Good morning. Happy Friday. Happy Employment Numbers Day.
Of the Asian/Pacific markets that were open, most closed down. The Philippines did well, but Japan, Australia, Indonesia and Thailand were weak. Europe, Africa and the Middle East are currently mostly down. The UK, Denmark, Poland, France, Germany, Russia, Greece, South Africa, Finland, Hungary, Italy, Portugal and Sweden are suffering moderate losses. Futures in the States point towards a relatively big gap down open for the cash market.
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BLOG:The Leavitt Brothers Trading List
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The dollar is flat. Oil is down; copper is up. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Trump tests positive for COVID-19
Stock index futures are down sharply, sliding around 2% overnight, after President Donald Trump tweeted he and First Lady Melania Trump have begun to quarantine after testing positive for the coronavirus. The price movement contrasts to what would normally be a day of cautious trading ahead of the September nonfarm payrolls report, and comes after Hope Hicks, considered Trump’s most trusted adviser, tested positive for the virus. “To say this potentially could be a big deal is an understatement,” Rabobank declared, according to the AP. “Anyway, everything now takes a backseat to the latest incredible twist in this U.S. election campaign.”
Is the knee-jerk selloff warranted?
Traders may be adding a blanket uncertainty premium, but Trump’s physician expects “the President to continue carrying out his duties without disruption while recovering.” “The White House medical team and I will maintain a vigilant watch, and I appreciate the support provided by some of our country’s greatest medical professionals and institutions,” adds Dr. Sean Conley. If Trump’s condition were to worsen, the standard course of action would be for him to hand over executive authority to Vice President Mike Pence, and to take back the reins when he returns to health.
Final jobs report before the presidential election
The September jobs report is out this morning, which will be one of the last major economic releases (besides Q3 GDP data) before the presidential election on Nov. 3. While economists predict the U.S. added another 850,000 jobs last month – marking the first time hiring has fallen below the 1M mark since May – the U.S. has regained about half of the 23M jobs it lost since the start of the coronavirus crisis. The unemployment rate has meanwhile fallen far faster than anyone would have dreamed of six months ago, and it’s forecast to dip another 2 percentage points to 8.2% (down from a pandemic high of 14.7%).
Stimulus talks in limbo
The House passed a $2.2T Democratic coronavirus stimulus plan on Thursday night, as a bipartisan deal continued to elude Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, who had suggested a $1.6T response. The two have talked every day this week, but they failed to bridge a gap on a range of issues, including how much aid to send state and local governments, and whether to establish a liability shield for businesses and schools. Time is running out as lawmakers preparing to leave Washington for the remaining weeks of the 2020 presidential and congressional campaign, while the $600 per week supplemental unemployment benefit and window to apply for PPP loans all expired weeks ago.
COVID spread triggers oil demand concerns
Crude futures are off nearly 4% to under $38/barrel, extending losses from yesterday’s sharp decline that saw the energy sector sink to a six-month low. Rising coronavirus cases around the world are hurting the demand outlook, with further price pressure from last month’s increase in OPEC production. Standard Chartered analysts now expect global demand to fall by 9M bbl/day this year before recovering by ~5.5M bbl/day next year, leaving the 2021 average slightly below the 2016 average.
Nikola volatility
No news appears to be good news for Nikola (NASDAQ:NKLA), which soared by as much as 31% at one point on Thursday, before ultimately closing with a gain of 17.7%. The movement came one day after the company said its production timeline and factory plans remain on track amid widespread investor anxiety regarding the company’s business, as well as reports that General Motors (NYSE:GM) could potentially take a stake of greater than 11% in the company. Nikola additionally appointed Steve Shindler as a new independent director to replace the retiring Lonnie Stalsberg.
Amazon reveals first data on coronavirus toll
Early on in the pandemic, warehouse workers raised concerns that Amazon (NASDAQ:AMZN) wasn’t doing enough to protect them from getting sick, whereupon the company said it would invest its Q2 profit of $4B into its COVID-19 response and spend $1B on testing throughout the year. The retail giant has now disclosed comprehensive data into the spread of the coronavirus across its front-line workforce, saying 19,816 workers, or 1.44% of the total, contracted COVID-19 this year. The rate of infections is 42% lower than expected, according to the company, compared to the “general population rate” in the U.S.
Another step towards a ‘digital euro’
In a sign that the ECB is serious about laying the groundwork for a central bank digital currency (CBDC), it has applied to trademark the term “digital euro.” It’s currently preparing a report that will detail the advantages and disadvantages of creating a CBDC for retail use across Europe, and afterwards, the public will have a feedback period to shape the future of CBDC policy. In the “investigation phase,” the central bank will also begin experimenting with the tender and decide toward mid-2021 whether to launch the digital euro project.
Brexit intervention
A day after the EU launched legal action over Boris Johnson’s plan to potentially override the Withdrawal Agreement, the U.K. prime minister said he will intervene in Brexit negotiations for the first time since June. He announced upcoming talks with European Commission President Ursula von der Leyen on Saturday, triggering the pound to erase losses and rise as much as 0.4% to $1.2945 on hopes of a breakthrough. Elsewhere in Europe, EU leaders imposed sanctions on 40 Belarusian officials accused of rigging August’s presidential election, and assured Cyprus that the bloc would punish Turkey if it continues oil and gas drilling in disputed areas of the Mediterranean.
What else is happening…
Senate panel subpoenaes CEOs of Facebook (NASDAQ:FB), Google (GOOG, GOOGL) and Twitter (NYSE:TWTR).
Twilio (NYSE:TWLO) forecasts more quarterly revenue than expected.
AMC (NYSE:AMC) to reopen North Carolina theaters over next two weeks.
Expanding consumer reach, Goldman (NYSE:GS) buys GM’s credit card unit.
Brazil seeks to reopen $27B dam lawsuit against Vale (NYSE:VALE) and BHP (NYSE:BHP).
Sasol (NYSE:SSL) sells $2B U.S. chemicals stake to LyondellBasell (NYSE:LYB).
Today’s Economic Calendar
Auto Sales
8:30 Non-farm payrolls
9:00 Fed’s Harker: “Inclusive Workforce Recovery”
10:00 Consumer Sentiment
10:00 Factory Orders
1:00 PM Baker-Hughes Rig Count
1:00 PM Fed’s Kashkari: “Racial and Economic Disparities in Education”
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Good morning. Happy Thursday.
The Asian/Pacific markets did well. Japan, India, Australia, Indonesia, Singapore and the Philippines led. Europe, Africa and the Middle East are currently mostly up. Denmark, France, Turkey, Greece, South Africa, Finland, Switzerland, Hungary, the Netherlands, Italy and Portugal are leading. Futures in the States point towards a moderate gap up open for the cash market.
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VIDEO:Trade Examples FSLY, WKHS, ZI, AAPL, CHGG, CRWD
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The dollar is down. Oil and copper are down. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Fourth quarter to open with solid gains
Traders appear to be betting on a better October for the market as futures rally against the backdrop of stimulus talks and the signing of a stopgap bill to avoid a U.S. government shutdown. Dow and S&P 500 futures are ahead by 1%, while contracts tied to the Nasdaq are 1.2% higher, following a session yesterday that ended in the green. While House Democrats initially aimed to pass their roughly $2.2T rescue legislation Wednesday night, they called off the vote to allow more time for bipartisan talks. Some investors are also hopeful that the recent economic rebound will result in corporate earnings that beat expectations when companies start reporting Q3 results later this month.
Direct listing recap
Data mining firm Palantir (NYSE:PLTR) closed the first day of trading up 31% to $9.50/share, down from the $10 open and high of $11.42 but still an upside to the $7.25 reference price. According to CNBC sources, some current employees had problems accessing Morgan Stanley’s Shareworks system to sell shares. Meanwhile, work management platform Asana (NYSE:ASAN) jumped 43% to $30.20/share following its direct listing on the New York Stock Exchange (it opened at $27 after setting a reference price at $21).
Bank buyback and dividend curbs go to year-end
Due to the ongoing “economic uncertainty from the coronavirus response” and the need for the banking industry to preserve capital, the Fed has extended its ban on share buybacks for the rest of the year. Additionally, dividends will continue to be capped and tied to a formula based on recent income. The decision will apply to banks with more than $100B in assets, and will likely come as a disappoint to lenders like JPMorgan (NYSE:JPM), which had already indicated interest in resuming share repurchases.
Racial diversity quotas
California Gov. Gavin Newsom has signed legislation that will require the boards of publicly traded companies based in the state to have at least one racially, ethnically or otherwise diverse director by 2021, and more by the end of 2022. Individuals who identify as Black, African-American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or who identify as gay, lesbian, bisexual or transgender, would be considered eligible for meeting the requirement. More than 35% of California’s 513 public-company boards – 185 companies – wouldn’t currently meet the new qualification, according to research firm Equilar.
Google hardware event
Google’s (GOOG, GOOGL) gadget update came on the heels of similar hardware events from Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL), but focused on affordability and value, rather than cutting-edge technology. Two 5G-capable Pixel smartphones were unveiled – the Pixel 5 ($699) and Pixel 4a ($499) – with the former featuring a bigger battery, faster wireless charging and reverse wireless charging. Google also replaced its original Google Home smart speaker with the $99 Nest Audio and showed off its first Chromecast that features a redesigned on-screen interface – branded Google TV – and remote to control it.
Moderna vaccine won’t be ready before election
Commenting at a Financial Times conference, Moderna (NASDAQ:MRNA) CEO Stéphane Bancel stated the company will not be able to apply for emergency use authorization in the U.S. for COVID-19 vaccine mRNA-1273 before November 25 at the earliest. That reflects the minimum amount of time needed to accumulate enough safety data. He also said that the company does not expect full approval to distribute the vaccine to all sections of the U.S. population until next spring.
Cruising ban extended through October
The CDC has extended its ban on passenger cruising from U.S. ports through Oct. 31 in a development that was largely anticipated. The date aligns with the decision by the Cruise Lines International Association to postpone ocean sailings in U.S. waters until at least November, while an eventual resumption is expected to include mandatory masks in public spaces and COVID-19 tests for passengers before they board. Executives of the cruise companies and CLIA are reportedly planning to meet at the White House tomorrow to discuss the latest developments.
No trading in Tokyo
The world’s third biggest exchange suffered its worst outage ever on Thursday, taking trading offline for the day and casting a spotlight on the bourse’s Arrowhead computer system developed in collaboration with Fujitsu (OTCPK:FJTSF). The outage was attributed to a hardware breakdown involving transmitting price information, while the switch to backup hardware didn’t take place properly, leaving the market unable to function. “We apologize to investors and market participants for causing disruption,” Tokyo Stock Exchange said in a statement, adding that it aims to resume trading as normal on Friday after replacing hardware.
Brexit gets messy
Calling it “the first step in an infringement procedure,” the European Union has launched legal proceedings against the United Kingdom for a breach of “good faith” clauses in the Brexit Withdrawal Agreement. “If adopted as is, it will be in full contradiction to the protocol of Ireland-Northern Ireland,” European Commission President Ursula von der Leyen announced in a televised statement. Should the U.K. refuse to drop its Internal Markets Bill, the EU has threatened further legal action, while some say hefty fines or trade sanctions are even on the table.
What else is happening…
FAA’s Dickson upbeat after flying Boeing’s (NYSE:BA) 737 MAX.
DOJ opens ventilator antitrust probe focused on Medtronic (NYSE:MDT) – WSJ.
Another outage hits Microsoft (NASDAQ:MSFT) as Outlook goes down worldwide.
First presidential debate viewed by far fewer people than 2016.
Facebook (NASDAQ:FB) broadens scope of prohibited election ads.
Total (NYSE:TOT) plans big spending boost on renewable energy production.
Today’s Economic Calendar
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Natural Gas Inventory
11:00 Fed’s Williams Speech
3:00 PM Fed’s Bowman:
“Opportunities and Challenges for Home Ownership”
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. Hong Kong and South Korea posted gains; Japan, Australia and Thailand were weak. Europe, Africa and the Middle East are currently mixed and little changed. Turkey, the UAE and Portugal are up; Poland and South Africa are down. Futures in the States point towards a slight down open for the cash market.
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VIDEO:Trade Examples FSLY, WKHS, ZI, AAPL, CHGG, CRWD
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The dollar is up. Oil is down; copper is up. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Reshaping the IPO market
Big data firm Palantir (NYSE:PLTR) and corporate software company Asana (ASAN) are the latest businesses to challenge the traditional IPO process by debuting on the New York Stock Exchange today in the form of a direct listing. Depending on how successful they are, more companies could choose to go public this way going forward, especially if they are allowed to raise new money as part of the process. Going public via direct listing tends to be a quicker route and involves less scrutiny, while super trendy SPAC mergers are also gaining prominence. The NYSE has set a reference point of $7.25/share for Palantir and $21/share for Asana, though the figure only acts as a placeholder in lieu of a formal IPO price.
Election outcome uncertainty
If investors were hoping to get any economic clarity from last night’s presidential debate, it was a total fail. Bickering, badgering and insults reigned through much of the hour-and-a-half political brawl that made it hard for either man to make a point, while odds increased that the coming election may not be decided for weeks or even months. Wall Street does not like uncertainty… S&P 500 futures fell 1% overnight as investors braced for heightened volatility in November and December. On the stimulus front, Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are expected to talk again today despite skepticism on Capitol Hill that a deal is possible at this stage.
More stimulus worries
The EU’s economic recovery package, which includes €750B in jointly-backed debt and a €1.07T common EU budget, appears to be in trouble due to differences between member states over democratic standards. Germany, which holds the rotating presidency of the bloc, offered a proposal this week that would suspend payouts from the budget if a weighted majority of nations determined a rule-of-law breach, such as not adhering to values like prosecuting high-level corruption. The draft was rejected by Hungary and Poland, with Polish Prime Minister Mateusz Morawiecki calling it “political blackmail,” while a group of richer nations, including Finland and the Netherlands, said the proposal didn’t go far enough.
Key milestone for 737 MAX recertification
FAA Administrator Steve Dickson is in Seattle today to conduct an evaluation flight at the controls of a Boeing (NYSE:BA) 737 MAX, which has been grounded for 18 months following two fatal crashes that killed 346 people.”I’m not going to sign off on this airplane until I fly it myself,” he has repeatedly said. Boeing not only rewrote the software for the MCAS control system, which was faulted for the crashes, but also the entire flight computer software. Other steps that remain before the 737 MAX can return to the skies include airlines drafting their own pilot training, getting it approved and training their pilots.
Seven airlines close billions in U.S. Treasury loans
Calling on Congress to extend more aid to prevent massive job cuts, the U.S. Treasury Department has closed loans to seven passenger airlines – American (NASDAQ:AAL), United (NASDAQ:UAL), Alaska Air Group (NYSE:ALK), Frontier Airlines (FRNT), JetBlue (NASDAQ:JBLU), Hawaiian Airlines (NASDAQ:HA) and SkyWest (NASDAQ:SKYW). Southwest (NYSE:LUV), Delta (NYSE:DAL) and others chose not to accept a federal bailout because they found financing in private markets, leaving more money for a smaller number of carriers.
Major layoffs at Disney amid parks slump
Disney (NYSE:DIS) is laying off 28,000 workers in response to the pounding its theme parks have taken in the COVID-19 pandemic. “We’ve cut expenses, suspended capital projects, furloughed our cast members while still paying benefits, and modified our operations to run as efficiently as possible, however, we simply cannot responsibly stay fully staffed while operating at such limited capacity,” Parks chief Josh D’Amaro said in a note seen by CNBC. D’Amaro also took a shot at California Gov. Gavin Newsom, noting the “State’s unwillingness to lift restrictions that would allow Disneyland to reopen.”
Deal in doubt
General Motors (NYSE:GM) will not finalize its deal with Nikola (NASDAQ:NKLA) by today, according to CNBC. That means a deal could still come within days, or fall apart entirely. Nikola founder Trevor Milton’s resignation combined with fraud (and sexual abuse) claims, which have reportedly sparked SEC and DOJ inquiries, have hammered Nikola shares. Since the deal was announced, shares are down more than 60%, making the EV maker much less attractive to GM.
Next chapter for Big Oil
Royal Dutch Shell (RDS.A, RDS.B) will slash up to 9,000 jobs, or over 10% of its workforce, as it nears the end of a global restructuring review designed to position it for a green energy transition. The move adds to the growing list of major announcements this year which has seen Big Oil slash dividends, take multibillion-dollar writedowns and ax jobs following oil’s coronavirus-induced plunge. In June, BP (NYSE:BP) said it intended to cut 10,000 jobs as it moved into cleaner energy, Chevron (NYSE:CVX) plans to trim 10-15% of its global workforce, while Exxon Mobil (NYSE:XOM) is reviewing staffing country by country.
What else is happening…
Apple’s (NASDAQ:AAPL) Tim Cook scores first major stock grant since 2011.
Verizon (NYSE:VZ) quietly scrambling to unload HuffPost – New York Post.
Caesars (NASDAQ:CZR) agrees to acquire William Hill (OTCPK:WIMHF) for £2.9B.
Duke Energy (NYSE:DUK) rebuffed NextEra (NYSE:NEE) takeover approach – WSJ.
Minimum pay rate approved for Uber (NYSE:UBER), Lyft (NASDAQ:LYFT) drivers in Seattle.
Walmart (NYSE:WMT) eyes using Tesla (NASDAQ:TSLA) Semi trucks in Canada to lower costs.
Tuesday’s Key Earnings
Micron (NASDAQ:MU) -4.8% AH giving weak short-term outlook.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 GDP Q2
8:30 Corporate profits
9:30 Fed’s Kashkari: “Covid and the Economy”
9:45 Chicago PMI
10:00 Pending Home Sales
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
1:40 PM Fed’s Bowman: “Community Banks Rise to the Challenge”
3:00 PM Farm Prices
6:00 PM Fed’s Kaplan Speech
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Good morning. Happy Tuesday.
The Asian/Pacific markets closed mostly down. China and South Korea did well, but Hong Kong, New Zealand, Malaysia, Indonesia, Singapore and Thailand were weak. Europe, Africa and the Middle East are currently mixed and little changed. Denmark, Turkey and Israel are up; Poland, Switzerland, Portugal, Austria and Saudi Arabia are down. Futures in the States point towards a slight down open for the cash market.
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The dollar is down. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Differing visions over path to prosperity
September has already seen some volatile moves for markets and tonight’s highly anticipated debate between President Trump and Joe Biden may go some way in providing clarity for investors. On the economic front, Trump has doubled down on tax cuts and deregulation, while Biden wants to raise corporate taxes and restore relationships with economic allies. Tariffs, trade and infrastructure are also likely to be discussed, while either one of them has to manage the country’s attempt to rebound from its sharpest economic contraction on record due to COVID-19. “The debate may not see an immediate reaction per se, but where you might see a reaction is in the post-debate polling data,” if it shows Biden’s lead over Trump narrowing or widening, said Rebecca Felton, senior market strategist at RiverFront Investment Group.
Stimulus talks continue
U.S. stock index futures largely hugged the flatline overnight after House Democrats released a $2.2T coronavirus relief proposal (that would restore the $600 weekly jobless benefit), though the figure remains above what Senate Republicans have said they would accept. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have agreed to continue talks again today. Investors are also awaiting the most recent gauge of U.S. consumer confidence, which will be out at 10 a.m. ET, while Micron (NASDAQ:MU) will report earnings after the closing bell. Meanwhile, the number of confirmed global deaths from COVID-19 topped the grim milestone of 1M on Monday evening, according to Johns Hopkins University, almost 10 months after the disease first emerged in Wuhan, China.
Brexit is back
The final round of Brexit talks kick off today before a self-imposed deadline for reaching a trade agreement by Oct. 15. The discussions are intended to bridge gaps on EU boats’ access to U.K. fishing waters and the amount of support that governments are allowed to give businesses. Lurking in the background is the U.K.’s Internal Market Bill, which is still making its way through parliament, but includes clauses that override parts of the Brexit withdrawal treaty. The EU has threatened to take legal action if the U.K. doesn’t drop the bill, while Boris Johnson sees the legislation as a safety net should the EU abuse the treaty and “put Northern Ireland in an economic chokehold.”
Shift to renewables
There’s a growing divide between state-backed companies and oil majors that have helped shape the modern energy industry. Attacking their shift towards renewables, Russia’s Rosneft (OTCPK:RNFTF) lashed out at BP (NYSE:BP) and Royal Dutch Shell (RDS.A, RDS.B) for creating an “existential crisis” for oil supplies. “I think that to go away from your core business, which is what they are doing, somebody will need to step in… somebody will need to take that responsibility,” Rosneft’s Didier Casimiro told the Financial Times Commodities Global Summit. “It is an existential threat for supply. It is an existential threat for price volatility… we will have a [supply] crunch, price volatility, and yes higher prices.”
Another Musk enterprise to go public
“We will probably IPO Starlink (STRLK), but only several years in the future when revenue growth is smooth & predictable,” Elon Musk wrote in a tweet. “Public market does *not* like erratic cash flow haha.” The full Starlink network, also known as a “constellation,” would consist of 11,943 satellites that fly in low Earth orbit and beam high-speed internet to anywhere on the planet. Musk estimates that Starlink could bring in revenue of $30B a year – or about 10x the highest annual revenue SpaceX (SPACE) expects from its core rocket business – and could pave the “way for SpaceX to generate revenue that can be used to develop more and more advanced rockets and spaceships.”
Will GM’s deal with Nikola still close tomorrow?
“Our transaction with Nikola (NASDAQ:NKLA) has not closed,” a GM spokesperson said Monday in an email. “We are continuing our discussions with Nikola and will provide further updates when appropriate or required” (the deal was expected to close by Sept. 30). Compare that to a statement from GM last week, which said it remained committed to the agreement despite a damning report from short seller Hindenburg Research that detailed fraud allegations. The recent pact calls for GM to build Nikola’s Badger electric pickup with its proprietary Ultium batteries and provide fuel cells for the Badger and Nikola’s semitrucks.
LVMH countersues over failed merger
Last week, a Delaware judge expedited the trial date for Tiffany’s (NYSE:TIF) lawsuit against LVMH (OTCPK:LVMHF) for backing out of the $16.2B takeover. Now LVMH has countersued, saying the original agreement had no pandemic carve-out under the material adverse effects, which allows LVMH to walk away. “The pandemic’s disruption to the luxury industry and to Tiffany in particular will persist well into 2021 at a bare minimum,” read LVMH’s complaint. “Tiffany is particularly ill-suited for the challenges ahead.”
The next big Indian super-app
Walmart (NYSE:WMT) is in talks with Tata Group for a potential $20B-25B investment in the Indian company’s upcoming super-app business, Mint reports. The two companies reportedly are likely to jointly run the new digital platform, which will offer products and services including food delivery and bill payment, and more foreign investors may be brought in. The news comes as Reliance Industries raised over $20B from investors including Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) by selling stakes in its digital business Jio Platforms.
What else is happening…
FDA puts partial clinical hold on Inovio’s (NASDAQ:INO) COVID-19 vaccine study.
Abbott Labs (NYSE:ABT) climbs on rapid coronavirus test shipments.
JPMorgan’s (NYSE:JPM) consumer unit to WFH until 2021 – Bloomberg.
EPA chief rips California’s plan to ban new gas-powered cars
Former Amazon (NASDAQ:AMZN) manager made $1.4M from insider trading.
Nokia (NYSE:NOK) signs 5G deal with Britain’s BT (OTCPK:BTGOF).
Today’s Economic Calendar
8:30 International trade in goods (Advance)
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
9:15 Fed’s Williams Speech
9:30 Fed’s Harker: “Machine Learning”
10:00 Consumer Confidence
11:40 Fed’s Clarida: “Future Considerations for Treasury Markets Resilience”
1:00 PM Fed’s Quarles Speech
1:00 PM Fed’s Williams Speech
3:00 PM Fed’s Quarles: “Financial Stability”
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets did well today. Japan, Hong Kong, South Korea, India, Taiwan and Thailand gained more than 1%; China and Indonesia were weak. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, Poland, France, Germany, Russia, Greece, South Africa, Finland, Norway, Hungary, Spain, the Netherlands, Italy, Portugal, Austria and Sweden are up more than 1%. Futures in the States point towards a moderate gap up for the cash market.
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Global markets churn higher on China economic data, M&A buzz
Global markets are higher after positive data over the weekend on China industrial profit took some of the investor focus off the resurgence of COVID-19 cases. Japan’s Nikkei 225 gained 1.3%, Hong Kong’s Hang Seng was up 1.0% and South Korea’s Kospi jumped 1.3% after only 50 new COVID-19 cases were reported in the nation today. In Europe, the Stoxx 600 Index is up 1.4%, with France’s CAC 40, U.K.’s FTSE 100 and Germany’s DAX all comfortably in positive territory at mid-day. U.S. stock futures are also pointing up more than 1% ahead of a light earnings and conference calendar. Underpinning some of the investor optimism are renewed hope over a new stimulus deal making its way out of Washington D.C. in the next few weeks and a wave of M&A talk.
Chinese industrial profit continues to improve
Profits at Chinese industrial companies rose for a fourth straight month as China continues to show momentum with industrial production after the COVID-19 slowdown. The National Bureau of Statistics reported industrial profits were up 19% in August after a 20% pop in July. Along with higher production, lower costs and fees are helping to pad the bottom line in China for industrial producers. Despite the recent turnaround, industrial profit was still down 4.4% from last year. “Sustained and stable growth of corporate profits continues to be under pressure in the face of a complex and changing domestic and international environment,” warned government economist Zhu Hong.
Nikkei 500 runs to record high as Japanese economy shows improvement
Japan’s Cabinet Office reports that the early preliminary reading for the Leading Economic Index for September was 86.9 to match consensus expectations. The broad measure of economic activity rose from a mark of 83.8 in August and 78.4 in July. The positive economic news helped push the Nikkei 500 to a record today in Tokyo as it finally topped the closing high from December of 1989. The broad-based Nikkei 500 is considered a better measure of overall economic activity in Japan than the oft-quoted Nikkei 225.
Huge deficits forecast for Gulf nations
Gulf economies in the Middle East could be set up for trouble due to their overreliance on oil. Factoring in subdued crude oil prices, S&P Global Ratings estimated that Gulf Cooperation Council central government deficits will soar to $490B cumulatively between 2020 and 2023. Separately, the IMF said that Saudi Arabia needs to see oil prices at $76.10 to achieve fiscal breakeven in the current year and is at risk of seeing a huge budget deficit of as much as 11% of GDP. Crude oil prices have fallen three of the last four weeks on a lack of visibility on short-term demand and are starting off the new week a bit soft. In early action, WTI crude oil futures -0.6% to $40.00/bbl and Brent crude -0.5% to $41.71/bbl.
TikTok still ticking
Judge Carl Nichols of the U.S. District Court for the District of Columbia halted the ban of TikTok that was set to go into effect last night at midnight. The ban would have covered new downloads of the app in the U.S. Attorneys for TikTok made the case that the ban infringed on free speech and due process rights. The plan for Oracle (NYSE:ORCL) and Walmart (NYSE:WMT) to become minority investors in a new TikTok Global (BDNCE) is still up in the air.
U.S. cracks down on top Chinese chip maker
The Commerce Department is reported to have instructed U.S. chip companies in a broad letter to the industry that they must obtain licenses before exporting certain technology to Semiconductor Manufacturing International (OTCQX:SMICY), which is China’s largest manufacturer of semiconductors. The letter warns that exports to Semiconductor Manufacturing or its subsidiaries risk being used for Chinese military activities. The tension between the U.S. and China has centered mainly on tech names like TikTok and Huawei, but there remains the outside chance that U.S. mainstays likes Starbucks (NASDAQ:SBUX) and Wynn Resorts (NASDAQ:WYNN) could feel some heat in China if there is an escalation
Cleveland-Cliffs to acquire ArcelorMittal USA for about $1.4B in cash and stock
Cleveland-Cliffs (NYSE:CLF) is set to become the largest flat-rolled steel producer in North America via a definitive deal to acquire ArcelorMittal USA (NYSE:MT) for about $1.4B in cash and stock. The enterprise value for the deal is about $3.3B; earlier reports had put a value on ArcelorMittal’s U.S. assets between $2B and $3B. ArcelorMittal USA averaged about $10.4B/year in revenue in 2018 and 2019. Cleveland-Cliffs expects the deal will be EPS-accretive and reduce its leverage.
Caesars, William Hill confirm talks of 272p/share cash takeout
Caesars Entertainment (NASDAQ:CZR) and William Hill (OTCPK:WIMHY) have confirmed they’re in advanced talks on a possible deal for Caesars to buy William Hill for 272 pence/share in cash, Bloomberg says. That’s a 25% premium to William Hill’s Thursday close in London – the day before the stock jumped amid reports of attention from Caesars and confirmed offers from Apollo Global Management (NYSE:APO). The reported price for a Caesars bid values William Hill’s current and to-be-issued share capital around £2.9B.
Devon Energy sets its sights on WPX Energy
Devon Energy (NYSE:DVN) is in talks to acquire WPX Energy (NYSE:WPX) in an all-stock deal that could be completed as soon as this week. The proposed merger would create an entity with a combined current market value of ~$6B; Devon itself was worth more than $50B at its peak value in 2008. Both companies have substantial operations in the Delaware portion of the Permian Basin in West Texas and New Mexico. Shares of WPX are up 14.8% in premarket action.
Alibaba on watch as Investor Day starts
A three-day virtual Investor Day hosted by Alibaba (NYSE:BABA) has launched in Hangzhou, China. Speakers will include CEO Daniel Zhang, CFO Maggie Wu and other members of the company’s senior management team. Ahead of the Investor Day festivities, RBC Capital reiterated a Buy rating and $300 price target on Alibaba. “Despite the geopolitical headwinds, we continue to see Alibaba as intrinsically attractive, with shares trading at ~5x CY22E P/S and 18x CY22E EV/EBITDA on ~24% 3-yr estimated Revenue & EBITDA CAGR,” previews analyst Mark Mahaney on the upside. Shares of Alibaba are up 0.50% in early action.
Prospects for higher bond yields stay muted
Bond strategists’ median forecast predicts the 10-year yield will climb 10 basis points from its current 0.65% level, with the highest projections just above 1%. That is assuming recovery of economic growth continues as a result of the Fed’s unprecedented accommodative stance. Some may also be expecting the U.S. election to pave the way for more fiscal stimulus, with a Democratic sweep scenario seen boosting yields through higher government spending.
What else is happening…
Verizon (NYSE:VZ), T-Mobile (NASDAQ:TMUS) charting different paths through airwaves to 5G ubiquity.
Uber (NYSE:UBER) updates on Postmates numbers.
Audi (OTCPK:AUDVF) looks to expand JV partnership in China.
Today’s Economic Calendar
10:30 Dallas Fed Manufacturing Survey
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