Alphabet , Facebook , and Twitter shares rose on strong earnings last week. But the threat of government oversight looms.
Michael Graham Managing director, Canaccord Genuity
“Facebook management addressed important data and privacy issues head-on, outlining new disclosure standards for political ads and hiring aggressively against privacy initiatives.…For the time being, the worst is very likely behind Facebook stock.”
Analyst, Hilliard Lyons
“We believe that a Neutral position on Alphabet ahead of Europe’s General Data Protection Regulation, or GDPR, is appropriate.…In particular, the ‘right to be forgotten’ could pose a long-term threat to companies processing large quantities of targeted user data.”
Analyst, Credit Suisse
“While…second-quarter user data [could] see some volatility given GDPR implementation, we are comfortable with our [Facebook] revenue estimates, as the ad-pricing growth it has continued to demonstrate should more than offset any headwinds.”
Senior analyst, Wells Fargo Securities
“We expect GDPR risk to be manageable for Twitter. An updated privacy policy has been rolled out globally, and we believe that Twitter’s lighter involvement in gathering…user data insulates it to a greater degree than key rivals Facebook and Alphabet.”
—Ed Lin
Next Week Stormy MarketsCrosscurrents continue to buffet stocks. A high percentage of companies, led by Amazon.com, Alphabet, and Facebook, beat earnings estimates, but the 10-year Treasury breached 3%, and fears that earnings had peaked sideswiped stocks. The Dow industrials fell 0.62% to 24,311.19 on the week; the Standard & Poor’s 500 was flat at 2669.91; and the Nasdaq Composite dropped 0.37% to 7119.80. The VIX averaged 16.77 on the week. The yield on the 10-year Treasury ended at 2.96% and the two-year at 2.48%. Oil slipped a bit, ending at $68 and bitcoin finished $9,100.
Macron, Merkel, and TrumpThe leaders of France and Germany came to Washington intent on persuading President Trump not to remove the U.S. from the Iran nuclear accord. France’s Macron has a famously good relationship with Trump; Merkel, a frostier one. But both argued that it made no sense to negotiate a denuclearization of North Korea if you’re going to pull out of the Iran deal. Trump has said he will decide the U.S. role in the Iran deal by May 12.
Meeting at the BorderWashington diplomacy was a backdrop to a historic meeting of North Korea’s Kim Jong-un and South Korean President Moon Jae-in at Panmunjom on Thursday. After eight hours of meetings, the pair promised to try to reduce tensions, normalize relations, and formally
end the war, which began in 1950.
CIA chief Mike Pompeo narrowly passed the Senate Foreign Relations Committee and was confirmed by the Senate as secretary of state. Meanwhile, Trump’s nominee to run the Veterans Affairs Department, White House physician and rear admiral, Ronny Jackson, lost bipartisan support over allegations of problems in the White House medical unit, and withdrew.
A New Plan for SearsEddie Lampert, who runs ESL Investments, the hedge fund that has long owned struggling retailer Sears, offered to buy company assets, including Kenmore appliances, an appliance-parts unit, and real estate. The sale, which would break up the retailer, would pump cash into the stores. Sears had earlier shopped the assets.
China Companies Eye IPOsThe music-streaming service of Tencent Holdings , Tencent Music Group Entertainment, said it would seek an IPO in the U.S., following Spotify Technology . And Didi Chuxing Technology, a ride-sharing service, has been talking to bankers, reported The Wall Street Journal, but hasn’t decided on a venue. Alibaba Group Holding , which went public in 2014 in New York, is also apparently exploring a China offering, and laptop maker Xiaomi is looking at a Hong Kong or China IPO of $100 billion.
Comcast Goes for SkyCable and broadband giant Comcast formally made its $31 billion bid for Sky, topping an existing bid from 21st Century Fox (Barron’s shares ownership with Fox). The Wall Street Journal also reported that Comcast is mulling a bid to break up Walt Disney ’s pending acquisition of Fox entertainment assets.
Cosby Found GuiltyA Pennsylvania court convicted comedian and actor Bill Cosby, 80, of drugging and assaulting a woman 14 years ago.
Edited by Robert Teitelman and Teresa Vozzo
Email: editors@barrons.com