Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Tue, 2 Jun 2020, 9:57 AM

 

Wall Street Breakfast: Retail Earnings On The Radar

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While U.S. consumers didn't do much shopping in April, considering last Friday's dreadful retail sales report, investors might soon get a better sense of what lies ahead for the industry. A deluge of retail earnings is on tap this week, starting with results today from Walmart (NYSE:WMT), Home Depot (NYSE:HD) and Kohl's (NYSE:KSS), and followed by figures at Target (NYSE:TGT), Nordstrom (NYSE:JWN) and Foot Locker (NYSE:FL). Keep an eye on the expenses side of things - not only COVID-19's influence on sales - as well as online spending, given the recent investments retailers have made in their internet platforms.

Will the rally continue?

Futures inched between slight gains and losses overnight following the best day for Wall Street in six weeks as the Dow jumped more than 900 points and the S&P 500 closed up 3.2%. Stocks began climbing as the Fed gave monetary assurances, but really picked up after Moderna (NASDAQ:MRNA) said early human tests of a coronavirus vaccine yielded positive results (see more below). Parts of the U.S. and Europe also eased lockdowns further, including some of the hardest-hit states.
 

The Moderna promise

Shares of the biotech company soared 20% yesterday to $80 on positive data from an early-stage coronavirus vaccine trial. At day 43, or two weeks following the second dose, levels of binding antibodies in the 25 microgram group were at the levels generally seen in blood samples from people who recovered from COVID-19. The stock is now 5% lower in premarket trade as Moderna (MRNA) priced an offering of 17.6M new shares at $76 each, for gross proceeds of $1.34B.

On the Hill (virtually)

The economic response to the coronavirus pandemic will come under scrutiny today as Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin testify before the Senate Banking Committee. Senators are expected to grill the two about actions still needed to keep the world's largest economy afloat and about missteps in rolling out aid so far, like glitches that held up PPP loans and policy changes that saw companies return their funds. In prepared testimony, Powell confirmed the central bank will use its "full range of tools to support the economy" and recapped the steps taken since cutting interest rates to near zero in mid-March.

Jury over Zoom? It's happening in Texas

Lawyers in Collin County District Court yesterday selected a jury to hear an insurance dispute by videoconference, in what is believed to be the first virtual jury trial to be held nationally during the COVID-19 crisis. "You can't drag people down to the courthouse and make them sit together for days at a time," Texas Supreme Court Chief Justice Nathan Hecht declared. "It's just too dangerous." It's yet another boon for Zoom (NASDAQ:ZM), which has seen its stock take off since January. In fact, at a market cap of $49B, Zoom is now worth more than every publicly traded U.S. airline - combined.

Square joins Twitter pajama party

Square (NYSE:SQ) is following Twitter (NYSE:TWTR) in letting employees work remotely, even after COVID-19 shelter-in-place orders come to an end (Jack Dorsey is the CEO of both companies). "We want employees to be able to work where they feel most creative and productive," a Square spokesperson said. "Over the past several weeks, we've learned a lot about what it takes for people to effectively perform roles outside of an office, and we will continue to learn as we go."

Drastic cuts at Uber

In an effort to navigate the coronavirus crisis, Uber (NYSE:UBER) said it would lay off 3,000 employees (roughly a quarter of its workforce), close more than three dozen offices and re-evaluate some of its big bets. The cutbacks mean that the ride-hailing giant, which operates food-delivery arm Uber Eats, needs a deal more than ever with rival Grubhub (NYSE:GRUB). Yesterday, SoftBank's (OTCPK:SFTBY) Vision Fund revealed that it lost $17B in the first quarter of 2020, in part on declines in holdings like Uber.

Disney streaming chief leaves for TikTok

Kevin Mayer is out at the Mouse House, moving on to become CEO of TikTok, and chief operating officer at the popular app's parent ByteDance (BDNCE). The move will be seen by many observers as a consolation prize after Disney (NYSE:DIS) selected Bob Chapek to succeed Bob Iger as CEO. As a business development leader at the company, Mayer was also heavily involved with the purchases of Pixar, Marvel Entertainment, Lucasfilm, and most of the Twenty-First Century Fox assets.
 

Nasdaq takes aim at Chinese IPOs with new rules

While China won't be called out in the new restrictions, they will undoubtedly make it harder for Chinese companies to debut on Nasdaq's (NASDAQ:NDAQ) stock exchange. Companies will be required to raise $25M or, alternatively, at least a quarter of their post-listing market capitalization. Nasdaq will also inspect the auditing of small U.S. firms responsible for accounts of Chinese IPO hopefuls and ensure that their international franchises comply with global standards.

EU coronavirus relief

In a sign of unity, France and Germany agreed to support a €500B aid package to help EU regions and sectors hit hardest by the coronavirus pandemic. The announcement saw the euro climb 0.4% to $1.0955 as Chancellor Angela Merkel said the bonds issued by the European Commission would be repaid from the EU budget (most of which is covered by Germany). "The plan amounts to a historic step by Germany away from its long-held opposition to mutual debt to fund other EU member states," said analysts at Eurasia group.

Monday's Key Earnings

Baidu (NASDAQ:BIDU) +8.2% AH as income jumped on milder revenue drop.

Today's Markets

In Asia, Japan +1.5%. Hong Kong +1.9%. China +0.8%. India +0.6%.
In Europe, at midday, London -0.6%. Paris -1.2%. Frankfurt -0.8%.
Futures at 6:20, Dow -0.2%. S&P -0.3%. Nasdaq -0.1%. Crude -0.6% to $31.47. Gold +0.2% to $1737.80. Bitcoin +2.1% to $9770.
Ten-year Treasury Yield -3 bps to 0.71%

Today's Economic Calendar

8:30 Housing Starts
8:55 Redbook Chain Store Sales
10:00 E-Commerce Retail Sales
10:00 Jerome Powell: "The Quarterly CARES Act Report to Congress"
2:00 Fed's Rosengren Speech

 

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