Make Millions Trading Stocks: Wall Street Breakfast: Markets Prepare For Q2 GDP Report

Thursday, July 30, 2015

Wall Street Breakfast: Markets Prepare For Q2 GDP Report

134 comments | Includes: BA, FB, FCAU, GOOG, GOOGL, HLF, MA, MO, QQQ, RDS.A, RD

Economy
U.S. economic growth likely rebounded in the second quarter as healthy consumer spending and residential investment offset the drag from trade and the energy sector. Experts estimate that after a contraction in the first three months of the year, the economy grew at an annual rate of 2.9% last quarter. The Commerce Department will publish the initial GDP figure at 8:30 a.m. ET.

The decision to keep rates near zero for at least a few more weeks was unanimous in the FOMC's statement yesterday. Policymakers continued to see an improving economy and labor situation, but questions remain as to when the first rate hike will occur. Will it finally happen at a September meeting, later this year or in 2016?

Just moments after Saudi Arabia announced plans to cut oil production, U.S. House Speaker John Boehner expressed his support for repealing the 40-year-old ban on domestic crude exports. "Until recently our nation's energy policy was rooted in a scarcity mindset that went back to the 1970s," Boehner told reporters. "But now America is experiencing an energy boom and our policy needs to follow suit." The House will start working on wider energy legislation when it returns after the August recess.

Meanwhile, the Export-Import Bank will stay shuttered for the rest of the summer after the House passed a highway funding bill that excluded a measure to save the lender. As a result, several corporations - the latest Boeing (NYSE:BA) - are considering moving work overseas given the federal credit agency's uncertain future. Ex-Im provided $27.4B in financing for U.S. exports in fiscal year 2014.

Stocks
Baidu has announced a new share repurchase program, after its stock price got hammered by investors following weak earnings results on Monday. The buyback will take place over the next 12 months and will be funded from the company's existing cash balance. On the decline: BIDU shares have now lost almost a third of their value since their all-time high last November, and aredown 19.1% over the past week.

Samsung Electronics is warning of "mounting challenges" ahead as the company's once-highflying mobile unit again dragged on its quarterly results. With poor Galaxy S6 sales and a dramatic loss of Chinese market share, operating profit at Samsung's (OTC:SSNLF) mobile division slid 38% to 2.76T won ($2.4B). Overall operating profit dropped 4% to 6.9T won ($5.93B). The company is now looking to "flexibly adjust" the price of the S6, introduce a new premium model with a larger screen and develop a fresh range of mid-to-low end devices.

Google's Project Loon has signed its first national agreement with the government of Sri Lanka, making the island nation a frontrunner in the race to provide countrywide Wi-Fi access from giant helium-filled balloons. Details of Google's (GOOG, GOOGL) memorandum of understanding didn't provide a timetable to when the project would begin, but sources say a launch is "highly unlikely" to happen in 2015.

Looking to gain a better foothold in the mobile messaging market, Yahoo (NASDAQ:YHOO) is launching Livetext, an app that makes video calling almost as private as texting. Users will be able to hold video chats in which text messages/emojis appear on the screen, but no audio is present. The app will be released today for Apple and Android devices.

Shell is bracing for a "prolonged downturn," the company declared, as it reported a sharp fall in Q2 profit and said it would cut 6,500 jobs and full-year capex to $30B. Quarterly profit on a current cost-of-supplies basis dropped to $3.4B from $5.1B a year earlier, meeting analyst expectations. Despite a slump in crude prices, Shell (RDS.A, RDS.B) is still acting boldly . In April it signed a $70B deal to acquire BG Group, and is pressing ahead with expensive plans to drill in the Arctic.

What appears to be a wing component of a Boeing (BA) 777 washed up off the coast of Madagascar on Wednesday, and officials believe it could be debris from Malaysia Airlines Flight 370 that went missing in March 2014. Following that tragedy, and the shooting down of flight MH17 over Ukraine, Malaysia's sovereign wealth fund Khazanah Nasional took the airline private to repair its image and begin a $1.9B company-wide restructuring.

Embattled nutritional products seller Herbalife continues to swat pesky lawsuits away. Yesterday, U.S. District Court Judge Dale Fischer dismissed a suit brought by the Oklahoma Firefighters Pension and Retirement System that accused the company of misrepresenting its sales practices as legitimate. The judge also said that CEO Michael Johnson's selling of 12% of his Herbalife (NYSE:HLF) stake, while "undeniably large," did not raise suspicions.

Tesla Motors is now offering a referral program as an experiment through October 31, under which owners can earn a $1,000 discount by referring a new customer to the automaker. The initiative follows an update by the company on models, battery options, and price adjustments as it prepares to launch its second higher-volume product, the Model X SUV. TSLA -0.4%premarket.

Uber has launched its own auto leasing subsidiary, bringing the fast-growing ride services company into contact with another controversial business. In late 2013, Uber (Pending:UBER) introduced its first leasing program, but partnered with automakers and other financial institutions to lease cars to its drivers. The next iteration of the program, Xchange Leasing, involves cutting out intermediaries and directly leasing to UberX drivers.

Fiat Chrysler Automobiles is in hot water again. The automaker has now been sued by a Canadian law firm for more than $4B in damages, in connection with a massive recall it announced earlier in July. On Sunday, Fiat Chrysler (NYSE:FCAU) got slapped with a record $105M fine for safety recall lapses, and the carmaker is warning that it faces a U.S. product drought through 2016.

After recently passing hedge funds in terms of total assets, ETFs are pressing on with the record setting. In the past 12 months investors traded $18.2T worth of ETF shares, a 17% increase from the 12 months prior and more than triple what it was 10 years ago. For perspective: The amount of dollars exchanging hands through ETFs is now more than the U.S. GDP, which stands at $17.4T.

Wednesday's key earnings
Altria (NYSE:MO) -1.5% despite an increase in market share. (link)
Facebook (NASDAQ:FB) -2.6% AH after costs soared. (link)
MasterCard (NYSE:MA) +1.7% on in-line results. (link)
SolarCity (NASDAQ:SCTY) -1.8% AH after missing profit estimates. (link)
Whole Foods (NASDAQ:WFM) -11.3% AH on disappointing earnings. (link)

Today's Markets:
In Asia, Japan +1.1% to 20523. Hong Kong -0.5% to 24498. China -2.2% to 3706. India +0.5% to 27705.
In Europe, at midday, London +0.7%. Paris +0.8%. Frankfurt +0.7%.
Futures at 6:20: Dow +0.1%. S&P flat. Nasdaq +0.2%. Crude +0.7% to $49.14. Gold -0.7% to $1085.30.
Ten-year Treasury Yield +3 bps to 2.3%