Monday Morning Reads
- Weakest Since Financial Crisis
- U.S. and China Near Currency Deal
- Momentum Signals
- It Just Caught Fire
- Bullish on Natural Gas
- Everyone Quoting Buffett
- 20 Percent Rule
- Will Slowing Chinese Growth Spark a Global Recession?
- Life Inventory
- Boeing -9% as China suspends 737 MAX 8 operations
- Nvidia acquires Mellanox for $6.9B
- Apple +1.7% as BofA sees 'opportunity'
- Boeing drop weighs on DJIA, Nasdaq rises
- IEA: Another U.S. shale revolution is coming
- Powell: No need to change rate policy
- More ground 737 MAX 8s; Black box found
- Alibaba gets PT boost for newsfeed monetization
- Aurora Cannabis launches cannabis oil sales in Germany; shares up 1% premarket
- Tesla to raise car prices by about 3%
- Nomura upgrades Facebook on Stories transition
- Takeda's Entyvio beats Humira in head-to-head UC study
Boeing shares plunged 10% premarket after China's aviation regulator grounded nearly 100 737 MAX 8 aircraft operated by its airlines, more than a quarter of the global fleet of the jets. A deadly crash in Ethiopia on Sunday killed 157 people, less than five months after another new 737 MAX 8 crashed in Indonesia, killing 189 people on board. "Given that two accidents happened during take-off phase, they have some degree of similarity," the Civil Aviation Administration of China declared. Boeing's (NYSE:BA) 737 MAX 8 first entered service in 2017.
Coming off their worst week of 2019, U.S. stock futures are trading mixed ahead of the open. The Dow is flagging triple-digit declines as Boeing (BA) shares tumble, while the S&P 500 is flat and Nasdaq futures are up 0.3%. A mixed employment report on Friday also showed solid wage growth and a drop in unemployment, but the headline nonfarms payroll figure fell way short of expectations at a measly 20,000 jobs.
The Fed does "not feel any hurry" to change the level of interest rates again, according to Chair Jerome Powell, as the central bank watches how a slowing global economy affects local conditions in the U.S. He further told CBS's 60 Minutes that current rates were "roughly neutral," meaning they are neither stimulating nor curbing the economy. Asked directly if he thought President Trump could fire him, he said, "No. The law is clear that I have a four-year term, and I fully intend to serve it."
Crude futures rose 1% to $56.63/bbl overnight, lifted by comments from Saudi oil minister Khalid al-Falih that an end to OPEC-led supply cuts was unlikely before June. OPEC+ has pledged to cut 1.2M bpd in crude supply since the start of the year to tighten markets and prop up prices. The forecast comes as the oil industry meets for the annual CERAWeek conference, a gathering of thousands of oil executives, traders, bankers and investors in Houston.
"The second wave of the U.S. shale revolution is coming," the IEA said in its annual five-year oil outlook report. "This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy." U.S. crude production is expected to account for 70% of the total increase in global production capacity by 2024, while total exports of crude and refined products should reach 9M barrels a day, surpassing Russia and rival Saudi Arabia.
Budget release... The White House forecasts the economy will grow about 3% annually over the next decade, though it expects a bigger near-term boost, with output rising 3.2% this year before declining to 3.1% in 2020, 3.0% in 2021 and 2.8% in 2026, according to projections viewed by the WSJ. The economy grew 3.1% last quarter - its highest rate in nearly four years and in line with projections - though there are concerns these figures will begin to slow after the effects of tax cuts and government spending wear off.
Theresa May's government has declared Brexit talks as "deadlocked," with ministers urging the EU to make a last minute concession to stop her Brexit deal from being thrown out by the U.K. parliament. Sterling investors are already pricing in a Brexit postponement, while the Bank of England has reportedly told some U.K. lenders to triple the amount of easy-to-sell assets they hold to help them weather any no-deal Brexit crisis. The pound -0.3% to $1.2977.
Germany's government is clipping GDP forecasts again, according to Handelsblatt, trimming its in-house growth outlook for 2019 to just 0.8%, following an early cut from 1.8% to 1%. The news came even before this morning's weak factory data, which showed industrial output sliding 0.8% M/M in January, intensifying the gloom hovering over the eurozone's economic powerhouse.
Boiling point in Venezuela? Self-declared interim president, Juan Guaido, will call for a "state of national emergency" in a special session of parliament today amid ongoing power outages in the country. 16 of the nation's 23 states continue to be completely without electricity, with at least 15 people dead and the private sector losing at least $400M due to the blackouts. Embattled President Nicolas Maduro has blamed U.S. sabotage for the outages.
Nvidia is nearing a deal to acquire Mellanox (NASDAQ:MLNX) for more than $7B, according to Bloomberg and CNBC sources, outbidding Intel (NASDAQ:INTC) in an auction. The deal, which could be announced as soon as today, would be Nvidia's (NASDAQ:NVDA) biggest-ever acquisition and bolster its business of making chips for data centers. NVDA -2.2%; MLNX +12.5%premarket.
BofA has upgraded Apple to Buy from Neutral, and upped its PT to $210 from $180, saying the recent pullback in shares "presents opportunity." "Our scenario analysis suggests that shares are discounting a 'declining hardware' scenario (ex-cash, services), and the debate hinges on the L/T trajectory." Other reasons include "stability of supply chain order cuts" and "growth across healthcare, wearables and increasing services penetration." AAPL +1.7%premarket.
Soaring at the box office, Captain Marvel (NYSE:DIS) has hauled in an estimated $153M domestically, and $455M worldwide, since Thursday. That would solidify it as the seventh best Marvel Cinematic opening day domestically, behind the three Avengers films, Black Panther, Captain America: Civil War and Iron Man 3. Marvel Studios now has seven of the top 20 film debuts in industry history, while Walt Disney Studios holds 12 of the top 20.
Tesla plans to raise average vehicle prices by about 3% globally after it decided to shut down fewer stores than it previously announced following its online-only controversial push. While potential Tesla (NASDAQ:TSLA) car buyers will have a week to place orders before prices rise for the Model S and X, there won't be a price increase to the $35,000 Model 3. TSLA +1.4%premarket.
Fiat Chrysler would backtrack on an earlier pledge to eliminate diesel from its passenger cars in Europe by 2022 if public demand for the vehicles remains strong. "We don't want to say we got rid of diesel, and by the way, it also came with a 15%, 20%, 30% drop in our sales," CEO Mike Manley said at the Geneva Motor Show. Just over a third of cars sold in the EU last year run on diesel, according to data from IHS. FCAU -1% premarket.
Corporate interests this year are heading to South by Southwest. Walmart's (NYSE:WMT) chief technology officer, Jeremy King, is taking the stage at the annual conference to showcase the latest technology - like virtual reality headsets and machine-learning-powered robots - it's using in stores to get online grocery orders to customers as quickly as possible. In its latest quarter, Walmart's e-commerce sales surged 43%, while in 2018, it achieved online sales growth of 40%.
The management board of Deutsche Bank has agreed to hold talks with rival Commerzbank (OTCPK:CRZBY) on the feasibility of a merger, according to Reuters. Proponents of a combination say that a tie-up would give the entity a 20% share of the German retail banking market, allowing it to potentially charge higher prices. Berlin is also backing the deal. DB +1.7% premarket.
Hong Kong's stock exchange and MSCI have agreed to launch futures contracts on the A-share portion of the global index provider's Emerging Markets Index (ETF: EEM), allowing international investors to hedge risk from their exposure to Chinese equities. MSCI recently decided to fast-track an increase in China's weighting in its flagship EM index - a benchmark that's tracked by $1.9T of funds - bringing forward to November the move originally planned for May next year.
In Asia, Japan +0.5%. Hong Kong +1%. China +1.9%. India +1%.
In Europe, at midday, London +0.8%. Paris +0.3%. Frankfurt +0.3%.
Futures at 6:20, Dow -0.7%. S&P flat. Nasdaq +0.3%. Crude +1% to $56.63. Gold -0.2% to $1296.40. Bitcoin -0.7% to $3864.
Ten-year Treasury Yield -2 bps to 2.65%