Facebook shares soared over 12% after the bell yesterday, when it easily topped Wall Street's most optimistic estimates and posted more than $1B in quarterly profit for the first time ever. For most of past year, Facebook's (NASDAQ:FB) spending outpaced its revenue growth, as it invested in projects such as virtual reality, artificial intelligence and delivering Internet access to remote areas, but in the latest quarter that dynamic reversed. "It's doom and gloom all around us and these guys are just killing it," said Kevin Landis, CEO of Firsthand Capital Management.
Economy
China's volatile shares tumbled again today, taking losses this month to about 25% or 13T yuan ($2T), while state media insisted that the market ructions did not reflect the real economy. The People's Bank of China also auctioned 340B yuan ($51.7B) of reverse-repurchase agreements during the session, after offering a record 440B yuan two days earlier. Policy makers are hoping to prevent a cash crunch before the week-long Lunar New Year holiday. Shanghai Composite -2.9%.
Uncertainty over the future path of U.S. interest rates is weighing on other stocks around the globe, although U.S. futures are seeing gains on upbeat earnings sentiment from Facebook (FB). On Wednesday, the Fed kept interest rates unchanged and said it was "closely monitoring" global economic developments, signaling it had accounted for a stock market selloff but was not ready to abandon a plan to tighten monetary policy this year.
Japanese Economy Minister Akira Amari, a key architect of the government's "Abenomics" program, has announced his resignation over allegations of financial impropriety. Serving as point man in the Trans-Pacific Partnership trade talks, Amari also spearheaded Abe's growth strategy to boost the nation’s competitiveness. His resignation comes at a critical time for the Abenomics project, which is aimed at pulling the world's third-largest economy out of deflation.
North Korea might be preparing for a long-range ballistic missile launch from its northwestern launch site, Kyodo News reports, citing satellite imagery analyzed over the last several days. A possible test, which could take place as soon as a week's time, would follow close on the heels of the detonation of what North Korea claimed was a hydrogen bomb. On Wednesday, Secretary of State John Kerry met with Chinese Foreign Minister Wang Yi and agreed on the need for a fresh resolution on the North Korea situation.
A deal to restructure Puerto Rico's debt-laden power utility received new life late Wednesday after the agency and bondholders agreed to extend a crucial deadline through Feb. 16, providing some breathing room to debate tweaks to legislation. Righting PREPA's ship is seen as a key step in fixing the island, which faces $70B of debt, a 45% poverty rate and a shrinking tax base as residents increasingly jump ship for the mainland United States.
Officials from the IMF and World Bank are heading to Azerbaijan to discuss a possible $4B emergency loan package in what risks becoming the first of a series of bailouts stemming from tumbling oil prices. Delegations from other international financial institutions, including the European Bank for Reconstruction and Development and the Asian Development Bank, are also due to arrive in the next few days, as concerns grow about emerging market producers.
The U.K. economy posted growth in line with expectations in the fourth quarter, but annual growth slowed to the lowest level in almost three years. GDP rose 0.5% from the previous three months; on a year-on-year basis, the economy grew 1.9%. While output has expanded for 12 straight quarters and unemployment is at its lowest rate for a decade, the expansion remains lopsided, with services the dominant driver and exports and manufacturing remaining sluggish.
Stocks
Samsung Electronics' fourth-quarter earnings displayed a sharp slowdown in profit growth from chips, signaling challenges ahead as the tech giant continues to grapple with weak smartphone sales. Net profit in the December quarter fell 40% to 3.2T Korean won ($2.7B), short of market expectations due to non-operating expenses. Samsung (OTC:SSNLF) also warned of a "difficult business environment" and "weaker IT demand," joining Apple (NASDAQ:AAPL) in foretelling a downbeat 2016 for the technology sector.
Yahoo is up 1.6% premarket despite Verizon (NYSE:VZ) shooting down rumors it was interested in the company's core business. On Jan. 23, the New York Post reported that Verizon made an $8B bid for the Internet unit. "The rumor's false," said Bob Varettoni, director of corporate communications for Verizon.
European earnings roundup: Deutsche Bank (NYSE:DB) -1% premarket after posting a full-year loss of €6.8B, as writedowns, litigation charges and restructuring costs took their toll. Electrolux (OTCPK:ELUXY) slumped to a Q4 loss after costs from its failed GE deal weighed on results. A strong dollar hit purchasing costs at H&M (OTCPK:HNNMY), resulting in a set of relatively lackluster earnings. Roche (OTCQX:RHHBY) reported a 5% fall in full-year net income as the strong Swiss franc countered gains from the company's diagnostics and cancer treatment units.
The U.S. Justice Department has announced the final settlement in a program, valued at more than $1.3B, that allowed Swiss banks to avoid possible prosecution for helping wealthy Americans evade taxes. Since March 30, 2015, the department has executed similar agreements with a total of 80 Swiss banks, which were required to provide detailed data of U.S. taxpayer accounts and cooperate in treaty requests for financial information.
More troubles at Theranos? In a statement sent directly to SeekingAlpha, embattled Vice President Brooke Buchanan said recent reports that a government inspector determined that one of its laboratories poses "immediate jeopardy to patient health and safety" does not reflect the current state of the lab (located in Newark, CA). She explained that the inspection cited only one deficiency at the "immediate jeopardy" level, which was a condition-level deficiency specific to its Hematology section, not the entire lab.
Artisan Partners, a major shareholder in Johnson & Johnson (NYSE:JNJ), is urging several activists to pressure the company to consider several major changes. The demands include separating J&J's three divisions - consumer products, pharmaceuticals and medical devices - into standalone units, replacing board members, and reviewing standards for executive pay and financial reporting.
American Airlines has expanded its refunds for pregnant customers visiting areas impacted by the Zika virus to include Puerto Rico, Martinique and nine countries in the Americas and Caribbean. American's (NASDAQ:AAL) move follows refund announcements by airlines United Continental (NYSE:UAL), Latam (NYSE:LFL) and others. Since there is no vaccine or specific drug to treat Zika, stopping travel to locations that have Aedes mosquitoes is the primary form of preventing the virus from spreading to the U.S.
Iran has put the finishing touches on a deal to buy over 100 Airbus (OTCPK:EADSY) passenger jets, French officials said during a visit by Iranian President Hassan Rouhani aimed at reviving business ties despite diplomatic differences. Ahead of his meetings in Paris, Rouhani visited Italy with a 120-member delegation of business leaders and cabinet ministers, signing a raft of deals. France's Peugeot (OTCPK:PEUGF) is also scheduled to meet with the group later today.
According to Jiji news, Toyota (NYSE:TM) will decide whether to make Daihatsu (OTCPK:DHTMY) a wholly owned subsidiary at a board meeting tomorrow. Earlier this week, Toyota said it was considering buying out the rest of the Japanese minivehicle maker (in which it owns a 51.2% stake) for roughly $3B.
German regulators have cleared Volkswagen's fix of emissions-rigging software in one of its diesel-powered models, but the approval suggests VW (OTCPK:VLKAY) is making more progress in solving its diesel issues in its home country than in the U.S. Although CEO Matthias Müller met EPA head Gina McCarthy two weeks ago, neither provided hints afterward regarding a solution to the carmaker's emissions violations.
Meanwhile, Takata is preparing the ground for the exit of its chief executive, as pressure builds on the company from the auto industry's biggest recall, Reuters reports. Takata (OTCPK:TKTDY) has been under fire for almost two years over defective air bags that can explode with excessive force and shoot shrapnel inside the car - a problem that has ballooned into a major safety scandal affecting nearly 50M vehicles.
Wednesday's Key Earnings
Biogen (NASDAQ:BIIB) +5.2% after beating estimates.
Boeing (NYSE:BA) -8.9% on a weak outlook for 2016.
eBay (NASDAQ:EBAY) -12.2% AH on disappointing forecasts.
EMC Corp (NYSE:EMC) -1.6% following slower revenues.
Facebook (FB) +12.3% AH after a set of monstrous results.
Novartis (NYSE:NVS) -5.2% on plans to overhaul its eyecare division.
PayPal (NASDAQ:PYPL) +4.8% AH after topping expectations.
Qualcomm (NASDAQ:QCOM) -0.6% AH on light FQ2 guidance.
Texas Instruments (NASDAQ:TXN) +3.4% AH meeting estimates amid a slowdown.
United Tech (NYSE:UTX) +0.2% after affirming its guidance for 2016.
Boeing (NYSE:BA) -8.9% on a weak outlook for 2016.
eBay (NASDAQ:EBAY) -12.2% AH on disappointing forecasts.
EMC Corp (NYSE:EMC) -1.6% following slower revenues.
Facebook (FB) +12.3% AH after a set of monstrous results.
Novartis (NYSE:NVS) -5.2% on plans to overhaul its eyecare division.
PayPal (NASDAQ:PYPL) +4.8% AH after topping expectations.
Qualcomm (NASDAQ:QCOM) -0.6% AH on light FQ2 guidance.
Texas Instruments (NASDAQ:TXN) +3.4% AH meeting estimates amid a slowdown.
United Tech (NYSE:UTX) +0.2% after affirming its guidance for 2016.
Today's Markets
In Asia, Japan -0.7% to 17041. Hong Kong +0.8% to 19196. China -2.9% to 2655. India -0.1% to 24469.
In Europe, at midday, London -1.1%. Paris -1.5%. Frankfurt -1.9%.
Futures at 6:20, Dow +0.3%. S&P +0.4%. Nasdaq +0.8%. Crude +0.5% to $32.46. Gold +0.3% to $1119.90.
Ten-year Treasury Yield flat at 1.99%
Today's Economic CalendarIn Europe, at midday, London -1.1%. Paris -1.5%. Frankfurt -1.9%.
Futures at 6:20, Dow +0.3%. S&P +0.4%. Nasdaq +0.8%. Crude +0.5% to $32.46. Gold +0.3% to $1119.90.
Ten-year Treasury Yield flat at 1.99%
8:30 Durable Goods
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Companies reporting earnings today8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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