Greece Bail out lifeline: kicking the can down the road…
Another round up of troika dealings and Greece:Greece won additional pledges of debt relief, but nothing substantial until 2018 at the earliest, and only then if it continues to carry out the painful reforms it agreed to over the weekend. Eurozone finance ministers and the IMF also gave a green light for the next round of aid for Athens, including €10.3B in fresh loans, starting with a €7.5B installment in the second half of June. Greek bond yields slid to six-month lows following the announcement.
In Asia, Japan +1.6% to 16757. Hong Kong +2.7% to 20368. China -0.2% to 2815. India +2.3% to 25881.
In Europe, at midday, London +0.7%. Paris +1%. Frankfurt +1.4%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude +1.1% to $49.17. Gold -0.6% to $1221.30.
Ten-year Treasury Yield flat at 1.86%
Tuesday’s Key Earnings
AutoZone (NYSE:AZO) +3% on rising same-store sales.
Best Buy (NYSE:BBY) -7.5% after disappointing guidance.
HP Enterprise (NYSE:HPE) +10.9%; Computer Sciences (NYSE:CSC) +27.7%AH on their spinoff/merger plans.
Intuit (NASDAQ:INTU) -2.2% AH despite a strong tax season.
Toll Brothers (NYSE:TOL) +8.7% as home prices increased.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 International trade in goods
9:00 FHFA House Price Index
9:45 PMI Services Index Flash
10:30 EIA Petroleum Inventories
1:00 PM Results of $13B, 2-Year FRN Auction
1:00 PM Results of $34B, 5-Year Note Auction
1:00 PM Fed’s Kaplan: Monetary Policy
House Republicans are attempting to hold together a rare bipartisan deal to help Puerto Rico manage its crippling finances as a committee today begins considering the legislation. The bill to create a financial control board and restructure some of the U.S. territory’s $70B debt has support from both GOP and Democratic House leaders, as well as the Obama administration, but some bondholders, unions and island officials still oppose it.
A U.S. Federal Reserve rate hike in June or July isn’t set in stone, but labor numbers suggest it’s time to pull the trigger, St. Louis Fed President James Bullard told CNBC. “There’s no reason to prejudge June,” he said, adding that the FOMC would look at the data and decide then. Bullard also noted that there’s no reason the Fed must hold a press conference in conjunction with a rate hike. A conference is scheduled to follow next month’s meeting, but not in July.
Donald Trump is less than 10 delegates shy of clinching the Republican presidential nomination following a win Tuesday in the Washington state primary. Trump became the presumptive nominee earlier this month with a decisive win in Indiana that forced his remaining rivals out of the race and ended months of talk about the potential of a contested convention.
The People’s Bank of China lowered the yuan’s reference rate by 0.3% to 6.5693 per dollar overnight, marking the currency’s weakest level against the greenback since March 2011. The move could increase tensions between China and its trading partners, as recent strength in the dollar and yen make exports from those countries less competitive globally.
Turkish President Tayyip Erdogan is threatening to scrap a refugee deal with the European Union just 24 hours after he met Germany’s Angela Merkel on the sidelines of a U.N. conference in Istanbul. What went wrong? Erdogan feels the EU isn’t keeping its word on financial aid and shouldn’t constantly impose criteria in return for pledged visa-free travel for Turkish citizens.
The ECB will aim to start small when it begins buying corporate debt next month, seeking first to lure new issuers and then slowly raise the monthly pace of purchases to €5-10B, several bank sources told Reuters. Investment-grade corporate bonds issued in euros are the latest addition to a growing list of assets the central bank is buying as part of its effort to boost eurozone economic growth via lower borrowing costs.
Russia’s presidential economic council will convene today for the first time in three years to discuss strategies to put the country on a long-term growth trend of at least 4%. Policies that have been floated in the media include increasing competitiveness by depressing wages or cutting taxes on capital investments. Whatever the recommendations, the high-level meeting is a concession that Russia can no longer count on oil windfalls.
Crude futures are pushing closer to $50 a barrel, with U.S. oil hitting its highest in over seven months after API data suggested a larger-than-expected drawdown in U.S. inventories last week. Crude is also getting support by an overnight surge in U.S. equities, strong home sales and a series of oil outages around the world. Wildfires in Canada and a spate of violence in Nigeria have helped cut global crude supply by nearly 4M bpd this month.
The ongoing strike by Verizon’s 40K union employees could pressure second-quarter results, Chief Executive Lowell McAdam warned at a technology conference in Boston. A key part of the negotiations is work rules. The company wants more flexibility to relocate workers and redirect call center traffic, while the unions are pushing for job security provisions. Verizon (NYSE:VZ) is expected to report Q2 results on July 26.
U.S. antitrust officials are investigating Anheuser-Busch InBev (NYSE:BUD) over its new incentives that encourage independent distributors to sell more of its own beer brands at the expense of competing craft brews, Reuters reports. AB Inbev introduced the program in late 2015, and authorities are looking into it as part of the antitrust review surrounding the beer giant’s planned takeover of SABMiller (OTCPK:SBMRY) – approved by the European Commission on Tuesday.
Unicredit CEO Federico Ghizzoni has agreed to resign following days of speculation about his future amid investor discontent over the performance of Italy’s largest bank. A successor should be appointed at a board meeting on June 9, according to Reuters. Candidates tipped for the job include Jean-Pierre Mustier, a former Societe Generale (OTCPK:SCGLY) and UniCredit (OTC:UNCFY) executive, UBS‘s investment banking boss, Andrea Orcel, and Merrill Lynch’s (NYSE:BAC) Italy chief, Marco Morelli.
The nation’s two largest oil companies may take a lot of heat at their annual meetings later today. Activist shareholders will propose a series of resolutions that would see Exxon (NYSE:XOM) and Chevron (NYSE:CVX) take more responsibility for climate change and disclose what risks their businesses face in a warming world. Many of the ideas have been offered and rejected in the past, but the global climate change accord reached in Paris last December has given them new momentum.
Fuel scandal news roundup: A federal judge overseeing lawsuits over Volkswagen’s (OTCPK:VLKAY) diesel-cheating cars said the automaker is on pace to meet next month’s deadline for a plan to fix 480K vehicles in the U.S. or get them off the road. Separately, Mitsubishi Motors (OTC:MMTOY) restated its financial results for the past business year to reflect a special loss of ¥19.1B ($173.7M) related to its manipulation of fuel economy data.
Automakers are looking toward a technology-driven future, one where they increasingly acknowledge that getting around may not require owning a car. Two new large investments from Toyota (NYSE:TM) and Volkswagen (OTCPK:VLKAY) have confirmed this growing trend. The Japanese carmaker is forming a partnership with and invested an undisclosed amount in Uber (Private:UBER), while VW put $300M into Israeli taxi startup Gett. The news comes just months after GM injected $500M into ride-hailing app Lyft (Private:LYFT).
Responding to Monsanto’s rejection of its $62B takeover offer, Bayer (OTCPK:BAYRY) said it “remains committed to working together” to complete a deal and is confident that it can “address any potential financing or regulatory [concerns].” Monsanto (NYSE:MON) announced earlier it regarded Bayer’s $122/share offer as too low, but that it respects the company’s business and believes in the potential benefits of a merger.
Nasdaq has rejected a listing application by cannabis social networking company MassRoots (OTCQB:MSRT) on the grounds that it may aid in the use and dealing of an illegal substance. “This will have ripple effects across the entire industry,” MassRoots CEO Isaac Dietrich declared. The rejection may insert roadblocks ahead of other cannabis-related companies seeking to list on a national stock exchange and make “it more difficult for cannabis entrepreneurs to raise capital.”
The SEC is concerned about the way Valeant Pharmaceuticals (NYSE:VRX) has been disclosing its “non-GAAP” financial measures, stripping away acquisition-related expenses from its adjusted metrics despite fueling growth through frenzied deal making. The company is also facing mounting scrutiny over its drug pricing, business practices and other methods of accounting, issues that have led to its share price plummeting nearly 90% since August.
Sanofi could name candidates to replace Medivation’s (NASDAQ:MDVN) entire board as early as today, taking advantage of a ‘written consent’ rule that gives shareholders the ability to swap directors at any time. Sanofi’s (NYSE:SNY) threat follows Medivation’s rejection of its unsolicited $9.3B acquisition offer last month. The latter has declined to engage in sale talks unless Sanofi raises its cash offer to $52.50 per share. SNY +1.9%; MDVN+2.3% premarket.
Struggling to restart its mobile strategy after multiple misfires, Microsoft (NASDAQ:MSFT) has announced a further step in dismantling the mobile-phone operations it acquired from Nokia (NYSE:NOK). The software giant will lay off 1,850 workers, taking an impairment and restructuring charge of approximately $950M in the current quarter. Last summer, Microsoft wrote down $7.6B related to its mobile-phone business and fired 7,800 workers in those operations.
Apple is upping its game in the field of intelligent assistants. After years of internal debate and discussion about how to do so, the company is preparing to open up Siri to apps made by others. The Information reports that Apple (NASDAQ:AAPL) is also working on an Amazon (NASDAQ:AMZN) Echo-like device with a speaker and microphone that people can use to turn on music, get news headlines or set a timer.
MasterCard has inked a deal with Pizza Hut (NYSE:YUM) to bring Softbank’s (OTCPK:SFTBY) robot companion, Pepper, to restaurants across Asia by the end of 2016. The move is intended to push the MasterPass (NYSE:MA) digital wallet, which Pizza Hut patrons can use by either tapping the Pepper icon within the app or by scanning a QR code on Pepper’s display. Besides taking payments, the robot can chat with customers, take orders and make recommendations.