Thursday Morning Market Prepper
The Year 2016 in Stocks – Stocktwits Style
PREMIUM
CHARTS
Consumer Confidence Soars
Consumer confidence at a 15 year high. pic.twitter.com/161OjTjgrS
— David Kudla (@David_Kudla) December 29, 2016
Shares in Toshiba closed down 17% overnight, clocking a third day of heavy losses following credit downgrades from both Moody's and S&P Global Ratings. The conglomerate formally announced late on Tuesday that cost overruns at its U.S. nuclear business might result in "several billion dollars" in goodwill charges. Since reports of the writedown, Toshiba (OTCPK:TOSYY) shares have tanked 40%, erasing almost $7B in market value.
Economy
The Santa rally has run out of steam. U.S. stocks declined on Wednesday in the second biggest loss since the election. The Dow opened just a short hop away from 20,000 but then lost 111 points, falling to 19,833, while the S&P 500 fell 18 to 2,249. Ripples from Wall Street have spread overseas overnight and U.S. futures are not looking too bright in the penultimate trading session of the year.
Splitting from an earlier ruling, a federal appeals court has found that in-house courts at the Securities and Exchange Commission are unconstitutional. That marks a heavy setback for the agency's enforcement efforts as it uses five administrative-law judges to handle most routine cases. A spokesman said the SEC is reviewing the decision and wouldn't immediately have further comment.
Bank loans to eurozone firms climbed 2.2% in November, growing at their fastest pace since the tail end of the global financial crisis, while household lending growth accelerated to 1.9%, the highest since mid-2011. The figures are positive for the euro area, but the continued rise is at roughly the same, modest pace that previously suggested to policy makers that continued stimulus was needed throughout 2017.
Russia is drumming up diplomatic support for talks in Kazakhstan next month aimed at ending the fighting in Syria, a plan that would give it a greater voice in efforts to broker a settlement of the nearly six-year-old conflict. Top officials from Ankara, Tehran and Moscow met last week in the Russian capital to discuss the negotiations, which wouldn't include the U.S.
Tensions are high after John Kerry defended the Obama administration's decision to abstain from voting on a U.N. resolution condemning Israeli settlement activity, while PM Benjamin Netanyahu voiced that peace will only be achieved through direct talks and recognition of Israel's right to exist. How does it affect the country's economy? Those who passed the resolution hope it will pave the way for international pressure and sanctions on Israeli or foreign entities that have dealings in the settlements.
Taiwan President Tsai Ing-wen will pass through the United States when she visits Latin America next month, angering China which urged authorities to block any such stopover by stating "we hope the U.S. can abide by the 'one China' policy." The transit details are being closely watched as Taiwan media has speculated Tsai will seek to meet President-elect Donald Trump's transition team ahead of his Jan. 20 inauguration.
Stocks
Shares in Takata soared 16% in Tokyo after it was reported the airbag maker was nearing a U.S. settlement that would resolve allegations of criminal wrongdoing. The penalty could reach up to $1B, and some would be paid up front and the rest over a number of years, sources told WSJ. Takata's (OTCPK:TKTDY) faulty inflator systems were responsible for 11 deaths and over 100 injuries worldwide.
Bombardier has signed a deal to deliver up to 300 Talent 3 trains to Austrian Federal Railways for about €1.8B at list prices. The Talent 3 is a multiple-unit railcar that allows for up to 50% more seating capacity than its predecessor generation. Bombardier (OTCQX:BDRAF, OTCQX:BDRBF) said the first 21 of the electric trains would be delivered in 2019.
Marking a greater use of real-time video that is part of a broader trend of immersive experiences and virtual reality, Twitter (NYSE:TWTR) has joined YouTube (GOOG, GOOGL), Facebook (NASDAQ:FB) and others in offering panoramic live views, but not everyone can post for now. Live 360-degree videos will be marked with a "LIVE 360" badge and users can change the angle of their view by either moving their phones or swiping their screens.
"I was just called by the head people at Sprint and they're going to be bringing 5,000 jobs back to the U.S.," President-elect Trump told reporters outside Mar-a-Lago, adding that another 3,000 U.S. jobs would be created at OneWeb. But Sprint (NYSE:S) spokesman Dave Tovar clarified that the positions were part of a previously disclosed pledge by parent company SoftBank (OTCPK:SFTBY), which promised to create 50,000 American jobs - still quite an impressive number - after meeting with Trump earlier this month.
Burger King and Tim Hortons will become the latest fast food chains to switch to chicken free of vital antibiotics. The companies will change in their U.S. stores next year and in Canada in 2018, according to their owner Restaurant Brands International (NYSE:QSR). McDonald's (NYSE:MCD) already removed antibiotics important to human medicine from its chicken supply, and Wendy's (NYSE:WEN) said it would quit by 2017.
Boehringer Ingelheim has agreed with the FTC to divest five types of animal health products to settle charges that a proposed asset swap with Sanofi (NYSE:SNY) would harm competition. The two companies agreed last December to swap businesses, with Boehringer getting Sanofi's $13.5B animal health business and Sanofi getting Boehringer's consumer healthcare business, valued at nearly $8B.
Upping the ante on his calls to reform the veterans health care system, President-elect Donald Trump convened a meeting on Wednesday to explore additional ways to enable veterans to obtain private medical treatment. "We think we have to have kind of a... public-private option," a senior transition official told reporters. "It's one of the options on the table." Related tickers: UNH, AET, ANTM, CI, HUM, WCG, CNC, MOH, GTS, HQY
Sony is looking to put OLED televisions on shelves worldwide in 2017, aiming to electrify sales with a new top-of-the-line technology. The TVs will first hit Europe, the U.S. and China starting in the spring. Sony (NYSE:SNE) will source panels from South Korea's LG Display (NYSE:LPL) and draw on its own proprietary technology for image processing.
AirPods remain in short supply. A Wednesday afternoon inventory check showed only one store in the country - in Bridgewater, N.J., - that currently has the wireless earphones in stock, while Apple.com displayed a six-week wait for delivery. During a visit to the New York Stock Exchange yesterday, CEO Tim Cook called the wireless earbuds "a runaway success," and said Apple (AAPL) was "making them just as fast as we can."
Meanwhile, Indian officials are meeting early next week to evaluate the incentives sought by Apple (NASDAQ:AAPL) to manufacture its products in the country, WSJ reports. The government is trying to promote local manufacturing under Prime Minister Narendra Modi's "Make in India" campaign, but it remains to be seen whether they would agree to more concessions for Apple.
New York narrowly edged out Hong Kong in the global rankings for IPOs this year, with $24.6B on the NYSE (NYSE:ICE) and Nasdaq (NASDAQ:NDAQ) combined, while Hong Kong had $24.5B. The numbers were still significantly lower than last year. Globally, new listings total $141B in 2016, down a third from 2015 and the weakest level recorded since 2012.
Today's Markets
In Asia, Japan -1.3%. Hong Kong +0.2%. China -0.2%. India +0.6%.
In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt -0.2%.
Futures at 6:20, Dow -0.1%. S&P flat. Nasdaq -0.1%. Crude -0.5% to $53.78. Gold +0.5% to $1146.80.
Ten-year Treasury Yield -2 bps to 2.48%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 International trade in goods
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:00 PM Results of $28B, 7-Year Note Auction
3:00 PM Farm Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet