Good morning. Happy Friday. Happy Options Expiration Day.
The Asian/Pacific markets closed mostly up. Hong Kong, South Korea, India, New Zealand, Malaysia and Thailand did well; the Philippines were weak. Europe, Africa and the Middle East are mixed, quiet and little changed. The UK, Norway and Sweden are up; Spain, Belgium, Israel and Austria are down. Futures in the States point to a positive open for the cash market.
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VIDEO: Sector Rotation at its Best
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The dollar is down. Oil is down; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Netflix shares tumbled over 9% AH on Thursday, wiping out nearly all the gains from the last month, after earnings fell below a lofty profit consensus and weak guidance was given for Q3. While the streamer logged another 10.1M new paid subscribers last quarter, it sees “growth slowing as consumers get through the initial shock of COVID and social restrictions.” There were also big changes in the C-suite: Ted Sarandos, who has led original content efforts, was named co-CEO along with founder Reed Hastings, while chief product officer Greg Peters added COO to his title. Looking ahead, some are asking how much new content Netflix (NASDAQ:NFLX) will be able to upload during the COVID-19 pandemic and whether the resumption of professional sports will eat into its market share.
Almost the weekend
U.S. futures are trying to come back from a lackluster session on Thursday that was dampened by data showing 1.3M people filing for unemployment benefits last week. At the time of writing, Dow and S&P 500 futures are up 0.3%, though the Nasdaq is powering ahead by 1%, a somewhat surprising move given Netflix’s (NFLX) big tumble. On the earnings front, investors will be watching BlackRock (NYSE:BLK) this morning to see how the world’s largest asset manager fared during the latest stage of the coronavirus pandemic. Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza are also scheduled to testify at a House Small Business Committee hearing on COVID-19-related economic assistance programs.
Crunch talks on massive coronavirus fund
Leaders across the European Union are gathering in person this morning (for the first time since the start of lockdowns) to thrash out a deal and bridge differences over a €750B recovery fund needed to lift the bloc out of recession. In its current form, the plan brings the EU closer to a fiscal union by introducing shared debt liability and mostly grants rather than loans, though it has faced some blowback from the “Frugal Four”: Austria, Denmark, the Netherlands and Sweden. While the proposal helped beef up confidence in the region since May – boosting Italian government bonds, the euro and the region’s stocks – any changes or deviations could put that rally at risk.
EU set to pick next tech battle
The European Commission is seeking information from 400 companies to establish whether top voice assistants create market problems meriting antitrust investigations. Apple’s (NASDAQ:AAPL) Siri, Amazon’s (NASDAQ:AMZN) Alexa and Google’s (GOOG, GOOGL) Assistant are at “the center of it all,” European Competition Commissioner Margrethe Vestager declared, saying the large amounts of user data involved could be used to hurt competition and smaller rivals. Violators of the EU’s antitrust rules can be fined up to 10% of their global turnover.
BA retires entire Boeing 747 fleet
“It is unlikely our magnificent ‘Queen of the Skies’ will ever operate commercial services for British Airways again due to the downturn in travel caused by the COVID-19 global pandemic,” a British Airways (OTCPK:ICAGY) spokesman told the BBC. The U.K. carrier was the world’s largest operator of the jumbo jet with 31 planes, or about 10% of its total fleet. Boeing (NYSE:BA) and its suppliers recently signaled the end of the production line for the 747 when they set the final number of parts needed for the program (the last 747-8 will roll out of Boeing’s Seattle factory in about two years).
Mask mandates
Due to the uptick in coronavirus cases, a growing number of U.S. states and localities have mandated the use of masks and face coverings while in public. The development has largely benefited mask manufacturers like Alpha Pro Tech (NYSEMKT:APT), Allied Healthcare Products (NASDAQ:AHPI) and Lakeland Industries (NASDAQ:LAKE), as well as 3M (NYSE:MMM) and Honeywell (NYSE:HON), though divisions are rising over particular directives. Georgia Governor Brian Kemp is suing Atlanta Mayor Keisha Lance Bottoms over the city’s mask mandate – which is punishable by a fine or up to six months in jail – claiming the measure is more restrictive than a state order that “strongly encourages face coverings” but does not require them. On the corporate side of things, Walmart (NYSE:WMT), Kroger (NYSE:KR) and Target (NYSE:TGT) announced Wednesday that they would will require customers to put on a mask or face covering inside stores.
New COVID-19 treatment by the fall?
“What we really need are drugs that, when given early, can prevent a symptomatic person from requiring hospitalization or very dramatically diminish the time that they’re symptomatic,” Dr. Anthony Fauci told Mark Zuckerberg during a Facebook Live interview. Looking for a treatment, he expects results for a clinical trial on monoclonal antibodies by late summer or early fall. The laboratory-produced proteins – described as “precise bullets” that can be developed from antibodies from other people who’ve been infected by COVID-19 – are hoped to be used to treat sick coronavirus patients as well as for prophylaxis.
Extending cruise ban
The CDC has lengthened its no-sail order for cruise ships through the end of September, preventing vessels from sailing in U.S. waters out of concern of COVID-19. The extension, which had been set to expire on July 24, is the second for the initial order that was given on March 14. However, the move is not expected to dramatically change the timeline for cruise lines like Carnival (NYSE:CCL), Royal Caribbean (NYSE:RCL) and Norwegian (NYSE:NCLH) returning to the seas. The Cruise Lines International Association already said it would suspend voyages from U.S. ports until Sept. 15.
What else is happening…
Twitter (NYSE:TWTR) says about 130 accounts were targeted in breach.
Barr warns companies on pushing China’s agenda.
U.S. travel ban may be coming for Chinese Communist Party members.
United Airlines (NASDAQ:UAL), pilots union reach deal to limit furloughs.
PG&E (NYSE:PCG) power lines caused last year’s wine country fire – Cal Fire.
Thursday’s Key Earnings
Abbott Laboratories (NYSE:ABT) -0.3% despite Q2 beat, surge in U.S. diagnostic sales.
Bank of America (NYSE:BAC) -2.7% revealing a bigger reserve build.
Johnson & Johnson (NYSE:JNJ) +0.7% as guidance raise topped estimates.
Morgan Stanley (NYSE:MS) +2.5% bolstered by i-banking, underwriting.
Netflix (NFLX) -9.1% AH on profit miss, growth concerns.
Today’s Economic Calendar
8:30 Housing Starts
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets suffered stiff losses. China and Hong Kong posted big losses; Japan, South Korea, New Zealand and Singapore were also weak. India and the Philippines did well. Europe, Africa and the Middle East currently lean down. Turkey is doing well, but the UK, France, Germany, South Africa, Switzerland, the Netherlands, Austria and Sweden are weak. Futures in the States point towards a moderate gap down open for the cash market.
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VIDEO: Sector Rotation at its Best
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The dollar is flat. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
In a major case surrounding data privacy, Europe’s top court has invalidated the “Privacy Shield,” an EU-U.S. framework used to transfer personal data across the Atlantic. The ruling came in a clash between Facebook (NASDAQ:FB) and Austrian privacy activist Max Schrems, who has challenged the tech giant’s handling of EU citizens’ data ever since Edward Snowden’s spying revelations in 2013. While the ruling does not mean an immediate halt to all data transfers outside the EU – the court upheld the validity of “Standard Contractual Clauses” to processors established in third countries – scrutiny over data transfers will be ramped up. A new system may also have to be implemented which guarantees that Europeans’ data is afforded the same EU standard of privacy protection in the U.S.
Tweetpology
“Tough day for us at Twitter. We all feel terrible this happened,” CEO Jack Dorsey tweeted following a day where hackers hijacked some of the platform’s top accounts in an attempt to siphon bitcoin from their social media followers. The breach specifically targeted verified badge accounts, or “Blue Checks,” including Bill Gates, Elon Musk, Jeff Bezos, Warren Buffett, Joe Biden, President Obama, Kim Kardashian and Kanye West. What happened? Twitter (NYSE:TWTR) said it detected a “coordinated social engineering attack by people who successfully targeted some of our employees with access to internal systems and tools.” TWTR -6.1% premarket.
Netflix numbers
Following a record first quarter in which a home-bound audience saw Netflix (NASDAQ:NFLX) add 15.8M new subscribers, all eyes are on the streamer’s Q2 earnings report, which will be released after the close. “Subscriber growth is key, then margins, then free cash flow,” said Steve Birenberg of Northlake Capital Management, and don’t forget forward-looking guidance. While Netflix expects 7.5M global paid net additions this time around, recent analyst estimates have put the number as high as 12M-15M. As for earnings, consensus forecasts see EPS of $1.83, up from $0.60 a year earlier, and revenues of $6.08B, a nearly 24% increase Y/Y.
Equities pull back
Global markets are sliding after a vaccine-induced rally, with Dow and S&P 500 futures off 0.7% and contracts tied to the Nasdaq down 1.6%. Data overnight showed that China’s economy grew 3.2% in annual terms in Q2, following a 6.8% contraction in the previous quarter, though that data failed to excite investors. On the U.S. economic calendar, weekly jobless claims reported today are expected to decline for the 15th week in a row to 1.25M, while retail sales are forecast to have jumped 5% in June. It will also be a busy day for earnings as Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), Johnson & Johnson (NYSE:JNJ) and Netflix (NFLX) release Q2 results. Coronavirus updates: Johns Hopkins University said late Wednesday that 67,632 cases of COVID-19 had been reported in the U.S. over the last 24 hours, marking a new national record.
ECB expected to take breather
The European Central Bank is all but certain to keep policy on hold today after a series of extraordinary moves. Asset purchases are also forecast to remain steady, though there is a chance the central bank could tinker cash deposit rules to help lenders cope with the pain of negative interest rates. Many are also seeking clarity on whether the ECB plans to spend all of its €1.3T Pandemic Emergency Purchase Program or exit early if Europe’s recovery beats expectations.
China tensions
The U.S. is imposing sanctions on some employees of Chinese tech firms over their role in providing “material support to the CCP (Chinese Communist Party) regime that commits human rights abuses.” “Companies impacted by today’s action include Huawei, an arm of the CCP’s surveillance state that censors political dissidents and enables mass internment camps in Xinjiang and the indentured servitude of its population shipped all over China,” said Secretary of State Mike Pompeo. “Telecommunications companies around the world should consider themselves on notice: If they are doing business with Huawei, they are doing business with human rights abusers.”
First carbon intensity target
The Oil and Gas Climate Initiative, a group that aims to accelerate the industry response to climate change, has for the first time set targets to cut greenhouse gas emissions as a proportion of production. The average carbon intensity of their aggregated upstream oil and gas operations will be reduced to between 20 kg and 21 kg CO2e/boe by 2025, from a collective baseline of 23 kg CO2e/boe in 2017, while the goals could be extended to other sectors like LNG and refining in the future. The OGCI includes BP (NYSE:BP), Chevron (NYSE:CVX), CNPC (NYSE:PTR), Eni (NYSE:E), Equinor (NYSE:EQNR), Exxon (NYSE:XOM), Occidental Petroleum (NYSE:OXY), Petrobras (NYSE:PBR), Repsol (OTCQX:REPYY), Saudi Aramco (ARMCO), Shell (RDS.A, RDS.B) and Total (NYSE:TOT), which together account for over 30% of the world’s oil and gas production.
Next bankruptcy
Owing more than 50,000 creditors about $6.1B, California’s top oil driller has filed for Chapter 11 bankruptcy protection, kicking off what could turn into the next wave of collapses. While California Resources (NYSE:CRC) has received a commitment of more than $1B in debtor-in-possession financing, it joins more than 200 oil explorers that have filed for court protection since 2015. Denbury Resources (NYSE:DNR) and Noble Corp. (NYSE:NE) missed their July debt payments, and Chaparral Energy (NYSE:CHAP) has asked lenders for more time, setting them on course for a possible default.
Automaker rebrand
Fiat Chrysler (NYSE:FCAU) and Peugeot (OTCPK:PUGOY) will become “Stellantis” after their merger is complete early next year. The name, with roots in the Latin verb “stello,” meaning “to brighten with stars,” is inspired by “this new and ambitious alignment of storied automotive brands and strong company cultures that in coming together are creating one of the new leaders in the next era of mobility.” Despite the difficulties from the COVID-19 pandemic, the two carmakers said they are pressing ahead with the combination, and the deal is still on track to close in early 2021.
What else is happening…
Crude inventory draw and OPEC+ tapers output cuts.
Walmart (NYSE:WMT) requires all U.S. customers to wear face coverings.
Amazon (NASDAQ:AMZN) extends work from home order until January 8.
Confirmed: Dell (NYSE:DELL) explores spinoff of VMware (NYSE:VMW) stake.
American Airlines (NASDAQ:AAL) warns 25,000 employees about potential job cuts.
Virgin Galactic (NYSE:SPCE) brings in Disney (NYSE:DIS) veteran as new CEO.
Wednesday’s Key Earnings
Alcoa (NYSE:AA) +6.7% AH topping Q2 earnings view.
BNY Mellon (NYSE:BK) -5.4% seeing downside risks for 2020.
Goldman Sachs (NYSE:GS) +1.4% posting record investment banking results.
PNC Financial (NYSE:PNC) +2.8% reflecting BlackRock sale gain.
U.S. Bancorp (NYSE:USB) +3.7% on EPS beat in ‘challenging’ environment.
UnitedHealth (NYSE:UNH) -1.4% despite record quarterly profits.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Retail Sales
10:00 Business Inventories
10:00 NAHB Housing Market Index
10:30 EIA Natural Gas Inventory
11:10 Fed’s Williams Speech
12:00 PM Fed’s Bostic Speech
1:30 PM Fed’s Evans: Monetary Policy
2:00 PM Fed’s Bostic: “Racial Equity and the Federal Reserve”
4:00 PM Treasury International Capital
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned up. Japan, South Korea, New Zealand, Australia, Singapore and Thailand did well; China, Hong Kong and the Philippines were weak. Europe, Africa and the Middle East are currently doing great overall. The UK, Denmark, Poland, France, Germany, Greece, South Africa, Switzerland, Norway, Singapore, the Netherlands, Italy, Israel, Austria, Sweden and the Czech Republic are up 1% or more. Futures in the States point towards a relatively big gap up open for the cash market.
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VIDEO: My Favorite Scan
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The dollar is down. Oil is up; copper is down. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
A back-to-normal trade is taking place across the globe after early data on coronavirus vaccine trials (see below) raised hopes for a return to the status quo. In the U.S., Dow futures are ahead by 1.3%, with the S&P 500 and Nasdaq up 1.1% and 0.8%, respectively. European shares also advanced, led by travel-and-leisure companies, while shares fell in China following U.S. sanctions over Hong Kong. “Every time we get some sort of positive news on the vaccine front, then understandably markets benefit from that,” said Paul Jackson, head of asset-allocation research at Invesco. “The way it’s looking at the moment, it really looks as though a vaccine is the only hope. This thing is not going away.”
The vaccine front
Moderna (NASDAQ:MRNA) jumped 17% after the closing bell on Tuesday after the company released data that showed its potential coronavirus vaccine producing a “robust” immune response in all 45 patients in its early human trial. The Oxford Covid-19 vaccine that is backed by AstraZeneca (NYSE:AZN) – whose shares are up 4% premarket – is generating the kind of antibody and T-cell (killer cell) response that the researchers would hope to see, added Robert Peston, saying the first data is due to be published soon in The Lancet. Related vaccine players are also on the move this morning, including BioNTech (NASDAQ:BNTX) +4.9% and Pfizer (NYSE:PFE) +1.3%.
Apple wins tax battle with EU
Apple (NASDAQ:AAPL) does not have to pay €13B in Irish back taxes, according to the EU’s General Court, which concluded that the tech giant has not been “granted a selective economic advantage and, by extension, state aid.” The decision, which can only be appealed “on points of law” to the EU’s highest tribunal, is a setback for the European Commission, which ruled in August 2016 that Apple’s practice of channeling sales through units in low-tax member states violated the bloc’s state aid rules. This case is particularly important due to the EU’s crackdown on taxation in recent years and could impact how the bloc deals with similar matters given the recent trend toward digital services taxes.
More bank earnings
As lenders kick off earnings season with their quarterly reports, there appear to be two sides of banking that are faring very differently during the coronavirus pandemic. JPMorgan (NYSE:JPM) recorded a record $33.8B of revenue, with a 54% jump in investment banking fees from a year ago, while Wells Fargo (NYSE:WFC) lost $2.4B in Q2 and Citigroup (NYSE:C) disappointed after highlighting swelling credit loss reserves. On the earnings front for today, more banks are set to report results, including Goldman Sachs (NYSE:GS), U.S. Bancorp (NYSE:USB), BNY Mellon (NYSE:BK) and PNC Financial Services (NYSE:PNC).
Ending preferential treatment of Hong Kong
“No special privileges, no special economic treatment and no export of sensitive technologies,” President Trump told a news conference after signing the Hong Kong Autonomy Act, which penalizes banks linked to Chinese interference in Hong Kong. “China will make necessary responses to protect its legitimate interests, and impose sanctions on relevant U.S. personnel and entities,” the country’s foreign ministry said in response, without elaborating. Hong Kong was the source of the largest bilateral U.S. goods trade surplus last year, at $26.1B, and more than 1,300 U.S. companies operate there, including nearly every major American financial firm.
Increased tensions
Hong Kong is not the only area where a cold war between China and the West appears to be in the making. The United Kingdom has reversed course on Huawei, moving to ban the Chinese equipment maker’s gear from any part of its national 5G network and ordering it all stripped by 2027. The U.S. is also sounding the alarm over Chinese-owned TikTok (BDNCE), with President Trump and Secretary of State Mike Pompeo publicly saying the government is “looking at potentially banning” the short-form video app.
Relaxing curbs, but seeking lost cuts
An OPEC+ technical committee that met online Tuesday detailed plans for countries including Iraq, Nigeria and Kazakhstan to make an additional 842K barrels a day of compensatory cuts in August and September, according to delegates. The proposal will be discussed by a ministerial monitoring committee today led by Saudi Arabia and Russia and comes after the nations missed their production targets again in June. Following the meeting, OPEC+ is still expected to announce that overall group cuts of 9.6M barrels a day – about 10% of global supplies – will be relaxed in August as global fuel demand recovers from the COVID-19 pandemic.
Making money off parking lots
The coronavirus pandemic is leaving retail real estate owners scrambling for new revenue sources, with Brookfield Property Partners (NASDAQ:BPY) signing a deal with entertainment company Kilburn Live to turn the parking lots at a number of its malls into drive-in theaters and virtual concerts. “People are desperate to leave home,” explained chief marketing officer Michelle Snyder, adding that Brookfield has set up food kiosks around the drive-ins for people to order from the mall’s food court. “If we can’t rent the mall, we are going to rent other space… We actually have tons of ideas for our parking lots.”
What else is happening…
Voices of Pimco past: Gross, El-Erian warn against growth stocks.
Google (GOOG, GOOGL) next to make investment in India’s Jio Platforms.
2021 Ford (NYSE:F) Bronco First Edition gets sold out.
Massachusetts sues Uber (NYSE:UBER), Lyft (NASDAQ:LYFT) over driver classification.
The New York Times (NYSE:NYT) is hit by another op-ed resignation.
Texas county OKs $14M-plus in Tesla (NASDAQ:TSLA) tax breaks for factory.
Boeing (NYSE:BA) reports 60 more MAX cancellations in June.
Tuesday’s Key Earnings
Citigroup (C) -3.9% bolstering credit-loss reserves.
Delta Air Lines (NYSE:DAL) -2.7% issuing cautious outlook.
JPMorgan Chase (JPM) +0.6% on ‘eye-popping’ trading numbers.
Wells Fargo (WFC) -4.6% slashing dividend, pushing up reserves.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Empire State Mfg Survey
8:30 Import/Export Prices
9:15 Industrial Production
10:00 Atlanta Fed’s Business Inflation Expectations
10:30 EIA Petroleum Inventories
12:00 PM Fed’s Harker: Economic Outlook
2:00 PM Fed’s Beige Book
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Good morning. Happy Tuesday.
The Asian/Pacific markets were weak. China, Hong Kong and India dropped more than 1%; New Zealand did well. Europe, Africa and the Middle East are currently mostly down. Denmark, France, Turkey, Germany, Russia, South Africa, Spain, Netherlands, Italy, Portugal, Israel and the Czech Republic are down 1% or more. Futures in the States point towards a flat open for the cash market.
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VIDEO: My Favorite Scan
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The dollar is down a small amount. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
“This is the week when we find out if the real world is going to intrude on the stock market world,” CNBC’s Jim Cramer declared as the largest U.S. banks begin reporting their Q2 results. “If the banks can rally, then maybe we’ve gone ‘through the looking glass,'” he said. “If the banks get hammered, things could get ugly.” While investors should expect another big hit as lenders set aside more loan loss provisions, that could be offset by a boost in fee incomes from elevated investment banking and trading activity, as well as mortgage demand. Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) will all release earnings before the opening bell, followed by Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) later this week.
Futures rise after volatile session
U.S. stock futures moved higher in overnight trade following a stunning reversal on Monday as California rolled back its reopening plans, triggering worries about another coronavirus lockdown (see below). Contracts tied to the Dow, S&P 500 and Nasdaq are all up 0.4% as investors get ready for earnings reports from some of the nation’s largest banks. A senior Trump administration official also announced that production of a potential coronavirus vaccine was expected to begin before the end of the summer following news that Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) were granted fast track designation by the FDA for two of the companies’ four COVID-19 vaccine candidates.
Biggest reopening rollback in the U.S.
California is the latest to roll back reopening plans as the coronavirus continues to surge in some of the most populous U.S. states. Governor Gavin Newsom ordered a full shutdown of bars, movie theaters, museums and dine-in restaurants, while forcing gyms, barbers and places of worship to close in the state’s hardest hit regions. The closures are similar to the recent, but less extensive, U-turns taken by Arizona and Texas. In addition to the statewide bans in California, school districts in Los Angeles and San Diego announced they would not reopen their buildings for students in the fall.
Wild Tesla
In a volatile session on Monday, shares of Tesla (NASDAQ:TSLA) closed down 3%, giving back an earlier 16% jump that had pushed the stock to a new all-time intraday high of $1,794.99. At one point Tesla’s market cap reached $321B, briefly making it the 10th-largest U.S. stock by market value. As the company’s valuation climbs higher, speculation is growing that it will soon join the S&P 500. In fact, Tesla CEO Elon Musk is now the seventh-richest person in the world, surpassing legendary investor Warren Buffett. TSLA +4.7% premarket.
Ford goes off-road with revived Bronco
Nearly a decade since plotting its return, Ford (NYSE:F) has unveiled a new retro-looking Bronco reminiscent of the rugged, boxy original from the 1960s. The new SUV will have two sizes: a smaller Bronco Sport to be released later this year, and two- and four-door versions arriving next spring and priced starting at $29,995, just $205 above a base Jeep (NYSE:FCAU) Wrangler. Reviving the Bronco is a key piece of Ford CEO Jim Hackett’s turnaround plan, which is sharpening the company’s focus on more-profitable pickup trucks (2021 F-150) and SUVs (the electric Mustang), while purging passenger cars from Ford’s U.S. showrooms.
Beijing reports trade data as tensions rise
China’s exports rose 0.5% in dollar terms in June from a year earlier, while imports climbed 2.7%, resulting in a trade surplus of $46.42B for the month (below the $59.3B surplus expected by economists). The figures also showed China’s trade surplus with the U.S. widening to $29.41B, compared to $27.89B in May. Tensions between the countries have worsened this year, with President Trump blaming China for the pandemic, saying last week that he wasn’t even thinking about Phase Two of the trade deal and formally rejecting Beijing’s expansive claims in the South China Sea.
More semiconductor dealmaking
SoftBank (OTCPK:SFTBY) is exploring alternatives including a full or partial sale or public offering of British chip designer Arm Holdings, which the Japanese conglomerate bought four years ago for $32B, WSJ reports. Goldman Sachs is advising the company on the review, which is still in the early stages. It isn’t known how much interest industry players might have in Arm, but the division has announced plans to spin off its two IoT businesses to SoftBank – to focus on its core semiconductor business – while Apple’s (NASDAQ:AAPL) recently announced in-house silicon is based on Arm architecture.
Skipping the checkout line
After opening its first Amazon Go stores to the public in 2018, Amazon (NASDAQ:AMZN) is doubling down on cashierless technology with innovative smart shopping carts. The Dash Carts are embedded with cameras, sensors, a weighing component and a smart display that automatically track a shopper’s order, and allow for a digital checkout without a human cashier. The carts, designed for small- to mid-sized grocery trips, will come first to Amazon’s grocery store in the Woodland Hills neighborhood of Los Angeles, which is slated to open in 2020.
What else is happening…
American Airlines (NASDAQ:AAL) to warn staff about potential furloughs.
Founder Jack Ma cuts stake in Alibaba (NYSE:BABA).
Luckin Coffee (NASDAQ:LK) ousts chairman Lu, names Guo as CEO.
KFC (NYSE:YUM) to close dine-in areas in Florida.
Apple (AAPL) shifts retail staff to remote work.
Pandemic will push up the already ‘record high’ corporate debt.
Monday’s Key Earnings
PepsiCo’s (NASDAQ:PEP) +0.3% as lockdowns boosted snack sales.
Today’s Economic Calendar
6:00 NFIB Small Business Optimism Index
8:30 Consumer Price Index
8:55 Redbook Chain Store Sales
2:00 PM Fed’s Brainard Speech
2:30 PM Fed’s Bullard: U.S. Monetary and Economic Policy
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets did well overall. Japan, China, Hong Kong, Taiwan, Australia, Malaysia rallied 1% or more. Singapore and Thailand were weak. Europe, Africa and the Middle East are currently doing well. The UK, France, Germany, Turkey, South Africa, Finland, Norway, Spain, Netherlands, Austria, Sweden and the Czech Republic are up 1% or more. The UAE, Russia and Greece are down. Futures in the States point towards a moderate gap up open for the cash market.
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The dollar is down. Oil is donw; copper is up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Earnings season for Q2 gets underway this week as major U.S. banks report results from the past three months that were slammed by the coronavirus. Collective earnings of S&P 500 companies are expected to decline by a whopping 44.6% Y/Y, according to FactSet, marking the biggest decline since the final quarter of 2008, when earnings fell 70% during the financial crisis. Writeoffs and other expenses will likely be forgiven due to the extenuating circumstances, though investors will be judging what firms have to say about the current quarter or the full year after they withdrew most of their guidance. “There’s a deficit of information that needs to be filled at some point,” said Sebastien Leburn, senior portfolio manager at Boston Private.
Bulls gain ground
The risk-on mood spread across the globe overnight, tracking an end-of-week rally in U.S. stocks as traders look to the start of earnings season for further clues on how companies are planning for the future. The Nikkei and Shanghai climbed about 2%, the Euro Stoxx 50 is 1% higher, while U.S. stock index futures are ahead by 0.6%. Coronavirus news: While Florida reported a record 15,299 new cases on Sunday – a national record – and Houston city leaders called for a return to lockdown, a declining death rate trend was highlighted by New York City, which reported no COVID-related fatalities for the first time.
IPO process in question?
2020 has become a boom year for special purpose acquisition companies, or SPACs, as seen by the postmerger returns of Nikola Motors (NASDAQ:NKLA), Virgin Galactic (NYSE:SPCE), and DraftKings (NASDAQ:DKNG). The latest? MultiPlan is combining with Churchill Capital Corp. III (NYSE:CCXX) in an $11B deal that will take the healthcare savings provider public. What are SPACs? They’re basically empty shell companies that raise a lot of money by going public – without targeting a particular industry – and later use the money to buy a company. Why are they becoming popular? At a time of great volatility, SPACs can offer liquidity, are quicker to come to market, provide better price support and are lighter on the regulatory side. CCXX +57.3% premarket.
More M&A
Expanding its offerings in sectors like autonomous vehicles and 5G, semiconductor maker Analog Devices (NASDAQ:ADI) has agreed to acquire Maxim Integrated Products (NASDAQ:MXIM) in an all-stock transaction that values the combined enterprise at over $68B. The deal is expected to be accretive to free cash flow at closing and adjusted EPS in 18 months post close. It’ll also provide $275M of cost synergies by the end of year two – given the common focus of the two companies on integrated circuits – and follows years of speculation that the two rivals could combine. MXIM +10.1% premarket.
Relaxing OPEC+ production curbs
Crude futures are off nearly 2% ahead of an OPEC+ meeting on Wednesday at which the group may announce plans to start tapering historic production cuts, WSJ reports. Under discussion is a Saudi proposal to relax the group’s production curbs by 2M bbl/day, amid signs that demand is returning to normal levels following COVID-led lockdowns. The renewed optimism coincides with a Friday report from the IEA showing COVID-19’s worst effects on global oil demand have passed but will linger as the market slowly recovers in the second half of 2020.
Turnaround at WeWork
A big cost-cutting drive has helped WeWork (WE) shore up its finances, and the company is set to see positive cash flow and profits in 2021, a year ahead of schedule, Chairman Marcelo Claure told the FT. “Everybody thought WeWork was mission impossible. [That we had] zero chance. And now, a year from now, you are going to see WeWork to basically be a profitable venture with an incredible diversity of assets,” he declared. Claure also sees the transition to remote work as appealing to companies that want satellite offices for their workers. Over the past few months, WeWork – backed by Softbank (OTCPK:SFTBY) – has cut more than 8K jobs, sold off non-core businesses and terminated leases on building space in New York and Baltimore.
Tesla drops prices as stock surges
The starting price for the Model Y crossover is now $49,990 (before taxes and incentives), marking the second significant price cut Tesla (NASDAQ:TSLA) has made to its vehicles in the last six weeks. In late May, the EV maker shaved $5,000 off the Model S and X and $2,000 off the Model 3, and ended up delivering 90,650 cars to customers in Q2, beating analyst estimates and sending shares soaring. In fact, Tesla’s stock has skyrocketed 260% since the beginning of the year, and is up another 4.2% in premarket trade to over $1,600 per share.
Supersonic travel revival
Founded in 2014, Boom Supersonic has built a supersonic prototype in only six years, significantly faster than the development of the Concorde. The Denver-based startup has set Oct. 7 to publicly unveil its XB-1 – a demonstrator aircraft that’ll be used for a conceptual commercial jet called Overture. It would have 55-seats onboard, reach cruising speeds of Mach 2.2, use alternative fuels and take to the skies in 2021. The company has so far raised $141M to build the XB-1 from investors like Japan Airlines (OTCPK:JAPSY) and Richard Branson’s Virgin Group, which have pre-ordered a total of 30 aircraft.
What else is happening…
Is Disney’s (NYSE:DIS) stock a buy as parks reopen?
Good news for Gilead’s (NASDAQ:GILD) remdesivir in South Korea.
COVID-19 drugs need to go where needed, not ‘highest bidder’ – Bill Gates.
Alibaba (NYSE:BABA) lines up lofty goals in shareholder letter.
Global coffee consumption is forecast by USDA to fall in 2020.
Today’s Economic Calendar
11:30 Fed’s Williams: “LIBOR: Entering the Endgame”
1:00 PM Fed’s Kaplan Speech
2:00 PM Treasury Budget
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