Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 28 Feb 2020, 7:47 PM

 

Wall Street Breakfast: Last Day In Davos

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It's been quite a week at the World Economic Forum in Davos, where President Trump spoke about how the U.S. is in the midst of an economic boom and announced that the country would join a WEF initiative to restore a trillion trees by 2050. "Climate change," "positive" and "impact" were trending terms on Twitter, highlighting the event's focus to improve the state of the world. As the meeting comes to a close today, the conversation will shift to the global economic outlook, including reassessing geopolitical risks, the impact of climate change and prioritizing inclusive growth.

ECB not in a hurry

For all the hype about Christine Lagarde's inaugural strategy review, yesterday proved to be a letdown for central bank watchers who wanted more. "It sounds like a dry proposal... but the biggest challenge is going to be to harness all of the views, assessments and convictions into a direction that will serve the purpose that we have been assigned to - which is to guarantee price stability and the economy," she declared in Davos. "I don't think an ECB president right from the get-go should say this is my view, because I don't want to preclude others from expressing theirs and over-influence the debate. We will hopefully reach a consensus by December 2020."

Futures slightly higher

Looking to avoid their first week of declines for 2020, U.S. stock index futures advanced 0.2% overnight, while oil continued to be spooked by demand signs from China. For the week, the DJIA is down nearly 0.7%, the S&P 500 is off about 0.2% and the Nasdaq is up slightly, as traders digested earnings and grappled with fears surrounding the coronavirus outbreak. China has widened a lockdown in Hubei province as the death toll climbed to 26 (with 830 confirmed cases), and instituted travel restrictions that will affect at least 20M people across 10 cities. On Thursday, the World Health Organization also stopped short of calling the new coronavirus a global health emergency, saying the outbreak remains a local crisis.
Go deeper: Gilead assessing Ebola drug as coronavirus treatment.

Prison time for the opioid crisis

Pharma executives linked to the opioid crisis have been put on notice after John Kapoor, the founder of Insys Therapeutics (OTCPK:INSYQ), was sentenced to 66 months in prison. Several other former Insys executives will also end up behind bars for bribing doctors to prescribe the dangerous painkillers. While Insys and Purdue Pharma have both gone bankrupt under the weight of legal liabilities, other opioid makers and distributors are trying to negotiate settlement deals with state and local governments.

Bayer looks to close out Roundup saga

Bayer (OTCPK:BAYRY) shares rallied into the close yesterday on headlines that the company is in talks to settle cancer cases involving its Roundup weedkiller for $10B. According to Bloomberg, Bayer's lawyers say the company could set aside $8B to resolve the current cases and another $2B for potential future claims. What happened? Nearly two years ago, Bayer scooped up Monsanto in an ill-timed acquisition. U.S. lawsuits piled up almost immediately after the deal closed alleging Monsanto's Roundup weedkiller causes cancer.
Go deeper: Cash-Centered Creep maintains Bayer is undervalued.

Broadcom strikes $15B deal with Apple

Under two separate agreements, Broadcom (NASDAQ:AVGO) will sell $15B of wireless components to Apple (NASDAQ:AAPL), which will be used in forthcoming products launches. Broadcom has already supplied several chips used in the iPhone 11, including silicon for Wi-Fi and Bluetooth, and an Avago-branded RF front-end chip that helps the phone connect to wireless networks. Reports in December further suggested that Broadcom was looking to offload a wireless chip division that focused on "radio-frequency" chips. AVGO +2.6% premarket.
Go deeper: 'Broadcom: This 4%-Yielding Tech Giant Is A Solid Buy Right Now' by Blue Chip DRiP.

EV wars heat up

Volkswagen (OTCPK:VWAGY) is ready to hit back at Tesla (NASDAQ:TSLA) after the market value of the EV maker, which plans to establish a factory near Berlin, surpassed the German car giant for the first time this week. "The company which adopts fastest and is most innovative but also which has enough scale in the new world will make the race," CEO Herbert Diess said at the World Economic Forum. "We're doing the right things to be competitive." He pointed out that Tesla is paving the way in electric cars, though VW is buying software companies and ramping up investments in sustainable vehicles and battery cells.

GrubHub leaves merger door open

"We would totally evaluate any offer, but we haven't had one yet," GrubHub CEO Matt Maloney told CNBC following reports earlier this month that a possible sale was on the table. When asked if consolidation is necessary, Maloney said that "there's a reckoning coming to the industry" and flagged that it could come within the next 12 months. DoorDash (DOORD) holds 33% market share, followed by GrubHub at 32%, Uber Eats (NYSE:UBER) at 10% and Postmates (POSTM) at 10%, according to analytics firm Second Measure.
Go deeper: U.K. watchdog opens Just Eat takeover probe.

Counterfeit crackdown

The Department of Homeland Security is set to release a report today outlining its immediate actions and longer-term goals for enlisting online players to combat counterfeits. "This is about e-commerce playing by a different set of rules that simultaneously hammer brick-and-mortar retailers, defraud consumers, punish workers and rip off intellectual-property rights holders," said White House trade adviser Peter Navarro, who is helping lead the effort. "It's Amazon (NASDAQ:AMZN), Shopify (NYSE:SHOP), Alibaba (NYSE:BABA), eBay (NASDAQ:EBAY), JD.com (NASDAQ:JD), Walmart.com (NYSE:WMT) and a constellation of lesser players that provide the digital hubs." The initiative comes the same month as a "Phase One" trade agreement with China that requires Beijing to take steps against counterfeiters or risk enforcement actions that could trigger new tariffs.

Thursday's Key Earnings

American Airlines (NASDAQ:AAL) +5.4% after load factor improvement.
Comcast (NASDAQ:CMCSA) -3.8% warning of video sub losses.
Freeport-McMoRan (NYSE:FCX) -2.8% on production falls.
Intel (NASDAQ:INTC) +5.6 AH seeing chip demand recovery.
Kimberly-Clark (NYSE:KMB) +0.2% posting strong margin improvements.
Procter & Gamble (NYSE:PG) -0.5% amid baby care competition.
Skyworks Solutions (NASDAQ:SWKS) -2.5% AH despite beats, upside guidance.
Southwest Airlines (NYSE:LUV) +3.6% powering through 737 MAX headwinds.
Union Pacific (NYSE:UNP) +3.5% helped by cost cuts.

Today's Markets

In Asia, Japan +0.1%. Hong Kong closed. China closed. India +0.6%.
In Europe, at midday, London +1.6%. Paris +1.1%. Frankfurt +1.4%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude -0.4% to $55.35. Gold -0.5% to $1558.40. Bitcoin -0.8% to $8356.
Ten-year Treasury Yield flat at 1.75%

Today's Economic Calendar

9:45 PMI Composite Flash
1:00 PM Baker-Hughes Rig Count

 

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