DAILY MARKET REPORTS
- U.S. stocks edged lower Monday, as investors continued to worry that the Trump administration’s plan to impose stiff import tariffs could spark an all-out trade war.
- Trump on Monday appeared to suggest that Canada and Mexico could win exemptions to the planned sweeping tariffs on steel and aluminum if the two countries sign a new NAFTA trade deal and take other steps.
- World stocks and emerging markets fell for the fifth straight day on Monday, with investors also worrying that Italian voters had flocked to anti-establishment and far-right groups in record numbers and had delivered a hung parliament.
- The Committee on Foreign Investment in the United States (CFIUS) ordered Qualcomm to postpone an annual shareholder meeting, giving it more time to resist efforts by Broadcom to force through a $117 billion merger.
US FINANCIAL MARKET
AXA to Buy Insurer XL Group for $15.3 Billion
- French financial giant AXA said it would buy New York-listed insurance company XL Group for $15.3 billion, creating one of the world’s biggest property and casualty insurers.
- The deal marks another step in AXA’s plan to cut its exposure to financial markets and focus more on insurance products that aren’t sensitive to swings in interest rates and stock prices.
- To finance the deal, AXA said it would use €6 billion in proceeds from the coming IPO of its U.S. business, €3 billion in cash and issue €3 billion in debt.
- XL generated revenue of $11 billion last year but reported a $560 million loss after the catastrophic hurricanes that slammed the U.S. and other disasters forced it to pay $2.1 billion in damage claims.
U.S. Orders Qualcomm to Delay Meeting for Review of Broadcom Offer
- The U.S. government ordered Qualcomm to delay its shareholder meeting this week to provide it more time to review rival Broadcom’s proposed $117 billion takeover of the chip maker.
- The move represents a highly unusual intervention by Washington and will delay Broadcom’s proxy fight for control of Qualcomm’s board.
- In a statement early Monday, Broadcom said Qualcomm in January requested a U.S. government review that will delay the Qualcomm shareholder vote on directors. That vote was slated for Tuesday.
- The Committee on Foreign Investment in the U.S., known as CFIUS, will review the merger, Broadcom said. Typically, the panel only weighs in after a deal is agreed.
Amazon mulling checking-account like product with big banks
- Amazon.com is in talks to create a checking-account-like product with big banks such as JPMorgan Chase.
- Amazon’s talks with financial firms is an attempt to create a product to attract younger consumers, mainly those without bank accounts, however the initiative would not see the online retailer become a bank.
- The e-commerce giant has been contemplating getting into the finance sector for years. The company is trying to bring Amazon Pay to brick-and-mortar stores and is likely to begin with Whole Foods.
- The move follows a January announcement from Amazon.com, Berkshire Hathaway and JPMorgan saying they will form a company to cut health costs for hundreds of thousands of their employees.
Credit-Card Losses Surge at Small Banks
- Missed payments on credit cards at small banks have risen sharply over the past year.
- Small banks have been fighting for a bigger piece of the credit-card market in search of higher returns. Now, they’re contending with rising losses.
- Their charge-off rate, or the share of outstanding card balances written off as a loss after consumers failed to pay, hit 7.2% in the fourth quarter, up from 4.5% a year ago.
- The average charge-off rate at a small bank is near an eight-year high, while the 3.5% loss rate at large banks remains well below the 10.6% seen in 2010.
- Half of large banks surveyed for January said they expect delinquencies and charge-offs on their credit card loans to worsen this year. That is up from 37% a year earlier and 10% in January 2015.
Ford to temporarily layoff about 2,000 hourly employees at Michigan
- Ford said it would temporarily layoff about 2,000 hourly employees at its Michigan assembly and stamping plants in Wayne, as the factories undergo retooling to build the Ranger pickup trucks and Bronco sport utility vehicles.
- The layoffs will start in early May and last through October, according to a notice filed by the automaker.
- The new Ford Bronco SUV will go into production at the plant in 2020, while the Ranger pickup trucks are expected to enter production later this year.
- The announcement comes as sales of Ford’s Focus small car currently built at the plant have slowed down.
Google expansion plans helping to turn NYC into tech hub
- Google is reportedly close to a reaching a $2.4 billion deal to add a landmark Meatpacking District building to its already substantial New York campus.
- The building, a block-long former Nabisco factory named after its ground-floor upscale food mall, Chelsea Market, sits across the street from Google’s current New York City headquarters.
- Google already leases space in Chelsea Market, which also contains offices for Major League Baseball and the local cable news channel NY1, among other tenants.
‘Black Panther’ is box-office king for third straight week
- The release from Marvel and Disney brought in $65.7 million domestically this weekend, easily outpacing new releases “Red Sparrow” and “Death Wish,” according to studio estimates Sunday.
- “Black Panther” has now grossed $500 million domestically after three weeks of release.
- It’s the third fastest film to reach the $500 million plateau.
US ECONOMY & POLITIC
U.S. Services-Sector Activity Grew Slower in February
- The Institute for Supply Management on Monday said its nonmanufacturing index fell to 59.5 in February.
- A reading above 50 indicates activity is expanding across service and other industries, while a number below 50 signals contraction.
U.S. Will Be the World’s Largest Oil Producer by 2023, Says IEA
- The U.S. will overtake Russia to become the world’s largest oil producer by 2023, accounting for most of the global growth in petroleum supplies.
- The IEA’s closely watched five-year forecast showed the U.S. hitting new strides in its oil and gas boom, helped by technological advances, improved efficiency and a fragile recovery in oil prices that is encouraging shale companies to ramp up their drilling.
- U.S. crude production is expected to reach a record of 12.1 million barrels a day in 2023, up about 2 million barrels a day from this year and above the world’s top producer, Russia, at 11 million barrels a day.
- Of the 6.4 million new barrels of oil that will be pumped every day between now and 2023, almost 60% will come from the U.S., the IEA said.
- American influence on global oil markets is also expected to rise, with U.S. oil exports more than doubling to 4.9 million barrels a day by 2023.
Trump Links Planned Steel Tariffs to Nafta Renegotiation Effort
- President Donald Trump on Monday increased pressure on two top U.S. trading partners, saying he would lift planned tariffs on steel imports only if Mexico and Canada sign a new version of the North American Free Trade Agreement, or Nafta.
- “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,” Mr. Trump said in a morning tweet.
- Those two countries and others were exempted when former President George W. Bush imposed broad steel tariffs in 2002.
EUROPE & WORLD
Surge by Populists Leaves Italy Without Clear Victor
- Italy’s national elections yielded no outright winner, initial projections showed, likely ushering in a protracted period of political instability and tension in the eurozone’s third-largest economy.
- Populist parties staged a strong showing on Sunday, underscoring the depth of anger among Italians at the country’s direction and the continued power of right-leaning populist parties in European politics.
- A long stretch of political uncertainty could stall progress on the structural overhauls the country sorely needs to reboot one of the weakest economies in the region.
- The country is the only Group of Seven member whose economy remains smaller than it was before the 2008 financial crisis.
Xiaomi Set to Enter U.S. Smartphone Market as Early as This Year
- China’s Xiaomi could sell smartphones in the U.S. as early as this year, extending its Western expansion as it plans a highly anticipated initial public offering.
- Xiaomi is China’s 4th largest smartphone vender, and its overall smartphone shipments rose more than 50% to 96 million units last year.
- Xiaomi plans to raise at least $10 billion in a Hong Kong IPO in the second half of this year, one of the biggest offerings of this year.
- The company is targeting a valuation of between $80 billion and $100 billion a big jump from the $46 billion valuation it received with its last private fundraising round in 2014.
China keeps growth target at 6.5 percent and cuts budget deficit ratio for first time since 2012
- China set a 2018 budget deficit target that’s lower than last year’s ratio even as it said “proactive” fiscal policy remains unchanged.
- Beijing has vowed to control financial risks and has tightened controls on new local government debt following a borrowing binge after the global financial crisis.
- The Ministry of Finance said that it is targeting a budget deficit of 2.6 percent of gross domestic product (GDP) for this year, compared with 2017’s 3.0 percent target, which was met.
- Despite the lower deficit target, the absolute amount of the deficit is expected to be unchanged at 2.38 trillion yuan ($375.92 billion), according to the finance ministry’s annual budget report.
- Growth in government revenue is forecast to slow this year to 6.1 percent from 7.4 percent, with spending projected to rise 7.6 percent compared with last year’s 7.7 percent.
EU eyes tax on tech giants closer to 2 percent than 6 percent of revenue: Le Maire
- The European Union this month will unveil plans to tax large global tech companies’ revenue at a rate in the 2-to-6-percent range, though more likely closer to 2 than to 6 percent.
- A draft European Commission document proposed a levy based on where the customer – rather than the company – is located.
- The charge would be based on 1 percent to 5 percent of the company’s “aggregated gross revenues”.
- The proposal aims at increasing the tax bill of firms like Amazon.com, Google and Facebook, which are accused by large EU states of paying too little by rerouting their EU profits to low-tax countries such as Luxembourg and Ireland.
- President Emmanuel Macron’s government has proposed taxing the tech giants on revenues rather than profits, to get around the problem that the companies shift the profits from where they are earned to low tax jurisdictions.
TODAY in HISTORY
- The Boston Massacre, a pre-Revolutionary incident that grew out of anger towards British troops, occurred. Five anti-British rioters were killed. (1770)
- In the last free elections in Germany until after World War II, the Nazi Party received 44% of the vote. (1933)
- Winston Churchill delivered his famous Iron curtain speech, “From Stettin in the Baltic to Trieste in the Adriatic, an Iron Curtain has descended across the continent.” (1946)
- Soviet dictator Josef Stalin died at age 73, after 29 years in power. (1953)
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