November 16th, 2018
Daily Market Commentary
- BlackBerry Ltd., the former mobile phone giant that’s now focused on producing software, is acquiring cybersecurity company Cylance Inc. for $1.4 billion. Waterloo, Ontario-based BlackBerry said the acquisition of Cylance would enable it to add artificial intelligence capabilities to its existing software products. It said the all-cash deal would close before the end of its current fiscal year in February 2019.
- Heavy Western Canadian Select crude fell to a record low as several oil producers shut in production and some demand the Alberta government intervene to mandate across-the-board cuts. The oil-sands benchmark fell $2.29 to $13.46 a barrel Thursday, the lowest in Bloomberg data extending back to 2008. The price broke a previous record set in early 2016, when West Texas Intermediate crude futures were trading under $30 a barrel amid a world-wide supply glut.
- Bombardier Inc.’s executive stock sale program is under review by Quebec’s financial markets regulator, which ordered the aerospace company to suspend all equity sales pending the probe. The Autorite des Marches Financiers said it’s examining “all operations surrounding the establishment” by Bombardier of the stock-sale plan, according to a statement late Thursday from the provincial agency. The AMF also said it asked Bombardier to advise brokers that transactions will be suspended until further notice.
- The Stoxx Europe 600 Index headed for its first weekly drop in three, trimming Friday’s gain as AstraZeneca Plc’s drop weighed on the gauge after a cancer-drug setback. The British pound managed a half-hearted rebound after after posting the biggest drop in more than two years Thursday as several ministers resigned. Prime Minister Theresa May is defying demands to quit as her detractors plot a vote of no confidence over disquiet with her proposed Brexit deal.
- U.S. futures fell after a mixed session in Asia as investors gauged whether China and America can de-escalate their trade dispute before the G-20 summit later this month. Sterling advanced as investors grapple with the U.K.’s political turmoil. Futures on the S&P 500 declined after Nvidia Corp. gave a disappointing sales forecast and Commerce Secretary Wilbur Ross damped hopes of any imminent trade deal with China.
- Asian shares were led lower by declines in Japan, even as those in China and Hong Kong climbed. Treasuries and the dollar were steady, while oil held around $57 a barrel in New York.
- Oil rose, paring a sixth weekly loss, amid growing confidence that OPEC and its partners will reduce production to avert a glut next year. Futures in New York rose 1.8 percent Friday, trimming the weekly drop to 4.6 percent. With the Organization of Petroleum Exporting Countries seeing waning demand for its oil, the group and its allies are said to be considering bigger-than-expected cuts despite criticism from President Donald Trump. In the U.S., government data showed stockpiles climbed the most in 21 months last week.
- Gold headed for the first weekly gain in three as investors sought haven assets amid uncertainty surrounding the political situation in the U.K. and the U.S.-China trade war. British Prime Minister Theresa May is defying demands to quit as she battles to keep control of her fractious government long enough to deliver a Brexit deal. Meanwhile, traders are gauging whether China and the U.S. can deescalate their spat before the G-20 summit later this month.
- British Prime Minister Theresa May is defying demands to quit as she battles to keep control of her fractious government long enough to deliver a Brexit deal that’s drawn ire from across the political spectrum. Facing a revolt over her proposed exit agreement with the European Union, May said she would stay in office because the public expects her to see through their 2016 vote to leave the bloc in an orderly way.
- The yield on China’s one-year government bonds is now more than 10 basis points lower than that on similar U.S. bills. Until mid-last week, the yield on the bonds was higher than on U.S. debt since at least June 2008. The rate on the Chinese bonds dropped for a 12th day Friday, falling one basis point to 2.51 percent.
- PG&E Corp. rallied as much as 49 percent in extended trading Thursday after the head of the California Public Utilities Commission said he can’t imagine allowing the state’s largest utility to go into bankruptcy as it faces billions of dollars in potential liability from deadly wildfires. “It’s not good policy to have utilities unable to finance the services and infrastructure the state of California needs,” PUC President Michael Pickersaid in an interview. “They have to have stability and economic support to get the dollars they need right now.”
- The chipmaking sector saw another bout of selling in Asia, wiping at least $11.2 billion in market value, as weak forecasts from Nvidia Corp. and Applied Materials Inc. added to the latest signals that demand for servers, personal computers and mobile is falling.
- India’s biggest conglomerate Tata Group said it is in preliminary discussions about its interest in the beleaguered Jet Airways India Ltd. No proposal has been made, the salt-to-software conglomerate said in an email on Friday. The statement comes after people familiar with the matter told Bloomberg that Indian Prime Minister Narendra Modi’s government has sought group holding company Tata Sons Ltd.’s help to rescue the struggling airline. The Tata Sons’ board was due to deliberate on the matter on Friday, the people had said.
- North Korean leader Kim Jong Un oversaw the test of a new “advanced tactical” weapon — the first such demonstration in almost a year — in a pointed signal to the U.S. and South Korea amid stalled nuclear negotiations. Kim inspected the “successful” test during a visit to North Korea’s Academy of Defense Science, the state-run Korean Central News Agency said Friday morning local time. KCNA didn’t provide any details on the type of weapon, whether it was related to Kim’s nuclear program, or when the test occurred.
- U.S. regulators are seeking sharp sales restrictions on tobacco products that appeal to young people, but internet users are already looking for ways to get around them. Food and Drug Administration Commissioner Scott Gottlieb hinted for weeks that his agency would take action to halt a dramatic increase in underage use of e-cigarettes. As part of a series of measures outlined on Thursday, he said that the agency would limit sales of most types of flavored e-cigarettes to specialized stores and online retailers that can verify a purchaser’s age.
- Rules pertaining to transfer of Indian central bank’s surplus funds to the government, a key point of conflict between the two, will come up for discussion when the monetary authority’s board meets on Monday, people with knowledge of the matter said. The agenda for the meeting, the first after differences between Governor Urjit Patel and his political bosses turned into a public spat last month, also lists a review of lending norms for weak state-run banks, the people said, asking not to be identified as they aren’t authorized to speak to the media.
- Federal Reserve Chairman Jerome Powell has laid out a scenario for a pause in the central bank’s interest-rate hiking campaign sometime next year by highlighting potential headwinds to the U.S. economy. While generally upbeat about the outlook, Powell on Wednesday listed three possible challenges to growth in 2019: slowing demand abroad, fading fiscal stimulus at home and the lagged economic impact of the Fed’s past rate increases.
- Anxiety is an occupational hazard, a fact of life, for professional traders. After all, even on good days, something is always going wrong, somewhere. But when everything starts to go wrong at once, imaginations can run wild. Like now, when everywhere you look, something’s blowing up. In commodities, it’s the record plunge in oil. In equities, it’s six weeks of turbulence in the S&P 500. Debt markets have been rattled by the turmoil engulfing General Electricand PG&E. Bitcoin just plunged 13 percent.
- Corporate bond spreads surged to the widest level in almost two years as the struggles of General Electric Co. fed into broader market worries. The spread on the Bloomberg Barclays U.S. IG Corporate Bond Index widened to 128 basis points over Treasuries at the close Thursday, from 122 basis points the day before. The jump in spread was the biggest since June 24, 2016 when markets were shaken after the Brexit vote. The index is now at its widest since Dec. 6, 2016.
- Activist investor Carl Icahn is ending his proxy fight and litigation against Dell Technologies Inc. after the tech giant boosted its offer to holders of its tracking stock. “Largely due to our opposition, today Dell enhanced the deal,” Icahn said in a statement posted to his website Thursday.
- General Electric Co. agreed to sell a portfolio of healthcare equipment leases and loans for $1.5 billion to Florida-based lender TIAA Bank. Held by GE Capital, the portfolio covers loans and leases to about 1,100 hospitals as well as 3,600 physician practices and diagnostic and imaging centers in the U.S., according to a statement posted on the newsroom section of GE’s website. The announcement was on the website for about 30 minutes Thursday evening Boston time, but has since become unavailable.
- Bain Capital and Carlyle Group LP are considering bids for the Asia-Pacific assets being sold by Belgian chocolatier Godiva, people with knowledge of the matter said. The confectioner’s Turkish owner, Yildiz Holding AS, is working with an adviser on the planned sale, which could fetch $1 billion to $1.5 billion, the people said. The potential disposal has also attracted interest from Japan’s Mitsubishi Corp., said the people, who asked not to be identified because the details are private.
- United Technologies Corp. is starting the final round of an auction for its fire safety and security business, people familiar with the matter said. Offers from Apax Partners and PAI Partners, as well as a joint bid from Eurazeo SE and Rhone Capital, are being considered, said the people, who asked not to be identified because the discussions are private. The asset could fetch about $3 billion, one of the people said.
- Viacom Inc. reported fourth-quarter revenue and earnings that topped analysts’ estimates, as the closely watched fees paid by affiliates rose. The owner of cable networks MTV and Nickelodeon earned 99 cents a share in the fiscal quarter, excluding some items, beating expectations by 4 cents. Revenue of $3.49 billion topped the $3.37 billion anticipated by analysts.
*All sources from Bloomberg unless otherwise specified