Today's Markets
gm everyone :)
In Asia, Japan +1.08%. Hong Kong +1.19%. China +1.14%. India -0.34%.
In Europe, at midday, London +0.03%. Paris +0.28%. Frankfurt +0.19%.
Futures at 6:20, Dow +0.04%. S&P -0.05%. Nasdaq +0.03%. Crude -0.03% to $69.57. Gold +0.40% to $1,207.80. Bitcoin +1% to $6,329.
Ten-year Treasury Yield +1.1 bps to 3.059%.
Today's Economic Calendar
7:00 MBA Mortgage Applications
7:00 Housing Starts
7:00 Current Account
10:30 EIA Petroleum Inventories
Equity markets are starting to regroup again as traders remain unflustered by the latest phase of the U.S.-China trade war. "There was relief as the United States set the initial tariffs at 10 percent, rather than the expected 25 percent, seen by some as a gesture that it was buying time for further negotiations," said a senior strategist at Sumitomo Mitsui Asset Management. China also hit back against the U.S. with a softer punch than anticipated, indicating the nation will not engage in competitive currency devaluations. In Asia, Japan's Nikkei shot up 1.1% and Hong Kong's Hang Seng Index rose 1.2% on the day. The Shanghai Composite Index and Australia's ASX 200 Index both registered a gain of 0.5%. Meanwhile, the European Stoxx 600 Index is showing a 0.1% bump, and U.S. stock futures are mixed in early action.
Economy
Keep an eye on interest rates as the China-U.S. trade battle ratchets up. Some analysts think the recent selloff in the bond market could be partially tied to concerns that China could use other measures to retaliate against the U.S. With Beijing seen as having limited room to match tariffs over the long term, some say China could attempt to dump the bonds to drive up borrowing costs in the U.S. The 10-year Treasury yield currently stands at 3.059%.
The Bank of Japan stood pat with plans to keep its benchmark rate very low "for an extended period," voting 7-2 to maintain short-term rates at -0.1%. It also reiterated an easing pledge to buy about ¥80T in government bonds per year (about $712B). Sitting below 1%, Japanese inflation is still below the bank's 2% target.
Retail prices in the U.K. rose 3.5% in August to match the consensus estimate for a 3.2% rise, according to data from the U.K. Office for National Statistics. Retail prices haven't slipped below a 3.0% pace in the U.K. since January of 2017. Core CPI was up 2.1% to top the 1.8% consensus mark. "Rising prices for a range of recreational and cultural goods and services, transport services and clothing produced the largest upward contributions to the change in the rate between July and August 2018," reports the agency.
Japan's trade deficit increased to ¥444.6B in August, almost double the gap in July. Imports rose 15.4% during the month, led by a 21.5% increase in U.S. imports on strong demand for airplane parts, LNG and coal. Exports out of Japan were up 6.6% during the month to top the expectation for a 5.3% rise.
In a move to shore up a rupee that's slipped to record lows, India is considering raising the effective import duty on some steel products to 15%, according to reports. India had become a net steel importer for the first time in two years in the June quarter, and it may focus on promoting domestic production to change up currency flows out of the country.
The housing market is expected to show a little bounce when the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly update on August starts and permits. Economists forecast housing starts will increase to a 1.24M SAAR from 1.17M in July, and permits will move to 1.32M from 1.31M. Home Depot (NYSE:HD), Lowe's (NYSE:LOW) and Sherwin-Williams (NYSE:SHW) have all showed a strong correlation between their same-store sales marks and the pace of housing starts growth over the last ten years.
Stocks
Chipping away: Alibaba (NYSE:BABA) announced at an event in Hangzhou that it plans to set up a new chip subsidiary to make customized artificial intelligence chips and embedded processors for the cloud and Internet of Things businesses. The company hopes to launch its first self-developed AI inference chip out of the Alibaba DAMO Academy in the second half of 2019. The new chip could be used for autonomous driving, smart cities and logistics. R&D spending at Alibaba is projected to double to $15B over the next three years.
U.S. videogame sales increased year over year for the fifth straight month in August, with hardware and accessories again pacing spending increases. The PlayStation 4 (NYSE:SNE), Xbox One (NASDAQ:MSFT) and Nintendo Switch (OTCPK:NTDOY) all saw spending gains, and Electronic Arts' (NASDAQ:EA) Madden NFL 19 had that football franchise's best launch month since Madden NFL 13. Meanwhile, Grand Theft Auto V (NASDAQ:TTWO) hung around the top five in software; it's been on the chart for 59 of its 60 months in release.
Split decision: Citi Research estimates that Amazon's (NASDAQ:AMZN) retail business would be worth $400B if the company was divided in two, while the valuation on the cloud computing division would be around $600B. The firm sees considerable upside from an Amazon separation, including a reduction in regulatory risk and a removal of the conflict of interest of AWS bidding for certain retail business. The Jeff Bezos succession issue and the company's stock-based incentive compensation packages could also be cleaner if Amazon pulled the trigger on a split.
Sterling Suffolk Racecourse filed a $3B lawsuit in federal court against Wynn Resorts (NASDAQ:WYNN) over how the company secured its license in Massachusetts. The owner of the Suffolk Downs racetrack near Boston alleges that Wynn conspired to fix the application process, citing racketeering laws in its complaint. Sterling lost out to Wynn on the only casino license awarded for the eastern part of Massachusetts. Wynn says it plans to mount a vigorous defense.
The mayor of Renton, Washington, tipped that Boeing (NYSE:BA) is developing plans to raise its 737 production rate to a record 63 per month, even as suppliers struggle to keep up with the current pace. The mayor refused to name the local Boeing managers who told him about the plan for each of the factory's three assembly lines to produce 21 jets, saying he wants to protect relationships with his city's largest employer.
The tension continues to build at Tesla (NASDAQ:TSLA) as a DOJ probe runs alongside a wide-ranging SEC investigation. Subpoenas have already been received by Goldman Sachs and Silver Lake, the two firms hired by Tesla to help the company explore Elon Musk's go-private plan. Shares of Tesla are down 0.86% in premarket trading following a 3.35% decline yesterday.
Things are starting to get interesting in the IPO market. Bank7 (OTC:BSVN) and Elanco Animal Health (ELAN) are scheduled to debut today, while Farfetch (FTCH), Y-mAbs Therapeutics (YMAB), Zekelman Industries (ZEK), Eventbrite (EB) and Remora Royalties (RRI) have IPOs scheduled for Thursday. The largest IPO of the bunch is expected to be Elanco Animal Health, with proceeds of $1.35B anticipated. Eli Lilly (NYSE:LLY) holds a controlling stake of 80% in the animal health company. Meanwhile, after planning the biggest U.S. IPO by a Chinese company this year, Tencent Music (OTCPK:TCEHY) has halved the listing to $2B, Reuters reports. The company reportedly filed confidentially with the SEC on Sept. 7.
One giant leap: While Japanese billionaire and online fashion tycoon Yusaku Maezawa said he's excited to be part of the first mission to the Moon since 1972, the rocket to take him there still hasn't been built yet. "It's not 100% certain we can bring this to flight," cautioned SpaceX CEO Elon Musk. If the new SpaceX (SPACE) Big Falcon Rocket is ready to go in 2023 as planned, Maezawa wants to bring a group of artists on the "free return trajectory" voyage that doesn't involve an actual lunar landing. The billionaire founded online retailer Start Today (OTCPK:SATLF, OTC:SRTTY) in 1998. Interestingly, shares of Start Today are down almost 5% for the week in Tokyo amid the news of a potential moonshot for the company's CEO.
A dramatic call is out from Thomas Crown Art on the cryptocurrency market. The art industry upstart thinks advancements with the Ethereum (ETH-USD) blockchain will lead to a large bite into Bitcoin's (BTC-USD) dominance over the next five years. Thomas Crown sees a rapid reversal in the price of Ether as the utility of the "immutable ledger" grows. "I think we can expect Bitcoin to lose 50 percent of its cryptocurrency market share to Ethereum, its nearest rival, within five years," advises the firm.
The first-ever partnership between an NHL team and a sports book operator was announced yesterday with an advertising deal between William Hill (OTCPK:WIMHF, OTCPK:WIMHY) and the Vegas Golden Knights inked. The partnership will feature a TV-visible dasher board, in-arena signage, updated odds during games and recognition on the LED ribbon board of the William Hill Line Change when the Golden Knights make a line change during the game. Las Vegas-based William Hill has 108 race and sportsbooks in Nevada.
