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Wall Street Breakfast

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

 

Wall Street Breakfast: Sweden Becomes First to Exit Negative Rates

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Despite a weakening economy, Sweden's Riksbank has swum against the tide of global monetary policy by hiking its benchmark repo rate by a quarter point to 0.0%. The move, which ends half a decade of negative rates, may have other central banks admit to some downside amid fears of penalizing good savers, supporting companies that might otherwise collapse and inflating bubbles in the property market. Kicking the unconventional addiction is not easy, however, with rates still negative in the eurozone, Hungary, Japan, Denmark and Switzerland.

Slightly higher open

Market reaction has been relatively muted so far as the Democrat-led House of Representatives voted to impeach President Trump for abuse of power and obstruction of justice. The case will now go to the Republican-controlled Senate, where the trial is likely to be dismissed or end with Trump being acquitted. Wall Street fell short of extending its five-session winning streak on Wednesday, as stocks reversed gains late in the day, though futures are now pointing to a slightly higher open.

Impeachment process and markets

The S&P 500 fell as much as 4.9% on October 8, 1998, the day the House voted to begin impeachment proceedings against President Clinton, before trimming losses to end the day down 1.2%. By the time Clinton was acquitted by the Senate in February 1999, the index was up 28%. Markets shrugged off an impeachment inquiry against President Nixon on February 6, 1974, but the S&P 500 fell around 30% until his resignation due to Watergate. There were other forces at play, however, including Nixon's decision to suspend the gold standard and a recession following the oil shock of late 1973.

Nike earnings: What to expect

With shares of Nike (NYSE:NKE) up 35% YTD, investors are expecting more good news when the sneaker giant reports FQ2 results after the bell. The company is likely to show growth in profits and revenue amid success in selling merchandise directly to consumers in-store and online, though focus will be on North America, where Nike has struggled to meet market expectations in recent quarters. Also watch out for comments about new CEO John Donahoe, who takes over for Mark Parker when he steps down in January.
Go deeper: Alexander Veytsman believes Nike's double digit top line growth is sustainable next year.

Facebook heads to the Super Bowl

Facebook (NASDAQ:FB) is airing its first ad at the big game, as part of the social network's "More Together" campaign which launched in May. The spot will have cameo appearances from Chris Rock and Sylvester Stallone, and display "how people from different backgrounds come together over shared interests and experiences, all through Facebook Groups." Fox (NASDAQ:FOX) had been selling 30-second slots for more than $5M, Variety reported in November.
Go deeper: FB is setting up to break previous highs, according to Steven Fiorillo.

MAX problems prompt Boeing downgrade

Amid a 737 MAX production halt and grounding extension, Moody's has cut Boeing (NYSE:BA) one level to A3, four levels above speculative grade. The agency sees long-term risk to the company’s reputation, which could jeopardize its financial future, as well as increasing program costs and claims for compensation. Overnight, Norwegian Air's acting CEO told a podcast - released by DNB Markets - that he hopes to secure a deal with Boeing by year-end over compensation for the 737 MAX grounding.
Go deeper: MAX suspension makes sense, but many questions remain unanswered, writes Dhierin Bechai.

California green lights driverless trucks, vans

The next step in the self-driving revolution is taking shape as California approves a broader variety of autonomous vehicles to be tested on the state's public roads, including small to mid-sized trucks and vans. Companies testing vehicles without a human test driver behind the wheel will have to build in a link to a remote operator and must agree to share data with the state. While 65 firms currently hold permits to test autonomous vehicles in California, only one company, Alphabet's Waymo (GOOG, GOOGL), has attained a license to test fully driverless vehicles.

Creating a smart standard

Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Google (GOOG, GOOGL) and the Zigbee Alliance have announced a new partnership called "Project Connected Home over IP." It will create a new standard that will make it easier for the fragmented ecosystem of smart home products to work together. “The project is built around a shared belief that smart home devices should be secure, reliable, and seamless to use,” the companies said in a press release.

Doubling down on a Scottish referendum

Scotland's First Minister Nicola Sturgeon is sending a letter to Boris Johnson asking for the U.K. Parliament to grant Scotland the right to hold another independence referendum. If he responds "no" again, Sturgeon says she will "consider all reasonable options to secure Scotland's right to self-determination." Scotland, part of the United Kingdom for almost 313 years, rejected independence by 55% to 45% in a 2014 referendum (but that was before Brexit).

Wednesday's Key Earnings
General Mills (NYSE:GIS) +1.9% posting pet segment strength.
Micron (NASDAQ:MU) +4.6% AH on beats, in-line revenue outlook.

Today's Markets

In Asia, Japan -0.3%. Hong Kong -0.3%. China flat. India +0.3%.
In Europe, at midday, London flat. Paris flat. Frankfurt -0.3%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq flat. Crude steady at $60.83. Gold unmoved at $1478.70. Bitcoin +8.1% to $7160.
Ten-year Treasury Yield +2 bps to 1.94%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Current Account
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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