Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 24 Jan 2020, 10:02 AM


Wall Street Breakfast: Merger Monday

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Marking the biggest ever deal in the luxury sector, LVMH (OTCPK:LVMHF) is buying Tiffany & Company (NYSE:TIF) for $16.2B, adding an iconic American name to the European giant's stable of brands. The $135-per share cash deal will boost LVMH's smallest business, the jewelry and watch division that is already home to Bulgari and Tag Heuer. Separately, Novartis (NYSE:NVS) has agreed to pay $9.7B for cholesterol-drug maker The Medicines Co. (NASDAQ:MDCO) as it continues to build up its heart treatment portfolio. The collection already includes Entresto, a $1B seller for heart failure, as well as an experimental RNA-targeting molecule from Ionis Pharmaceuticals (NASDAQ:IONS). TIF +5.8%; MDCO +22.6% premarket.

More M&A news

Charles Schwab (NYSE:SCHW) said it will scoop up TD Ameritrade (NASDAQ:AMTD) in a $26B all-stock deal, which is expected to close in the second half of 2020. The transaction will create "a Goliath in Wealth Management," Wells Fargo senior analyst Mike Mayo said on Thursday, when talks of the merger were first reported by CNBC. Consolidation in the industry was expected given that all the major brokers dropped trading commissions in recent months, leaving brokerages scrambling to find ways to maintain profits. AMTD +2.4%; SCHW -0.4% premarket.
Go deeper: The success of the combination will rest on the scale that can be achieved, writes John Mason.

Futures brighter as China acts on IP

The latest trade headlines are giving U.S. stock index futures a boost to start the week, with the DJIA pointing to a gain of 72 points at the open. China announced it will raise penalties on violations of intellectual property rights and is exploring lower thresholds of criminal punishments for those who steal IP. Assuaging recent concerns, U.S. National Security Adviser Robert O'Brien also said on Saturday that an initial trade deal with China was still possible by the end of the year.
Go deeper: Jeff Miller says the economic calendar this week is loaded with data.

Uber stripped of London license

Shares of the ride-hailing giant declined 6.4% in premarket trade after the company lost its license to operate in London for the second time in two years. While its services won't immediately be blocked, it is a major blow to Uber (NYSE:UBER), which must now appeal the decision and prove its safety record. Uber was previously blocked from the city in September 2017, leading to a protracted legal battle with Transport for London that won it a reprieve.
Go deeper: Competition is also a major concern for Uber, according to Crispus Nyaga.

Cybertruck orders trigger Tesla rebound

In a tweet late Sunday, Elon Musk indicated that Cybertruck orders have reached 200K, marking a milestone for the vehicle only three days after its launch. The news sent Tesla (NASDAQ:TSLA) shares up 3.4% premarket, after closing 6.1% lower on Friday as Wall Street analysts assessed the electric pickup truck, and questioned its futuristic design and price point. Musk added that "Cybertruck is our last product unveil for a while, but there will be some (mostly) unexpected technology announcements next year."
Go deeper: Despite being a fan, David Lerner gets bearish on Tesla.

Disney strikes gold with 'Frozen II'

The movie hauled in $127M domestically and $223M worldwide, resulting in the highest-grossing debut ever for any animated film globally. More records? The motion picture marked a new high in the U.S. and Canada for an animated release outside the summer season and was the largest opening ever for Walt Disney Animation Studios. It's also likely to be Disney's (NYSE:DIS) sixth film to net more than $1B at the box office in 2019. DIS +0.8% premarket.

Bitcoin crash

Bitcoin (BTC-USD) euphoria is wearing off fast as the currency plunged another 10% overnight to below $6,600 on concerns about a crackdown on crypto operations by China. That puts it on track for eight straight days of declines, tying a record losing streak from 2014. While bitcoin soared to $10K last month on comments from President Xi, who said Beijing should speed up research into blockchain, the PBOC is now warning investors not to conflate the technology with cryptocurrencies.

JEDI sees Amazon brandish lightsaber

After saying it would protest the award, Amazon (NASDAQ:AMZN) has formally filed a lawsuit challenging the Pentagon's choice of rival Microsoft (NASDAQ:MSFT) for a $10B cloud-computing contract called JEDI (Joint Enterprise Defense Infrastructure). The complaint is sealed, but the company said earlier this month there was "unmistakable bias" on the government's part. Amazon isn't alone. Oracle (NYSE:ORCL) is also appealing a July ruling from the U.S. Court of Federal Claims that dismissed its legal challenge to the cloud contract.

Landslide victory in Hong Kong

The Hang Seng index rose 1.6% overnight as pro-democracy forces won 86% of the seats on Hong Kong’s local district councils. The pro-government camp only won about 12% of seats versus 65% four years ago, putting pressure on authorities to meet the demands of the city's protestors. While district councilors typically handle local matters and lack legislative power, they hold close to 10% of the seats on the 1,200-member election committee that chooses the chief executive.

Johnson promises a Merry Brexmas

Comfortably ahead of the opposition Labour Party in the polls, Boris Johnson has laid out the Tory manifesto ahead of the Dec. 12 election. He's pledging to bring back his Brexit deal to parliament before Christmas and ruled out any further delays, saying, "we will not extend the implementation period beyond December 2020." Johnson also promised no new taxes in contrast with Jeremy Corbyn, who has proposed the measures to fund a major expansion of the U.K. Sterling +0.4% to $1.2881.

Today's Markets

In Asia, Japan +0.8%. Hong Kong +1.5%. China +0.7%. India +1.3%.
In Europe, at midday, London +0.8%. Paris +0.4%. Frankfurt +0.4%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.4%. Crude -0.2% to $57.68. Gold -0.4% to $1457.60. Bitcoin -8% to $6618.
Ten-year Treasury Yield +2 bps to 1.8%

Today's Economic Calendar
8:30 Chicago Fed National Activity Index
10:30 Dallas Fed Manufacturing Survey
1:00 PM Results of $40B, 2-Year Note Auction
7:00 PM Jerome Powell Speech

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