Friday Morning Reads, charts, earnings, options
- Gold at the Year’s Low
- Offshore Tax Havens
- Its the Interest Rates Stupid
- Price-Fixing Scandal
- Weak Outlook
- Greener Cloud
- Your Trading Rules Too Rigid?
- The Drag Along Right
- Campbell Soup lower after earns, CEO exit
- Baidu COO to exit
- China deflates olive branch trade rumor
- NAFTA countries 'nowhere near' a deal
- Google imagines total data collection
- OPEC talk: Crude prices too high?
- Shell's AirFlow Starship goes cross-country
- Fujifilm to sue Xerox over takeover
Tweet of the morning:
More than 40% of America's housing wealth is concentrated in the hands of those age 60 or more, from 24% in 2006. Just 14% is held by people under the age of 45, from 24% in 2006. https://t.co/QsssdYzmzP
— Lisa Abramowicz (@lisaabramowicz1) May 18, 2018
Open Interest Changes:
Unusual Option Action:
China's Foreign Ministry shot down reports overnight stating Beijing offered to slash the U.S. trade deficit by up to $200B, a move that was seen as benefiting U.S. aircraft maker Boeing (NYSE:BA), as well as producers of U.S. farm products. However, China did extend an olive branch to the U.S. by dropping an anti-dumping probe into imports of American sorghum, which effectively halted a trade worth roughly $1.1B last year.
"The NAFTA countries are nowhere near close to a deal," U.S. Trade Representative Robert Lighthizer declared, pointing to "gaping differences" on issues like intellectual property, agricultural access, labor and energy. It comes as House Speaker Paul Ryan said there could still be a few weeks of "wiggle room" for a deal to be considered by the current Congress, but stressed even that seemed uncertain.
Greece and neighboring Macedonia are close to resolving a decades-old naming dispute that has prevented the latter from joining the EU. The former part of Yugoslavia, then known as the Socialist Republic of Macedonia, adopted the shortened version Macedonia when it became independent in 1991, but Greece has since blocked accession talks as it contains a region with the same name. A deal would likely see the Balkan nation go by "Upper Macedonia."
Although they have yet to agree on a prime minister, Italy's Five Star Movement and the League have struck a deal on a common platform to bring a populist government to the eurozone's third-largest economy. Key points: Universal basic income of €780 per person per month, no mention of a referendum on membership of either the EU or the euro, and no plans to ask the ECB to cancel debt.
The Vatican has released a 10,000-word bulletin on global economics and finance, warning against "unstable" products like derivatives and credit default swaps, and classifying them as "unethical." Calling on Wall Street, Pope Francis in the past has suggested regulating speculative financial practices and reining in the "absolute power" of the financial system, which he said would bring more crises.
Hawaii's Kilauea volcano has erupted from its summit, shooting a dusty plume of ash about 30K feet into the sky. Additional eruptions could not only shroud large areas of the Big Island in volcanic ash and smog, according to the US Geological Survey, but also other Hawaiian Islands and potentially distant areas if the plume reaches up into the stratosphere and ash is carried by winds.
North Korea has suspended talks with the South over joint military exercises with the U.S. as the rhetoric between the nations ratchets up once again. Speaking in the Oval Office, President Trump said Kim Jong-un could remain in power if the two sides reached a deal to rid the North of nuclear weapons. Otherwise, the country should expect "total decimation."
The crude rally towards $80 a barrel is being seen as a short-term spike driven by geopolitics rather than any supply shortage, according to four OPEC delegates, a sign the group is not rushing yet to rethink its output cut agreement. Saudi Arabia is meanwhile discussing concerns over volatile oil prices with other OPEC members and Russia amid supply worries following the U.S. withdrawal from the 2015 Iran nuclear deal.
PayPal is getting into point-of-sale transactions in a big way by buying iZettle, the so-called "Square of Europe," in a $2.2B all-cash deal. Earlier this month, iZettle filed for an IPO in which it planned to raise $227M, that would have given it a value of about $1.1B. The transaction is expected to be approximately $0.01 dilutive to PayPal's (NASDAQ:PYPL) full-year 2018 non-GAAP EPS. PYPL +1% premarket.
A leaked internal video from Google X design head Nick Foster, called The Selfish Ledger, describes the company's vision of "total data collection." Google (GOOG, GOOGL) would "help users into alignment with their goals... and even guides the behavior of entire populations to solve global problems like poverty and disease." It also "becomes possible for emerging users to benefit from the preceding generation's behaviors and decisions.”
Cambridge Analytica, the data firm at the center of this year's Facebook (NASDAQ:FB) privacy row, has filed for voluntary Chapter 7 bankruptcy in a New York court. The filing could shed some light on the company's relationships and finances, as U.S. legal proceedings are more transparent than those in the U.K., and creditors can use bankruptcy law to subpoena information and probe asset transfers.
CBS has voted to strip National Amusements of voting control, a move aimed at stopping a merger between the company and Viacom (NYSE:VIA). A special dividend that the board approved 11-3 would cut the Redstone family's stake to about 20% from 80%. CBS will postpone today's annual meeting in the midst of the legal drama.
AstraZeneca -2.1% premarket after first quarter profit was hit by higher costs and generic competition to cholesterol drug Crestor. Core operating earnings tumbled 46% to $896M, well below market forecasts. AstraZeneca (NYSE:AZN) still expects a better second half and said it remained on track for a promised return to sales growth in 2018.
While some firms pull back from their business with Iran, others are seeing opportunity. According to Iran's oil minister, Chinese state-owned oil giant CNPC (NYSE:PTR) is looking to replace Total (NYSE:TOT) on its local gas field project. Russia's Sukhoi is also exploring plans to supply a modified version of its Superjet 100 regional airliner as Boeing (BA) and Airbus (OTCPK:EADSY) face sanctions on transactions with the Islamic Republic.
Fujifilm is planning to "file a damages lawsuit as soon as possible" against Xerox (NYSE:XRX) for unilaterally scrapping their $6.1B takeover agreement. Xerox ditched the deal this week in a settlement with activist investors Carl Icahn and Darwin Deason, who opposed the takeover by Fujifilm (OTCPK:FUJIY) saying it undervalued the U.S. photocopier company.
Shell's energy-efficient AirFlow Starship begins its cross-country trek today and developers of Tesla's (NASDAQ:TSLA) Semi are watching. The aerodynamic truck, equipped with 5,000-watt solar panels, aims to break the record for trucking fuel efficiency. Its hybrid electric axle system and custom automatic tire inflation will also make the Shell (RDS.A, RDS.B) vehicle more energy efficient.
In Asia, Japan +0.4%. Hong Kong +0.3%. China +1.2%. India -0.9%.
In Europe, at midday, London -0.1%. Paris flat. Frankfurt flat.
Futures at 6:20, Dow +0.3%. S&P +0.2%. Nasdaq +0.3%. Crude +0.2% to $71.64. Gold -0.3% to $1286. Bitcoin +0.8% to $8126.
Ten-year Treasury Yield flat at 3.1%
Today's Economic Calendar
Friday's economic calendar:
3:00 Fed's Mester Speech
9:15 Fed's Kaplan Speech
9:15 Fed's Reserve Gov. Lael Brainard Speech
1:00 PM Baker-Hughes Rig Count