Wednesday Morning Market Prepper
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- It's One Giant Myth
- You Are Here
- Goodbye
- Hogs Get SLaughtered
- Five Things for Today
- Lost Year
- Has The Market Finally Topped
- Another Record
- Market Rigged
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Despite some of the slowest trading of the year over the past few sessions, U.S. stock indexes continue to notch record highs, with the summer sun heating up markets. Futures now look poised to continue their bullish run amid a quiet day of economic releases, while investors turn their attention to another slew of corporate earnings. Banking heavyweight Morgan Stanley (NYSE:MS) is among the companies slated to post results before the open.
Economy
The risk of deflation has been removed from the eurozone, according to ECB Governing Council member Francois Villeroy de Galhau. "We have made progress, but we have not yet reached the [two percent] target and so there is still a need for our accommodative monetary policy," he declared. "We are adapting its intensity depending on the economic situation."
Top Chinese and U.S. business leaders are urging their governments to quickly solve bilateral trade issues. The appeal came during the U.S.-China business leaders summit, co-hosted by Alibaba's (NYSE:BABA) Jack Ma and Blackstone's (NYSE:BX) Stephen Schwarzman. U.S. Commerce Secretary Wilbur Ross responded by saying that the private sector is well placed to resolve "serious trade imbalances."
The Trump administration is considering a ban on oil imports from Venezuela, sources told Bloomberg, as part of a spate of sanctions to punish President Maduro. Potential disruptions? Venezuela is the third-biggest supplier of oil imports to the U.S., and Gulf refiners like Valero (NYSE:VLO), Chevron (NYSE:CVX) and Phillips 66 (NYSE:PSX) have spent millions tailoring their plants to use its unique brand of heavy, tar-like crude.
Stocks
Toshiba has resumed blocking access by Western Digital (NYSE:WDC) to data at their memory chip joint venture, amid a feud over the Japanese company's planned auction of the business. Toshiba (OTCPK:TOSYY) previously allowed partial access after a U.S. court ordered a temporary restraining order, but it won an appeal in California on Tuesday.
Apple just announced a new major executive post: Engineering leader Isabel Ge Mahe will be taking on a role as managing director of Greater China, reporting to CEO Tim Cook and COO Jeff Williams. Apple's (NASDAQ:AAPL) China business has boomed over the past half decade, peaking at $61B in 2015, but it has recently stumbled, declining to $46B in 2016 and shrinking for the past five quarters.
Qualcomm is facing a fresh set of antitrust allegations from a group of four companies that assemble the iPhone and other products on behalf of Apple. The accusations, made in a filing late Tuesday, are counterclaims to a Qualcomm (NASDAQ:QCOM) lawsuit filed in May seeking to force the contractors to pay license fees that Apple directed them to stop paying.
"People say ICOs [initial coin offerings] are great for ethereum because, look at the price, but it's a ticking time-bomb," former Ethereum CEO Charles Hoskinson told Bloomberg in interview. "There's an over-tokenization of things as companies are issuing tokens when the same tasks can be achieved with existing blockchains," he said. "People are blinded by fast and easy money." Related: COIN, OTCPK:BTCS, OTCPK:BTSC, OTCPK:GAHC
Google Glass is back from the dead, but this time it's targeting corporate customers. Dubbed Glass Enterprise Edition (GOOG, GOOGL), the product has been in testing at about 50 companies, including Boeing (NYSE:BA), General Electric (NYSE:GE) and Volkswagen (OTCPK:VLKAY). The device allows workers to see instructional content and permits them to broadcast what they are viewing to others.
Baidu first revealed its open source self-driving tech platform back in April, but Microsoft (NASDAQ:MSFT) just threw its weight behind the initiative, providing cloud services to companies using "Apollo" outside China. More than 50 groups have signed on to build and improve Baidu's (NASDAQ:BIDU) project, including top Chinese carmakers Chery Auto, Great Wall Motors (OTCPK:GWLLY) and Changan Automobile.
More autonomous news? General Motors (NYSE:GM) and Softbank (OTCPK:SFTBY) are among the latest investors in Nauto, a Silicon Valley startup developing self-driving software. "Our aim is to provide the data, intelligence and a cloud platform" to automakers that plan to begin putting self-driving cars on the road from 2020," said CEO Stefan Heck. Previous investors included BMW (OTCPK:BAMXF) and Toyota (NYSE:TM), as well as Allianz (OTCQX:AZSEY).
Daimler is seeking to head off a growing crisis over potential emissions cheating by voluntarily recalling more than 3M Mercedes-Benz diesel vehicles in Europe. The plan, which involves a software patch and avoids complex component fixes, will cost the automaker about €220M. If accepted by officials, it could help Daimler (OTCPK:DDAIF) avoid the massive penalties that beset Volkswagen (OTCPK:VLKAY).
BP is considering spinning off some of its U.S. pipelines into a publicly traded MLP. Tentatively called BP Midstream Partners, it would house its Gulf Coast and Midwest pipeline assets that transport its crude oil, natural gas and refined products. Out of the global oil giants, only Royal Dutch Shell (RDS.A, RDS.B) has an MLP, launching Shell Midstream Partners in 2014.
Akzo Nobel CEO Ton Buechner is stepping down due to health reasons, and will be replaced by the company's current chemicals division chief, Thierry Vanlancker. It's the second time he resigned on his doctor's advice, having announced his departure in September 2012, before resuming work a few months later. Earlier this year, Buechner repelled an Akzo (OTCQX:AKZOY) takeover attempt from U.S. rival PPG.
Time for another made-up food holiday. Today is National Hot Dog Day, which means restaurants across the country have free or discounted dogs. It comes in the middle of barbecue season. The National Hot Dog and Sausage Council estimates Americans will eat 7B hot dogs between Memorial Day weekend and Labor Day. Related tickers: TSN, KHC, NATH, CAG, OTCPK:NSRGY
Pass the mustard. McCormick (NYSE:MKC) is set to buy Reckitt Benckiser's (OTCPK:RBGLY) food business for $4.2B, adding French's to the company spice rack by beating out several competitors. The American seasonings maker hopes the move will help it achieve "meaningful accretion" to margins and adjusted earnings per share, while Reckitt said it will use the funds to pay down debt.
NBC News is launching a twice-per-day news show called Stay Tuned on Snapchat (NYSE:SNAP) as part of its push to attract younger viewers who tend to watch TV on mobile devices. "This is a concerted effort that is crucial to our future," said Nick Ascheim, head of digital at NBC News. NBCUniversal (NASDAQ:CMCSA) invested $500M in Snap during its initial public offering.
Deal time! Discovery Communications (NASDAQ:DISCA) and Scripps Networks Interactive (NYSE:SNI) are in merger talks, revisiting a deal that was scrapped three years ago. Stocks of both companies shot up in AH trading on the news. Separately, Broadcom's (NASDAQ:AVGO) $5.9B deal to merge with Brocade Communications (NASDAQ:BRCD) has been delayed to allow more time for a governmental review of the transaction.
AT&T is in talks about acquiring the balance of Otter Media, their 3-year-old joint venture, sources told the NY Post. The move is part of a wider effort by AT&T (NYSE:T) to clean up a host of joint ventures ahead of its expected acquisition of Time Warner (NYSE:TWX). Those JVs include stakes in the MLB Network, the NHL Network and the Game Show Network.
BofA (NYSE:BAC) -0.5% posting a drop in net interest income.
CSX (NYSE:CSX) -1.9% AH following disappointing guidance.
Goldman Sachs (NYSE:GS) -2.6% stung by its trading division.
IBM (NYSE:IBM) -2.7% AH with revenue down for another quarter.
Johnson & Johnson (NYSE:JNJ) +1.8% raising its profit forecast.
Lockheed Martin (NYSE:LMT) -0.6% on strong F-35 sales.
United Continental (NYSE:UAL) -3.6% AH issuing flat guidance.
UnitedHealth (NYSE:UNH) +0.3% beating earnings estimates.
In Asia, Japan +0.1%. Hong Kong +1.4%. China +1.4%. India +0.8%.
In Europe, at midday, London +0.1%. Paris +0.1%. Frankfurt flat.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude +0.4% to $46.79. Gold -0.2% to $1239.20.
Ten-year Treasury Yield +1 bps to 2.27%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 Housing Starts
10:30 EIA Petroleum Inventories
Growing cash piles Apple Inc., Microsoft Corp. and Alphabet Inc. helped companies sock away another $ 100 billion overseas, pushing the pile of money U.S. corporations keep offshore to a new peak in 2016, writes CFO Journal's Tatyana Shumsky .
Cash held by U.S. non-financial companies notched its largest increase, 9.2%, to set a fresh record of $1.84 trillion at the end of 2016, according to a report from Moody's Investors Service. Moody's estimates that roughly 70% of total corporate cash, or a record $1.3 trillion, is held overseas.
Offshore cash holdings continue to grow due to the disparity between U.S. and foreign tax codes, said Moody's senior vice president Richard Lane. Finance chiefs who oversee companies with overseas profits must pay the difference between lower offshore tax rates and the higher U.S. rate in order to bring the money home. "Most CFOs are loathe to do that for good financial sense," Mr. Lane said.
THE DAY AHEAD
Earnings season continues with second-quarter results from American Express Co., Morgan Stanley, and Qualcomm Inc. among many others.
CORPORATE NEWS
Farmers turn to bank of John Deere . Many cash-strained farmers are borrowing from Deere & Co. The world's largest manufacturer of tractors and harvesting combines is providing more short-term credit for crop supplies such as seeds, chemicals and fertilizer, making it the No. 5 agricultural lender behind banks Wells Fargo, Rabobank, Bank of the West and Bank of America.
McCormick adds some spice . McCormick & Co. agreed to buy the food division of U.K. consumer-goods company Reckitt Benckiser Group PLC for $4.2 billion. Reckitt's products include Frank's RedHot hot sauce and French's mustard.
Akzo Nobel chief out due to health . Dutch paint giant Akzo Nobel NV said Wednesday that its chief executive Ton Büchner has resigned for health reasons. The company doesn't expect this to slow its plan to spin off its chemicals business to appease shareholders after it rejected a $28 billion takeover bid from U.S. rival PPG Industries Inc.
One more time . Cable giant Discovery Communications Inc. is in merger talks with The Food Network owner Scripps Networks Interactive Inc. The two media companies had abandoned similar talks in 2014 after the family that controls Scripps decided it wasn't ready to sell.
Six Flags CEO exits . Six Flags Entertainment Corp. said Tuesday that Chief Executive John Duffey is leaving the company after 17 months leading the theme-park operator. Six Flags Executive Chairman Jim Reid-Anderson, who led the company from August 2010 until February 2016, will become CEO effective immediately, the company said.
Big banks raise corporate deposit rates . Banks including JPMorgan Chase & Co, Bank of America Corp., Wells Fargo & Co. and PNC Financial Services Group raised rates for corporate deposits during the second quarter, Reuters Reports.
Chipotle faces new scare . Chipotle Mexican Grill Inc. said it temporarily closed a restaurant in Sterling, Va., on Monday after learning about a "small number" of reported illnesses that the company believes are likely to be from norovirus. This leaves the company facing another blemish to its food-safety record more than a year after navigating a crisis that put a dent in its revenues and profits.
Philip Morris goes after young people in India . Tobacco giant Philip Morris International Inc. is pushing Marlboros to young adults in India, using aggressive tactics that are angering government health officials, Reuters reports.
P&G CEO grapples with company culture . David Taylor, chief executive of Procter & Gamble Co., has been trying to change the company's insular culture, but now faces more pressure as activist investor Nelson Peltz watches, reports the Financial Times.
REGULATION
NYSE supports rollback of Enron-era audit rule . The president of the New York Stock Exchange called on lawmakers to scrap or narrow the requirement for firms to hire an external auditor to review their internal controls over financial reporting. The rule intended to guard against accounting fraud, but critics say it drives up compliance costs.
EARNINGS
Goldman beats expectations . Goldman Sachs Group Inc. reported a surprise increase in second-quarter profit as big gains on its private portfolio of equity stakes offset steep declines in its core trading businesses.
UnitedHealth sees strong growth . UnitedHealth Group Inc. reported profit growth in the second quarter and raised its projections for the year, fueled by its Optum health-services arm, which highlighted the company's ongoing expansion of its role as a health-care provider and data-analysis shop.
ECONOMY
Japan's economy has a new problem: Amazon . Japan thought it was on track to beat deflation. Then came the Amazon effect. The country's retailers have been cutting prices in response to the rise of online rivals like Amazon.com Inc., disrupting what had seemed like perfect conditions for Japan to get the stable dose of inflation it has long been looking.