Wednesday Morning Reads
- More Bull Traps
- New Tobacco Device
- Bad-Debt Pile Creeps Higher
- $1 Billion Surprise From Boeing
- iPhone Revival
- Alphabet Throws a Wet Blanket on Wall Street
- Running Out of Impossible Burgers
- The Accidental Case for Market Timing
- Things That Were Said During the Bear Market
- More highs in store amid Apple earnings
- Mortgage applications trend lower
- U.S.-China trade talks continue next week
- New Middle East marketplace for Amazon
- Eric Schmidt to leave Alphabet board
- CVS Health beats by $0.11, beats on revenue
- New Residential Investment EPS in-line
- Southern CO misses by $0.02, misses on revenue
- Enterprise Products Partners beats by $0.09, misses on revenue
- New Residential invests in Covius Holdings
- Amarin up 4% on Q1 beat
- GlaxoSmithKline plc reports Q1 results
The FOMC is expected to leave borrowing costs unchanged today as it maintains a "patient" monetary policy stance in the midst of a strategy rethink. It's a tough balancing act for Fed Chairman Jerome Powell, who will want to avoid sounding too dovish, due to the strength of the U.S. economy and the fact financial conditions have improved considerably in the last several months. Tilting to hawkish could also spook financial markets and draw the ire of President Trump, who yesterday called for the Fed to cut rates by a percentage point and a return to quantitative easing.
Apple (NASDAQ:AAPL) shares are up 6% premarket following the tech giant's first quarter results. iPhone sales appear to have stabilized following a difficult holiday period, while services revenue jumped as consumers signed up for an expanding list of digital subscriptions. Apple is also going to put another $75B into its buyback pot, raise its dividend 5% to $0.77 per share and gave guidance for next quarter that was higher than analysts expected.
Sell in May? Doesn't look like investors are buying that advice today. Dow futures are up 80 points, the Nasdaq is 0.8% higher and the S&P 500 could breach the 3,000 level this session. It's the best start to any year in nearly a decade for U.S. stocks amid a robust earnings report from Apple (AAPL), ongoing bets for a dovish Fed rate decision later today and hints of progress in U.S.-China trade talks. Many see the stronger earnings performance, set against a better-than-expected reading for first quarter economic growth as an indicator U.S. equities have even more room to run.
Most of Europe is off today for May Day, but Brexit can't press the snooze button. Theresa May is set to face questions on her strategy at three public and private meetings and reportedly wants to wrap up talks with Jeremy Corbyn's Labour party on a compromise Brexit solution next week. Channel Four also reports that she’s about to offer the opposition pretty much everything it wants to get a deal done, adding to the threats of tomorrow's local elections and the EU poll later in May.
"Ambassador Lighthizer and I just concluded productive meetings with China's Vice Premier Liu He. We will continue our talks in Washington, D.C. next week," U.S. Treasury Secretary Steven Mnuchin wrote on Twitter. Reports meanwhile suggest that President Trump has dropped a central demand that China halt alleged instances of commercial cyber theft to reach a trade deal by the summer. Chinese officials say Beijing has complied in full with a September 2015 agreement, that stated neither government would "engage in or knowingly support" online theft of intellectual property.
Elon Musk and the SEC are finally heading out of the boxing ring as U.S. District Judge Alison Nathan approved a deal that will govern the Tesla (NASDAQ:TSLA) CEO's use of Twitter. The settlement lays out in more detail what types of statements by Musk must be reviewed by Tesla’s legal counsel before publication, such as financial statements, previously unreported production figures and delivery numbers. SEC Commissioner Robert Jackson still decried the agency's agreement, saying Musk had not yet admitted what is "crystal clear to anyone who has followed this bizarre series of events."
Amazon (NASDAQ:AMZN) has launched a new Middle East marketplace, two years after buying the Dubai-based e-commerce company Souq.com for $580M. With the launch, Amazon said Souq.com will be rebranded to Amazon.ae, although Souq remains available in Saudi Arabia and Egypt. Reports also suggest that Amazon is gearing up to start activities in Israel and has approached local retailers to invite them to sell their products via a dedicated shopping website.
Former Chairman and CEO Eric Schmidt is leaving Alphabet's (GOOG, GOOGL) board, marking the end of an era for perhaps the company’s most well-known figure. Schmidt served as the public face for the tech giant and oversaw Google's expansion from a stand-alone conduit for internet queries into a conglomerate stretching into mapping, email and software, as well as banner acquisitions of upstarts like YouTube. He'll still retain an office at the company, where he will remain as a technical adviser.
McGraw-Hill Education (NYSE:APO) and Cengage Learning Holdings II (OTC:CNGO) are planning an all-stock merger, which would set them up to better compete as the rise of digital books and course materials pressures their businesses, WSJ reports. The new company is to be called McGraw Hill and will be led by Cengage CEO Michael Hansen. Based on revenue multiples of publicly traded rivals, the combination could be valued at around $5B, trailing the roughly $8.5B market capitalization of London-based Pearson (NYSE:PSO), the biggest player in the U.S. higher-education market. CNGO +22.6% premarket.
What else is happening...
Beyond Meat raises price range in upsized IPO.
Markets still closed in Japan as Emperor Naruhito ascends throne.
China's Belt and Road scores Swiss endorsement amid debt worries.
Macau's April casino revenue posts worst drop in nearly three years.
Is the unraveling of Venezuela's economy coming to an end?
Apple (AAPL) +6% AH on strong Services, upside outlook.
AMD (NASDAQ:AMD) +6% AH following a revenue beat.
ConocoPhillips (NYSE:COP) +0.8% as production rose.
General Electric (NYSE:GE) +4.5% as profit tripled, guidance confirmed.
General Motors (NYSE:GM) -2.7% on mixed results.
McDonald's (NYSE:MCD) +0.2% on stronger comp sales.
Merck & Co (NYSE:MRK) +2.5% topping EPS expectations.
Pfizer (NYSE:PFE) +2.6% after Q1 beat, raised outlook.
In Asia, Japan closed. Hong Kong closed. China closed. India closed.
In Europe, at midday, London -0.2%. Paris closed. Frankfurt closed.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.8%. Crude -0.4% to $63.68. Gold -0.1% to $1284. Bitcoin +2.1% to $5294.
Ten-year Treasury Yield flat at 2.5%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Treasury Refunding Quarterly Announcement
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM Chairman Press Conference