Friday Morning Reads
- Fed May Consider Lower Rates
- Market Perspective
- Hard-to-Reverse Ways
- Squeezing the U.S. Furniture Business
- Falling Mortgage Rates
- Uber Losing $1 Billion in a Quarter
- Amazon Interested in Buying Boost from T-Mobile, Sprint
- Weakest Sales in Three Years
- ‘From Bad, to Worse, to Disastrous,’
- A 600-Page Textbook About Modern Monetary Theory
- Flight to safety after Mexico tariff threat
- USMCA fate hangs in the balance
- Tesla promotes lower priced Chinese Model
- Amazon interested in buying Boost Mobile
- Evercore warns on vehicle maker
- GE's Culp reiterates earnings guidance, negative free cash flow view
- More film studios threaten Georgia boycott
- Fannie, Freddie closer to private ownership
- J&J nabs accelerated review for U.S. application for Darzalex combo for certain multiple myeloma patients
- Whirlpool updates on plant plans
- FCA CEO Manley sold $3.5M in shares this week
- LyondellBasell approves share repurchase program
Todays Top Open Interest Changes:
President Trump has turned the tariff gun on his southern neighbor, saying the U.S. will impose a 5% levy on "all goods coming into our country from Mexico" from June 10, which will "gradually increase until the Illegal Immigration problem is remedied." The shock tweet sent investors into safe haven assets, with gold climbing back above $1300/ounce, amid fears that another increase in tariffs could tip the U.S., and maybe the whole world, into recession. Along with a fall in global stocks, DJIA futures slid 283 points on the news, while the 10-year U.S. Treasury yield declined 7 bps to a fresh 20-month low of 2.16% and the Mexican peso slipped 2.8% against the dollar.
The fate of the updated USMCA trade deal was thrown into question after President Trump's Mexican tariff threat, making it unlikely that the new version of NAFTA will be ratified this year. Both Canada and Mexico have signaled they are ready to start the approval process, but Mexico may now feel that it's "forced to retaliate" despite being the U.S.'s largest trading partner. American officials have said 80,000 illegal immigrants are being held in custody, with an average of 4,500 arriving daily, overwhelming the ability of border patrol officials to handle them.
Investing sentiment was also dented by factory activity data from China, which posted a more-than-expected contraction during the month of May amid domestic headwinds and the ongoing U.S. trade dispute. The official manufacturing PMI fell to 49.4 from 50.1 in April, dropping below the critical 50 level that separates growth from contraction. The official non-manufacturing PMI for May was 54.3 - unchanged from the month before.
Italy faces a deadline today to explain its rising debt load, but the country is set to push back, citing near-zero inflation and global trade tensions for its rising debt-to-GDP ratio. As a consequence, the EU Commission will consider launching an excessive deficit procedure, which is likely to be proposed to the college of 28 commissioners on June 5. Deputy Prime Minister Matteo Salvini has also told his Five Star party he's ready to see the governing coalition collapse if he can't push through tax plans.
It's not too often that a company reports a billion-dollar quarterly loss, and on top of that, sees its shares rise 2%. "Our story is simple. We're the global player," Uber (NYSE:UBER) CEO Dara Khosrowshahi told analysts on a call following the first earnings release since its IPO. "Our job is to grow fast at scale and more efficiently for a long, long time." A statement that Uber will cut back on customer promotions and that marketing expenses as a proportion of revenue should decline soon was also well-received.
As Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) look to offload Boost Mobile to get their $26B merger over the regulatory line, Amazon (NASDAQ:AMZN) has turned up as an interested buyer of the prepaid service. The deal, which could fetch up to $3B, would allow it to use New T-Mobile's wireless network for at least six years, Reuters reports. Amazon has a long history of exploring new ventures and has already been building experience by offering phone calls through its Echo Connect product.
The Trump administration is putting the finishing touches on a plan to return mortgage finance giants Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) to private shareholder ownership, WSJ reports. The proposal is expected to include a version of what has been called "recap and release," which would ensure the firms have adequate capital to absorb loan losses in a future housing slump and thus avoid needing another taxpayer-backed bailout. If carried out, the companies could return to a status similar to how they operated before the financial crisis.
WarnerMedia (NYSE:T), Sony Pictures (NYSE:SNE) and NBCUniversal (NASDAQ:CMCSA) have joined a growing number of major studios - including Disney (NYSE:DIS) and Netflix (NASDAQ:NFLX) - which are threatening to pull their productions out of Georgia should the state's fetal heartbeat bill go into effect. Known as the Hollywood of the South or Y'allywood, Georgia in recent years has become the country's third-largest production hub after Los Angeles and New York, thanks to tax credits of up to 30% it offers to movie and TV production companies. In 2018, the state reported some 92,000 jobs and an economic impact of more than $9B from film productions there.
What else is happening...
Contributor Rida Morwa discusses the Rule Of 72 and high dividend opportunities.
Intelligence sharing on the line in Huawei rift.
Costco (NASDAQ:COST) -1.5% AH with tariff threat pressuring prices.
Dell (NYSE:DELL) -3.6% AH as China softness hit server business.
Dollar General (NYSE:DG) +7.2% on strong same-store sales.
Dollar Tree (NASDAQ:DLTR) +3.1% with plans to mitigate tariff risks.
The Gap (NYSE:GPS) -13.3% AH cutting profit forecast for 2019.
Uber (UBER) +1.9% AH on margin outlook, loses $1B in quarter.
Ulta Beauty (NASDAQ:ULTA) -3% AH on comp sales miss.
VMware (NYSE:VMW) -3.4% AH despite beats and buyback.
In Asia, Japan -1.6%. Hong Kong -0.8%. China -0.2%. India -0.3%.
In Europe, at midday, London -1.2%. Paris -1.6%. Frankfurt -2%.
Futures at 6:20, Dow -1.1%. S&P -1.2%. Nasdaq -1.5%. Crude -2.1% to $55.43. Gold +0.8% to $1303.30. Bitcoin -4.8% to $8333.
Ten-year Treasury Yield -7 bps to 2.16%
Today's Economic Calendar
8:30 Personal Income and Outlays
9:15 Fed's Bostic: “Assessing the Global Economy: An Insider's Look”
9:45 Chicago PMI
10:00 Consumer Sentiment
12:00 PM Fed's Williams: "Monetary Policy Theory and Practice and the Lower Bound on Interest Rates"
1:00 PM Baker-Hughes Rig Count
3:00 PM Farm Prices