Good morning! Here’s what you need to know.
AT&T wants to buy DirecTV. The Wall Street Journal says AT&T has approached the country’s second-largest satellite pay TV provider about an acquisition. AT&T itself actually already has its own landline based TV package. And DirecTV is interested. “The satellite TV industry is facing a slowdown in subscriber growth after years of adding customers,” the Journal reports. “The pay television market in the U.S. is now mature, with about 90% of U.S. households with TV now subscribing to either cable, satellite or phone company-delivered television. And satellite firms’ inability to offer Internet access that is competitive with cable and phone companies is becoming a bigger issue.”
China Slump. China manufacturing PMI came in slightly under expectations at 50.4 vs 50.5 forecast. China’s economy is ‘a slow-moving ship at the moment, but the sentiment is turning progressively negative,’ Chris Weston, chief market strategist at IG Ltd. in Melbourne, told Bloomberg. “We haven’t had positive news for quite some time.”
UK Economy Booming. British manufacturing PMI for April surged to a 5-month high.”Manufacturing continues to bask in the spring sunshine, with solid growth and mounting optimism for the months ahead,” said David Noble of the Chartered Institute of Purchasing & Supply. “Building on the strong performance of Q1, success was consistent across the consumer, intermediate and investment goods sectors. Supporting the robust expansion and new order inflows, employment numbers were boosted even further this month; all of which are good signs of a sustainable upward surge in the UK economy more broadly.”
Buffett Busts Coke Comp. Warren Buffett privately met with Coke CEO Muhtar Kent to express his distaste for teh company’s executive comp plan, the Wall Street Journal reports. Buffett’s Berkshire Hathaway owns 9% of the firm. “Mr. Buffett has frequently expressed his distaste for pay plans that rely heavily on stock options, calling them “lottery tickets” for executives that often generate outsize rewards. Such options give the recipient the right to purchase shares at a later date for a set price. clear with Coke management from the outset that he thought the plan was excessive.”
Busy Day In Data, Starting With Auto Sales. They will be coming in throughout the day. Analysts estimate the pace of sales slipped to an annualized rate of 16.20 million from 16.33 million in March. “Motor vehicle sales jumped 7% in March to a new cycle high of 16.3 million after starting the month well, accelerating mid-month, and then ending the last weekend particularly robustly according to company comments,” noted Morgan Stanley’s Ted Wieseman. “Mid-month industry surveys for April indicate that the momentum coming out of March continued in further upside in retail sales, but a pullback in fleet deliveries is expected to the leave the overall selling rate slightly lower.”
Claims And Outlays. The BLS will announce weekly jobless claims at 8:30 a.m. Expectations are for a decrease to 320,000 from 329,000. Also at this time, the BEA will announce personal income and outlays. Consensus is for a 0.4% increase in personal income, a 0.6% increase in personal spending, and Core PCE price index to increase 0.2%.
Manufacturing And Construction Data. At 9 a.m. we get Markit PMI. Economists forecast a reading of 55.8, up from 55.5. At 10 a.m. we get ISM manufacturing. The consensus is for an increase to 54.2 from 53.7 in March. The ISM employment index was at 51.1% in March, and the new orders index was at 55.1%, McBride says. Finally we also get construction spending at 10 a.m. It’s expected to be up 0.6% vs 0.1% prior.
The Junk Bond Market Is Tightening. Investors are slowing down on buying into risky deals, Bloomberg says. Six months ago the Fed and OCC told banks to improve deteriorating loan standards. Investors are demanding better terms and pulled cash from leveraged-loan funds the last two weeks, snapping an unprecedented 95 straight weeks of inflows. ‘The balance of power, for the moment, has a little bit shifted to the buy side,” Jonathan Insull, a money manager at Crescent Capital Group LP in New York, said in a telephone interview yesterday. ‘The market’s been taking a breather and people are using the opportunity to push back.”
Earnings. Exxon, Mastercard, Motorola Solutions, T-Mobile and Wynn all report Q1 financial results today.
Markets Take The Day Off. It’s May Day in Europe and parts of Asia. U.S. futures were a bit higher. Janet Yellen speaks to the Community Bankers of America at 8:30 a.m.
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