{"id":13758,"date":"2020-02-18T08:15:26","date_gmt":"2020-02-18T13:15:26","guid":{"rendered":"http:\/\/leavittbrothers.com\/blog\/?p=13758"},"modified":"2020-02-18T08:15:26","modified_gmt":"2020-02-18T13:15:26","slug":"before-the-open-feb-18-21","status":"publish","type":"post","link":"https:\/\/blog.leavittbrothers.com\/?p=13758","title":{"rendered":"Before the Open (Feb 18-21)"},"content":{"rendered":"

Good morning. Happy Friday. Happy options expiration. <\/span>
\n The Asian\/Pacific<\/strong> markets closed mostly down. China did well, but Hong Kong, South Korea, Indonesia, Singapore and the Philippines were weak. Europe, Africa and the Middle East<\/strong> currently lean down. Turkey, Hungary and Saudi Arabia are up; Denmark, Greece, South Africa, Norway, Belgium, Israel and Austria are down. Futures in the States<\/strong> point towards a moderate gap down open for the cash market. <\/span>
\n—————
\nJoin our email list<\/a> – get technical research reports and trading ideas sent directly to you.<\/strong>
\n—————<\/span>
\n The dollar is down. Oil and copper are down. Gold and silver are up. Bonds are up. <\/span>
\n Stories\/News from Seeking Alpha…<\/span>
\n While news of Morgan Stanley’s (NYSE:MS) $13B acquisition of E*Trade (NASDAQ:ETFC) broke shortly after publishing on Thursday, the deal is still being discussed all around the Street. That’s because it’s the biggest takeover by a major American lender since the 2008 financial crisis and highlights a continuing trend of Wall Street giants striving to get even bigger. The transaction will give Morgan Stanley a larger share of the online trading market amid a zero commissions war in the brokerage industry that has weighed heavily on profit margins. Morgan Stanley shares fell 4.6% on Thursday on a pending share dilution, while E-Trade surged 21.8%.<\/span>
\n Renewed coronavirus fears<\/span>
\n Jitters over the virus are sending investors to safe haven assets following another upward revision in cases, which now stand at 75,465 in China and 2,236 deaths nationwide. U.S. equity futures slipped 0.5% and oil fell nearly 2%, though gold remains on a tear, rising 1.1% to $1638\/oz. Impacts of the virus were laid bare once again by Chinese car sales, which crumbled 92% in the first 16 days of February, while the IATA estimated losses for Asian airlines alone could amount to almost $28B in 2020.<\/span>
\n A look into farm spending<\/span>
\n Releasing FQ1 results before the bell, Deere (NYSE:DE) is projected to report $1.27 in earnings per share and $6.17B in revenue, both of which would be big declines from the same quarter a year ago. A beat for any of those estimates could turn shares around, sending the stock northward. Amid international trade disputes and soft demand, CFO Ryan Campbell said at an analyst day last month that Deere anticipated agricultural retail sales to be down 5% in the U.S. and Canada this year and flat in other major markets.<\/span>
\n Buffett’s annual letter<\/span>
\n Warren Buffett will release his annual letter to Berkshire Hathaway (BRK.A, BRK.B) shareholders this weekend following another lackluster year that saw the conglomerate’s stock price lag the broader market. Class A shares, at about $339,000, were up 16% in 2019, against a 29% return for the S&P 500. Investors will also be watching what the Oracle writes about the acquisition environment – after exiting the newspaper business last month – as well as Berkshire’s recent move to pare longtime holdings in Wells Fargo.<\/span>
\n Clearing operations resume at Giga Berlin<\/span>
\n In a defeat for local environmental activists, Tesla (NASDAQ:TSLA) has received the green light from a German court to clear 220 acres of forest for Giga Berlin. The new ruling will help Tesla keep to a proposed timeline for beginning construction on its first European car and battery factory by mid-March. Lawmakers from Germany’s Christian Democrat and Free Democrat parties had warned that the legal battle waged against the Gigafactory would harm Germany’s image as a place to do business, and the Green Party even voiced its displeasure with the environmental complaints.<\/span>
\n Biggest thing since light beer?<\/span>
\n Within weeks of launching, Bud Light Seltzer is already the country’s third-most popular hard seltzer, according to sales data from Nielsen. White Claw is still the most dominant brand, controlling about 60% of the category, followed by Truly from Boston Beer (NYSE:SAM). By adding in Bud Light Seltzer, AB InBev (NYSE:BUD) now sells three of the top five spiked seltzer brands: Natural Light Seltzer sits in fourth place, and its original spiked seltzer, Bon & Viv, is in fifth place.<\/span>
\n Alternative 5G<\/span>
\n U.S. plans to create a 5G rival to Huawei “would be a challenge,” Huawei CTO Paul Scanlan declared, noting that technical standards and actual implementation of 5G have taken about 10 years to create. “That’s a very very long game and that has its own sort of complexity built into (it),” he added. The U.S. has been considering providing over $1B to invest in Western-based 5G alternatives, while Larry Kudlow has said the “big-picture concept is to have all of the US 5G architecture and infrastructure done by American firms, principally.”<\/span>
\n New terms for T-Mobile, Sprint deal<\/span>
\n Immediately following the merger’s closing, Deutsche Telekom (OTCQX:DTEGY) and SoftBank (OTCPK:SFTBY) will hold stakes of approximately 43% and 24%, respectively (the remaining percentage will be held by public shareholders). A separate agreement entered into by SoftBank will result in an effective exchange ratio of 11 Sprint (NYSE:S) shares for each T-Mobile (NASDAQ:TMUS) share, up from the original 9.75 shares. The ratio change was due to SoftBank agreeing to surrender 48.8M T-Mobile shares acquired in the merger to the new company immediately after closing.<\/span>
\n Fighting misinformation<\/span>
\n Twitter (NYSE:TWTR) could start labeling lies and misinformation from politicians and public figures, according to a new feature demo obtained by NBC News. The company confirmed the design, which features brightly colored labels beneath inaccurate tweets, and is one possible path for a new misinformation policy that rolls out on March 5. The tweet corrections will come from fact checkers and journalists verified on the site, and possibly from other users participating in a Wikipedia-like “community reports” feature.<\/span>
\n What else is happening…<\/span>
\n G20 finance ministers gather for summit in Riyadh.<\/span>
\n HP (NYSE:HPQ) responds to Xerox’s (NYSE:XRX) advances with poison pill.<\/span>
\n More financing for Sears (OTCPK:SHLDQ) as losses continue.<\/span>
\n Apple (NASDAQ:AAPL) considers loosening grip on App Store.<\/span>
\n New Mexico sues Google (GOOG, GOOGL) over school kids’ data.<\/span>
\n Sikorsky (NYSE:LMT) grabs contract for presidential helicopters.<\/span>
\n Thursday’s Key Earnings<\/strong>
\n Domino’s Pizza (NYSE:DPZ) +25.6% delivering strong profit, dividend boost.
\n Dropbox (NASDAQ:DBX) +10.7% AH on Q4 beats, $600M buyback.
\n First Solar (NASDAQ:FSLR) -15% AH posting surprise loss, reviewing options.
\n Fitbit (NYSE:FIT) -1.2% AH missing expectations, lower ASP.
\n Southern Co. (NYSE:SO) +1.8% hitting EPS estimates.
\n ViacomCBS (NASDAQ:VIAC) -17.9% dragged down by merger expenses.<\/span><\/span><\/span><\/span><\/span><\/span><\/span>
\n Today’s Economic Calendar<\/strong>
\n 9:35 Fed’s Kaplan: \u201cRoom to Grow: Housing for a New Economy\u201d
\n 9:45 PMI Composite Flash
\n 10:00 Existing Home Sales
\n 10:00 Fed’s Brainard: \u201cMonetary Policy for the Next Recession\u201d
\n 10:00 Fed’s Bostic: \u201cMonetary Policy for the Next Recession\u201d
\n 1:00 PM Baker-Hughes Rig Count
\n 1:30 PM Fed’s Mester: \u201cMonetary Policy for the Next Recession\u201d
\n 1:30 PM Fed’s Clarida: \u201cFinancial Markets and Monetary Policy: Is There a Hall of Mirrors Problem?\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>
\n——————————-
\n Good morning. Happy Thursday. <\/span>
\n The Asian\/Pacific<\/strong> markets were mostly quiet. China did well; Hong Kong and New Zealand also posted gains. South Korea, Singapore and Thailand closed down. Europe, Africa and the Middle East<\/strong> are currently quiet. Russia and Norway are up; Turkey, Greece, Spain and Italy are down. Futures in the States<\/strong> point towards a gap down open for the cash market. <\/span>
\n—————
\nJoin our email list<\/a> – get technical research reports and trading ideas sent directly to you.<\/strong>
\n—————<\/span>
\n The dollar is up. Oil is up; copper is down. Gold and silver are up. Bonds are up. <\/span>
\n Stories\/News from Seeking Alpha…<\/span>
\n The Shanghai Composite Index closed up 1.8% overnight as the PBOC lowered its benchmark lending rates, cutting its one-year loan prime rate from 4.15% to 4.05% and the five-year rate from 4.80% to 4.75%. The move follows the central bank’s decision on Monday to lower interest rates on its one-year medium-term lending facility – funds the PBOC lends to financial institutions – from 3.25% to 3.15%. “The ten basis point reduction will help companies weather the damage from the coronavirus at the margins,” said Julian Evans-Pritchard, senior China economist at consultancy Capital Economics.<\/span>
\n World’s biggest shipper sees coronavirus peak<\/span>
\n “Over the last two and a half weeks we have seen a steady decline in the number of new [coronavirus] cases” and “that is positive,” A.P. M\u00f8ller-M\u00e6rsk (OTCPK:AMKAF) CEO S\u00f8ren Skou told Bloomberg, after soft Q4 results. “It means, very well, we could be set for a peak within the next two weeks,” he added. “If that were to be the case, then we would expect a very weak March and a rebound in April, a sharp rebound in April… but there is still a lot of uncertainties out there.”<\/span>
\n Fresh record highs<\/span>
\n Markets continue to discount potential coronavirus impacts on the belief that the virus will be largely controlled by the quarter-end and as China continues to loosen its macro policy purse strings. That sent the S&P 500 and Nasdaq to new closing highs on Wednesday, though stock index futures are now debating direction after inching between gains and losses overnight. The release of weekly jobless claims today will also give us a read on the health of the labor market, while earnings season continues with results from Domino’s Pizza (NYSE:DPZ), ViacomCBS (NASDAQ:VIAC), Dropbox (NASDAQ:DBX) and Fitbit (NYSE:FIT).<\/span>
\n Fed minutes<\/span>
\n The FOMC viewed “current stance of monetary policy” as “appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the committee\u2019s symmetric 2% objective,” according to the minutes of its Jan. 28-29 meeting. Still, uncertainties remain, “including those posed by the outbreak of the coronavirus,” which warrants “close watching.” The monetary policy-setting committee also indicated the central bank could slow its $60B-per-month pace of Treasury bill purchases in Q2 and most Fed officials were comfortable with this proposal.<\/span>
\n Victoria’s Secret to go private<\/span>
\n L Brands (NYSE:LB) is nearing a deal to sell control of Victoria’s Secret in a transaction that values the lingerie brand at about $1.1B, WSJ reports. Private-equity player Sycamore Partners is expected to buy 55% of the struggling business and take it private, while L Brands will retain a 45% stake that will include the Pink chain. Alongside, L Brands Chairman and CEO Leslie Wexner, the embattled billionaire who has run the retail company for more than 50 years, will step down from both roles (but remain on the board).<\/span>
\n FrownDirectClub<\/span>
\n The top dentist and public face of SmileDirectClub (NASDAQ:SDC) is at risk of losing his California license following a two-year state dental board investigation, according to records reviewed by Reuters. Shares closed down 5.4% to $12.37 following the news on Wednesday. The 24-page complaint by the state AG’s office accuses Jeffrey Sulitzer of violating state law, defrauding state dental regulators and acting with gross negligence toward patients while helping the company grow its business.<\/span>
\n ‘Copyright case of the decade’<\/span>
\n The DOJ has thrown its weight behind Oracle (NYSE:ORCL) in a pivotal Supreme Court case against Google (GOOG, GOOGL). At issue is the way Google used Java in Android. Oracle argues the tech giant copied 11,500 lines of its code more than 10 years ago, though Google posits it was legal under the fair use doctrine. The entire case hinges on whether it’s possible to copyright APIs and could have significant consequences as the high court weighs the limits of copyright law in the digital age.<\/span>
\n Data breach at MGM Resorts<\/span>
\n MGM Resorts (NYSE:MGM) has confirmed the personal information of more than 10.6M guests who have stayed at its hotels, including celebrities and tech CEOs, that was published on a hacking forum earlier this week. While the leaked files contained “full names, phone numbers, addresses, emails and dates of birth… no financial, payment card or password data was involved in this matter.” MGM’s hotels include Bellagio, Aria, MGM Grand, Mandalay Bay, Park MGM, Mirage, New York New York, Luxor and Excalibur in Las Vegas.<\/span>
\n Europe unveils ambitious tech blueprint<\/span>
\n By creating a single European market for data, the European Commission is hoping to pool the region’s expertise and challenge the dominance of Silicon Valley and China in artificial intelligence and technology. There’s also a big focus on industrial data and the next wave of connected innovation via the so-called “Internet of Things.” Other elements of the Commission’s proposal included new rules covering cross-border data use, data interoperability, climate change, the auto industry, healthcare and financial services.<\/span>
\n Curbs on exports?<\/span>
\n A deputy-level meeting of U.S. government officials today will explore further restrictions on exports to Huawei and China, with some favoring a tougher line and others more focused on prioritizing trade ties with Beijing. The gathering comes ahead of a cabinet-level meeting scheduled for Feb. 28. Doubts have already swirled about whether the meetings would take place after President Trump on Tuesday blasted a proposal that would’ve prevented companies from supplying jet engines and other components to China’s aviation industry.<\/span>
\n What else is happening…<\/span>
\n Foxconn (OTC:FXCOF) warns coronavirus will hit revenues.<\/span>
\n ING (NYSE:ING) boss named as new chief of UBS (NYSE:UBS).<\/span>
\n U.S. crude supply rose 4.2M barrels last week – API.<\/span>
\n As lithium prices lag, Albemarle (NYSE:ALB) expects 2020 sales drop.<\/span>
\n Wednesday’s Key Earnings<\/strong>
\n Avis Budget (NASDAQ:CAR) +13.3% AH showing ‘best’ December in the U.S.
\n Bausch Health (NYSE:BHC) -5.7% on $3.25B debt offering.
\n Energy Transfer (NYSE:ET) -0.2% AH as growth panned out in Q4.
\n Hyatt Hotels (NYSE:H) -3.1% AH giving a cautious outlook.
\n Stamps.com (NASDAQ:STMP) +28.6% AH on major Q4 beats.
\n Realty Income (NYSE:O) +0.7% AH issuing strong 2020 guidance.
\n Zillow (NASDAQ:Z) +16.6% AH juiced by its Homes segment.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>
\n Today’s Economic Calendar<\/strong>
\n 8:30 Initial Jobless Claims
\n 8:30 Philly Fed Business Outlook
\n 10:00 Leading Indicators
\n 10:30 EIA Natural Gas Inventory
\n 11:00 EIA Petroleum Inventories
\n 1:20 PM Fed’s Barkin Speech
\n 4:30 PM Money Supply
\n 4:30 PM Fed Balance Sheet<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>
\n————————–
\n Good morning. Happy Wednesday. <\/span>
\n The Asian\/Pacific<\/strong> markets closed mostly up. Japan, Hong Kong, India, New Zealand, Taiwan, Austria, Indonesia, Singapore and the Philippines did very well; China and Thailand were weak. Europe, Africa and the Middle East<\/strong> are currently doing very well. The UK, Denmark, France, Germany, Russia, Greece, Finland, Switzerland, Hungary, Spain, the Netherlands, Italy, Portugal, Israel, Sweden and Saudi Arabia are all doing great; Poland, Turkey and Kenya are down. Futures in the States<\/strong> point towards a moderate gap up open for the cash market. <\/span>
\n—————
\nJoin our email list<\/a> – get technical research reports and trading ideas sent directly to you.<\/strong>
\n—————<\/span>
\n The dollar is up. Oil is up; copper is down. Gold and silver are up. Bonds are down. <\/span>
\n Stories\/News from Seeking Alpha…<\/span>
\n The Fed releases minutes of its Jan. 28-29 policy meeting today, which could help explain what the central bank is thinking about potential economic risks, including those stemming from the coronavirus. It may additionally provide insight into the central bank’s balance sheet policy, with Powell having indicated that both Treasury bill purchases and role of repo operations in the open markets would decline during Q2. Four regional Fed presidents are also set to give speeches around the country, including 2020 FOMC members Robert Kaplan, Loretta Mester and Neel Kashkari.<\/span>
\n Futures rebound<\/span>
\n Markets across Asia and Europe were mostly higher overnight, though shares in Shanghai dipped 0.3%, as the coronavirus death toll in China hit 2,000. Sentiment received a boost on reports that China was considering measures such as direct cash infusions and mergers to bail out its heavily hit airline industry. While the outbreak has triggered Apple (NASDAQ:AAPL) to issue a revenue warning, the Nasdaq Composite posted another record close on Tuesday (though the Dow and S&P drifted lower), while stock index futures are now pointing to opening gains of 0.2%.<\/span>
\n Brussels proposes new digital strategy<\/span>
\n Margrethe Vestager, the EU’s digital and competition chief, is set to publish the first draft of an EU digital strategy likely to have major effects on tech giants like Apple (AAPL), Facebook (NASDAQ:FB), Google (GOOG, GOOGL) and Amazon (NASDAQ:AMZN). The new rules will focus on a so-called digital single market that will support growth and innovation in the European tech industry, as well as a framework for companies’ use of artificial intelligence. Vestager is also examining Big Tech’s data practices, including how companies compete by using third party data.<\/span>
\n Rare profit miss at Walmart<\/span>
\n Despite missing the Q4 consensus EPS mark ($1.38 vs. $1.44) and comparable sales estimates (1.9% vs. 2.4%), Walmart (NYSE:WMT) shares rebounded during yesterday’s session, rising 1.5% to $119.63. CFRA analyst Garrett Nelson notes that while the EPS miss was only the second in 18 quarters, investors may have been prepared for the weak mark after Target’s (NYSE:TGT) disappointing holiday sales update a few weeks ago. Walmart’s sluggish holiday sales come despite continued online gains, as traditional retailers adjust to changing shopping habits.<\/span>
\n Bed Bath remodels<\/span>
\n New CEO Mark Tritton has laid out his vision for remaking the troubled retailer, planning to invest $350M to $400M on store upgrades, tech initiatives and supply chain improvements. He also wants a more streamlined look at Bed Bath (NASDAQ:BBBY) stores, including wider aisles and no more piles of merchandise up to the ceiling. Besides the decluttering efforts and more private brands, Tritton aims to have online pickup service available in all stores by the end of the year.<\/span>
\n First fintech takeover of a U.S. bank<\/span>
\n Giving it access to a stable and cheaper source of funding, LendingClub (NYSE:LC) is paying $185M in cash and stock for Radius Bancorp, a Boston-based online bank with about $1.4B in assets. The move marks the first time an American fintech company has acquired a regulated U.S. bank. Fintechs like Robinhood and Square (NYSE:SQ) have already applied for ways to become banks (and issue new products like checking accounts), while mobile bank Varo Money received FDIC approval last week for a national bank charter.<\/span>
\n Buffett jumps on the ETF train<\/span>
\n It’s pocket change given the $128B in cash at Berkshire Hathaway (BRK.A, BRK.B), but The Oracle (or, more likely, managers Todd Combs and Ted Weschler) dipped toes into a couple of passive ETFs in Q4. Berkshire now owns a combined $25M of the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and the Vanguard S&P 500 ETF (NYSEARCA:VOO), with the investments going toward a company pension plan. Bloomberg’s Eric Balchunas suggests it’s not a bad place to park some money and gain a bit more yield than short-dated Treasury paper (VOO yields 1.80%, SPY 1.66%), while having plenty of liquidity should the need arise.<\/span>
\n Space tourism<\/span>
\n NASA has given SpaceX (SPACE) the thumbs-up to become the first company in its Commercial Crew program to send humans into space. Four privately-paying space tourists will orbit the planet aboard SpaceX’s Crew Dragon capsule, in missions set for late 2021 or 2022. The space frenzy is also being seen in the stock market. A seven-day surge in Virgin Galactic (NYSE:SPCE) has lifted shares to $32, four times above its level in December (Tesla moment?).<\/span>
\n Alphabet scales back moonshot projects<\/span>
\n Espousing increased financial discipline, Alphabet (GOOG, GOOGL) is calling it quits on efforts to build and monetize its Makani wind energy kites. It’s the first project from X, Alphabet’s moonshot factory, to be terminated since Google co-founders Larry Page and Sergey Brin stepped aside as leaders in December. The news follows Alphabet’s disappointing earnings report, where the losses from its “Other Bets” category swelled to $4.8B in 2019, up from $3.4B the year before.<\/span>
\n Drive to profitability<\/span>
\n Uber (NYSE:UBER) has closed a customer support office in downtown Los Angeles, laying off about 80 employees, according to the Los Angeles Times. “We will be moving the outreach and innovation work to Manila,” said Uber manager Ruffin Chevaleau. “I know that this is a shock.” In the months since going public, Uber has made a series of cuts to its corporate workforce totaling more than 1,000 workers, including in its marketing, self-driving and engineering departments.<\/span>
\n What else is happening…<\/span>
\n Executive ranks shuffled at Nike (NYSE:NKE).<\/span>
\n Macy’s (NYSE:M) drops after S&P cuts to junk level.<\/span>
\n Blue Apron (NYSE:APRN) considers going private.<\/span>
\n Trump supports sale of GE-made jet engines to China.<\/span>
\n Boeing (NYSE:BA) finds debris in 737 MAX jetliners.<\/span>
\n Sanofi (NASDAQ:SNY) enters race to develop coronavirus vaccine.<\/span>
\n Dismissed… Huawei suit challenging federal ban.<\/span>
\n Tuesday’s Key Earnings<\/strong>
\n Devon Energy (NYSE:DVN) +2.2% AH boosting production guidance.
\n Groupon (NASDAQ:GRPN) -24.3% AH exiting the Goods category.
\n Herbalife (NYSE:HLF) +4.1% AH beating expectations.
\n LendingClub (LC) -0.2% AH giving a soft outlook.
\n Medtronic (NYSE:MDT) -4% missing on revenues.
\n Nutrien (NYSE:NTR) -0.7% AH on weak potash demand.
\n Walmart (WMT) +1.5% rallying past a rare profit miss.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>
\n Today’s Economic Calendar<\/strong>
\n 7:00 MBA Mortgage Applications
\n 8:10 Fed’s Bostic: Economic Outlook
\n 8:30 Housing Starts
\n 8:30 Producer Price Index
\n 8:30 Fed’s Mester Speech
\n 8:55 Redbook Chain Store Sales
\n 10:00 E-Commerce Retail Sales
\n 10:00 Quarterly Services Report (Advance)
\n 11:45 Fed’s Kashkari Speech
\n 1:30 PM Fed’s Kaplan Speech
\n 2:00 PM FOMC minutes
\n 4:30 PM Fed’s Barkin: \u201cNew Monetary Policy Frameworks: Why Now?\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>
\n——————————–
\n Good morning. Happy Tuesday. Hope you had a good, long weekend. <\/span>
\n The Asian\/Pacific<\/strong> market closed mostly down. China and New Zealand did well, but Japan, Hong Kong, South Korea, Taiwan and Thailand were weak. Europe, Africa and the Middle East<\/strong> are currently mostly down. Denmark and Hungary are doing well, but the UK, France, Turkey, Germany, Russia, Greece, South Africa, Finland, Norway, the Netherlands, Belgium, Israel and Austria are weak. Futures in the States<\/strong> point towards a moderate down open for the cash market. <\/span>
\n—————
\nJoin our email list<\/a> – get technical research reports and trading ideas sent directly to you.<\/strong>
\n—————<\/span>
\n The dollar is up. Oil is up; copper is flat. Gold and silver are up. Bonds are up. <\/span>
\n Stories\/News from Seeking Alpha…<\/span>
\n Apple slipped 3.3% premarket after becoming the first major U.S. company to say it won’t meet its revenue projections for the current quarter due to the coronavirus outbreak. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company announced, adding that “stores which are open have been operating at reduced hours and with very low customer traffic.” Apple (NASDAQ:AAPL) had forecast revenue of $63B-$67B for the fiscal second quarter ending in March, ahead of estimates of $62.4B.<\/span>
\n Futures retreat<\/span>
\n Nasdaq futures are down 0.8% on the warning from Apple, though the shockwaves weren’t limited to the tech sector, with Dow and S&P 500 futures falling back 0.5%. Shanghai, meanwhile, inched up following a big day yesterday that saw shares recoup all their losses from a record $720B selloff earlier this month. Authorities in Beijing are responding to the coronavirus threat by ramping up the economic stimulus, and said they will accept tariff exemption requests on nearly 700 U.S. imports from March 2.<\/span>
\n ‘Severe’ worker shortage<\/span>
\n While about 90% of the 109 U.S. manufacturers in the Yangtze River Delta Economic Zone expect to resume production this week, 78% of them don’t have enough staff to run at full speed due to travel restrictions and quarantine requirements. According to the survey by AmCham, nearly 60% of the firms expect demand to be lower than normal over the next few months, about half said their global supply chain had already been affected by the business shutdown, while almost a third of them will consider moving operations out of the country if the situation continues.<\/span>
\n Major overhaul at HSBC<\/span>
\n Facing substantial challenges in its key markets, HSBC (NYSE:HSBC) is cutting 35,000 jobs and $100B in assets over the next three years, and will incur $7.2B of costs because of the restructuring. “Around 30% of our capital is currently allocated to businesses that are delivering returns below their cost of equity,” said interim CEO Noel Quinn, adding that net profit at the bank fell 53% to $5.97B in 2019. HSBC will also suspend buybacks for two years (but maintain its dividend) and close around a third of its 224 underperforming U.S. branches. HSBC -5% premarket.<\/span>
\n Active consolidation<\/span>
\n Amid an industry shift toward passive investing and unprecedented pressures on fees, active asset managers have been hunting for new sources of revenue and ways to slash expenses, such as mergers. The latest: Franklin Resources (NYSE:BEN) is reportedly nearing an all-cash deal for Legg Mason (NYSE:LM) that would value the latter at $50 per share, or a 23% premium to the company’s closing price on Friday. A deal would clear up uncertainty that had shrouded Legg Mason’s future for nearly a year since activist investor Trian Fund Management took a stake in the firm and secured representation on its board. LM +10.8% premarket.<\/span>
\n Facebook regulation?<\/span>
\n Mark Zuckerberg toured Brussels on Monday, meeting with senior EU officials over the way online content and his social network should be regulated. While most of the meetings took place behind closed doors, Thierry Breton, the French commissioner overseeing the bloc’s data strategy, came out strongly against the plans. “It’s not enough. It’s too slow, it’s too low in terms of responsibility and regulation,” he said, following a weekend announcement from Zuckerberg that welcomed regulation but said the platform should be treated like a telco-newspaper hybrid. The case is significant, as Facebook (NASDAQ:FB) is the only U.S. tech giant that has escaped antitrust action or formal competition investigations by the EU.<\/span>
\n NY won’t appeal T-Mobile merger ruling<\/span>
\n New York Attorney General Letitia James has decided not to appeal a federal judge’s decision to allow T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) to merge, removing another hurdle for the cell phone carriers’ long-planned combination. “Instead, we hope to work with all the parties to ensure that consumers get the best pricing and service possible, that networks are built out throughout our state, and that good-paying jobs are created here in New York,” she said. A spokeswoman for California AG Xavier Becerra, who also led the AG coalition suing to block the deal, said the state is still reviewing its options.<\/span>
\n GM pulls out of Australia, NZ and Thailand<\/span>
\n Continuing a years-long global restructuring, General Motors (NYSE:GM) said it will wind down sales, design and engineering operations in Australia and New Zealand, and retire the Holden brand by 2021. The company also announced that it had signed a binding term sheet with Great Wall Motor (OTCPK:GWLLY) to purchase GM’s Rayong vehicle manufacturing facility in Thailand and would withdraw Chevrolet from the domestic market by the end of 2020. GM expects to take $1.1B in charges mostly in the first quarter as a result of the actions, including $300M in cash.<\/span>
\n Court halts forest clearance for Giga Berlin<\/span>
\n The Higher Administrative Court for Berlin-Brandenburg has ordered Tesla (NASDAQ:TSLA) to stop clearing forest land near Berlin to build its first European Gigafactory until it considers an environmental group’s appeal. While a lower court in Germany ruled last week that Tesla could clear the trees for its factory, a final construction permit has not yet been issued. Germany’s environment ministry had only given Tesla permission to begin work “at its own risk,” and complaints against the factory can still be filed up until March 5.<\/span>
\n Bombardier scales back to focus on business jets<\/span>
\n Alstom (OTCPK:ALSMY) has reached a $8.2B deal to acquire Bombardier’s (OTCQX:BDRAF, OTCQX:BDRBF) train business as the latter looks to radically shrink its business amid production problems, order delays and rising costs. The planned sale would more than halve Bombardier’s current debt of $9B and reduce the once-sprawling transportation manufacturer to a business jet maker of brands such as the Challenger, Learjet and Global aircraft. In 2017, Alstom tried to merge with the train business of Siemens (OTCPK:SIEGY), but the European Commission blocked the proposed tie-up two years later.<\/span>
\n What else is happening…<\/span>
\n Alibaba (NYSE:BABA), Tencent (OTCPK:TCEHY) help track coronavirus via QR codes.<\/span>
\n Macau casinos are back online starting Thursday.<\/span>
\n Bad news in Japan as economy shrinks 6.3%.<\/span>
\n Pier 1 (NYSE:PIR) files for Chapter 11 bankruptcy protection.<\/span>
\n Dell (NYSE:DELL) close to selling RSA Security for $2B.<\/span>
\n Nissan (OTCPK:NSANY) CEO ready to be sacked if can’t deliver turnaround.<\/span>
\n U.S. may halt GE (NYSE:GE) engine sales for new Chinese jet.<\/span>
\n ‘Do-or-die’ restructuring talks in Argentina.<\/span>
\n Today’s Economic Calendar<\/strong>
\n 8:30 Empire State Mfg Survey
\n 10:00 NAHB Housing Market Index
\n 2:00 PM Fed’s Kashkari Speech
\n 4:00 PM Treasury International Capital<\/span><\/span><\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Good morning. Happy Friday. Happy options expiration. The Asian\/Pacific markets closed mostly down. China did well, but Hong Kong, South Korea, Indonesia, Singapore and the Philippines were weak. Europe, Africa and the Middle East currently lean down. Turkey, Hungary and Saudi Arabia are up; Denmark, Greece, South Africa, Norway, Belgium, Israel and Austria are down. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts\/13758"}],"collection":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13758"}],"version-history":[{"count":0,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts\/13758\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}