DAILY MARKET REPORTS
- U.S. stocks rose Tuesday after a rocky start to the quarter, although escalating trade tensions and pressure on the technology sector continued to send shares lower in Europe and Asia.
- Pressure on those FAANG names—Facebook, Apple, Amazon, Netflix, and Google intensified at the start of the week, with those five stocks wiping out $78.7 billion in market value on the first trading day of the quarter as President Donald Trump blasted Amazon’s practices.
- The Trump administration is expected sometime this week to publish a list of Chinese goods that could be subjected to new U.S. tariffs.
- Tesla shares gained after the electric automaker said it would not need to raise more capital this year while announcing it built 2,020 of its cheaper Model 3 sedans in the last seven days of March.
- U.S auto sales showed strong results after a weak performance in February, with GM, Fiat Chrysler, Ford and Toyota all reported increases in sales.
US FINANCIAL MARKET
Silicon Valley, Wall Street taking notes on Spotify debut
- Spotify’s unusual route to becoming a public company is a test case for other multibillion-dollar tech companies that are looking to sell their shares but are not in need of cash.
- On Tuesday, investors will be able to buy and sell shares in the Swedish music streaming service in the New York Stock Exchange’s first-ever direct floor listing.
- This is without Spotify having hired investment banks as underwriters and undertaking an investor road show as is typical in a traditional initial public offering (IPO).
- If it goes well, other highly valued tech firms expected to pursue a listing in the future, with the likes of U.S. ride hailing companies Uber and Lyft, could look to adopt a similar approach.
- The New York Stock Exchange on Monday set the reference price for shares of Spotify at $132.
Tesla says produced 2,020 Model 3 sedans last week
- Tesla said on Tuesday that it built 2,020 Model 3 sedans in the last seven days of March, would produce the same number next week and would see output climb rapidly through the second quarter.
- The numbers, short of Tesla’s own target of 2,500 per week for the end of March, are far above the 793 Model 3s built in the final week of last year.
- Quickly ramping up Model 3 production is crucial for the Silicon Valley electric vehicle maker; whose profitability depends on the cheaper sedan. Tesla says it has about 500,000 advance reservations from customers for the car.
- Analysts said a run-rate of 2,000 per week, while short of the 2,500 target, was better than most on Wall Street had expected and clearly showed progress versus where the company was at the start of the year.
Apple plans to replace Intel chips in Macs with its own
- Apple is planning to use its own chips in Mac computers beginning as early as 2020, replacing processors from Intel.
- The initiative, code-named Kalamata, is still in early developmental stages but is part of a bigger strategy to make Apple’s family of devices work more similarly and seamlessly together, according to Bloomberg.
- Apple has used Intel chips in its computers since 2005.
- The Mac plays a small part in Apple’s overall financial picture, with sales of 19.2 million units last year and accounting for 11 percent of Apple’s $229.2 billion in revenue for fiscal 2017.
- The company has been designing its own iPhone processors since the release of the iPhone 4 in 2010 and has steadily increased the amount of chip work it handles itself.
Automakers’ March U.S. sales rise, lifted by strong economy
- Detroit’s automakers posted sales gains in new vehicles in March on the back of a strong U.S. economy, sending shares in both General Motors and Fiat Chrysler up in early trading.
- The strong results for March followed a weak performance in February.
- GM posted a 16 percent jump in new vehicle sales from the previous March, led by a 14 percent increase in higher-margin retail sales to consumers.
- Fiat Chrysler reported a 14 percent increase in sales in March, including a 45 percent spike in sales of its popular Jeep models, giving the brand its best sales month on record.
- Ford reported a 3.4 percent increase in overall sales for March, led by an 8.7 percent rise in fleet sales. Retail sales were up just 0.8 percent in the month.
- Toyota reported a 3.5 percent increase in sales in March, with double-digit increase in SUV and pickup truck sales offsetting a 6.1 percent decrease in sedan sales.
GM will stop reporting monthly U.S. vehicle sales
- GM said on Tuesday it will stop reporting monthly U.S. vehicle sales, saying the 30-day snapshot does not accurately reflect the market and will instead issue quarterly sales.
- GM will provide monthly data to the U.S. Federal Reserve, industry associations and government agencies across the globe but that data is not made public.
- GM’s actions could prompt other automakers to also switch to quarterly U.S. sales reports.
Fox Says Disney Is Prepared to Buy Sky News in Bid to Allay Regulators
- 21st Century Fox said Walt Disney was prepared to buy Sky’s news channel, a move that could help Fox consolidate its ownership of the European pay-TV operator.
- Fox, which currently owns 39% of Sky, in December 2016 launched its $16 billion bid to acquire the rest of the broadcaster that it doesn’t already own.
- It comes as Disney pursues a separate $52 billion bid to acquire much of Fox, including its film studios and stake in Sky. Fox said Disney is open to acquiring Sky News even if the larger transaction doesn’t proceed.
- At least 75% of Sky’s shareholders, not including Fox, need to support the takeover, which faces competition from Comcast.
CBS, Viacom merger talks hit roadblock over who will be Moonves’ second-in-command: Sources
- Merger talks between CBS and Viacom have hit a snag, sources tell CNBC.
- CBS has not made a formal bid for Viacom after social issues raised a potential roadblock, specifically, the two sides are trying to decide who the second in command will be at the combined company.
- The battle is between Joe Ianniello, the chief operating officer of CBS, and Bob Bakish, the CEO of Viacom.
- CBS CEO Les Moonves is to remain at the combined company for at least two years, sources confirmed to CNBC on Monday.
Up-and-Down IPO Longfin Is Facing an SEC Probe
- Longfin, which was valued at $5.4 billion as recently as 10 days ago, is now under investigation by the Securities and Exchange Commission after it failed to disclose important information and left a trail of misstatements behind.
- On Monday, the company disclosed the SEC probe while also reporting material weaknesses in financial controls. The company, which said it is cooperating with the probe, said it may not be able to continue as a going concern.
- Longfin went public using a provision known as Reg A+. The rules allow companies with less than $1 billion in annual sales to bypass some accounting and disclosure requirements imposed on bigger companies, but they do require accurate reporting.
- The other nine Reg A+ IPOs that have listed on U.S. exchanges or been issued over the counter have lost more than half their value on average, Dealogic data show.
US ECONOMY & POLITIC
Small-business hiring falls to lowest level in over 7 years
- Small–business hiring in March fell to the lowest point in over seven years, while hourly earnings grew steadily, a report from human resources firm Paychex said Tuesday.
- The Small Business Jobs Index decreased 0.12 percent from last month and 1.07 percent from a year earlier. Small-business wages continued to rise, reaching a 2.66 percent annual growth rate in March, Paychex said.
- Paychex said national hourly earnings in March were $26.48.
EPA Will Ease Vehicle-Emissions Standards
- The Environmental Protection Agency moved to ease Obama-era vehicle emissions standards, siding with car makers who say the rules don’t work in an era of cheap gasoline and setting up a fight with environmentalists and the state of California.
- The rules, finalized in the waning weeks of the Obama administration, would require auto makers to cut emissions enough so that new vehicles sold average more than 50 miles a gallon by 2025.
- Monday’s decision would start a process to relax future standards covering vehicle model years 2022-2025. The standards, arrived at through complex government calculations, equal roughly 36 mpg in real-world driving for 2025.
- The decision is expected to prompt a battle with California and other states that have implemented tougher controls on greenhouse-gas emissions to limit air pollution and slow climate change.
White House Probes EPA Chief Pruitt Over His Links to Lobbyist
- The White House is conducting a review of Environmental Protection Agency chief Scott Pruitt’s activities after reports that he had rented accommodations in Washington at below-market rates from the family of an energy lobbyist, a White House official said Monday.
- While there is no sign yet that Mr. Pruitt’s job is in jeopardy, another White House official said that few people are coming to Mr. Pruitt’s defense.
- The purpose of the inquiry is to “dig a little deeper,” the first official said, indicating that the White House isn’t satisfied with a statement from the EPA last week that the $50-a-night lease agreement didn’t violate federal ethics rules.
- The EPA chief also is one of several cabinet members to face scrutiny over their travel arrangements, another source of consternation at the White House, officials say.
- When international trips and a handful of chartered and military flights are included, Mr. Pruitt’s travel costs appear to exceed $150,000 in the year since he became administrator.
Trump to Nominate Justin Muzinich to Deputy Treasury Secretary Post
- President Donald Trump will nominate Justin Muzinich as deputy treasury secretary, the White House said Monday.
- Mr. Muzinich is currently a counselor to Treasury Secretary Steven Mnuchin and worked on the tax-overhaul package that went into law late last year.
- If confirmed by the Senate, Mr. Muzinich would become the agency’s second-highest-ranking official, helping Mr. Mnuchin manage the department. The position has been vacant since Mr. Mnuchin took over last year.
EUROPE & WORLD
China ready for proportionate response to U.S. tariffs: envoy
- China will take counter-measures of the “same proportion” and scale if the United States imposes further tariffs on Chinese goods, China’s ambassador to Washington said, amid growing fears of an impending trade war.
- Cui Tiankai made the comments ahead of what is expected to be the announcement this week of U.S. tariffs on $50 billion to $60 billion in Chinese imports following an investigation under Section 301 of the 1974 U.S. Trade Act.
- The U.S. tariffs are expected to target products benefiting from Beijing’s “Made in China 2025” industrial development program, although it may be more than two months before the import curbs take effect, U.S. officials have said.
- China on Sunday announced tariffs on $3 billion in imports of U.S. food and other goods in response to U.S. tariffs on imports of aluminum and steel, a skirmish that investors fear is a prelude to a broader trade war.
Toshiba won’t cancel $18 billion chip deal unless any major material change: CEO
- Toshiba will not use the option of cancelling the $18 billion sale of its memory chip unit unless there is any “major material change” in circumstances, the Japanese conglomerate’s new chief executive said on Tuesday.
- Toshiba was unable to complete the sale to a consortium led by U.S. private equity firm Bain Capital by the agreed deadline of March 31 as it was still waiting for approval from China’s anti-monopoly regulator.
- Under the agreement, Toshiba now has the option to cancel the sale without forfeit.
- Cancelling would give Toshiba the freedom to pursue alternative courses of action, such as renegotiating the sale or conducting an initial public offering – a move activist shareholders have urged Toshiba to consider.
U.A.E. Says Oil Cuts Removed ‘85% of the Problem’ of Oversupply
- The global deal to rein in oil output has removed “85 percent of the problem” of oversupply, and OPEC and allied producers are seeking ways to cooperate after the agreement ends, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.
- Participants in the oil-cuts accord plan to meet later this month in Jeddah, Saudi Arabia, to assess their progress toward clearing a glut and re-balancing the market.
- Saudi Arabia, Russia, the U.A.E. and other producers agreed in November to extend the deal through this year.
French rail unions take on Macron with mass rolling strikes
- French railway services were thrown into chaos on Tuesday, the first day of rolling nationwide strikes that are set to run for months in the toughest test yet of President Emmanuel Macron’s determination to modernize the French economy.
- Just one in four trains were running in the Paris region, national rail company SNCF said, as people made their way back to work after an extended Easter holiday weekend on what French media dubbed “Black Tuesday”.
- The four main rail unions plan to strike for two days out of every five for the next three months — a total of 36 days of disruption — to fight a shake-up of the SNCF before its monopoly is ended in line with European Union rules.
- If Macron triumphs — and this is by far the biggest test the 40-year-old former investment banker has faced so far — it will set the tone for other proposed changes, including revamping the education system and overhauling pensions.
TODAY in HISTORY
- First pony express service began. (1860)
- Outlaw Jesse James was shot in the back by Bob Ford, one of his own gang members, reportedly for a $10,000 reward. (1882)
- President Truman signed the Marshall Plan, which would foster the recovery of war-torn Europe. (1948)
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