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  • U.S. stocks fell on Wednesday morning as investors fretted that the exit of staunch free trade supporter Gary Cohn could encourage President Donald Trump to go ahead with his threat to impose hefty tariffs and risk a global trade war.
  • Shares of industrial firms that would be most affected by higher commodity costs were among the worst performers Wednesday.
  • The ADP’s National Employment Report showed that private employers added 235,000 jobs in February, compared with Reuters estimate of 195,000.
  • A more comprehensive report that includes hiring in both public and private sectors is due on Friday.
  • Dollar Tree slumped 14% after reporting disappointing holiday quarter results.
  • Ross Stores fell 7.4% after its full-year profit forecast came in largely below expectations.


Dollar Tree same-store sales, forecast disappoint; shares fall

  • Discount store operator Dollar Tree reported disappointing holiday quarter results, hurt by lower-than-expected sales at both Dollar Tree and Family Dollar stores, and issued a full-year profit outlook that was well below estimates.
  • Overall, sales at established stores rose 2.4 percent, lower than the average analyst estimate of 2.73 percent.
  • Net sales rose to $6.36 billion from $5.64 billion.
  • Net income rose to $1.04 billion in the fourth quarter from $321.8 million a year earlier.
  • Dollar Tree said it estimates net sales to range between $22.70 billion and $23.12 billion, based on a low single-digit increase in same-store sales. Analysts on average were expecting revenue of $23.1 billion.
  • Dollar Tree said it would invest $100 million of the benefit it received from new tax law to raise wages of hourly-workers, give them more work hours and offer paid maternity leave for some employees.

Ross Stores exceeds 4Q profit forecasts

  • Ross Stores reported fiscal fourth-quarter profit of $450.7 million.
  • The results exceeded Wall Street expectations.
  • The discount retailer posted revenue of $4.07 billion in the period, beating Street forecasts.
  • For the year, the company reported profit of $1.36 billion, or $3.55 per share.
  • Revenue was reported as $14.13 billion.
  • Ross Stores expects full-year earnings to be $3.86 to $4.03 per share.

Strong demand for Abercrombie brands boosts holiday quarter sales

  • The Abercrombie brand posted a 5% rise in same-store sales following a revamp of its clothing styles and stores.
  • Net income rose to $74.2 million in the fourth quarter from $48.8 million a year earlier.
  • The company reported a 15% rise in revenue to $1.19 billion.

CVS Bets Big With $40 Billion Bond Sale

  • CVS sold $40 billion of bonds Tuesday to help pay for its acquisition of health insurer Aetna.
  • The sale, the largest in two years, showed there is still eager demand from investors for corporate bonds issued by financially strong borrowers.
  • The company split the $40 billion financing into seven bonds with repayment dates ranging from two years to 30 years.
  • The 30-year portion, which yields 1.95 percentage points more than underlying Treasuries.
  • After a relatively slow 2017, M&A activity is heating up, with pending deals including United Technologies’ $23 billion planned purchase of Rockwell Collins and Bayer’s $57 billion expected acquisition of Monsanto.

Exxon woos Wall St. with bold plan to double earnings by 2025

  • The world’s largest publicly traded oil producer said on Wednesday it expects earnings to more than double by 2025 to $31 billion, with crude prices at or above current levels.
  • Exxon reported an adjusted profit of $15 billion in 2017.
  • Exxon is also spending money to make money, with plans to spend $24 billion on capital projects this year, $28 billion next year and an average of $30 billion from 2023 to 2025.
  • Production is expected to grow by about 1 million barrels of oil equivalent per day (boe/d), to about 5 million boe/d in 2025 as 25 projects come online.

Broadcom to stick with U.S. 5G investment after Qualcomm deal

  • Broadcom sought again to soothe U.S. security concerns around its bid for chipmaker Qualcomm, saying it would stick with investments aimed at maintaining the United States’ leadership in 5G technology.
  • A U.S. government panel, in an unusual move, stepped into Singapore-based Broadcom’s hostile takeover bid for Qualcomm this week, citing a number of concerns around the development of the next generation of mobile networks and technology.
  • CFIUS delayed a Qualcomm shareholder meeting and said that Broadcom’s recent statements and its history in other buyouts suggested the bid for Qualcomm would lead to such a reduction in investment in favor of short-term profits.
  • Broadcom’s statement also promised to create a $1.5 billion fund with a focus on innovation to train and educate the next generation of U.S. engineers to ensure the country’s lead in future wireless technology.

Qualcomm, Huawei in Talks to Settle Patent-Royalty Dispute

  • Qualcomm is in talks to settle a dispute with Huawei Technologies, which has been withholding a hefty stream of royalty payments from the chip maker, according to people familiar with the matter.
  • The negotiations between Qualcomm and Huawei are well along and could result in a settlement in the coming weeks.
  • News of the settlement talks comes as Qualcomm has spent months fending off a $117 billion takeover proposal from Broadcom.
  • Should Qualcomm manage to reach an agreement with the handset makers that maintains its usual royalty structure, it could strengthen the company’s hand ahead of the shareholder meeting, now set for April 5.

Amazon is taking aim at Walmart by offering a 54 percent discount on Prime memberships for Medicaid recipients

  • Under the offer, customers on Medicaid can get Amazon Prime for $5.99 a month, or $7 less than the new regular monthly fee of $12.99.

Coca-Cola is launching the first alcoholic drink in its history with a canned liquor product in Japan.

  • The drinks giant will experiment with a canned beverage called Chu-Hi, made up of distilled Japanese drink shochu, sparkling water and flavoring.
  • The company’s sodas only made up about 25 percent of product sales by volume in Japan in 2016, while tea made up 27 percent of Japan’s overall beverage consumption in the same year.

Boeing snares Hawaiian Airlines widebody jet order from Airbus

  • Boeing has snared a Hawaiian Airlines order for widebody long-haul jets from European rival Airbus, the carrier announced on Tuesday, in a striking blow to Airbus amid dwindling widebody sales.
  • Hawaiian said it had placed an order for 10 Boeing 787-9 aircraft, with the first expected to arrive in 2021.
  • The carrier dropped an earlier order of Airbus A330neos to go with the Boeing series.
  • Airbus is under mounting pressure to defend its A330neo jet against the Boeing 787, with American Airlines also expected to announce a decision soon on a potential order for 25-30 wide-body jets.

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Gary Cohn Resigns as White House Economic Adviser After Losing Tariffs Fight

  • Gary Cohn will resign from the White House after 14 months serving as President Donald Trump’s top economic adviser, days after Mr. Trump surprised his senior staff by announcing steel and aluminum tariffs that Mr. Cohn had opposed.
  • During his time at the White House, Mr. Cohn oversaw a major revamp of the U.S. tax code and pushed a significant rewrite of financial rules.
  • Though not universally well liked on Wall Street, Mr. Cohn was widely admired for his market savvy and his pro-trade world view, which many traders and executives share.

U.S. trade deficit hits more than nine-year high as exports falter

  • The U.S. trade deficit increased to a more than nine-year high in January, with the shortfall with China widening sharply, suggesting that President Donald Trump’s trade policies are unlikely to have a material impact on the deficit.
  • The Commerce Department said on Wednesday the trade gap jumped 5.0 percent to $56.6 billion. That was the highest level since October 2008 and exceeded economists’ expectations of an increase to $55.1 billion.
  • Exports fell 1.3%, largely reflecting a big drop in the volatile category of commercial aircraft shipments. Exports of oil, chemicals and other industrial supplies also declined.
  • Imports were unchanged at $257.5 billion.
  • The politically sensitive trade deficit with China surged 16.7 percent to $36.0 billion, the highest since September 2015.
  • The deficit with Canada soared 65 percent to a three-year high of $3.6 billion.

U.S. Private Sector Added 235,000 Jobs in February, ADP says

  • Firms across the country added 235,000 workers in February, according to payroll processor Automatic Data Processing. Economists had expected the addition of 200,000 jobs.
  • The January figure was revised up to 244,000 from 234,000.
  • The ADP report is based on private-payroll data in addition to government data.

U.S. Productivity Growth Stalled in Fourth Quarter

  • Productivity—a measure of the goods and services Americans produced per hour worked—was flat in the fourth quarter of 2017, the Labor Department said Wednesday.
  • That figure, based on revised data, replaced the agency’s prior estimate of a 0.1% decline, at an annual rate, for nonfarm business productivity.
  • Meanwhile, unit labor costs grew at an annual rate of 2.5% in October through December. The agency previously reported a 2% gain.
  • Economists expected the revised figures to show a 0.1% drop in productivity and a 2.1% gain in labor costs.

U.S. Senate votes 67-32 to begin debate on bank bill

  • The U.S. Senate voted 67-32 in favor of beginning to debate a bipartisan bill that would ease rules for mid-sized and small lenders introduced following the 2007-2009 financial crisis.
  • The bipartisan bill has the support of 13 moderate Democrats, which given broad Republican backing should be enough to assure passage in the 100-seat chamber.
  • The vote paves the way for the chamber to potentially pass the proposed legislation by the end of the week.

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EU warns Trump of trade war, China raises concerns at WTO

  • Europe and the IMF urged Donald Trump on Wednesday to step back from the brink of a trade war, after the resignation of his economic adviser emboldened those encouraging him to push ahead with tariffs on imported steel and aluminum.
  • Trump plans to impose a duty of 25 percent on steel and 10 percent on aluminum to counter cheap imports, especially from China, that he says undermine U.S. industry and jobs.
  • “In a so-called trade war … nobody wins, one generally finds losers on both sides,” International Monetary Fund head Christine Lagarde said.

South Korea Seeks to Blunt Skepticism of Its Outreach with North

  • South Korea’s president said his country would stick with tough economic sanctions against North Korea until “real progress” is made toward ending its nuclear-weapons programs, in an attempt to blunt skepticism over Seoul’s efforts to kick-start dialogue between Washington and Pyongyang.
  • South Korea’s presidential Blue House said that it hadn’t offered North Korea any concessions in the process of bringing Pyongyang to the negotiating table.
  • North Korea hasn’t issued any statement confirming the South’s account of the inter-Korean talks, though it did report on the delegation’s arrival and a dinner with Mr. Kim on Monday evening.
  • The North’s silence added to skepticism in Washington and among conservatives in Seoul, who say South Korean President Moon Jae-in has moved too quickly to embrace Mr. Kim.

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  • Alexander Graham Bell received a patent for the telephone. (1876)
  • Adolf Hitler broke the Treaty of Versailles and the Locarno Pact when he ordered troops to march into the Rhineland. (1936)

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