DAILY MARKET REPORTS
- U.S. stocks opened slightly higher Wednesday, steadying following Tuesday’s decline as investors weighed data showing moderate inflation and the latest signs of caution from the European Central Bank.
- Figures early in the day showed the consumer-price index rose less than economists had expected in March when excluding the volatile food and energy categories, the latest sign underlying price pressures remain contained.
- Higher energy prices did help push up overall inflation last month.
- Meanwhile, the European Central Bank left its policies unchanged as it gauges the impact of its latest stimulus measures designed to spur growth in the lagging eurozone economy.
- Investors were weighing results from Delta Air Lines, which said it would leave airline capacity stable this summer travel season, a move that could ease fears of excess capacity lowering fares. Shares rose 2.8%.
- Levi Strauss jumped 6.3% after the jeans maker posted a 7% rise in revenue after returning to public markets last month.
US FINANCIAL MARKET
Levi Strauss Swings to Profit, Maintains Outlook
- Levi Strauss swung to a profit in the latest period with broad-based sales growth across regions and a sharply lower tax bill.
- Revenue for the quarter rose to $1.43 billion from $1.34 billion a year earlier, in line with the company’s previous revenue expectation of between $1.42 billion and $1.44 billion.
- The company reported a first-quarter profit of $146.6 million compared with a loss of about $19 million a year earlier.
- The company had forecast profit of $130 million to $146 million.
- The year-ago results included a $136 million charge tied to the U.S. tax overhaul.
Delta lifts 2019 revenue forecast after quarterly beat
- Delta Air Lines lifted its 2019 revenue forecast after reporting better-than-expected quarterly profits, boosted by robust travel demand and a renewed agreement with credit-card issuer American Express.
- Total operating revenues grew 5.1 percent to $10.47 billion in the first quarter.
- Net income rose to $730 million in the first quarter from $557 million a year earlier, ahead of consensus.
- Delta did not update its 2019 profit guidance but expects second-quarter profit in the range of $2.05 per share to $2.35 per share, the midpoint of which was above average analyst estimates of $2.13 per share.
- The carrier expects full-year revenue growth of 5 to 7%, an increase from 4 to 6% previously, and forecast total unit revenue, a closely watched measurement of revenues per available seat mile, to increase 1.5% to 3.5% in the second quarter.
- Atlanta-based Delta does not own the Boeing 737 MAX, which was grounded worldwide in March following two fatal crashes.
Boeing Didn’t Get Any Commercial 737 Orders in March
- Boeing didn’t book any commercial orders for its 737 jetliner in March, the first month without a sale of the aerospace giant’s best-selling aircraft in almost seven years.
- Boeing delivered just 11 of the 737 MAX jets in March, less than half the rate of deliveries in the two previous months and far off the pace needed to reach the aircraft maker’s guidance in January for handing over 900 jetliners this year.
- Analysts now expect Boeing to be more likely to deliver about 750 jets this year, with forecasts of the potential financial impact ranging from $2 billion to $3 billion through a mix of compensation, delayed airline payments and costs to fix the MAX.
- Boeing delivered a total of 54 jets in March, taking the total for the year to 149.
- The company also booked orders for 44 planes, including three business-jet versions of the 737, but no commercial models.
JetBlue Says March Traffic Climbed 7.9%
- JetBlue Airways reported a nearly 8% increase in traffic for March and said it expects revenue-per-available-seat mile to fall by about 3.1% in the company’s first quarter.
- The company had been guiding for that measurement to fall between 1.5% and 3.5%.
- JetBlue had expected operating-cost-per-available-seat mile, not including fuel, to increase between 1.5% and 3.5%, but on Wednesday the company said it expects that growth to either meet or be below the lower end of that outlook.
Wynn Resorts Ends Talks with Crown Resorts After Premature Disclosure
- Wynn Resorts abruptly called-off discussions over a potential $7.1 billion offer for Australia’s Crown Resorts Tuesday, saying the takeover target had prematurely disclosed their talks.
- Less than a day after Crown Resorts surprised industry watchers by announcing that Wynn Resorts had offered 14.75 Australian dollars (US$10.51) a share, Wynn took the deal off the table.
- The deal would have given the Las Vegas giant a foothold in its second international market, underscoring how casinos are looking beyond the traditional gambling hub of Macau to attract lucrative Asian high rollers.
Saudi Aramco Raises $12 Billion in Debut Bond Sale
- Saudi Aramco raised $12 billion in its debut international bond Tuesday, according to people familiar with the sale, an issuance that sparked massive interest among investors eager to access the world’s most profitable company.
- Government-owned Aramco, known officially as Saudi Arabian Oil Co., received more than $100 billion in orders for its bond and had been expected to raise about $10 billion from the sale.
- Saudi officials are likely to view the large investor interest as a positive bellwether for the oil giant’s potential initial public offering, which is expected in 2021.
Exclusive: U.S. lawmakers introduce bill to boost electric car tax credits
- A bipartisan group of U.S. lawmakers will introduce legislation to expand the electric vehicle tax credit by 400,000 vehicles per manufacturer, a provision that would give a boost to GM and Tesla before the existing credit comes to an end for them.
- The existing $7,500 EV tax credit, which allows tax payers to deduct part of the cost of buying an electric car, phases out over 15 months once an automaker hit 200,000 cumulative EV sales.
- GM saw its tax credit cut to $3,750 on April 1. Tesla’s tax credit fell to $3,750 on Jan. 1 and will end entirely at year’s end.
- The bill dubbed the “Driving America Forward Act” would grant each automaker a $7,000 tax credit for an additional 400,000 vehicles on top of the existing 200,000 vehicles eligible for $7,500 tax credits, but shorten the phase-out schedule to nine months.
U.S. Charges Drug Maker Indivior With Organizing Multibillion-Dollar Fraud
- Federal prosecutors charged a U.K. pharmaceutical company with organizing a multibillion-dollar fraud to drive up sales of Suboxone Film, an opioid-addiction treatment.
- Indivior lost three-quarters of its stock market value and former parent Reckitt Benckiser also fell after the U.S. Justice Department accused the British drugmaker of illegally boosting prescriptions for its blockbuster opioid addiction treatment.
- An indictment alleged Indivior made billions of dollars by deceiving doctors and healthcare benefit programs into believing the film version of its Suboxone treatment was safer and less susceptible to abuse than similar drugs.
US ECONOMY & POLITICS
U.S. Consumer Prices Increased in March
- The consumer-price index (CPI), which measures what Americans pay for household items such as bluejeans and services such as eye care, increased 0.4% in March from the prior month, the Labor Department said Wednesday.
- Excluding the volatile food and energy categories, so-called core prices rose just 0.15% from February.
- Economists expected overall prices to increase 0.3% in March and prices excluding food and energy to edge up 0.2%.
- In the 12 months through March, the CPI increased 1.9%.
- In the 12 months through March, the core CPI increased 2.0%, the smallest advance since February 2018.
U.S. mortgage applications retreat from 2-1/2 year peak
- U.S. mortgage applications fell from their highest level in 2-1/2 years as refinancing activity pulled back in step with an increase in home borrowing costs, the Mortgage Bankers Association said on Wednesday.
- The Washington-based group’s seasonally adjusted index on requests for loans to buy a home and refinance a mortgage declined by 5.6% to 475.6 in the week ended April 5. The previous week’s reading was the strongest since the week of Oct. 14, 2016.
- Interest rates on 30-year “conforming” mortgages, or home loans with balances of $484,350 or less, averaged 4.40%, up from the prior week’s 4.36% which was the lowest since the week of Jan. 19, 2018.
Justice Department Examining Origins of Probe Into Trump Campaign’s Possible Ties to Russia
- Attorney General William Barr has formed a team at the Justice Department to examine the origins of the counterintelligence investigation into the Trump campaign’s possible ties to Russia’s interference in the 2016 election.
- The issue has been a longstanding grievance among Republican lawmakers who allege law enforcement officials and prosecutors abused their authority at the start of the investigation.
- The person familiar with the matter said the team will look at the decisions and actions of officials involved in the early stages of the probe. The formation of the team was first reported by Bloomberg.
Republicans Revive Efforts to Preserve Health-Law Provisions
- A group of Senate Republicans is reviving legislation aimed at guaranteeing protections for people with pre-existing conditions, as the GOP attempts to blunt the political advantage Democrats may have on health care before the 2020 election.
- The bill, which Sen. Thom Tillis (R., N.C.) and roughly a dozen other Senate Republicans plan to introduce Wednesday, would preserve key provisions of the Affordable Care Act, which the Trump administration has moved to strike down in court.
- The proposal, an expanded version of a Republican bill introduced last year, prohibits insurers from charging higher premiums to patients with pre-existing conditions and bars them from excluding coverage of treatments for those individuals.
EUROPE & WORLD
EU Prepares to Push Brexit Into Next Year
- European Union leaders are likely to offer Britain an extension to the U.K.’s exit from the bloc, possibly delaying its split into 2020, though they could demand guarantees that Britain refrain from disrupting the EU’s agenda while it remains a member.
- The timetable aims to give the U.K. government enough time to approve a deal while clearing Brexit off the EU’s agenda and allowing European capitals to focus on the myriad other challenges the bloc faces.
- Diplomats say the EU’s partners are currently looking at pushing Brexit back further until the end of 2019 or March 2020. Mrs. May had asked for an extension until June 30.
Italy Warns of Bigger Budget Deficit
- Italy’s populist government conceded it won’t hit the budget-deficit target agreed on with European Union authorities, setting the stage for renewed tensions with Brussels.
- Italy’s finance ministry on Tuesday said this year’s deficit will be 2.4% of gross domestic product, rather than 2% as agreed with the EU in December after tense negotiations that rattled financial markets.
- The Italian government also cut its 2019 economic-growth forecast to 0.2%, including a boost from its latest fiscal proposals, compared with an earlier forecast of 1%.
- Markets are sensitive to Italy’s deficit because of the country’s lack of growth and a government debt of around €2.3 trillion ($2.6 trillion), or 132% of GDP, that is the world’s third-biggest after that of the U.S. and Japan.
ECB to Review the Impact of Negative Rates on Banks
- European Central Bank President Mario Draghi Wednesday said policy makers will consider whether they need to mitigate the impact on eurozone banks of its negative interest rate.
- European banks have chafed at the long period of negative rates, which were first introduced almost five years ago, and which lenders complain hurt profits because they can’t be fully passed on to customers.
- Mr. Draghi said policy makers will focus on whether those complaints are justified, and weaken the economic stimulus expected of negative rates.
Benjamin Netanyahu Poised to Win Fifth Term as Israel’s Leader
- Prime Minister Benjamin Netanyahu secured enough support to win re-election on Wednesday, emerging stronger from a period of political crisis before Israeli prosecutors pursue corruption charges that will stalk his fifth term.
- Mr. Netanyahu survived a strong challenge from former Gen. Benny Gantz, who rallied centrists and the country’s security establishment in a revolt against the prime minister.
- But Mr. Netanyahu’s Likud was on track to win more seats than he’s ever had over 13 years as prime minister, potentially making him less beholden to his small-party governing partners as he faces new tests of his leadership and policies.
Turkey Unveils $5 Billion Plan to Help Banks Manage Bad Debts
- Turkey’s Finance Minister Berat Albayrak announced a $5 billion plan to help the country’s banks cope with a rise in corporate defaults, a remedy analysts said may not be enough to erase the towering debt left by a decade of credit-fuelled growth and avert protracted economic recession.
- Mr. Albayrak, the son-in-law of President Recep Tayyip Erdogan, said Wednesday that the government would make the funds available to a number of state-run lenders to help them cope with bad debts, especially in the energy and construction sectors.
- He said the nonperforming loan ratio of Turkish banks could peak at 6%, from a current level of 4.2%, but that government support would provide adequate relief.
Germany’s Scholz: Must avoid escalation in EU-U.S. trade dispute
- The global economy is slowing and political leaders must avoid any escalation in trade disputes, German Finance Minister Olaf Scholz told Reuters in an interview on Wednesday.
- U.S. President Donald Trump’s threat this week to impose tariffs on $11 billion worth of EU products, including commercial aircraft, has deepened a long-running trans-Atlantic subsidy dispute and opened a new front in his global trade war.
- “All parties must do their part to avoid an escalation of trade disputes,” Scholz said when asked to comment on the U.S. threat to impose additional tariffs.
TODAY in HISTORY
- Titanic set sail on its fateful voyage. (1912)
- Paul McCartney announced the official split of the Beatles. (1970)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.