Wall Street Breakfast: Getting Bigger

Getting bigger

There's a new target date for the expansion of the European Union proposed by European Council President Charles Michel. Coming meetings by EU leaders should focus on the enlargement of the trade bloc by 2030 in order to boost influence and assertiveness, and help remodel the global approach to development. Parts of the speech at the Bled Strategic Forum also focused on not importing past conflicts to block the accession process, but sticking to a merit-based process that outlines economic, judicial and administrative reforms needed for membership.

Backdrop: The EU's last major expansion occurred in the early 2000s, when the trade bloc stretched to Central and Eastern Europe, but starting in the 2010s, a different wave of thinking arose. The European debt crisis, as well as the European migrant crisis, gave rise to Euroskepticism, which ultimately saw Britain vote to exit the European Union during the Brexit referendum of 2016. Struggles for the U.K. economy, COVID, and Russia's invasion of Ukraine have swung the pendulum back to the side of pro-Europeanism, though there are still many hurdles that need to be overcome in order to promote greater integration.

In June 2022, the EU accepted Ukraine and Moldova as formal EU candidates, while the bloc has tried to push forward the accession process of several Balkan countries that have spent decades on seeking membership. Georgia has also been recognized as a potential member, though membership talks with Turkey are currently frozen. In his speech, Michel called some of those countries out by name, but acknowledged that relative prosperity would not follow immediately, but rather significant funds would be needed to help poorer countries catch up.

Quote: "To be stronger and safer, the EU needs to reinforce our bonds and become more powerful," he declared. "The GDP of the future member states is about 50-70% of the smallest EU economy. This means they will be net recipients, while several current net recipients will become net contributors, so we need to work out how to manage this complex transition. It will be difficult and sometimes painful... [but] enlargement is no longer a dream. It is time to move forward."

Hurricane warning

Florida is preparing for its first major storm of this year's Atlantic hurricane season. Idalia may intensify into a major Category 3 hurricane before making landfall in Florida, according to the National Hurricane Center, while Gov. Ron DeSantis declared a state of emergency for more than 45 counties in the state. Idalia isn’t estimated to be as strong as Hurricane Ian, which last year killed at least 140 people as it swept through Florida and the Carolinas, but backup generator player Generac (NYSE:GNRC) still rose about 4% on Monday. The stock has posted gains in the past as regions throughout North America face blackouts and power disruptions because of extreme weather. (4 comments)

Advised to sell

Scaling back ambitions to push into mass-market financial planning, Goldman Sachs (GS) has reached an agreement to sell its Personal Financial Management unit. The business oversees around $29B in assets and was built up from United Capital, a registered investment adviser that Goldman bought for $750M in 2019. However, the deal may not bode well for CEO David Solomon, who is seeing another strategy unravel after attempting to push into the mass-affluent sector, only to renew the bank's focus on the ultra-wealthy. Earlier this year, Goldman put online lending service GreenSky up for sale, unraveling another deal of the Solomon era.

Shipping minimums

Amazon (AMZN) is increasing its free shipping minimum to $35 (from $25) for non-Prime members in some markets, matching the minimum order amount required by rival Walmart (WMT) to avoid shipping fees for its Walmart+ subscription service. "We continually evaluate our offerings and make adjustments based on those assessments," spokesperson Kristina Pressentin said in a statement provided to Seeking Alpha. Amid the heightened focus on profitability, SA analyst Stanislas Capital called AMZN an underappreciated margin improvement story and well-positioned to benefit from previous investments and efficiency initiatives. The latest decision could also incentivize non-Prime members to sign up for the $139 per year Prime service. (52 comments)

Today's Markets

In Asia, Japan +0.1%. Hong Kong +1.9%. China +1.2%. India +0.1%.
In Europe, at midday, London +1.6%. Paris +0.4%. Frankfurt +0.5%.
Futures at 6:30, Dow flat. S&P flat. Nasdaq flat. Crude +0.8% to $80.74. Gold +0.2% to $1950.70. Bitcoin +0.2% to $25,956.
Ten-year Treasury Yield -1 bps to 4.20%

Today's Economic Calendar

9:00 S&P CoreLogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $36B, 7-Year Note Auction
3:00 PM Fed's Barr: “Banking Services”

Companies reporting earnings today »

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