Good morning. Happy Friday.
The Asian/Pacific markets leaned down. China and Australia did well, but South Korea, India, Malaysia, Singapore and Thailand were weak. Europe, Africa and the Middle East are weak. The UK, Denmark, France, Turkey, Finland, Norway, Hungary, Spain, the Netherlands, Italy, Austria and Sweden are down more than 1%. Futures in the States point to a flat open for the cash market.
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The dollar is down. Oil is flat; copper is up. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
The state of the consumer is in focus as the world’s two largest economies release retail sales figures for July, in addition to the latest consumer sentiment index from the University of Michigan. Retail figures from China overnight failed to hit positive territory (see below) and numbers in the U.S. are expected to come in at a clip of 1.9%. While that would continue a rebound seen in previous months, it would not be as rapid of a pace seen in May (17.7%) and June (7.5%), and could suggest growth is cooling. Another consumer gauge will be seen next week as major U.S. retailers like Walmart (NYSE:WMT) and Target (NYSE:TGT) release quarterly results.
Recovery loses some momentum
China’s economy returned to growth in Q2 following a deep plunge at the start of the year, but unexpected weakness in domestic consumption has failed to shake off wariness about the coronavirus. Marking the seventh straight monthly drop, retail sales unexpectedly slipped 1.1% in July from a year ago, worse than a predicted 0.1% rise. Industrial output advanced 4.8%, missing analyst forecasts for 5.1% growth, suggesting the recovery in the world’s second-largest economy is still fragile.
Record remains elusive
It doesn’t look like the S&P 500 is going to achieve a fresh record closing high this week as futures contracts tied to the benchmark slipped 0.4% in overnight action. Weighing on sentiment is the stalemate over economic stimulus in Washington, the seizure of Iranian fuel cargo, renewed travel restrictions in Europe and a fall in Chinese retail sales. Traders are also bracing for high-level trade talks between U.S. and Chinese officials over the weekend, with Vice Premier Liu He expected to bring up concerns over the executive orders against WeChat (OTCPK:TCEHY) and TikTok (BDNCE).
Digital dollar?
Fed Governor Lael Brainard gave some updates yesterday on the Fed’s ongoing experimentation with central bank digital currencies (CBDCs). It has been conducting in-house experiments for the last few years, through means that include the Board’s Technology Lab, Fed application developers and a collaboration with MIT. Studies are exploring the “implications of digital currencies on the payments ecosystem, monetary policy, financial stability, banking and finance, legal tender status and consumer protection.”
Big court loss over product liability
Amazon (NASDAQ:AMZN) has been successful in the past at shielding itself from lawsuits surrounding third-party sellers, but a new court decision could make it harder for the e-commerce giant to avoid such legal action. The California Fourth District Court of Appeals has ruled that Amazon can be held liable for damages caused by a defective replacement laptop battery that gave a San Diego woman third-degree burns after exploding. Amazon Marketplace, which hosts millions of third-party sellers, now accounts for approximately 60% of the company’s e-commerce sales.
If you thought Epic Games was bluffing…
After the game company sued Apple (NASDAQ:AAPL) Thursday night over Fortnite’s removal from the App Store over payment cuts, Epic additionally sued Google (GOOG, GOOGL) following the game’s removal from the Play Store. “While Fortnite remains available on Android, we can no longer make it available on Play because it violates our policies,” Google said in a statement, although it let Android customers know the game was available elsewhere. Now that Epic has stepped into the ring, allies like Spotify (NYSE:SPOT) and Match Group (NASDAQ:MTCH) are starting to speak up with words that could help fuel the antitrust case against Apple.
Alternative protein expansion
Impossible Foods (IMPF) has brought in another $200M as part of its latest funding round, taking total capital raised to $1.5B as it competes against Beyond Meat (NASDAQ:BYND). Coatue Management led the round, with Mirae Asset Global Investments, Temasek Holdings and XN Capital as investors. “We need to meet the incredible demand we’re seeing,” said CFO David Lee. “Our retails business has grown over 60x to over 8,000 grocery locations, so we’re excited to deploy more capital against our mission.”
Methane regulations lifted for oil and gas industry
The Trump administration has rolled back another Obama-era climate regulation, eliminating federal requirements for oil and gas companies to monitor and repair methane emissions from pipelines, storage facilities and wells. “EPA has been working hard to fulfill President Trump’s promise to cut burdensome and ineffective regulations for our domestic energy industry,” EPA Administrator Andrew Wheeler declared. Proponents of the rule include smaller oil and gas companies that argue the regulations are too expensive, though some of the larger industry players, like Exxon (NYSE:XOM), BP (NYSE:BP) and Shell (RDS.A, RDS.B), have opposed the decision due to their climate change pledges.
What else is happening…
Novavax (NASDAQ:NVAX) to supply 60M COVID-19 vaccine doses to the U.K.
WeWork (WE) secures $1.1B loan from SoftBank (OTCPK:SFTBY) as it cuts cash burn.
Tesla (NASDAQ:TSLA) may be working on new car model made in China.
ViacomCBS (NASDAQ:VIAC) streaming rebrand, isn’t opposed to company sale – FT.
Thursday’s Key Earnings
Applied Materials (NASDAQ:AMAT) +3.3% AH after beats, strong FQ4 guidance.
Baidu (NASDAQ:BIDU) -6.6% AH as revenues flag, SEC probes iQiyi.
Today’s Economic Calendar
8:30 Retail Sales
8:30 Productivity and Costs
9:15 Industrial Production
10:00 Business Inventories
10:00 Consumer Sentiment
10:00 Fed’s Kaplan Speech
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets leaned up. Japan, Malaysia, Singapore, Thailand and the Philippines did well; Australia was weak. Europe, Africa and the Middle East are mixed and little changed. Poland, the UAE and Saudi Arabia are up; the UK, Austria and the Czech Republic are down. Futures in the States point to a flat open for the cash market.
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The dollar is down. Oil is up; copper is down. Gold is down; silver is up. Bonds are down.
Stories/News from Seeking Alpha…
The coronavirus crisis has “cast a long shadow” over crude demand, the IEA said in its latest oil market report, as it lowered its forecasts for the first time in several months. Due to ongoing weakness in the aviation and travel sectors, the agency sees global crude demand for 2020 at 91.1M barrels per day, down 140K bpd from a previous projection and reflecting a fall of 8.1M bpd Y/Y. The agency also revised down its 2021 global oil demand estimate by 240K barrels per day to 97.1M bpd. The report comes shortly after oil majors from BP (NYSE:BP) to Shell (RDS.A, RDS.B) reported historic losses in Q2 as lockdown measures led to an unparalleled shock for energy markets.
Jobless claims due amid stimulus deadlock
U.S. stock index futures inched between gains and losses overnight following a steady August rally that pushed the S&P 500 to the cusp of fresh record high on Wednesday. Traders are eyeing the latest round of jobless claims this morning, which are expected to have declined for a second straight week to 1.12M (from 1.186M). That would be the lowest level in almost five months, but would also mark the 21st week in which claims have topped 1M. Regarding a coronavirus stimulus package, House Speaker Nancy Pelosi said Democratic leaders and the White House are still “miles apart.”
U.S. consumer prices jump in July
After tanking in the first two months of the pandemic, the consumer price index came roaring back, posting a gain that was double what economists had been expecting. U.S. inflation picked up pace as consumer prices jumped 0.6% again in July, mirroring the June increase. It was driven up by new and used car prices, but falling oil and food prices kept a lid on gains. The news came as the U.S. budget deficit climbed to $2.81T in the first 10 months of the budget year, exceeding any on record.
On to the next bankrupt retailer
How are mall owners coping with the coronavirus crisis? They’re looking to scoop up high-profile tenants. Fresh off a deal to buy Brooks Brothers out of bankruptcy for $325M (with Authentic Brands), Simon Property Group (NYSE:SPG), the largest U.S. mall owner, and Brookfield Property Partners (NASDAQ:BPY), another major shopping center player, entered advanced talks to purchase J.C. Penney’s (OTCPK:JCPNQ) retail operations. Simon has also been exploring the possibility of turning over space left by ailing department stores like Penney into Amazon (NASDAQ:AMZN) distribution hubs.
Netflix premiere before Broadway debut
More Broadway shows are finding a home in the streaming world during the COVID-19 pandemic. “Diana,” a musical based on the life of Princess Diana, will be released on Netflix (NASDAQ:NFLX) next year ahead of its rescheduled Broadway debut on May 25, 2021 (it had originally been slated for an official opening in March 2020). “Hamilton,” the runaway Broadway hit, also began streaming on Disney+ earlier this summer, while “The Prom,” a Tony Award-nominated musical that ran on Broadway in 2018-19, is being developed for Netflix.
Concerns about WeChat ban
While Tencent (OTCPK:TCEHY) is playing down the recent moves by Washington, saying soon to be banned WeChat (for international users) and key revenue driver Weixin (for mainland Chinese customers) are two separate products, more action from the U.S. may be on the table. The executive orders against TikTok (BDNCE) and WeChat could be “broader” than just those two apps, according to Secretary of State Mike Pompeo, adding that “American data will not end up in the hands of an adversary like the Chinese Communist Party.” If Apple (NASDAQ:AAPL) is forced to remove WeChat from its global app stores, iPhone annual shipments will decline 25% to 30%, TF International Securities analyst Kuo Ming-chi wrote in a research note.
Shifting supply chains
The recent trade war, which has spiraled into a tech war, has also seen a shakeup of the global supply chain. Hon Hai Precision Industry, a key supplier to Apple (AAPL) that is also known as Foxconn (OTC:FXCOF), is gradually adding more capacity outside of China. The proportion outside the country is now at 30%, up from 25% last June, and the ratio will increase as the company seeks to avoid escalating tariffs on Chinese-made goods headed to U.S. markets. “No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” Chairman Young Liu told investors, saying that while China will still play a key role in Foxconn’s manufacturing empire, the country’s “days as the world’s factory are done.”
Aircraft subsidy dispute continues
The U.S. is maintaining 15% tariffs on Airbus (OTCPK:EADSY) aircraft despite moves by the EU to resolve a 16-year-old dispute over billions of dollars of aircraft subsidies (some tariffs were also introduced on French jams and and German knives). U.S. Trade Representative Robert Lighthizer said the bloc had not taken actions necessary to come into compliance with WTO rulings, and it was not enough for Airbus to increase loan repayments to France and Spain. An escalation will likely come in the fall when the EU is expected to win WTO approval to level its own tariffs over subsidies to Boeing (NYSE:BA).
What else is happening…
Churchill Downs (NASDAQ:CHDN) posts safety plan for rescheduled Kentucky Derby.
General Motors (NYSE:GM) to continue ventilator production in Indiana.
More GM news… Goldman Sachs (NYSE:GS) vies for credit card business.
Facebook (NASDAQ:FB), Snap (NYSE:SNAP) reportedly held talks to buy TikTok rival Dubsmash.
B>Wednesday’s Key Earnings
Cisco (NASDAQ:CSCO) -6.4% AH as downside guidance overshadowed earnings beat.
SmileDirectClub (NASDAQ:SDC) -4.9% AH weighed down by pandemic disruptions.
Lyft (NASDAQ:LYFT) -1% AH following revenue drop of 61%.
Vroom (NASDAQ:VRM) -18.9% AH giving weak Q3 revenue forecast.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Import/Export Prices
10:30 EIA Natural Gas Inventory
11:00 Fed’s Bostic: “Equitable Solutions for the Future of Cities”
1:00 PM Results of $26B, 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 leaned up. Japan, Hong Kong, South Korea, Indonesia, Singapore, Thailand and the Philippines did well; China, New Zealand, Taiwan and Malaysia were weak. Europe, Africa and the Middle East are currently doing well. The UK, France, Turkey, Greece, Switzerland, the Netherlands, Italy and Austria are leading. Futures in the States point towards a moderate gap up open for the cash market.
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BLOG:Dividend-Paying REITs are Benefiting from Sector Rotation
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The dollar is down. Oil is up; copper is down. Gold is flat; silver down. Bonds are down.
Stories/News from Seeking Alpha…
As the White House and Democratic leaders struggle to restart coronavirus relief negotiations, Senator Kamala Harris of California was announced as Joe Biden’s running mate for the 2020 presidential election. The two will appear together today in Wilmington, Del., to deliver joint remarks. On the economic side of things, Harris is for a $15/hour minimum wage, advocated for closer regulatory scrutiny of Big Tech and has proposed taxing Wall Street trades and derivative transactions to pay for her Medicare for All healthcare plan. She has also promoted a tax credit for the middle-class (and rent relief), supports the Green New Deal, but has opposed the Trans-Pacific Partnership and NAFTA.
Inflation reading expected to be tame
Traders will examine the latest consumer price report before the opening bell. The CPI is forecast to have increased 0.3% in July, half the monthly increase seen in June, while the core CPI is expected to rise by 0.2%, or 1.2% on an annualized basis. U.S. stock index futures rebounded 1% overnight after the S&P 500 closed down 0.8% on Tuesday – snapping a seven-day winning streak – as the tech sector weighed on the benchmark. On the earnings front, Cisco (NASDAQ:CSCO), Lyft (NASDAQ:LYFT) and SmileDirectClub (NASDAQ:SDC) will all report after the closing bell.
Worst economic plunge in Europe
The U.K. economy shrank 20.4% in the second quarter, equivalent to an annualized rate of 59.8%, notching the worst economic hit from coronavirus in Europe as well as reporting the highest death toll. Over the same period, the U.S. and Germany lost around 10% of their output, with Italy losing 12%, France 14% and Spain 19%. The outsize hit reflects the timing and duration of the U.K.’s nationwide lockdown, though there were signs of a recovery in June as GDP grew by 8.7% from May. Officials warn it could take until the end of 2021 to fully recover.
Vaccine news
Allegations that Russia’s coronavirus vaccine is unsafe are groundless and driven by competition, Russian Health Minister Mikhail Murashko told the Interfax news agency. Yesterday’s announcement is being viewed by some as a propaganda coup for the Kremlin, and the name of the vaccine, Sputnik V, references the world’s first satellite that was launched by Russia during the Cold War. Experts and public health officials have also voiced concerns, given the lack of data and Phase 3 trials, which test a vaccine’s safety and efficacy on a larger number of people across multiple locations.
Precious metals
In what felt like “a mini-crash,” gold plunged 4.6% on Tuesday to settle at $1,946.30/oz. for its steepest one-day dollar decline since April 15, 2013, and biggest percentage slide since March 13. Other precious metals also took a beating, with silver down 11% – giving up all its gains since the start of August – as well as losses for platinum and palladium. “The precious metals complex was driven by a drop in rates, a steady increase in inflation expectations and a falling U.S. dollar,” according to Bart Melek, head of commodity strategies at TD Securities. “The rally is now giving up some of these gains as these drivers lose momentum.”
5-for-1 stock split
After shares tripled in value this year – and rose nearly sixfold over the past 12 months – Tesla (NASDAQ:TSLA) has approved a five-for-one split to make stock ownership more accessible to employees and investors. Each stakeholder of record on August 21 will receive a dividend of four additional shares that will begin trading on a stock split-adjusted basis on August 31. The decision follows a similar move by Apple (NASDAQ:AAPL), which announced a 4-for-1 split last month, as well as criticism from Elon Musk that Tesla’s stock price was too high. TSLA +4.5% premarket.
IPO filing from Airbnb
The home-sharing giant will confidentially file IPO paperwork with the SEC later this month for a listing that could still happen this year, WSJ reports. Airbnb (AIRB) was recently valued at $18B during an April fundraising round (down from the prior $31B), as the coronavirus pandemic drove bookings toward zero, though those have rebounded to March levels as of July 8. The IPO market has been a hot one, with more than $60B raised so far in 2020 – putting this year on track to be the highest since the tech boom in 2000.
What’s in the TikTok ban?
“Prohibited transactions may include, for example, agreements to make the TikTok app available on app stores… purchasing advertising on TikTok, and accepting terms of service to download the TikTok app onto a user device,” according to a White House document seen by Reuters. Barring legal challenges, a deal for TikTok (BDNCE) seems like the only way out of the current predicament. The chances of a Microsoft (NASDAQ:MSFT) purchase stand at 20%, according to the SCMP, while the odds of a Twitter (NYSE:TWTR) deal are said to be even smaller.
College football season
Other conferences were expected to quickly fall in line with the Big Ten and Pac-12, each of which elected to put off fall sports due to ongoing challenges from the COVID-19 pandemic. But as of Tuesday night the Atlantic Coast Conference suggests it’s business as usual, in addition to the Southeastern Conference, Big 12 and American Athletic Conference. The quick developments for the fall season have been closely watched by broadcasters like ABC (NYSE:DIS), NBC (NASDAQ:CMCSA), CBS (NASDAQ:VIAC) and Fox (NASDAQ:FOX), as well as betting firms including DraftKings (NASDAQ:DKNG) and Penn National Gaming (NASDAQ:PENN).
What else is happening…
Xbox (MSFT) Series X coming in November; Halo Infinite delayed.
Court throws out antitrust ruling against Qualcomm (NASDAQ:QCOM).
Shake Shack (NYSE:SHAK) opens first restaurant in Beijing.
Overstock (NASDAQ:OSTK) slips 5% after pricing equity offering.
Icahn’s ‘mall short’ pays $1.3B in wake of pandemic.
Wednesday’s Key Earnings
Eastman Kodak (NYSE:KODK) +6.4% AH forecasting sales, working capital improvement.
NIO (NYSE:NIO) -8.6% retreating after record-high quarterly deliveries.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:00 Atlanta Fed’s Business Inflation Expectations
10:00 Fed’s Rosengren: “U.S. Economy and Current Economic Conditions”
10:30 EIA Petroleum Inventories
11:00 Fed’s Kaplan Speech
1:00 PM Results of $38B, 10-Year Note Auction
2:00 PM Treasury Budget
3:00 PM Fed’s Daly: “U.S. Economy and The Ongoing Impacts of COVID-19”
6:00 PM Fed’s Kaplan Speech
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned up. Japan, Hong Kong, South Korea and Thailand gained more than 1%; China and Taiwan were weak. Europe, Africa and the Middle East are currently up big. The UK, Denmark, Poland, France, Turkey, Germany, Russia, Greece, South Africa, Finland, Norway, Spain, the Netherlands, Italy, Portugal, Israel, Austria, Sweden, Saudi Arabia and the Czech Republic are doing great. Futures in the States point towards a positive open for the cash market.
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BLOG:Dividend-Paying REITs are Benefiting from Sector Rotation
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The dollar is down. Oil is up; copper is down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
“As far as I know, a vaccine against a new coronavirus infection has been registered this morning, for the first time in the world,” Russian President Vladimir Putin declared, according to RIA Novosti. “I know that it works quite effectively, forms a stable immunity and, I repeat, has passed all the necessary checks.” He added that one of his daughters was vaccinated against COVID-19, despite Phase 3 trials that normally last for months and involve thousands of people. At the end of July, the WHO said that there were 26 candidate vaccines in the clinical evaluation stage, including one registered in Russia that was developed by the Gamaleya Research Center.
S&P 500 nears record territory
Stocks continue to shrug off the latest U.S.-China tensions as President Trump explores a variety of tax cuts (see below), while lawmakers attempt to restart talks over a coronavirus stimulus package. Contracts tied to the S&P 500 suggest a 25 point opening bell gain that would take the broader benchmark to within 16 points of its intraday high of 3,393.5, set on February 19. Dow futures are recording even bigger gains, up 1.1%, as investors extend a rotation into value stocks – which tend to outperform growth coming out of a recession – from heavyweight tech names.
Tax cuts
In addition to several weekend executive actions that included a payroll tax holiday, President Trump is “very seriously” considering a capital gains tax cut, which would “create a lot more jobs.” While the president can’t unilaterally slash the 20% long-term capital gains rate without Congress, some advisers say he could issue an executive order that would slash tax bills for investors when they sell assets. The move, known as indexing capital gains to inflation, would likely face legal challenges, and comes as Trump also explores “an income tax cut for middle-income families.”
Robinhood blows competitors out of the water
The ‘retail bros’ appear to be at it again as Robinhood joined the rest of the brokerage industry by publishing monthly trading data. The startup saw 4.3M daily average revenue trades (DARTs) in June, outperforming all of the publicly traded, incumbent brokerage firms. TD Ameritrade (NASDAQ:AMTD) was the next highest monthly total at 3.84M DARTs, Interactive Brokers (NASDAQ:IBKR) saw 1.8M DARTs, followed by Charles Schwab (NYSE:SCHW) and E-Trade (NASDAQ:ETFC) at 1.8M and 1.1M, respectively. Robinhood’s DARTs during Q2 more than doubled compared to the prior three months, while all three of its top days based on trading volume, happened in June.
New York Jobs CEO Council
Leaders from 27 firms that represent many of New York’s leading industries have banded together to create the New York Jobs CEO Council, which aims to hire 100K people from low-income Black, Latino and Asian communities by 2030. The co-chairs of the new organization include JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon, IBM (NYSE:IBM) CEO Arvind Krishna and Accenture (NYSE:ACN) CEO Julie Sweet, as well as initial members like Jeff Bezos of Amazon (NASDAQ:AMZN). “Today’s economic crisis is exacerbating economic and racial divides and exposing systemic barriers to opportunity,” Dimon said in a press release. “Young people in low-income and minority communities feel this failure the most. Unless we actively work to close the gap, COVID-19 will make matters worse.”
Employees or contractors?
San Francisco Superior Court Judge Ethan Schulman has granted a preliminary injunction against Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT), but will pause the order for 10 days to give the companies time to appeal the decision. California Attorney General Xavier Becerra and a trio of city attorneys previously filed for the injunction to force the ride-hailing services to comply with a new state law and immediately stop classifying their drivers as contractors. The decision, known as Assembly Bill 5, or AB 5, would weigh heavily on their business models and other gig-economy companies.
Lebanon government resigns
Lebanon’s stock market reopened yesterday, and the BLOM Stock Index is down 1.6%, amid further uncertainty following last week’s explosion at Beirut’s port. Prime Minister Hassan Diab confirmed the resignation of his administration after just seven months in office and blamed a corrupt political elite for sabotaging his tenure. Even before the fatal incident, which killed 163 people and wounded over 6,000, Lebanon was struggling. It hasn’t undertaken the reforms required to unlock international funding, while the Lebanese pound has also lost 80% of its value since October.
Latest China tensions
Companies from China and other countries that do not comply with accounting standards will be delisted from U.S. stock exchanges as of the end of 2021, according to U.S. Treasury Secretary Steven Mnuchin. The U.S. will also soon require imports from Hong Kong to be labeled as ‘Made in China’ following a notice that’s set to be published today in the Federal Register. China appears to be in a delicate balancing act as it keeps a trade deal alive. The country is reportedly scrapping expensive Brazilian soy bean purchases and replacing previously done deals with American supplies, while retaliatory sanctions imposed yesterday didn’t include any members of the Trump administration.
What else is happening…
Salesforce (NYSE:CRM) offloads stakes in Zoom (NASDAQ:ZM) and Dropbox (NASDAQ:DBX).
Tech surge sees SoftBank (OTCPK:SFTBY) swing to $12B profit.
Reports indicate Big 10 and Pac 12 will cancel fall football season.
McDonald’s (NYSE:MCD) sues ousted CEO over sexual relationship with employees.
Brooks Brothers set to be bought by Authentic Brands-Simon (NYSE:SPG) venture – WSJ.
Monday’s Key Earnings
Hertz (NYSE:HTZ) -5.3% AH posting wider than expected loss.
International (NASDAQ:MAR) +3.6% on slower monthly cash burn.
Petroleum (NYSE:OXY) -5.6% AH after booking $6.6B in charges.
Royal Caribbean (NYSE:RCL) +10% as investors looked to 2021.
Today’s Economic Calendar
6:00 NFIB Small Business Optimism Index
8:30 Producer Price Index
8:55 Redbook Chain Store Sales
12:00 PM Fed’s Daly Speech
1:00 PM Results of $48B, 3-Year Note Auction
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets were mixed. China, South Korea, Indonesia, Australia and the Philippines closed up; Hong Kong, Malaysia and Singapore closed down. Europe, Africa and the Middle East are little changed. Hungary, Spain, Austria and the Czech Republic are up; Greece and South Africa are down. Futures in the States point towards a flat open for the cash market.
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VIDEO:Trade Examples – CHGG, FSLY, CHWY, CRWD, LAUR
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The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
The timeline for a U.S. stimulus package is still unclear as neither Democrats nor Republicans are giving a firm date after negotiations collapsed last week. President Trump meanwhile announced four executive actions to work around the impasse, including a $400 weekly enhanced jobless benefit – a quarter of which will be covered by states – as well as student loan relief, an eviction moratorium and a payroll tax holiday (a second round of stimulus checks must be approved by Congress). States can either use money already appropriated by the federal government to provide the 25% of unemployment benefits, according to Treasury Secretary Steven Mnuchin, or they can request a waiver from Trump.
Growing friction
More tensions surfaced over the weekend as China sanctioned 11 American officials in retaliation for similar measures imposed by the U.S. Treasury Department over Hong Kong. Speaking of the new national security law, Jimmy Lai, the outspoken publisher of Hong Kong’s pro-democracy newspaper Apple Daily, was arrested Monday on suspicion of foreign collusion, sending a chill across the financial hub. Investors were already on edge after President Trump signed two executive orders banning WeChat (OTCPK:TCEHY) and TikTok (BDNCE), while U.S. regulators recommended that overseas firms listed on American exchanges be subject to public audit reviews from 2022.
S&P 500 on brink of a record high
Rallies in five of the last six weeks have lifted the S&P 500 to within 1% of its all-time high reached in February, and contracts tied to the index are up 0.2% in premarket trade. Dow futures are ahead by 0.4% and Nasdaq futures are little changed. Traders are monitoring the state of stimulus talks, as well as the latest fraying of relations between Washington and Beijing (see above). On the earnings front, keep an eye on the travel and energy sectors, with Q2 results expected from Marriott International (NASDAQ:MAR), Royal Caribbean (NYSE:RCL) and Occidental Petroleum (NYSE:OXY).
Biggest share repurchase for Buffett
Berkshire Hathaway’s (BRK.A, BRK.B) Q2 operating earnings fell to $5.51B from $5.87B in Q1 and $6.14B in the year-ago quarter, as its “other businesses” category earnings dropped dramatically Y/Y. Warren Buffett also gravitated to his own firm’s shares after keeping cash high during the coronavirus pandemic. He bought back a record $5.1B of stock during the quarter, up from $1.74B in Q1, and may have kept that higher pace through July. Berkshire Class A and Class B shares lagged the S&P 500 during Q2 with declines of more than 1%.
Major milestone for SpaceX
The Elon Musk-led company has rocketed into an elite tier of military suppliers, scoring a multibillion-dollar contract that makes it one of the Pentagon’s two primary satellite-launch providers through most of the decade. SpaceX (SPACE) will split (40/60) an estimated nearly three dozen launches through 2027 with United Launch Alliance, a joint venture between Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT), barring a successful protest from snubbed bidders Northrop Grumman (NYSE:NOC) or Blue Origin (BORGN). Until a few years ago, ULA had a virtual monopoly on such business, which focuses on the highest-priority military and intelligence payloads.
Aramco keeps dividend, sees oil recovery
Net profit at Saudi Aramco (ARMCO) slumped 73% to 24.6B riyals ($6.57B) in the second quarter (vs. estimates of 31.3B riyals), as a plunge in energy demand – due to the coronavirus crisis – weighed on sales of the world’s biggest oil producer. Aramco still maintained its Q2 dividend of $18.75B, unlike BP (NYSE:BP) and Royal Dutch Shell (RDS.A, RDS.B), which cut their dividends in recent months. “We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies,” CEO Amin Nasser declared, helping put a floor under crude above $40/bbl.
New fulfillment centers
The biggest mall owner in the U.S., Simon Property Group (NYSE:SPG) is in talks with Amazon (NASDAQ:AMZN) to transform some of its anchor department store spaces (like those formerly occupied by Sears and J.C. Penney) into Amazon fulfillment centers, WSJ reports. Department stores have traditionally drawn customers into malls. But with the deterioration of department store traffic, Simon would be gaining a steady new tenant if talks result in an agreement. For Amazon, it would locate fulfillment centers close to residential areas and help improve delivery speed in the so-called last mile of the process.
TwitTok
Reports from the WSJ also suggested that Twitter (NYSE:TWTR) held preliminary talks about a potential combination with TikTok (BDNCE). Twitter would be a long shot vs. much-bigger TikTok suitor Microsoft (NASDAQ:MSFT), which is further along in talks and would have an easier time funding a deal that could run into tens of billions of dollars (TikTok is suing the Trump administration over the executive order). Another WSJ article said Qualcomm (NASDAQ:QCOM) was lobbying Washington to roll back an export ban on Huawei, claiming the moves would hand foreign competitors a market worth as much as $8B annually.
Kodak loan deal on hold
The U.S. International Development Finance Corp. has sidelined a loan agreement with Eastman Kodak (NYSE:KODK) to produce drugs that could be used to fight the coronavirus until allegations are cleared. The SEC is probing whether insider trading laws had been broken, citing “unusual trading activity” before the letter of intent was announced. The deal would provide the former photography company a $765M loan to help pay for factory changes needed to make pharmaceutical ingredients in short supply in the U.S.
What else is happening…
How will stocks perform under different U.S. election scenarios?
AT&T’s (NYSE:T) WarnerMedia ousts HBO Max’s top leadership.
Gold ETF expenses come under scrutiny; here’s the cheapest.
Barclays (NYSE:BCS) probed by U.K. privacy watchdog for spying on staff.
Chinese luxury EV maker Xpeng (XPEV) files for an IPO.
The best performing equity ETFs in 2020 don’t own FAAMG.
Today’s Economic Calendar
10:00 Job Openings and Labor Turnover Survey
12:30 PM TD Ameritrade IMX
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