DAILY MARKET REPORTS
- The S&P 500 and the Nasdaq hit record highs on Monday after data showed U.S. consumer spending surged in March, but gains in shares remained muted as investors waited for a fresh batch of earnings reports.
- Domestic consumer spending rose by the most in more than 9-1/2 years in March, but price pressures remained muted.
- The Federal Open Market Committee will announce its interest rate decision at the end of a two-day meeting, starting Tuesday.
- In yet another busy week for earnings, about 160 S&P 500 companies, including Alphabet and Apple, are due to report.
- Analysts now expect profits of S&P 500 companies to fall 0.2%, a sharp improvement from a 2% fall estimated at the beginning of the month.
- Walt Disney shares jumped 1.3% after “Avengers: Endgame” became the first movie to gross more than $1 billion in its world-wide box-office debut.
US FINANCIAL MARKET
Spotify Narrows Loss, Hits 100 Million Subscribers
- Spotify narrowed its loss in the most recent quarter as the music-streaming giant invested heavily in its growing podcast business and said it now has 100 million paying users.
- Revenue rose 33% to €1.51 billion, above both company estimates and analysts’ expected €1.47 billion in revenue.
- The company ended the quarter with 217 million monthly active users, in line with its expectations of 215 million to 220 million.
- It now has 100 million premium subscribers, at the top of its guidance, but average revenue per user slipped 2% to €4.71 as more subscribers signed up for discounted plans through family accounts, or in international markets with lower pricing power.
- In all, Spotify posted a loss of €142 million ($158.3 million), compared with a loss of €169 million in the year-earlier period.
- For the current quarter, Spotify said it expects total monthly active users to rise to a range of 222 million to 228 million, and premium subscribers to increase to 107 million to 110 million.
- The company guided for an operating loss of €15 million to €95 million, and said revenue is expected to rise to €1.51 billion to €1.71 billion.
Burger King Parent Posts Sales Growth Across Brands
- Restaurant Brands, the parent of Burger King, Tim Hortons and Popeyes Louisiana Kitchen, said sales in the latest quarter grew as the company added stores across the globe.
- Revenue grew slightly to $1.27 billion from a year earlier. Analysts had estimated $1.26 billion in revenue.
- System-wide sales—which include sales from company-owned restaurants and franchisees—rose 6.4% in the quarter.
- Across its brands, system-wide sales at Burger King rose 8.2%, Popeyes increased 6.8% and Tim Hortons rose 0.5%.
- In the quarter, net income was $246 million, compared with $279 million a year earlier.
‘Avengers: Endgame’ Pulverizes Box-Office Records With $1.2 Billion Debut
- The Marvel Studios blockbuster collected an estimated $1.2 billion in its first five days of release.
- An estimated $350 million of that total came from the U.S. and Canada, an amount that blew past the previous opening-weekend record set last year by “Avengers: Infinity War” by about $92 million.
- In China, the movie is virtually guaranteed to become the highest-grossing import of all time, with $331 million grossed so far—only about $60 million behind the current record holder, 2017’s “The Fate of the Furious.”
- “Endgame” could become the highest-grossing movie of all time, beating the record set by “Avatar,” which made $2.79 billion globally in 2009. After just five days of release, it is already No. 18 on the world-wide box-office chart.
Anadarko to Resume Talks with Occidental on Buyout Bid
- Anadarko Petroleum said it was considering Occidental Petroleum’s $38 billion offer, weeks after agreeing to be taken over by Chevron for about $33 billion, raising the likelihood of a bidding war for assets in the heart of the U.S. fracking boom.
- The declaration puts the onus on Chevron to raise its price or walk away from its deal for Anadarko, whose acreage in the Permian Basin of West Texas and New Mexico is coveted by both Chevron and Occidental as a path to further expansion.
- A Chevron spokesman said in a statement that the company believes its agreement with Anadarko provides the best value and most certainty to Anadarko shareholders.
Apple Held Talks with Intel About Buying Its Smartphone-Modem Chip Business
- Apple held talks with Intel about acquiring parts of its smartphone-modem chip business, a potential multibillion-dollar deal that would accelerate the iPhone maker’s efforts to develop wireless technology for its devices.
- The talks started around last summer and continued for months before halting recently, around the time Apple reached a multiyear supply agreement for modems from Intel rival Qualcomm, some of the people said.
- Intel is now exploring strategic alternatives for its modem chip business, including a possible sale and has already received expressions of interest from a number of parties and has hired Goldman Sachs to manage the process, which is in an early stage.
- Potential buyers could include Broadcom, Samsung, or China’s Unisoc Communications, which is working on 5G modems.
Boeing Didn’t Advise Airlines, FAA That It Shut Off Warning System
- Boeing didn’t tell Southwest and other carriers when they began flying its 737 MAX jets that a safety feature found on earlier models that warns pilots about malfunctioning sensors had been deactivated, according to government and industry officials.
- Federal Aviation Administration safety inspectors and supervisors responsible for monitoring Southwest, the largest 737 MAX customer, also were unaware of the change, the officials said.
- The alerts inform pilots whether a sensor known as an “angle-of-attack vane” is transmitting errant data about the pitch of a plane’s nose, which have linked such bad data to the deadly Ethiopian Airlines and Lion Air crash.
- Both planes lacked the alert system.
Tesla says may seek alternative financing sources
- Tesla said on Monday it could seek alternative sources of financing although it expects cash generated from its business to be enough to fund its investments and pay down debt for at least the next 12 months.
- Wall Street has been looking for more details after Chief Executive Officer Elon Musk suggested last week that a capital raise could be imminent as the electric vehicle maker posted a $700 million loss for the first quarter.
- However, tapping the debt market for raising capital might become more expensive for the electric car maker.
- Tesla’s $1.8 billion junk bond sank half a cent to yield 8.42% on Friday, more than 3 percentage points above the bond’s coupon rate of 5.3%.
EU accepts Visa and Mastercard fees offer to end antitrust probe
- The European Union has accepted an offer by Visa and Mastercard to cut fees on payments made by tourists using cards issued outside the bloc to stave off fines and end an EU antitrust investigation.
- The European Commission, which has waged a decades-long crackdown on payment and credit card fees, says that so-called interchange fees in which the merchant’s bank pays a charge to the cardholder’s bank, result in higher prices for consumers.
- The companies’ commitments will cut such fees by 40% on average, the European Commission said on Monday.
Marriott to Take on Airbnb in Booming Home-Rental Market
- Marriott is starting a new home-rental business, aiming to take on Airbnb and other home-sharing companies in one of the lodging industry’s hottest segments.
- The company could unveil details for the plan’s first phase as early as next month, according to people familiar with the matter.
- Marriott is the world’s biggest hotel operator with about 1.3 million guest rooms globally, according to data tracker STR.
- Airbnb has the largest home-rental platform with nearly 5 million accommodations globally, according to data tracker AirDNA and based on listings with at least one booking in a month.
- Airbnb’s website puts the figure at more than 6 million, based on active listings.
US ECONOMY & POLITICS
U.S. consumer spending posts biggest increase since 2009
- Personal-consumption expenditures, a measure of household spending on everything from cars to cocktails increased a seasonally adjusted 0.1% in February and 0.9% in March over the prior months, the Commerce Department said Monday.
- Personal income, which includes Americans’ pretax earnings from wages, salaries and investments, grew more slowly, up 0.1% in March on the month after rising 0.2% in February.
- Economists expected personal expenditures would rise 0.3% in February and 0.7% in March.
- They expected incomes to rise 0.4% in March.
Inflation Picks Up, but Still Below Fed’s 2% Target
- A closely watched measure of U.S. inflation picked up in March but remained well below the Federal Reserve’s 2% target, highlighting the central bank’s struggles to foster reliable price growth even in a strong economy.
- The Fed’s preferred inflation gauge, the price index for personal-consumption expenditures (PCE), rose a seasonally adjusted 0.1% in February from the previous month and climbed another 0.2% in March, the Commerce Department said.
- While the pace of inflation marked a pickup from January, when the PCE price index slowed to its weakest pace since 2016, price increases were well below the Fed’s goal at just 1.49% since March 2018.
- Stripping out volatile food and energy prices, the so-called core PCE price index was up 1.55% in March from a year earlier, the slowest 12-month increase since September 2017 and fell short of the 1.7% rise forecast of economists.
Trump’s New Nafta Faces Mounting Resistance in Democratic House
- President Trump’s push to revamp North America’s trade rules is hitting a roadblock in Washington as Democrats and labor groups demand changes, dimming its chances of passage before next year’s presidential election.
- Democrats said they want to make it easier to enforce new rules designed to strengthen labor rights in Mexico, saying a lack of worker protections there is hurting wages and job prospects for U.S. workers.
- The deal must still be ratified by all three countries, and there is no deadline for that to happen.
- But with the U.S. election season approaching, some Republicans and trade experts said Democrats may be seeking in part to deny Mr. Trump a political win—or at least to exact a heavy price for advancing the deal.
Mnuchin Suggests China Trade Talks Could Wrap Up by End of Next Week
- Treasury Secretary Steven Mnuchin suggested Monday that trade talks with China could be wrapped up by the end of next week, following two more rounds of negotiations.
- Mr. Mnuchin is set to travel to China this week for another round of trade talks.
- In an interview with Fox Business Network, Mr. Mnuchin said Vice Premier Liu He will return to Washington next week with his team for more meetings to try to hammer out details of a final agreement.
EUROPE & WORLD
ZTE swings to first-quarter profit of 862.6 million yuan
- China’s ZTE reported on Monday a first-quarter profit of 862.6 million yuan ($128.2 million), as expected, up from 276 million yuan in the preceding three months, as it recovered from last year’s U.S. sanctions.
- Revenue dropped 19.34% to 22.2 billion yuan in January-March, from 28.88 billion yuan a year earlier.
- The quarterly profit was toward the lower end of the company’s forecast of 800 million to 1.2 billion yuan and much lower than the net loss of 5.4 billion yuan a year earlier, which booked the impact of a U.S. supplier ban that has now been lifted.
- The world’s fourth-largest telecommunications equipment maker by market share also forecast a net profit of 1.2-1.8 billion yuan for the first half of 2019.
Chinese electric car maker BYD’s first-quarter profit up 632%, sees first-half profit up
- Chinese electric vehicle maker BYD, backed by U.S. investor Warren Buffett, reported on Sunday a 632% jump in its first-quarter net profit, buoyed by strong demand for its new energy vehicles.
- The company sold 117,578 vehicles in the first three months this year, up 5.2% from a year earlier.
- Profit surged to 749.73 million yuan ($111.4 million), up from just 102.4 million yuan a year ago, when its earnings fell sharply due to cuts to subsidies for electric vehicles.
Negative Yields Deepen Along with Europe’s Problems
- The amount of negative-yielding government bonds outstanding through 2049 has risen by 20% this year to about $10 trillion, the highest level since 2016, according to data from Deutsche Bank Securities.
- The expanding pool of such bonds—which guarantee that a buyer will receive less in repayment and periodic interest than the buyer paid—highlights how expectations for growth in much of the developed world have deteriorated.
- The European Central Bank’s (ECB) deposit rate is currently -0.4%, and policy makers this year ended bond purchases that were intended to boost growth and inflation, adding trillions of euros of government and corporate bonds to the ECB’s balance sheet.
Abe Says Overhauling World Trade Organization Is High on G-20 Agenda
- Japanese Prime Minister Shinzo Abe said he would use the country’s presidency this year of the Group of 20 large industrialized and emerging countries to push for an overhaul of the World Trade Organization.
- At a joint press conference in Ottawa with Canadian Prime Minister Justin Trudeau, Mr. Abe said the WTO has failed to adapt to a changing economy.
- The WTO’s negotiating function must be revitalized, he added, and the body’s dispute-resolution mechanism must function as expected.
Sri Lanka Militants Set Off Bombs During Raid, Killing 15
- Militants linked to Easter suicide bombings opened fire and set off explosives during a raid by Sri Lankan security forces on a house in the country’s east, leaving behind a grisly discovery Saturday: 15 bodies, including six children.
- The gunbattle comes amid widespread fear of more attacks as officials hunt for militants with explosives believed to still be at large after the coordinated bombings of churches and luxury hotels that killed more than 250 people nearly a week ago.
- The U.S. State Department, citing terror groups plotting more possible attacks, also urged Americans to reconsider travel to Sri Lanka and ordered the school-age children of government workers to leave the country.
UK pulls up Rolls-Royce for slow supplier payments
- Engine maker Rolls-Royce said on Monday that it had been suspended from the UK government’s Prompt Payment Code (PPC) after failing to pay suppliers in time.
- The PPC is administered by the Chartered Institute of Credit Management and sets standards for payment practices including prompt payment as well as wider payment procedures.
- The company said it was suspended from the Code as it did not pay at least 95% of its supplier invoices within 60 days.
TODAY in HISTORY
- American soldiers liberated the Dachau concentration camp. (1945)
- Film director Alfred Hitchcock died at age of 80. (1980)
- A Los Angeles jury acquitted four police officers accused of beating Rodney King. Massive rioting and looting ensued. (1992)
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