Wednesday Morning Reads
- Trade talk
- Theresa May to face no-confidence vote
- Vote on EU-Japan free trade deal
- Will Brussels treat France the same way as Italy?
- Bausch Health to acquire Synergy Pharma assets for $200M
- New York recreational marijuana could come in 2019
- Realty Income declares $0.221 dividend
- Trump would intervene in Huawei case
- Bigger footprint with smaller Amazon Go
- Lilly and AC immune sign license and collaboration agreement
- GE sinks to $6.66/share, lowest since financial crisis
- Hitachi nears $7B deal for ABB's power grid business
- Apple Cuts
- Trump Fight
- Vote of Confidence?
- Japan planning to spend JPY 3 trillion in second extra budget (EWJ). Reuters Report
- UK Lawmakers are critical of Arconic (ARNC) unit sale talks. NY Post Report
- Amazon (AMZN) will introduce compact version of its cashier-less stores. Reuters Report
- Samsung (SSNLF) plans to close China mobile phone plant. Reuters Report
- Sinclair (SBGI) might be a top bidder for Fox (FOXA) regional sports networks. Fox Business Report
Theresa May will face a no-confidence vote this evening after the announcement that 48 Conservative lawmakers had formally called for her ouster. A decision to delay this week's House of Commons vote on her Brexit deal is thought to have enraged previously supportive Tories, plunging the divorce from the EU into chaos. If over half of Conservative MPs vote against May, there will be a leadership election to choose her replacement.
President Trump would "certainly intervene" in the DOJ's case against Huawei CFO Meng Wanzhou if it would serve national security interests or help close a trade deal with China. "Whatever's good for this country, I would do," he told Reuters. A Canadian court on Tuesday granted Meng bail while she awaits a hearing for extradition to the U.S. She's due back in court in February.
Previously spooked by U.S. government shutdown fears, U.S. stock index futures are getting a lift following upbeat trade comments. Besides saying he would intervene in the Huawei case, President Trump announced that China was buying a "tremendous amount" of U.S. soybeans and that trade talks with Beijing were already underway by telephone. He also said it would be a mistake if the Fed raises rates when it meets next week, but called Chair Jerome Powell "a good man."
France risks EU censure over its latest "Gilets Jaunes" budget concessions, Italian Deputy Prime Minster Luigi Di Maio declared, adding that he expected Brussels to treat Paris and Rome in the same fashion. The European Commission has rejected Italy's draft budget which targets the deficit to rise to 2.4% of GDP in 2019, while France's 2019 deficit is now likely to rise above 3%. More news headlines are anticipated today as Italy's Giuseppe Conte meets with Jean-Claude Juncker.
The European Parliament is continuing its legislative sessions in Strasbourg, France, despite yesterday's suspected terrorist attack in a local Christmas market that killed four people and injured eleven. A vote today is likely to approve an EU-Japan free trade pact, often dubbed the "cars for cheese" deal. It will create the world's largest free trade area when it comes into force in early 2019.
The future of the World Trade Organization is also in focus as a meeting of the general council convenes against the backdrop of ongoing trade wars. Tensions? The U.S. has said it wouldn’t green-light the selection process to replace retiring judges on the Appellate Body until broader issues with the WTO's dispute resolution system had been settled, creating uncertainty in the global trade watchdog.
Prime Minister Narendra Modi's government is likely to announce farm loan waivers worth as much as 4T rupees ($56.5B), government sources and analysts told Reuters. That would woo India's 263M farmers ahead of a general election, after his ruling party suffered a rural drubbing in state polls. The previous Congress party-led coalition government announced farm loan waivers in 2008, helping it return to power with a bigger mandate in 2009.
The House Judiciary Committee grilled Google (GOOG, GOOGL) CEO Sundar Pichai yesterday on a wide range of issues. Regarding concerns about suppressing conservative voices, Pichai echoed Google's previous denials, and repeatedly responded that search algorithms did not favor any particular ideology. He also said Google has no current plans to launch a censored search engine in China, but doesn't rule out a future project.
Valuing its ADRs at $13 each, Tencent Music Entertainment (NYSE:TME) has priced its initial public offering at the bottom of its $13-$15 range, contrary to signals earlier that it was aiming for the midpoint. That results in a raise of about $1.1B and values the company at $21.3B. It's less than the Tencent (OTCPK:TCEHY) spinoff and underwriters were previously seeking, but is still one of the biggest IPOs by market value since Alibaba's (NYSE:BABA) coming-out in 2014.
Amazon is taking its cashier-free shops in a new, smaller direction. Located in one of the company's Seattle offices, the eighth Amazon Go store is about a quarter of the size of its predecessors, at a mere 450 square feet. Such small stores could help Amazon (NASDAQ:AMZN) broaden its bricks-and-mortar footprint and keep ahead of startups which are trying to convince existing retailers to buy their cashierless technology.
More fingers are being pointed at China for last month's massive breach at Marriott (NYSE:MAR) that compromised the data of 500M Starwood users. The New York Times is the latest to suggest the intrusion was part of a larger state-sponsored intelligence gathering effort. "China firmly opposes all forms of cyberattack and cracks down on it in accordance with the law," said Geng Shuang, a spokesman for China’s Ministry of Foreign Affairs.
Verizon will book a $4.6B accounting charge related to its Oath media business, after creating the unit by spending $9B on acquiring AOL in 2015 and then Yahoo (NASDAQ:AABA) in 2017. Verizon (NYSE:VZ) hoped the combination would make it a more powerful force in digital advertising, but its share of that market has shrunk instead. Unable to turn the tide, the company recently scaled back its internet ambitions.
General Electric shares fell as low as $6.66 share in trading Tuesday, a level which marked the lowest close for the stock during the financial crisis a decade ago. Despite a brief rally after the appointment of Larry Culp as chairman and CEO, the conglomerate's stock has sold off and has now fallen 61% in 2018. GE shares have shed 33% alone since the embattled company reported Q3 earnings on Oct. 30.
Seeking to build up its overseas presence, Hitachi (OTCPK:HTHIY) is in the final stages of talks to acquire the power grid business of Switzerland's ABB for up to an estimated ¥800B ($7.1B). It would be the Japanese industrial conglomerate's largest-ever acquisition, the Nikkei reports. The power grid market is growing rapidly with the spread of renewable energy and demand from emerging nations.
Alstom and Siemens have sent proposed concessions to the European Commission that would give up prized assets - including signaling activities and rolling stock products - to get their massive rail merger over the line. Opening the probe earlier this year, EU antitrust chief Margrethe Vestager said the deal might lead to higher fares for travelers, while Alstom (OTCPK:ALSMY) and Siemens (OTCPK:SIEGY) maintain it would help them compete with China's state-backed operator, CRRC.
Set to book a $3B profit from the sale, SoftBank (OTCPK:SFTBY) is planning to offload its stake in Nvidia (NASDAQ:NVDA) early next year as the company's stock continues to slide. The graphics chipmaker's shares are now down about 50% from their early October peak. However, no final decision has been made, according to Bloomberg, and SoftBank may opt to keep its stake or sell only part of it.
New York Governor Andrew Cuomo will unveil a plan to legalize recreational marijuana in the state early next year, when Democrats have control of every branch of the state's government. "The goal of this administration is to create a model program for regulated adult-use cannabis," said Cuomo spokesman Tyrone Stevens. Imposing excise taxes on weed could generate $436M in new state tax revenues and $336M in additional city tax revenues.
In Asia, Japan +2.2%. Hong Kong +1.6%. China +0.3%. India +1.8%.
In Europe, at midday, London +1.3%. Paris +1.7%. Frankfurt +1%.
Futures at 6:20, Dow +0.6%. S&P +0.7%. Nasdaq +0.9%. Crude +1.8% to $52.56. Gold +0.1% to $1248.80. Bitcoin +2.1% to $3415.
Ten-year Treasury Yield flat at 2.88%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $24B, 10-Year Note Auction
2:00 PM Treasury Budget