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26Apr2017 Pre-Market Commentary: Wall Street Set To Open Flat, Trump's Proposed Tax Plan Has Analysts Divided, WTI Crude Trading In The Low 49 Handle

Written by Gary

US stock index futures are flat on the red side (SPY -0.03) amid a flood of corporate earnings, while investors awaited President Donald Trump's tax plan. Analysts seem divided over the tax plan, with some saying stocks could be vulnerable to a selloff, while others see it as a catalyst higher, along with earnings momentum.

Here is the current market situation from CNN Money

European markets are lower today with shares in London off the most. The FTSE 100 is down 0.12% while Germany's DAX is off 0.12% and France's CAC 40 is lower by 0.02%.

Wall Street set for flat open as investors await Trump's tax plan; earnings in focus

Tuesday's Key Earnings

3M (NYSE:MMM) +0.5% raising outlook for 2017.
AT&T (NYSE:T) -0.3% AH as wireless equipment sales slid.
Biogen (NASDAQ:BIIB) +3.6% exceeding expectations.
Caterpillar (NYSE:CAT) +7.9% crushing estimates.
Chipotle (CMG) +2.9% AH increasing comparable sales.
Coca-Cola (NYSE:KO) -0.4% with flat organic revenues.
Corning (NYSE:GLW) +3.7% posting strong sales growth.
DuPont (NYSE:DD) +3.6% beating expectations.
Eli Lilly (NYSE:LLY) -2.7% lowering EPS guidance.
Freeport-McMoRan (NYSE:FCX) +7.1% seeing big cash flows.
Lockheed Martin (NYSE:LMT) -2.2% trimming outlook.
McDonald's (MCD) +5.6% growing comparable sales.
Realty Income (NYSE:O) +1.1% AH beating estimates.
Rite Aid (NYSE:RAD) +6.4% following an earnings beat.
U.S. Steel (NYSE:X) -17% AH after a shocking loss.
Valero (NYSE:VLO) -1.5% expecting higher biofuel costs.
Wynn Resorts (NASDAQ:WYNN) +4.1% AH getting nod for a lagoon-theme park.

What Is Moving the Markets

Here are the headlines moving the markets.

Congress moves closer to deal to avert government shutdown

WASHINGTON (Reuters) - The U.S. Congress was moving closer to crafting a deal to avoid shutting down at the stroke of midnight on Friday, but the details and even broad strokes of an agreement were still murky.

Trump tax plan slashing business rates to test support in Congress

WASHINGTON (Reuters) - U.S. President Donald Trump will release a tax plan on Wednesday proposing some deep rate cuts, mostly for businesses, including a slashed corporate income tax rate and steeply discounted tax rate for overseas corporate profits brought into the United States, officials said.

Futures flat as Trump tax plan awaited

(Reuters) - U.S. stock index futures were little changed on Wednesday amid a flood of corporate earnings, while investors awaited President Donald Trump's tax plan.

PepsiCo profit beats on demand for healthier snacks, drinks

(Reuters) - PepsiCo Inc reported higher-than-expected quarterly revenue and profit as the company benefited from demand for its healthier drinks and snacks and kept a tight leash on costs.

Twitter posts strongest growth in monthly users in a year

(Reuters) - Twitter Inc reported its strongest growth in monthly active users in more than a year and a much better-than-expected quarterly profit, despite stiff competition from Facebook and Snapchat, sending its shares up 11 percent.

Acquisitions help Nasdaq beat profit estimates

(Reuters) - Nasdaq Inc posted a better-than-expected quarterly profit as the transatlantic exchange operator benefited from its acquisitions.

Exclusive: A New York hotel deal shows how some public pension funds help to enrich Trump

WASHINGTON (Reuters) - Public pension funds in at least seven U.S. states have invested millions of dollars in an investment fund that owns a New York hotel and pays one of President Donald Trump's companies to run it, according to a Reuters review of public records. That arrangement could put Trump at risk of violating an obscure constitutional clause, some legal experts say.

China's richest man deepens sports foray with global marathons deal

BEIJING (Reuters) - China's Dalian Wanda Group, controlled by the country's richest man Wang Jianlin, has signed a deal to sponsor races with the world's top organizer, Abbott World Marathon Majors (WMM), the latest move by Wanda to expand its global sports business.

Credit Suisse seeks capital security with $4 billion cash call

ZURICH (Reuters) - Credit Suisse has ditched plans to raise money by listing part of its Swiss business and will instead sell new shares worth about 4 billion Swiss francs ($4 billion) to get its financial strength back on a par with rivals.

Frontrunning: April 26

Futures flat as Trump tax plan awaited (Reuters)

Trump's 15% Tax Plan May Just Be His Opening Gambit (BBG)

Budget Director, After Health-Law Missteps, Preps for Spending Battle (WSJ)

100 Days: Trump's victories dimmed by misfires (Reuters)

White House Intervened to Toughen Letter on Iran Nuclear Deal (WSJ)

Trump Changing Tactics on Tax After Health-Care Failure (BBG)

Is Justin Trudeau the Anti-Trump? (BBG)

Oil prices slip on bulging U.S. crude stockpiles, ample supplies (Reuters)

Congress moves closer to avert shutdown (Reuters)

Hungarian opposition struggles to build on anti-Orban sentiment (Reuters)

FCC Chief Poised to Roil Capital With Net Neutrality Rollback (BBG)

Currency Moves Suggest U.K. Data Seen Before Release (

Gold Imports Into China via Hong Kong Double

Gold bullion imports into China via main conduit Hong Kong more than doubled month-on-month in March, data showed on Tuesday as reported by Reuters.

China's net-gold imports via Hong Kong more than doubled in March to 111.6 tonnes. Chart not updated as official data not publicly available yet. Source:

Net-gold imports by the world's top gold consumer through the port of Hong Kong rose to 111.647 tonnes in March from 47.931 tonnes in February, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.

China's net-gold imports rose to its best since May 2016. Total gold imports rose to 116.68 tonnes in March from 49.026 tonnes in February.

Both total and net imports in March rose for a second straight month.

Gold has risen over 10 percent so far this year, driven by geopolitical worries.

Twitter Surges After Beating Expectations, MAUs Jump Despite Revenue Slowdown: The Quarter In Charts

For once Twitter did not disappoint Wall Street, when moments ago it reported results that beat consensus estimates handily as non-GAAP EPS of $0.11 beat consensus of $0.02, even topping the highest estimate of $0.10, on revenue of $548.3 million, also beating est. of $509 million (just don't look at the GAAP EPS loss of 8 cents). Helping the beat was a jump in monthly active users, which rose to 328 million, beating estimates of 322 million, on Q1 daily active usage up 14% y/y, higher than 11% in 4Q and 3% in 1Q16.

In kneejerk reaction the stock was up 9% in premarket trading, having risen as much as 11%.

That said, there were some less welcome signs, especially in the outlook, where Twitter expects adjusted EBITDA to be between $95 million and $115 million; below consensus est. of $137.1 million.

Some further guidance:

Adjusted EBITDA margin to be between 21% and 21.5%; and

Stock-based compensation to be between $115 million and $125 million.

Additionally, for the full year 2017, Twitter expects:

Total non-GAAP expenses to be flat to down 5%, compared to full year 2016;

Stock-based compensation to be down 20% to 25%, compared to full year 2016; and

Capital expenditures to be between $300 million and $400 million.

Just as concerning, the company still sees 2017 advertising revenue growth to meaningfully lag audience growth, further pressing the ...

JPMorgan: "Trump's Tax Plan Will Be Virtually Impossible To Pass Through Congress"

With little macro data overnight (aside from a modestly disappointing Australian CPI print), offset by an ongoing of corporate profits (this is the single busiest week for corporate earnings in more than 10 years), today everyone's attention will be focused on three things to come out of Washington: taxes, healthcare, spending.

And while we did our best to summarize what is known and unknown last night, this morning JPM has released what may be the best summary assessment, one which comes to a predictable conclusion, namely that Trump's tax plan "will be virtually impossible to pass through Congress", in other words it is merely a gambit, or as Trump would see it, a first step in a negotiating process with Congress. Whether Congress responds favorable, especially to a plan that has no revenue aspect to it whatsoever, remains to be seen.

Until we wait, for those who may be unfamiliar with the framework of what Trump will propose today, here is JPM's summary:

Washington - three big headlines overnight - taxes, healthcare, spending

Taxes - Trump's much-anticipated tax blueprint will be released on Wed but

  1. a lot of the details have already been leaked to the press over the last few days;

    it seems very inchoate, leaving out key details esp. as it pertains to the individual code;

    it will be virtually impossible to pass through Congress.

With all that said, Trump will propose cutting the corporate rate and "pass-through" rate to 15% (from 35% and 39.6% now, respectively) and the repatriation rate to 10% (from 35%) while raising sig ...

Google's Costs Don't Always Click

How Google generates advertising revenue that now totals nearly $80 billion a year is no easy feat—especially at the double-digit rates the company has been reliably pulling off for years.

Netflix's China Deal May Prove a House of Cards

Netflix has gained an entry into China, but its gains may be diluted since it had to partner with a local player for access to the vast market.

The Great Divide on Stocks and the Economy

Deep disagreements on America's outlook could mean one thing for the stock market, another for the economy.

Matthew Lynn's London Eye: If the Macron rally is going to continue, he's going to have to deliver

If the Macron Trade is to be more than just a relief rally, then the likely French president needs to deliver some substance and not just rhetoric, writes Matthew Lynn.

Chinese stocks are experiencing the mother of all dead cat bounces

The Shanghai Composite Index resembles the U.S. tech bubble of 2000, says Ivan Martchev.

Need to Know: Here's how much a Trump tax-plan letdown could whack the stock market

The market has been giving U.S. President Donald Trump the benefit of the doubt over his tax plan, but that could all end today if he doesn't meet investors expectations. The Dow could fall back all the way down to this level.

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