Thursday Morning Reads
- China Holds Fire on Rate
- Fed Raises Interest Rates
- Here’s Why Bitcoin Is Falling
- Push For Checkout-Free Retail
- Elon Musk’s Boring Co. Wins Chicago Airport High-Speed Train Bid
- Domino’s is Repairing Roads
- Why Is the Program in Trouble?
- Double Valuation to as Much as $40 Billion
- Relative Valuation Update
- Microsoft declares $0.42 dividend
- Microsoft takes aim at Amazon Go
- Unilever not likely to stay in FTSE
- GE falls short of Alstom commitments
- Permian Basin oil production seen doubling in five years, report says
- Ford, Daimler to close fuel cell venture
- Mortgage REITs in the red as Fed signals two more rate hikes
- Rolls-Royce slashes 4,600 jobs
Open Interest Changes:
Unusual Option Action:
The ECB has relocated to Latvia this week for a Governing Council session that could result in the end of its bond-buying program. A policy decision from the central bank will also come a day after the Fed hikes rates and pointed to two more increases by year's end. Forecasts for economic growth and inflation are expected as well, which are likely to be scrutinized for clues on exiting QE.
Slowdown in China? Industrial output cooled to 6.8% in May, while fixed-asset investment and retail sales expanded 6.1% and 8.5%, respectively - the slowest paces since 1996 and 2003. Amid uncertainty about the economic outlook, the PBOC left interest rates on hold overnight. Washington is additionally expected to levy tariffs on tens of billions of dollars of Chinese goods as early as Friday.
New tensions... Italy's agriculture minister has suggested the country will not ratify a free trade agreement between the EU and Canada, saying that it doesn't do enough to protect the nation's specialty products. National governments (and some regions) of all 28 EU member states must approve the Comprehensive Economic and Trade Agreement for it to come into effect.
The U.S. hopes to achieve "major disarmament" of North Korea's nuclear arsenal during President Trump's first term in office, according to Secretary of State Mike Pompeo, and would resume joint military exercises with South Korea if talks stall. He also emphasized that Kim Jong-un wouldn't receive sanctions relief until after his complete disarmament, pushing back against Pyongyang's view that the process would be phased and reciprocal.
Venezuela is considering producing fuels from foreign crude oil for the first time, Reuters reports, as the country struggles to meet its obligations despite having the world’s largest crude reserves. Declining oil production and exports have driven Venezuela into a severe economic recession, while state-run PDVSA lost access in May to inventories produced in Curacao, where it operated the Isla refinery.
Comcast is preparing financing for its 21st Century Fox (NASDAQ:FOXA) bid, with "Highly Confident Letters" from Wells Fargo and Bank of America Merrill Lynch. According to Thomson Reuters Deal Insight data, the $65B offer is the largest all-cash deal of all time. In case the transaction doesn't close, Comcast (NASDAQ:CMCSA) said it will shell out $4.025B, matching a breakup fee from Disney (NYSE:DIS) and adding a reimbursement.
Taking on Amazon's automated grocery shop, called Amazon Go (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) is working on nascent technology that would eliminate cashiers and checkout lines from stores, Reuters reports. The company has already shown sample technology to retailers from around the world and has had talks with Walmart (NYSE:WMT) about a potential collaboration.
The White House is objecting to a Senate measure that would block President Trump’s agreement to revive ZTE (OTCPK:ZTCOY) as the company looks to rebuild a business crippled by an American supplier ban. The Chinese telecom equipment firm has proposed a $10.7B financing plan and nominated eight board members in a drastic management overhaul in an attempt to meet conditions laid out by the U.S.
Apple is changing its iPhone settings to undercut the most popular means for law enforcement to break into the devices. The new software feature, called USB Restricted Mode, is being beta-tested by Apple (NASDAQ:AAPL). It prevents other devices from accessing data on the iPhone via its Lightning port an hour after a phone is last unlocked.
It's "extremely unlikely" Unilever (NYSE:UN) will stay in Britain's blue-chip FTSE 100 Index upon ending its dual-headed structure and moving its headquarters to the Netherlands. "We understand and appreciate that a departure has negative implications... however simplification is the right thing for the company and our shareholders as a whole," said CFO Graeme Pitkethly. UN -1.5% premarket.
Volkswagen has been fined €1B over diesel emissions cheating in what amounts to one of the highest ever fines imposed by German authorities against a company. The penalty doesn't address any civil claims or claims by vehicle owners, but does end regulatory offense proceedings against VW (OTCPK:VLKAY), which could help settle further administrative proceedings in Europe.
Lawyers for several Big Oil firms have urged a federal judge to throw out a lawsuit filed by New York City seeking to hold them financially liable for damages caused by global warming. The city sued Chevron (NYSE:CVX), BP, ConocoPhillips (NYSE:COP), Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (RDS.A, RDS.B) in January, announcing at the same time that it intended to divest fossil fuel investments from its $189B public pension funds over the next five years.
French Finance Minister Bruno Le Maire is pushing General Electric (NYSE:GE) to stick to job commitments at Alstom (OTCPK:ALSMY) after the U.S. group informed him that the target was now "out of reach." GE had committed to create 1,000 net new jobs by the end of this year when it bought Alstom's energy business in 2015, but had created only 323 by the end of April.
Known as "Le Cost Killer," Carlos Ghosn is likely to step down as chief executive of Renault (OTCPK:RNLSY) before the end of his term in 2022, sources told FT. He would still remain chairman of the French automaker and continue as chief executive and chairman of the Renault-Nissan-Mitsubishi alliance (OTCPK:NSANY, OTC:MMTOY) responsible for driving the three groups closer towards being a single global entity.
The Automotive Fuel Cell Cooperation, a joint venture between Ford (NYSE:F) and Daimler (OTCPK:DDAIF), is winding down operations as both companies plan to take their respective fuel cell technology development in-house. Despite years of research and investment by major automakers and startups, vehicles powered by fuel cells still remain a tiny niche in the global vehicle market.
Elon Musk is adding to his position in Tesla (NASDAQ:TSLA), snapping up around 72K shares for $25M through a series of purchases on June 12 and 13. He now holds around 33.74M shares to make him far and away the largest individual shareholder. Also in the headlines... Elon Musk's Boring Company has won a bid to build a high-speed express train to Chicago's O'Hare International Airport.
Facing investor pressure to boost competitiveness and profitability, Rolls-Royce (OTCPK:RYCEY) is shedding 4,600 jobs - 8.4% of the company’s 55K workforce - even as it grapples with engine problems powering Boeing's (NYSE:BA) 787 Dreamliners. The latest cuts, which will be implemented over the next 24 months, follow a previous removal of about 5,000 roles after a series of profit warnings in 2014.
COMAC aims to obtain type certification from China for its narrowbody C919 jet by the end of 2020, putting the state planemaker on track to meet its 2021 goal of delivering the first jet to its launch customer. The plane, which currently has 815 orders from 28 customers, will compete directly with jetliners in Europe and America, like the Airbus A320 (OTCPK:EADSY) and Boeing (BA) 737.
In Asia, Japan -1%. Hong Kong -0.9%. China -0.2%. India -0.4%.
In Europe, at midday, London -0.5%. Paris -0.2%. Frankfurt -0.3%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq -0.1%. Crude +0.2% to $66.80. Gold +0.5% to $1308.10. Bitcoin +3% to $6485.
Ten-year Treasury Yield -3 bps to 2.95%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Import/Export Prices
8:30 Retail Sales
9:45 Bloomberg Consumer Comfort Index
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet