Good morning. Happy Friday.
The Asian/Pacific markets were weak. Japan, China, Hong Kong, South Korea and Singapore posted the biggest losses. Europe, Africa and the Middle East are currently weak. The UK, Denmark, France, Turkey, Germany, Greece, Spain, the Netherlands, Italy and Sweden are down. Futures in the States point towards a down open for the cash market.
————— VIDEO: Current Trades —————
The dollar down slightly. Oil is up; copper is down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Earnings kickoff
Three big Wall Street banks are reporting Q3 earnings today, giving investors a window into how the sector is dealing with elevated interest rates and muted capital markets activity. JPMorgan Chase (JPM) and Wells Fargo (WFC) were the first to report, with both banks notching a quarterly earnings beat. Citigroup (C) is also slated to report its results today. Bank of America (BAC) and Goldman Sachs (GS) will post their earnings on Tuesday, and Morgan Stanley (MS) rounds out the lot on Wednesday.
Market expectations: Morgan Stanley analyst Betsy Graseck noted that investors have been more optimistic about banks since the latest industry conference and that raises the bar for bank earnings, which lenders will likely not clear. “We expect net interest margins to be under pressure for longer, not much expense flex until at least Jan. and weak loan growth,” she said. Goldman Sachs’ Richard Ramsden said three headwinds will be in focus: the net interest income trajectory in 2024, the impact of the Basel III endgame, and the potential downside from credit and reserve increases.
Net charge-offs are expected to be another weak spot as delinquencies return to higher, and more normal levels, after rates have climbed steeply in the past year. The four biggest U.S. banks are expected to see their net charge-offs – the amount they write down for bad debt – jump to $5.3B in Q3. That’s the highest for JPMorgan, Citigroup, Wells Fargo, and BofA, combined, since Q2 2020.
SA commentary: “The common and preferred stocks of too-big-to-fail megabanks are buys, most smaller banks are holds, and banks that have runs or rumors of insolvency are sells,” said Seeking Alpha analyst Logan Kane, adding that JPMorgan looks undervalued compared to its long-term prospects. Ian Bezek expects Wells Fargo to fare better than many of its peers on asset quality, while Yiannis Zourmpanos continues to be very bullish on Citigroup considering its strong turnaround progress. (5 comments)
CPI still hot
Retail inflation slowed again in Sept. from the prior month, but came in hotter than expected as rental costs surged, accounting for more than half of the increase. Growth in the Consumer Price Index slowed to 0.4% M/M from a 0.6% increase in Aug. Core CPI, which excludes food and energy, stayed steady at a 0.3% M/M increase. The latest data pushed stock markets lower, while Treasury yields rose. Investing Group Leader David Alton Clark, said the data indicated that rate hikes are “by and large” over, but Boston Federal Reserve President Susan Collins said she wouldn’t “take further tightening off the table yet.” Note that the Producer Price Index growth had also slowed, but was still stronger than expected. (119 comments)
Last hurdle cleared
Microsoft’s (MSFT) revised $69B offer to acquire Activision Blizzard (ATVI) has passed muster with U.K. regulators, clearing the way for the technology sector’s biggest-ever acquisition. The U.K.’s Competition and Markets Authority granted consent for the revised deal today, which excludes Activision’s cloud streaming rights that will be sold to French firm Ubisoft (OTCPK:UBSFY). The regulator’s objections to the mega deal marked the last major global hurdle for the acquisition that has been more than a year and a half in the making. SA analyst DJTF Investments had rated Activision a ‘Hold,’ given the deal value’s limited upside to Activision’s shares and uncertainty over the deal’s closing date. (11 comments)
Closing loopholes
As chip export controls are being finalized in the U.S., Washington is considering ways to close a loophole that gives Chinese companies access to American AI chips through units abroad. The Biden administration has been cracking down on chip exports to China, with updated rules expected as soon as next month. It is also looking at closing the loophole that allows Chinese parties to access U.S. cloud providers like Amazon Web Services. Nvidia (NVDA) and AMD (AMD) are two of the most notable semiconductor companies that have been impacted by the U.S.’s export controls in recent months, while Dutch chip equipment maker ASML (ASML) has also been in the crosshairs. (2 comments)
Today’s Economic Calendar
8:30 Import/Export Prices
9:00 Fed’s Harker: Economic Outlook
10:00 Consumer Sentiment
1:00 PM Baker Hughes Rig Count
What else is happening…
More than 7M Americans have received updated COVID shots.
Qualcomm (QCOM) plans job cuts in California to slash costs.
Tesla to hike wages for German plant workers amid union dispute.
Cassava (SAVA) falls on probe into Alzheimer’s drug data manipulation.
Disney (DIS), Comcast hire banks to arrive at Hulu valuation for sale.
Dollar General (DG) brings back ex-CEO Todd Vasos to take the helm.
China eyes setting up stabilization fund to boost weakening stock market.
California preparing lawsuit to block Kroger (KR)-Albertsons (ACI) deal.
Boeing (BA), Spirit Aerosystems (SPR) expand inspections of 737 Max 8.
GM (GM) EV battery plant could face $270K in fines for safety violations.
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Good morning. Happy Thursday.
The Asian/Pacific markets posted solid gains. Japan, China, Hong Kong, South Korea, Taiwan and Singapore led. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, Germany, Greece, Norway, Spain, the Netherlands, Italy and Sweden are up; Turkey and the UAE are down. Futures in the States point towards a moderate gap up open for the cash market.
————— VIDEO: Current Trades —————
The dollar down. Oil is up; copper is down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Strike heats up
The United Auto Workers announced that 8.7K members at Ford Motor’s (F) Kentucky Truck Plant have joined the picket lines as talks failed to progress. The plant, which builds the Ford F-Series Super Duty, Ford Expedition and Lincoln Navigator, is Ford’s (F) largest in terms of employment and revenue. Ford called the UAW’s decision “grossly irresponsible, but unsurprising.” The automaker reiterated that its offer makes a meaningful positive difference in the quality of life for its 57K UAW-represented workers.
Bigger picture: The strike has sparked widespread layoffs. General Motors (GM), Ford, and Stellantis (STLA) laid off 4.8K workers at factories not included in the strike, blaming a chain reaction in the manufacturing and supplier network. While analysts have called the layoffs a simple reality due to the impact of lost production, the UAW contended that the job cuts were aimed at pressuring UAW members to accept less favorable contract terms.
When the UAW strike began, Deutsche Bank estimated that a full strike would hit the Detroit Three’s earnings by about $400M-$500M each per week of lost production. Investing Group Leader David Alton Clark believes a deal in the UAW’s favor would drain Ford’s coffers. “I see Ford’s dividend being cut and the stock price plummeting 36% to $8 before too long,” he warned. Singular Research said GM and Ford will likely see a 1% contraction in profit margins, assuming a 30% increase in labor costs over four years.
Strike watch: In Canada, GM and Canadian auto workers struck a tentative labor deal shortly after a strike was initiated at three of the automaker’s facilities. The news came days after Canadian trade union Unifor reached a labor contract with Ford. Meanwhile, over in Hollywood, negotiations between studios and actors broke down after the two sides failed to agree on SAG-AFTRA’s latest proposal. Note that Las Vegas workers are also picketing MGM Resorts (MGM) and Caesars Entertainment (CZR) casinos as they contemplate a possible strike. (40 comments)
Back taxes
Microsoft (MSFT) dipped 0.4% afterhours on Wednesday after the tech giant disclosed a notice from the Internal Revenue Service, which said it owed $28.9B in back taxes plus interest and fines for the tax years 2004 to 2013. The issue pertains to the practice of transfer pricing, generally used by companies to reduce their tax burden by shifting profits to tax havens. “We disagree with the proposed adjustments and will vigorously contest the NOPAs through the IRS’s administrative appeals office and, if necessary, judicial proceedings,” said Microsoft. The company does not expect a final resolution in the next 12 months. (121 comments)
Bank support
China’s sovereign wealth fund Central Huijin Investment marginally raised its stake in the country’s four biggest banks for the first time since 2015, including Bank of China (OTCPK:BACHF). The move kindled hopes that Chinese authorities will step in to prop up the stock market amid an exodus of global funds. Note that Beijing is weighing fresh economic stimulus, and may raise its 2023 budget deficit by issuing additional sovereign debt. “Huijin’s modest yet symbolic investments are very likely aimed at supporting share prices,” said Redmond Wong, market strategist, Saxo Capital Markets. Huijin’s stake raise lifted Chinese banking stocks, while the CSI 300 Index (SHSZ300) rose 0.9%. (2 comments)
Weak debut
Birkenstock (BIRK) opened trading on Wednesday at $41 per share after pricing its highly-anticipated IPO at $46 apiece, which valued the company at $8.6B. The iconic shoemaker’s stock stumbled throughout the session, finally ending 12.6% lower at $40.20 a share. Based on Birkenstock’s (BIRK) SEC filings, the stock began trading with a higher price-to-earnings multiple than sector peers such as Skechers (SKX), Crocs (CROX), and Steve Madden (SHOO). Wider concerns regarding Birkenstock’s financials remain, given the premium valuation it’d sought in the IPO. SA analyst Douglas McKenny called it a “dangerous” stock to buy on account of its weak profitability. (9 comments)
Today’s Economic Calendar
8:30 Consumer Price Index
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:00 PM Fed’s Bostic’s Speech
1:00 PM Results of $20B, 30-Year Bond Auction
2:00 PM Treasury Statement
4:00 PM Fed’s Collins’ Speech
4:30 PM Fed Balance Sheet
What else is happening…
Minutes show most Fed officials favored holding rates steady in Sept.
Disney (DIS) announces price hikes at Disneyland, Disney World.
1MDB scandal: Goldman sues Malaysian govt over settlement.
Chipotle (CMG) to raise prices for the first time in over a year.
Dialysis stocks tumble on Ozempic kidney failure study news.
U.S. Space Force halts generative AI use on security concerns.
BP’s (BP) deal to buy stake in Israel’s NewMed Energy on track.
FTC proposes new rule to ban hidden fees charged by businesses.
These analysts delve into AI’s global economic impact this decade.
The Las Vegas Strip is fading concerns of a consumer slowdown.
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Good morning. Happy Wednesday.
The Asian/Pacific markets posted solid gains. China, Hong Kong, South Korea, India, Taiwan, Australia and Thailand did great. Europe, Africa and the Middle East are currently mostly up. Denmark, the UAE, Greece, Finland, Switzerland, Hungary, Italy, Portugal and Austrial are up; Turkey, Israel and Saudi Arabia are down. Futures in the States point towards a positive open for the cash market.
————— Online Course: Jason Leavitt’s Masterclass in Trading —————
The dollar is up a few cents. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Big Oil gets bigger
Confirming several earlier reports, Exxon Mobil (XOM) has agreed to acquire Pioneer Natural Resources (PXD) for more than $253/share, in an all-stock transaction valued at nearly $60B. For Exxon, a deal would add valuable acreage near some of its own fields and make it the dominant producer in the Permian Basin. Pioneer is the Permian’s largest operator at 9% of gross production, while Exxon is no. 5 at 6% of gross production.
Backdrop: The acquisition is the second in recent months for Exxon after it scooped up Denbury Resources (DEN) for almost $5B in an all-stock deal in July. Exxon has been flush with cash since earning a record $56B in profits last year, and has set aside tens of billions of dollars for M&A. While investor and political pressure has mounted on Exxon in recent years to shift towards a more renewable energy strategy, CEO Darren Woods has stuck to a heavy oil-dependent approach, setting a 1M barrel per day target in the Permian that will easily be reached with the latest deal.
“Acquiring Pioneer would be accretive for Exxon Mobil due to the valuation difference and potential synergies,” writes Jonathan Weber, explaining the financial impacts behind the deal. SA Investing Group Leader The Value Portfolio agrees, calling it A Crown Jewel For Exxon Mobil, while Leo Nelissen discussed three alternative stocks that he’s buying in the wake of the transaction.
Economies of scale: The Exxon-Pioneer deal could likely jumpstart M&A in the Permian, with ConocoPhillips (COP) looking at potential deals across the shale patch. Chevron (CVX) was also interested in Occidental Petroleum (OXY), one of the largest producers in the Permian basin, in the early part of this year, though the oil giant has reportedly moved on to smaller targets. Permian producers saw gains last Friday following news of a possible Pioneer deal, including Permian Resources (PR) +4.8%, Diamondback Energy (FANG) +4.2%, Coterra Energy (CTRA) +2.6% and Devon Energy (DVN) +2%. (15 comments)
Big moves
Treasury yields continue to sink across the board as traders seek safe-haven assets amid the Israel-Hamas war, while equities drove higher as the Federal Reserve signaled that rate hikes may be over. Minneapolis Fed President Neel Kashkari called the recent jump in the 10-year Treasury yield (US10Y) “perplexing,” but noted that the odds of a soft landing looked “favorable.” Atlanta Fed President Raphael Bostic also doesn’t expect any more rate hikes, while Fed Governor Christopher Waller stressed that the central bank would “stay on the job” to reach its inflation target. Markets now await the Fed’s minutes, due this afternoon, for further clues on policymakers’ views. Also on deck today is the Producer Price Index report, while the Consumer Price Index data will be out tomorrow. (11 comments)
IPO watch
Get ready for the trading debut of Birkenstock (BIRK), which has priced its IPO of nearly 32M shares at $46 per share. The footwear maker, which will raise about $1.5B, will be valued at just under $9B. L Catterton, a private equity firm backed by Bernard Arnault’s LVMH (OTCPK:LVMHF), owns about 83% of Birkenstock and will retain its stake after the IPO. Birkenstock is going public amid heightened concerns over spending for consumer discretionary items, including footwear. The last significant footwear IPO was Allbirds (BIRD), whose market cap has shrunk to $143M since its stellar market debut. SA analyst David Trainer has warned traders to stay away from this IPO as Birkenstock’s valuation is too high. (3 comments)
Teen spending
Piper Sandler’s Taking Stock With Teens survey has pointed to initial signs of a slowdown in teenager spending, although there were some pockets of strength. Cosmetics held the highest priority of teen beauty spending, with LVMH’s (OTCPK:LVMHF) Sephora shooting past Ulta Beauty (ULTA) to become the preferred beauty shopping destination, though there were other top choices. Also see what stocks tanked highest in apparel and footwear, top restaurant picks and some surprises in the food and snack sector. (9 comments)
Today’s Economic Calendar
4:15 Fed’s Bowman: “Financial Stability in Uncertain Times”
7:00 MBA Mortgage Applications
8:30 Producer Price Index
10:00 Atlanta Fed’s Business Inflation Expectations
10:15 Fed’s Waller’s Speech
12:15 PM Fed’s Bostic: “Economic Conditions”
1:00 PM Results of $35B, 10-Year Note Auction
2:00 PM FOMC Minutes
4:30 PM Fed’s Collins: “Reflections on Policymaking Amidst (Pandemic) Uncertainty”
What else is happening…
Bank of England warns on U.S. tech stocks’ stretched valuations.
Kashkari: Jump in 10-year Treasury yield (US10Y) a bit ‘perplexing.’
Biden admin to award $7B in funds for hydrogen hubs this week.
HP (HPQ) raises annual dividend by 5%, provides FY24 guidance.
Oil prices pull back a bit on reduced fears of supply disruptions.
Blackstone (BX) eyes stake in Disney’s (DIS) India business.
PepsiCo (PEP) stock gains after organic sales shine in Q3.
Walgreens (WBA) names ex-Cigna (CI) executive as new CEO.
Samsung (OTCPK:SSNLF) sees 78% drop in Q3 operating profit.
American Airlines (AAL) halts flights to Israel through early Dec.
Las Vegas Strip will have a new mega resort opening soon.
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Good morning. Happy Tuesday.
The Asian/Pacific markets posted solid gains. China was weak, but Japan, Hong Kong, India, Australia, New Zealand, Malaysia and Singapore did great. Europe, Africa and the Middle East are currently up big. The UK, Poland, Denmark, France, Turkey, Germany, Greece, South Africa, Finland, Switzerland, Hungary, Spain, the Netherlands, Italy, Portugal, Israel, Austria and Sweden are leading. Futures in the States point towards a flat open for the cash market.
————— Online Course: Jason Leavitt’s Masterclass in Trading —————
The dollar is down. Oil and copper are down. Gold is up; silver is down. Bonds are down.
Stories/News from Seeking Alpha…
All-out war
Things are heating up in the Middle East following the brutal weekend attack by Hamas that killed over 900 Israelis and injured 2,800. Overnight, Israel regained control of the Gaza-Israel border, while beefing up retaliatory air strikes that have resulted in thousands of casualties as it imposed a complete siege of the Strip. Over 100 Israeli civilian hostages, including women and children, still remain in Gaza – whom Hamas has threatened to execute with broadcasts of audio and video – as it continues to shoot rockets into Israel that have numbered in the thousands in recent days.
Incoming: “The horrors that Hamas has committed have not been witnessed since the hours of ISIS,” Israeli Prime Minister Bibi Netanyahu declared in a nationally televised address. “What we will do to our enemies in the coming days will reverberate with them for generations.” The Israeli military has already activated 300,000 reservists in a massive mobilization, while the Pentagon has warned Iran and Lebanese terror group Hezbollah to “think twice” before opening another front to the war.
Defense stocks surged on Monday as the U.S. began delivering munitions to Israel, with Northrop Grumman (NOC), L3Harris (LHX), Huntington Ingalls (HII), Lockheed Martin (LMT) and General Dynamics (GD) finishing the session as the top five gainers in the S&P 500. The USS Gerald Ford aircraft carrier and accompanying war vessels have also been sent to the eastern Mediterranean, with the U.S. indicating it was prepared to come to Israel’s defense and protect its interests in the region. Elsewhere, WTI crude oil (CL1:COM) pared its big gains following a “knee-jerk” surge reaction, but still remains elevated at $86/bbl, while U.S. stock indexes turned higher and Treasuries had their best day since March following the latest policy remarks from the Federal Reserve.
On the move: Israel’s currency, the shekel, fell to a seven-year low against the dollar on Monday, prompting the Bank of Israel to sell up to $30B of dollar reserves and $15B through the swaps markets. The move will provide necessary liquidity, as well as support and stabilize the exchange rate, while many economists expect that the local economy can withstand an extended war of more than eight weeks. “It’s very different now than back in 1973,” said Bob Savage, BNY Mellon’s head of Markets Strategy and Insights, referring to the Yom Kippur War and ensuing oil crisis. “There are some notable economic strengths along with political shifts in play. Israel has links to Egypt and to the UAE, along with some significant natural gas reserves now. When you look at Israel’s budget situation, it appears to have plenty of room for war spending.”
More strikes
The United Auto Workers said employees at Mack Trucks, owned by Volvo (OTCPK:VLVLY), have gone on strike after rejecting a proposed five-year labor contract. Nearly 4,000 union workers at Mack Trucks facilities walked out, bringing the total number of UAW members on strike to over 30,000. In Canada, General Motors (GM) workers also staged a walkout after failing to agree on a contract. Note that Unifor members last month voted to clear Ford’s (F) new contract. And Tesla (TSLA), which has been immune to the U.S. strikes, is now facing employee heat in Germany. While U.S. jobs data has not reflected the UAW strike’s impact, SA analyst Justin Purohit expects the full effects to be seen in the Q4 reports. (4 comments)
Gatekeepers or no?
The European Commission is seeking information as to whether a group of Microsoft’s (MSFT) services and Apple’s (AAPL) iMessage messaging system should comply with the continent’s Digital Markets Act. Questionnaires were sent out earlier this month to rate the importance of the services compared to competitors. The European Commission last month announced its first list of “gatekeepers,” six tech companies that are subject to the tough new rule – including Apple, Microsoft, Alphabet (GOOG, GOOGL), Amazon (AMZN) and Meta (META). Apple and Microsoft argued that iMessage, Bing, Edge and Microsoft advertising should not be qualified as gatekeepers. (10 comments)
Cash crunch
Country Garden (OTCPK:CTRYF) warned it may not meet all of its offshore debt obligations and could be in for debt restructuring, as its liquidity position will remain “very tight in the short- to medium-term.” Its Hong Kong-listed shares dropped 9.5% on the news. China’s largest private property developer pointed to “remarkable pressure” on its sales and uncertainty regarding asset disposals. The warning comes at a time when Chinese real estate companies have been floundering under mounting debt, with many defaulting in recent months. While Country Garden has not yet defaulted, any non-payment could push creditors to demand faster payments or pursue enforcement action.
Today’s Economic Calendar
6:00 NFIB Small Business Optimism Index
9:30 Fed’s Bostic: U.S. Economic Outlook
10:00 Wholesale Inventories (Preliminary)
1:00 PM Results of $46B, 3-Year Note Auction
1:30 PM Fed’s Waller: “The Evolution of Monetary Policy”
3:00 PM Fed’s Kashkari Speech
6:00 PM Fed’s Daly Speech
What else is happening…
IMF raises U.S. growth outlook on stronger-than-expected momentum.
Bank of America’s (BAC) long-term securities to weigh on Q3 earnings.
Writers Guild members overwhelmingly approve new labor contract.
PG&E (PCG) could face $45M in penalties for California’s Dixie Fire.
WeightWatchers (WW) stock rides the Ozempic wave, closes up 13%.
Truist (TFC) in talks to sell rest of its insurance brokerage unit for $10B.
Joby Aviation (JOBY) on track to launch electric flying taxis in 2025.
Google (GOOG) search deal may be worth $20B annually to Apple.
Unity (U) slips as CEO retires; former IBM exec named interim chief.
Fannie Mae survey: Pessimism in housing market hits new high.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets were very quiet. Vietnam did well; India and New Zealand were down. Europe, Africa and the Middle East currently lean to the downside. Poland, Norway, Portugal and Israel are up; France, Turkey, Germany, Greece, the UAE, Spain, Austria and Sweden are down. Futures in the States point towards a moderate gap down open for the cash market.
————— VIDEO: A Quick Run Through the Indexes —————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Oil spikes
Crude oil and gold futures bumped higher in response to the Hamas attack on Israel, which caused over 700 Israeli deaths so far and the abduction of several Israeli citizens and soldiers. More than 400 Palestinians have been killed in retaliatory Israeli strikes on the Gaza Strip. WTI November crude oil (CL1:COM) rose to as high as $87.39/bbl on Sunday, while the December Brent crude (CO1:COM) climbed to $89.15 /bbl. December Comex gold (XAUUSD:CUR) rose more than 1%.
Bigger picture: Analysts generally expect a “knee-jerk surge” in crude prices but limited gains thereafter, provided the conflict does not expand into a regional war – which is far from certain, since the fighting is on the doorstep of an important oil-producing and exporting region. “While oil fundamentals have not changed since these attacks, it does not mean they won’t,” ING Economic and Financial Analysis warned, flagging risks to oil supply. If Iranian involvement in the attack is affirmed, the U.S. could step up sanctions on Iran’s crude exports. If Israel were to strike any Iranian infrastructure, crude oil prices would spike immediately.
The Biden administration had hoped to broker a Saudi-Israel deal in the next six months, but the escalating situation in Israel has likely dashed hopes for normalized relations between the countries. Saudi Arabia is not expected to slow oil production, although there is a risk of the Saudis unwinding their additional voluntary supply. The surprise attack also leaves Israel unlikely to make any concessions to the Palestinians that the Saudi government might have sought.
Market impact: U.S. stock index futures pointed to a lower open today, while traders are seeking out safe haven assets to hedge against the latest geopolitical turmoil. The U.S. dollar index (DXY) rose 0.4% to cross $106, while the Japanese yen (USD:JPY) – another traditional safe-haven currency – ticked up 0.1% to 149.15 per dollar. Note that the U.S. bond market is closed for Columbus Day. Defense stocks rose before the bell – Lockheed Martin (LMT) +5%, RTX (RTX) +4.6% and General Dynamics (GD) +3.2%. American Airlines (AAL), United Airlines (UAL) and Delta Air Lines (DAL) – all of whom suspended direct flights to Israel – traded 2% lower each. (75 comments)
Mirati takeover
Bristol-Myers Squibb (BMY) will acquire Mirati Therapeutics (MRTX) for about $4.8B, ending months of speculation over which pharmaceutical giant would buy the cancer drug maker ahead of its pipeline updates. Mirati shareholders will also receive one non-tradeable Contingent Value Right for each share held, potentially worth $12/share. Mirati’s lung cancer drug Krazati has been in the spotlight of late, especially since the FDA’s accelerated approval that led to takeover interest, even from Sanofi (SNY). Note that Mirati will release additional Phase 3 data on Krazati this month. Meanwhile, BMO raised its peak market penetration estimate for Krazati to 30% as a second-line treatment, reflecting the possibility of Amgen’s (AMGN) cancer drug Lumakras not being approved. (21 comments)
New proxy fight
Nelson Peltz is planning to push for board seats at Disney (DIS) once again, as its stock continued to decline despite the entertainment conglomerate’s reorganization efforts. Peltz’s Trian Fund Management, one of Disney’s largest shareholders, is expected to request multiple seats, including one for Peltz. The activist investor previously tried to run for a seat on Disney’s board, but he withdrew his nomination after Disney announced major cost cuts. However, its shares dropped about 25% since Peltz ended his proxy fight. Investing Group Leader Danil Sereda has advised traders to avoid Disney’s stock, as there are no significant changes that would favor a rapid recovery. (3 comments)
Tesla headwinds
Tesla (TSLA) dipped 1.6% before the bell today, as the headwinds facing the automaker continue to mount. Tesla’s China sales in Sept. dropped 10.9% Y/Y and 12% lower than its tally in Aug. Adding to its woes, the company’s latest price cuts following its Q3 deliveries miss, are expected to further impact demand. Tesla has been adjusting prices across models based on market conditions as it prioritizes volume over pricing and near-term profits. “Tesla’s intention is to realize greater profit from post-sale products such as Full Self Driving,” Bank of America noted. But SA analyst Christoph Liu is doubtful of Tesla’s “aspirational” targets, given stiff competition and its history of overpromising. (85 comments)
Today’s Economic Calendar
9:00 Fed’s Logan: U.S. Economy and Monetary Policy
12:30 PM Investor Movement Index
What else is happening…
AI race: China plans to boost computing power to help local firms.
Citi (C) to sell China consumer wealth portfolio to HSBC (HSBC).
Birkenstock (BIRK) IPO may price at top end of indicated range.
Tech’s ambitions for sports are growing. Where does it end?
Shift Technologies (SFT) plans to file for Chapter 11 bankruptcy.
These analysts believe the end of the luxury supercycle is near.
Cryptocurrency fundraising falls to lowest level in three years.
A timeline of how Fed’s Powell becomes an Instagram influencer.
Fitch Ratings: Pressure on hospital sector labor is starting to ease.
PLD Space launches rocket in first for Europe’s private space industry.
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