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Wall Street at Breakfast

ECB, OPEC takes the attention.

OPEC is set for another showdown during today’s producer summit in Vienna, with reports of an output agreement being shot down by Iran as Saudi Arabia tries to revive coordinated action. Member countries failed to reach a consensus at their April get-together, but world crude production fell nonetheless, due to outages in Nigeria, Libya, Venezuela and Canada. Capped by those disruptions, along with rising output by OPEC’s Middle East producers, the group’s overall production has remained largely flat this year, currently standing at 32.5M bpd.

Wednesday’s Key Earnings
Box (NYSE:BOX) -9.9% AH on slowing billings growth.
Michael Kors (NYSE:KORS) +6.6% after beating expectations.

 

Today’s Markets
In Asia, Japan -2.3% to 16563. Hong Kong +0.5% to 20859. China +0.4% to 2925. India +0.5% to 26843.
In Europe, at midday, London +0.4%. Paris +0.1%. Frankfurt +0.1%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude flat at $49.01. Gold +0.3% to $1218.70.
Ten-year Treasury Yield -1 bps to 1.83%

 

Today’s Economic Calendar
Chain Store Sales
Fed’s Evans: U.S. Economic and Monetary Policy
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
8:30 Initial Jobless Claims
8:30 Gallup Good Jobs Rate
8:35 Fed’s Powell speech
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:00 PM Fed’s Kaplan speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Economy

The ECB’s governing council is also meeting in Vienna, where it will give a rate announcement at 1:45 p.m. local time, followed by a press conference from Mario Draghi forty five minutes later. No changes to monetary policy are expected, as the central bank already ramped up its stimulus twice since December, but it may upgrade its forecasts for inflation. Also worth watching: The ECB could elaborate on its corporate bond buying program, reintroduce a waiver on accepting Greek government bonds as collateral and indicate its approach to a possible Brexit.

The U.S. has designated North Korea a “primary money laundering concern” through a provision from the Patriot Act. The label is used to invoke sanctions or fines on institutions that conduct banking transactions with Pyongyang, or to cut off the unit from the American financial system. As a practical matter, that would largely affect Chinese and Singaporean banks, which facilitate cash flow to and from North Korea.

Japanese stocks fell by the most in a month overnight and the yen strengthened after Prime Minister Shinzo Abe moved to delay a sales-tax hike for more than two years. There are also concerns that the postponement could lead to a credit rating downgrade, increasing the cost of foreign funding and further raising doubts over the sustainability of the nation’s public debt – which currently exceeds 200% of its GDP. Nikkei -2.3%.

American births declined and the death rate rose last year in a sign of continuing pressure on the country’s population growth and future labor force. Preliminary numbers from the Centers for Disease Control and Prevention show there were 3.98M U.S. births in 2015, down 0.3% from 2014. The CDC also found the mortality rate to be 729.5 deaths per 100K people last year, up from 723.2 the year before.

Stocks

The U.S. Justice Department is likely to approve AB InBev’s (NYSE:BUD) takeover of SABMiller (OTCPK:SBMRY) later this month, Bloomberg reports. The agreement may contain measures to keep the beer behemoth from edging craft brewers from shelves, and could also include limits on the combined company’s ownership of distributors. The deal received a green light from South Africa’s Competition Commission earlier this week.

Amazon isn’t aiming to take over the last mile of delivery from UPS, FedEx (NYSE:FDX) or the U.S. Postal Service, according to Chief Executive Jeff Bezos, but the company is looking to “supplement it heavily.” This is necessary for peak selling seasons ahead of major gift-giving holidays in the countries in which Amazon (NASDAQ:AMZN) operates. Although a grand shift to delivery is not expected in the near future, investors still have their eyes on the company’s 767 freighters, delivery drones and Prime Now program.

Sheryl Sandberg said she isn’t interested in the top post at Walt Disney (NYSE:DIS), throwing cold water on speculation that the Facebook executive is a frontrunner for the position. “I don’t want another job,” she declared. Rumors about who will succeed Disney CEO Bob Iger – whose contract expires in June 2018 – have heated up since his former heir apparent, Disney COO Tom Staggs, left the company last month.

Pushing for an active focus on security, Twitter (NYSE:TWTR) has closed about 125K accounts related to terrorism. “We’re being very aggressive in shutting these down,” CEO Jack Dorsey said at the Code Conference in California. “We get help from governments all over the world in pointing out these accounts.” He also noted that safety was one of Twitter’s top five priorities for 2016.

More than 18 months after Apple Pay (NASDAQ:AAPL) took the United States by storm (with usage totaling $10.9B in 2015), the smartphone giant has made only a small dent in the global payments market. Adoption has been snagged by technical challenges, low consumer take-up and resistance from banks. Meanwhile, Goldman Sachs has cut its price target on Apple to $124 from $136, but maintained its Buy rating, as a reflection of lower growth expectations for the smartphone industry. AAPL -0.6% premarket.

Alibaba has disclosed terms of its buyback from SoftBank (OTCPK:SFTBY) as part of the latter company’s $7.9B divestment in the Chinese retail conglomerate. It’s agreeing to buy just over 27M shares at $74/share, for an aggregate of $2B worth. Singapore’s Temasek Holdings Pte and GIC Pte, long-term Alibaba (NYSE:BABA) investors, bought the second-biggest stakes being sold by SoftBank – a combined $1B of stock in the e-commerce behemoth.

Sumner Redstone’s granddaughter Keryn plans to support the independent directors of Viacom (VIA, VIAB) to help free the 93-year-old media mogul from the “clutches” of his daughter, Shari. The independent directors have questioned Sumner’s mental competence, and said they will legally contest any move by his purported representatives to remove them from the board. Keryn has also retained the lawyer who represented the media billionaire’s former girlfriend Manuela Herzer.

Putting an end to speculation that it might move away from the Chicago area, McDonald’s (NYSE:MCD) is near a deal to move to Oprah Winfrey’s former Harpo Studios campus, Crain’s Chicago Business reports. The move means that McDonald’s would join the flight downtown from suburban areas, which has included companies such as Kraft Heinz (NASDAQ:KHC), Motorola Mobility (OTCPK:LNVGY) and Motorola Solutions (NYSE:MSI).

Saudi Arabia’s sovereign wealth fund is investing $3.5B in Uber (Private:UBER), the largest investment ever in the ride-sharing leader, as the country seeks to diversify its assets with more overseas acquisitions. A managing director for the Saudi fund will take a board seat at the San Francisco-based company after the deal, which values Uber at $62.5B. The investment, which was months in the making, does not cash out any of Uber’s existing investors.

Seriously? Four car manufacturers are still selling new vehicles with defective Takata (OTCPK:TKTDY) air bags that will eventually need to be recalled by 2018. Among them: Toyota (NYSE:TM), Fiat Chrysler (NYSE:FCAU), Volkswagen (OTCPK:VLKAY) and Mitsubishi (OTC:MMTOY). “This may be the first time in history where multiple automakers are selling brand new cars with a known, and potentially deadly, defect,” said Karl Brauer, senior analyst at Kelley Blue Book.

In a wide-ranging interview Wednesday night, Tesla (NASDAQ:TSLA) CEO Elon Musk said that he expects Apple (AAPL) to have a car available to the public by 2020. In contrast, Google (GOOG, GOOGL) worries him less as a competitive threat. “Google’s done a great job, but they’re not a car company,” he said. Musk also detailed plans to have the first rocket carrying human cargo to Mars launch in 2024, and arrive at the red planet 18 months later.

More auto news: Honda (NYSE:HMC) has given a sneak preview of its self-driving prototypes, saying it is on its way to offering semi-autonomous safety functions to the mass market. General Motors (NYSE:GM) has “a lot of the pieces in place now” to develop ride sharing businesses, autonomous vehicles and services that rely on both. Volkswagen (OTCPK:VLKAY) is looking to divert more money from classic carmaking into apps and software to earn a “notable share” of future revenues.

1,250 jobs are likely to be cut as part of the London Stock Exchange’s (OTCPK:LDNXF) planned merger with Deutsche Boerse (OTCPK:DBOEY), according to the prospectus issued to shareholders of both firms which gave details of the $30B deal. The targeted cuts form part of an annual savings goal of €450M by 2019. LSE shares have leapt almost 17% since rumors of the deal were first leaked in late February. Deutsche Boerse is meanwhile up around 4%.

The Consumer Financial Protection Bureau will release a set of sweeping proposals today aimed at reshaping the market for payday loans and other expensive credit that the agency and consumer advocates call “debt traps.” The rules would limit the number of payday loans (which can carry interest rates as high as 390%) a consumer can take out, change how lenders collect payments and require them to do a more thorough review of borrowers’ finances

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