Friday Morning Reads
- Gloomy Report
- Surprise Shivers
- Trade Recession
- Up 7,500% with more Upside
- Labor Department could change overtime threshold for salary to $35K from $23K. WSJ Report
- Paul Manafort will get 47 months in jail for bank and tax fraud. NY Times Report
- China exports drop 21% YoY (FXI). FT Report
- Growth worries weigh on U.S. futures, Europe
- China leads losses in Asia after weak trade data
- Oil and gas stocks lower after Norway decision
- Jobs report for February on tap
- More eurozone gloom as German factory orders slump
- EU makes fresh offer to Theresa May
- Beijing backs Huawei lawsuit against U.S.
- Deutsche Bank, Commerzbank resume merger talks - Focus
- Reports: Amazon, Sinclair, Yankees near buying YES Network for $3.5B
- Gilead's GS-6207 shows encouraging action in early-stage studies
- FDA grants priority review to Dupixent
- Navistar misses by $0.07, beats on revenue
It will be hard to match January's big gain of 304,000 jobs, but another strong increase in payrolls is expected despite a bad winter seen by weather-sensitive industries. Nonfarm payrolls likely increased by 181,000 in February, with the unemployment rate falling back below 4% and average hourly earnings rising by 0.3%. The release will be welcomed by economists, who are still frustrated by the lack of data and delays prompted by the government shutdown.
Asian stocks shuddered lower overnight, with losses of 4.4% seen on the Shanghai Composite, after shockingly weak trade data from China. Exports in February tumbled 20.7% from a year earlier, far beneath forecasts of a 4.8% drop and more than erasing January's surprise jump. Analysts warned the timing of the Lunar New Year made it tough to draw a true signal from the data, but the scale of the miss was alarming.
Worries about a global economic slowdown are also weighing on European shares and U.S. futures - with the Dow pointing to triple-digit losses - after a slump in Chinese exports and the launch of new stimulus measures by the ECB. The central bank on Thursday postponed interest rate hikes to 2020, lowered its GDP expectations and launched a new round of cheap loans to banks in an effort to spark the eurozone economy. The small steps backward come amid the current bull market's 10-year anniversary. Since March 9, 2009, the S&P 500 has soared more than 300%.
German factory orders unexpectedly fell in January, adding to the evidence that Europe's largest economy is continuing to lose momentum. Orders were down 2.6%, the most since June, defying expectations for a 0.5% gain. The Bundesbank's latest assessment is that Germany is seeing a dent in momentum and that growth this year will be below potential (the economy barely avoided a recession at the end of 2018).
Theresa May is scheduled to speak later today after the EU made a new offer about how to review the Irish backstop to break the impasse. While the fresh offer focuses on bolstering the review system and is designed to speed up the process of finding a better solution, there's no guarantee this will win a vote in parliament next week. Many U.K. lawmakers say the backstop risks binding the nation to EU rules forever after Brexit.
Looking to reduce its aggregate oil price risk, Norway has decided to exclude exploration and production companies within the energy sector from its $1T sovereign wealth fund. Oil and gas stocks are sliding on the news, with Royal Dutch Shell (RDS.A, RDS.B) and BP down 1.6% and Total (NYSE:TOT) 0.8% lower (the fund owns more than 2% of the companies). The move will also likely turn the heat up on Big Oil, which is already facing pressure to do more to fight climate change and adapt to the energy transition.
The FCC has again stopped the clock on reviewing the proposed $26B merger of T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) - the nation's No. 3 and No. 4 wireless carriers - to take comment on new information. The agency said on Wednesday that the companies' lawyers had been in discussions about merger simulation modeling with chief of staff to Chairman Ajit Pai. On April 4, the FCC plans to resume the 180-day informal "shot clock" at Day 122.
"Justice will have its day," declared Wang Yi, China’s top diplomat, as Huawei launched its legal challenge against the U.S. government. The telecom equipment supplier has the right to refuse to be "victimized like silent lambs," he added. The lawsuit focuses on a particular section of the National Defense Authorization Act, which prohibits government agencies from procuring Huawei gear. Related: Nokia (NYSE:NOK) and Ericsson (NASDAQ:ERIC).
Airbus shares are down 1.7% following a set of weak order figures. Two months into 2019, the French planemaker has logged cancellations for 103 jetliners and garnered a grand total of four new sales (which were all for the A220 plane manufactured in Canada by Bombardier). The order drought comes after Airbus (OTCPK:EADSY) pulled the plug on its A380 after Emirates decided to cut back its orders of the iconic aircraft.
Tesla has signed an agreement with lenders in China for a 12-month credit facility of up to 3.5B yuan, or about $521M, for its Gigafactory in Shanghai. The company broke ground on the facility in January. Tesla has estimated the Gigafactory will cost about $2B to build and will allow it to better compete with Chinese EV makers by avoiding the worst of the trade tariffs.
As German Finance Minister Olaf Scholz speaks in favor of strong banks, Deutsche Bank (NYSE:DB) and Commerzbank's (OTCPK:CRZBY) CEOs have resumed talks over a potential merger of the lenders, Focus magazine reports. Deutsche Bank has been plagued by three years of losses, ratings downgrades, failed stress tests, and money laundering scandals, while Commerzbank is still partially owned by the German government after a bailout.
The SEC is looking into whether the multi-tiered pricing system used by stock exchanges favors big brokers at the expense of small ones, Reuters reports. Currently, Wall Street banks and other big traders get rebates based on how much business they bring to the exchanges. As a result, big users can end up trading for free, or even get paid to trade, while small brokers pay substantial fees. Related: NDAQ, ICE, CBOE
Upending the industry? The Trump administration is reaching out to the medical industry for feedback on requiring hospitals, doctors and other healthcare providers to publicly disclose the heretofore confidential prices they charge insurers for services. Needless to say, health insurers, hospitals and most doctors will most certainly push back on the proposal. The public comment period will close Friday, May 3.
In Asia, Japan -2%. Hong Kong -1.9%. China -4.4%. India -0.2%.
In Europe, at midday, London -0.5%. Paris -0.7%. Frankfurt -1.1%.
Futures at 6:20, Dow -0.4%. S&P -0.4%. Nasdaq -0.5%. Crude -1.6% to $55.77. Gold +0.6% to $1294.10. Bitcoin +0.5% to $3870.
Ten-year Treasury Yield flat at 2.64%