Thursday Market Prepper
News and Reads
— Jeff Sandene, CFP® (@MarathonWealth) January 12, 2017
— Mark Constantine (@vexmark) January 12, 2017
Apple is planning to build a significant new business in original television shows and movies, WSJ reports, in a move that could make it a bigger player in Hollywood and offset slowing sales of iPhones and iPads. Programming would be available to subscribers of Apple Music (NASDAQ:AAPL), which already includes a limited number of documentary-style segments on musicians, but nothing like the premium programming the company is now seeking.
Brexit is no longer the biggest single risk to Britain's financial stability, according to Bank of England governor Mark Carney. "In the run up to the referendum, we felt it was the largest risk because there were things that could have happened which had financial stability implications... Actions were taken to mitigate that, but having got through the day after, the scale of the immediate risks has gone down."
German economic growth accelerated more than analysts forecast last year to its fastest pace since 2011, as falling unemployment and record-low interest rates boosted spending. According to the Federal Statistics Office, GDP growth rose 1.9%, after a gain of 1.7% the previous year. Germany is the first of the world's biggest developed economies to provide preliminary GDP data for 2016.
Global macroeconomic numbers have responded "positively" to the agreement between OPEC and non-OPEC producers to pare output, according to OPEC Secretary General Mohammad Barkindo. Crude-producing countries will decide in May whether to extend their collective output cuts beyond the first half of the year, he added, stating OPEC isn't targeting a specific price for crude.
The U.S. dollar nursed widespread losses overnight after President-elect Donald Trump's long-awaited press conference provided little clarity on future fiscal policies. Most of the discussion centered on Russia and his potential conflicts of interest, but the defense and healthcare sectors ended the day in the red after some notable mentions. Trump again criticized the cost of Lockheed Martin's (NYSE:LMT) F-35 program and argued the drug industry is "getting away with murder" by overcharging for medicines.
After debating seven hours through the night, the Senate narrowly passed a budget resolution early Thursday, clearing the first major hurdle in the GOP effort to repeal Obamacare. House leaders plan to take it up tomorrow amid pressure from President-elect Donald Trump; he said yesterday that the repeal and replacement should happen "essentially simultaneously."
Johnson & Johnson has tentatively agreed with Actelion (OTCPK:ALIOY) on a price to acquire the Swiss biotechnology company, Bloomberg reports, and talks are now focused on valuing what would be a new unit that would house research and development assets. Before the current round of negotiations started in late December, J&J (NYSE:JNJ) had made an offer for Actelion valued at about $260 per share, or more than $28B.
For the seventh consecutive year, Rhode Island lawmakers plan to introduce legislation that would legalize recreational use of marijuana instead of a ballot initiative. Advocates are hopeful that the proposal might finally get a vote this time, because Rhode Island residents can simply buy the drug in neighboring Massachusetts. That state approved recreational use in a November ballot.
Shire has agreed to pay a $350M settlement over U.S. claims that it used "kickbacks and other unlawful methods" to induce doctors to prescribe Dermagraft, a bioengineered human skin substitute. Deputy U.S. attorney-general Benjamin Mizer, head of the DOJ's civil division, said the settlement was "the largest False Claims Act recovery" in a kickback case involving a medical product. SHPG -1.7% premarket.
The U.S. Justice Department is not expected to bring antitrust action against U.S. airlines after finding little proof the four major carriers - DAL, LUV, AAL and UAL - coordinated to raise fares by curbing the supply of seats. Investigators failed to uncover sufficient evidence of collusion among airlines to restrain seats, since the DOJ's probe began in the summer of 2015.
Indian budget airline SpiceJet is set to seal an order for at least 90 new 737 jets from Boeing (NYSE:BA), Reuters reports. At current list prices, the order could be valued at about $10B. The announcement is expected as early as tomorrow when SpiceJet's chairman holds a press event in New Delhi.
United Continental expects to cut some management employees as a part of its larger restructuring program to reduce bureaucracy and boost profit margins. Frontline employees, which include pilots, flight attendants, customer-service and gate agents, will not be affected by United's (NYSE:UAL) impending changes.
Toyota President Akio Toyoda met with Vice President-elect Mike Pence in Washington this week, following criticism from Donald Trump about the company's Mexican production facilities. While a Toyota (NYSE:TM) spokeswoman declined to say what was discussed, Toyoda is believed to have explained the degree of the automaker's contribution to the U.S. economy.
Further individuals could be charged in an ongoing investigation by U.S. authorities into Volkswagen's (OTCPK:VLKAY) diesel emissions cheating, according to the U.S. Attorney General Loretta Lynch. The announcement comes after VW agreed with the U.S. government to pay $4.3B in fines and penalties, while six high-ranking employees were indicted in connection with a conspiracy to cheat emissions tests.
Tesla announced last week that battery production had started at its Nevada Gigafactory, but it didn't mention one exciting detail. According to an investor handout, the Gigafactory will be powered by a 70-megawatt solar array, which is "~7x larger than the largest rooftop solar system installed today." Any generated excess power will be stored by Tesla (NASDAQ:TSLA) Powerpack batteries for use at other times.
Massachusetts Judge Heidi Brieger has refused to excuse Exxon Mobil (NYSE:XOM) from a request by the state's attorney general to hand over decades worth of documents on its views of climate change. "This order affirms our longstanding authority to investigate fraud," she said on Twitter following the decision, adding that Exxon "must come clean." A total of 17 states and territories are cooperating in the investigation.
The Obama administration is expected today to launch a formal complaint with the World Trade Organization against China over subsidies Beijing provides to the country's aluminum industry. The complaint will likely accuse China of granting cheap loans from state-run banks to its aluminum producers, helping companies to enhance their production. Related tickers: AA, BLL, CENX, KALU, CSTM
British Columbia has given the green light to Kinder Morgan's (NYSE:KMI) plan to nearly triple its Trans Mountain oil pipeline, which runs from Canada's oil sands through the province to a marine terminal on the Pacific Coast. The federal government approved the $6.8B expansion in November after the National Energy Board recommended moving ahead with the project based on the fulfillment of 157 conditions.
More trouble in Italy's banking sector? After Monte dei Paschi (OTCPK:BMDPY) failed to raise funds on the market, attention now turns to the nation's biggest bank. UniCredit (OTC:UNCFY) is seeking investor backing for a €13B rights offer - almost as much as its market value - to carry out a turnaround plan. The lender also said today it will book €8.1B in additional provisions for bad loans, as part of a balance-sheet cleanup it unveiled in December.
In Asia, Japan -1.2%. Hong Kong -0.5%. China -0.6%. India +0.4%.
In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.2%. Crude +1.2% to $52.85. Gold +0.6% to $1204.
Ten-year Treasury Yield -4 bps to 2.32%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Import/Export Prices
8:30 Fed's Harker: Economic Outlook
8:30 Fed's Evans: Monetary Policy
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
1:00 PM Results of $12B, 30-Year Note Auction
1:15 PM Fed's Bullard: U.S. Monetary and Economic Policy
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:00 PM Janet Yellen speech