Wall Street Breakfast: Fed Minutes, Inflation Take Center Stage

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Wall Street Breakfast

Investors eager to learn what Fed policymakers think of the U.S.-China trade dispute, the yield curve and the pace of future rate hikes may get a peek at their outlook today when the central bank publishes minutes of its March meeting. The Labor Department's inflation report will also be in the spotlight. While the rate remains modest, and likely stayed that way in March, today's figure will be a key factor in determining how quickly the Fed bumps up rates.


It's the largest grant in the history of the U.S. Department of Housing and Urban Development. Puerto Rico is set to receive $18.5B from the agency to help rebuild its battered housing and infrastructure following Hurricane Maria. Despite the record amount, the award was still significantly less than the $46B requested by Governor Ricardo Rossello in November.

Plenty of time? The U.K. can change its negotiating stance even after it has left the European Union, according to chief EU negotiator Michel Barnier, as it will still be part of the single market and customs union during the transition period ending in 2020. "If Britain decided to change its red lines, then we'd also change our positions," he told Sueddeutsche Zeitung.

Backing expectations of a broader economic slowdown, China's producer price inflation continued to cool in March, while consumer inflation slowed due to the Lunar New Year holiday. There were some worries that an escalating trade dispute between China and the U.S. could push up inflation over the coming months, though many analysts believe any impact on consumer prices will be limited.

A gulf diplomatic standoff may be bleeding into the financial world. Saudi Arabia has surprised investors with the sudden monster sale of $11B in bonds as Qatar kicks off its own roadshow for its first debt sale since 2016. The two have been at odds since June, when Riyadh and its allies cut off ties with Doha over extremism.

Airlines have been warned to steer clear of the eastern Mediterranean over the next 72 hours due to possible air strikes on Syria. The Trump administration has reportedly won the support of France, the U.K. and Saudi Arabia, suggesting the strikes could be more extensive than last year's U.S. attack on a Syrian airfield.


Facebook shares climbed 4.5% yesterday as Mark Zuckerberg testified before Congress without making any pledges to support new legislation or change how the social network does business. Key moments: Facebook (FB) did not notify FTC about the Cambridge Analytica leak and is working with Robert Mueller's investigation into Russian interference. Zuck also clarified that "there will always be a free version of Facebook."

Besides another hearing today for Mark Zuckerberg, Mick Mulvaney, head of the Consumer Financial Protection Bureau, will stand before a Congressional panel for a grilling. Lawmakers want to know why he dropped cases against payday lenders, pulled back from regulating the market for small-dollar loans and put a probe into Equifax (EFX) on ice.

Surprise! Sprint (S) has restarted talks to merge with T-Mobile (TMUS), sources told WSJ, marking the latest effort to bring together the fourth and third largest U.S. wireless carriers. New discussions are at a preliminary stage and it's not clear what the sides are discussing. The combined company would have more than 127M customers amid a race to expand offerings in 5G.

British offices of 21st Century Fox (FOX) have been raided by European Commission investigators, who are conducting an antitrust probe into sports rights and distribution of sports content. "The fact that the Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself," the EC said in a statement.

Google is in talks to buy Nokia's (NOK) airplane broadband business to offer new services to more users by offering high-speed internet during flights. The technology could offer a faster alternative to existing in-flight Wi-Fi, according to Bloomberg, adding that the discussions are in advanced stages and a deal with Google (GOOG, GOOGL) could be reached soon.

Sears is going online for sales, but it's not for e-commerce. The troubled department store chain is looking to cash in on real estate and some of its stores could be sold via auction site Real Insight Marketplace. It comes after last month's move by S&P Global Ratings to downgrade Sears' (SHLD) corporate credit rating to "SD," or "selective default."

Sign of the times? Nordstrom (JWN) is opening its first-ever Manhattan location to woo online shoppers away from their screens with a clubhouse bar, 24/7 store pickup, customized products and a barber shop. "It's a unique time to be building a big store," said Chris Wanlass, VP of Nordstrom New York. The region also happens to be the company's largest market for online sales.

"Britain must recognize that future investments are not a given," said Airbus (OTCPK:EADSY) CEO Tom Enders, demanding more clarity about Brexit beyond an agreed upon transition deal. He also called on Britain to remain part of EASA and stated the nation's business depended on aircraft parts and people being able to move freely between its sites across the U.K. and Europe.

Another Mueller in the crosshairs... The replacement of Volkswagen's (VLKAY) chief executive has been planned for months, Germany's Bild newspaper reports, and board members Francisco Garcia Sanz and Karlheinz Blessing are also due to be ousted. CEO Matthias Mueller will be fired before VW's annual general meeting on May 3, with brand chief Herbert Diess taking his place.

Theranos amazingly still had about 125 employees, but that's now been whittled down to two dozen or fewer, according to the WSJ. The report comes less than a month after Theranos (THERA) founder and CEO Elizabeth Holmes settled civil fraud charges with the SEC and as the company tries to put off bankruptcy for a few more months.

Taking a page out of the Iranian playbook, Russian aluminum giant Rusal (OTC:RUALF) - whose shares have plunged 37% since Monday - has reportedly activated a contingency plan asking customers to pay in euros instead of dollars to skirt around U.S. sanctions. A few years ago, Tehran opted to use gold, oil and the Japanese yen to pay for goods that would typically be priced in U.S. currency.

Bank of America plans to stop lending to companies that make military-style firearms for civilians, Bloomberg reports, making it the second major U.S. lender to address gun sales after the high school shooting in Parkland, Florida. Citigroup (C) added firearm restrictions last month for new retail sector clients. "We want to contribute in any way we can to reduce these mass shootings," said BofA's (BAC) Anne M. Finucane. Related tickers: AOBC, RGR

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Today's Markets

In Asia, Japan -0.5%. Hong Kong +0.6%. China +0.6%. India +0.2%.
In Europe, at midday, London -0.1%. Paris -0.4%. Frankfurt -0.5%.
Futures at 6:20, Dow -0.7%. S&P -0.8%. Nasdaq -0.9%. Crude +0.5% to $65.86. Gold +0.3% to $1349.80. Bitcoin +0.1% to $6837.
Ten-year Treasury Yield flat at 2.79%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $20B, 10-Year Note Auction
2:00 PM FOMC minutes
2:00 PM Treasury Budget

Companies reporting earnings today »

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