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Swipe fees
A $30B settlement proposed by Visa (V) and Mastercard (MA) is likely to be rejected by a federal judge in a major setback for the card networks in the long-running dispute over swipe fees. At a hearing, Judge Margo Brodie said she will "likely not approve the settlement" as it does not appear to provide sufficient relief. The judge plans to issue a written decision in about a week.
Deal terms: Under the landmark settlement, the companies agreed to reduce swipe fees for three years, and cap the rates for five years, with the moves estimated to deliver at least $29.79B in savings. They also agreed to update network rules to allow merchants more choice in how they accept digital payments. The settlement aimed to resolve most claims in the nearly 20-year long litigation by merchants over high fees charged for processing card payments.
Industry response: The card companies disagreed with the judge, with Mastercard and Visa calling the proposed settlement "fair" and "appropriate." However, Christopher Jones, executive committee member of Merchants Payments Coalition, argued that the settlement would have locked in cartel pricing and the judge's statement was "in support of justice for merchants and consumers."
Bigger picture: Credit and debit card swipe fees, which have more than doubled over the past decade, are the biggest operating cost for most merchants after labor. Visa and Mastercard centrally set the swipe fees charged by banks that issue cards under their brands, and block transactions from being processed over other networks that charge lower fees. SA analyst Perseus Perspectives previously noted that the biggest losers from the settlement are likely to be card issuing banks, and it may not materially alter the long-term trajectory of payment networks' businesses. (4 comments)
Options sold
Influential meme stock trader Keith Gill, known online as Roaring Kitty, appears to have sold his call options in GameStop (GME) while adding to his pile of shares. Gill now holds over 9M shares of the video game retailer, up from 5M on Monday, and his cash position seems to have shrunk to $6.3M from $29.4M. Meanwhile, GameStop postponed its annual meeting as its investor website crashed multiple times on Thursday because of heavy traffic. GameStop shares have been on a rollercoaster over the past month, after Gill's return to social media reignited interest in the meme stock, while the company cashed in on the frenzy to raise over $3B. (140 comments)
Tax plans
In an attempt to woo business leaders, Donald Trump told around 100 CEOs of some of the biggest firms that he planned to reduce the corporate tax rate to 20% from the current 21%, if elected. He made the statements off the record at a Business Roundtable meeting, attended by CEOs including Apple's (AAPL) Tim Cook, JPMorgan's (JPM) Jamie Dimon, and Walmart's (WMT) Doug McMillon. Trump had lowered the corporate tax rate in 2017 from 35% to 21% when he was in office. The Republican presidential candidate also floated the idea of an "all tariff policy" to GOP lawmakers as a means to eventually eliminate income tax in the U.S. (91 comments)
Abortion pill access
The Supreme Court unanimously upheld access to the abortion pill mifepristone, saying the plaintiffs did not have legal standing to challenge the Food and Drug Administration's approval of the medication. The plaintiffs, led by the Alliance for Hippocratic Medicine, sought to roll back the FDA's 2016 and 2021 relaxations of regulatory requirements for mifepristone access. "Under Article III of the Constitution, a plaintiff's desire to make a drug less available for others does not establish standing to sue," Justice Brett Kavanaugh wrote in the ruling. To note, similar challenges are being brought by Missouri, Kansas and Idaho, whose attorneys believe they will fare better on legal standing.
Today's Markets
In Asia, Japan +0.2%. Hong Kong -0.9%. China +0.1%. India +0.2%.
In Europe, at midday, London -0.5%. Paris -2.5%. Frankfurt -1.4%.
Futures at 7:00, Dow -0.8%. S&P -0.5%. Nasdaq -0.2%. Crude +0.1% to $78.70. Gold +1.3% to $2,347.10. Bitcoin -1.5% to $66,814.
Ten-year Treasury Yield -3 bps to 4.22%.
Today's Economic Calendar
8:30 Import/Export Prices
10:00 Consumer Sentiment
1:00 PM Baker Hughes Rig Count
2:00 PM Fed’s Goolsbee Speech
7:00 PM Fed’s Cook Speech
Companies reporting earnings today »
What else is happening...
Tesla (TSLA) shareholders approve Musk's pay package, Texas move.
Producer price index unexpectedly falls in May; core measure stalls.
U.S. government to recalculate Medicare Advantage quality ratings.
Bank of Japan maintains rates, signals plan to reduce bond buying.
Wells Fargo (WFC) fires over a dozen for simulating keyboard activity.
Adobe (ADBE) soars on better-than-expected results, strong outlook.
Sony (SONY) still 'hanging around the hoop' for Paramount's parent.
OPEC rips 'unrealistic' and 'dangerous' peak oil demand prediction.
G7 summit: Ukraine loan deal reached, Pope Francis to talk AI.
FDA recommends KP.2 strain be used in updated COVID shots.
