Before the Open (Oct 21-25)

Good morning. Happy Friday.
The Asian/Pacific markets were mixed. China, Australia and Singapore posted gains; Hong Kong, Indonesia and Thailand posted losses. Europe, Africa and the Middle East are currently mostly down. The UK, Poland, Greece, South Africa, Norway, Hungary, Belgium and the Czech Republic are down. Futures in the States point towards a positive open for the cash market.
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VIDEO: Leavitt Brothers Overview
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The dollar is up slightly. Oil and copper are up small amounts. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Top U.S. and Chinese trade officials reportedly will discuss plans today for China to buy more U.S. farm products, but in return, China wants cancellation of some planned and existing U.S. tariffs on Chinese imports. U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steve Mnuchin and Chinese Vice Premier Liu He plan to speak by telephone today as the two sides try to hammer out the text for a “Phase 1” trade deal announced earlier this month by President Trump. So far, Trump has only agreed to cancel the Oct. 15 increase in tariffs on $250B in Chinese goods, but Beijing is expected to ask Washington to drop its plan to impose tariffs on $156B worth of Chinese goods plus 15% tariffs imposed on Sept. 1 on $125B of Chinese goods.
EU to discuss Brexit delay as Johnson seeks snap election
The European Union will discuss today the possibility of another delay to Brexit as Prime Minister Boris Johnson seeks a new general election to break the paralysis over the issue. The EU likely would choose between a three-month delay and a “two-tier” lag, but it is not yet clear when a decision might come. Johnson said in a letter to Labour leader Jeremy Corbyn he would give Parliament more time to approve his Brexit deal by Nov. 6 but Corbyn must back a December election, the PM’s third attempt to try to force a snap vote.
Amazon sinks on Q3 profit miss, light holiday sales forecast
Amazon.com (NASDAQ:AMZN) fell 7% in after-hours trade following disappointing Q3 earnings and Q4 sales guidance that fell well short of Wall Street estimates. Q3 profit fell 26% from a year ago to $2.1B, or $4.23 per share, weighed down by the company’s heavy investment into reducing shipping times for retail customers. Net sales beat expectations in rising nearly 24% to $70B, while AWS sales totaled $9B, slightly short of estimates of $9.2B. But Amazon expects revenues during Q4 – the holiday shopping season – of $80B-$86.5B, below consensus for $87.2B.
Final Lion Air crash report blames Boeing design, pilot error
A final report on the fatal crash of Lion Air 610 highlights 89 significant findings, laying blame largely on the design of Boeing’s (NYSE:BA) 737 MAX aircraft and pilot mistakes. Certification failures by regulators also came to light, and the report recommends a redesign and better training. A major point of focus is the plane’s MCAS flight control feature, designed to press a plane’s nose down to prevent stalls.
AB InBev belches flat Q3 core profit, reduced guidance
Anheuser-Busch InBev (NYSE:BUD) tumbled ~10% in European trade after reporting flat Q3 adjusted earnings, missing analyst expectations for 3% growth, amid a decline in beer shipments in China and the U.S. The world’s largest brewer expects the weakness to continue into Q4, as it now forecasts “moderate” EBITDA growth for the year rather than its previous characterization of “strong.” InBev says results also were weighed by higher raw material costs, adverse currency swings and weaker volumes in South Korea and Brazil.
Massachusetts hits Exxon with another climate change lawsuit
Exxon Mobil (NYSE:XOM) has been accused by the Massachusetts attorney general of allegedly hiding its early knowledge of climate change from the public and misleading investors about the future financial impact of global warming. The Massachusetts AG filed the lawsuit shortly after Exxon lost an attempt to delay the filing until after it is done defending itself in a trial that began earlier this week over similar allegations brought by the state of New York.
Citi fills president role with Latin America chief Fraser
Citigroup (NYSE:C) has filled its vacant role of president with its Latin America chief Jane Fraser, a move that could put her in line to be the first female CEO of a major bank. Another potential Citi CEO, Stephen Bird, is departing his role leading Global Consumer Banking, and Fraser was named to succeed him in that role as well. Citi has been without a president since another heir apparent, Jamie Forese, retired earlier this year.
GM lands key approvals for union deal
Unionized workers at several General Motors (NYSE:GM) factories have voted in favor of the new labor contract struck last week by United Auto Workers and GM negotiators, according to The Wall Street Journal. Key approvals were obtained at key factories in Michigan and Ohio ahead of the final vote tally, which is expected to be announced Friday night. A simple majority is enough for the new contract to go into effect.
Tesla’s new China-made cars only slightly cheaper than imports
Tesla (NASDAQ:TSLA) has started selling its China-made Model 3 with Autopilot driver assistance software priced from 355,800 yuan, or ~$50K, making it the company’s cheapest model on sale in the country. But the vehicles will sell for only about 3% less than the most basic imported models, after the company decided to include the Autopilot function in each vehicle; variants without Autopilot will be phased out in China. The launch marks the first time a wholly foreign-controlled automaker has made a car in China.
Three top retailers pull 22-oz. J&J baby powder off shelves
Walmart (NYSE:WMT), CVS (NYSE:CVS) and Rite Aid (NYSE:RAD) are removing all 22-ounce bottles of Johnson & Johnson’s (NYSE:JNJ) baby powder from their stores, following last week’s recall of one lot of the product due to possible asbestos contamination. Analysts say other retailers including Amazon likely will remove the product in order to avoid liability. “It’s not important at all in terms of the dollar figure… What it tells you is that retailers are being extra cautious with how they are dealing with J&J’s voluntary recall,” Jefferies healthcare analyst Jared Holz said.
South Korea grounds nine Boeing planes with cracks
Nine Boeing (BA) 737 NG jets have been grounded by South Korea’s transport ministry after inspections found structural cracks requiring repairs. Five of the grounded planes are operated by Korean Air Lines, which says it has 18 737 NGs in its fleet. The suspension follows an order from the U.S. Federal Aviation Administration earlier this month for aircraft operators to inspect older Boeing 737 NGs for structural cracks.
What else is happening…
Japan’s trade minister resigns amid scandal.
UAW suspends Mack Trucks (OTCPK:VOLVY) strike after tentative deal.
Albemarle (NYSE:ALB) cuts 2019 guidance on lithium price weakness.
Thursday’s Key Earnings
Amazon (AMZN) -5.3% PM on Q3 profit miss, light holiday sales forecast.
Intel (NASDAQ:INTC) +3.9% PM on Q3 beat, upside guidance.
Gilead Sciences (NASDAQ:GILD) -1% AH on flat Q3 revenue.
Visa (NYSE:V) +1% PM on Q3 earnings, dividend boost.
First Solar (NASDAQ:FSLR) -2.7% AH after Q3 loss.
Yamana Gold (NYSE:AUY) +2.9% AH on Q3 cash flow growth.
Illumina (NASDAQ:ILMN) -2.4% PM despite strong Q3 earnings.
Southwestern Energy (NYSE:SWN) +3% AH on Q3 operational efficiencies.
Aflac (NYSE:AFL) -3.7% AH despite upside guidance.
Juniper Networks (NYSE:JNPR) +5.1% AH amid earnings beat, stock buyback.
Alaska Air (NYSE:ALK) +1.3% AH on double-digit profit growth.
Capital One Financial (NYSE:COF) -2.6% AH as delinquency rate rises.
Cerner (NASDAQ:CERN) flat PM after mixed guidance.
Flex (NASDAQ:FLEX) -2.8% AH after revenue miss, mixed outlook.
Eastman Chemical (NYSE:EMN) -6.1% AH on Q3 miss.
Principal Financial Group (NASDAQ:PFG) -3.4% AH due to Q3 fee pressure, macro headwinds.
Proofpoint (NASDAQ:PFPT) -6.2% AH after beats, in-line guide.
Deckers Outdoor (NYSE:DECK) +1.3% AH on Q2 beat, upside guidance.
VeriSign (NASDAQ:VRSN) flat AH on in-line revenue, narrow outlook.
Today’s Economic Calendar
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
2:00 PM Treasury Budget
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Good morning. Happy Thursday.
The Asian/Pacific markets traded quietly while leaning to the upside. Hong Kong, Taiwan, Indonesia and Singapore did well while Thailand was weak. Europe, Africa and the Middle East are currently posting solid gains. The UK, Poland, Turkey, Russia, Saudi Arabia, Switzerland, Norway, Hungary, the Netherlands, Italy and Portugal are are leading. Futures in the States point towards a positive open for the cash market.
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VIDEO: Leavitt Brothers Overview
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The dollar is flat. Oil is down; copper is up. Gold and silver are flat. Bonds are up.
Stories/News from Seeking Alpha…
European stocks trade slightly higher as investors try to focus their attention away from the U.K. Brexit drama toward corporate earnings. The Stoxx 600 Index is up 0.3% at last check, with auto stocks doing the heavy lifting. Meanwhile, Asian markets were mostly higher following the blitz of earnings reports from the U.S. and no negative developments on the trade war front. Hong Kong’s Hang Seng Index rose 0.9% and Japan’s Nikkei gained 0.6%. South Korea’s Kospi closed up 0.2% after a strong earnings report from SK Hynix (OTC:HXSCF) tipped sentiment favorably, while Australia’s ASX 200 closed flat on the day. U.S. stock futures are pointing slightly higher ahead of another busy day of earnings reports. Amazon (NASDAQ:AMZN), Twitter (NYSE:TWTR), Intel (NASDAQ:INTC), Visa (NYSE:V) and Comcast (NASDAQ:CMCSA) are among the notable companies stepping up to the plate.
Eurozone PMI limps in
The Eurozone economy remained close to stagnation at the start of Q4, according to the latest flash PMI data. A further steep decline in manufacturing output was accompanied by one of the weakest service sector expansions since 2014. The flash eurozone manufacturing PMI rose to a two-month high of 46.2, while the flash services PMI rose to 51.8 from 51.6 in September. Flash composite PMI edged up to 50.2 from 50.1 in September to linger perilously close to the 50.0 mark that separates growth from contraction. Future expectations sank to the gloomiest level since 2013 and jobs growth hit the lowest mark since 2014.
Draghi says goodbye
Mario Draghi’s last meeting as European Central Bank chief is set for later today with his eight-year term due to expire at the end of the month. Draghi’s last meeting could be a lively one due to the division among policymakers over renewed asset purchases that threatens the effectiveness of the central bank’s policy measures. While economists predict no major changes to the ECB’s post-meeting policy statement from the September meeting blast, there could be more details on planned asset purchases and technical issues around the restarting of quantitative easing. What will Draghi’s parting shot be? “His sign-off message is likely to be that things would have been much worse had the ECB done less,” predicts Societe Generale’s Annenkov. Christine Lagarde replaces Draghi as ECB chief on November 1.
Okinawa oil deal on the way
Japan and Saudi Arabia struck a deal in principle at a ministerial meeting to renew a joint crude oil storage scheme out of Okinawa. The agreement is seen as providing Saudi Arabia quick and easy access to key customers in East Asia, while Japan gains energy security. Currently, Saudi Aramco (ARMCO) leases 1.30M kiloliters or 8.18M barrels of crude oil storage capacity at Okinawa for commercial purposes in exchange for prioritizing supply to Japan in the event of an emergency. “It is significant to renew the joint crude oil storage project,” stated Minister of Economy, Trade and Industry Isshu Sugawara on the deal. “Our country will continue to support Saudi Arabia’s stable oil supply through this project henceforward,” he added.
Surprise profit for Tesla
Tesla (NASDAQ:TSLA) racked up a double-digit gain after posting an unexpected profit in Q3 and delivering more than 96K cars. Looking ahead, Tesla says it’s highly confident it will deliver more than 360K vehicles this year (down from prior guidance). Positive quarterly free cash flow is anticipated going forward, with possible temporary exceptions around the launch and ramp of new products. The Model Y is on track to be released by summer 2020 and limited Tesla Semi trucks are expected to be produced sometime next year. On the post-earnings conference call, Elon Musk said Tesla Insurance will be expanded to other states and possibly other countries. Shares of Tesla are up 17.2% premarket after being up by more than 20% in the after-hours session.
Spotlight on Amazon
Amazon (AMZN) is scheduled to report Q3 earnings after the closing bell today. Analysts seem to be expecting a mixed report, with revenue surprising to the upside and the e-commerce giant’s focus on one-day shipping and a slowing cloud services business setting up a potential profit miss. Stifel thinks the earnings report could be an opportunity for investors. “We would be buyers on any weakness stemming from potentially lower margin as historically the company has emerged from past investment cycles in a stronger competitive position and generated stronger-than-expected operating income dollars,” reads the firm’s earnings preview. Yesterday, Amazon warmed up for the big report by acquiring Health Navigator for an undisclosed amount. The healthcare startup provides online symptom checking and triage tools for companies wanting to route patients to the appropriate care location.
Nordstrom storms Manhattan
Nordstrom (NYSE:JWN) is set to open its 320K square-foot Manhattan flagship store today. The store’s location on Broadway and 57th Street positions it to be a tourist draw, while Nordstrom’s collaborations with Nike (NYSE:NKE), Everlane, Burberry (OTCPK:BURBY), Madewell and others are aimed at raising the brand’s profile. “We’ve been looking at the New York market for years and we saw this opportunity to build a flagship in the fashion authority of New York City,” stated Nordstrom CFO Anne Bramman on the Big Apple strategy. Shares of Nordstrom are down 40% over the last 52 weeks.
Johnson & Johnson takes a profit hit
Johnson & Johnson (NYSE:JNJ) has confirmed its agreement in principle to settle opioid litigation by contributing $4B. The company says the proposed settlement would reduce reported GAAP net earnings for Q3 and the nine months ended September 29 to $1.8B from $4.8B and to $11.1B from $14.2B, respectively. The settlement would have no impact on adjusted earnings results for Q3 and for the nine-month period that ended on September 30.
Zuckerberg stands up for Libra on Capitol Hill
Facebook (NASDAQ:FB) chief Mark Zuckerberg sounded a defiant note amid six hours of questioning on Capitol Hill over his company’s plans for its Libra payments system, suggesting he’s sticking it out even as Libra faces increasing pushback from lawmakers. He repeated assurances that Libra wouldn’t launch anywhere in the world without an OK from U.S. regulators. Meanwhile, representatives took on everything from payments particulars to Facebook’s reputational problems and its (light) approach to policing political ads.
Nokia down 18% on slashing guidance, pausing dividends
Nokia (NYSE:NOK) plunged 18% PM on slashing guidance. It now expects FY19 Non-IFRS EPS of €0.21 (±€0.03), operating margin of 8.5% (±1%); FY20 Non-IFRS EPS of €0.25 (±€0.05), operating margin of 9.5%. The company will not distribute third and fourth installments of the dividend for FY18 to increase investments in 5G and strengthen cash position.
PG&E starts second, milder round of blackouts
PG&E (NYSE:PCG) launched a second round of intentional blackouts in California, this time cutting off power to 179,000 customers across 17 counties, amid more warnings of critical wildfire conditions. But this round was milder than an earlier set, which affected 750,000 homes and businesses, and power could be restored as soon as Thursday to some. Meanwhile, blackouts may come in the southern part of the state as well, with Southern California Edison considering shut-offs for 163,000 customers.
What else is happening…
Boeing (NYSE:BA) rides out tough Q3.
Microsoft (NASDAQ:MSFT) sees Intelligent Cloud boost.
Infosys (NYSE:INFY) says SEC probing whistleblower issue.
Ford (NYSE:F) slumps after cutting guidance.
Wednesday’s Key Earnings
Microsoft (MSFT) -3% AH on Q3 earnings beat, Azure growth.
Tesla (TSLA) +17.2% PM on surprise profit.
Ford Motor (F) -2.6% AH after disappointing guidance.
PayPal (NASDAQ:PYPL) +7.1% PM on Q3 earnings beat, upside guidance.
eBay (NASDAQ:EBAY) -6.3% PM after mixed Q3.
Lam Research (NASDAQ:LRCX) +6% PM on upside guidance.
Las Vegas Sands (NYSE:LVS) flat AH as Macau revenues drop.
Xilinx (NASDAQ:XLNX) -1% PM on 2H headwinds warning.
ServiceNow (NYSE:NOW) +6.7% PM after Q3 beat.
Washington Prime Group (NYSE:WPG) +4.5% AH on Q3 beat, reaffirmed FY guidance.
Align Technology (NASDAQ:ALGN) +6.8% PM on Q3 beat, strong Q4 guidance.
Range Resources (NYSE:RRC) +1.8% AH despite Q3 loss, revenue drop.
Edwards Lifesciences (NYSE:EW) +5.9% AH on guidance raise, strong Q3.
BioMarin Pharmaceutical (NASDAQ:BMRN) +3.5% AH on Q3 beat, FY guidance.
F5 Networks (NASDAQ:FFIV) +6.3% PM on strong software services revenue, partnership with AWS.
Canadian Pacific Railway (NYSE:CP) flat despite on Q3 beat, low operating ratio.
O’Reilly Automotive (NASDAQ:ORLY) +3.4% AH on strong Q3 profit.
Spirit Airlines (NYSE:SAVE) +5.8% AH after posting Q3 beat, big Airbus order.
Today’s Economic Calendar
8:30 Durable Goods
8:30 Initial Jobless Claims
9:45 PMI Composite Flash
10:00 New Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $32B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:00 PM Fed’s Williams Speech
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned down. Japan, Indonesia and Thailand did well, while China, Hong Kong, South Korea, New Zealand and Singapore were weak. Europe, Africa and the Middle East currently lean down. Turkey, Finland, Hungary and Austria are up; Denmark, France, Greece, South Africa, Norway and Italy are down. Futures in the States point towards a slight down open for the cash market.
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VIDEO: Leavitt Brothers Overview
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The dollar is flat. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
A slowdown warning from Texas Instruments (NASDAQ:TXN) and widened antitrust probe into Facebook (NASDAQ:FB) weighed on the tech sector overnight, though U.S. stock index futures are heading back to the starting line as the next wave of Q3 earnings roll in. Big names on the radar today include Boeing (NYSE:BA) and Caterpillar (NYSE:CAT), which post results before the bell, and Microsoft (NASDAQ:MSFT) and Tesla (NASDAQ:TSLA), which report after the close. Profits for the S&P 500 are expected to fall by 3.1% for the quarter, after growing by more than 3% in Q2, according to Refinitiv, but it may be like other quarters where results beat forecasts and overall earnings gain.
Zuckerberg to Capitol Hill
There’s a lot of news swirling around Facebook (FB) as Mark Zuckerberg prepares to testify on cryptocurrency plans today before the House Financial Services Committee. According to his prepared testimony, Facebook will support delaying Libra’s launch, currently set for mid-2020, and won’t introduce its Libra payments system anywhere in the world unless all U.S. regulators approve it. Competition concerns? FB shares slipped almost 4% yesterday as New York AG Letitia James announced that 47 attorneys general from states and U.S. territories plan to take part in an antitrust probe into Facebook.
SoftBank clinches WeWork takeover
Shares of SoftBank (OTCPK:SFTBY) fell as much as 3% overnight as the tech conglomerate agreed to spend more than $10B for an 80% stake in WeWork (WE), which is in danger of running out of cash in the coming weeks. The deal takes its total investment to more than $13B, though the office-space sharing startup is now valued at just $8B. As part of the deal, WeWork will appoint SoftBank COO Marcelo Claure to executive chairman of its board of directors, while former WeWork CEO Adam Neumann will become a “board observer.”
Nike CEO announces 2020 departure
Long-time Nike (NYSE:NKE) CEO Mark Parker will step down next year and be replaced by board member and former eBay (NASDAQ:EBAY) CEO John Donahoe, who will be tasked with bolstering the company’s online strategy. Parker said that recent Nike scandals, including one involving track coach Alberto Salazar, had “absolutely nothing” to do with him leaving the top job and that succession plans have been months in the making. “This is not something that happens in a matter of weeks,” he told CNBC.
Possible U.K. election
Brexit is set to be delayed for a third time after U.K. lawmakers accepted the principles of Boris Johnson’s deal but rejected his timetable for implementing it by Oct. 31. Reports in Britain now suggest that Downing Street will push for an election if Brexit is delayed until January – as indicated by European Council President Donald Tusk. Sterling slid below $1.2850 on the news, but with the final outcome still up in the air, the decline was contained overnight.
Smaller penalty for 1MDB scandal?
Malaysia has continuously demanded Goldman Sachs (NYSE:GS) pay an eye-popping $7.5B for its role in the 1MDB scandal, but privately, negotiators are considering settling for less than half of that, Bloomberg reports. Discussions are now centering on a $2B-$3B payment, with Prime Minister Mahathir Mohamad keen to reach a deal with Goldman this year as the government grapples with a high debt burden. Simultaneously, Malaysian prosecutors are trying to turn up the pressure by pushing for the bank’s criminal case to be heard at the country’s High Court.
Aerospace giants team up for lunar lander
Jeff Bezos is making some space headlines, with his Blue Origin (BORGN) partnering with industry giants to land humans back on the surface of the moon under NASA’s Artemis program. The company is the new group’s prime contractor and will provide its lunar lander called Blue Moon. Others? Lockheed Martin (NYSE:LMT) is building the reusable vehicle that will then return astronauts from the surface of the Moon, known as the “Ascent Element,” Northrop Grumman (NYSE:NOC) will supply the “Transfer Element” and landing gear, while Draper will provide flight avionics.
Boeing design faulted in Lion Air crash
Flaws in the design of Boeing’s (BA) 737 MAX and lack of information on how to deal with MCAS malfunctions contributed to last year’s crash of Lion Air Flight 610, which killed 189 people, according to Indonesian investigators. The findings could influence regulators worldwide as they assess the fate of the plane, which has been grounded globally since March 13, costing the company over $8B. Boeing shuffled the ranks of top management on Tuesday, replacing the head of its jetliner business as it struggles to shore up confidence in its handling of the 737 MAX crisis.
Climate change trial
In opening arguments at New York’s climate change fraud trial, a lawyer for the state attorney general argued that Exxon Mobil (NYSE:XOM) used two sets of books to hide the true cost of climate change regulations from investors, while an attorney for XOM blasted the claims as politically motivated. The statements launched the long-awaited trial in a civil lawsuit filed by the New York AG’s office last year accusing Exxon of defrauding investors out of $1.6B by causing them to overvalue its stock.
Unrest in Chile
Emerging market investors trading the Chilean peso have taken a hit as the worst protests in decades hit the country, leading to thousands of arrests and 15 deaths. Some European companies are exposed, like miners with operations in the copper-rich nation, while JPMorgan has turned bearish on the country’s domestic stocks, lowering the country to underweight from neutral. Chile’s President Sebastián Piñera acknowledged government failures overnight and announced economic reforms intended to restore calm to the country.
What else is happening…
Google (GOOG, GOOGL) lays claim to quantum supremacy.
Pentagon chief recuses himself from JEDI review.
Lexus (NYSE:TM) plans battery EV launch in 2020.
The Fed could soon own 12% of U.S. Treasury bill market.
Blackstone (NYSE:BX), CVC may take Paysafe public again.
Best Buy (NYSE:BBY) makes next-day delivery push.
Disney+ (NYSE:DIS) closes in on Netflix (NASDAQ:NFLX) with Verizon (NYSE:VZ) promotion.
Tuesday’s Key Earnings
Biogen (NASDAQ:BIIB) +26.1% resurrecting Alzheimer’s drug.
Chipotle (NYSE:CMG) -2.1% AH reversing after crushing estimates.
Harley-Davidson (NYSE:HOG) +8% riding through tariff-impacted quarter.
Hasbro (NASDAQ:HAS) -16.8% stung by the trade war.
JetBlue (NASDAQ:JBLU) +7.3% topping Q3 profit expectations.
Kimberly-Clark (NYSE:KMB) -7.1% trailing the report from P&G.
Lockheed Martin (LMT) -0.1% held back by FCF concerns.
McDonald’s (NYSE:MCD) -5% posting a rare earnings miss.
Novartis (NYSE:NVS) +0.5% with a strong start to Zolgensma.
Procter & Gamble (NYSE:PG) +2.6% amid strong organic sales.
Snap (NYSE:SNAP) -3.4% AH on light guidance.
Texas Instruments (TXN) -9.8% AH posting a downside forecast.
Travelers (NYSE:TRV) -8.3% amid a “challenging tort environment.”
United Technologies (NYSE:UTX) +2.2% increasing guidance.
UPS (NYSE:UPS) -2% announcing its COO retirement.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
9:00 FHFA House Price Index
10:30 EIA Petroleum Inventories
11:30 Results of $20B, 2-Year FRN Auction
1:00 PM Results of $41B, 5-Year Note Auction
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Good morning. Happy Tuesday.
The Asian/Pacific markets closed mostly up. Japan, China, South Korea, Taiwan, Indonesia, Singapore, Thailand and the Philippines did well; India was weak. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, Poland, Turkey, the UAE, Russia, Hungary, Israel and Saudi Arabia are leading. Futures in the States point towards a positive open for the cash market.
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VIDEO: State of the Market
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The dollar is up. Oil is up; copper is down. Gold and silver are flat. Bonds are up.
Stories/News from Seeking Alpha…
Done with Brexit headlines? Not yet. Boris Johnson will finally put his Withdrawal Agreement to a vote in Parliament today, in the first test of whether he has won over enough lawmakers to his plan to pull the U.K. out of the EU. The agreement lays out conditions for an orderly exit from the bloc, detailing treatment of citizens, a financial settlement and a plan to avoid a border on the island of Ireland. While many hurdles still lay ahead, the long-term case for the pound appears strong, while U.K. stocks are “investable” again, according to Morgan Stanley.
Futures search for direction
U.S. stocks wavered between slight gains and losses overnight as traders continue to assess whether the two major themes dominating sentiment all year – the U.S.-China trade war and Brexit – will turn out all right. Early indications also suggest S&P 500 companies might avoid a first annual aggregate profits contraction since 2016, for the third quarter in a row. What’s going on in the bond market? 10-year Treasury yields are at their highest level in almost a month as the yield curve between three months and 10 years moves further back into positive territory.
Rescue strategy
After pulling plans in September for an initial public offering, WeWork (WE) faces a real threat of running out of cash as early as next month without new financing. Confronted with the possibility, the We Company’s board will meet today to evaluate SoftBank’s (OTCPK:SFTBY) $5B debt financing versus an alternative proposal from JPMorgan (NYSE:JPM). SoftBank is also proposing to accelerate a previous $1.5B equity commitment and launch an up-to-$3B tender offer to acquire WeWork shares in a move that would lead to the exit of Chairman Adam Neumann.
Earnings underway for big European banks
Despite a “challenging environment,” UBS (NYSE:UBS) reported third-quarter net income of $1.05B versus a consensus estimate of $971M. Investment banking revenues were down 59% on “persistent” negative rates, but the firm got a boost from its affluent clients, who added $15.7B in new money last quarter. The inflows give a boost to star hire Iqbal Khan as he seeks to revitalize the key wealth management unit. UBS +1.7% premarket.
Effects of going sub-zero
Negative interest rates have “adverse consequences which we do not fully understand,” JPMorgan (JPM) CEO Jamie Dimon told CNBC-TV18. “I think when they did it earlier on, there was a notion that we are saving the EU, the monetary union, which is one thing. I think as a permanent part of policy, it is a really bad idea… If you want to have growth you better really think through with the policies, not just on negative rates but capital allocation et cetera,” he added. “So, I hope it doesn’t happen in United States.”
Opioid talks set to resume
Four large drug distributors, Teva (NYSE:TEVA), McKesson (NYSE:MCK), AmerisourceBergen (NYSE:ABC) and Cardinal Health (NYSE:CAH), could resume talks today on reaching a $48B settlement of all opioid litigation against them. It follows yesterday’s $260M deal with two Ohio counties that averted the first federal trial over their role in the U.S. opioid epidemic. According to data from S3 Partners, October has been a rough month for short sellers betting against companies at the heart of the opioid crisis, although those traders still have paper profits of almost $600M for the year.
Stamps.com inks partnership with UPS
Stamps.com (NASDAQ:STMP) +27.8% premarket following the announcement of a deal with UPS (NYSE:UPS) that will give its customers access to specially discounted shipping rates. “This new collaboration will make attractive discounts of up to 55 percent off daily rates, including various waived surcharges,” UPS said in a statement. Stamps.com dissolved its partnership with the U.S. Postal Service in February in place of a big bet on Amazon (NASDAQ:AMZN) gaining a larger market share in the shipping space.
Force is strong with the Mouse House
Disney’s (NYSE:DIS) Rise of Skywalker sold 45% more tickets during its first hour on Atom Tickets than Avengers: Endgame did during its first hour earlier this year (and the latter turned out to be the highest grossing film of all time). Both Marvel and Lucasfilm have been a big blessing for Disney, with combined gross earnings at the box office of over $20B since it bought the franchises in 2009 and 2012, respectively. That doesn’t include money made from toys and other merchandise, as well as revenue from the new Galaxy’s Edge areas at Disney’s theme parks.
Up in Canada
Prime Minister Justin Trudeau will remain in power with a minority government, the Canadian Broadcasting Corp. projected after polls closed across the country, following an election campaign marred by the SNC-Lavalin scandal and blackface controversy. Canada’s economy has been on a general upswing in 2019. The loonie has been the best performing G10 currency this year, rising more than 4% against the greenback, while the economy added jobs at a robust pace and inflation stayed close to the BoC’s 2% target.
What else is happening…
Nvidia (NASDAQ:NVDA) forms big tech partnerships for 5G.
UPS (UPS) follows rival FedEx (NYSE:FDX) on drone deliveries.
EU regulator could clear Boeing’s (NYSE:BA) 737 MAX by January.
Bidding war erupts over Just Eat (OTCPK:JSTTY).
Apple (NASDAQ:AAPL) is building its iPhone XR in India.
Bracing for competition, Netflix (NASDAQ:NFLX) preps $2B debt offering.
Second state drops out of Sprint (NYSE:S)-T-Mobile (NASDAQ:TMUS) lawsuit.
Monday’s Key Earnings
Halliburton (NYSE:HAL) +6.4% pledging to cut costs.
SAP (NYSE:SAP) +2.8% on a three-year cloud deal.
TD Ameritrade (NASDAQ:AMTD) +4.3% AH following strong guidance.
Today’s Economic Calendar
8:55 Redbook Chain Store Sales
10:00 Existing Home Sales
10:00 Richmond Fed Mfg.
1:00 PM Fed’s Kaplan Speech
1:00 PM Results of $40B, 2-Year Note Auction
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets traded quietly. Japan, Hong Kong, India and Singapore posted gains; Thailand closed down. Europe, Africa and the Middle East are currently mostly up. Poland, Germany, Russia, South Africa, Finland, Norway, Spain, Italy, Belgium, Austria, Sweden and the Czech Republic are doing well; Turkey is weak. Futures in the States point towards a moderate gap up open for the cash market.
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VIDEO: Leavitt Brothers Overview
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The dollar is down. Oil is down; copper is up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
In an about-face, Prime Minister Boris Johnson has asked European lawmakers for an extension of the Brexit deadline until the end of January 2020. He was forced to capitulate after Parliament voted 322 to 306 to withhold support for the deal until the passage of legislation to implement it.
Senator Warren to release funding plan for “Medicare for All”
Democratic frontrunner Senator Elizabeth Warren will “soon” release her plan to fund U.S. universal health care, known as “Medicare for All.” Voters and rivals are keen to see the details, since it will take trillions to fund a government-backed single-payer system.
Boeing continues damage control efforts over software linked to crashes
Boeing (NYSE:BA) released a statement clarifying comments made in 2016 from a technical pilot about its flight control software, saying the dialogue pertained to flight simulator software. It added that his comments did not mean that the company had prior knowledge of flaws that led to the two crashes.
Economic chiefs consider fiscal stimulus to stoke growth
At meetings in Washington, DC, finance ministers and central bankers were warm to the idea of fiscal stimulus, but there was little agreement on precisely what to do. U.S. Treasury Secretary Mnuchin believes “all tools” should be used as the benefits of monetary easing shrink.
China committed to resolving trade war with U.S. – Vice Premier Liu He
In rare public comments by a senior government official, Vice Premier Liu He said that China will work with the U.S. to resolve the core issues of the trade war, adding that stopping it would benefit both sides and the world. A deal could limit the damage to global growth.
Bank of Japan mulls more monetary stimulus to hit inflation target
Facing a weak global economy and softer domestic demand after a recent sales tax hike, the BOJ is considering even more stimulus aimed at hitting its 2% inflation target. The central bank projects 1% inflation this fiscal year and lower than 2% the following two years.
Opioid players in Ohio court Monday
Lawyers for Teva Pharmaceutical Industries (NYSE:TEVA), AmerisourceBergen (NYSE:ABC), Cardinal Health (NYSE:CAH) and Walgreens Boots Alliance (NASDAQ:WBA) will be in a Cleveland district court on Monday to face accusations from two counties in the state that their actions were the main drivers of the opioid epidemic there. Last-minute settlement talks stalled, but a deal could still be reached while the trial progresses.
Disney’s Maleficent sequel tops weekend box office but gross disappoints
Disney’s (NYSE:DIS) Maleficent: Mistress of Evil was number one in the U.S. in its debut weekend, but the $36M gross was only about half the original’s. Joaquin Phoenix’s Joker was #2, maintaining its momentum from its October 4 release.
Frackers float mortgage bond-like security to raise much-needed cash
Cash-burning fracking companies, consumers of more than $100B since 2014, are turning to a new security akin to a mortgage-backed bond to raise much-needed capital. The instrument, issued from a company-created special entity with ownership rights to wells, is paid off with production revenues. Yields are ~6% for the highest-quality wells and higher for riskier assets.
Insurers face wave of claims from child abuse cases
U.S. insurance companies are facing potential payouts that could reach into the billions related to child sex abuse cases after 22 states and Washington, DC enacted laws extending or eliminating the statute of limitations for claims.
SAP, Microsoft disclose three-year cloud deal
SAP and Microsoft (NASDAQ:MSFT) have come to a three-year deal to help large enterprise customers move processes to the cloud. The “Embrace” partnership is an extension of an existing close (but nonexclusive) relationship between SAP and Microsoft’s Azure operations. The deal has already helped SAP double new cloud bookings for Q3.
UBS reportedly cutting 30 jobs in Asian banking centers
UBS is cutting up to 30 jobs in Asian banking centers – mainly Hong Kong and Singapore, along with Sydney and Tokyo – following the combination of its global markets and banking businesses, Reuters says. Those cuts will hit both front and back office positions. One aspect of its business streamlining is the merger of the bank’s main equities unit with smaller foreign exchange, rates and credit trading operations.
What else is happening…
Thomson Reuters (NYSE:TRI): CEO search “succession planning.”
Samsung (OTC:SSNLF) plans to sell as many as 6M foldable phones next year.
Saudi Aramco (ARMCO) to delay IPO promotion until after Q3 results.
Barrick Gold (NYSE:GOLD) to restart mining in Tanzania after deal with government.
Today’s Economic Calendar
11:40 Fed’s Bowman Speech