Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 13 Dec 2019, 9:17 AM

 

Wall Street Breakfast: Johnson Promises Brexit After Landslide Victory

Author: bmotrader   |  Publish date: Fri, 13 Dec 2019, 9:17 AM


Sterling is trading at $1.3474, more than 2.4% higher, while the FTSE 100 is up 1.8%, as Boris Johnson returned to Downing Street with a big parliamentary majority. The "huge great stonking mandate" likely means backing for his Brexit deal and the departure from the EU by the end of next month. While that reduces a significant amount of Brexit uncertainty, the U.K. could still have a hard exit from the single market and customs union at the end of 2020 if the two sides cannot strike a trade agreement.

Standoff over Scottish independence

Winning 48 of Scotland's 59 seats in the national parliament, the SNP's Nicola Sturgeon is expected to write to Johnson next week asking him for approval to stage a new independence referendum. While he "may have a mandate to take England out of the European Union, he emphatically does not have a mandate to take Scotland out of the EU," she declared. Part of the U.K. for more than 300 years, Scotland rejected independence by 10 percentage points in a 2014 referendum (that was before Brexit).

EU agrees to go carbon neutral by 2050

Stepping up their fight against climate change, EU leaders have agreed to cut the bloc's greenhouse gas emissions to net-zero by 2050. The only standout was Poland. It refused to implement the decision before June, seeking financial assurances to safeguard its economy, which relies on coal for 80% of its energy needs. Funding shortfall? The EU Commission estimates the bloc's 28 members - including the U.K. - could need as much as €575B annually to cover the costs of reaching their mid-century target.

Fresh record highs

Stocks soared across the board overnight on news of an imminent trade deal between the U.S. and China, as well as the end to Brexit deadlock, as traders crave some certainty in what is already a banner year for markets. Shanghai advanced 1.8% and the Euro Stoxx 50 posted gains of 1.5%, while U.S. equity index futures are ahead by 0.5%, setting up fresh record highs for Wall Street. A gauge of U.S. consumer health is also on tap as the Commerce Department releases retail sales for November, which includes the busy Black Friday holiday.

Half a trillion repo intervention

Concerns are high that banks will pull back from lending ahead of regulatory capital calculations on Dec. 31, triggering flashbacks of when overnight repo rates jumped as high as 10% in September. A new plan from the New York Fed includes overnight lending across New Year totaling $225B and $190B in longer-term repo loans - starting next week - that will provide cash to borrowers into 2020. Together with $75B of cash already provided to the market to cover year-end, the Fed will have $490B in lending outstanding, nearly double the scale of its recent repo interventions.

AT&T turns on low-band 5G network

AT&T (NYSE:T) has switched on its 5G service in 10 markets, including Los Angeles, San Diego and Pittsburgh, as it begins selling the Samsung (OTC:SSNLF) Galaxy Note10+ to take advantage of the new network. It's what the company is calling "low-band 5G" - for consumers on mobile devices vs. the high-band 5G+ built to serve businesses, large stadiums or campuses. Both are based on new 5G tech, as compared to the LTE-based 5G Evolution service that customers had until now.

More companies folding to Chinese pressure?

Since August, Refinitiv has blocked more than 200 stories about the Hong Kong protests plus numerous other Reuters articles that could cast Beijing in an unfavorable light, according to an exclusive report from Reuters. Internal Refinitiv documents show that over the summer, the company installed an automated filtering system to facilitate the censoring. Refinitiv was formed last year when a consortium led by Blackstone (NYSE:BX) purchased a 55% stake in Thomson Reuters' Financial & Risk business (NYSE:TRI), which included its Eikon terminal business, for about $20B.

Lyft disrupts with rental service

Shares of Hertz (NYSE:HTZ) and Avis (NASDAQ:CAR) dropped sharply on Thursday after Lyft (NASDAQ:LYFT) introduced a car rental service allowing customers to rent a vehicle without having to go to the counter. The service that has no mileage limits, cars can be taken for a day or up to two weeks, and 22 will be set minimum age for a renter. Lyft will also charge the "local market rate" for gas and provide renters with two $20 ride credits to cover the cost of taking a Lyft to and from the rental points.

Bonobos founder leaving Walmart

In a LinkedIn post entitled "A Love Letter to Walmart," Bonobos founder Andy Dunn said he would be leaving the company in early 2020, more than two years after it bought his menswear brand. Dunn, currently SVP of digital consumer brands at Walmart (NYSE:WMT) U.S. eCommerce, became part of the company’s efforts to take on Amazon (NASDAQ:AMZN) and other online sellers. But recently, Walmart has been evaluating its clothing brands, selling women’s apparel brand ModCloth and, according to media reports, had discussed even selling Bonobos.

Thursday's Key Earnings
Adobe (NASDAQ:ADBE) +3.1% AH beating expectations.
Broadcom (NASDAQ:AVGO) -1.4% AH as order losses hit shares.
Costco (NASDAQ:COST) -0.8% AH missing revenue estimates.
Oracle (NYSE:ORCL) -2.9% AH weighed down by its licensing business.

Today's Markets

In Asia, Japan +2.6%. Hong Kong +2.6%. China +1.8%. India +1.1%.
In Europe, at midday, London +1.8%. Paris +1.2%. Frankfurt +1.2%.
Futures at 6:20, Dow +0.5%. S&P +0.5%. Nasdaq +0.5%. Crude +1.3% to $59.93. Gold +0.2% to $1475.80. Bitcoin +0.7% to $7224.
Ten-year Treasury Yield flat at 1.89%

Today's Economic Calendar

8:30 Retail Sales
8:30 Import/Export Prices
10:00 Business Inventories
11:00 Fed's Williams Speech
1:00 PM Baker-Hughes Rig Count

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Wall Street Breakfast: Future Of Brexit Hangs In The Balance

Author: bmotrader   |  Publish date: Thu, 12 Dec 2019, 9:27 AM


U.K. voters are heading to the polls for a general election that is being seen as a vote on Brexit and will likely shape the country for decades to come. Boris Johnson and his Conservative Party are aiming to win a majority in the 650-seat parliament that will enable them to pass their Brexit deal, formally known as the "Withdrawal Agreement," and leave the EU by January 31, 2020. Strong short-term impacts are expected on trading floors, but the outcome will also have a long structural influence on U.K. financial asset classes like stocks, sterling and government bonds.

Lagarde's debut

Already pledging a wide strategy review, new ECB President Christine Lagarde is in the hot seat today for her first policy meeting and press conference that follows. She'll present the ECB's latest economic forecasts, including a first reading for 2022, the earliest date at which economists see the central bank beginning to exit its stimulus. Lagarde might also see her prime task as reuniting the ECB's Governing Council, healing the wounds from a controversial policy decision to reinstate QE in September.

Dovish Fed and tariff decision

Building on yesterday's gains, Dow and S&P 500 futures are up 0.2% and Nasdaq futures are ahead by 0.5%, after the Fed held rates steady and signaled little chance of a near-term move. "Our economic outlook remains a favorable one, despite global developments and ongoing risks," Jerome Powell said in a statement. President Trump also meets his senior trade team in Washington today about planned Dec. 15 tariffs on nearly $160B in Chinese imports. Many had already expected a Phase One trade deal, but the question now appears to be whether Washington will delay the duties or let them take effect.
Go deeper: Kristina Hooper asks if trade is entering an era of 'vigilante protectionism.'

Last of the tech earnings

Traders will get quarterly results after the bell from Adobe (NASDAQ:ADBE), Broadcom (NASDAQ:AVGO) and Oracle (NYSE:ORCL), which are usually the last to report following the busy earnings season. Robust adoption is anticipated in Adobe's Digital Media Solutions, as well as impressive growth at its Creative Cloud and Document Cloud business lines. Broadcom is meanwhile expected to benefit from the upcoming 5G cycle, but weakness may be seen from recent enterprise networking and storage trends, while Oracle results are likely to reflect solid adoption of cloud-based services.
Go deeper: Brian Gilmartin gives a preview on Oracle earnings.

Macau to diversify into financial hub

As unrest continues in neighboring Hong Kong, Chinese President Xi Jinping will visit Macau next week to announce a raft of new policies aimed at diversifying the city's casino-dependent economy into a financial center. Those include the establishment of a yuan-denominated stock exchange and the acceleration of a renminbi settlement center, Reuters reports. "We used to give all the favorable policies to Hong Kong," said one Chinese official who requested anonymity. "But now we want to diversify it."
Go deeper: Hong Kong-Chinese intervention risk is on the rise, says Harrison Schwartz.

'Decentralized standard'

Twitter (NYSE:TWTR) plans to set up an independent research group to create an "open and decentralized" system for social networks, enabling individuals to use a variety of services to access the same platform. For example, a user could sign up with a provider that would aggressively filter out racist material, or another that would promote conversations over other types of content. The "open standard," however, could upend Twitter's business model in the process by giving rise to competitor services.
Go deeper: From Growth to Value feels Dorsey is a good CEO for Twitter.

Saudi Aramco touches $2T market cap

Reaching the price tag long sought by Saudi Crown Prince Mohammed bin Salman, shares of Saudi Aramco (ARMCO) surged to 38.7 riyals ($10.32) in their second day of public trading, pushing the state-backed oil giant to a record $2T valuation before paring gains. The figure, nearly $1T higher than the world's next-largest public companies, was long doubted by most in the financial community, especially after several recent high-profile IPO flops.

Harold Hamm moves to chairman role

Billionaire shale drilling pioneer Harold Hamm is retiring as chief executive of Continental Resources (NYSE:CLR), the oil-and-gas company he founded back in 1967. The new CEO will be William Berry, though Hamm will retain his holdings and help the company cultivate new strategic opportunities as chairman. Continental is now the largest producer in North Dakota’s Bakken shale, though its share price has languished nearly 37% over the past three years, as a prolonged downturn swept through the shale industry.

General Electric a Buy at UBS

GE (NYSE:GE) +1.3% premarket after UBS raised its rating on the stock to Buy (from Neutral) and predicted a 2020 "inflection point" for the company given its successful de-levering efforts. Analyst Markus Mittermaier additionally upped his price target to $14, one of the highest on Wall Street and a $1.50 increase from his previous estimate. He further sees "strong" estimated earnings growth in 2020 and 2021, as well as a tripling of free cash flow to $2.3B next year.

Hearing highlights on Boeing oversight

Surviving a gauntlet of questions, Boeing (NYSE:BA) ended the session on Wednesday in positive territory following a House hearing on the FAA's oversight of the planemaker. Agency chief Steve Dickson said he would have grounded the 737 MAX after its first crash "with what I know now," if he had been the FAA chief at the time. He's also considering unspecified enforcement action against Boeing, while another FAA official said an investigation is underway of a whistleblower's complaints about the company's manufacturing practices at a MAX factory near Seattle.

Wednesday's Key Earnings

Lululemon (NASDAQ:LULU) -4.5% AH on a weaker-than-expected outlook.

Today's Markets

In Asia, Japan +0.2%. Hong Kong +1.3%. China -0.3%. India +0.4%.
In Europe, at midday, London +0.5%. Paris flat. Frankfurt +0.1%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.5%. Crude +0.5% to $59.04. Gold +0.3% to $1479.20. Bitcoin -0.6% to $7177.
Ten-year Treasury Yield flat at 1.8%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Producer Price Index
10:30 EIA Natural Gas Inventory
1:00 PM Results of $16B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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Wall Street Breakfast: Aramco Becomes World's Largest Listed Company

Author: bmotrader   |  Publish date: Wed, 11 Dec 2019, 9:54 AM


Writing a new chapter in IPO history, Aramco (ARMCO) shares rose 10% (the daily limit) to 35.2 riyals in Riyadh, raising the company's valuation to $1.88T and propelling the Saudi Tadawul exchange into the top ten global financial markets. The start of trading of the state-backed oil giant marks the end of a near four-year saga that's been linked with Crown Prince Mohammed bin Salman's Vision 2030. The plan hopes to diversify the economy away from energy by pumping funds into mega projects and industries like tourism and entertainment.

737 MAX whistleblower goes public

Ed Pierson, a former manager on the Boeing (NYSE:BA) 737 MAX line - who warned of production trouble - will testify today before the U.S. House Transportation and Infrastructure Committee. "All my internal warning bells are going off and for the first time in my life, I'm sorry to say that I'm hesitant about putting my family on a Boeing airplane," Pierson wrote to management before the first 737 MAX incident. The aircraft has been grounded since March after two fatal crashes in five months killed 346 people.
Go deeper: Dhierin Bechai comments on the possibility of a MAX production halt.

Funding the EV revolution through gas guzzlers

As the industry moves toward electric vehicles, profits from large SUVs will help pay for investments, according to General Motors (NYSE:GM) President Mark Reuss. On that note, the automaker, which owns close to 70% of the U.S. large sport utility market, unveiled its 2021 Chevrolet Tahoe and Suburban. GM has also sided with the Trump administration in a fuel economy dispute with California, which has sued to maintain stronger Obama-era standards.
Go deeper: Doron Levin talks GM's electrified future.

Rare earth security

Aiming to secure domestic supplies of minerals used to make military weapons and electronics, the U.S. Army plans to fund construction of rare earths processing facilities, according to government documents seen by Reuters. The move marks the first financial investment by the U.S. military into commercial-scale rare earths production since the Manhattan Project built the first atomic bomb during WWII. Ucore (OTCQX:UURAF), Texas Mineral Resources (OTCQB:TMRC) and a joint venture between Lynas (OTCPK:LYSCF) and privately-held Blue Line are expected to respond to the proposals.
Go deeper: 'REMX: Stability Returning To Strategic Metals' by Harrison Schwartz.

Fed decision

U.S. stock index futures are still in a holding pattern as investors guess whether the U.S. and China will announce some form of trade deal before Sunday. Eyes are also on the Fed's last policy meeting of 2019. The central bank is expected to keep rates steady after completing a year-long U-turn that saw it abandon a tightening cycle and lower borrowing costs three times. A key indicator of inflation trends, the Consumer Price Index, will additionally be released this morning and is predicted to be in line with the Fed's 2% annual inflation target.
Go deeper: Ray Dalio discusses the legacy of Paul Volcker.

Agreement reached on USMCA - again

The Trump administration will "push hard on passing USMCA before the end of the year," White House spokeswoman Stephanie Grisham declared, after U.S. House Democrats backed a renegotiated version of the trade agreement. The updated deal aims to improve enforcement of worker rights and hold down prices for biologic drugs by eliminating a patent provision. Besides clearing the U.S. Congress, Mexico’s Senate must approve the modifications, as well as the Canadian parliament.

Johnson's polling lead shrinks

Sterling inched lower overnight to $1.3144 after YouGov's final pre-election forecast predicted fewer Conservative net gains than in previous estimates. Party leaders are touring the country today in one final push for votes before polling stations open tomorrow at 7 a.m. Hours earlier, Prime Minister Boris Johnson plowed a British flag-themed digger through a styrofoam wall with "gridlock" written on it, vowing to demolish three years of stalemate over Brexit.

Big Tech probes wrap up in 2020

While the DOJ reviews aren't limited to antitrust worries, it is a "front and center" concern, according to U.S. Attorney General William Barr. "We started in earnest in July. It’s been moving very quickly. We're talking very broadly with people and getting a lot of input from people in the industry and experts and so forth," he told the WSJ CEO Council. The investigations cover Facebook (NASDAQ:FB), Google (GOOG, GOOGL), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL).

Ad sales boom for 2020 Summer Olympics

NBCUniversal (NASDAQ:CMCSA) has landed more than $1B in national advertising commitments for the 2020 Summer Olympics in Tokyo, reflecting double-digit growth over where it was pacing eight months before the 2016 Olympics in Rio de Janeiro. There's fresh interest as well, with more than half of advertisers committing to slots being new to the games. Next summer is expected to be a hot one for media, with an approaching U.S. election and proximity to the Democratic and Republican National Conventions.

Tuesday's Key Earnings
AutoZone (NYSE:AZO) +6.9% after a same-store sales beat.
GameStop (NYSE:GME) -14.4% AH as revenue continued to plummet.

Today's Markets

In Asia, Japan -0.1%. Hong Kong +0.8%. China +0.2%. India +0.4%.
In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt +0.3%.
Futures at 6:20, Dow -0.1%. S&P flat. Nasdaq flat. Crude -0.7% to $58.85. Gold +0.2% to $1471.50. Bitcoin -1.7% to $7218.
Ten-year Treasury Yield -1 bps to 1.82%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:00 Quarterly Services Report
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM Treasury Budget
2:00 PM Chairman Press Conference

 

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Wall Street Breakfast: Trade Deadline And Fed Meeting

Author: bmotrader   |  Publish date: Tue, 10 Dec 2019, 7:31 AM


Equities look poised for another day of losses as DJIA futures suggest a 105-point decline at the open. Investors appear to be fretting over a Dec. 15 deadline set for the next round of U.S. tariffs on Chinese imports, as the Fed meets for its last policy meeting of the year. While the central bank is expected to keep rates where they are following Friday's better-than-expected jobs report, Fed watchers tomorrow will be closely listening for signals to the contrary at Jerome Powell's press conference.

Fun to stay at the USMCA

Putting the finishing touches on the trade pact, U.S. Trade Representative Robert Lighthizer and White House adviser Jared Kushner are headed to Mexico, where they will be joined by Canadian Deputy Prime Minister Chrystia Freeland. On Monday night, U.S. House Speaker Nancy Pelosi said she expected the final language of the deal to be set by Tuesday, which would bring Democrats to a "moment of truth" on whether to proceed to passage. USMCA would replace the 26-year-old NAFTA and encompass $1.2T in annual trade across the continent.
 

National Defense Authorization Act

The U.S. House of Representatives and Senate Armed Services Committees have reached a deal on a massive $738B defense bill, which includes many worker benefits like pay hikes and paid parental leave. The legislation also prohibits the transfer of Lockheed Martin (NYSE:LMT) F-35s to Turkey and establishes the U.S. Space Force as the sixth Armed Service of the United States, under the Air Force. Cash for military hardware was further allocated for three Arleigh Burke class destroyers (GD, HII), eight new F-15EX fighters (NYSE:BA), as well as twelve more F-35s than were requested by the administration.
 

World's biggest IPO just got bigger

Saudi Aramco (ARMCO) will exercise its 15% greenshoe option in whole or part during the first 30 days of its trading period, potentially raising the oil giant's valuation to $29.4B. The IPO is already the biggest on record, beating the $25B raised by Alibaba (NYSE:BABA) when it debuted in New York in 2014. Aramco's initial share price will be published today before the company lists tomorrow on the Saudi stock exchange.
 

Netflix dominates Golden Globe noms

Netflix (NASDAQ:NFLX) landed a total of 34 Golden Globe film and TV nominations in what is setting up to be a strong awards season for the streamer. Martin Scorsese's The Irishman landed five nominations on the film side, while The Crown and Unbelievable both landed four on the TV side. Three of the five films nominated for best motion picture drama were also from Netflix, with Marriage Story and The Two Popes joining The Irishman.
 

Amazon details JEDI bid protest

In a 103-page document made public on Monday, Amazon Web Services (NASDAQ:AMZN) claims it didn’t win the $10B JEDI cloud contract as a result of repeated public and private attacks from President Trump against Amazon and its CEO, Jeff Bezos. “The question is whether the President of the United States should be allowed to use the budget of DoD to pursue his own personal and political ends," the filing states. AWS is now calling for the Pentagon to terminate the award and conduct another review of the submitted proposals.

Nintendo turns on Switch in China

Shares of Nintendo (OTCPK:NTDOY) rose 2.9% overnight in Tokyo, hitting their highest intraday level since May 2018, after the Switch went on sale in China via a partnership with Tencent (OTCPK:TCEHY). Around 105,000 people made a reservation to buy the console on e-commerce site JD.com (NASDAQ:JD), while another platform Fenqile, reported strong demand. Nintendo has sold 41.67M units of the Switch globally since it was released worldwide in March 2017.

McAfee weighs potential merger

NortonLifeLock (NASDAQ:NLOK) has attracted deal interest from rival McAfee, the antivirus-software company owned by Intel (NASDAQ:INTC), TPG and Thoma Bravo, WSJ reports. Other suitors include private equity firms Permira and Advent International. NortonLifeLock is the new name for Symantec since that company closed a $10.7B deal to sell its enterprise-security business to Broadcom (NASDAQ:AVGO) in early November. NLOK +5.7% premarket.

Safari privacy features disrupt ad market

Advertisers have largely lost the ability to target people on Safari due to Apple's (NASDAQ:AAPL) Intelligent Tracking Prevention feature, which has been "stunningly effective" at preventing companies from identifying users' behavior across the web, The Information reports. In fact, the cost of reaching Safari users has fallen over 60% in the past two years, according to ad tech firm Rubicon Project, while ad prices on Google's (GOOG, GOOGL) Chrome browser have risen slightly. This has a greater impact in the U.S. than elsewhere, since more than 50% of mobile browsing is done on Safari.

Today's Markets

In Asia, Japan -0.1%. Hong Kong -0.2%. China +0.1%. India -0.6%.
In Europe, at midday, London -1.3%. Paris -1%. Frankfurt -1.7%.
Futures at 6:20, Dow -0.4%. S&P -0.4%. Nasdaq -0.4%. Crude -0.4% to $58.81. Gold +0.3% to $1469.60. Bitcoin -1.8% to $7353.
Ten-year Treasury Yield -3 bps to 1.8%

Today's Economic Calendar
FOMC meeting begins
6:00 NFIB Small Business Optimism Index
8:30 Productivity and Costs
8:55 Redbook Chain Store Sales
1:00 PM Results of $24B, 10-Year Note Auction

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Wall Street Breakfast: Stocks Take Breather From Market Rally

Author: bmotrader   |  Publish date: Mon, 9 Dec 2019, 10:15 AM


U.S. stock index futures are suggesting a pause from Friday's job-fueled rally as investors prepare for a series of major risk events later this week. Brexit is on watch ahead of a U.K. general election, a tariff deadline looms with China, and the Fed and ECB will hold their final policy meetings of the year. House Democrats could also vote on articles of impeachment against President Trump, while economic reports will reveal details on producer/consumer prices and retail sales.

Disney scores $10B at global box office

Frozen II pushed the studio past the milestone this weekend by bringing in another $125M worldwide. Disney (NYSE:DIS) already broke the annual global box office record back in July, as a Lion King remake pushed the company past its own $7.6B record set in 2016. It's also pretty remarkable as Disney reached the mark without the help of recently acquired 20th Century Fox (which grossed $2B at the box office this year), or Star Wars, which will likely provide another $500M+ before the end of 2019.
 

Future of U.S. wireless industry

In a case slated to start this morning, a coalition of 13 states and the District of Columbia, all led by their attorneys general, will face off against T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) over their $26.5B merger. Both the DOJ and the FCC have already allowed the deal to proceed after reaching an agreement with Dish Network (NASDAQ:DISH), which will buy Sprint's prepaid businesses including Boost and Virgin Mobile. The states argue, however, that the regulators erred in their decision, stating the tie-up of the third and fourth largest wireless carrier will limit competition and lead to higher prices.
 

Big Tech may pose risk to financial stability

The Financial Stability Board called for "vigilant monitoring" of the tech industry's shift into financial services in a new report released Sunday. "The risks are similar to those from financial firms more broadly, stemming from leverage, maturity transformation and liquidity mismatches, as well as operational risks." They would also crimp the ability of banks to generate capital through retained profits, while widespread access to customer data may mean that Big Tech could dominate the market for certain services.
 

China makes move against foreign tech

China's Communist Party has ordered all state offices to remove foreign hardware and software within three years, FT reports, in a move which could hit Microsoft (NASDAQ:MSFT), Dell (NYSE:DELL) and HP (NYSE:HPQ). Substitutions will take place at a pace of 30% in 2020, 50% in 2021, and 20% the year after, earning the policy the nickname "3-5-2." Earlier this year, Washington banned U.S. companies from doing business with China's Huawei, and expanded its blacklist in October to include a number of Chinese surveillance firms like Hikvision.

Hong Kong protests mark six-month anniversary

Hundreds of thousands of black-clad protesters thronged the streets of Hong Kong on Sunday, ahead of the six-month anniversary marking anti-government unrest. Authorities gave the green light to Civil Human Rights Front to hold the rally for the first time since August 18, while the city appealed for calm, saying, it had "learned its lesson and will humbly listen to and accept criticism." The Hang Seng Index is down 4% since the protests ramped up in June, with around 6,000 people arrested and hundreds injured, including police.

Trade war weighs on Chinese exports

China's exports dropped 1.1% in dollar terms in November from a year earlier, while imports rose 0.3% (the first Y/Y growth since April), resulting in a trade surplus of $38.73B for the month. "If a phase one trade deal is struck and there is no further escalation of U.S.-China trade tensions, the drag on China's exports from higher U.S. tariffs will likely ease through 2020," said Sylvia Sheng, global multi-asset strategist at JPMorgan. Imports from the U.S. rose for the first time since August last year, with China's trade surplus with the U.S. for November standing at $24.6B, easing from the previous month's surplus of $26.45B.

Another bite in the delivery wars

Naspers' Prosus (OTCPK:PROSF) raised its unsolicited cash offer for Just Eat (OTC:JSTLF) to $6.5B, ratcheting up the bidding war over the British food delivery service. That's about 5% higher than a rival all-share deal from Takeaway.com (OTCPK:TKAYF), which has the backing of the board of Just Eat. Both sides are due to report on how many shares their offers have won by Dec. 12. If neither emerges as a winner, Britain's Takeover Panel will start an auction process from Dec. 27.

Sanofi bolsters immuno-oncology pipeline

Sanofi (NASDAQ:SNY) will acquire all of the outstanding shares of Synthorx (NASDAQ:THOR) for $68 per share in cash, representing a 172% premium to the latter's closing price on Dec. 6. "This acquisition fits perfectly with our strategy to build a portfolio of high-quality assets and to lead with innovation, as you will hear at our Capital Markets Day tomorrow," said CEO Paul Hudson. "Additionally, it is aligned with our goal to build our oncology franchise with potentially practice-changing medicines and novel combinations." THOR +171% premarket.
 

Fed balance sheet reaches $4.07T

The expansion of the Federal Reserve's balance sheet continues as $72.8B in temporary liquidity was added to financial markets on Friday. While repo interventions have become mainstream since mid-September - when short-term rates unexpectedly shot up - Fed Chair Jerome Powell has maintained the ongoing program is not quantitative easing, though some believe the central bank is in effect implementing round four of QE. Last Thursday, the Fed reported that its balance sheet had risen from $3.8T in September to $4.07T.

Today's Markets

In Asia, Japan +0.3%. Hong Kong flat. China +0.1%. India +0.1%.
In Europe, at midday, London -0.2%. Paris -0.4%. Frankfurt -0.1%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude -0.8% to $58.75. Gold +0.2% to $1467.50. Bitcoin -0.5% to $7488.
Ten-year Treasury Yield -2 bps to 1.82%

Today's Economic Calendar

12:30 PM TD Ameritrade IMX
1:00 PM Results of $38B, 3-Year Note Auction

 

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Wall Street Breakfast: Deeper Cuts Debated At OPEC Meeting

Author: bmotrader   |  Publish date: Thu, 5 Dec 2019, 6:49 PM


Reports out of Vienna suggest OPEC and its allies led by Russia are discussing increasing current cuts of 1.2M barrels per day by more than 400K bpd, as well as extending their agreement from March, to June or later. Crude futures already soared 4.2% on Wednesday - the biggest gain since the attacks on Saudi Aramco's (ARMCO) facilities - on output cut rumors and tightening American stockpiles. A final decision by OPEC+ is likely to come tomorrow afternoon. The group has curbed supply since 2017 to counter booming output from the U.S., which has become the world's largest producer.

 

World's biggest IPO

Saudi Arabia is expected to publish the initial share price of Aramco (ARMCO) today, which will list locally on the Tadawul stock exchange. The current price range puts the oil giant's value at between $1.6T to $1.7T, a figure that's set to beat the record $25B raised by Alibaba (NYSE:BABA) when it debuted in New York in 2014. A 1.5% stake in Aramco is being offered, with 0.5% available to individual retail buyers and 1% for institutional investors.
 

Futures point to more gains

Traders are closely monitoring the prospect of a Phase One trade deal with just 10 days to go before Washington is poised to impose another $156B of tariffs on Chinese goods. Trade optimism led the DJIA to break a three-day decline on Wednesday and rise nearly 150 points, while U.S. futures aimed to extend the gains overnight, climbing another 0.4%. On the data front, the latest weekly jobless claims will be released at 8:30 a.m. ET, while earnings season wraps up with results from Tiffany (NYSE:TIF), Dollar General (NYSE:DG), Ulta Beauty (NASDAQ:ULTA) and DocuSign (NASDAQ:DOCU).
 

Shari Redstone's dream comes true

Viacom (NASDAQ:VIA) and CBS (NYSE:CBS) have completed their re-merger, scaling up against big competition with more than 140,000 premium TV episodes, 3,600 film titles and $13B in annual content investment. ViacomCBS Class A "VIACA" and Class B "VIAC" shares will begin trading today on the Nasdaq. The new company accounts for 22% of TV viewership in the U.S., with the highest share of broadcast and cable viewing across key demographics.
 

Auto news roundup

Local United Auto Workers leaders nationwide have approved a new four-year labor contract with Fiat Chrysler (NYSE:FCAU), sending it to their rank-and-file members for final approval. Former GM (NYSE:GM) board member Joe Ashton, a retired UAW leader, also pleaded guilty to criminal charges as part of an ongoing federal corruption probe into the union. Lastly, General Motors announced it will be laying off more than 800 employees as it converts its Detroit Hamtramck plant to an electric vehicle facility, though most of the workers will be offered buyouts or jobs at other factories.

Mass strike paralyzes France

Protests are rocking France again and threatening to bring the country to a standstill over Emmanuel Macron's plan for a top-to-bottom rebuilding of the pension system. Unions representing everyone from transport workers to lawyers, doctors, teachers and students are going on an indefinite "greve," or strike, starting today. The walkouts come as German industrial orders fell unexpectedly in October and eurozone retail sales slumped a worse-than-forecast 0.6%.

Johnson pledges Brexit in 100 days

"This is the most important election in a generation - important because it will define if we go forward as a country or remain stuck, stalled, repeating the same arguments of the last three years with yet more damaging uncertainty," Boris Johnson declared on the campaign trail. Should he win the general election, Johnson would bring his EU withdrawal agreement bill before MPs for an initial vote before Christmas, with the aim of leaving the EU by January 31. Britain would then enter a transition period for the remainder of 2020 as a trade deal is finalized with the bloc.

Brokerage disruption

"We're delighted to share that more than 10M people have accounts on Robinhood," the company wrote in a blog post, rapidly growing from 1M subs in 2016 and 6M accounts in October of 2018. To put that in context, the combined Charles Schwab (NYSE:SCHW) and TD Ameritrade (NASDAQ:AMTD) brokerage giant will serve about 24M clients. The Schwab deal was announced last week after all major brokerages dropped stock trading commission fees to keep up with the trend set by Robinhood, which landed a $7.6B valuation in July after its latest funding round.

Wednesday's Key Earnings

Campbell Soup (NYSE:CPB) +1.9% with turnaround on track.
Slack Technologies (NYSE:WORK) +1.9% AH on beats, in-line outlook.

Today's Markets

In Asia, Japan +0.7%. Hong Kong +0.6%. China +0.7%. India +0.2%.
In Europe, at midday, London -0.1%. Paris +0.8%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude +0.2% to $58.56. Gold -0.1% to $1479.40. Bitcoin +2.5% to $7374.
Ten-year Treasury Yield flat at 1.78%

Today's Economic Calendar

7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 International Trade
10:00 Factory Orders
10:00 Randal Quarles: “Testimony Before the Senate Banking Committee”
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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