MARKET WRAPS
Watch For:
U.S. Univ. of Michigan Preliminary Consumer Survey for
September.
Opening Call:
Stock futures edged up ahead of fresh data on consumer
sentiment, pointing to a subdued end to a choppy week in
markets.
Stocks have seesawed this week as investors grappled with mixed
economic data in the U.S. and China and the spread of the Covid-19
Delta variant. This week brought the first sign of inflation easing
and an unexpected boost to retail sales, but also a slight rise in
Americans applying for initial jobless claims, a proxy for
layoffs.
"What this week tells us is that there's going to be this bumpy
normalization for the foreseeable future. All this mixed data puts
us a bit in limbo," said Ludovic Subran, chief economist at
Allianz. "The return of volatility in an environment that is a bit
of an in-between time is very probable."
Investors are awaiting a preliminary reading of the Michigan
consumer sentiment index for September, which is set to go out at
10 a.m. ET.
Invesco jumped over 9% in after hours trading after The Wall
Street Journal reported the company is in talks to merge with State
Street's asset management business. State Street rose 0.5%.
Overseas, the pan-continental Stoxx Europe 600 advanced 0.8%.
Travel stocks rallied on reports that the U.K. will ease
restrictions. International Consolidated Airlines rose 3.5% and
InterContinental Hotels added 3%.
In Asia, most major benchmarks rose. The Shanghai Composite
Index edged up 0.1%, while Hong Kong's Hang Seng gained 0.3%. The
mainland China benchmark is down more than 2% for the week after a
range of Chinese economic indicators signaled a pullback in growth
and giant property developer Evergrande's debt problems weighed on
sentiment.
"This has been a stone in the shoe of markets and these events
are coming to a head, but it's hard to see how this develops in a
way that's too destructive," Mr. Jeffery said.
Forex:
A rally which took the DXY dollar index to a three-week high of
92.9640 on Thursday pauses, leaving the DXY last down 0.1% at
92.8200, with investors lacking the impetus to push it higher,
UniCredit said.
The dollar has been lifted by safe-haven demand due to concerns
over slowing growth, rising inflation and "growing fears about a
possible international financial shock, potentially coming from
China," alongside better U.S. data such as retail sales, UniCredit
said.
Yet the uncertain outlook leaves investors "reluctant to ride a
more sustained USD recovery," it said.
The DXY index is therefore stuck below 93 for now while EUR/USD
has support above 1.1760, it said.
Bitcoin climbed about 2% from the level at 5 p.m. Thursday,
trading around $48,000, according to data from CoinDesk. The
cryptocurrency fell below $44,000 earlier in the week before
recovering some ground.
Data showing an unexpected 0.9% fall in U.K. retail sales in
August, against the consensus forecast in a WSJ poll for a rise of
0.8%, "may take some of the momentum out of the rise in U.K. money
market rates and also GBP," ING said.
The impact may be limited, however, as the weak figures are
unlikely to prompt the Bank of England to "deliver a 'rate
protest'" against market pricing of future interest-rate rises at
next week's meeting, ING said.
This is likely to leave GBP/USD gravitating around 1.3800 and
EUR/GBP near 0.8500, it said.
Bonds:
Benchmark 10-year U.S. Treasury yields declined to 1.334% from
1.335%
The Treasury yield curve has been flattening this week,
signaling that investors are positioning ahead of the Federal
Reserve monetary policy meeting that begins Tuesday, according to
Chris Jeffery, head of rates and inflation strategy at Legal &
General Investment Management.
"That's telling us the market is starting to worry more about
the Fed," he said.
DWS expects the US Federal Reserve to "gently guide" markets at
the upcoming September meeting toward more significant changes in
the future, said Christian Scherrmann, U.S. economist at the German
asset manager.
This could be expressed by an adjustment of the statement, most
likely mirroring Chairman Jerome Powell's speech at Jackson Hole
where he stated that "...if the economy evolved broadly as
anticipated, it could be appropriate to start reducing the pace of
asset purchases this year," Scherrmann said.
DWS remains of the view that the Fed will announce tapering at
the November meeting and that the reduction in asset purchases will
start in December at the earliest.
Commodities:
Oil prices were ticking lower as supply from U.S. refiners
shuttered by storms makes a slow return. Some analysts are betting
that oil prices could struggle to rise significantly above the $75
a barrel mark.
"The Delta variant is taking a toll on the pace of the demand
recovery across Asia, where vaccine rollouts and the lifting of
restrictions have been slower than in Europe and North America,"
analysts at Fitch Solutions said.
Supply increases from OPEC+ will bring the market back to a
position of oversupply next year, they added.
Gold prices ticked higher but are on course for a weekly loss,
as gold investors remain on the sidelines. The precious metal is
1.5% lower for the week.
Inflows into gold ETFs have remained lackluster, said TD
Securities. That is despite lingering concerns about high inflation
coupled with slowing growth.
Stagflation "is increasingly capturing the market's share of
mind, but the theme has yet to translate into inflows for gold," TD
said.
Gold ETFs tracked by FactSet have seen a net outflow of $947
million over the last month.
Nonetheless, TD expects prices are unlikely to rout as
positioning data suggests most investors have already sold their
gold holdings, the bank said.
TODAY'S TOP HEADLINES
Former Boeing Pilot Expected to Face Prosecution in 737 MAX
Probe
Federal prosecutors plan to criminally charge a former Boeing
Co. pilot they suspect of misleading aviation regulators about
safety issues blamed for two fatal crashes of the 737 MAX,
according to people familiar with the matter.
Mark Forkner, who was Boeing's 737 MAX chief technical pilot
during the aircraft's development, is likely to face prosecution in
the coming weeks, these people said. In his former role, Mr.
Forkner served as the plane maker's lead contact with the Federal
Aviation Administration for how airline pilots should be trained to
fly the new jet.
Read More ->
Invesco in Talks to Merge With State Street's Asset-Management
Business
Invesco Ltd. is in talks to merge with State Street Corp.'s
asset-management business, people familiar with the matter
said.
A deal isn't imminent, and the discussions might not result in
an agreement, the people said. It isn't clear what the terms of a
potential deal would look like, but it would likely be one of the
industry's biggest in recent memory, given State Street's
asset-management unit manages nearly $4 trillion in assets.
Read More ->
U.S. Steel Plans New U.S. Mill as Prices Surge
United States Steel Corp. said it plans to begin construction of
a new steel mill in the U.S. next year, as the company chases
rising demand from a rebounding manufacturing sector.
The Pittsburgh-based company said Thursday the new mill will
have the capacity to produce three million tons of sheet steel
annually, boosting its sheet-steel capacity by about 20% and
helping to alleviate tight supplies of steel in the domestic
market. The U.S. Steel mill would increase new production capacity
under construction or planned in the U.S. to about 12 million tons
annually, or almost 21% of sheet-steel consumption in 2019.
Read More ->
GM Plans to Idle Factories Longer Amid Chip Shortage
General Motors Co. is extending its plans to idle some of its
North American factories, compounding the effects of the world-wide
semiconductor shortage on the auto maker's production.
The company said Thursday it will add to scheduled downtime at
seven plants in the U.S., Canada and Mexico. The move builds upon
curtailments that have slammed GM and the broader auto industry
throughout the year as supply constraints on computer chips
continue to hold back car production.
Read More ->
Facebook Employees Flag Drug Cartels and Human Traffickers. The
Company's Response Is Weak, Documents Show.
In January, a former cop turned Facebook Inc. investigator
posted an all-staff memo on the company's internal message board.
It began "Happy 2021 to everyone!!" and then proceeded to detail a
new set of what he called "learnings." The biggest one: A Mexican
drug cartel was using Facebook to recruit, train and pay hit
men.
The behavior was shocking and in clear violation of Facebook's
rules. But the company didn't stop the cartel from posting on
Facebook or Instagram, the company's photo-sharing site.
Read More ->
SpaceX Inspiration4 Crew Wraps Up First Day in Space
The first all-civilian crew to orbit the Earth traveled nearly
six times around the planet during the mission of Elon Musk's
company, SpaceX.
The four-person crew aboard the Crew Dragon space capsule made
history Wednesday evening when a Falcon 9 rocket lifted off from
Kennedy Space Center in Florida.
Read More ->
CEO's Father Gets a $3.6 Billion Stock Windfall at Carvana
Aside from Jeff Bezos, Mark Zuckerberg and members of Walmart
Inc.'s Walton family, no individual has earned more from selling
stock in their company over the past year than a used-car magnate
from Arizona.
Company filings show Ernie Garcia II, the father of Carvana
Co.'s chief executive officer, has sold more than $3.6 billion of
stock since October. The sales amount to 16% of his holdings in the
company. He has benefited from an ownership structure that confers
benefits on him and his family and allows them to maintain control
of the business, according to company filings. Some of these
benefits can come at the expense of other shareholders, according
to the filings, a lawsuit, and corporate governance and tax
analysts.
Read More ->
Justice Department Fights Settlement That Would Shield Sacklers
From Opioid Lawsuits
The Justice Department, continuing its fight against a roughly
$4.5 billion settlement that will shield the family who owns
OxyContin maker Purdue Pharma LP from opioid lawsuits, is seeking
to pause the deal until after federal appeals courts have weighed
in on the agreement.
U.S. Trustee William Harrington, who is part of the Justice
Department unit monitoring the nation's bankruptcy courts, said in
a Wednesday court filing that U.S. Bankruptcy Judge Robert Drain
was wrong to approve the settlement earlier this month and said his
ruling authorizing the deal between Purdue and its Sackler family
owners will likely be overturned by a higher court.
Read More ->
Biden Steps Up Efforts to Advance $3.5 Trillion Spending
Bill
WASHINGTON-President Biden is taking a more public role in the
negotiations around Democrats' roughly $3.5 trillion social welfare
and climate bill, as lawmakers work through thorny policy
debates.
At the White House Thursday, he touted proposals to increase
taxes on high-income households and U.S. companies to finance the
plan, saying, "Big corporations and the super wealthy have to start
paying their fair share of taxes."
Read More ->
U.S., China Jockey for Position in Pacific With Moves on
Security, Trade
China on Thursday moved quickly to counter an effort by the
U.S., U.K. and Australia to contain its ambitions in the Pacific,
saying it would apply to join a regional economic pact the U.S. had
eschewed, as Washington and Beijing maneuvered for economic and
military position in the theater that will define their great power
competition.
The U.S. has been amassing a network of alliances, including
India and Japan. The latest among the three English-speaking allies
will be an effort to provide Australia with nuclear submarines to
strengthen deterrence in the Indo-Pacific region, White House
officials said. Australia scrapped a multibillion-dollar submarine
deal with France as a result, prompting Paris to accuse the three
of betrayal.
Read More ->
Fed to Review Financial Trading Rules for Officials
The Federal Reserve is launching a review of its internal rules
governing the financial activities of its officials in the wake of
news last week that the leaders of the Dallas and Boston regional
Fed banks actively traded in financial markets.
"Because the trust of the American people is essential for the
Federal Reserve to effectively carry out our important mission,
Chair [Jerome] Powell late last week directed Board staff to take a
fresh and comprehensive look at the ethics rules around permissible
financial holdings and activities by senior Fed officials," a Fed
spokesperson said Thursday.
Read More ->
MassMutual Fined for Failing to Oversee GameStop Trader Keith
Gill, Others
A Massachusetts Mutual Life Insurance Co. subsidiary agreed to
pay a $4 million fine to settle an inquiry from Massachusetts
securities regulators into the social-media and trading activity of
its employees, including well-known GameStop Corp. investor Keith
Gill.
Mr. Gill, known as "Roaring Kitty" on YouTube and
"DeepF-ingValue" on Reddit, became an Internet folk hero in
January, thanks to his prescient bets on GameStop stock. For months
leading up to the GameStop trading frenzy in January-during which
nonprofessional traders sent the company's shares soaring to a
record high-Mr. Gill posted videos and messages discussing why he
was putting large sums of money into the stock.
Read More ->
Chinese Astronauts Complete Country's Longest Stay in Space,
Landing in Gobi Desert
HONG KONG-A trio of Chinese astronauts landed back on Earth on
Friday after three months in space, setting a record for the
country's longest stay in orbit as China pursues an ambitious space
program.
China has marked a number of milestones in space this year,
including sending the first component of its space station into
orbit in April and the landing of a rover on Mars in May. The three
taikonauts, as astronauts are known in China, have been celebrated
as the country's space achievements dovetail with an era of
heightened nationalism.
Read More ->
U.S., China Jockey for Position in Pacific With Moves on
Security, Trade
China on Thursday moved quickly to counter an effort by the
U.S., U.K. and Australia to contain its ambitions in the Pacific,
saying it would apply to join a regional economic pact the U.S. had
eschewed, as Washington and Beijing maneuvered for economic and
military position in the theater that will define their great power
competition.
The U.S. has been amassing a network of alliances, including
India and Japan. The latest among the three English-speaking allies
will be an effort to provide Australia with nuclear submarines to
strengthen deterrence in the Indo-Pacific region, White House
officials said. Australia scrapped a multibillion-dollar submarine
deal with France as a result, prompting Paris to accuse the three
of betrayal.
Read More ->
World Bank Cancels Flagship 'Doing Business' Report After
Investigation
The World Bank canceled a prominent report rating the business
environment of the world's countries after an investigation
concluded that senior bank management pressured staff to alter data
affecting the ranking of China and other nations.
The leaders implicated include then World Bank Chief Executive
Kristalina Georgieva, now managing director of the International
Monetary Fund, and then World Bank President Jim Yong Kim.
Read More ->
GOP Rep. Anthony Gonzalez Won't Seek Re-Election
WASHINGTON-GOP Rep. Anthony Gonzalez of Ohio said Thursday night
that he won't run for re-election next year, the first of the 10
House Republicans who voted to impeach former President Donald
Trump to do so.
Mr. Gonzalez, who will turn 37 this weekend, cited family
reasons and the struggle over the direction of the Republican Party
in his decision to depart Washington at the end of next year.
Read More ->
Write to sarka.halas@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Indicators (ET):
Nothing major scheduled
Stocks to Watch:
TeraGo CFO David Charron Will Step Down
TeraGo Inc. said Thursday Chief Financial Officer David Charron
will step down, effective Oct. 29, to "pursue other professional
opportunities."
Mr. Charron will continue to serve as a special adviser to the
board after he leaves, the company said. He has served as CFO since
he joined TeraGo in September 2017.
"During Dave's tenure, he spearheaded the improvement of our
balance sheet through a successful equity raise and focused debt
reduction efforts, as well as built a strong financial planning and
accounting team," Chief Executive Matthew Gerber said in prepared
remarks.
The Canadian enterprise wireless network provider said it will
soon begin a search for a new finance chief and will name an
interim CFO until a replacement for the role has been found.
Other News:
No items published
Market Talk:
No items published
Expected Major Events for Friday
06:00/UK: Aug UK monthly retail sales figures
08:30/UK: Aug Bank of England/Kantar Inflation Attitudes
Survey
08:30/UK: 2Q Bank of England statistics on UK banks' external
claims
09:00/ITA: Jul Balance of Payments
14:00/US: Sep University of Michigan Survey of Consumers -
preliminary
14:00/US: Aug State Employment and Unemployment
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Friday
ASA Gold & Precious Metals Ltd (ASA) is expected to report
for 2Q.
Amerityre Corp (AMTY) is expected to report for 4Q.
Coffee Holding Co (JVA) is expected to report $0.06 for 3Q.
Great Elm Group Inc (GEG) is expected to report for 4Q.
PFSweb (PFSW) is expected to report $0.01 for 2Q.
Progressive Corp (PGR) is expected to report.
U.S. Gold Corp (USAU) is expected to report for 1Q.
Value Line (VALU) is expected to report for 1Q.
Wall Financial (WFC.T) is expected to report for 2Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
American Express Raised to Neutral From Underperform by B of A
Securities
Avis Budget Group Raised to Buy From Neutral by B of A
Securities
Beyond Meat Cut to Underweight From Neutral by Piper Sandler
Cisco Systems Raised to Outperform From Neutral by Credit
Suisse
Dana Raised to Buy From Neutral by B of A Securities
DoorDash Raised to Buy From Neutral by B of A Securities
Fisker Cut to Neutral From Buy by B of A Securities
Las Vegas Sands Cut to Neutral From Overweight by JP Morgan
Lordstown Motors Cut to Underperform From Neutral by B of A
Securities
Visteon Cut to Underperform From Neutral by B of A
Securities
Wynn Resorts Cut to Neutral From Overweight by JP Morgan
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
September 17, 2021 06:03 ET (10:03 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.