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Wall Street at breakfast

  • Futures Rise As Fed Fears Subside;

  • Global Stocks Rebound From Six Week Lows

  • G7 Summit Kicks Off In Japan

Finance ministers and central bankers from the G7 are gathering in Japan for a two-day meeting that will discuss a broad range of global risks. Among them: swings in oil prices, world growth, Brexit, cybersecurity, tax evasion, monetary policy and financial regulation. A surging yen is also pushing Washington and Tokyo into a standoff over currency intervention, and U.S. officials hope to convince the latter to temper its threats regarding a yen devaluation.

Today’s Markets

In Asia, Japan +0.5% to 16736. Hong Kong +0.8% to 19852. China +0.7%to 2825. India -0.4% to 25302.
In Europe, at midday, London +1.4%. Paris +1.1%. Frankfurt +0.9%.
Futures at 6:20, Dow +0.3%. S&P +0.2%. Nasdaq +0.3%. Crude +0.4% to $48.33. Gold +0.2% to $1257.40.
Ten-year Treasury Yield +1 bps to 1.86%

Thursday’s Key Earnings

Applied Materials (NASDAQ:AMAT) +8.5% AH as display and flash orders surged.
Gap (NYSE:GPS) +0.5% AH charting a path for a turnaround.
Wal-Mart (NYSE:WMT) +9.6% after beating expectations on a sales lift.

 

Economy

The dollar is cruising to its third straight week of gains as stock and commodity markets show signs they might be able to manage another U.S. interest rate hike in the coming months. With risk appetite gradually returning following a bumpy few days, U.S. futures are edging back into the green. “The question for traders now is whether this Fed rate hike issue is a ‘risk-on’ or a ‘risk-off’ situation,” said Saxo Bank FX strategist John Hardy.

Firefighters are making some progress against the wildfire in the Fort McMurray region of northern Alberta as rain and a shift in winds pushed it away from communities and oil sands facilities. The blaze, which hit the area in early May, has forced the evacuation of more than 8,000 oil sands workers and prolonged a shutdown that has cut Canadian oil output by a million barrels a day.

Two months after the EU’s controversial deal with Turkey came into effect, still no refugees have been deported from Greece under terms of the new pact. “No asylum seeker will be sent back under the EU-Turkey agreement if, in their individual case, Turkey cannot be considered a safe third or first country of asylum,” European Commission spokeswoman Mina Andreeva said. The program’s slow start risks undermining the migrant deterrent emphasized in the agreement signed in March.

The IMF has agreed to give Iraq a three-year $5.4B bailout to help it manage the economic fallout of its war against ISIS and low oil prices that have left a gaping hole in its budget. The new rescue package will require Baghdad to implement public spending cuts and other reforms, the fund said, outlining that it should be accompanied by assistance from the international community.

Stocks

The frontrunner in the bidding race for Yahoo’s (NASDAQ:YHOO) internet assets could offer much less than what was originally expected. According to the WSJ, Verizon (NYSE:VZ) and a consortium will bid between $2-3B for Yahoo’s core business, under half of the previously anticipated $4-8B range. Yahoo has set a deadline in the first week of June for the next round of bids, but it isn’t clear whether that will be the final session. YHOO -1% premarket.

Samsung has struck a partnership with Alibaba’s (NYSE:BABA) financial affiliate on mobile payments as the world’s largest smartphone maker looks to expand its presence in China. The collaboration will allow Samsung Pay (OTC:SSNLF), the electronics giant’s mobile payment system, to work with Alipay, which is currently a separate app that has 450M active registered users. “It reduces friction and time to make a purchase, and will increase adoption,” said Jack Kent, senior mobile analyst at IHS.

LinkedIn is moving quickly to deal with a possible data release from a 2012 security breach, which could include 117M passwords. A hacker is reportedly looking to sell the user data on Dark Web marketplace TheRealDeal for 5 bitcoins (about $2,200). “We’ve begun to invalidate passwords for all accounts created prior to the 2012 breach that haven’t updated their password,” said May Chow of LinkedIn’s (NYSE:LNKD) corporate communication.

The Egyptian navy has found belongings and parts of the missing EgyptAir jet’s fuselage about 180 miles north of Alexandria. Authorities aren’t ruling out any possible cause for the disappearance, though Egyptian Minister of Aviation Sherif Fathy said the possibility of a terrorist attack is higher than a technical failure. What is known so far? The Airbus A320 (OTCPK:EADSY) made sudden movements before swooping into a deep descent. The pilots didn’t send an emergency signal, and their final contact with controllers revealed no signs of distress.

Next to join the self-driving car race… Uber! The car-hailing company is testing an autonomous Ford Fusion (NYSE:F) on the streets of Pittsburgh. The vehicle has been outfitted with laser scanners, radars and high-resolution cameras, and will have a human in the driver’s seat to monitor operations. Uber’s (Private:UBER) project is being carried out in partnership with Pittsburgh’s Carnegie Mellon University. Self-driving taxis, anyone?

Fiat Chrysler has come under fire from German Transport Minister Alexander Dobrindt for not showing up at a meeting to discuss emissions irregularities of its diesel vehicles. The carmaker reportedly cancelled its attendance last minute, with Dobrindt describing the company’s actions as “totally incomprehensible.” Separately, Google (GOOG, GOOGL) said it does not have current plans to expand its self-driving partnership with Fiat (NYSE:FCAU), stating it was “talking to a lot of different automakers.”

Deutsche Bank is investigating a series of trades that may have improperly generated millions of dollars in personal profit, some at the bank’s expense, for a handful of current and former employees, WSJ reports. Meanwhile, 51.9% of investors voted against Deutsche’s (NYSE:DB) executive pay plans at the bank’s shareholder meeting, the latest in a wave of C-suite remuneration disputes that have hit other major companies.

EU state aid regulators aim to rule on Amazon’s (NASDAQ:AMZN) tax deal with Luxembourg by July, sources told Reuters, and it may order the country’s tax authorities to recover about €400M in back taxes. The European Commission’s decision will come after a near-two year investigation into whether a Luxembourg 2003 tax ruling for an Amazon subsidiary allows the firm to pay less tax there than other companies.

A scheduled hearing regarding SunEdison’s (OTCPK:SUNEQ) $300M bankruptcy loan in the U.S. Bankruptcy Court for the Southern District of New York has been moved to today. Some of SunEdison’s creditors and its yieldcos, TerraForm Global (NASDAQ:GLBL) and TerraForm Power (NASDAQ:TERP), had objected to the debtor-in-possession loan, which includes features that may help a group of lenders recoup their initial investment.

Oil Search has agreed to acquire InterOil (NYSE:IOC), its Papua New Guinea oil exploration rival, in a deal valued at $2.2B. Oil Search (OTCPK:OISHF) is offering 8.05 of its shares plus a contingent value right linked to gas reserves at the Elk-Antelope fields for each IOC share. The company also said it will sell to Total (NYSE:TOT) 60% of the interest acquired from InterOil in the PRL 15 venture and 62% of IOC’s exploration assets, subject to the closing of the acquisition. IOC +28% premarket.

Valeant Pharmaceuticals has received a notice of default from some of its bondholders because of a delay in filing its Q1 financial results. The notice from creditors starts the clock of a 60-day grace period, giving Valeant (NYSE:VRX) until July 18 before the bondholders can demand immediate repayment. The default notice also triggers a credit agreement provision that allows its most senior lenders to demand repayment if the financials aren’t filed by July 5.

The U.S. soda industry faces its next threat in Philadelphia, which is weighing a tax that could raise soft drink prices by 55-60%, on average. Mayor Jim Kenney is pitching the measure to pay for prekindergarten and other popular services. Philadelphia’s city council plans to vote on the proposed tax next month, which would cover regular soda and other sugar-added beverages, including energy drinks and iced tea. Related stocks: KO,PEP, DPS, MNST, FIZZ

Though best known for its extra-large movie screens, IMAX is now betting on a far more intimate viewing format: virtual reality. The company will begin launching VR experiences in locations such as multiplexes and malls later this year, using its connections with movie theaters and Hollywood along with partnerships in the tech community to build the new business. The plan comes as IMAX and Alphabet (GOOG, GOOGL) announced plans to collaborate on a virtual reality camera that will enhance 3D movies.

Thursday’s Key Earnings
Applied Materials (NASDAQ:AMAT) +8.5% AH as display and flash orders surged.
Gap (NYSE:GPS) +0.5% AH charting a path for a turnaround.
Wal-Mart (NYSE:WMT) +9.6% after beating expectations on a sales lift.
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