Wednesday, August 31, 2016

Wall Street Breakfast: Eurozone Economic Figures Fail To Budge

Includes: AALAZNCRZBYDBEADSYGOOGGOOGLHSYJBLUL

Consumer price inflation in the eurozone was stuck at 0.2% in August, leaving the ECB no closer to its inflation target than when it launched the first of a series of stimulus measures more than two years ago. Other data released by Eurostat showed the bloc's unemployment rate unchanged at 10.1% (more than double the U.S.). The figures could push the ECB to launch additional stimulus at its next policy meeting on Sept. 8, like extending the duration of its bond-buying program by at least another six months.
Economy
U.S. Treasuries are set for their largest monthly loss since June 2015 after a slew of hawkish rhetoric from Fed officials almost doubled the probability of a September rate hike to 34% in the futures market. Fed Vice Chairman Stanley Fischer said Tuesday that any increase will be data dependent, having previously pointed to employment figures on Friday as being of key importance.
New Jersey Governor Chris Christie has vetoed a bill to raise the state's minimum wage to $15 per hour over the next five years, which would've made it the third state to approve such a pay level. But the matter isn't over yet. Democratic leaders have indicated they would put the measure on the 2017 ballot to let voters decide whether the state should move toward a $15 minimum wage.
Republican presidential nominee Donald Trump will meet Mexican president Enrique Pena Nieto today, hours before a closely watched speech in Arizona that will clarify his immigration policy. The two men will get together at Pena Nieto's official residence in the early afternoon and issue a statement immediately thereafter. Neither will take any questions, according to a person familiar with the plans.
Brazil's Senate continued the final phase of President Dilma Rousseff's impeachment trial late Tuesday, though the debate isn't expected to sway lawmakers from ousting her in a vote this morning. Rousseff's administration is accused of using illegal loans from state banks to camouflage the precarious state of Brazil's federal finances.
Philippine President Rodrigo Duterte is ready to discuss any issues with Barack Obama when they meet in Laos next week, but added that the U.S. president must listen to "what the problem is" before bringing up human rights. Newly released data shows the number of drug-related killings since Duterte took office two months ago at around 2,000, nearly half of them in police operations and the rest in shootings by unidentified gunmen.
Expectations aren't high for Canada's second-quarter gross domestic product results, which will be released at 8:30 a.m. in Ottawa. The period includes the time when a huge wildfire swept through Fort McMurray, Alberta, leading to the shutdown of several major oil sands operations. Even without the natural disaster, sluggish oil prices have continued to weigh on Canada's economy and a weaker exchange rate failed to revive manufacturing.

Stocks
The first regularly scheduled commercial flight between the U.S. and Cuba since 1961 is set to fly today, as a JetBlue (NASDAQ:JBLU) plane departs Fort Lauderdale for Santa Clara. Transportation Secretary Anthony Foxx will be on board. Other U.S. air carriers that are planning to begin airline service to Cuba include American Airlines (NASDAQ:AAL), Frontier Airlines, Silver Airways, Southwest Airlines (NYSE:LUV) and Sun Country Airlines.
Now that a takeover of Hershey (NYSE:HSY) is off the table, Mondelez (NASDAQ:MDLZ) and its chief executive have signaled that ongoing cost cutting will be the way to profitability. Irene Rosenfeld has promised to expand the company's operating margin to 17%-18% by 2018. They hit 15% in the most recent quarter. Investors seemed to welcome the end of the months-long play by the Oreo maker, with Mondelez shares closing up 4% on Tuesday.


Rumors are swirling that Deutsche Bank (NYSE:DB) explored a possible merger with rival Commerzbank (OTCPK:CRZBY) and mulled options such as reintegrating its Postbank consumer branches that were earmarked for sale. The considerations were "only of a theoretical nature" and at a very early stage, Germany's Manager Magazin reported, without saying where it obtained the information.
SWIFT has disclosed new hacking attacks on its member banks as it pressured them to comply with security procedures instituted after February's $81M heist at the central bank of Bangladesh. The global financial messaging system said it might report institutions if they failed to meet a November 19 deadline for installing the latest version of software which includes a host of new security features.
Unloading the rest of his stake over the past couple of days, Philippe Dauman has kept up his rapid sell-off of millions of dollars worth of Viacom (VIAVIAB) after a settlement that brought his exit from company leadership. According to an SEC filing, he sold the remaining 749,281 shares of his Class B beneficial holdings on Friday and Monday. Last week, Dauman sold more than $28M in shares in sales that took place daily.
Google is reportedly extending a program it began piloting to all San Francisco area Waze users in May, moving onto UBER's turf with a ride-sharing service to help commuters join carpools. The two companies were once allies - Google invested $258M in Uber in 2013 - but more recently have become rivals in some areas. Alphabet (GOOGGOOGL) executive David Drummond even resigned from Uber's board on Monday because of rising competition between the pair.
Talks with U.S. authorities over large-engined diesel cars found to have cheated emissions tests are progressing well and a settlement could be reached by October, according to Audi sales chief Dietmar Voggenreiter. In June, Volkswagen (OTCPK:VLKAY) agreed with U.S authorities to pay up to $15.3B for buybacks and fixes to 475K 2.0-liter diesel vehicles, but the accord didn't include 3.0 liter engine cars, which could cost billions more if the automaker needs to buy them back.
Airbus delivered more aircraft in August than for the same period in any previous year, a feat that would improve its chances of meeting 2016 targets after earlier delays in receiving parts. The company's previous busiest August was in 2013, when it passed 47 aircraft to customers; for FY 2016, Airbus (OTCPK:EADSY) has targeted at least 650 deliveries, up 2.4% Y/Y.
"All hands on deck" may soon be a thing of the past. Ship designers, their operators and regulators are gearing up for a future in which cargo vessels sail the oceans autonomously with minimal or even no crew. British engine maker Rolls-Royce (OTCPK:RYCEY) is among those leading the pack, with its Advanced Autonomous Waterborne Applications initiative involving other companies and universities. It predicts unmanned shipping to cut transport costs by 22%.
A former Monsanto executive who tipped the SEC to accounting improprieties involving the company's Roundup product has been awarded more than $22M from the agency, marking the second largest bounty under the whistleblower program. Awards to 33 whistleblowers by the SEC have now surpassed a total of $107M since it launched the plan under the Dodd Frank financial reform law. MON +0.6% premarket.
Tokyo Electric Power, operator of the wrecked Fukushima power plant,jumped as much as 12% - the most in more than a year - after a prefecture governor opposing the restart of one of its reactors abandoned his bid for re-election. Hirohiko Izumida was cautious about accepting the company's plans, saying Tepco (OTCPK:TKECY) hadn't done enough research into the causes of the nuclear reactor meltdown in March 2011.
AstraZeneca will pay $5.5M to resolve a foreign bribery probe into improper payments by its sales and marketing staff to state-employed healthcare officials in China and Russia. The SEC detailed the settlement with AstraZeneca (NYSE:AZN) in an order instituting an administrative proceeding arising out of violations of provisions in the Foreign Corrupt Practices Act.
In yet another setback for Theranos (NASDAQ:THER), the company withdrew its request for emergency clearance of a Zika-virus blood test after federal regulators found it didn't include proper patient safeguards, WSJreports. Meanwhile, Singapore has confirmed another 26 locally-transmitted Zika cases, bringing the total to 82, with some new victims being identified outside of the previously-affected areas.
Alphabet subsidiary Nest Labs is undergoing yet another restructuring, becoming part of Google's (GOOGGOOGL) internet-of-things team, in a unified division headed by Hiroshi Lockheimer, Fortune reports. The combined group also will continue to work on Google Home, a smart speaker rival to the Amazon Echo (NASDAQ:AMZN), expected to launch sometime this year. Nest co-founder Tony Fadell resigned earlier this summer, amid reports of tensions with Alphabet management and disappointing sales figures.
The head of the Nokia division aiming to bring the brand's mobile phones back to market is leaving after two years in the role. Brad Rodrigues, chief of business development at Nokia Technologies, will become acting president of the unit, as the company starts its search for a permanent successor to Ramzi Haidamus. Once the world's biggest mobile phone maker, Nokia (NYSE:NOK) sold its handset business to Microsoft in 2014, and is now focused on telecoms network equipment.
Today's Markets 
In Asia, Japan +1% to 16887. Hong Kong -0.2% to 22976. China +0.4% to 3085. India +0.4% to 28452.
In Europe, at midday, London -0.2%. Paris +0.6%. Frankfurt -0.1%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -0.7% to $46.03. Gold flat at $1316.90.
Ten-year Treasury Yield +1 bps to 1.58%
Today's Economic Calendar
Companies reporting earnings today »

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