North American Morning Briefing: Stock Futures Struggle as Earnings Eyed

MARKET WRAPS

Watch For:

Weekly Jobless Claims; PPI for March; earnings from Delta Air Lines, Fastenal

Today's Headlines/Must Reads

Google to Ask Judge to End DOJ Antitrust Case

TikTok Parent ByteDance Battles Meta For Virtual-Reality App Developers

IBM Explores Sale of Weather Business

JPMorgan Internally Flagged Epstein's Withdrawals Years Before His Conviction

Deposit Crisis Sets Up a Tough First Quarter for All But the Biggest Banks

Chinese Exports Surge as Trade With Russia and Southeast Asia Jumps

Property Has an Open-Ended Problem

Follow WSJ markets coverage here .

Opening Call:

Stock futures nudged higher on Thursday as investors continued to weigh inflation data and a Federal Reserve forecast of a "mild recession" beginning later this year.

Gains were contained, however, as traders looked ahead to first-quarter earnings season with uncertainty over how well companies will be able to maintain profits with expectations the economy will decelerate.

"The U.S. is still faced with a sustained high inflation outlook, tighter credit and banking risk, as well as a slowing economy and further rate hikes," ACY Securities said.

Stocks in the News

Apple is in talks with suppliers about moving production of its MacBook computers to Thailand, a further move to distance itself from China amid tensions with the U.S.

Apple is talking to companies with existing facilities in Thailand about starting to produce MacBooks there, Nikkei reported, citing three unnamed suppliers involved in talks. It currently mainly makes MacBooks in China but has already shifted some production to Vietnam.

The company has been mass-producing the Apple Watch in Thailand for more than a year, Nikkei said.

Other Stocks to Watch

ADRs of Alibaba were up 2% after a report from the Financial Times said SoftBank has moved to sell almost all of its remaining stake in the Chinese tech giant.

Harley-Davidson fell 4% in premarket trading after it was announced that its CFO would be leaving at the end of April to join Hasbro in the same role.

Rent the Runway said it anticipates fiscal-year revenue of $320 million to $330 million, below analysts' expectations of $346 million. The company also said its CFO. Its shares dropped 6% in after-hours trading.

Sportsman's Warehouse said it expects fiscal first-quarter net sales of $265 million to $270 million, and a decline in same-store sales of 17% to 19%. Analysts were calling for first-quarter sales of $319.7 million. The stock fell 15% in premarket trading.

Forex:

The dollar remained under pressure in early European trading after falling sharply on Wednesday due to a larger-than-expected drop in inflation, which drove expectations the Fed could pause raising interest rates soon.

Although Fed minutes signaled that interest rates could rise at the next meeting in May, IG said traders assumed this will mark a final increase.

"The dollar continues to weaken despite the expectations of more Fed tightening, as markets continue to expect a pause beyond the next meeting, and this has allowed the euro, sterling and others to drive higher," IG said.

EUR/USD hit a 10-week high of 1.1026, following the heavy selling in the dollar.

UniCredit Research said Wednesday's inflation data highlighted the contrast between the outlook for U.S. and eurozone interest rates, adding that it could see the euro test and exceed the year-to-date high of $1.1035.

"Markets remain convinced that there is more room for the ECB than for the Fed to tighten further."

UniCredit said a break above this year's peak could see the euro target $1.12.

Read Sterling Buoyed by Weak Dollar, Shrugs off Stagnant UK Economy

Read U.S., Eurozone Headline Inflation Expected to Continue Falling

Bonds:

The market swings on Wednesday around the release of March consumer price inflation data were testament to elevated short-term volatility, ING said.

The size of the market swings, top to trough, was almost 20 basis points for the two-year Treasury yields and almost 10 basis points in the 10-year yield, ING said.

"Ultimately, we think the case for faster rate cuts by the Fed and for 10Y rates to converge to 3% has only strengthened."

Energy:

Oil futures edged lower in Europe but held on to most of the gains made following the inflation data.

Expectations of growing tightness in the market are further lifting prices after data showed U.S. inventories rose last week.

"Weakening Russian shipments, OPEC production cuts and retreating U.S. inventories are increasing prospects of a tighter market," ANZ said.

Meanwhile, Energy Secretary Jennifer Granholm said the U.S. could begin refilling its strategic stockpiles later this year, according to reports.

Metals:

Base metals and gold inched higher in Europe and a softer PPI print later Thursday would help put a ceiling over the dollar and boost risk assets and commodity markets, Peak Trading Research said.

TODAY'S TOP HEADLINES

Google to Ask Judge to End DOJ Antitrust Case

WASHINGTON-A judge on Thursday will hear Google's arguments for why the landmark antitrust case over its search-engine dominance should be tossed instead of going to trial later this year.

U.S. District Judge Amit Mehta has scheduled an oral argument in which both sides will weigh in on Google's request for judgment in its favor in a 2020 civil lawsuit brought by the Justice Department. Google is also asking Judge Mehta to toss out a similar lawsuit brought by a bipartisan coalition of 38 state attorneys general.

South Korea's Top Court Upholds Fine for Qualcomm

South Korea's top court has upheld a local antitrust regulator's decision to fine U.S. chip maker Qualcomm Inc. about $779 million for unfair business practices.

The country's Supreme Court said Thursday that it had rejected the appeal made by three Qualcomm affiliates against a 2019 lower court ruling that had upheld the Korea Fair Trade Commission's decision.

TikTok Parent ByteDance Battles Meta For Virtual-Reality App Developers

TikTok parent ByteDance Ltd. is offering to pay developers who have made virtual-reality software for Meta Platforms Inc. to bring their apps to its own fast-growing Pico headsets, according to people familiar with the matter.

The incentives underscore the intensifying competition between the two companies in virtual reality, a space that Meta Chief Executive Mark Zuckerberg has predicted will become the next major computing platform. ByteDance has offered some VR developers $15,000 to $25,000 per title, the people said.

IBM Explores Sale of Weather Business

International Business Machines Corp. is exploring a sale of its weather operation, according to people familiar with the matter, as the technology company seeks to streamline its operations. An auction of the business is at an early stage, the people said, and there may not be a deal. Should there be one, private-equity is most likely the buyer in a deal that could be valued at more than $1 billion, the people said.

IBM agreed to buy the business in 2015, purchasing The Weather Company's business-to-business, mobile and cloud-based businesses including Weather.com, which provides weather forecasts around the globe. The deal price at the time was pegged at more than $2 billion.

Hasbro Hires Harley-Davidson CFO to Lead Its Finances

Hasbro Inc. hired the finance chief of motorcycle maker Harley-Davidson Inc. to lead its finances as it is working to cut hundreds of millions of dollars in costs.

Pawtucket, R.I.-based Hasbro, the toy and entertainment company behind Transformers, Play-Doh and Monopoly, on Wednesday named Gina Goetter as chief financial officer, effective May 18. She is set to succeed Deborah Thomas, whose retirement plans were announced in November. Ms. Thomas, who has been with the company for roughly 25 years, will remain in an advisory role through the end of the year to help with the transition, Hasbro said.

Twitter Inc. Changes Its Name to X Corp. and Moves to Nevada

Twitter Inc. has told the courts that it has a new company name in a new state: X Corp., an entity incorporated in Nevada instead of Twitter's previous domicile in Delaware.

While the social-media platform on users' phones and computers still bears the name Twitter, "Twitter Inc. has been merged into X Corp. and no longer exists," according to a legal filing last week informing a Florida federal court of the change in a case where Twitter is a party. X Corp. is a privately held company incorporated in Nevada, Twitter's lawyers said.

JPMorgan Internally Flagged Epstein's Large Withdrawals Years Before His 2008 Conviction, Lawsuit Alleges

JPMorgan Chase & Co. employees internally flagged Jeffrey Epstein's large cash withdrawals two years before he was convicted of soliciting a minor for prostitution, according to new court papers filed Wednesday.

A JPMorgan risk-management team in 2006 noted that Epstein "routinely" made cash withdrawals of $40,000 to $80,000 several times a month, the U.S. Virgin Islands said in an amended lawsuit against the bank. At the time, Epstein was pulling more than $750,000 a year in cash from the bank, according to the lawsuit.

Judge Blasts Fox News Over Evidence Disclosures in Defamation Case

WILMINGTON, Del.-The Delaware judge overseeing a defamation case against Fox News said he was likely to appoint a special master to investigate whether the network improperly withheld information during the litigation, with possible sanctions against the company to follow.

Superior Court Judge Eric Davis imposed one penalty right away, saying plaintiff Dominion Voting Systems was entitled to conduct new depositions of Fox News witnesses, at Fox's expense, to compensate for the potential withholding of relevant evidence by the network. The judge said Fox News might also face sanctions for its last-minute disclosure that Rupert Murdoch is an officer of the network, with the formal title of executive chairman at Fox News.

Deposit Crisis Sets Up a Tough First Quarter for All But the Biggest Banks

Bigger is better for banks this earnings season.

A deposit run that felled Silicon Valley Bank and Signature Bank has hurt small banks much more than big ones, draining low-cost funding that has fueled their profitability in recent years.

Track How U.S. Banks Are Faring in First-Quarter Earnings

In March, banks experienced one of their worst months this century. The collapse of Silicon Valley Bank and Signature Bank sparked widespread fears about potential deposit runs and declining values of bonds and loans.

Now attention will turn to how the banks are doing and what comes next. The Wall Street Journal will break down some of the critical numbers investors will be watching in first-quarter earnings over the coming weeks. Stay tuned for further updates.

Banks Keep Pouring Cash Into Fossil Fuels. U.S. Lenders Lead the Way.

The world's biggest banks continued to channel billions of dollars into boosting fossil-fuel production capacity in 2022 despite growing calls to scale back lending in response to global warming, finds a new report.

The annual Banking on Climate Chaos report, authored by a group of nonprofits, including Rainforest Action Network, said banks provided $673 billion in finance to the fossil-fuel industry last year. Canadian banks are providing a rising share of the money, though U.S. lenders are still the dominant player.

Banks Keep Pouring Cash Into Fossil Fuels. U.S. Lenders Lead the Way.

The world's biggest banks continued to channel billions of dollars into boosting fossil-fuel production capacity in 2022 despite growing calls to scale back lending in response to global warming, finds a new report.

The annual Banking on Climate Chaos report, authored by a group of nonprofits, including Rainforest Action Network, said banks provided $673 billion in finance to the fossil-fuel industry last year. Canadian banks are providing a rising share of the money, though U.S. lenders are still the dominant player.

Chinese Exports Surge as Trade With Russia and Southeast Asia Jumps

HONG KONG-China's exports bounced back sharply in March, a surprise that reflects greater demand in Asia and Europe as well as improved supply chain conditions.

Another major reason that was behind the unexpectedly strong result: A more than doubling of Chinese exports to Russia in March from a year earlier, highlighting warming economic ties between the two like-minded neighbors.

More Junk-Rated Companies Are Facing Credit Downgrades and Defaults

The prospects of U.S. companies with significant leverage or rated several notches below investment grade have turned bleaker in recent months, credit-rating firms say, and default rates for junk-rated companies could more than double by early next year.

While highly rated companies are proving largely resilient during the postpandemic economic turbulence, businesses with lower credit ratings and floating-rate debt are increasingly struggling with steep increases to debt-servicing costs and a possible recession as the Federal Reserve continues interest-rate hikes. What's more, still-steep inflation and softer demand are also expected to erode some companies' profit margins, the ratings firms said.

Property Has an Open-Ended Problem

An old design flaw in the commercial real-estate industry is back, and this time it is bigger and broader.

Property investment funds have ballooned in size since the 2008 global financial crisis, and not just in the U.S. According to the European Central Bank, eurozone real-estate funds had assets under management of 1.04 trillion euros at the end of 2022, equivalent to $1.14 trillion and up from EUR200 billion in 2007. Some 80% of these funds by value are open-ended, giving investors the option to cash out daily, weekly or quarterly.

Chinese State-Owned Enterprises Are Hong Kong's Hottest Stocks

China's stodgy state-owned companies have become the stars of Hong Kong's stock market.

At the Communist Party Congress in October, President Xi Jinping said state-owned enterprises needed to "get stronger, do better and grow bigger." Investors are taking heed. State-owned property developers are trouncing their debt-laden private sector rivals. Shares of the country's largest homegrown semiconductor maker are up by more than a third.

UK Economy Stagnated in February After Labor Strikes Hit Activity

The U.K. economy stalled in February after public-sector strikes hit activity in the services sector, adding to concerns the economy is struggling amid sky-high inflation and rising interest rates.

The country's gross domestic product held steady on month in February, easing from an upwardly revised 0.4% rise in January, data from the Office for National Statistics showed Thursday.

White House Works to Satisfy Senate Democrats in Fed Vice Chair Search

WASHINGTON-The White House is working to secure the support of key Capitol Hill allies as officials deliberate over whom to nominate for the No. 2 job at the Federal Reserve, according to people familiar with the matter, with Democrats' slim majority in the Senate hanging over the search.

Last month, some administration officials privately identified Janice Eberly, a finance professor at Northwestern University, as the leading candidate for the Fed vice chair. But Sen. Robert Menendez (D., N.J.), a senior member of the Senate Banking Committee, has continued to mount an aggressive campaign to pressure the White House to nominate a Latino economist for the job.

Property Has an Open-Ended Problem

An old design flaw in the commercial real-estate industry is back, and this time it is bigger and broader.

Property investment funds have ballooned in size since the 2008 global financial crisis, and not just in the U.S. According to the European Central Bank, eurozone real-estate funds had assets under management of 1.04 trillion euros at the end of 2022, equivalent to $1.14 trillion and up from EUR200 billion in 2007. Some 80% of these funds by value are open-ended, giving investors the option to cash out daily, weekly or quarterly.

UK Economy Stagnated in February After Labor Strikes Hit Activity

The U.K. economy stalled in February after public-sector strikes hit activity in the services sector, adding to concerns the economy is struggling amid sky-high inflation and rising interest rates.

The country's gross domestic product held steady on month in February, easing from an upwardly revised 0.4% rise in January, data from the Office for National Statistics showed Thursday.

White House Works to Satisfy Senate Democrats in Fed Vice Chair Search

WASHINGTON-The White House is working to secure the support of key Capitol Hill allies as officials deliberate over whom to nominate for the No. 2 job at the Federal Reserve, according to people familiar with the matter, with Democrats' slim majority in the Senate hanging over the search.

Last month, some administration officials privately identified Janice Eberly, a finance professor at Northwestern University, as the leading candidate for the Fed vice chair. But Sen. Robert Menendez (D., N.J.), a senior member of the Senate Banking Committee, has continued to mount an aggressive campaign to pressure the White House to nominate a Latino economist for the job.

North Korea Fires Ballistic Missile Toward Japan

SEOUL-North Korea fired a ballistic missile on Thursday, nearly a week after the country's military stopped responding to calls on an inter-Korean military hotline and days after leader Kim Jong Un vowed to strengthen the military's capabilities.

The missile was launched at a lofted trajectory around 7:20 a.m. from an area near North Korea's capital of Pyongyang, traveling for more than 600 miles before landing in waters east of the Korean Peninsula, according to South Korea's military. Japan sent out an alert warning residents in the country's northernmost island of Hokkaido to take shelter but later said the missile didn't land in Japan's territory or its exclusive economic zone.

Government Looking for Leaker in Ukraine Documents Probe

WASHINGTON-The U.S. government is treating the apparent disclosure of classified material surrounding the war in Ukraine as an insider's leak, people familiar with the matter say, but hasn't yet homed in on key suspects for a massive intelligence breach that has exposed the challenges of safeguarding sensitive U.S. information and tested ties with some of America's closest allies.

The bulk of the more than 60 documents, if genuine, appear to originate from the Central Intelligence Agency's Operations Center and the Pentagon's Joint Chiefs of Staff. Such documents are typically briefed to senior-level decision makers at the Pentagon in an environment protected from electronic surveillance and secured against leaks.

Sen. Dianne Feinstein Rejects Calls to Resign After Being Sidelined With Shingles

Longtime California Sen. Dianne Feinstein said she would temporarily leave the Judiciary Committee but not resign from the Senate, responding to pressure from some fellow Democrats to step down rather than serve out the rest of her final term.

Mrs. Feinstein underwent treatment for shingles in February and has been absent from the Senate since then, missing dozens of votes, and hasn't provided a timeline for returning to Washington, fueling speculation about her plans. In her statement Wednesday, she said she had intended to get back to the Capitol in March but had been delayed by medical complications.

Write to [e-mail] TODAY IN CANADA

Earnings:

Cogeco Commun 2Q

Corus Ent 2Q

Opsens 2Q

Economic Calendar:

None scheduled

Stocks to Watch:

Ascot Resources Announces C$4M Non-Brokered Flow Through Private Placement

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Collective Metals Signs Option Agreement to Acquire 100% of Northwestern Ontario Lithium Property; Landings Lake Property Is Situated in Region With Multiple Lithium Deposits Nearby

Expected Major Events for Thursday

06:00/UK: Feb UK trade

06:00/UK: Feb Index of Production

06:00/UK: Feb Index of services

06:00/UK: Feb Monthly GDP estimates

06:00/GER: Mar CPI

08:00/ITA: Feb Industrial Production

08:30/UK: 1Q Bank of England's Bank Liabilities Survey

08:30/UK: 1Q Bank of England Credit Conditions Survey

10:00/FRA: Feb OECD Harmonised Unemployment Rates

10:00/FRA: 4Q OECD Quarterly Labour Market Situation

11:30/UK: Mar NIESR Monthly GDP Tracker

12:30/US: Mar PPI

12:30/US: 04/08 Unemployment Insurance Weekly Claims Report - Initial Claims

12:30/US: U.S. Weekly Export Sales

13:00/RUS: Weekly International Reserves

14:30/US: 04/07 EIA Weekly Natural Gas Storage Report

16:59/GER: Feb Balance of Payments

20:30/US: Foreign Central Bank Holdings

20:30/US: Federal Discount Window Borrowings

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Thursday

ADF Group (DRX.T) is expected to report for 4Q.

ASA Gold & Precious Metals Ltd (ASA) is expected to report for 1Q.

Advaxis Inc (ADXS) is expected to report for 1Q.

Amerityre Corp (AMTY) is expected to report for 2Q.

Arcimoto Inc (FUV) is expected to report for 4Q.

Atlantic American (AAME) is expected to report for 4Q.

Barrick Gold Corp (ABX.T,GOLD) is expected to report for 1Q.

Bit Digital Inc (BTBT) is expected to report for 4Q.

CCA Industries (CAWW) is expected to report for 1Q.

Caldwell Partners International Inc (CWL.T) is expected to report for 2Q.

Cass Information Systems (CASS) is expected to report $0.70 for 1Q.

Cogeco Inc (CGO.T) is expected to report for 2Q.

Corus Entertainment Inc - Class B (CJR.B.T,CJREF) is expected to report for 2Q.

Delta Air Lines (DAL) is expected to report $0.27 for 1Q.

Edgio Inc (EGIO) is expected to report $-0.12 for 4Q.

Edgio Inc (EGIO) is expected to report for Full year.

Escalade Inc (ESCA) is expected to report for 1Q.

Fastenal Co (FAST) is expected to report $0.51 for 1Q.

Fastenal Co (FAST) is expected to report.

Hooker Furnishings Corp (HOFT) is expected to report $-2.93 for 4Q.

LGL Group (LGL) is expected to report $0.06 for 4Q.

Lakeland Industries (LAKE) is expected to report $0.21 for 4Q.

Lucira Health Inc (LHDXQ) is expected to report for 4Q.

Manhattan Bridge Capital (LOAN) is expected to report $0.10 for 1Q.

NantHealth Inc (NH) is expected to report for 4Q.

National CineMedia Inc (NCMI) is expected to report $-0.04 for 4Q.

Oncotelic Therapeutics Inc (OTLC) is expected to report for 4Q.

Orbit International (ORBT) is expected to report for 4Q.

Progressive Corp (PGR) is expected to report.

RespireRx Pharmaceuticals Inc (RSPI) is expected to report for 4Q.

Royale Energy (ROYL) is expected to report for 4Q.

Starry Group Holdings Inc (STRYQ) is expected to report for 4Q.

Statera Biopharma Inc (STAB) is expected to report for 4Q.

Symbolic Logic Inc (EVOL) is expected to report for 4Q.

Unity Bancorp Inc (UNTY) is expected to report $0.91 for 1Q.

Washington Federal (WAFD) is expected to report $1.07 for 2Q.

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ANALYST RATINGS ACTIONS

Abercrombie & Fitch Cut to Hold From Buy by Argus Research

Adtran Cut to Market Perform From Outperform by Northland Capital Markets

Aeglea BioTherapeutics Cut to Hold From Buy by JonesTrading

Aeglea BioTherapeutics Cut to Market Perform From Outperform by LifeSci Capital

Allied Motion Raised to Outperform From Market Perform by Northland Capital Markets

Arconic Cut to Peer Perform From Outperform by Wolfe Research

Arrowhead Pharmaceuticals Raised to Outperform From Market Perform by SVB Securities

Becton Dickinson Raised to Overweight From Sector Weight by Keybanc

Celanese Raised to Neutral From Underweight by Piper Sandler

Confluent Raised to Overweight From Equal-Weight by Morgan Stanley

Dow Raised to Overweight From Neutral by Piper Sandler

Eastman Chemical Raised to Overweight From Neutral by Piper Sandler

Empire State Realty Trust Cut to In-Line From Outperform by Evercore ISI Group

Essex Property Raised to Sector Outperform From Sector Underperform by Scotiabank

Evercore Raised to Buy From Sell by UBS

Evercore Raised to Overweight From Equal-Weight by Morgan Stanley

Global Payments Raised to Buy From Neutral by Goldman Sachs

Goldman Sachs Raised to Buy From Neutral by UBS

Insight Enterprises Cut to Hold From Buy by Stifel

Jefferies Financial Cut to Underweight From Equal-Weight by Morgan Stanley

Kaiser Aluminum Cut to Underperform From Peer Perform by Wolfe Research

Lockheed Martin Cut to Neutral From Outperform by Baird

Mid-America Apartment Cut to Sector Underperform From Sector Perform by Scotiabank

MongoDB Raised to Overweight From Equal-Weight by Morgan Stanley

Netstreit Cut to Sector Perform From Sector Outperform by Scotiabank

Raytheon Technologies Raised to Outperform From Peer Perform by Wolfe Research

Realty Income Raised to Sector Outperform From Sector Perform by Scotiabank

Take-Two Interactive Cut to Neutral From Outperform by Exane BNP Paribas

Vitesse Energy Cut to Market Perform From Outperform by Northland Capital Markets

Westlake Raised to Overweight From Neutral by Piper Sandler

Yum China Holdings Raised to Positive From Mixed by OTR Global

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

April 13, 2023 06:13 ET (10:13 GMT)

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