November 15th, 2018
Daily Market Commentary
- Steve Williams, 62, is going to retire as chief executive officer of Suncor, Canada’s largest oil producer. Chief Operating Officer Mark Little was appointed president effective immediately and will succeed Williams as CEO in May, the company said.
- Investors will be watching for hints as how Ontario plans to start tackling the world’s largest largest pile of sub-sovereign debt when the Canadian province gives a snapshot of its finances on Thursday. Finance Minister Victor Fedeli will unveil the new government’s economic and fiscal outlook in the provincial legislature starting at about 1:15 p.m. While not an official budget, the document will outline the government’s initial assessment of a province that’s growing moderately while steadily racking up debt.
- The cannabis startup backed by former Speaker of the House John Boehner is set to become one of the most valuable companies in the U.S. weed industry. Acreage Holdings is the latest U.S. cannabis firm to tap the public markets in Canada, where marijuana is legal, through a reverse takeover. The company raised $314 million in a private placement that values it at about $2.8 billion. Acreage shares are set to start public trading on Thursday.
- The pound slumped, European stocks dropped and U.S. equity futures fluctuated as a series of British ministers quit in protest at Theresa May’s Brexit deal, plunging the U.K. government into crisis. Investors turned to havens including Treasuries, bunds and gilts. The danger that May could be replaced and Britain could crash out of the EU with no deal is an unpredictable and high-risk scenario for markets. The prime minister defended her plan as she addressed lawmakers in the House of Commons, but faced a barrage of critical questions and was repeatedly told she does not have the support she needs to pass the deal.
- S&P 500 futures turn negative, tracking a sell-off in European stocks after U.K. Brexit Secretary Dominic Raab resigned, imperiling Prime Minister’s Theresa May’s proposed Brexit deal. S&P 500 futures down 0.1%, Dow futures down 0.1%, Nasdaq 100 futures up 0.1% at 5:04 a.m. in New York
- Japanese shares slipped on renewed concern over U.S. trade policies and their implications for the global economy. Banks and electronics makers were the biggest drags on the benchmark Topix index. President Donald Trump’s new trade deal with Canada and Mexico needs changes to secure support from Democrats, according to Bill Pascrell, a senior House Democrat in line to play a leading role on trade policy in the new Congress. His comments rekindled worries over the Nafta deal at a time when negotiations with China remain fraught.
- Oil slipped to near $56 a barrel, after snapping a record run of declines, as traders assessed signs of rising U.S. crude inventories and a stronger dollar. Futures in New York fell as much as 1.2 percent after recovering slightly on Wednesday from an 18 percent drop over the previous 12 sessions. An industry report was said to show U.S. stockpiles rose 8.8 million barrels last week, more than double the increase forecast in a Bloomberg survey before government data due Thursday. Meanwhile the Bloomberg Dollar Spot Index erased earlier losses to trader higher on the day.
- Gold reversed earlier gains to trade little changed as the fallout in the U.K. government over the draft Brexit bill saw both the euro and pound fall against the U.S. dollar. Gold may yet benefit from investors seeking a safe haven amid uncertainty about how Brexit will affect both the U.K. and the EU, two of the largest global economies. However, in the short-term the price is being driven by the strength of the U.S. dollar, which is near the highest in 18 months.
- Chinese officials have outlined a series of potential concessions to the Trump administration for the first time since the summer as they continue to try to resolve a trade war, according to three people familiar with the discussions. The commitments for now fall short of the type of major structural reforms that President Donald Trump has been demanding, two of the people said, cautioning that a long road lies ahead in negotiations. One person said that talks between the world’s two largest economies are continuing and constructive.
- President Vladimir Putin said he discussed the price of oil with U.S. counterpart Donald Trump when they met in Paris briefly on Sunday, adding that Russia is happy with current prices. Putin was more upbeat on the current market situation than his colleagues in OPEC, saying “where it is now, where it was recently, anything around $70 suits us completely.” He wouldn’t commit to cutting output to help support prices, as some OPEC members have urged, earning them criticism from Trump. Russia aims to continue cooperation with OPEC to stabilize the oil market, with existing efforts having shown “positive results,” Putin said.
- Ascendas-Singbridge Group is considering a Singapore real estate investment trust listing backed by recently acquired U.S. office properties that could raise about $500 million, people with knowledge of the matter said. The real estate firm, owned by Singapore’s Temasek Holdings Pte and JTC Corp., is working with advisers on the planned deal, the people said. The initial public offering could take place as early as the first quarter, said the people, who asked not to be identified because the details are private.
- Apple Inc. is aggressively hiring engineers in Qualcomm Inc.’s home base of San Diego, seeking designers to develop wireless components and processors that would further weaken the chipmaker’s chances of again supplying chips for the iPhone maker’s future devices. This month, Apple published 10 job listings on its website for chip design-related positions located in the city, marking the first time the Cupertino, California-based technology giant has publicly recruited for such roles in the Southern California hotbed for chip design.
- Walmart Inc. sailed into the holiday season with stronger-than-expected sales and a boosted full-year outlook, signaling that the world’s largest retailer can more than hold its own against rival Amazon.com Inc. in the critical holiday weeks ahead. Comparable sales for Walmart stores in the U.S. — the best barometer of the company’s performance — rose 3.4 percent in the third quarter, beating analysts’ estimates. It now sees the measure growing at least 3 percent this year, better than the previous guidance of “about 3 percent.”
- A lawyer for UBS Group AG took a jab at American authorities to ridicule a request of French prosecutors that judges force the bank to pay as much as 5.3 billion euros ($6 billion) for helping customers avoid taxes by hiding their money in Swiss accounts. On the closing day of the trial, Jean Veil said “the objective in seeking such an extravagant amount is to give credibility to the accusation” and impress the press and the Paris criminal court. Financial prosecutors asked judges to impose a record penalty of 3.7 billion euros, while the French state is seeking 1.6 billion euros in damages.
- Takeda Pharmaceutical Co. pulled in more than 10 billion euros ($11 billion) of bids for what may be the year’s biggest euro corporate bond sale, even as renewed Brexit uncertainty roiled markets. The Japanese drugmaker plans to sell at least 5 billion euros of bonds, spread across six tranches with maturities as long as 12 years, according to a person familiar with the matter, who asked not to be identified because they aren’t authorized to discuss the matter publicly. The company intends to sell a total of $14.05 billion of bonds, potentially including a later dollar offering, to help fund the acquisition of Shire Plc.
- China’s biggest lender pulled an offering of dollar bonds in the U.S. market on Wednesday, adding to concern that American investor demand for Chinese offerings is dwindling amid the trade war. Industrial & Commercial Bank of China Ltd. had been marketing three-year and five-year floating-rate notes through its New York branch, then decided not to proceed with pricing, according to people familiar with the matter. A call to ICBC’s press officer in Beijing went unanswered.
- Shares of Jet Airways India Ltd. jumped to a three-month high after reports the Tata Group is considering buying the cash-strapped carrier as the conglomerate looks to expand its footprint in the country’s growing aviation sector. The stock climbed as much as 17 percent to 302.80 rupees on Thursday in Mumbai, their highest intra-day level since August and the biggest jump in more than three years. The Economic Times reported that Tata is weighing a potential all-stock merger of Jet Airways with its own local venture with Singapore Airlines Ltd. CNBC-TV18 television channel reported that Tata board will discuss the proposal Friday.
- Dell Technologies and its special committee agreed to boost the consideration payable to Class V shareholders to either $120 in cash or between 1.5043 and 1.8130 shares of Class C stock.
- Bank of China Ltd., the nation’s fourth-largest bank by assets, said it plans to establish a wholly owned wealth management subsidiary, responding to a regulatory push to cut risk in the financial sector. The firm said in a statement Thursday that it will start the Beijing-based unit with as much as 10 billion yuan ($1.4 billion) of capital. At least 10 other publicly traded banks have announced plans to set up wealth-management units since March in preparation for tougher regulations on the $4 trillion industry. The firm is the first of China’s big four banks to make the move.
- China is opening up its 18.07 trillion ($2.6 trillion) local government bond market further to individual investors. Municipal bonds in the interbank bond market will be made available to retail investors through banks’ counters, according to a notice issued jointly by the People’s Bank of China, Ministry of Finance and China Banking and Insurance Regulatory Commission. Authorities last year allowed them to buy munis listed on the country’s exchanges.
- Credit Suisse Group AG is considering hundreds of job cuts as Chief Executive Officer Tidjane Thiam austerity drive extends into a fourth year, according to people with knowledge of the matter. The dismissals could start as soon as this year and help the bank achieve its 2019 expense targets, the people said, asking not to be identified discussing private information. The Zurich-based bank’s International Wealth Management business and Swiss Universal Bank may be among the businesses affected by the cuts, the people said. Credit Suisse declined to comment.
- SoftBank Group Corp.’s underwriters are embracing an unusual television marketing campaign to make sure that investors — especially individuals of all ages — will flock to what may be the country’s biggest-ever initial public offering. A 30-second television spot shows a multigenerational family with antennas on their heads. While eating breakfast, the appendages blink, alerting them to the 2.6 trillion yen ($23 billion) market debut of SoftBank’s Japanese telecommunications business. The ad will run through Nov. 30, when the share price range will be set, people with knowledge of the matter said.
- ConocoPhillips plans to invite bids by the end of the year for its remaining North Sea assets, which could be valued at up to $3 billion in a sale, according to people with knowledge of the matter. The assets, which would include what’s left of its holding in the Clair Field, are likely to draw interest from private equity-backed companies investing in the North Sea and from rival energy firms, the people said, declining to be identified as the deliberations are confidential.
- Federal Reserve Chairman Jerome Powell said the U.S. economy is strong but could face headwinds next year as policy makers weigh how far and fast to raise interest rates. “We have to be thinking about how much further to raise rates, and the pace at which we will raise rates,” Powell said during a question and answers session Wednesday in Dallas moderated by Dallas Fed chief Robert Kaplan. The goal is to “extend the recovery, expansion, and to keep unemployment low, to keep inflation low.”
*All sources from Bloomberg unless otherwise specified