Wednesday Morning Reads
- Starting Out Small
- Futures inch down as Treasury yields advance
- Michael transforms into Category 4 storm
- Time to buy Kinder Morgan and other MLPs, Goldman analyst says
- How to introduce self-driving vehicles?
- International Paper announces $2B share repurchase program
- Amazon expands grocery delivery and pickup from Whole Foods Market to more cities
- Wireless big four deny being the telecom in Super Micro hack story
- DRAM, NAND players down on predicted price drops
Intensifying into an extremely dangerous Category 4 hurricane, Michael is expected to strengthen further before making landfall in the Florida Panhandle or Big Bend area around noon today. Oil producers - including Anadarko (NYSE:APC), BHP Billiton (NYSE:BHP), BP (NYSE:BP) and Chevron (NYSE:CVX) - have evacuated many personnel, with nearly 40% of daily crude oil production shut in the Gulf. On watch are also insurers, power providers, hospitals, livestock and crop producers, generator manufacturers and building stocks.
Treasury yields resumed their upward march overnight ahead of more U.S. debt sales, putting a bit of pressure on U.S. stock index futures. "We are at some sort of critical moment, a crossroads, for bond and equity markets," said Marie Owens Thomsen, global head of economic research at Indosuez Wealth Management. American producer and consumer price data is also due in the next two days, and may determine where yields go from here.
IMF-World Bank meetings... Roberto Azevêdo, the head of the WTO, called on defenders of the multilateral trading system to "raise their voices" to help it survive, flanked by the IMF's Christine Lagarde, World Bank's Jim Yong Kim and the OECD's José Ángel Gurría. "Let me be clear, the trading system is not perfect, we never said it was. But it represents the best efforts of governments around the world working together for 70 years to find ways to co-operate on trade issues."
Sterling is inching up on reports that negotiators have moved within sight of a deal on Brexit terms that center on how to avoid a physical border separating Ireland. If a pact is reached, the two sides would still need to agree on a blueprint for future trade and security ties. The U.K. and European parliaments would then need to ratify a deal before the scheduled split on March 29.
Unveiling a new set of measures, Turkish Finance Minister Berat Albayrak has promised an "all-out war" on inflation, with the private sector agreeing to cut prices on its goods by at least 10% across the board. The program will also include a freeze on energy prices until the year-end and an acceleration of VAT rebates. Turkey's annual inflation reached 24.52% in September, up from 17.9% in August.
South Africa's finance minister has resigned after admitting links to the Gupta family at the heart of a corruption scandal. President Ramaphosa replaced him with Tito Mboweni, a former central bank governor, marking the fifth finance minister in the past three years. Moody's is set to review its stance on South Africa on Friday, with Mboweni's appointment seen restoring stability for an economy now in recession.
Aiming to tackle graft in Latin America's largest economy, far-right Brazilian presidential candidate Jair Bolsonaro has vowed to appoint non-partisan ministers, breaking with the tradition of building cabinets through coalitions. Bolsonaro, a conservative congressman favored by financial markets, fell just short of an outright majority in Sunday’s vote, and will face leftist Fernando Haddad in a second round ballot on Oct. 28.
Amid improving relations, South Korea is weighing lifting some of its unilateral sanctions against Pyongyang to resume inter-Korean economic projects. The penalties currently ban South Koreans from traveling to North Korea and investing in the communist country. President Trump separately confirmed that his second summit meeting with Kim Jong-un will be held after the U.S. midterm elections on Nov. 6.
Sears has hired advisers to prepare for a possible bankruptcy that could come ahead of a $134M debt payment due on Monday, WSJ reports. A Sears (NASDAQ:SHLD) special committee is currently weighing a prior offer from CEO Eddie Lampert to acquire the retailer's Kenmore appliances brand and home services business for as much as $480M, but the company may go out of business before the approval. SHLD -23% premarket.
With Canada on the verge of becoming the first major economy to legalize recreational marijuana, Walmart's (NYSE:WMT) Canadian unit is exploring the possibility of selling cannabis-based items, but has no immediate plans to "carry CBD products at this time." Shares in cannabis producers have rallied in anticipation of the legislation and the latest news boosted Walmart shares nearly 3% in afternoon trading on Tuesday.
In what would be one of the biggest deals of the startup boom, SoftBank Group (OTCPK:SFTBY) is reportedly in talks to take a majority stake in WeWork (VWORK). The investment could be between $15B-$20B and would likely come from SoftBank's Vision Fund, which already owns almost 20% of WeWork. Talks are fluid and there is no guarantee there will be a deal.
Activist moves: PPG Industries (NYSE:PPG) +3.5% premarket following a Dow Jones report that Nelson Peltz's Trian Fund Management took a 2.9% stake in the company worth $690M. Shares had slumped 10% yesterday after warnings of softening demand and rising materials costs. Meanwhile, Bill Ackman's Pershing Square disclosed a stake in Starbucks (NASDAQ:SBUX) worth about $900M, predicting the stock could more than double in price over the next three years.
Big shift? Exxon Mobil (NYSE:XOM) has pledged to give $1M over two years to promote a surcharge on carbon emissions, marking the first contribution by a major oil company to such an effort. The contribution, made to the Americans for Carbon Dividends, comes less than a month after Exxon agreed to contribute $100M to oil companies' efforts to develop technologies to reduce greenhouse gases.
Compromise... EU nations have agreed to seek a 35% cut in car emissions by 2030, compared to 2021 levels, as Germany warned that overly challenging targets risked harming the industry and jobs. The final rules will be hashed out in talks beginning today with the bloc's two other lawmaking bodies: the European Parliament, which is seeking a more ambitious climate target, and the European Commission, which proposed a lower one.
Fully self-driving cars may be on the fast lane to U.S. roads under a pilot program the NHTSA is considering, which would allow real-world road testing for a limited number of autonomous autos. Cars would potentially need to have technology disabling the vehicle if a sensor fails or barring them from traveling above safe speeds. Accidents or near misses may also need to be disclosed within 24 hours.
Boeing delivered 61 of its best-selling 737 single-aisle aircraft in September, surging past numbers for August and suggesting manufacturing problems at suppliers may be easing. Production delays had been attributed to suppliers Spirit AeroSystems (NYSE:SPR) and CFM International (GE, OTCPK:SAFRY). As a result, Boeing (NYSE:BA) could still make good on its target to deliver 50 more airplanes overall in 2018, beating last year's record of 763.
In Asia, Japan +0.1%. Hong Kong +0.1%. China +0.2%. India +1.4%.
In Europe, at midday, London flat. Paris -0.4%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude flat at $74.93. Gold -0.1% to $1190.50. Bitcoin -1.6% to $6503.
Ten-year Treasury Yield +1 bps to 3.22%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 Producer Price Index
10:00 Atlanta Fed's Business Inflation Expectations
10:00 Wholesale Trade
11:30 Results of $36B, 3-Year Note Auction
12:15 PM Fed's Evans: Economic Outlook
1:00 PM Results of $23B, 10-Year Note Auction
6:00 PM Fed's Bostic: Economic Outlook