Thursday Morning Reads:
- U.S. Army could become major HoloLens customer
- Unilever CEO Polman replaced by beauty head Jope
- Facebook debated charging for user data access?
- GE, seven other industrial stocks could get hit hard by lower oil prices
- VW weighs location of N.America factory
- Microsoft declares $0.46 dividend
- Micron +2.6% on CEO conference comments
- BP's Dudley backs Trump for support of U.S. business, dismisses oil weakness
- Altria eyes 'significant minority' stake in Juul
- Germany clarifies Nord Stream 2 comments
- Qualcomm sets up fund to invest in AI startups
- AWS announces its A.I. chip
- Fed’s PowellDovish Shift
- Regulators ease ‘living will' regulations for banks (XLF). WSJ Report
- Deutsche Bank (DB) considering Garth Ritchie's suitability to run its investment bank. FT Report
- Ad Buyers Skeptical
- Did The Market Just Bottom?
- Innovation Happens With Less Weight
- MLB considering purchase of Fox (FOXA) regional sports networks. NY Post Report
- Volkswagen (VWAGY) considering building electric car factory in North America. Reuters Report
- A Farmer’s Tough Choice
- More Small Companies Avoid IPOs
- Germany antitrust officials will investigate Amazon (AMZN) over third party seller relationships. Reuters Report
- UPS (UPS) delivered 98% of packages on time for Thanksgiving weekend. WSJ Report
- Don’t Count on the Fed Saving Stocks Again
- Steel tariffs causing companies to sell products to Europe instead of the U.S. (SLX). WSJ Report
- The Trump Administration considering raising China auto tariffs to 40% from 25% (CARZ, GM, F, FXAU, TSLA, KNDI). Reuters Report
Crude prices have dropped below $50 a barrel for the first time since October 2017, amid data from the EIA showing U.S. crude stockpiles increasing for the tenth consecutive week. All eyes are now on this weekend's G20 summit, where Russia and Saudi Arabia will likely discuss how to coordinate oil policy. Shielded by a budget surplus and a weak ruble, Vladimir Putin said yesterday current prices are fine for Russia, but Crown Prince Mohammed bin Salman, under pressure over the Khashoggi killing, can't afford to alienate President Trump and his demand for lower prices.
U.S. stock index futures are pulling back after a stellar session on Wednesday, when the DJIA closed up over 600 points following a dovish speech by Jerome Powell. He said the Fed's benchmark interest rate was "just below" neutral, marking a step away from comments made in recent months. Also on deck for today is personal income and spending data for October, as well as the release of minutes from the last FOMC meeting.
EU Brexit negotiator Michel Barnier has informed Britain that the current withdrawal agreement agreed to by Prime Minister Theresa May was the "only one possible." May will try to sell the deal to her divided parliament on Dec. 11. On Wednesday, the Bank of England warned the U.K. economy could contract by 8% within a year if the plan doesn't sail through parliament, but British banks were healthy enough to handle a chaotic Brexit. Sterling -0.5%to $1.2761.
Germany's economy minister has dismissed suggestions that his country's commitment to the Nord Stream 2 pipeline - that will allow Russia to bypass Ukraine in pumping gas to Europe - undermines efforts to de-escalate a crisis between the two neighbors. "Those are two separate questions," Peter Altmaier declared. Russia's state-run Gazprom (OTCPK:OGZPY) leads the Nord Stream 2 consortium, which includes Royal Dutch Shell (RDS.A, RDS.B), BASF's (OTCQX:BASFY) Wintershall, Engie (OTCPK:ENGIY), OMV (OTCPK:OMVJF) and Uniper (OTC:UNPPY).
Life expectancy for Americans fell again last year, to 78.6 years, and has now lost three-tenths of a year since 2014. Economists consider life expectancy to be an important measure of a nation's prosperity, but the 2017 data paints a darker picture of health in the U.S. The figure was pushed down by the sharpest annual increase in suicides in nearly a decade and a continued rise in deaths from opioid drugs.
The U.S. Senate has advanced a measure to withdraw American support for a Saudi-led coalition fighting in Yemen against the backdrop of the killing of journalist Jamal Khashoggi. The news follows a CNBC report suggesting Saudi Arabia had signed a letter of offer and acceptance with the U.S. for Lockheed Martin's (NYSE:LMT) THAAD missile defense system, a crucial step forward in the $15B deal.
After a decade at the helm of Unilever (UL, UN), CEO Paul Polman has announced his retirement. He'll be replaced by Alan Jope, head of the company's beauty unit, from Jan. 1. Polman angered shareholders earlier this year with a plan to move Unilever's headquarters to the Netherlands, but an investor rebellion forced him to abandon the idea.
Deutsche Bank -4% premarket after its Frankfurt headquarters was raided in an investigation tied to the Panama Papers. Germany's public prosecutor alleged that two staff members helped clients set up off-shore accounts to launder money from criminal activities. "We will communicate as soon as we have more details," Deutsche Bank (NYSE:DB) said in a statement.
Germany's antitrust authority is next to investigate whether Amazon's (NASDAQ:AMZN) dominance is hindering other retailers in the country's online marketplace and if sellers have become dependent on Amazon to make sales. In separate news, AWS has launched an AI microchip aimed at so-called machine learning, called Inferentia, which will offer "high throughput, and low latency inference performance at an extremely low cost."
Doubling down on artificial intelligence, Qualcomm (NASDAQ:QCOM) has set up a $100M fund that will invest in startups working in autonomous cars, robotics and machine learning platforms. The fund, Qualcomm Ventures AI Fund, has already made its first investment in AnyVision, a facial recognition company. The move pits Qualcomm against chip industry contemporaries like Intel (NASDAQ:INTC), Micron (NASDAQ:MU) and Nvidia (NASDAQ:NVDA) in investing in AI.
Microsoft is readying its HoloLens augmented reality headset for combat, winning a $480M military contract with the U.S. Army to help soldiers during training and military missions. The two-year deal may result in follow-on orders of more than 100K HoloLens (NASDAQ:MSFT) headsets. Magic Leap was also pursuing the contract according to the report in Bloomberg.
Huawei is seeking clarification after New Zealand's intelligence agency rejected the telecom industry's first request to use the Chinese firm's equipment in its planned 5G mobile network. Intelligence officials have said 5G grids have different security concerns compared to previous generations because it's difficult to restrict vendors considered high risk to less sensitive parts of the network.
Internal Facebook emails in court filings viewed by the WSJ provide a window into a document trove a British lawmaker plans to make public next week - based on a lawsuit filed by a company called Six4Three. The emails (mostly from 2012 to 2014) suggest Facebook (NASDAQ:FB) considered charging companies for continued access to user data and may have pushed some advertisers to spend more in return for increased access to user information.
No deal is in place yet, but Altria (NYSE:MO) will take a "significant minority" stake in Juul if terms can be worked out. Negotiating a potential tie-up could take several weeks, according to the WSJ. Big tobacco companies have been investing in e-cigarettes as U.S. smoking rates decline, but those products have lost significant market share over the last year as Juul’s popularity has surged.
BMW said it can force its hybrid cars to switch to an electric-only mode in heavily polluted urban areas as a raft of EU cities seek to create strict emissions-free zones. "The car switches off the combustion engine automatically," BMW's (OTCPK:BMWYY) Klaus Froehlich told Reuters at the Los Angeles Auto Show. The carmaker is currently demonstrating the technology to local authorities in German cities.
"We are 100% deep in the process of 'We will need an electric car plant in North America,' and we're holding those conversations now," said Scott Keogh, CEO of Volkswagen Group of America. The factory will produce a yet-to-be-revealed EV, priced between $30K-$40K, that is due in 2020. VW (OTCPK:VWAGY) previously announced it would spend almost €44B on developing electric cars, autonomous driving and new mobility services by 2023, while exploring areas of cooperation with Ford (NYSE:F).
In Asia, Japan +0.8%. Hong Kong -0.9%. China -1.3%. India +1.3%.
In Europe, at midday, London +0.4%. Paris +0.5%. Frankfurt +0.1%.
Futures at 6:20, Dow -0.2%. S&P -0.3%. Nasdaq -0.6%. Crude -1% to $49.79. Gold +0.6% to $1231.20. Bitcoin +3.8% to $4165.
Ten-year Treasury Yield -3 bps to 3.01%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
2:00 PM Fed's Mester Speech
2:00 PM Fed's Evans Speech
2:00 PM FOMC minutes
1:00 PM Fed's Kaplan Speech
3:00 Farm Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet