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Morning News Call Reuters U.S MORNING NEWS CALL REUTERS U.S. Edition Thursday, March 23, 2017 TOP NEWS ANALYSIS • Hospital, Medicaid insurer shares set for volatility as health vote nears The slumping U.S. healthcare stocks at the center of efforts to dismantle the Trump Tantrum looms on Wall Affordable Care Act are expected to stay volatile as Republican legislation Street if healthcare effort stalls heads into a vote that could signal how protracted their battle to repeal the law will be. The Trump Trade could start looking • With Sears' future in doubt, vendors begin pulling back more like a Trump Tantrum if the Suppliers to Sears Holdings Corp told Reuters they are doubling down on de- new U.S. administration's healthcare fensive measures, such as reducing shipments and asking for better payment bill stalls in Congress, prompting terms, to protect against the risk of nonpayment as the company warned about worries on Wall Street about tax cuts its finances. and other measures aimed at pro- • Major oil companies open their wallets in Gulf of Mexico bidding moting economic growth. Royal Dutch Shell plc, Chevron Corp and Exxon Mobil Corp signaled the oil Investors are dialing back hopes that industry's return to the Gulf of Mexico's deep waters with high bids in a govern- U.S. President Donald Trump will ment auction up 76 percent over a year ago. swiftly enact his agenda, with a • Westinghouse's clients gear up for bankruptcy fight-sources Thursday vote on a healthcare bill a The U.S. utilities that are clients of Toshiba Corp's nuclear power plant con- litmus test which could give stock struction subsidiary, Westinghouse Electric Co LLC, have hired advisers to investors another reason to sell. prepare for its potential bankruptcy, according to people familiar with the mat- "If the vote doesn’t pass, or is post- ter. poned, it will cast a lot of doubt on • London banks need to move key functions to EU to keep access -ECB the Trump trades," said the influen- The European Central Bank expects London-based banks seeking to keep tial bond investor Jeffrey Gundlach, access to the European Union's single market once Britain leaves the bloc to chief executive at DoubleLine Capi- move key functions, branches and dealing operations, the ECB's top supervi- tal. sor said. U.S. stocks rallied after the Novem- ber presidential election, with the S&P 500 posting a string of record BEFORE THE BELL highs up to earlier this month, on U.S. stock index futures were little changed ahead of U.S. President Donald bets that the pro-growth Trump Trump's first significant policy test, as he looks to get a healthcare bill passed agenda would be quickly pushed by in U.S. congress. New home sales, jobless claims and Kansas City Fed manu- a Republican Party with majorities in facturing data are slated for release. European shares pared earlier losses as both chambers of Congress. markets took the latest terror attack in London largely in their stride, while The S&P 500 ended slightly higher Asian stocks closed higher. Gold futures fell, while the dollar edged higher. on Wednesday, the day before a Oil prices rebounded, after touching their lowest level since November over- floor vote on Trump's healthcare pro- night, on data that showed U.S. crude inventories grew more than expected. posal scheduled in the House of Representatives. On Tuesday, stocks had the biggest STOCKS TO WATCH one-day drop since before Trump won the election, on concerns about Deals of the day opposition to the bill. • Superior Industries International (SUP). The aluminum wheel maker has Investors extrapolated that a stalling launched an offer to buy Uniwheels for around $715 million after winning the bill could mean uphill battles for oth- support of the Warsaw-listed company's biggest shareholder. Superior Indus- er Trump proposals. Trump and Re- tries said it had agreed to buy the 61.3 stake in Uniwheels held by Uniwheels publican congressional leaders ap- Holding Malta for 226.50 zlotys per share and was offering 235.83 zlotys each peared to be losing the battle to get for the remaining shares - below the current stock price. Superior Industries enough support to pass it. said the deal would create one of the world's largest suppliers of such wheels Any hint of further trouble for to the automotive industry. Trump's agenda, especially his pro- posed tax cut, could precipitate a Results stock market correction, said Byron • Accenture Plc (ACN). The consulting and outsourcing services provider re- Wien, veteran investor and vice ported a 4.7 percent increase in quarterly net revenue, helped by strong de- chairman of Blackstone Advisory mand for its digital and cloud services. Net income attributable to Accenture Partners. fell to $838.8 million or $1.33 per share in the second quarter ended Feb. 28, “The fact that they are having trouble from $1.33 billion or $2.08 per share, a year earlier. Net revenue rose to $8.32 with (healthcare repeal) casts a MORNING NEWS CALL - U.S. EDITION March 23, 2017 billion from $7.95 billion. Accenture's digital, cloud and security-related ser- shadow over the tax cut and the tax vices make up more than 40 percent of total revenue. cut was supposed to be the principal fiscal stimulus for the improvement In other news in real GDP," Wien said. "Without • Alphabet Inc (GOOGL). Google said on Wednesday it would offer an audio- that improvement in GDP, earnings only option on its Duo video calls service to help users communicate using aren’t going to be there and the mar- poor-quality connections, and was adding a feature to permit file sharing in ket is vulnerable." group chats on its Allo messaging App. Google said audio-only calls on Duo Strategists have been cautioning for would be available from Wednesday in Brazil, and would be rolled out to users weeks that markets are pricing in a around the world in the coming days. scenario where nothing goes wrong • Bebe Stores Inc (BEBE). The contemporary women's retailer said it is ex- with Trump's agenda. Investors are ploring strategic alternatives following four years of losses. Bebe Stores said it paying $18.10 for every dollar in has retained B. Riley & Co as its financial adviser. Bebe is planning to shut earnings expected on the S&P 500 stores and seek a turnaround as an online brand to avoid filing for bankruptcy, over the next 12 months, near the Bloomberg had reported on Tuesday, citing people familiar with the situa- most expensive U.S. stocks have tion. The company's stock has lost about 89 percent of its value in the last two been since 2004. years. "This is really about the fact that the • Daseke Inc (DSKE). The trucking company plans to double its pretax earn- market is pricing in too much certain- ings over the next three years as it seeks aggressive growth through acquisi- ty on a number of accounts," said tions to consolidate a fragmented area of the industry, the company’s presi- Julian Emanuel, executive director of dent, chief executive and founder said on Wednesday. "We can be several U.S. equity and derivatives strategy times larger in five to 10 years from now," Don Daseke told Reuters. "There at UBS Securities. "Even if you got are over 400 companies that have over 100 trucks that would be prospects for the positive vote, there's still the re- us to discuss consider acquiring, merging with them, over the next several sidual knowledge that the agenda years." Daseke’s acquisition targets typically range in revenue from $40 million will be difficult to get through the to $250 million with around 200 to 1,500 employees, the company’s founder Senate." said. While investors and strategists have • PPG Industries Inc (PPG). The paint maker PPG has made a "very compel- said they do not see an immediate ling" offer for Akzo Nobel and was shocked when its Dutch rival turned it down, threat to the eight-year-old bull mar- PPG's chief executive Michael McGarry said on a visit to Amsterdam to drum ket, there is a risk of a 5-to-10 per- up support for a proposed tie-up. McGarry said he would meet Akzo share- cent drop. Only a bear market -a 20 holders during the visit and was prepared to meet Akzo's boards "any time, percent decline- would put an end to any place" to discuss its 22.7 billion euro takeover offer. He disputed Akzo's the bull. view that the two companies' cultures were ill-matched. Asked to comment on "It looked like a mini tantrum," said a possible hostile bid, McGarry said he wanted to "work together" with Akzo. David Kotok, chief investment officer • PTC Therapeutics Inc (PTCT). Two U.S. lawmakers sent a letter on of Cumberland Advisors. "Trump has Wednesday to the company, seeking information about the drugmaker's pric- made the House vote his own now ing strategy for its recently acquired muscle-wasting disorder drug. "We urge so he has a lot at stake. My guess it you to keep the price of this relatively common steroid at its current importa- will pass the House. If not, markets tion cost," Senator Bernie Sanders and Representative Elijah Cummings wrote will be shocked and it won't be in a letter to PTC Chief Executive Stuart Peltz. The lawmakers also requested pleasant." to know if the company intends to pursue an additional approval of deflazacort Michael Arone, chief investment as an orphan drug to treat juvenile arthritis.
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