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Apr 26, 2019

FX | Currencies The Dollar On Friday 26, 2019 | Dollar hit as weak inflation data takes shine off first-quarter GDP numbers

David Reid

Reusable - dollar bills 151216
The dollar fell against a basket of other currencies on Friday, after an overall strong U.S. first-quarter growth report was overshadowed by soft inflation data.
Gross domestic product increased at a 3.2 percent annualized rate in the quarter, the Commerce Department said in its advance GDP report, released on Friday, versus the 2.0 percent estimated by economists polled by Reuters.
The dollar, however, did not enjoy a boost from the report as traders focused on the core personal expenditures consumption price index figure, the Federal Reserve’s preferred inflation gauge, which increased at only a 1.3% rate versus 1.8% in the prior quarter.
“Overall, U.S. growth last quarter was outstanding. But the soft inflation components were enough to spur some profit-taking in the buck’s winning week,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
The dollar index, which measures the greenback against six other major currencies, was 0.23% lower at 97.98. The index, which hit a 23-month high earlier in the session, is up 0.5% for the week.
While, the forecast-beating headline numbers defied the notion that the U.S. economy is slowing as fiscal stimulus fades, the underlying numbers offered plenty of causes for concern, Paul Ashworth, chief U.S. economist at Capital Economics, said in a note.
“Taking out the over-sized boosts from net trade, inventories and highways investment, which will all be reversed in the coming quarters, growth was only around 1.0%,” Ashworth said.
“Under those circumstances, we continue to expect that overall growth will slow this year, forcing the Fed to begin cutting interest rates before year-end,” he said.
The Fed recently suspended its three-year monetary policy tightening campaign, dropping forecasts for any interest rate hikes this year.
Recent U.S. data has been robust and has reinforced the belief that the United States is on a firmer economic footing than other leading economies.
“Once the dust settles, the focus should shift back to the bullish U.S. growth theme which has been resoundingly positive for the dollar,” said Manimbo.
The euro which is hovering near its weakest level against the greenback since May 2017, amid worries about the strength of the euro zone economy, was up 0.22% at $1.1155, ahead of a national election in Spain on Sunday.
The pound rose 0.24% on Friday, but remained on pace to finish the week down about 0.5%, amid growing concern about stagnant talks around Britains exit from the European Union, or Brexit.

Source: CNBC

Bonds Yields Report on Friday 26, April 2019 | US Treasury yields fall despite stronger GDP print

Thomas Franck

U.S. government debt yields fell Friday even though the U.S. government said economic activity rose more than expected during the first few months of 2019.
The Bureau of Economic Analysis said Friday that first-quarter GDP expanded by 3.2%, the best start to a year since 2015 and well ahead of economist expectations for 2.5% growth. While the stronger-than-anticipated headline number initially spent stock futures and yields higher, both reversed course as investors analyzed dug into the report.
At around 9:53 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.502%, while the yield on the 30-year Treasury bond was also lower at 2.922%. The 2-year note yield traded at 2.28%.
The initial rosy sentiment about an uptick in net exports, for example, retreated after traders realized that the rise was due in large part thanks to a contraction in imports. While a decline in imports to the U.S. tends buoys raw GDP numbers, it can also reveal a deceleration in American spending in general as consumers curb purchases of oversees goods.
“Certainly the headline number looks quite strong ... [but] it was the second-weakest quarter for household spending in the last 5 years,” said Jon Hill, a fixed-income strategist at BMO Capital Markets. “What is driving the GDP is much more an inventory build and improvement in net exports though that’s a bit more ominous with a decrease in imports.”
“You add that to the disappointing inflation data, this keeps the Fed on pause longer and reinforces elements of Fed rate cut,” Hill added.
Meanwhile, the Federal Reserve’s preferred inflation measure dipped compared to the prior quarter. The price index for personal consumption expenditures increased 0.6% in the first quarter compared to 1.5% in the fourth quarter of 2018.
Anemic price pressure can be problematic for the Fed, as some members of the central bank hope to resume hiking its benchmark lending rate. The central bank tries to keep inflation at 2%, a level they believe represents healthy price growth in the American economy.

U.S. Markets Overview: Treasurys chart

Wall Street Closing Report on Friday 26, April 2019 | S&P 500 and Nasdaq close at record highs after strong GDP report

Fred Imbert

Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange.
Johannes Eisele | AFP | Getty Images
“The economic expansion will set new records for longevity in July and it looks like there is no stopping this economy,” said Chris Rupkey, chief financial economist at MUFG, in a note. “We had all but given up on the first quarter with the Federal government shutdown ending January 25, frigid winter weather conditions shutting down manufacturing production, and the fears of a world growth slowdown.”
“So far the fears are unfounded,” Rupkey said.
But stock gains were kept in check after companies like Exxon Mobil and Intel delivered quarterly reports that disappointed investors.
Dow member Exxon fell more than 2% after the company’s results were dragged down by poor performances in its refining and chemicals businesses. Intel, another Dow component, fell more than 10% after the company issued light revenue guidance for the year. The stock was also headed for its biggest one-day drop since 2008.
“The burden of proof is fairly high,” said Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management. “Investors’ appetite for companies that either disappoint or offer lower guidance on a go-forward basis tends to be met with a pretty sharp reaction.”
Those results overshadowed stronger-than-expected numbers from companies like Amazon and Ford Motor.
Amazon shares traded 0.7% higher after results topped expectations on Thursday and Wall Street analysts trumpeted its announced push to one-day delivery for Prime members.
Ford Motor, meanwhile, jumped 10% after issuing better-than-forecast quarterly numbers, which were driven by strong truck and SUV sales in North America.
Other companies that reported between Thursday afternoon and Friday morning include, Mattel, Starbucks and American Airlines.
The S&P 500 and Nasdaq were on pace for solid gains this week after more than 140 companies released their quarterly reports. The two indexes were up 1% and 1.7%, respectively, and hit record closing highs.
—CNBC’s Sam Meredith contributed to this report.

Source: CNBC

Energy Report on Friday 26, April 2019 | Oil prices plunge nearly 4% after Trump says he told OPEC to tame fuel costs

Tom DiChristopher

Oil prices tumbled as much as 4% on Friday, extending early losses after President Donald Trump said he told OPEC to take action to temper fuel costs.
“The gasoline prices are coming down. I called up OPEC. I said, ‘You’ve got to bring them down. You’ve got to bring them down,’ and gasoline’s coming down,” Trump told reporters en route to a National Rifle Association event in Indianapolis.
In fact, the national average for a gallon of regular gasoline is $2.883 per gallon, up from $2.877 a day ago and $2.839 a week ago, according to AAA. Wholesale U.S. gasoline prices have ticked lower in recent days, but are still up about 10% from a week ago and nearly 7% from a month ago.
Brent crude futures were down $2.72, or 3.7%, at $71.63 per barrel around 12:30 p.m. ET (1630 GMT), after hitting a one-week low at $71.31. Brent was down about half a percent for the week, threatening to fall short of a fifth weekly price gain, which would be the longest stretch in a year.
U.S. West Texas Intermediate crude futures fell $2.57, or 3.9%, to $62.64 per barrel and were down about 2% for the week. WTI had been on track for its eighth successive weekly gain, the longest weekly run since the first half of 2015.

Earlier this week, the administration said it will not extend waivers that allow several countries to continue buying Iranian crude despite U.S. sanctions on the Islamic Republic. Oil prices surged more than 3% in the two days following the announcement.
The administration said it has secured commitments from Saudi Arabia, UAE and other allies to fill any gap left by the anticipated drop in Iranian supplies.
However, the influential Saudi Energy Minister Khalid al-Falih said earlier this week that there is no need to immediately start pumping more oil, and the kingdom will hike output only after customers ask for more supplies.
Prices fell earlier on expectations that some OPEC members will raise output to counter shrinking exports from Iran.
“The end of the U.S. waivers on Iran exports will be offset by higher core-OPEC and Russia and as a result we do not expect further price upside, even if volatility is likely to increase in coming months,” U.S. bank Goldman Sachs said.
Despite U.S. efforts to drive Iranian oil exports down to zero, many analysts expect some oil to still seep out of the country.
Energy consultancy FGE said “400,000 to 500,000 barrels per day of crude and condensate will continue to be exported,” down from around 1 million bpd currently.
Jefferies bank saw 500,000 to 600,000 bpd, adding “at least China and potentially India and Turkey will continue to import Iranian crude.”
China, the world’s biggest buyer of Iranian oil, has formally complained to the United States.
Meanwhile OPEC member Iraq said it could raise its output. Also providing a cap on prices, U.S. crude inventories last week rose to their highest since October 2017.
Oil markets have tightened amid an OPEC output cut deal, sanctions on Venezuela and Iran and unsteady production in Libya.
The drop followed Brent’s rise above $75 per barrel for the first time this year on Thursday after Germany, Poland and Slovakia suspended imports of Russian oil via a major pipeline, citing poor quality.
The move cut parts of Europe off from a major supply route. Russia has said it planned to start supplying clean oil via a pipeline on April 29.
— Reuters contributed to this story.+

Source: CNBC

Futures & Commodities Report on Friday April 26, 2016 | Gold eyes weekly gain as dollar slips after US GDP data

Matt Clinch

Reusable Gold bullion american eagle
Gold will continue to shine amid a weak dollar, says author and gold pro Jim Rickards.
Simon Dawson | Bloomberg | Getty Images
Gold rose on Friday as the dollar fell after data suggested an acceleration of U.S. growth was driven by temporary factors that are likely to reverse in the coming quarters.
Spot gold was up 0.4 percent at $1,282.37 per ounce, after hitting its highest since April 16 at $1,283.59.
The metal, which reached its lowest since late December on Tuesday at $1,265.90, is up 0.5 percent so far this week, and is poised for its first weekly gain since March 22.
U.S. gold futures edged up 0.3 percent to $1,282.30.
“We have seen a pretty strong recovery after a dip following the GDP data. The dollar index is turning weaker (helping gold),” said Jim Wyckoff, senior analyst with Kitco metals.
“Also, there seems to be a bit of short covering as we are heading in to the weekend and some technical buying.”
The dollar fell to a session low against a basket of currencies, after data showed that while U.S. growth accelerated in the first quarter, the jump was driven by trade and the largest accumulation of unsold goods since 2015, temporary factors that are likely to reverse in the coming quarters.
Even strong data out of the U.S. was unlikely to change the Federal Reserve’s monetary strategy, analysts said.
According to a Reuters poll, major central banks are done tightening policy as the global growth outlook has softened across developed and emerging economies, with scant prospects for a surge in inflation.
The view is supported by a recent slashing of its growth outlook by the Bank of Canada and a disclosure from the Bank of Japan that it will keep interest rates super-low for at least one more year.
“Despite a signicant drop in long-term real rates, gold prices have remained at year-to-date as recession fears have receded since late last year,” Goldman Sachs said in a note.
Central bank gold purchases have been running strong this year, which could support prices, the bank said.
While gold has fallen nearly 5 percent from a peak in February, bullion’s recovery from this week’s four-month low is painting a neutral picture in technical charts.
Gold looks neutral in a $1,274-$1,284 range, and an escape could suggest a direction, said Reuters technical analyst Wang Tao.
Among other precious metals, silver was up 0.2 percent at $15.01 per ounce.
Platinum rose 0.7 percent to $888.46, while palladium was up 1 percent at $1,427.71 per ounce.

Source: CNBC

News | Politics | Jeremy Corbyn snubs state banquet for Donald Trump as he attacks Theresa May for 'rolling out the red carpet'

2-3 minutes

Jeremy Corbyn has turned down an invitation to attend a State banquet for Donald Trump when he visits Britain in June, Labour has confirmed.
The Labour leader on Friday refused to attend a dinner at Buckingham Palace with the US President, due to be held during his long-awaited State visit to Britain.
Mr Trump will arrive in the UK on June 3-5 to coincide with the 75th anniversary of D-Day, which will culminate in a commemoration event in Portsmouth.
The US President will also meet the Queen during his visit, and intends to “reaffirm the steadfast and special relationship” between the two countries.
However, Mr Corbyn has now confirmed he has declined an invitation to attend the State banquet, which is normally attended by the leaders of the main political parties and other British dignitaries.
In a statement, he said: “Theresa May should not be rolling out the red carpet for a State visit to honour a President who rips up vital international treaties, backs climate change denial and uses racist and misogynist rhetoric.
“Maintaining an important relationship with the United States does not require the pomp and ceremony of a State visit. It is disappointing that the Prime Minister has again opted to kowtow to this US administration.
“I would welcome a meeting with President Trump to discuss all matters of interest.”
It came just hours after John Bercow, the Speaker of the House of Commons, was accused of disrespecting the Queen when he also rejected the invitation.
Mr Bercow sparked outcry in 2017 when he told MPs that he was “strongly opposed” to a State address by Mr Trump in Parliament, citing “opposition to racism and sexism” and describing an address as “an earned honour”, not an automatic right.
He is now under mounting pressure from ministers to reconsider, amid fears that another snub could seriously damage  Britain's special relationship with the US.
Liberal Democrat leader Sir Vince Cable has also rejected the invitation.

Source: The Telegraph

Europe Markets Closing Report on Friday 26, April 2019 | Europe markets edge higher amid earnings; Deutsche Bank cuts revenue target

Chloe Taylor,Sam Meredith

European stocks were slightly higher on Friday, as market participants reacted to another flurry of corporate earnings.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE7428.19-5.94-0.08860917327
The pan-European Stoxx 600 closed provisionally up 0.19% during afternoon deals, with most sectors and major bourses in positive territory.
Europe’s media stocks led the gains, up 1.65% amid earnings news. Luxembourg-based satellite operator SES was the top performer, surging to the top of the European benchmark after the company said it had maintained its full-year outlook. Shares of the firm jumped 7.75%.
Meanwhile, oil and gas stocks slipped 1.58%, as U.S. oil prices fell and the market retreated from its strongest bull-run in at least a year. U.S. West Texas Intermediate (WTI) crude oil was trading at less than $63 on Friday afternoon, down more than 3%. International benchmark Brent crude was also down more than 3%.
Looking at individual stocks, Deutsche Bank posted stronger-than-anticipated first-quarter net profit Friday morning. Germany’s flagship lender reported 201 million euros ($223 million) in net income for the first three months of the year. The figures came less than 24 hours after bank formally abandoned merger talks with Commerzbank. Shares of Deutsche bank slipped 2.09%.
France’s Sopra Steria said revenue rose approximately 10% in the first three months of the year, citing a buoyant market for digital services in Europe. The Paris-listed stock rose toward the top of the European benchmark on the news, with shares up more than 7.6%.
Skanska tumbled toward the bottom of the index Friday afternoon, after the Swedish builder posted a surprise fall in first-quarter operating earnings. Profit at its commercial development operations slumped in the first three months of the year, prompting shares to fall 4.53%.
On the data front, French consumer confidence held steady at an eight-month high in April. INSEE, the official statistics agency said Friday that its index remained unchanged from March at 96 points.
Stateside, stocks were flat on Friday as investors weighed better-than-expected gross domestic product (GDP) data against a mixed set of quarterly earnings reports.

Source: CNBC

CNN video: Rosenstein takes on critics of Mueller report

Gross Domestic Product, First Quarter 2019 (Advance Estimate)

4-5 minutes

Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the first quarter of 2019 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2018, real GDP increased 2.2 percent.
The Bureau’s first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The "second" estimate for the first quarter, based on more complete data, will be released on May 30, 2019.
Real GDP: Percent change from preceding quarter
The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, state and local government spending, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased (table 2). These contributions were partly offset by a decrease in residential investment.
The acceleration in real GDP growth in the first quarter reflected an upturn in state and local government spending, accelerations in private inventory investment and in exports, and a smaller decrease in residential investment. These movements were partly offset by decelerations in PCE and nonresidential fixed investment, and a downturn in federal government spending. Imports, which are a subtraction in the calculation of GDP, turned down.
Current dollar GDP increased 3.8 percent, or $197.6 billion, in the first quarter to a level of $21.06 trillion. In the fourth quarter, current-dollar GDP increased 4.1 percent, or $206.9 billion (table 1 and table 3).
The price index for gross domestic purchases increased 0.8 percent in the first quarter, compared with an increase of 1.7 percent in the fourth quarter (table 4). The PCE price index increased 0.6 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 1.8 percent.
Personal Income (table 8)
Current-dollar personal income increased $147.2 billion in the first quarter, compared with an increase of $229.0 billion in the fourth quarter. The deceleration reflected downturns in personal interest income, personal dividend income, and proprietors’ income that were partly offset by an acceleration in personal current transfer receipts.
Disposable personal income increased $116.0 billion, or 3.0 percent, in the first quarter, compared with an increase of $222.9 billion, or 5.8 percent, in the fourth quarter. Real disposable personal income increased 2.4 percent, compared with an increase of 4.3 percent.
Personal saving was $1.11 trillion in the first quarter, compared with $1.07 trillion in the fourth quarter. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 7.0 percent in the first quarter, compared with 6.8 percent in the fourth quarter.
Source Data for the Advance Estimate
Information on the source data and key assumptions used for unavailable source data in the advance estimate is provided in a Technical Note that is posted with the news release on BEA’s Web site. A detailed "Key Source Data and Assumptions" file is also posted for each release. For information on updates to GDP, see the "Additional Information" section that follows.
Upcoming Annual Update of the National Income and Product Accounts
The annual update of the national income and product accounts, covering the first quarter of 2014 through the first quarter of 2019, will be released along with the "advance" estimate of GDP for the second quarter of 2019 on July 26. For more information, see the Technical Note.
*          *          *
Next release, May 30, 2019 at 8:30 A.M. EDT
Gross Domestic Product, First Quarter 2019 (Second Estimate)
Corporate Profits, First Quarter 2019 (Preliminary Estimate)
*          *          *

Wealth I Investors pile into Japan stocks ahead of BoJ pledge to keep rates...

Tom Arnold

LONDON (Reuters) - Japanese equities sucked in their biggest inflows of cash this week since March 2018 ahead of the Bank of Japan’s pledge to keep interest rates at super-low levels for longer - the latest central bank to commit to ultra-loose policy.
FILE PHOTO: A man is reflected on an electronic board showing a graph analyzing recent change of Nikkei stock index outside a brokerage in Tokyo, Japan, January 7, 2019. REUTERS/Kim Kyung-Hoon
Investors plowed $5.4 billion into Japanese equity funds in the week to April 24, BAML strategists said on Friday, citing data from EPFR.
That came before the Japanese central bank on Thursday put a time frame on its forward guidance for the first time, telling investors that it would keep interest rates at super-low levels for at least one more year.
“Flows continue to reflect rising investor conviction that central banks will never raise rates again,” strategists at the U.S. bank said in the note.
A rally across European and U.S. stocks this year has in part been fueled by big about-turns by the increasingly dovish European Central Bank and Federal Reserve on interest rates.
The big move into Japanese stocks also came as the Nikkei hit one-year highs ahead of an unprecedented holiday in Japan, with markets shut for six trading days from April 29 to celebrate its new emperor taking the throne.
Global bond funds received inflows of $9.9 billion in the week to April 24, with $4.4 billion leaving global equities, the sixth week of outflows, BAML said.
Cash continued to leave U.S. and European equities, with $6.4 billion flowing out of the United States and another $1.9 billion out of Europe. Emerging markets saw $900 million in outflows.
Investors were seeking to capture growth through $1.3 billion of investments in the technology sector and $800 million in healthcare. That move was at the expense of “value” sectors like financial services and energy, the bank added.
Elsewhere, government bonds saw the largest inflows in three months with $1.9 billion invested in the asset class, while high yield and emerging markets debt funds had their first outflows since Jan. 2.
Debt and currency positions in emerging markets were very crowded, with $250 billion flowing into emerging market debt and equity since February 2016, it said, adding that the current financial problems in Argentina and Turkey were the first signs of U.S. dollar pressures raising the risk of contagion in emerging markets.
Reporting By Tom Arnold, Editing by Helen Reid and Josephine Mason

Source: Reuters

Market Insider I Stocks making the biggest moves premarket: Amazon, Intel, Ford, Qorvo, Mattel & more

Fred Imbert

Check out the companies making headlines before the bell:

Amazon — The e-commerce giant reported earnings per share that easily beat analysts’ expectations. The company’s quarterly revenue came in just above expectations, however, as growth slows to its lowest level since the first quarter of 2015.
Ford Motor — Ford shares jumped more than 7% in the premarket on the back of better-than-expected first-quarter results. The automaker posted earnings per share of 44 cents on revenue of $37.24 billion. Analysts polled by Refinitiv expected a profit of 27 cents per share on sales of $37.08 billion. Ford’s results were boosted by strong demand for its pickup trucks and SUVs in North America.
Qorvo — The Apple supplier’s stock was downgraded to “sector weight” from “overweight” at KeyBanc Capital Markets, with an analyst noting: “Our recent supply chain checks indicated that the situation has changed and that AVGO is likely to regain 100% market share of the mid/high-band PAD in the 2019 iPhone.”
Intel — The Dow component reported better-than-expected earnings for the first quarter, but those numbers were overshadowed by a weak revenue forecast for 2019. Intel said it expect sales to total $69 billion for 2019, below an estimate of $71.05 billion. Intel shares fell more than 7% before the bell.
Mattel — The toymaker’s stock jumped 9% in the premarket, boosted by the company’s better-than-expected results for the previous quarter. Mattel reported a loss of 44 cents a share on revenue of $689 million. Analysts polled by Refinitiv expected a loss of 56 cents a share on revenue of $645 million. The company said demand for its Barbie dolls, along with toys based on movies like and “Toy Story” boosted the Mattel’s results.
Western Digital — Baird downgraded the chipmaker’s shares to “underperform” amid concerns over an increasing “disconnect between significant stock appreciation YTD and a continued deterioration in NAND flash fundamentals.” The firm also cut its price target on Western Digital to $40 a share from $50 a share.
Starbucks — Starbucks posted quarterly earnings that topped analysts’ expectations and hiked its full-year outlook. The company highlighted strong sales in China and the U.S. But Starbucks shares dipped 0.4% as its quarterly revenue numbers disappointed analysts.
American Airlines — The airline reported mixed quarterly results, with its earnings per share topping estimates while revenue missed. American Airlines also said it took a $350 million pretax hit due to the grounding of Boeing’s 737 Max jet. The company also hiked its fuel cost guidance for the year, citing higher oil prices.
FedEx — An analyst at UBS downgraded FedEx to “sell” from “neutral,” citing worries that the company’s challenges in its Ground & Express businesses “may last longer” than expected.
—CNBC’s Vincent Caruso contributed to this report.

Source: CNBC

Technology News I Dutch telecom KPN won't use Huawei for 'core' 5G network

Bart H. Meijer

AMSTERDAM (Reuters) - Dutch telecom firm Royal KPN NV said on Friday it would select a Western supplier to build its core 5G mobile network, making it one of the first European operators to make clear it would not pick China’s Huawei for such work.
FILE PHOTO: KPN logo is seen at its headquarters in Rotterdam, Netherlands, January 30, 2019. REUTERS/Piroschka van de Wouw
The United States has been seeking to discourage its allies from using equipment made by Huawei because of concerns that it could be used for spying by the Chinese government. Huawei says such worries are baseless and U.S. policy is driven by economic interests.
KPN, based in The Hague and the Netherlands’ largest telecom firm, said Huawei would supply 5G radio equipment, which it considers less sensitive.
Chief Financial Officer Jan Kees de Jager said the decision took into account concerns heard in the Dutch political debate and was in line with the stance to be taken by the United Kingdom, according to leaked government plans.
“They see the core networks as somewhat more critical than the radio access networks,” said De Jager, who served as the Netherlands’ Finance Minister from 2010-2012.
Sources told Reuters on Wednesday that Britain’s National Security Council (NSC) had decided to bar Huawei from core parts of the country’s 5G network and restrict its access to non-core areas, although it is not yet official British policy.
The Dutch government has yet to take a stance on the issue, although the head of the country’s intelligence agency this month warned against buying technology from Russia or China, countries whose spying activities he said threatened national security.
Although Huawei has been a key supplier to KPN over the past decade, De Jager argued the company’s purchasing costs would not rise by excluding Huawei in favor of companies such as Nokia and Ericsson for its core equipment.
KPN also reported on Friday slightly worse than expected first quarter core earnings of 563 million euros ($627 million).. Shares were 0.4 percent higher at 2.70 euros by 0926 GMT.
The core of a 5G network is where the most critical controls are located and the most sensitive information is stored, while the periphery includes masts, antennas and other passive equipment.
KPN said it would use equipment made by Huawei, which it described as a world leader in radio and antenna technology, to improve security on its existing network.
“This preliminary agreement can be adjusted or reversed to align it with future Dutch government policy,” it added.
The Dutch government set up a task force with KPN and other major operators in the Netherlands this month to analyze the “vulnerability of 5G telecommunications networks to misuse by technology vendors ... and measures needed to manage risks”.
The government is expected to make a statement on its position on the use of Chinese technology by the end of June.
Reporting by Bart Meijer; Editing by Kirsten Donovan and Edmund Blair

Source: Reuters

World News I Support for Malaysian PM drops as concerns grow over economy, race:...

Reuters Editorial

KUALA LUMPUR (Reuters) - Fewer than half of Malaysians approve of Prime Minister Mahathir Mohamad, an opinion poll showed on Friday, as concerns over rising costs and racial matters plague his administration nearly a year after taking office.
Malaysian Prime Minister Mahathir Mohamad speaks at the opening ceremony for the second Belt and Road Forum in Beijing, China April 26, 2019. REUTERS/Florence Lo
The survey, conducted in March by independent pollster Merdeka Center, showed that only 46 percent of voters surveyed were satisfied with Mahathir, a sharp drop from the 71 percent approval rating he received in August 2018.
Mahathir’s Pakatan Harapan coalition won a stunning election victory in May 2018, ending the previous government’s more than 60-year rule.
But his administration has since been criticized for failing to deliver on promised reforms and protecting the rights of majority ethnic Malay Muslims.
Of 1,204 survey respondents, 46 percent felt that the “country was headed in the wrong direction”, up from 24 percent in August 2018, the Merdeka Center said in a statement. Just 39 percent said they approved of the ruling government.
High living costs remained the top most concern among Malaysians, with just 40 percent satisfied with the government’s management of the economy, the survey showed.
It also showed mixed responses to Pakatan Harapan’s proposed reforms.
Some 69 percent opposed plans to abolish the death penalty, while respondents were sharply divided over proposals to lower the minimum voting age to 18, or to implement a sugar tax.
“In our opinion, the results appear to indicate a public that favors the status quo, and thus requires a robust and coordinated advocacy efforts in order to garner their acceptance of new measures,” Merdeka Center said.
The survey also found 23 percent of Malaysians were concerned over ethnic and religious matters.
Some groups representing Malays have expressed fear that affirmative-action policies favoring them in business, education and housing could be taken away and criticized the appointments of non-Muslims to key government posts.
Last November, the government reversed its pledge to ratify a UN convention against racial discrimination, after a backlash from Malay groups.
Earlier this month, Pakatan Harapan suffered its third successive loss in local elections since taking power, which has been seen as a further sign of waning public support.
Despite the decline, most Malaysians - 67 percent - agreed that Mahathir’s government should be given more time to fulfill its election promises, Merdeka Center said.
This included a majority of Malay voters who were largely more critical of the new administration, it added.
Reporting by Rozanna Latiff; Editing by Nick Macfie

Source: Reuters

Markets On Friday 26, April 2019 I The Euro’s Bad Year Just Keeps Getting Worse

The Wall Street Journal.
Markets Bear logo.
Happy Friday. I'm Jessica Menton, breaking down the latest in markets as the week winds down. 
Amazon shares are rising in premarket trade after the e-commerce titan posted a fourth straight record profit. Meanwhile, oil giants Exxon Mobil and Chevron will report earnings results shortly, along with American Airlines.
Investors will also get a fresh reading this morning on U.S. economic growth in the first quarter. Heading into the opening bell, the S&P 500 is 1.5% higher for the week while the Dow is mildly lower. 
Plus, our Akane Otani weighs in on what's been driving the euro lower recently. 

Markets in a Minute

Markets Data

Overnight Developments


Euro Hurt by Growth Fears, Political Uncertainty

By Akane Otani, markets reporter
Investors souring on hopes of an economic rebound in the eurozone are taking their bets to the currency market.
The euro is trading at a nearly two-year low against the U.S. dollar, hurt by reports this week showing confidence among businesses in Germany and manufacturers in France both fell in April. The currency is headed for its fifth weekly decline in six weeks, a reflection of the growing skepticism among investors about policymakers’ ability to steer an economic turnaround in Europe.
Data released in the coming days stand to potentially widen the gap between the two currencies.
Economists surveyed by The Wall Street Journal expect the Commerce Department’s initial estimates for first-quarter gross domestic product, released Friday, to show the U.S. economy growing 2.5%, an improvement from the fourth quarter’s 2.2% growth rate. That should reassure investors that U.S. growth prospects have improved after a bumpy start to the year.
In contrast, expectations are more muted for next week’s batch of European data, which includes estimates for French gross domestic product Tuesday, U.K. manufacturing data Wednesday and French and German manufacturing data Thursday. The diverging prospects for growth between the U.S. and Europe have some analysts betting the euro has further room to slide.
“I think the dollar may even break out of [its] range and head higher now,” Mark Grant, managing director and chief global strategist at B. Riley FBR, said in an email, citing the relative strength of the U.S. economy compared to the European economy.
To be sure, the dollar has already run up to levels that some analysts believe is unsustainable.
The WSJ Dollar Index, which tracks the greenback against a basket of 16 currencies, closed Wednesday at its highest level since November. After the rally of the past few months, BlackRock’s global chief investment strategist, Richard Turnill, says he has a neutral outlook on the currency.
“It has perceived ‘safe-haven’ appeal but gains could be limited by a high valuation and a narrowing growth gap with the rest of the world,” Mr. Turnill said in a note. While European data have been uneven, reports have pointed to improving prospects elsewhere around the world, particularly in China. That could take some shine out of the dollar’s rally, in turn offering some relief to the euro.
But others warn that with political risks like Brexit and the upcoming European Union elections remaining, it’s too early to turn optimistic.
Don’t discount the possibility of a “major power shift” in the E.U. sending the dollar higher, Mr. Grant said.

Market Facts

  • The S&P 500 has climbed an average of 13% in the 12 months after snapping a six-month drought without a record, according to an LPL Financial analysis of data going back to 1950. The broad index snapped such a drought on Tuesday.
  • Shares of 3M tumbled 13% Thursday, their biggest percentage loss since Black Monday, the stock market crash on Oct. 19, 1987. The manufacturer of Post-its said that China and other big markets are buying fewer products used to make cars and electronics. 3M was the worst performer in the Dow industrials, shaving 192.3 points from the blue-chip index.
  • On this day in 1973, the Chicago Board Options Exchange opened for trading with call options available on 16 U.S. common stocks. For the first time, stock options were listed on a dedicated exchange and registered for trading in standardized form, creating a “fair and orderly market.”

Key Events

U.S. gross domestic product is expected to advance 2.5% in the first quarter. The figures will be released at 8:30 a.m. ET.
The University of Michigan consumer-sentiment index for April is expected to tick up to 97.0 from 98.4 at the end of March. The index is released at 10 a.m.
The Baker-Hughes rig count is slated for 1 p.m.
President Trump meets with Japanese Prime Minister Shinzo Abe at the White House. The gathering will focus on trade and North Korea.

Must Reads

Uber calibrated downward its target valuation to a range of roughly $80 billion to $90 billion as it readies an initial public offering. PHOTO: KEVIN HAGEN FOR THE WALL STREET JOURNAL
Uber lowered its target IPO valuation again. Uber ratcheted down its target valuation to a range of about $80 billion to $90 billion for its initial public offering, following rival Lyft’s struggles after listing last month.
Deutsche Bank cut its revenue target a day after merger talks failed. Deutsche Bank cut its full-year revenue target to “essentially flat” from 2018 in quarterly results, a day after saying it ended merger talks with smaller rival Commerzbank.
Bitfinex drained Tether to mask missing funds, a probe alleged. The cryptocurrency exchange operated by Hong Kong-based iFinex raided dollar reserves underpinning its popular digital coin Tether to cover up a missing $850 million, the New York attorney general’s office said.
Microsoft hit a $1 trillion market value for the first time. Shares of Microsoft topped the $130.50 value needed to give the company a market value of $1 trillion, joining Apple and as the only U.S. companies to ever reach that mark on an intraday basis.
Elon Musk’s standoff with the SEC over his tweets continues. Elon Musk and the SEC want more time to work out their dispute over whether the Tesla CEO violated a court order restricting his use of social media.
Vanguard is handing over some of its voting power. By the end of the year, firms that manage Vanguard’s active equity funds will be able to cast votes on takeovers, board slates or shareholder proposals affecting the portion of shares they oversee.

What We've Heard on the Street

“Sometimes it’s hard to know whether to laugh or cry. Deutsche Bank investors will know this feeling after talks collapsed over a potential merger with domestic rival Commerzbank Thursday.”
—Heard on the Street columnist Paul J. Davies

Stocks to Watch

Amazon.comThe e-commerce company reported its first-quarter profit more than doubled, but its quarterly revenue grew at the slowest pace in nearly four years.
Intel: The company trimmed its financial forecast for this year and said quarterly sales of chips for data centers declined in for the first time in seven years.
Ford: The auto maker's first-quarter operating profit rose 12%, as the company shored up overseas losses and notched sharp gains from the strength of its pickup-truck and sport-utility lineup in the U.S.
Starbucks: The coffee company beat profit expectations during its most recent quarter and boosted forecasts for sales growth this year, rejuvenating sales in its biggest markets.
Mattel: The toy company's sales fell less than anticipated in the latest quarter. 
T-MobileThe No. 3 wireless carrier by subscribers said that its first-quarter profit jumped 35% on the strength of new customer sign-ups.

Real Time Economics on April 26, 2019.

The Wall Street Journal.
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Real Time Economics

Separate Commerce Department data shows that existing firms started cranking out jobs as soon as the last recession ended. The number of jobs created by new firms hit the lowest level on record in 2013 and has since been slow to recover.

More than ever, the oldest companies are helping drive employment gains.

What to Watch Today

U.S. gross domestic product for the first quarter is expected to advance at a 2.5% pace. Here’s what to watch in the report. (8:30 a.m. ET)
The University of Michigan's consumer sentiment index for April is expected to tick up to 97.0 from a preliminary reading of 96.9. (10 a.m. ET)
The Baker-Hughes rig count is out at 1 p.m. ET.
President Trump meets with Japanese Prime Minister Shinzo Abe at the White House. The gathering will focus on trade and North Korea. 

Top Stories

Built to Last

Orders for long-lasting factory goods rose in March at the fastest clip in seven months. The numbers are likely to further assuage concerns that the economy was heading toward a potentially sharp slowdown after market turmoil in late 2018 and a lengthy government shutdown, Paul Kiernan and Sarah Chaney report.
  • Taking flight: The increase was driven in part by demand for aircraft, a volatile segment of the report. But a closely watched proxy for business investment—new orders for nondefense capital goods excluding aircraft—was up 1.3% in March.
  • Takeaway: "The strong rise in underlying capital goods orders in March, together with stronger retail sales last month, suggests the economy is carrying a bit more momentum into the second quarter," says Capital Economics's Michael Pearce.

Ownership Society

The U.S. homeownership rate fell for the first time in more than two years in the first quarter, tapping the brakes on a recovery for the sector. After more than a decade of declines, the homeownership rate had been reliably on the upswing since the beginning of 2017 and was nearing its historic average of around 65%. But now first-time buyers “are hitting a bit of an affordability ceiling here,” said Zillow Director of Economic Research Skylar Olsen. Younger buyers, who had been driving the rise in homeownership, had some of the steepest falls in the first quarter, Laura Kusisto reports.

On the plus side, household formation—people moving into either rentals or their own homes—is still strong. That bodes well for the overall economy.

The Old College Try

The strongest labor market in decades has yet to entice young Americans away from pursuing more education. Nearly 69% of 2018 high-school graduates were enrolled in higher education in October, compared with 67% the year before, acording to the Labor Department. The rebound suggests that despite the lure of plentiful jobs, many fresh high-school graduates are choosing to attend postsecondary schools instead of jumping right into the labor pool, Sarah Chaney and Michelle Hackman report.
Why bother? In a knowledge-based economy, higher-paying jobs often require education beyond high school, whether a college diploma or trade certificate.

Chart of the Day: Cry for Me

Argentine President Mauricio Macri announced new price controls last week to try to get Argentina’s inflation under control. Consumer prices rose almost 55% from a year earlier in March.

Poll of the Day: Trump vs. Powell

President Trump has railed against the Federal Reserve and its chairman, Jerome Powell. The president blames the Fed for holding back the economy and stock market. A newly released Gallup poll, though, shows Americans have a bit more faith in Mr. Powell than Mr. Trump. Half of all Americans reported a "great deal" or "fair amount" of confidence that Mr. Powell would do the right thing for the economy; a touch higher than Mr. Trump's 47%. Ratings for both men ticked up five percentage points from a year earlier.

Quote of the Day

We would not charge negative interest if we did not regard this as being absolutely crucial for us in fulfilling our mandate.
Swiss National Bank Chairman Thomas Jordan, defending negative interest rates 

What Else We're Reading

A job at pays at least $15 an hour. If you can keep it. "In a signed letter last year, an attorney representing Amazon said the company fired 'hundreds' of employees at a single facility between August of 2017 and September 2018 for failing to meet productivity quotas. ... The number represents a substantial portion of the facility’s workers: a spokesperson said the named fulfillment center in Baltimore includes about 2,500 full-time employees today. Assuming a steady rate, that would mean Amazon was firing more than 10 percent of its staff annually, solely for productivity reasons," Colin Lecher writes in the Verge.
The process that brought Europe and Asia out of poverty is starting to work in Africa: industrialization. "African industrialization will complete the great transformation that began more than two centuries ago in Britain — the mass movement of humanity from indigence to material security. This is the last frontier of poverty reduction," Noah Smith writes at Bloomberg Opinion