Stocks are vulnerable.
Buckle up bulls, your standing will be challenged to close the week. While the Twitter war between Donald Trump, French President Emmanuel Macron and Canadian Prime Minister Justin Trudeau ahead of the G-7 meeting has grabbed the headlines (and was weighing on stocks), it is the coordinated moves in markets Friday that should be of worry. The U.K.’s FTSE dropped 0.8%, Germany’s DAX fell 1% to the lowest in more than a week. Meanwhile, the MSCI Emerging Market Index tanked 1.5%. Asian stocks were down as well, and gold has caught a bid.
At least copper is on fire (flirting with four-year highs) — that’s somewhat encouraging.
In short, Trump is playing with fire in his dealings with global leaders and investors would be wise to rein in risky positions.
The Deal Conference, Rewind
Shout out to the team at TheStreet Inc. for putting together one hell of a conference on Thursday. The Deal’s annual corporate governance was robust in its breaking news and insights that you just can’t find anywhere else (unless you meet with activist Nelson Peltz each morning over an egg sandwich). Here are a bunch of random thoughts from a day of being in the trenches:
(1) Peltz came out like a silent assassin on Procter & Gamble (PG) at the conference, knowing full well that with the stock under considerable pressure this year his standing on the board is elevated right now. Peltz told me on the sidelines he has an “idea” of when P&G “might” announce some form of reorganization. He declined to share more beyond that, but he did offer me a smile before I departed back to my seat. Can’t blame a former stock analyst for trying. Peltz earlier in the session suggested P&G was open to a breakup.
(2) Introduced Panera Bread founder Ron Shaich (whose speech against activist investors stole the show — we thought he was going to announce a 2020 presidential run at the end; the guy was on fire) to Wendy’s (WEN) CEO Todd Penegor in the hallway. Great to see these two good human beings talk fast food for a bit. Never know, maybe Wendy’s could be part of the JAB Holdings portfolio (where Panera now lives) some day. There is strong alignment with JAB’s values and Wendy’s, I think, that harken back to the work of founder Dave Thomas. Penegor told me he is bullish on kiosks and has seen no sales impact from McDonald’s (MCD) fresh beef marketing efforts
(3) It was weird to see Elliott Management’s Paul Singer on stage talking in a very calm, almost grandfatherly way to the room. Elliott is an activist firm that doesn’t exactly play lightly with a target (see AthenaHealth (ATHN) and Alcoa (AA) – it often shreds them to pieces using various tactics. Weird stuff.
(4) TheStreet’s founder Jim Cramer, the host of the day, asked Qualcomm’s (QCOM) CEO Steve Mollenkopf point blank: The stock is in the high $50s currently, rival Broadcom (AVGO) offered $82 a share — what’s up? Mollenkopf’s answer was OK, but still on the evasive side. To be sure, he is banking it all on the NXP Semiconductors (NXPI) deal closing and earnings getting a major re-rating higher.
(5) Macy’s CEO Jeff Gennette told me on the sidelines he wants an outlet store inside of every Macy’s store. As I discussed here, he is right to want to make that happen.
Move of the Week
Facebook’s (FB) stock has been a real dog this week, down almost 3%. A new privacy bug that accidentally changed suggested privacy settings for status updates to public from established settings for 14 million users is the latest news that has hurt the stock. That’s unfortunate for two reasons.
First, Facebook’s PR machine has helped rebuild investor confidence in the wake of the Cambridge Analytica debacle. Say goodbye to those efforts. Secondly, the Nasdaq hit a record this week on appetite for other FANG stocks (Facebook, Amazon (AMZN) , Netflix (NFLX) and Alphabet (GOOGL) ). The lack of interest in owning Facebook makes you wonder what other bad news is in store for the social media giant later this year.