Wall Street Breakfast

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


Wall Street Breakfast: And Then There Were Three

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Sprint is up more than 60% in premarket trading on reports that its long-awaited merger with T-Mobile (NASDAQ:TMUS) will finally be approved by U.S. District Judge Victor Marrero. That would shut down a challenge by state attorneys general who allege Sprint's (NYSE:S) tie-up would lead to higher cellphone bills despite approval from federal antitrust and telecom officials. Merging the third and fourth top U.S. wireless carriers will result in a company with more than 90M customers that would aim to snatch even more subscribers from AT&T (NYSE:T) and Verizon (NYSE:VZ). TMUS +9% premarket.

Powell on the Hill

Fed Chair Jerome Powell is likely to sound upbeat about the U.S. economic outlook today when he begins his semiannual testimony before Congress, even as he nods to the potential threat from the coronavirus in China. The central bank lowered interest rates three times in 2019, but earlier this month signaled a pause in easing unless there was a clear threat of inflation moving away from its 2% target. Fed Vice Chair Randal Quarles, Minneapolis Fed President Neel Kashkari and St. Louis Fed President James Bullard are all set to comment at separate events later in the session.

Stocks advance with virus in focus

The S&P 500 and the Nasdaq scored fresh record highs yesterday as Chinese workers and factories gradually returned to business, while new coronavirus statistics showed signs that the disease was slowing. There were 2,478 new confirmed cases on the mainland as of Monday, down from 3,062 on the previous day, bringing the total to 42,638. Stocks in Shanghai climbed 0.4% on the news, while U.S. equity futures suggest a solid open on Wall Street, ahead of earnings from Under Armour (NYSE:UAA), Hasbro (NASDAQ:HAS), Hilton (NYSE:HLT) and Lyft (NASDAQ:LYFT).

Chinese businesses seek billions in loans

More than 300 Chinese companies are seeking bank loans totaling at least 57.4B yuan ($8.2B) to help to soften the impact of the coronavirus outbreak. "Banks will have the final say on lending decisions," sources told Reuters. "The interest rates are likely to be on par with those offered to banks' top clients." Among the prospective borrowers are Meituan Dianping (MEIT), Xiaomi (XI), Didi Chuxing (DIDI), Megvii Technology and Qihoo 360.
Go deeper: Amazon is stockpiling China-made products - Business Insider.

S20 trio, Galaxy Z Flip

Seeking to revive sales after ceding its smartphone crown to Apple (NASDAQ:AAPL) last quarter, Samsung (OTC:SSNLF) is expected to launch three variants of Galaxy S today - the regular, the Plus and the Ultra - at its Unpacked 2020 event in San Francisco. The S20 phones won't be Samsung's first 5G phones, but they're going to be the first 5G phones that matter, with all four major U.S. carriers now offering at least some form of next-generation networking. The S20 trio will be unveiled alongside the Galaxy Z Flip, a square-shaped foldable phone rumored to be cheaper than the bulky Galaxy Fold.

Executive shakeup continues

Google's (GOOG, GOOGL) head of human resources, Eileen Naughton, will step down later this year amid rising tensions between the company's top executives and rank and file employees. She's been in the role since 2016, and led the company though a period of growth that saw its global workforce expand by more than 65% to 119,000. Among the tensions: Employee anger at the handling of sexual harassment claims, the firing of workers who organized protests against the company and the elimination of weekly all-hands meetings, as well as staff complaints about secret projects and the lack of diversity.
Go deeper: Larry Page and Sergey Brin resigned from their roles in December, while legal chief David Drummond retired in January.

Uber fails to block gig worker law

U.S. District Judge Dolly Gee has rejected a request by Uber (NYSE:UBER) and Postmates (POSTM) to block California's gig worker law, which will make it harder to classify workers as independent contractors. While the companies had proven they could suffer a "degree of irreparable harm" as a result of the legislation, the potential risks to them were "less important" than the public interest in setting a living wage and regulating employment. Investors have been watching the California dispute closely as the rule would require higher pay and other benefits like medical insurance.

Chinese officers charged in Equifax hack

The United States has charged four Chinese military officers with the hacking of major credit reporting agency Equifax (NYSE:EFX) in 2017 and making off with sensitive personal data on about 145M Americans. "The U.S. government doesn't normally bring criminal charges against members of another country's military or intelligence services outside of the U.S.," according to U.S. Attorney General William P. Barr. But there are exceptions in cases of "indiscriminate theft of vast amounts of sensitive personal data of civilians."

Latest in 737 MAX crisis

It will take "several quarters" to return Boeing's (NYSE:BA) worldwide 737 MAX fleet to the skies following a grounding that has left about 700 planes on the tarmac. "We are not going to over-stress the system," Randy Tinseth, Boeing's vice president for marketing, said at the Singapore Airshow. The company announced last week it had discovered another software problem on the plane, but still aims to get the jet flying again by mid-2020, a deadline it previously said includes room for additional flaws.

Monday's Key Earnings
Allergan (NYSE:AGN) +1.3% with Vraylar sales up 88%.
Brookfield Infrastructure Partners (NYSE:BIP) +1.3% topping expectations.
Restaurant Brands (NYSE:QSR) +2.7% amid a big boost from Popeyes.

Today's Markets

In Asia, Japan closed. Hong Kong +1.3%. China +0.4%. India +0.6%.
In Europe, at midday, London +0.8%. Paris +0.5%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.4%. Crude +1.4% to $50.26. Gold -0.5% to $1571. Bitcoin -0.7% to $9790.
Ten-year Treasury Yield +5 bps to 1.59%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
6:00 Fed's Daly Speech
8:55 Redbook Chain Store Sales
10:00 Powell to testify before the house financial services committee
10:00 Job Openings and Labor Turnover Survey
12:15 PM Fed’s Quarles: “Bank Supervision”
1:00 PM Results of $38B, 3-Year Note Auction
1:30 PM Fed's Bullard: U.S. Monetary and Economic Policy
2:15 PM Fed's Kashkari Speech


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