>>> US Close Dow +0.26% S&P +0.41% Nasdaq +0.42% Russell +0.59%

Closing Market Summary: Stock Market Ends Week at Record High

The major averages wrapped up the range-bound week with modest Friday gains. The S&P 500 (+0.4%) and the Nasdaq (+0.4%) finished at new record highs while the Dow (+0.3%) settled just a step behind its peers. For the week, the S&P 500 added 0.6%.

Buyers had a slight edge from the jump after the Employment Situation Report for April showed better than expected nonfarm payrolls (211,000 actual vs 180,000 consensus) and lower than expected unemployment (4.4% actual vs 4.6% consensus). However, the Jobs report did have a few blemishes. Namely, the labor force participation rate dipped to 62.9% from 63.0% and average hourly earnings decelerated on a year-over-year basis (to 2.5% from 2.6%). 

The Federal Reserve Bank of New York revised its second quarter GDP forecast to +1.8% from last week's +2.3% following today's data. However, investors in the bond market lacked conviction to push Treasuries one way or the other. The benchmark 10-yr yield (2.35%) settled at its unchanged mark.

Crude oil registered a much needed bounce-back performance on Friday, jumping 1.5% to $46.23/bbl. However, the positive showing only put a dent into the 8.0% week-to-date loss that the commodity brought into Friday's session. WTI crude faced multiple challenges this week, including persistently high U.S. inventories, weak economic data from China, and deteriorating technical support. Nonetheless, the energy sector appreciated the late-week rally, adding 1.6%.

The lightly-weighted telecom services (+1.5%) and materials (+1.4%) sectors closed in line with the energy space at the top of the day's leaderboard. Like energy, the materials group received some support from the commodity market with copper ($2.53/lb, +0.8%) finishing solidly higher after dropping 5.7% over the three previous sessions. Gold (1,226.90/ozt, -0.1%) and silver ($16.28/ozt, -0.1%) closed just below their flat lines, however, in light of their respective weekly losses of 3.3% and 5.7%, the slight downtick was a positive.

Retailers helped push the consumer discretionary sector (+0.6%) ahead of the benchmark index, evidenced by the 1.5% increase in the SPDR S&P 500 Retail ETF (XRT 43.39, +0.62). The industrial group (+0.6%) also settled ahead of the broader market with aerospace and defense names providing a pocket of strength. The real estate (+0.8%), utilities (+0.6%), consumer staples (+0.3%), and technology (+0.3%) spaces also finished in the green.

On the flip side, the influential financials (-0.1%) and health care (-0.1%) sectors ended Friday's session a tick below their flat lines. Biotech names weighed on the health care sector with the iShares Nasdaq Biotechnology ETF (IBB 295.87, -2.58) losing 0.9%. The financial space experienced broad weakness with most of its largest components settling in the red.

In Europe, the major bourses finished higher across the board with France's CAC (+1.1%) leading the advance. The positive performance precedes the French presidential run-off, which will take place on Sunday. The latest polls give Emmanuel Macron a healthy 62-38 advantage over Marine Le Pen. This has been construed as a positive for equity markets in light of Ms. Le Pen's anti-EU rhetoric. Germany's DAX and the UK's FTSE settled higher by 0.6% and 0.7%, respectively.

The U.S. Dollar Index (98.44, -0.17) slipped 0.2% as the greenback lost 0.1% and 0.4%, respectively, against the euro (1.0994) and the pound (1.2978).

In addition to the Employment Situation Report, investors received the March Consumer Credit report on Friday:

  • The April Jobs Report showed that nonfarm payrolls hit 211,000 (consensus 180,000), nonfarm private payrolls added 194,000 (Briefing.com consensus 175,000), the unemployment rate fell to 4.4% (consensus 4.6%), average hourly earnings increased 0.3% (consensus 0.3%), and the average work week was 34.4 (consensus 34.4).
    • The key takeaway from the report for us is that there were some elements that left it a little out of sync with the view that the economy is poised to hit, and sustain, escape velocity. The asynchrony we are referring to is the drop in the labor force participation rate and the deceleration in average hourly earnings growth on a year-over-year basis. The former dipped to 62.9% from 63.0% while the latter slipped to 2.5% from 2.6%. Friday's last economic report--March Consumer Credit (consensus $16.0 billion)--will cross the wires at 15:00 ET.
  • The Consumer Credit report for March showed an increase of $16.4 billion while the consensus expected growth of $16.0 billion. The prior month's credit growth was revised to $13.8 billion from $15.2 billion.
    • Consumer credit increased at a seasonally adjusted annual rate of 4.25% during the first quarter (and 5.25% in March), with revolving credit little changed and nonrevolving credit increasing at an annual rate of 5.75%.

Investors will not receive any economic data on Monday.

  • Nasdaq Composite +13.3% YTD
  • S&P 500 +7.2% YTD
  • Dow Jones Industrial Average +6.3% YTD
  • Russell 2000 +2.9% YTD

Reuters - Exclusive: Saudi Arabia, U.S. in talks on billions in arms sales - U.S

Exclusive: Saudi Arabia, U.S. in talks on billions in arms sales - U.S. sources

Washington is working to push through contracts for tens of billions of dollars in arms sales to Saudi Arabia, some new, others in the pipeline, ahead of U.S. President Donald Trump's trip to the kingdom this month, people familiar with the talks told Reuters this week.

Saudi Arabia is Trump's first stop on his maiden international trip, a sign of his intent to reinforce ties with a top regional ally.

The United States has been the main supplier for most Saudi military needs, from F-15 fighter jets to command and control systems worth tens of billions of dollars in recent years. Trump has vowed to stimulate the U.S. economy by boosting manufacturing jobs.

Washington and Riyadh are eager to improve relations strained under President Barack Obama in part because of his championing of a nuclear deal with Saudi foe Iran.

Lockheed Martin Co (LMT.N) programs in the package include a Terminal High Altitude Area Defense (THAAD) missile defense system with several batteries, the sources said. The THAAD system, like the one being made operational in South Korea, costs about $1 billion. Also being negotiated is a C2BMC software system for battle command and control and communications as well as a package of satellite capabilities, both provided by Lockheed.

The sources spoke on condition of anonymity because they were not authorized to discuss the negotiations, which also include previously reported contracts or items under discussion for years. One such deal, an $11.5 billion package of four multi-mission surface combatant ships and accompanying services and spares, was approved by the State Department in 2015. Talks followed to hammer out capabilities, configuration and design for the complex warships but the deal has never gone to final contract.

The next step for the ships is likely a letter of agreement between the two countries, the sources said.

Versions of the ship used by the U.S. Navy, the Littoral Combat Ship, are built by Bethesda, Maryland-based weapons maker Lockheed Martin and Australia's Austal Ltd (ASB.AX). If a deal goes through, it would be the first sale of a new small surface warship to a foreign power in decades. Any major foreign weapons sale is subject to oversight by Congress. Lawmakers must take into consideration a legal requirement that Israel must maintain its qualitative military edge over its neighbors.

Also, more than $1 billion worth of munitions including armor-piercing Penetrator Warheads and Paveway laser-guided bombs made by Raytheon Co (RTN.N) are in the package, the sources said. The Obama administration suspended the planned sale because of concerns over the Saudi-led military campaign in Yemen and civilian casualties.

A U.S. administration official said the proposed Raytheon sale was still undergoing interagency review. A Raytheon representative declined to comment on the sales. A Lockheed representative said such sales are government-to-government decisions and the status of any potential discussions can be best addressed by the U.S. government.

A representative for the Saudi embassy in Washington declined to comment.

One of the people with knowledge of the sales said that as planning for Trump's trip to Saudi Arabia intensified in recent weeks, the arms negotiations also accelerated. Two U.S. officials said a U.S.-Saudi working group met at the White House Monday and Tuesday to negotiate the trip, as well as financing for military equipment sales and stopping terrorist financing.

Saudi foreign minister Adel al-Jubeir and other Saudi officials met with lawmakers at the Capitol on Thursday, including Senators Bob Corker and Ben Cardin on the foreign relations committee.

The Pentagon declined to comment. White House and State Department officials said it was U.S. policy not to comment on proposed U.S. defense sales until they had been formally notified to Congress.

The Obama administration had offered Saudi Arabia more than $115 billion in weapons. Most of the Obama-era offers, which are reported to Congress, became formal agreements though some were abandoned or amended.

Washington also provides maintenance and training to Saudi security forces.

(BFW) Oil Bullish Reversal on Daily Candles, Downtrend May Be Over

Oil is forming a “hammer” setup on daily candlesticks, if confirmed is evidence of a bullish reversal and suggests the current downtrend has run out of steam, may indicate there is more upside to come.
  • Oil printed at a trend low of $43.76 earlier, lowest intraday level since Nov. 15, before bouncing back, and is now up on day
    • See chart here
  • Oil had fallen as much as 11.3% this week following EIA data that showed a continued expansion of U.S. crude production
  • U.S. output rose for an 11th week through April 28 for longest run of gains since 2012, EIA data showed Wednesday
  • While OPEC is likely to prolong curbs for further 6 months, U.S. shale supply remains a concern, Nigeria’s oil minister said
  • Stoxx 600 oil and gas index is down 4.5% ytd
  • The biggest SXEP decliners ytd are: Saipem -26.5%, Tullow Oil -25.7%, Wood Group -15.4%

>>> Telecom Italia shareholders appoint new board, 10 of 15 directors from Viven

Telecom Italia shareholders appoint new board, 10 of 15 directors from Vivendi
05 MAY 2017
The ordinary Shareholders' Meeting of Telecom Italia [BIT:TITR] was held under the chairmanship of Giuseppe Recchi. The Shareholders' Meeting recorded the presence of 58.75% of the Company's ordinary share capital.
The Shareholders' Meeting:
  • approved the 2016 financial statements of TIM S.p.A., which closed with a profit of 1,896 million euros, and the distribution of a privileged dividend of 2.75 cents per share to savings shares only. The dividend will be payable from 21 June 2017 (record date 20 June 2017) with a coupon date of 19 June 2017;
  • approved the Report on Remuneration where it describes the Company’s remuneration policy for directors and key managers;
  • appointed the new Board of Directors approving the proposals presented by shareholder Vivendi [EPA:VIV] and establishing the number of Directors at 15, the duration of their term of office at three financial years (until the approval of the financial statements as of 31 December 2019), the total annual compensation of the board at 2,200,000 euros, to be distributed among its members in compliance with the resolutions approved by the Board itself.
As provided by the Company’s bylaws, having the slate presented by Vivendi obtained the highest number of votes, based on the slate voting system, the following 10 Directors were appointed:
1. Arnaud Roy de PUYFONTAINE
2. Hervé PHILIPPE
3. Frédéric CREPIN
4. Giuseppe RECCHI
5. Flavio CATTANEO
6. Félicité HERZOG (independent)
7. Franco BERNABÈ (independent)
8. Marella MORETTI (independent)
9. Camilla ANTONINI (independent)
10. Anna JONES (independent)
The remaining 5 Directors (all independent) were appointed from the slate presented by a group of asset management companies and international investors, as follows:
11. Lucia CALVOSA
12. Francesca CORNELLI
13. Dario FRIGERIO
14. Danilo VIVARELLI
15. Ferruccio BORSANI
Finally, the Shareholders' Meeting approved the proposal made by the shareholder Vivendi to authorise the waiver of the competition prohibition for the Directors imposed by article 2390 of the Italian Civil Code, where applicable.