Thursday Morning Reads
- The Trump Administration will provide alternative sources of oil to its allies (XLE, USO). FT Report
- North Korean leader Kim Jong Un wants to have 2nd summit with President Trump. USA Today Report
- China plans to decrease average tariff rates for several trading partners (FXI). Bloomberg Report
- Nike (NKE) sold out 61% more merchandise since Kaepernick ad. Reuters Report
- Volkswagen (VWAGY) plans to pull out of Iran completely. Bloomberg Report
- Alibaba (BABA) CEO Jack Ma has backtracked on commitment to create 1 mln U.S. jobs due to trade issues. WSJ Report
- Facebook (FB) could face sanctions if it does not comply with EU rules by the end of this year. Reuters Report
- Bidding war showdown: Comcast, Fox vie for Sky
- China plans broad import tariff cuts
- Biggest risks to the financial system?
- Rio Tinto announces new share buyback
- Facebook faces deadline on EU consumer rules
- Retail shocker: Amazon said to be planning 3K stores
- Latest crypto exchange hack in Japan
- Total acquires G2mobility and forms partnership with Nexans
- The Watchlist
- Week Ahead Webinar
- Today's Option Recap
- 2018 Top 5 For Back Half of 2018
- 2018 Top 5 Stocks
Open Interest Changes:
It's an unusual process for corporate deal making, but the battle for pay-TV giant Sky (OTCQX:SKYAY) is going to auction. After 21 months of sales drama, 21st Century Fox (NASDAQ:FOXA) and Comcast (NASDAQ:CMCSA) both have bids on the table, with the latter currently the higher offer at £26B. The process, set up by the U.K. Takeover Panel, will comprise up to three rounds of bidding starting Friday and ending Saturday.
China is planning to cut the average tariff rates on imports from the majority of its trading partners as soon as next month - including the U.S. - fulfilling a previous pledge as a tariff war bites into trade. Premier Li Keqiang further said his government wouldn't devalue its currency to boost exports. We "must uphold multilateralism, the rules of free trade... If there are problems, negotiation is needed to solve them."
Denuclearization negotiations with North Korea will be completed by January 2021, according to Secretary of State Mike Pompeo. "We welcome... the permanent dismantlement of all facilities at Yongbyon and the Tongchang-ri site in the presence of U.S. and international inspectors. On the basis of these important commitments, the U.S. is prepared to engage immediately in negotiations to transform U.S.-DPRK relations."
Response to China's Belt and Road Initiative? The EU has launched a new "Connectivity Strategy" linking Europe and Asia that focuses on "sustainable, comprehensive and rules-based" networks. While it didn't delve into specifics, the bloc said it will build on its experience of regulating connectivity and creating cross-border transport, energy, human and digital links. "All regions and all sectors are important in their own ways."
Theresa May cautioned EU leaders on Wednesday night that their plan to create a customs border between mainland Britain and Northern Ireland was "not credible," as the EU's Jean-Claude Juncker warned that a Brexit deal remained "far away." "It's important to be clear there will not be a second referendum in the U.K.," she announced at an informal Brexit summit in Salzburg, Austria. "The U.K. will leave on March 29 next year."
There's more trouble in Argentina as GDP contracted 4.2% in Q2 of 2018. A drought at the beginning of the year slammed soybean and corn production, which account for a big part of exports, while more bad news followed suit. A selloff of the peso in May forced President Mauricio Macri to seek help from the IMF as the government agreed to cut spending as part of a $50B bailout.
U.S. companies repatriated $169.5B in foreign profits in the second quarter - more than in recent periods but marking a decline from a revised $294.9B in Q1, the three months after Congress passed a sweeping tax overhaul. The legislation ended that practice of taxing foreign profits only as companies transferred them to a U.S. parent, instead imposing a one-time tax on accumulated foreign profits.
Former Federal Reserve economist, Nellie Liang, has been nominated to a seat on the central bank's board of governors. She's known for a strong background on financial and monetary stability, including crisis response, and established the bank's Division of Financial Stability in 2010. Today, that operation is as large as the Fed's long-dominant division of monetary affairs.
Japan's Zaif is the latest crypto exchange to be hacked, with losses of Bitcoin (BTC-USD) and two other digital currencies estimated at about $60M. The incident follows the high-profile theft of $530M earlier this year at Tokyo-based Coincheck - one of the world's biggest cyber heists that forced regulators to step up risk management protocols.
Biggest risks to the financial system? "I think the biggest vulnerability is cyber... because - terrorist and cyber countries - they could cause real damage," declared CEO Jamie Dimon. "We're already spending a lot of money and JPMorgan (NYSE:JPM) is secure but we should really worry about that." Inflation running too hot is his second biggest concern, warning that reactionary rate raising from the Fed could be the cause of a "traditional" recession.
European Justice Commissioner Vera Jourova has given Facebook (NASDAQ:FB) until the end of the year to comply with EU consumer rules or face sanctions. "My patience has reached its limit... It is now time for action and no more promises." In other news, Facebook said it would set up a real-time "war room" on its Silicon Valley campus to prevent meddling in the upcoming U.S. and Brazil elections.
Jack Ma has recanted on his promise to bring 1M jobs to the United States. The Alibaba (NYSE:BABA) chairman, who will step down within the next year, made the pledge to incoming President Donald Trump during a January meeting. "The promise was made on the premise of friendly U.S.-China partnerships and rational trade relations. That premise no longer exists today."
Retail sector investors are holding tight after a Bloomberg report revealed that Amazon (NASDAQ:AMZN) plans to introduce 3K of its cashierless Go stores by 2021. The development could impact retail chains far and wide. Keep an eye on Walmart (NYSE:WMT), Kroger (NYSE:KR), Target (NYSE:TGT), CVS Health (NYSE:CVS), Walgreens Boots Alliance (NASDAQ:WBA), Dollar Tree (NASDAQ:DLTR), Dollar General (NYSE:DG) and Sprouts Farmers Market (NASDAQ:SFM)
A wild ride for Tilray... Shares of the Canadian marijuana producer opened yesterday at $233.58, zoomed to $300, corrected to almost $151, then rallied again. The stock, which was halted five times by the Nasdaq for volatility, still ended the day up 38%, its best day ever as a public company. The hype continues to grow for pot-related plays on Wall Street. TLRY +4.7%premarket.
In addition to its existing buyback programs, Rio Tinto (NYSE:RIO) is returning another $3.2B to shareholders this year from its sale of Australian coal assets. Repurchases have gathered steam across the mining sector following a recovery from the crash of 2015-16. Investors are also pressuring companies not to waste growing piles of cash on buying up assets that may never deliver returns. RIO +3.2% premarket.
Filing for an IPO in London, Aston Martin is looking to pass Ferrari (NYSE:RACE) with a $6.7B valuation. It's "a big vote of confidence," CEO Andy Palmer said in an interview, outlining that shares will begin trading on or around Oct. 8. The company’s first SUV is coming out in 2020, giving it access to the Chinese market and a head start over Ferrari, which this week postponed its Purosangue SUV to 2022.
Self-driving motorcycles? BMW's (OTCPK:BMWYY) bike division has built an autonomous prototype - one that can start, accelerate, steer and brake, all without a rider. While the company doesn't have plans to sell the model, which is based on the R 1200 GS, it wants to work some of the technology into its conventional motorcycles to offer "more stability in critical riding situations."
The Trump administration has persuaded Volkswagen (OTCPK:VWAGY) to comply with U.S. sanctions on Iran, a symbolically charged step in undercutting EU efforts to keep the 2015 nuclear deal alive, Bloomberg reports. VW will still be able to conduct some business in Iran on humanitarian grounds, according to U.S. Ambassador to Germany Richard Grenell, who led discussions with the Wolfsburg-based company.
In Asia, Japan flat. Hong Kong +0.3%. China -0.1%. India closed.
In Europe, at midday, London +0.2%. Paris +0.8%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +0.4% to $71.02. Gold flat at $1207.80. Bitcoin +0.1% to $6392.
Ten-year Treasury Yield flat at 3.07%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet