Thursday Morning Reads, News, Charts, and More
- $2 Trillion
- Its The Buybacks Stupid
- The bull run in emerging stocks may be just getting started.
- Holding Pattern
- Social media is a ‘red-hot’ focus in Mueller's probe.
- A decade after the crash, British banks are smaller and poorer.
- Shkreli ordered to jail over Clinton hair-bounty stunt.
- Mnuchin sought government plane for honeymoon.
- The new £10 note dares counterfeiters to just try.
- The case against civilization.
- Weaker factory activity in China
- Samsung ups bet on self-driving cars
- Bitcoin skepticism: McAfee vs. Dimon
- Amazon, eBay accused of VAT evasion
- First reinsurer warning on Harvey, Irma
- Toshiba: WDC overstating its chip rights
- Google payment service in India?
- Martin Shkreli's bail is revoked
Yesterdays Unusual Option Volume:
The Swiss National Bank has held interest rates unchanged, but reduced its growth forecast and said the franc remains "highly valued." The focus now turns to the Bank of England, which is widely expected to keep interest rates on hold at 0.25%. There could also be more dissenting votes in favor of a hike as inflation pulls further away from the central bank's target and the wording of the latest statement will be closely watched.
Rich Americans "will not be gaining at all" from the tax reform plan that Republicans hope to pass this year, according to President Trump, and taxes on the group may even "have to go higher." Meanwhile, leading congressional Democrats said they have reached a DACA deal with the president, which excludes border wall funding, but the claim has been rejected by the White House.
No leaving healthcare behind... "As I have continued to say, inaction is not an option, and I sincerely hope that Senators Graham and Cassidy have found a way to address the Obamacare crisis," President Trump said in a statement. The last-gasp plan aims to get rid of subsidies and mandates under the Affordable Care Act, and instead give block grants to states to help make coverage affordable.
Saddled with economic problems and its own damage from Hurricane Irma, Puerto Rico is taking thousands of refugees from the U.S. Virgin Islands whose homes were destroyed by the storm. The length of their stay is still unclear, but the expenses will be covered by emergency federal funding. Puerto Rico has almost $70B in debt, a poverty rate above 46%, and near-insolvent pension and health systems.
Asian stocks inched down from 10-year highs overnight following a burst of Chinese data that was largely weaker than investors expected. Factory output grew 6% in August, while fixed-asset investment expanded 7.8% and retail sales rose 10.1%. It's the second straight month of soft economic figures, a sign that the world's second-largest economy may be losing momentum in Q3.
Qatar has pumped over $38B of its $340B reserves into its economy to offset the impact of its neighbors' embargo, according to Moody's, which said the equivalent of 23% of the country's GDP has been used. Saudi Arabia, the UAE, Bahrain and Egypt have imposed a trade embargo on Qatar since the start of June, after accusing it of sponsoring terrorism.
Citing national security risks, the Trump administration has barred the $1.3B sale of Lattice Semiconductor (NASDAQ:LSCC) to Canyon Bridge Capital Partners. U.S. regulatory scrutiny grew after reports in November suggested that Canyon Bridge was funded partly by capital from China's central government and had indirect links to its space program. Precedent for future deals?
Evasion? Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) were accused last night of profiteering from a major VAT fraud scheme at the expense of British taxpayers and businesses. MPs said the online companies were "turning a blind eye" to organized criminals from China and elsewhere who sell their goods cheaply on internet sites, but don't register to pay the tax. The scam is estimated to cost the U.K. around £1.5B a year.
Making a big payments push outside the U.S., Google (GOOG, GOOGL) plans to introduce a localized digital payment service in India as soon as next week, according to a report from The Ken. It will be called "Tez," which means fast in Hindi, and offer a comprehensive set of payment options beyond existing products like Google Wallet or Android Pay.
Toshiba feels Western Digital (NYSE:WDC) has been "persistently" overstating its rights regarding the chip unit that it's trying to offload, showing the business partners remain at loggerheads over the $18B sale. Without an agreement to sell the unit soon, it will be difficult for Toshiba (OTCPK:TOSYY) to gain regulatory approval by the end of the financial year in March, jeopardizing the funds it needs to cover billions in liabilities at its U.S. nuclear unit.
Seadrill is looking for a swift pass through a bankruptcy that will reduce the holdings of outside shareholders and make way for new money to save one of the world’s largest offshore oil-drilling fleets. Seadrill (NYSE:SDRL) is aiming to exit bankruptcy in less than a year, and already has about $1B in cash in its coffers, so it won't need Chapter 11 financing to continue business as usual.
Munich Re has warned it could miss its profit target this year, making it the first major reinsurer to flag a hit to earnings from the damage caused by hurricanes Harvey and Irma. Analysts at Jefferies expect this to be the first of a series of such statements as insurers count the costs of the destructive storms. Related tickers: RE, RNR, AHL, ENH, AXS, ACGL, RGA, UNM, MHLD, GLRE, BRK.A, BRK.B
As the company's shares fell another 15% on Wednesday, the House Subcommittee on Digital Commerce Consumer Protection said Equifax (NYSE:EFX) CEO Richard Smith will testify about the company's massive data breach at an Oct. 3 hearing. Taking their business elsewhere? Since the attack, Symantec's (NASDAQ:SYMC) LifeLock has seen six times its normal web traffic, and signups per hour are up 10x.
John McAfee, who made a bet this summer that bitcoin would reach $500K within three years, has entered the boxing ring with Jamie Dimon, who recently called the cryptocurrency a "fraud." "I'm a bitcoin miner. We create bitcoins. It costs over $1,000 per coin to create a bitcoin. What does it cost to create a U.S. dollar?...Sure it will rise and fall as all new technologies are. But at the same time, it is certainly not a fraud."
The Federal Reserve has given the green light to the purchase of Scottrade by Toronto-Dominion Bank (NYSE:TD), bringing together the two biggest discount brokerages in the U.S. The $4B deal, announced last October, is set to close by Sept. 30. After it's completed, Scottrade will convert to TD Ameritrade systems in 2018.
Bail revoked! Martin Shkreli has been sent to jail for offering $5,000 for a strand of Hillary Clinton's hair on Facebook. "That is a solicitation to assault in exchange for money," said Judge Kiyo A. Matsumoto. The "Pharma Bro" was found guilty on Aug. 4 of three of eight federal criminal charges, including one count of conspiracy to commit securities fraud related to Retrophin (NASDAQ:RTRX).
"Tesla Semi truck unveil & test ride tentatively scheduled for Oct 26th in Hawthorne. Worth seeing this beast in person. It's unreal," Elon Musk tweeted overnight. He already revealed some details about the project, stating he has been working with its "biggest customers" on the design of the semi truck, so they already know what Tesla (NASDAQ:TSLA) is making.
Upping its $8B bet on auto technology, Samsung Electronics (OTC:SSNLF) is forming a separate business unit within Harman (NYSE:HAR) to house autonomous driving products. "Our industry is literally screaming, saying, 'We love Mobileye (NASDAQ:INTC) but we need an open platform,'" Harman CEO Dinesh Paliwal declared. Samsung will also plow $300M into a new fund investing in related startups.
In Asia, Japan -0.3%. Hong Kong -0.4%. China -0.4%. India +0.2%.
In Europe, at midday, London +0.1%. Paris flat. Frankfurt -0.2%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude +0.7% to $49.63. Gold +0.1% to $1329.60.
Ten-year Treasury Yield flat at 2.19%