A closely-watched showdown at the U.S. Supreme Court today will determine whether states can force out-of-state online retailers to collect sales tax. South Dakota is asking the nine justices to overturn a 1992 Supreme Court precedent, appealing a lower court decision that favored Wayfair (NYSE:W), Overstock (NASDAQ:OSTK) and Newegg. Amazon (NASDAQ:AMZN) is not involved in the case as it collects sales taxes on direct purchases on its site, although it makes an exception for third-party vendors.
Economy
China's economy grew 6.8% in the first quarter of 2018, despite widespread concerns about financial risks amid a government-led economic restructuring. "The U.S.-China trade friction can't beat the Chinese economy," added Xing Zhihong, a spokesman at the National Bureau of Statistics, as China slapped a hefty temporary deposit on imports of U.S. sorghum.
Besieged by alleged cronyism scandals at home, Japan's Shinzo Abe will meet with President Trump today for an important summit in Mar-a-Lago. Tokyo is one of the few American allies that hasn't been exempted from U.S. steel and aluminum tariffs, and Trump's decision to meet with North Korea's Kim Jong-un without consulting Abe has sparked fears of Japan being sidelined during nuclear negotiations.
Meanwhile, North and South Korea are in discussions to announce at next week’s leaders' summit an official end to their military conflict, Munhwa Ilbo daily reports. The neighbors have not yet signed a peace treaty to replace the armistice which ended the Korean War in 1953. The summit will also focus on denuclearization of the Korean Peninsula and progress in inter-Korean relations.
Sterling saw some strong buying overnight, reaching its highest level since Britain voted to leave the EU in June 2016. At $1.4363, the currency broke the most recent high seen back in January, climbing 6% YTD. The strengthening has been caused by expectations that the Bank of England will hike rates, as well as the freshly reached Brexit transition deal.
Richard Clarida has been with PIMCO for 30 years, and an economic professor at Columbia for the last four years, but he's set to be nominated for the vice chairman's post at the Fed, according to the WSJ. Described more as pragmatist, rather than ideologue, Clarida also previously served as the Treasury Department's top economist during George W. Bush's term.
Stocks
The U.S. Commerce Department has slapped a seven-year ban on U.S. sales to China's ZTE (OTCPK:ZTCOF) for breaking terms of an agreement reached last year after it was found to be illegally shipping goods to Iran. Caught in the crossfire is Qualcomm (NASDAQ:QCOM), whose products account for the lion's share of chips inside ZTE smartphones. Qualcomm is also grappling with regulatory approval in China for a takeover of NXP Semiconductors (NASDAQ:NXPI).
Microsoft is warming up to Linux once again, using it to secure its first Azure Sphere chipset, the MT3620. "Of course we are a Windows company, but what we've recognized is the best solution for a computer of this size in a toy is not a full version of Windows," said chief legal officer Brad Smith. Microsoft (NASDAQ:MSFT) joined the Linux Foundation in 2016 and rebranded public cloud Windows Azure as Microsoft Azure.
Adding to the privacy woes that have been mounting against Facebook (NASDAQ:FB): The social network must face a class action suit alleging it unlawfully used a facial recognition process called DeepFace - to match similar photos after tagging - without user permission. Storing the biometric data could result in "damages that amount to billions of dollars," according to U.S. District Judge James Donato.
Forget Cambridge Analytica? The biggest stock-picking fund at BlackRock (NYSE:BLK), the Global Allocation Fund, raised its bet on Facebook (FB) in March, making the social network a top 10 equity holding. The increases in Facebook shares were enough to make the company the $36.7B fund's sixth largest stock holding at March 30, up 10 spots from where it had been two months earlier.
The Department of Defense has updated its request for proposals from potential bidders on a $10B cloud services project, in a deal that has been closely watched because Amazon (AMZN) has been considered a top contender. The U.S. is also exploring ways to retaliate against Beijing’s restrictions on U.S. cloud providers and other tech services, opening a new front on its trade offensive against China.
T-Mobile has agreed to pay a $40M fine over accusations that the company tried to cover up poor rural cell service with "false rings." The settlement, announced by the FCC, also requires T-Mobile (NASDAQ:TMUS) to implement a "compliance plan" to address the issues. The nation's third-largest wireless carrier said it stopped using the false ring tones last January.
Years of courtroom battles between billionaire Steve Wynn, founder of casino operator Wynn Resorts (NASDAQ:WYNN), and his ex-wife, Elaine Wynn, have ended with a settlement. The long-running lawsuit centered on a since-dissolved shareholders’ agreement and claims involving breach of contract. Neither Wynn Resorts nor its general counsel paid any money to Ms. Wynn, according to the company.
Continuing to reshape its business, Sanofi (NYSE:SNY) is in talks to sell its Zentiva European generic drugs arm to private equity firm Advent International for €1.9B. That's after spending more than $16B to buy biotech company Ablynx (NASDAQ:ABLX) and haemophilia specialist Bioverativ (NASDAQ:BIVV). This week, Sanofi also sold some brands to Cooper-Vemedia drugs manufacturing arm for €158M.
Walmart is overhauling its website as it battles Amazon (AMZN) for shoppers' dollars online. The new site, rolling out in May, is highly personalized with features that make it easier to reorder items, explore services at nearby stores, and discover products that are trending locally. According to comScore, Walmart.com (NYSE:WMT) has around 100M unique monthly visitors, compared with 180M at rival Amazon.com.
Further opening its markets, China is removing a two-decade restriction on foreign automakers, which can currently only own a 50% share of any local venture. The rule change could boost Tesla (NASDAQ:TSLA), which has been seeking to set up a wholly owned plant in Shanghai, as well as other global carmakers. Ownership limits for new EVs will be removed this year, commercial vehicles in 2020 and passenger vehicles in 2022.
Despite the news... Tesla (TSLA) -1.5% premarket after announcing another production halt of the Model 3, days after CEO Elon Musk said the automaker's pace of making 2,000 of the sedans a week is sustainable. A spokesman repeated past statements that shutdowns are "used to improve automation and systematically address bottlenecks in order to increase production rates."
Ramping up its Level 4 testing program, Alibaba (NYSE:BABA) is hiring 50 self-driving vehicle experts, according to the South China Morning Post. Meanwhile, Toyota (NYSE:TM) plans to start selling U.S. vehicles in 2021 that can talk to each other via short-range wireless technology to "realize a future with zero fatalities from crashes, better traffic flow and less congestion."
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Monday's Key Earnings
Bank of America (NYSE:BAC) +0.4% after topping expectations.
Netflix (NASDAQ:NFLX) +5.2% AH smashing subscriber estimates.
Today's Markets
In Asia, Japan +0.1%. Hong Kong -0.8%. China -1.4%. India +0.3%.
In Europe, at midday, London +0.2%. Paris +0.4%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.6%. S&P +0.5%. Nasdaq +0.5%. Crude +0.1% to $66.29. Gold -0.4% to $1344.70. Bitcoin +0.6% to $8097.
Ten-year Treasury Yield flat at 2.84%
Today's Economic Calendar
8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 Randal Quarles: “Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System”
11:00 Fed's Harker Speech
1:40 PM Fed's Evans: Monetary Policy
