Good morning. Happy Friday.
The Asian/Pacific markets closed mixed. Hong Kong, South Korea and the Philippines did well; Japan, China and Thailand were weak. Europe, Africa and the Middle East currently lean down. Turkey and Spain are up; the UK, Poland, Russia, Finland and Hungary are down. Futures in the States point towards a moderate gap up open for the cash market.
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The dollar is down. Oil is down; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
New era of flight
Get ready for the next SpaceX (SPACE) flight to the International Space Station, which will take place on Saturday at 7:49 p.m. EST. While the company already completed its maiden trip to the ISS back in August, sending up astronauts Bob Behnken and Doug Hurley on a Crew Dragon capsule and Falcon 9 rocket, the latest launch comes after NASA formally authorized SpaceX for regular human spaceflight. The last time a certification was issued was nearly 40 years ago under the space shuttle program, but that wasn’t a commercial system. “NASA’s partnership with American private industry is changing the arc of human spaceflight history by opening access to low-Earth orbit and the International Space Station to more people, more science and more commercial opportunities,” NASA commercial spaceflight director Phil McAlister declared. Other companies looking to break into the industry are Blue Origin (BORGN), Boeing (NYSE:BA) and Virgin Galactic (NYSE:SPCE).
Vertiport
It’s not the only exciting development happening in the space. The city of Orlando, Fla., and German aviation startup Lilium have unveiled plans to build the first hub for flying cars in the U.S. The $25M, 56,000-square-foot transportation hub, called a vertiport, is scheduled to be completed in 2025 and will enable passengers to bypass Florida’s congested highways. Electric-powered aircraft, still in developmental phase, will be able to take off and land vertically (eVTOL) from the ground-based hub and reach a top speed of 186 miles per hour.
Quarterly results
Following a quieter week on the earnings front, investors had several names to watch after the bell on Thursday. Disney (NYSE:DIS) rose as much as 6% after revealing 73M paid subscribers for streaming service Disney+ (it had targeted 60M-90M subscriptions by 2024), though its other divisions (parks, studio) struggled during the coronavirus pandemic and it had to forego another dividend. Cisco (NASDAQ:CSCO) soared nearly 9% after starting its fiscal year with softer-than-expected earnings drop and issuing FQ2 guidance that exceeded expectations. Meanwhile, shares of Palantir (NYSE:PLTR) bounced around in extended trading on a wider loss, though the data analytics firm showed 52% sales growth in the first earnings report since its public debut.
Rally resumes
After rotating out of stay-at-home plays on Monday, only to have a tech rally resume days later, traders have been getting whipsawed nearly every session this week. While all three major U.S. indices closed lower on Thursday, stock index futures are in the green this morning, climbing nearly 1% ahead of the open. Many are still weighing the impacts of surging COVID-19 cases and a vaccine rollout against hopes of turning the corner on the pandemic and expectations that pro-business policies will remain after last week’s U.S. elections. Initial claims for jobless benefits also declined to 709,000 last week from 757,000 a week earlier, but are still well above levels of about 200,000 seen before the coronavirus hit this spring.
Central bank digital currencies
“My hunch is that it will come,” ECB President Christine Lagarde said during a virtual panel discussion with her U.S. and British peers. “If it’s cheaper, faster, more secure for the users then we should explore it. If it’s going to contribute to a better monetary sovereignty, a better autonomy for the euro area, I think we should explore it.” It still might be two to four years before the project could be launched as the ECB addresses concerns over money laundering, privacy and the technology involved. On the same panel, Jerome Powell said the Fed will “carefully and thoughtfully” review the issue, while Bank of England Governor Andrew Bailey said there’s a “lot of hard work to think through the implications.”
Shelton headed for confirmation vote
The nomination of Judy Shelton has been stalled in the Senate due to wavering GOP support despite the finance committee clearing her by a narrow party-line 13-12 vote in July. With Sen. Lisa Murkowski (R-Alaska) jumping on board, Mitch McConnell said he will now advance Shelton’s name to the Senate floor for a confirmation vote, marking President Trump’s latest imprint on the Federal Reserve. Shelton has a long history of unorthodox economic commentary, like questioning the basic role of the Fed and advocating a return to the gold standard. Being only one governor, she won’t have disproportionate influence on monetary or regulatory policy, but she could dissent frequently from decisions or challenge the current Fed atmosphere.
U.S. backs down on TikTok
The Commerce Department backed down from a deadline yesterday on TikTok, saying it won’t enforce an order that required the company be spun off from its Chinese parent, ByteDance (BDNCE). The move would have barred companies from providing internet hosting or content delivery services to TikTok, effectively making it inoperable in the U.S., and there’s been little comment from President Trump or the administration on what was once an energetic effort to get TikTok sold to U.S. interests. Deals currently on the table, but hung up in ongoing negotiations, have Oracle (NYSE:ORCL) and Walmart (NYSE:WMT) taking a combined 20% in TikTok Global, a new U.S.-based company that would run the video service.
Xi reportedly pulled plug on Ant’s IPO
Chinese President Xi Jinping personally made the decision to halt the listing of Ant Group on Nov. 3, which would have been the world’s biggest IPO, Chinese officials told WSJ. The decision came days after the fintech giant’s billionaire founder Jack Ma publicly criticized the government’s increasingly tight financial regulation for holding back technology development. At that point, investors around the world had already committed to paying more than $34B for shares of Ant, which is a third owned by Alibaba (NYSE:BABA). Since Xi rose to power in late 2012, the government has taken action and cracked down on some of the country’s highest-profile private conglomerates, including Dalian Wanda and Anbang Insurance Group.
Largest free trade deal ever
China will sign a mega trade deal this weekend with Japan, South Korea, Australia, New Zealand and the 10 ASEAN member countries, wrapping up years of negotiations before the next U.S. administration comes into office. The Regional Comprehensive Economic Partnership, which covers 30% of global GDP and trade, aims to reduce tariffs, strengthen supply chains with common rules of origin and codify new e-commerce rules. Beijing has looked to RCEP as an opportunity to write regional rules and diversify its avenues of trade amid declining economic relations with the U.S. after it pulled out of the Trans-Pacific Partnership in 2017 and engaged in a broader tariff war.
What else is happening…
Musk questions accuracy of rapid coronavirus antigen tests.
Ford (NYSE:F) makes big EV push with new E-Transit van.
U.S. refiners seek strategies to adapt to lower demand – S&P Global.
Deutsche Bank raises Snap (NYSE:SNAP) target on AR commerce potential.
Trump stokes speculation he’ll launch a Fox (NASDAQ:FOX) rival.
Today’s Economic Calendar
7:00 Fed’s Williams Speech
8:30 Producer Price Index
8:30 Fed’s Bullard: U.S. Economy and Monetary Policy
10:00 Consumer Sentiment
10:30 EIA Natural Gas Inventory
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets closed mostly down. Malaysia did well, but South Korea, India, Australia, Indonesia and Thailand were weak. Europe, Africa and the Middle East are currently mostly down. The UK, France, Germany, Finland, Spain, Italy and Austria are down the most. Futures in the States point towards a 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 and copper are up. Gold is up; silver is flat. Bonds are up.
Stories/News from Seeking Alpha…
What’s next for TikTok?
Narrowly avoiding a ban in the U.S. earlier this fall, TikTok is again facing an imminent crisis, with a deadline today that requires the company be spun off from its Chinese parent, ByteDance (BDNCE). The video-sharing app is not going down without a fight, and on Tuesday made a significant legal maneuver by filing a petition challenging an executive order by President Trump, as well as a sales process being overseen by CFIUS. TikTok alleged it has been working in good faith toward today’s deadline, but said the administration wasn’t playing ball and it needed a 30-day extension. It also said in the filing that it proposed a new deal this month that would effectively hand over control of TikTok in the U.S. to Oracle (NYSE:ORCL), Walmart (NYSE:WMT) and Bytdance’s U.S. investors. That was important because it appeared to be a U-turn from earlier in the process when Bytedance refused to give up a majority stake in its American operations. Bigger picture: Oracle will manage the data and see TikTok’s source code, but the algorithm and technology will still be owned by Bytedance, and there are concerns that data will not be firewalled from China.
Clock ticks down
What will happen if the TikTok divestiture isn’t approved by today? We can make some predictions, but it’s hard to tell since the executive orders are open-ended. CFIUS could accept the terms of the deal and recommend that Trump submit his final approval (he gave the deal his “blessing” in September) or could support a 30-day extension as the app continues to address national security concerns. Another outcome is that TikTok misses the deadline and Attorney General William Barr takes “any steps necessary” to have Trump’s order enforced in court. The last consideration could see the case drag into a Biden administration and he may not care about the app in the same way that Trump does. TikTok has 100M users in the U.S. alone and is one of the world’s fastest-growing social media services.
Moderna gets in the vaccine spotlight
Shares of Moderna (NASDAQ:MRNA) are 5% higher in premarket trade after accumulating enough cases of COVID-19 in its vaccine trial to analyze the shot’s effectiveness. Preliminary results could be released soon, with the biotech firm saying it could hand the data over to an independent monitoring committee within days. The vaccine, which uses a similar mRNA technology to Pfizer’s (NYSE:PFE), will probably prove to be highly effective, and likely mirror Pfizer’s announcement earlier this week with a shot that appears to be more than 90% effective, said Drew Weissman, an immunologist and mRNA expert at the University of Pennsylvania.
Is the rotation over?
Contracts linked to the Dow Jones fell 0.5% for a second day, along with S&P 500 futures, while the Nasdaq climbed 0.5% after churning out a 2% gain on Wednesday. “People are waking up to the reality of how long it will take to roll out a vaccine. I’m not a medical expert, but it seems unlikely that we’re going to very quickly revert to the pre-Covid world,” said Sebastian Mackay, a fund manager at Invesco. Jitters of fresh coronavirus restrictions are also hitting sentiment, with New York putting a 10 p.m. curfew on bars and restaurants and Joe Biden’s coronavirus czar backing a four- to six-week lockdown (see below). On the economic front, fresh data on unemployment-benefit claims will be released at 8:30 a.m. ET and Walt Disney (NYSE:DIS) and Cisco (NASDAQ:CSCO) will report earnings after the market close.
Biden coronavirus advisor talks lockdown
A four- to six-week lockdown could bring COVID-19 under control and get the U.S. economy back on track until a vaccine is approved and distributed, said Michael Osterholm, who is advising President-elect Joe Biden on the coronavirus. His plan, though, depends on the government coming up with another relief package. “We could pay for a package right now to cover all of the wages, lost wages for individual workers for losses to small companies to medium-sized companies or city, state, county governments,” he declared, after warning earlier this week that the country was heading for “COVID hell.”
Racking up records
Singles Day, a major shopping event in China, saw e-commerce giants Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD) rack up around $115B in sales across their platforms, both setting new records. Small caveat: The event this year ran from Nov. 1 to midnight on Nov. 12, instead of the usual 24-hours on 11/11 (which represents “bare branches” that are single and unattached). While the GMV numbers continue to show signs of recovery from the coronavirus pandemic, the event was overshadowed by big stock price falls of both Alibaba and JD.com due to Chinese regulators releasing draft antitrust rules (see below).
More crackdowns on Big Tech
China’s internet sector saw a $260B selloff on Wednesday after Beijing signaled its strongest intention yet to rein in Big Tech by drafting a slew of new anti-monopoly laws. “We believe potential implementation of the new antitrust regulations has negative implications for major Internet companies with dominant positions across segments,” Morgan Stanley said in a research note. “That said, competition has already intensified in recent years, with ‘incumbents’ (e.g., Alibaba, Tencent) losing market share to ‘disruptors’ (e.g. Pinduoduo, Bytedance), so the consequences will likely be less meaningful given reduced dominance across segments compared to a few years ago.” See a full breakdown on the impacts by company.
IEA lowers crude demand outlook
A day after OPEC cut its global oil demand forecasts, the IEA is jumping on the train, as the “task of re-balancing the market will make slow progress unless the fundamentals change.” “With a COVID-19 vaccine unlikely to ride to the rescue of the global oil market for some time, the combination of weaker demand and rising oil supply provides a difficult backdrop to the meeting of OPEC+ countries,” according to the agency. The IEA now expects world oil demand to contract by 8.8M barrels per day this year, reflecting a downward revision of 0.4M barrels from last month’s assessment, but lifted its estimates for 2021.
To extend or cut?
OPEC+ is also sizing up crude output in light of vaccine developments and is having second thoughts about opening the taps in January as originally planned. While a breakthrough announced this week by Pfizer (PFE) could revive fuel demand, the logistical challenges of deploying a vaccine to billions of people mean it won’t materially change oil-market conditions over the next six months. A planned output increase is likely to be postponed, while the presidents of both Russia and OPEC have even mentioned the option of cutting production further, though the idea hasn’t garnered widespread support so far among other members. We’re still three weeks away before the group meets to make a final decision, so expect some more news out of the oil space. The alliance is currently keeping about 7.7M barrels a day offline, or 8% of global output.
What else is happening…
Facebook (NASDAQ:FB), Google (GOOG, GOOGL) extend post-election political ad ban.
No more natural gas in new San Francisco buildings.
Keystone XL, Dakota Access at risk under a Biden administration.
Target (NYSE:TGT) and Ulta Beauty (NASDAQ:ULTA) pair up for the long term.
Amid cold-storage hurdle, Sanofi (NASDAQ:SNY) and J&J (NYSE:JNJ) may beat logistical challenges.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Consumer Price Index
9:30 Jerome Powell Speech
10:00 Atlanta Fed’s Business Inflation Expectations
11:00 EIA Petroleum Inventories
1:00 PM Results of $27B, 30-Year Note Auction
1:00 PM Fed’s Evans: “Building a Strong and More Equitable Future”
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly up. Japan, South Korea, India, Taiwan, Australia and Indonesia did well; China and Hong Kong were weak. Europe, Africa and the Middle East are currently posting solid gains. The UK, Poland, Denmark, Turkey, Germany, the UAE, Spain, the Netherlands, Italy, Switzerland, Norway, Hungary, Portugal, Israel and Sweden are leading. Futures in the States point towards a moderate gap up open for the cash market.
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The dollar is up. Oil is up; copper is down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Tech looks to regain some footing
Pandemic favorites sold off for a second day on Tuesday, though tech climbed ahead of the broader market overnight, with Nasdaq futures rising 1.1% and the Dow/S&P 500 up 0.7%. While an “abrupt macro positive shock” such as this week’s vaccine news can lift all value stocks for some time, there’s a need to separate short-term tactical moves from medium-term prognosis, said analysts at Bernstein. The U.S. bond market is shut today for Veterans Day, with the yield on the benchmark 10-year Treasury just several basis points away from the 1% level. The AP also reported that Democrats have clinched a majority in the House of Representatives, albeit with a slimmer margin, as President Trump continues to dispute the results of the presidential election.
Is remote work the new normal?
Investors are still assessing whether trends like working from home will continue after a vaccine arrives, but some are more confident they are not going to reverse themselves. Remote work is “here to stay,” according to former IBM (NYSE:IBM) CEO Ginni Rometty, and will become part of a “hybrid” work model that sees some people travel to the office, while others stay at home. “The digital acceleration will continue because people have now seen what is possible,” she added. Google (GOOG, GOOGL) and Amazon (NASDAQ:AMZN) are allowing employees to work from home until summer 2021, while Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and Square (NYSE:SQ) are among tech names that have announced staff members could WFH permanently.
Vaccine deals
Following in the footsteps of the U.K., the European Union is next to secure an experimental vaccine from Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX), shortly after it was announced to be 90% effective in preventing COVID-19. “This is the most promising vaccine so far,” the bloc declared, announcing a contract for up to 300M doses. “Once this vaccine becomes available, our plan is to deploy it quickly, everywhere in Europe. This will be the fourth contract with a pharmaceutical company to buy vaccines. And more will come. Because we need to have a broad portfolio of vaccines based on different technologies.”
Unlikely to topple Obamacare
Health insurers and hospital operators staged a modest rally on Tuesday in apparent reaction to comments from Supreme Court Justice Brett Kavanaugh and Chief Justice John Roberts surrounding the Affordable Care Act. “It’s hard for you to argue that Congress intended the entire act to fall if the mandate was struck down,” said Roberts, who authored 2012 and 2015 rulings that upheld Obamacare in previous Republican legal challenges. The Trump administration had argued that the individual mandate, ruled as unconstitutional by an appeals court almost a year ago, is not “severable,” therefore Obamacare is unconstitutional and should be repealed.
UPS drivers can now sport beards
UPS (NYSE:UPS) is lifting a longstanding ban on facial hair, as well as Afros and braids, as part of an effort to “celebrate diversity rather than corporate restrictions,” according to an announcement on an internal website and reviewed by the WSJ. The delivery giant said the changes, which also include eliminating gender-specific rules, reflect our “values and desire to have all UPS employees feel comfortable, genuine and authentic.” With more than 500,000 workers globally, UPS has a long list of personal appearance guidelines that impact everything from hairstyles to length of shorts, piercings and tattoos.
Autonomous delivery age
Walmart (NYSE:WMT) and General Motors’ (NYSE:GM) Cruise are planning to test using self-driving cars to deliver customer orders, which will take place in the early part of next year in Scottsdale, Arizona. If the program works well, the two companies could expand it to other stores. “You’ve seen us test drive with self-driving cars in the past, and we’re continuing to learn a lot about how they can shape the future of retail,” said Tom Ward, SVP of Customer Product, Walmart U.S. “We’re excited to add Cruise to our lineup of autonomous vehicle pilots as we continue to chart a whole new roadmap for retail.”
Is Beyond Meat involved in the new McPlant?
On Monday, the Golden Arches said it had developed a plant-based patty called the McPlant – “crafted exclusively for McDonald’s, by McDonald’s” – that will be tested in 2021 on a market-by-market basis. The news sent shares of Beyond Meat (NASDAQ:BYND) – a previous Mickie D’s partner in Canada – tumbling that morning, as well as later in the session as weak pandemic demand hit its Q3 results. Following the moves, a spokesperson for Beyond Meat said that both the company and McDonald’s (NYSE:MCD) “co-created the plant-based patty,” but that part was likely the one that shouldn’t have been said aloud. “All the investment we’re making here, all the scaling we’re doing here, would suggest the relationship [with McDonald’s] is really strong,” Beyond Meat CEO Ethan Brown told Jim Cramer. “That’s really all I could say.”
Beijing tightens grip on Hong Kong
Hong Kong’s government dismissed four opposition lawmakers overnight after China passed a law permitting the disqualification of officials deemed “unpatriotic” without having to go through the courts. The news also prompted the en masse resignation of 16 remaining opposition lawmakers in the city’s 70-seat Legislative Council. Back in June, Beijing also bypassed the Legislative Council to impose controversial national security legislation, causing G7 nations to accuse China of violating the terms of the “1997 handover agreement” and the U.S. to sanction local officials.
What else is happening…
Boeing (NYSE:BA) leaps from Dow worst to first as MAX nightmare nears its end.
Alibaba’s (NYSE:BABA) Singles Day topped $56B in GMV, but sales started a week ago.
Chinese tech selloff wipes over $260B after new antitrust rules.
ByteDance (BDNCE) asks U.S. court to stop TikTok forced sale.
Nord Stream 2 sanctions to be part of must-pass U.S. defense bill.
Airbnb (AIRB) delays IPO document release until next week – Bloomberg.
Tuesday’s Key Earnings
Lyft (NASDAQ:LYFT) +5.3% AH forecasting EBITDA profit by end of 2021.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned up. Japan, India, Malaysia, Indonesia, Singapore and Thailand did well; China and Taiwan were weak. Europe, Africa and the Middle East are currently well overall. The UK, France, Turkey, the UAE, Finland, Hungary, Spain, Belgium, Austria and the Czech Republic are up; Denmark, Switzerland and Israel are down. Futures in the States point towards a 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 is down; copper is up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Vaccine rally loses steam
A global rally, triggered by the announcement of a successful COVID-19 vaccine trial (see below), decelerated overnight after ending Monday’s session off highs that saw some of the biggest intraday jumps since April. Cyclical stocks led the advance, with the Dow surging more than 1,600 points at one point, while the tech-heavy Nasdaq fell 1.5% as investors rotated portfolios and dumped popular stay-at-home plays like Zoom Video (NASDAQ:ZM), Netflix (NASDAQ:NFLX) and Shopify (NYSE:SHOP). Knee-jerk selling could be following knee-jerk buying, but some vaccine questions still remain, including production and distribution, how long it will protect against infection and how well it will work in the elderly. Tensions over the size of a coronavirus stimulus package also resurfaced as lawmakers reconvened following the election, while President Trump continues to challenge the results of the national vote. Futures: Dow +0.4%; S&P 500 -0.5%; Nasdaq -1.8%.
Vaccine breakthrough
Hopes of a return to normalcy abounded yesterday after a vaccine developed by Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) appeared to be more than 90% effective in stopping COVID-19. At that level of effectiveness and administered widely, it would be enough to break chains of infection (the companies already have supply deals with the U.S. and other nations), More positivity was seen later in the session after Eli Lilly’s (NYSE:LLY) antibody therapy, bamlanivimab, was granted an emergency-use authorization by the FDA for treating the novel coronavirus.
EU charges Amazon with antitrust violations
European regulators have announced formal antitrust charges against Amazon (NASDAQ:AMZN) over how it uses data about the merchants on its platform. At the heart of the case is the company’s dual position as a retailer that sells goods but also acts as a marketplace for third-party vendors. Amazon has downplayed antitrust concerns in the past, noting that many retailers have their own private label offerings, and that online sales represent only a small slice of the overall retail sector. Over in the U.S., Amazon is part of a group of companies under scrutiny by the House Judiciary Committee, while the DOJ and FTC have also launched antitrust probes against the company.
India’s competition watchdog takes aim at Google
India’s competition watchdog is going after Google (GOOG, GOOGL), according to the FT, ordering a full investigation into the links between the tech giant’s mobile app store and its payment service. The regulator already did an initial review which found that Google was unfairly squeezing out competitors when it required customers to use Google Pay to buy apps or make in-app payments in the mobile Play Store. The in-depth investigation is expected to last 60 days and would take aim at one of Google’s most promising businesses in India, where it is engaged in a battle with rival payment apps from Walmart (NYSE:WMT) and Facebook’s (NASDAQ:FB) WhatsApp.
‘One More Thing’ event
Apple (NASDAQ:AAPL) is expected to unveil new Mac computers today that use processors developed in-house (based on ARM architecture), signaling an end to the tech giant’s nearly 15-year reliance on Intel (NASDAQ:INTC) processors. That would bring personal computers in line with its approach on iPhones and iPads, which have long used Apple-designed chips. JPMorgan analyst Samik Chatterjee sees many benefits in the new SKU, like volume, pace of innovation and lower materials cost, and believes the in-house silicon presents a $15B sales opportunity.
New era of gaming
Microsoft (NASDAQ:MSFT) is scheduled today to launch the Xbox Series X ($500), as well as its digital-only little brother, the Series S ($300). The release comes just days before Sony (NYSE:SNE) unveils the PS5 ($500), with the two competing for speed and dazzling graphics. While the Series X is being touted as the most powerful console on the market and a value proposition due to Xbox Game Pass, Sony has focused on increasing the feeling of immersion in games with its new DualSense controller. PlayStation heads into the “next generation” after significantly outselling its rivals in the last round: PS4 – 112.4M, Nintendo Switch – 63M, Xbox One – 52.8M.
Trans-Atlantic tariffs
The European Union will impose tariffs on $4B of U.S. goods starting today, escalating a trans-Atlantic fight over illegal aid to aircraft manufacturers. They will include a 15% duty on imports of all Boeing (NYSE:BA) models, while other goods, including some agricultural products, processed agricultural products and industrial products, will be hit with a 25% tariff. EU Trade Commissioner Valdis Dombrovskis said the bloc prefers to negotiate a settlement, but it would take the steps given the U.S. decision last year to quickly impose tariffs and the fact a new administration does not take office until January.
Brexit standoff reaches endgame
Boris Johnson is vowing to press ahead with legislation designed to override the Brexit deal on Northern Ireland after the U.K.’s House of Lords voted late Monday to remove the most controversial parts of the Internal Market Bill. While the government has admitted the legislation breaches part of the Northern Ireland protocol, Downing Street says the clauses are necessary to give domestic power over the EU if it threatened the Good Friday agreement. The latest drama comes as EU and British negotiators enter their final week of trade talks ahead of a Nov. 15 deadline, after which the U.K. risks a disorderly exit from the single market at year-end.
What else is happening…
Shooting down rumors, Lowe’s (NYSE:LOW) has no plans for HD Supply (NASDAQ:HDS).
CBS (NASDAQ:VIAC) sets diversity targets for reality shows.
Disneyland (NYSE:DIS) furloughs more workers citing California guidelines.
FAA to end Boeing (BA) 737 MAX grounding as soon as Nov. 18.
GM (NYSE:GM) to hire 3,000 new workers for EV initiatives.
Monday’s Key Earnings
Beyond Meat (NASDAQ:BYND) -22.6% AH warning on soft foodservice demand.
Canopy Growth (NYSE:CGC) +4.6% on robust recreational marijuana revenue.
McDonald’s (NYSE:MCD) -1.5% outlining new growth strategies.
Occidental Petroleum (NYSE:OXY) -3.6% AH recording a fourth straight quarterly loss.
Plug Power (NASDAQ:PLUG) +7.7% raising gross billings guidance.
Simon Property Group (NYSE:SPG) -6.5% AH missing expectations.
Today’s Economic Calendar
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
10:00 Fed’s Rosengren Speech
1:00 PM Results of $41B, 10-Year Note Auction
2:00 PM Fed’s Quarles Testify on Oversight of Financial Regulators
4:00 PM Fed’s Rosengren Speech
5:00 PM Fed’s Brainard: “Community Reinvestment Act Modernization”
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Good morning. Happy Monday. Hope you had a great weekend.
The Asian/Pacific markets posted big gains. Japan, China, Hong Kong, South Korea, India, New Zealand, Taiwan, Australia, Singapore and Thailand did great. Europe, Africa and the Middle East are currently huge. The UK, Poland, France, Turkey, Germany, Russia, Greece, Finland, Norway, Hungary, Spain, the Netherlands, Italy, Portugal, Israel and Austria are up 3-10%. Futures in the States point towards a big gap up open for the cash market.
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Online Course: Mini Masterclass in Trading
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The dollar is up. Oil is up 10%; copper is up. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Post-election rally continues
Traders who held off on buying last week due to the political uncertainty appear to be triggering a new wave of buying this morning as they unwind positions amid reduced odds of a drawn-out election fight. Dow and S&P 500 futures are ahead by 1.6%, contracts tied to the Nasdaq are up 2%, while equities jumped across the globe. Markets have strongly reacted to the likelihood of a split Congress, meaning less drastic policy changes like tax hikes and increased regulation. With the fiscal response uncertain, it also means the Fed will have to do more to bolster the world’s largest economy, which has weakened the dollar in recent days. “The consensus is that Biden will be easier on trade and foreign policy, unlike Trump who is more erratic and aggressive,” added Colin Low, senior macro analyst at FSMOne.com in Singapore.
Buffett locates next ‘elephant’-sized deal
Berkshire Hathaway (BRK.A, BRK.B) splurged another $9B on repurchasing its own stock in the third quarter, bringing its nine-month total to around $16B. The record buybacks surpass many of Berkshire’s biggest investments in recent years as the conglomerate reported Q3 operating earnings of $5.48B vs. $5.51B in Q2 and $8.07B in the year-ago quarter. The only major business segment to see a Y/Y increase in operating earnings was “railroad, utilities and energy,” while insurance underwriting posted a loss vs. a year-ago profit. Other investments? About 70% of Berkshire’s cash in equities at Sept. 30 was concentrated in four companies – Apple (NASDAQ:AAPL), Bank of America (NYSE:BAC), Coca-Cola (NYSE:KO) and American Express (NYSE:AXP).
‘Nasdaq whale’ loses big
SoftBank’s (OTCPK:SFTBY) foray into trading doesn’t appear to have gone as planned, with the group reporting a ¥131.7B ($1.3B) loss from speculation on tech stocks in Q3 after an attempt to diversify using its massive cash pile. Back in September, the company led by Masayoshi Son was said to be the “Nasdaq whale” behind the purchase of billions of dollars’ worth of U.S. equity derivatives that stoked a rally in big U.S. tech stocks. The group still reported a net profit of $6B for the quarter, helped by fresh signs of recovery at its $100B Vision Fund since the WeWork debacle, as well as a gain related to the merger of its portfolio firm Sprint with T-Mobile U.S. (NASDAQ:TMUS).
Is January the new November?
Investor focus is also turning to the Senate after major networks declared Democrat Joe Biden winner of the U.S. presidential election, though Republicans have sued over ballot counting and President Trump said his campaign will file additional lawsuits. While seats in North Carolina and Alaska are still too early to call – but will likely go to the GOP – both Senate seats in Georgia (a state Biden appeared to flip blue) are headed to a runoff election on Jan. 5. If they would end up in Democratic hands (and Kamala Harris is Vice President), then Democrats could gain a majority since VPs can provide tie-breaking votes. The significance of those races means January is “the new November” in terms of election volatility risk, said Michael Purves, CEO of Tallbacken Capital, citing contracts for the VIX, the stock market’s fear gauge, stretching out into the months ahead.
Transition of power
While Biden is preparing his transition team, he cannot shift into high gear until the U.S. General Services Administration, which oversees federal property, certifies the winner. Over the weekend, the GSA said “an ascertainment [of the presidential election] has not yet been made. GSA and its administrator will continue to abide by, and fulfill, all requirements under the law.” While some office space has been allocated at the Commerce Department’s headquarters in Washington, additional resources like salaries for administrative support and government email addresses won’t be given over until the agency has formally identified Biden as the winner.
Coronavirus cases spiral upward
Making the resurgent coronavirus an immediate priority, Joe Biden will announce a 12-member task force today to deal with the pandemic that has killed more than 237,000 Americans. It will be charged with developing a blueprint for containing the disease and will be co-chaired by former Surgeon General Vivek Murthy, former FDA Commissioner David Kessler and Dr. Marcella Nunez-Smith of Yale University. Biden has promised that he will ask Dr. Anthony Fauci, the infectious diseases expert who has clashed with President Trump, to stay on in his role as the Director of the National Institute of Allergy and Infectious Diseases. He’ll also reach out to Republicans and Democrats in Congress to discuss a new relief package, with new daily coronavirus infections in the U.S. totaling over 100K for each of the last five days.
Heading up the economy under Biden administration?
Joe Biden’s COVID-19 task force announcement will kick off a busy week that will see him and Kamala Harris moving forward with a presidential transition on a number of fronts. They have a host of economic positions to fill including Secretary of the Treasury, where Federal Reserve Governor Lael Brainard is seen as a top contender. The selection for the post and others must be approved by the Senate, which may still be in the hands of the GOP, and could threaten the chances of progressive candidates for the position like Senator Elizabeth Warren. Biden’s team is also considering naming a climate czar to deliver on the promises he made during the campaign, with John Kerry in the running after negotiating the Paris climate accords in 2016.
Pot stocks light up
Cannabis stocks are enjoying a third consecutive day of big gains amid expectations that Joe Biden will lead a reform effort that will spark investment in the sector. “While Tuesday night’s election did not clearly show who America thinks should lead the nation, it did make clear that we are united on replacing our country’s archaic cannabis laws,” said the Cannabis Consumer Policy Council. Marijuana would be decriminalized at a federal level in the United States under a Biden administration, but efforts toward full legalization may also be on the table. Premarket: ACB +41%, HEXO +39.6%, TLRY +35.4%, CRON +22.8%, APHA, +18.1%, MJ +17.3%, CGC +13%.
Earnings season was a smasher
While the Q3 earnings season has been overwhelmed by the focus of investors on the U.S. election, a look back by Bank of America shows that 67% of S&P 500 companies have beaten estimates on both the top and bottom line. The firm notes that small caps smashed it, with the S&P SmallCap 600 index Q3 earnings topping consensus expectations by 50%, driven by Consumer Discretionary, Financials and Industrials. Analysts, however, were a bit handicapped during the quarter with many companies not providing guidance. The question might now be: Will there be a big push higher of consensus estimates after U.S. corporations showed some pandemic resiliency?
What else is happening…
McDonald’s (NYSE:MCD) to hold an investor meeting today after Q3 results.
Apple (AAPL) suspends iPhone supplier Pegatron (OTC:PGTRF) over labor violations.
China’s exports roar ahead, trade surplus widens.
Volkswagen’s (OTCPK:VWAGY) board signs off on a $3.7B Navistar (NYSE:NAV) deal.
DOJ suit against Visa (NYSE:V) may affect how digital payment tech evolves.
Netflix (NASDAQ:NFLX) trying out older-style linear TV channel in France.
Today’s Economic Calendar
12:30 PM Investor Movement Index
1:00 PM Results of $54B, 3-Year Note Auction
1:30 PM Fed’s Mester Speech
2:20 PM Fed’s Harker Speech
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