Tuesday Morning Reads
- Drop In Gold Shouldn’t Worry Investors
- Getting Rich Faster Than Anyone Else
- What If China-U.S. Trade Row Worsens?
- Why Would the Fed Want to Raise the Unemployment Rate?
- The Iron Mountain Of Dividends?
- Cheaper Than They Look
- NXP Semiconductors -3.1% after Senate sinks ZTE deal
- iPhones, Intel chips exempt from tariffs?
- Tesla eyes Germany for European Gigafactory
- IBM unveils Project Debater
- Trade war: China leads world markets lower
- Susquehanna goes Positive on Accenture
- Sanofi transfers infectious disease unit to Evote
- Media mergers carry big debt risks
Open Interest Changes:
Unusual Option Action from Friday:
Chinese markets are leading losses across the globe, with Shanghai down 3.8% and Shenzhen 5.8% lower, after President Trump asked the U.S. Trade Representative to identify $200B worth of Chinese products that will be subject to additional tariffs of 10%. "The U.S. has initiated a trade war," China's Commerce Ministry declared, adding that it will respond with "comprehensive quantitative and qualitative measures and retaliate forcefully."
Kim Jong-un will arrive in China today for his third trip to the country in 2018. The North Korean leader will likely brief Chinese President Xi Jinping on his recent summit in Singapore, where the U.S. agreed to complete the denuclearization of the Korean peninsula and pledged to end "war games," which Pyongyang and Beijing have long seen as provocative.
With Brexit negotiations slowly meandering as lawmakers in London bicker over the course the U.K. government should take, EU diplomats are now seriously considering whether a statement following a summit next week should say that "no deal" is a real proposition, Bloomberg reports. The summit was once billed as a final staging post in the negotiations before a concluding meeting in October.
A three-day ECB forum on central banking, exploring "price and wage-setting in advanced economies," is underway in Portugal as markets seek more clues on future interest rates increases. The conference will likely reach a high point this afternoon with Fed Chair Jerome Powell's participation in a policy panel with ECB President Mario Draghi, BOJ Governor Haruhiko Kurodo and RBA Governor Philip Lowe.
In limbo for three years, the U.S. Export-Import Bank may get a new head soon. The Trump administration is expected to nominate former Treasury Department official Kimberly Reed, following the rejection of ex-congressman Scott Garrett in December. The move would be a victory for large manufacturers like Boeing (NYSE:BA) and General Electric (NYSE:GE) who use the agency to complete export deals.
Corporate tariff exemptions? President Trump told Apple (NASDAQ:AAPL) CEO Tim Cook that the U.S. government will not levy tariffs on iPhones assembled in China, according to the NYT. Analysts also told Reuters that Intel (NASDAQ:INTC) could avoid the most severe effects from the new list of tariffs by shifting processor and memory chip production among its facilities.
The U.S. Senate has passed the $716B National Defense Authorization Act, including an amendment that would sink a deal struck with ZTE (OTCPK:ZTCOY), which had allowed the Chinese telecom equipment maker to resume doing business with U.S. companies. ZTE's Hong Kong-listed shares tumbled as much as 24% on the news, while its Shenzhen shares fell by their daily limit of 10%.
Chinese smartphone maker Xiaomi has lowered its likely valuation to between $55B-$70B, far below the $100B touted by sources earlier this year. It follows Xiaomi's (BATS:XI) decision to put off its mainland share offering until after its Hong Kong IPO - expected later this week - due to a dispute with regulators over the valuation of its China depositary receipts.
GameStop is holding talks with private equity firms after receiving buyout interest, source told Reuters. Like most brick-and-mortar stores, the company has suffered from heightened competition from online retailers including Amazon (NASDAQ:AMZN). GameStop (NYSE:GME) shares rose almost 9%following the news on Monday, after sliding more than 32% over the last 12 months.
Richer than ever before... Since June 1, Amazon (AMZN) founder and CEO Jeff Bezos' net worth has grown over $5B and now totals $141.9B, according to the Forbes World's Billionaires list. It comes as Amazon's customer base sticks around despite the latest Prime price hike in exchange for a slew of services and perks. The company's stock has continued to increase in value, up 45% YTD.
"I am hereby directing the DoD and Pentagon to begin the process necessary to establish a 'space force' as the sixth branch of the armed forces," President Trump said during a meeting of the National Space Council. He also signed a space directive aimed at tracking objects in space and protecting against debris in orbit as Lockheed Martin (NYSE:LMT) completes a system called Space Fence for the U.S. Air Force.
The possible withdrawal of Total (NYSE:TOT) from Iran's South Pars gas field has not slowed the project, with China's CNPC (NYSE:PTR) and local PetroPars willing to step in if the French oil major walks away. Tehran is also in talks with Russia's Gazprom (OTCPK:OGZPY) over the development of two other areas as it plans to increase its oilfield production potential by 400K barrels per day.
Anadarko has placed staff working on a liquefied natural gas plant in northern Mozambique under "lock-down" due to the threat from suspected Islamist militants in the area. Anadarko (NYSE:APC), which is looking to raise a record $14B-$15B for the LNG facility, said last week it was monitoring the situation after a spate of beheadings and kidnappings in the area.
Elon Musk sent an email to all employees on Sunday night alleging a saboteur was discovered within Tesla's (NASDAQ:TSLA) ranks who conducted "quite extensive and damaging sabotage" by "changing code to an internal product and exporting data to outsiders." It follows a tweet from the CEO stating investors "have about three weeks before their short position explodes." TSLA -1.8% premarket.
Swiss drugmaker Roche (OTCQX:RHHBY) has agreed to pay $137 per share to buy the rest of Foundation Medicine (NASDAQ:FMI), a $2.4B transaction that values the U.S. company at $5.3B. Foundation Medicine offers comprehensive genomic profiling assays to identify molecular alterations in a patient's cancer and match them with targeted therapies, immunotherapies and clinical trials.
A wave of expected media mergers would transform AT&T (NYSE:T) and Comcast (NASDAQ:CMCSA) into the two most indebted companies in the world, a standing that carries uncharted risks for investors in the firms' bonds, WSJ reports. If purchases of Time Warner (NYSE:TWX) and 21st Century Fox (NASDAQ:FOXA) are completed, the two would carry a combined $350B of bonds and loans, according to Dealogic and Moody’s Investors Service.
Taking on two humans in a formal debating competition, IBM's Project Debater came up only slightly short in conjuring arguments that a human audience would find more persuasive. The system is a sign computers are venturing into subjective human territory after IBM's Watson bested humans at Jeopardy in 2011, while Deep Blue conquered chess champion Garry Kasparov in 1997.
In Asia, Japan -1.8%. Hong Kong -2.8%. China -3.8%. India -0.7%.
In Europe, at midday, London -0.5%. Paris -1.1%. Frankfurt -1.3%.
Futures at 6:20, Dow -1.4%. S&P -1.1%. Nasdaq -1.1%. Crude -1.4% to $64.76. Gold +0.1% to $1281.70. Bitcoin +0.1% to $6714.
Ten-year Treasury Yield -4 bps to 2.88%