Thursday Morning Charts, Reads, News and More
- Recapitalization Plan
- New Cyber Law
- First Rules of Finance
- Can’t Kick Its Addiction
- Investors Pick Tesla
- Uber Posts $708 Million Loss
- $3.2 Billion Fine
- Biometric Scanning to Replace Boarding Passes
- Whistleblower Could Make $600 Million
- Don’t Be Fooled
- Chart of the Day
— Bloomberg (@business) June 1, 2017
Some very big, back-to-back flows in & out of this $11.3 billion junk-bond ETF, $634 million in one day, $541 million out the next. pic.twitter.com/fXhV6b4DXH
— Lisa Abramowicz (@lisaabramowicz1) June 1, 2017
"I will be announcing my decision on Paris Accord, Thursday at 3:00 P.M. The White House Rose Garden. MAKE AMERICA GREAT AGAIN!" President Trump wrote on Twitter. During his 2016 presidential campaign, Trump blasted the accord, and called global warming a hoax aimed at weakening U.S. industry. The landmark agreement asks the nearly 200 participating countries to reduce greenhouse-gas emissions in an effort to combat climate change.
Oil prices are recovering today from yesterday's falls. Reports that U.S. crude stockpiles had fallen more than expected have helped boost markets, as well as expectations that President Trump is going to pull the U.S. out of the Paris agreement. Traders are reading this as a signal of his intention to scrap emission regulations, which would boost oil demand.
China's foreign ministry has again called for THAAD to be removed from South Korea after the U.S. missile defense system was installed in the country. It's also making waves since South Korea's new leader was not told about THAAD's latest deployment. The foreign ministry said it will also stick to the Paris accord and has been in close touch with the U.S. on many matters including climate change.
A private gauge of China's manufacturing slipped into contractionary territory in May, contrasting with yesterday's government's PMI reading, which showed steady manufacturing activity last month. The Caixin/Markit Manufacturing PMI fell to 49.6 from 50.3, marking the lowest reading since June 2016. Output fell to 50.2 vs. 51.0, reflecting a relatively muted increase in total new orders.
Sterling retreated overnight after a YouGov poll showed Theresa May could be well short of the number of seats needed to form a government, raising the prospect of political turmoil just as formal Brexit talks begin. A lot could still happen before the June 8 election as other polls display her winning a big majority and a Kantar poll showed her lead widening.
U.S. companies have signed business deals with Vietnam worth over $8B, including power projects and jet engines from GE and Honeywell (NYSE:HON), generator technology from Caterpillar (NYSE:CAT) and a hotel partnership with Hilton Worldwide (NYSE:HLT). The U.S. Commerce Secretary, who has pledged to shrink U.S. trade deficits, said the transactions would include $3.4B in U.S. produced content that would support 23,000 jobs.
Wilbur Ross also announced yesterday that the best window to complete the renegotiation of NAFTA is by early January, well before Mexico's general elections and U.S. congressional elections in 2018. Unfair trade? Canada just reported its economy expanded at an annual pace of 3.7% in Q1, more than three times the growth seen in the U.S., while Mexico's GDP grew 2.8% in the same period.
Fired FBI Director James Comey is expected to testify in public before the Senate Intelligence Committee next week after having been "cleared for takeoff" by Special Counsel Robert Mueller, NBC News reports. However, it's still unclear whether President Trump will invoke his executive privilege to prevent Comey from testifying in front of the group investigating Russian election interference.
Speaking in South Korea, San Francisco Fed President John Williams said he views three rate hikes in 2017 as his baseline scenario and even sees a fourth increase if growth surprises to the upside. Today's calendar: Fed Governor Jerome Powell, a permanent voter on monetary policy who may succeed Chair Janet Yellen next year, is scheduled to speak before the Economic Club of New York.
Today's St. Petersburg forum is bound to see Russia demonstrating its emergence from a multi-year recession linked to sanctions and tumbling oil prices. Vladimir Putin will be attending, along with other political and business leaders, including heads of BP, Total (NYSE:TOT) and Shell (RDS.A, RDS.B). Last year, the forum resulted in a number of contracts amounting to more than 1.4T rubles ($25B).
Russia is also exploring ways to regulate bitcoin. "We don't consider that bitcoin can be considered as a virtual currency. It's more digital assets with the regulation of assets," said Elvira Nabiullina, governor of the Russian Central Bank. Japan recently passed a law to legalize payments in bitcoin which helped boost the price, with major trading volumes now coming from the country. Related tickers: COIN, OTCPK:BTCS
IEX Group, operator of the newest U.S. stock exchange, plans to list its first company in October as it tries to break into a business dominated by the New York Stock Exchange (NYSE:ICE) and Nasdaq (NASDAQ:NDAQ). The linchpin of IEX's strategy is a 350 microsecond delay on orders, meant to offset what it argues are structural advantages for high-speed traders over long-term investors.
Japanese investment bank Nomura Securities (NYSE:NMR) bought about $100M worth of Venezuelan government bonds last week as part of the same transaction that landed Goldman Sachs (NYSE:GS) in the thick of a political controversy. The news comes as Venezuela's central bank devalued its currency by 64% in a dollar auction that aimed to ease a crisis in a nation stricken by the world's highest inflation.
The U.S. government may have overpaid Mylan (NASDAQ:MYL) by as much as $1.27B between 2006 and 2016 for its EpiPen emergency allergy treatment, according to the DHHS. The amount is nearly three times a proposed settlement that the drugmaker announced in October. "Taxpayers have a right to know what happened here and to be repaid whatever they are owed," said Republican Senator Chuck Grassley.
Watch out Google Home (GOOG, GOOGL) and Amazon Echo (NASDAQ:AMZN)... Apple (NASDAQ:AAPL) has started manufacturing the long-rumored Siri-powered smart speaker, according to Bloomberg. Inventec, maker of AirPods, will handle the actual construction of the device. The speaker, which may offer better integration across mobile devices, might debut at the developer conference in June, but wouldn't ship until the end of the year.
Netflix plans to spend $6B on original content in 2017, with that number substantially increasing in the coming years. "As we grow the membership base, we want to grow the current budget," CEO Reed Hastings said at the Code Conference. He also commented on what he sees as the greatest competition, citing Amazon (AMZN) as one of the biggest threats to his business. NFLX +0.7% premarket.
Facebook will hold its annual stockholders meeting today in Redwood City, Calif. The company will ask attendees to vote on a series of measures, including re-electing Facebook's (NASDAQ:FB) board of directors, while shareholders will confront Mark Zuckerberg over the social network’s role in spreading fake news, arguing that democracy is at risk every time it tweaks an algorithm.
The $14B merger between SoftBank's (OTCPK:SFTBY) satellite startup OneWeb and peer Intelsat (NYSE:I) is likely to fall through after bondholders failed to back the proposal and couldn't reconcile their differences. The collapse represents a rare blow to SoftBank CEO Masayoshi Son, a prolific dealmaker who put together a complex transaction that hinged on creditors accepting a discount for their bonds.
After Toshiba attempted to defuse a legal row with its memory joint-venture partner, Western Digital (NYSE:WDC) said that it will not abandon its request to take the matter to arbitration. The statement came after Toshiba (OTCPK:TOSYY) transferred interest in its joint venture with Western Digital back to its parent company to ward off claims that it cannot sell the unit without the latter's consent.
PPG Industries will not launch a formal bid for Dutch rival Akzo Nobel (OTCQX:AKZOY) after repeated informal offers were rejected. CEO Michael McGarry said the company had made a final approach last week, but the paint maker did not respond. Under Dutch securities rules, PPG may not approach Akzo again during a six month cooling-off period.
More M&A? ConAgra Brands (NYSE:CAG) has approached Pinnacle Foods (NYSE:PF) to express interest in an acquisition, sources told Reuters. Conagra's approach shows that Pinnacle Foods remains an acquisition target, three years after its $4.3B sale to Hillshire Brands was canceled after the latter agreed to sell itself to Tyson Foods (NYSE:TSN) for $7.7B. CAG +1.2%; PF +6% premarket.
In the latest executive exit, UBER is losing its head of finance as Gautam Gupta departs amid heavy losses for the quarter. The ride-hailing company told WSJ that Q1 revenue was $3.4B, up 18% from the fourth quarter, but its loss, excluding employee stock compensation and other items, was $708M. About a dozen top executives have left Uber since February.
Investors will be watching for further signs of erosion in the car market today as automakers report new car sales for May. Edmunds.com is predicting a flat month, with U.S. sales of about 1.53M cars and light trucks, but notes that manufacturers have been pumping out incentives. Sales had been on the rise since 2010, but declined in the first four months of this year.
In Asia, Japan +1.1%. Hong Kong +0.6%. China -0.5%. India flat.
In Europe, at midday, London +0.4%. Paris +0.7%. Frankfurt +0.4%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.2%. Crude +0.2% to $48.41. Gold -0.5% to $1268.80.
Ten-year Treasury Yield +1 bps to 2.21%Today's Economic Calendar
Chain Store Sales
7:30 Challenger Job-Cut Report
8:00 Fed's Powell speech
8:15 ADP Jobs Report
8:30 Initial Jobless Claims
8:30 Gallup Good Jobs Rate
9:45 PMI Manufacturing Index
9:45 Bloomberg Consumer Comfort Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
4:30 PM Money Supply
4:30 PM Fed Balance Sheet