Global & FX

  • Today - Friday, May 25, 2018
    • We might have expected the bid for Treasurys to vanish after the president this morning said the June 12 summit with North Korea "could" still happen. But troubles in the EU periphery have yields falling in Western Europe and the U.S.
    • Spain is driving the narrative today, with the future of PM Rajoy in doubt and corruption convictions for former officials in his ruling party. Spanish stocks are  down 2.1%, and the 10-year yield is up eight basis points to 1.48%. Italian shares are off 1.4%, and its 10-year yield is up 14 basis points to 2.54%.
    • The German 10-year Bund yield is down 8.5 basis points to 0.39%, and the 10-year U.S. Treasury is lower by 5.5 basis points to 2.92%. TLT +0.8%, TBT -1.6%.
    • ETFs: TLT, TBT, TMV, TBF, EDV, TMF, TTT, ZROZ, VGLT, TLH, UBT, SPTL, DLBS, VUSTX, TYBS, DLBL
    • Fiat Chrysler Automobiles (NYSE:FCAU) recalls 4.8M vehicles due to a potential defect with the cruise control function.
    • The recall action covers Jeep, Ram, Chrysler and Dodge models built between 2014 and 2018.
    • Drivers are warned by the automaker to stop using the cruise control function immediately due to the risk that it can't be turned off.
    • Model included in recall: 2015-17 Chrysler 200 sedan, 2014-18 Chrysler 300 sedan, 2017-18 Chrysler Pacifica minivan, 2015-18 Dodge Challenger coupe, 2014-18 Dodge Charger sedan, 2014-18 Dodge Journey CUV, 2014-18 Dodge Durango SUV, 2014-18 Jeep Cherokee SUV, 2014-18 Jeep Grand Cherokee SUV, 2018 Jeep Wrangler, 2014-19 Ram 1500 pickup, 2014-18 Ram 2500 pickup, 2014-18 Ram 3500 pickup, 2014-18 Ram 3500 cab chassis.
    • Shares of Fiat are down 2.47% in premarket trading in the U.S.
    • Antitrust officials from China’s Anti-Monopoly Bureau of Ministry of Commerce met with Micron Technology (NASDAQ:MU) yesterday to “express concerns” about continued price increases for PC DRAM products.
    • The report comes from TrendForce’s DRAMeXchange.
    • China is the largest importer of memory products and thus is more vulnerable to DRAM price shifts. China has worked to build up its domestic DRAM and NAND Flash industries and that’s likely to ramp with the continued trade tensions with the US.
    • Samsung (OTC:SSNNF, OTC:SSNLF), SK Hynix (OTC:HXSCF, OTC:HXSCL), and Micron hold 44.9%, 27.9%, and 22.6% of the DRAM market.
    • Micron shares are down 1.6% premarket to $61.49.  
    • Previously: Micron still trading higher on analyst day, $10B share repurchase (May 24)
    • GDP grew by 1.2% Y/Y in the quarter, unchanged from the preliminary estimate and in line with expectations.
    • GDP growth of 0.1% M/M in 1Q18, in-line with estimates.
    • 1Q18 business investment revised down to annual growth of 2.0% from the prior 2.6%.
    • On a quarterly basis, business investment contracted 0.2%, compared to the 0.3% growth initially estimated.
    • Source: Investing.com
    • ETFs: FXB, EWU, GBB, DBUK, FKU, EWUS, HEWU, QGBR, DGBP, FLGB, UGBP
    • Political uncertainty in Italy over the past couple or weeks has fed the rout in government bonds for the EU peripheral countries (namely Italy, Spain to an extent), but growing calls to remove Spanish PM Mariano Rajoy are doing the trick today.
    • At issue are the corruption-related convictions of a number of former officials of Rajoy's ruling party. The centrist Ciudadanos party today indicated it will back a no-confidence vote in Rajoy unless he calls a snap election.
    • "Rajoy’s chances of completing his term are minimal, it’s a matter of timing now,” says Oxford Economics' Angel Talvera.
    • Most of Europe is in the green, but Spain's IBEX 35 has tumbled 2% and Italy's MIB 1%. Government bond yields are lower in Germany and the U.K., but Spain's 10-year yield is up 7 basis points to 1.47%, and Italy's 7.5 basis points to 2.476%.
    • Checking the Spanish banks, Santander (NYSE:SAN) and BBVA are both down more than 4% premarket.
    • ETFs: EWP, EWI, HEWI, HEWP, DBSP, DBIT, FLIY
    • An overnight report that OPEC and Russia are mulling an increase in production by up to 1M barrels per day has WTI crude oil down 2.2% to $69.13 per barrel.
    • Also in the news are comments by Saudi Arabia Energy Minister Khalid Al-Falih that the current pace of oil demand growth is "not sustainable." On production, Saudi Arabia, he says, has about 2M barrels per day of spare capacity.
    • The major average futures are in the green, but the XLE is down 0.85% premarket after yesterday's 1.7% decline. USO -2.25% premarket
    • ETFs: XLE, VDE, ERX, OIH, ERY, DIG, BGR, FENY, IYE, DUG, FIF, RYE, PXJ, CRAK, FXN, DDG, NANR, FTXN, JHME, ERYY, ERGF
    • Daimler (OTCPK:DDAIF) could see as many as 600K diesel C-Class and G-Class vehicles recalled due to emission cheating allegations, according to German publication Der Spiegel.
    • Germany's KBA Motor Transport Authority is said to be deep into an investigation over the use by the automaker of emission manipulation devices.
    • Shares of Daimler are down 0.67% in Frankfurt.
    • Japan +0.06%.
    • Hong Kong -0.56%.
    • China -0.42%.
    • India +0.60%.
    • London +0.29%.
    • Paris +0.58%.
    • Frankfurt +0.50%.
    • "The downward trend [in German business morale] has stopped," according to Ifo institute economist Klaus Wohlrabe. "The global economic environment is difficult, but Germany is holding its ground."
    • Ifo's gauge of business climate held at 102.2 in May, halting a five-month slowdown in Europe's largest economy that began at the start of the year.
    • ETFs: EWG, DAX, GF, DXGE, HEWG, DBGR, EWGS, FGM, QDEU, FLGR
    • Greece's European creditors have agreed to kick talks finalizing the debt relief measures they are willing to grant Athens to June 21, just two months ahead of the country’s prospective bailout exit.
    • The key moment will decide whether Greece can make a clean escape after eight years of financial rescues and raise money on financial markets following a lengthy sustainability analysis.
    • ETFs: GREK
    • "Mexico is not going to negotiate [NAFTA] on the basis of pressure," said President Enrique Pena Nieto's spokesman, but sources said the country made a new offer after the U.S. launched a probe into auto tariffs.
    • "If an agreement is reached, it will be one that truly benefits Mexico. If these conditions don’t exist, Mexico will not move forward."
    • ETFs: EWW, MXF, MXE, DBMX, HEWW, MEXX, FLMX
    • Irish voters will decide today whether to remove a ban on abortion from the country's constitution, after legalizing divorce in 1995, and three years ago becoming the first country in the world to adopt gay marriage by popular vote.
    • Government funding is also on watch. The European Commission has expressed concerns about the cost-effectiveness and sustainability of the Irish health system, which could have negative impacts in the medium term on fiscal sustainability.
    • ETFs: IRL, EIRL
    • North Korea is still hopeful for a "Trump formula" to resolve the standoff over its nuclear weapons program, and remains open to an upcoming summit, as it blew up tunnels leading to its nuclear facilities in front of international journalists.
    • President Trump canceled the June 12 meeting yesterday, calling the collapse "a tremendous setback for North Korea and indeed a setback for the world."
    • KOSPI -0.2% to 2,461.
    • ETFs: EWY, KF, KORU, KEF, DBKO, FKO, DXKW, KOR, HEWY, FLKR
  • Thursday, May 24, 2018
    • Apple (NASDAQ:AAPL) has won $538.6M in damages from Samsung (OTC:SSNLF) in a retrial of the damages portion of a long-fought patent lawsuit.
    • The new verdict comes almost six years after a jury awarded Apple more than $1B in the case, linked to infringement of iPhone IP.
    • The damages portion was returned to a lower federal court in December 2016 by the U.S. Supreme Court in order to determine whether an entire iPhone, or its components, were the "article of manufacture" that would affect damages.
    • The new jury decision effectively splits the difference between wildly different suggestions from the companies: $28M in damages suggested by Samsung, and $1B suggested by Apple.
    • But with about $399M at stake in the retrial, the $538.6M figure is a relative win for Apple.
    • After hours: AAPL +0.1%.
    • A decision on Fox's (FOX +0.4%, FOXA +0.2%) bid to buy the rest of Sky (SKYAY -1.2%) is coming soon, UK Culture Minister Matt Hancock says.
    • “June 13 is the deadline, so between now and then,” he told Bloomberg TV from Paris.
    • Meanwhile, Hancock has already essentially given a blessing to a possible bidding war, saying he doesn't see a need for a public-interest review of Comcast's (CMCSA -1%) £22B bid for Sky.
    • If Hancock chooses to block Fox's bid, then Disney (DIS -0.9%) could make its own bid to face off with Comcast.
    • American Depositary Receipts of BT Group (BT +0.3%), down as much as 1.3% earlier, have jumped back into positive ground after word that the incumbent British telecom is drawing interest in its Openreach fixed network.
    • The network has been a political bone of contention, with rivals (particularly Vodafone (NASDAQ:VOD)) saying Openreach needs to be separated and/or regulated to provide an even playing field.
    • British media regulator Ofcom pushed for a split of Openreach in fall 2016, though BT had dug in and said the unit needed to be left alone.
    • Updated: Bloomberg reports that BT has gotten informal interest from private-equity and infrastructure investors, though deliberations are early stages and might not result in any deals. Under consideration are minority and majority stake purchases in the unit, which could be valued overall at £12.4B-£24.9B (up to $33B) -- a wide range consideration regulatory uncertainty.
    • In a letter to North Korean dictator Kim Jong Un, the president says their planned June meeting is no longer going to happen. "Based on the tremendous anger and open hostility displayed in your most recent statement ... it is inappropriate at this time, to have this long-planned meeting."
    • Stocks (SPY -0.6%) are slipping modestly, and the 10-year Treasury yield is now firmly under 3% - off three basis points to 2.965%. TLT +0.75%, TBT -1.5%
    • Gold (GLD +0.9%) is getting perky as well.
    • Singapore’s economy remained on solid footing in the first quarter, with the government narrowing its growth forecast for 2018 to 2.5 to 3.5 percent expressing more certainty of a steady pace in 2018 as global trade risks and tightening financial conditions allow for a patient monetary policy.
    • Steady growth that’s within the government’s forecast range, coupled with data earlier this week showing inflation comfortably within the target, should support the central bank’s plans to gradually tighten monetary policy this year.
    • Construction fell 5% Y/Y, Manufacturing climbed 9.8% percent, financial services industry surged 9.1% in 1Q18.
    • Source: Investing.com
    • EWS, FXSG, SGDS
    • UK retail sales rose 1.6% in April from revised data of 1.1% decline in March, compared to the forecast of 0.8%.
    • Retail sales rose by 1.4% Y/Y last month from 1.3% in March, compared to the forecast of 0.1% gain.
    • Core retail sales, which exclude automobile sales and fuel, increased by 1.3% in April, after dropping 0.5% in March.
    • Source: Investing.com
    • ETFs: FXB, EWU, GBB, DBUK, FKU, EWUS, HEWU, QGBR, DGBP, FLGB, UGBP
    • Japan -1.11%.
    • Hong Kong +0.31%.
    • China -0.45%.
    • India +1.08%.
    • London -0.06%.
    • Paris +0.50%.
    • Frankfurt +0.48%.
    • Looking to stop MS-13 from crossing into the U.S. illegally, President Trump has warned of plans to cut funding for countries from which gang members originate.
    • "We're looking at our whole aid structure. It’s going to be changed very radically... We're going to work out something where every time someone comes in from a certain country, we are going to deduct a rather large sum of money."
    • ETFs: EWW, MXF, MXE, DBMX, HEWW, MEXX, FLMX
    • "China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems," said Gao Feng, spokesman at the Ministry of Commerce, adding that it will "firmly defend" its rights and interests.
    • The comments follow the opening of an investigation by the Trump administration into car and truck imports, which may lead to new U.S. tariffs similar to those imposed on imported steel and aluminum in March.
    • Previously: Trump considering tariffs on new imported autos up to 25% (May. 23 2018)
    • Premarket movement: GM +0.9%, F +1.3%, TSLA +0.3%, FCAU -2.1%, TM -1.4%, RACE, +0.9%.
    • A pickup in industrial output and resilient growth in services and agricultural production kept Mexico's economy turning over in Q1.
    • The increase, equivalent to an annualized rate of 4.6%, was the largest since the third quarter of 2016.
    • The economy has been more resilient than expected considering negotiations with the U.S. and Canada to rewrite NAFTA.
    • ETFs: EWW, MXF, MXE, DBMX, HEWW, MEXX, FLMX
    • North Korea's senior envoy for American affairs has renewed a threat to call off an upcoming summit and warned that Pyongyang could "make the U.S. taste an appalling tragedy it has neither experienced nor even imagined."
    • Choe Son Hui also also referenced a "nuclear-to-nuclear showdown" and dubbed Vice President Mike Pence "a political dummy" for his comparisons to Libya's denuclearization.
    • KOSPI -0.2% to 2,466.
    • ETFs: EWY, KF, KORU, KEF, DBKO, FKO, DXKW, KOR, HEWY, FLKR
  • Wednesday, May 23, 2018
    • Computer Modelling Group (OTC:CMDXF) has named Ryan Schneider to be its next president and chief executive officer, with current President/CEO Kenneth Dedeluk set to retire at the annual meeting in July.
    • Schneider is currently the company's chief operating officer.
    • He'll take over on July 12 and has also been nominated to join the board; Dedeluk is also up for re-election and is expected to be named vice chairman.
    • French unemployment rose 0.3% in the first quarter of the year, confounding economists' expectations for a decline and suggesting President Emmanuel Macron's policies to boost jobs and growth are struggling to find traction.
    • French ILO jobless rate rose to 9.2% in the first quarter, up from 9.0 percent in the last quarter of 2017, compared to the forecast of 8.8%.
    • While disappointing for a government that has banked on bringing high unemployment down via faster growth and tweaks to employment law, analysts suggest France may now be hampered by a wider loss of momentum across the euro zone.
    • Source: Investing.com
    • EWQ, FLFR
    • Telefonica (TEF -1.3%) is establishing a security/cybersecurity advisory council and hired Javier Solana, former secretary general of NATO, to join it, Vozpopuli reports.
    • The board features 10 experts in the fields and held its first meeting today, with company CEO José María Álvarez-Pallete taking part.
    • The panel features nine men and one woman.
    • Vozpopuli report (Spanish)
    • Source: Bloomberg
    • U.K. CPI unexpectedly slowed to 2.4% Y/Y in April, the lowest level since March 2017, compared to the forecast of 2.5.%.
    • CPI rose 0.4% M/M in April, compared to the 0.1% in March
    • Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 2.1% last month, below forecasts for an increase of 2.2%.
    • The retail price index increased by 3.4% on an annualized basis in April, compared to 3.3% rise in March.
    • ETFs: FXB, EWU, GBB, DBUK, FKU, EWUS, HEWU, QGBR, DGBP, FLGB, UGBP
    • Source: Investing.com
    • Germany flash private sector composite output index deteriorated in May to 53.1 from 54.6 in April, compared to the forecast of 54.7.
    • German services PMI declined to 52.1 this month, from 53.0 in April.
    • German manufacturing PMI slumped to 56.8, lowest in 15 months from 58.1 in April.
    • Commenting on the report, Phil Smith, Principal Economist at Markit, said, “weaker order book growth and a further waning of business confidence point to the economy carrying a lot less underlying momentum than at the end of 2017."
    • Source: Investing.com
    • ETFs: EWG, DAX, GF, DXGE, HEWG, DBGR, EWGS, FGM, QDEU, FLGR
    • Margins are already cycle-high for advertising sector firms, and adding in growth that lags GDP makes a warning bell for the stocks, Morgan Stanley says.
    • The giants -- WPP, Publicis Groupe (OTCQX:PUBGY), Interpublic Group (NYSE:IPG) and Omnicom (NYSE:OMC) -- look to be losing share in media spending, the firm says in a note. If the sector goes through a cyclical slowdown in 2019, then valuation multiples could re-test lows from late 2017, it says. (h/t Bloomberg)
    • WPP today is down 4.7%; Publicis is off 2.7%; Interpublic Group is 2.5% lower (but closer to its 52-week high than its 52-week low); Omnicom is 4% lower.
    • Previously: WSJ: Omnicom takes HSBC media account from struggling WPP (May. 22 2018)
    • Tata Motors (TTM +0.9%) trades higher despite posting almost a 50% drop in net profit during Q1. The bottom line mark also missed the consensus estimate of analysts by a wide margin.
    • Investors make have their focus on the automaker's performance in its domestic market. "We gained market share in both commercial and passenger vehicles with strong improvement in profitability and positive cash flow," notes Tata Chairman N Chandrasekaran.
    • Jaguar Land Rover posted 4% revenue growth during the quarter.
    • Previously: Tata Motors reports Q4 results (May 23)
    • Hitting new 18-month lows, IHS Markit's Eurozone PMI fell from 55.1 in April to 54.1 in May,  suggesting a stiffer policy challenge for the ECB ahead.
    • While there was a series of public holidays in May, it is "becoming increasingly evident that underlying growth momentum has slowed compared to late last year, especially in relation to exports," said Chris Williamson, economist at IHS Markit.
    • Japan -1.18%.
    • Hong Kong -1.82%.
    • China -1.40%.
    • India -0.88%.
    • London -0.66%.
    • Paris -1.21%.
    • Frankfurt -1.35%.
       
    • Adding to the losses seen on Tuesday, U.S. stock index futures are sinking further into the red, after President Trump told reporters there was a "substantial chance" his summit with Kim Jong Un will not take place on June 12.
    • The president also said he was "not satisfied" with trade talks with China.
    • "We have a long way to go," he declared, adding he wants the talks to go "fairly quickly."
    • Asia: Nikkei -1.2%; Hang Seng -1.7%; Shanghai -1.4%; Sensex -0.5%.
    • Europe: FTSE 100 -0.6%; CAC 40 -1.4%; DAX -1.2%.
    • U.S. futures: Dow -0.8%; S&P -0.7%; Nasdaq -1%.
    • Oil is down 0.5% at $71.87/bbl, gold is flat at $1219/ounce and the 10-year Treasury yield is down 5 bps to 3.01%.
    • ETFs: SPY, QQQ, DIA, SH, SSO, VOO, SDS, IVV, SPXU, TQQQ, UPRO, PSQ, SPXL, RSP, SPXS, SQQQ, QID, DOG, QLD, DXD, UDOW, RWL, SDOW, VFINX, EPS, DDM, QQEW, QQQE, SPLX, SFLA, QQXT, SPUU, SPXE, LLSP, UDPIX, OTPIX, RYARX, SPXN, SPDN, SPXT, SPXV
    • The lira slid as much as 2.8% against the dollar overnight to a fresh record low of 4.7989, after Fitch Ratings said it was concerned about the erosion of the central bank's independence to fight double-digit inflation.
    • President Erdogan confirmed last week that he intends to take more responsibility for Turkey's monetary policy if he wins an election next month.
    • The currency has slumped about 12% this month alone, with only the Argentine peso having plunged more.
    • ETFs: TUR, TKF
  • Tuesday, May 22, 2018
    • Northland Power (OTCPK:NPIFF) has named Mike Crawley its new chief executive officer.
    • He's replacing John Brace, who's retiring effective Aug. 4 after 30 years with the company.
    • Crawley is currently Northland's executive VP, Development. He's been with the company since 2015 and was previously CEO of AIM PowerGen.
    • Ctrip.com (NASDAQ:CTRP) is up 2% in after-hours trading following the release of Q1 earnings where it beat on top and bottom lines and increased margins.
    • Operating income jumped 58% to 590M yuan; non-GAAP operating income rose 7.8% to 966M yuan.
    • A boost in interest income helped spur net income to jump to 1.04B yuan from a year-ago 44M yuan; comprehensive income attributable to Ctrip.com International was 1.459B yuan, up from 1.203B.
    • Revenue breakout: Accommodation reservation, 2.49B yuan (about $397M, up 22.9% in renminbi terms); Transportation ticketing, 2.89B yuan (about $460M, up 0.5%); Packaged tour, 834M yuan (about $133M, up 17.6%); Corporate travel, 180M yuan (about $29M, up 25%); Others, 377M yuan (about $60M, up 10.2%).
    • For Q2, it's guiding for continued net revenue growth of 12-17% (adjusting year-ago revenue for the new recognition standard).
    • Conference call to come at 8 p.m. ET.
    • Press release
    • Top global McDonald's franchisee Arcos Dorados (NYSE:ARCO) is up 4.7% after hours in NYSE trading after announcing a $60M share repurchase program.
    • The program has a one-year duration, expiring May 22, 2019.
    • It reflects "confidence in the health and long-term outlook of the company," says CEO Sergio Alonso. “We are committed to delivering shareholder value, and with a strong balance sheet, and operating cash to sufficiently fund both our previously announced dividend resumption and investment programs, we believe we can buy back our shares while maintaining the flexibility to continue to execute on our strategic investment in the future.”
    • According to Bloomberg, traders poured $53M into the Direxion Daily Brazil Bull 3x Shares ETF (NYSEARCA:BRZU) yesterday. This came as the fund hit its lowest level in nearly one year.
    • They're being rewarded today - it's higher by 8.15%.
    • The popular iShares MSCI Brazil Capped ETF (NYSEARCA:EWZ) is up 2.7%.
    • HSBC has moved its global media account to Omnicom (NYSE:OMC) from flagging WPP (WPP +0.7%), following a review, The Wall Street Journal reports.
    • The review came as is typical after a change in marketing direction, and HSBC added former Mondelez exec Leanne Cutts as its chief marketing officer last year.
    • But the account has billings of about $400M and was worth about $20M in annual revenue to WPP as part of a long-held close relationship.
    • The HSBC account was at WPP's Mindshare, whose American Express business is also up for review; WPP is trying to hold its relationship with Ford Motor, also in review.
    • Tencent (OTCPK:TCEHY, OTCPK:TCTZF) leads a $50M Series C round in Chinese news app NewsDog, which is popular in India.
    • Other round participants: Danhua Capital, Legend Capital, and DotC United. 
    • The news aggregation company has over 50M users and is available in over 10 of India’s languages. 
    • Competitor: Bytedance’s Toutiao has 200M daily users in China and the parent company also owns Dailyhunt in India. Other competitors include Inshorts, NewsPoint, and a service from Alibaba’s (NYSE:BABA) UC Web.       
    • Previously: Tencent acquires majority stake in "Path of Exile" publisher (May 21)
    • Singapore's economy is expected to expand 4.3% Y/Y, 1.4% Q/Q basis in January-March quarter.
    • The country's growth is supported largely by the manufacturing sector, especially electronics, however electronics sector has seen a contraction in exports for five straight months.
    • A trade spate between the United States and China is another headwind for Singapore as its exports equate to around 200 percent of its GDP.
    • Source: Investing.com
    • ChinaNet Online (NASDAQ:CNET) is up 3.1% after double-digit revenue gains in it Q1 results led to a narrower net loss.
    • Revenues rose 13.7% overall, and revenues from search engine marketing and data services rose 29.6% to $6.4M as the company rapidly expanded its client base.
    • Gross profit was $0.6M, down from a year-ago $1.3M, chiefly due to increased investment in resources for lead generation and sponsored search.
    • Net loss narrowed to $0.6M from a year-ago loss of $1.1M.
    • The company had cash and equivalents of $7.5M, vs. $3M as of De.c 31; advances from customers were $2M, vs. $3.6M at the end of Q4.
    • Press release
    • The growth in the German economy continues to be robust but the underlying momentum has likely weakened and the risk of a global trade war still remains.
    • The slowdown comes at a sensitive time for the European Central Bank, which is debating whether to end a 2.55 trillion euro bond purchase scheme, satisfied that growth is strong enough now to generate much needed inflation.
    • But the Bundesbank dismissed some of these worries, arguing that the slowdown has to be seen in the context of exceptionally strong momentum since mid-2016.
    • Source: Investing.com
    • European Central Bank policymaker Erkki Liikanen stated that underlying inflation in the Eurozone will need time to accelerate and support the rise in headline inflation.
    • He further states there was an exceptional amount of uncertainty about how unconventional monetary policy worked but argued that easy monetary policy remained necessary for inflation to rise back to the ECB's target of almost 2.0%.
    • Source: Investing.com
    • More hitches in optical component stocks as President Trump now says there's not yet a deal with China to save ZTE (OTC:ZTCOF).
    • Trump contradicted this morning's Wall Street Journal report suggesting the deal outlines were set, including financial penalties for ZTE and required management changes.
    • ZTE had ceased major business operations after receiving a seven-year ban on buying components and software from U.S. companies.
    • Up as much as 2.8%, Oclaro (NASDAQ:OCLR) has trimmed gains a bit to 1.8%. Up as much as 4.9% today, Acacia Communications (NASDAQ:ACIA) is now up just 0.4%.
    • A week after its earnings spurred share declines, NetEase (NTES +1.1%) is up at midday following the latest update to its games pipeline.
    • The company unveiled 20 new titles for PC and mobile, including "MMO games, sandbox games, battle arena games, puzzle games, simulation games, collectible card games and sports games."
    • It's introducing NetEase Da Shen to bring game players on to a single platform, an "online community of elite game players," as part of the news.
    • And it announced licensing partnerships with TV, film and stage producers and book/comic publishers to extend its titles, including a live action movie based on Onmyoji and Internet dramas based on the Knives Out and Tianxia franchises.
    • Comcast (CMCSA +0.9%) is seeing one less hurdle for a $31B takeover of Sky (SKYAY +0.6%), with the UK's culture secretary saying regulators aren't likely to have a problem with the deal.
    • Matt Hancock, the UK secretary of State for Digital, Culture, Media and Sport, says he doesn't expect to intervene since the proposed deal "does not raise concerns in relation to public interest considerations which would meet the threshold for intervention.”
    • Interested parties have until 5 p.m. Thursday to submit statements and Hancock says he'll come to a final decision shortly.
    • The deal's at the crossroads of a few others: The Comcast-Sky bid comes directly in the middle of Fox's (FOX +1.5%, FOXA +1.4%) own bid for the 61% of Sky it doesn't already own, and complicates Disney's (DIS +0.7%) bid for Fox's media assets (and possible separate bid for Sky).
    • A decision favoring AT&T (T +0.5%) in its Time Warner (TWX +0.1%) bid would likely strengthen Comcast's own bid for Fox media assets, Mike Farrell notes.
    • Dingbo Xu has joined the board at JD.com (JD +1%), replacing David Daokui Li.
    • The professor will serve as chairperson of the board's nominating and corporate governance committee as well as sitting on the audit committee.
    • He's currently Essilor Chair Professor in Accounting and an associate dean at CEIBS in Shanghai, and has served on several public companies boards, including People's Insurance of China Limited and China Cinda Asset Management.
    • Yesterday's panicky selling in Italian government paper has been met with a bout of buying today, with the 10-year yield down eight basis points to 2.336%.
    • The German 10-year Bund yield this session is higher by three basis points.
    • Europe's modestly higher, with Italian shares modestly underperforming, up 0.15%.
    • ETFs: EWI, HEWI, DBIT, FLIY
    • Previously: Political unknown proposed as new Italian PM (May 22)
    • Previously: Italian bonds routed (May 21)
    • Automobile stocks are generally higher after China lowered its auto import tariff to 15% from 25%. The Finance Ministry also dropped the tariff on imported car parts to a standardized 6% across the board from an average of 10%.
    • Analysts say that although the tariff rate drop is significant and could help bottom lines, it probably won't have a major impact on where automakers actually assemble vehicles. The lower tariff on imported parts may make it more economical for global automakers to assemble in China and keep their partnerships with Chinese automakers - a major boost for the China automobile industry (OTC:CQCAF, OTCPK:GWLLF, OTCPK:GWLLY, OTCPK:GELYF, OTCPK:GELYY, OTCPK:BYDDY, OTCPK:BYDDF, OTCPK:DNFGY, OTCPK:DNFGF, OTCPK:DDAIF, OTCPK:GNZUF, OTCPK:GNZUY).
    • Shares of Tata Motors closed up 3.8% in Bombay, while the U.S.-trade ADRs are up 3.3% in premarket trading. BMW is 1.95% higher in Frankfurt, while Daimler (OTCPK:DDAIF) is up 1.55% and Volkswagen (OTCPK:VLKAY) is 1.36% higher in its home market. Ford (NYSE:F) is up 0.78% premarket, while GM is 1.02% higher and Fiat Chrysler Automobiles (NYSE:FCAU) is showing a 2.44% gain. Tesla (NASDAQ:TSLA) is up 0.86% after the China development.
    • Previously: China to cut import duties on cars (May 22)
    • Japan -0.18%.
    • Hong Kong Closed.
    • China +0.02%.
    • India +0.15%.
    • London +0.08%.
    • Paris -0.08%.
    • Frankfurt +0.03%.
    • Brexit negotiations will resume today in Brussels following Theresa May's compromise offer at last week's Western Balkans summit in Sofia.
    • Her new “backstop” proposal would keep the U.K. tied to European customs rules for longer in a bid to solve the Irish border issue.
    • While she forced ministers to get behind her plan, it received a cool response from EU leaders and officials.
    • ETFs: FXB, EWU, GBB, DBUK, FKU, EWUS, DXPS, HEWU, QGBR, DGBP, FLGB, UGBP
    • The easing of trade tensions between the U.S. and China is continuing, with the latter pledging to cut import tariffs on passenger vehicles to 15%, down from 25%. Import duties on car parts will be reduced to 6%.
    • It comes after Washington froze its proposed Chinese tariffs and looked into lifting the ban on ZTE, while Beijing halted its probe into U.S. sorghum imports and restarted the review of the Qualcomm-NXP deal.
    • Premarket movement: F +0.8%, FCAU +2.4%, GM +1.3%, HMC, TM, TSLA +0.8%, TTM +3.3%.
    • Largely unknown Florence University law professor Giuseppe Conte has been chosen by the coalition of the 5-Star Movement and League to lead Italy's government.
    • If his appointment is confirmed by President Sergio Mattarella, he will present a list of cabinet members for the president's approval.
    • The government will then be subject to confidence votes in both houses of parliament.
    • ETFs: EWI, HEWI, DBIT, FLIY
  • Monday, May 21, 2018
    • Tencent (OTCPK:TCEHY, OTCPK:TCTZF) acquires a majority stake in “Path of Exile” publisher Grinding Gear Games.
    • Grinding Gear Games announced via blog post and said it will remain an independent company. 
    • Path of Exile launched on PC in 2013 and Xbox One in 2017 and had more than 14M players as of 2016. Last year, the game saw a 56% Y/Y increase in player engagement.
    • The New Zealand-based publisher plans to launch new Exile expansions this year and next with version 4.0.0 expected to enter beta in early 2020.  
    • Alibaba’s (NYSE:BABA) Ant Financial leads an over $200M Series D round in motion sensing company Orbbec.
    • The round also included SAIF Partners, R-Z Capital, Green Pine Capital Partners, and Tianlangxing Capital. 
    • Orbbec designs and manufactures 3D sensors that work for facial and gesture recognition, 3D measurement, and map reconstructions. The sensors can work in smartphones, robots, or smart home devices.
    • Alibaba shares are up 1.3% to $197.51 on the easing US-China trade tensions. 
    • Previously: Stocks surge at the open as U.S.-China trade war 'on hold' (May 21)
    • Indonesia's central bank will conduct three foreign exchange swap auctions this week to ensure there is enough rupiah liquidity in the market following the hike in its key rate, the 7-day reverse repo rate by 25 bps to 4.50%
    • The overnight contract for the Jakarta Interbank Offered Rate rose to 4.22528 percent on average the following day, from 4.02500 percent.
    • The rupiah has been under pressure in past weeks as U.S. Treasury yields rose and the dollar rallied. The currency continued to fall despite BI's rate hike and on Monday it softened further to trade at 14,195 to the dollar, its weakest since October 2015.
    • Source: Investing.com
    • China's 21Vianet Group (NASDAQ:VNET) is up 11.6% on heavy volume in a delayed move after Thursday's earnings report.
    • Shares are at their highest point since March 23. They're now down just 16% YTD.
    • On Thursday, the company reported EBITDA nearly doubled to 196M yuan, with EBITDA margin jumping to 24.5% from the prior year's 11.6%.
    • China to "actively and steadily" deleverage and tackle financial risks, citing the country's five-year plan (2016-2020) for the financial sector.
    • China will significantly boost the share of direct financing in its financial system, especially equity financing.
    • China will continue to promote the process of yuan internationalization, expecting cross-border yuan payments to account for over a third of all cross-border payments by 2020.
    • Source: Investing.com
    • The supposedly bullish news of a power-sharing agreement between Italy's Five Star Movement and The League isn't doing much to help that country's market for government debt, and chatter about a eurozone break up is again entering the conversation.
    • Italy's 10-year government bond has exploded higher by 18 basis points today to 2.40%. Against Germany, it looks even worse, as 10-year Bund yields are down six basis points.
    • Italian stocks are the worst performers on the Continent as well, with the FTSE MIB down 1.5% vs. the Stoxx 600's 0.3% advance.
    • Checking another peripheral name, Spanish 10-year yields are up 7.5 basis points to 1.50%, and the IBEX 35 is off 0.45%.
    • ETFs: EWP, EWI, HEWI, HEWP, DBSP, DBIT, FLIY
    • Baidu (NASDAQ:BIDU) announces it will divest its global ad and tools business Global DU business.
    • After the completion of the transaction, Baidu will own about 34% of Global DU’s outstanding shares and won’t have effective control. 
    • The transaction is expected to close in Q3.   
    • Baidu shares are down 5.1% to $240.11.    
    • "Carmen Reinhart dropped an interesting stink bomb on the markets last week," JPMorgan Asset Management Global CIO Bob Michele tells Bloomberg.
    • Economist Reinhart took note of higher debt levels in emerging markets, as well as the increased exposure of that debt to foreign currency.
    • Michele agrees: "These economies have levered up and it’s not clear they can absorb higher funding rates going forward." 2016's taper tantrum ended up being a nothing-burger, says Michele, but this time, monetary tightening is the real deal - QE is over and a central bank rate hike cycle shows no signs of slowing.
    • ETFs: EEM, VWO, IEMG, EDC, SCHE, EDZ, EMF, MSF, ADRE, EEV, EUM, EET, SPEM, EEME, XSOE, DBEM, FEM, HEEM, EWEM, ROAM, ESGE, EDBI, EMLB, FLQE, KEMP, EMSA, KLEM, RFEM, EMEM, MFEM, PPEM
    • Altice (OTCPK:ALLVF) is off 1.8% in U.S. trading after word from MSCI that it will delete Altice A shares from its global standard and large-cap indexes.
    • The move is effective May 22, the day the stock goes ex-dividend for a separation of Altice USA (ATUS -3.3%), where Altice shareholders will get 0.4163 share of Altice USA for each share of Altice held.
    • Shares of Altice Class A are down 7.8% in Amsterdam.
    • WestJet Airlines (OTC:WJAFF, OTC:WJAVF) responds on Twitter to reports of works disruptions and a potential strike by pilots.
    • "We have not received any notification of labour action and remain actively engaged in negotiations. We will provide additional updates should this change as they become available," tweets the airline.
    • SoftBank’s (OTCPK:SFTBF, OTCPK:SFTBY) Fortress Investment Group is raising a $400M fund for suing tech companies over IP infringement, according to the NY Post.
    • Fortress will buy companies with patent portfolios and lend money to small-cap companies with rich patent portfolios. Fortress has conducted that type of lending for years. 
    • The fund will be the first IP fund for Fortress, which SoftBank acquired in December for $3.3B with the stipulation that Fortress would run independently. 
    • SoftBank’s $100B Vision Fund invests in larger tech companies more likely to be on the receiving end of IP infringement suits.  
    • Previously: SoftBank planning second Vision Fund, Saudi Arabian office (May 15)
    • Fiat Chrysler Automobiles (NYSE:FCAU) is planning to make a major production change in Italy, sources tell Automotive News.
    • The automaker is expected to stop making small cars like the Fiat Punto and Alfa Romeo MiTo Italy in order to focus on upscale Maserati and Jeep models.
    • The shift is part of a broad strategy by CEO Sergio Marchionne to focus on premium cars and hybrid electric vehicles over diesel-powered cars.
    • Japan +0.31%.
    • Hong Kong +0.60%.
    • China +0.66%.
    • India -0.67%.
    • London +0.90%.
    • Paris +0.72%.
    • Frankfurt -0.25%.
    • Stocks, oil prices and the dollar are all getting a boost, with the Dow set to leap 228 points, amid easing U.S.-China tensions that have roiled global markets this year. Dow +0.9%; S&P 500 +0.6%; Nasdaq +0.7%.
    • "We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Treasury Secretary Steven Mnuchin told Fox News.
    • Trade Representative Robert Lighthizer still cautioned that tariffs remained an important tool to "protect our technology."
    • Oil is up 0.4% at $71.65/bbl, gold is 0.6% lower at $1284/ounce and the 10-year Treasury yield is flat at 3.07%.
    • ETFs: SPY, QQQ, DIA, SH, SSO, VOO, SDS, IVV, SPXU, TQQQ, UPRO, PSQ, SPXL, RSP, SPXS, SQQQ, QID, DOG, QLD, DXD, UDOW, RWL, SDOW, VFINX, EPS, DDM, QQEW, QQQE, SPLX, SFLA, QQXT, SPUU, SPXE, LLSP, UDPIX, OTPIX, RYARX, SPXN, SPDN, SPXT, SPXV
    • The average price of regular-grade gasoline in the U.S. is now $3.00 per gallon after jumping $0.10 over the past two weeks.
    • Most expensive/cheapest in the nation? $3.79 in the San Francisco Bay Area and $2.54 in Baton Rouge, Louisiana.
    • Though prices at the pump are likely to be the highest since 2014, AAA is still projecting the largest Memorial Day weekend travel volume since 2005.
    • ETFs: UGA
    • Political instability in Italy seems to be coming to an end with a power sharing agreement between the Five Star Movement and The League.
    • While both parties are due to present their deal to the country's president later today, such a government could raise concerns across the eurozone due to planned higher spending.
    • Italy's main stock market index, the FTSE MIB, started the week more than 1.8% lower on the news.
    • ETFs: EWI, HEWI, DBIT, FLIY
    • With Argentina on the brink of a financial crisis, the IMF has formally begun bailout negotiations, without any objection from the Trump administration.
    • Such measures rarely advance without U.S. support.
    • The peso has fallen drastically against the dollar, while the nation has been dogged by persistent budget deficits, high inflation and trade imbalances.
    • ETFs: ARGT