Wall Street Breakfast: A Fresh Healthcare Vote

 Includes: AAL, AAPL, AET, AIG, BA, BUD, CS, FB, FIT, FRNT, GOOG, GO

Top Republicans are expressing optimism over today's healthcare vote in the U.S. House, while Democratic leaders blast the revised bill, noting it's not yet been analyzed by the Congressional Budget Office. The legislation comes after President Trump endorsed a plan adding $8B over five years to help fund high-risk pools and cover the cost of patients with pre-existing conditions.

Economy

The Fed kept interest rates on hold at its May meeting, but maintained expectations for further 2017 rate hikes. In a unanimous statement - the committee said it "views the slowing in growth during the first quarter as likely to be transitory" and believes the "fundamentals... remain solid." The dollar pushed higher following the news, putting pressure on gold and oil.

With its creditors at its heels and coffers depleted, Puerto Rico has sought what is essentially bankruptcy relief under PROMESA, a federal law enacted last summer. According to the island's oversight board, the territory is "unable to provide its citizens effective services," crushed by $74B in debt and $49B in pension liabilities.

Bank of Canada Governor Stephen Poloz will deliver a speech in Mexico City today at an event sponsored by a Mexican-Canadian business group, CanCham Mexico. His speech comes as the Trump administration hopes to start discussions on renegotiating NAFTA. Talks could begin as soon as this summer.

"China should no longer recklessly try to test the limitations of our patience," said the commentary released by North Korea's official news agency, warning it could trigger "grave consequences." KCNA added that China has regularly "infringed upon the strategic interests" in becoming closer to the U.S. and thus committed a "betrayal" in the process.

Protests in Caracas have claimed at least one more fatality, bringing the total number of people killed to more than 30 in several weeks of unrest. Venezuelans are taking to the streets as President Maduro begins the process of overhauling the country's constitution amid a political and economic crisis.

Marine Le Pen and Emmanuel Macron squared off last night in their final TV debate, laying bare their profoundly different visions for the country. The two clashed over security, the economy and their relationship with Europe. Campaigning will continue through Sunday, when voters hit the polls for the second round of France's presidential election.

Britain's economy picked up some steam in April after slowing in early 2017, as Markit/CIPS's Services PMI rose to a four-month high of 55.8, above all the forecasts. The news comes as Prince Philip, the 95-year-old husband of Queen Elizabeth II, step downs from royal duties. His retirement will start in the fall.

Stocks

Tesla slipped 1.5% in extended trade after posting a wider-than-expected first quarter loss. However, revenues more than doubled from a year ago as record deliveries boosted sales. Tesla (NASDAQ:TSLA) also said its Model 3 remains on track to begin production in July as it spends heavily to meet the tight deadline for its mass-market sedan.

Despite posting a big earnings beat, Facebook (NASDAQ:FB) shares fell 1.5% from an all-time high, while Q1 revenue rose around 50% Y/Y to just over $8B. The company added 80M monthly users in the first three months of the year, as ad revenue soared, but investors appeared focused on its new earnings format. Facebook will no longer report adjusted figures.

Not only did the tech giant's stock take a hit last night, it appears WhatsApp (FB) was caught in the crossfire. The popular messaging service went down for a few hours, affecting users across the globe. "We have now fixed the issue and apologize for the inconvenience," WhatsApp said via email.

Phishing with Google Docs? Apparently spreadsheets make good bait. A computer attack that mimicked Google's (GOOG, GOOGL) cloud-based document software spread across U.S. news organizations and other institutions on Wednesday. Not only did the malicious link look remarkably realistic, but the email that delivered it appeared to come from someone users already know and replicated Google's login system.

Apple is starting a $1B fund to promote advanced manufacturing jobs in the United States, a sector already high on its list of priorities. "By doing that, we can be the ripple in the pond... those manufacturing jobs create more jobs around them because you have a service industry that builds up around them," Apple's (NASDAQ:AAPL) Tim Cook told Jim Cramer.

European earnings roundup: HSBC +2.7% premarket buoyed by higher interest rates, a weaker dollar and a jump in trading income. Another profit and beer volume rise boosted AB Inbev (NYSE:BUD) shares up 4% despite a headache in the U.S. and Brazil. Shell (RDS.A, RDS.B) +2.3% premarket after doubling its profits with an oil price rebound, while Statoil (NYSE:STO) handily beat estimates.

The NCAU has received a $400M payment from Credit Suisse (NYSE:CS) in connection with toxic residential MBSs that led to the failure of three credit unions during the financial crisis. That settles the 19th of 20 lawsuits the agency has filed in the last six years. Its legal recoveries related to failed corporate credit unions have already reached $5.1B.

Aetna will not sell Obamacare individual insurance plans in Virginia next year, citing "growing uncertainty" in the market and $200M in expected losses on the business this year. Aetna (NYSE:AET) already has sharply curbed its 2017 participation in the marketplace to cover just four states and left open the question of whether it will sell individual health plans anywhere next year.

Over at the Waymo/Uber courtroom, Waymo parent Alphabet (GOOG, GOOGL) has presented documents showing that UBER worked to buy a startup from engineer Anthony Levandowski while he was still working on self-driving technology at Alphabet. High stakes? Alphabet hopes the documents will help persuade a federal judge to temporarily block parts of Uber's driverless-car program.

While it resumed selling diesel cars in the U.S. last month, Volkswagen (OTCPK:VLKAY) just disclosed positive data for April. Diesels accounted for nearly 12% of sales, a sign consumer demand for such cars had not been dampened by its emissions scandal. There's still a ways to go... before the crisis, diesels accounted for about 25% of VW brand sales across America.

A ticket to watch an NFL game can be expensive, but the price tag to stream a match-up can be more outrageous: Verizon (NYSE:VZ) will reportedly pay $21M to stream just one NFL game this fall. The week-three match-up in London, between the Baltimore Ravens and Jacksonville Jaguars, will be distributed across Verizon's AOL platform, go90 and Complex.

American Airlines is further shrinking the space for passengers on its newest Boeing (NYSE:BA) 737 jetliners, allowing it to cram in more travelers. Space between most rows will be trimmed to 30 inches, an inch less than on its existing 737-800s, and at least three rows will have only 29 inches. It moves American (NASDAQ:AAL) closer to deep discounters such as Spirit (NYSE:SPR) and Frontier Airlines (Pending:FRNT).

Wednesday's Key Earnings

AIG (NYSE:AIG) +1.4% AH boosting its buyback.
Facebook (FB) -1.5% AH changing its earnings style.
Fitbit (NYSE:FIT) +9% AH turning a corner?
Groupon (NASDAQ:GRPN) -13.3% as revenues shrunk.
Kraft Heinz (NASDAQ:KHC) -1.6% AH with declining U.S. sales.
Southern Co. (NYSE:SO) unmoved after strong earnings.
Sprint (NYSE:S) -14.3% missing profit estimates.
Square (NYSE:SQ) +5% AH raising its outlook.
Tesla (TSLA) -1.4% AH following a Q1 loss.
Time Warner (NYSE:TWX) flat despite topping expectations.

Today's Markets 

In Asia, Japan closed. Hong Kong -0.1%. China -0.3%. India +0.8%. 
In Europe, at midday, London +0.4%. Paris +1%. Frankfurt +0.8%. 
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -0.9% to $47.37. Gold +1.1% to $1235. 
Ten-year Treasury Yield +3 bps to 2.34%

Today's Economic Calendar

Chain Store Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Productivity and Costs
8:30 Gallup Good Jobs Rate
8:30 International Trade
9:45 Bloomberg Consumer Comfort Index
10:00 Factory Orders
10:30 EIA Natural Gas Inventory
4:30 Money Supply
4:30 Fed Balance Sheet

Companies reporting earnings today »

Source: https://goo.gl/9hW93q

Wall Street Breakfast: Apple In The Spotlight

Includes: AAPL, AMD, ANGI, BABA, COH, F, FCAU, GM, IAC, JD, JYMHF, KATE, MSFT, QQQ

The world's largest company by market capitalization reports earnings after the bell. Apple (NASDAQ:AAPL) is expected to post revenue of $53B and EPS of $2.02. Sales of iPhones are forecast to increase 1% year over year to 52M, a relatively low mark by Apple standards as many consumers are seen waiting for the iPhone 8. Keep an eye on the growth reported by Apple for its services business after it increased at a solid 18% pace in Q4 to $7.2B, as well as the amount of dividends and buybacks doled out of Cupertino to shareholders. Apple hit a new all-time high of $147.20 yesterday.

Economy

European bourses are largely higher after a long weekend, with the Stoxx Europe 600 Index up 0.13%. U.K.'s FTSE +0.5%, Germany's DAX +0.1% and France's CAC +0.3% are all in positive territory for the day as banking stocks show some bounce. In Asia, Japan's Nikkei was solid with a 0.7% gain, while South Korean stocks closed at a six-year high as the nation's presidential election nears. U.S. stock futures are mixed in early trading.

Manufacturing business activity in eurozone jumped in April, according to IHS Markit's Manufacturing Purchasing Managers' Index, which increased to a six-year high of 56.7 from 56.2. Seven out of the eight nations covered showed an improvement in operating conditions, while Greece fell back. "The latest survey readings indicate that manufacturing is growing at an annual rate of approximately 4-5%, which should make a significant contribution to overall economic growth," said Chris Williamson, chief economist at IHS Markit.

Bank of Japan Governor Haruhiko Kuroda gave a strong endorsement for the expansion of the Asian Infrastructure Investment Bank at a seminar today in Yokohama. "Infrastructure needs are huge and it's simply not possible for the Asian Development Bank and the World Bank to fill the gap completely," said Kuroda. China created the AIIB in 2015 in a development some caution will increase its global leadership position to an uncomfortable level.

President Trump plans to replace Comptroller of the Currency Thomas Curry as early as this week, according to The Wall Street Journal. Joseph Otting, a former banker at OneWest Bank who worked with Treasury Secretary Steven Mnuchin, is said to be under consideration for the position. The White House hasn't commented on the report.

The Federal Reserve's policy-making committee holds a meeting today and tomorrow. While trading on Fed funds futures contracts implies less than 5% probability of a rate hike, the language in the FOMC statement could be crucial for investors in assessing the June meeting. The tweaking of words by the Fed will hold even more weight since Fed Chair Janet Yellen is not scheduled to hold a press conference following the two-day meeting.

Crude oil prices are scratching back from one-month lows, with the American Petroleum Institute due to release its supply data later today. Concerns on higher U.S. crude production are being weighed by traders against the output cuts from major OPEC exporters. WTI crude oil futures +0.49% to $49.08/bbl at last check. Brent crude +0.56% to $51.81/bbl.

Stocks

Chinese e-commerce giant JD.com Inc. (NASDAQ:JD) is in talks to take a major stake in Indonesian firm Tokopedia. Sources indicate that a JD investment of hundreds of millions of dollars could increase the valuation of Tokopedia to over $1B. Tokopedia is a major rival of Alibaba (NYSE:BABA).

Kelley Blue Book forecasts new car sales in the U.S. will fall 3.1% Y/Y in April to 1.445M units. Sales for mid-size SUVs/crossovers are expected to be 8%, while compact and small car sales are seen falling. General Motors (NYSE:GM) is expected to pick up market share during the month from Detroit peers Ford (NYSE:F) and Fiat Chrysler Automobiles (NYSE:FCAU). Kelley Blue Book's forecast for 2017 calls for U.S. auto sales in the range of 16.8-17.3M units, which represents a 1% to 4% decline from last year. Barclay thinks it's important for sentiment that the April seasonally adjusted selling rate comes in at 17M or over.

An intriguing press conference will take place in New York City today when Microsoft (NASDAQ:MSFT) hosts the "Learn What's Next" event. Based off of the #MicrosoftEDU hashtag being used for the event, it appears the company could be planning to make a major announcement related to the education sector. Microsoft is focusing on the education business after Chromebooks have seen a massive market share increase in U.S. schools over the last several years.

It's earnings time for Coach (NYSE:COH), which is expected to post revenue of $1.018B and EPS of $0.44. Analysts see the retailer posting a 1.4% improvement in comparable sales during the quarter. Recent channel checks from Wolfe Research indicated Coach is seeing solid sell-through in the +$400 price category. Beyond the numbers, Coach management could be pressed on the earnings call about the company's M&A track. Recent speculation has Coach in the mix to acquire Jimmy Choo (OTCPK:JYMHF) and Kate Spade (NYSE:KATE).

M&A buzz lit a torch under Angie's List (NASDAQ:ANGI) in AH trading. The Wall Street Journal reported that IAC/InterActiveCorp (NASDAQ:IAC) wants to buy the home-service review site for $8.50 per share. The bid values Angie's List at more than $500M. Shares of Angie's skyrocketed 41% in AH trading.

Fresh off a Sunday deal with Bloomberg to launch 24-hour video, Twitter (NYSE:TWTR) is rolling out even more video deals to fill in its vision for streaming content. At a NewFront sales presentation, the company said it was partnering with BuzzFeed, Vox Media, MLB Advanced Media and Live Nation, as well as the NFL, PGA and WNBA. Shares of Twitter are up 17% over the last month.

Another day, another high: Tesla (NASDAQ:TSLA) continued to accelerate right into its Q1 earnings release, as investors have now bid up the stock +50% YTD. The strong buying action comes ahead of a management update that will include more details on Model 3 production. "The Model 3 is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018," CEO Elon Musk said recently. Will tomorrow's presser include any changes to that forecast?

Investors sent AMD (NASDAQ:AMD) 12% lower in AH trading after the company merely matched consensus estimates. Revenue for the quarter was up 18% year over year to $984M, and a net loss of $0.04 was reported. For Q2, AMD sees revenue rising 12% in Q2 at the midpoint of its range to top the estimate from analysts for a 9% increase.

Today's Markets 

In Asia, Japan +0.7%. Hong Kong +0.3%. China -0.4%. India flat.
In Europe, at midday, London +0.5%. Paris +0.3%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.0%. S&P -0.1%. Nasdaq +0.1%. Crude +0.5% to $49.08. Gold +0.1% to $1256.20.
Ten-year Treasury Yield Flat 2.34%.

Today's Economic Calendar

Auto Sales
FOMC meeting begins
8:30 Gallup US ECI
8:55 Redbook Chain Store Sales

Companies reporting earnings today »

Source: https://goo.gl/dkrV2q

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Wall Street Breakfast: Snap! Early Elections In The U.K.

Includes: BP, CS, F, FB, FGL, GIS, LNG, LYG, NFLX, NSRGY, POST, QQQ, RDS.A, RDS.B, SN

Theresa May has called a snap general election in the U.K., with the vote to be held on June 8. With a 19 point lead in polls over her nearest rivals, it seems to be an opportunity for her Conservative party to gain a sizeable majority as Brexit negotiations get underway. Sterling had a sharp fall ahead of the announcement, but has now pared losses. The FTSE 100 is down 1.6% to 7,210.

Economy

The race for the French presidential election is still tight. The latest Ifop poll puts the gap between the top four candidates at just 4 points: 23% to 19%. Emmanuel Macron, Marine Le Pen, Francois Fillon and Jean-Luc Melenchon remain the top four candidates ahead of first-round voting on April 23.

While international monitors have criticized the referendum, President Trump has become the first western leader to congratulate Recep Tayyip Erdogan over victory in Sunday's vote, which will grant him sweeping new powers. There were volatile moves in the Turkish lira in the buildup to the referendum, but the currency is down against the dollar following the result.

Switzerland is not manipulating its currency, Jorg Gasser, the country's state secretary for international financial matters, told CNBC. "It's not so much about a strong Swiss franc. It's rather about a very weak euro." he said. Switzerland was recently listed on the "monitoring list" in the U.S. Treasury's semi-annual currency report of potential foreign-exchange manipulators.

Ahead of meetings with finance ministers and central bankers in Washington this week, Treasury Secretary Steve Mnuchin is warning a summer tax reform is "not realistic at this point," attributing the delay to setbacks in healthcare. Speaking to the FT, he added that should the planned "border adjustment tax" not survive there would be other ways of making up the $1T budget shortfall.

Fed Vice Chairman Stanley Fischer doesn't see a replay of the so-called taper tantrum of 2013 as the central bank rolls out its plan for reducing its $4.5T balance sheet. Yields on Treasury securities shot higher at the time after then-Fed Chairman Ben Bernanke suggested that the central bank might eventually scale back, or taper, its asset purchases.

President Trump will head to Kenosha, Wisconsin, today to sign an order dubbed "Buy American, Hire American" at the headquarters of the Snap-on (NYSE:SNA) tool company. It will direct federal agencies to recommend changes in the H-1B visa program and examine their purchasing systems to more effectively favor buying American goods.

Top White House advisers will also meet over whether to recommend President Trump withdraw the United States from the Paris climate accord. Ivanka Trump and her husband Jared Kushner, along with SecState Tillerson, have urged the President to stay in the deal, while Exxon Mobil (NYSE:XOM), Shell (RDS.A, RDS.B), BP and Cheniere Energy (NYSEMKT:LNG) have also endorsed the pact.

Continuing his four-nation tour in the Asia-Pacific region, VP Mike Pence emphasized that all options are on the table in dealing with North Korea and the U.S. was with the Japanese people "100 percent." He also announced a free trade deal may be worked out between the two countries in the future, but outlined that the current South Korea-U.S. free trade agreement needed to be reviewed and reformed.

Stocks

Netflix's U.S. and international subscriber growth slowed in the first quarter, coming in below expectations, though profit grew as content costs were lower than anticipated. The company reported 98.75M total subscribers, up from 81.5M a year ago. NFLX shares dropped as much as 3% in AH trading before rebounding to gain 1.3%, after the company said it expects to top 100M global subscribers this weekend.

Mark Zuckerberg will give a keynote address this morning at Facebook's (NASDAQ:FB) annual F8 developer conference, where he's expected to discuss augmented reality, a more powerful Messenger, and tackling fake news and violent videos. It comes as Facebook launches a review on how to handle objectionable content after a murder clip of a Cleveland man remained on its site for about three hours on Sunday.

In an update to a review of strategic alternatives, Fidelity & Guaranty Life (NYSE:FGL) said it has terminated its merger deal with Anbang Insurance Group. "We have determined that it is no longer in the best interests of FGL's shareholders," CEO Chris Littlefield declared. The company will continue to explore and negotiate with other parties.

Broad consequences for the policing of Wall Street? The U.S. Supreme Court will hear oral arguments today in a case that has the potential to scale back the SEC's ability to recover illegal profits earned as a result of fraud or other wrongdoing. The agency already faces a five-year statute of limitations for collecting civil monetary penalties, a time bar upheld in the 2013 Gabelli v. SEC ruling.

It has taken nearly a decade, but the British government is now poised to return Lloyds (NYSE:LYG) to the private sector at a profit, the FT reports. With a remaining stake of less than 2% and some £20B now returned to taxpayers, the U.K. Treasury is expected to imminently recoup the remaining £300M spent on salvaging the lender during the global financial crisis.

Mounting shareholder pressure has resulted in the CEO of Credit Suisse (NYSE:CS) and its board of directors taking a voluntary 40% cut in their performance pay. That leaves Tidjane Thiam with 2016 compensation of 10.24M Swiss francs, down from 11.9M. The remaining 3M franc reduction will come from his planned long-term payments for 2017.

Bright Foods has agreed to sell Weetabix to America's third largest cereal company, Post Holdings (NYSE:POST), for $1.76B, according to a spokesman for the Chinese conglomerate. Other groups competing to buy Weetabix had included AB Foods and Cereal Partners, a joint venture between Nestle (OTCPK:NSRGY) and General Mills (NYSE:GIS). Italy's Barilla also expressed interest.

Resolving a year-long regulatory impasse, Elizabeth Holmes and Theranos (Private:THERA) have pledged to stay out of the blood-testing business for at least two years in exchange for reduced penalties from federal health authorities. That doesn't put Theranos completely in the clear. It still has to worry about criminal and civil investigations, as well as lawsuits from several investors.

Under control... A damaged BP oil and natural gas well that had been venting gas vapors on Alaska’s remote North Slope since Friday morning has been successfully killed. The total amount of oil spilled and whether the crude affected the snow-covered tundra nearby is not yet clear, but authorities believe the contamination has been contained.

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A small hazardous material spill at Tesla's (NASDAQ:TSLA) Gigafactory is being inveorthstigated by emergency workers after several employees were hospitalized per safety protocol. "There are no reports of serious injuries. We don't expect any impact to production," spokesman Dave Arnold told reporters. Tesla plans to start manufacturing Model 3 battery packs at the plant during the current quarter.

Another high-level executive has jumped ship from UBER. This time it's Sherif Marakby, vice president of global vehicle programs, who helped launch the company's crucial (and embattled) self-driving car program. He joined Uber in April 2016 after a 25-year career at Ford Motor (NYSE:F).

United Continental shares rose nearly 1% AH after the company exceeded earnings expectations. UAL CEO Oscar Munoz also called the dragging incident last week a "watershed" moment for the company. "We are dedicated to setting the standard for customer service among U.S. airlines," he declared.

Today's Markets 

In Asia, Japan +0.3%. Hong Kong -1.4%. China -0.8%. India -0.3%.
In Europe, at midday, London -1.6%. Paris -1.3%. Frankfurt -0.7%.
Futures at 6:20, Dow -0.2%. S&P -0.3%. Nasdaq -0.3%. Crude -0.7% to $52.26. Gold -0.3% to $1288.60.
Ten-year Treasury Yield -3 bps to 2.22%

Today's Economic Calendar

8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:00 Fed's George speech
9:15 Industrial Production

Companies reporting earnings today »

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