Economy
S&P index futures are -0.8% as of 6:00 AM ET, paring a 1% drop after Friday's non-farm payroll data which trailed even the most pessimistic forecast. Stock exchanges will reopen this morning after being closed for Good Friday. Gold futures are +1.5% to $1,218 and crude is up 2.7% to $50.47.
Friday's March jobs report was a wake-up call about the surging dollar. The economy added 126K nonfarm payroll jobs in March, the slowest monthly increase since December 2013 (109K). The slowdown was broad-based: goods-producing jobs declined by 13K, and construction and manufacturing declined by 1K. Temporary help services rose by 11K (vs. -8K in Feb.), potentially a sign of weaker labor demand as employers shun permanent hires. The report will exacerbate concerns that the factory and energy sectors are weighing on the economy, giving the Fed cause to be more patient in initiating rate hikes. If recent weakness continues, the September liftoff date may start to be called into question.
Developing economies are suffering their biggest capital outflows since the financial crisis, with the 15 largest emerging economies seeing their biggest capital outflow since the crisis during the second half of 2014. These trends, analysts say, may signal a “great unravelling” of an emerging markets debt binge that has swollen to unprecedented dimensions. The pain inflicted by this capital flight is being felt in the real-life economies of vulnerable countries and in a surging number of emerging market corporations that are forecast to default on their debts.
Hedge funds increased bullish oil bets by the most in four years as negotiators worked to reach a deal over Iran’s nuclear program. Speculators boosted their net-long position in crude by 21% during the seven days ended March 31, CFTC data show, the biggest percentage increase since March 2011. Short positions declined by the most in three months.
Stocks
Hoping to solve expensive roaming charges, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) is in talks with Hutchison Whampoa (OTCPK:HUWHY,OTCPK:HUWHF) for a deal that would allow Americans to use their phones abroad at no extra cost. Hutchison could give Google access to mobile service in the UK, Ireland, Italy, and several more markets. Google's goal, sources say, is to create a global network with the same cost for calls, texts, and data no matter where a customer is located. Hutchison would be a natural partner for Google, because it has also sought to eliminate roaming charges for its customers. Google has so far described its mobile network aspirations as "small scale." A serious move by Google or Apple (NASDAQ:AAPL) to enter the mobile market would be feared by U.S. giants AT&T (NYSE:T), Verizon (NYSE:VZ), Sprint (NYSE:S) and others.
Chinese online game developer Shanda Games (NASDAQ:GAME) has agreed to be taken private by Capitalhold in a deal worth $1.9B. Capitalhold will pay $3.55 per ordinary share and $7.10 per ADS for Shanda, a premium of 46.5% to Shanda's 30-day average price. The deal brings to an end a year-long saga during which Shanda Games was courted by its parent, Shanda Interactive, backed by Carlyle Group (NASDAQ:CG) and Fountainvest Partners.
U.S. federal law enforcement agencies questioned about 10 Herbalife (NYSE:HLF) members last week for information about their business practices. HLF said it is cooperating with requests for information, and "remains confident in the integrity of our business practices." Separately, Herbalife also received inquiries recently about irregular trading in its stock as part of a broader investigation into possible market manipulation. HLF says the investigation is focused on Bill Ackman's "nearly three-year effort to drive down HLF's stock." Also Sunday, Bill Stiritz, HLF's fifth-largest shareholder (8.2%), said he has no plans to sell his stake - deflating speculation after an April 3 SEC filing disclosed a change in his investor status from active to passive. Stiritz believes Herbalife shares and sales will rebound once the FTC investigation ends. HLF was inactive as of 6:00 AM.
A teardown of the new Samsung Galaxy S6 smartphone didn't turn up a single Qualcomm (NASDAQ:QCOM) part, suggesting a deeper loss of business for the U.S. chipmaker than previously anticipated. However, the WSJ says Qualcomm will remain the S6's modem supplier for "a meaningful share" of units, noting that Samsung (OTC:SSNLF) may be forced to use different modems depending on the carrier.
Magnum Hunter Resources disclosed Friday it had received a Wells Notice from the SEC stating that regulators had made a preliminary decision to recommend an enforcement case. Magnum Hunter (NYSE:MHR) says it believes the pending enforcement case relates to internal controls during periods before it filed its annual report for 2012, which identified material weaknesses; MHR says it had remediated all of the weaknesses by the end of 2014.
In response to new Chinese government mandates, 500.com (NYSE:WBAI) plans to voluntarily and temporarily suspend all online lottery sales services. The company doesn't expect to generate any revenue during the suspension period. It "will continue to work with China Sports Lottery Administration Center for the development of the pilot program for online sales of sports lottery." 500.com's beaten-down shares soared on Thursday on reports lottery suspensions will soon be lifted. SA Instablog author MNS Global dismissed the reports prior to 500.com's announcement.
Merrill Lynch is shaking up the ranks of its 14,000 brokers with an apparent zero-tolerance approach to brokers who break key company rules. Case in point: A top Indiana adviser with $1.3B in AUM was terminated in March without advance warning. In the past, brokerages have tended to give second chances to top producers. The tougher approach is seen largely as a response to closer regulatory scrutiny of brokerages. Securities lawyers agree this attitude is taking hold in the industry. They say even small violations, such as poor record keeping or email retention, are drawing stricter penalties.
Russian billionaire Mikhail Fridman and his partners are creating a $16B fund to invest in tech and telecom companies in the U.S. and Europe. LetterOne Technology plans to buy struggling telecom companies that require fresh capital, or technology companies that make apps or streaming services that could be used by its global mobile operations. The fund will also act as a holding company for the group's 48% stake in VimpelCom (NASDAQ:VIP) and 13% stake in Turkcell (NYSE:TKC).
Today's Markets:
In Asia, Japan -0.2%, Hong Kong +0.8%, China +1%.
In Europe at midday, London +0.35%, Paris +0.2%, Frankfurt -0.3%.
U.S. futures at 6:20: S&P -0.75%, Dow -0.8%, Nasdaq -0.8%, Crude +3.1%, Gold +1.4%.
In Asia, Japan -0.2%, Hong Kong +0.8%, China +1%.
In Europe at midday, London +0.35%, Paris +0.2%, Frankfurt -0.3%.
U.S. futures at 6:20: S&P -0.75%, Dow -0.8%, Nasdaq -0.8%, Crude +3.1%, Gold +1.4%.
Monday's economic calendar:
8:30 Gallup US Consumer Spending Measure
9:45 PMI Services Index
10:00 Labor market condition index
10:00 ISM Non-Manufacturing Index
12:30 PM TD Ameritrade IMX
8:30 Gallup US Consumer Spending Measure
9:45 PMI Services Index
10:00 Labor market condition index
10:00 ISM Non-Manufacturing Index
12:30 PM TD Ameritrade IMX
Notable earnings after Monday’s close: SHLM
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