DAILY MARKET REPORTS
- Wall Street was higher on Thursday after U.S. consumer prices increased modestly in April, cooling worries of accelerating inflation that would have made a case for faster interest rate hikes.
- Consumer price index (CPI) rose 0.2%, below the economists’ expectation of 0.3%, as rising costs for gasoline and rental accommodation were tempered by a moderation in healthcare prices.
- Oil prices hit fresh 3½-year highs Thursday, with Brent crude oil last up 0.3% at $77.46 a barrel, having hit $78 earlier.
- Among stocks, Wells Fargo rose 1.1% after the lender said it expects efficiency efforts to cut expenses by $2 billion annually in 2018 and 2019.
- Qualcomm rose 2.3% after the chipmaker approved a new $10 billion share buyback program that replaces the previous $15 billion program.
US FINANCIAL MARKET
21st Century Fox Revenue Falls Without Super Bowl Boost
- 21st Century Fox posted lower revenue as higher distributor fees failed to offset a fall in advertising revenue compared with a Super Bowl-boosted quarter a year ago.
- Revenue fell 1.9% to $7.42 billion, marginally above the $7.4 billion expected by analysts polled by Thomson Reuters.
- Revenue in the television segment fell 32% from the same quarter a year before, when Fox carried the Super Bowl. Revenue from channel-carriage payments by pay TV distributors increased 10%.
- In all, Fox’s recorded a fiscal third-quarter profit of $858 million, compared with $799 million a year earlier. This was below estimates.
Roku shares jump after smaller-than-expected loss
- Roku shares were up nearly 7% premarket after it posted smaller-than-expected first-quarter loss helped by its TV streaming platform.
- Roku, which makes devices for TV streaming, said on Wednesday revenue from its platform more than doubled to $136.6 million, from strong growth across advertising and content distribution.
- Roku also beat Wall Street expectations with active accounts up 47% to 20.8 million and average revenue per user jumping 50%, fastest growth rate in 18 months.
- The company lost $6.6 million in the quarter, compared to a loss of $8.7 million in the year ago period.
Record Buybacks Help Steady Wobbly Market
- U.S. companies are buying back their shares at a record pace, providing fresh support during a rocky stretch for the stock market when many investors have rushed for the exits.
- S&P 500 companies that have reported earnings for the first three months of 2018 have bought $150 billion of their own stock in the first quarter. That is on pace for the biggest amount in any quarter, based on data going back to 1998.
- S&P 500 firms are on pace to have returned almost $1 trillion to shareholders for the 12 months through March though dividends and buybacks.
- Of the 20 S&P 500 companies that spent the most on buybacks over the first quarter, nearly three-quarters have outperformed the index so far this year.
Wells Fargo gives better-than-expected expense outlook, shrinks asset cap hit
- Wells Fargo said the aftertax impact on net income of a regulatory cap on its assets will be less than $100 million in 2018, and gave an outlook for 2019 expenses that was slightly lower than analyst expectations.
- For 2018, the bank said it expects that total noninterest expenses will be between $53.5 billion and $54.5 billion, and between $52 billion and $53 billion for 2019.
- Analysts on average expected 2019 noninterest expenses of $53.2 billion.
- It is now under orders by the Federal Reserve to keep assets below $1.95 trillion until governance and controls improve, which has complicated matters as the bank tries to improve its closely watched efficiency ratio measuring costs per dollar of revenue.
NTSB investigating Tesla crash, fire that killed 2 Florida teens
- The National Transportation Safety Board will investigate a deadly Tesla crash and fire that killed two Florida high school students, the agency said.
- The agency said it expects the primary focus of this investigation to be the electric vehicle battery fire.
- The NTSB said it does not currently expect autopilot to be part of its investigation.
Ford to temporarily suspend F-150 truck production
- Ford will temporarily halt production of the F-150 truck, the U.S.’s best-selling vehicle, due to the May 2 fire at a supplier’s facility.
- The move means approximately 4,000 workers at Ford’s Dearborn Truck Plant will be temporarily laid off, joining roughly 3,600 workers at Ford’s truck plant in Kansas City who were told to stay home earlier this week.
- How much could stopping production of the F-Series hurt Ford and dealers who rely on the popular pickup truck to generate huge sales? That depends on how long the assembly lines are shut down.
- Ford admits near-term financial results will be adversely impacted by the loss of F-Series production, but the company reaffirmed its full year earnings guidance.
- It takes 76 days for an F-150 to sell. Ford has enough inventories for the near term.
- Last month Ford sold 73,104 F-Series pickups, with the overwhelming majority of those being the F-150.
Sears to Sell Tires on Amazon
- Sears has deepened its ties with Amazon.com and will use the e-commerce giant’s platform to sell some of its DieHard tires and connect with customers seeking tire-installation services.
- Sears said Wednesday it will provide tire installation and balancing services for people who buy any brand of tire on Amazon, a service the retail chain expects to soon roll out nationwide.
- The company also plans to make its Sears Auto Center locations a pick-up point for Amazon tire orders.
- The ship-to-store option initially will be available at 47 Auto Centers in eight metro areas, but will eventually be expanded to the more than 400 Auto Centers nationwide, Sears said.
Qualcomm sets new $10 billion buyback plan
- Chipmaker Qualcomm said on Wednesday its board has approved a new $10 billion buyback program that replaces the previous $15 billion stock repurchase program announced in March 2015.
- The earlier stock repurchase program had $1.2 billion remaining, the company said.
US ECONOMY & POLITIC
U.S. Consumer Prices Rose 0.2% in April
- The consumer-price index, which measures what Americans pay for everything from salad dressing to eye care, rose 0.2% in April after falling a seasonally adjusted 0.1% in March.
- Excluding the volatile food and energy categories, so-called core prices rose 0.1% compared with a 0.2% rise in March.
- In the 12 months ended in April, overall prices rose 2.5%.
- Core prices were up 2.1% on the year.
- Other factors held down price growth. Prices for used cars and trucks dropped 1.6% in April, the largest decline since March 2009. Airline fares fell 2.7%.
U.S. Jobless Claims Stay Near Historically Low Level
- The number of Americans applying for unemployment benefits—known as initial jobless claims—stood at 211,000 in the week ended May 5. Economists expected 215,000 claims.
- That figure was unchanged from the prior week and just a touch above the 209,000 claims filed in mid-April, when the figure hit the lowest level since 1969.
- Thursday’s report showed the number of continuing unemployment benefit claims—those drawn by workers for more than a week—rose 30,000 to 1.79 million in the week ended April 28.
- Job openings across the U.S. reached a record 6.6 million at the end of March, almost equivalent to the number of unemployed workers.
Proposal to Curb Drug Prices Would Hand More Competition to Insurers
- President Donald Trump on Friday plans to outline a series of initiatives aimed at curbing drug prices, unveiling a blueprint to drive down costs amid complaints that Washington has done little to address the issue.
- Mr. Trump’s speech on combating high drug prices will be accompanied by proposed rules and a broad request for input from manufacturers, health providers, patients and others, according to people familiar with the plan.
- The plan is expected to include changing the payment system for certain drugs under Medicare, the health program for seniors, people familiar with it said.
FCC says ‘net neutrality’ rules will end on June 11
- The Federal Communications Commission (FCC) said in a notice Thursday that landmark 2015 U.S. open-internet rules will cease on June 11.
- The FCC in December repealed the Obama-era “net neutrality” rules, allowing internet providers to block or slow websites as long as they disclose the practice. The FCC said the new rules will take effect 30 days from Friday.
- The U.S. Senate is set to vote as early as next week on whether to reject the FCC repeal of the net neutrality rules.
EUROPE & WORLD
BT to cut 13,000 jobs as seeks to revive growth
- BT will cut 13,000 managerial and back-office jobs and move to a smaller London base in the latest attempt by the boss of Britain’s biggest telecoms group to rebuild from an accounting scandal and multiple pressures on its business.
- The job cuts, the highest number by the former monopoly since 2008, will save 1.5 billion pounds in costs in three years, the company said. The restructuring will cost 800 million pounds to implement.
- Some of the proceeds will go toward increasing capital expenditure on new fiber fixed-line connections and 4G and next generation 5G mobile networks to about 3.7 billion pounds over the next two years.
- BT said its outlook for the current financial year, to end-March, would see a 2% drop in underlying revenue, while adjusted core earnings would be in the range 7.3 billion-7.4 billion pounds, down from 7.5 billion pounds in the last year.
RBS reaches $4.9 billion deal to settle U.S. mortgage bond investigation
- Royal Bank of Scotland has agreed to pay a smaller-than-expected $4.9 billion to resolve a U.S. investigation into its sale of mortgage-backed securities, paving the way for a long-awaited return of cash to UK taxpayers who bankrolled its survival.
- Analysts had estimated the U.S. Department of Justice could impose a fine of up to $12 billion on RBS for mis-selling mortgage-backed securities in the run-up to the 2007-2008 financial crisis.
- RBS said that $3.46 billion of the proposed civil settlement would be covered by existing provisions and that the bank would take a $1.44 billion charge in the second quarter to cover the rest.
- The agreement will draw a line under RBS’s last outstanding major litigation issue, which had weighed on its share price, blocked dividend distributions to shareholders and complicated the UK government’s plan to sell down its more than 70% stake.
Venezuela’s Brewing Oil Shock May Be Bigger Than Iran’s
- Less than two weeks before a controversial snap presidential election that would almost certainly give incumbent Nicolás Maduro a six-year term, the country’s main source of export revenue could take another drastic tumble.
- Venezuela faces two risks that stem from Venezuela’s dependence on importing lighter varieties of crude to mix with the heavy oil it produces, and its need for products imported from the U.S. to enable its thick oil to be transported.
- U.S. Vice President Mike Pence has already called the presidential election a sham.
- The second situation would play out if the U.S. halts exports to Venezuela of a product called diluent, which allows the thick oil to be transported. Such a move would imperil half or more of the country’s remaining production.
- S&P Global Platts estimates the country’s recent crude production was 1.41 million barrels a day, at least a 30-year low except for a crippling 2002-2003 strike.
TODAY in HISTORY
- Confederate General Stonewall Jackson died after being accidentally shot by his own troops. (1863)
- Edgar Hoover became director of the FBI. (1924)
- Winston Churchill succeeded Neville Chamberlain as British prime minister. (1940)
- Nelson Mandela was sworn in as South Africa’s first black president. (1994)
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