Highlights

Wall Street Breakfast

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

 

Wall Street Breakfast: Stocks Bounce As 2020 Rally Returns

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U.S. equities are once again positive for the year as a de-escalation between the U.S. and Iran led shares back to the black on Wednesday. Stepping away from military retaliation, President Trump said he would instead tighten sanctions on the Islamic Republic, prompting oil prices to drop below $60 a barrel. Focus returns to trade? Futures now suggest the DJIA will tack on another 100 points at the open as China confirmed Vice Premier Liu He will sign a "Phase 1" deal next week in Washington.

Post-Brexit relationship

In his first face-to-face meeting with Ursula von der Leyen, the new president of the EU Commission, Boris Johnson laid out some red lines for his visions of a post-Brexit deal. He stressed that the U.K. won't extend its transition period beyond 2020, and that he wants a Canada-style trade accord (under which 98% of goods traded are free of tariffs). "Any future partnership must also not involve any kind of alignment" with EU rules and standards or be subject to the jurisdiction of the European Court of Justice.
Go deeper: Andrew Hecht sees potential for the pound rising to $1.40 in 2020.

Corona joins hard seltzer party

Shares of Constellation Brands (NYSE:STZ) rose 3.6% on Wednesday despite a drag from its stake in Canopy Growth (OTC:CGC), as results topped estimates and guidance received a lift. The company is now looking to diversify past cannabis, with plans to spend more than $40M in marketing alone on a line of Corona hard seltzers (the alcoholic category is a millennial favorite). "We're prepared to have one of the biggest introduction spends that we've ever had against a single brand, but recognize we're spending it against a franchise and that's Corona," CEO Bill Newlands told CNBC.
Go deeper: Ian Bezek points out other problematic STZ acquisitions.

Grubhub considers strategic options

The food-delivery provider has tapped financial advisers for help with a review of potential moves that could include a sale of the company or an acquisition, WSJ reports. Also on the menu is what to do in case an activist shows up. Going public nearly six years ago, Grubhub's (NYSE:GRUB) market cap is now valued at roughly $5B, down from a peak of more than $13B just over a year ago - before competition from other delivery startups heated up. GRUB shares are up 1% premarket, building on yesterday's 13% advance.
Go deeper: Aaron Butler calls Grubhub a structurally challenged business model.

AI welcomed into Hollywood

A new deal signed with Cinelytic will see Warner Bros. (NYSE:T) employ an artificial intelligence system to analyze potential movies and choose which ones to put into development. While the platform doesn't guarantee a hit, it can assess the value of a star in any territory and how much a film is expected to make in theaters and on other ancillary streams. The system can also complete the menial tasks executives normally have to do, like calculating the parameters for packaging, marketing and distribution, including release dates.
Go deeper: AT&T reiterates guidance ahead of earnings.

Loosening control over stock data

A proposal advanced by the SEC takes aim at a two-tier system that allows trading platforms like the New York Stock Exchange (NYSE:ICE) and Nasdaq (NASDAQ:NDAQ) to charge their largest customers higher fees for faster proprietary feeds, leaving smaller players to rely on a slower public stream. If the regulator decides to issue an order after receiving public input, the exchanges and FINRA would have to create a new governance plan, which would also be published for public comment before the SEC takes it into consideration.
Go deeper: Harrison Schwartz says Nasdaq is struggling to keep up with the competition.

Milestone for space tourism

"We now have two spaceships which are structurally complete, with our third making good progress," according to Virgin Galactic (NYSE:SPCE) CEO George Whitesides. "These spaceships are destined to provide thousands of private astronauts with a truly transformative experience by performing regular trips to space." The company has not set a date for the start of commercial operations, but has said it anticipates doing so in 2020.

Ghosn comes out swinging

During a two-hour-plus news conference on Wednesday, Carlos Ghosn, the world's most famous white-collar fugitive, defended himself against charges of financial crimes and called out former Nissan CEO Hiroto Saikawa and board member Masakazu Toyoda for orchestrating his downfall. Ghosn also criticized the recent performance of Nissan (OTCPK:NSANY) and Renault (OTCPK:RNLSY), declaring, "there is no more alliance." Nissan's stock is still trading near recent lows as the automaker faces huge investment requirements and challenges of slowing sales.

Sidestepping California's gig worker law

Uber (NYSE:UBER) drivers will now be able to see a trip's time, distance, destination and estimated price ahead of time, and can reject requests without penalty, essentially giving them more freedom to refuse less-profitable trips. The latest changes are meant to give drivers more choice about which rides they accept, making them appear more independent in the eyes of the law. California's Assembly Bill 5 went into effect on Jan. 1, establishing a test that employers must pass to classify their workers as contractors.

Wednesday's Key Earnings

Bed Bath & Beyond (NASDAQ:BBBY) -9.9% AH withdrawing its annual forecast.
Constellation Brands (STZ) +3.6% as marijuana losses eased.
Lennar (NYSE:LEN) +0.8% forecasting cash flow growth.
Walgreens (NASDAQ:WBA) -5.8% on soft pharmacy volumes.

Today's Markets

In Asia, Japan +2.3%. Hong Kong +1.7%. China +0.9%. India +1.6%.
In Europe, at midday, London +0.6%. Paris +0.4%. Frankfurt +1.3%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.4%. Crude +0.3% to $59.77. Gold -0.8% to $1548.30. Bitcoin -6% to $7862.
Ten-year Treasury Yield flat at 1.87%

Today's Economic Calendar

8:00 Fed’s Clarida: Economic Outlook and Monetary Policy
8:30 Initial Jobless Claims
9:30 Fed's Kashkari Speech
10:30 EIA Natural Gas Inventory
11:30 Fed's Williams: “The Future of Inflation Targeting”
12:45 PM Fed's Barkin Speech
1:00 PM Results of $16B, 30-Year Note Auction
1:20 PM Fed's Evans Speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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