Friday Morning Reads
- VIX Manipulation
- Low Forever
- What's Next After the Sell Off?
- Another Day of Selling?
- 10 Things for Today
- The Fate of Tech
- Less Profit
- Senate blocks 'skinny' Obamacare repeal
- Death of the border adjustment tax
- European bank earnings roundup
- Amazon revenue strong, guidance light
- How to trade the Model 3 event?
- Fiat Chrysler learning to love EVs
- Jeff Immelt: Next Uber CEO?
- Largest corporate bond sale of 2017
One of the most important economic releases for July will be published this morning. Investors will be watching the preliminary estimate of second quarter GDP, which will indicate how well the economy bounced back from a lackluster 1.4% revised growth rate in Q1. "The market is looking particularly for a pickup in consumer spending," said Boris Schlossberg, managing director at BK Asset Management. "The results will be vital to the Fed policy going forward."
Unable to pass even a so-called "skinny repeal," it's unclear if Senate Republicans can advance any health bill. The tally overnight was 49-51, with three GOP lawmakers voting against the bill, which would have repealed a medical device tax, along with individual and employer insurance mandates. In a floor speech following the defeat, Senate Majority Leader Mitch McConnell said "it is time to move on."
Sending a cheer through the retail sector, Republican leaders have also abandoned the idea of a border adjustment tax, as part of an effort to present a united front for a broad tax overhaul. "While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it," Steven Mnuchin, Paul Ryan and Mitch McConnell said in a statement.
The border wall prototypes that were supposed to be built in June in San Diego have been delayed until winter because of complaints about the bidding process. The news comes as the House voted Thursday evening on a security bill that included $1.6B to build 74 miles of wall - separate from the prototypes that received $20M in funding earlier this year. Possible beneficiaries: ACM, CX, CXW, EXP, FLIR, FLR, GEO, GVA, KBR, MLM, NUE, STLD, SUM, TPC, TTEK, USCR, USG, VMC, WMS, X
Qatar wants the United Nations to have a greater role in resolving its standoff with a Saudi-led alliance after U.S. and U.K. efforts to find a solution among the parties reached an impasse. "It's all about violation of international law and infringing the sovereignty of the state of Qatar," Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani told reporters. "This is the right place where we have to start to seek our options."
Panama Papers fallout... Pakistan has plunged into a new phase of turmoil after the Supreme Court disqualified Prime Minister Nawaz Sharif from office following an investigation into allegations of corruption. The court also dismissed Finance Minister Ishaq Dar, one of Sharif's closest allies who has been credited with steering the economy to its fastest pace of growth in a decade.
Russia has ordered the U.S. to cut its embassy and other personnel in the country and ousted it from properties in Moscow, retaliating against the passage late Thursday of a new sanctions bill in Congress. The measure, which also imposes penalties on North Korea and Iran, passed the Senate on a 98-2 vote, although President Trump hasn't yet indicated whether he will sign the legislation.
Amazon fell 2.6% in after-hours trading on Thursday, as quarterly income plunged 77%, well below expectations. Revenue was strong, but heavy investments in video and global expansion hurt the retailer's bottom line. CEO Jeff Bezos also briefly unseated Bill Gates as the world's richest person yesterday, when Amazon (NASDAQ:AMZN) shares rose ahead of the earnings report.
Tesla will hand over Model 3 keys to the first 30 customers tonight at a party which will be livestreamed starting at 8:45 p.m. PT. How to trade the event? If history is any guide, Tesla (NASDAQ:TSLA) shares tend to fall once the rubber meets the road. The stock dropped significantly the week and month after both of the last two releases: the Model S in 2012 and Model X in 2015.
Ready for liftoff... SpaceX (Private:SPACE) has disclosed a new $351M fundraising round that would likely bump its valuation to $21B, up from the $12B it was valued at in early 2015. If the company completes the financing as planned, it would propel it towards the top of the list of so-called unicorns, or private tech companies with sky-high valuations.
The California Air Resources Board has unanimously approved the first $200M tranche (of a total $800M plan) for clean vehicle infrastructure that VW (OTCPK:VLKAY) has agreed to spend in the state as part of its settlement over emissions cheating. The automaker must spend $2B nationwide over the next decade to advance zero emissions vehicles, including charging and development of ride-sharing fleets.
Fiat Chrysler has come full circle on electric vehicles, with its once-skeptical CEO saying he's now ready to embrace them. On a conference call with analysts, Sergio Marchionne said Fiat's (NYSE:FCAU) premium Maserati sports cars will begin introducing electric engine-powered models after 2019, and that by early next decade more than half of the brand’s cars will be electrified.
"Normally I do not comment on rumors, but the speculation about my future and UBER has become a distraction," said the head of Hewlett Packard Enterprise (NYSE:HPE). "Uber's CEO will not be Meg Whitman." There's a new name being floated among a handful of candidates for the position: General Electric's (NYSE:GE) Jeff Immelt, who will relinquish his role as chief executive at the end of the month.
Looking to finance its $85.4B takeover of Time Warner (NYSE:TWX), AT&T (NYSE:T) is finalizing the year's largest corporate bond sale. The company is set to raise $22.5B through a seven-tranche bond offering, sources told the FT. The sale will include notes with maturities ranging between 5.5 and 41 years, with yields on new 10-year debt set to price 160 bps above benchmark Treasuries.
Verizon is in talks to acquire WideOpenWest's (Pending:WOW) fiber network in the Chicago area for more than $200M, Reuters reports. In April, Verizon (NYSE:VZ) struck a deal to buy optical fiber from Corning for at least $1.05B over the next three years, while in February, it closed on its acquisition of XO Communications' fiber-optic network business for about $1.8B.
European bank earnings roundup: Credit Suisse (NYSE:CS) +1.5%premarket after reporting a record level of assets under management during Q2 and its strongest inflows in six years. UBS fell 2.8% following a cautious outlook and highlighting that low volatility had hurt certain sectors, while Barclays (NYSE:BCS) rose 1.3% despite seeing its first earnings hit by the divestment of its Africa business.
According to NYC's Comptroller, Wells Fargo (NYSE:WFC) needs to work more quickly to remake its board following a sales scandal and public rebuke at the bank's annual meeting in April. "The extent of fraud at Wells Fargo was stunning," Scott Stringer declared. "Executives have been held responsible - but now directors must answer for their part... This board needs to be refreshed - today."
Altria (NYSE:MO) +3.1% with a boost from smokeless tobacco.
Amazon (AMZN) -2.6% AH with a drop in quarterly income.
Baidu (NASDAQ:BIDU) +3.7% AH posting double-digit gains.
Bristol-Myers (NYSE:BMY) -3.1% following in-line earnings.
Celgene (NASDAQ:CELG) -2.6% despite topping forecasts.
ConocoPhillips (NYSE:COP) +2.2% returning to an underlying profit.
Dow Chemical (NYSE:DOW) +0.2% as worldwide prices picked up.
Intel (NASDAQ:INTC) +1.2% AH lifting its profit outlook.
MasterCard (NYSE:MA) -1.6% despite impressive volume growth.
Procter & Gamble (NYSE:PG) +1.6% improving operating margins.
Starbucks (NASDAQ:SBUX) -5.6% AH closing all Teavana stores.
Twitter (NYSE:TWTR) -14.1% losing monthly users in the U.S.
UPS (NYSE:UPS) -4% on soft outlook for rest of 2017.
Verizon (VZ) +7.7% announcing subscriber additions.
In Asia, Japan -0.6%. Hong Kong -0.6%. China +0.1%. India -0.2%.
In Europe, at midday, London -0.8%. Paris -1.3%. Frankfurt -0.7%.
Futures at 6:20, Dow -0.2%. S&P -0.4%. Nasdaq -0.9%. Crude +0.1% to $49.11. Gold +0.4% to $1264.50.
Ten-year Treasury Yield +2 bps to 2.33%