Thursday, March 19, 2015

Wall Street Breakfast: Investors Digest Fed's 'Patient-less' Statement


Economy
Global shares edged up today after the Fed dropped its "patient" philosophy toward raising rates, but downgraded its views on the economy, inflation and lowered its interest rate trajectory. The statement would put a June increase on the table, but the dovish tone suggested the first hike wouldn't come until at least September or October. In the wake of the Fed's cautious words, the dollar clawed back much of the ground it lost on Wednesday, after posting its biggest daily fall in 18 months. U.S. Dollar Index+1.8% to 99.08.
Things are getting rocky for Greece before EU leaders attend a two-day summit discussing Europe's energy security and the Ukraine crisis. After refusing to update its creditors on the reform progress it made since it agreed on a bailout extension in February, Greece angered its eurozone partners again yesterday by passing a "unilateral" poverty law without consultation. While Greece is not officially on the summit's agenda, Greek PM Alexis Tsipras has insisted on waiting to speak directly to Angela Merkel and others about it in Brussels.
Brazilian President Dilma Rousseff has launched an anti-corruption offensive to counter rising discontent over the kickback scandal that took place at Petrobras (NYSE:PBR) during the years she was chairwoman of the state-run oil company. Her proposals include the criminalization of campaign slush funds, seizure of assets from government officials convicted of corruption and implementing an anti-bribery law passed more than a year ago. On Sunday, over 1 million people took to Brazil's streets in anti-government protests.
Stocks
Bank of America must allow shareholders to vote on a proposal that calls for the company to consider spinning off its investment banking business, following a ruling from U.S. regulators stating it couldn't exclude the proposal from its corporate ballot. The March 17 decision by the SEC will put the proposal on the bank's proxy statement, allowing shareholders to vote on it at BofA's (NYSE:BAC) annual meeting.
Citigroup says it will not appeal Judge Thomas Griesa's ruling which barred it from processing Argentine bond payments if he helps it exit its custody business in the country. The move sets up a showdown with Argentina which earlier declared it would not allow the bank to walk away from the business. Separately, Citi (NYSE:C) cut chief executive Michael Corbat's annual compensation by 10.3% to $13M in 2014, citing high legal expenses and the bank's failure to win regulatory approval for its capital plan last year.


Tesla is up and running again in New Jersey after Governor Chris Christie signed a bill to allow the company to sell directly to consumers. The step comes after fighting efforts in nearly every state to halt its direct sales method, which doesn’t use independent dealers. Tesla (NASDAQ:TSLA) will also present a software update to its Model S vehicle at a news conference today set for 9 a.m.
Loss-making electronics firm Sharp plans to cut over 10% of its workforce, around 6,000 jobs, in a global restructuring that will cost over ¥200B ($1.7B), Reuters reports. The job cuts will include around 3,000 in Japan through early retirement and 3,000 overseas. Sharp (OTCPK:SHCAY) expects to post its third annual net loss in four years for its fiscal year ending in March and has been in talks with lenders regarding another major bailout, its second since 2012.
Starbucks declared a 2-for-1 stock split set for April 9 at its Annual Meeting yesterday, saying it sees enough growth on the horizon to help push the company to a $100B market capitalization. Other notable announcements: a new delivery service, an expansion of its Mobile Order & Pay program and plans to have 3,400 stores open in China within five years. SBUX +0.4%premarket.
Sony has launched its PlayStation Vue streaming video service in three cities, with a starting price of $50/month, after testing the service since November. The lineup features content from three of the big four (CBS (NYSE:CBS), Fox (NASDAQ:FOXA), NBC (NASDAQ:CMCSA)), but popular content from Disney (NYSE:DIS) - ABC, ESPN and Disney cable - is still a glaring omission. Sony's (NYSE:SNE) price is raising eyebrows, as it's competing with Sling TV's (NASDAQ:DISH) $20/month price point.
Feeling pressure from Shopify and Bigcommerce, Amazon (NASDAQ:AMZN) is shuttering its Webstore business, Re/code reports, giving its Webstore customers more than a year to find a new vendor before it kills off the service. The e-commerce business helps small and midsize retailers gain a competitive edge and create and run their own online shops.
Yahoo is "withdrawing its remaining operations in China, laying off 200-300 employees and shutting down its Beijing research center," WSJ reports. A layoff of 250 employees would equal 2% of Yahoo's (NASDAQ:YHOO) global workforce and follows the 700-900 layoffs the company announced since October. The move also comes as activist Starboard Value urged Yahoo to cut costs by as much as $500M a year and pushed for larger buybacks and a AOL (NYSE:AOL) merger.
Canada's National Energy Board is reportedly investigating up to a dozen new allegations of gas pipeline safety code violations at TransCanada (NYSE:TRP), marking the second time in recent years the regulator has investigated safety practices at the company. Documents reviewed by Reuters show the allegations include faulty or delayed repairs, sloppy welding work and a failure to report key issues to the regulator.
Transocean expects to book an after-tax charge of between $300M-$325M as it moves to dispose of four rigs. According to Baker Hughes, U.S. oil-rig count fell to 866 last week, the 14th straight week of declines, as plunging oil prices wreak havoc on the industry. Transocean (NYSE:RIG) also logged a $992M charge to correct the value of its contract drilling business in February, and saw the departure of CEO Steven Newman. RIG -3.2%premarket.
Allianz has struck a deal with Goldman Sachs (NYSE:GS) to help it hedge part of its stake in China Pacific Insurance Group (OTCPK:CHPXY) and lock in profits from two rounds of investments that it made in China's third-largest insurer. Under the deal, Allianz (OTCQX:AZSEY) agreed to a future sale of 147.7M Hong Kong-traded shares of CPIC at HK$36.77 each to Goldman in a $700M transaction. That price is equivalent to a 4.2% discount to CPIC's closing price on Wednesday.
Target has agreed to pay a $10M settlement related to its 2013 data breach, which compromised the personal information of as many as 110M people. Under the proposal, Target (NYSE:TGT) would pay individual victims up to $10,000 in damages and implement additional data security measures, such as appointing a chief information security officer and maintaining a written information security program. The retailer also raised the minimum wage for all of its workers to $9 an hour yesterday, matching moves made by rivals Wal-Mart (NYSE:WMT), GAP (NYSE:GPS) and T.J. Maxx (NYSE:TJX).

Today's Markets:
In Asia, Japan -0.4% to 19477. Hong Kong +1.5% to 24469. China +0.2% to 3582. India -0.5% to 28470.
In Europe, at midday, London +0.2%. Paris +0.1%. Frankfurt +0.1%.
Futures at 6:20: Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude -2.3% to $45.56. Gold +1.3% to $1165.80.
Ten-year Treasury Yield -11 bps to 1.95%
Notable earnings before today's open: CRCM, LEN, TECD, TNP
Notable earnings after today's close: CTRP, GMAN, MFRM, NKE, NWY,RALY, YOKU
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