Tuesday Morning Reads, News, Charts
- Peak Oil?
- Short-Lived Victory For Consumers
- New Income Tax for Wealthy
- Unused Television Channels
- Snap Below IPO Price
- Intel Tries to Protect Lead
- Problem for Teen Retailers
- Tesla’s New Vehicle Inventory Skyrockets
- More Correlation?
- Futures struggle for direction
- PepsiCo flies past estimates
- Another leg down for Snap
- CFPB rules restrict bank arbitration
- Prime Day: A billion dollars in sales?
- WDC matches top bid for Toshiba unit
- Randal Quarles: Fed regulatory chief
- Electricity investment overtakes E&P
- HSBC next to plot its Brexodus
The unwinding of QE programs is an unprecedented challenge that may be more disruptive than many think: Jamie Dimon https://t.co/5eeMPpSZEj
— Lisa Abramowicz (@lisaabramowicz1) July 11, 2017
The biggest sales day of the year for Amazon (NASDAQ:AMZN) kicked off at 9 p.m. ET last night and has been expanded by six hours this year to 30 hours. Analysts are forecasting the discounted deals could lead to over $1B in sales, with Prime membership now around 85M in the U.S. That's one reason for Amazon's surging share price, which climbed almost 350% in the last five years by outpacing retail rivals.
Putting his first mark on the Federal Reserve, President Trump has nominated Randal Quarles, an investment fund manager and former Treasury official, to be the central bank's chief in charge of regulating big banks. Besides serving as vice chair of supervision, Quarles would weigh in on monetary policy as one of seven members of the Fed's board of governors.
The U.S. Treasury is taking aim at the Obama-era "earnings stripping" rule that's intended to stop firms from reducing their tax bills by shifting profits overseas. Companies are supposed to be fully compliant by January 2018, but business groups have railed against it as executive overreach with expensive consequences. Reforms ranging from streamlining to a full repeal will be proposed by Sept. 18.
Iraq has declared a week-long holiday to mark the victory. The country has fully defeated Islamic State in Mosul, three years after the militants seized the city and made it the stronghold of their self-proclaimed caliphate. "I announce from here the end and the failure and the collapse of the terrorist state of falsehood and terrorism," Prime Minister Haider al-Abadi said on state television.
Following similar moves by Saudi Arabia and Oman, Abu Dhabi now plans to float a portion of its state-owned oil company. The IPO of Abu Dhabi National Oil Company comes as oil-dependent nations battle with a glut of supply that has been pushing down crude prices. Meanwhile, U.S. Secretary of State Rex Tillerson is in the Persian Gulf, hoping to help settle a dispute between Qatar and its neighbors.
Fossil fuels are no longer the largest recipient of investment in the energy industry, according to the latest report from the IEA. The electricity sector received the largest level of investment for the first time ever, growing its share by 12 percentage points to 43% between 2014 and 2016. In comparison, over the same period, investments in upstream (exploration and production) oil and gas fell 44%.
Croatia is taking steps that would make it eligible to join the eurozone single currency, reducing its public debt relative to GDP last year for the first time in almost a decade. "When you look at the eurozone perspective of Croatia, one has to have in mind that Croatia is a heavily 'euroized' economy anyway. About three quarters of savings in Croatian banks are in euros," said Boris Vujcic, governor of the Croatian National Bank.
U.K. Prime Minister Theresa May is giving a major speech today, where she's anticipated to restate her commitment to reform, despite the loss of her parliamentary majority. She's also expected to challenge opposition parties to "contribute, not just criticize" Conservative policies and unveil proposals to protect workers in the "gig economy."
Western Digital has matched rival bidders' offers to acquire Toshiba's (OTCPK:TOSYY) flash memory unit ahead of a court hearing on Friday over whether to halt the auction process. Western Digital (NYSE:WDC) argues that its joint venture means the chipmaker cannot sell without its consent. On June 21, Toshiba said its preferred bidder was a consortium of Bain Capital and Japanese government investors offering $18B.
Snap shares closed below their IPO price of $17 for the first time on Monday, as fears over the company's growth potential spooked investors. Credit Suisse cut its price target for the stock to $25, while some analysts argued its waning user numbers and high valuation could pose a threat to Snap's (NYSE:SNAP) future profitability.
Cryptocurrencies need to be regulated or they risk running "amok from society," cautioned Bobby Lee, CEO of exchange BTCC. "But the challenge is how to craft the rules around this new technology." The warnings come as the head of defunct Mt. Gox pleaded not guilty to charges relating to the loss of hundreds of millions of dollars from what was once the world's biggest bitcoin exchange.
Next Brexodus? Assuming the U.K. will end up with a "hard Brexit," HSBChas confirmed it will move 1,000 jobs to Paris. CEO Stuart Gulliver said the steps announced by the French government last week are "very positive" for the finance industry and it's early stages of assessing the measures. Plans may change if the U.K. ends up choosing a "soft Brexit."
Coffee drinkers are waking up to some good news after two new studies claimed to have found a direct correlation between a cup of joe and a reduced risk of suffering from strokes, and heart and liver disease. The benefits are said to hold true whether one gets a kick from espresso, Americano, latte, or even decaffeinated coffee, according to the Annals of Internal Medicine. Related tickers: SBUX, DNKN, SJM, QSR, MCD, MDLZ, WWAV, JVA, OTCPK:JAMN, OTCPK:BCCI, FARM, OTCPK:NSRGY
Sanofi is buying privately-held Protein Sciences for an initial amount of $650M, as it steps up its acquisition program after recently missing two large deals (Actelion and Medivation). The purchase "will allow us to broaden our flu portfolio," declared Sanofi's (NYSE:SNY) David Loew. It will also pay up to another $100M if the influenza vaccine specialist achieves certain milestones.
Wildfires in British Columbia are disrupting timber and mining operations and are heading closer to Kinder Morgan's (NYSE:KMI) Trans Mountain pipeline. Companies affected: Norbord (NYSE:OSB), Taseko Mines (NYSEMKT:TGB), Teck Resources (NYSE:TECK), West Fraser Timber (OTCPK:WFTBF), EnGold Mines (OTC:GWRRF) and Imperial Metals (OTCPK:IPMLF). The blaze has also spread across the western U.S., forcing thousands of evacuations across California and Colorado.
Eddie Lampert is circling Sears Canada (OTCPK:SRSCQ) as it prepares for another court hearing this week after seeking bankruptcy protection. His ESL Partners and Fairholme Capital Management, both major investors in the embattled retailer, are "considering a potential negotiated transaction." Lampert is also CEO of U.S.-based Sears Holdings (NASDAQ:SHLD), from which Sears Canada was spun off in 2012.
Want to bet that online retailers will kill off traditional shopping? ProShares is preparing a trio of new funds for investors who want to do just that, according to prospectuses filed with the SEC. The diverging performance can be seen in two existing retail-focused funds: The SDPR S&P Retail ETF (NYSEARCA:XRT) has dropped over 12% this year, while the Amplify Online Retail ETF (NASDAQ:IBUY) has gained over 30%.
Pearson is selling a 22% holding in Penguin Random House for $1B, but will maintain a 25% stake in the publisher. "Today's deal enables Pearson (NYSE:PSO) to realize a significant amount of the value we’ve helped to create," said Chief Executive John Fallon. It will also enable the group to return £300M of surplus capital to investors via a share buyback.
Shares in Suzuki Motor fell as much as 4.1% in Tokyo overnight after Dutch prosecutors said they would investigate the automaker's possible misuse of vehicle software. Suzuki Vitara (OTCPK:SZKMY) models allegedly produced unacceptably high levels of emissions during road tests, while the Netherlands Vehicle Authority also pointed fingers at the Jeep Grand Cherokee (NYSE:FCAU).
All 16 people aboard a Lockheed Martin-built (LMT) KC-130 military plane were killed in a crash about 85 miles north of Jackson, Mississippi, on Monday evening. While a Marine Corps spokesperson said that the aircraft "experienced a mishap," an official from Mississippi's Greenwood Airport said the plane was affected by structural failure at 20,000 feet.
The THAAD missile defense system has successfully shot down a target over Alaska, according to Lockheed Martin (NYSE:LMT) and the U.S. Missile Defense Agency. The test was the first involving an intermediate-range ballistic missile and the 14th successful intercept in 14 tests since 2005. THAAD was deployed in South Korea earlier this year, much to the chagrin of some of Seoul's neighbors.
In Asia, Japan +0.6%. Hong Kong +1.5%. China -0.3%. India +0.1%.
In Europe, at midday, London -0.9%. Paris -0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow flat. S&P -0.1%. Nasdaq flat. Crude -0.7% to $44.08. Gold -0.3% to $1209.90.
Ten-year Treasury Yield +2 bps to 2.39%
Today's Economic Calendar
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
10:00 Wholesale Trade
1:00 PM Results of $24B, 3-Year Note Auction