Highlights

Wall Street Breakfast

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

 

Wall Street Breakfast: Future Of Brexit Hangs In The Balance

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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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