Tuesday Morning Reads
- Too Much Cash
- This Rally Has Everything
- How to Really Tax the Rich
- Monumental Move
- Profit Falls Short
- Is Buying A Home A Sucker’s Bet?
- Futures pare some early-week gains
- Iranian stocks plunge on Zarif resignation
- Markets await Powell's Senate testimony
- Pound spikes after Brexit delay report
- Day of reckoning for Big Pharma
- J. M. Smucker beats by $0.24, beats on revenue
- Home Depot declares $1.36 dividend
- Home Depot lower after Q4 results
- Aphria in-licenses transdermal patches for cannabis applications; shares up 3%
- Bank of Nova Scotia declares CAD 0.87 dividend
- Bank of Nova Scotia misses by $0.07, misses on revenue
- Tesla -4.3% as SEC reportedly seeks contempt charge for Musk (updated)
Fed Chairman Jerome Powell is scheduled to testify today before the Senate Banking Committee in Washington, presenting his semi-annual monetary policy report. He'll likely be quizzed on the economy, interest rates and the Fed balance sheet, after Powell adopted a more cautious stance toward rate hikes last month. "The markets have been fully liking what they've heard lately, and I think it’s going to listen to make sure no new news comes out," said Matt Toms of Voya Investment Management.
U.S. healthcare shares may face some turbulence as leaders from the largest pharmaceutical companies get grilled on Capitol Hill today over the high cost of prescription drugs. The congressional hearing, called "Drug Pricing in America: A Prescription for Change, Part II," is reminiscent of previous encounters with businesses that proved to be watershed moments, leading to massive reforms on Wall Street, the health insurance industry and Big Tobacco.
Gentle selling in Europe overnight followed similar trading in Asia as traders sought clarity on the U.S.-China trade front a day after President Trump postponed a tariff deadline. Futures are now pointing to U.S. stocks slipping at the open, with the S&P 500 and the DJIA set for losses of 0.3%. Investors are also watching out for corporate earnings releases from Home Depot (NYSE:HD) and Macy's (NYSE:M) before the bell.
Sterling jumped to a four-week high of $1.3156 against the dollar after Bloomberg reported that Theresa May was considering a plan to delay Brexit and stop the U.K. from leaving the EU without a deal. The U.K.'s main opposition Labour Party also said it would support holding a second Brexit referendum. Any plan for a future vote would require Britain to formally request the EU extend Brexit negotiations beyond March 29.
New U.S. sanctions targeting assets of Venezuelan state governors have been imposed as Vice President Mike Pence called on allies to freeze the assets of state-owned oil company PDVSA. "In the days ahead... the U.S. will announce even stronger sanctions on the regime's corrupt financial networks," he declared. Pence also said Latin American countries should recognize Juan Guaidó, head of the Venezuelan opposition, as envoy to the Inter-American Development Bank.
Iran's stock market dropped around 2,000 points overnight following the surprise resignation of Foreign Minister Javad Zarif. President Hassan Rouhani hasn't yet accepted Zarif's resignation, but indications suggest he was undermined in his role. Zarif was the architect of the 2015 nuclear deal, which the U.S. pulled out of in May last year, leaving the pact on shaky ground.
Oil suffered its worst YTD price decline on Monday, tumbling from three-month highs after President Trump lashed out at crude prices. April WTI settled down 3.1% at $55.48/bbl, while Brent closed 3.5% lower at $64.76/bbl. While the message immediately flipped investor sentiment, some analysts doubt that OPEC will heed Trump’s advice and say prices could rebound in the coming days.
Tesla -2.7% premarket after the SEC asked a judge to hold Elon Musk in contempt for violating their tweet deal (which was implemented after he teased taking the automaker private). On Feb. 19, Musk said Tesla (NASDAQ:TSLA) would make "around" 500,000 cars this year, clarifying about four hours later that he "meant to say" the company's annualized production rate at the end of 2019 could be around 500,000 vehicles.
Yesterday marked a big session for General Electric (NYSE:GE), whose shares soared 10.7% after selling its biopharma business to Danaher (NYSE:DHR) for $21.4B. GE will use net proceeds to trim its debt pile, which stood at $121B at the end of December. Despite the latest restructuring, GE still faces significant hurdles in recovering its former corporate glory after losing two-thirds of its market value in the last two years.
Brexit preparations... Boeing (NYSE:BA) is shifting spare parts between its distribution centers in the U.K. and across the globe, according to Ken Shaw, head of supply chain management. Earlier this month, Airbus (OTCPK:EADSY) spent tens of millions of euros on stockpiling parts and securing IT systems. Brexit worries have also led Rolls-Royce (OTCPK:RYCEY) to move the home for its best-known jet engine designs to Germany to avoid regulatory delays or sales disruptions.
Back to the moon? SpaceX (SPACE) is in the early stages of manufacturing a rocket called Starship aimed at transporting as many as 100 humans and cargo to Mars. "But the rocket will also be good for creating a base on the moon," Elon Musk told Popular Mechanics. Earlier this month, NASA Administrator Jim Bridenstine said he expects to return to the moon in 2024, but this time the mission is "likely to be a public-private partnership."
The Peugeot brand is coming back to North America after a near 30-year hiatus, as part of PSA's (OTCPK:PEUGF) plan to reduce its reliance on its European heartland following a year of record results. Group net profit rose 40% to €3.3B in 2018, with sales climbing 6.8% to 3.9M vehicles. The strategy, which will also see Citroen launch in India and Opel in Russia, is part of PSA's plans to increase sales outside of Europe by 50% by 2021.
Bank of America is phasing out the name Merrill Lynch from some of its businesses, a decade after it bought the firm during the 2008 financial crisis, WSJ reports. The first to lose the brand will be its investment bank and capital markets business, which will become BofA Securities. BofA's (NYSE:BAC) wealth management businesses will collectively be known as "Merrill," without the Lynch, and will still keep the trademark bull in its logo.
The first free ETFs on the way as online lender Social Finance (SOFI) filed regulatory paperwork to launch two funds with zero management fees. This was all but certain given the ongoing price war in the ETF industry. The cheapest ETFs from BlackRock (NYSE:BLK), State Street (NYSE:STT), and Schwab (NYSE:SCHW) - which together control 60% of U.S. ETF AUM - have an average fee of just $0.30 for every $1K invested (Vanguard has another 26% of the market).
The European Commission is considering new rules to speed up the ECB's TARGET Instant Payment Settlement (TIPS) system that lets people and companies in Europe transfer euros to each other within seconds - regardless of the opening hours of their local bank. This is seen as a direct challenge to U.S. firms Visa (NYSE:V) and Mastercard (NYSE:MA), which currently dominate the European market for card payments, as well as PayPal (NASDAQ:PYPL), Google (GOOG, GOOGL), Facebook (NASDAQ:FB) and Amazon (NASDAQ:AMZN).
The DOJ has formally asked U.S. District Judge Richard Leon to approve a deal allowing CVS Health (NYSE:CVS) to merge with insurer Aetna. Leon had scolded the government and parties late last year for closing the $69B merger before a consent order was approved by the court. In response, CVS offered to halt some integration of the two companies.
Amazon has appointed former Pepsi (NYSE:PEP) CEO Indra Nooyi as a company director, marking the fifth female member of its 11-person board. Following shareholder complaints about the company's lack of diversity, Amazon (AMZN) last year pledged to include women and minority candidates in its board search. Nooyi was awarded 549 shares of common stock (currently worth almost $900K) as part of her appointment.
In Asia, Japan -0.4%. Hong Kong -0.7%. China -0.7%. India -0.7%.
In Europe, at midday, London -1.1%. Paris -0.3%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.3%. S&P -0.3%. Nasdaq -0.4%. Crude -0.3% to $55.29. Gold -0.2% to $1326.90. Bitcoin +0.4% to $3791.
Ten-year Treasury Yield
Today's Economic Calendar
8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
9:45 Powell to deliver semi-annual monetary policy report
10:00 Consumer Confidence
10:00 Richmond Fed Mfg.
1:00 PM Results of $32B, 7-Year Note Auction