Morning Reads, News, Charts
- It Feels Empty
- Watch that Debt
- Traders brace for the return of volatility.
- A single buyer bought $800 million worth of Aussie bonds.
- These three Asia markets still haven't recovered from the 1997 crisis.
- Italian Banks Hit Reset as Taxpayer Billions Bail Out Lenders
- Automakers Cutting U.S. Jobs
- Will Tesla Disrupt Long Haul Trucking?
- Jawboning Works?
- Higher Than You Think
- China's big short looks more like a big squeeze to investors.
- Volvo's 'historic end' to the engine as we know it.
- Why big pharma is struggling to profit from the obesity epidemic.
- Seven signs of over-hyped fintech.
- Crude falls on concerns over Russia
- Futures flutter after Independence Day
- U.S. confirms N.Korea launched ICBM
- Qatar LNG hike as Moody's cuts outlook
- Voice assistant speaker from Alibaba
- U.S. wading into Apple's EU tax appeal?
- Nokia, Xiaomi sign patent deal
- Volvo to go all electric from 2019
- Monte dei Paschi bailout approved
— Pandamonium (@IndiePandant) July 4, 2017
The U.S. has confirmed that North Korea's latest launch was indeed an intercontinental ballistic missile, calling it a "new escalation of threat," as Pyongyang vowed to keep sending Washington more "gift packages." Equity indexes across the region fell yesterday in response to the news. Calling for global action, the U.S. has requested an emergency meeting of the U.N. Security Council, while South Korea seeks fresh sanctions on the isolated regime.
Minutes from the Fed's June monetary policy meeting will be released this afternoon after the central bank mapped out plans to reduce its $4.5T balance sheet. One key detail was left out: Will it begin the asset reduction before another rate hike? Investors have also been focused on global central bank signals in recent sessions amid signs officials might be ready to ease off massive stimulus programs.
Ten years since the Bank of England last raised interest rates, policy makers are warning Britons to prepare for the next one. "Our foot is pretty much on the floor with the accelerator," said Michael Saunders, a member of the rate-setting Monetary Policy Committee. "There's no sense that policy has to stay on hold just because Brexit negotiations are underway."
Qatar's credit outlook has been cut to negative by Moody's, which cited growing financial risks surrounding the country's diplomatic spat with its Arab neighbors. It comes as Bahrain, Egypt, Saudi Arabia, and the UAE meet in Cairo to consider further sanctions on Doha as a deadline approaches for their list of demands. QAT has plunged over 12% since the crisis began on June 5.
Suggesting it was ready for a protracted dispute, Doha announced plans to significantly raise natural gas production in the coming years, with Qatar Petroleum upping output by 30%. "Basically what it's saying is, 'We are going to promote LNG as a substitute for oil,'" said Jonathan Stern, senior research fellow at the Oxford Institute for Energy Studies. "That's a very confrontational thing to say."
New Hong Kong leader Carrie Lam struck a conciliatory tone in her first week in office, but suggested that fresh reforms to bring greater democracy to the city would not be tabled any time soon. "If I... restart political reform immediately, such that the society becomes embroiled in serious conflicts again and the economy and livelihood issues come to a standstill, then as the person with the utmost responsibility, I would have failed."
Ties between Russia and China were appraised in glowing terms as Chinese President Xi Jinping met Vladimir Putin for the third time this year, concluding with at least $10B in agreements. During his two-day state visit, Xi told Russian media that relations between the two countries were currently at their "best time in history" and the two nations were each other's "most trustworthy strategic partners."
It's official! A meeting between President Trump and Putin will take place on the sidelines of the upcoming G-20 summit. "[It's been] agreed for the seventh," Kremlin foreign policy aide Yuri Ushakov declared. Trump has repeatedly called for improved ties with Russia, but his encounter comes against a backdrop of tough sanctions, tensions over Ukraine and Syria, and reported election interference.
The Italian government has taken control of Monte dei Paschi (OTCPK:BMDPY), injecting €5.4B into the troubled lender as the EU approved a state bailout. In return, BMPS has promised to transfer its bad loans to a special vehicle and institute a cap on executive compensation. The recapitalization will bring the total amount of Italian taxpayer funds deployed to rescue banks over the past week to more than €20B.
Italian prosecutors have also decided to take Morgan Stanley (NYSE:MS) to court over allegations that it caused €2.7B in losses to the state in relation to derivative transactions, Reuters reports. The Corte dei Conti, which rules on abuses of public funds, is bringing the case against the bank on behalf of Italy's taxpayers. Hearings are expected to begin next April.
Santander has launched a €7.1B rights issue, pricing the cash call at a 19% discount to Monday's closing price, as the lender looks to finance the takeover of Banco Popular (OTCPK:BPESY). Existing shareholders have until later this month to decide whether they want to buy into the capital increase. Santander (NYSE:SAN) will also set aside billions of euros to cover Popular's bad property assets.
"I can confirm the U.S. filed an application with the EU General Court to intervene in the case involving the retroactive application of state aid rules to Apple (NASDAQ:AAPL)," a source told Reuters. The report didn't specify when the application was submitted, so it's unclear if it occurred under the Obama or Trump administration. The European Commission ordered the tech giant to pay up to €13B in back taxes to Ireland in 2016.
Look out Echo (NASDAQ:AMZN), Home (GOOG, GOOGL) and HomePod (AAPL)! Samsung (OTC:SSNLF) is developing a voice-activated speaker powered by its digital assistant Bixby, WSJ reports. The timing is far from determined as the English-language version of Bixby has been delayed and many of its features and other specifications are yet to be decided.
More speakers? Alibaba (NYSE:BABA) has launched a voice assistant speaker, marking its first foray into artificially intelligent home devices. The "Tmall Genie", named after the company's e-commerce platform, costs 499 yuan ($73.42), significantly less than western counterparts. It's currently programmed to use Mandarin as its language and will only be available in China.
Toshiba has asked a U.S. court to dismiss Western Digital's (NYSE:WDC) request for an injunction to prevent a sale of its chip business, saying the court has no jurisdiction and that an injunction would cause irreparable harm. Western Digital, which jointly runs Toshiba's (OTCPK:TOSYY) main semiconductor plant, is claiming that its partner breached joint venture contracts as it pursues an $18B sale of the unit.
Ericsson Chairman Leif Johansson plans to stand down before the company's next annual meeting in 2018, as Cevian Capital, an activist fund with a 5.6% stake, pressures the board over the group's performance. Ericsson (NASDAQ:ERIC) shares have lost almost half their value in the last two years and the company reported a loss of 12.3B Swedish crowns ($1.45B) in the first quarter.
Disney's biggest business, cable TV, is stalling, and the problems go well beyond ESPN, WSJ reports. The Disney Channel and Freeform (NYSE:DIS) have lost about 4M subscribers over the past three years, bringing them to about 90M apiece, according to consulting firm SNL Kagan. The troubles are twofold: a lack of hits and the shift to digital alternatives.
Looking to expand into other markets, Nokia (NYSE:NOK) and Chinese smartphone maker Xiaomi (Private:XI) have announced an agreement to cross-license patents from each other. According to a press release, the companies will "explore opportunities for further cooperation" in areas such as data centers, the internet of things, augmented/virtual reality and artificial intelligence.
Tencent shares recovered slightly overnight after plunging as much as 5.1% in Hong Kong on Tuesday, wiping out nearly $17.5B in market value. It followed an avalanche of criticism over Tencent's (OTCPK:TCEHY) smartphone game "Honor of Kings" for encouraging all-nighter gaming marathons with Chinese kids. The game has over 50M daily active users.
Two people were injured in an explosion yesterday morning at a Honeywell Aerospace (NYSE:HON) plant in Tulsa, Oklahoma. Investigators said the explosion left a huge hole in the roof of the building and they are amazed someone wasn't more seriously hurt. The blast occurred in a painting booth, which was well ventilated, so the cause remains unknown.
A top European legal adviser has said France has the right to punish UBERfor running an "illegal" service in the country. Uber played down the non-binding opinion from an advocate general at the Court of Justice of the EU, stating it applied only to a service using unlicensed drivers known as UberPOP, which it had already discontinued in France.
All new Volvo Car models launched from 2019 will be fully electric or hybrids, becoming the first major automaker to set a date for the complete phase-out of traditional vehicles. "This announcement marks the end of the solely combustion engine-powered car," Volvo Cars (OTCPK:GELYY) CEO Hakan Samuelsson declared. "This means that in the future there will be no Volvo cars without an electric motor."
In Asia, Japan +0.3%. Hong Kong +0.5%. China +0.8%. India +0.1%.
In Europe, at midday, London flat. Paris +0.1%. Frankfurt +0.1%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq -0.2%. Crude -1.5% to $46.36. Gold steady at $1219.14.
Ten-year Treasury Yield flat at 2.35%