Thursday Morning Reads
- More U.S. Demands
- Bond Guru Dismisses Crisis Talk
- Kind or Hostile
- Didn’t Cause the Stock Market Downturn
- This Crazy Market?
- President Trump considering executive order to ban purchases of China's Huawei and ZTE telecommunications equipment (ZTCOF, SMH, ACIA, FNSR, LITE, IPH). Reuters Report
- Qualcomm (QCOM) / FTC case will begin on January 4 (AAPL). Bloomberg Report
- Foxconn (FXNCY) will begin producing higher end Apple (AAPL) iPhones in India next year. Reuters Report
- Futures pull back after post-Christmas surge
- ECB sees economic slowdown in 2019
- Apple doubles down on iPhones made in India
- Germany may face hefty bill under hard Brexit
- U.S., China trade meeting set for early January
- Visa to buy British payments firm for $250M
- Chesapeake Energy +26% after insider buying spree
- Stocks score broad rally; Dow racks up biggest one-day point gain in history
- Musk tweets on European Supercharger availability
- Disney warns Verizon customers of potential blackout
- Prospect Capital +1.5% on CEO share purchase
- Oil prices rebound as some traders say slide is overdone
Wednesday marked the biggest post-Christmas rally for U.S. stocks ever amid strong retail sales indications, surging oil prices and positive headlines from the White House. The DJIA jumped 1,086.25 points, or 4.98%, posting its largest single-day point gain in its history, while the S&P 500 and Nasdaq recorded their best days since March 2009. Santa's trip to Wall Street is not coming easy, however, with futures pointing to a significant decline for the three major U.S. stock indexes ahead of the open.
A U.S. trade team will travel to Beijing the week of Jan. 7 to hold talks with Chinese officials, according to Bloomberg. Since President Trump and Xi Jinping came to a temporary truce almost a month ago, China has slashed import tariffs and drafted a law to prevent forced technology transfers. Trade tensions have weighed on the world's second-largest economy, with the latest data showing industrial profits suffering their first drop in three years.
The U.S. Commerce Department will not publish economic data - including GDP, inflation and other figures - during the ongoing partial government shutdown, an agency spokeswoman told the WSJ. The closure is set to enter its sixth day after President Trump said he was prepared to wait as long as it takes to get $5B in border wall funding.
Business leaders' confidence in the U.K. economy has sunk to its lowest level in more than 18 months as the risk of a no-deal Brexit grows, according to a survey by the Institute of Directors. Meanwhile, EU budget commissioner Günther Oettinger has warned that Germany's bill would amount to the "mid-three digit range" of hundreds of millions of euros if Britain doesn't pay into EU coffers under a "hard" Brexit.
"Looking ahead, global economic activity is expected to decelerate in 2019 and remain steady thereafter," according to the European Central Bank. "Global inflationary pressures are expected to rise slowly as spare capacity diminishes." The bulletin highlights the ECB's recent decision to end its €2.6T bond buying program, but continue reinvesting the money it receives from maturing paper for a long time following its first rate hike.
India will ban e-commerce companies from selling products in which they have an equity interest, which could impact Amazon (NASDAQ:AMZN) and Walmart's (NYSE:WMT) Flipkart. The companies also can't form exclusive deals with sellers, but they can make bulk purchases through their wholesalers or retail groups and then sell those products with agreements. The rules go into effect on Feb. 1.
China trade tensions? Apple's (NASDAQ:AAPL) business in India is heading to an entire new level. According to Reuters, Foxconn (OTC:FXCOF) will begin assembling top-end iPhones in the country, including devices in the flagship iPhone X family, as early as 2019. Until now, Apple has only manufactured the lower-cost SE and 6S models in India through Wistron's (OTC:WICOF) local unit in Bengaluru.
Two of China's biggest network equipment manufacturers may soon be barred from the U.S. market. President Trump is considering an executive order that would ban American companies from using gear made by China's Huawei and ZTE (OTCPK:ZTCOY), sources told Reuters. The U.S. alleges the companies work at the behest of the Chinese government and their equipment could be used to spy on Americans.
Tesla is planning a Supercharger expansion, which can charge a vehicle to around 80% battery capacity in 40 minutes, that will cover the entire European continent next year. "From Ireland to Kiev, from Norway to Turkey," Elon Musk wrote on Twitter. Tesla (NASDAQ:TSLA) is on the verge of launching its Model 3 in Europe and initial deliveries are expected in the first quarter of 2019.
It's the latest twist in a saga that has jolted Nissan's (OTCPK:NSANY) alliance with Renault (OTCPK:RNLSY). According to Reuters, fresh misconduct allegations brought by Tokyo prosecutors against ousted Nissan Chairman Carlos Ghosn center on the use of company funds to pay a Saudi businessman who is believed to have helped him out of financial difficulties.
Chinese state oil major Sinopec, Asia's largest refiner, has suspended two top officials at its trading arm due to "severe trading losses," with senior executives Ling Yi Qun and Chen Gang managing Unipec in their place. Oil prices have fallen more than 30% since hitting their highest in four years in October, while a sudden widening of the WTI-Brent crude spread has also led to hefty losses at major traders. SNP -3% premarket.
Visa is paying £198M ($250.6M) to buy Earthport (OTCPK:EPCUF), a British firm that facilitates cross-border payments. Its lower-cost alternative allows banks and money transfer firms to have a single relationship instead of multiple ties with various payments channels around the world. For Visa (NYSE:V), cross-border payments represents a growing business, with volumes rising 10% in the 2018 fiscal year.
Although it didn't admit to any wrongdoing, JPMorgan (NYSE:JPM) will pay more than $135M to settle SEC charges that it wrongly handled "pre-released" ADRs. The regulator said the investment bank improperly provided ADRs, which are U.S. securities that represent stock of foreign companies, even though their brokers and clients lacked the corresponding foreign shares.
Sign of the times? Gap (NYSE:GPS) is shutting down its massive NYC store on Fifth Avenue, CNBC reports, as the apparel retailer considers closing hundreds of locations "aggressively" to focus on higher-performing shops. While prices have recently started to cool off, the news comes as retail rents in Manhattan have been climbing over the past few years, with landlords unwilling to negotiate with tenants.
In Asia, Japan +3.9%. Hong Kong -0.7%. China -0.6%. India +0.4%.
In Europe, at midday, London -0.9%. Paris -0.1%. Frankfurt -1.7%.
Futures at 6:20, Dow -1.5%. S&P -1.5%. Nasdaq -1.7%. Crude -1.2% to $45.67. Gold +0.1% to $1274.70. Bitcoin -0.1% to $3735.
Ten-year Treasury Yield -2 bps to 2.77%
Today's Economic Calendar
8:30 Initial Jobless Claims
9:00 FHFA House Price Index
10:00 New Home Sales
10:00 Consumer Confidence
1:00 PM Results of $32B, 7-Year Note Auction
3:00 PM Farm Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet