Thursday Morning Reads, News, Charts
- Silver Tongue?
- No Money in Culture
- Tech Bounce
- Forget austerity, this measure gives blessing for a fiscal fest.
- AI will add $15.7 trillion to the global economy.
- BHP Chair regrets $20 billion shale spree.
- Emerging markets are standing up to oil.
- How much does it cost to influence an election? About $400,000.
- Where in the world is Nokia now?
- Greetings, E.T.
- Five Things for Today
British 2-year yields climb to the highest in a year as Mark Carney says the BOE may need to start raising rates soon. pic.twitter.com/8XOSccwas6
— Lisa Abramowicz (@lisaabramowicz1) June 28, 2017
dollar fell further against several developed-market currencies, as investors continue to digest messages signaling the end of easy-money policies. It follows statements from the Bank of England, Bank of Canada and the European Central Bank. With Western policymakers rewriting the outlook for markets, the second half of 2017 just got a lot more interesting.
The U.S. Commerce Department's final estimate of Q1 GDP is expected to show the economy growing at a 1.2% annualized rate. "If it shows any sign of upside surprise, that could be very positive for both equity and bond markets. However, any kind of downward revision would really cast a very, very downward spell," BK Asset Management's Boris Schlossberg told Trading Nation.
Chinese President Xi Jinping has arrived in Hong Kong to celebrate the 20th anniversary since the territory was handed back by Britain. He underlined his commitment to "one country, two systems," but the next stage analysts are watching is what Hong Kong's new chief executive will outline for the next five years. The chief executive designate, Carrie Lam, is seen as being favored by Beijing.
Moon Jae-in, South Korea's new president, will meet President Trump for the first time today, serving as an early test of the leaders' relationship following several differences over key policies. Moon has called for closer ties with North Korea, primarily through economic cooperation, while the Trump administration has emphasized tougher sanctions, military pressure and diplomatic isolation.
Theresa May's minority administration is about to face its biggest challenge as Parliament votes on her legislative program amid bids by opponents to peel off her supporters with an array of amendments. The deadline to reach an agreement to restore a power-sharing executive in Northern Ireland also expires today after talks were put on hold for the U.K. general election.
NATO allies plan to boost their defense spending by 4.3% in 2017, according to Secretary General Jens Stoltenberg, after a summit last month at which President Trump berated them for their "chronic underfunding." "We have shifted gears, the trend is up, and we intend to keep it up," he told reporters in Brussels. Individual countries' figures will be released today, after approval by NATO ambassadors.
Brazil's real firmed sharply overnight after the resignation of Senate leader Renan Calheiros, a harsh critic of President Michel Temer. The move is seen as boosting the chances Brazilian lawmakers will approve a labor overhaul. The revamp is expected to pass a vote in a congressional committee today, paving the way for a final vote in the Senate next week.
For the first time in seven years, the Federal Reserve did not object to any of the capital plans of the 34 banks it reviewed in the second part of the annual CCAR tests implemented in the wake of the financial crisis. Last Thursday, the same lenders passed the first round of the Dodd-Frank stress tests by topping the Fed's requirements for being able to handle a severe recession.
The SEC may take action against bankers from Barclays (NYSE:BCS) and Morgan Stanley (NYSE:MS) for their roles in Puerto Rico debt sales. The banks were both underwriters of the island's $3.5B bond sale in March 2014, its last major borrowing. A little more than a year later, then-Governor Alejandro Garcia Padilla said the island couldn't pay its debt.
Martin Shkreli's securities fraud trial - linked to Retrophin (NASDAQ:RTRX) - finally began Wednesday, featuring an opening argument by his lawyer who suggested that while the "Pharma Bro" might be crazy, he's definitely innocent of the charges. "As Lady Gaga said, he was born this way," declared Ben Brafman. "You wanna call him names? Call him names. Just don't call him guilty. 'Cause he's not guilty."
Western Digital has responded to Toshiba's (OTCPK:TOSYY) decision yesterday to countersue the U.S. company for $1B over its interference on the sale of the Japanese conglomerate's memory chip business. While arbitration proceedings "are ongoing," Western Digital (NYSE:WDC) remains "committed to upholding all of our commitments and obligations as a partner in the JVs" as well as to jointly invest in them.
The White House is not ruling out providing government support for Toshiba's (OTCPK:TOSYY) bankrupt Westinghouse U.S. unit, FT reports, as the Trump administration wants to make sure the U.S. remains a force in the nuclear industry, as well as keep the assets out of Chinese or Russian hands. The administration has held regular discussions about Westinghouse since the company entered Chapter 11 proceedings in March.
Samsung Electronics is opening its first U.S. appliances plant in more than three decades, a politically pleasing investment ahead of South Korean leader Moon Jae-in's summit with President Trump. Samsung's (OTC:SSNLF) $380M plant in South Carolina will produce washing machines and other appliances from early next year and create nearly 1,000 jobs by 2020.
Staples +2% premarket after Sycamore Partners agreed to buy the office-supply retailer for about $6.9B. It's a bold bet on a company whose sales have been shrinking in recent years. The price represents a nearly 20% premium to where the shares traded just before reports surfaced that Staples (NASDAQ:SPLS) was exploring a buyout in early April.
Having weighed reports from regulators, U.K. Culture Secretary Karen Bradley is set to reveal whether 21st Century Fox (FOX, FOXA) will be able to take full control of Sky (OTCQX:SKYAY). One of the tests will be if the Murdoch family have a corporate structure in place at Fox that is deemed "fit and proper." Fox owns 39% of Sky, but wants to buy the rest for £11.7B.
Blue Apron has priced its IPO at $10 a share - the low end of its estimate - valuing the biggest U.S. meal kit provider at $1.9B. At that level, it raised $300M, a third less than it had hoped. "Amazon's (NASDAQ:AMZN) deal for Whole Foods (NASDAQ:WFM) earlier this month added to concerns, but Blue Apron's (Pending:APRN) high marketing costs were a negative factor," said Kathleen Smith, principal of Renaissance Capital.
Providing an update on their merger, Dow Chemical (NYSE:DOW) and DuPont (NYSE:DD) have announced their support for a comprehensive portfolio review and have engaged McKinsey & Co. to assist in the assessment. The companies also reaffirmed their expectation to close the merger in August, with the intended spin-offs to occur within 18 months of closing.
At a Sydney lunch briefing, BHP Billiton (NYSE:BHP) Chairman Jacques Nasser said the timing of its $20B spree into U.S. shale in 2011 was a misstep and that if the miner could turn the clock back it wouldn't have invested in the assets. BHP has been peppered with criticism since April, when activist investor Elliott Management went public with demands for an independent review of its oil division.
Bombardier may have to wait to find out if its CSeries jets will be hit by U.S. duties after Boeing (NYSE:BA) requested the U.S. Commerce Department postpone its preliminary ruling until Sept. 25. In April, Boeing had asked the department to investigate alleged subsidies and unfair pricing for the CSeries, accusing Bombardier (OTCQX:BDRAF, OTCQX:BDRBF) of having sold 75 of the planes to Delta (NYSE:DAL) last year at a price well below cost.
The Department of Homeland Security has decided not to expand an in-cabin "laptop ban" on planes flying to the U.S., but will instead demand tighter security measures. If any airline doesn't meet the new requirements, DHS said it could ban its flights. The new procedures were announced before President Trump's modified travel ban goes into effect tonight. Related tickers: DAL, UAL, AAL
In Asia, Japan +0.5%. Hong Kong +1.1%. China +0.5%. India +0.1%.
In Europe, at midday, London +0.2%. Paris -0.7%. Frankfurt -0.4%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq -0.3%. Crude +0.8% to $45.10. Gold -0.3% to $1245.70.
Ten-year Treasury Yield +3 bps to 2.25%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 GDP Q1
8:30 Corporate profits
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
1:00 PM Fed's Bullard: U.S. Monetary and Economic Policy
3:00 PM Farm Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet