Tuesday Morning Reads
- Inflation Dropping
- A small unit might be center of Deutsche Bank (DB) investigation. FT Report
- Leaked documents show timeline for Tesla (TSLA) Model Y production. Business Insider Report
- Liberty Media (LBTYA) positioning to acquire iHeart Media (IHRT) media in bankruptcy. WSJ Report
- Exxon (XOM) plans to sell stake in Azeri oil field. Reuters Report
- Insys (INSY) aggressive sales tactics could have helped fuel the opioid crisis. Bloomberg Report
- Foxconn (FCXNY) considering Apple (AAPL) iPhone factory in Vietnam. Reuters Report
- Brazil has concerns about Disney (DIS) / Fox (FOXA) M&A deal. Reuters Report
- Futures slip on trade, yield curve concerns
- Eurogroup reaches deal on eurozone reform
- EU court advisor: U.K. can cancel Brexit unilaterally
- France set to suspend fuel tax hike
- Microsoft said to ditch Edge browser for Chromium
- Deal talks flying in beverage-cannabis-tobacco realm
- November U.S. auto sales wrapup
- Big records for SpaceX's 19th annual launch
- Bank of Montreal declares CAD 1.00 dividend
- Walmart to deploy hundreds of robot janitors
- U.S. crude finishes +4% on trade truce, anticipated supply cuts
- Yamana Gold, other Canadian miners, lag in Shareholders Gold Council study
Britain can still cancel Brexit by revoking Article 50 without the consent of other EU member states, according to the ECJ's top legal advisor. While the decision is not binding, in around 75% of cases ECJ judges will follow the advice of their Advocate General's opinion. The news is a win for Remainers hoping to reverse Brexit when MPs vote on Theresa May’s controversial withdrawal agreement on Dec. 11. Pound +0.8% to $1.2820.
The rapprochement between President Trump and Xi Jinping fired up markets on Monday, but skepticism crept into investing sentiment overnight, weighing on equity markets. None of the commitments that U.S. officials said had been given by China were agreed to in writing, while there was initial confusion on when the three-month negotiating window would start. Meanwhile, the curve between U.S. three-year and five-year and between two-year and five-year paper inverted on Monday for the first time since the financial crisis, and analysts expect the two-year, 10-year yield curve - seen as a predictor of a U.S. recession - to follow suit.
The French government is reportedly ready to suspend a controversial rise in fuel tax that has triggered protests by the gilets jaunes - or yellow vests - throughout the country and dramatic scenes of violence and civil unrest. Initial demonstrations have now morphed into wider anger at a perceived drop in living standards, price rises and a rallying cry for those who say Emmanuel Macron's policies favor the elite and wealthy.
Aiming to avoid a disciplinary procedure by Brussels, Italian Prime Minister Giuseppe Conte said he will present a new budget proposal in the next few hours. The government intends to drop the proposed deficit to 2% for 2019, from a previous 2.4%, according to sources. The EU Commission had threatened to slap Rome with an excessive deficit procedure as early as Dec. 19, potentially costing the country up to €9B in sanctions.
"Eurogroup is over after 18h. We have a deal on euro area reform," Eurogroup spokesman Luis Rego wrote overnight on Twitter. The agreement between the EU's 27 finance ministers will take steps to bolster the bloc against future financial crises, equip the eurozone's banking union with more financial muscle and give the European Stability Mechanism extra flexibility to assist member nations.
CIA Director Gina Haspel will brief Senate leaders this morning on what the agency knows about the death of Saudi journalist Jamal Khashoggi. President Trump has previously said the findings weren't conclusive and there was no direct evidence of Mohammed bin Salman's involvement, but many lawmakers are unhappy about his response. Their anger has resulted in an upcoming vote on pulling U.S. support for Saudi forces in Yemen.
South Africa emerged from its first recession in almost a decade in Q3, as recoveries in manufacturing and agriculture contributed to an increase in economic growth. Gross domestic product rose by an annualized 2.2% in the three months through September, lifting the rand up 1.1% on the dollar in recent trade. The currency has jumped 5.7% over the past month, but is still down more than 8% for 2018.
It's now a three-way race to become the world's most valuable public company. Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) have tossed around the title over the past few trading days, each closing with a market cap over $860B. Microsoft surpassed Apple in market cap on Friday, only for Apple to overtake it at the close on Monday. Amazon briefly eclipsed both tech giants yesterday during intraday trading.
Shareholder pushback against Walt Disney (NYSE:DIS) CEO Robert Iger's compensation has led the company to increase the targets he must meet to collect his performance bonus. Under the new arrangement, he'll only collect the remaining amount tied to a $100M equity grant if his company's total shareholder return outperforms 65% of companies in the S&P 500. He's already been granted a portion of the grant valued at roughly $25M.
Even though the two companies closed their merger last week, Federal Judge Richard Leon has floated the idea that CVS and Aetna (NYSE:AET) should keep their assets separate until he can determine whether their agreement struck with the DOJ clears anti-competitive concerns. "Unusual is almost too light of a word," said Andrea Agathoklis Murino, co-chair of Goodwin's antitrust law practice. "I can't recall another instance of a judge doing this."
There's a lot of discussion going on between both beverage and tobacco giants with cannabis players. Following up on news from yesterday that Altria (NYSE:MO) is in early talks about a takeover of Cronos Group (NASDAQ:CRON), the FT said Coca-Cola (NYSE:KO) has held talks with Canada's Aurora Cannabis (NYSE:ACB) to develop beverages, and Diageo (NYSE:DEO) is sniffing around the sector. Altria has also reportedly held talks with Tilray (NASDAQ:TLRY) and Aphria (NYSE:APHA) in addition to the Cronos interest.
"As a matter of our policy, we want to end all those [electric vehicle] subsidies," White House economic adviser Larry Kudlow told reporters. "And by the way, other subsidies imposed during the Obama administration-renewables, etc. We are a free market." The subsidies are expected to end in 2020 or 2021, he added, when asked about the actions planned following GM's U.S. plant closings and layoffs.
Tokyo prosecutors plan to arrest Carlos Ghosn on a fresh claim of understating his income, the Sankei newspaper reports, in a move that could keep the former chairman of Nissan (OTCPK:NSANY) and Mistubishi (OTC:MMTOY) in detention until the end of the year. In Japan, crime suspects can be kept in custody for 10 days and that can be extended for another 10 days if a judge grants a request. This process can be repeated with new claims, sometimes keeping suspects detained for months.
Looking to keep ahead of the curve, Volkswagen's (OTCPK:VLKAF) premium auto brand Audi (OTCPK:AUDVF) is investing €14B through 2023 in electric mobility, digitalization and autonomous driving. Overall, the company’s total projected expenditure for the next five years amounts to €40B. It also plans restructuring measures that will generate €1B in earnings uplift already in 2018.
A successful rocket launch on Monday by SpaceX (SPACE) marked twin milestones for the company's drive to ease access for commercial satellites into orbit. The mission was SpaceX's 19th launch this year, topping its previous record of 18 in 2017. The Falcon 9 rocket also carried the largest number of satellites - a cluster of more than five dozen - ever stacked on top a U.S. booster.
Indonesia's Lion Air is reviewing plane orders from Boeing (NYSE:BA) and examining the possibility of cancelling orders as relations worsen over responsibility for the 737 Max jetliner crash that killed 189 people in late October. Lion Air co-founder Rusdi Kirana is furious over what he considers attempts by Boeing to deflect attention from recent design changes and blame the Indonesian firm for the crash, according to Reuters. Lion Air currently has 190 Boeing planes on order.
The automation revolution continues as robot janitors come to Walmart (NYSE:WMT). Hundreds of the Zamboni-style floor scrubbers, made by San Diego-based startup Brain Corp., will begin cleaning in stores - even when customers are around - by the end of January. Walmart has already been experimenting with automation, such as the scanning of shelves for out-of-stock items and hauling products from storage for online orders.
Retailer Ace Hardware and investment firm Centerbridge Partners are together eyeing an offer for bankrupt Sears' (OTCPK:SHLDQ) home services division that would compete with an expected bid from Chairman Eddie Lampert, sources told Reuters. Wednesday is the deadline for initial offers in a bankruptcy auction for the home services business, the largest U.S. appliance repair provider, and other Sears assets.
Beset by some performance issues, Microsoft (MSFT) is reportedly working on a replacement for its Edge web browser, which is said to have been codenamed "Anaheim." It'll swap out the EdgeHTML engine it built from scratch for the one that’s part of the open source Chromium base, and powers Google Chrome (GOOG, GOOGL), Opera, and Brave. According to analytics service Net Applications, Edge currently has a 4.2% share of the browser market, while Chrome is at 65.6%.
In Asia, Japan -2.4%. Hong Kong +0.3%. China +0.4%. India -0.3%.
In Europe, at midday, London -0.7%. Paris -0.7%. Frankfurt -0.7%.
Futures at 6:20, Dow -0.4%. S&P -0.3%. Nasdaq -0.5%. Crude +2.1% to $54.05. Gold +0.4% to $1244.80. Bitcoin -0.9% to $3928.
Ten-year Treasury Yield