Thursday Morning Reads
- Europe’s Middle Class Is Shrinking
- Growth Stagnates
- U.S. Recession May Be Coming
- Anybody’s Guess
- Low-Cost Freelance Drivers
- Tesla Model 3 Drives Off The Demand Cliff
- Where Do You Go For Trading Ideas?
- A Short List
- Electronic Arts (EA) Apex Legends game broke viewership records on Twitch (AMZN). Dexerto Report
- Apple (AAPL) plans to sell older iPhones in Germany (QCOM). WSJ Report
- EU has agreement on new copyright laws (XLK, GOOG, FB). WSJ Report
- Deutsche Bank (DB) shareholders want cuts to U.S. investment bank. FT Report
- Ant Financial (BABA) plans to acquire WorldFirst. TechCrunch Report
Earnings this week:
Sterling may be on the move later today as Eurosceptic Conservative MPs threaten to vote against Theresa May's Brexit strategy, which is a restating of her current negotiating position, but also contains a rejection of a "no deal" Brexit. If May loses the non-binding vote it would effectively strip her of her mandate from Parliament to secure binding changes to her Brexit deal, sending the wrong signal to the EU and highlighting how little room she has to maneuver.
U.S. stock index futures advanced 0.4% overnight amid signs of further progress in the U.S.-China trade dispute. China's closely-watched U.S. trade surplus eased to $27.3B, the lowest since May 2018, as imports fell 42% thanks in part to steep declines in soybean purchases. President Trump is also reportedly considering expanding the March 2 deadline by 60 days in order to ensure that a comprehensive trade deal is ultimately agreed to between the world's two biggest economies.
Fewer consumers are celebrating Valentine's Day this year, but those who do are spending more, according to an annual survey by the National Retail Federation. Total spending is expected to be $20.7B, breaking the previous record set in 2016. The increases in spending (an average $161.96 per person) come even though only 51% of Americans plan to celebrate the holiday, down from 55% last year.
Texas oil wells produced more than 1.54B barrels of crude in 2018 - despite a 40% commodity price drop during Q4 - beating the previous record of 1.28B barrels set in 1973, TIPRO disclosed in its annual "State of Energy Report." Natural gas production also grew, reaching 8.8T cubic feet in 2018. "Texas is paving the way for America's energy independence," declared Governor Greg Abbott.
Venezuela's opposition-controlled congress has named new temporary boards to state-oil firm PDVSA, in an effort to wrest the OPEC member's oil revenue from increasingly isolated President Nicolas Maduro. Controlling PDVSA's U.S. refiner Citgo Petroleum, Venezuela’s most valuable foreign asset, would go some way to helping in that, though seizing the reins of PDVSA itself seems improbable while Maduro remains in power.
The German economy narrowly escaped recession in the final quarter of 2018, recording output growth of just 0.02%, following a 0.2% contraction in the previous quarter. Fallout from global trade disputes and Brexit are threatening to derail a decade-long expansion in Europe's economic powerhouse. Morale is also being depressed by weaker demand for German products in China, the eurozone and emerging markets.
After a dozen years in service, Airbus (OTCPK:EADSY) said it will stop making the A380 superjumbo jet in 2021 even as it reported record Q4 profits and said it would increase production to take advantage of a boom in air travel. The decision comes after Emirates - the largest A380 customer - decided to cut back its orders of the iconic aircraft in favor of smaller, more nimble jets. Boeing (NYSE:BA) has also signaled it could stop building its 747 jumbo jet around 2022.
The new chairman of Renault said it was not the time to discuss whether he would also take the helm of Nissan (OTCPK:NSANY), as he arrived in Japan to reaffirm an auto alliance rocked by the arrest and ouster of former Chairman Carlos Ghosn. The comment from Jean-Dominique Senard appeared aimed at avoiding putting further strain on a partnership that some in Japan see as unequal, but expected, given Renault's (OTCPK:RNLSY) 43% stake in the Japanese carmaker.
Apple news roundup: The tech giant has sharply increased its efforts to test self-driving cars on public roads, but its disengagement rates (when humans have to take over the wheel) are still well above market leader Waymo (GOOG, GOOGL), according to the California Department of Motor Vehicles. Apple (NASDAQ:AAPL) is also planning to launch its video streaming service in April or early May, but Netflix (NASDAQ:NFLX) won't be there and HBO might not join, CNBC reports.
Rather than paying a standard 21% corporate income tax rate in 2018, Amazon (NASDAQ:AMZN) is actually claiming a tax rebate of $129M, which works out to a rate of negative 1%. That's according to the Institute for Taxation and Economic Policy. Aside from "tax credits," which the company does not have to spell out in its public filings, Amazon is also claiming a tax break for executive stock options.
Deal clinched! The European Union is rewriting two-decades-old copyright rules that will force Google (GOOG, GOOGL) and Facebook (NASDAQ:FB) to share revenue with the creative industries and remove copyright-protected content on YouTube or Instagram. Google, which has lobbied intensively against both features and even suggested that it may pull Google News from Europe, said it would study the text before deciding on its next steps.
Royal Bank of Scotland is among eight global banks being scrutinized in a probe of an alleged euro bond trading cartel, Bloomberg reports. However, the details of RBS's involvement and any potential penalty is unknown. While the bloc's powerful antitrust arm often trails behind financial authorities in the U.S. and the U.K. in punishing collusion between traders, its fines can sometimes be heavy.
Almost 18 months after the biggest consumer data security scandal of the decade, information from the Equifax (NYSE:EFX) breach has still not surfaced or been sold for financial gain. That's leading many to suspect a spy scheme of a foreign government, cybersecurity experts and data "hunters" told CNBC. The hack exposed the data of 143M people, leading to the changing of credit freeze laws and new regulatory oversight for credit ratings agencies.
Deutsche Bank has rebuffed calls for cuts at its struggling investment bank following reported requests from four of the bank's 10 largest shareholders. "We have adjusted our footprint in our Corporate & Investment Bank and in the U.S. already in 2018, including reducing our leverage exposure by more than €100B." A decision on a proposed merger between Deutsche (NYSE:DB) and Commerzbank (OTCPK:CRZBY) is also likely to be made in the next few months.
Alibaba's Ant Financial has agreed to buy British payments group WorldFirst for around $700M, marking the biggest push yet by the Chinese financial services giant into Western markets. The acquisition comes after a thwarted attempt to take over U.S.-based MoneyGram (NYSE:MGI), which was blocked by Washington on security concerns. Last month, WorldFirst closed its U.S. arm to avoid similar problems occurring with its Ant Financial (NYSE:BABA) deal.
A key supplier of talc used in Johnson & Johnson’s (NYSE:JNJ) baby powder has filed for Chapter 11 bankruptcy in the wake of multibillion-dollar lawsuits alleging its products caused ovarian cancer and asbestos-related mesothelioma. Imerys Talc America, the U.S. unit of French group Imerys (OTC:IMYSY), has repeatedly denied the allegations, but said it lacks the financial clout to defend against the nearly 15K lawsuits over its talc mineral product.
Researchers have found that cannabis use during the teenage years was associated with a nearly 40% bump in the risk of depression and a 50% increase in the risk of suicidal thoughts in adulthood, according to a study published in JAMA Psychiatry. Although the increased risk was only moderate, "given the large number of adolescents who smoke cannabis, the risk in the population becomes very big,” said the study's lead author, Dr. Gabriella Gobbi. Related: TLRY, CRON, CGC, ACB, MJ, GWPH
AIG (NYSE:AIG) -2.1% AH amid a hit to investment income.
Barrick Gold (NYSE:GOLD) -4.1% on expected higher production cost.
CenturyLink (NYSE:CTL) -10.8% AH slashing its dividend.
Cisco (NASDAQ:CSCO) +3.9% AH on a $15B repurchase authorization.
DISH Network (NASDAQ:DISH) -7.7% following a Q4 subscriber shed.
Hilton (NYSE:HLT) +6.8% on Q4 beat, solid guidance.
Teva Pharma (NYSE:TEVA) -7.8% giving a soft outlook.
Yelp (NYSE:YELP) +6% AH on earnings, buyback increase.
In Asia, Japan flat. Hong Kong -0.2%. China -0.1%. India -0.4%.
In Europe, at midday, London +0.3%. Paris +0.7%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude +1% to $54.46. Gold -0.5% to $1308.70. Bitcoin -0.6% to $3555.
Ten-year Treasury YieldToday's Economic Calendar
8:30 Initial Jobless Claims
8:30 Producer Price Index
8:30 Retail Sales
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
11:00 Fed's Harker: “Approaches to Leadership”
4:30 PM Money Supply
4:30 PM Fed Balance Sheet