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U.S. STOCKS LITTLE CHANGED AS INVESTORS WEIGH INFLATION DATA

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US FINANCIAL MARKET | US ECONOMY & POLITICS
 EUROPE & WORLD | TODAY IN HISTORY

DAILY MARKET REPORTS

  • U.S. stocks treaded water on Thursday, as gains in bank shares ahead of earnings were countered by growth worries following warnings from major central banks.
  • Earnings season begins in earnest on Friday when JPMorgan and Wells Fargo report results.
  • Next week several corporate heavyweights are slated to file their quarterly earnings.
  • The producer-price index (PPI), a measure of prices businesses receive for their goods and services, in March posted its biggest increase since October, the Labor Department said.
  • Minutes of the Federal Reserve’s March meeting released Wednesday suggested the central bank has set a high bar to raising rates again, because of greater risks to the U.S. economy from a global growth slowdown and after a muted inflation reading took more officials by surprise.
  • European Central Bank President Mario Draghi said Wednesday that Europe’s economic slowdown would continue this year.
  • Bed Bath & Beyond shares tumbled 10.2% after the home furnishing retailer forecast weak current-quarter profit.
  • Tesla shares fell 2.9% after the electric carmaker and Panasonic said they were holding off on further investment in Tesla’s Nevada Gigafactory.

US FINANCIAL MARKET

Bed Bath & Beyond Tanks as Street Awaits Proof of Turnaround

  • Comparable sales in fourth quarter fell 1.4 percent, below analysts’ expectations, hurt by mid-single digit drop in sales at its brick and mortar stores which overshadowed strong growth from digital channels.
  • The company expects current quarter same-store sales to fall between 5 and 6 percent.

Disney’s Next Big Remake: Itself

  • Disney is preparing to launch a service called Disney+ that will, for a monthly fee, stream new and old shows built around its most popular franchises.
  • That means breaking off a lucrative relationship with Netflix Inc. and instead competing against the streaming powerhouse.
  • Today, Disney is expected to reveal the details in a major presentation to investors laying out the company’s streaming strategy.

Boeing Looks to Build Overseas Support for MAX Fix

  • Boeing and U.S. aviation regulators will be seeking what amounts to an international stamp of approval around the time they roll out a safety fix for 737 MAX jets, expected this summer.

Uber Aims for Public Valuation of as Much as $100 Billion, Below Expectations

  • Uber Technologies is aiming for a valuation in its impending initial public offering of as much as $100 billion, below previous expectations, as ride-hailing competitor Lyft stumbles in its early days of trading as a public company.
  • Uber recently provided documentation to holders of its convertible notes that sets a potential price range of $48 to $55 a share, according to people familiar with the matter.
  • That would equate to an aggregate valuation of between $90 billion and $100 billion, including the roughly $10 billion Uber expects to raise in the offering.
  • The current expectations fall below the valuation of as much as $120 billion that Morgan Stanley and Goldman Sachs the lead underwriters, had pitched as a possible public offering price tag last year.
  • Uber is expected to make its IPO filing public Thursday, with the stock’s debut planned for early May.

Bezos Rebuts Warren’s Amazon Breakup Call in Antitrust Defense

  • Bezos argued that Amazon’s growth has benefited its third-party merchants — a veiled riposte to calls to break up the company.
  • Last month Senator Elizabeth Warren, a presidential candidate, laid out a detailed plan for breaking up Amazon, Google and Facebook Inc. In her vision, Amazon’s Marketplace should be separated from the rest of the site because she said it “crushes” small businesses.
  • “Third-party sellers are kicking our first-party butt. Badly,” Bezos wrote in the letter published Thursday.
  • He also challenged rival retailers to raise their minimum wage to $16 an hour.

Amazon buys warehouse robotics startup Canvas Technology

  • Amazon.com on Wednesday said it had acquired Canvas Technology, a robotics startup in Boulder, Colorado, that has built autonomous carts that can move goods around warehouses.
  • The world’s largest online retailer has increasingly automated its fulfillment centers with robots, originally from Kiva Systems which it agreed to buy for $775 million in 2012, that transport shelves of inventory to workers to pick customer orders.
  • Amazon has also shown growing interest in self-driving technology more broadly, recently participating in a $530 million funding round in driverless car startup Aurora Innovation.

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US ECONOMY & POLITICS

U.S. Producer Prices Rose 0.6% in March as Energy Prices Soared

  • The producer-price index, a measure of the prices businesses receive for their goods and services, rose a seasonally adjusted 0.6% in March from a month earlier, the biggest increase since October, the Labor Department said Thursday.
  • Much of the increase owed to a strong rebound in energy prices, which had dropped in late 2018.
  • Gasoline prices, for instance, soared 16% last month from February, the biggest gain since August 2009.
  • Excluding the often-volatile food and energy categories, producer prices were up a more modest 0.3% in March from the prior month.
  • And excluding food, energy and a volatile gauge of margins called trade services, prices were flat from February.
  • Compared with March 2018, the overall PPI was up 2.2% last month.
  • Excluding food and energy, the index was up 2.4%; and prices sans food, energy and trade services were up 2%.

U.S. labor market tightening

  • The number of Americans filing applications for unemployment benefits dropped to a 49-1/2-year low last week, pointing to sustained labor market strength that could temper expectations of a sharp slowdown in economic growth.
  • Initial claims for state unemployment benefits fell 8,000 to a seasonally adjusted 196,000 for the week ended April 6, the lowest level since early October 1969.
  • The report also showed the number of continuing claims workers made for longer than a week fell by 13,000 to 1,713,000 in the week ended March 30.

Fed Minutes: Officials See Little Need to Change Rates This Year

  • Federal Reserve officials signaled greater conviction at their meeting last month that they don’t need to move interest rates up or down.
  • Minutes of the March meeting released Wednesday suggest the Fed has set a high bar to raise rates again because of greater risks to the U.S. economy from the global growth slowdown and muted inflation that took more of the officials by surprise.
  • At the same time, the minutes show officials didn’t see any need to cut their benchmark rate absent a broad deterioration in the economy.
  • Officials said their view of the appropriate setting for interest rates “could shift in either direction based on incoming data and other developments,” according to the minutes.

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EUROPE & WORLD

WikiLeaks Founder Julian Assange Arrested, Charged with Computer Hacking Conspiracy

  • British police on Thursday arrested WikiLeaks founder Julian Assange in London at the request of U.S. authorities, a dramatic turn in Washington’s long-running effort to prosecute a man it accuses of running a hostile foreign intelligence service.
  • Prosecutors alleged in an indictment that in March 2010 Mr. Assange conspired to help former U.S. Army intelligence analyst Chelsea Manning break into a U.S. Defense Department computer system by attempting to help her crack a password.
  • British police are holding Mr. Assange at a police station in central London. On Thursday morning, they entered the Ecuadorean embassy where Mr. Assange has been living since 2012, at the invitation of Ecuador’s government, and dragged him into a police van. Ecuador had withdrawn asylum protection.

Carlos Ghosn’s Defense Says Detention Is Worsening His Kidney Condition

  • Tokyo court has said the former Nissan and Renault executive can be held without possibility of bail through Sunday, and prosecutors can ask to extend that period a further 10 days.
  • Mr. Ghosn’s medication for high cholesterol caused a condition called rhabdomyolysis, in which muscle cells break down, enter the blood stream and damage the kidneys in some cases, according to the document dated April 5. People suffering from the condition are advised to exercise and eat a balanced diet. That is made more difficult by Mr. Ghosn’s detention, a Ghosn family representative said.

ASML says it suffered intellectual property theft, rejects ‘Chinese’ label

  • Dutch ASML said on Thursday it had been the victim of corporate espionage in 2015 involving employees from countries including China but said it had not been the target of any “national conspiracy”.
  • ASML said the perpetrators took “large files” on memory sticks from its Silicon Valley software subsidiary that develops software for machine optimization.
  • It said it had since taken action to make such theft much more difficult.
  • ASML is the dominant maker of lithography systems, used to trace out the circuitry of semiconductor chips.
  • Its sales to China more than doubled to 1.8 billion euros ($2 billion) in 2018 as Beijing drives growth of its domestic semiconductor industry, now accounting for about a sixth of ASML’s total sales.

U.S., China agree to establish trade deal enforcement offices: Mnuchin

  • The United States and China have largely agreed on a mechanism to police any trade agreement they reach, including establishing new “enforcement offices,” U.S. Treasury Secretary Steven Mnuchin said on Wednesday.
  • “We’ve pretty much agreed on an enforcement mechanism, we’ve agreed that both sides will establish enforcement offices that will deal with the ongoing matters,” Mnuchin said, adding that there were still important issues for the countries to address.

LVMH shares touch record highs after luxury group’s solid first-quarter sales

  • LVMH’s shares hit record highs on Thursday after the Louis Vuitton owner posted strong first-quarter sales which set a high bar for rival luxury companies also chasing Chinese demand for high-end handbags and clothing.
  • LVMH said late on Wednesday that revenues rose 16% to 12.5 billion euros ($14.10 billion).

Turkey Weakness Is Hurting German Economy More Than China

  • The trajectory of Germany’s major trading partners helps explain the sources of export pain and in turn the weakness of the economy.
  • Rather than China, the biggest hit to the German economy from foreign demand came from Turkey, output has tanked.
  • Soft global demand is weighing on Germany again in the first half of 2019, but BE forecasts stronger growth among major trading partners later this year.

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TODAY in HISTORY

  • Napoleon was exiled to the island of Elba (1814)
  • The treaty ending the Spanish-American War took effect (1899)
  • Iowa imposed the first state cigarette tax (1921)
  • President Harry Truman fired General Douglas McArthur (1951)
  • President Lyndon B. Johnson signed the 1968 Civil Rights Act (1968)
  • President Ronald Reagan returned to the White House after he was shot in an assassination attempt (1981)

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.

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