Wall Street Breakfast: Investors Assess Geopolitical Risk
Global markets are waiting to take their cues from the U.S. amid growing geopolitical risk.
In Asia, the Shanghai Composite in China finished the day 0.5% lower, while the Nikkei in Japan was up 0.71%. It's a quiet session
at midday in Europe, with the Stoxx 600 down 0.09%. Investors in the U.S.
are coming off a quarter that saw the first ever Dow close over 21K and an
overall stock equity return of +4.8%. The key question is if historically low
interest rates and improving employment trends can overshadow the drama out of
Washington, D.C., to give the Trump trade another leg upward. S&P 500
futures are up 0.1% to start the week.
Economy
Crude oil prices are moving higher to start the week off. A strong level of demand
and continued global uncertainty after the U.S. missile strike in Syria have
traders in a buying mood. WTI crude oil futures +0.75% to $52.63/bbl at last
check. Brent crude +0.85% to $55.71/bbl. U.S. gasoline prices sit at their highest level in
eight months. The most recent data from Lundberg Survey showed an average of
$2.4327 per gallon, while AAA reported an average price at the pump of $2.389
per gallon.
U.S. officials are ratcheting up criticism of Russia in front of Secretary of State Rex
Tillerson's visit later this week to the nation. U.S. Ambassador to the United
Nations Nikki Haley said nothing "is off the table" in dealing with
potential sanctions against Russia. Tillerson is expected to ask Russia to back
off supporting Syrian leader Bashar al-Assad and confront officials over
election tampering.
The anti-corruption crackdown in China rose to a new level over the weekend after the head of
China's insurance regulator fell into the spotlight. China Insurance Regulatory
Commission leader Xiang Junbo was charged with serious disciplinary violations,
a phrasing typically associated with graft. Xaing has led the insurance
regulator since 2011 and has been vocal about finding "financial
crocodiles" while on the job.
Japanese Prime Minister Shinzo Abe and President Trump are in agreement to stay in close coordination
on North Korea after talking yesterday. Abe also offered support for the U.S.
resolve to prevent the proliferation of chemical weapons in a reference to the
U.S. missile strike in Syria. Though Abe and Trump are expected to clash on
trade issues in the future, their relationship is off to very comfortable
start.
Investors are showing a higher level of interest in "macro" hedge funds as
they look to navigate the topsy-turvy political landscape with their
investments. Macro funds lost assets over the last few years, but are charging back
with European elections and Donald Trump's agenda difficult to hedge against.
"With volatility coming back and monetary supply tightening, we believe it
could be a great environment for macro managers," notes Citi Private
Bank's Eric Siegel.
Fedspeak alert: Federal Reserve Chair Janet Yellen gives a talk this afternoon at
the University of Michigan with some intriguing issues hanging in the wind.
Will Yellen give a road map to how the Fed plans to shed the $4.5T in bonds it
holds on its balance sheet? And what will she say on the leak of confidential
information to Medley Global by Richmond Fed President Jeffrey Lacker? On a
side note, Yellen reportedly met with Medley Global Advisors back in 2011 and
2012.
Stocks
Regulators in the U.K. are investigating Barclays (NYSE:BCS) over how CEO Jes Staley handled a
whistleblower case. The company's board has already concluded that Staley
mistakenly tried to determine the identity of the author of a whistleblower
letter. Staley's compensation was cut dramatically as a result of his action
An unconfirmed report out of China indicates that Tesla (NASDAQ:TSLA) plans to build a wholly-owned
factory in the Guangdong region, with an announcement potentially coming
sometime this year. It's unclear if the Chinese government would approve of a
plant that wasn't owned through a joint venture with a local company. The story
on the factory was published by the Southern Metropolis Daily, a paper that
often clashes with Beijing authorities.
Food brands for sale: Reckitt Benckiser (OTCPK:RBGPF, OTCPK:RBGLY) is looking to sell foods
assets, including the French's mustard business and Frank's hot sauce brand.
The company is looking to raise cash to help pay for its acquisition of Mead
Johnson Nutrition (NYSE:MJN). McCormick
(NYSE:MKC), Unilever (UN, UL) and Ajinomoto Co. (OTC:AJINF, OTCPK:AJINY) are said to be in the mix for
the Reckitt brands.
It's on to plan B at Mondelez International (NASDAQ:MDLZ) amid activist investor unrest. The
company confirms that it is searching for a successor to CEO Irene Rosenfeld,
including looking at external candidates. The new twist from Mondelez follows
its failed pursuit of Hershey and reports indicating the food giant is
uninterested in merging with Kraft Heinz (NASDAQ:KHC).
The proposed concessions to the FTC by Walgreens Boots Alliance (NASDAQ:WBA) in its acquisition bid for Rite Aid
(NYSE:RAD) include
selling 1,200 stores and allowing 100 Rite Aid executives to jump over to
Fred's. The company is also considering unloading some buildings at Rite Aid's
HQ in Camp Hill, Pennsylvania, to Fred's (NASDAQ:FRED) to sweeten the deal. Fred's
confirmed its interest in acquiring the stores during its earnings conference call
last week. Shares of Fred's were up 11% last week.
Amid a routine probe into whether Alphabet's Google (GOOG, GOOGL) is complying with
anti-discrimination laws, the Department of Labor found the company
systematically pays female employees less than their male counterparts. Company
officials deny the claim, saying that the Department of Labor hasn't provided
any data to back up the allegation.
Members of the Porsche-Piech clan that controls Volkswagen (OTCPK:VLKAY) will no longer be eligible to
serve as executives of the carmaker, Porsche (OTCPK:POAHY) Chairman Wolfgang Porsche
told Frankfurter
Allgemeine Zeitung. His comments come after Ferdinand Piech sold the bulk
of his stake in Porsche, which owns 52.2% of the voting shares in VW, to his
younger brother Hans Michel Piech.
The U.S. box office continues to hum right along. Fox (NASDAQ:FOXA) and Dreamworks Animation movie Boss
Baby took in $26.3M over the
weekend, and now stands at close to $90M since its debut. Disney's (NYSE:DIS) Beauty and the Beast raked in $25M to edge closer to $1B
worldwide. Smurfs:
The Lost Village stumbled in
with a $14.1M opening. The U.S. box office is up 5.5% to $3.198B this year
through April 9 to top most estimates from media analysts. Next weekend,
Universal's (NASDAQ:CMCSA) The
Fate of the Furious is
expected to bring in over $100M for its debut.
Barron's bounces? Companies mentioned favorably in the weekend publication include
Barrick Gold (NYSE:ABX) and Jones Lang
LaSalle (NYSE:JLL). Perhaps for the faint of heart, but
Barron's also thinks Ultra Petroleum (OTCPK:UPLMQ), Goodrich Petroleum (OTCQX:GDPP), SandRidge Energy (NYSE:SD) and Midstates Petroleum (NYSE:MPO) could be post-bankruptcy plays.
Meanwhile, Glaukos (NYSE:GKOS) is called out
as overvalued.
On the corporate calendar, the lockup expiration
for shares tied to the Planet Fitness (NYSE:PLNT) secondary offering is today.
Management roadshows for Clearside Biomedical (NASDAQ:CLSD), Concert Pharmaceuticals (NASDAQ:CNCE) and Curis (NASDAQ:CRIS) could add to volatility.
Shareholders with TIO Networks (OTC:TNCGF) are due
to vote on the company's acquisition by PayPay (NASDAQ:PYPL).
Weekend Reads
Today's Markets
In Asia, Japan +0.7%. Hong Kong flat. China -0.5%. India -0.2%.
In Europe, at midday, London -0.2%. Paris -0.7%. Frankfurt -0.3%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq +0.1%. Crude +0.7% to $52.63. Gold -0.2% to $1255.00.
Ten-year Treasury Yield Flat at 2.37%
In Europe, at midday, London -0.2%. Paris -0.7%. Frankfurt -0.3%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq +0.1%. Crude +0.7% to $52.63. Gold -0.2% to $1255.00.
Ten-year Treasury Yield Flat at 2.37%
Today's Economic Calendar
10:00 Labor
market condition index
12:30 PM TD Ameritrade IMX
1:00 PM Results of $24B, 3-Year Note Auction
4:10 PM Janet Yellen speech
12:30 PM TD Ameritrade IMX
1:00 PM Results of $24B, 3-Year Note Auction
4:10 PM Janet Yellen speech
Editor's
Note: This article discusses one or more securities that do not trade on a
major U.S. exchange. Please be aware of the risks associated with these stocks.
No comments:
Post a Comment