Good morning. Happy Friday. Happy Employment Numbers Day.
The Asian/Pacific markets did very well. Japan, China, Hong Kong and South Korea rallied more than 1%. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, Poland, France, Turkey, the UAE, South Africa, Norway, Hungary, the Netherlands, Italy, Portugal, Israel, Sweden and the Czech Republic are up 1% or more. Futures in the States positive open for the cash market.
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VIDEO: Managing Winning Trades
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The dollar is down. Oil and copper are up. Gold is down; silver is up. Bonds are down.
Stories/News from Seeking Alpha…
Removing a chunk of trade uncertainty that had been hanging over the market, top U.S. and Chinese officials have agreed to strengthen cooperation for a phase one trade deal (see more below). U.S. stock index futures rose another 1% on the news, building on a strong week that saw the Nasdaq Composite yesterday reenter positive territory for 2020. Yields on the 2-year Treasury note meanwhile hit a record low of 0.129% as investors digested the prospect of a surge in debt supply. An ugly jobs report is also on tap, though the market has so far blown past weak data amid progress toward COVID-19 treatment, loosening restrictions and reopening of economies.
Worst since the Great Depression
The April non-farm payrolls report is expected to show that a record 22M jobs were lost as the U.S. shut down to stop the spread of the coronavirus, driving the unemployment rate to 16%. Putting it in perspective: The U.S. economy has never lost more than 2M jobs in a single month, and while the unemployment rate reached 25% in 1933, it got there much more slowly. Due to the scale and speed of the job losses, some see a quicker recovery as things reopen, though others, like J.P. Morgan’s Bob Michele, predict it will take 10-12 years to get unemployment back to pre-pandemic levels.
Trade deal optimism
Top trade negotiators for the U.S. and China talked by phone overnight, pledging to create “governmental infrastructures necessary to make the phase one trade deal “a success.” “In spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner,” read an emailed statement from the USTR. The call alleviated tensions seen earlier in the week after President Trump threatened to “terminate” the pact if China failed to buy promised goods and services from the U.S.
Shanghai Disneyland sells out
Tickets for the earliest days of Shanghai Disneyland’s reopening have sold out following a three-month shutdown due to the coronavirus outbreak. The Chinese government has asked Disney (NYSE:DIS) to cap attendance of the re-opened park at 30% of capacity, or roughly 24,000 people, as it adjusts to new safeguards like social distancing, masks and temperature screenings. In an earnings call on Tuesday, executives said that shuttered parks would cost Disney roughly $1B in profits.
Resuming car production
Michigan Governor Gretchen Whitmer will allow the state’s auto manufacturing facilities to reopen on Monday, making it possible for suppliers to begin restarting plants ahead of Ford (NYSE:F), General Motors (NYSE:GM) and Fiat Chrysler (NYSE:FCAU). The Detroit Three intend on resuming operations a week later, while the last U.S. automaker, Tesla (NASDAQ:TSLA), is turning the lights on as soon as today. The latter’s Fremont plant has been idled since March 23 due to shutdowns aimed at limiting the spread of COVID-19.
Neiman Marcus files for bankruptcy
With no debt relief in sight, Neiman Marcus Group (NMG) has officially filed for bankruptcy on the heels of similar filings by J.Crew and Canadian shoe retailer ALDO Group. “Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” said CEO Geoffroy van Raemdonck. Neiman Marcus has changed hands among private equity firms over the past 15 years, culminating in a $6B takeover by Ares Management (NYSE:ARES) and the Canada Pension Plan Investment Board.
Zoom security
New York Attorney General Letitia James has announces an agreement with Zoom Video (NASDAQ:ZM) concerning the videoconferencing company’s security practices. This puts “protections in place so that Zoom users have control over their privacy and security, and so that workplaces, schools, religious institutions, and consumers don’t have to worry while participating in a video call.” Following the news, the NYC Department of Education reversed its Zoom ban, saying the company made several fixes to address the department’s concerns.
Alphabet pulls plug on ‘smart city’ concept
It’s the latest retrenchment by Alphabet (GOOG, GOOGL) under new CEO Sundar Pichai as the company ditched plans to develop a “smart city” along Toronto’s waterfront. Costs, real estate pressure and economic uncertainty were all reasons cited for the decision. The 12-acre project, under Alphabet arm Sidewalk Labs, had been a favorite of Google co-founder and former CEO Larry Page, who envisioned an energy-efficient neighborhood where sensors tracked residents and responded to their needs.
Why was everyone coming to the office?
Facebook (NASDAQ:FB) is extending a policy that will give employees the option to work remotely through the end of 2020, while Mark Zuckerberg acknowledged that the majority of workers are able to do so. Facebook will still reopen most of its offices on July 6 for staff that need to come in, as well as other employees who choose to return to the office. For many industries, however, will work-from-home become a standard job feature in the post-pandemic world?
What else is happening…
Lyft (NASDAQ:LYFT) joins Uber (NYSE:UBER) with mandatory mask policy.
Bitcoin (BTC-USD) is a hedge against “inflation” – Paul Tudor Jones.
Shopify (NYSE:SHOP) falls after announcing share offering.
PG&E (NYSE:PCG) hit with record $1.9B penalty wildfire penalty.
Wendy’s (NASDAQ:WEN) wants answers on high beef costs.
Thursday’s Key Earnings
Booking Holdings (NASDAQ:BKNG) -0.3% AH posting 51.2% drop in gross bookings.
Bristol-Myers (NYSE:BMY) -0.5% despite affirming guidance.
Dropbox (NASDAQ:DBX) +4.6% achieving first quarterly profit.
Grubhub (NYSE:GRUB) -11.7% on restaurant challenges.
Main Street Capital (NYSE:MAIN) -1.4% AH as distributable NII fell Y/Y.
Roku (NASDAQ:ROKU) -10.2% AH amid rising costs.
Teva Pharma +10.2% (NYSE:TEVA) as cash flow ops rose 172%.
Uber Technologies (UBER) +6.1% AH
with executives seeing a ride recovery.
Today’s Economic Calendar
8:30 Non-farm payrolls
10:00 Wholesale Trade
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets leaned to the downside. New Zealand and Taiwan did well, but Hong Kong, India and Thailand were weak. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, France, Poland, Germany, Russia, Finland, Israel and Austria are up more than 1%. Futures in the States point towards a moderate gap up open for the cash market.
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VIDEO: Managing Winning Trades
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The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Effects of the coronavirus pandemic are being clearly seen as earnings season goes into overdrive, with Corporate America adjusting to different consumer habits, trends and economies still struggling to reopen. Predicting fewer passengers for the foreseeable future, UBER slashed 14% of its workforce (LYFT cut 17% of its staff last week), while Costco’s (NASDAQ:COST) sales fell for the first time in over a decade as shoppers stayed home. Peloton’s (NASDAQ:PTON) shares are meanwhile up 15% premarket, thanks to a revenue surge from stay-at-home policies, while Beyond Meat (NASDAQ:BYND) skyrocketed 26% on Wednesday as the company looked to “win consumers” amid soaring meat prices.
Jobs? Economy? Future of trade?
These are some of the questions on traders’ minds as they gauge market sentiment, with the Dow and S&P 500 dipping on Wednesday, only to rebound by 1.5% overnight along with the Nasdaq. Figures due later today are likely to show that another 3M Americans are out of work, adding to the 30M figure that has already been racked up over the past two months. The latest ADP data on Wednesday showed private payrolls were cut by 20.2M last month, while Friday’s payrolls report is expected to show an unemployment rate of 16% or higher.
Stampede into online brokerage accounts
TD Ameritrade (NASDAQ:AMTD) disclosed a record 608K new funded accounts for Q1, as well as more than 3x the number of users in March Y/Y, while brokerages like Schwab (NYSE:SCHW), Fidelity and E*Trade (NASDAQ:ETFC) also reported record new users. Earlier this week, millennial-focused trading app Robinhood also closed a $280M Series F funding at an $8.3B valuation. In fact, finance apps have seen 55% growth in usage time from the end of 2019 to the week ended April 18, according to data from App Annie.
Battle over stock data feeds
For the first time in years, the SEC is forcing the NYSE (NYSE:ICE), Nasdaq (NASDAQ:NDAQ) and Cboe Global Markets (NYSE:CBOE) to revamp the management of public data feeds that provide real-time stock prices. Two-tiered market? Exchanges are currently required to publicly transmit a consolidated view of all stock trades and best prices, but also sell more robust data feeds to sophisticated traders and investors. With the new system, the SEC hopes to increase transparency and richer content, though exchanges caution the move could shift the balance of power to brokers and prop traders, and hurt revenues that allow them to remain competitive.
Facebook names members to oversight board
Labeled by some as Facebook’s (NASDAQ:FB) “Supreme Court,” the independent board will be able to overturn decisions by the company and CEO Mark Zuckerberg on whether individual pieces of content should be allowed on Facebook and Instagram. The project could turn into a new standard for the industry, with some seeing the experiment expanding to YouTube (GOOG, GOOGL), Twitter (NYSE:TWTR) or other platforms that make content moderation decisions. “We are basically building a new model for platform governance,” said Helle Thorning-Schmidt, former prime minister of Denmark and one of the board’s four co-chairs.
Norway cuts rates to zero
Marking its third cut in less than two months, Norway’s central bank has reduced its key interest rate to zero for the first time and said rates are likely to stay there for the next several years. “The activity in the Norwegian economy has fallen abruptly as a result of the coronavirus pandemic… amplified by the severe impact of a sharp fall in oil prices,” Norges Bank said in a statement. The twin shocks are also forcing the government to make record withdrawals from Norway’s $1T Sovereign Wealth Fund, which recorded a return of -11.7% in Q1.
‘Made in India’
India is seeking to lure U.S. business out of China as tensions ramp up over Beijing’s role in the coronavirus pandemic, Bloomberg reports. The government reached out to more than 1,000 companies in April, including Abbott Laboratories (NYSE:ABT) and Medtronic (NYSE:MDT), to offer incentives for manufacturers of medical equipment, food processing units, textiles, leather and auto part makers. Japan has also earmarked $2.2B to help shift factories from its neighbor, while EU members plan to cut dependence on Chinese suppliers.
Virgin Media, O2 take on BT
It’s the biggest shakeup in the British telecoms market in five years. Liberty Global (NASDAQ:LBTYA) and Telefonica (NYSE:TEF) have agreed to merge their U.K. businesses in a $38B deal that will challenge market leader BT (OTCPK:BTGOF) in mobile and broadband. The transaction will bring together Virgin Media, the largest cable TV provider, and O2, the second-biggest mobile operator, and allow debt-laden Telefonica to extract some cash from the business while keeping a presence in Britain.
Future of 5G wireless standards
The U.S. Commerce Department is close to allowing American companies to work with China’s Huawei Technologies on setting standards for next generation 5G networks, Reuters reports, after U.S. engineers took a backseat in the discussions following the firm’s blacklisting in May 2019. It’s a big deal. 5G wireless networks are expected to power the industry of the future, like high-speed video and self-driving cars, while patented technology for the standards could boost a company’s bottom line by billions of dollars.
What else is happening…
World’s biggest pork processor to restart South Dakota plant.
FLIR’s fever scanners coming to GM factories.
Domino’s Pizza (NYSE:DPZ) to join the S&P 500.
Sinclair Broadcast (NASDAQ:SBGI) agrees to pay record FCC fine.
Oilfield firm Halliburton (NYSE:HAL) cuts 22% of HQ staff.
Wednesday’s Key Earnings
CVS Health (NYSE:CVS) -1.3% despite solid earnings, cash flow.
General Motors (NYSE:GM) +3% on post-pandemic confidence.
Lyft (NASDAQ:LYFT) +16.4% AH amid strong sales, narrower losses.
PayPal (NASDAQ:PYPL) +8.5% AH following Q1 credit loss charges.
Shopify (NYSE:SHOP) +6.9% posting revenue growth of 47%.
Square (NYSE:SQ) -4.2% AH with payment volume shy of consensus.
T-Mobile (NASDAQ:TMUS) +1.1% AH after record Q1 figures.
Wynn Resorts (NASDAQ:WYNN) -2.8% AH on EBITDA loss, dividend suspension.
Today’s Economic Calendar
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Productivity and Costs
8:30 Fed’s Bostic: “Financial Impacts of the COVID-19 Pandemic”
10:30 EIA Natural Gas Inventory
12:00 PM Fed’s Kashkari Speech
3:00 PM Consumer Credit
4:00 PM Fed’s Harker: “Federal Reserve’s Response to COVID-19”
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned to the upside. China, Hong Kong, South Korea, India, New Zealand and Singapore did well; Malaysia, Indonesia and the Philippines were weak. Europe, Africa and the Middle East are currently mixed. The UK, Denmark, South Africa, Finland adn Switzerland are up; Poland, the UAE, Russia, Greece and Saudi Arabia are down. Futures in the States point towards a slight up open for the cash market.
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VIDEO: Managing Winning Trades
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The dollar is up. Oil is down; copper is up. Gold is down; silver is up. Bonds are down.
Stories/News from Seeking Alpha…
Optimism over the economy’s reopening appears to be supporting stock prices and the oil rally, as S&P 500 futures rose another 1% overnight and crude topped $25/bbl. Speaking in an interview Tuesday evening, President Trump outlined that restarting business activity was key and said “we have to get our country open and we have to get it open soon.” The state of the jobs market is also on the radar over the next few days, with the ADP National Employment Report today, weekly jobless claims tomorrow and non-farm payrolls figures on Friday. On the earnings front, General Motors (NYSE:GM) and CVS (NYSE:CVS) report before the bell, while Square (NYSE:SQ) and Paypal (NASDAQ:PYPL) report after the close.
House of Mouse
Disney (NYSE:DIS) shares fell 2% AH on Tuesday after revealing the extent of the financial damage from coronavirus closures. $1.4B was wiped from its quarterly profit, mostly from its shuttered theme parks, but the company did say it would reopen Shanghai Disneyland to a reduced number of visitors next week. It’s also forgoing its first half dividend payment worth $1.6B and pulled its guidance for the rest of the year. Bright spot? Disney+ signed up more than 54M subscribers as of Monday (executives had predicted it would take four years to hit 60M).
Earnings from General Motors
The automaker will likely comment on what economic hit it expects from the COVID-19 pandemic and when it intends to resume North American production. GM has already suspended its dividend and share buybacks, closed its Maven car-sharing unit and delayed work on some product programs, while adding $16B to its cash position by drawing down credit lines. Many hope the U.S. market reopening will mirror China, where GM sales fell 43% in Q1, but quickly rebounded to grow by double digits in April.
Cash burn
Even after grounding more than 3,000 aircraft, or nearly 50% of their active fleets, U.S. airlines are averaging just 17 passengers per domestic flight and 29 passengers per international flight. The industry is “burning more than $10B in cash a month,” trade group Airlines for America warned in prepared testimony ahead of today’s Senate hearing on the “State of the Aviation Industry.” It will “emerge from this crisis a mere shadow of what it was just three short months ago,” CEO Nicholas Calio declared. “If carriers were to refund all tickets… this will result in negative cash balances that will lead to bankruptcy.”
‘Recession of historic proportions’
In its first estimate since lockdowns were put into place, the European Commission said the EU will contract 7.5% in 2020 as the coronavirus pandemic brings the worst economic shock since the Great Depression in the 1930s. “While the immediate fallout will be far more severe for the global economy than the financial crisis, the depth of the impact will depend on the evolution of the pandemic, our ability to safely restart economic activity and to rebound thereafter,” said Valdis Dombrovskis, VP for economic affairs.
Identifying fake coronavirus gear
U.S. Immigration and Customs Enforcement is working with companies like 3M (NYSE:MMM), Amazon (NASDAQ:AMZN) and Pfizer (NYSE:PFE) to curtail the flood of counterfeit masks, coronavirus tests and other equipment entering the country. U.S. Customs has seized nearly 500 shipments of unauthorized products, while agents have opened 315 investigations and made 11 arrests of people allegedly selling or shipping improper goods. The agency has also been able to identify more than 19,000 suspect COVID-19-related domain names due to the partnership and is working to take many of them down.
Hospitals vs. insurers
U.S. hospitals are losing around $50B per month due to the large number of cancelled elective procedures, costs associated with treating COVID-19 and an increased number of uninsured patients. “I think it’s fair to say that hospitals are facing perhaps the greatest challenge that they have ever faced in their history,” said CEO of the American Hospital Association, Rick Pollack, calling the situation a “triple whammy.” However, the net impact on U.S. health insurers is quite the opposite and is “going to be positive for them,” added Jeff Jonas of Gabelli Funds. “The costs from COVID-19 are going to be actually very small and more than outweighed by the deferral of elective procedures.”
Access to remdesivir
Gilead Sciences (NASDAQ:GILD) is in discussions with “leading chemical and pharmaceutical companies” to expand manufacturing of its remdesivir COVID-19 treatment to ensure wider access to the drug in Europe, Asia and the developing world through at least 2022. It’s also negotiating long-term voluntary licenses with several generic drugmakers in India and Pakistan to produce the drug for developing markets. Advanced talks are already underway with UNICEF to deliver remdesivir using the agency’s distribution networks.
Demise of America’s oldest department store
More gloom is surfacing for the apparel retail industry a day after J. Crew filed for bankruptcy protection. Lord & Taylor is preparing to liquidate its inventory as soon as its 38 department stores reopen, but is holding off on a bankruptcy filing until it ensures customers will be able to attend its “going out of business” sales. Meanwhile, Nordstrom (NYSE:JWN) said it would close 16 locations and restructure its operations in an effort to cut costs and weather the impact of the COVID-19 pandemic.
Removing chaebol status
Embroiled in a bribery scandal, Samsung’s (OTC:SSNLF) de facto leader Jay Y. Lee, apologized over controversial succession plans and said he will not hand over management rights to his children. “Samsung failed to live up to public expectations. I will not abuse loopholes in the law in relation to the succession of corporate control, or do anything that can be criticized ethically.” The 52-year old Lee is the third-generation leader of Samsung – a family-controlled conglomerate, known as chaebol in South Korea.
What else is happening…
IPO in question? Airbnb (AIRB) cuts 25% of staff.
AbbVie (NYSE:ABBV) deal for Allergan (NYSE:AGN) wins antitrust approval.
California sues UBER and LYFT over alleged worker misclassification.
Norwegian Cruise Line (NYSE:NCLH) prices upsized $400M equity offering.
New York AG probing harassment at NBC News (NASDAQ:CMCSA).
Meat concerns? Tyson (NYSE:TSN) to resume production at Waterloo.
Tuesday’s Key Earnings
Activision Blizzard (NASDAQ:ATVI) +5.3% AH with bookings up 21%, raised guidance.
Beyond Meat (NASDAQ:BYND) +4.8% AH following a surprise profit.
Disney (DIS) -2.1% AH on COVID-19 hit, forgoing dividend.
DuPont (NYSE:DD) -0.1% cutting full-year capex by $500M.
Electronic Arts (NASDAQ:EA) -4.6% AH as bookings tumbled by double digits.
Occidental Petroleum (NYSE:OXY) +3.9% AH topping expectations.
Regeneron Pharma (NASDAQ:REGN) +6% with Dupixent sales up 129%.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Treasury Refunding Quarterly Announcement
10:30 EIA Petroleum Inventories
1:30 PM Fed’s Bostic: “Federal Reserve’s Response to COVID-19”
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned to the upside. Hong Kong, Australia, Malaysia and the Philippines did well; India and Thailand were weak. Europe, Africa and the Middle East are currently doing great. The UK, France, Germany, Russia, Greece, Switzerland, Norway, Hungary, Spain, the Netherlands, Italy, Israel, Austria, Sweden, Saudi Arabia and the Czech Republic are up more than 1%. 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 up. Bonds are down.
Stories/News from Seeking Alpha…
Investors will size up the level of damage suffered by the world’s most powerful entertainment company today, with Disney’s (NYSE:DIS) stock down 30% from the all-time highs notched at the start of the year. The numbers will be the first outing for Bob Chapek, the former parks chief, who took the reins in February as COVID-19 spread around the world. Analysts are expecting per-share profit of $0.90, down 44% from a year ago, with cash cows like its theme parks and cruises closed or docked, and production delays as movie theaters remain off-limits. The true scale of the pandemic’s impact might still not be known until late summer, when results are released for the current quarter in which 100K Disney employees were furloughed and another $5B line of credit was taken out to bolster liquidity.
Backing for ECB’s bond buying program
Germany’s top court has ruled that some actions taken by the country’s Bundesbank to participate in the ECB’s €2.7T bond-buying program were unconstitutional, and not backed by the EU treaty. However, it sees no breach of the prohibition of monetary financing of governments, and therefore backs the program – effectively sanctioning the powers the ECB has deployed to keep its economy growing. The ruling opens the door to a large potential increase in ECB bond purchases in its efforts to counterbalance the economic downside of the coronavirus pandemic.
Record borrowing
A clearer picture is emerging as to what the U.S. debt load will look like for 2020 after the Treasury announced it would borrow a record $3T this quarter to subsidize economic rescue efforts due to COVID-19. That’s on top of first-quarter borrowing of $477B and an anticipated $677B for the third quarter. All the red ink (national debt is near $25T) has some worried about a potential debt crisis and sparked talk about deflation/inflation, while many see the spending as a temporary lifeline, and see the return to growth despite easy money and massive deficits.
Turnaround Tuesday
While bickering between Washington and Beijing triggered early selling on Monday, oil’s longest run of gains in nine months and reopenings of the economy are helping boost sentiment. U.S. stock index futures are ahead by 1%, while crude is up almost 10% to $22.38/bbl, before a slew of U.S. economic reports including the trade deficit and PMIs. “May, June will be the turning point in terms of restarting global economic activity, and that’s really what the market is looking at,” said Stefan Hofer, chief investment strategist at LGT Bank Asia.
Big Oil
While first quarter net profit at Total (NYSE:TOT) fell 35% Y/Y to $1.8B, the French energy major kept its dividend stable at €0.66 despite “exceptional circumstances.” The results follow those of Royal Dutch Shell (NYSE:RDS.A) last week, which slashed its dividend for the first time since WWII, though rivals BP (NYSE:BP), Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) all maintained their payout to shareholders. Total CEO Patrick Pouyanne said he will also take a 25% fixed salary pay cut for the remainder of the year and laid out plans to have net zero emissions from all its European businesses by 2050.
Ferrari tops Detroit Three, Tesla tops all
Following bumper earnings that sent shares of the sports carmaker up 7% on Monday, Ferrari’s (NYSE:RACE) market cap ($29.8B) is now worth more than each of the Detroit Three – GM ($29.3B), F ($19.2B) and FCAU ($13B). Investors are betting on Ferrari’s storied brand name and profit margins despite producing a fraction of the other major carmakers (about 10,000 vehicles a year vs. GM’s 7.7M), while shares have tripled in value since its IPO in late 2015. Speaking of market cap figures, Tesla (NASDAQ:TSLA) is worth more than all of the above-mentioned automakers combined at $130B, putting Elon Musk on track for a $700M payout just days after saying the EV maker’s stock was too high.
Standards set for coronavirus antibody tests
At least 160 antibody tests manufactured for COVID-19 entered the U.S. market without previous FDA scrutiny on March 16 because the agency felt emergency authorization was warranted. Now, the FDA will require them to meet standards for accuracy. Tests will need to be found 90% “sensitive,” or able to detect coronavirus antibodies, and 95% “specific,” or able to avoid false positive results. Disclaimer: The tests may be of limited usefulness because researchers are still working to determine the precise level of antibodies sufficient to result in immunity.
IBM Think Digital
The coronavirus pandemic will “dramatically accelerate” adoption of AI and cloud computing, according to new IBM (NYSE:IBM) CEO Arvind Krishna, who is set to launch a slew of new products today at the company’s annual Think Digital conference. Among them: IBM Watson AIOps, which uses AI to automate the way companies detect and respond to IT anomalies in real-time, and IBM Edge Application Manager, which uses AI to manage up to 10,000 internet-connected devices. Another set of products is focused on 5G mobile networks, while a suite of solutions will be unveiled to help chief information officers automate business planning, operations and call centers.
Staying alive
Hertz (NYSE:HTZ) shares are off 25% premarket after the rental-car company hired a restructuring advisor ahead of a possible bankruptcy filing. It’s been talking to some of its creditors about how to ease its burden without going through the process, but negotiations have been a struggle. Meanwhile, Gold’s Gym filed for bankruptcy protection on Monday amid fitness closures, while Carnival (NYSE:CCL) expects to resume some cruise sailings in August after a monthslong pause.
What else is happening…
NBC News (NASDAQ:CMCSA) Chairman Andy Lack steps down.
Ackman builds stake in Restaurant Brands (NYSE:QSR) to 9.6%
Deep job cuts at United Airlines (NASDAQ:UAL) expected in October.
Meat shortage update – now it’s Costco (NASDAQ:COST).
FedEx (NYSE:FDX) workers in Newark die from COVID-19.
Amazon’s (NASDAQ:AMZN) French warehouses remain closed.
Deal for Victoria’s Secret (NYSE:LB) officially ends.
Another Argentina default a real possibility.
Monday’s Key Earnings
AIG (NYSE:AIG) -0.8% AH stung by equity market declines.
Omega Healthcare (NYSE:OHI) +2.2% AH beating estimates.
Realty Income (NYSE:O) +3% AH collecting 82.9% of April rent.
Skyworks Solutions (NASDAQ:SWKS) +0.7% AH reporting FQ2 upside, wider Q3 outlook.
Williams Cos. (NYSE:WMB) -1.4% on GAAP loss of $517M.
Today’s Economic Calendar
8:30 International Trade
8:55 Redbook Chain Store Sales
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
2:00 PM Fed’s Bullard: “Perspectives on the Pandemic”
2:00 PM Fed’s Bostic Speech
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets suffered big losses. Australia did well, but Hong Kong, South Korea, India, Taiwan, Malaysia, India, Singapore and the Philippines were very weak. Europe, Africa and the Middle East are currently down big. Poland, France, Turkey, Germany, the UAE, Russia, Greece, South Africa, Finland, Sweden, Norway, Hungary, Spain, the Netherlands, Italy, Portugal, Austria, Switzerland and the Czech Republic – all down big. 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 up. Oil and copper are down. Gold is up; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Escalating tensions between the world’s two largest economies saw S&P 500 futures fall 1% to start the week, while European stocks tumbled as investors returned from a May Day break. President Trump said China made a “horrible mistake” and the government was putting together a report that would be “very conclusive,” while Warren Buffett tried to soothe (“never bet against America”), although he doesn’t see any attractive investments (see more below). Meanwhile, the weakest earnings season in more than a decade continues, with nearly 150 companies in the S&P 500 expected to report quarterly results this week.
U.S. looking to rip supply chains from China
These discussions include “how we restructure … supply chains to prevent something like this [coronavirus economic fallout] from ever happening again,” said Secretary of State Mike Pompeo, after citing “significant evidence” that COVID-19 emerged from a Chinese laboratory. Tax incentives and potential re-shoring subsidies are among measures being considered to spur changes, while the U.S. is pushing to create an alliance of “trusted partners” dubbed the “Economic Prosperity Network.” “We’ve been working on [reducing the reliance of our supply chains in China] over the last few years but we are now turbo-charging that initiative,” added Keith Krach, undersecretary for Economic Growth, Energy and the Environment at the U.S. State Department.
More PPP loans may be needed
That’s according to White House economic adviser Larry Kudlow, who said “we waited a little bit too long when the last tranche ran out. Let’s not make the same mistake again.” He’s not in a rush to provide more funds to individuals, however, with 175M Americans having already received assistance, either through direct payment or enhanced unemployment. During the interview on CNN’s “State of the Union,” host Jake Tapper outlined that that $175B of the second round of $310B of PPP loans have already been approved.
The Oracle speaks
Asked why he hasn’t invested in any companies during the pandemic crisis like the company did during the financial crisis, Warren Buffett said “we haven’t seen anything attractive” and the Fed “did the right thing and very promptly.” In fact, Berkshire Hathaway (BRK.A, BRK.B) sold $6.5B of equities in the month of April, and offloaded its entire stake in all airlines it held. Buffett still gave an upbeat assessment of the United States’ ability to withstand crises, and said “American magic” will overcome coronavirus uncertainty.
Next steps
With a new forecast of up to 100K coronavirus deaths in the U.S., the medical community is watching three critical areas in its fight against COVID-19: Testing, treatments and vaccines. On Sunday, Roche’s (OTCQX:RHHBY) COVID-19 antibody test and Gilead’s (NASDAQ:GILD) experimental drug remdesivir received emergency use authorization from the FDA, while Moderna (NASDAQ:MRNA) inked a production deal for 1B experimental vaccine doses on Friday. Estimated timelines for a vaccine are still murky, with some seeing a solution by the end of the year, while others say it cannot be reasonably expected until the end of 2021.
Uncertain road to recovery
Crude futures are off 8% to start the week as oil executives see signs that fuel consumption is starting to recover, but say it’s likely to be a slow, painful process. “I believe we have seen the bottom,” said Marco Dunand, co-founder of Mercuria Energy Group, one of the five largest trading houses. Traders feel the recovery in demand is likely to take more than a year before it reaches a pre-pandemic rate of about 100M bbl/day, though some say it may never reach those levels.
Virtual roadshows and remote IPOs
There probably couldn’t be a better way to highlight demand for its product as Norway’s Pexip kicked off a virtual IPO roadshow amid the coronavirus pandemic. The company competes with Zoom (NASDAQ:ZM) and Bluejeans (NYSE:VZ), and says its video conferencing software is used by the U.S. military and the German government. “Pexip has for example never met the two U.S. based cornerstone investors face-to-face, all interaction with them have been done by video,” CEO Odd Sverre Ostlie declared.
Hot on the heels of Facebook
Just two weeks after Facebook (NASDAQ:FB) shelled out $5.7B for a nearly 10% stake in Jio, a subsidiary of Indian conglomerate Reliance Industries, Silver Lake announced it would jump on the bandwagon. The private-equity firm has struck a deal to invest $750M in the telecom and technology giant, valuing the entity at $65B – a 12.5% premium to the value implied by the Facebook investment. Jio owns a suite of diversified services, including music streaming, smartphones, broadband, on-demand live TV and payments.
Another hit to brick-and-mortar
It’s the first major retailer to fall during the coronavirus pandemic, but it’s unlikely to be the last. J. Crew has filed for Chapter 11 bankruptcy protection as part of a financial reorganization that will hand over control to top creditors, including hedge fund Anchorage Capital, by converting $1.65B of its debt into equity. The company also plans to hold onto its Madewell brand, which it had considered spinning off into a public company.
Mandatory mask policies
Uber (NYSE:UBER) is in the process of developing technology to detect if drivers are wearing masks or face coverings before they go online and start accepting trips, and is also looking into ways to hold riders accountable, according to CNN Business. While it didn’t elaborate on how the technology would work, Uber already has a Real Time ID-check feature that periodically asks drivers to take selfies. The policy is expected to be rolled out in the coming weeks as the ride-sharing giant comes to terms with new realities imposed by the COVID-19 pandemic.
What else is happening…
Clorox (NYSE:CLX) lifts ad spending on disinfectant demand.
Amazon (NASDAQ:AMZN) eyes asset sale from bankrupt OneWeb.
Glut for U.S. auto industry; EVs a priority in China.
Tesla (NASDAQ:TSLA) takes first step to becoming a U.K. energy provider.
Embraer (NYSE:ERJ) not actively seeking new partner.
EU clears €7B bailout for Air France-KLM (OTCPK:AFRAF).
Rocket Lab sees long ‘slog’ for space industry.
Confirmed! Merger talks between O2 (NYSE:TEF) and Virgin Media (NASDAQ:LBTYA).
Intel (NASDAQ:INTC) in talks to buy Israel’s Moovit for $1B.
Impossible Foods (IMPF) starts new talks for funding.
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