Wall Street Breakfast

Author: bmotrader   |   Latest post: Mon, 27 Jan 2020, 9:03 AM


Wall Street Breakfast: Trade Deadline And Fed Meeting

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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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