Friday Morning Reads
News
Charts:
Premium:
Shivers are running through the equity markets again, triggering a flight to safety overnight, as China's commerce ministry struck back following President Trump's move to impose tariffs on up to $60B of Chinese imports. Beijing will take measures against the 128 U.S. products in two stages - that cover about $3B and $1.9B, respectively - if it cannot reach an agreement with Washington. Legal action under WTO rules is also being considered.
Economy
Latest cabinet shakeup... President Trump has named John Bolton as his new national security adviser, succeeding Lt. Gen. H.R. McMaster. The move follows fresh appointments to the roles of national economic advisor and Secretary of State. Bolton was the former U.S. ambassador to the United Nations under President George W. Bush. U.S. futures: Dow -0.8%; S&P -0.6%; Nasdaq -1.1%.
"Based on a certain set of criteria," the U.S. will grant the EU a temporary exemption from aluminum and steel tariffs while the bloc negotiates with the Trump administration, U.S. Trade Representative Robert Lighthizer told the Senate Finance Committee. Exemptions were previously granted to Mexico and Canada when the tariffs were signed earlier this month, while Argentina, Australia, Brazil and South Korea are also off the hook.
The Senate voted 65-32 to pass a $1.3T spending bill early Friday, several hours after the House of Representatives approved the measure 256-167. With Trump's signature, the bill will avert another government shutdown and keep federal agencies funded until Sept. 30, ending Washington's constant budget squabbles and letting lawmakers focus on campaigning for November elections.
Venezuela's President Maduro is knocking three zeroes off the ailing bolivar currency, with the step against hyperinflation taking effect from June 4. "Venezuela has been victim of a brutal, economic war," he declared. While it sounds like a currency revaluation, economists consider the move a currency re-denomination as the country is not changing the value of its official exchange rate.
Stocks
Echoing the views of Facebook's (NASDAQ:FB) Mark Zuckerberg, COO Sheryl Sandberg addressed the Cambridge Analytica scandal in an interview with CNBC. "It's not a question of if regulation, it's a question of what type. We work with lawmakers all over the world." Meanwhile, the Chairman of the House Energy and Commerce Committee has called on Zuck to appear before the panel, stating "the buck stops with him." FB -1% premarket.
Qualcomm's annual shareholder meeting today will lack the once-anticipated drama of a potential hostile takeover by Broadcom (NASDAQ:AVGO), but investors will still be watching other developments. Paul Jacobs, former CEO, chairman and son of company co-founder Irwin Jacobs, is expected to lose his board member status after informing fellow directors that he was interested in acquiring Qualcomm (NASDAQ:QCOM) and taking the company private.
Dramatic exit? Steve Wynn has sold off his last holdings in the casino and hotel enterprise he founded over 16 years ago, offloading 8M shares, or a 7.8% stake, for a total of $1.4B. In an unexpected separate move, Macau's Galaxy Entertainment (OTCPK:GXYEY) said it has agreed to buy 5.3M primary shares of Wynn Resorts (NASDAQ:WYNN) at $175 per share, giving the casino operator around a 5% stake in the company.
GlaxoSmithKline +3.6% premarket after withdrawing from the race to buy Pfizer's (NYSE:PFE) consumer healthcare business. That could endanger an auction the U.S. drugmaker hoped would bring in as much as $20B. "While we will continue to review opportunities... they must meet our criteria for returns and not compromise our priorities for capital allocation," Glaxo (NYSE:GSK) CEO Emma Walmsley declared. PFE -1% premarket.
What's going on with Amazon's delivery drone division? While the patent was initially filed in July 2016, the public can now see technology of "human interaction with unmanned aerial vehicles." According to Amazon (NASDAQ:AMZN), it can be used to adjust plans for a drone delivered package after getting feedback from humans either through visible movements or audible gestures.
The founder of Toys 'R' Us, Charles Lazarus, has died at the age of 94. "There have been many sad moments for Toys 'R' Us in recent weeks, and none more heartbreaking than today's news," said a company spokeswoman. A 25-year-old Lazarus opened baby-furniture retailer Children's Supermart in 1948. The store gradually ventured into selling toys, and Lazarus opened the first Toys 'R' Us in 1957.
Chipotle has won dismissal of an investor lawsuit claiming it concealed food safety risks related to the widely publicized 2014-15 outbreaks of foodborne illnesses. Judge Katherine Polk Failla was "as concerned as the parties about foodborne illness outbreaks" at Chipotle (NYSE:CMG), but "not all adverse events are the product of corporate misfeasance or nonfeasance."
Following the recent fatal accident of an UBER autonomous vehicle, which is still under investigation, Nissan (OTCPK:NSANY) said it does not plan to change its road tests for self-driving vehicles. Honda (NYSE:HMC) is also not altering its work on the nascent technology. Toyota (NYSE:TM) and Uber halted their autonomous driving tests in the U.S. this week because of the possible "emotional effect on its test drivers."
Boeing will not appeal against the U.S. trade commission's ruling that allows Canada's Bombardier (OTCQX:BDRAF, OTCQX:BDRBF) to sell its CSeries jets to U.S. airlines without a near 300% duty on sales. Mending the relationship? Boeing (NYSE:BA) is currently a bidder for the Canadian government's competition for fighter jets worth between C$15B-$C19B.
Citigroup has added restrictions on firearms sales for new retail-sector clients following the Parkland high school shooting in Florida. The policy, which will bar customers offering bump stocks or selling guns to people who are younger than 21, is "designed to respect the rights of responsible gun owners while helping to keep firearms out of the wrong hands," said Citi (NYSE:C) CEO Mike Corbat.
The asset management division of Germany's largest bank began trading on the country's stock exchange this morning at €32.55 per share. Deutsche Bank (NYSE:DB) is selling 22.5% of the company, which has assets worth more than €700B under management. The IPO is expected to generate proceeds of about €1.4B for the bank. DB -3% premarket.
The SEC is preparing to examine as many as 100 hedge funds focused on cryptocurrencies, WSJ reports. The action is separate from the dozens of enforcement investigations already underway, which largely target ICOs. The SEC will also look at the accuracy of risk disclosures provided to investors, including how the documents explain the fund’s strategy of trading cryptos or tokens.
Listen on the go with the latest feature to Wall Street Breakfast! A daily podcast will be available by 8:30 a.m. oniTunes, Stitcher and SoundCloud (click the highlighted links).
In Asia, Japan -4.5%. Hong Kong -2.5%. China -3.4%. India -1.2%.
In Europe, at midday, London -0.6%. Paris -1.5%. Frankfurt -1.6%.
Futures at 6:20, Dow -0.8%. S&P -0.6%. Nasdaq -1.1%. Crude +0.3% to $64.51. Gold +1.1% to $1342.40. Bitcoin -2.7% to $8479.
Ten-year Treasury Yield flat at 2.82%Today's Economic Calendar
8:10 Fed's Bostic Speech
8:30 Durable Goods
10:00 New Home Sales
1:00 PM Baker-Hughes Rig Count