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Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 14 Aug 2020, 7:19 AM

 

Wall Street Breakfast: Trader Nerves Settle After Iranian Missile Strikes

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Markets have recovered following initial panic after Iran launched more than a dozen ballistic missiles at bases housing U.S. troops in Iraq. Down by nearly 400 points overnight, DJIA futures have recouped all of their losses, while oil has given back gains and gold is off its highs. The direction of today's session will likely depend on the U.S. response. President Trump will make a statement this morning, but tweeted last night that "all is well" and seemed to suggest there were no American casualties in the attacks.

737 crashes in Iran, no survivors

A Boeing (NYSE:BA) 737 passenger plane operated by Ukraine International Airlines crashed minutes after takeoff from Tehran overnight killing all 176 people on board. Ukraine's embassy in Iran pointed to an engine failure - the turbines are made by CFM International (GE, OTCPK:SAFRY) - though Iran said it wouldn't give the recovered black box to Boeing. The 737-800 (only three years old) is a predecessor of the 737 MAX, the type that regulators grounded worldwide in March after two fatal crashes in a span of five months.
Go deeper: Boeing concedes to MAX simulator training.

Most valuable American carmaker

Continuing its surge into 2020, Tesla (NASDAQ:TSLA) rose as much as 4.7% on Tuesday to carve out yet another all-time high at over $470/share. The extended rally has pushed the company's market cap to the highest ever recorded by a U.S. automaker, topping the $80.81B cap of Ford (NYSE:F) in 1999 and easily outdistancing the record cap for pre-bankruptcy General Motors (NYSE:GM) or post-bankruptcy GM. Global records? Tesla's market cap still trails Toyota (NYSE:TM) and Volkswagen (OTCPK:VWAGY), which were valued at $231.76B and $98.05B, respectively.
Go deeper: The European View addresses bullish Tesla arguments.

Ghosn breaks silence

Lawyers for fugitive ex-Nissan (OTCPK:NSANY) chief Carlos Ghosn blasted the carmaker hours before he was scheduled to hold a highly anticipated news conference, accusing the company of using a "flawed, biased" internal probe to engineer his arrest. Keep your eyes on the presser, which begins at 8 a.m. ET. Ghosn is likely to name people behind what he says was a plot to halt his plans to integrate Nissan more closely with France's Renault (OTCPK:RNLSY), though the Japanese group is expected to go on the offensive to head off the attacks.

Earnings

Results today from Walgreens Boots Alliance (NASDAQ:WBA), Constellation Brands (NYSE:STZ) and Bed Bath & Beyond (NASDAQ:BBBY) will be among the last ahead of the fourth-quarter earnings season, which kicks into full gear over the coming weeks. While profits are expected to fall slightly - capping 2019 as a lackluster year - Wall Street is hopeful that earnings will rebound in 2020, possibly rising 9.6%. That would be the third-best growth rate in the last seven years, helping justify high stock prices and boosting further economic growth.
Go deeper: 'Why Walgreens Valuation Is No Longer That Appealing' by Wolf Report.

Chip prices bottom out

Shares of Samsung Electronics (OTC:SSNLF) rose 2% in Korea overnight after the company said operating profit likely slumped 34% in the fourth quarter. The figure was much milder than analysts had forecast, indicating that memory chip prices have bottomed out and strengthening hope of recovery from an industry downturn. Samsung, the world’s biggest maker of memory chips, has seen earnings drop since late 2018 on rising inventories and trade gloom.

IBM quantum computing service tops 100 clients

That's up from 40 a year ago, with customers including Delta (NYSE:DAL), Daimler (OTCPK:DDAIF), JPMorgan (NYSE:JPM) and Anthem (NYSE:ANTM), as well as industries ranging from energy to electronics. IBM's (NYSE:IBM) announcement suggests that quantum computing is no longer a lab or university experiment, said Matthew Brisse, an analyst at research and advisory firm Gartner. By 2023, a fifth of organizations, including businesses and governments, are expected to budget for quantum-computing projects, up from less than 1% in 2018.
Go deeper: Arturo Neto says IBM Cloud will drive cash flows and dividends.

Latest punch in meatless wars

McDonald's (NYSE:MCD) is expanding its pilot of Beyond Meat (NASDAQ:BYND) burgers to 52 restaurants across Canada after rolling out the plant-based meat burgers in 28 local outlets in October. The news comes after BYND shares soared 12.4% on Tuesday and follows an announcement from rival Impossible Foods, which said it won't be able to partner with the Golden Arches until the company is able to scale up production. "I wish we had vastly more capacity than we do right now because the demand is high," said CEO Pat Brown.

Troubles in Puerto Rico

Following a week of tremors, a magnitude-6.4 earthquake rocked Puerto Rico on Tuesday, triggering a blackout on the island that is still recovering two years after Hurricane Maria. The territory's federal board, which last year struck a $35B debt restructuring deal with creditors, authorized $260M in emergency reserve funds for expenses related to the quakes. More than 133K Puerto Ricans moved to the U.S. mainland in 2018, accelerating an exodus that has further dampened the local economy.

Today's Markets

In Asia, Japan -1.6%. Hong Kong -0.8%. China -1.2%. India -0.1%.
In Europe, at midday, London -0.5%. Paris -0.5%. Frankfurt -0.7%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.1%. Crude +0.1% to $62.77. Gold +0.5% to $1582.10. Bitcoin +5.7% to $8312.
Ten-year Treasury Yield -2 bps to 1.8%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
10:00 Fed's Brainard Speech
10:30 EIA Petroleum Inventories
1:00 PM Results of $24B, 10-Year Note Auction
3:00 PM Consumer Credit

 

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