Friday Morning Reads
- The Trump Administration considering executive action to privatize Fannie (FNMA) and Freddie (FMCC). FT Report
- NYC politicians want to curb Amazon's (AMZN) retail presence in NYC after HQ2 pullout. NY Post Report
- Former Goldman Sachs (GS) banker will be sent to U.S. over 1MDB issue. FT Report
- Visa (V) and Mastercard (MA) plan to raise fees. WSJ Report
- Futures pare losses, hug flatline
- Canopy Growth +3.5% on surging pot sales
- Chinese inflation slows further; Shanghai -1.4%
- May suffers defeat on Brexit strategy
- PepsiCo EPS and revenue in-line
- PepsiCo Q4 results meet expectations
- Canopy Growth misses by C$0.13, beats on revenue
- Buffett's Berkshire takes stake in Red Hat, reduces Apple
- Shell buys Sonnen in shift toward clean energy
- Newell Brands beats by $0.04, misses on revenue
- Lampert steps down as Sears chairman
Wall Street is now pointing to gains after the DJIA snapped a four-day winning streak and futures logged a triple digit fall overnight following the biggest decline in U.S. retail sales since 2009. President Xi Jinping has revealed that U.S.-China trade talks will continue in Washington next week, with the hope of reaching a mutually beneficial deal. Investors are also eyeing the market impacts of President Trump's decision to declare a national emergency and other executive actions to fund his proposed border wall.
A twin set of inflation data from China has underscored both export and domestic demand weakness, pushing the Shanghai Composite down 1.4%. Factory gate inflation slowed for the seventh consecutive month in January, coming in at 1.7%, while consumer prices rose at the weakest pace in a year, inching up just 0.1% from a year ago. The figures suggest China will struggle to reverse last year's broader economic slowdown, which was the worst in a decade.
The U.S. Commerce Department is set to meet a Sunday deadline to deliver its recommendations to President Trump on whether imported vehicles and parts pose a national security risk. It's already a rough environment out there for European auto sales, with data overnight pointing to a 4.6% decline in car registrations for January. Trump administration officials have said tariff threats are intended to win further EU concessions at the bargaining table.
Theresa May suffered another Brexit defeat last night in a parliamentary vote that was symbolic rather than binding, but showed how weak her hand is as she tries to secure changes to her divorce deal from the EU. Lawmakers intent on averting a "no-deal" Brexit are now gathering support to force the government's hand in a new series of votes scheduled for Feb. 27, but by then Brexit will only be a month away.
Spain's Prime Minister Pedro Sanchez has called a snap election following the government's failure to pass its 2019 budget through Congress. At issue? Two Catalan separatist parties voted against the proposal, which Sanchez maintains would address some of the country's long-standing economic inequality via spending increases. The drama comes just days after the European Commission issued surprisingly healthy economic forecasts for Spain.
Headquarter changes... Amazon (NASDAQ:AMZN) is canceling plans to build its HQ2 in New York City, blaming opposition from local leaders upset by the nearly $3B in incentives promised by state and city politicians. The facility was intended to create 25,000 jobs in Long Island City. General Electric (NYSE:GE) has also scrapped a 12-story headquarters office tower on Boston's waterfront, choosing instead to lease smaller buildings nearby.
The Federal Trade Commission is negotiating with Facebook (NASDAQ:FB) over a record multibillion-dollar fine related to the Cambridge Analytica data scandal, The Washington Post reports. The exact amount is still subject to agreement but it would be the largest fine imposed by the FTC on a tech company. Previous record? A $22.5M penalty paid by Google (GOOG, GOOGL) in 2012 to settle privacy issues.
Once calling bitcoin a "fraud," Jamie Dimon is now leading Wall Street's push into cryptocurrencies. JPMorgan (NYSE:JPM) has created the first digital currency to be backed by a major U.S bank, which will help settle payments between clients in its wholesale payments business. Each "JPM Coin" is redeemable for one U.S. dollar, so its value shouldn't fluctuate, similar to so-called stablecoins.
Buffett moves... New 13F filings show Berkshire Hathaway (BRK.A, BRK.B) took a new stake in software maker Red Hat (NYSE:RHT) valued at $733M at the end of December and reduced its holdings in Apple (NASDAQ:AAPL) by about 1%. The group also dumped its entire stake in Oracle (NYSE:ORCL) only months after revealing its $2B investment, and reduced holdings in United Continental (NASDAQ:UAL) and Phillips 66 (NYSE:PSX). ORCL -2.9%premarket.
Eddie Lampert is stepping down as chairman of Sears' (OTCPK:SHLDQ) board, according to a company filing. The resignation relates to the completion of the "going concern" transaction and is "not the result of any disagreement with the company." Lampert, whose hedge fund won a $5.2B auction for the retailer last month, already stepped down as CEO when Sears filed for bankruptcy last year.
Facing slowing sales growth in its second-largest market, Starbucks (NASDAQ:SBUX) is launching a new all-day dining cafe in Shanghai amid pressure from a growing number of independent coffee shops. The Starbucks Reserve Bakery Cafe is the firm's first such store in China and will offer its premium coffees, freshly prepared food from its Princi Italian bakery and alcoholic drinks from a "mixology bar."
Canopy Growth +3.5% premarket after the company reported a 283% increase in quarterly revenue as marijuana became legal in Canada. Results were released late, shortly before midnight, and disclosed plans for Canopy's (NYSE:CGC) CFO to depart later this year. The largest pot company by market value saw its net income reach C$67.6M, compared to $C11M last year, but earnings were slammed by sales and market costs in the lead up to legalization.
Profits at Royal Bank of Scotland doubled to £1.62B in 2018, with CEO Ross McEwan calling the results "a good performance in the face of economic and political uncertainty." The lender also proposed a combination of final and special dividends, taking its total payout for the year to 13p per share (60% higher than forecast), but cautioned that Brexit impacts might make it hard to reach some of its longer-term targets. RBS +1% premarket.
Shift toward clean energy... Royal Dutch Shell (RDS.A, RDS.B) has agreed to buy Sonnen (OTC:SONP), a German rival to Tesla (NASDAQ:TSLA) and Samsung (OTC:SSNLF) in providing homeowners with lithium-ion battery packs powered by solar energy. Founded in 2010, Sonnen has since grown to become Europe's biggest maker of rechargeable energy storage packs. It's installed more than 40,000 units produced at its three factories in Germany, Australia and the U.S.
Applied Materials (NASDAQ:AMAT) -2% AH posting a downside outlook.
AstraZeneca (NYSE:AZN) +9.3% riding high on a sales rebound.
Canopy Growth (CGC) +3.5% AH on surging pot sales.
CBS (NYSE:CBS) -2.3% AH on weak content licensing.
Coca-Cola (NYSE:KO) -8.4% expecting slower sales growth.
Duke Energy (NYSE:DUK) -1% as earnings came up short.
Nvidia (NASDAQ:NVDA) +5.3% AH on an upside FY20 outlook.
Waste Management (NYSE:WM) +0.3% following a Q4 beat.
In Asia, Japan -1.1%. Hong Kong -1.9%. China -1.4%. India -0.2%.
In Europe, at midday, London +0.4%. Paris +1.1%. Frankfurt +1%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude +1.3% to $55.13. Gold +0.6% to $1321.90. Bitcoin +0.8% to $3577.
Ten-year Treasury Yield flat at 2.66%
Today's Economic Calendar
8:30 Empire State Mfg Survey
8:30 Import/Export Prices
9:15 Industrial Production
9:55 Fed's Bostic: “Workforce Development”
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count