Highlights

Wall Street Breakfast

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

 

Wall Street Breakfast: Powell On The Hill - Day 2

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Fed Chair Jerome Powell is set to testify before Congress for a second day, having used the first day of testimony to say "the U.S. economy is in a very good place." U.S. equities mostly climbed on the latest view, while Wall Street prepares for another solid session, with DJIA futures up 100 points and the S&P 500 and Nasdaq at record highs. "The FOMC believes that the current stance of monetary policy will support continued economic growth, a strong labor market and inflation returning to the committee’s symmetric 2% objective, he added. "As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary policy will likely remain appropriate."

Coronavirus policy

According to Powell, the Fed is also "closely monitoring" the deadly outbreak of the coronavirus, which has now been officially named Covid-19. While the outbreak could "lead to disruptions in China that spill over to the rest of the global economy," he stopped short of saying the outbreak had changed the Fed's baseline outlook for the U.S. economy, or the expectation among many members of the FOMC that rates will remain on hold this year. More Fedspeak... Philly Fed President Patrick Harker speaks today before the Economic Forecast Breakfast, while San Francisco Fed President Mary Daly participates in a Q&A before the European Financial Forum.

Crude climbs back over $50

Oil clawed its way above the key level overnight as Russia said it was studying an OPEC+ proposal to curb crude output by a further 600K barrels per day, though Energy Minister Alexander Novak didn't specify when the country would make a decision. Adding to the sentiment, the growth rate of new coronavirus cases in China slowed to the lowest level since late January, stoking hopes that fuel demand for the world's second-largest oil consumer may begin to recover. Also get ready for the OPEC monthly oil report later today, and developments in Libya, where experts are exploring oil revenue sharing options amid a political crisis.
Go deeper: QuandaryFX says to buy the crude pullback.

It's official!

U.S. District Judge Victor Marrero approved the $26B merger between Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) on Tuesday, saying the deal is unlikely to stifle competition in the U.S. wireless market. Marrero rejected an argument from a consortium of state AGs that Dish (NASDAQ:DISH) "would not enter the wireless services market as a viable competitor nor live up to its commitments to build a national wireless network." A spokesman for the California Public Utilities Commission, the last regulatory body to decide on the merger, said its review of the deal is expected to conclude in July.
Go deeper: Max Greve is still staying on the sidelines of Sprint's stock.

Psychedelic startups ready for public trip

A growing number of companies are already conducting clinical trials of psychedelic treatments for everything from depression to PTSD, and some have even recently received the blessing of the FDA. Mind Medicine, which is preparing a Phase 2 clinical trial into the use of ibogaine to treat opioid addiction, intends to list on Toronto's NEO Exchange by the first week of March via a reverse takeover under ticker "MMED." "I think that the psychedelics industry could be much bigger than the cannabis industry because it's going to attract institutional capital and already is starting to," co-founder JR Rahn declared. "It's also going to be a more concentrated space because the barriers to entry are much higher."

Climate action pays off

BlackRock's (NYSE:BLK) new exchange-traded fund, the iShares ESG MSCI EM Leaders ETF (LDEM), has already attracted more than $600M this week despite only starting trading on Friday. That's the best debut for any U.S. ETF this year as investing in companies that care about environmental, social and governance (BATS:ESG) picks up after years of sluggish growth. Although only a small part in the $4.5T U.S. ETF market, sustainable funds added more than $8B in 2019 and assets recently topped $20B, according to Bloomberg.

Path to profitability

Lyft (NASDAQ:LYFT) reported Q4 earnings on Tuesday that beat estimates on revenue and active riders, but the company's net loss widened to $356M, bringing its losses for the year to $2.6B. It also didn't give an update to its profitability timeline as Uber (NYSE:UBER) did during its earnings report last week, leading the stock to fall 5% AH. As investors grow increasingly suspicious of IPOs that are still racking up losses, Airbnb (AIRB) said it swung to a $322M loss for the first nine months of last year as costs rose steeply. The slide into the red could affect the lodging provider's price tag as it aims to go public "during 2020."
Go deeper: 'Why I'll Probably Buy Airbnb If It Goes Public' by Vishesh Raisinghani.

Coronavirus weighs on Carnival

Another 39 people have tested positive for the coronavirus on the cruise ship Diamond Princess quarantined in Japan, with one quarantine officer also infected, bringing the total to 175. The quarantine officer had been following rules that require the wearing of a mask and gloves but not a full protective suit, according to the Nikkei. The British-flagged Diamond Princess is managed by Princess Cruise Lines, a unit of Carnival Corp. (NYSE:CCL), whose shares have stumbled 17% since the virus started spreading globally on Jan. 21.

Nissan seeks damages from Ghosn

Nissan (OTCPK:NSANY) has filed a civil lawsuit in Japan against former Chairman Carlos Ghosn, suing for ¥10B ($91M) in damages for alleged financial misconduct while he was leader of the automaker and alliance partner Renault (OTCPK:RNLSY). The amount of the claim may "increase in future" depending on fines and penalties that Nissan will be obliged to pay regulators. Ghosn was arrested in November 2018 for understating his annual salary and misusing company funds, and faced trial in Japan until making a dramatic escape to Lebanon at the end of December.

Trump touts a different kind of MAGA

During a press briefing at the Oval Office, President Trump took a moment to lift a sign, entitled, "The trillion $ club," that displayed the names "Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Google (GOOG, GOOGL) and Amazon (NASDAQ:AMZN)." "For 144 days, we set a record stock market. It means 401Ks, it means jobs," he said, while displaying the acronym. The Trump administration has had a sometimes tense relationship with Big Tech and the recent comments came just hours after the FTC announced it will examine small unreported acquisitions by all four companies - and Facebook (NASDAQ:FB).

Tuesday's Key Earnings

Dominion Energy (NYSE:D) +0.8% on an earnings topper.
Hasbro (NASDAQ:HAS) -0.8% giving back earlier gains.
Hilton (NYSE:HLT) +1.4% posting a solid outlook.
Lyft (LYFT) -5.7% AH with forecast of continued losses.
Under Armour (NYSE:UAA) -18.9% giving weak guidance.
Western Union (NYSE:WU) -5.1% AH dragged down by forex effects.

Today's Markets

In Asia, Japan +0.7%. Hong Kong +0.9%. China +0.9%. India +0.9%.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.4%. S&P +0.3%. Nasdaq +0.5%. Crude +1.4% to $50.65. Gold -0.1% to $1568.80 Bitcoin +5.2% to $10278.
Ten-year Treasury Yield +3 bps to 1.62%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Fed's Harker: Economic Outlook
9:00 Fed's Daly Speech
10:00 Powell to testify before the house financial services committee
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $27B, 10-Year Note Auction
2:00 PM Treasury Budget

 

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