Wednesday Morning Reads
- The U.S. Trade War Is Making It Worse.
- From Trade War To Currency War
- Regretting the Rate Cut
- Insurers Balk at Costs
- Energy Storage Will Be Big Business Soon
- A $300 Billion Rainbow Economy
- How 7.4 Tons of Venezuela’s Gold Landed in Africa—and Vanished
- The Greatest Asset Bubble of All Time
- Libra Edition
- Facebook’s New Crypto
- Do Small Portfolio Changes Matter?
- Futures drift before FOMC rate decision
- Apple mulls shifting output from China - Nikkei
- NY passes its own Green New Deal
- Boeing scores order for 200 737 MAX planes in big vote of confidence
- Rocket explodes near Exxon site in Iraq
- Catalent to buy Bristol-Myers plant in Italy
- No NCR deal long-term positive - Morgan Stanley
- Videogame sales fall 11% as software joins hardware in doldrums
- Trans Mountain expansion project OK'd by Trudeau government
- Support grows for hearings on Facebook's crypto plans
- Axalta +10% on review of strategic options
- Bausch + Lomb ULTRA Multifocal for Astigmatism lenses now available in U.S.
Open Interest Changes
Episode 4 of FOMC Season 2019 airs this afternoon (2:00 p.m. ET) and it looks like the Fed is backed into a corner. A failure now to suggest a rate cut later this year - or a pivot back to even a neutral stance - could cause a violent selloff by markets, but if Jerome Powell does flag the plans, he will be accused of caving to President Trump, who has been relentless in excoriating the Fed and demanded that it reverse rate hikes made last year. More drama? Asked by reporters outside the White House yesterday if he wanted to demote Powell, Trump said "let's see what he does."
U.S. equity index futures entered a holding pattern overnight, steadying before the conclusion of today's crucial Fed meeting against a backdrop of trade tensions, conflicting data signals and growing worries about the economy. The three major benchmarks, which rallied yesterday to the highest levels since early May, were boosted by a dovish turn from ECB President Mario Draghi, who pledged to restart the bank's €2.6T bond buying program if growth and inflation continued to slow. President Trump's "good telephone conversation" and announcement of a G20 meeting with President Xi later this month gave markets an extra leg-up.
A rocket struck the site of the residential and operational headquarters of several global major oil companies in southern Iraq early Wednesday, including ExxonMobil (NYSE:XOM), but had no effect on oil fields or exports, sources told Bloomberg. The incident in the Basra province injured three Iraqi workers, however, prompting Exxon to evacuate 20 foreign employees. While attacks on energy facilities, including a Saudi Arabian pipeline and several oil tankers, as well as a U.S. military buildup, are stoking concerns, a considerable ratcheting of tensions will likely be required to drive prices higher.
New York's Senate has passed its own version of the Green New Deal - a climate bill that will set the most aggressive clean energy target in the country. The legislation would more than triple the amount of solar power in New York to 6 gigawatts by 2025 (from about 1.7 gigawatts currently) and unleash wind power off the coast. The bill also codifies New York’s goal of getting all of its electricity from emission-free sources by 2040, putting the state ahead of all others that have set clean-energy standards. Related: ED, NFG, PEG
U.S. lawmakers from both sides of the aisle are forming a growing group calling for hearings on Facebook's (NASDAQ:FB) Libra cryptocurrency. Democrat Maxine Waters, chairwoman of the House Financial Services Committee, said she wants Facebook to testify about the plans and the company should put them on hold for a review, while she's also received a letter from the committee's top Republican, Patrick McHenry, calling for a hearing. Many have additionally cited concerns about the social network's checkered past when it comes to trust and privacy.
Amazon (NASDAQ:AMZN) is leasing another 15 737-800 cargo aircraft made by Boeing (NYSE:BA) through a partnership with General Electric Capital Aviation Services (NYSE:GE). The aircraft will be in addition to the five Boeing 737-800s already leased from GECAS, announced earlier this year. "These new aircraft create additional capacity for Amazon Air, building on the investment in our Prime Free One-Day program," said Dave Clark, senior vice president of worldwide operations at Amazon. "By 2021, Amazon Air will have a portfolio of 70 aircraft flying in our dedicated air network."
Nissan (OTCPK:NSANY) and Renault (OTCPK:RNLSY) are reportedly set to resolve a standoff about Nissan's corporate governance ahead of the Japanese carmaker's shareholder meeting next week. A settlement would end one of the most acrimonious disputes between the partners since the November arrest of Carlos Ghosn, who formerly led both automakers. Renault, which owns 43.4% of Nissan, has been trying to ensure its influence over Nissan doesn't falter, while the Japanese side has been pushing to maintain its independence.
Apple (NASDAQ:AAPL) has asked its major suppliers to evaluate the cost implications of shifting 15% to 30% of their production capacity from China to Southeast Asia as it prepares for a fundamental restructuring of its supply chain, Nikkei Asian Review reports. The tech giant's request was triggered by the protracted trade tensions between Washington and Beijing, but multiple sources say that even if the spat is resolved there will be no turning back as risks are too great and even rising. The countries being considered for diversification include Mexico, India, Vietnam, Indonesia and Malaysia.
CBS (NYSE:CBS) is once again preparing a buyout offer for Viacom (NASDAQ:VIA) in the coming weeks, WSJ reports, marking the third attempt to reunite the companies following last year's ouster of longtime CEO Les Moonves. Preliminary discussions have already taken place over the layout for the deal in what would be a third attempt to reunite the companies that were broken up over a decade ago. Sources emphasized however that a deal was "far from certain" with fixing the price for a stock transaction being one of the major hurdles. CBS +0.5%; VIA +0.9% premarket.
Boris Johnson took a step closer to becoming Britain’s next prime minister on Tuesday, winning 40% of votes in the second round of a contest on a firm promise to leave the European Union. "We must come out on the 31st of October because, otherwise I am afraid we face a catastrophic loss of confidence in politics," he declared. By Thursday, Conservative lawmakers will have whittled the list of candidates to a final two. Then 160,000 Conservative members will vote to choose the winner, with a result expected in July.
What else is happening...
The U.S. economy is a lot stronger than you think, says contributor Clif Droke.
Does Italy need new bonds to pay government debts?
Legal challenges may surface as Canada approves Trans Mountain expansion.
In Asia, Japan +1.8%. Hong Kong +2.6%. China +1%. India +0.2%.
In Europe, at midday, London -0.3%. Paris +0.1%. Frankfurt flat.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude -0.1% to $54.08. Gold -0.3% to $1346.50. Bitcoin -1.1% to $9137.
Ten-year Treasury Yield +3 bps to 2.09%Today's Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM FOMC Forecast
2:00 PM Chairman Press Conference