Thursday, February 18, 2016

Wall Street Breakfast: Futures Point To Fourth Day Of Gains

 Includes: AAPL, ABX, AMZN, AXP, BA, BABA, CF, COST, DVN, FB, GD



U.S. futures are marching higher after Wall Street logged its first three-day rally of 2016. Some stronger-than-expected industrial production data reassured investors about the strength of the U.S. economy, while crude prices soared after Iran endorsed an oil output cap (see below). The Fed's January meeting minutes also reflected a dovish tone, boosting equities sentiment on a likely delay to upcoming rate hikes.
Economy
It would be "unwise" for the U.S. Federal Reserve to continue raising interest rates given declining inflation expectations and recent equity market volatility, St. Louis Fed President James Bullard said Wednesday evening in a speech on monetary policy. A big U-turn? Bullard, who is a voting member of the Fed's rate-setting committee this year, argued for much of 2015 for an earlier hike, but said he now feels key assumptions supporting higher rates have been undermined.
Japan's annual exports in January fell the most since the global financial crisis as demand weakened in China and other major markets. Ministry of Finance data showed exports dropped 12.9% Y/Y, with the fourth straight month of declines led by a slump in shipments of steel and oil products. Imports declined 18%, leaving a ¥645.9B ($5.7B) trade deficit. The latest data adds to growing concerns that Japanese authorities are left with few options to revive a stumbling economy.
High stakes talks to keep Britain in the European Union will take place over the next 36 hours, as Prime Minister David Cameron heads to Brussels to hammer out a deal he can sell to British voters. He has called for reform in four areas: measures to curb migration, safeguards to protect London's financial district, Britain to be excluded from an "ever closer union" and for greater competition in the bloc. Most officials expect a referendum to be held in late June.
Turkey's leaders vowed to retaliate after a bomb targeted a military bus in the capital killing at least 28 people and wounding 61, raising the risk that the country will step up its intervention in Syria. Turkish Prime Minister Ahmet Davutoglu said a Kurdish militant from Syria carried out the bombing, vowing to expand the country's war on terror and warning Western allies against collaborating with its sworn enemies.
Oil is holding onto the strong gains it recorded yesterday after Iranian Oil Minister Bijan Zanganeh said he would support a production "ceiling" to stabilize oil prices, but did not commit to participating in the deal. It was an unexpected move from the country, which had already voiced resistance before the talks in Tehran began, with Iran's OPEC envoy calling plans to freeze output "illogical." If an agreement is reached, it could become the first joint OPEC and non-OPEC deal in 15 years, as oil producers seek to boost persistently low prices. Crude futures +2.6% to $31.46/bbl.
Despite the recent gains, Standard & Poor's has downgraded the credit ratings of several Middle East nations, in its second mass cut of large oil producers in almost exactly a year. Citing pressures from the drop in crude prices, the ratings agency lowered Saudi Arabia by two notches to A- stable, and stripped Bahrain of its investment grade status. S&P also cut the ratings of Bahrain and Oman to reflect lower oil price assumptions.
Cash-strapped Venezuela has finally taken action to address its ailing economy, raising the price of the world's cheapest gasoline and devaluing its currency by 37%. President Nicolas Maduro said the government would also "simplify" the country's complex three-tier exchange rate system to just two rates: a protected official rate for food/medicine imports and a parallel "floating" rate for other transactions. The measures are meant to help shore up the OPEC nation's finances as it battles a severe recession, triple-digit inflation and chronic product shortages.
President Obama is planning a trip to Cuba next month, marking the first time in more than 80 years a sitting U.S. president will visit the country. The journey to Havana would cap what administration officials see as one of Obama's legacy foreign policy achievements: normalizing relations with Cuba and taking steps toward expanded commercial relations after a 54-year freeze.
Stocks
Starboard Value is taking initial steps toward a potential proxy fight with Yahoo (NASDAQ:YHOO), indicating that the activist investor is not satisfied with the firm's efforts to streamline its business, Bloomberg reports. In January, Starboard took aim at Chief Executive Marissa Mayer and her leadership team, asking them to separate the company's Asian assets (Alibaba (NYSE:BABA) and Yahoo Japan (OTCPK:YAHOY) stakes) and sell its core business. The news comes after Yahoo disclosed 300 job cuts, as part of 1,500 layoffs announced earlier, and plans to shutter seven of its digital magazines.
Marriott and Starwood have set shareholder meetings to approve the transactions related to Marriott's (NASDAQ:MAR) $12.2B buyout bid. The two companies will meet separately on March 28 at 10 a.m. ET to consider the deal that will create the world's largest hotel business. A number of approvals (and Starwood's (NYSE:HOT) divestiture of its vacation ownership unit) lie ahead for the transaction, which they expect to close in mid-2016.


Amazon is quietly inviting drivers for its new "on-demand" delivery service, in the latest sign that the world's largest e-commerce company wants to control more of its own deliveries. The company outlined the plan over the last few weeks to contractors who transport parcels for Amazon Flex, a program which allows local drivers to pick up packages at small warehouses and deliver them to customers' doors. If the gambit works, industry analysts said it could help Amazon (NASDAQ:AMZN) contain its shipping costs, which grew more than 18% to $11.5B last year.
While public opinion may be divided on whether Apple (NASDAQ:AAPL) should unlock one of the San Bernardino shooter's iPhone, Tech CEOs have come out in support of CEO Tim Cook's strong stance against the FBI. In an open letter Wednesday, Cook wrote, "the government's demands are chilling… We are challenging the FBI's demands with the deepest respect for American democracy and a love of our country." Google (GOOG, GOOGL) boss Sundar Pichai as well as Jan Koum, CEO of messaging service Whatsapp (NASDAQ:FB), are among those who have backed Apple's decision.
Shares of Devon Energy slid almost 10% in extended-hours trading after the company said it would offer 55M shares through Goldman Sachs (NYSE:GS). Proceeds from Devon's (NYSE:DVN) offering will be put toward "general corporate purposes" such as bolstering its liquidity position, reducing indebtedness and funding its capital program.
Boeing won't face labor strife later this year after engineers and technical workers approved a six-year contract extension that brings better salary, vacation, layoff and retirement benefits. The contract takes effect immediately and extends to October 2022. Boeing (NYSE:BA) was also the Dow's top gainer yesterday after CEO Dennis Muilenburg reaffirmed the company's outlook for strong growth and cash flow over the next five years, and defended accounting practices for the 787 Dreamliner.
Encountering tremendous pressure on multiple fronts, Takata is considering trimming its global air bag operations, including consolidating production plants in Europe and shedding overseas jobs, Kyodo News reports. The move would be part of a restructuring plan by the Japanese firm which is struggling with a global recall of potentially faulty airbag inflators. Takata (OTCPK:TKTDY) shares ended up 7% in Tokyo on the news.
Toyota is calling back almost 3M vehicles due to the possibility that their seatbelts could be damaged by a metal seat frame part in the event of a crash. The global recall involves its 2005-14 RAV4 SUV sold worldwide, and its 2005-16 Vanguard SUV sold in Japan. Toyota (NYSE:TM) is also one of 14 manufacturers recalling 24M cars to replace inflators to prevent Takata (OTCPK:TKTDY) air bags from exploding; older RAV4 models are included in that recall.
"We find Manny Pacquiao's comments abhorrent," Nike (NYSE:NKE) said in a statement before severing ties with the boxing star due to derogatory remarks he made about same-sex relationships. "Nike strongly opposes discrimination of any kind and has a long history of supporting and standing up for the rights of the LGBT community." Pacquiao, who has endorsed the company for a little more than eight years, apologized after his remarks, but stood by his opposition to same-sex marriage.
American Express is overhauling its management, streamlining its marketing operations and slashing jobs as it looks to reduce $1B in costs over the next two years. "To get ahead of the changes that are altering the dynamics of the payments business, we need to readjust our expense base," American Express (NYSE:AXP) CEO Ken Chenault declared. The company is facing stiff competition in the co-branding business and has lost lucrative long-term contracts from Costco (NASDAQ:COST) and Fidelity Investments.
Nestle saw global sales growth decelerate in 2015 as a pick-up in the U.S. failed to offset weakness across Asia, especially in India where its Maggi noodles were hit by a health scare. The company reported organic sales growth of 4.2% - the bottom end of the "about 4.5%" range it forecast in October - marking the third successive year the group has failed to achieve its target of 5-6% annual growth. Nestle (OTCPK:NSRGY) Chief Executive Paul Bulcke described 2015 as a "challenging environment," a situation he expected to continue this year.
Chinese conglomerate Tianjin Tianhai is acquiring electronics distributor Ingram Micro (NYSE:IM) for $6B, or $38.90/share in cash (representing a 31% premium to the latter's close on Wednesday). Once the transaction is finalized, Ingram Micro will operate as a subsidiary of Tianjin Tianhai but will maintain its headquarters in California. The deal, which will also see Ingram suspend its dividend and buyback program, is expected to close in the second half of 2016.
Wednesday's Key Earnings
Barrick Gold (NYSE:ABX) -2.4% AH despite a smaller quarterly loss.
CF Industries (NYSE:CF) -4.5% AH as fertilizer prices weakened.
GoDaddy (NYSE:GDDY) -5.2% AH after a strong dollar weighed on results.
Marriott (MAR) -2.5% AH as revenue fell short of estimates.
NetApp (NASDAQ:NTAP) +1.8% AH after disclosing major workforce cuts.
Newmont Mining (NYSE:NEM)-2.9% AH on weaker than expected earnings.
Noble Energy (NYSE:NBL) +6.2% after posting an unexepected profit.
Nvidia (NASDAQ:NVDA) +7.2% AH on higher chip demand, strong guidance.
Priceline (NASDAQ:PCLN) +11.2% following an increase in hotel bookings.
T-Mobile (NASDAQ:TMUS) +1.1% after tripling profits.
Today's Markets 
In Asia, Japan +2.3% to 16197. Hong Kong +2.3% to 19363. China -0.2% to 2862. India +1.1% to 23649.
In Europe, at midday, London -0.2%. Paris +1%. Frankfurt +1.7%.
Futures at 6:20, Dow +0.5%. S&P +0.5%. Nasdaq +0.6%. Crude +2.6% to $31.46. Gold -0.6% to $1204.
Ten-year Treasury Yield flat at 1.81%
Today's Economic Calendar
Companies reporting earnings today

Source: http://seekingalpha.com/article/3905866-wall-street-breakfast-futures-point-fourth-day-gains
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)