Good morning. Happy Friday.
The Asian/Pacific markets did well. China, Hong Kong, South Korea and India led, while Singapore was weak. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, France, Turkey, Germany, Russia, Greece, Spain, Italy and South Africa are leading. Futures in the States point towards a moderate gap up for the cash market.
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Looking for a catalyst after a muted session on Thursday, U.S. stock index futures advanced 1% overnight after hugging the flatline for most of the session. A report from Bloomberg said China plans to accelerate purchases of American farm goods to comply with the Phase One trade deal after buying fell behind due to “coronavirus disruptions.” Don’t forget that it’s also quad witching day, which refers to the simultaneous expiration of market index futures, stock futures, market index options and stock options. The event can lead to higher volatility and more trading volume, giving speculators an opportunity for quick arbitrage opportunities.
Juneteenth spreads to corporate America
Spurred by weeks of protests for racial justice, many companies are marking Juneteenth this year, the oldest-known holiday honoring the end of slavery in America. Some 200 firms have made the day a paid holiday, including Twitter (NYSE:TWTR), Square (NYSE:SQ), Nike (NYSE:NKE) and Spotify (NYSE:SPOT), as well as Adobe (NASDAQ:ADBE), Altria (NYSE:MO), Lyft (NASDAQ:LYFT) and Uber (NYSE:UBER). JPMorgan Chase (NYSE:JPM) will close bank branches early, while the Detroit Three – GM (NYSE:GM), Ford (NYSE:F) and Fiat Chrysler (NYSE:FCAU) – will hold moments of silence.
Next IPO to watch
After a deep freeze for most of the year, the IPO market has heated up in recent weeks, powered by the strong debuts from Warner Music (NASDAQ:WMG) and ZoomInfo Technologies (NASDAQ:ZI). Albertsons (ACI) is now kicking off the roadshow for its IPO, which would give the nation’s second-biggest grocer a more-than-$10B valuation if the stock prices at the midpoint of its $18-$20 target range. The offering, likely to begin trading publicly late next week, won’t yield proceeds for Albertsons because the stock sale is coming from existing shareholders like Cerberus Capital, which is cashing out of a roughly 15-year investment.
Sweet deal in Texas?
Tesla (NASDAQ:TSLA) is pushing officials in Travis County, Texas for tax breaks of as much as $68M over ten years in order for the automaker to move ahead with plans to invest about $1B to build a large vehicle assembly plant in the Austin region. The tax breaks are said to be needed to make the site competitive with what Tulsa, Oklahoma officials have offered to Tesla. The new factory is expected to be 4M-5M square feet and able to manufacture both the Cybertruck and Model Y.
Missing cash
German payment processor Wirecard (OTCPK:WCAGY), which has mostly attracted interest from short sellers and some analysts over the past year, is making headlines after auditors couldn’t locate €1.9B in cash. The stock crashed in Frankfurt on the news, tumbling as much as 62%, while the company suspended its chief operating officer. Wirecard also said it would delay filing its 2019 annual report for the fourth time, putting it in danger of having banks terminate €2B of loans.
Coronavirus tracing apps
As COVID-19 cases hit 100,000 in Canada, Shopify (NYSE:SHOP) and BlackBerry (NYSE:BB) announced a coronavirus contact tracing app – developed with provincial and federal governments – expected to launch in July. The app, called COVID Alert, will use Bluetooth connections to swap randomly generated codes with users in a geographic vicinity. It may pay off for Canada. The U.K. yesterday switched to the Apple (NASDAQ:AAPL) and Google (GOOG, GOOGL) model for its COVID-19 test-and-trace app after a locally developed system did not work well on the iPhone.
Consumer confidence
There are two major shopping events in China – 618 on June 18, which was started by JD.com (NASDAQ:JD), and Singles Day on Nov. 11, which was created by Alibaba (NYSE:BABA) – though nowadays both companies join in on the promotions. This year’s 618 festival was being watched closely for signs about the health of the Chinese consumer amid the coronavirus pandemic, and initial figures may be pointing to a recovery; the two e-commerce giants handled a record $136.51B of sales through their platforms over the last 24 hours. JD.com’s U.S.-listed shares are up 72% this year and Alibaba has climbed 5%, while both companies recently carried out secondary listings in Hong Kong.
Retail rebound and U.K. debt load
British retail sales rebounded more strongly than expected last month, jumping by a record 12% as the country relaxed lockdown measures, but government borrowing surged to counter coronavirus impacts on the economy. In fact, public borrowing hit a record high and debt passed 100% of economic output for the first time since 1963. The Office for National Statistics still warned the figures were preliminary and care was needed with the usual measures of public finances.
Stimulus discussion in the EU
The 27 European governments are beginning negotiations today on a €750B stimulus package to tackle the COVID-19 crisis. The plan has sparked division among some EU countries, and differences remain over how much and in which form the money should be borrowed, distributed and repaid. It has become an even more complicated topic after the U.S. pulled out of international digital tax talks, a move the European Commission had suggested could increase revenues and repay some of the new debt.
What else is happening…
McDonald’s (NYSE:MCD) looks toward recovery with heavy summer hiring.
AMC (NYSE:AMC) will reopen most U.S. theaters on July 15.
Marathon Petroleum (NYSE:MPC) revives sale of Speedway gas station chain – WSJ.
Dalio’s Bridgewater flags potential ‘lost decade’ for stocks.
Facebook (NASDAQ:FB) pulls Trump campaign ad featuring controversial symbol.
Thursday’s Key Earnings
Kroger (NYSE:KR) -3.1% despite earnings smasher, strong outlook.
Smith & Wesson (NASDAQ:SWBI) -2.5% AH cooling off after a 90-day rally.
Today’s Economic Calendar
8:30 Current Account
10:15 Fed’s Rosengren: U.S. Economy
12:00 PM Fed’s Quarles: “Stress Testing”
1:00 PM Jerome Powell Speech
1:00 PM Fed’s Mester Speech
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets were mixed. China, India and the Philippines posted gains; South Korea, New Zealand, Australia, Malaysia and Indonesia posted losses. Europe, Africa and the Middle East are currently mostly down. The UK, Denmark, France, Germany, Russia, Greece, South Africa, Spain and Italy are down. Futures in the States point to a down open for the cash market.
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VIDEO: Playing the Software Run
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The dollar is up slightly. Oil and copper are up. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Things are escalating quickly on the digital tax front after the U.S. pulled out of international talks on the matter, saying the talks had failed to make any progress. France called the withdrawal a “provocation” and said it would apply the duties regardless, increasing the likelihood of a fresh trade and tariff dispute. Paris suspended its national digital tax earlier this year as part of a truce with the U.S., and in return, Washington held off on sanctioning French imports. At issue are current rules that base taxation on where a company’s value is generated, not where its customers are located, which can prove tricky in the digital age.
Central bank day in Europe
The Swiss National Bank stuck to its ultra-expansive monetary policy and kept in place negative interest rates, while the Norges Bank reaffirmed rates will remain at zero for the next couple of years. Decision day at the Bank of England will likely result in another bond buying program of at least another £100B, to complement the £200B stimulus announced in March, while there’s been some talk that the BOE could impose yield-curve control. Big action is also expected after data showed U.K. inflation slowing to a quarter of the BOE’s target in May, dampened by coronavirus lockdowns.
Jobless claims
Futures wavered between slight gains and losses overnight as investors track an uptick in new COVID-19 cases against the reopening of the economy. “Markets are probably going to remain range-bound here until we see some sort of significant breakthrough either on the medical front or on the economic front,” said David Lebovitz, global market strategist at J.P. Morgan Asset Management. New jobless claims data are set to be published this morning, offering the latest update on the pace of the labor market’s recovery. Economists expect a total of 1.3M new filings for the week ending June 13, a decline from 1.54M from the previous week and the 11th straight weekly drop since late March.
Hertz halts share plan
Bankrupt Hertz (NYSE:HTZ) has suspended a controversial plan to sell up to $500M in shares after the SEC voiced concern and launched a review of the deal. The rental car company wanted to use the sale to leverage interest in its stock, which had seen volatile trading since its bankruptcy filing. Hertz felt it was a better option than obtaining debtor-in-possession financing, a loan that the company would need to pay back.
Brand names and logos
As a debate over racial inequality ensues nationwide, PepsiCo (NASDAQ:PEP) is retiring the Aunt Jemima brand due to its racial stereotype that dates back to 1889. “While work has been done over the years to update the brand in a manner intended to be appropriate and respectful, we realize those changes are not enough,” the company wrote in a statement. It’s possible the clock could be ticking for ConAgra Brands’ (NYSE:CAG) Mrs. Butterworth’s syrup, while Mars Inc. said it will be “evaluating all possibilities” for its Uncle Ben’s brand.
No overseas flights until the fall
Qantas Airways (OTCPK:QABSY) has canceled all international flights until late October – except for those to New Zealand – after the Australian government said the country’s borders are likely to remain closed until 2021. Already 11 airlines, including Virgin Australia, have collapsed and many others are on the brink. Governments around the globe have poured billions into the industry to keep some of the largest names in aviation alive as the industry heads for its worst year on record.
JD.com raises nearly $4B in Hong Kong debut
Shares of JD.com (NASDAQ:JD) soared 5.7% at the open on their first day of trading in Hong Kong, in a secondary listing that will give the e-commerce giant proceeds of 30.05B Hong Kong dollars ($3.87B). It follows similar listings in the financial hub by rival Alibaba (NYSE:BABA) and gaming firm NetEase (NYSE:NETS) as rising U.S.-China tensions lead to more scrutiny of foreign firms listed on Wall Street. What’s JD.com doing with the cash? It intends to “invest in key supply chain based technology initiatives to further enhance customer experience while improving operating efficiency.”
Spotify adds a Kardashian
After a 7% advance on Wednesday, Spotify (NYSE:SPOT) shares are up marginally in premarket trade, but have tacked on 17 cents to hit $200 per share for the first time ever. Just weeks after locking down Joe Rogan in a deal worth more than $100M, Spotify is signing with Kim Kardashian West for a criminal-justice podcast, a topic that has come to the fore of the national conversation in recent weeks. It’s part of a broader push by Spotify to fortify its business with nonmusical content, in part by investing in exclusive deals.
Google roundup
Australia’s competition authority has become the first global regulator to voice concerns about Google’s (GOOG, GOOGL) $2.1B purchase of Fitbit (NYSE:FIT) as it may give the tech giant too much of people’s data and raise barriers to entry (a final decision will come on August 13). A new security weakness was also seen in Google Chrome due to a massive spyware effort that attacked users through extensions. Regarding diversity: Google announced a new hiring goal to dramatically boost the number of black executives, and by 2025, it intends to have 30% more of its leaders coming from underrepresented groups.
Saving the season
The NBA is looking to restart the 2019-2020 season in what is being described as “a bubble” at Disney’s (NYSE:DIS) Wide World of Sports complex. Players will use “smart rings” that can reportedly predict the onset of coronavirus symptoms, and will be subject to extensive testing, quarantines and strict rules pertaining to social behavior. They’ll also be given access to a Disney MagicBand – that will be required to wear at all times (except during workouts and games) – to check in at security checkpoints and coronavirus screenings. In baseball news, the MLB appears to be making headway towards resuming play for 2020, though tensions remain over the length of the season.
What else is happening…
Zoom (NASDAQ:ZM) to offer all users end-to-end encryption.
Lyft (NASDAQ:LYFT) pledges zero vehicle emissions by 2030
Twitter (NYSE:TWTR) is testing a new voice tweeting feature.
Election security hearing with Big Tech; rolling back protections.
FAA confirms Boeing (NYSE:BA) mistakes in 737 MAX certification.
British oil major BP (NYSE:BP) raises $12B in debt.
Hong Kong Disneyland (DIS) reopens under health restrictions.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
11:00 Fed’s Kashkari: “Higher Ed: Who Pays?”
12:15 PM Fed’s Mester Speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday.
The Asian/Pacific markets did well as a whole, but only New Zealand and Australia posted big gains. Europe, Africa and the Middle East currently lean to the upside. The UK, Denmark, France, Germany, South Africa, Switzerland, the Netherlands, Portugal and Sweden are leading. Futures in the States point towards a positive open for the cash market.
Subscribe to Leavitt Brothers research. Market Analysis and Trading Ideas.
The dollar is up. Oil is down; copper is up. Gold is down; silver is up. Bonds are mixed.
Stories/News from Seeking Alpha…
The Fed’s moves to backstop credit markets, combined with a rebound in U.S. retail sales and prospects for COVID-19 treatment dexamethasone appear to have put a floor under equities (for now) as futures rose modestly in overnight trading. It follows several days of turbulence fueled by a cascade of news about fresh coronavirus infections and its impact on the global economy. In his semi-annual monetary policy report, Fed Chair Jay Powell told lawmakers on Tuesday that the path to recovery remained uncertain and he’ll testify for a second day today before the House Financial Services Committee.
Trade and tariffs
The WTO has treated the U.S. “as the world’s greatest trade abuser” and “created new obligations out of thin air,” Robert Lighthizer will tell Congress today, as the administration pushes for a broader reset of the international trading system. “Many countries with large and developed economies maintain very high bound tariff rates. The U.S. must ensure that tariffs reflect current economic realities to protect our exporters and workers.” The stance could weigh on the WTO, which is struggling for relevance at a time of growing protectionism, as well as a possible leadership void when Director-General Roberto Azevedo steps down in September.
Beijing tightens lockdown
China is accelerating containment measures in Beijing, lifting its emergency response to level two and requiring a negative coronavirus test before leaving the city. All schools have been ordered to close, restrictions were imposed on visits to all residential communities and more than 1,200 flights in and out of the city were canceled. 31 new COVID-19 cases were reported on Wednesday, taking the total number of infections to 137, while cases linked to the Beijing cluster have already been reported in two provinces in China’s northern region.
Wearables to fight COVID-19
Starting with its facility in Kent, Washington, Amazon (NASDAQ:AMZN) will begin deploying devices today – shaped like clear plastic sleeves – that emit a loud beeping noise and flashing lights when workers are too close to one another. Covid-detecting “smart rings” are also being trialed by staff at Las Vegas Sands (NYSE:LVS). The products, made by Finnish startup Oura, can reportedly predict the onset of coronavirus symptoms, such as subtle changes in temperature, sleep patterns and heart rate.
Coronavirus effects on banking industry
Lenders nearly quadrupled the amount set aside for anticipated losses in Q1, according to the FDIC’s latest Quarterly Banking Profile, which showed U.S. banking industry profits tumbling nearly 70% to $18.5B amid the coronavirus pandemic. “Bank capital and liquidity levels remain strong, asset quality metrics are stable and the number of ‘problem banks’ remains near historic lows,” added FDIC Chairwoman Jelena McWilliams, sounding a positive note. As many investors cashed out of the stock market, banks saw a $1.2T, or 8.5%, spike in deposits from the prior quarter.
Optimism for the crude market
On the heels of an IEA report that forecast a record rebound for oil demand next year, others in the industry are expressing similar enthusiasm despite concerns about a second wave of COVID-19. “We are seeing encouraging signs of a rebalancing oil market and the beginnings of economic recovery,” Dr. Sultan Ahmed Al Jaber, CEO of Abu Dhabi National Oil Company Group, told an unprecedented meeting of sixteen of the world’s leading energy executives. Optimism was also expressed by the CEOs of BP (NYSE:BP) and Total (NYSE:TOT) as the industry navigates one of its biggest crises in recent history.
Move to de-escalate tensions
“The overall situation is stable and controllable,” China’s foreign ministry declared, after 20 Indian troops were killed in a clash with Chinese soldiers along the countries’ disputed border. Reports suggest that there were casualties on both sides, while India’s Narendra Modi called for an all-party meeting on Friday to discuss the incident. Just days ago, it appeared that diplomatic and military efforts to lower tensions in the area were working as the nuclear-armed neighbors compete for regional influence.
Political ads
Facebook (NASDAQ:FB) is now labeling political ads with who paid for them – when they’re shared by users on their own feeds – a small change that closes a pretty big loophole in its ad-transparency approach. A bigger change will see the company give users the ability to turn off all political advertising. Facebook still intends to register 4M voters before the 2020 presidential election through the launch of a Voting Information Center tab on Facebook and Instagram later this summer.
What else is happening…
HSBC (NYSE:HSBC) resumes cutting around 35,000 jobs.
Shale producer Devon Energy (NYSE:DVN) halts 10,000 barrels per day.
H&R Block (NYSE:HRB) sees sufficient liquidity until tax season 2021.
Tesla (NASDAQ:TSLA) Model Y complaints start to stack up.
Bill introduced to reform aircraft certification.
Microsoft (NASDAQ:MSFT) stores to remain closed until further notice.
Tuesday’s Key Earnings
Oracle (NYSE:ORCL) -3.2% AH as revenue felt a pandemic pinch.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Housing Starts
10:30 EIA Petroleum Inventories
12:00 PM Powell Testify on Semi-Annual Monetary Policy Report
1:00 PM Results of $17B, 20-Year Bond Auction
4:00 PM Fed’s Mester: “The Fed’s Response to COVID-19”
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Good morning. Happy Tuesday.
The Asian/Pacific markets posted big gains. Japan, China, Hong Kong, South Korea, India, Taiwan, Austria, Malaysia, Indonesia, Singapore, Thailand and the Philippines all did very well. Europe, Africa and the Middle East are doing great. The UK, Poland, France, Germany, Greece, Finland, Hungary, Spain, the Netherlands, Italy, Austria and Sweden are each up 3% or more. Futures in the States point towards a big gap up for the cash market.
Subscribe to Leavitt Brothers research. Market Analysis and Trading Ideas.
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
A big turnaround on Wall Street was seen Monday as the S&P 500 erased a 2.5% drop on word that the Fed would begin buying individual corporate bonds, on top of the ETFs it’s already snapping up (see more below). Futures are adding to the gains this morning amid reports that the Trump administration is preparing a $1T infrastructure proposal, as well as an executive order on police reform. What else is happening? Jay Powell heads to Capitol Hill for his semi-annual economic testimony before Congress and the latest retail sales figures will provide a key look at U.S. consumer spending activity.
Fed does it again
The big signal from the central bank yesterday was that it will take a broader approach to corporate bond buying, expanding its operations into the secondary market. Details were also given on how it plans to implement its buying strategy – a diversified market index of U.S. corporate bonds specifically created for the facility. It marks the latest step by the Fed to reassure investors that it will continue to support financial markets during the coronavirus.
Big drop, big bounce
“In sporting terms, the 2020 oil market is now close to the half time mark,” the IEA said in its closely-watched monthly report. Demand is expected to drop by 8.1M barrels per day in 2020 – slightly less than forecast in May – before rebounding by a record 5.7M bpd in 2021. “So far, initiatives in the form of the OPEC+ agreement and the meeting of G20 energy ministers have made a major contribution to restoring stability to the market. However, we should not underestimate the enormous uncertainties.”
Latest bankruptcy
Chesapeake Energy (NYSE:CHK) is in the final stages of negotiating a roughly $900M debtor-in-possession loan, as well as “rolling up” some of its existing debt to bring its total DIP financing near $2B, Reuters reports. It’s also attempting to negotiate an equity infusion, and if the company manages to emerge from bankruptcy, creditors that include Franklin Resources (NYSE:BEN) would take over Chesapeake in exchange for eliminating more than $7B of its debt. A Chapter 11 filing could come as soon as Thursday, but the timing could slip to next week depending on how the negotiations play out. CHK +6.8% premarket.
Hydroxychloroquine
The FDA has issued a warning to healthcare providers that it does not recommend co-administering malaria meds chloroquine or hydroxychloroquine with Gilead Sciences’ (NASDAQ:GILD) remdesivir for COVID-19 patients. The combination may compromise the antiviral effect of the latter, though it is not aware of any instances in the field of this reduced activity. The FDA has also rescinded emergency use authorization of malaria drugs for COVID-19, saying there is no longer a reason to believe that they “may be effective.”
Biggest U.S. listing of 2020
Trading kicks off today for Royalty Pharma (RPRX). The company sold $2.18B in stock after pricing shares at $28 a piece, which was at the top of its intended price range. According to data provider Dealogic, Royalty Pharma has surpassed Warner Music’s (NASDAQ:WMG) $1.93B IPO earlier this month as the largest U.S. listing so far this year, and is behind only Zoetis (NYSE:ZTS) as the largest pharma IPO of all time.
Standards are critical to technologies
Washington is amending prohibitions on American companies doing business with China’s Huawei to permit them to work together on setting standards for 5G networks. “The United States will not cede leadership in global innovation,” said Commerce Secretary Wilbur Ross, outlining that participation will influence the “future of 5G, autonomous vehicles, artificial intelligence and other cutting-edge technologies.” The blacklisting of Huawei in May 2019 had previously created confusion as to whether U.S. firms could be involved in standards setting discussions and organizations where Huawei was also a participant.
Fresh EU antitrust probes
EU regulators have opened fresh investigations into Apple (NASDAQ:AAPL), saying restrictions imposed by the iPhone maker may have breached competition rules. The first case centers around the Apple Store and the mandatory use of proprietary in-app purchase systems, as well as limits on developers for outside their apps. The second case focuses on the terms and conditions for integrating Apple Pay into merchant apps and websites across Apple devices.
Self-checkout only
Walmart (NYSE:WMT) is doubling down on self-checkout in the age of the coronavirus. The retailer is removing all cashiers and conveyor belt lanes at one of its popular superstores in Fayetteville, Arkansas, and if successful, the program could be expanded to more outlets. The initiative comes a month after the company deployed a touch-free payment system called Walmart Pay aimed at mitigating the spread of COVID-19.
Cyberstalking
Six former employees of eBay (NASDAQ:EBAY) have been charged in Massachusetts with leading a cyberstalking campaign targeting the editor and publisher of a newsletter that eBay execs viewed as critical of the company. The alleged harassment included sending the couple threatening messages, as well as disturbing deliveries like live cockroaches, a funeral wreath and a bloody pig mask (covert surveillance of the victims is also alleged). eBay’s statement on the matter: “Neither the company nor any current eBay employee was indicted. In order to preserve the integrity of the government’s investigation, eBay did not previously communicate about this matter.”
What else is happening…
Amazon’s (NASDAQ:AMZN) Bezos willing to testify before Congress.
ABC News (NYSE:DIS) suspends top exec over racist allegations.
PG&E (NYSE:PCG) to plead guilty to involuntary manslaughter.
N.Korea blows up liaison office, India-China border skirmish.
Delta (NYSE:DAL) set to resume passenger flights to China.
FCC probes as T-Mobile (NASDAQ:TMUS) suffers widespread outage.
Monday’s Key Earnings
Lennar (NYSE:LEN) +2.7% AH as beats triggered homebuilder gains.
Today’s Economic Calendar
8:30 Retail Sales
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 NAHB Housing Market Index
10:00 Business Inventories
10:00 Powell Testifies on Semi-Annual Monetary Policy
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets posted big losses. Japan, China, Hong Kong, South Korea, India, Australia, Malaysia, Indonesia, Singapore, Thailand and the Philippines were very weak. Europe, Africa and the Middle East are currently mostly down. The UK, Poland, Russia, Greece, South Africa, Finland, Norway, Spain, Portugal, Israel and Austria are down 1% or more. Futures in the States point towards a relatively big gap down open for the cash market.
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VIDEO: The 25-Year Tech Cycle
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The dollar is down. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
“The second wave has begun,” said William Schaffner, a professor at the Vanderbilt University School of Medicine, outlining the need for social distancing and mask-wearing, though he “cannot imagine” a second shutdown due to the impact of the first one. Dallas Fed President Robert Kaplan also said Sunday that the U.S. economic recovery hinged on effective public health measures, and “right now, it’s relatively uneven.” S&P 500 futures (SPX) started the night off more than 3%, before paring losses to 1.5%, as the choppy trading continues following Thursday’s brutal selloff and Friday’s partial rebound.
Rising infections
Overseas markets also flashed red as investors questioned whether fresh coronavirus outbreaks could hold back the global economic recovery. More than 20 U.S. states are seeing a pickup in COVID-19 cases, Tokyo reported a jump over the weekend and a fresh outbreak in Beijing led officials to close the Xinfadi market. Chinese economic data, which showed a smaller rebound than expected in May, also weighed on sentiment, with retail sales falling for a fourth straight month and industrial output rising less than forecast.
Vaccine deals
AstraZeneca (NYSE:AZN) inked an agreement with Europe’s Inclusive Vaccines Alliance – led by Germany, France, Italy and the Netherlands – to supply up to 400M doses of Oxford University’s COVID-19 vaccine beginning in late Q4 (at no profit). The company also has agreements with the U.K., U.S., CEPI and Gavi, the Vaccine Alliance, to supply 700M doses, in addition to a deal with the Serum Institute of India to supply 1B doses to low- and middle-income countries. Reports overnight suggested Israel was in talks with Moderna (NASDAQ:MRNA) to purchase its COVID-19 vaccine, which will begin Phase 3 trials in July. AZN +1.7%; MRNA +6.4% premarket.
Latest bankruptcy
24 Hour Fitness Worldwide has filed for Chapter 11, unable to keep up with debt payments following an extended shutdown caused by the coronavirus pandemic. It’s also permanently closing 100 locations, nearly a quarter of its gyms, casting a cloud over the recovery prospects for Planet Fitness (NYSE:PLNT) and Town Sports International (NASDAQ:CLUB). Roughly 28 of 100 U.S. gym members are expected to bail this year, according to trade group International Health, Racquet & Sportsclub Association. Related: Nautilus (NYSE:NLS) and Peloton Interactive (NASDAQ:PTON).
How to reopen, that is the question
As coronavirus cases spike nationwide, Utah and Oregon have put any further economic reopenings on hold, while states like Texas, Arkansas and Arizona pledged to keep going. It comes as California, which implemented the country’s first statewide stay-at-home order, entered the most expansive phase of its gradual reopening Friday. Across the country, Governor Andrew Cuomo threatened to “reverse” reopening Manhattan and the Hamptons amid “rampant” coronavirus social-distancing violations.
Oil prices staying low
BP (NYSE:BP) will take an estimated $13B-$17.5B in impairments and writedowns in the second quarter after revising its long-term price assumptions. What changed? “With the COVID-19 pandemic having continued during the second quarter of 2020, BP now sees the prospect of the pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period.” In addition, BP “reset its price outlook to reflect that impact and the likelihood of greater efforts to ‘build back better’ towards a Paris-consistent world” as it aims to “become a net zero company by 2050 or sooner.” BP -4.8% premarket.
Biggest increase in three years
The number of publicly accessible charging points for electric vehicles jumped 60% in 2019 to reach 862,118, according to the IEA’s annual Global EV Outlook. Fast chargers accounted for 31% of the total, reflecting efforts to build critical infrastructure ahead of an expected boom for EVs, which accounted for just 1% of all vehicle sales last year. Along with Tesla (NASDAQ:TSLA), there are other charge point providers like Shell (RDS.A, RDS.B), Engie (OTCPK:ENGIY), E.ON (OTCPK:EONGY), Volkswagen (OTCPK:VWAGY) and ChargePoint, whose shareholders include Daimler (OTCPK:DDAIF), BMW (OTCPK:BMWYY) and Siemens (OTCPK:SIEGY).
Raising self-driving awareness
The shift toward a self-driving future may take a leap forward this week as the U.S. Department of Transportation launches the Automated Vehicle Transparency and Engagement for Safe Testing Initiative. It intends to provide “an online, public-facing platform for sharing automated driving system on-road testing activities,” as there is currently no centralized database (for example, crash report requirements vary from state to state). Who is expected to take part? GM’s Cruise, Uber (NYSE:UBER), Alphabet’s Waymo (GOOG, GOOGL), Fiat Chrysler (NYSE:FCAU) and Toyota (NYSE:TM), along with states California, Florida, Michigan, Ohio, Pennsylvania and Texas.
Bankrupt share sale?
Hertz (NYSE:HTZ) -16.6% premarket after the car rental company won bankruptcy court approval to sell up to $1B in stock. Bankruptcy experts said the planned sale raises questions about whether a company under Chapter 11 should exploit equity markets for financing when the value of its shares, as with nearly all bankrupt issuers, is at significant risk of being wiped out. “Give them credit for creativity – trying to turn something potentially worthless into a pot of cash,” added John Penn, a bankruptcy lawyer at Perkins Coie LLP who is not involved in the Hertz case.
What else is happening…
Main Street has killed Wall Street during this rally. Here are the stocks they’re buying.
Hong Kong Disneyland (NYSE:DIS) to reopen on June 18.
More Chinese technology companies are looking to list locally.
Nokia (NYSE:NOK) adds Broadcom (NASDAQ:AVGO) as third 5G chip vendor.
Ford’s (NYSE:F) Bronco makes long-awaited debut on July 9.
Unilever (UN, UL) allocates €1B for climate change fund.
Washington state joins California in probing Amazon (NASDAQ:AMZN).
Today’s Economic Calendar
8:30 Empire State Mfg Survey
11:00 Fed’s Kaplan: “The Economic Impact
of Covid-19 and How the Country Will Move Forward.”
4:00 PM Treasury International Capital
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