of Things." Other elements of the Commission's proposal included new rules covering cross-border data use, data interoperability, climate change, the auto industry, healthcare and financial services.

Curbs on exports?

A deputy-level meeting of U.S. government officials today will explore further restrictions on exports to Huawei and China, with some favoring a tougher line and others more focused on prioritizing trade ties with Beijing. The gathering comes ahead of a cabinet-level meeting scheduled for Feb. 28. Doubts have already swirled about whether the meetings would take place after President Trump on Tuesday blasted a proposal that would've prevented companies from supplying jet engines and other components to China's aviation industry.

Wednesday's Key Earnings

Avis Budget (NASDAQ:CAR) +13.3% AH showing 'best' December in the U.S.
Bausch Health (NYSE:BHC) -5.7% on $3.25B debt offering.
Energy Transfer (NYSE:ET) -0.2% AH as growth panned out in Q4.
Hyatt Hotels (NYSE:H) -3.1% AH giving a cautious outlook.
Stamps.com (NASDAQ:STMP) +28.6% AH on major Q4 beats.
Realty Income (NYSE:O) +0.7% AH issuing strong 2020 guidance.
Zillow (NASDAQ:Z) +16.6% AH juiced by its Homes segment.

Today's Markets

In Asia, Japan +0.3%. Hong Kong -0.2%. China +1.8%. India -0.4%.
In Europe, at midday, London flat. Paris -0.2%. Frankfurt -0.1%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude +0.4% to $53.70. Gold +0.1% to $1614. Bitcoin -5.4% to $9611.
Ten-year Treasury Yield -3 bps to 1.54%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:20 PM Fed's Barkin Speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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