Good morning. Happy Friday.
The Asian/Pacific markets suffered moderate losses. Japan, Hong Kong, South Korea, New Zealand, Taiwan, Australia and Thailand each dropped more than 1%. Europe, Africa and the Middle East are currently doing very well. The UK, France, Germany, Finland, Norway, Hungary, Spain, Italy, the Netherlands and the Czech Republic are up more than 1%; Poland, the UAE and Russia are down. Futures in the States point towards a relatively big gap up open for the cash market.
The dollar is flat. Oil is down; copper is up. Gold is up; silver is flat. Bonds are down.
Stories/News from Seeking Alpha…
Thursday was an ugly day on Wall Street, as stocks posted their worst day since March, though some of the massive losses might be recouped as S&P 500 futures rebounded 2% overnight. “The U.S. economy will not be shut down again,” declared U.S. Treasury Secretary Steven Mnuchin, saying testing and tracing are improving and officials understand more about how to contain outbreaks. “There’s just too much cash sitting around for this to be a deep correction,” added Ken Peng, head of Asia investment strategy at Citi Private Bank. “The Fed and other major central banks have already made it very clear they’re there to buy the bottom basically.”
Betting or investing?
Another factor to consider in the current environment is the advance of retail traders into the market as the coronavirus pandemic sidelines many professional investors. “Day trading has replaced sports betting as a form of entertainment,” reads a headline from Axios, “and this phenomenon could partly explain the current disconnect between the economy (down) and the stock market (up).” Big price action seen in the stocks of bankrupt companies like Hertz (NYSE:HTZ), J.C. Penney (OTCPK:JCPNQ) and Whiting Petroleum (NYSE:WLL) have also underlined this trend as investors rush to buy anything that moves.
737 MAX production start and stop
Boeing’s (NYSE:BA) 16% drop yesterday contributed more than 230 points of the Dow Jones’ 1,700-pont plunge as the planemaker cut production plans for the 737 MAX just two weeks after restarting work in its Seattle-area factory. Key supplier Spirit AeroSystems (NYSE:SPR), which was asked by Boeing to cut production on the MAX, and other suppliers also traded deep in the red. Less production in 2020 could mean the MAX timeline is slipping again or Boeing will deliver MAX jets at a slower rate than previously expected.
Quarantine policy
British Airways (OTCPK:ICAGY), easyJet (OTCPK:EJTTF) and Ryanair (NASDAQ:RYAAY) have initiated legal action against the U.K. government’s quarantine policy, asking for a judicial review to be heard as soon as possible. The airlines describe the rule as “flawed,” saying it will have a “devastating effect on British tourism and the wider economy.” Instead, they want the government to reintroduce a policy from March 10, which saw passengers from countries deemed at high risk for COVID-19 being ordered to self-isolate upon arrival in the U.K.
Record contraction
Besides logging the highest COVID-19 death toll in Europe, Britain has also paid a heavy economic price. GDP contracted a record 20.4% in April, the largest monthly fall on record, as businesses and workers reeled under a lockdown designed to control the coronavirus pandemic. The OECD has already warned that the U.K. could see one of the developed world’s deepest recessions in 2020, with output plunging more than 11%.
What is free speech on social media?
Presumptive Democratic nominee Joe Biden penned a letter to Facebook (NASDAQ:FB) that called, among other things, for the promotion of trustworthy sources of election-related information and to quickly remove fast-spreading misinformation and false paid advertisements. “Just as they have done with broadcast networks – where the U.S. government prohibits rejecting politicians’ campaign ads the people’s elected representatives should set the rules, and we will follow them,” Facebook responded in a statement. Snap (NYSE:SNAP) is also facing some backlash after it stopped promoting President Trump’s Snapchat account on its Discover feature, a move CEO Evan Spiegel said “is within its First Amendment rights.”
Zoom does some explaining
The company’s recent ban against U.S.-based Chinese activists “fell short,” Zoom (NASDAQ:ZM) wrote in a blog post, offering more details about what happened. In May and early June, the Chinese government reached out to the platform about meetings commemorating the 1989 Tiananmen Square massacre. The activity is illegal in China, so Zoom terminated some of the meetings that had a significant number of mainland China participants – as well as their host accounts – despite a few being based in Hong Kong and the U.S. (those have since been reinstated). “We will have a new process for handling similar situations,” Zoom added, saying it is “developing technology over the next several days that will enable us to remove or block at the participant level based on geography.”
Facial recognition – again
Microsoft (NASDAQ:MSFT) is latest big firm to back away from the business following similar moves by IBM (NYSE:IBM) and Amazon (NASDAQ:AMZN). The company said it won’t sell facial recognition software to police departments in the U.S. until there’s a national law “grounded in human rights” to govern the technology. The news comes amid nationwide protests against law enforcement brutality following the death of George Floyd in Minneapolis on May 25.
Bankrupt Hertz wants to sell shares
One of the more curious bankruptcies in recent memory just got a little odder with word that Hertz Global (HTZ) wants to sell up to $1B in shares following a sizable rally (a court ruling could come today). “The recent market prices of and the trading volumes in Hertz’s common stock potentially present a unique opportunity for the company to raise capital on more favorable terms than the strings-attached loans that many other bankrupt companies get,” stated Hertz attorneys on the strategy. Related? Hertz has been extremely popular on Robinhood over the last few weeks, with twice as many users snapping up shares than in Amazon (AMZN) or Microsoft (MSFT).
What else is happening…
Quicken Loans, the largest U.S. mortgage lender, files for IPO.
Cox returns as Facebook (FB) head of product.
Sony (NYSE:SNE) shows off PlayStation 5 at online event.
Nestle (OTCPK:NSRGY) explores overhaul of water business.
Uber (NYSE:UBER), Lyft (NASDAQ:LYFT) drivers are employees – California regulator.
Regeneron (NASDAQ:REGN) initiates study of antibody cocktail for COVID-19.
Thursday’s Key Earnings
Adobe (NASDAQ:ADBE) +4.1% AH despite soft forecast.
Lululemon (NASDAQ:LULU) -5.1% AH amid losses from shut stores.
The Children’s Place (NASDAQ:PLCE) -3.9% AH on mixed results.
Today’s Economic Calendar
8:30 Import/Export Prices
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets closed with stiff losses. Japan, Hong Kong, India, Taiwan, Austria, Malaysia, Indonesia, Singapore and Thailand lost more than 1%. Europe, Africa and the Middle East are currently very weak. The UK, Denmark, France, Germany, Russia, Greece, Finland, Switzerland, Norway, Hungary, Spain, the Netherlands, Portugal, Israel, Austria, Sweden and the Czech Republic are down at least 1%. Futures in the States point towards a big gap down open for the cash market.
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VIDEO: My Favorite Breadth Indicators
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The dollar is up. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
U.S. stock index futures, along with global stocks, are taking another turn for the worse as investors cash out of an extraordinary rally following the latest comments from Fed Chair Jerome Powell. While he vowed to continue aggressive stimulus “and keep interest rates near zero for years,” he struck a cautious note on jobs, undercutting the hopes for a V-shaped recovery. “My assumption is that there will be a significant chunk, well, well into the millions of people who don’t get to go back to their old jobs and there may not be a job in that industry for them for some time. It could be some years before we get back to those people finding jobs.”
On the economy
The Fed sees GDP plunging 6.5% in 2020 (before bouncing back to a 5% gain in 2021) and the unemployment rate to be 9.3% at year’s end. A clearer picture may arise today as the Labor Department reports weekly jobless claims following last Friday’s surprise of a 2.5M increase in nonfarm payrolls for May. Meanwhile, a resurgence in COVID-19 infection rates is also hitting states that have recently reopened, prompting concern about a potential second wave as the total number of U.S. cases topped 2M.
Big Tech gets even bigger
While the broader market sold off yesterday, a surge into tech stocks ensued in the face of economic uncertainty and social unrest. The market caps of both Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) crossed $1.5T for the first time ever, while Amazon (NASDAQ:AMZN) reached a market valuation of $1.3T and Alphabet (GOOG, GOOGL) topped the $1T level for the first time since February. Driving the excitement has been an acceleration in the adoption of e-commerce, a shift to cloud computing and remote work, as well as the companies’ rock-solid balance sheets and global user bases.
Getting hungry
Grubhub (NYSE:GRUB) plans to merge with Just Eat Takeaway.com after talks with Uber (NYSE:UBER) fell through amid antitrust scrutiny. The deal would combine two of the top food delivery services in the U.S. and Europe and create the world’s biggest food delivery company outside of China. Grubhub shareholders would receive 30% of the combined company via an all-stock transaction worth $7.3B. GRUB +7.6% premarket.
Over $1,000
Elon Musk could’ve been popping champagne bottles yesterday as Tesla (NASDAQ:TSLA) shares topped $1,000 for the first time ever, though instead he wrote to employees that it was “time to go all out” and put its Semi into volume production. It seems timely, given the hype surrounding newly listed Nikola (NASDAQ:NKLA), an EV truck maker that has seen its shares take off to dizzying levels. A rally of about another 11% in Tesla shares could see it become the world’s most valuable carmaker, taking the crown currently worn by Toyota (NYSE:TM).
Facial recognition
A day after IBM (NYSE:IBM) said it would exit the facial recognition business, Amazon (AMZN) announced it would ban the use of its facial recognition software by police for one year. “We hope this one-year moratorium might give Congress enough time to implement appropriate rules, and we stand ready to help if requested,” the company said in a statement. Organizations focused on stopping human trafficking will still be permitted to use Rekognition, a product AWS launched in 2016.
Other controversy
Zoom’s (NASDAQ:ZM) ties to China are under the microscope after it banned a group of prominent U.S.-based Chinese activists following a videoconference on the 1989 Tiananmen Square massacre. “When a meeting is held across different countries, the participants within those countries are required to comply with their respective local laws,” the company told various media outlets. While it has since reactivated the account, Zoom has previously acknowledged that much of its product development has been based in China, and that some Zoom calls were mistakenly routed through Chinese servers.
5G fortunes at stake
Suffering from product design delays and higher costs to supply equipment, Nokia (NYSE:NOK) is continuing a C-suite overhaul to catch up with rivals Ericsson (NASDAQ:ERIC) and Huawei in the 5G race. Marco Wiren will join the company as CFO on Sept. 1, the same day Pekka Lundmark starts as chief executive. Sari Baldauf took over as chairwoman last month, succeeding Risto Siilasmaa who chaired the Finnish firm for eight years. NOK -1.8% premarket.
Unilever makes second attempt at unification
“After a comprehensive review over the last 18 months, the board continues to believe that moving from the current dual-headed legal structure to a single parent company will bring significant benefits,” Unilever (UN, UL) said in a statement. The move, which would combine its U.K. and Dutch arms in a single British parent company, would result in one class of shares and a single pool of liquidity. A previous attempt to consolidate in the Netherlands drew fierce opposition from U.K. shareholders. UN +3.6% premarket.
Boost for Hong Kong
The city’s status as a destination for major Chinese technology companies got a lift overnight amid recent tensions over U.S. listing requirements. Shares of mobile games group NetEase (NASDAQ:NTES) jumped nearly 10%, with the retail portion of the stock sale more than 130 times oversubscribed, while e-commerce company JD.com (NASDAQ:JD) fixed a price for its own $3.9B offering. The moves are likely to increase inflows and strengthen the local dollar at a time when China’s national security law has raised concerns about Hong Kong’s future as a financial hub.
What else is happening…
U.S. government deficit YTD exceeds full year FY2019.
Three key studies of COVID-19 vaccines to launch in summer.
Goldman Sachs (NYSE:GS) releases plan to return to the office.
Disneyland (NYSE:DIS) plans for phased reopening on July 17.
Boeing (NYSE:BA) may soon conduct 737 MAX recertification flight.
Tailored Brands (NYSE:TLRD) soars on update amid bankruptcy rumors.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Producer Price Index
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
1:00 PM Results of $19B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday.
The Asian/Pacific markets were mixed. India, Taiwan and Thailand posted gains; China, Indonesia and the Philippines posted losses. Europe, Africa and the Middle East are currently mixed and quiet. Denmark and Turkey are up; Greece, Hungary and Austria are down. Futures in the States point towards a slight positive open for the cash market.
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BLOG: Summary of Trades
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
No major policy decisions are expected from the Fed today, but any hint of taking the foot off the pedal could hammer risk sentiment, while more dovishness could have the opposite effect. Keep a lookout for comments on yield curve control, forward guidance and how long the Fed will keep current policies in place after investors stopped pricing in the possibility of negative rates following last week’s blowout jobs report. Chairman Jerome Powell skipped the last quarterly forecast in March – as the pandemic forced a shutdown of the economy – so today’s projections will likely suggest whether the central bank believes the worst part of the coronavirus crisis has passed.
On pause
Futures were mixed overnight ahead of the Fed’s first economic projections of 2020 – due out at 2 p.m. ET. Nasdaq futures climbed 0.3%, while the Dow and S&P fell as much as 0.4%, reflecting a similar trade on Tuesday that saw a shift back into Big Tech. Other concerns abound as Dr. Anthony Fauci warned the pandemic has further to run, while the rate of new COVID-19 infections goes under the microscope as counties lift additional stay-at-home restrictions.
Worst peacetime slump in a century
In its latest report on the global outlook, the OECD said it expects the world economy to contract by 6% this year if a second wave of infections and containment measures can be avoided. “Economic impacts are dire everywhere. The recovery will be slow and the crisis will have long-lasting effects, disproportionately affecting the most vulnerable people.” In the U.S., the OECD sees GDP contracting 7.3% in 2020 and at an 8.5% rate if a second outbreak occurs.
Weak demand remains a risk
Soft inflation figures put Chinese shares under pressure overnight, marking the latest data to show the reach of the coronavirus pandemic. Industrial prices fell deeper into deflation in May, declining 3.7% Y/Y, while consumer inflation eased due to softening food prices, slowing to 2.4%. “Concerns on unemployment and salary cuts may keep consumers from spending. Small companies and export-oriented companies may continue to see headwinds,” said Bruce Pang of China Renaissance Securities.
‘Bad bank’
ECB President Christine Lagarde has consulted banks and EU officials about a “bad bank” scheme in recent weeks as the COVID-19 outbreak squeezes borrowers and hinders new lending. One blueprint would involve the European Stability Mechanism as a guarantor for the bad bank, which would issue bonds that commercial banks would buy – in exchange for portfolios of unpaid loans – and use as collateral for ECB funding. The project would also require the blessing of Germany, which has long opposed shared responsibility for eurozone debts, though it did recently agree to pool EU borrowing for a coronavirus recovery fund.
Movies, TV shows under review
Entertainment companies are reassessing the content they offer in the wake of George Floyd’s death amid nationwide protests for racial justice and against police brutality. Gone with the Wind has been pulled from HBO Max (NYSE:T), though the streamer plans to return the movie to the platform “with a discussion of its historical context and a denouncement of ethnic and racial prejudices.” Long-running TV show Cops has been canceled outright by the Paramount Network (NASDAQ:VIAC), while Live PD has been pulled from the schedule of the A&E Network (NYSE:DIS).
More corporate action
“The events of the past two weeks have caused all of us to reflect on what we can do to confront the cultural and systemic forces that sustain racism,” Adidas (OTCQX:ADDYY) CEO Kasper Rorsted said in a statement. A minimum of 30% of all new positions in the U.S. at Adidas and Reebok will now be designated for blacks and Latinos, while the company will finance 50 university scholarships for black students each year over five years. It’s also investing $20M in black communities after some U.S. employees complained Adidas was profiting off black culture without doing enough to help them.
CrossFit CEO resigns
The fitness industry is watching as CrossFit CEO Greg Glassman stepped down from the company he co-founded and was replaced by Dave Castro, the director of the CrossFit Games. “I created a rift in the CrossFit community and unintentionally hurt many of its members,” Glassman declared, following a series of tweets about the BLM protests and the death of George Floyd that many criticized as racist, offensive and tone-deaf. CrossFit is the world’s largest fitness chain with more than 15,000 locations.
Juneteenth
“Both Twitter (NYSE:TWTR) and Square (NYSE:SQ) are making #Juneteenth (June 19th) a company holiday in the US, forevermore. A day for celebration, education, and connection,” reads a tweet from CEO Jack Dorsey. The holiday commemorates the end of slavery in America. On that day in 1865, Union General Gordon Granger read the Emancipation Proclamation to the public in Galveston, Texas, two and a half years after it was issued by Abraham Lincoln.
What else is happening…
First phase of Apple’s (NASDAQ:AAPL) HQ return begins June 15.
Nikola (NASDAQ:NKLA) guns for the Ford (NYSE:F) F-150 crown.
Efforts have stalled on transatlantic trade, says EU trade chief.
Top 20 shareholder calls out HSBC, Standard Chartered (OTCPK:SCBFF).
Tensions are running high at Volkswagen (OTCPK:VWAGY).
Gundlach sees stocks falling and gold rising.
Tuesday’s Key Earnings
AMC Entertainment (NYSE:AMC) +4.8% AH adding details to reopening plans.
Chewy (NYSE:CHWY) -2.2% AH despite strong sales growth.
GameStop (NYSE:GME) -6.9% AH as global comparable sales fell 17%.
Tiffany (NYSE:TIF) +2% noting compliance with its leverage ratio.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:00 Atlanta Fed’s Business Inflation Expectations
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM Treasury Budget
2:30 PM Chairman Press Conference
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Good morning. Happy Tuesday.
The Asian/Pacific markets closed mixed. China, Hong Kong, Australia, Malaysia and the Philippines did well; India, New Zealand, Indonesia and Thailand were weak. Europe, Africa and the Middle East are currently mostly down. The UK, France, Germany, the UAE, Russia, Finland, Norway, Hungary, Spain, the Netherlands, Italy, Austria, Sweden and the Czech Republic are down 1% or more. Futures in the States point towards a moderate gap down open for the cash market.
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BLOG: Summary of Trades
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The dollar is up. Oil is down; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Traders are reassessing the current state of the market after the S&P 500 wiped out all of its 2020 losses on Monday, in a historic rally that shocked the Wall Street establishment. It took just 53 sessions for the index to restore the nearly $10T in value that was erased since an intraday low on March 23. The move may be warranted, especially after May’s blowout jobs report, unprecedented stimulus and economy reopenings, but many are reviewing positions and looking for the next big catalyst. Ahead of a session that kicks off the Fed’s latest two-day policy meeting, S&P 500 futures have pulled back, falling 1% in overnight trade.
Bull vs. Bear
Speculative excess has surged to the highest in at least two decades among U.S. options traders and not a single stock in the S&P 500 index is down for the past 10 weeks. It’s either a coming sign that everything will fall together when the rally fades or an indication of broader optimism. “I don’t think even the most optimistic bullish bull could have anticipated this,” said David Sowerby, portfolio manager at Ancora Advisors in Cleveland. “The words that comes to mind are epic, monumental.” Job openings data and small business optimism numbers are on deck for today, while Tiffany (NYSE:TIF), Chewy (NYSE:CHWY) and GameStop (NYSE:GME) report quarterly earnings.
Recession began in February
The peak in monthly economic activity in the U.S. occurred in February, according to the National Bureau of Economic Research – more or less the group that gets the honor of dating expansions and recessions. The expected duration of the downturn is a matter of debate and is likely to influence opinions on the need for additional economic relief. Congress has already provided $3.3T in emergency spending and tax breaks, prompting worries about a ballooning budget deficit.
Bankruptcy and financing
Shares of Chesapeake Energy (NYSE:CHK) tumbled 42% in extended trading on Monday following reports that the natural-gas producer was preparing to file for bankruptcy. The owner of Men’s Wearhouse and Jos. A. Bank, Tailored Brands (NYSE:TLRD), also fell nearly 5% on similar reports. On the flip side, Macy’s (NYSE:M) soared 13% AH upon securing $4.5B in new financing, while Hertz (NYSE:HTZ) erased all the losses suffered since the car rental company declared bankruptcy on May 22.
No active deal discussions
Following a weekend report that Gilead (NASDAQ:GILD) and AstraZeneca (NYSE:AZN) were in touch about a possible merger, CNBC’s David Faber said there is nothing going on at the moment. Faber does acknowledge that “there may have been a conversation” at one point, but points out that AstraZeneca, as a U.K. company, would have been required to disclose that anything was going on per takeover panel regulations. The prior report did indicate that formal talks weren’t yet underway and that advisers and others were being informally included in the process.
Facial recognition exit
“We believe now is the time to begin a national dialogue on whether and how facial recognition technology should be employed by domestic law enforcement agencies,” IBM CEO Arvind Krishna told Congress, as the company shut down its facial recognition business. The unit did not generate significant revenue, according to CNBC, but the decision remains notable for a technology giant that counts the U.S. government as a major customer. “Technology can increase transparency and help police protect communities but must not promote discrimination or racial injustice.”
$5B rescue package for Cathay Pacific
Governments across the globe have been aiding airlines amid a plunge in travel demand, and in some cases, like Germany’s Lufthansa (OTCQX:DLAKY), they are taking direct equity stakes. Cathay Pacific Airways (OTCPK:CPCAY) is the latest to announce a recapitalization plan worth HK$39B ($5.03B) led by the Hong Kong government to help it weather the COVID-19 pandemic. According to the carrier, a plunge in passenger revenue to only 1% of the previous year’s levels meant the airline had been losing cash at a rate of HK$2.5B-HK$3B per month since February.
Electric vehicle revolution
Shares of Nikola (NASDAQ:NKLA) are up another 14% premarket to $83 per share after a major run yesterday that saw the stock skyrocket more than 100%. The company went public this past Thursday – after a merger with VectoIQ – with the intention of disrupting the trucking industry, like Tesla (NASDAQ:TSLA) upended the car business. Shares of Tesla also hit a record closing price of $949.92 on Monday, partly in response to electric vehicle sales data out of China.
Start your engines
The IPO market is heating up as online car seller Vroom priced its initial public offering at $22/share, with the stock expected to start trading today on the Nasdaq under ticker “VRM.” That’s above even its recently increased price range of $18-20/share, and brings the raise to about $412.5M. Underwriters have received a 30-day greenshoe option to buy up to an additional 3,187,500 shares at the IPO price.
Movie theater reopenings
New industry guidance in California allows for theaters in the state to start reopening as soon as this weekend with strict measures. Cinemas will need to limit capacity to 25% or 100 people per auditorium (whichever is fewer) at first, though the rule is expected to be relaxed after two weeks. That would provide some ramp-up time before the planned arrival of the first big post-pandemic blockbuster, Tenet from Warner Bros. (NYSE:T) on July 17, followed by live-action Mulan from Disney (NYSE:DIS). Related tickers: AMC, CNK, IMAX, MCS, RDI, NCMI
What else is happening…
Goldman Sachs forecasts a pullback in crude prices.
BP (NYSE:BP) to slash 14% of global workforce.
Taiwan Semiconductor (NYSE:TSM) would be able to fill Huawei order gap.
3M (NYSE:MMM) sues seller over fake N95 respirators.
Beauty brands are pivoting away from talc.
Today’s Economic Calendar
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
10:00 Wholesale Trade
1:00 PM Results of $29B, 10-Year Note Auction
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets leaned to the upside. Japan, New Zealand, Taiwan, Indonesia and Singapore did well. Europe, Africa and the Middle East currently lean up too. Turkey, Russian, Greece, Norway, Hungary, Spain, Italy, Israel and Austria are doing well; Denmark and Sweden are down. Futures in the States point towards a positive open for the cash market.
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BLOG: Summary of Trades
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The dollar is flat. Oil is down; copper is up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Two drugmakers at the forefront of the industry’s efforts to fight the novel coronavirus are exploring a combined future. AstraZeneca (NYSE:AZN), co-developer of one of the fastest-moving experimental coronavirus vaccines, has made a preliminary approach to Gilead Sciences (NASDAQ:GILD), the only company to have received FDA emergency authorization for its COVID-19 treatment remdesivir. Formal talks are not yet underway, but if combined, the two companies would have a market capitalization of $232B, based on Friday’s closing share prices. AZN -2.2%; GILD +3.2% premarket.
Higher and higher
Futures suggest equities are looking to extend a record rally at the open following the U.S. jobs report on Friday which smashed expectations and underpinned risk assets. “The reopening of the economy has seen financials, industrials, energy and real-estate stocks rallying and investors will continue to rotate funds into sectors such as these for a few more months,” said Eli Lee, head of investment strategy at Bank of Singapore. A weekend agreement by OPEC+ to an extension of output cuts saw oil climb to over $40 overnight, while investors get ready for Tuesday’s kickoff of the Fed’s June policy meeting.
Details of the OPEC+ deal
The finalized pact calls for collective cuts of 9.6M daily barrels until the end of next month, with Nigeria and Iraq making up for their backlog of reductions with deeper cuts over the next three months. Mexico won’t pursue curbs beyond June, as it aims to implement longstanding plans to revive its oil industry. The cuts will be reviewed on a monthly basis, with the next meeting set for June 18. OPEC+ compliance with the May deal was 89%, meaning the group fell some 1.1M barrels short of the target set in the April agreement, according to commodities data firm Kpler.
‘Worst month ever’ for Germany’s economy
German industrial output posted its steepest decline on record in April, plunging 17.9% during the month that saw unprecedented closures of factories and shops due to COVID-19. ING economist Carsten Brzeski called it “the worst month ever” for the eurozone powerhouse, but the Bundesbank feels the peak of the economic crisis is likely over. It sees a contraction of 6.3% this year, based on the assumption that a €130B fiscal stimulus package will help economic activity pick up again in the second half of 2020.
‘All the news that’s fit to print’
The New York Times’ (NYSE:NYT) editorial page editor, James Bennet, has resigned following significant criticism over the paper’s decision to publish an op-ed by Republican Senator Tom Cotton under the headline “Send in the Troops.” Until recently, Bennet was viewed internally as a candidate to succeed NYT Executive Editor Dean Baquet when he retired. Stan Wischnowski, the top news editor of the Philadelphia Inquirer, also resigned over the weekend following the publication of a headline entitled “Buildings Matter, Too” that drew condemnation from readers and the newspaper’s staff.
Reviewing content policies at Facebook
Facing criticism for not moderating or removing controversial posts from President Trump, Facebook (NASDAQ:FB) CEO Mark Zuckerberg said the company will review policies on posts that promote or threaten state use of force or voter suppression techniques. “While we will continue to stand for giving everyone a voice and erring on the side of free expression in these difficult decisions – even when it’s speech we strongly and viscerally disagree with – I’m committed to making sure we also fight for voter engagement and racial justice.”
Uber takes steps to support the Black community
“As a starting point, we will use Uber Eats to promote Black-owned restaurants while making it easier for you to support them, with no delivery fees for the remainder of the year,” Uber (NYSE:UBER) CEO Dara Khosrowshahi wrote in a letter. “In the coming weeks, we will offer discounted rides to Black-owned small businesses, who have been hit hard by COVID-19, to help in their recovery. We know this isn’t enough. It won’t be enough until we see true racial justice. But we plan to work day in and day out to improve, learn, and grow as a company.”
Airlines rip U.K. quarantine plan
British Airways (OTCPK:ICAGY), EasyJet (OTCQX:ESYJY) and Ryanair (NASDAQ:RYAAY) have written to the British government in protest at its “wholly unjustified and disproportionate” quarantine rules and are threatening legal action over the policy. Starting June 8, nearly all international arrivals in the U.K. will be required to self-isolate for 14 days and to supply details of their accommodation. The three carriers say the moves will devastate tourism and wreck any chance of salvaging the summer season when tens of millions of people generally travel, while also destroying thousands of jobs.
HSBC warns on Chinese reprisals
After backing China’s controversial national security law last week, HSBC is now warning Downing Street against a ban on Huawei in 5G telecoms networks, saying it could face reprisals in China over such a motion. Chairman Mark Tucker made the claim in private conversations with British Prime Minster Boris Johnson’s advisers, according to The Telegraph. The U.K. classified Huawei as a “high-risk vendor” in January, limiting its 5G involvement to 35% and excluding it from the core of the network, but could phase Huawei out completely by 2023.
Samsung leader faces jail again
A court ruling expected today or early Tuesday will decide whether the de facto leader of Samsung Group, Jay Y. Lee, will head back to jail after more than two years of freedom. He’s accused of stock price manipulation and audit rule violations, among other offenses. The risk of more jail time for Lee has cast a cloud over the sprawling conglomerate and its crown jewel, Samsung Electronics (OTC:SSNLF), whose annual revenue alone is equivalent to 12% of South Korea’s GDP.
What else is happening…
American Airlines (NASDAQ:AAL) draws severance packages for high-level employees.
What’s going on with Amazon’s (NASDAQ:AMZN) Prime Air drone program?
China’s trade surplus climbs to new record.
Nasdaq (NASDAQ:NDAQ) tops NYSE (NYSE:ICE) in coronavirus-era IPOs.
Barron’s is positive on Twitter (NYSE:TWTR) as global influence grows.
Ann Taylor parent Ascena (NASDAQ:ASNA) weighs bankruptcy filing.
Today’s Economic Calendar
12:30 PM TD Ameritrade IMX
1:00 PM Results of $44B, 3-Year Note Auction
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