Monday Morning Market Prepper
Uber Extends an Olive Branch to Local Governments: Its Data
End of Hedge Funds As We Know Them?
Digging Down on the Trump Effect
Lampert’s on the Hook for $1.2 Billion
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CHARTS
These 6 charts prove why the world is better than it's ever been https://t.co/Vx2tkRtGfT pic.twitter.com/0hc9942sca
— World Economic Forum (@Davos) January 9, 2017
McDonald's has entered an agreement to sell 80% of its 2,200 stores in China and Hong Kong to a consortium including Citic (OTCPK:CTPCY) and Carlyle Group (NASDAQ:CG). It decided to keep a minority stake to benefit from exposure to future growth, a source told Reuters. The deal, which includes 20-year mass franchise rights, will value the business at as much as $2.08B and likely help McDonald's (NYSE:MCD) trim its overall operational costs and preserve capital.
Economy
At least nine confirmation hearings begin on Capitol Hill this week, starting tomorrow with one for Sen. Jeff Sessions, whom President-elect Trump has nominated to lead the Justice Department. The lineup also includes five hearings on Wednesday, the same day the Senate is expected to vote on a step toward repealing much of the Affordable Care Act.
"I think he accepts the findings," said Trump's incoming chief of staff Reince Priebus, referring to U.S. intelligence reports on Russian interference in the presidential election, adding that "actions may be taken." Over the weekend, Trump tweeted that "having a good relationship with Russia is a good thing... Only 'stupid' people, or fools, would think that it is bad! We have enough problems around the world without yet another one."
Theresa May has denied the government's approach to Brexit is "muddled" in response to criticism by the U.K.'s former EU ambassador, Sir Ivan Rogers, who quit his post last week. "We are leaving. We are coming out. We are not going to be a member of the EU any longer," she told Sky News. "I will be setting out some more details in the coming weeks as we look ahead to triggering Article 50." Sterling -1.1% to $1.2148.
China's foreign exchange reserves fell for the sixth the consecutive month in December, but held just above the critical $3T level, as authorities stepped in to support the weakening yuan. According to PBOC data, the world's largest stockpile of foreign currency plunged by $41.08B to $3.01T, the lowest level since March 2011.
The dollar is likely to hit parity with the euro during 2017, according to Goldman's chief economist Jan Hatzius, driven by diverging paths for interest rates. "If we are right that the Fed moves the funds rate up more than what the market's currently pricing... that's generally a relatively good indicator to watch." Euro -0.1% to $1.0526.
Stocks
Showing its commitment to American manufacturing, Fiat Chrysler (NYSE:FCAU) will invest $1B in plants in Michigan and Ohio, which will add 2000 new jobs in the U.S. and expand its sports utility and truck lineup. The announcement comes days after Ford (NYSE:F) decided to scrap a plan to build a facility in Mexico, instead opting to invest in a plant in Michigan. FCAU +2.2% premarket.
Self-driving cars are a big theme at the North American International Auto Show, which kicked off yesterday in Detroit. Alphabet's (GOOG, GOOGL) Waymo revealed that it has built all of its sensor hardware in-house and was ready to offer its autonomous-drive technology in "millions" of vehicles at a competitive price. A package of LIDAR sensors and radar, which used to run approximately $75,000 a few years ago, has fallen by more than 90%.
The FBI has arrested Volkswagen's (OTCPK:VLKAY) regulatory compliance executive, Oliver Schmidt, who faces conspiracy charges linked to Dieselgate, according to NYT. The arrest comes as VW nears a deal to pay the DOJ more than $3B to settle the emissions scandal's criminal investigation, on top of the nearly $17.5B the automaker will pay to resolve civil claims.
Will Mercedes become the world's top luxury carmaker? Daimler (OTCPK:DDAIF) sold more than two million Mercedes branded cars in 2016, achieving the milestone for the first time since 2005. Sales increased 11.3% on year, driven by demand for SUVs, the C-Class family and AMGs. BMW (OTCPK:BAMXF), which has held the premium sales crown since 2005, is due to release annual sales figures later today.
SpaceX's much-vaunted return to flight was delayed over the weekend due to bad weather around a central California launch complex. The latest schedule calls for the Saturday blastoff of a Falcon 9 rocket, carrying 10 satellites for Iridium Communications (NASDAQ:IRDM). SpaceX (Private:SPACE) has been grounded since its pre-flight test explosion in September.
Shares in Lufthansa flew lower overnight, falling 5.3% in Frankfurt, as the airline's trading outlook disappointed investors. Lufthansa (OTCQX:DLAKY) said fuel costs will rise this year and failed to provide an earnings forecast for 2017, but Barclays believes "the implication is for declining profitability year-on-year."
Marking a key step in opening up trade, IranAir has accepted its first brand-new plane in over 37 years following the Islamic Republic's nuclear sanctions deal. "The registration has been done," said Reza Jafarzadeh, a spokesman for Iran's Civil Aviation Organization. The Airbus A321 (OTCPK:EADSY) jetliner has been painted in IranAir livery and is expected to be delivered on Thursday.
The British government is no longer the top shareholder in Lloyds (NYSE:LYG) after reducing its stake to below 6% as it aims to return the lender to full private ownership this year. The title is now owned by BlackRock (NYSE:BLK). U.K. Financial Investments Limited resumed Lloyds share sales in October, having halted them for almost a year due to market turbulence. LYG -1.2% premarket.
French drugmaker Ipsen is buying some assets of Merrimack Pharmaceuticals (NASDAQ:MACK), including pancreatic cancer drug Onivyde, for up to $1B, barely a month after the U.S. company stopped a breast cancer drug trial. The deal would give Merrimack the resources to fund the development of three new compounds targeting cancer and boost Ipsen's (OTCPK:IPSEY) portfolio, which has traditionally focused on endocrinology. MACK +37.5% premarket.
UnitedHealth's Optum unit is acquiring Surgical Care Affiliates (NASDAQ:SCAI) for $2.3B, in a deal it expects to be neutral for adjusted net EPS in 2017 and modestly accretive in 2018. While the purchase is a relatively small one for UnitedHealth (NYSE:UNH), whose annual revenues last year were around $180B, it marks the latest step in the firm’s evolution from a traditional insurer to a diversified health services company.
SeaWorld in San Diego hosted its last killer whale performance on Sunday after promising to phase out the show due to outcry over animal rights and pressure from falling attendance. Instead, the SeaWorld (NYSE:SEAS) park will unveil a new attraction this summer. "Orca Encounter" is being billed as an educational experience that will show how killer whales eat, communicate and navigate.
After securing exclusive rights for the handset name, HMD Global is launching the first Nokia (NYSE:NOK) branded smartphone since the Finnish-based company was sold to Microsoft (NASDAQ:MSFT) in 2014. The new Android device, Nokia 6, is manufactured by Foxconn (OTC:FXCOF) and will be sold exclusively in China through JD.com (NASDAQ:JD) for a list price of 1,699 yuan ($246).
The Golden Globe Awards looked past the big Hollywood studios on Sunday to lavish most of its attention on Lionsgate (LGF.A, LGF.B) and its retro-musical La La Land. The motion picture took home seven statuettes, a new record for the most Golden Globes by a single movie, and has so far grossed $51.7M domestically and $34.1M worldwide.
Reigniting Star Wars fever in China appears to be a goal far, far away for Disney (NYSE:DIS). According to comScore, Rogue One opened this weekend to a fairly tepid $31M over three days at the country's box office. That was about 60% of what The Force Awakens grossed in its first two days - a year ago - in the world's second-largest movie market.
Today's Markets
In Asia, Japan closed. Hong Kong +0.3%. China +0.6%. India -0.1%.
In Europe, at midday, London +0.1%. Paris -0.7%. Frankfurt -0.5%.
Futures at 6:20, Dow -0.2%. S&P -0.1%. Nasdaq flat. Crude -1.8% to $53.02. Gold +0.5% to $1179.50.
Ten-year Treasury Yield -3 bps to 2.39%
Today's Economic Calendar
10:00 Labor market condition index
12:30 PM TD Ameritrade IMX
12:40 PM Fed's Lockhart speech