Wall Street Breakfast: Central Bank-Filled Week Comes To A Close

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Includes: ARMCO, BIDU, BMWYY, DAL, DBX, DDAIF, DOORD, FB, FSLR, GOLD, GOOG, GOOGL, GRUB, GS, HAS, HPE, JPM, KHC, MAXR, MS, NCMGY, NEM, NKE, PINIT, POSTM, QQQ, ROKU, SPACE, SPY, STMP, T, TSLA, UBER, VZ, Z
by: Wall Street Breakfast
Wall Street Breakfast
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It's the finale of a very busy week for central bank speakers. ECB President Mario Draghi will be today's headliner, with his words being parsed for any indication on policy direction, as well as five U.S. Fed officials speaking at events in New York. The Fed's latest Monetary Policy Report will also be released during the session, but unless the report contains new information, the market impact is likely to be muted - having already been priced in following earlier Fed releases and commentary.

Economy

With Dow futures up 124 points overnight, the DJIA is again shooting for the 26,000 milestone after falling back during yesterday's session. President Trump is set to meet today with China's top trade official, Liu He, with only a week left until the temporary truce between the two nations expires. EU Trade Commissioner Cecilia Malmstrom also sounded an upbeat note on the potential for a U.S. trade deal as the bloc tries to keep at bay the threat of American automotive tariffs.

Current Brexit discussions suggest Theresa May will ask the EU for a three-month delay to the March 29 Brexit deadline, on the assumption that when she brings a renegotiated deal back to Britain, lawmakers pass it. Anything longer than this would put the U.K. under pressure to take part in European elections on May 23-26, something that both sides are keen to avoid.

Boiling point? Nicolas Maduro has announced the closure of Venezuela’s border crossings with Brazil, as part of a sustained bid to prevent tens of millions of dollars in humanitarian aid flowing into the country. By the IMF's calculations, Venezuela's annual rate of inflation for 2019 will be 10M percent, while the county's opposition-controlled National Assembly reckons inflation topped 1.6M percent as recently as December.

Stocks

With privacy concerns now at the forefront, Facebook (NASDAQ:FB) is completely shutting down its controversial Onavo VPN, removing it from the Play Store half a year after pulling the app from Apple's App Store. Facebook will also end its practice of conducting unpaid market research programs. Although paid research studies will continue through other means, the company says it will ensure users explicitly understand their privacy implications.

As it makes room for more powerful standards, AT&T (NYSE:T) plans to stop providing service to devices that use third-generation wireless technology in early 2022. It echos a similar warning from Verizon (NYSE:VZ), which said it would disconnect old 3G cellphones by the end of this year. These transitions could be tough. Sprint shed millions of customers after it bought Nextel and moved customers off the company's iDEN push-to-talk technology.

Food delivery startup DoorDash has raised $400M in a round led by Temasek and Dragoneer Investment Group, nearly doubling its valuation to $7.1B. CEO Tony Xu said the company will use the funds to continue to scale, and that profitability is not a focus at the moment. DoorDash (DOORD) faces fierce competition from GrubHub (NYSE:GRUB), as well as Uber (UBER) and Postmates (POSTM), both of which have registered to go public.

Joining the group is Pinterest, which just filed confidentially for an IPO and is seeking a valuation of at least $12B, according to the WSJ sources. Goldman Sachs and JPMorgan are underwriting and aiming for a late-June listing. Pinterest (PINIT) surpassed 250M MAUs last September and grew revenue 50% in 2018 to over $700M.

More fallout... AT&T (T) and Hasbro (NASDAQ:HAS) are the latest to pull ads from YouTube (GOOG, GOOGL) following reports that pedophiles latched onto videos of young children and lurked in the comments section. YouTube has reportedly sent a memo to advertisers outlining changes it's making this week to help protect brands, including "deleting accounts and channels, disabling comments and reporting illegal activity."

Tech culture is spreading to the finance industry, with JPMorgan (NYSE:JPM) the latest to tear down walls and move its San Francisco investment bankers onto "hot desks." The company is also redesigning offices in Dallas, Phoenix, Columbus, and other cities. Goldman Sachs (NYSE:GS) created shared workspaces at in its New York asset management office in 2017, and Morgan Stanley (NYSE:MS) is reportedly redesigning its Manhattan headquarters to move brokers, traders and tech employees closer together.

Judging by an early count in the first quarter, corporate buybacks could be on their way to another record year, potentially topping the just over $1T seen in 2018, CNBC reports. Threatening new legislation to curtail them, senators on both sides of the aisle have recently targeted the repurchases, maintaining corporate America is getting an unfair advantage in the tax code that rewards selfish behavior.

Nike was in the spotlight yesterday after Duke basketball star Zion Williamson blew out of his PG 2.5 basketball shoe and sprained his knee in a highly-publicized game against North Carolina. Shares ended the session down 1%. There has been a bright spotlight on Williamson this college basketball season, with some seeing him as the next NBA superstar and logical Nike (NYSE:NKE) marketing target.

Pivot to the East... More big deals are being signed by Crown Prince Mohammed bin Salman as he continues his tour in Asia. State-owned Saudi Aramco (ARMCO) inked an agreement to form a joint venture with Chinese conglomerate Norinco to develop a refining and petrochemical complex in Panjin city, saying the project is worth more than $10B. Aramco will supply up to 70% of the crude feedstock for the complex, which is expected to start operations in 2024.

M&A? Barrick Gold (NYSE:GOLD) has looked into a bid for Newmont Mining (NYSE:NEM) as a means to boost production, Bloomberg reports. That might involve the world's No. 2 gold producer teaming up with another miner on the bid, such as Newcrest Mining (OTCPK:NCMGY). That news comes ahead of a key mining confab next week, BMO's Global Metals & Mining Conference.

Pushing further into mobility services, German carmakers Daimler (OTCPK:DDAIF) and BMW (OTCPK:BMWYY) are deepening their cooperation by combining their ride-hailing, parking and electric car charging businesses. The luxury manufacturers have earmarked more than €1B to expand the JV, which includes Car2Go, DriveNow and ChargeNow - as the carmakers move beyond auto production towards a pay-per-minute system based on vehicle usage.

Tesla slipped nearly 4% on Thursday after a new reliability survey from Consumer Reports said the organization can no longer recommend the Model 3 sedan. Many of the issues are in electronics, according to the agency. The Trump administration also ended negotiations with California over a proposed rollback of Obama-era fuel efficiency standards for cars and light trucks, further weighing on Tesla (NASDAQ:TSLA) shares.

Delta Air Lines has opened the world’s largest engine test facility, the latest bid to grow its aircraft maintenance business eightfold over the next five years by fixing its own planes and those of other airlines. The big bet aims for $1B a year - based on recurring revenue from some of the biggest and newest engines - compared with Delta's (NYSE:DAL) overall revenue of $44.4B in 2018.

SpaceX on Thursday night recorded its second milestone of reusing a single Falcon 9 rocket three times, launching a hodgepodge of spacecraft into orbit. Among them was a communications satellite built by Maxar Technologies (NYSE:MAXR), as well as a SpaceIL's "Beresheet" lunar lander which, if successful, would see Israel become the fourth country in history to land on the moon and the first privately-funded lunar mission. Reusing rockets is key to SpaceX (SPACE), which hopes to make humanity "a multiplanetary species."

Thursday's Key Earnings

Baidu (NASDAQ:BIDU) +3.8% AH surpassing estimates.
Dropbox (NASDAQ:DBX) -9.7% AH on disappointing guidance.
First Solar (NASDAQ:FSLR) -5.4% AH missing Q4 expectations.
Hewlett Packard Enterprise (NYSE:HPE) +1.7% AH raising its EPS forecast.
Kraft Heinz (NASDAQ:KHC) -20.6% AH slashing its dividend, SEC subpoena.
Newmont Mining (NEM) +0.1% on rising gold production.
Roku (NASDAQ:ROKU) +5.3% AH increasing accounts, engagement.
Stamps.com (NASDAQ:STMP) -49% AH discontinuing its partership with USPS.
Zillow (NASDAQ:Z) +6.3% AH as Barton returned to the CEO role.

Today's Markets

In Asia, Japan -0.2%. Hong Kong +0.7%. China +1.9%. India -0.1%.
In Europe, at midday, London +0.5%. Paris +0.3%. Frankfurt +0.5%.
Futures at 6:20, Dow +0.5%. S&P +0.5%. Nasdaq +0.6%. Crude +0.9% to $57.48. Gold -0.2% to $1325. Bitcoin +0.9% to $3917.
Ten-year Treasury Yield flat at 2.68%

Today's Economic Calendar

10:15 Fed's Mary Speech
10:15 Fed's Williams: “Prospects for Inflation with a High-Pressure Economy”
1:00 PM Baker-Hughes Rig Count
1:30 PM Fed's Bullard: “The Future of the Federal Reserve's Balance Sheet”
1:30 PM Fed’s Clarida: “The Future of the Federal Reserve's Balance Sheet”
1:30 PM Fed's Harker: “The Future of the Federal Reserve's Balance Sheet”
5:30 PM Fed's Williams Speech

Companies reporting earnings today »