Wall Street Breakfast: G20 Summit Takes Center Stage

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G20 optimism boosts stocks, G20 tensions weigh on equities… While that’s most of the rhetoric investors have been hearing this week, the moment of truth has finally arrived. As the big gathering kicks off in Osaka, Japan, U.S. stock index futures are in green, with the DJIA ahead by 75 points. Trade will be at the top of the agenda today, however, the most anticipated meeting between President Trump and China’s Xi will take place Saturday morning. Hopes are high for the two leaders to write the last chapter in their trade war, which has reverberated across the global economy.

Ive leaving Apple

How much was Jon Ive worth to Apple (NASDAQ:AAPL)? Apparently $9B. That’s the market value the tech giant lost when its shares fell 1% AH on Thursday as the chief design officer announced his exit to start his own firm that will count Apple among its customers. He’s been “one of the most important figures at Apple” during his tenure, according to Wedbush analyst Daniel Ives. “From his iMac vision to the stunning iPhone launch and transformation his fingerprints are deeply woven within Apple’s core DNA.”

Stress tests

The Federal Reserve didn’t object to the capital plans of all 18 firms subject to its CCAR stress tests, but is requiring Credit Suisse (NYSE:CS) to address “certain limited weaknesses in its capital planning processes.” Big U.S. banks, like JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC), showered investors with fatter dividends and share repurchases following the news. Another notable, Deutsche Bank (NYSE:DB), cleared the hurdle after failing last year’s assessment, sending shares of the lender up 3% premarket.

Easy come, easy go

Bitcoin yesterday gave back almost all the week’s gains that had pushed its price to nearly $14,000 on Wednesday – its highest level since January 2018 – slumping over 16% to below $11,000. Some pointed to an outage at prominent crypto exchange Coinbase (COINB), while others said volatility is plaguing the digital currency once again. Bitcoin has surged in value since April, rising more than 260% YTD amid Facebook’s (NASDAQ:FB) crypto plans and investors seeking alternative safe haven assets, but it remains below its all-time high of nearly $20,000 hit in December 2017.

Maxed out

Boeing (NYSE:BA) now expects it will take until at least September to fix a newly identified problem on its grounded 737 MAX, a company official told Reuters, meaning the jet’s return to service will be delayed until October at the earliest. Shares closed down 3% on the news. Putting it into perspective: American Airlines (NASDAQ:AAL) CEO Doug Parker said on June 12 it was “highly likely” 737 MAX flights would resume by mid-August, but Southwest Airlines (NYSE:LUV), the largest global operator of the MAX, became the first yesterday to extend cancellations into October.

Last chance

Today’s meeting in Vienna between the remaining signatories of the 2015 nuclear deal – Britain, France, Germany, Russia and China – is the “last chance” to save the accord, according to Iran, which said it will not accept “artificial” solutions to U.S. sanctions. At issue is how much money can be transferred via INSTEX, a special mechanism set up that allows for imports/exports without any direct financial flows. Tehran has already threatened to exceed the maximum amount of enriched uranium permitted by the deal and is just days away from that limit.

King of M&A

The U.S. lead M&A globally in the second quarter of 2019 as companies seized on strong equity and debt capital markets to agree on mega combinations. Among the top deals were the $121B agreed merger of United Technologies (NYSE:UTX) with Raytheon (NYSE:RTN), AbbVie’s (NYSE:ABBV) $63B agreement to acquire Allergan (NYSE:AGN) and Occidental Petroleum’s (NYSE:OXY) $38B deal to buy Anadarko Petroleum (NYSE:APC). U.S. M&A totaled $466B in Q2, down just 3% from a year ago, while dealmaking in Europe plunged 54% to $152B and Asia M&A dived 49% to $132B.

European headlines

Madame Tussauds owner Merlin Entertainments (OTCPK:MERLY) has agreed to be acquired by the investment vehicle of Lego’s founding family and Blackstone (NYSE:BX) in a deal valuing the company and its debt at nearly £6B. The move, which propelled Merlin shares ahead by 14% in London, comes after activist investor ValueAct Capital last month urged the firm, which also operates Legoland and the Alton Towers theme park in Britain, to take itself private. Meanwhile, in Europe’s second largest IPO of the year, Volkswagen’s (OTCPK:VWAGY) truck unit Traton began trading at €27 a share, the low end of its expected range.

Food trends

With its traditional foods and snacks segment struggling, ConAgra Brands (NYSE:CAG) said it’s poised to “capitalize on the explosive growth” in meat alternatives following its acquisition of Pinnacle Foods in 2018. Included in the deal was Gardein, which sells meatless beef and chicken products. PepsiCo (NASDAQ:PEP) separately announced plans to test sales of its Aquafina water in aluminum cans as the company moves to reduce its use of virgin plastic, while opening reservations for Yum Brands’ (NYSE:YUM) Taco Bell-themed restaurant in Palm Springs sold out yesterday in only two minutes.

What else is happening…

Bespoke Investment Group says ‘sentiment still not buying the highs.’

SpaceX (SPACE) set to fire off third funding round of the year.

Apple Music (AAPL) hits more than 60M subscribers, trailing Spotify (NYSE:SPOT).

Twitter (NYSE:TWTR) to label, de-emphasize leaders’ rule-breaking tweets.

Accident at Glencore (OTCPK:GLNCY) mine kills at least 41 in Congo.

FDA says Medtronic (NYSE:MDT) insulin pumps pose cybersecurity risk.

Thursday’s Key Earnings

Nike (NYSE:NKE) flat AH on profit miss, strong sales.

Today’s Markets

In Asia, Japan -0.3%. Hong Kong -0.3%. China -0.6%. India -0.5%.
In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt +0.5%.
Futures at 6:20, Dow +0.3%. S&P +0.2%. Nasdaq +0.1%. Crude +0.2% to $59.55. Gold +0.3% to $1416.70. Bitcoin -0.2% to $11806.
Ten-year Treasury Yield +2 bps to 2.02%

Today’s Economic Calendar

8:30 Personal Income and Outlays
9:45 Chicago PMI
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count

Companies reporting earnings today »

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