Wednesday, April 29, 2015

Wall Street Breakfast: Investors Await FOMC Statement, GDP Data


Economy
Investors will again be looking for subtle clues today for the timing of a future interest rate hike as the Federal Reserve's policy-setting committee wraps up its third meeting of the year. The chance of a hike in June is still on the table, although the likelihood of one has steadily decreased amid a drum-beat of soft Q1 economic data. The U.S. Commerce Department is also scheduled to issue its first snapshot of first-quarter GDP this morning. Economists are forecasting growth at a seasonally adjusted annual rate of 1%, which would be the worst performance in a year.
Stocks fell in Europe, following Asia lower, while the dollar held near two-month lows before the much-anticipated policy decison. "While steady language by the FOMC may not by itself change the mind of the rates market, we believe incoming data will, prompting a front-end sell-off in Treasuries and a rebound in the USD," BNP Paribas said. The bank expects Q1 weakness to be downplayed in today's announcement.
After months of urging allies not to join the AIIB as founding members, the Obama administration now says the new bank could be a good development, but cautioned against its lack of transparency. "This could be a positive thing," President Obama declared at a White House press conference with Japanese Prime Minister Shinzo Abe. "But if it’s not run well, then it could be a negative thing." Despite China receiving 47 member applications, the U.S. and Japan remain the only two major economies that have not asked to join the bank.
Greece is expected to present draft reform legislation to lenders today, government officials said, in a bid to show it is serious about securing its much-needed aid prior to a €1B loan repayment to the IMF next month. Although the bill is not expected to offer major new concessions, it will include details on measures to tackle corruption, evasion and tax and public administration reforms.
Stocks
It looks like Dick Costolo's credibility is again on the line after Twitter missed analysts' first-quarter revenue estimates and cut its 2015 sales forecast. While this isn't the first time the micromessaging company has fallen short on promised results, investors keep being told that new features and services are starting to pay off. Meanwhile, the company's user growth slowed to 18% Y/Y from 21% in the fourth quarter. Twitter (NYSE:TWTR), whose earnings were leaked before yesterday's closing bell, saw its shares fall over 18% before the market closed.
Reporting its sixth consecutive quarterly decline, Samsung's (OTC:SSNLF) net profit slumped 39% to 4.63T Korean won ($4.3B) during the January-March period, as cut-throat competition hit its mobile division. Mobile operating profit margins, however, saw a rise, climbing to 10.6% from 7.5% last quarter due to lower marketing costs and better sales of midrange handsets. Despite the lousy results, Samsung said it expected an earnings improvement in Q2, citing the recent launch of the new Galaxy S6.
Intel is reorganizing its operations responsible for helping move the company into new products, establishing what it calls the new technology group, which will combine a number of R&D efforts into a single organization. The change will shift around a number of key Intel (NASDAQ:INTC) executives, including Mike Bell, who formerly carried out those operations in the company's new devices group and led the chip maker's push into wearable devices.
Wal-Mart is planning to increase its investment in China, aiming to open 115 stores before 2017 and upgrade more than 50 this year. Wal-Mart (NYSE:WMT) has a mixed history in the country with the preference of consumers for local tastes making national distribution a challenge.


U.S. first-quarter earnings are on track to post a slight gain following many stronger-than-expected results. With reports in from 47% of S&P 500 companies as of Tuesday, Q1 earnings are now expected to have risen 0.02% from a year ago, beating a Thomson Reuters forecast for a 2.9% decline. Still, the raised outlook has been mainly attributed to one company - Apple (NASDAQ:AAPL). Without the tech giant, the S&P 500 forecast would show a profit decline of 1.6%.
"Corporate activity in early 2015 supports our view that the S&P 500 will return more than $1T of cash to investors this year," Goldman Sachs said, forecasting an 18% jump in buybacks and 7% climb in dividends for the year. Next week more than 80% of S&P 500 companies will exit a blackout period for repurchases, which could fuel an extended rally, or at least continue to keep a floor under equities.
GoPro +10% premarket after beating both profit and revenue estimates on strong demand for its flagship Hero4 action cameras and giving a strong Q2 forecast. Net profit increased 52% to $16.6M, while revenue jumped up 54% to $363.1M. GoPro (NASDAQ:GPRO) also announced its intentions to focus its international expansion on Japan, Korea and China.
Despite a power struggle at the automaker, Volkswagen's (OTCQX:VLKAY) operating profit jumped 17% to €3.3B ($3.6B) in the first quarter, beating analysts' predictions. "The key focus for the entire workforce is on ensuring that 2015 will be another successful year," CEO Martin Winterkorn said in the statement. The German group also came close to shutting a gap with rival Toyota (NYSE:TM) for worldwide deliveries. Volkswagen's Q1 sales rose 1.8% to 2.49M vehicles, compared to the 2.52M of its Japanese competitor.
Stratasys has issued a warning of lower-than-expected first-quarter results, citing reduced spending in North America and the stronger dollar. "Our industry still remains in the early phases of adoption, and our belief in the long-term opportunity remains unchanged," said Chief Executive David Reis. Stratasys (NASDAQ:SSYS) now expects Q1 revenue of $171M-$173M and EPS of $0.02-$0.04, well below a consensus of $198.8M and $0.29. SSYS -16.6%premarket.
Barclays has set aside another £800M ($1.2B) to cover a potential settlement for alleged foreign exchange manipulation, bringing its total provision for resolving the scandal to £2.05B. Barclays (NYSE:BCS) also reported a first-quarter statutory pretax profit of £1.3B (-26% Y/Y), and underlying pretax profit (which strips out the provision) of £1.85B (+9% Y/Y).

Today's Markets:
In Asia, Japan closed. Hong Kong -0.2% to 28400. China flat at 4477. India-0.6% to 27226.
In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt -0.2%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.2%. Crude -0.6% to $56.71. Gold -0.7% to $1205.60.
Ten-year Treasury Yield +5 bps to 1.97
Notable earnings before today's open: ABB, ACCO, ADT, AME, AMED,ANTM, AVY, BC, BEN, BGCP, BOKF, CBG, CCJ, CFR, CRI, CVE, DHX, DX, DXYN,EDR, ETN, EVER, EXC, FCAU, FCH, FDML, FI, FUN, GD, GEL, GIB, GRMN,GRUB, GT, HCBK, HERO, HES, HLT, HOT, HUM, ICON, IDCC, IP, ISSI, LFUS,LINE, LL, LVLT, MA, MDLZ, MTOR, MWV, NEE, NOC, NSC, NYCB, OCR, PCG,PX, Q, RES, ROL, SAIA, SAVE, SLAB, SLGN, SNCR, SO, SPIL, SPR, SPW, TRI,TWX, UMC, VRX, WEX, WM, WOOF
Notable earnings after today's close: AEL, AFFX, AR, ARII, ARRS, ASGN,ASH, ATRC, ATW, AVG, AXS, BIDU, BLKB, BVN, CACI, CAVM, CBT, CHMT,CMO, CMPR, CNO, CNW, COHR, CRL, CSGP, CSII, CW, CWT, DOX, DRE, DXCM,DYAX, ECOL, ELGX, EQIX, EQY, ES, ESV, EXL, EXR, FLEX, FOE, FORM, FORR,GLUU, HOLX, HOS, HY, IPCM, ISIL, KAMN, KEG, KEX, KRA, LNC, LOCK, LOPE,LXRX, MAA, MAC, MANT, MAR, MDAS, MEOH, MEP, MMLP, MTGE, MTW, MUR,NE, NSR, NXPI, O, OGS, OIS, PDM, PPC, PRXL, PTC, QEP, QUIK, RKT, ROG,RRTS, SAM, SCI, SFLY, SGI, SPOK, SPRT, SSS, STAA, STR, SU, TAL, TCO,TEX, TILE, TTEK, TTMI, TX, UNM, VAR, VRTX, WLL, WMB, WMGI, WTS, XL,YELP
Source: http://seekingalpha.com/article/3114666-wall-street-breakfast-investors-await-fomc-statement-gdp-data
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