Good morning. Happy Friday.
The Asian/Pacific markets suffered big losses. The Philippines posted a gain, but Japan, China, South Korea, Hong Kong, New Zealand, Malaysia and Singapore dropped at least 1% each. Europe, Africa and the Middle East are currently mixed and little changed. Hungary, Portugal and Israel are up; Poland, Turkey and Saudi Arabia are down. Futures in the States point towards a moderate gap down open for the cash market.
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Online Course: Mini Masterclass in Trading
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The dollar is down. Oil is flat; copper is down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Volatility returns after Big Tech parade
Alphabet (GOOG, GOOGL) took the spotlight of yesterday’s Big Tech earnings show, rallying as much as 8% AH as ad sales bounced back sharply from a pandemic slump (YouTube pulled in more than $5B alone). While other peers did quite well, the quarterly reports led traders to pull out of the sector. Facebook (NASDAQ:FB) slipped nearly 3% amid a user decline and “a significant amount of COVID-related uncertainty,” though revenues were up more than 20% despite ad boycotts. Amazon (NASDAQ:AMZN) also fell 1.5% after predicting $4B in pandemic costs next quarter, while Apple (NASDAQ:AAPL) declined 4% as iPhone sales missed estimates due to customers holding off on purchases before the release of the iPhone 12.
Wild swings
Solid earnings from America’s largest tech firms weren’t enough to keep investors from selling late Thursday, with U.S. stock index futures reflecting the sentiment overnight: Dow -1.5%; S&P 500 -1.5%; Nasdaq -2%. Outlooks hit by COVID, valuation fears, regulatory scrutiny and election uncertainty all seemed to come back to the fore after a session that saw stocks rebound from the worst selloff in four months. The earnings cycle continues this morning with results from the energy industry: Exxon Mobil (NYSE:XOM), Chevron (CVX) and Phillips 66 (NYSE:PSX) are all scheduled to report.
Record GDP growth rate
U.S. GDP came roaring back in Q3 at an annualized rate of 33.1% (vs. +30.9% consensus estimate and -31.4% prior). The number of U.S. workers filing initial claims for unemployment insurance also fell by 40,000 to 751,000 last week to the lowest level since the pandemic began, though some are skeptical about taking a quick look at the data. “Much of the Q3 gain came from carry-over effects from fast progress in May-July while real GDP remains down 2.9% Y/Y,” said Gregory Daco, chief U.S. economist for Oxford Economics. Furthermore, “the average 7.4% (or 33.1% annualized) advance tells us little, if anything, about momentum heading into Q4.”
Blame game
“Your ALL OR NOTHING approach is hurting hard-working Americans who need help NOW,” Treasury Secretary Steven Mnuchin said in response to a letter from House Speaker Nancy Pelosi, which detailed six areas that need to be addressed before stimulus talks can move forward. Those include state and local funding, school safety, child care, tax credits for working families, unemployment insurance and worker liability. While an aid package is out of sight before the election, Pelosi said it may be possible to strike a COVID relief deal in the so-called the lame-duck session of Congress.
Aftermath of Zeta
At least six people have been killed across Louisiana, Alabama, Mississippi and Georgia, while more than 2M people were without power after Hurricane Zeta slammed into the Gulf Coast. It’s the 27th named storm this season, one less than the record set in 2005, and has halted up to 85% of offshore Gulf of Mexico oil production this week and nearly 58% of its natural gas output. Oil prices collapsed, regardless, as new coronavirus lockdowns in Europe and surging infections elsewhere weighed on the demand outlook. Crews have now begun returning to Gulf offshore facilities, with Chevron (NYSE:CVX) and Royal Dutch Shell (RDS.A, RDS.B) redeploying personnel to restore production.
Netflix price increase
Shares of Netflix (NASDAQ:NFLX) closed up 3.7% on Thursday after saying it would bump up its most popular standard plan by a buck to $14/month (premium goes to $18/month and the lowest tier stays at $9/month). The increase was signaled during last week’s earnings call, when COO/Chief Product Officer Greg Peters said, “You heard from Ted [Sarandos] the number of original productions we’re doing… if we do that, we feel like there is that opportunity to occasionally go back and ask, for members where we’ve delivered that extra value in those countries to pay a little bit more.” A rise to $14/month puts Netflix’s most popular plan almost at parity with HBO Max ($15/month) – which launched at a price point that some observers thought might be too much for a streaming service.
Walmart pulls guns off shelves
The company removed firearms and ammunition from its U.S. store floors this week “due to the current unrest in isolated areas of the country and out of an abundance of caution.” Customers can still purchase the items upon request even though they are no longer on display. Walmart (NYSE:WMT) also removed guns from stores this summer following the killing of George Floyd, when several of its stores were damaged, and raised the minimum purchase age to 21 after a deadly shooting at a high school in Parkland, Fla., in 2018.
Juul cuts valuation to $10B
Once one of the most highly valued startups, Juul (JUUL) has been stricken over the past two years by regulatory crackdowns, lawsuits and probes into whether it marketed vaping products to teens. Latest? The e-cigarette maker has lowered its valuation to about $10B, after being valued at around $38B just two years ago when Altria (NYSE:MO) took a 35% stake. Last month, Juul cut more than half its workforce and said it was exploring pulling out of most overseas markets.
China tech drive
Presenting the first glimpses of its economic plans for the next five years, China promised to become a self-reliant technological powerhouse, marking another twist to the conflict with the U.S. over chips and intellectual property. “Core technologies” were not named in the communique, but likely include similar areas highlighted in other government plans, ranging from semiconductors and telecommunications to big data and artificial intelligence. It also emphasized “quality growth over speed” and underscored the roles of innovation, real economy, a strong domestic market, rural vitalization and green development.
What else is happening…
Sustainable energy, heavy infrastructure on the ballot for Nov. 3.
Bankruptcy judge approves $1.65B loan for Hertz (NYSE:HTZ).
Exxon (XOM) expects to shed up to 15% of global workforce.
ConocoPhillips (NYSE:COP) warns on Alaska production if voters pass tax.
Delta Air Lines (NYSE:DAL), pilots union reach deal to avoid furloughs.
Thursday’s Key Earnings
Activision Blizzard (NASDAQ:ATVI) -1.3% AH seeing significantly lower cash flow.
Alphabet (NASDAQ:GOOG) +6.7% as ad sales bounced back sharply.
Amazon (AMZN) -1.5% increasing spending for COVID-19.
Apple (AAPL) -4.1% as iPhone sales missed estimates.
Comcast (NASDAQ:CMCSA) +2.6% buoyed by record Internet subscriber adds.
ConocoPhillips (COP) +1.3% matching analyst EPS expectations.
DuPont (NYSE:DD) +3.7% forecasting upside full-year profit.
Facebook (FB) -2.9% warning of continued uncertainty.
Kraft Heinz (NASDAQ:KHC) +2.8% as at-home demand remained strong.
Moderna (NASDAQ:MRNA) +8.4% on COVID-19 vaccine upfront payments.
Shopify (NYSE:SHOP) -4.8% despite continued e-commerce strength.
Southern Co. (NYSE:SO) -0.3% in a quarter of ‘unprecedented circumstances.’
Starbucks (NASDAQ:SBUX) -0.6% AH as outlook came up short.
Twitter (NYSE:TWTR) -16.7% amid slowing user growth and ad concerns.
Today’s Economic Calendar
8:30 Personal Income and Outlays
8:30 Employment Cost Index
9:45 Chicago PMI
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
3:00 PM Farm Prices
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Good morning. Happy Thursday.
The Asian/Pacific markets closed mostly down. Taiwan, Australia, Singapore and the Philippines dropped more than 1%. Europe, Africa and the Middle East are currently mostly down. Poland, France, Turkey, Greece, South Africa, Finland, Hungary, Spain, Italy, Portugal, Austria, Saudi Arabia and the Czech Republic are all weak. Futures in the States point towards a positive open for the cash market.
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Online Course: Mini Masterclass in Trading
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Shape of the recovery
U.S. GDP data due out at 8:30 a.m. ET will be one for the record books, with forecasts of annualized growth of 31% in Q3, but it also follows an annualized decline of 31.4% in Q2, which marked the sharpest pullback in modern American history. Many statistics go into measuring the scale of an economic rebound, and figures seen earlier this week showed another mixed bag of data. Durable goods orders and home price growth came in ahead of expectations, while new home sales and consumer confidence numbers recorded a bit of a miss. With both parties arguing about the scale of the recovery (V-shaped vs. K-shaped), as well as what is needed going forward, don’t think the latest GDP figure will be any different just five days before the presidential election.
Worst selloff in months
Futures are trading higher following a session that saw the biggest plunge for stocks since June on a resurgence in the number of deaths and hospitalizations due to COVID-19: Dow +0.8%; S&P +1%; Nasdaq +1.3%. “There’s a degree of short covering and opportunistic buying after the big selloff,” said Ilya Spivak, head Asia-Pacific strategist at DailyFX. “I don’t think it means anything in terms of a big leg up for U.S. stocks. This is just a short-term, tactical move.” While targeted lockdowns may be reimposed at the state or local level in the U.S., the discussions come on the back of faded stimulus negotiations and election uncertainty.
Big Tech testimony
How should social media moderate online speech? What should their role be in public discourse (especially around the election)? Is too much power being given to Big Tech? Those were some of the questions asked yesterday as CEOs of Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and Google (GOOG, GOOGL) tangled with U.S. senators, in a hearing that centered around a 1996 law known as Section 230. Republicans voiced concern that the content liability shield has been misused to censor conservative views, while Democrats expressed fears over disinformation campaigns and political polarization. While the CEOs denied any political bias, they conveyed varying degrees of openness toward amending Section 230, including more transparency around content moderation.
Big Tech earnings
Four of the big five – Alphabet (GOOG, (GOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Facebook (FB) – are set to report earnings after the bell, alongside Twitter (TWTR). Also known as FAAMG, the stocks account for $7T in market value, or nearly 46% of the Nasdaq 100, while the group’s scale and influence has made it an outsized target for lawmakers in Washington. The stocks sold off yesterday, each dropping around 5% with the broader market, though they pared back some of those losses in the AH trading session.
Shell boosts payout after beating forecasts
Following a tough week for oil, Shell (RDS.A, RDS.B) shares climbed 4.7% in premarket trade after a better-than-expected Q3 earnings report and accompanying dividend raise. The payout for ADSs listed on the NYSE will rise by around 4% to $0.333 for Q3 and on an annual basis going forward, just six months after the oil major slashed its dividend for the first time since WWII. Hit by lower crude prices and weaker refining, Shell’s adjusted net income was $955M for Q3, down 80% from the same period a year ago, but better than even the highest analyst estimate.
ECB expected to hold fire
Slowing of economic activity across the eurozone could prompt the ECB to unveil preemptive stimulus measures at its meeting today, though analysts say the bank is more likely to take action at its December gathering. On Wednesday, Germany announced a four-week shutdown of restaurants, bars, cinemas and theaters, while France said it would impose a second national lockdown as coronavirus infections surge across the region. The ECB will announce its interest-rate decision at 8:45 a.m. ET, followed by a press conference with President Christine Lagarde that will present new staff forecasts, as well as the latest commentary on inflation.
Luxury pricing
The deal was on its way to court, but the two luxury giants have worked out a bitter legal dispute on their own. A slightly lower price will see LVMH (OTCPK:LVMHF) take over Tiffany (NYSE:TIF) at $131.5 per share, down from $135 in the original transaction, bringing the price tag to around $15.8B (or a discount of $425M). After sealing an agreement last November, the French conglomerate had argued Tiffany should have a lower valuation due to the effect of the coronavirus pandemic on its business.
Chip deals
Marvell Technology (NASDAQ:MRVL) is reportedly nearing a deal to acquire Inphi (NASDAQ:IPHI) for about $10B, adding to an already record year for chip industry deals. Previous acquisitions: Advanced Micro Devices’ (NASDAQ:AMD) $35B takeover of Xilinx (NASDAQ:XLNX), Nvidia’s (NASDAQ:NVDA) $40B purchase of Arm and Analog Devices’ (NASDAQ:ADI) agreement to acquire Maxim Integrated Products (NASDAQ:MXIM) for $20.9B. Marvell will pay 60% of the acquisition in stock, with the rest in cash, while an announcement could come as soon as today. IPHI +40.6% premarket.
What else is happening…
Court sides with Qualcomm (NASDAQ:QCOM) in FTC’s appeal of dismissed antitrust case.
Regeneron (NASDAQ:REGN) COVID-19 antibody treatment cut medical visits in trial.
General Motors (NYSE:GM) seen riding Hummer into EV fast lane.
With bottom not yet in for tankers, Evercore downgrades a key player.
Samsung Electronics (OTC:SSNLF) sees fourth-quarter decline in profits.
Wednesday’s Key Earnings
Amgen (NASDAQ:AMGN) +0.3% AH with product sales up 12%, non-GAAP earnings up 17%.
Blackstone (NYSE:BX) -3.1% despite corporate private equity performance.
Boeing (NYSE:BA) -4.6% seeing historic passenger traffic returning in ~3 years.
Enterprise Products (NYSE:EPD) -1.8% as crude pipeline transport volumes plunge.
Ford (NYSE:F) +4.7% AH posting strong results for North America.
General Electric (NYSE:GE) +4.5% avoiding Q3 loss, positive cash flow.
Gilead Sciences (NASDAQ:GILD) -1.3% AH lowering guidance for 2020.
Mastercard (NYSE:MA) -8.1% as COVID-19 hit cross-border volumes.
UPS (NYSE:UPS) -8.8% on concerns over the margin outlook.
Visa (NYSE:V) +0.3% AH amid payments volume growth, processed transactions.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 GDP Q3
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
1:00 PM Results of $53B, 7-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 down. China and South Korea did well, but Japan, India, Taiwan, Singapore and the Philippines were weak. Europe, Africa and the Middle East are currently suffering huge losses. The UK, Poland, France, Turkey, Germany, Russia, South Africa, Finland, Switzerland, Norway, Hungary, Spain, the Netherlands, Sweden, Austria and Italy are all down more than 2%. Futures in the States point towards a big gap down for the cash market.
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Online Course: Mini Masterclass in Trading
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Another hearing for Big Tech
It’s been a common sight over the past few years, but Big Tech leaders are again going before Congress. The CEOs of Facebook (FB), Twitter (NYSE:TWTR) and Alphabet (GOOG, GOOGL) are scheduled to appear virtually today before the Senate over Section 230 of the Communications Decency Act. The law allows social media companies to be exempted from the content third parties post on their platforms – because they are not deemed to be “publishers” – but critics take issue with the classification, given their current moderation policies. In prepared testimony, Mark Zuckerberg said Congress needs to “update” Section 230, while Jack Dorsey feels “eroding” the legislation would “collapse how we communicate on the Internet.”
Selling picks up, oil tumbles
An alarming rise in new COVID-19 cases continues to weigh on market sentiment, with U.S. stock index futures sliding over 1% overnight and crude futures off 4% to under $38/bbl. Many European nations are tightening restrictions on business activity, clouding the global economic outlook and recovery, while investors are still waiting for more stimulus for the U.S. economy. Election uncertainty also has market players hesitant to make big moves despite the earnings parade coming down Wall Street. Today’s Q3 results feature three Dow members, including Boeing (NYSE:BA), Amgen (NASDAQ:AMGN) and Visa (NYSE:V).
Microsoft kicks off tech heavyweight reports
The software giant beat estimates after the bell on Tuesday, but its stock slipped 1.7% AH on a weak forecast for its “More Personal Computing” category. While growth is expected to continue through FQ2, the growth rate will be smaller due to the seasonably higher sales during the previous three months. It was an all-out impressive quarter for Microsoft (NASDAQ:MSFT) as pandemic tailwinds continued, though some noted that Azure growth was also slightly below estimates (even though the figure skyrocketed 48% Y/Y).
Gulf Coast braces for Zeta
Gulf of Mexico operators like BP (NYSE:BP) and Chevron (NYSE:CVX) have shut roughly half of all oil and gas production in the basin ahead of Hurricane Zeta. The storm is forecast to be a Category 2 at landfall and could make a direct hit on New Orleans. Already this year, Louisiana has been hit by two tropical storms and two hurricanes: Laura, which caused at least 27 deaths after it struck in August, and Delta, which worsened Laura’s damage in the same area weeks later.
Apple bolsters search efforts
There may be a new search player on the block. Apple (NASDAQ:AAPL) has started to show its own website search results when iPhone users type in a query from the home screen on iOS 14. While this might seem small, sources tell the FT that it’s an important advance in Apple’s in-house development and the latest in the Google/DOJ saga. Google (GOOG, GOOGL) currently pays Apple an estimated $8B-12B to be the iPhone’s default search tool, but if regulators block the partnership, Apple would be able to use its own search capability as an alternative.
Rocky start to Facebook’s political ad ban
Political advertisers are complaining that some ads were incorrectly blocked as the blackout period went into effect, while others criticized rule-breaking posts that could be misleading. In an attempt to clamp down on misinformation, Facebook (NASDAQ:FB) said last month it would impose a moratorium on new political ads in the week before the Nov. 3 election. The changes apparently set off some technological issues for advertisers, as well as glitches in Facebook’s system. “We’re working quickly on these fixes, and will share an update once they are resolved,” tweeted Rob Leathern, Facebook director of product management.
Drive-thru is changing in the coronavirus age
Restaurant Brands (NYSE:QSR), the company that owns Burger King, Popeyes and Tim Hortons, is planning to modernize and speed up the drive-thru experience at over 10,000 restaurants in North America by mid-2022. That includes the installation of over 40,000 digital menu screens, or four per drive-thru lane, which offer contactless payment, integrate loyalty programs and use predictive technology to suggest products based on weather, time of day and trending items. Last month, Burger King also unveiled two new restaurant designs that feature food delivered via conveyor belt at drive-thru lanes, a dedicated delivery drive-thru lane and burger pickup lockers.
Dodgers win World Series, losses pile up for MLB
The Los Angeles Dodgers may have reason to celebrate after winning the 2020 World Series, but the league as a whole is reeling from financial difficulties. The MLB lost $3.1B this year, according to The Athletic, due to the shortened season, fan-less games and other disruptions related to the coronavirus pandemic. While there are very few publicly traded MLB teams – Atlanta Braves (NASDAQ:BATRA) and Toronto Blue Jays (NYSE:RCI) – additional cuts to advertising and broadcast revenues may weigh on ESPN (NYSE:DIS), TBS (NYSE:T) and Fox Sports (NASDAQ:FOX).
What else is happening…
Amazon (NASDAQ:AMZN) to hire 100,000 seasonal workers for holidays.
An ‘enormous tech bubble’ has already popped – David Einhorn.
Deutsche Bank (NYSE:DB) swings back to profit driven by growth in the Core Bank.
Antitrust probe puts Visa’s (V) planned Plaid acquisition in jeopardy.
Sanofi (NASDAQ:SNY), Glaxo (NYSE:GSK) to supply 200M doses to COVID-19 vaccine alliance.
Is Jeff Bezos interested in CNN (T)?
Tuesday’s Key Earnings
3M (NYSE:MMM) -3.1% on soaring healthcare sales, holding off on guidance.
Advanced Micro Devices (NASDAQ:AMD) +0.3% AH reporting record revenue, raising FY view.
Caterpillar (NYSE:CAT) -3.2% warning on heavy machinery demand, no outlook.
Eli Lilly (NYSE:LLY) -6.9% missing expectations, lower guidance.
First Solar (NASDAQ:FSLR) +12.6% AH on big earnings beat, 70% sales increase.
JetBlue (NASDAQ:JBLU) -5.4% predicting continued cash burn for Q4.
Merck & Co. (NYSE:MRK) -1.1% falling back after strong earnings.
Microsoft (MSFT) -1.8% AH with Azure growth below estimates, weaker PC forecast.
Pfizer (NYSE:PFE) -1.3% ruling out vaccine before election day.
Raytheon (NYSE:RTX) -7% as defense weakness added to commercial aerospace woes.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 International trade in goods (Advance)
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $26B, 2-Year FRN Auction
1:00 PM Results of $55B, 5-Year Note Auction
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned down. China and India did well, but Hong Kong, South Korea, New Zealand, Austria and the Philippines were weak. Europe, Africa and the Middle East currently lean down. Turkey, the UAE and the Czech Republic are down; France, Russia, South Africa, Finland, Portugal and Austria are down. Futures in the States point towards a positive open for the cash market.
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Online Course: Mini Masterclass in Trading
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The dollar is down. Oil and copper are up. Gold is down; silver is up. Bonds are up.
Stories/News from Seeking Alpha…
Election, coronavirus, earnings, stimulus
Concerns about COVID-19 infection rates appear to have come back to the fore for markets as average daily cases hit a record high in the U.S., just days away from the presidential election. Wall Street sold off on Monday, led by a decline in energy, industrial stocks and other cyclicals, prompting the Dow to slide 650 points to record its worst week since September. Echoing the weakness, compounded with little hope of a stimulus package from Washington, U.S. stock index futures hugged the flatline in the overnight session. “To me, this is Phase 2 of the pandemic,” said Frank Rybinski, chief macro strategist at Aegon Asset Management. “Until we get some eradication of the virus, it’s going to be like a gray cloud.”
Third quarter reports
More than one third of the S&P 500 index components, or 186 companies, are set to report Q3 results this week, including some of the top names in the index. Today’s lineup includes manufacturing behemoth’s 3M (NYSE:MMM) and Caterpillar (NYSE:CAT), healthcare giants Pfizer (NYSE:PFE), Eli Lilly (NYSE:LLY) and Merck (NYSE:MRK), as well as tech titans Microsoft (NASDAQ:MSFT) and AMD (NASDAQ:AMD). Sideshow? While net earnings are surprising to the upside, with the exception of a few misses, the market seems laser focused on the election, COVID-19 and any news related to stimulus talks.
Hopes dim for stimulus deal
A coronavirus aid package before the election is looking less likely by the day as the Senate adjourned after confirming Amy Coney Barrett’s nomination for the U.S. Supreme Court. Members will now be allowed to leave the capital and join their House counterparts on the campaign trail, where the representatives have been since early October. House Speaker Nancy Pelosi still remains “optimistic” about a pre-election deal following Monday’s phone call with Treasury Secretary Steven Mnuchin, but is still waiting on the White House to accept “language around Covid-19 testing.”
Data center push
Intensifying its battle with Intel (NASDAQ:INTC) in the data center chip market, Advanced Micro Devices (AMD) has agreed to buy Xilinx (NASDAQ:XLNX) in a $35B all-stock deal. The tie-up would create a combined firm with 13,000 engineers, with a nimble manufacturing strategy that relies heavily on Taiwan Semiconductor Manufacturing (NYSE:TSM). Since taking over AMD in 2014, Lisa Su has focused on data centers that power internet-based applications and services, which have fueled the rise of artificial intelligence and 5G telecom networks. AMD -4.5%; XLNX +10.2% premarket.
Overnight earnings roundup
HSBC (NYSE:HSBC) soared nearly 7% after the bank beat estimates and signaled it may resume limited dividend payments, as well as accelerating a restructuring plan. On the energy front, BP (NYSE:BP) swung back to profit, with the stock climbing 2% in premarket trade amid a “continuing oil demand recovery.” Novartis (NYSE:NVS) shares meanwhile went south, falling 2% overnight, after revenues missed expectations, though the drugmaker did lift its full-year forecast.
Blockbuster listing
Ant Group is reportedly planning to stop taking investor orders for the Hong Kong leg of its IPO on Wednesday, a day earlier than scheduled, as the record stock sale has already been heavily subscribed. The potential move would bring the closing in line with the Shanghai leg of its dual offering, which is slated to begin trading on Nov. 5. Putting it in perspective: Ant, which is a third owned by Alibaba (NYSE:BABA), will have a market value of at least $315B, about the same valuation as JPMorgan (NYSE:JPM) and four times larger than Goldman Sachs (NYSE:GS).
Cloud gaming
Facebook Gaming (NASDAQ:FB) is launching cloud-streamed games for the Facebook app and web browser, a move that will expand its content library to include more-complex and multiplayer titles. Its free-to-play model is in contrast to the paid, subscription cloud-gaming services of rivals like Google Stadia (GOOG, GOOGL) and Amazon’s Luna (NASDAQ:AMZN). Facebook’s service will launch on the desktop web and Android, but not iOS due to terms and conditions of the App Store. “Apple treats games differently and continues to exert control over a very precious resource,” reads a blog post.
Adelson may exit U.S. gambling industry
Las Vegas Sands (NYSE:LVS) is exploring the sale of its casinos in Las Vegas, according to Bloomberg, in a deal that would leave Sheldon Adelson focused on Asia. The world’s largest casino company is working with an adviser to solicit interest for the Venetian Resort Las Vegas, the Palazzo and the Sands Expo Convention Center, which are all connected along the city’s famous strip and together may fetch $6B or more. Investor attention has focused on its Macau operations of late, but a sale in Nevada may point to trouble for Las Vegas casinos. LVS +1.2% premarket.
Taiwan sales
Not paying any attention to China’s recent sanctions, the U.S. State Department has signaled its approval for a potential $2.4B sale of anti-ship missiles to Taiwan. As many as 100 Harpoon Coastal Defense Systems built by Boeing (NYSE:BA) could be shipped. On Monday, Beijing said it would impose sanctions on Boeing’s defense unit, Lockheed Martin (NYSE:LMT) and Raytheon (NYSE:RTX) over another $1.8B arms sales to Taiwan, an island with which it has not ruled out the use of force to achieve reunification.
What else is happening…
Eli Lilly (LLY) ends COVID-19 antibody trial after lack of improvement.
Schwab (NYSE:SCHW) begins cutting 1,000 jobs from TD Ameritrade acquisition.
U.S. appeals court rejects immediate WeChat (OTCPK:TCEHY) ban.
Big shakeup at AIG… New CEO and life insurance separation.
Facebook (FB) achieves goal of helping 4M people register to vote.
Smucker (NYSE:SJM) to sell Crisco unit to B&G Foods (NYSE:BGS) for $550M.
Monday’s Key Earnings
NXP Semiconductors (NASDAQ:NXPI) +3.1% AH driven by auto and mobile recoveries.
Twilio (NYSE:TWLO) -1.5% AH forecasting wider-than-expected Q4 loss.
Today’s Economic Calendar
8:30 Durable Goods
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg.
1:00 PM Results of $54B, 2-Year Note Auction
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets leaned to the downside. Hong Kong, New Zealand and Indonesia did well, but Japan, China, South Korea, India, Singapore and Thailand were weak. Europe, Africa and the Middle East are currently down big. Denmark, France, Turkey, Germany, Greece, Finland, Norway, the Netherlands, Italy, Portugal and Sweden are down more than 1%. Futures in the States point towards a moderate gap down open for the cash market.
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Online Course: Mini Masterclass in Trading
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The dollar is up. Oil and copper are down. Gold is flat; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Flurry of dealmaking
Bayer (OTCPK:BAYRY) is paying as much as $4B for U.S. biotech firm Asklepios BioPharmaceutical, bolstering its pharmaceuticals division as it continues to reel from its acquisition of crops giant Monsanto (and cancer-related Roundup lawsuits). The latest deal, which includes upfront consideration of $2B and potential milestone payments of up to $2B, is a bet on cutting-edge gene therapy, which offers the potential to cure a wide range of often-rare diseases by editing errors in the body’s instruction manual. Drugmakers including Novartis (NYSE:NVS), Roche Holding (OTCQX:RHHBY) and Bristol-Myers Squibb (NYSE:BMY) have also made big bets on the industry, snapping up gene therapy makers.
Dunkin’ may sell and go private
Dunkin’ Donuts and Baskin Robbins chains owner Dunkin’ Brands (NASDAQ:DNKN) confirmed preliminary talks to be acquired by Inspire Brands after the NYT reported on the negotiations. Inspire would take Dunkin’ private at $106.5 per share, valuing the company at $8.8B, or a 20% premium over DNKN’s closing price of $88.79 on Friday. While Dunkin’ said “there is no certainty that any agreement will be reached,” if successful, Inspire would add the new assets to the Buffalo Wild Wings, Arby’s Sonic, and Jimmy John’s chains that it already owns. DNKN +19% premarket.
More M&A: Blackstone to buy Simply Self Storage for about $1.2B.
New Canada oil giant
Cenovus Energy (NYSE:CVE) has agreed to buy Husky Energy (OTCPK:HUSKF) in a C$3.8B ($2.9B) all-stock deal that will combine two of the largest players in Canada’s struggling oil-sands industry. The combined company will have about 750K boe/d production, making it the third-largest Canadian oil and natural gas producer. it would also be the second-largest Canadian-based refiner and upgrader with total North American upgrading and refining capacity of ~660K boe/d.
Coronavirus surge, elusive stimulus deal
U.S. stock index futures are starting the week on the backfoot, falling nearly 1% overnight, as the nation reported a record of more than 83,000 new COVID infections on both Friday and Saturday. “We’re not going to control the pandemic. We are going to control the fact that we get vaccines, therapeutics and other mitigation areas,” White House Chief of Staff Mark Meadows told CNN’s State of the Union program. Meadows and Nancy Pelosi also accused each other of “moving the goalposts” on stimulus legislation in back-to-back interviews, dimming chances a deal could be reached before Election Day.
Vaccine trials
The COVID-19 vaccine being developed by the University of Oxford and AstraZeneca (NASDAQ:AZN) produces a robust antibody and T-cell immune response in elderly people, the group at highest risk, FT reports. While details of the finding are expected to be published shortly in a clinical journal, sources cautioned that positive immunogenicity tests do not guarantee that the vaccine will ultimately prove safe and effective in older people. AstraZeneca resumed the U.S. trial of its experimental vaccine on Friday after a pause due to safety concerns, while Johnson & Johnson (NYSE:JNJ) also restarted trials, saying the first batches of its shot could be available in January.
Farm purchases under China trade deal
“China has purchased approximately 71% of its farm purchases target for 2020,” according to an interim report on agricultural trade from the U.S. Trade Representative. “They have purchased $23.6B in agricultural products so far this year, substantially more than the base year of 2017, and should end up being our best year ever in sales to China. It is worth noting that the Phase One Agreement did not go into effect until February 14, 2020, and March is the first full month of its effect… We already are on pace to have all-time high sales to China in beef, pork, corn, and soybeans.”
California blackouts
PG&E (NYSE:PCG) is pre-emptively cutting power again in northern California, affecting 386,000 homes and businesses in 38 counties, or nearly 1M people. It’s the fourth times this year the state’s largest utility had to shut off electricity due to high winds and extreme wildfire danger, which could spark blazes if live wires topple into dry brush. Utilities in Southern California, like Southern California Edison (NYSE:EIX), are also warning of potential blackouts.
Potential election chaos
As the threat of election-related unrest escalates in the U.S., Facebook (NASDAQ:FB) said it would implement emergency measures reserved for “at-risk” countries to bring down the online temperature. The social media giant plans to limit the “spread of viral content” and lower the bar for “suppressing potentially inflammatory posts” using internal tools previously deployed in Sri Lanka and Myanmar, WSJ reports. The tools would only be used in the event of election-related violence or other serious circumstances, though some employees are concerned it could slow down viral content and unintentionally hide legitimate political discussions.
Samsung chairman and icon dies
A chapter has closed for the Samsung conglomerate following the death of Lee Kun-hee, who transformed the South Korean appliance maker into the world’s biggest producer of smartphones, TVs and memory chips. He had been incapacitated for years following a 2014 stroke, leaving day-to-day operations to his son, Lee Jae-yong, who goes by Jay Y. in the West. While Lee spends about 95% of his time focused on Samsung Electronics (OTC:SSNLF), the conglomerate’s most valuable arm, he formally takes the reins with Samsung on the defensive and struggling to evolve within the tech industry.
What else is happening…
SAP (NYSE:SAP) tumbles 18% premarket after slashing revenue forecast.
Coca-Cola (NYSE:KO) steps away from bottling in Australia.
Chinese policymakers discuss new five-year development plan.
Airbnb (AIRB) approves private share split ahead of IPO.
American (NASDAQ:AAL) plans PR events before 737 MAX (NYSE:BA) takes to the skies.
AT&T (NYSE:T) job cuts at historical levels; CNN’s Zucker may be on the block.
Today’s Economic Calendar
8:30 Chicago Fed National Activity Index
10:00 New Home Sales
10:30 Dallas Fed Manufacturing Survey
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