Highlights

Wall Street Breakfast

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

 

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

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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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