Before the Open (Jan 27-31)

Good morning. Happy Friday.
The Asian/Pacific markets leaned down. Japan, New Zealand and Taiwan did well; Hong Kong, South Korea, Malaysia, Indonesia, Singapore, Thailand and the Philippines were weak. Europe, Africa and the Middle East currently lean down. Denmark and Saudi Arabia are up; the UK, Poland, Greece, South Africa, Spain and Italy are down. Futures in the States point towards a moderate gap down open for the cash market.
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The dollar is down. Oil is up; copper is down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Brushing off concerns about the cost of one-day delivery, Amazon shares surged 10% AH on Thursday as the e-commerce giant crushed expectations for the key holiday season with sales of $87.4B and profit of $6.47/share. AWS revenue was up 34% to $9.95B, while the company continued to plow money into overseas markets such as India and Brazil. The impressive results and over $2,000 share price will see Amazon (NASDAQ:AMZN) re-enter the elite $1T market cap club – which has already extended membership to Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Alphabet (GOOG, GOOGL) – during today’s session.
A Brexit goodbye
After more than three years of economic uncertainty, political division and missed deadlines, the U.K. is set to leave the EU at the stroke of midnight Brussels time. A potentially volatile new chapter lies ahead: London and Brussels will try to hash out a trade deal by the end of the year as Britain enters a transition phase. On the eve of Brexit, the Bank of England opted to leave interest rates on hold at 0.75%, citing a pickup in business activity since the election of Boris Johnson and defying some market speculation that a cut was in the cards.
Struggling for footing
Mixed market signals are sending U.S. indices on a roller-coaster ride as futures head into the final day of January down 0.7%, continuing a volatile month for global equities. Stocks rebounded yesterday after the WHO dubbed the coronavirus a global health emergency – but did not recommend restrictions on international trade and travel – though fears are growing as new countries confirm their first cases of the disease. Earnings sentiment is also being reassessed after Amazon’s (AMZN) blowout results and Visa’s (NYSE:V) disappointing quarter, while economists weigh in on the U.S. GDP growth rate of 2.3% in 2019.
Oil majors set to report
Traders will digest Q4 results this morning from the U.S. oil majors after Shell’s (NYSE:RDS.A) big slide raised red flags for the industry. Chevron’s (NYSE:CVX) earnings are expected to be affected by a sharp decline in natural gas prices and an $11B charge related to asset impairment. Exxon (NYSE:XOM), whose stock hit a decade low this week, is likely to reveal a heavy drop from a year ago on weakness in chemicals and refining, while Phillips 66 (NYSE:PSX) is anticipated to post softer profits and revenue. 2020 capital spending budgets, as well as updates on new projects, will also be in focus.
New face of Big Blue
After a 40-year career at IBM (NYSE:IBM), CEO Ginni Rometty is handing over the reins to Arvind Krishna, the head of the company’s cloud business. Her announcement comes only days after IBM reported its first revenue growth in six quarters, though shares have lost about a quarter of their value since she took charge of the company in 2012. During her tenure, Big Blue completed 65 acquisitions, culminating in the $34B deal for Red Hat last year, while selling some legacy businesses as it put a greater focus on the cloud.
Up in smoke
Reworking its deal terms, Altria (NYSE:MO) is taking another $4B charge on its investment in Juul Labs (JUUL), which faces heightened scrutiny amid a backlash against vaping. “I’m highly disappointed in the financial performance of the investment,” CEO Howard Willard said on an earnings call, adding that the charge is mainly due to the increased number of legal (and future) cases against Juul. Altria has now recorded $8.6B in impairment charges after it took a 35% stake in Juul for $12.8B in December 2018.
Hummer EV
Get ready for the resurrection of the Hummer, the military-style SUV that was discontinued as part of GM’s (NYSE:GM) 2009 bankruptcy and sour reputation for polluting the planet. This time around, it will be released as an all-electric “super truck” under the GMC brand, featuring 1,000 horsepower, 0 to 60 acceleration in three seconds and 11,500 pound feet of torque. A 30-second Super Bowl ad for the vehicle will feature NBA star LeBron James, though a price was not announced.
American pilots sue to halt service to China
While U.S. airlines have already reduced flights to China due to the coronavirus, some are demanding more action. American Airlines’ (NASDAQ:AAL) pilots have filed a lawsuit seeking an immediate halt to U.S.-China service as health officials declared a global emergency over the rapidly spreading disease. The U.S. government on Thursday also advised its citizens not to travel to China, raising its warning to the same level as those for Iraq and Afghanistan.
Coronavirus misinformation
Facebook (NASDAQ:FB) is taking the rare step of removing false claims about cures and prevention methods for the coronavirus, saying such content would violate its ban on misinformation leading to “physical harm.” Hashtags used to spread fictitious material on Instagram will be blocked or restricted, as well as alerts by users who share content about the disease that third-party fact-checkers deem false. It’s an unusual move for the social network, which generally limits the distribution of health misinformation through restrictions on search results and advertising, but permits original posts to stay up.
What else is happening…
VW (OTCPK:VWAGY) offers $2.9B for U.S. truckmaker Navistar (NYSE:NAV).
Cheniere Energy (NYSEMKT:LNG) drops suit against Tellurian (NASDAQ:TELL) chairman.
J&J (NYSE:JNJ) ordered to pay $344M in pelvic mesh case.
Nintendo (OTCPK:NTDOY) says no new Switch planned for 2020.
Southwest (NYSE:LUV) failed to prioritize safety – DOT report.
Thursday’s Key Earnings
Altria (MO) -4.2% recording a $4.1B Juul impairment charge.
Amazon (AMZN) +9.8% AH on blowout holiday quarter.
Amgen (NASDAQ:AMGN) -2.5% posting soft earnings guidance.
Biogen (NASDAQ:BIIB) -1.8% with Spinraza short of consensus.
Blackstone (NYSE:BX) -2.5% despite $26B in Q4 inflows.
Coca-Cola (NYSE:KO) +3.3% showing off organic sales growth.
DuPont (NYSE:DD) -8.6% giving a disappointing outlook.
Electronic Arts (NASDAQ:EA) -3.1% seeing revenue below estimates.
Eli Lilly (NYSE:LLY) +2% raising revenue forecast.
Enterprise Products (NYSE:EPD) -1.1% as profits dropped in Q4.
Northrop Grumman (NYSE:NOC) +0.6% on mixed results.
Raytheon (NYSE:RTN) -0.6% on EPS beat, revenue miss.
U.S. Steel (NYSE:X) +5% AH expecting improved results in 2020.
UPS (NYSE:UPS) -6.7% dented by light profit guidance.
Valero Energy (NYSE:VLO) +2% topping estimates.
Verizon (NYSE:VZ) -0.3% following a Q4 miss.
Visa (V) -2.4% AH as fiscal Q1 underwhelmed.
Western Digital (NASDAQ:WDC) +6% AH giving an upside Q3 outlook.
Today’s Economic Calendar
8:30 Personal Income and Outlays
8:30 Employment Cost Index
9:45 Chicago PMI
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
3:00 PM Farm Prices
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Good morning. Happy Thursday.
The Asian/Pacific markets posted sizable losses. Japan, Hong Kong, South Korea, India, Taiwan, Indonesia and the Philippines all dropped more than 1%. Europe, Africa and the Middle East are currently mostly down. The UK, France, Germany, Greece, Switzerland, Spain, the Netherlands, Italy, Belgium, Austria and the Czech Republic are down more more than 1%. Futures in the States point towards a big gap down open for the cash market.
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VIDEO: State of the Market
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The dollar is down. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Coronavirus anxiety and another 2.6% plunge from the Hang Seng Index overshadowed upbeat earnings from Tesla (NASDAQ:TSLA) and Microsoft (NASDAQ:MSFT) as U.S. stock index futures point to declines of 0.7% at the open. Meanwhile, the 10-year Treasury yield fell to its lowest level since early October, while crude futures declined 1.7% to $52.41/bbl. More than 7,700 people have so far been infected by the disease, with at least 170 dead, while WHO officials announced the spread of the virus outside of China is of “grave concern.” The outbreak could cause China’s real GDP growth to shrink to below 4% from the 6% pace in the fourth quarter, with worse impact than SARS in 2003, according to Nomura economists led by Lu Ting.
GDP, Fed stays steady
Economists expect U.S. fourth quarter growth to be about the same as the third quarter, at 2.1%, reflecting softer spending and a surprise widening in the trade gap in December. The figure comes after the Fed’s meeting on Wednesday provided little new insight into policy, but did make it clear that it sees a more moderate consumer, which should show up in a weaker consumption number for GDP. All 10 members of the central bank’s rate-setting committee voted to hold the benchmark Federal Funds rate in a range of 1.5% to 1.75%.
Next FAANG to report
Amazon’s (NASDAQ:AMZN) investment in one-day delivery may cut into profits when the U.S. e-commerce giant reports earnings this afternoon, though things could also turn around given customers shopped at “record” levels during the holidays. Rising costs have weighed on Amazon’s share price of late with the stock only up 17% over the past 12 months, trailing the S&P 500 and other mega-cap tech names. Investors will additionally be focusing on cloud unit AWS – Amazon’s biggest source of profit.
Microsoft, Tesla, Facebook
Revenue from Microsoft’s (MSFT) commercial cloud unit Azure soared 62% in Q4, pushing up shares 4% AH, amid a pitched battle with Amazon’s (AMZN) AWS. Continuing a meteoric rise, Tesla shares advanced 12% AH as the EV maker blasted past earnings estimates and said it would “comfortably” deliver more than half a million cars in 2020. Things were not as rosy at Facebook (NASDAQ:FB), which fell 7% AH. The social network giant topped bottom and top line forecasts, though it was FB’s smallest-ever quarterly earnings beat (slowing growth?) amid an increase in expenses.
Victoria’s Secret may be on the block
L Brands (NYSE:LB) shares soared nearly 13% on Wednesday on reports that CEO Leslie Wexner was discussing plans to step aside from the company he has led since 1963. The deliberations are also said to include the unloading of Victoria’s Secret in a full or partial sale (to PE firm Sycamore Partners). Wexner, 82 years old, built Abercrombie & Fitch (NYSE:ANF), The Limited and Victoria’s Secret into national chains over his career, and is the longest-serving CEO of an S&P 500 company.
UPS aims for driverless, electric future
Following in the footsteps of Amazon (AMZN), which recently inked a deal for 100,000 electric vehicles from Rivian, UPS (NYSE:UPS) has placed an order for 10,000 electric vans (with an option for 10,000 more) from U.K.-based Arrival. The contract, worth “hundreds of millions of euros,” will also see UPS take a minority stake in the startup. Besides joining the EV revolution, UPS has driverless dreams. A six-month test will begin with Alphabet’s (GOOG, GOOGL) Waymo next month, using the latter’s autonomous Chrysler Pacifica minivans to shuttle packages from Phoenix UPS stores to a nearby sorting center.
News Corp. unveils news aggregation service
Looking to break away from the tech platforms that dominate digital media, News Corp. (NASDAQ:NWS) has unveiled an online news aggregation service called Knewz. The idea, which won’t be “relegated in the rankings,” is to help publishers claw back some of the control and ad dollars they’ve lost to Google and Facebook. The site includes content from more than 400 large and small publishers in the U.S. and worldwide, from The Washington Post and Fox News to Daily Kos and Washington Examiner.
Breaking U.S. tech dominance
A European Commission proposal seen by Reuters reveals an upcoming plan to create a “single EU market for data” aimed at challenging the dominance of Facebook (FB), Google (GOOG, GOOGL) and Amazon (AMZN). “Currently a small number of big tech firms hold a large part of the world’s data. This is a major weakness for data-driven businesses to emerge, grow and innovate today, including in Europe, but huge opportunities lie ahead,” according to the paper. New rules to achieve the goal would cover cross-border data use, data interoperability and standards related to manufacturing, climate change, healthcare, financial services and energy.
What else is happening…
Earnings overnight: Unilever (NYSE:UL), Deutsche Bank (NYSE:DB) and Shell (NYSE:RDS.A).
CalTech wins $1.1B patent case against Apple (NASDAQ:AAPL), Broadcom (NASDAQ:AVGO).
Google (GOOG, GOOGL) temporarily shuts down all China offices.
Lyft (NASDAQ:LYFT) cuts 2% of jobs on journey to profitability.
Jaguar Land Rover (NYSE:TTM) CEO to step down – FT.
Bayer (OTCPK:BAYRY) may end private sales of glyphosate.
PG&E (NYSE:PCG) threatened with state takeover by CA governor.
Wednesday’s Key Earnings
AT&T (NYSE:T) -4% hit by HBO Max preparations.
Boeing (NYSE:BA) +1.7% despite first annual loss in two decades.
Corning (NYSE:GLW) +1.3% affirming outlook.
Dow (NYSE:DOW) +5.3% topping estimates.
Facebook (FB) -7% AH forecasting decelerating growth.
General Electric (NYSE:GE) +10.3% improving cash flow generation.
Mastercard (NYSE:MA) flat expecting a rise in expenses.
McDonald’s (NYSE:MCD) +1.9% posting a comp sales increase.
Microsoft (MSFT) +4.1% AH on cloud strength.
Mondelez (NASDAQ:MDLZ) +2.6% AH following an earnings topper.
Novartis (NYSE:NVS) +0.2% beating expectations.
PayPal (NASDAQ:PYPL) -2.5% AH giving a disappointing outlook.
Tesla (TSLA) +11.6% AH promising a quick ramp for Model Y.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 GDP Q4
10:30 EIA Natural Gas Inventory
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 leaned to the upside. Japan, South Korea, India, Australia and Thailand did well; Hong Kong was weak. China was closed. Europe, Africa and the Middle East are currently mostly up. Denmark, France, Russia, South Africa, Switzerland, Spain, the Netherlands, Italy, Portugal and Israel are leading. 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 and copper are up. Gold and silver are flat. Bonds are up.
Stories/News from Seeking Alpha…
“It was sort of a blockbuster quarter all the way around,” Apple (NASDAQ:AAPL) CEO Tim Cook declared after blowout earnings and revenue during the holiday quarter. Net income for the latest period rose 11% to $22.24B, thanks to rising iPhone sales for the first time in a year and soaring demand for add-ons like AirPods. In fact, Apple’s fastest-growing business segment, “Wearables, Home and Accessories,” is now bigger than Mac. Apple also reported $207.06B in cash on hand, hosting one of the largest cash piles of any U.S. company. AAPL +2% premarket.
Futures extend gains
Earnings season put a renewed spirit into the market yesterday, with big gains being seen across all three U.S. indices, while remarkable results from Apple helped U.S. futures continue the advance overnight. Besides a Fed rate decision later in the day, traders are looking forward to another busy session of corporate reporting, offsetting concerns for the rapidly spreading coronavirus. On the radar: McDonald’s (NYSE:MCD) menu changes amid the chicken sandwich wars? Will Tesla (NASDAQ:TSLA) justify its fundamentals? Cloud Services are in focus in Microsoft’s (NASDAQ:MSFT) results, while turnaround efforts will be analyzed at Boeing (NYSE:BA) and GE (NYSE:GE). An earnings showdown from telecom rivals is also on the calendar. AT&T (NYSE:T) reports today, while Verizon (NYSE:VZ) discloses results tomorrow.
First Fed meeting of the decade
Economists aren’t expecting a change in the Fed’s key rate range of 1.5% to 1.75% at a policy meeting today, but Chairman Jerome Powell could signal tweaks to the central bank’s repo program. In an effort to stabilize overnight and short-term lending market rates, it has been conducting about $60B per month in bond purchase. The Fed might also discuss how global growth and the coronavirus outbreak may influence future rate decisions, as well as hints of any operational changes.
Virus prompts 2,000 Starbucks closures
Despite posting strong holiday sales in the U.S., Starbucks (NASDAQ:SBUX) shares fell nearly 2% AH after warning about the scale of the coronavirus disruption in China. The coffee chain is temporarily shutting more than half of its near-4,300 cafes in the country – its largest market outside the U.S. – and had intended to upgrade its 2020 profit forecasts, but has now put those plans on hold. KFC (NYSE:YUM), Pizza Hut and McDonald’s (MCD) have also closed outlets in China, with the latter expected to divulge more details about its exposure in its earnings report today.
Markets reopen in Hong Kong
A hefty dose of back-to-work blues plagued Hong Kong traders today as trading resumed after the Lunar New Year break. The Hang Seng index tumbled 2.8%, its worst opening since 2016, led lower by real estate firms Hang Lung Properties (OTCPK:HLPPY) and Country Garden Holdings (OTCPK:CTRYY), and Macao casino operators Sands China (OTCPK:SCHYY) and Galaxy Entertainment Group (OTCPK:GXYEY). China’s financial markets will remain closed until next Monday after authorities extended the Lunar New Year break by three days as they grapple with the worsening virus that has now recorded more cases than SARS.
First investor day from Goldman Sachs
The company led by David Solomon is widely expected to give updates on how it plans to improve shareholder returns after more than a decade of trading sideways and lagging behind peers such as JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS). Analysts and investors are particularly eager to hear more about the consumer bank, which consists of Goldman Sachs’ (NYSE:GS) online bank Marcus and credit card with Apple (AAPL). At the moment, that consumer bank generates just 2.4% of Goldman’s annual revenue, compared to almost 40% of revenue that comes from the bank’s securities division.
Meatless still trendy?
Tim Hortons (NYSE:QSR) has removed Beyond Meat (NASDAQ:BYND) products from its shops in Ontario and British Columbia, after eliminating the meatless items from all of Canada in September except the two provinces. “The product was not embraced by our guests as we thought it would be,” said a spokeswoman for Tim Hortons. While plant-based fast food has been gaining in popularity, some are questioning its environmental and health benefits.
Britain refuses to ban Huawei
The U.K. has granted Huawei a limited role in developing its new high-speed 5G wireless network, hindering a global attempt by the U.S. to exclude the Chinese telecom equipment giant from the West’s next-generation communications. Both the U.S. and China, vying for tech supremacy, had tried to sway the nation’s decision. The verdict could complicate Britain’s membership in the so-called Five Eyes intelligence sharing group, as well as upcoming plans for a new U.S.-U.K. trade agreement.
Signing of USMCA
During a ceremony at the White House today, President Trump is set to finally sign the USMCA trade pact, which still needs to be formally approved by Canada. The deal is aimed at protecting farmers, changing car industry rules, strengthening labor and environmental standards, and will set terms of digital trade. Two trade achievements… The signing comes just two weeks after the president celebrated a “phase one” trade pact with China following a years-long trade war.
Troubling forecasts from the CBO
Federal debt held by the public is projected to balloon to 98% of the U.S. gross domestic product in 2030, its highest percentage since 1946, vs. 81% in 2020, according to a report by the Congressional Budget Office. By 2050, debt would be 180% of GDP, far higher than it’s ever been. It stems from the combination of tax cuts and projected increases in spending – particularly on safety net programs such as Medicare and Social Security.
What else is happening…
‘Do or die’ moment for Nissan (OTCPK:NSANY) – Reuters.
Airbus (OTCPK:EADSY) faces record €3.6B fine from corruption probe.
Former Tinder COO to take over as Match (NASDAQ:MTCH) CEO.
WWII bombs defused at Tesla’s (TSLA) German site.
Vodafone (NASDAQ:VOD) to sell stake in Egypt unit for $2.39B.
Facebook (NASDAQ:FB) engineering chief to depart company.
Tuesday’s Key Earnings
3M (NYSE:MMM) -5.7% cutting 1,500 employees in restructuring.
AMD (NASDAQ:AMD) -4.4% posting a soft revenue projection.
Apple (AAPL) +2.2% AH on strong iPhone and wearables sales.
eBay (NASDAQ:EBAY) -5.2% AH giving light revenue guidance.
Harley-Davidson (NYSE:HOG) -3% amid sales growth struggles.
Lockheed Martin (NYSE:LMT) +1.1% ending 2019 on strong note.
Pfizer (NYSE:PFE) -5% after missing estimates.
Starbucks (SBUX) -1.8% AH on a coronavirus warning.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 International trade in goods
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:00 Pending Home Sales
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 closed mostly down. China, South Korea, New Zealand, Australia, Malaysia, Singapore and the Philippines dropped more than 1%. Europe, Africa and the Middle East currently lean to the upside. The UK, Poland, France, Russia, Finland, Switzerland, Spain, Italy, Portugal and Austria are doing well. 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 down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
It was only a year ago that Apple (NASDAQ:AAPL) reported a bleak holiday quarter, though the stock has more than doubled over the past 12 months to a lofty valuation of $1.4T. Analysts expect the tech giant to handily beat EPS and revenue estimates after the bell today, with an earnings report that will be the first to include Apple’s TV+ streaming service, as well as holiday sales of the new iPhone 11 line and popular AirPods. Wearables and services will likely remain Apple’s growth engines, though a report from the Nikkei overnight suggested that the company is targeting production of 80M iPhones in the first half of 2020, an increase of more than 10% from the previous year’s output.
Selling abates
Coronavirus concerns hammered global stocks on Monday, with Wall Street recording its biggest single-day decline since October, though traders are hoping a full menu of earnings reports today can pull shares out of the latest downtrend. On close watch are Q4 results from Apple (AAPL) and AMD (NASDAQ:AMD), as well as 3M (NYSE:MMM), Starbucks (NASDAQ:SBUX), Pfizer (NYSE:PFE), eBay (NASDAQ:EBAY), Harley-Davidson (NYSE:HOG) and Lockheed Martin (NYSE:LMT). U.S. equity futures were up by nearly 1% overnight, but recently pared some early-session gains to 0.3% on news that Hong Kong would suspend high-speed rail travel to the mainland, reduce flights and limit individual travel permits.
Yield curve on watch as Fed meets
The U.S. Treasury yield curve, measured by the gap between yields on three-month and 10-year bonds, briefly inverted overnight for the first time since October as Treasuries rallied for a sixth day. The two-year/five-year curve already inverted on Monday, while the gap between two-year and 10-year yields – considered a recession signal – was at the flattest since Nov. 29. “If the signs were to multiply, there could be a more severe impact not just in China but globally,” said Philip Shaw, chief economist at Investec. “Markets are starting to speculate the Fed could bring rates down by summer.”
Kobe gear pulled from Nike.com
Nike (NYSE:NKE) has removed all Kobe Bryant-related items from its online store following the tragic death of the basketball legend. “He was a beloved member of the Nike family. We will miss him greatly. Mamba Forever,” the company wrote in a tribute, as it reevaluates its strategy on how to handle the signature gear. Bryant had an endorsement deal with Nike, which paid him $8M annually over five years.
GM formalizes electric future in Detroit
The production of General Motors’ (NYSE:GM) new autonomous vehicle, called the Cruise Origin, will take place at its Detroit-Hamtramck plant, cementing the company’s hometown as a hub of future technology. Manufacturing of the passenger shuttle will come “soon after” the reopened facility starts building its first new vehicle, an electric pickup truck, in late 2021. The self-driving Origin is a pod-shaped people-mover with no steering wheel, pedals or other manual driving controls.
Corruption probe settlement
A longstanding investigation into bribery and corruption has been hanging over Airbus (OTCPK:EADSY) for years amid claims that it used third-party consultants to help secure lucrative commercial orders. The planemaker has now reached a so-called deferred prosecution agreement – with fraud agencies in the U.S., U.K. and France – that will allow the company to avoid formal charges, but requires it to pay what is expected to be a record fine. The probes had already prompted a nearly complete overhaul of Airbus’ top management and sales teams, as well as a new ethics and compliance system.
Starlink, star bright
SpaceX (SPACE) yesterday called off a scheduled launch of a Falcon 9 rocket about a half-hour before liftoff from Cape Canaveral, but will attempt the mission again on Wednesday. Another 60 Starlink broadband internet satellites are set to be deployed, resulting in a total constellation of 240 that are operating in low Earth orbit. At least 400 Starlink satellites will offer “minor” broadband coverage, though SpaceX plans to operate an initial block of 1,584 worldwide and has FCC approval for a fleet of up to 12,000.
Baby powder testimony
Johnson & Johnson (NYSE:JNJ) CEO Alex Gorsky testified in court for the first time on Monday in a jury trial over allegations that the company’s signature baby powder causes cancer. “I was told by experts in these fields that in fact we were using the most appropriate, most up-to-date methodologies to make sure our talc was safe,” he told a New Jersey state courtroom. More than 16K plaintiffs have filed lawsuits against J&J in U.S. state and federal courts alleging the talcum powder caused cancer and the company failed to properly warn consumers of the risk.
MacKenzie Bezos reduces Amazon stake
Jeff Bezos’ ex-wife, MacKenzie Bezos, has sold about $400M worth of the Amazon (NASDAQ:AMZN) stock that she received as part of the couple’s divorce settlement. Word of the sale came indirectly, as Jeff retains voting rights over her shares. A recent proxy holding shows 19.5M shares at year-end, or about 200K less than the 19.7M she’s calculated to have received, but even after the sale, MacKenzie’s Amazon holdings amount to nearly $36B.
The Brexit conversation
With Brexit officially “done” this coming Friday, the discussion is starting to shift to what an EU-U.K. trade deal will look like, though currently, the two sides remain far apart. “There will be no compromise on the single market. Never, never, never,” EU chief Brexit negotiator Michel Barnier said at Queen’s University Belfast. “It is our main asset on the EU side… Never will the EU compromise, (make) fragile or unravel the single market, never.”
What else is happening…
Boeing (NYSE:BA) lands $12B in financing to weather MAX crisis – CNBC.
Muilenburg resigns from Caterpillar (NYSE:CAT) board.
Aramco (ARMCO) joins oil blockchain platform VAKT.
Oil major Lundin Petroleum (OTCPK:LNDNY) to become carbon neutral.
U.S. steel imports fall to lowest since 2010.
Canada begins USMCA ratification process.
No bonus bump for JPMorgan (NYSE:JPM) bankers, traders.
Monday’s Key Earnings
Sprint (NYSE:S) -4.1% reporting downside Q3 revenue.
Today’s Economic Calendar
FOMC meeting begins
8:30 Durable Goods
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg.
11:30 Results of $20B, 2-Year FRN Auction
1:00 PM Results of $32B, 7-Year Note Auction
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Good morning. Happy Monday. Hope you had a good weekend.
Several Asian/Pacific markets posted massive losses. Japan, China, South Korea, India, Indonesia and Thailand all suffered. Europe, Africa and the Middle East are currently posting big losses. The UK, Denmark, Poland, France, Germany, Russia, South Africa, Finland, Norway, the Netherlands, Belgium and Sweden are down 2% or more. Futures in the States point towards a huge gap down open for the cash market.
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VIDEO: State of the Market
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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…
Traders across the globe are starting the week in risk-off mode amid growing concerns over the potential economic damage from the fast-spreading coronavirus. In the U.S., Dow futures plunged 477 points, while futures on the S&P 500 and Nasdaq are down 1.7% and 2.1%, respectively. Crude futures traded 3.5% lower at $52.28/bbl and gold rose 0.8% to $1584/oz. Nearly 2,800 people in China have been infected and 80 killed by the disease, and over the last week, both numbers have been rising at close to 50% a day. “We don’t know how infectious it is, we don’t know how severe it is, and we don’t know how it’s spreading,” said Tom Frieden, former director of the CDC.
Economic impacts
Preliminary data has also shown the scale at which the outbreak is affecting China’s economy. On the first day of the Lunar New Year, there was a 41.6% decline Y/Y in civil air travel, 41.5% reduction in rail travel and 25% drop in road transport. Shanghai Disneyland also locked their doors, Starbucks (NASDAQ:SBUX) said it would shut all its outlets in Hubei province, while Marriott (NASDAQ:MAR), Hilton Worldwide (NYSE:HLT) and Hyatt Hotels (NYSE:H) are waiving cancellation fees. Separately, Honeywell (NYSE:HON) and 3M (NYSE:MMM) are boosting production of protective face and respirator masks, while DuPont (NYSE:DD) is working to increase supply of medical body suits and other protective gear.
Further weighing on market sentiment
Five Katyusha rockets were fired at the fortified Green Zone in Baghdad last night, one directly hitting the U.S. Embassy building. The rare direct targeting of the compound wounded three people, adding to the bearish market turn being seen around the world. News reports also suggested that Iraqi security forces in Baghdad killed an anti-government protester, adding to the months-long civil unrest that has seen the death of 500 people since Oct. 1.
Busiest week of earnings season
Providing key outlooks for many sectors of the market, nearly half of the 30 Dow components are scheduled to report Q4 results this week, as well as 141 of the S&P 500 companies. What’s on watch? Tech – Apple’s (NASDAQ:AAPL) shift to services and wearables, Amazon’s (NASDAQ:AMZN) holiday quarter, Facebook’s (NASDAQ:FB) ad opportunities. Industrials – Boeing (NYSE:BA) growing debt and GE’s (NYSE:GE) turnaround. Energy – Headwinds for Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX)? Consumer – UPS’s (NYSE:UPS) state-of-the-economy and forecasts from McDonald’s (NYSE:MCD) and Starbucks (SBUX). Financials – PayPal (NASDAQ:PYPL) and Visa (NYSE:V). Healthcare – Pfizer (NYSE:PFE), Eli Lilly (NYSE:LLY) and Amgen (NASDAQ:AMGN).
Google probe coordination
State attorneys general will meet next week with U.S. Department of Justice attorneys to share information on their investigations into Google (GOOG, GOOGL), a step that could eventually lead to the groups joining forces. The two sides have not previously shared data about their concurrent investigations, WSJ reports, adding that at least seven state AGs who are part of the probe, led by Texas AG Ken Paxton, were invited to the meeting. At issue? Google’s dominant position in online search and advertising, and possible anti-competitive behavior in its Android mobile operating system.
777X completes maiden flight
Following several delays due to strong winds, Boeing (BA) successfully staged the first flight of the world’s largest twin-engined jetliner on Saturday. The demonstration provides Boeing with a boost ahead of its quarterly results on Jan. 29, with some analysts forecasting a multibillion-dollar annual loss because of charges tied to the 737 MAX. Dubai-based Emirates is due to receive the first 777X, which can seat more than 400 passengers and carries a list price of $420M, though delivery has been pushed back until next year amid technical problems and an upcoming “rigorous” review by the FAA.
Rivian looks to crash EV party
Electric vehicle startup Rivian, backed by Amazon (AMZN) and Ford (NYSE:F), showed off its pickup truck and SUV at a weekend event in San Francisco. Scheduled to be delivered at the end of this year, the R1T pickup with 300 miles of range is expected to list at $69K and the R1S SUV with similar range at $72K. Tesla’s (NASDAQ:TSLA) legal victories in key states like Michigan should help clear a path for Rivian to sell directly to customers.
Carbon tax retaliation
There might be a new irritant to transatlantic relations. The Trump administration said it will respond to the EU’s plans for a carbon tax – a top priority under the new commission led by president Ursula von der Leyen – with possible punitive measures. “Depending on what form the carbon tax takes, we will react to it – but if it is in its essence protectionist, like the digital taxes, we will react,” U.S. Commerce Secretary Wilbur Ross told the FT.
U.S.-U.K. trade deal in 2020?
The U.K. is set to finally leave the EU on Friday, opening the way for it to negotiate fresh trade deals, and the U.S. is hoping to complete a new pact within the year. “There are certain issues that perhaps they (first) need to resolve with the EU, but there are a lot of issues that can be resolved simultaneously,” Treasury Secretary Steven Mnuchin declared. Annual trade in goods and services between the U.K. and U.S. is more than $230B. Roughly 20% of British exports each year go to the U.S., making it the U.K.’s largest market outside the EU.
What else is happening…
Passenger plane crashes in Afghanistan.
Italian yield sinks after M5S election failure.
Probed: Deutsche Bank (NYSE:DB) payments to Saudi royal.
‘Bad Boys 3’ (NYSE:SNE) stays at top of the box office.
Nestle (OTCPK:NSRGY) expands in medical nutrition with Allergan (NYSE:AGN) purchase.
Fiat (NYSE:FCAU) asks court to dismiss GM racketeering suit.
Poland announces $4.6B deal for Lockheed Martin (NYSE:LMT) F-35s.
Today’s Economic Calendar
10:00 New Home Sales
10:30 Dallas Fed Manufacturing Survey
11:30 Results of $40B, 2-Year Note Auction
1:00 PM Results of $41B, 5-Year Note Auction