Wednesdays Market Prepper
- An Inverted Financial Crisis
- E.U. Tax Avoidance Campaign
- Power at the Fed
- Wipe Out Puerto Rico’s Debt
- Lawmakers Not Buying It
- The Next Great Battle is Between Google and Amazon
- All 3 Billion
- Fight With Dan Loeb
- Financial News Repeat Itself
- Brightwire warns on iPhone X delay
- PepsiCo slips after revenue miss
- Timeshare stocks on watch amid M&A talk
- FuelCell rallies after upgrade
- EU steps up war on tax avoidance
- Catalonian independence within days
- Senate panel to hold hearing on Yahoo
- IEA hails new era of solar power
- Disney's Iger to step down in 2019
Unusual Option Action Yesterday
The European Commission has moved to refer Ireland to the European Court of Justice for failing to recover up to €13B of illegal state aid from Apple (NASDAQ:AAPL). In a parallel case, Europe's competition chief said Luxembourg must collect around €250M of back taxes from Amazon (NASDAQ:AMZN), adding to a growing list of scalps for Margrethe Vestager in her crackdown on tax loopholes. The Commission is also looking into the tax deal between the country and McDonald's (NYSE:MCD).
Investors are getting ready for another dose of Janet Yellen. She will speak at the Community Banking in the 21st Century Conference this afternoon amid growing speculation concerning her position as Fed Chair. Fed Governor Jerome Powell and ex-board member Kevin Warsh were both interviewed at the White House last week to replace her in February. The events come as the three major U.S. stock indexes and Russell 2000 posted record high closes for the second straight day.
"I hate to tell you, Puerto Rico, but you threw our budget a little out of whack. But that's fine," President Trump said during a visit to San Juan, assessing the recovery efforts following Hurricane Maria. Later in the day, he discussed the island's economy with Fox News. "They owe a lot of money to your friends on Wall Street and we're going to have to wipe that out. You're going to say goodbye to that."
India's central bank held interest rates overnight at a seven-year low of 6%, in a decision that's likely to disappoint the government, which had sought a cut to help boost flagging growth. India was the fastest expanding major economy in the world last year, but since then Prime Minister Modi has rolled out two large economic reforms: GST and a note ban. GDP growth fell to 5.7% in Q1 from 7.1% a year earlier.
Catalan leader Carles Puigdemont has said that the region will declare independence within a "matter of days." The latest comments throw down the gauntlet to Spain to do what it can to prevent one of the worst constitutional crises in the country's recent history. Spain's King Felipe, who is normally silent on politics, has also gotten involved, showing how serious the matter has become.
Stepping up its retaliation for an independence vote, Iraq will stop selling dollars to leading banks in Kurdistan and has banned foreign currency transfers to the autonomous area. The financial sanctions follow a ban on direct international air travel to the region. While it strengthened its alliance with Iraq's Kurds during the war with ISIS, the U.S. is taking the side of Baghdad.
Argentina's benchmark stock index rose for a 13th straight session on Tuesday, the longest streak in its history, as polls showed the market-friendly Macri government is likely to win in October's legislative elections. It's been a banner year for emerging market stocks in South America. The Merval has climbed 58% so far this year, compared with 31% for Chile's IPSA and 27% for Brazil's Bovespa.
The U.S. Senate Commerce Committee plans to hold a hearing later this month over the 2013 massive data breach at Yahoo (NYSE:VZ) after the firm bumped up its estimate for users affected to 3B from 1B. Senator John Thune said he will ask witnesses whether "new information has revealed steps they should have taken earlier, and whether there is potentially more bad news to come."
Roku's post-IPO honeymoon appears to be over. Shares of the video streaming company fell 12% yesterday to $20.81, after dropping more than 11% on Monday, meaning the stock has lost 30% of its value since reaching a high of $29.80 on Friday. Investors celebrated the IPO last week, lifting ROKUshares up 67% in their debut after the $252M offering.
Bob Iger is trying to give up his Mickey Mouse ears again, outlining plans to leave Disney (NYSE:DIS) in mid-2019. "This time I mean it," he joked at Vanity Fair's New Establishment Summit. Asked about whether Disney considered buying Twitter (NYSE:TWTR), he confirmed that they did, but ultimately decided not to do it and acquired majority control of BAMTech instead.
Amazon has acquired Body Labs, a start-up that specializes in 3D body scanning and modeling, for an estimated value of between $50M-$70M, according to TechCrunch. The acquisition is another sign of Amazon's (AMZN) growing ambition in the fashion space. It launched nine new fashion brands in 2017, released the Echo Look and a new service called Amazon Prime Wardrobe.
With one week left until shareholders vote whether to add activist investor Nelson Peltz to Procter & Gamble's (NYSE:PG) board, the company sought to assure shareholders it was already on the right path. "To have him come in and say, 'Because I've taken a position in your company, this is my business model,' we don't think that ought to be the right criteria," CEO David Taylor told investors in a webcast.
Uber will accept an investment from Japan's SoftBank (OTCPK:SFTBY), joining a growing portfolio of U.S. technology deals made by intrepid mogul Masayoshi Son. The investment will be between $1B-$1.25B at the company's last reported valuation of $69B. UBER's board has also agreed to governance changes that limit the influence of former CEO Travis Kalanick and an IPO deadline in 2019.
Ford has outlined a dramatic plan to evolve, including accelerating the introduction of connected cars and smart vehicles. New CEO Jim Hackett also plans to slash $14B in costs over the next five years, as well as leveraging Ford (NYSE:F) partnerships. Meanwhile, General Motors (NYSE:GM) plans to combine all of its operations outside of North America and China into one entity, and is making "rapid progress" on developing fully autonomous driving capabilities.
Less than 18% of the $67.9T world stock market cap is owned by index-tracking investors, according to a new estimate from BlackRock (NYSE:BLK), as it suggested that passive investing plays less of a role than assumed in setting equity prices. Stocks in actively managed hedge funds, mutual funds and institutional accounts total about 25% of the global equity market cap, while the remaining 57% are assets held by governments, pension funds, insurers or corporations.
Solar power was the fastest-growing source of new energy worldwide last year, outstripping growth in all other forms of power generation for the first time. "What we are witnessing is the birth of a new era in solar PV," said Fatih Birol, executive director of the IEA, outlining that new solar photovoltaic capacity increased by 50% in 2016. Related tickers: ASYS, AXTI, CSIQ, CSUN, CVV, DQ, EMKR, ENPH, FSLR, GEX, GLBL, HQCL, JASO, JKS, RGSE, RUN, NRG, SEDG, SOL, SKYS, SPWR, TAN, TERP, TSL, TSLA, VSLR, YGE
In Asia, Japan +0.1%. Hong Kong +0.7%. China closed. India +0.6%.
In Europe, at midday, London -0.1%. Paris -0.4%. Frankfurt -0.1%.
Futures at 6:20, Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude -0.4% to $50.22. Gold +0.5% to $1281.20.
Ten-year Treasury Yield -2 bps to 2.31%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
10:30 EIA Petroleum Inventories
3:00 PM Fed's Bullard speech
3:15 PM Janet Yellen speech