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Wall Street at Breakfast

 

 

  • Futures Halt Selloff,
  • Levitate Higher On Another USDJPY Spike;
  • Oil Rises
  • Brazil: Senate approves Rousseff impeachment

Brazil’s Senate voted 55-22 to suspend President Dilma Rousseff from office and begin an impeachment trial. During the trial – which could last for up to six months – Vice President Michel Temer will assume the office. He’s expected to begin naming his cabinet today, and former central bank chief Henrique Meirelles – a favorite of investors – is in line to be named finance minister. Resisting calls to resign, Rousseff has described the effort to remove her as a coup, but given the overwhelming majority of today’s vote, analysts give her very little chance of winning the trial and being able to serve her final two-plus years in office.

Today’s Markets

In Asia, Japan +0.4% to 16646. Hong Kong -0.7% to 19915. China flat to 2835. India +0.8% to 25790.
In Europe, at midday, London +0.1%. Paris +0.6%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.4%. S&P +0.5%. Nasdaq +0.5%. Crude +0.8% to $46.61. Gold -0.4% to $1270.
Ten-year Treasury Yield flat at 1.75%

Today’s economic calendar:
8:30 Initial Jobless Claims
8:30 Import/Export Prices
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 Fed’s Mester: Monetary policy
1:00 PM Results of $15B, 30-Year Note Auction
2:15 PM Fed’s George speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Wednesday’s Key Earnings

Sina (NASDAQ:SINA) -3.9% as E-House pushes it to an adjusted loss.
Weibo (NASDAQ:WB) +1.8% on beat and strong guidance.
CA, Inc. (NASDAQ:CA) +4.1% after beat, though currencies hit revenue.

 

Economy

While 2015 was a record-breaking year for M&A, 2016 so far will go down as what could have been. Nearly $400B of deals – most recently the Staples/Office Depot merger – have fallen apart so far this year, according to Dealogic, whether thanks to regulators, rocky markets, or reluctant targets. Even if no other deals fall through for the rest of the year, that amount would still be a record. It’s bad news for banks, particularly as business continues to slow in areas like trading. Also, advisors typically only pocket most of their money when deals close, meaning there’s been a lot work for naught this year. The breakups of just the Pfizer/Allergan, Halliburton/Baker Hughes, and Staples/Office Depot deals cost banks more than $300B in advisory fees (and potentially much more than that).

Global oil stocks will fall by 200K barrels per day in the second half of the year after rising by 1.3M barrels per day in H1, according to the IEA. Behind the quick rise in the first half was a faster-than-expected gain in Iranian oil production and exports. Behind what’s expected to be a dramatic reduction in the second half of the year is a continuing slowdown in non-OPEC production, and stronger demand.

Embattled Theranos expanded its board by three members and announced the retirement of COO Sunny Balwani, giving the company yet another management spot to fill. The company is also reorganizing to create dedicated units for Technology and Clinical Operations. Amgen and Baxter International veteran Dr. Fabrizio Bonanni is among those joining the board and working in a special capacity with management as it looks to expand its executive team.

Stocks

Cheniere Energy is set to name Calpine Executive Chairman Jack Fusco its next CEO, replacing interim chief Neal Shear, the WSJ reports. The move could come as soon as today. Fusco had served as CEO at natural gas/geothermal firm Calpine from 2008-2014. Shear had served in the interim role at Cheniere (NYSEMKT:LNG) after the company ousted co-founder Charif Souki from the CEO/chairman slots.

In a possible realignment of the eight-player Japanese car industry, Nissan (OTCPK:NSANY) will become the controlling shareholder in scandal-hit Mitsubishi Motors (OTCPK:MMTOF), taking a 34% stake in the company for $2.18B. A final agreement is expected by May 25, and Nissan is expected to get representation on the Mitsubishi board proportional to its stake, along with the chairman slot. “Nissan is determined to preserve and nurture the Mitsubishi Motors brand. We will help this company address the challenges it faces, particularly restoring consumer trust in the fuel-economy performance,” says Nissan CEO Carlos Ghosn.

“We are seeing continued weakness in consumer spending levels for apparel and related categories,” said Macy’s (NYSE:M), shaking up its own stock as well as that of the retail sector. The company ended the first quarter with momentum lagging after sales slowed sharply in mid-March. Comparable sales fell 5.6% during the quarter, and are seen sliding 3-4% for the year.

Linn Energy and LinnCo filed for bankruptcy and say they have reached agreement with creditors to support a new plan of reorganization to include a new $2.2B reserve-based and term loan credit facility. Linn (LINE, LNCO) expects to maintain sufficient liquidity to support the business during the restructuring process, so it does not expect to seek debtor-in-possession financing.

News about the whether the FTC is back asking questions about whether Google (GOOG, GOOGL) is abusing a dominant position in the search market helped send the stock price lower by more than 1% yesterday. That means the agency could reopen a probe it closed over three years ago, Politico reports. It’s been talking with a major rival who’s raising objections again. The report may not mean a full new investigation; a majority of commissioners would have to vote to go forward in a closed-door session.

Thanks to a continuing slump in demand for premium smartphones and a lack of groundbreaking features for the upcoming iPhone 7, Taiwan’s tech suppliers will get significantly fewer orders in H2 than the previous year, according to the Nikkei Asian Review. The traditional peak season this year will not be able to compare to the past few years, says one source. Another source says for Taiwan Semiconductor Manufacturing Company (NYSE:TSM) – the sole supplier for the A10 chips used in the iPhone 7 – its iPhone 6s and iPhone 7 chip shipments in H2 will be just 70-80% of 2015’s H2 levels. Those names mulling the news include Broadcom (NASDAQ:AVGO), Skyworks Solutions (NASDAQ:SWKS), and Qorvo (NASDAQ:QRVO).

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