Friday Morning Reads
- Profound Shift in Policy
- Are We There Yet?
- Economic Misery Could Bring It Back
- A Short Seller Bets It All on a Spectacular Market Crash
- Just Got Very Rich
- A $90 Billion Fee Pool
- Financial Superpowers
- Futures pare losses following tariff increase
- Bezos brings on the next space race
- JD.com +10$ on beats, Tencent agreement
- Enbridge beats by $0.081
- JD.com beats by RMB1.40, beats on revenue
- Ford +2% after BAML points to 'escape velocity'
- Gilead to donate Truvada to help prevent HIV
- Enbridge Q1 beats, achieves record EBITDA
- Occidental CEO faces shareholders at annual meeting
- GE's rising bonds offer Culp endorsement
- EU antitrust fines coming for forex rigging
- VW's new EV passes 10K orders in 24 hours
There's only one event today that competes for attention in markets with trade concerns - this year's biggest IPO. Uber has priced its initial public offering at $45/share - the low end of its targeted range - for a valuation of $82.4B, hoping its conservative approach will spare it from the trading plunge suffered by rival Lyft (NASDAQ:LYFT) since its IPO. The company, which will list on the NYSE under ticker "UBER," has yet to record an operating profit, but hopes its four main branches - ride-hailing, deliveries, B2B (leasing, freight, health) and future (robo and flying taxis) - will pay off in the longer term. Will investors think the same?
DJIA futures fell over 100 points overnight after President Trump's tariff increase on $200B worth of Chinese goods took effect after midnight, but those losses have now been erased, while Shanghai closed up 3.1%. China's Commerce Ministry immediately announced it would take countermeasures against the American move, but did not reveal what its response would entail. While trade negotiators from the two sides today are scheduled to meet for a second day in Washington, President Trump is already taking steps to impose a fresh round of tariffs on $325B in Chinese goods that aren’t currently taxed. If that happens, virtually all Chinese exports to the U.S. would face 25% tariffs, further ratcheting up tensions between the world's two largest economies.
CPI figures this morning will provide the first test of whether low inflation is indeed what Jerome Powell and his Fed colleagues are now calling "transitory." The U.S. Labor Department's report will likely show consumer price index rose 0.4% in April, following a similar gain in March. Core consumer price inflation, with a particular eye on clothing and shelter measures, comes after producer price inflation in April rose less than anticipated.
The U.K. economy accelerated in the first quarter of the year to grow by 0.5%, according to preliminary official figures, but the Office for National Statistics credited the advance to stockpiling by businesses ahead of the original Brexit date of March 29. The rate of growth was up from 0.2% in the final three months of 2018. Meanwhile, there is still no deal between the Conservatives and Labour on the U.K.'s departure from the EU following another week of tough Brexit negotiations.
Blue Origin (BORGN) founder Jeff Bezos has unveiled the company's "Blue Moon" lunar lander, which will be able to deliver payloads to the lunar surface, deploy up to four smaller rovers and shoot out satellites that orbit the moon. "I love Vice President Pence's 2024 lunar landing goal," he declared, adding that Blue Origin can meet that timeline "because we started this three years ago." Bezos invests more than $1B in Blue Origin each year - through sales of his Amazon (NASDAQ:AMZN) shares - and is competing with space ventures like Elon Musk's SpaceX (SPACE) and United Launch Alliance, a partnership between Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT).
Occidental Petroleum (NYSE:OXY) CEO Vicki Hollub takes her case for buying Anadarko Petroleum (NYSE:APC) to stockholders today at an annual meeting that will be the first chance for OXY investors to present their views to managers, even if they do not get a say on the deal. The lack of a vote and the stock’s drop to a 10-year low of $56.33 on Thursday could also lead to a messy victory party. Occidental turned the tables on Chevron (NYSE:CVX), which has withdrawn from the bidding process, by securing a $10B investment from Berkshire Hathaway (BRK.A, BRK.B) and an $8.8B asset sale to France's Total (NYSE:TOT).
The cash-and-stock deal would put Sam Adams beer and Dogfish Head's 60-, 90- and 120-Minute IPAs and sour beers all under the same company. It will also see Dogfish co-founder Sam Calagione join the board of Boston Beer (NYSE:SAM), whose founder, Jim Koch, is chairman. In the transaction, Calagione and his family will receive about 406K shares of Boston Beer and Dogfish shareholders will receive $173M in cash. SAM +1.8% premarket
The Asia business of Anheuser-Busch InBev (NYSE:BUD), which makes up 18% of group volume, has filed a draft prospectus for a Hong Kong IPO that could be valued at a minimum of $5B. AB InBev aims to spin off the business to reduce its net debt, which stood at $102.5B at the end of December, a figure inflated by its late 2016 purchase of nearest rival SABMiller for around $100B. It also wants to bring its net debt/EBITDA ratio to around 2x from a multiple of 4.6 at the end of last year, halving its proposed dividend and saying payouts will only grow slowly to achieve that result.
What else is happening...
Seven banks face EU antitrust fines for forex rigging.
Booking Holdings (NASDAQ:BKNG) +3.8% AH posting a bookings increase.
Cheniere Energy (NYSEMKT:LNG) +1.8% topping estimates.
Duke Energy (NYSE:DUK) -1.1% hurt by weather, share dilution.
Dropbox (NASDAQ:DBX) +5.1% AH on paid user growth.
GoPro (NASDAQ:GPRO) +8.7% AH beating expectations.
Nutrien (NYSE:NTR) -1.2% AH citing unfavorable weather conditions.
Vale (NYSE:VALE) -2% AH hit by dam rupture impacts.
Wynn Resorts (NASDAQ:WYNN) -4.6% AH as operating revenue trailed estimates.
Yelp (NYSE:YELP) -5.6% AH with Q1 profits falling short.
In Asia, Japan +0.3%. Hong Kong +0.8%. China +3.1%. India +0.3%.
In Europe, at midday, London +0.5%. Paris +0.8%. Frankfurt +1.1%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude +0.4% to $61.97. Gold steady at $1285.70. Bitcoin +4% to $6293.
Ten-year Treasury Yield unchanged at 2.46%
Today's Economic Calendar
8:30 Consumer Price Index
8:30 Fed's Brainard: “Renewing the Promise of the Middle Class”
9:05 Fed's Bostic: Economic Outlook and Monetary Policy
10:00 Fed's Williams Speech
1:00 PM Baker-Hughes Rig Count
2:00 PM Treasury Budget
10:55 Fed's Daly Speech on Sunday