Wednesday Morning Reads
- Powell Delivers a Subtle Message to Markets
- New Task Force on Big Tech
- Buffett Criticizes Others
- Musk Lays Into SEC
- Won’t Be Pretty
- There’s A Beer That Tastes Just Like Lucky Charms
- Easiest Retirement Choice
- Futures edge lower after choppy session
- Ford's China JV lays off 'thousands' of workers - NYT
- Oil advances as OPEC set to continue cuts
- Trump cites economic potential for N.Korea
- Vietnamese carriers sign deals for 110 Boeing jets
- Amarin up 4% on Q4 results
- More on Lowe's Q4 mixed results
- Lowe's beats by $0.01, misses on revenue
- Amarin misses by $0.02, beats on revenue
- Facebook 'clear history' tool coming in 2019
"Vietnam is thriving like few places on earth. North Korea would be the same, and very quickly, if it would denuclearize. The potential is AWESOME," President Trump tweeted ahead of today's closely watched meeting with Kim Jong-un. Vietnam's frontier market reported growth of 7.1% in 2018 - its strongest pace in a decade and also among the fastest in the world. Morgan Stanley estimates if North Korea followed in Vietnam's footsteps, the nation's gradual opening up could bring in investment opportunities worth up to $9B per year.
Futures contracts for U.S. stock markets have resumed trade stateside after being halted due to a technical glitch at CME Group. Wall Street's three major indexes are now pointing to losses of 0.3% as investors sift through dovish testimony from Jerome Powell, conflicting U.S. economic data and a summit between President Trump and Kim Jong-un. Tensions are also escalating between nuclear-armed India and Pakistan following the shooting down of two IAF jets and a suicide bombing in Kashmir.
Investors were relieved by the lack of fireworks at yesterday's congressional hearings. The Fed confirmed it is in no rush to make judgments on future policy, while Big Pharma CEOs highlighted how complex the American healthcare system is and that no quick fixes are going to present themselves. Powell heads back to Capitol Hill today to testify before the House Financial Services Committee, discussing monetary policy and the economy.
In exchange for market access after Brexit, the U.K. financial services industry will have to stick closely to EU standards on everything from bonuses to capital requirements. The tough new rules are part of broader reform arranged by the European parliament and the bloc's national governments. Sterling is also getting a lift, up 0.4% to $1.3303, after Theresa May offered MPs a chance to delay Brexit.
Crude oil futures rose 1.7% to $56.43/bbl overnight following a decline in U.S. crude inventories and as OPEC seemed to stick to its supply cuts despite pressure from President Trump. "We're taking it easy," Saudi Energy Minister Khalid said at an OPEC symposium in Riyadh. The group is taking a "very slow and measured approach. Just as the second half last year proved, we are interested in market stability first and foremost."
General Electric +1% premarket after CEO Larry Culp reassured investors that he has a plan to return the company to a "position of strength," while asking for "support and patience." The conglomerate is looking to rebuild around four businesses: Power, renewable energy, aviation and healthcare. The letter also focused on GE's aims to improve cash generation, while cutting costs, and eventually restoring the once-treasured dividend.
During President Trump's visit to Hanoi, Vietnam's Bamboo Airways and VietJet Aviation signed deals to buy 110 aircraft from Boeing (NYSE:BA) worth more than $15B as the fast-growing companies look to expand their operations. Earlier this month, the FAA said Vietnam complied with international aviation standards, allowing Vietnamese carriers to fly to the United States for the first time and codeshare with U.S. airlines.
The shift to electric vehicles is gathering pace in the luxury car industry. Porsche (OTCPK:POAHY) has announced plans to release an electric version of the Macan SUV, its most popular model, in the next few years. The automaker also intends to invest about €6B in developing EVs, and wants half of all its new vehicles to be either hybrids or fully electric by 2025.
In Chongqing, China, where Ford (NYSE:F) builds cars like the compact Focus, three big assembly plants have been running at less than one-fifth of capacity. According to the NYT, Ford's joint venture there has quietly begun dismissing thousands of its 20,000 workers. In other car news, Fiat Chrysler (NYSE:FCAU) said it will invest $4.5B in five plants in Michigan for new Jeep SUV models.
Spotify has officially launched in India after an injunction filed by Warner Music was denied by the High Court of Mumbai. The service will be available for free in the country, with a premium package priced at Rs 119 ($1.67) per month. Spotify (NYSE:SPOT) currently has over 207M active subscribers, but the company is searching for new listeners outside its core European and U.S. markets.
Facebook will finally release its long-awaited "clear history" feature this year, according to CFO David Wehner. Will it hurt advertising? "Broadly, it is going to give us some headwinds in terms of being able to target as effectively as before," he told Morgan Stanley's 2019 Technology, Media & Telecom Conference. Facebook (NASDAQ:FB) announced plans for the product last year, but technical challenges delayed its implementation.
eBay has reportedly informed Elliott Management it's willing to explore shedding some of its key assets and give the hedge fund board representation in a bid to avert a proxy contest. The U.S. e-commerce company, whose shares have dropped 15% in the past 12 months, has offered to explore options for its StubHub ticket sales business and eBay Classifieds Group, including a sale. EBAY +0.3% premarket.
The U.S. Justice Department is standing down in a so-far losing battle to unwind the AT&T (NYSE:T)-Time Warner merger after its defeat at the appellate level. "We are grateful that the Court of Appeals considered our objections to the District Court opinion," a DOJ spokesman declared. "The Department has no plans to seek further review.”
Adding to recent speculation of a deal, major shareholder Cerberus is open to a merger between Germany’s two largest private banks, Deutsche Bank (NYSE:DB) and Commerzbank (OTCPK:CRZBY). Cerberus believes there is still room in Germany for two big lenders, a source told Reuters, but it remains an open question whether both can turn around their businesses.
One of the biggest shareholders in Barrick Gold (NYSE:GOLD) and Newmont Mining (NYSE:NEM), Flossbach von Storch, has thrown its support behind the merger of the two rivals, but only if the deal can "be seamless and not too hostile." Barrick stunned the industry when it unveiled a hostile $18B bid for its closest rival on Monday, just over a month after it acquired London-listed rival Randgold. NEM +1% premarket.
The refining sector has its eyes on Citgo Petroleum, which reportedly cut ties with parent, state-run oil firm PDVSA to meet U.S. sanctions imposed on Venezuela. Citgo is the OPEC nation's main foreign asset. It's the eighth largest U.S. refiner, with a 750,000-barrel-per-day refining network capable of supplying 4% of the country’s fuel through a network of some 5,000 gas stations across 30 states.
Cheniere Energy (NYSEMKT:LNG) -1.7% suing former CEO Souki.
EOG Resources (NYSE:EOG) -3.2% AH missing earnings estimates.
Frontier Communications (NYSE:FTR) +15.1% AH posting a Q4 beat.
Home Depot (NYSE:HD) -0.9% giving weak guidance.
J.M. Smucker (NYSE:SJM) +5% after an earnings topper.
Macy's (NYSE:M) +1.5% on Q4 beat, restructuring actions.
Mylan (NASDAQ:MYL) -9.7% AH following an EPS miss.
Palo Alto Networks (NYSE:PANW) +9.8% AH posting a $1B buyback.
Papa John's (NASDAQ:PZZA) +1.3% AH giving an upbeat outlook for 2019.
Seadrill (NYSE:SDRL) -0.2% after mixed results.
Weight Watchers (NYSE:WTW) -32% AH on soft figures, forecast.
In Asia, Japan +0.5%. Hong Kong -0.1%. China +0.4%. India -0.2%.
In Europe, at midday, London -0.8%. Paris -0.2%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.3%. S&P -0.3%. Nasdaq -0.3%. Crude +1.7% to $56.43. Gold +0.1% to $1329.30. Bitcoin +0.3% to $3811.
Ten-year Treasury Yield flat at 2.63%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 International trade in goods
8:30 Factory Orders
8:30 Retail Inventories
8:30 Wholesale Inventories
10:00 Pending Home Sales
10:00 Powell to deliver semi-annual monetary policy testimony
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories