Fridays Market Prepper
- The End of the World
- Global Demand for Bitcoin
- Corporate Reform
- U.S. Corporate Tax Shake-Up
- Curtain Falls on a Tech Rivalry
- 2 Peas In A Pod
- This Is the Real Storm Crushing the Stock
- Tech Giants Viewed as Threats
- Not What You Think
- Futures edge higher
- Higher interest rates boost BofA
- Strong earnings from PNC Financial
- Barclays electrified by General Motors
- Trump to cut off ACA payouts to insurers
- Amazon Studios chief Price suspended
- HP offers upbeat 2018 earnings guidance
- In surprise, Samsung CEO sets exit
- Trump seen not certifying Iran nuke deal
Yesterdays Unusual Option Action
World stocks could be on track for more new record highs, as the MSCI World benchmark of large and mid-cap stocks is poised for a new all-time high amid gains in most Asian and European bourses. Japan’s Nikkei is ahead by 1% to pass the 21,000 level, the highest since 1996. China released figures showing imports last month jumped by a larger than expected 19% in dollar terms from a year ago. European shares have climbed to four-month highs, aided by some well-received earnings reports. Equity markets also are supported by gains in commodity prices, as Brent crude oil futures rose by nearly 2% to about $57.25 per barrel. In the U.S., investors await quarterly results from other big banks, with Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) reporting, following results yesterday from JPMorgan Chase and Citigroup.
The Trump administration says it plans to cut off billions of dollars in payments to health insurers that offset their costs for providing subsidies to consumers. The payments will stop immediately, with no transition period, Acting HHS Secretary Eric Hargan and Centers for Medicare and Medicaid Services Administrator Seema Verma said tonight; the next payments were due next week. Given the ongoing uncertainty over the payments, many health insurers had dramatically raised the premiums they planned to charge for next year in anticipation of not getting the funds. The move, coming just hours after President Trump signed an executive order that paves the way for a proliferation of pared-down insurance plans for individual buyers, marks the start of what promises to be a long and contentious campaign to unravel the Affordable Care Act. Relevant tickers include CNC, MOH, UNH, AET, WCG, CI, HUM, ANTM, GTS, HQY, QHC, HCA, THC, UHS, LPNT, CYH, HCP, SEM.
President Trump is expected to announce today he will not certify that Iran is complying with the 2015 nuclear accord, starting an uncertain process in which Congress has a 60-day period to consider whether to reinstate sanctions that had been lifted under the agreement. The U.S. is not expected to completely abandon the deal, and the European governments that backed the Obama administration - the U.K., France and Germany - likely will acknowledge U.S. concerns about Iran’s regional behavior and missile tests, but say that those issues, which were not part of the previous talks, should be dealt with separately. Fresh doubt about the agreement’s fate threatens to raise uncertainty for businesses such as Boeing (NYSE:BA), General Electric (NYSE:GE), Airbus (OTCPK:EADSF, OTCPK:EADSY) and Total (NYSE:TOT) that have worked out their own deals with Iran and for others that already were hesitating.
U.S. negotiators have presented a proposal for a "sunset clause" that would see the North American Free Trade Agreement expire after five years unless the parties can agree to extend it, Bloomberg reports. Canada and Mexico rejected the idea of a sunset clause after Commerce Secretary Wilbur Ross floated it last month, saying it would create so much uncertainty for businesses that it could hurt long-term investment. The U.S. has “miscalculated badly” in proposing the provision and “doesn’t understand how much damage the uncertainty would do to private sector investment,” according to Nate Olson, director of the Trade21 program at the Stimson Center in Washington, D.C.
Amazon has suspended the head of its entertainment studio, Roy Price, following allegations that he harassed a female producer and that the company ignored an actress’s claim of a sexual assault by disgraced producer Harvey Weinstein. The suspension comes after The Hollywood Reporter cited a female producer of an Amazon (NASDAQ:AMZN) show saying Price had made lewd advances to her in 2015, and actress Rose McGowan launched a Twitter storm that she had been assaulted by Weinstein and ripped AMZN for doing business with Weinstein's company. Price has been integral to AMZN's movie business, helping steer it through an attempt to crowd-source television scripts and winning Hollywood awards for shows such as Transparent.
HP Inc. offered upbeat 2018 earnings guidance, sending shares higher after the close. HP (NYSE:HPQ) expects EPS of $1.74-1.84 in FY 2018 ending in October, compared with the $1.76 analyst consensus estimate, and it forecasts 2018 free cash flow of at least $3B with plans to return 50-75% of the amount to shareholders through dividends and stock buybacks. The board also approved a 5% increase in the quarterly dividend. HP has been gaining market share in worldwide PC shipments, as it battles with Lenovo (OTCPK:LNVGY, OTCPK:LNVGF) for the title of largest maker of personal computers, while focusing on higher-profit segments such as gaming and convertible laptops.
Shares of optical equipment makers fell sharply after the close following preliminary Q3 results from Applied Optoelectronics (NASDAQ:AAOI) that came in well short of estimates. The company now expects non-GAAP Q3 earnings of $1.04-1.09 per share, down from its prior outlook of $1.30-1.43, on revenue of $88-89 million, below previous expectations of $107-115 million; the consensus forecast among analysts was for EPS of $1.31 on revenue of $111 million. AAOI says results were hurt by lower than expected sales to one of its large datacenter customers, but that it continues to experience “solid” demand with its other top datacenter customers. Shares slid 18% to $48.10 in after-hours trading, and peers including Lumentum (NASDAQ:LITE), Finisar (NASDAQ:FNSR) and Oclaro (NASDAQ:OCLR) all turned sharply lower.
In a surprising development, Samsung (OTC:SSNLF) CEO and Vice Chairman Kwon Oh-hyun said he will exit his post in March, calling for new leadership amid an "unprecedented crisis." Observers are scratching their heads, since the company has forecast a record Q3 operating profit of 14.5 trillion won ($12.8 billion) driven by the memory chip business that Kwon built up. "We are fortunately making record earnings right now, but this is the fruit of past decisions and investments... We are not able to even get close to finding new growth engines by reading future trends right now," Kwon said. The move creates huge uncertainty for Samsung's leadership, as Kwon was expected to take a bigger role after the arrest of de facto leader Jay Lee in February in a bribery scandal, followed by other key executive departures.
The Federal Aviation Administration has ordered an emergency inspection of about 120 A380 superjumbo jets made by Airbus (OTCPK:EADSF, OTCPK:EADSY), just two weeks after an engine violently broke apart on an Air France flight. The inspections, to take place worldwide, cover engines made for the Airbus SE A380s by the joint venture of General Electric (GE) and Pratt & Whitney (NYSE:UTX), which supplies engines for about 60% of the global A380 fleet. While the engine that failed will be given a detailed analysis by GE, the FAA wants operators to inspect front fan hubs on most of the global fleet for possible defects or damage.
Bayer has agreed to sell significant parts of its crop science business to rival BASF (OTCQX:BASFY) for €5.9 billion ($6.98 billion), which it says will partially finance its planned acquisition of Monsanto (NYSE:MON). Bayer (OTCPK:BAYRY) says the assets to be sold include its global glufosinate-ammonium business and related LibertyLink technology for herbicide tolerance, nearly all its field-crop seeds businesses, as well as respective R&D capabilities. The businesses included in the agreement generated about €1.3 billion in net sales in 2016. The deal is contingent upon the completion of Bayer's acquisition of Monsanto, but the takeover still faces scrutiny from European regulators.
EXFO (NASDAQ:EXFO) +13.6% AH on Q4 earnings and better than expected Q1 guidance.
In Asia, Japan +0.96%. Hong Kong +0.06%. China +0.13%. India +0.78%.
In Europe, at midday, London -0.17%. Paris +0.01%. Frankfurt +0.08%.
Futures at 6:20, Dow +0.06%. S&P +0.04%. Nasdaq +0.06%. Crude +1.76% to $51.49. Gold -0.02% to $1,296.30.
Ten-year Treasury Yield +2bps to 2.325%Today's Economic Calendar
8:30 Consumer Price Index
8:30 Retail Sales
8:30 Fed's Rosengren speech
9:00 Janet Yellen Speech on Sunday
10:00 Business Inventories
10:00 Consumer Sentiment
11:30 Fed's Kaplan speech
1:00 PM Baker-Hughes Rig Count
1:00 PM Fed's Powell speech
2:00 PM Treasury Budget