Market Snapshot

Asia: Japan +0.1% to 20563. Hong Kong -0.1% to 27424. China -0.2% to 4613. India +1.2% to 27828.
Europe: London flat. Paris -1.1%. Frankfurt -1%.
Futures: Dow -0.3%. S&P -0.2%. Nasdaq -0.3%. Crude +1.4% to $58.47. Gold +0.1% to $1190.
Ten-year Treasury Yield flat at 2.12%

Economic News

8:30 GDP Q1
9:45 Chicago PMI
10:00 Consumer Sentiment

Key earnings before the open



U.S. stock futures struggle for direction this morning, as investors wait for revised first-quarter gross domestic product data, due at 8:30 a.m. Eastern Time. Economists expect growth to be downgraded from an earlier estimate of 0.2% gain to a fall of 1%. Concerns about an interest-rate hike this year continued to chip away at Wall Street on Thursday, leaving moderate declines across the board.

Hammered by a port slowdown, adverse weather and lower growth inventories, the U.S. Commerce Department is expected to report this morning that GDP shrank 1% in Q1 instead of growing at the 0.2% pace it estimated last month. With growth estimates so far for the second quarter around 2%, the economy appears poised for its worst first half performance since 2011.

Switzerland’s economy contracted the most since the financial crisis in Q1 as the strong franc took a toll on exports. Gross domestic product fell by 0.2% in the first three months of 2015 compared to revised growth of 0.5% in the prior period. The outlook for the economy suffered a blow in January when the Swiss National Bank removed its currency cap, causing the franc to rally 15% vs. the euro during the quarter.

“A Greek exit is a possibility,” IMF Chief Christine Lagarde told German newspaper Frankfurter Allgemeine Zeitung in an interview due to be published Friday. Such an eventuality would “not be a walk in the park,” she added, but would “probably not” mean the end of the euro. Although cash-for-reform talks between Greece and its creditors have dragged on for months now, many see June 5 – the date when Athens will have to repay €1.5B to the IMF – as a coming deadline.

Bubble or no bubble, Chinese shares extended a selloff today after swinging wildly in the wake of one of their biggest falls of the year. China equity funds have taken in $4.6B from overseas over the past week, according to data from EPFR, more than double the previous high set in the second quarter of 2008.

The Japanese economy limped into the second quarter, as household spending declined, people left the job market and the central bank’s key inflation gauge registered zero. Consumer prices excluding fresh food and effects of last year’s sales-tax increase were unchanged in April, while household spending unexpectedly fell 1.3%. Consumption has now been in decline for 13 straight months. The Nikkei closed up 0.1% following the flurry of data, barely extending its winning streak to an 11th day.


Intel is close to a deal to buy fellow chipmaker Altera (ALTR) for about $15B, the NY Post reports, stating that a deal is “likely by the end of next week.” Altera reportedly rejected an Intel (INTC) $54/share bid just a few months ago and then broke off sales talks, but that was before Altera issued disappointing earnings. Intel also has the option to launch a hostile bid after June 1, when its standstill agreement with Altera expires.

Google kicked off its I/O conference yesterday with several new product launches. Among them: Android Pay, a replacement for the Google Wallet Android app that handles both in-app and in-store/NFC payments. Google (GOOG, GOOGL) states 7 out of 10 Android devices currently support Pay, and that 700,000 U.S. stores are able to accept it. Other products unveiled include Android M, Now on Tap, and a standalone cloud photo service. The Cardboard virtual reality platform has also been extended to iOS.

Amazon is planning to “broadly expand its fledgling lineup of private-label brands to include an array of grocery items such as milk, cereal, and baby food as well as household cleaners,” WSJ reports. Amazon (AMZN) has approached several private-label foodmakers about partnerships, and has sought trademark protection for various products under its Elements brand. Amazon also reported yesterday that Prime subscribers in 14 metro areas will get free same-day delivery on orders of $35 or more.

Yahoo Japan and Alibaba have agreed to work together to help Japanese companies sell cosmetics, baby products and other household items on Alibaba’s Tmall and Tmall Global sites. The move also paves the way for a very cozy partnership. Just like Yahoo Japan (YAHOY), Alibaba (BABA) counts Softbank (SFTBY) and Yahoo (YHOO) as its two major shareholders.

Equinix (EQIX) has agreed to buy U.K. firm Telecity Group (TLEIY) in a deal worth £2.35B ($3.6B, creating the largest data center player in Europe. Equinix said every Telecity Group shareholder would receive 572.5 pence in cash for each share, a 27.3% premium to the firm’s closing price on May 6 before talks were announced, as well as 0.0327 new Equinix shares.

GE (GE) has picked Deutsche Bank to sell Italian lender GE Capital Interbanca as part of a strategic review to refocus the U.S. company around its industrial base. GE Capital Interbanca specializes in lending and financing transactions for medium-sized Italian firms and has a book value in excess of €1B.

The corruption scandal engulfing FIFA is having corporate sponsors ponder whether to back away from the powerful marketing outlet, although severing ties will not likely be easy. Visa (V) said it wants sweeping changes at FIFA and could otherwise end its agreement, which runs until 2022. Other top sponsors such as Adidas (ADDYY), McDonald’s (MCD) and Coca-Cola (KO) also expressed deep concerns. FIFA collected $1.6B in sponsorship money in the four years leading up to the 2014 World Cup, nearly half of which came from its six top “partners” (the four mentioned above, Emirates and Hyundai (HYMLF)). Meanwhile, Sepp Blatter is expected to secure re-election as FIFA President today, despite the many calls for him to step down.

Cellectis is in talks about a potential sale to Pfizer (PFE) (which already owns 9.5% of the company), in a move that would strengthen the latter’s push to become a serious player in the immuno-oncology market. A deal could value Cellectis (CLLS) at as much as €1.5B, FT reports, and would mark Pfizer’s second big move into immuno-oncology in the last six months – following a $2.85B development deal with Merck (MKGAY). CLLS -10% premarket after popping more than 16% yesterday on the news.

Syngenta, which already has rejected an unsolicited $45B takeover offer from Monsanto (NYSE:MON), is building up defenses as it prepares for a possible higher bid. Syngenta (SYT) is said to have added UBS to its stable of advisers led by Goldman Sachs, as it expects Monsanto could return as soon as next week with a bid that tops the unsuccessful recent offer of 449 Swiss francs/share.

Looking to counter slow midday trading and uneven liquidity, the New York Stock Exchange (ICE) is preparing to launch a midday auction for thinly traded shares after last week’s approval from the SEC. “The fact that more trading is happening on the open and close today than in the past is a symptom of a larger problem, which is that the market is so fragmented during the day,” NYSE President Tom Farley said. The last half hour of trading accounted for more than one in six trades in S&P 500 stocks last year, up from about one in eight in that window in 2007.

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