DAILY MARKET REPORTS
- U.S. stocks jumped Friday, extending major indexes’ weekly gains, after an upbeat February jobs report eased investors’ concerns about whether inflation is firming.
- The bull market for stocks turned nine years old on Friday and, despite being long in the tooth, appears poised to set the record as the longest in history, buoyed by global economic growth and stronger company earnings.
- Stocks moved firmly higher after the latest monthly jobs report showed wage growth had eased, tamping down concerns among investors that the Federal Reserve will hasten its pace of short-term interest rates to tame it.
- Strong jobs data last month fueled speculation that higher wages could lead to faster interest rate increases by the Federal Reserve and make borrowing expensive, rattling global equities market.
- Meanwhile, government bonds weakened following the jobs report. The yield on the benchmark 10-year U.S. Treasury note rose to 2.899% from 2.866% on Thursday.
- Signs of a potential breakthrough in nuclear tensions in the Korean peninsula also lifted sentiment, with world markets hitting one-week highs on Friday.
US FINANCIAL MARKET
Qualcomm Names New Chairman as Broadcom Pushes Case for Takeover
- Qualcomm said Paul Jacobs handed his title as board chairman to an independent director and as the two chip makers continued their maneuvering during a U.S. review of a proposed hostile takeover.
- Jeffrey Henderson, who has been on the Qualcomm board since 2016 and was previously finance chief of Cardinal Health Inc., will take over as nonexecutive chairman.
- Tom Horton, Qualcomm’s lead director, said in prepared remarks it is in shareholders’ best interest to have an independent director as chairman at “this important juncture” in the company’s history.
- Meanwhile, in an open letter to the U.S. Congress, Broadcom promised to invest $3 billion in research and engineering and $6 billion in manufacturing in the United States annually – while simultaneously promising not to sell critical national security assets to foreign buyers if its deal to buy chipmaker Qualcomm is approve.
Wynn Resorts to Pay $2.6 Billion in Settlement That Removes a Barrier to Steve Wynn Stake Sale
- On Thursday, Wynn Resorts moved to resolve the standoff by agreeing to pay $2.6 billion to settle litigation with Universal Entertainment, a Japanese company that was forced by Wynn in 2012 to give up its 20% stake in the casino giant.
- Wynn Resorts in 2012 forcibly redeemed shares owned by Universal, then valued at $2.77 billion, at a 30% discount, and the board voted to remove Mr. Okada as a nonexecutive director.
- Wynn Resorts has been under increased pressure to resolve the Nevada legal dispute after a Wall Street Journal investigation published in January detailed allegations that Mr. Wynn sexually harassed and assaulted employees.
Toys ‘R’ Us Considers Closing All of Its U.S. Stores
- Troubled toy chain Toys “R” Us is preparing to liquidate all of its U.S. stores and abandon efforts to restructure through the bankruptcy process, people familiar with the matter said, after a weak holiday season torpedoed plans to reorganize.
- The company recently announced plans to close 184 stores, or about 20% of its roughly 800 U.S. stores, however, now it is now evaluating bids to liquidate the remainder of its U.S. locations, the people said.
- An announcement could come as soon as Monday when the parties are expected to appear at a bankruptcy hearing in Richmond.
- The plan to shut down the stores and liquidate the U.S. operations is one of several scenarios in play and while some lenders are pushing that route, others want to find other options for Toys “R” Us to continue operations.
Ford’s China vehicle sales in February fall 30 percent year-on-year
- Ford said on Friday its vehicle sales in China, hampered in part by a dearth of new products, fell a sharp 30 percent in February from a year earlier, as it continued to struggle in the world’s largest auto market.
- The U.S. automaker, whose sales in January fell 18 percent year-on-year, said sales volumes last month totaled 47,483 vehicles.
- Sales volumes in the first two months of the year fell 23 percent to 123,473 vehicles from the same period a year ago.
- Ford does not expect new products to start hitting the market in China until the first quarter of next year.
Disney shareholders vote against CEO Iger’s pay package
- Walt Disney shareholders rejected an executive compensation plan that could reward Chief Executive Officer Bob Iger with up to $48.5 million a year over four years plus an equity grant worth about $100 million, in a non-binding vote on Thursday.
- Fifty-two percent of shareholders voted against Disney’s compensation plan for Iger and other executives, the company said at its annual shareholder meeting in Houston.
- Iger’s compensation reached $36.3 million in fiscal 2017. His contract was extended through 2021 when Disney announced the Fox deal in December.
Fed says will not object to revised capital plan from Capital One
- The U.S. Federal Reserve said it will not object to a revised capital plan submitted by Capital One Financial as part of the Fed’s Comprehensive Capital Analysis and Review of the bank.
- The revised plan showed “progress in addressing deficiencies” identified in a Fed review last year.
- The Fed said it would continue analyzing Capital One’s progress in this year’s CCAR submission.
Waymo’s self-driving trucks to haul cargo for Google in Atlanta
- Waymo, the autonomous vehicle arm of Alphabet, said on Friday it would launch a self-driving trucks pilot in Atlanta to carry cargo for Google’s data centers.
- The announcement comes two days after rival Uber said its self-driving trucks will haul cargo on Arizona highways.
- Waymo had been road testing its self-driving trucks in California and Arizona over the last year, since making it public in July 2017.
US ECONOMY & POLITIC
Trump Agrees to Meet North Korean Leader Kim Jong Un
- President Donald Trump accepted an invitation to meet with North Korean leader Kim Jong Un a meeting that would mark the first time a serving U.S. president has sat down with the leadership of the heavily militarized and diplomatically isolated country.
- Progress in an encounter between two strong-willed leaders could set the terms for painstaking negotiations, carried out by aides, to eliminate North Korea’s nuclear arsenal in return for security guarantees.
- In a tweet, Mr. Trump said he believed he was seeing “great progress” from North Korea.
U.S. economy adds 313,000 jobs in February; wage growth slows
- U.S. job growth surged in February, recording its biggest increase in more than 1-1/2 years, but a slowdown in wage gains pointed to only a gradual increase in inflation this year.
- Nonfarm payrolls jumped by 313,000 jobs last month, boosted by the largest gain in construction jobs since 2007.
- The unemployment rate was unchanged at a 17-year low of 4.1 percent in February for a fifth straight month as 806,000 people entered the labor force in a sign of confidence in the job market.
- Average hourly earnings edged up 0.1 percent in February, a slowdown from the 0.3 percent rise in January. That lowered the year-on-year increase in average hourly earnings to 2.6 percent from 2.8 percent in January.
- Economists had forecast payrolls rising by 200,000 jobs last month and the unemployment rate falling to 4.0 percent. Average hourly earnings had been expected to increase 0.2 percent in February.
Trump sets steel and aluminum tariffs but exempts Canada, Mexico
- U.S. President Donald Trump pressed ahead with import tariffs of 25 percent on steel and 10 percent for aluminum but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier “no-exceptions” stance.
- Plans for the tariffs, set to start in 15 days, have stirred opposition from business leaders and prominent members of Trump’s own Republican Party, who fear the duties could spark retaliation from other countries and hurt the U.S. economy.
- Trump said in a White House announcement that the best outcome would be for companies to move their mills and smelters to the United States. He insisted that domestic metals production was vital to national security.
- U.S. steel stocks, which have gained for weeks on anticipation of the tariffs, fell after the announcement, with the Standard and Poor’s composite steel index ending down 2.53 percent.
Mortgage Rates at a Four-Year High Threaten to Roil Housing
- U.S. mortgage rates have hit their highest level since 2014, a new challenge for a housing market that has been central to the economic recovery but remains vulnerable to even modest headwinds.
- The rate for a 30-year fixed-rate mortgage rose to 4.46%, the highest in more than four years and the ninth consecutive week of increases, according to data Thursday from mortgage-finance giant Freddie Mac.
- In recent months, home-sales activity has dropped sharply amid low inventory levels, tax-code changes and buyers’ growing weariness from being priced out of the market.
- However, rising rates tend to have a bigger impact on the market for refinancing existing mortgages. The Mortgage Bankers Association expects mortgage-purchase originations to increase about 7% this year.
- It forecasts the refinancing market, which is smaller, to plunge by nearly 28%, adding to a sharp drop in 2017.
U.S. Household Net Worth Pushes Further Into Record Territory
- Americans’ wealth pushed further into record territory in the final quarter of last year, hitting nearly $100 trillion thanks to rising stock markets and property prices.
- Household net worth—the value of all assets such as stocks and real estate minus liabilities like mortgage and credit-card debt—rose more than $2 trillion last quarter to a record $98.746 trillion.
- U.S. households also saw their net worth rise to nearly seven times their disposable personal income in 2017, swelling past earlier prerecession peaks.
- Household wealth in the stock market climbed by $1.346 trillion in the fourth quarter while the value of households’ real estate increased $511.2 billion, reflecting continuing increases in home prices.
EUROPE & WORLD
U.S. allies line up for exemptions from Trump’s tariffs
- From Japan and South Korea to Australia and Europe, officials lined up on Friday to seek exemptions from President Donald Trump’s tariffs on U.S. steel and aluminum imports, while Chinese producers called on Beijing to retaliate in kind.
- Tokyo and Brussels rejected any suggestion that their exports to the United States threatened its national security, while Brazil, which after Canada is the biggest steel supplier to the U.S. market, said it wanted to join the exemption list and Argentina made a similar case.
- China’s metals industry issued the country’s most explicit threat yet in the row, urging the government to retaliate by targeting U.S. coal – a sector that is central to Trump’s political base.
- On Thursday night, Trump said “real friends” of the United States could win waivers from the measures, which come into force after 15 days. In the event he exempted Canada and Mexico.
Toshiba expects to complete chip unit sale by June at latest
- Toshiba expects the sale of its $18 billion memory chip business to be completed by June at the latest, if not by an agreed deadline of the end of March, as it awaits antitrust regulatory approval from China.
- Toshiba agreed last year to sell the semiconductor business – the world’s second-biggest producer of NAND flash memory chips – to a consortium led by Bain Capital to plug a huge financial hole left by the bankruptcy of its U.S. nuclear unit.
- The flash memory chip business has been the source of most of Toshiba’s earnings as the company struggles to grow other core businesses such as social infrastructure.
- After receiving injections of capital late last year from overseas investors Toshiba is in less of a rush to finalize the deal. If it does not complete the deal by March, it has the option of walking away, sources have said.
China Fast-Tracks IPO Approval for Foxconn Unit
- A fledgling unit of Taiwanese electronics manufacturer Foxconn Technology Group jumped to the front of the queue of Chinese companies waiting to go public, showing how China is moving quickly to allow select technology stalwarts to list at home.
- The regulator’s approval came a little over a month after Foxconn Industrial filed its listing application, an unusually swift turnaround relative to the one- to two-year wait that most companies have to endure.
- The fast-tracking of Foxconn Industrial’s IPO application shows how Beijing is giving “special treatment” to companies it considers strategically important.
- Foxconn Industrial Internet’s offering is expected to raise at least 27.3 billion yuan (US$4.3 billion) on the Shanghai Stock Exchange.
TODAY in HISTORY
- Napoleon Bonaparte married Josephine de Beauharnais, widow of a former French officer executed during the revolution. (1796)
- The first battle between two ironclad ships, the Monitor (Union) and Merrimack (Confederate) occurred, revolutionizing naval warfare. (1862)
- Dr. Antonia Novello was sworn in as both the first Hispanic and woman to be U.S. surgeon general. (1990)
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