Good morning. Happy Friday.
The Asian/Pacific markets were mostly weak. China, Japan, Hong Kong and Thailand dropped more than 1%. Europe, Africa and the Middle East are currently mixed. The UK, France, Germany, Switzerland, the Netherlands and Italy are up; Poland, Turkey, Greece, Hungary, Russia and the Czech Republic are down. Futures in the States point towards a down open for the cash market.
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BLOG: Targets Getting Hit Across the Board
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The dollar is up a small amount. Oil is down; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
The tech-heavy Nasdaq on Thursday closed at a new all-time high led by gains from Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN), while the Dow and S&P 500 closed lower on disappointing earnings from Walgreens (NASDAQ:WBA). While U.S. stock index futures are all inching lower premarket, the same pattern is being seen as the Dow and S&P 500 lead losses at 0.5% and the Nasdaq behind at 0.2%. “The cyclical story is on hold for now,” Allianz Global Investors’ Mona Mahajan declared, as money flows back into stay-at-home plays. “It’s not dead forever,” she added. “There are a few things that could reignite it,” like evidence virus cases have peaked, a vaccine or a resolution to the November presidential election.
Improved oil demand, clouded outlook
“While the oil market has undoubtedly made progress… the large, and in some countries, an accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control and is casting a shadow over the outlook,” the IEA wrote in its closely watched monthly report. While global oil demand in the first half of 2020 plunged by 10.75M barrels a day, down roughly 11% Y/Y, the agency forecast oil demand would be down by 5.1M bpd in the second half. This means global oil demand this year will average 92.1M barrels per day, down by 7.9M bpd versus 2019, a slightly smaller decline than forecast in the last report.
Pandemic era earnings
Investors are also set to get a glimpse of the coming earnings season as Carnival (NYSE:CCL) reports Q2 results this morning against the backdrop of the COVID-19 pandemic. Like many of its peers, the company has already borrowed heavily and raised money to stay afloat as most of its voyages were canceled due to coronavirus restrictions. The world’s largest cruise operator will also likely discuss the future and its plans to sail again as COVID-19 cases spike. Yesterday, AIDA Cruises, Germany’s leading cruise line and a part of Carnival, announced that three of its ships will restart sailing in August.
Mask policies
Following an increase in COVID-19 cases and hospitalizations in various parts of the country, Starbucks (NASDAQ:SBUX) is requiring customers to wear facial coverings at all company-owned locations from July 15. The coffee chain joins a long list of companies that require masks, including Costco (NASDAQ:COST) and major airlines. Earlier this week, the Retail Industry Leaders Association asked governors to require consumers not affected by a medical condition to wear masks when shopping or in public spaces.
Thinking about automation
Tyson Foods (NYSE:TSN), the biggest U.S. meat company by sales, currently relies on about 122K workers to churn out about 20% of chicken, beef and pork produced in the U.S. That’s changing after the coronavirus pandemic showed supply chain vulnerabilities. The company is now pushing further into robotics, developing an automated deboning system destined to handle some of the roughly 39M chickens it processes each week. At Pilgrim’s Pride (NASDAQ:PPC), the second largest U.S. chicken processor, deboning machines now trail humans by only 1% to 1.5% in terms of meat yield per chicken.
Latest trade actions
The U.S. is expected to announce actions today against France over its digital services tax, but will suspend them while France defers the collections from U.S. technology firms. The steps are tied to a U.S. Section 301 probe into the foreign tax, which Washington says discriminates against U.S. tech giants like Google (GOOG, GOOGL), Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB). The Trump administration also plans to finalize regulations this week that will bar the U.S. government from buying goods or services from any company that uses products from five Chinese firms, including Huawei, Hikvision, Dahua (OTCPK:DHUA), Hytera and ZTE Corp. (OTCPK:ZTCOY).
Competitive self-driving world
On June 26, Amazon (AMZN) announced a $1.3B deal to acquire startup Zoox, which is set on designing a fully autonomous vehicle from scratch rather than retrofitting existing cars. The problem? Amazon needs to keep talent on board to make the deal worth it. It’s planning at least $100M in stock awards to retain Zoox’s 900+ employees, and can walk away from the deal if large numbers of them turn down the offers. The Information already reported last week that two senior Zoox engineers, James Philbin and Marc Wimmershoff, joined rival Alphabet’s (GOOG, GOOGL) self-driving unit Waymo, and Reuters revealed that GM’s (NYSE:GM) Cruise stepped in to offer $1.05B for Zoox after the latter signed an exclusive agreement to negotiate with Amazon.
Local currency coronavirus relief
Tenino, a town of fewer than 2,000 people in Washington state, has begun printing its own wooden currency to help residents and businesses through the coronavirus crisis. There’s some history here: In 1931, civic leaders printed local wooden banknotes to restore consumer confidence after the town’s bank failed during the Great Depression. Current Tenino residents, who have documented loss of income due to the pandemic, are eligible for up to $300 a month, while nearly all businesses in the town are accepting the local $25 bills (which can be redeemed at city hall). “A federal program dumps money from the top and these blue-chip companies steal it all,” said Mayor Wayne Fournier. “If we do it from the ground up, there’s no stealing. It’s a direct ballast to Main Street.”
What else is happening…
TikTok (BDNCE) is no longer available in Hong Kong.
Sony (NYSE:SNE) invests $250M in ‘Fortnite’ maker Epic Games.
United Airlines (NASDAQ:UAL), pilots union reach tentative agreements.
Reports suggest Coinbase (COIN) is headed for stock market listing.
Tesla (NASDAQ:TSLA) poised to electrify S&P 500 – Reuters.
Thursday’s Key Earnings
Walgreens (WBA) -7.8% AH on $1.7B loss from the coronavirus outbreak.
Today’s Economic Calendar
8:30 Producer Price Index
1:00 PM Baker-Hughes Rig Count
2:00 PM Treasury Budget
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Good morning. Happy Thursday.
The Asian/Pacific markets were mixed. China, Hong Kong, India and Australia did well; New Zealand, Indonesia, Singapore and the Philippines were weak. Europe, Africa and the Middle East are currently little changed. Denmark, Poland, Germany, South Africa and Switzerland are up; Norway is weak. Futures in the States point towards a positive open for the cash market.
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BLOG: Targets Getting Hit Across the Board
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The dollar is flat. Oil is down; copper is up. Gold is down; silver is up. Bonds are up.
Stories/News from Seeking Alpha…
Walt Disney World opens to annual passholders today and tomorrow, with the Magic and Animal Kingdom areas opening to the general public on Saturday, followed by Epcot and Disney’s Hollywood Studios four days later. New safety requirements from the theme park operator will include temperature checks, face coverings and extra sanitation efforts, though Disney (NYSE:DIS) is facing a petition from some workers asking for a reopening delay due to increased COVID-19 cases and hospitalizations in Florida. SeaWorld (NYSE:SEAS), Cedar Fair (NYSE:FUN) and Six Flags (NYSE:SIX) have all seen moderate traffic at their reopened parks over the past week amid the ongoing coronavirus pandemic.
Weekly jobless claims
Tech stock love saw Nasdaq futures rise overnight, while Dow and S&P 500 futures inched lower, following a turnaround on Wednesday that saw all three indexes close back in the green. More than 60,000 new daily COVID-19 infections were recorded in the U.S. yesterday to mark the single-largest total of any country since the coronavirus outbreak began in early January. Today’s session will be highlighted by earnings from Walgreens Boots Alliance (NASDAQ:WBA), as well as jobless claims data at 8:30 a.m. ET, which analysts expect will show 1.3M Americans filing for weekly unemployment benefits.
Unemployment rate
Sentiment also got a boost on Wednesday after St. Louis Fed President James Bullard said that the jobless rate could fall substantially by the end of 2020. “I think we’re tracking very well right now,” the central bank official told CNBC. “Seems to me like by the end of the year you can get down certainly to single digits, probably even below 8%, maybe 7% by the end of the year.” It’s been quite a run for the unemployment rate, which was at a 50-year low of 3.5% just five months ago before spiking up to 14.7% in April (it currently stands at 11.1%).
Latest retail bankruptcy
Add Brooks Brothers to the recent retail bankruptcy list that includes Neiman Marcus, J.Crew and J.C. Penney (OTCPK:JCPNQ). The storied apparel brand, founded in 1818, will be looking for a buyer as it goes through reorganization, and has decided to close 51 stores, a decision it attributed to the coronavirus pandemic. One reason for Brooks Brothers’ struggle was its big rent obligations, but the company was also feeling some effects of a change in traditional business dress and shift towards casual, despite its own efforts in activewear. That loss in demand will only become more pronounced as people continue to work from home.
Amazon pulls Washington Redskins merch
Echoing similar moves by Target (NYSE:TGT), Walmart (NYSE:WMT) and Nike (NYSE:NKE), Amazon (NASDAQ:AMZN) is removing Washington Redskins merchandise from its online store, adding to pressure on the NFL team to change its name. Sellers have 48 hours to review and remove items flagged by Amazon, including jerseys, t-shirts and jewelry. The decision comes after the Washington Redskins announced last week it would review its name after several big sponsors – FedEx (NYSE:FDX), Nike, PepsiCo (NASDAQ:PEP) – called on the team to rebrand itself following pressure from investors.
Pressure builds on J&J to halt global talc sales
More than 170 nonprofit groups are asking Johnson & Johnson (NYSE:JNJ) to stop selling its talc-based baby powder worldwide after the company said in May that it would discontinue the product in the U.S. and Canada. “Decades of independent scientific studies by medical experts around the world support the safety of Johnson’s Baby Powder,” according to the company. “We continue to offer this product in many other regions around the world where there is higher consumer demand.” Johnson & Johnson still faces thousands of lawsuits from consumers and their survivors claiming its talc products were contaminated with asbestos and caused cancer.
Self-driving technology
Tesla (NASDAQ:TSLA) is “very close” to achieving level 5 autonomous driving capabilities, CEO Elon Musk said by video at the opening of the World Artificial Intelligence Conference in Shanghai. “I remain confident that we will have the basic functionality for level 5 autonomy complete this year,” he added, as the company competes against Google’s Waymo (GOOG, GOOGL), GM’s Cruise (NYSE:GM), Amazon’s Zoox (AMZN) and Uber (NYSE:UBER) in the self-driving arena. Level 5 is typically referred to as “full automation,” where all roads and environmental conditions can be managed without a driver and steering wheels are optional.
Challenge to secure tech business in China
Google (GOOG, GOOGL) is scrapping plans for a new major cloud service in China due to concerns over political tensions and the coronavirus pandemic, Bloomberg reports. The initiative was known as “Isolated Region” and sought to address the desires of China and other countries to control data within their own borders (via a local business or government agency). Google Cloud brought in $8.9B for Alphabet last year, but the cloud platform lags behind market leaders Amazon Web Services (AMZN) and Microsoft Azure (NASDAQ:MSFT).
Hong Kong tensions
Following in the footsteps of Canada, Australia has suspended its extradition treaty with Hong Kong, as the country moves to offer a path to citizenship for those who wish to leave the city. Australia also updated its travel advisory, warning that China’s new “vague” national security law could lead to foreign nationals being arbitrarily detained in Hong Kong. The law is the biggest change in Hong Kong’s freedoms and autonomy since Britain handed the territory back to China in 1997 and could endanger the city’s appeal as a financial hub.
What else is happening…
Nvidia (NASDAQ:NVDA) passes Intel’s (NASDAQ:INTC) market cap on GPU tailwinds.
Twitter (NYSE:TWTR) shares pop on speculation of subscription service.
Costco (NASDAQ:COST) comparable sales rose 11.5% in June.
Travel slump… United Airlines (NASDAQ:UAL) explores 45% cut to U.S. staff.
IBM (NYSE:IBM) acquires software-bot maker WDG Automation.
Amazon (AMZN) and Netflix (NASDAQ:NFLX) pitched on buying a theater chain.
Wednesday’s Key Earnings
Bed Bath & Beyond (NASDAQ:BBBY) -7.4% AH on soft earnings, store closings.
Today’s Economic Calendar
8:30 Initial Jobless Claims
10:00 Wholesale Trade
10:30 EIA Natural Gas Inventory
12:00 PM Fed’s Bostic: “The Prescription: Fiscal Policy for the COVID-19 Economy”
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 closed mixed. China, Hong Kong, Malaysia and Indonesia did well, but Japan, India, Australia and Thailand were weak. Europe, Africa and the Middle East currently lean down. South Africa is doing well, but France, Germany, the UAE, Finland, Spain, Israel and Austria are weak. Futures in the States point to a flat open for the cash market.
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The dollar is flat. Oil and copper are up small amounts. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
U.S. stock index futures are trading cautiously after snapping a five-day winning streak in the previous session amid the latest uncertainty surrounding the coronavirus pandemic: Dow -0.2%; S&P -0.1%; Nasdaq +0.1%. “While significant gains in technology stocks kept the market afloat yesterday, even these market darlings capitulated during the afternoon hours today,” said Jim Paulsen, chief investment strategist at the Leuthold Group. The COVID-19 outbreak crossed the grim milestone of over 3M confirmed cases on Tuesday as more states reported record numbers of new infections, while Florida faced an impending shortage of ICU hospital beds.
#BoycottFacebook
Organizers of the “Stop Hate for Profit” campaign weren’t impressed after meeting with Facebook (NASDAQ:FB) executives on Tuesday. “We had 10 demands and literally we went through the 10 and we didn’t get commitments or timeframes or clear outcomes. We expected specifics, and that’s not what we heard,” Anti-Defamation League CEO Jonathan Greenblatt declared. The gathering also included leaders from the NAACP, Color of Change and Free Press. Prior to the meeting, Facebook COO Sheryl Sandberg said the company is “making changes – not for financial reasons or advertiser pressure, but because it is the right thing to do.”
Walmart takes on Amazon Prime
Shares of Walmart (NYSE:WMT) soared 7% on Tuesday on reports that the retailer’s same-day delivery program, dubbed an “Amazon Prime Killer” by some, is due to launch in July. The service, named Walmart+, is priced at $98 per year and undercuts Amazon Prime (NASDAQ:AMZN) at $119, according to Recode. It will also include video entertainment, as well as other perks like discounts on gas, product deals, reserved delivery and two-hour delivery offers.
Insurer M&A
Allstate (NYSE:ALL) has agreed to acquire National General Holdings (NASDAQ:NGHC) for nearly $4B in cash as the U.S. insurance giant looks to “increase market share in personal property-liability.” Shareholders of National General will receive a total of $34.50 a share – comprised of $32 in cash and closing dividends of $2.50 – representing a 69% premium to the stock’s closing price on Tuesday. The deal, which includes a breakup fee of $132.5M, will be “accretive to adjusted net income earnings per share and return on equity beginning in the first year,” said Allstate CEO Tom Wilson.
Banks ring the PPP register
Small business owners and employees were not the only beneficiaries of the Payment Protection Program. JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) are in line to split between $1.5B-$2.6B in fees for being the conduits of the government aid, according to an analysis of newly released data. The government prioritized speed when it designed the $670B program – betting banks would be able to get huge sums out faster than a federal agency – but that decision also required giving lenders a financial incentive and boosted associated PPP costs. Other banks in line to receive hundreds of millions of dollars in processing fees include Wells Fargo (NYSE:WFC), Truist (NYSE:TFC), PNC (NYSE:PNC), TD Bank (NYSE:TD), U.S. Bank (NYSE:USB), KeyBank (NYSE:KEY) and Zions (NASDAQ:ZION).
Hard Brexit
Hot topics like Brexit have been buried in the news cycle over the past few months as coronavirus headlines grabbed most of the attention. Not overnight… U.K. Prime Minister Boris Johnson told German Chancellor Angela Merkel he is prepared to leave the EU without a trade deal if no compromise can be reached over disputes like fishing rights and the influence of European courts on British legislation. What would happen in that case? The U.K. would leave the bloc with the same terms as Australia – no comprehensive trade deal, following default WTO rules and specific agreements for certain goods.
Withdrawal from the World Health Organization
The Trump administration has officially given the required one-year notice for the U.S. to quit the World Health Organization, citing “undue deference to China and failure to provide accurate information about the coronavirus.” Responding to the decision, the United Nations Foundation called the move “shortsighted, unnecessary, and unequivocally dangerous amid the greatest public health crisis that Americans and the world have faced in a century.” The U.S. is the global health agency’s largest single contributor, providing more than $400M in 2019, or around 15% of its total budget.
‘Best business in the world’
Berkshire Hathaway (BRK.A, BRK.B) held 245M shares of Apple (NASDAQ:AAPL) at the last count in May, making it Apple’s second-largest shareholder with about 5.5% ownership of the company’s public stock. Given the tech giant’s stellar run over the past few months, the Buffett conglomerate now owns more than $91B worth of Apple, comprising 43% of its portfolio, according to The Motley Fool. “Diversification is protection against ignorance,” The Oracle once declared. “It makes little sense if you know what you are doing.” “I don’t think of Apple as a stock. I think of it as our third business,” he added, referring to wholly owned subsidiaries Geico and BNSF. “It’s probably the best business I know in the world.”
7th former eBay employee charged for cyberstalking
A retired police captain who oversaw security operations at eBay (NASDAQ:EBAY) is next to be charged in the alleged cyberstalking campaign that targeted a Massachusetts couple who wrote critical content about the company on e-commerce blog, EcommerceBytes. The alleged harassment included sending the couple threatening messages, as well as disturbing deliveries like live cockroaches, a preserved fetal pig and a bloody-pig Halloween mask, along with a funeral wreath and a book on surviving the loss of a spouse. “The events from last year never should have happened, yet it gives us a chance to reflect, to reset and to act,” said eBay CEO Jamie Iannone. “Integrity is the foundation of how I work, and as CEO, I will hold our leadership team and all employees to this same standard.”
What else is happening…
Trump considers ban on TikTok (BDNCE) in the U.S.
AMC (NYSE:AMC) nears financing deal to avert near-term bankruptcy – WSJ.
Deutsche Bank (NYSE:DB) fined $150M over Jeffrey Epstein links.
GM (NYSE:GM) rolls Chevrolet Sonic into the auto graveyard.
Space race… Why has Boeing (NYSE:BA) fallen behind SpaceX (SPACE)?
Tuesday’s Key Earnings
Levi Strauss (NYSE:LEVI) -4.5% AH reporting a 62% drop in quarterly revenue.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
12:15 PM Fed’s Bostic: “Federal Reserve’s Response to COVID-19”
1:00 PM Results of $29B, 10-Year Note Auction
3:00 PM Consumer Credit
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned down. China and New Zealand did well, but Hong Kong, South Korea, Malaysia, Singapore and the Philippines were weak. Europe, Africa and the Middle East are currently mostly down. Portugal is doing well, but the UK, France, Germany, Greece, Finland, Hungary, Spain and Austria are weak. Futures in the States point to a moderate down open for the cash market.
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
It’s a big day in the social media sphere as Facebook’s (NASDAQ:FB) Mark Zuckerberg, Sheryl Sandberg and Chris Cox meet the heads of the civil rights group leading the “Stop Hate for Profit” campaign against the company. The boycott, initiated in the aftermath of George Floyd’s death, has so far elicited the support of more than 400 corporations, including Coca-Cola (NYSE:KO), Starbucks (NASDAQ:SBUX), Ford (NYSE:F), Microsoft (NASDAQ:MSFT) and Verizon (NYSE:VZ). Demands include Facebook submitting to independent audits and removing all hate speech and misinformation, refunding companies when ads appear next to hate speech and hiring a civil rights executive to scrutinize products and policies. While ads – which grew by 26% last year – accounted for almost all of Facebook’s $70B of revenue in 2019, the top 100 brands likely represented only about 6% those sales, according to data from Pathmatics.
Clock is ticking for TikTok
“In light of recent events,” TikTok (BDNCE) will exit the Hong Kong market within days as other tech giants like Facebook (FB) and Google (GOOG, GOOGL) suspend processing government requests for user data in the region. Last week, mainland Chinese authorities imposed a law on Hong Kong that includes provisions empowering police to order internet firms to take down content deemed threatening to national security. Meanwhile, Secretary of State Mike Pompeo said late Monday that the U.S. is “certainly looking at” banning Chinese social media apps, including TikTok, amid concerns that data could be accessed by Beijing.
Podcast plays
E.W. Scripps (NASDAQ:SSP) has been shopping Stitcher for several months, but is now close to selling the podcast platform to SiriusXM (NASDAQ:SIRI) for $300M, sources tell the WSJ. The jump into podcasting would follow similar moves by Spotify (NYSE:SPOT) and iHeartMedia (NASDAQ:IHRT) and would broaden the reach of SiriusXM after its expansion into internet-radio streaming via the $3B purchase of Pandora Media. Nice return… Scripps bought Stitcher in 2016 for $4.5M in cash and then combined it with Midroll Media, the podcast-advertising company it had acquired the year before for $50M.
Taking a breather
Stocks were mixed in Asia overnight, while Europe is down 1.3% as the European Commission cut the region’s economic forecasts for 2020 and 2021. Over in the U.S., S&P 500 futures have paused their strong rally, off 0.8% in early trade following a gain of 1.6% on Monday. Boosting the index were technology and consumer stocks, while the June ISM Non-Manufacturing Index not only jumped back into expansion territory, but the 57.1 print heavily beat the consensus forecast. The U.S. is “still knee deep in the first wave” of the coronavirus pandemic, warned Dr. Anthony Fauci, adding that immunity may be “finite” and a vaccine might require a booster to prolong protection.
Payment Protection Program
With some members of Congress pressing for greater transparency, the Small Business Administration has made public for the first time a large number of businesses and nonprofits that have received forgivable PPP loans. $521B in loans were granted to almost 4.9M small businesses as of June 30 – with an average loan size of $106,744 – though more than 80% of the transactions were below the “$150K transparency threshold.” Top PPP lenders include JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Truist Bank (NYSE:TFC) and PNC Bank (NYSE:PNC).
Secretive data giant Palantir IPO
One of Silicon Valley’s oldest private startups has filed confidentially to go public, and may follow Spotify (SPOT) and Slack (NYSE:WORK) in opting for direct listing. Co-founded in 2003 by famed investor Peter Thiel, Palantir Technologies (PALAN) conducts sensitive and extensive data-mining work for large companies and government agencies. Reports suggest that Palantir has yet to turn an annual profit, though it has been valued privately at as much as $20B and is in the midst of raising nearly $1B in new capital, separate from an IPO.
Ready to run
Sunrun (NASDAQ:RUN), the largest U.S. residential solar company, is acquiring a leading competitor, Vivint Solar (NYSE:VSLR), to form one of the world’s largest providers of solar equipment with about 500K customers. The all-stock deal, unanimously approved by the companies’ boards, is valued at $3.2B including debt, and is expected to deliver annual cost savings of about $90M. Vivint shareholders will get 0.55 shares of Sunrun for every share held, representing a premium of 10.4% to Vivint’s close on Monday. VSLR +19.2% premarket.
Tesla keeps momentum going
Shares of the EV maker jumped for a fourth straight session on Monday, soaring another 13.5% to $1,371, following a price target boost from J.P. Morgan. “If the company can manage 90K units during an extraordinarily challenging quarter, there is no reason that TSLA cannot be shipping 130K to 140K units a quarter by the end of the year in our opinion,” advised the firm, assigning a PT of $1,500. Looking further ahead, JPM thinks Tesla (NASDAQ:TSLA) is on track to record revenue of $100B by 2025, which is quite a step up from the last few years. TSLA +2.8% premarket.
What else is happening…
Novavax (NASDAQ:NVAX) rises 20% on $1.6B award from Operation Warp Speed.
Reckitt’s (OTCPK:RBGPF) Lysol use approved by EPA against COVID-19.
Live musical version of Hamilton delivers big numbers for Disney (NYSE:DIS).
Samsung (OTC:SSNLF) sees 23% increase in Q2 operating profit.
Keystone XL (NYSE:TRP) construction remains blocked by Supreme Court.
Square’s (NYSE:SQ) market cap climbs to rival those of big banks.
Today’s Economic Calendar
8:55 Redbook Chain Store Sales
9:00 Fed’s Bostic Speech
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $46B, 3-Year Note Auction
1:00 PM Fed’s Quarles Speech
2:00 PM Fed’s Barkin: “Perspectives on the Pandemic”
2:00 PM Fed’s Daly: “Perspectives on the Pandemic”
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets did well. Japan, China, Hong Kong, South Korea, India, Taiwan, Malaysia and Singapore all gained more than 1%; China rallied more than 5%. Europe, Africa and the Middle East are currently doing great. The UK, Poland, France, Turkey, Germany, the UAE, Russia, Finland, Norway, Hungary, Singapore, the Netherlands, Italy, Austria and Sweden are up more than 1%. Futures in the States point towards a moderate gap up open 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…
The latest stock party started in Asia overnight, where China’s Shanghai Composite jumped 5.7% to record its largest one-day gain since 2015. Over in Europe, the Euro Stoxx 50 climbed 2%, while S&P 500 futures are ahead by 1.3% in the U.S., building on a strong end to last week following an unexpectedly strong jobs report. The big advance comes despite daily record spikes in coronavirus cases in the states of Florida and Texas, though NYC is entering a Phase 3 reopening today, but without indoor dining. “All of the global monetary policy indicators are flashing green right now. It is very loose and that should mean markets which have underperformed should do well,” said Sean Darby, chief global equity strategist at Jefferies.
Lots of dry powder to support equity prices
The amount of money creation so far in the pandemic crisis is similar to what we saw during the financial crisis of 2008/2009, according to JPMorgan analyst Nikolaos Panigirtzoglou, “but has occurred much more quickly, in only a few months, as policy makers responded more aggressively to the impact of the pandemic.” And since debt creation and QE will continue to be stronger than normal until 2021, “we believe that the total money or liquidity creation could exceed $15T or more globally by the middle of 2021.” Given how low bond yields are at the moment, Panigirtzoglou expects that “most of this liquidity will eventually be deployed into equities as the need for precautionary savings subsides over time.”
Major policy U-turn on Huawei
The British government is drawing up plans to strip Huawei gear from its 5G networks by the end of the year, according to The Sunday Times and The Daily Telegraph, backtracking on the ‘limited role’ previously assigned to the Chinese telecom equipment giant. The reversal was driven by a new report that uncovered “severe” security issues after the U.S. banned the company from using American components – a move that “fundamentally changes” the situation. The U.S. has been on a global campaign for over a year to convince nations to block Huawei from their 5G networks and some countries like Australia, New Zealand and Japan have followed suit.
Trade deal targets
The economic wallop caused by the COVID-19 pandemic raises doubts about whether China will be able to buy the U.S. goods it committed to under the Phase One trade deal. Energy purchases were hurt the most; the latest data on U.S. exports for May show that China has bought only $2B of energy from the U.S. YTD, far from the $25B it’s agreed to purchase in 2020 (to hit that amount, China would have to start buying more than $3B of energy per month). U.S. Trade Representative Robert Lighthizer points out that the export numbers only reflect finalized exports and don’t take into account purchase agreements that have been made but haven’t yet been shipped.
Buffett is back with some M&A
Sitting on the sidelines during the coronavirus crisis, Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) broke its silence at the end of a holiday weekend with its largest acquisition in more than four years. The conglomerate is buying Dominion Energy’s (NYSE:D) Gas Transmission & Storage segment for $9.7B in cash, which includes more than 7,700 miles of natural gas storage and transmission pipelines and about 900B cubic feet of gas storage. Proceeds will be about $3B, as the deal includes the assumption of $5.7B in debt and there are some taxes to pay (that amount will be used by Dominion to buy back shares).
Combining food delivery rivals
Reports suggest that Uber (NYSE:UBER) is close to revealing a deal to acquire food-delivery rival Postmates (POSTM), continuing the trend of consolidation in a sector which has been a big winner due to the COVID-19 pandemic. The $2.65B all-stock agreement is expected to be announced this morning and would see Uber’s head of food delivery (Pierre-Dimitri Gore-Coty) run the larger combined business. Postmates was last valued at $2.4B, when it raised $225M in a private fundraising round last September, and accounts for 8% of the U.S. meal delivery market.
Tesla teases short sellers with ‘Short Shorts’
Elon Musk has already sent pairs of short shorts to David Einhorn, who has a big short position on Tesla (NASDAQ:TSLA), and announced a similar shipment destined for the SEC, but the latest product offering comes as Tesla’s stock tripled this year to $1,208/share. A pair of the limited edition red satin shorts are now being sold at the Tesla Shop for $69.420, the last three digits an apparent reference to Musk’s infamous tweet in 2018 that he was considering taking Tesla private for $420 per share. As of mid-June, more than 15M shares of TSLA stock were being sold short and are currently valued at more than $18B, making Tesla by far the most shorted company by valuation on the Nasdaq.
Operational readiness review
Following up on last week’s formal certification flight tests performed by Boeing (NYSE:BA) and the FAA, the next challenge for bringing 737 MAX jets back into service is slated to play out as early as this week, WSJ reports. Called an operational readiness review, it is among a series of test flights to feature federal pilots along with global airline crews, intended to vet changes to the fleet’s flight-control system. If all goes well, the FAA order grounding the planes is expected to be lifted in September and be on a path to resume U.S. service in 2020, though the process has been plagued by delays for more than a year.
What else is happening…
Twitter (NYSE:TWTR), Facebook (NASDAQ:FB) to face free speech test in Hong Kong.
Shareholders give Luckin Coffee (NASDAQ:LK) chairman the boot.
President Trump signs bill extending Paycheck Protection Program.
Glaxo (NYSE:GSK), Sanofi (NASDAQ:SNY) near £500M COVID-19 vaccine deal with the U.K.
Latest casualty in retail: Lucky Brand files for bankruptcy.
Kanye West announces 2020 presidential run on Twitter.
Royal Dutch Shell (RDS.A, RDS.B) eyes moving headquarters.
Today’s Economic Calendar
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
12:30 PM TD Ameritrade IMX
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