Wednesday Morning Market Prepper
Chart: A Pileup in U.S. Motor Vehicle Inventories - pic.twitter.com/yOYN6oc5DB
— (((The Daily Shot))) (@SoberLook) January 11, 2017
— World Economic Forum (@Davos) January 11, 2017
Wall Street Breakfast - Seeking Alpha
President-elect Donald Trump will meet the press at 11 a.m. today for his first news conference since the election, and markets are hoping for more topics besides Russia and his potential conflicts of interest. While there isn't a great deal known about the event, investors are looking to get a clearer picture on trade, currencies, tax plans, fiscal stimulus and the new administration's relationship to the Fed.
The world economy is expected to expand 2.7% this year, recovering from a post-crisis low in 2016, thanks to rising commodity prices and Donald Trump's stimulus, the World Bank said in its latest Global Economics Prospects report. However, this growth could be hit by a significant slowdown in investment in emerging markets and political uncertainty in major economies, including the U.S.
The Kremlin said it has no compromising material on Donald Trump or Hillary Clinton and dubbed an unsubstantiated dossier which said it did as "total nonsense." Spokesman Dmitry Peskov further called the allegations "pulp fiction" and said the report had been dreamt up to further damage U.S.-Russia relations.
Italy "will not need" the support of the European Stability Mechanism, Economy Minister Pier Carlo Padoan told La Repubblica, when asked about the possibility that Rome tapped the eurozone bailout fund. He also confirmed that Italy will inject €6.6B of public money into Monte dei Paschi (OTCPK:BMDPY) after the bank's failure to complete a capital boosting plan.
After months without one, Iceland finally has a new government. The catch? The new coalition of the Independence, Reform and Bright Future parties will give parliament a chance to debate whether to hold a referendum on EU membership. Iceland began EU accession talks in 2010, while the country was still reeling from the 2008 financial crash.
Saudi Arabia plans to follow its record-breaking debut on global debt markets with an Islamic bond issue. The sale, which could come as early as February, will help the kingdom finance its budget deficit and invest in economic diversification away from oil. Last year, the country set a record for developing countries with its first sovereign bond sale, attracting $67B in investor bids for a $17.5B issue.
There will be "trouble for equity markets" if the yield on the 10-year U.S. Treasury note moves beyond 3%, warned Jeffrey Gundlach, while another bond king stated 2.6% was the key level to watch. According to Bill Gross, the number is much more important than Dow 20K, the price of oil or dollar strength, as it would signal a bear bond market. The 10-year yield last stood at 2.38%.
Trying to recover from a scandal driven by aggressive sales targets, Wells Fargo (NYSE:WFC) has unveiled a new compensation structure for branch bankers. The plan will create incentives based on customer service rather than sales goals, is longer-term in nature and includes additional monitoring of sales activities.
There is a lively argument going on at the Supreme Court - with justices considering how the First Amendment applies to credit card fees. At issue is a dispute over the "freedom of speech" for merchants, who want to avoid charges by steering customers toward cash, and payment companies, which seek to make the fees invisible. But New York law, similar to ones in nine other states, bars credit card "surcharges," while permitting "cash discounts." Related tickers: AXP, BAC, C, COF, DFS, JPM, MA, V
The de facto head of the Samsung Group (OTC:SSNLF) will be investigated as a bribery suspect by South Korean prosecutors, drawing the country's biggest business group deeper into an unfolding political scandal that led to the president's impeachment. According to a spokesman, Lee Jae-yong was summoned to appear in court on Thursday morning.
Seoul prosecutors have also indicted seven current and former executives of Volkswagen's (OTCPK:VLKAY) Korea operations on charges of fabricating official documents and alleged violation of the Clean Air Conservation Act. The news comes after VW negotiated a $4.3B draft settlement with American regulators over its diesel emission issues in the U.S., pleading guilty yesterday to criminal wrongdoing.
Looking to stoke demand for electric cars, BMW (OTCPK:BAMXF), VW (OTCPK:VLKAF), Ford (NYSE:F) and Daimler (OTCPK:DDAIF) are aiming to build a network of ultra-fast charging stations across Europe. The 400 next-generation 350 kilowatt chargers would be nearly three times as powerful as Tesla's (NASDAQ:TSLA), reloading an electric car in minutes instead of hours.
Elon Musk has famously mocked Apple (NASDAQ:AAPL) as a "Tesla graveyard," hiring engineers that the automaker had fired, but the company just scooped up Apple veteran Chris Lattner. He will head up Autopilot efforts at Tesla (TSLA) after working for the tech giant for 11 years. Lattner's chief contribution was creating Swift, Apple's most recent programming language.
Airbus's productivity surged in December, allowing it to record a full year delivery of 688 planes, but it still fell short of rival Boeing (NYSE:BA), which rolled out 748 jets to customers. But in the race for new business, Airbus (OTCPK:EADSY) recorded 731 net orders in 2016, compared with the 668 of Boeing. Still, the combined book-to-bill ratio of the two giants dipped below 1 for the first time since 2009, placing a dent in record industry order backlogs.
After almost a decade-long absence, Yum China (NYSE:YUMC) is bringing Taco Bell back to China, with a plan to have 1,000 restaurants operating in the country by 2022. But, wary that Chinese consumers may not be clamoring for beans and tortillas, it's hedging its bets with a menu that appeals to local tastes. "Let's be honest: It's not Mexican food; it's Mexican-inspired food," said Greg Creed, chief executive of Yum Brands (NYSE:YUM).
Shortly after the ouster of Roger Ailes as the CEO of Fox News (FOX, FOXA), the company reached a secret settlement of sexual harassment claims against anchor Bill O'Reilly, sources told NYT. Juliet Huddy, who appeared semi-regularly on The O'Reilly Factor, reportedly settled for an amount in the high six figures. The news could add more fuel to stakeholders concerned about reports of a pervasive (and potentially expensive) cultural problem at the network.
U.S. District Judge Jesse Furman has ruled that Alstom (OTCPK:ALSMY) may ask an independent accounting firm to resolve a dispute over the company's $800M purchase of General Electric's (NYSE:GE) train signaling business, rejecting the latter's bid for arbitration. Alstom had sued GE for breach of contract for refusing to let Deloitte Touche Tohmatsu decide whether the purchase price should be adjusted up or down to account for working capital and net debt.
Canada's largest alternative-asset manager has submitted proposals regarding its interest in buying the yieldcos of bankrupt solar company SunEdison (OTCPK:SUNEQ). Brookfield Asset Management (NYSE:BAM) would purchase all of TerraForm Power (NASDAQ:TERP) for $11.50 per share in cash, or a total consideration of $1.6B, and may even raise its offer to $12.50 per share if it can also buy TerraForm Global (NASDAQ:GLBL).
Wal-Mart plans to cut hundreds of jobs before the end of January at its headquarters and regional personnel that support stores, WSJ reports. Many of the layoffs will affect Wal-Mart's (NYSE:WMT) human resources department, which some senior company executives believe should be more efficient or whose duties could be handled by outside consultants.
More reports are mounting to indicate that Apple's (AAPL) next iPhone might be mostly glass. The tech giant has found suppliers for a model featuring two reinforced glass panes connected by stainless steel forging in the middle, DigiTimes reports. The design, supplied by Foxconn (OTC:FXCOF) and Jabil Circuit (NYSE:JBL), would replace the phone's conventional aluminum-backed chassis.
In Asia, Japan +0.3%. Hong Kong +0.8%. China -0.8%. India +0.9%.
In Europe, at midday, London +0.1%. Paris +0.1%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq +0.1%. Crude +0.7% to $51.17. Gold +0.4% to $1189.70.
Ten-year Treasury Yield flat at 2.38%
Today's Economic Calendar
7:00 MBA Mortgage Applications
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $20B, 10-Year Note Auction
1:20 PM Fed's Dudley Speech