Wall Street Breakfast: Storm's A Brewin'

Mar. 31, 2023 7:15 AM ET33 Comments
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Storm's a brewin'

A Manhattan grand jury has voted to indict former President Donald Trump on felony charges, launching the first criminal case against a former president. The precise charges are unknown and the felony indictment has been filed under seal, but Trump will now face surrender and arrest in the coming days. Trump's lawyers have confirmed he's been indicted, according to the Associated Press, referring to payments made during his 2016 campaign to silence claims of an extramarital sexual encounter.

Quote: "This is political persecution and election interference at the highest level in history," Trump said in response to the indictment. "The American people realize exactly what the Radical Left Democrats are doing here. Everyone can see it. So our Movement, and our Party - united and strong - will first defeat Alvin Bragg, and then we will defeat Joe Biden, and we are going to throw every last one of these Crooked Democrats out of office so we can MAKE AMERICA GREAT AGAIN!”

Digital World Acquisition (DWAC), the blank-check company taking Trump's social media company public, rose 11% AH on Thursday following the news (conservative video network Rumble (RUM) is also up in premarket trade). The case will likely provide a boost for Trump's media coverage, but is unlikely to have any legal bearing on his candidacy, even if he is convicted. The developments will also impact the messaging around the 2024 election season, which could cut different ways politically, and ultimately determine what administration will head to the White House and govern the U.S. economy.

Outlook: It appears that the case is being built on the falsification of business records, which has been made into a felony - due to an intersection with campaign finance law - like the payoff of porn star Stormy Daniels to protect the 2016 election campaign. It would be a novel approach to combine state charges with federal crimes, though a tax angle could change the legal theory behind the case, or possibly another hush money payment made to Playboy model Karen McDougal. The Manhattan case is just one that Trump is facing: There's a federal probe of his actions around his 2020 presidential loss, and a Georgia investigation into his attempts to reverse the election result there. (583 comments)

Chip war

Economic fallout is being seen across many industries as China seeks to promote a new world order. Japan is now restricting exports of 23 types of equipment used to make semiconductors in a move that will likely impact companies like Nikon (OTCPK:NINOY) and Tokyo Electron (OTCPK:TOELY). The battle over silicon has erupted as the U.S. looks to isolate China from one of the most important technologies of the future, lobbying its allies abroad to take measures, as well as the passing of the CHIPS ACT on the domestic front and implementing serious export controls of its own. The Netherlands also previously agreed to an American request to impose export restrictions on China - limiting powerful chips and deep lithography tools of Dutch company ASML (ASML) - while Taiwan President Tsai Ing-wen this week is visiting the U.S., where she'll surely talk about TSMC (TSM) and other local fabs (that account for 92% of the world's advanced chipmaking capacity). (23 comments)

NATO expansion

Finland is one step closer to becoming a NATO member after Turkey's parliament approved a bill to expand the military alliance. It was the last vote the country needed to join the 30-nation group after Hungary's legislature gave its approval earlier this week. "Soon both Finland and Sweden will be members, meaning that President Putin is getting the exact opposite of what he wanted," NATO Secretary General Jens Stoltenberg declared. "He wanted less NATO. He is getting more NATO." Stocks like Lockheed Martin (LMT) and Northrop Grumman (NOC) have risen about 20% since Russia's invasion of Ukraine in February 2022, but many other defense players haven't held on to their gains. Wells Fargo explores how cuts in federal spending could hit defense stocks (37 comments)

Final Four

The bracket-busting nature of the NCAA college basketball tournament this year may be helping the house with its edge. Macquarie analyst Chad Beynon and team calculated an above-average hold rate of 8% after a rash of upsets during the Sweet Sixteen and Elite Eight games. That includes mid-major Florida Atlantic beating the Big 12's Kansas State, a team that was a heavy betting favorite of the public and had created some risk for sportsbooks that do not always have perfectly balanced betting action. The push for profitability is the biggest theme in the sports betting sector for 2023 with investors focused on bottom lines and valuations. Check out related stocks and iGaming plays, with sports betting revenue in the U.S. forecast to top $10B this year. (4 comments)

Today's Markets

In Asia, Japan +0.9%. Hong Kong +0.5%. China +0.4%. India +1.8%.
In Europe, at midday, London +0.2%. Paris +0.4%. Frankfurt +0.3%.
Futures at 6:30, Dow +0.2%. S&P +0.2%. Nasdaq +0.1%. Crude -0.4% to $74.07. Gold -0.1% to $1955.20. Bitcoin -2.4% to $27,878.
Ten-year Treasury Yield unchanged at 3.57%

Today's Economic Calendar

8:30 Personal Income and Outlays
9:45 Chicago PMI
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
3:00 PM Farm Prices
3:05 PM Fed's Williams Speech

Companies reporting earnings today »

What else is happening...

U.S. economy: Q4 GDP revised down again in final estimate.

Virgin Orbit (VORB) ceases operations and axes most of workforce.

Fed, Treasury fine Wells Fargo (WFC) over sanctions violations.

Scrambling for minerals, Ford (F) inks big nickel deal in Indonesia.

Tesla (TSLA) reportedly eyes American battery plant alongside CATL.

Nikola (NKLA) shares at nearly $1 after new stock offering.

Royal clause: DeSantis' board says Disney (DIS) stripped them of power.

Apple (AAPL) buying Disney? Needham says 'worth more together.'

Bed Bath & Beyond (BBBY) slumps on latest bankruptcy hint.

More layoffs: Roku (ROKU) to cut around 6% of its workforce.

After Alibaba (BABA) breakup, JD.com (JD) files for Hong Kong IPOs.

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