Market Snapshot
Asia: Japan +3% to 19136. Hong Kong -1% to 21612. China +4.9% to 3232. India +0.6% to 26392.
Europe: London flat. Paris -0.4%. Frankfurt -0.7%.
Futures: Dow -0.7%. S&P -0.7%. Nasdaq -0.7%. Crude -0.1% to $42.54. Gold +0.4% to $1126.60.
Ten-year Treasury Yield -1 bps to 2.15%
Economic News
Jackson Hole Symposium
8:30 Personal Income and Outlays
10:00 Reuters/UofM Consumer Sentiment
Markets
After some of the most turbulent market days in recent memory, the weekend can’t come soon enough for many investors. Panicked selling on Monday and Tuesday gave way to a rush to buy on Wednesday and Thursday. However, there could be a sting in the tail for Friday – U.S. stock futures are signaling all three main indexes will open about 0.7% lower and European markets were weaker in morning trade.
In Asia: Chinese shares rallied for a second day and the yuan gained the most since April on speculation authorities took several more steps to prop up equities. During this week’s wild ride, China became the epicenter of a global selloff, with a five-session crash starting last Thursday triggering steep losses in U.S. and European stocks – only to be followed by surges. The Shanghai Composite index closed the session up 4.9%, paring its loss for the week to just over 10%.
The Bank of Japan’s key inflation gauge slumped to zero for a third time this year, heightening pressure on policymakers to offer fresh monetary support to reflate the world’s third-largest economy. While Japan’s core consumer price index was unchanged in July from a year earlier, other data provided a mixed picture for the start of the third quarter. Household spending unexpectedly fell, retail sales rose 0.6% from June, and the job market remained tight (job-to-applicant ratio rose to 1.21).
North Korean leader Kim Jong Un is calling this week’s accord between the rival Koreas “a landmark occasion” for improved ties, but said it was the strength of its armed forces that made the deal possible. Officials from the two nations held three-days of marathon talks after an exchange of fire across their border, raising fresh hopes for a push to restore exchanges that had been cut off since 2010. South Korea’s KOSPI Index closed up 1.6% following the news.
So what’s on the menu at Jackson Hole? The Federal Reserve’s annual economic policy conference kicked off late last night, and will run through Saturday. With Fed Chair Janet Yellen skipping the conference, traders will be watching for signals about the likely timing of an interest rate increase from Vice Chairman Stanley Fischer. Speakers are also expected to touch upon China’s devalued currency, the collapse in oil prices and recent global market turmoil, although the official topic of this year’s conference is “Inflation Dynamics and Monetary Policy.”
Crude prices are steadying after bouncing back from six-and-a-half-year lows on positive U.S. growth numbers, recovering equities markets and reports of an emergency OPEC meeting. On Thursday, oil saw its biggest one-day bounce since 2009 with North Sea Brent and U.S. light crude rising more than 10%. WTI crude is now on track for its first weekly gain in nine weeks, ending its longest losing streak since 1986. Crude futures -0.1% to $42.54/bbl.
Stocks
The architect of Apple’s online radio strategy has resigned just two months after the launch of its Beats1 radio service, FT reports. News of Ian Rogers’ departure is unexpected. He is leaving to work for a Europe-based company in an unrelated industry. Apple (AAPL) said this month that 11M people had signed up for free trials of Apple Music in the first four weeks since its launch. Spotify, meanwhile, claims 75M active users, and Pandora (P) has about 80M.
“For the first time ever, one billion people used Facebook (FB) in a single day – one in seven people on earth,” CEO Mark Zuckerberg announced in a blog post. With 1B users this past Monday, the 12-year-old company has become an online community that is bigger than the population of every country on the globe except China and India. Facebook has 1.49B average monthly users, and said it had an average of 968M daily users in June.
Looking to revive a $23B takeover bid for Micron (MU), the chairman of China’s Tsinghua Unigroup traveled to the U.S. this week to meet with board members of the U.S. chipmaker, sources told Reuters. Micron dismissed Unigroup’s informal offer in July on the presumption U.S. authorities would block an acquisition due to national security concerns. Several politicians have also called for a rejection of a deal, citing Micron’s role in making chips used in U.S weapons systems.
Sprint is taking the wireless price war to a whole new level, stating it would give away a free year of wireless service to any DirecTV subscriber who switches to Sprint (S). The move is a direct attack on AT&T (NYSE:T), which recently completed a $49B acquisition of the satellite TV provider. The deal will only be offered over the next month – August 28 through September 30.
What a session for Freeport McMoRan yesterday. The stock surged almost 30% after announcing plans to cut spending and production, and lowering its 2016 capex budget by 29% from its $5.6B estimate issued in July. After the closing bell, Carl Icahn disclosed an 8.46% active stake in the company, sending shares up another 10% in after-hours trading. In a new 13D filing, Icahn said he plans to engage with Freeport McMoRan (FCX) management and may seek board seats.
According to forecasts from Beverage Marketing, bottled water sales volume grew at a rate of 7% in the U.S. last year to put it on pace to outsell soda by 2017. That’s not necessarily all bad news for Coca-Cola (NYSE:KO), Pepsi (NYSE:PEP) and Nestle (NSRGY), which offer several bottled water brands, though it’s not an ideal trend. The wholesale gallon price of water fell 25% over the past decade compared to a 33% rise in soda prices, and more companies continue to pour into the market.
Wells Fargo is the leader in the hunt to buy General Electric’s (GE) railcar financing unit, Bloomberg reports. The sale is another step in GE’s divestment of financial services in order to refocus on its industrial roots. A deal to buy the business, which has more than $4B in assets, could be announced by Labor Day.
The FDA has approved Amgen’s Repatha drug for patients with hereditary forms of high cholesterol and those at high risk of cardiovascular disease. The scope of the approval was similar to the recent approval given to Regeneron’s (REGN) Praluent, which was approved for patients with similar conditions. Each of the drugs are expected to generate more than $2B a year in sales by 2020.
Mylan shareholders are scheduled to vote today on a matter related to its $36B hostile takeover bid for pharmaceutical company Perrigo (PRGO). The vote – on whether Mylan (MYL) can issue new stock for the offer – will be a critical step in moving forward with that bid. Although proxy advisory firm ISS has recommended that investors vote no, two of Mylan’s biggest shareholders have already publicly supported the deal.