DAILY MARKET REPORTS
- Stocks pivoted higher Monday as policy makers appeared to dial back the tough tone on trade that rocked markets at the end of last week.
- Monday’s brighter tone in stock markets came after Trump administration officials on Sunday softened some of the rhetoric after threatening to impose new tariffs on China, noting the penalties aren’t imminent and there is time to work out a deal.
- Analysts also attributed some of Monday’s improved risk sentiment to news that North Korea confirmed its readiness to discuss denuclearization of the Korean Peninsula with the U.S.
- As of Friday, 53 S&P 500 companies had issued positive earnings guidance for the quarter, which would mark the highest number since at least 2006, according to FactSet.
- Guidance has been particularly strong in the technology sector, even as technology shares have fallen sharply in the past month.
- AveXis stock rose 79% after Swiss drugmaker Novartis offered to buy the gene therapy company for $8.7 billion.
US FINANCIAL MARKET
Novartis Bets $8.7 Billion on Gene-Therapy Company
- Novartis agreed to buy U.S.-based gene-therapy company AveXis for $8.7 billion, marking the first big bet by the Swiss pharmaceutical giant’s new chief as he looks to the deal table to refresh his drug-development pipeline.
- Novartis said Monday it will pay $218 for each share in Illinois-based AveXis, an 88% premium to its closing price on April 6.
- AveXis is a gene-therapy company conducting several clinical studies for the treatment of spinal muscular atrophy or SMA, an inherited neurodegenerative disease caused by a defect in a single gene.
- AveXis’ gene-therapy candidate AVXS-101 has the potential to be the first one-time gene-replacement therapy for SMA, according to Novartis.
PayPal Makes a Move Toward Traditional Banking
- PayPal has been quietly reaching out to groups of customers in recent months with an offer to add basic banking features to their PayPal digital wallet.
- The features include Federal Deposit Insurance Corp. insurance for their balances, a debit card that can be used to withdraw cash at ATMs and the ability to direct-deposit their paychecks.
- There is a catch, though: PayPal doesn’t have a U.S. banking license. The FDIC doesn’t backstop funds stored at nonbanks, and Visa and Mastercard only permit cards that run on their network to be issued by banks.
- In PayPal’s new service, users will have to pay a fee to take their money out from ATMs not in PayPal’s network, in addition to 1% of any check they deposit via taking a photo with their smartphone.
Viacom asks CBS to raise its bid by $2.8 billion
- Viacom has asked CBS to sweeten its merger bid by about $2.8 billion or almost a quarter more than CBS’s offer, people familiar with the matter said, indicating the wide gap in the U.S. media firms’ price expectations.
- National Amusements, the Redstone family company that controls CBS and Viacom, has pushed them to negotiate a merger by forming independent board committees. Viacom’s request shows how the companies have yet to make progress in their talks.
- At CBS’s proposed share exchange ratio of 0.55, Viacom would be valued at $11.9 billion, below its current market capitalization of $12.7 billion. Viacom’s counterproposal values the company at $14.7 billion.
- Combined, CBS and Viacom would have more leverage to negotiate prices for their programming with U.S. cable and satellite companies, which face a decline in their subscriber base amid fierce competition against media streaming companies, such as Netflix.
Uber agrees to buy electric cycle-sharing startup JUMP Bikes
- Uber said on Monday it has agreed to buy electric bicycle service JUMP Bikes, allowing Uber to offer U.S. passengers an alternative to cars and further consolidating the crowded bike-sharing industry.
- JUMP is a dockless electric bike service that has rolled out in San Francisco, where it has 250 bikes, and Washington. About 100 JUMP employees will join Uber.
- Terms of the deal were not disclosed.
Merck’s Keytruda helps lung cancer patients live longer in trial
- Merck’s blockbuster drug Keytruda helped previously untreated lung cancer patients live longer in a late-stage trial, potentially cementing its position as the dominant player in the lucrative lung cancer market.
- Merck is already considered the frontrunner in the space and Keytruda is expected to earn peak sales of over $10 billion in 2023.
- Keytruda is already approved in the U.S. to treat patients with non-small cell lung cancer (NSCLC) who have not received prior therapies and whose tumors show PD-L1 protein levels of 50 percent or greater.
Despite horrific incidents, airline service soars to record high
- The other area where airlines are improving is with luggage. On average, carriers mishandle 2.46 bags per 1,000 passengers, according to DoT data.
- Meanwhile, airlines like Delta now route and track bags using RFID tags, which have tiny chips that communicate their location to scanners at airports.
- Among the four categories that make up the Airline Quality Rating, the top performances include Hawaiian Airlines having the best on-time arrival rate, and Delta bumping the lowest percentage of passengers. Spirit Airlines did the best job handling bags and Southwest had the lowest customer complaint rate with the Department of Transportation.
Apple announces new red iPhone 8 and iPhone 8 Plus
- Apple announces new red versions of the iPhone 8 and iPhone 8 Plus.
- Revenue from sales of (PRODUCT) RED devices go toward helping people with AIDS and HIV.
- The red iPhone 8 and iPhone 8 Plus goes on sale Tuesday and ships April 13.
Mark Zuckerberg will meet with lawmakers Monday ahead of congressional hearings
- Facebook CEO Mark Zuckerberg will hold meetings with some U.S. lawmakers on Monday, a day before he is due to appear at congressional hearings over a political consultancy’s use of customer data
- The planned meetings at Capitol Hill are expected to continue through Monday afternoon and include some lawmakers from committees before whom Zuckerberg is due to testify.
- Facebook has come under fire in recent weeks after it said that the personal information of up to 87 million users, mostly in the United States, may have been improperly shared.
- Zuckerberg is scheduled to appear before a joint hearing of the U.S. Senate Judiciary and Commerce committees on Tuesday and the U.S. House Energy and Commerce Committee on Wednesday.
Proxy adviser ISS recommends vote for all Wells Fargo board nominees
- Proxy advisory firm Institutional Shareholder Services (ISS) on Friday recommended Wells Fargo shareholders vote for all Wells Fargo board nominees at the bank’s annual meeting on April 24.
- The backing of the Wells Fargo board by the influential proxy advisor comes at an important time for the San Francisco Bank as it works to regain the trust of investors and regulators.
- ISS also added a caveat saying that incumbent nominees on Wells Fargo board prior to 2017 need “cautionary support” while support for all new nominees is warranted.
- ISS recommended the bank’s shareholders to vote for a shareholder proposal that the bank report on incentive based compensation and risks of material losses.
Saudi Aramco eyes new petrochemical plant in Texas
- Saudi Arabia’s national oil company Saudi Aramco on Saturday is expected to disclose initial steps toward a multibillion-dollar chemical plant in Texas, according to sources familiar with the company’s U.S. operations.
- Saudi Aramco has been weighing an expansion of its U.S. subsidiary Motiva Enterprises’ Port Arthur, Texas refinery, already the largest in the United States by capacity.
- But Motiva wants to first move into petrochemicals, using abundant natural gas from U.S. shale fields to make the precursors for plastics, the sources said.
- Refiners see petrochemicals as a new market as demand for motor fuels is expected to plateau later in the century, said Sandeep Sayal, vice president, downstream energy research at IHS Markit.
- Saudi Aramco last year said it would invest $18 billion in Motiva’s Port Arthur refinery, which can process up to 603,000 barrels of crude oil per day (bpd).
Tesla to recall 8,898 vehicles in China
- China’s quality watchdog said on Monday that Tesla will recall a total of 8,898 Model S vehicles in the country from June 28.
- Tesla has been voluntarily recalling Model S sedans built before April 2016 in order to replace bolts in the power steering component.
Bitcoin tanks below $7,000, down 6% in two hours
- Bitcoin dropped sharply Monday, below $7,000 as the April tax-filing deadline approaches.
- Tax-related selling has been a key driver of this month’s sell-off. Thomas Lee, head of research at Fundstrat Global Advisors, says U.S. households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings.
- To meet tax liabilities, investors are selling bitcoin, which could mean “massive” selling into U.S. dollars ahead of the April 17 tax filing deadline, Lee says.
US ECONOMY & POLITIC
Trump Warns of ‘Big Price’ After Suspected Chemical Attack in Syria
- President Donald Trump warned on Sunday that Syrian President Bashar al-Assad and his two biggest allies could pay a “big price” for a suspected chemical-weapons attack that killed dozens of civilians, raising the prospect that the U.S. could launch a punitive military strike against Mr. Assad.
- American intelligence analysts and their allies around the world began poring over the videos and sifting through witness reports and other evidence to pinpoint who carried out the attack and what caused such a large number of deaths.
- The weekend attack is fueling a discussion in Washington over what role the U.S. should play in Syria, where more than 2,000 American troops are working to eliminate the last pockets of Islamic State fighters.
- The U.S. response is expected to be a central topic of discussion in Washington on Monday, when Mr. Trump plans to meet with his cabinet before gathering his senior military leaders for a briefing and dinner where Syria is likely to be a top issue.
Trump Officials Soften Tone on Trade Dispute with China
- After threatening to slap China with new tariffs, Trump administration officials on Sunday softened some of the rhetoric, noting that the penalties aren’t imminent and there is ample time to work out a deal and step back from a possible trade war.
- President Donald Trump on Thursday signaled an escalation in a trade dispute with China, warning that he might impose tariffs on an additional $100 billion of goods imported from China, apart from tariffs on $50 billion in imports he had announced earlier in the week.
- In interviews on the Sunday talk shows, senior Trump administration officials played down talk of a looming trade war, a message that could help calm markets.
- Appearing on CBS’s “Face the Nation,” Treasury Secretary Steven Mnuchin said, “I don’t expect there will be a trade war” and that the U.S.’s intention is to “continue to have discussions with China.”
- He suggested, though, that if China doesn’t agree to create conditions for “free and fair reciprocal trade,” the U.S. is prepared to aggressively defend its interests.
North Korea Ready to Discuss Denuclearization, U.S. Officials Say
- North Korea has told the U.S. that Kim Jong Un is prepared to discuss the denuclearization of the Korean Peninsula, clearing the way for a summit meeting between the North Korean leader and President Donald Trump, U.S. officials said.
- U.S. officials didn’t say when and how that assurance was delivered, but U.S. and North Korean officials have been in communication.
- The North Korean assurance doesn’t mean that talks will necessarily succeed. Pyongyang has indicated that progress toward denuclearization should proceed in phases that are synchronized with diplomatic and economic concessions from the U.S. side.
- North Korea also might ask for more concessions than Washington is willing to provide. Working out verification arrangements to confirm that North Korea isn’t hiding weapons could be an additional stumbling block.
Americans Face Highest Pump Prices in Years
- Americans are spending more at the pump than they have in years. Prices could rise even higher just as drivers hit the road for family vacations.
- Since the Organization of the Petroleum Exporting Countries (OPEC) and other major oil producers, including Russia, agreed to collectively limit output two years ago, U.S. oil futures have risen about 40%, closing at $62.06 a barrel on Friday.
- According to the U.S. Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week—the highest level since 2015.
- Prices will likely climb further as the weather warms and driving picks up, according to energy analysts.
Trump administration mulls stiffer rules for imported cars
- The Trump administration is considering ways to require imported automobiles to meet stricter environmental standards in order to protect U.S. carmakers, according to two sources familiar with the administration’s thinking.
- Two U.S. automotive executives said Friday they believed the idea had been floated in White House talks last week by Commerce Secretary Wilbur Ross, but said the auto industry had not asked for the changes or backed them.
- The White House initiative was still in the planning stage, with officials at the U.S. Environmental Protection Agency working to craft a legal justification for the policy, the Wall Street Journal said.
Florida Gov. Rick Scott is running for Senate
- Calling Washington “horribly dysfunctional,” Florida Gov. Rick Scott is challenging U.S. Sen. Bill Nelson in an election that could be one of the most expensive and highly-watched races in the nation.
- Scott is leaving office due to term limits, and had been urged to challenge Nelson, Florida’s only statewide-elected Democrat, by President Donald Trump.
- Scott’s record on gun laws earned him an A+ rating from the National Rifle Association before the killings of 17 people at a Florida high school this year.
- Democrats also plan to fault Scott over his record while governor, including his initial push for deep budget cuts to education and his back-and-forth position on whether to expand Medicaid.
EUROPE & WORLD
Russia Points Finger at Israel as Missiles Strike Base in Syria
- Missiles hit an air base in Syria early Monday in a strike that Russia blamed on Israel, an assault that comes on the heels of an alleged chemical-weapons attack on a Damascus suburb that killed dozens of civilians and spurred calls for international action.
- The attack comes a day after world leaders condemned an alleged chemical-weapons attack late Saturday on civilians in a rebel-held town in Eastern Ghouta outside Damascus.
- At least 14 military personnel were killed in the strike, including three Syrian commanders and several Iranians who were housed at the base, according to the Syrian Observatory for Human Rights.
- The Russian Defense Ministry said two Israeli F-15 fighter jets had carried out the strike with eight guided missiles from Lebanese air space, state news agency RIA Novosti reported, while pro-regime Syrian media said some 20 missiles were fired.
- Syrian media said the direction of the strikes indicated Israel might be behind the attack.
Rusal shares plunge over 40 percent on U.S. sanctions
- Shares of Russian aluminum giant United Company Rusal plunged as much as 41.8 percent on Monday as investors bailed on the stock after it was included in a new list of U.S. sanctions targeting Russian companies and their owners.
- Washington imposed sanctions on Friday on seven Russian oligarchs, including Rusal’s former President Oleg Deripaska, 12 companies they own or control, as well as 17 senior Russian government officials.
- The Russian individuals and companies were targeted for profiting from a Russian state engaged in “malign activities” around the world.
- Rusal assesses that the sanctions may result in technical defaults in relation to certain credit obligations of the group, and the company is evaluating the impact of such technical defaults on its financial position.
Russia’s ruble in biggest one-day fall since 2016 as U.S. sanctions bite
- Russia’s ruble experienced its biggest one-day fall for over two years on Monday and stocks in major Russian companies also slid, as investors reacted to a new round of U.S. sanctions targeting some of Russia’s biggest tycoons.
- The impact of the new sanctions could threaten Russia’s fragile economic recovery, which was only just beginning to take hold after the first major wave of sanctions against Russia, introduced in response to Moscow’s annexation of Crimea in 2014.
- Russia’s currency plunged to its lowest level since November last year, trading at 60.24 to the dollar. That was its biggest fall in a single day since January 2016.
- The cost of insuring exposure to Russian debt also rose on Monday to its highest since mid-December, IHS Markit data showed.
Teva Pharm to close plant in Israel after no buyer found
- Teva said on Monday it would close an unprofitable plant in the Israeli port city of Ashdod in March 2019 after failing to find a buyer for the facility.
- Teva, the world’s largest generic drugmaker and Israel’s biggest company, said in a statement half of the factory’s 175 workers would lose their jobs in the coming months with the rest continuing to work until the plant closes.
Alibaba Invests in Chinese Facial-Recognition Startup
- Chinese e-commerce giant Alibaba is leading a $600 million funding round in SenseTime, which makes surveillance systems using facial recognition for law enforcement and commercial applications.
- The funding values Beijing-based SenseTime at more than $4.5 billion, according to a person familiar with the company. It also underscores Alibaba’s move into businesses that use artificial intelligence, the technology that underpins facial recognition.
- Alibaba affiliate Ant Financial has developed a mobile-payment system based on facial recognition, and Alibaba is also using AI to develop so-called smart cities where technology is used to dispatch police, speed traffic flow and regulate other public services.
- Smart cities and cloud computing are likely areas of cooperation with Alibaba, SenseTime Chief Executive Xu Li said in an interview.
Venezuela Debt Crisis Nears New Low as Riskiest Bond Matures
- The Venezuelan debt crisis could be on the verge of a new milestone as a $650 million bond matures Tuesday with little hope it’ll get paid.
- A missed principal payment would mark a new low for Venezuelan investors who are already confronting $2 billion in late interest but haven’t yet seen the government skip out on paying back maturing notes.
- President Nicolas Maduro said in November that he wanted to restructure the nation’s obligations amid a deep recession, currency crisis and tumbling oil production, but international sanctions have prevented any progress.
- If the bond does get paid, investors who bought the notes now would make a quick 150 percent profit. It could also spur a rally in other Venezuelan debt.
TODAY in HISTORY
- The first full-color film, The World, The Flesh and the Devil, was shown in London (1914)
- NASA announced the selection of America’s first astronauts, including Alan Shepard and John Glenn (1959)
- Winston Churchill became the first honorary U.S. citizen (1963)
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