Good morning. Happy Friday. Happy November. Happy Employment Numbers Day.
The Asian/Pacific markets leaned to the upside. China, Hong Kong and South Korea did well; Thailand and the Philippines were weak. Europe, Africa and the Middle East currently lean up. The UK, Denmark, France, Germany, Russia, Spain, the Netherlands and Italy are doing well; Turkey, Greece and Hungary are down. Several markets are closed. Futures in the States point towards a moderate gap up 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 flat. Gold and silver are down. Bonds are down.
Here are the employment figures.
unemployment rate: 3.6%
nonfarm payrolls: +128K
private payrolls:
average workweek:
hourly wages: up 0.2% to $28.18
labor participation rate: up to 63.3%
August number revised up to 168K from 130K.
Stories/News from Seeking Alpha…
Today’s non-farm payrolls report is expected to be unusually weak, weighed down by a strike at General Motors (NYSE:GM). Economists expect that only 89,000 jobs were created in October, down from 136,000 in September, with the unemployment rate ticking up slightly to 3.6% from 3.5%. A better gauge of the U.S. economy may, in fact, be this morning’s ISM manufacturing data, which is likely to show a contraction for the third month in a row. Factory activity has been at the heart of recent sluggishness, with a decline in business investment a big reason for the weak 1.9% GDP growth pace seen during Q3.
Equities head higher
Stocks across the globe are back in the green as a surprise bounce in Chinese manufacturing activity overshadowed doubts raised by a Bloomberg report on whether the U.S. and China can reach a long-term trade deal. The Caixin/Markit manufacturing PMI came in at 51.7 for October, the fastest expansion in more than two years, as export orders and production rose. Shanghai climbed 1% on the news, the Euro Stoxx 50 is up 0.4%, while U.S. stock index futures have pulled ahead by 0.3%.
5G goes online in China
China turned on its 5G networks ahead of schedule on Friday – after initially targeting a 2020 launch – amid an ongoing trade war with the U.S. that has turned into a battle over tech supremacy. President Trump said earlier this year that “the race to 5G is on and America must win,” and has been seeking to convince other countries to ban Huawei from their next-generation networks. China Telecom (NYSE:CHA), China Unicom (NYSE:CHU) and China Mobile (NYSE:CHL) all unveiled 5G plans that start at around 128 yuan ($18) per month, though experts have warned of challenges to adoption, including price and a lack of 5G capable handsets.
Big Oil earnings
Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) this morning will join the more than two-thirds of Dow components that have already posted Q3 results. “If I look at the differentiation between Exxon Mobil and Chevron, Exxon has been in a series of lower lows and lower highs for quite some time. Chevron, though, looks like it’s in a high-level trading range after the stock moved from $70 to $130 and it’s just consolidating,” said Craig Johnson, chief market technician at Piper Jaffray. The two stocks have come under pressure this week as the rest of the energy space sold off, “but, integrated, the big companies have been a safe haven within that sector,” said Michael Binger, president of Gradient Investments.
Keystone pipeline shut after spill
Around 9,120 barrels of oil have spilled from TC Energy’s (NYSE:TRP) Keystone crude pipeline in North Dakota, making it one of the biggest onshore crude spills in the past decade and the largest for Keystone. The leak comes at a time of increased regulatory scrutiny of oil pipeline development. TC Energy has faced many regulatory and environmental hurdles as it seeks to expand its pipelines linking Western Canadian oil fields to U.S. refineries via Keystone XL.
China bans online e-cig sales
The e-cigarette industry’s fortunes have soured quickly over the past few months as a lung disease linked to vaping affected hundreds and killed 37 people. China has become the latest to ban online e-cig sales, while marketing campaigns across the nation will be brought to a halt. Once seen as a useful tool to help smokers quit traditional cigarettes, e-cigarette sales are now banned by 27 countries, including India and Australia.
More vaping gloom
Altria (NYSE:MO) wrote down its investment in Juul by more than a third on Thursday, recording a $4.5B pretax charge against its third-quarter earnings. There wasn’t a specific event or factor that led to the write-down, but the company cited the Trump administration’s plans to remove flavored e-cigarettes from the market as well as e-cig bans by cities and states around the U.S. Altria invested $12.8B for a 35% stake in Juul late last year, valuing the e-cigarette maker at $38B.
House close to approving USMCA
“We are moving with the U.S.-Mexico-Canada trade agreement, making progress every day,” Speaker Nancy Pelosi said on Thursday. “I’m optimistic that we are still on a path to yes, and that… we will come to conclusion soon on that.” Mexico has already ratified the trade pact, but Canada has not. Pelosi gave no details on what changes Democrats have secured, but said the trade agreement could eventually be a model for future trade deals.
Lagarde takes reins of the ECB
Christine Lagarde begins her new gig atop the European Central Bank today at a time when persistently low inflation and weak growth are showing the limits of monetary policy. Under a 2012 pledge to do “whatever it takes” to save the eurozone from collapse, predecessor Mario Draghi drove interest rates deep into negative territory and pumped trillions of euros into the economy through QE. With an almost exhausted ECB monetary toolkit, unprecedented dissent has broken out between those eurozone members who back this policy and those who are losing faith in further easing.
What else is happening…
U.S. oil production shatters monthly record.
Aramco (ARMCO) hopes to begin its planned IPO on Sunday.
Marriott (NASDAQ:MAR) sells New York’s St. Regis to Qatar.
Cisco (NASDAQ:CSCO) dips after Arista’s (NYSE:ANET) dim Q4 guidance.
Shakeup continues at Nissan Motor (OTCPK:NSANY).
Samarco (BHP, VALE) set for restart after deadly dam collapse.
Thursday’s Key Earnings
Altria (MO) -2.6% taking a $4.5B hit on Juul.
Bristol-Myers Squibb (NYSE:BMY) +0.9% topping expectations.
DuPont (NYSE:DD) +0.5% after mixed Q3 results.
Kraft Heinz (NASDAQ:KHC) +13.5% following an EBITDA beat.
Marathon Petroleum (NYSE:MPC) -3.4% as CEO Heminger announced retirement.
Pinterest (NYSE:PINS) -20% on revenue miss, downside outlook.
Sirius XM (NASDAQ:SIRI) +3.9% amid revenue growth, guidance hike.
U.S. Steel (NYSE:X) +5.8% on lighter-than-expected Q3 loss.
Today’s Economic Calendar
8:30 Non-farm payrolls
9:30 Fed’s Kaplan Speech
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
12:00 PM Fed’s Williams Speech
1:00 PM Baker-Hughes Rig Count
1:00 PM Fed’s Clarida Speech
1:00 PM Fed’s Quarles: “Friedrich Hayek and the Price System”
1:00 PM Fed’s Mary Speech
2:30 PM Fed’s Williams Speech
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Good morning. Happy Thursday. Happy Halloween.
The Asian/Pacific markets closed mixed. Hong Kong, Malaysia and Singapore did well; China, Indonesia and the Philippines were weak. Europe, Africa and the Middle East are currently mostly down. South Africa is posting a gain, but the UK, Denmark, Poland, Finland, Norway, Austria, Sweden, Saudi Arabia and the Czech Republic are down moderately. Futures in the States point towards a down open for the cash market.
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VIDEO: State of the Market
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The dollar is down. Oil is flat; copper is down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Fiat Chrysler and Peugeot owner PSA have officially agreed to join forces through a 50-50 share swap, creating the world’s fourth-largest automaker. “In a rapidly changing environment, with new challenges in connected, electrified, shared and autonomous mobility, the combined entity would leverage its strong global R&D footprint and ecosystem,” the companies said in a statement. The deal calls for paying a special dividend of €5.5B to Fiat (NYSE:FCAU) investors and for PSA (OTCPK:PEUGF) to spin off to its shareholders a €3B stake in parts maker Faurecia (OTCPK:FURCF). It’s also likely to be approved by the French government, which shot down a merger with PSA’s French rival Renault (OTCPK:RNLSY) just five months ago.
More car industry news
Ford (NYSE:F) has reached a tentative agreement with the United Auto Workers union on a new labor contract for its U.S. workers, likely avoiding a strike that cost its larger rival General Motors (NYSE:GM) about $3B. The deal includes $6B in new investments from Ford and the creation and retention of more than 8,500 jobs. Other details were not disclosed, but they are expected to follow the basic pattern set in the GM contract, which includes lump-sum payments and annual pay increases that lift production wages up to $32.32/hour by 2023.
Futures fall back
Up for most of the night after the Fed cut rates for the third time this year – and indicated the possibility of a pause in the easing cycle – U.S. stock index futures are turning around sharply. The DJIA is now pointing to a 100-point decline at the open following a report from Bloomberg that said Beijing has doubts about reaching a comprehensive long-term trade agreement with the U.S. Chinese officials have warned they won’t budge on the thorniest issues and they remain concerned about President Trump’s impulsive nature, as well as the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks.
Big Tech earnings
Showing it has life beyond the iPhone, Apple (NASDAQ:AAPL) beat Wall Street’s fiscal fourth-quarter expectations and issued strong guidance for the holiday quarter. The stock rose 2% AH on a big boost from its Wearables, Home & Accessories segment, which saw revenue grow 54% Y/Y, comfortably beating a $5.94B consensus. Facebook (NASDAQ:FB) shares also traveled upward, rising 4.6% AH, as strong double-digit gains were seen across nearly all metrics.
Twitter is axing political ads
Twitter (NYSE:TWTR) will ban political advertising on its platform next month in an apparent swipe at Facebook (FB), which has received criticism in recent weeks over its policy to neither fact check nor remove political ads placed by politicians. “We believe political message reach should be earned, not bought,” Twitter’s Jack Dorsey declared. Paying for reach removes individual decisions to follow an account or retweet, he points out, “forcing highly optimized and targeted political messages on people. We believe this decision should not be compromised by money.” TWTR -2% premarket.
Tough times for chipmakers
Samsung Electronics’ (OTC:SSNLF) operating profit for the three months ending in September fell 56% versus the same period a year ago. While that number ticked up almost 18% from the previous quarter and beat the company’s own guidance from earlier this month, Samsung expects “demand for components to turn sluggish in general amid weak seasonal effects.” Analysts say there could be a slow recovery in the semiconductor space, with chipmakers struggling due to low prices and demand for memory chips.
Hong Kong in recession
The Hong Kong Monetary Authority chopped its policy rate by 25 basis points overnight, tracking the Federal Reserve as obligated by Hong Kong’s currency peg with the greenback. Two of Hong Kong’s biggest banks, HSBC (NYSE:HSBC) and Standard Chartered (OTCPK:SCBFF), also cut their key benchmark rates in the city, their largest market, which officially fell into a recession amid the months-long protests. The economy shrank 3.2% in Q3 from the period just before, marking the worst quarter-to-quarter drop since 2009.
China manufacturing shrinks again
Factory activity in China contracted for the sixth straight month in October and by more than expected, while service sector growth eased as companies face the weakest economic growth in nearly 30 years. Weighed down by slowing global demand and the Sino-U.S. trade war, the manufacturing PMI fell to 49.3, versus 49.8 in September, according to the country’s statistics bureau. The figures will heap pressure on policymakers to roll out more stimulus to avoid a sharper slowdown and job losses.
Trade deal delay
The Trump administration still expects to sign an initial trade deal with China next month, even as Chile said ongoing protests in the country would prevent it from hosting the APEC summit, where both sides were expected to finalize the accord. Chinese officials also voiced optimism that Beijing and Washington can find a way to clinch the so-called Phase One trade agreement in November. Bilateral talks will continue to proceed as previously planned and the lead trade negotiators from both countries will speak by telephone on Friday.
Trick or treat!
More than 172M Americans plan to celebrate Halloween this year and are expected to spend about $8.8B on the holiday, according to the National Retail Federation. That’s the third-highest figure in the survey’s 15-year history, after the record $9.1B set in 2017. “We are seeing a noticeable increase in consumers whose Halloween purchases are inspired by their friends, neighbors and even celebrities on social media,” NRF President and CEO Matthew Shay said. “Retailers expect to have another strong Halloween season and have stocked up on candy, decorations and the season’s most popular costumes.”
What else is happening…
World Series pulls Fox (NASDAQ:FOX) to top of TV ratings.
Alibaba (NYSE:BABA) set to resume Hong Kong listing plans.
Lower energy prices weigh on Shell (NYSE:RDS.A) results.
Exxon (NYSE:XOM) climate plan wasn’t fake, says Rex Tillerson.
MGM Resorts (NYSE:MGM) is eyeing more real estate deals.
Wednesday’s Key Earnings
Apple (AAPL) +2% AH as iPhone, Wearables drove beats.
Facebook (FB) +4.6% AH amid double-digit Q3 gains.
General Electric (NYSE:GE) +11.5% on beat, FCF guidance raise.
Lyft (NASDAQ:LYFT) +2.2% AH blasting past sales estimates.
McKesson (NYSE:MCK) -8.4% as U.S. drug unit margins compressed.
Molson Coors (NYSE:TAP) -3.1% with reorganization on tap.
Southern Company (NYSE:SO) +2.8% posting impressive Q3 beat.
Starbucks (NASDAQ:SBUX) +3% AH on strong U.S., China sales growth.
Twilio (NYSE:TWLO) -7.8% AH giving disappointing forecast.
Western Digital (NASDAQ:WDC) -9.9% AH announcing CEO succession plan.
YUM! Brands (NYSE:YUM) -5.8% after comp sales miss.
Today’s Economic Calendar
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
8:30 Employment Cost Index
9:45 Chicago PMI
10:30 EIA Natural Gas Inventory
3:00 PM Farm Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday. Happy Fed Day.
The Asian/Pacific markets closed mixed. India, Taiwan and Thailand closed up; China, Hong Kong, Singapore and Australia closed down. Europe, Africa and the Middle East are currently mixed and little changed. The UAE, Russia and Saudi Arabia are up; Denmark, Turkey and Spain 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 flat. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Monetary policy will be front and center for investors today, and futures are trading sideways – after failing to make any major moves on Tuesday – before the big Fed decision. While divisions remain on the FOMC about the need to lower borrowing costs further, the committee is expected to cut interest for the third time this year (to a new range of between 1.5% and 1.75%), while signaling that it is done for now. Watch for Jerome Powell’s presser to see if he takes a page from the Greenspan playbook. His mentor cut rates three times in midcycle adjustments in 1995-1996, and again in 1998, to counter economic risks.
GDP expected to show a slowdown
The central bank’s rate decision will come hours after the release of U.S. Q3 GDP data, which is forecast to show a further slowdown due to slowing business investment and recent weakness in retail sales. Economists are estimating gross domestic product increased at a 1.6% annualized pace in the July to September period, down from a 2% expansion in the second quarter. This morning’s ADP private sector payroll is also expected to show job growth of just 100K, according to Dow Jones, but traders may hold their reaction to the numbers as they wait to see what the Fed is going to do.
Big earnings on tap
Apple’s (NASDAQ:AAPL) results today will provide some early insight into how its new iPhones are selling as investors watch the tech giant’s forecast for the all-important holiday season. Facebook (NASDAQ:FB) is expected to post a rise in Q3 revenue amid a steady rise in advertising despite concerns that cloud its privacy and data protection standards. Reporting Q3 figures early this morning, General Electric (NYSE:GE) shares jumped 6.5% premarket after an earnings beat and raising its 2019 cash flow forecast.
Deutsche Bank still suffering
A sweeping overhaul failed to arrest a slump at Deutsche Bank (NYSE:DB) in Q3, with the lender reporting its second consecutive quarterly loss of €832M as it exits businesses and absorbs restructuring costs. Declines were also seen in one area of traditional strength – fixed income trading – while a €1B pretax loss was taken at its Capital Release Unit (an entity that is selling or winding down various divisions). Better news was seen at Credit Suisse (NYSE:CS), which posted robust profits for Q3, as well as Standard Chartered (OTCPK:SCBFF), which was helped by rising income from corporate and private banking clients. DB -5.3% premarket.
Alternative (alternative) protein
Beyond Meat (NASDAQ:BYND) shares plunged a staggering 22% on Tuesday after the company warned on a post-earnings conference call that discounting could be dialed up as competition in alternative protein heats up. “We do anticipate we’ll be doing more promotion through trade and discounts going into the future,” noted Executive Chair Seth Goldman. Volume spike… More than 28M shares swapped hands, representing nearly 50% of all BYND shares outstanding, as the expiration of the IPO share lockup further weighed on the stock.
AT&T lays out price for HBO Max
AT&T (NYSE:T) played it safe with its new streaming service HBO Max by selling it for $14.99 a month, the same price it currently offers for HBO, and making it free for current HBO customers. That compares with Netflix’s (NASDAQ:NFLX) standard $12.99 plan, and pricing for Disney Plus (DIS, $6.99) and Apple’s TV Plus (AAPL, $4.99). HBO Max, which will launch next May, will offer HBO programs, hit shows and movies from the Warner Bros. library, as well as new content from prolific TV producer Greg Berlanti and actress-producer Mindy Kaling.
Miss your old flip phone?
Samsung (OTC:SSNLF) unveiled ‘One UI 2’ at its annual developer conference in San Jose on Tuesday, racing ahead in foldable devices after it launched its first model in September. A short demo showed a user recording video in full screen at one moment, and creating a split view with more extensive controls when bending the device 90 degrees. Despite a lot of screen issues with the Galaxy Fold, it’s clear Samsung isn’t ready to give up on foldable display technology as it battles Apple (AAPL) and Huawei in an increasingly saturated market.
Car consolidation
Shares already rose 7.6% yesterday on reports of the news, but Fiat Chrysler (NYSE:FCAU) has confirmed talks with PSA Group (OTCPK:PEUGF) “on a possible business combination.” If successful, the merger would give its French rival access to the U.S. market for the first time in decades, and give Fiat a partner to survive major technological shifts in the industry. The Italian-American carmaker’s planned tie-up with Renault was scrapped earlier this year after it failed to win the full backing of the French government.
EV revolution
With over 5.1M electric cars on the roads globally, or 0.6% of the passenger car stock worldwide, General Motors (NYSE:GM) is doubling down on production of clean energy vehicles. In fact, the Detroit automaker expects to spend more on developing and selling EVs than gasoline-powered cars over the next five years, CEO Mary Barra told analysts on a conference call. Concerns about employment levels – due to EVs making up a larger share of the market – were also expressed in the recent strike by the UAW union, which just ratified a new four-year labor deal after costing GM $3B in lost earnings.
Aviation industry struggles
Facing production delays at its newly expanded plant in Hamburg, Germany, Airbus (OTCPK:EADSY) is having a hard time capitalizing on the grounding of Boeing’s (NYSE:BA) 737 MAX. The French planemaker now expects to deliver 860 commercial aircraft this year, a company record, though that is down from a previous estimate of 880 to 890, while it cut its free cash flow guidance to €3B for 2019 from as much as €4B earlier. Despite the cuts, Airbus is still on track to overtake Boeing as the world’s largest aircraft manufacturer, handing over 571 planes to customers in the first nine months of the year, compared with 301 for Boeing.
Bid to resolve Brexit impasse
The U.K. appears headed to a December general election after opposition Labour Party leader Jeremy Corbyn dropped his objections to an early election, saying he’s now satisfied that a no-deal Brexit is off the table. Prime Minister Boris Johnson hopes that an early vote will break the legislative stalemate by securing a clear majority to pass his Brexit plans. The last national vote in 2017 ended in a “hung Parliament,” making it difficult for the government to pass legislation.
What else is happening…
Boeing (BA) shares held up well during Muilenburg’s Senate grilling.
Apple (AAPL) resumes human reviews of Siri audio.
Sony (NYSE:SNE) pulls plug on PlayStation Vue TV service.
Big commitment… Amazon (NASDAQ:AMZN) pumps $600M into India units.
WeWork (WE) is launching a gaming business, according to Bloomberg.
Tesla’s (NASDAQ:TSLA) U.S. sales tumbled 39% in the third quarter.
No signs of asbestos found in J&J (NYSE:JNJ) baby powder.
Tuesday’s Key Earnings
Advanced Micro Devices (NASDAQ:AMD) -1.1% AH missing revenue estimates.
Amgen (NASDAQ:AMGN) unchanged AH amid flat product sales.
Cummins (NYSE:CMI) -1.6% cutting guidance again.
ConocoPhillips (NYSE:COP) +2.5% generating $1B of free cash flow.
Eaton (NYSE:ETN) +2% on heavy-duty EV transmission debut.
Electronic Arts (NASDAQ:EA) -2% AH canceling NBA Live 20.
General Motors (GM) +4.3% on strong N.America performance.
Kellogg (NYSE:K) +3% showing key brand momentum.
Mastercard (NYSE:MA) -0.6% despite higher transactions.
Mattel (NASDAQ:MAT) +20.5% AH posting an earnings smasher.
Merck (NYSE:MRK) +3.5% beating estimates.
Mondelez (NASDAQ:MDLZ) -1.6% AH despite Q3 beat, guidance raise.
Pfizer (NYSE:PFE) +2.5% topping expectations.
Shopify (NYSE:SHOP) -3.8% recording a Q3 loss.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 GDP Q3
8:30 Treasury Refunding Quarterly Announcement
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
2:00 PM FOMC Announcement
2:00 PM Chairman Press Conference
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Good morning. Happy Tuesday.
The Asian/Pacific markets collectively were flat. Japan, India and the Philippines closed up; China closed down. Europe, Africa and the Middle East are currently weak. The UK, Denmark, the UAE, Finland, Norway, Portugal, Sweden and Saudi Arabia are down more than 1%. 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…
There wasn’t much movement for U.S. stock index futures overnight as traders held their breath after pushing the S&P 500 index to a closing high of 3,039.42 on Monday. The rise was propelled by expectations of a third consecutive rate cut from the Federal Reserve, which has started a program to purchase $60B/month in Treasury bills until the end of 2019 and took the extraordinary action to shore up overnight liquidity starting in September. Trade optimism is also in the air after the USTR said Washington will consider extending certain tariff exclusions on $34B worth of imports from China.
Growing costs at Alphabet
Alphabet (GOOG, GOOGL) reported quarterly figures on Monday that showed costs (like spending on R&D) continuing to rise faster than revenue, dampening investor enthusiasm despite Google’s continued dominance in ad sales. The stock fell as much as 4% AH, after a rare 23% decline in profits and warnings of forex headwinds, but recovered and settled down around 2%. The latest results add to a tricky dance Google must execute as regulation remains an overhang for the company.
Oil majors commence earnings
Citing lower upstream earnings, weaker oil prices and weather-related impacts, BP (NYSE:BP) posted Q3 underlying replacement cost profit, used as a proxy for net income, of $2.3B. While the figure beat expectations, it fell 41% compared with earnings of $3.8B over the same period a year earlier. The report comes shortly after Bob Dudley, who has held the position of CEO for almost a decade, announced he would be soon be stepping down from his role. BP -2.9% premarket.
Details on HBO Max
The high stakes streaming wars will light up again today as AT&T (NYSE:T) unveils its answer to Netflix (NASDAQ:NFLX) and Disney Plus (NYSE:DIS) at WarnerMedia Day. Set for a spring launch, the HBO Max offering is targeting 80M global subscribers by 2025 (50M of those in the U.S.). The iconic Warner Bros. water tower has been rechristened with an HBO Max logo for the event, which will reveal financial details and expectations, as well as decide the fate of its senior executives, including AT&T heir apparent John Stankey.
Housing market
A slew of data this morning will clarify whether the housing market is heating back up. The S&P CoreLogic Case-Shiller U.S. National Home Price Index is expected to rise 2% annually in August, the same as last month, while pending home sales for September are estimated to rise 0.7%, rebounding from August’s drop of 1.6% (consumer confidence figures will also be watched). Though marked with low supply, the housing market is further benefiting from outsized demand and lower mortgage rates.
Another election bid in the U.K.
With Britain’s exit from the EU officially delayed until Jan. 31, 2020, Boris Johnson is trying for a fourth time to trigger an election to break the Brexit impasse. This time he’ll only need a simple majority to get an early vote, compared to previous attempts that required a two-thirds “super-majority.” Johnson has made clear he is giving up on trying to get his Brexit deal passed before an election, but feels parliament is broken and “dead,” and needs to be dissolved.
‘Davos in the Desert’
Lured by the looming IPO of Saudi Aramco (ARMCO), top executives from Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM), as well as CEOs from Blackstone (NYSE:BX) and SoftBank (OTCPK:SFTBY), are gathering at Saudi Arabia’s Future Investment Initiative – popularly known as “Davos in the Desert.” It’s a big contrast from last year when outrage over Jamal Khashoggi’s murder sparked a mass boycott of the conference. The annual summit seeks to project the insular kingdom as a dynamic investment destination and draws 6,000 people and international firms to Riyadh.
Unprecedented blackouts
PG&E’s (NYSE:PCG) power lines may have started two wildfires over the weekend in the San Francisco Bay Area, according to the utility, despite the widespread blackouts in place to prevent downed lines from starting fires during windy weather. More than 2.5M people were without power at the height of the latest blackout and another 1.5M people will be hit with more shutoffs starting today. Legalities? California regulators have said they will open a formal probe of whether utilities violated any rules by cutting power to millions of residents for as much as five days.
Industry divide over emissions standards
Along with Toyota (NYSE:TM) and Fiat Chrysler (NYSE:FCAU), General Motors (NYSE:GM) is backing the Trump administration in its clash with California over pollution standards. The decision pits them against leading competitors, including Honda (NYSE:HMC) and Ford (NYSE:F), who this year reached a deal to follow the state’s stricter policies. Obama-era rules from 2012 called for a fleet-wide fuel efficiency average of 46.7 mpg by 2026, compared with 37 mpg by 2026 under the Trump plan.
Boeing CEO faces Congress
Dennis Muilenburg, who was stripped of his chairman title by the board earlier this month, is due to testify today at a congressional hearing after two 737 MAX crashes killed 346 people. “We know we made mistakes and got some things wrong,” he’ll reportedly tell the U.S. Senate Commerce Committee, adding that Boeing (NYSE:BA) has made improvements to the now-grounded plane “that will ensure that accidents like these never happen again.” Muilenburg will also testify before the House Transportation and Infrastructure Committee this week, where he will face tough questions about the MCAS flight control system and how the company works with the FAA to certify aircraft as safe.
What else is happening…
Amazon Fresh (NASDAQ:AMZN) now free for Prime members.
Virgin Galactic (NYSE:SPCE) takes off, then crashes, in NYSE debut.
CBS (NYSE:CBS), Viacom (NASDAQ:VIA) see merger on track for December.
Uber (NYSE:UBER) announces deeper push into financial services.
Lockheed (NYSE:LMT), DoD set to finalize $34B F-35 government contract.
Necessary reset? Juul (JUUL) reverses a fast expansion.
Fitbit (NASDAQ:FITB) jumps on report of Google (GOOG, GOOGL) acquisition talks.
Tencent (OTCPK:TCEHY) wins China approval for Switch ‘Mario’ game.
Monday’s Key Earnings
Alphabet (NASDAQ:GOOG) -1.3% AH on profit miss, seeing FX impacts.
AT&T (T) +4.3% giving upside outlook, strategic review.
Beyond Meat (NASDAQ:BYND) -10.2% AH despite turning its first profit.
Enterprise Products Partners (NYSE:EPD) -2.4% missing estimates.
Grubhub (NYSE:GRUB) -31.6% AH posting weak revenues, lame guidance.
NXP Semiconductors (NASDAQ:NXPI) +5.3% AH following Q3 beats, in-line outlook.
Restaurant Brands (NYSE:QSR) -3.8% on disappointing Tim Hortons sales.
Spotify (NYSE:SPOT) +16.2% reporting a surprise profit.
T-Mobile (NASDAQ:TMUS) -0.4% AH falling short of expectations.
Transocean (NYSE:RIG) +1.7% AH after an in-line quarter.
Walgreens (NASDAQ:WBA) +0.7% topping expectations.
Today’s Economic Calendar
FOMC meeting begins
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 Pending Home Sales
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets closed with a lean to the upside. China, Hong Kong and Singapore led while New Zealand was weak. Europe, Africa and the Middle East are currently mixed and little changed. Poland, South Africa, Norway and Austria are up; Hungary, Saudi Arabia and the Czech Republic are down. 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…
The financial markets have priced in a 50 basis-point rate cut by the Federal Reserve at this week’s FOMC meeting, possibly the third in the last three meetings. Opinions vary on the effectiveness of the cuts since rates are already low, so lowering them further may not have the desired effect and would take away some of its powder for future interventions.
Brexit deadline extended to 31 January
The EU has agreed to extend the Brexit deadline until 31 January 2020, reports the BBC. EU Council President Donald Tusk tweeted that the bloc is allowing for a “flextension” – which means that the U.K. can leave before the deadline if a deal is approved by Parliament.
Strike to trim $3B from GM bottom line
Bank of America (NYSE:BAC) believes that the just-settled 40-day strike will cost GM more than $3B in profits, most of which will show up this quarter. Production at 30 plants will ramp back up as soon as possible in order to recoup the lost production of 300K cars and allow workers to earn back (via overtime) lost wages.
Warner Bros. bad call on “Joker” a costly misjudgement
Thinking that Joker was not going to be a huge winner, Warner Bros. (NYSE:T) sold a substantial share of the movie to outside investors during development. Now that the film is the #1 R-rated movie of all time with a $788M gross and counting, it wishes that it could roll back the clock on the decision.
All that glitters is gold – LVMH bids $14.5B for Tiffany
Tiffany (NYSE:TIF) has received a $120/share offer from LVMH (OTCPK:LVMUY), valuing the company at $14.5B, 22% above Friday’s close. According to informed sources, it will need to sweeten the offer to get the deal done.
U.S. economic growth continues despite manufacturing woes
Weakness in the manufacturing sector, from a weary global economy and the U.S./China trade war, may not be much to worry about, at least in the near term, reports the Wall Street Journal. Domestic unemployment is a minuscule 3.5%, retail sales were up 4% last month, and the economy is projected to have grown ~1.3% last quarter according to a forecasting firm. Manufacturing represents ~11% of domestic output, down from ~16% 20 years ago.
Amazon Pay to support utility bill payments
Amazon.com (NASDAQ:AMZN) says its Amazon Pay will enable users to pay their utility bills, either online or using the Alexa voice assistant. It discussed the plan during a Sunday keynote at the Money 20/20 conference. The e-commerce giant is partnering with Paymentus, which reached a similar bill-payment deal with Paypal (NASDAQ:PYPL) earlier this year.
Air Products/Saudi JV borrowing to buy $11.5B in assets
A joint venture between Air Products (NYSE:APD), ACWA Power and Aramco (ARMCO) is in advanced talks with lenders to help finance the purchase of $11.5B in assets, Reuters reports. The gasification/power JV is looking to buy the assets from Aramco by year-end, and will operate the facility under a 25-year contract for a fixed monthly fee.
China wooing foreign companies as trade war weighs on growth
Senior Chinese government figures are dialing up the charm in an effort to attract U.S. and other foreign companies to invest there. The ongoing tit-for-tat trade war with the Trump administration has created enough headwinds to concern Chinese leaders that, without foreign investment, they may fall short of President Xi’s goal of doubling the economy in the decade from 2010 to 2020. Hence, the charm offensive.
What else is happening…
Bitcoin (BTC-USD) surges on comments from China Prez.
CA Governor thinks Berkshire Hathaway (BRK.A, BRK.B) a good suitor for PG&E (NYSE:PCG).
Prologis (NYSE:PLD) bids $12.6B for Liberty Property (NYSE:LPT).
PG&E (PCG) continues power shutdowns aimed at preventing more fires.
PPF takes out CETV (NASDAQ:CETV) for $2.1B.
NY Insurance regulatory probes UnitedHealth Group (NYSE:UNH) over possible racial bias in care algorithm.
Today’s Economic Calendar
8:30 Chicago Fed National Activity Index
8:30 International Trade in Goods
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:30 Dallas Fed Manufacturing Survey