Market Overview (11.07.2017)
Market Today
Indices
Currency
Commodities
Econ & Policy
Economic Indicators
Policy
Business News
Energy
Industrials
Consumers
Financials
Information Tech
Calendar
Economic Calendar
Market Today
Dow Jones (0.0% at 23,548) NASDAQ (+0.1% at 6,786) All three major U.S. equity indexes closed at record highs, with investors focused on what could be the biggest merger ever in the technology sector that that chip maker Broadcom Ltd made an unsolicited bid to buy peer Qualcomm for $103 billion.
Oil prices surged to their highest since July 2015 on Monday as Saudi Arabia's crown prince cemented his power with a crackdown on corruption, while shares worldwide were little changed and key currencies stayed in tight ranges.
US Dollar Index (DXY): The American dollar continued to increase against other major currencies on Tuesday as investors monitor progress on the U.S. tax bill and the chances of a rate hike increase. Demand for the dollar continued to be underpinned by expectations that the Federal Reserve is on track to raise interest rates in December for a third time this year after strong U.S. factory and service sector data last week backed the case for continued policy tightening. (DXY: 0.33% at 94.93)
EUR/USD: The euro was lower, with EUR/USD down 0.46% at 1.1557, the lowest level since mid-July, still weighed by the European Central Bank decision late last month to extend its bond purchases until September 2018. (EUR/USD: -0.26% at 1.158)
Japan Yen: USD/JPY climbed 0.53% to 114.30, just off the previous session's eight-month high of 114.73, after Bank of Japan Governor Haruhiko Kuroda said on Monday that the central bank will continue with its monetary easing policy, but added that the bank was closely watching the economic effects of prolonged stimulus. (USD/JPY: 0.29% at 114.03)
CommoditiesGold and silver prices are weaker in early morning trading Tuesday. The modest selling pressure stems from a rally in the U.S. dollar index Tuesday, which hit a 5.5-month high overnight. (Gold Prices: -0.06% at $1,278.62)
Oil prices traded flat to slightly lower Tuesday, pausing after the prior day’s settlement at fresh more-than-two-year highs following a purge of high-level figures in Saudi Arabia, a key crude producer. (Brent Crude Futures: -0.23% at $64.12 a barrel. WTI Futures: -0.03% at $57.33 a barrel)
Steel: Iron ore futures in China rallied to their highest in nearly six weeks on Tuesday, extending recent gains along with steel prices, although steel production curbs over winter suggest further price increases in the raw material may be limited. (Shanghai Steel Rebar Futures: +0.8% at 3,753 yuan per tonne. Iron Ore Contract: +5.8% at 420.48 yuan tonne.)
Econ & Policy
Americas
North American commercial property insurance rates seen rising sharply in 2018. North American commercial property insurance rates could rise by as much as 25 percent during 2018 for properties that suffered catastrophe losses this year, according to a report on Monday by insurance brokerage Willis Towers Watson. The commercial property insurance market, which has been soft during recent years, is now heading toward a correction, largely due to hurricanes Harvey, Irma and Maria, which together triggered one of the most destructive hurricane seasons in history, Willis Towers Watson said.
Europe
UK retailers suffer worst October since 2008: BRC. British retail spending fell last month at the fastest pace for any October since 2008 as consumers curbed purchases of non-food goods in the face of rising inflation, a survey showed on Tuesday. Retail sales values slid by an annual 1.0 percent on a like-for-like basis, which strips out changes in store size, the British Retail Consortium (BRC) said, compared with a 1.9 percent rise in September.
Asia and Pacific
Chain store sales increase 2.6%. Redbook Chain Store Sales: +2.6% Y/Y vs. +3.6% last week. Month-to-date sales are up 2.6% through November 4. November sales are expected to increase 4.1%.
Japan Sept price-adjusted wages down for fourth straight month. Japanese wages fell 0.1 percent in September from a year earlier after adjustment for inflation, down for the fourth straight month, suggesting consumer inflation could take a hit as salaries fail to keep pace with rising prices. The decline, announced by the labor ministry on Tuesday, comes despite persistent calls by the government for companies to boost salaries to help drive economic activity. Wage earners' nominal cash earnings rose 0.9 percent compared with the same month last year, accelerating from 0.7 percent growth in August and marking the fastest rise since July 2016.
Reserve Bank Of Australia Holds Steady At Record Low 1.50%. The Reserve Bank of Australia on Tuesday held its benchmark cash rate at 1.50% as expected, signaling it is watching the housing market closely and that a higher Australian dollar is restraining price pressures.
PolicyAmericas
Major hurdles for tax overhaul: Disagreements over key pieces of a tax bill that would reduce taxes by $1.4T over 10 years are proving difficult as the House Ways and Means Committee begins considering the bill. Senate Republicans disagree on child tax credits and whether to accept significantly bigger budget deficits, while House GOP leaders are at odds over plans to eliminate deductions for state and local taxes.
Remarks from Yellen, Quarles on tap: Besides acceptance remarks from outgoing Fed Chair Janet Yellen this afternoon, investors will be watching Fed Vice Chair for Supervision Randal Quarles discuss financial regulation before the Clearing House Annual Conference. It will be his first extensive public comments since taking up the job and many will be listening for hints about deregulation desired by Wall Street.
Asia and Pacific
U.S., South Korea to renegotiate trade deal: "North Korea is a worldwide threat that requires worldwide action," President Trump said at a news conference following meetings with South Korea President Moon Jae In. "Ultimately, it will all work out; it always works out; it has to work out." The two also agreed to renegotiate the free trade agreement between their countires in order to make it "free, fair, and reciprocal."
Middle East and Africa
Al-Sisi urges calm in the Middle East: Egyptian President Abdel Fattah al-Sisi will not seek a third term, and won't interfere with the country's constitution which permits its leaders to serve only two four-year terms. He also called on Middle Eastern nations to maintain stability amid spiking tensions between Saudi Arabia and Lebanon, whose prime minister announced his resignation over the weekend and shocked the political establishment in Beirut.
Business News
Aramco audit may not be finished in 2017: An audit of Saudi Aramco's oil reserves is unlikely to be completed before the initial "end of 2017" time frame because of the huge scale of the task, Reuters reports. The Aramco (Private:ARMCO) audit, which is about two-thirds complete, is an important part of the state oil company's preparatory work for its planned IPO next year.
IndustrialsMore asset sale talk from GE: General Electric is considering options for its aircraft leasing unit, including the sale of all or part of the business, as CEO John Flannery searches for new divestitures, Reuters reports. With a fleet of 1,339 planes worth an estimated $25B, GE Capital Aviation Services ranks only behind AerCap (NYSE:AER) as the globe's largest lessor.
Lockheed wins Air Force contract for airborne high-energy laser weapons: Under a $26.3M contract from the Air Force Research Lab, Lockheed Martin (NYSE:LMT) will develop and produce high-energy fiber laser weapons for tactical fighter aircraft, with plans to test the technology by 2021. The move comes after a series of successful tests with similar systems in ground-based platforms, but experts say developing a laser for an airborne design will be a challenge.
ConsumersCNBC: Fox in talks to sell most of itself to Disney: "We have not seen much in the way of dealmaking this year. So this might jump-start some of the dealmaking ahead of the tax policy changes," said Paul Nolte, portfolio manager at Kingsview Asset Management. Qualcomm (NASDAQ:QCOM) rose 1.2% on Monday after Broadcom (NASDAQ:AVGO) offered to buy the chip supplier for $103B, while Twenty-First Century Fox (FOX, FOXA) surged 9.9% on reports that it held talks to sell most of the company to Disney (NYSE:DIS).
Sony pulls Spacey film from festival: Sony Pictures (NYSE:SNE) has withdrawn All the Money in the World, a movie starring Kevin Spacey, from the American Film Institute's annual festival following sexual misconduct allegations against the actor. "It would be inappropriate to celebrate at a gala at this difficult time," the studio declared, but said it would go ahead with a planned U.S. movie theater release in December.
Earlier Thanksgiving open for retailers: Keeping up with an industry-wide trend to get a jump-start on seasonal deals, J.C. Penney (NYSE:JCP) is opening its doors on Thanksgiving an hour earlier at 2 p.m. Kohl's (NYSE:KSS) is also shifting things ahead, bumping up its opening to 5 p.m., the same time Macy's (NYSE:M) will unlock its doors. Meanwhile, Target (NYSE:TGT) is planning its Turkey Day open at 6 p.m., while Wal-Mart (NYSE:WMT) has yet to announce its holiday schedule.
Tesla battery director leaves company: It's the latest in a string of management departures. Tesla's (NASDAQ:TSLA) director of battery engineering, Jon Wagner, has left the company as it continues to deal with Gigafactory bottlenecks, which has been the "primary constraint" on Model 3 production. Next move? He's launching a battery and powertrain startup in Redwood, CA.
Starbucks opens first Princi bakery: Seeking to find new sources of revenue, Starbucks (NASDAQ:SBUX) is making its next move into the high-end food and beverage market. The chain is opening its first Italian Princi bakery and cafe today at its Starbucks Reserve Roastery in Seattle. Next, it will bring the concept to Shanghai, followed by Milan, New York, Tokyo and Chicago.
FinancialsGoldman Sachs sees bitcoin at $8,000: Analysts at Goldman Sachs (NYSE:GS) think so. "Next in focus $7,941. This is the minimum target for a 3rd of 5-waves up. Might consolidate there before continuing higher," they wrote in a research note. The cryptocurrency hit a record high of $7,601.53 over the weekend, but then slumped below $7,000. It currently trades at $7,165, according to CoinDesk.
CME: Bitcoin is a new asset class: Bitcoin is also likely to become a new asset class in its own right, such as gold or stocks, which can be traded by major investors and regulated, not simply a cryptocurrency. That's according to Leo Melamed, Chairman Emeritus of CME Group (NASDAQ:CME), which plans to launch bitcoin futures by the end of the year.
Information TechnologyLatest cloud pals: Salesforce, Google: Salesforce is partnering with Google (GOOG, GOOGL) in one of cloud computing's highest profile alliances. The partnership will combine Salesforce's (NYSE:CRM) customer relations management technology with Google's G Suite, which competes against Microsoft Office 365 (NASDAQ:MSFT), as well as connecting Salesforce with Google Analytics.
Calendar
6:00 NFIB Small Business Optimism Index
8:30 Gallup US ECI
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $24B, 3-Year Note Auction
3:00 PM Consumer Credit
3:00 PM Janet Yellen speech
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