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The US dollar continues to lose ground this morning amid rising expectations of rate cuts by the Federal Reserve, boosting other major currencies ahead of speeches by several fed officials this week. Markets are pricing in at least a 40 per cent chance of two rate cuts before the end of this year, according to Fed fund futures.  As a result, major currencies have been buoyed despite global central banks beginning to signal the start of a fresh easing cycle.  Markets are watching closely as Jerome Powell is set to discuss the US economy at an event at the Council on Foreign Relations in New York today. (FT)

 

Pharmaceutical maker AbbVie has agreed to buy Allergan, the Irish-domiciled maker of Botox, in a $63bn deal that is the sector’s latest blockbuster transaction driven by the need to replenish drug pipelines.  AbbVie is betting the acquisition will improve its offering as Humira, the world’s best-selling treatment for inflammatory diseases, is set to face competition from generic versions as the drug goes off patent in the US. The deal will see AbbVie pay $188.24 for each share of Allergan, and the offer values Allergan at a 45 per cent premium to its closing price a day earlier. (FT)

 

President Donald Trump’s announcement of sanctions on Iran’s supreme leader, Ayatollah Ali Khamenei, seem to be a tactic aimed at annoying Iranians rather than doing any real damage to the country’s already battered economy. If that was the idea, it has been a complete success, with state media saying the move has permanently closed the diplomatic path. Oil, which had risen strongly on tensions in the region, was broadly unchanged this morning as traders do not see much escalation in the latest diplomatic wrangling, while looking for more details on a possible output deal from OPEC.  (Bloomberg)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



Cutting its profit forecast for the third time in a year, Mercedes parent Daimler has warned investors that Q2 earnings will take a "high three-digit-million" hit due to higher-than-anticipated financial fallout of alleged diesel emissions manipulation. Shares fell the most in over four months on the news, sliding as much as 4% in European trading overnight. The profit warning comes at a highly politically sensitive moment, with the new Daimler CEO meeting Chancellor Angela Merkel in Berlin this week to discuss the future of the German car industry and the transition to electric vehicles. (SA)

 

Two senators from opposing sides of the aisle will introduce legislation today to call on tech giants to disclose the value of their users' data, Axios reports. Sens. Mark Warner and Josh Hawley will bring forward the DASHBOARD act (Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data), calling on major platforms like Facebook, Google, Amazon, and Twitter to disclose to users the types of data collected, how it is used, and to provide an assessment of the value of that data once every 90 days. (SA)

 

The G20 event, which begins on Friday in Osaka, is expected to include a meeting between Presidents Donald Trump and Xi Jinping on its sidelines. Hopes abound that such a top-level encounter could produce a breakthrough in the trade dispute between the world’s two biggest economies. The US has threatened to apply tariffs on another $300bn in Chinese goods if a deal is not reached. (FT)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



Shares of Slack Technologies soared nearly 50% in their public trading debut on Thursday, valuing the company at more than $23B. The strong performance helped validate the unusual direct listing model the company used to go public, as well as underscoring investor demand for business software makers. Revenues for Slack soared more than 80% to $400M in 2018, but it reported losses from operations of $143.85M. The app has more than 90M users, but so far has only around 100K paid customers. (FT)

 

Dividend-focused bank investors should be paying attention this afternoon to the first round of the Fed's annual stress tests on 18 of the largest U.S. financial institutions. The quantitative part will show the impact of hypothetical scenarios on banks' capital levels, with a consensus that most lenders will pass the exam. A second round next week will say whether any firm failed because of either insufficient capital or on qualitative grounds. (SA)

 

Looks like GE could be the surprise winner of the Paris Air Show: Marking its highest close in four months, General Electric closed up 2.8% to $10.63/share on Thursday after emerging as the surprise winner at the Paris Air Show. Its International joint venture with Safran tallied a total of $55B in orders, including more than 1,150 LEAP engines. (WSJ)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



As the Fed spreads its dovish wings, the yield on the benchmark 10-year Treasury dropped below 2% overnight for the first time since November 2016. The FOMC left interest rates unchanged at its monetary policy meeting on Wednesday, dropped the word "patient" from its statement and said it would "act as appropriate" to sustain the economy.  Free money for everyone.  (Bloomberg)

 

The latest high-profile company to go public in 2019 is Slack Technologies, which will begin trading this morning on the NYSE through a direct listing. The method allows a firm to simply float its existing stock onto a public exchange. Valued at about $15.7B, the NYSE has set a reference price for Slack at $26/share, which will be used by market makers to build an order book to open trading. More firms may follow suit if the direct scheme is successful, with the workplace-messaging app being only the second big tech company after Spotify to bypass the traditional IPO process. (SA)

 

In earnings news, business software maker Oracle claimed headway in shifting its applications to the cloud as it reported stronger than expected revenues and earnings in its latest quarter.  Oracle reported revenue of $11.1bn, up 1 per cent from a year before, despite a three percentage point headwind caused by the rise of the US dollar. (FT)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.
 



Episode 4 of FOMC Season 2019 airs this morning 11pm PST and it looks like the Fed is backed into a corner. A failure now to suggest a rate cut later this year - or a pivot back to even a neutral stance - could cause a violent selloff by markets, but if Jerome Powell does flag the plans, he will be accused of caving to President Trump, who has been relentless in excoriating the Fed and demanded that it reverse rate hikes made last year. More drama? Asked by reporters outside the White House yesterday if he wanted to demote Powell, Trump said "let's see what he does." (SA)

 

Amazon is leasing another 15 737-800 cargo aircraft made by Boeing through a partnership with General Electric Capital Aviation Services.  The aircraft will be in addition to the five Boeing 737-800s already leased from GECAS, announced earlier this year. By 2021, Amazon Air will have a portfolio of 70 aircraft flying in their dedicated air network. (WSJ)

 

Adobe on Tuesday reported upbeat quarterly results driven by strength in its digital media unit, but delivered a soft outlook for the current quarter. The California-based company said revenues rose 25 per cent year-on-year to a record $2.74bn. Revenues in its largest division, digital media, which includes its creative cloud tools and photo-editing app Photoshop, rose 22 per cent from a year ago to $1.89bn.  (FT)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



Stocks rose slightly on Monday, led by gains in tech, as investors looked ahead to a crucial Federal Reserve meeting this week.
 
While other economic signs may be weakening, Americans are still confident about their job prospects.  A recent New York Federal Reserve consumer expectations survey showed that workers’ confidence for finding a new job after losing their current position was at 61.5% in May — an increase from 59.3% in April and the highest since the central bank started keeping track in June 2013.
 
The nation’s homebuilders reported solid confidence in the housing market in June, but levels dropped slightly due to concerns over trade issues, the high costs of construction and the lack of skilled labor.  Builder confidence dipped to 64, that’s down from 66 in May.  Sentiment has remained in the low 60s for the past five months. Anything above 50 is considered positive.
 
Wall Street analysts are eagerly anticipating Facebook’s possible unveil of its long-awaited cryptocurrency payments plan on Tuesday. According to various reports the company is preparing to finally reveal what it calls Project Libra with partners including Visa and Mastercard.
 
With Northwest Quadrant Wealth Management I’m Tyler Simones



Wall Street futures suggest modest gains at the open as investors adopt a cautious stance on risk heading into this week's Fed gathering. While market expectations point to an interest rate cut this year, most observers expect rates to stay unchanged at this meeting, although eyes will be on the wording of Jerome Powell's policy statement, as well as the dot plot. Bets on central bank action have underpinned stocks in recent weeks, even as manufacturing data continues to suggest that the U.S.-China trade dispute is having knock-on effects across the globe. (SA)

 

Shares in online pet supply retailer Chewy jumped about 60 per cent on their trading debut, giving the company a market capitalization of around $15bn as investors show a strong appetite for selected new listings.  The pop placed it towards the higher end of first-day performances for companies that have IPO’d this year. Some companies that listed last week, such as Fiverr, Revolve Group and CrowdStrike had first-day gains between 70 per cent and 90 per cent. (FT)

 

India will impose higher retaliatory tariffs on 28 U.S. products including almonds, apples and walnuts from Sunday, following Washington's decision to strip the country of preferential access to the American market. New Delhi initially issued an order in June last year to raise import taxes as high as 120% on a slew of U.S. items, incensed by Washington's refusal to exempt it from higher steel and aluminum tariffs, but repeatedly delayed the decision as the two nations engaged in trade talks. U.S.-India bilateral trade reached $142B in 2018, a seven-fold increase since 2001.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



U.S. stocks rose yesterday as investors mostly shrugged off a spate of geopolitical concerns. Meanwhile, oil prices reversed steep declines earlier this week amid reports of a suspected attack on tankers in the Gulf of Oman.

 

The number of people who applied for jobless benefits in early June edged up to a five-week high, but not enough to signal any deterioration in a robust labor market that’s fueling the longest economic expansion in U.S. history.  Initial jobless claimed rose by 3,000 to 222,000, which is close to a 46-year low.

 

A pair of lawsuits filed in Washington and California allege Amazon’s Alexa keeps voiceprints of children without their parents’ consent.   These suits which allege that the devices are breaking the law in at least eight states by recording children who use the smart speakers without consent.  Shares of Amazon traded lower on the news.

 

And the punches keep coming for Facebook.  Amid ongoing controversy over its use of its user’s private information, Facebook has been kicked out of an index tracking companies that abide behind socially responsible practices.  S&P Dow Jones Indices announced Thursday that the social network no longer will be part of the S&P 500 ESG Index.  Shares of Facebook are lower on that news.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones.



US Stocks traded lower yesterday to break a 6-day winning streak as investors digest more signs of growing global economic stimulus.

 

The index of small-business optimism from the National Federation of Independent Business rose to 105.0 in May.  Six of ten survey components increased, three were unchanged, and only one fell in May. Nearly two-thirds, reported hiring or trying to hire, a 5-point increase from April, but 54% reported “few or no qualified applicants for the positions they were trying to fill”.

 

The wholesale cost of goods and services barely rose in May, reflecting easing inflationary pressures in the U.S. amid slower economic growth and fading gasoline prices.  The producer price index edged up 0.1% last month, matching forecast.  More notably, the increase in wholesale prices over the past year slowed to 1.8% from 2.2%, and down sharply from a recent high of 3.1% last summer.

 

NASA has opened the International Space Station to tourists and companies are already buying rides to fly so-called “private astronauts” up to the laboratory in the sky for a visit.  For approximately $52 million per person, you can purchase a seat to fly with SpaceX.  Bigelow Aerospace, a company that is developing space stations that expand, announced that its subsidiary Bigelow Space Operations has “paid substantial sums as deposits and reservation fees” to SpaceX for four launches to the space station.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones



U.S. stocks extended their gains from last week yesterday after President Donald Trump decided not to impose tariffs on imports from Mexico, cooling tensions on one front of a multi-pronged trade war. 

 

China extended its gold-buying spree, adding to reserves for a sixth straight month, as the protracted trade war with the U.S. hurts growth expectations and boosts demand for a portfolio diversifier.  The People’s Bank of China increased its bullion reserves by 15.86 tons.  The rise reflects the government’s “determined diversification” away from dollar assets.

 

Shares of cloud software giant Salesforce dropped sharply yesterday after it announced it would buy big data firm Tableau, a Seattle-based company that specializes in data visualization, for $15.3 billion in stock.  Tableau is a leading analytics platform that will help Salesforce augment its current product offerings, which include tools to help companies with sales, marketing and customer service.

 

FedEx is dropping a contract for air shipment of packages for Amazon within the United States, reducing its ties with the online retail giant that is already expanding its own delivery business.  FedEx said that they will not renew the contract for domestic FedEx Express handling of Amazon shipments when the deal expires June 30.  It's "a strategic decision" that will let FedEx focus on thousands of other retailers including Target, Walgreens and Walmart.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones



US Stocks snapped a 6 week losing streak last week and had their best week of the year.  The S&P 500 rose 4.7% after weak economic data pointed to the Federal Reserve cutting interest rates at some point this year.
 
After deciding to exit escalators and air conditioners, United Technologies Corp. is doubling down on the aerospace market with an all-stock deal to merge with defense contractor Raytheon.  The combined company, valued at more than $100 billion after planned spinoffs, would be the world's second-largest aerospace-and-defense company by sales behind Boeing Co., with annual revenue of about $74 billion this year. It will make everything from engines and seats for jetliners and F-35 jet fighters, to Patriot missile launchers and space suits for astronauts.


Finance ministers and central bank chiefs from the Group of 20 major economies wrapped up a meeting in Japan yesterday with a pledge to use all the policies they can to protect global growth.  The G-20 finance leaders said in a joint communique that risks from trade and geopolitical tensions were "intensifying."


Japanese data reaffirmed the world's third-largest economy grew in the first quarter of 2019, while underscoring signs of weakness amid a global trade war.  Japan's economy expanded an annualized 2.2% during the January-March quarter, following 1.6% growth in the previous three months.

 

With Northwest Quadrant Wealth Management, I'm Tyler Simones



The US economy added a weaker-than-expected 75,000 jobs in May, although the unemployment rate remains at its lowest level in half a century.  Non-farm payrolls rose by 75,000 last month, from April’s downwardly revised 224,000 (previously 263,000), the Department of Labor revealed on Friday, and ahead of the median 185,000 predicted by economists.  The unemployment rate was unchanged at 3.6 per cent, matching its lowest level since 1969. (FT)

 

Elliott Management has agreed a deal to acquire bookstore chain Barnes & Noble for $6.50 a share, in an all-cash transaction valued at $683m including debt. Barnes & Noble once towered over the industry and became known for its big-box bookstores in a rapid expansion during the 1980s and 1990s, as independent booksellers declined. But, its subsequent struggles to deal with the disruption of ecommerce have left the company vulnerable to a lowball takeover. Even after the rally on Thursday, the shares are still down more than 82 per cent from a 2006 peak, when they were worth nearly $32.  (WSJ)

 

Talks between the U.S. and Mexico are set to continue into a third day in a bid to reach an agreement that would stop the imposition of 5% tariffs on American imports from its southern neighbor on Monday. Mexican Foreign Minister Marcelo Ebrard confirmed that his government has offered to send about 6,000 national guard troops to Mexico’s southern border with Guatemala to help stem migration, while Vice President Mike Pence said it is still the U.S. plan to go ahead with the tariffs.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



Stocks advanced yesterday, trading near session highs in afternoon action, after a volatile morning that saw benchmarks flipping between gains and losses as investors digested a round of conflicting economic data that showed strength in the U.S. services sector but signaled a potential weakening of the labor market.


A periodic examination of the US economy done by the Fed known as the Beige Book was released yesterday and it was a bit more upbeat compared to the previous report. The U.S. economy expanded at “a modest pace overall” from April to mid-May, but growth was partly held in check by labor shortages and worries over tariffs on China, the Federal Reserve said.  The Fed also left the door open to cut interest rates later in the year.


The service side of the U.S. economy that employs the vast majority of Americans grew faster in May and executives said they were “mostly optimistic” despite worries about trade tariffs and a shortage of skilled workers.  An index of service-oriented companies such as banks, restaurants and computer developers rose to 56.9% last month from a two-and-a-half-year low of 55.5% in April.


The price of Crude Oil has officially entered a bear market, falling 22% since reaching a high in April.  A combination of rising U.S. inventories, trade war concerns and economic fears are trumping the supply-side factors.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones



The President may finally get the rate cut he has been demanding as top Fed officials began warning this week that the global trade war may force them to respond. Chair Jerome Powell made a subtle move in that direction on Tuesday, dropping his standard reference to the Fed being "patient," and said it is prepared to "act as appropriate to sustain the expansion" amid intensifying trade tensions. (SA)

 

It’s not just Apple with China-related woes… Samsung Electronics is cutting production and laying off workers at its only remaining smartphone plant in China as it continues to shift production to lower-cost Asia locations. The world's biggest smartphone maker has only about 1% market share in the country, down from about 20% in 2013. The intervening years have seen a bout of anti-South Korean sentiment following a diplomatic spat, as well as a shift to local champions like Huawei at a time of deteriorating Sino-U.S. relations. (WSJ)

 

The labor market unexpectedly ground to a near halt in May, with the latest data showing the private sector adding the least number of jobs in over nine years.  Non-farm private employers added just 27,000 jobs last month, according to a report from payroll processor ADP. The figure, which followed a strong April, badly missed expectations for a gain of 185,000 and marks the weakest monthly gain since March 2010. (FT)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



The House Judiciary Committee unveiled a sweeping "top-to-bottom" review of unnamed tech companies late Monday as reports surfaced of a dual effort from the DOJ and the FTC to tackle the perceived dominance and potential abuses of Big Tech. Shares yesterday plummeted in response: Facebook -7.5%, Alphabet -6.1%, Amazon -4.6% and Apple was down -1%, erasing more than $133bn in market cap combined. "The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today," said David Cicilline, who chairs the Antitrust Subcommittee, adding that "market power in digital markets presents a whole new set of dangers." (SA)

 

Mexican officials have arrived for talks in Washington to find a way to avoid crippling bilateral trade tariffs triggered by the President;s demands to curb illegal migration. Marcelo Ebrard, foreign minister, said the task of “convincing, conversing, persuading” lay ahead as he prepared to meet secretary of state Mike Pompeo tomorrow. (FT)

 

James Bullard, head of the St Louis Fed and a voting member of the committee that sets interest rates in the US, said a drop in the cost of borrowing might be “warranted soon”, marking the first time a Federal Reserve official has explicitly said a rate cut may be needed this year.  Today’s opening remarks by Chair Jerome Powell at a policy conference in Chicago be very closely watched for any pushback against the rising consensus. (Bloomberg)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



Treasury yields added to their steep decline from May, with the benchmark 10-year treasury note falling below the 2.10 per cent mark for the first time since September 2017 as tariff threats against Mexico further rattled investors who are already on edge over renewed US-Chinese trade tensions. Growing fears that Washington’s disputes with its biggest trading partners will hobble global economic growth have intensified expectations that the Federal Reserve will cut interest rates sharply this year.  Markets are now pricing in greater than an 80% chance of at least one rate cute this year.  (FT)


Private Equity firm Blackstone is buying a network of U.S. industrial warehouses from Singapore-based GLP for $18.7B, in the largest private real-estate transaction ever. It's a big bet on the continued explosion of e-commerce and delivery as global investors spend billions of dollars to acquire logistics assets. Blackstone outbid real-estate company Prologis for the 179M-square-foot portfolio, nearly doubling the size of its U.S. industrial footprint. (SA)


Trust-busting is back -- Amazon could face heightened antitrust scrutiny under a new agreement between the government's twin antitrust agencies that puts it under closer watch by the Federal Trade Commission, this according to The Washington Post . The move would divvy up competition oversight of two of the country's top tech companies, with the U.S. Justice Department having more jurisdiction over Google and paving the way for an antitrust investigation of the search-and-advertising giant.  (SA)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



U.S. stocks were slightly higher yesterday, wavering between gains and losses as investors considered the latest hurdles to a U.S.-China trade deal.

 

Uber reported earnings yesterday for the first time as a public company.  The company lost $1 Billion on $3 Billion in revenue.  Investors remain skeptical about Uber’s path to profitability.

 

Pending home sales fell a seasonally adjusted 1.5% in April and were 2% lower than a year ago, according to the National Association of Realtors.  The National Association of Realtors index, which tracks home-contract signings, has been volatile, but the trend is solidly downward. April marked the 16th-straight month of annual declines.

Frontier Communications, which provides phone, internet and cable TV service in Portland’s suburbs and some rural parts of Oregon, said Wednesday it has sold its Northwest operations for $1.4 billion.  The buyers are two investment firms, WaveDivision Capital and Searchlight Capital Partners.  The deal covers 350,000 residential and business customers in Oregon, Washington, Idaho and Montana.

According to Jeff Eager and the Bend Entrepreneur Report, new business registrations in Bend for the first 4 months of 2019 outpaced the same period in 2018.  There have been 1,299 new businesses formed in Bend in the first 4 months of the year.



Stocks fell again yesterday as bond yields declined again, triggering concerns about the economic outlook. Increasing trade tensions in the China-U.S. trade fight also weighed on markets.

Shares of Johnson & Johnson fell as much as 6.2%, the biggest drop in five months, as a trial implicating the drug maker in the opioid crisis grinds on for a second day in Oklahoma.  While Teva Pharmaceutical Industries reached a settlement with the state for $85 million on Sunday and Purdue Pharma LP settled for $270 million in March, Johnson & Johnson has so far committed to fighting it out in court.

 

The Pentagon presented a report to Congress on rare earth minerals to reduce our reliance on China.  The pentagon continues to work closely with the President and Congress to mitigate U.S. reliance on China for rare earth minerals. The move came after China threatened to use its dominance in rare earth minerals as a countermeasure in the trade war with the Chinese explicitly warning the U.S. that China would cut off rare earth supply, saying “don’t say we didn’t warn you,” a phrase it only used twice in history, both of which involved full-on wars.

 

E-commerce giant Alibaba is considering raising $20 billion through a second listing in Hong Kong.  The news came five years after Alibaba raised a record-breaking $25 billion through an IPO listing on the New York Stock Exchange in 2014 as Hong Kong refused to approve its filing due to rules around companies dual class structure.



Stocks fell yesterday as President Donald Trump’s latest remarks on trade weighed down market sentiment.  Trump said Monday the U.S. was “not ready” to make a deal with China.
 
National home prices rose 3.7% annually in March, down from 3.9% in February, according to the S&P CoreLogic Case-Shiller home price index.  Prices had been seeing double-digit annual gains, but those are gone. The largest annual gain was 8.2% in Las Vegas; one year ago, Seattle had a 13% gain but has dropped dramatically to just 1.6%. The 20-City Composite dropped from 6.7% to 2.7% annual gains over the last year.
 
Consumer confidence surged in May to a six-month high, spurred by a strong labor market. Higher gas prices and a flareup in trade tensions with China appeared to do little to dampen the optimism of Americans.  The consumer confidence index climbed to 134.1 from 129.2 in April.


Data released Tuesday by The Conference Board showed 47.2% of consumers polled in May thought jobs are “plentiful.” That’s up from 46.5% in April and the most confident consumers have been on the labor market since January 2001.


Shares of Beyond Meat surged more than 8% after the alternative meat brand said it has signed a deal to start producing its plant-based meat substitutes in Europe next year. The stock has skyrocketed more than 240% since its initial public offering in early May.
 
With Northwest Quadrant Wealth Management, I'm Tyler Simones



US Stocks rose on Friday but were lower on the week last week the fifth week in a row US stocks declined, which is the longest losing streak since 2011.  But in case anyone is worried about that fact they shouldn't be because US Stocks are still up 13% in 2019 and are only 4% off all-time-highs.
 
New-home sales were at a 673,000 seasonally adjusted annual rate in April. That was 6.9% lower than March. The median sales price in April, $342,200, was 8% higher than a year ago. At the current pace of sales, it would take 5.9 months to exhaust available supply, about matching the 6 months that’s traditionally been considered the marker of an evenly balanced market.
 
Orders for durable or long-lasting goods tumbled in April because of falling demand for Boeing jets and new cars and trucks, but even more worrisome, business investment continued to weaken in the face of a tense trade standoff with China and a slower U.S. economy.  Orders for durable goods — products meant to last at least three years — dropped 2.1% in April.

 

Fiat Chrysler Automobiles has proposed a merger with French rival Renault SA, a move that if completed would create the third-largest auto maker by production and shake the global automotive industry.  If Renault and Fiat Chrysler merge, it would create a car company with a combined value of about $37 billion and annual vehicle production of almost nine million passenger cars and light trucks.  Shares of both companies rose over 12% on the news.

 

With Northwest Quadrant Wealth Management, I'm Tyler Simones



Looking to jump-start its Prime one-day shipping program, Amazon is offering steep warehouse discounts of up to 75% to get sellers onboard. Independent merchants are particularly important to the goal, since they make up about 58% of Amazon's total online sales. One-day shipping will encourage consumers to spend more online, which still accounts for just 12% of U.S. retail spending, and will upend an industry already working overtime for deliveries. (SA)

A disease ravaging hog farms 11,000km away in China is affecting US restaurant chains and meat producers, leaving customers forking over higher prices for their pork.


Hormel Foods, which produces Spam, said on Thursday that African swine fever in China drove up pork costs, weighing on its quarterly earnings and contributing to a cut in its full-year earnings and sales outlook.  African swine fever is a highly contagious and deadly viral disease that affects both domestic and wild pigs. On its earnings call, Hormel pointed to industry information that showed China, the world’s largest pork producer and consumer, has lost 150m to 200m hogs, equivalent to more than the entire pork production in the US.  (FT)

 

The owner of the Bend Bulletin plans to dissolve the company and sell all seven newspapers in its Pacific Northwest chain, according to a liquidation plan filed in federal bankruptcy court.  A total liquidation like this is atypical under a Chapter 11 proceeding because Chapter 11 is based on the assumption a business can survive if new terms are negotiated with creditors.  The corporation owes roughly $30 million in debt, much of it accumulated during an ill-timed investment in a new headquarters at the outset of the digital media revolution. 


Oil had its worst day of the year yesterday, dropping almost 6% as the commodity got caught in the stampede out of risky assets. Tensions in the Middle East had helped to shelter crude from some of the worst fears on global trade as investors balanced demand concerns against a possible supply disruption. Clearly that balance broke yesterday amid the renewed global growth concerns. While oil is 1.2% higher at $58.62 a barrel this morning, the damage is clear.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



EU elections, Brexit drama and the usual U.S.-China tensions are sending stocks lower this morning.  A flurry of U.S economic reports are also on tap, including the latest weekly jobless claims data, a flash reading of manufacturing and services PMI figures for May, as well as new home sales for April. In corporate news, Medtronic, Best Buy, Hewlett Packard, Intuit are all set to report their earnings for the first quarter. (SA)


Amazon shareholders have rejected a proposal to stop selling the company’s controversial facial recognition technology to governments.  The proposal, which was voted down at the tech giant’s annual meeting, had called for Amazon to stop selling Rekognition to governments until after a review of whether it posed a threat to certain civil and human rights.  A second proposal that called for the company to commission an independent report into the threats posed by the technology was also rejected.  (FT)

 

Domestic data continues to be good:  The number of Americans filing applications for unemployment benefits unexpectedly fell last week, pointing to sustained labor market strength even as the economy slows.  Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 211,000 for the week ended May 18, the Labor Department said this morning. Data for the prior week was unrevised. (CNBC)

 

Panasonic has become the latest electronics company to scale back ties with Huawei in the face of US export restrictions, a day after mobile phone carriers across the world suspended their plans to launch Huawei phones, and UK chip designer Arm said it would stop licensing essential technology to the Chinese group. Meanwhile, US companies are stepping up their response to the Administration’s China ultimatum. (Bloomberg)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



Target continued to gain the upper hand in the battle for US retail dollars, with its digital investment and aggressive push to offer same-day delivery powering sales for its latest quarter.  The company, whose cheap-chic offerings and stylish celebrity partnerships have garnered a loyal following among middle-class shoppers, saw its shares jumped more than 8 per cent in pre-market trading on Wednesday after it delivered sales and earnings growth that sailed past analysts’ lofty expectations.  Like-for-like sales, a closely followed industry metric, rose 4.8 per cent in the three months to May 4 as shoppers flocked to its stores. The rise marks the eighth straight quarter of same-store sales growth for Target and topped expectations for a 4.1 per cent rise. (FT)

 

Saudi Aramco has announced a deal with Sempra Energy for a 25 per cent stake in the first phase of its Port Arthur liquified natural gas export project in Texas, as the state energy giant seeks to grow its business beyond oil.  The transaction with the San Diego company would also include a 20 year supply agreement from the project, which is still under development, for 5m tonnes per year of the supercooled fuel.  Saudi Aramco is already planning billions of dollars worth of investments in its Port Arthur refinery, the largest in the US. (Alphaville)

 

The calls for 737 MAX compensation are growing as China's three biggest airlines - Air China, China Southern, and China Eastern - requested payments from Boeing for losses incurred by the grounding and delayed deliveries of 737 MAX. China was the first country to ground the jets globally after a crash in Ethiopia killed 157 people in March, in the second such incident for Boeing's newest aircraft. The compensation requests come as the FAA hosts global regulators in Dallas tomorrow to determine when the grounded 737 Max aircraft will return to the air. (SA)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



Home Depot reported a rise in earnings that beat analysts’ expectations in the first quarter -- The Atlanta-based company said net earnings rose to $2.5bn in the first quarter of fiscal 2019, beating expectations and up from $2.4bn the previous year.  The company reported revenue of $26.4bn, a 5.7 per cent increase from the first quarter of 2018.  (WSJ)
 
The sell-off in chipmakers is going from bad to worse.  Semiconductor stocks are facing their biggest monthly drop since the financial crisis as the Trump administration’s crackdown on Chinese technology group Huawei and the continued trade spat between Washington and Beijing heap pressure on the sector.  All 30 members of the Philadelphia semiconductor index, which tracks companies that design, distribute and manufacture semiconductors, were in the red on Monday, dragging the index 3.1 per cent lower this morning and leaving it down by 13 per cent so far this month. That puts the gauge, which trades under the ticker Sox, on track for its worst month since November 2008, when it shed 17.2 per cent.  (FT)
 
Chinese officials continue to warn that the country will retaliate to the U.S. blacklisting of Huawei Technologies Co., while also refusing to be drawn on what form that response might take.  The rhetoric has ramped up, with Chinese state TV playing a steady procession of anti-American movies from the Korean War era, and Tencent was prevented from broadcasting the season finale of Game of Thrones.  (WSJ) 
  
With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.
 



It's a rough start to the week for chipmakers as key semiconductor manufacturers cut off supplies to Huawei after the Trump administration added the Chinese company to a trade blacklist last week. Qualcomm, Intel, and Micron are all lower on the news. Google started the trade suspensions over the weekend, leaving Huawei with access only to the open-source version of Android. Nokia and Erikson shares are both higher on the news.  (SA)

 

Japan’s economy unexpectedly grew in the first quarter of the year.  The 2.1% growth rate defied analyst forecasts for a small contraction in gross domestic product The surprise rise in GDP piles pressure on prime minister Shinzo Abe to introduce a delayed change to the country’s consumption tax rate from the current rate of 8 per cent to 10 per cent. (FT)

 

Following talks with the FCC, T-Mobile and Sprint are planning to announce commitments to the U.S. government within days that include asset sales and rural-service guarantees to help secure regulatory approval for their $26.5B merger, Bloomberg reports. Among them: The sale of one of their prepaid brands, a three-year buildout of their 5G network and a reiterated pledge not to raise prices while the network is being constructed. The deal has stoked concerns of reduced competition in the wireless industry because the number of major players would fall from four to three. (Bloomberg)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.


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