Thursday Morning Market Prepper
- Central Bank Chess
- New Home Sales Plunge
- Stop Worrying About the Debt and Love Tax Cuts
- Uber Reports 2Q Loss of $645 Million
- Climate Change
- Eye on Amazon
- No Antitrust Issues In Amazon’s Buying Whole Foods
- Fewer Store Visits
- Startup Equity
- This Time Really Is Different
- On the menu at Jackson Hole
- J.M. Smucker slumps after margins weaken
- Next OPEC meeting set for Sept. 22
- Seadrill slides preparing for Chap. 11
- Harvey puts refining industry on watch
- Samsung lacks leadership 'Plan B'
- New head of Ford's China operations
- GE, ABB restart industrial solution talks
- Lockheed, Raytheon win missile contracts
Yesterdays Unusual Option Volume:
It's that time of year again. Monetary policymakers from around the world are gathering in Jackson Hole for the Federal Reserve's annual powwow on economic policy. Janet Yellen is preparing for what could be her final visit as Fed Chair, while Mario Draghi could offer clues as to when the ECB will begin to taper QE. While many topics will be explored, the official theme of this year's conference is "Fostering a Dynamic Global Economy."
Nearly a third of U.S. refining capacity appears to be in Harvey's path on the Texas and Louisiana coastlines, while forecasters expect the tropical storm to reach hurricane strength soon. Making preparations... Anadarko Petroleum (NYSE:APC) has pulled workers from its Gulf of Mexico platforms, and refiners are assessing their operations. Among companies with major facilities in the area: XOM, PSX, VLO, MPC
The next joint committee meeting of OPEC and non-OPEC producers will be held in Vienna on Sept. 22. All options, including extending supply cuts beyond Q1 of 2018, are "left open to ensure that all efforts are made to rebalance the market," according to an OPEC statement. The group also confirmed that its deal achieved a conformity level of 94% as of July.
Qatar has restored diplomatic ties with Iran in a move set to further inflame tensions with the four Arab states it has been locked in a regional dispute with since June. Doha and other Gulf states withdrew their ambassadors to Iran in early 2016 after mobs damaged Saudi diplomatic facilities in the country following the execution of a Shia cleric in Riyadh.
Venezuelan bond prices tumbled yesterday as traders grappled with the prospect that U.S. sanctions could restrict trading in the troubled nation's securities. The Trump administration is considering banning transactions by U.S. banks of new debt issued by Venezuela or its state-owned entities, and possibly some existing debt, sources told the WSJ.
Britain's economy grew as expected in the second quarter of 2017, but continued to experience a Brexit-based struggle, according to the Office for National Statistics. GDP expanded by 0.3% during the period, while annual growth was 1.7%. However, business investment held steady, while household spending rose 0.1%, its weakest since the end of 2014.
Once the biggest offshore rig firm by market value, Seadrill (NYSE:SDRL) plans to begin its Chapter 11 debt restructuring in the coming weeks, while revealing a $100M loss in Q2. The negotiations will likely involve bankruptcy "on or before Sept. 12," as the company plans to raise $1B in new capital and obtain a five-year extension for its bank facilities. SDRL -22% premarket.
A consortium that includes Western Digital (NYSE:WDC), KKR, INCJ and the Development Bank of Japan is offering ¥1.9T ($17.4B) for Toshiba's (OTCPK:TOSYY) memory chip business, sources told Reuters. Western Digital will also not seek voting rights in the unit, which the Japanese conglomerate is trying to sell to cover losses from its U.S. nuclear division.
Samsung has no 'Plan B' for taking big decisions if its de facto leader Jay Y. Lee is jailed for corruption, according to Reuters. He has been in detention since February, on trial for charges ranging from Samsung (OTC:SSNLF) embezzlement to perjury in a scandal that has rocked South Korea. A lower court will give its verdict tomorrow, with prosecutors demanding a 12-year jail term.
Scoring another live sports partnership, Facebook (NASDAQ:FB) is teaming up with Stadium to broadcast 15 college football contests. While financial terms were not disclosed, the deal will give it the rights to stream nine Conference USA and six Mountain West match ups. Facebook had previously gotten beaten out by Amazon (NASDAQ:AMZN) for streaming Thursday night NFL games.
Ford has poached Jason Luo, previously chief executive of Key Safety Systems - which is acquiring troubled air bag maker Takata (OTCPK:TKTDY) - to lead its business in greater China. The announcement comes a day after Ford (NYSE:F) said it was in talks to form a joint venture to develop and sell electric cars in the Chinese market, as it attempts to catch up with international rivals.
Still a long way from being profitable... UBER raked in $8.7B in gross bookings last quarter, marking a 17% increase, but the ride-hailing service is still losing more than half a billion dollars every three months. Clamping down on excessive spending, Uber lost $645M in Q2, down 9% from the first quarter. Last year, the San Francisco-based company lost about $3B.
Just hours after Whole Foods (NASDAQ:WFM) shareholders approved the company's buyout by Amazon (AMZN), the Federal Trade Commission said it will allow the $13.7B deal. The agency began an investigation to see whether the tie-up would reduce competition, but ultimately decided not to proceed with the probe. The transaction is set to close in the second half of 2017.
Hershey Trust, the charitable trust which controls the chocolate maker, is selling 4.5M shares of Hershey (NYSE:HSY) common stock. 3M of those shares are earmarked for Morgan Stanley (NYSE:MS) and an additional 1.5M shares will be scooped up by the confectionery company. The sale will allow diversification of the trust's school assets, while retaining its majority voting control in Hershey.
Drugmaker news roundup: Novartis (NYSE:NVS) has received EU approval for its breast cancer drug Kisqali, while Roche (OTCQX:RHHBY) has been granted an FDA priority review for its haemophilia drug emicizumab. Meanwhile, results from a clinical trial have shown that AstraZeneca's (NYSE:AZN) blood-thinner Brilinta reduces cardiovascular mortality risks by 29% in patients with a history of heart problems.
Zillow has won the dismissal of a federal lawsuit in Chicago challenging the accuracy of its 'Zestimate' tool used for estimating U.S. home values. Homeowners had sued Zillow (NASDAQ:Z) in May, complaining that its computer algorithm often undervalued their homes, sometimes by hundreds of thousands of dollars, making them harder to sell and constituted illegal "appraisals."
Irish building materials group CRH has sold its U.S. distribution business to Beacon Roofing Supply (NASDAQ:BECN) for $2.63B in cash and will use the proceeds for acquisitions elsewhere. "When we look at the value we could crystallize through this transaction, no way could we create that value for our shareholders if we were to hang onto the business," CEO Albert Manifold told Reuters.
Moderating its price expectations, General Electric (NYSE:GE) has resumed negotiations to sell its industrial solutions business to ABB, which offers circuit breakers, panel boards and other electrical equipment. The move underscores the determination of John Flannery, who took over as GE's chief executive on Aug. 1, to continue divesting non-core assets and review the company's portfolio.
The air-based leg of the nuclear triad... Lockheed Martin (NYSE:LMT) and Raytheon (NYSE:RTN) have been awarded initial contracts of $900M each by the U.S. Air Force to begin development of a new nuclear cruise missile for long-range bombers. The decision is a defeat for Boeing (NYSE:BA), which in the 1980s developed and fielded the AGM-86B Air Launched Cruise Missile that is still in use today.
In Asia, Japan -0.4%. Hong Kong +0.4%. China -0.5%. India +0.1%.
In Europe, at midday, London +0.4%. Paris +0.3%. Frankfurt +0.4%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude -0.6% to $48.12. Gold -0.2% to $1291.80.
Ten-year Treasury Yield +1 bps to 2.18%
Today's Economic Calendar
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Existing Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
4:30 PM Money Supply
4:30 PM Fed Balance Sheet