Highlights

Wall Street Breakfast

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

 

Wall Street Breakfast: Stellar 2019 Comes To A Close

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It was another exciting year for investors in 2019 amid a stock market rally that saw the S&P 500 surge 28%, for the biggest gain since 2013. Easing trade tensions with China, a shift in monetary policy at the Fed, and improving economic outlook all renewed investors' faith, while safer assets like gold and bonds also soared. Other notable highlights: Tech domination, M&A activity, streaming wars, vaping crackdown, American energy independence, hot IPO market, the EV revolution, 737 MAX crisis, record holiday shopping and getting Brexit over the line.

Final trading day of 2019

U.S. stock futures turned green overnight before the final trading session of the year after Wall Street slipped from record highs on Monday as investors booked profits. While there's little to drive the market with trading desks lightly staffed, the South China Morning Post reported on some trade news. Chinese Vice Premier Liu He will head to Washington in the next few days to complete the highly anticipated Phase One trade deal, though the actual signing ceremony may take place next week.
 

California sued over gig worker law

The battle over the gig economy is escalating in California, where a recently passed bill that reclassifies contractors as employees goes into effect on Jan. 1. Uber (NYSE:UBER) and Postmates have filed suit against the state, alleging that the legislation violates constitutional guarantees of equal protection and due process because of how it targets some workers and companies. An injunction is now being sought against the new law, known as Assembly Bill 5, which will transform the operations of on-demand services.
 

Ghosn turns celebrity fugitive

How did he do it? Ousted Nissan (OTCPK:NSANY) and Renault (OTCPK:RNLSY) boss Carlos Ghosn has fled to Lebanon, saying he wouldn’t be "held hostage by a rigged Japanese justice system where guilt is presumed." It's the latest dramatic twist in a year-old saga that has shaken the global auto industry and jeopardized the Nissan-Renault alliance. Ghosn is accused of misconduct ranging from understating his salary to misdirecting Nissan funds.
 

Tesla Shanghai

Tesla (NASDAQ:TSLA) has delivered its first batch of made-in-China Model 3s to 15 of its Chinese employees. The Shanghai plant now produces 28 or more Model 3s every hour and works about 10 hours each day, meaning that it produces more than 1,000 cars each week (output of 3,000/week is expected "in the near future"). About 30% of the Model 3 parts are currently sourced in China and the car will be totally localized by the end of next year.
 

MAX compensation

The 737 MAX crisis is costing Boeing (NYSE:BA) another pretty penny as the planemaker reached a compensation agreement with Turkish Airlines. The statement to the Istanbul stock exchange did not specify the deal's value, but Hurriyet newspaper said it was worth $225M: $150M in compensation and $75M covering things such as spare parts and training. Following two fatal crashes, the 737 MAX has been grounded since March, costing Boeing more than $9B so far.

McDermott in bankruptcy talks

McDermott (NYSE:MDR) closed down 50% on Monday to $0.75/share in reaction to a WSJ report that the engineering firm is in talks with its lenders to file for bankruptcy within weeks. The group may provide an approximately $2B loan to keep the company's operations running during bankruptcy, while the financing would afford McDermott the ability to provide letters of credit, most of which expire within a year and need to be renewed for the firm to continue its work on projects.

Leviathan goes online

Following numerous regulatory delays and court petitions, Israel's offshore Leviathan natural gas field, controlled by Noble Energy (NYSE:NBL), Delek Drilling (OTCPK:DGRLY) and Ratio Oil, has finally begun production. "Israel is now an energy powerhouse, able to supply all its energy needs and gaining energy independence," said Delek Drilling CEO Yossi Abu. The project's partners have also signed multi-billion-dollar export deals with Egypt and Jordan. The gas will start flowing in the coming weeks.

Huawei brushes off U.S. sanctions

Despite a U.S. campaign to curtail its global business, Huawei's revenue grew roughly 18% in 2019 to more than 850B yuan, or about $122B. In the past year, American authorities have handed down a pair of criminal indictments of the company, added Huawei to the Commerce Department's trade blacklist, and placed new restrictions on its ability to sell to small U.S. carriers. The Trump administration also pressured allies to exclude the Chinese telecom equipment supplier from 5G network rollouts.

U.S. population growth slowest in century

The U.S. grew from 2018 to 2019 by almost a half percent, or about 1.5M people, with the population standing at 328.2M, according to U.S. Census Bureau. That ranks as the slowest in 100 years as the number of births declined, the number of deaths increased, and international migration slowed. The trends are important to watch on a macro basis because population growth and productivity improvements are key to economic growth.+

What else is happening...

Chinese manufacturing activity expands for second straight month.

Lockheed Martin (NYSE:LMT) hits F-35 delivery target for 2019.

Ford (NYSE:F) reports strong demand for Mustang Mach-E.

FedEx (NYSE:FDX), UPS (NYSE:UPS) add new fees for bulky items.

Netflix (NASDAQ:NFLX) original content is watched more than other titles.

Microsoft (NASDAQ:MSFT) takes down domains of N.Korean hackers.

Today's Markets

In Asia, Japan closed. Hong Kong closed. China +0.3%. India -0.7%.
In Europe, at midday, London -0.6%. Paris flat. Frankfurt closed.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +0.1% to $61.74. Gold +0.5% to $1525.50. Bitcoin -0.9% to $7228.
Ten-year Treasury Yield flat at 1.9%

Today's Economic Calendar

9:00 S&P Corelogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence

 

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