Thursday Morning Reads
- The market will kill oil before the government does.
- Summer of Samsung: A corruption scandal, a political firestorm -- and a record profit.
- Spanish unemployment falls to the lowest since start of 2009.
- U.K. politics is a boon for London fx trading.
- Bannon calls for a 44 percent tax on incomes over $5 million.
- More than a year after Brexit vote, Britain wants to know what EU workers do to the economy.
- Michael R. Bloomberg: Trump's dishonorable transgender ban.
- Futures higher amid earnings deluge
- Bristol-Myers falls after earns, AZN news
- Twitter ad rev, MAU, outlook disappoint
- Starbucks strikes huge China deal
- A-B InBev rallies after profit dazzles
- Samsung's earnings poised to top Apple
- Mobile ads lift Facebook
- More OPEC oil cut promises
- FCA: Libor to end in 2021
It's the busiest day of earnings season in the U.S., with several dozen companies reporting their latest quarterly results before and after the bell. Investors will get figures from the likes of ConocoPhillips (NYSE:COP), Verizon (NYSE:VZ), Twitter (NYSE:TWTR) and Procter & Gamble (NYSE:PG), as well as Intel (NASDAQ:INTC), Starbucks (NASDAQ:SBUX) and Amazon (NASDAQ:AMZN). U.S. markets are called higher, according to future values, following yesterday's record closing highs.
Republican senators have shifted their focus to a so-called "skinny" healthcare repeal that introduces smaller changes to Obamacare. These include eliminating individual and employer insurance mandates, and removing the medical device tax, along with a few other provisions. It comes after the Senate voted against a straight repeal of the 2010 Affordable Care Act for the second time in 24 hours.
The dollar index has fallen to its lowest level in over a year after the Fed signaled its balance sheet reduction would be starting soon. The central bank kept rates on hold yesterday and made no changes to its overall policy, but the statement following its July meeting said balance sheet normalization would start "relatively soon". That's a change from June when it said "this year."
In five years' time Libor should be no more. The Financial Conduct Authority is phasing out the London Interbank Offered Rate, a scandal plagued benchmark that's used to set the price of trillions of dollars of loans across the world. The move should happen by the end of 2021, as regulators look to replace it with a more reliable alternative.
Moody's Investors Service no longer takes a negative view on China's banking system, raising its outlook to stable as concerns over "shadow banking" eased since the "government's adoption of more coordinated policy measures." Shadow banking is a broad category of banking-like services from non-traditional players; it can include loans from non-financial companies as well as investment products, and largely goes unregulated.
The U.S. has imposed sanctions on 13 senior Venezuelan officials ahead of the country's upcoming election, widely feared as a power grab by President Maduro. "Who do these imperialists think they are?" he declared in response. "The government of the world?" Two more people were killed overnight in clashes with Venezuelan police, bringing the death toll to 105 in the last four months of protests.
In the latest round of OPEC promises, Kuwait's state run oil company has pledged to cut "contractual sales volumes of oil for 2017." It comes a day after the UAE promised to cut its own crude exports by 10% starting in February, and just two days after Saudi Arabia promised to curb oil exports starting in August. Many are still concerned about compliance, however, based on the group's track record.
Huge sales of the Galaxy S8 and memory chip demand propelled Samsung Electronics (OTC:SSNLF) to record quarterly earnings in Q2 as it moved past a bribery scandal and last year's recall debacle. Operating profit soared 72.9% from the previous year to 14.07T won ($12.6B), compared with consensus forecasts of $10.6B for Apple (NASDAQ:AAPL), which is due to report results next week.
"Thank you Foxconn, for investing $10 BILLION DOLLARS with the potential for up to 13K new jobs in Wisconsin! MadeInTheUSA," tweeted President Trump after the company announced a new plant to make display panels. The plan marks the first major U.S. investment for Foxconn (OTC:FXCOF), the world's largest contract manufacturer of electronics and the maker of gadgets for Apple (AAPL).
Premarket moves after European earnings: Deutsche Bank (NYSE:DB) -1.4% after suffering a 10% drop in revenues, weighed down by its fixed income unit. Shell (NYSE:RDS.B) +1.7% as profits tripled, boosted by strong performance in its downstream division. Total (NYSE:TOT) +1.4% with a jump in net earnings and confirming its cost reduction plans. Nokia (NYSE:NOK) +6.7% despite warning of challenging telecom market conditions. AB InBev (NYSE:BUD) +5.5% as strength in China, Mexico and South Africa offset declines in Brazil. Diageo (NYSE:DEO) +6.7% raising its margin growth forecast and launching a share buyback.
A McMoldy? Another food safety scare is hitting the fast food industry after two pictures of a moldy-looking ice cream tray posted by a McDonald's (NYSE:MCD) worker went viral. "We're paying attention to the information being reposted online about U.S. ice cream machines," McDonald's China said in the statement, adding the firm was investigating the case in the United States.
Viacom is out of the running to acquire Scripps Networks Interactive (NYSE:SNI), leaving Discovery Communications (NASDAQ:DISCA) as the preferred bidder for the cable TV programmer. Viacom (VIA, VIAB) faced financial constraints and didn't want to overpay for the asset, a source told the WSJ. A deal with Discovery could come next week. SNI +1.4% premarket.
Meg Whitman has stepped down as chairwoman of HP's (NYSE:HPQ) board of directors, although she'll remain chief executive officer of the enterprise-focused Hewlett Packard Enterprise (NYSE:HPE). The two companies were created in 2015 from the split of Hewlett Packard. The news follows a report from Recode yesterday stating that Whitman was being considered for a CEO role at UBER.
Millions of Americans who want to borrow up to $25M have a new potential lender: Goldman Sachs' (NYSE:GS) new GS Select platform. To find customers, Goldman is partnering with Fidelity Investments' clearing and custody business, which caters to small brokerages and wealth management firms. Those firms, in turn, have investors who may need loans, and would use their portfolios as collateral.
Forming another strategic partnership, Baidu (NASDAQ:BIDU) has teamed up with PayPal (NASDAQ:PYPL) to make its payment platform, Baidu Wallet, accepted by roughly 17M PayPal merchants globally. Fierce competition? The deal comes as China's top payment firms, Ant Financial (NYSE:BABA) and Tencent (OTCPK:TCEHY), make aggressive moves to expand their payment networks overseas.
After nearly a month of testimony and evidence, jurors in the securities fraud trial of Martin Shkreli are expected to hear closing arguments in the case today. The "Pharma Bro" is charged with defrauding investors in two hedge funds he ran, as well as a drug company he founded, Retrophin (NASDAQ:RTRX). Jurors could then begin deliberations later Friday, with the defense not calling a single witness of their own.
AstraZeneca -15% premarket after the trial of its new lung cancer drug failed to reach its "endpoints" for progression free survival - the length for which people go without their condition worsening. The study, known as Mystic, featured an immunotherapy drug that AstraZeneca (NYSE:AZN) hoped would eventually be adopted as a first line treatment in preference to chemotherapy.
Boeing (NYSE:BA) +9.9% boosting its earnings forecast.
Coca-Cola (NYSE:KO) +1.1% upping organic revenue.
Facebook (NASDAQ:FB) +3.3% AH on mobile ad gains.
Ford (NYSE:F) -1.9% with underlying concerns.
Gilead Sciences (NASDAQ:GILD) +2.1% AH beating estimates.
PayPal (PYPL) +2.2% AH growing user partnerships.
In Asia, Japan +0.2%. Hong Kong +0.7%. China +0.1%. India flat.
In Europe, at midday, London -0.1%. Paris +0.1%. Frankfurt -0.5%.
Futures at 6:20, Dow +0.1%. S&P +0.2%. Nasdaq +0.6%. Crude +0.1% to $48.81. Gold +1% to $1262.20.
Ten-year Treasury Yield +1 bps to 2.3%
Today's Economic Calendar
8:30 Durable Goods
8:30 International trade in goods
8:30 Initial Jobless Claims
8:30 Chicago Fed National Activity Index
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $28B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet