US index futures rose in premarket trading on Monday, as
investors looked ahead to earnings and the inflation index later in
the week. European markets, on the other hand, are operating
in decline impacted by weak industrial data in Germany.
By 6:57 AM, Dow Jones (DOWI:DJI) futures were up 45 points,
or 0.13%. S&P 500 futures were up 0.24%, while Nasdaq-100
futures were up 0.40%. The 10-year Treasury yield was at
4.107%.
Industrial production in Germany contracted by 1.5% in June on a
monthly basis, greater than analysts’ forecasts, raising doubts
about the recovery of the region’s largest economy. In the UK,
house prices fell 0.3% in July compared with May, registering the
fourth decline, according to the Halifax bank.
In Asia, markets closed with no clear direction, amid rumors
that a regional government in China could take control of indebted
Country Garden, one of the biggest companies in the Chinese real
estate sector.
On Monday’s American economic agenda, investors will follow, at
8:30 am, the speech by the director of the Federal Reserve,
Michelle Bowman, which should indicate that monetary policy in the
US is not on track, although there are positive signs in the fall
in core inflation.
In commodities markets, West Texas Intermediate crude for
September is down 1.04% at $81.96 a barrel. Brent crude for
October is down 0.99% near $85.39 a barrel. Iron ore futures
traded in Dalian, China fell 1.57% to $99.99 a tonne on doubts
about the US and Chinese economy.
The stock market continued to post losses on Friday after an
initially positive reaction to the US Payroll data. The number
of job creations was below expectations, with a total of 187,000
jobs created in July, below expectations of
200,000. Initially, the rise was justified by the prospect of
a “soft landing” by the Fed.
However, this optimistic view soon dissipated as the market
realized that the data was not as favorable as it
appeared. Although the number of jobs created was smaller, the
unemployment rate dropped to 3.5%, and monthly wage earnings
increased, which raised concerns about the pace of decline in
inflation.
However, the Phillips Curve, which relates inflation to
unemployment, suggests that the Fed managed to reduce inflation
considerably without causing a significant economic impact. It
is possible that the effects of monetary policy are manifesting
themselves with a delay in this cycle, which means that its impact
on the economy and on corporate profits will still be felt with
some intensity in the coming months. However, it is already
noticeable that we are moving away from the risk of recession.
Ahead of Monday’s corporate results, investors await reports
from Tyson Foods (NYSE:TSN), Lucid Group (NASDAQ:LCID), Skyworks
Solutions (NASDAQ:SWKS), Paramount Global (NASDAQ:PARA), and
Palantir Technologies (NYSE:PLTR).
Wall Street Corporate Highlights for Today
Amazon (NASDAQ:AMZN) – Amazon.com is
preparing to launch a credit card in Brazil in partnership with
Banco Bradesco, with credit risk management by the bank and powered
by Mastercard (NYSE:MA). More
details on rewards and limits will be revealed soon. The offer
comes at a time of falling interest rates in Brazil.
Alphabet (NASDAQ:GOOGL), Robinhood
Markets (NASDAQ:HOOD) – Google parent Alphabet has
reduced its stake in Robinhood Markets by nearly 90%, decreasing
its exposure to the trading application operator. Robinhood
faces a slump after its initial success during the pandemic, but
has seen its stock plummet since then. To combat weakness in
the negotiations, the company is looking to expand revenue streams
through acquisitions.
Meta
Platforms (NASDAQ:META), Tesla (NASDAQ:TSLA)
– Elon Musk has announced that his proposed fight with Meta CEO
Mark Zuckerberg will be streamed live on the X platform. Proceeds
will go to charity for veterans. The two tech moguls have been
teasing each other for a mixed martial arts bout in Las Vegas since
June. Zuckerberg suggested a “more reliable platform” to raise
money for charity and suggested an August 26 date for the
fight. At the same time, Bloomberg announced that Elon Musk
will have an MRI of his neck and back and may need
surgery. The health of the Tesla and SpaceX CEO is of great
interest to the public, who say he is preparing for the fight by
lifting weights.
BP Plc (NYSE:BP) – BP is considering
construction of two offshore wind farms in the Irish Sea without
government support for the first time in the industry. The
company intends to use its own generated electricity, not
participating in the UK difference auctions. The projects
could supply 3.4 million homes. BP steps up its plans to
invest in offshore wind, pledging to increase spending on
renewables. Other wind energy projects face challenges and
rising costs around the world. The company seeks to expand its
green energy capacity to meet its growing needs.
Icahn Enterprises (NASDAQ:IEP) – Icahn
Enterprises, Carl Icahn’s company, slashed its dividend by half
following a negative report from Hindenburg Research. The
shares are down 23% and more than half their value since
May. Icahn has restructured personal loans and plans to focus
on activism. The company is cooperating with the US SEC in an
investigation. Hindenburg’s allegations remain unanswered.
Blackstone (NYSE:BX) – US private equity
fund Blackstone will make a bid to acquire 33.47% of Indian
drugmaker Cipla (USOTC:CPLFY), leading
to the departure of the founding family. Blackstone could have
59.4% of the stake after open offer for another 26%. Cipla
shares are up more than 14% since the previous report.
KKR & Co (NYSE:KKR) – KKR &
Co. plans to take German space technology company OHB SE
(XE:OHB) private by offering €44 a share, valuing OHB at around
€1bn. The offer aims to compete in the satellite industry,
driven by plans by Elon Musk and Jeff Bezos to launch thousands of
spacecraft into orbit. The Fuchs family group of shareholders,
with 70% of the company, will not sell shares. OHB provides
technology for projects such as the Galileo navigation system and
the International Space Station.
TPG Inc (NASDAQ:TPG) – Private equity firm
TPG has made a revised takeover bid for Australian funeral home
operator InvoCare Ltd. of about US$1.21 billion. The
offer was reduced following exclusive due diligence requested by
InvoCare to halt negotiations. TPG has accumulated a 19.9%
stake in the company. Discussions continue and details may
change. InvoCare provides funeral services in Australia, New
Zealand and Singapore.
Moody’s (NYSE:MCO) – Moody’s is the last
of the three major credit rating agencies to maintain the top US
rating, despite Fitch’s downgrade to AA+. Investors are not
worried as US debt is seen as a safe haven. Moody’s considers
“exceptional economic strength” and sound governance in assigning
the AAA rating, but could downgrade if fiscal challenges are not
addressed. The debt crisis is also a concern.
JPMorgan Chase (NYSE:JPM) – JPMorgan has
revised its US growth forecasts and ruled out a recession this
year, citing an economy expanding at a “healthy pace”. The
annualized GDP growth estimate was raised to 2.5%. Recession
risks are still high for next year, but modest and below-average
growth is expected. The bank warned of the need for a rate
hike by the Fed. In other news, JPMorgan has stopped
processing payments to the Russian Agricultural Bank, and Russia is
demanding action from Washington to help its grain and fertilizer
exports. Russia seeks reconnection to SWIFT and hopes to
resume Black Sea agreement.
Morgan Stanley (NYSE:MS) – Michael Wilson,
strategist at Morgan Stanley, warned that high fiscal spending
underpinning US economic growth is unsustainable. Fitch’s
downgrade of US debt indicates a potential letdown in earnings and
economic growth.
Bain Capital (NYSE:BCSF) – Bain Capital
will acquire Australian senior care operator Estia Health for A$838
million, a premium of 25.5% over Estia’s closing share
price. The purchase expands Bain’s focus in Australia,
strengthening its position in the global healthcare
industry. The transaction is awaiting shareholder
approval.
UBS Group AG (NYSE:UBS) – UBS is restructuring
its technology, media and telecommunications team, promoting some
bankers and looking to increase its share of the transaction
market, particularly in the US. The reorganization is led by
CEO Sergio Ermotti following the acquisition of Credit
Suisse. UBS Group AG has announced that it is considering
cutting approximately two-thirds of Credit Suisse Group’s
investment bankers in Asia Pacific following the merger of the two
Swiss creditors. Around 200 jobs could be affected at its
global banking division in Asia in the coming months. UBS
still intends to retain more than 100 Credit Suisse investment
bankers in the region. The Credit Suisse acquisition increased
UBS’s workforce to around 120,000, which it intends to reduce by
around 30% to reduce personnel costs by approximately $6 billion
over the next few years.
HSBC (NYSE:HSBC) – Sherard Cowper-Coles,
head of public relations at HSBC Holdings Plc, has criticized the
US for forcing the UK to cut business with China. He accused
the British government of being “weak” for blindly following the
US. The US-China political disputes have created tensions for
US companies and allies. HSBC faces a delicate balancing act
as it makes much of its money in China but is listed in London and
relies on access to the US financial system. Cowper-Coles’
comments reveal the private sector’s frustration with these
issues.
Berkshire Hathaway (NYSE:BRK.A) –
Berkshire Hathaway posted its highest quarterly operating profit,
reaching nearly $36 billion, driven by equity earnings and better
performance from insurer Geico. However, rising interest rates
negatively affected the results of the construction and RV
acquisition business.
Biogen (NASDAQ:BIIB), Sage
Therapeutics (NASDAQ:SAGE) – The U.S. Food and Drug
Administration (FDA) has approved Zurzuvae oral pill by Biogen and
Sage Therapeutics to treat postpartum depression and major
depressive disorder (MDD). The medication will be commercially
available in the fourth quarter of 2023 pending schedule as a
controlled substance. About 21 million adults in the US are
estimated to have MDD, while PPD affects about one in seven women
after giving birth.
Lucid (NASDAQ:LCID) – Electric
vehicle maker Lucid has cut prices on its Air luxury sedans by up
to $12,400 as part of an offer, in response to competition and a
price war led by Tesla. The offer is valid while supplies
last.
Toyota (NYSE:TM) – Toyota and Pony.ai plan
to mass-produce robot taxis in China in a joint venture. The
companies will invest more than $140 million and aim to build
self-driving cars with ride-sharing services. China is leading
the development of self-driving cars as global automakers adapt to
the local market.
General Motors (NYSE:GM) – General Motors
plans to increase jobs next year despite worker concerns about
electric vehicles. The company disagrees with the idea that
they require fewer workers. Negotiations with the UAW union
include pay and treatment at battery plants. CFRA Research
downgraded GM over concerns of a possible strike due to UAW
demands.
Nikola (NASDAQ:NKLA) – Shares in US
electric truck maker Nikola fell more than 25% on Friday after
naming its fourth CEO in four years and expressing doubts about its
continuity. Shareholders approved a plan to issue more shares
to bolster cash but face dilution concerns. The company faces
supply chain challenges and is focusing on hydrogen fuel cell
technology.
Magna International (NYSE:MGA) – Magna
International raised its full-year earnings and sales outlook after
quarterly results beat estimates of solid demand. However,
shares fell on labor concerns over union contract negotiations that
could affect production in the near term. The company expects
revenue of between $41.90 billion and $43.50 billion in 2023,
reflecting a stronger recovery in global vehicle production.
Yellow Corp (NASDAQ:YELL) – Yellow has
filed for Chapter 11 bankruptcy, with liabilities of $1 billion to
$10 billion, after heavy debt and tense negotiations with the Truck
Drivers Union. The company will close after almost 100 years
in the market. Customers
including Walmart (NYSE:WMT)
and Home Depot (NYSE:HD) fear
losses. The company faces disputes with the union and has
accumulated debt from its previous mergers. The US government
faces potential losses from a bailout loan issued in 2020.
Altice (NYSE:ATUS) – Billionaire Patrick
Drahi, of Altice, will face the corruption investigation that
affected his telecommunications empire, in teleconferences for
investors. Altice denied involvement in irregularities and
reinforced processes. The company’s bonds were devalued, and
the scandal hit executives and suppliers. Drahi will hold
investor meetings in September.
Wayfair (NYSE:W) – Wayfair was up 2.5% in
pre-market trade to hit $85.15 after the online home furnishings
retailer was upgraded from “Neutral” to “Buy” by UBS , and with the
price target increased from $72 to $110.
Fortinet (NASDAQ:FTNT) – Fortinet received
an update to “buy” from “neutral” with a $70 Guggenheim price
target. Shares rose 3.05% to $58.29 in premarket trade, after
falling 25% on Friday due to lower-than-expected second-quarter
earnings and the postponement of deals to the next quarter.
Skyworks Solutions (NASDAQ:SWKS)
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