Monday, June 11, 18
U.S. stocks futures are mostly higher, as investors took the volatility at the G7 meeting over the weekend in stride between the U.S. and trading countries Canada, Mexico and the EU and turn their attention to tomorrow summit in Singapore between President Trump and North Korean leader Un. The weekend saw a fresh escalation of tensions between Trump and Canadian Prime Minister Justin Trudeau, with Trump withdrawing his support for the group’s communique after Trudeau criticized U.S. tariffs on Canadian metals. Stocks had climbed late last week, as the Dow Average posted its best weekly gain since March, ending the week higher by 2.8%, with the S&P 500 up 1.6% and the to gain 1.2% on a weekly basis.
In Asian markets, The Nikkei Index gained 109 points to settle at 22,804, the Shanghai Index lost -14 points to settle at 3,052 and the Hang Seng Index rose 105 points to close at 31,063. In Europe, the German DAX is up around 60 points at 12.830, while the FTSE 100 is up around 60 points under 7,750. Away from international relations, investors will also begin to focus on central bank meetings this week, with the FOMC rate meeting Wednesday (expected to end with a 25 bps rate hike), the European Central Bank meeting on Thursday morning and the Bank of Japan Thursday night/Friday morning.
Market Closing Prices Yesterday
· The S&P 500 Index climbed 8.66 points, or 0.31%, to 2,779.03
· The Dow Jones Industrial Average rose 75.12 points, or 0.30%, to 25,316.53
· The Nasdaq Composite gained 10.44 points, or 0.14%, to 7,645.51
· The Russell 2000 Index advanced 4.72 points, or 0.28% to 1,672.49
· No Major Economic Data Released Today
· The United States and Canada swung sharply toward a diplomatic and trade crisis on Sunday as top White House advisers lashed out at Canadian Prime Minister Justin Trudeau a day after U.S. President Trump called him “very dishonest and weak.”
· U.S. Secretary of State Mike Pompeo said Washington’s position on North Korean denuclearization “remains clear and unchanged,” staking out a resolute position a day ahead of a historic summit between President Donald Trump and Kim Jong Un.
· White House economic advisor Larry Kudlow said the U.S. participated in G7 talks and bilateral talks on Nafta in good faith and that Trump had been “charming.” But the president broadsided his allies after leaving the meeting by disavowing a joint statement the U.S. had agreed to, criticizing Trudeau and vowing tariffs on automobiles
· U.K. factory output fell in April at the steepest monthly pace since 2012, as British manufacturing output declined 1.4% in April compared with March, the largest monthly fall since October 2012
· Bitcoin prices dropped 10% after news of South Korea crypto exchange hack, leading a broad cryptocurrency selloff. Coinrail, a small South Korean cryptocurrency exchange, tweeted over the weekend that it was hacked, according to Google Translate. Bitcoin fell more than 10 percent to a low of $6,647.33, its lowest since April 9. The decline followed a report Friday from WSJ that U.S. regulators are investigating potential price manipulation at four major cryptocurrency exchanges
Sector News Breakdown
· Southwest Airlines (LUV) mentioned positively in Barron’s saying shares could soar 25% as temporary headwinds like fuel costs abate and the carrier benefits from U.S. corporate tax cuts; Cowen analyst said shares may hit $63, up from a June 8 close of $50.48
· United Airlines (UAL) May 2018 consolidated traffic (revenue passenger miles) increased 6.7% and consolidated capacity (available seat miles) increased 4.2% versus May 2017. UAL’s May 2018 consolidated load factor increased 2.0 points compared to May 2017
· Goldman Sachs downgrades both Host Hotels & Resorts (HST) and Park Hotels & Resorts (PK) to Sell from Neutral saying the recent multiple expansion in the stocks, related primarily to industry consolidation, leaves unfavorable risk/reward profiles
· Mars Inc. is pushing further into the lucrative business of pet care, saying it had agreed to buy a European veterinary operator. The deal to buy AniCurafrom European buyout firm Nordic Capital values the business at close to €2 billion ($2.36B) including debt https://on.mktw.net/2l3mbGI
· Shake Shack (SHAK) files automatic mixed securities shelf
· Boyd Gaming (BYD) raises quarterly dividend to 6c per share from 5c
· Utilities mentioned favorably in Barron’s saying fast growth in grid storage will make wind power even more competitive, which is good news for utilities with plenty room to add wind capacity like American Electric (AEP) and Xcel (XEL) and for wind developers like NextEra (NEE). Nuclear-heavy companies in deregulated markets like Exelon (EXC) and Public Service Enterprise Group (PEG), on the other hand, could face rising competitive pressures, he adds
· S&P MidCap 400 constituents HollyFrontier (HFC) and Broadridge Financial Solutions (BR) will switch places with Acuity Brands (AYI) and Range Resources (RRC) respectively in the S&P 500
· Kinder Morgan’s (KMI) Canada’s Trans Mountain pipeline tells regulators that an estimated 4,800 liters (1,268 gallons) of medium crude blend spilled near Barriere, British Columbia, last month; co. is in final stages of competing clean-up
· PG&E Corp. (PCG) likely active as California confirms that equipment owned by PCG ignited devastating wildfires that tore through the state in October and killed 44 people, and also says it found evidence of violations of law by PCG in connection with 8 of the blazes
· Genworth Financial (GNW) gets approval from U.S. national security panel for $2.7B buyout by China Oceanwide Holdings Group after companies agreed to use 3rd-party provider from U.S. to help protect consumer data; more regulatory approvals are needed
· HSBC Holdings PLC (HSBC) said Monday that it will invest between $15 billion and $17 billion in technology and growth as it targets a return on tangible equity of 11% by 2020.
· KKR & Co. (KKR) is nearing a deal to buy Envision Healthcare Corp. (EVHC) for $46 a share, or about $5.5 billion, according to people familiar with the matter, in one of the largest recent leveraged buyouts
· S&P SmallCap 600 constituents Chemed (CHE) and Haemonetics (HAE) will switch places with Endo International (ENDP) and Cooper Tire & Rubber (CTB)respectively in the S&P MidCap 400
Industrials & Materials
· Volkswagen (VLKAY) and Bayerische Motoren Werke (BMW) shares mentioned positively in Barron’s saying they should bounce back from recent declines over fears of tariffs and Donald Trump’s threat to bar German carmakers from the U.S. Barclay’s expects Volkswagen’s new models to drive its share price up 29%, and they foresee a 35% rally in BMW shares
Technology, Media & Telecom
· Altaba (AABA), the former Yahoo!, remains a good proxy for investors seeking exposure to Alibaba (BABA) according to Barron’s as the former owns a 15% stake in the Chinese e-commerce juggernaut worth around $79B
· Comcast (CMCSA) is set to gain unconditional EU antitrust approval for its bid to buy European pay-TV company Sky, two people familiar with the matter said
· Electronic Arts (EA) said it will include a battle-royale mode in its upcoming Battlefield V game, following similar announcement by Activision for its next version of Call of Duty, also due out in October
· Foxconn said it is investigating a plant in China that makes devices for Amazon.com Inc (AMZN), after a U.S. watchdog group criticized what it described as harsh working conditions at the factory.
· VeriFone (PAY) Q2 EPS 25c/$438M vs. est. 28c/$435.9M; because of pending acquisition by Francisco Partners, Verifone isn’t providing financial guidance or holding an earnings conference call
· Web.com (WEB) issued the following statement in response to the Schedule 13D filed by Starboard Value LP: “Web.com welcomes open communication with its shareholders and values any input and suggestions that may advance its goal of enhancing shareholder value. We expect to engage in a constructive dialogue with Starboard moving forward