Crude prices are flirting with new 2016 highs, as U.S. oil heads for a fifth week of gains, marking the longest rising streak in about a year for the benchmark. The run has brought WTI above $40 per barrel, surging more than 50% from 12-year lows in February, on the back of a weaker dollar and growing optimism that major producers will strike a production freeze deal. Crude futures -0.1% to $40.16/bbl, after advancing as far as $40.55 - its highest level so far this year.
Economy
"I made clear that even though monetary policy has been really the only policy driving the recovery in the last few years, it cannot address some basic structural weaknesses of the eurozone," ECB President Mario Draghi told EU heads gathered in Brussels. "For that you need structural reforms, mostly driven to raise the level of demand, public investments and lower taxes. Even more importantly, one needs clarity on the future of our...monetary union." European leaders will discuss further integration of the economies and policy making at a summit in June.
Many countries have not yet introduced laws allowing regulators to write down banks' debts to avoid taxpayer bailouts and prevent them from being "too big to fail." The Financial Stability Board, which can "name and shame" those which do not yet comply with its rules, said countries that do not yet have these laws include Argentina, Australia, Brazil, Canada, China, Hong Kong, India, Indonesia, Korea, Mexico, Russia and Saudi Arabia. Membership of the G20 includes a commitment to implement all agreed upon financial rules.
The minutes of the BOJ's January meeting, where the central bank adopted negative rates, showed that officials also explored the possibility of expanding record asset purchases before they decided on the subzero stimulus option. The new insight "reinforces a view that the next easing will be a combination of a rate cut and expansion of QQE," said Yasuhiro Takahashi, an economist at Nomura Securities. Japanese shares resumed their descent into the red today as the dollar's plunge against the yen continued to hurt exporters, while the 10-year JGB yield hit a record low of -0.135%.
As it continues annual military exercises and protests new U.S.-led sanctions, North Korea fired a ballistic Rodong-missile into the sea early Friday and likely shot another projectile around 20 minutes later. If confirmed, it would mark Pyongyang's first test of a medium-range missile, capable of reaching Japan, since 2014. "We call again on North Korea to refrain from actions that further raise tensions in the region and focus instead on...its international commitments and obligations," U.S. Secretary of State John Kerry said in a statement.
Former Brazilian President Lula da Silva was sworn in as chief of staff to his successor Dilma Rousseff on Thursday as a judge sought to block his appointment and Congress began proceedings to impeach Rousseff amid the country's deepening crisis. Brazil's Bovespa stock index rallied 6.6%, its biggest daily jump in seven years, and the Brazilian real firmed 2.3% as the political crisis increased bets that Rousseff's ouster could bring a more market-friendly administration to power.
The EU's migrant plan is hanging in the balance after European leaders agreed on a common position but admitted it would not be easy to negotiate with Turkey on watered down proposals. "We're on the right track but we're not there yet," French President Francois Hollande told reporters after the first day of talks in Brussels. "I can't guarantee you a happy ending." Summit chairman Donald Tusk will hold a lunch meeting today at which all 28 EU representatives hope to seal a deal with Ankara.
Stocks
TransCanada has agreed to buy Columbia Pipeline Group (NYSE:CPGX) for $10.2B, creating one of North America's largest regulated natural gas transmission businesses. The deal, valued at $13B including debt, comes months after President Obama blocked TransCanada's (NYSE:TRP) cross-border Keystone XL crude pipeline. His decision was a victory for environmentalists and a blow to TransCanada after a seven-year battle for approval. CPGX +5.3% premarket.
SeaWorld closed out Thursday's session up 9.4%, after announcing that it would stop breeding killer whales and cease its theatrical shows featuring them. The theme-park operator has navigated turbulent waters in recent years, which included the release of Blackfish (a 2013 documentary that claimed orcas suffer in captivity) and slumping park attendance. SeaWorld (NYSE:SEAS) will continue its dolphin and other animal shows, but added that could also change based on consumer preferences.
Since announcing plans to sell a minority stake in its Paramount Pictures studio three weeks ago, Viacom (VIA, VIAB) said it has received interest from three dozen companies, despite Paramount's particularly weak quarter at the box office. The company is looking for a strategic partner that could help its international and digital businesses, rather than financial buyers such as private-equity firms, CEO Philippe Dauman told the WSJ. He also confirmed that the contenders "include some Asian interests," and reiterated his commitment to completing the transaction by the end of June.
Nike has unveiled sneakers with self-lacing technology (think Marty McFly) that it plans to make available for the 2016 holiday season, as it looks to one-up rivals in an increasingly tech-driven athletic market. The HyperAdapt Trainer 1.0 has a sensor in the heel that adjusts the sneaker's fit, while two side buttons allow the user to tighten or loosen the grip. Nike's (NYSE:NKE) new shoes take about three hours to fully charge, and each charge lasts about two weeks.
After watching one of his top stocks, Valeant Pharmaceuticals (NYSE:VRX), get mauled again on Thursday (-11.5%), Bill Ackman now confronts another indignity: his hedge fund Pershing Square (OTCPK:PSHZF) might be headed for the junk-bond yard. Standard & Poor's has put the company's BBB rating on watch for a potential downgrade after the plunge in Valeant eroded its net asset value over the past five months.
Ackman's not the only one in hot water...more hedge funds closed their doors in 2015 than at any time since the financial crisis, as turbulent markets dragged down the industry's performance. According to data from Hedge Fund Research, last year was the worst period for liquidations since 2009, with 979 funds closing, up from 864 in 2014. The fourth quarter of 2015 also saw the fewest new hedge funds starting up since 2009, with just 183 openings compared to 269 in the third quarter.
Coming amid a marked rise in hedge-fund activism, two Senate Democrats have introduced a bill that would take aim at activists and their ability to act together in "wolf packs" to overtake public companies. The bill would shorten the number of days the investors have to disclose newly acquired shares in a firm and force the disclosure of derivatives and other holdings that now don't have to be reported. It would also redefine the rules about who has to report when they have amassed a greater than 5% stake in a company.
JPMorgan Chase is adding $1.88B to its buyback authorization, after having approved $6.4B in buybacks last year. The new funds are good for repurchasing 0.9% of shares at current levels. JPMorgan (NYSE:JPM) carried out $1B worth of net repurchases in the fourth quarter and $4.5B over the whole of 2015.
UBS raised its bonus pool by 14% to 3.5B francs ($3.6B) last year, leaving it the only major European lender to award bankers with higher pay. "Our compensation decisions reflect our commitment to deliver competitive compensation for excellent performance," said Ann Godbehere, who leads UBS's pay committee. CEO Sergio Ermotti remained the highest paid member on the group executive board, with a total compensation of 14.3M francs ($14.8M), up 28% from 2014.
French billionaire Patrick Drahi is set to pay as much as €4B, as part of a transaction that would carve up Bouygues' (OTCPK:BOUYY) telecom unit and reshape France's telecom sector, WSJ reports. Under the framework of a possible deal, Orange (NYSE:ORAN) would buy Bouygues Telecom for €10B in shares and cash, and then sell a large part of its fixed-line and mobile customers to Numericable-SFR (OTCPK:NUMCF). Following the move, Iliad (OTCPK:ILIAY) would pay a little more than €2B to acquire Bouygues Telecom’s spectrum, network and shops.
Having concluded the business "isn't likely to produce a marketable product in the next few years," Alphabet (GOOG, GOOGL) plans to sell its Boston Dynamics robot unit, Bloomberg reports, stating Toyota (NYSE:TM) and Amazon (NASDAQ:AMZN) are viewed as potential buyers. Boston has partnered with various military agencies, and YouTube videos of its robots moving at high speeds, displaying humanoid traits, and staying on their feet while navigating rugged terrain have been quite popular.
Facebook and Twitter are battling to win the right to stream conventional TV programming, according to The NY Post. Both companies, eager to ramp up their capacity to deliver compelling live streaming video, have approached programmers about a deal for such rights. "All of a sudden, Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) are trying to get in the tent with us," one programmer told The Post. "They're each arguing their attributes and why aligning with them is to our advantage."
Today's Markets
In Asia, Japan -1.2% to 16725. Hong Kong +0.8% to 20672. China +1.7% to 2955. India +1.1% to 24953.
In Europe, at midday, London +0.5%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude -0.1% to $40.16. Gold -0.7% to $1255.60.
Ten-year Treasury Yield -3 bps to 1.87%
Today's Economic CalendarIn Europe, at midday, London +0.5%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude -0.1% to $40.16. Gold -0.7% to $1255.60.
Ten-year Treasury Yield -3 bps to 1.87%
10:00 Reuters/UofM Consumer Sentiment
10:00 Atlanta Fed's Business Inflation Expectations
1:00 PM Baker-Hughes Rig Count
3:00 PM Fed's Bullard: U.S. Monetary and Economic Policy
Companies reporting earnings today10:00 Atlanta Fed's Business Inflation Expectations
1:00 PM Baker-Hughes Rig Count
3:00 PM Fed's Bullard: U.S. Monetary and Economic Policy
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