The entertainment giant is expected to show off its Disney+ streaming service during its investors day on Thursday. It's Disney's answer to the challenge posed by Netflix(NFLX) as well as tech giants like Amazon(AMZN) and Google(GOOGL).
Buying Fox(FOX) will help Disney meet the threat. The deal strengthened what was already the entertainment industry's most enviable array of brands, with Fox's National Geographic among the announced Disney+ elements.
If properties with avid fan bases serve as the linchpin of any subscription-driven service, the industry consensus is that nobody can match the arsenal that Disney possesses.
Yet even that doesn't assure success with such a startup venture.
2. Uber IPO: Uber is expected to file paperwork as soon as Thursday in what is likely to be one of the biggest public offerings ever for a technology company.
The IPO caps off Uber's rapid and very public effort to overhaul its internal culture and move past a long list of scandals that upended the company.
Uber is still facing problems: The company lost $1.8 billion in 2018, an unprecedented sum for a company about to go public.
Lyft(LYFT), its chief US rival, gained market share amid Uber's stumbles. But Lyft shares dropped almost 11% on Wednesday following media reports about the Uber IPO and are now trading more than 16% below their IPO price.
3. Brexit delayed (again): The European Union has granted Britain a six-month delay to Brexit with an option to leave earlier if the UK parliament can agree an exit deal.
The British pound was flat on Thursday, as the news of the delay did not come as a major surprise.
Businesses and investors will be relieved that the United Kingdom has, for now, avoided crashing out of the European Union without a deal. But the delay will prolong the uncertainty that has already damaged the UK economy.
"The situation remains uncomfortable and potentially unstable," said Holger Schmieding, chief economist at Berenberg bank.
Wall Street on Wednesday largely shrugged off minutes from last month's Federal Reserve meeting, which showed the US central bank acknowledged the threat of a global growth slowdown and didn't anticipate an interest rate hike this year. The Dow Jones industrial average closed flat. The S&P 500 added 0.4% and the Nasdaq gained 0.7%.
5. Earnings and economics: Rite Aid(RAD) will release earnings before the open.
The International Energy Agency said Thursday that OPEC crude oil production dropped in March to 30.1 million barrels a day, roughly 3.3 million barrels a day below the cartel's sustainable capacity. Lower supply, which results from deliberate production cuts and sanctions, has helped pushed US oil prices up 50% to $64 per barrel from $42.53 on Christmas Eve.
6. Coming this week: Thursday — Rite Aid(RAD) earnings; Disney(DIS) investor day; India election polling begins Friday — JPMorgan Chase(JPM) and Wells Fargo(WFC) earnings; China export data
SYDNEY (Reuters) - Asian stocks stepped back from near eight-month highs on Thursday and the dollar eased as cautious European and U.S. central banks reinforced investors' worries about the slowing global economy and trade protectionism.
Spreadbetters pointed to a subdued start for Europe, with Eurostoxx 50 futures flat while futures for Germany's and London's opened open lower.
Risky assets have been volatile so far this year while bonds have rallied on fears of a recession in the United States and the possibility of a sharper slowdown in other major economies including the euro zone.
Also weighing on sentiment, U.S. President Donald Trump has escalated trade tensions by threatening new tariffs on goods from the European Union, even as the Sino-U.S. trade dispute remains unresolved.
All those risks pulled down Asian equities on Thursday.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.4 percent after four straight days of gains took it to the highest since last August. Japan's reversed early losses to end 0.1 percent higher.
Losses in Asia were led by Chinese shares, with the blue-chip CSI300 index off 1.7 percent while Hong Kong's stumbled 0.7 percent.
Australian shares also lost ground, pressured by political uncertainty after the prime minister called a national election for May 18.
"Traders continue to operate in a ‘wait and watch’ mode as they look for the next opportunity in a cautious market," said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia. "Two big event risks are now behind us with the ECB and Fed."
But, Twidale said, investors were still on the lookout for a trigger that would push markets out of their familiar trading ranges.
On Wednesday, the European Central Bank (ECB) kept its loose policy stance and warned that threats to global economic growth remained. The ECB has already pushed back its first post-crisis interest rate hike, and President Mario Draghi raised the prospect of more support for the struggling euro zone economy if its slowdown persisted.
"If, as we expect, growth in the euro-zone continues to disappoint over the coming months, we think that ECB policymakers will adopt an even more accommodative stance," analysts at Capital Economics wrote in a note.
While easy monetary conditions are generally a boon for equities as investors go hunting for yield, share price performance could take a hit if corporate earnings suffer in a slowing economy.
'GREAT RETREAT'
Separately, data showed U.S. consumer prices increased by the most in 14 months in March but underlying inflation remained benign against a backdrop of slowing global economic growth.
Minutes from a March 19-20 meeting of Federal Reserve policymakers showed they agreed to be patient about any changes to interest rate policy as they saw the U.S. economy weathering a global slowdown without a recession in the next few years.
In currencies, the British pound held on to gains after European leaders agreed to extend the deadline for UK to leave the union to the end of October, averting a potential crash out of the bloc on Friday with no divorce deal but threatening more months of uncertainty.
Sterling has stayed in a triangle holding pattern between $1.2945 and $1.3380 during the past month or so. It was last at $1.3080.
The fell for a fourth straight day to 96.933 against a basket of major currencies. The euro was barely changed at $1.1275 while the Japanese yen was a shade weaker at 111.11 per dollar after three days of gains.
In commodities, futures eased 27 cents to $71.46 a barrel. dipped 30 cents to $64.31.
Gold hovered near a two-week top on Thursday at $1,306.97 an ounce.
Wednesday morning was generally quiet on Wall Street, with many market participants waiting to see what the minutes from the latest meeting of the Federal Open Market Committee will say about the likely direction of U.S. interest rates for the rest of 2019. As of just after 11 a.m. EDT, the Dow Jones Industrial Average(DJINDICES:^DJI) was down 15 points to 26,135. However, the S&P 500(SNPINDEX:^GSPC) was higher by 5 points to 2,883, and the Nasdaq Composite(NASDAQINDEX:^IXIC) picked up 39 points to 7,948.
Earnings season is just about to begin, and Delta Air Lines (NYSE:DAL) got an early start by announcing its latest results. Elsewhere, Tesla (NASDAQ:TSLA) investors turned their attention to Washington, with the hope that lawmakers will extend additional valuable tax credits to buyers of electric vehicles above and beyond what they've already done in past years.
Delta's ready for takeoff
Delta Air Lines saw its stock rise about half a percent following the airline's release of first-quarter financial results. The company said that its earnings per share jumped 28% from year-earlier levels on an adjusted basis, with total adjusted revenue rising at a healthy 7.5% clip.
Image source: Delta Air Lines.
Delta cited several contributing factors to its positive performance. Nonfuel unit expenses were down for the third quarter in a row, showing the airline's commitment to cost containment. Delta's efforts to take advantage of value-added opportunities showed up clearly in its top-line figures, where 55% of revenue came from non-ticket sources or from premium offerings. Corporate revenue in the U.S. market was especially strong, and Delta also said that its extended card agreement with American Express added about a percentage point to its 2.4% rise in unit revenue.
Delta sees clear skies ahead. "With the momentum in our business and our American Express contract renewal," said CEO Ed Bastian, "we have increased confidence in achieving our full-year plan." That includes positive guidance for the second quarter, including 6% to 8% sales growth, 1.5% to 3.5% gains in revenue per available seat mile, and earnings of $2.05 to $2.35 per share. Many investors continue to see Delta as the leader of the airline pack, and today's results provide evidence of the company's strength.
A less taxing Tesla?
Shares of Tesla rose 1% as investors tried to assess the potential for what could be a nice boost to its electric vehicle business. Reports surfaced this morning that lawmakers on Capitol Hill will propose new legislation that would expand the electric vehicle tax credit that Tesla buyers have been able to use to offset the cost of their vehicles.
Currently, the electric vehicle tax credit pays $7,500 to purchasers until a manufacturer sells 200,000 vehicles. At that point, the credit starts to phase out over a 15-month period. Tesla has already seen some of that impact, as its credit fell to $3,750 at the beginning of the year. By the end of 2019, the current law would eliminate the credit entirely for Tesla buyers.
The new legislation seeks to offer additional tax credits of $7,000 for up to 400,000 more vehicles per manufacturer. The current $7,500 figure would still remain in place for manufacturers that haven't yet hit the initial 200,000 limit, and the new $7,000 credit would phase out over nine months instead of 15. That makes the bill attractive not just for Tesla but for just about every automaker serving the U.S. market, most of which already have electric vehicle development plans in place.
Investors weren't happy with Tesla's most recent news on deliveries, and the fact that tax credits have been on the decline has weighed on even the most optimistic of Tesla's fans. Adding new credits would breathe new life into Tesla's value proposition for buyers and potentially reinvigorate interest in electric vehicles across the auto industry.
A bipartisan group of lawmakers plans to introduce a bill to expand federal tax credits for buyers of electric vehicles, in what could be a boon for the growing EV market.
The existing $7,500 tax credit for buyers of EVs phases out over 15 months once an automaker sells 200,000 electric cars. The tax credit for Tesla buyers was halved to $3,750 on Jan. 1; General Motor's tax credit was likewise cut in half starting April 1.
The bill, dubbed the Driving America Forward Act, would grant each automaker a $7,000 tax credit for an additional 400,000 vehicles after it exhausts the first 200,000 vehicles eligible for tax credits. It would shorten the phase-out schedule to nine months. The credits are paid directly to consumers, who can write them off on their tax returns.
"At a time when climate change is having a real effect on Michigan, today's legislation is something we can do now to reduce emissions and combat carbon pollution," Sen. Debbie Stabenow, D-Mich., one of the sponsors of the legislation, said in a statement. "Our bill will help create American jobs and cement Michigan's status as an advanced manufacturing hub."
Tesla shares rose 1.6 percent in morning trading Wednesday on the news.
Sens. Gary Peters, D-Mich., Lamar Alexander, R-Tenn., and Susan Collins, R-Maine, and Rep. Dan Kildee, D-Mich., signed on to the bill.
Electric vehicles comprise a tiny, but growing, share of the U.S. vehicle market. Support for low- and no-emissions vehicles has grown both in the U.S. and in other major automotive markets, such as China. Though Tesla has been a market leader in EVs, several automakers are planning to release fully electric cars, trucks and SUVs over the next few years.
"This would be a major shot in the arm for Tesla as this could be a much needed potential catalyst for demand in the U.S." said Wedbush analyst Dan Ives. "Ultimately, while there are still hurdles to get this legislation passed, it would result in an additional 40,000 Tesla vehicles sold domestically in 2019 based on our estimates. After a tornado of bad news the last few months this would finally be a positive data point for Musk & Co."
— CNBC's Phil LeBeau and Meghan Reeder contributed to this article. Reuters also contributed to this report.
An ECB meeting, Fed minutes, U.S. inflation data and an emergency EU summit on Brexit are all lined up for investors (more details on all of that below). But this may all be a sideshow for Friday’s earnings and to be sure, after another IMF global growth downgrade and fresh trade tensions between the U.S. and Europe have dinged sentiment.
Disappointed that the S&P 500 on Tuesday snapped its longest string of victories since October of 2017, as Apple also narrowly missed a 10-day winning run? South African-based money manager Vestact notes that the iPhone maker has only notched four 10-day win streaks in its history as a public company, in an emailed note to clients.
“Think about that. Apple, the first listed company to be worth $1 trillion, has only had four 10-day winning streaks. Despite creating vast shareholder wealth over time, it has not all been happy days,” says Vestact.
Elsewhere in the technology sector, investors will note the Nasdaq Composite Index has been coming about 2.5% of last August’s record close of 8,109.69 for the last several sessions — a veritably stone’s throw away.
Our call of the day, from Daily Wealth blogger and Stansberry Research analyst, Steve Sjuggerud, says investors may be losing their nerve over tech stocks at precisely the wrong moment, and stand to miss out on more big gains.
He points to the most recent Commitment of Traders report, from the U.S. Commodity Futures Trading Commission (CFTC), which shows positioning of big institutional traders and small speculators and can sometimes indicate future direction of equities and other assets.
“Futures traders recently made record bets on lower prices for tech stocks. The last time we saw a similar extreme was last spring. The index spent the next several months marching higher, rising by double-digit percentage points,” he said, in a recent blog post.
Before last year, you’d have to go back to 2010 for a reading that negative, and from that point, tech stocks soared hundreds of percent, noted Sjuggerud.
“As the bull market continues, traders will pile back into U.S. stocks. That’ll cause a frenzy of higher prices. It’s a virtuous cycle that will fuel the Melt Up. causing prices to rise higher than anyone could imagine,” he said. “And when it does, tech stocks will be big winners.”
If you’re not familiar with the term ‘melt up,’ it basically refers to when an asset that has been steadily moving higher starts to see extremely fast movements up, driven by investor sentiment as they pile in amid fear of missing out (FOMO). It happened in 1999 as an example, when investors rode the dot-com boom higher, until its eventual collapse. Here’s one great explanation.
“When the crowd bets in one direction, the opposite is likely to occur,” maintains Sjuggerud.
Europe stocks
SXXP, +0.21%moved higher. The ECB left key rates unchanged and President Mario Draghi said at a press conference that risks for the region remain to the downside. Eastern. And a two-day emergency summit over Brexit kicks off in Brussels where leaders will debate a one-year delay to avoid the U.K. crashing out without a deal.
The IMF’s cut to its global growth forecast on Tuesday — the third time in six months — is still drawing chatter. Our colorful chart of the day, from the IMF (h/t The Daily Shot) helps put it all in perspective.
Indivior
INDV, -71.31%
is down 80% in London after the U.S. accuses the U.K. pharmaceutical group of a multibillion-dollar fraud to boost sales of its opioid-addiction treatment.
Joining the stampede of startup techs to list this year, PagerDuty hiked the price range of its IPO that’s expected this week (see five things to know about the DevOps group). And Uber is reportedly looking to offer around $10 billion worth of shares for its IPO, valued at up to $100 billion.
JPMorgan Chase & Co.
JPM, -0.26%
CEO James Dimon is among several big bank CEOs due to appear in front of the House Financial Services Committee on Wednesday, to discuss the financial industry, 10 years after the crisis. The potential for fireworks could be huge, say some.
The quote
“Please dismiss everybody. I believe you’re supposed to take the gravel and bang it.” — That was Treasury Secretary Steven Mnuchin trying to get out of an appearance in front that same committee on Tuesday.
“Please do not instruct me as to how I am to conduct this committee.” — That was top Democrat, California Rep. Maxine Waters, not having any of it. It’s gavel, by the way, said the internet, which was eating up that fiery exchange.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.
Lyft shares dropped as much as 7.3% on Wednesday after it was reported its rival, Uber, was seeking a valuation of between $90 billion and $100 billion when it officially files to go public.
Uber plans to sell around $10 billion worth of stock when it officially files to go public on Thursday, Reuters reported on Tuesday, citing people familiar with the matter.
Uber's new projected valuation, according to Reuters, is below that of prior $120 billion estimates. In contrast, Lyft's market cap on Tuesday was just under $20 billion, having raised about $2.69 billion in its IPO last month.
Lyft has traded in a volatile fashion since its debut, which isn't uncommon for newly minted public companies.
The stock priced at $72 a share the evening before its IPO in late March, then officially opened at $87.24 a share, then dropped below its IPO price in its first full day of trading. It's now down about 27% from its opening price, and down 11% from where the stock initially priced.
Lyft analysts are concerned about the company's uncertain path to profitability and a highly competitive ride-hailing space. Regulatory uncertainties may also pose a challenge, some analysts say, while others say the stock is overvalued.
"While we believe the ridesharing market will continue to grow and expect LYFT to be a prime competitor, in our view, current valuations reflect an overly optimistic view of consumer behavior in the US," said Michael Ward, an analyst at Seaport Global, in a note to clients last week.
