DAILY MARKET REPORTS
- Trade tensions and political uncertainty remain threats to the rally, but some think strong earnings and growth can push indexes higher.
- The U.S. trade gap narrowed in April, largely because Americans cut purchases of foreign-made goods while boosting exports, including a record amount of oil. It isn’t clear how tariffs affected the April figures.
- Gains for Amazon and Tesla helped the Nasdaq open at a record high on Wednesday before the index fell slightly as Facebook led a decline in the technology sector.
- Tesla jumped 5% after billionaire Chief Executive Officer Elon Musk reassured shareholders that building 5,000 of its mass-market Model 3 cars per week by the end of June was “quite likely”.
- Facebook fell 1.3% after two key U.S. lawmakers rebuked it for not being more transparent over its data sharing with at least four Chinese companies.
US FINANCIAL MARKET
Oil prices slip on expectations of higher supply
- Oil prices fell on Wednesday on increasing signs that Saudi Arabia and other big crude producers may raise supply to balance a surge in demand during the peak U.S. summer driving season.
- India’s oil minister said on Wednesday his Saudi counterpart had told him the kingdom was revisiting its policy of cutting production, which has been a major factor in supporting prices in recent months.
- The U.S. government has unofficially asked Saudi Arabia and some other OPEC producers to increase output.
- OPEC and Russia will meet on June 22/23 to decide whether to increase production following a fall in global inventories as world demand outstrips supply.
Jack Daniel’s maker Brown-Forman profit beats, flags tariff worries
- Brown-Forman edged past Wall Street estimates for fourth-quarter profit on Wednesday but warned that its outlook was clouded by potential retaliatory tariffs from top U.S. trade allies.
- Net income fell to $110 million from $144 million a year earlier.
- Net sales rose 5.6% to $733 million.
Delta shares fall after airline lowers profit outlook on higher fuel prices
- Shares of Delta Air Lines tumbled more than 3% on Wednesday after the airline said it expected a surge in fuel prices to eat into its second-quarter profits.
- Delta expects to earn $1.65 to $1.75 a share in the three months to June 30, down from its forecast in April of $1.80 to $2 a share the airline said in a filing.
Facebook Confirms Data-Sharing Deals with Chinese Tech Firms
- Facebook said Tuesday that it struck data partnerships with at least four Chinese electronics firms.
- The four partnerships are among the roughly 60 that Facebook struck with device manufacturers starting in 2007 so they could recreate the Facebook service on their devices.
- The social-media company said it plans to wind down its data-sharing partnership with Huawei by the end of the week.
- It isn’t clear when Facebook will end partnerships with the three other companies: Lenovo, the world’s largest personal-computer maker; Oppo Electronics, a smartphone maker; and Chinese electronics conglomerate TCL.
Tesla Says ‘Quite Likely’ to Meet 5,000-a-Week Model 3 Production Goal
- Tesla will “quite likely” meet its goal of making 5,000 Model 3 cars in a single week by the end of the month, Chief Executive Elon Musk told investors on Tuesday.
- The Silicon Valley electric-car maker has demonstrated the ability to make 500 Model 3s a day, or 3,500 a week, already, he said.
- The company is pushing to meet the critical 5,000-a-week rate after twice delaying the deadline.
- Meeting the goal of 5,000 Model 3s a week by the end of June is crucial to generating enough cash to sustain operations without having to raise more capital.
CVS Health Looks to Aetna for Its Next CFO
- Aetna’s current chief financial officer, Shawn Guertin, will become CFO of CVS, one of several planned executive changes CVS unveiled Wednesday as it works to complete its acquisition of the health insurer.
- CVS will pay Mr. Denton two years of his base salary in addition to other benefits.
The world’s biggest hedge fund is reportedly ‘bearish on financial assets
- The website ZeroHedge reports that the hedge fund considers 2019 a “dangerous year“.
- Bridgewater skeptical that a calm market scenario will play out.
- “We are bearish on financial assets as the U.S. economy progresses toward the late cycle, liquidity has been removed, and the markets are pricing in a continuation of recent conditions despite the changing backdrop,” Bridgewater said.
- The hedge fund’s forecast also pointed to a tightening of conditions for the U.S. economy as tailwinds from both the Federal Reserve and White House ease off.
Online shopping boom keeps hopes high for air freight profits
- An explosion of e-commerce demand is buoying the air freight business, boosting profit at some major airlines despite global trade tensions and underscoring robust consumer confidence.
- Air freight demand is expected to rise 4 percent this year.
- Top beneficiaries will be freight-heavy carriers like Hong Kong’s Cathay Pacific Airways, Dubai’s Emirates, Germany’s Lufthansa and Korean Air Lines.
- The growth in e-commerce is also a boon for parcel firms such as UPS and FedEx as well as second-hand jet traders and an army of pilots known as “freight dogs.”
US ECONOMY & POLITIC
U.S. Trade Gap Narrowed 2.1% in April
- The U.S. trade gap narrowed in April, largely because Americans cut purchases of foreign-made goods while boosting exports, including a record amount of oil.
- The trade deficit fell 2.1% from a month earlier to $46.2 billion, the smallest since September.
- Imports fell 0.2% to a record $257.4 billion, while exports rose 0.3% to a record $211.2 billion.
- Exports to China dropped 17.1 percent in April.
- Imports from China were unchanged in April.
- The politically sensitive goods trade deficit with China increased 8.1% to $28.0 billion in April. The deficit with Mexico narrowed 29.8% to $5.7 billion in April. The United States had a $0.8 billion goods trade deficit with Canada in April.
U.S. Productivity Rose Less Than Expected in First Quarter
- The productivity of nonfarm workers, measured as the output of goods and services for each hour on the job, increased at a 0.4% seasonally adjusted annual rate in the first quarter.
- From a year earlier, worker productivity advanced 1.3%. That is consistent with the sluggish 1.2% average annual rate recorded from 2007 to 2017, and well below the better than 2% annual average recorded since the end of World War II.
- A gauge of compensation costs, unit labor costs, increased at a 2.9% annual rate in the first three months of the year, compared to an initial estimate of 2.7%.
California Democrats on Track to Advance in Key Races for House Control
- The Democratic Party on Wednesday appeared on track to avoid being shut out of several competitive California House races, escaping pitfalls of the state’s primary election system that would have threatened its fight for control of Congress in November.
- In an Orange County district, GOP Rep. Dana Rohrabacher won with 30% of the vote. With all of the vote counted, Democrat Harley Rouda, a businessman endorsed by the Democratic Congressional Campaign Committee, took the No. 2 spot, beating scientist Hans Keirstead by 73 votes.
- In the northern Orange County district now held by retiring GOP Rep. Ed Royce, the AP declared the top vote-getter was Republican Young Kim, a former assemblywoman who was backed by Mr. Royce. Democrat Gil Cisneros, a Navy veteran and lottery winner who was backed by the national party, was in the No. 2 spot.
EUROPE & WORLD
ECB Official Indicates Next Meeting Is Key to Bond-Buying Decision
- The ECB’s chief economist, Peter Praet, sent a strong signal that the bank could decide as soon as next week to wind down its €30 billion-a-month ($35.09 billion) bond-buying program, which is credited for supporting a robust economic recovery in the 19-nation currency union.
Swiss prosecutors will not pursue Novartis over Trump lawyer payments
- The Swiss attorney general’s office (OAG) said on Wednesday it will not bring proceedings against Novartis in connection with $1.2 million in payments the Swiss drugmaker made to U.S. President Donald Trump’s personal lawyer.
Canada’s Trade Deficit Narrows to Six-Month Low
- Canada’s trade deficit in April narrowed to the lowest in six months as imports slumped and exporters continued to show signs of strength.
- The merchandise trade gap narrowed to C$1.90 billion ($1.5 billion), half the C$3.93 billion gap recorded a month earlier.
- Imports fell 2.5% paring back strong gains in March. Exports advanced 1.6%, the sixth gain in the past seven months.
Honda to start selling Hondajet in Japan next year
- Honda said it would start selling its six-seater business jet in Japan next year, as it seeks to expand global sales by tapping into demand from a growing class of high net-worth individuals.
- The automaker is currently awaiting certification for the plane both at home and in China, after having already received U.S. and European certifications over the past two years.
- Honda said it had partnered with trading house Marubeni for domestic deliveries of the jet.
- Marubeni will begin delivering the jets around the first half of 2019.
- Honda’s $5.25 million jet is the first aircraft developed by an automaker since World War Two. It sells the plane in North America, Europe and the Middle East, among other regions.
Uber jumps into Europe’s crowded bike-sharing market
- Uber is about to launch its JUMP electric bicycle sharing service in Germany as it diversifies and seeks to build bridges with local authorities.
- Uber bought the JUMP start-up as part of a bid to become the go-to app for urban transport, be it buses, bikes, cars, or even trains, allowing people to book trips across a range of services.
- Its dockless electric bike has already been rolled out in San Francisco, where there are 250 bikes, and Washington.
TODAY in HISTORY
- The first drive-in movie theater opened in Camden, New Jersey (1933)
- The Securities and Exchange Commission (SEC) was established to protect investors and maintain the integrity of the securities markets (1934)
- Thousands of Allied troops invaded the beaches of Normandy, France, on D-Day (1944)
- Israel invaded Lebanon to drive out the Palestine Liberation Organization (PLO) (1982)
- President Bush proposed a new Cabinet department: The Department of Homeland Security (2002)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.