Thursday Market Prepper
- Myth of a Bull Market
- S&P Cuts China’s Credit Rating
- Yellen Brushes Aside Inflation ‘Mystery’
- Someone Made a Fake Equifax Site. Then Equifax Linked to It.
- HTC Messed Up Its Google Deal
- Baidu Fund Heats Up Driverless Race
- Brewing Brawl Gets Real
- Apple Watch Problem Can’t Be Fixed
- The Tyrannosaurus Rex and Jamie Dimon
- The Calm Before the Calm
- World markets mixed overnight
- S&P downgrades China, citing debt
- Puerto Rico battered by Maria
- SEC discloses cyberattack
- Bank of Japan keeps rates steady
- Fed on track for another 2017 hike
- Google buys part of HTC smartphone ops
- Apple stung by poor Watch reviews
- Tesla working with AMD on AI chip
Yesterdays Unusual Option Volume:
The FOMC held the Fed Funds rate steady but still expects to hike one more time between now and year-end. The central bank will also begin to trim back its balance sheet next month with a $10B reduction. Longer term is a somewhat more dovish message, with the "dots" showing a 20 basis point cut in the expected final resting place of the Fed Funds rate.
The SEC said hackers last year attacked EDGAR - the system for public company filings - and may have traded on the information. The agency is still investigating the source of the hack, but said the "software vulnerability" was quickly patched. Beyond that there are few details, including why the SEC waited until now to disclose the attack.
The Bank of Japan also held rates steady but faced an unexpected dissent from its newest board member, Goushi Kataoka, who argued for easier policy. The board believes the economic recovery will have inflation moving toward the 2% target, but Kataoka said excess supply in capital stock and labor markets would prevent that. The Nikkei closed with modest gains, with the 10-year JGB yield flat at 0.03%.
Hurricane Maria slammed into Puerto Rico, knocking out power to the entire island, flooding parts of San Juan, likely causing $30B in damage. The cost, in fact, could reach the "extraordinary" level of 10% of Puerto Rico's GDP, said AccuWeather's Joel Myers. This, as the island recently sought bankruptcy protection. Myers added, “It is going to take years for some areas to recover.”
Hackers went undetected for more than four months before the security team at Equifax (NYSE:EFX) discovered the breach, according to FireEye (NASDAQ:FEYE), which was hired to investigate the attack. According to FireEye's Mandiant Group, the first evidence of hackers appeared on March 10, though Equifax previously disclosed the breach as having taken place in May. One security expert noted it's not unusual for hackers to take weeks before accessing sensitive data. “Typically, you first build out a beachhead so that it’s difficult to get kicked out." On average, it takes companies nearly 100 days to discover they've been hacked, FireEye said. In this case, it took 141 days.
Toshiba has set an extraordinary shareholder meeting for 10 a.m. Tokyo time on Oct. 24 to approve its $18B deal to sell its prized semiconductor unit, Toshiba Memory, to a consortium led by Bain Capital and SK Hynix (OTC:HXSCF). Shareholders will be asked to sign off on that sale as well as the company's annual earnings report and director appointments. Toshiba's (OTCPK:TOSYY) decision to go with the Bain consortium even after reports suggested it was favoring Western Digital (NYSE:WDC) sent the latter's shares lower Wednesday, and they fell another 1.6% in Tokyo today.
Twitter said it will head to the Senate Intelligence Committee to meet with staff next week regarding the investigation into Russian interference in the U.S. presidential election. The panel has heard from Facebook (NASDAQ:FB) and plans a public hearing with the social media company; its chairman says he may include Twitter (NYSE:TWTR) in that hearing as well. Ranking Democrat Mark Warner has said he wants to hear from Twitter to learn about fake accounts and bot networks and their role in spreading misinformation.
Google has agreed to acquire part of HTC Corp.’s (OTC:HTCKF) smartphone operations for $1.1B in an attempt to build its hardware business. Under the deal, Google (GOOG, GOOGL) will obtain HTC employees, including teams that develop the Pixel smartphone, as well as a non-exclusive licensing agreement for HTC's intellectual property. The agreement does not involve the purchase of a direct stake, and HTC will continue to run its remaining smartphone business.
Apple acknowledged cellular connectivity issues with its Watch Series 3 just days before the product comes available for purchase. The company says it's working on a fix for a future software release. Apple (NASDAQ:AAPL) was responding to some early reviews, including one from the WSJ titled "Untethered ... and Unreliable." In the meantime, iPhone 8 orders could be coming in well below those for previous models, at least in part thanks to some customers waiting for the iPhone X.
Looking to cut costs under new CEO John Flannery, General Electric (NYSE:GE) has grounded its corporate jet fleet. Without the internal airline, the company's execs will be using charter services or commercial as needed. GE has promised to trim $2B in costs by the end of next year.
In Asia, Japan +0.18%. Hong Kong -0.06%. China -0.24%. India flat.
In Europe, at midday, London +0.07%. Paris +0.56%. Frankfurt +0.23%.
Futures at 6:20, Dow -0.06%. S&P -0.08%. Nasdaq -0.11%. Crude -0.55%to $50.41. Gold -1.26% to $1,299.80.
Ten-year Treasury Yield -7bps to 2.269%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:00 FHFA House Price Index
9:45 Bloomberg Consumer Comfort Index
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet