Wall Street Breakfast

Author: bmotrader   |   Latest post: Thu, 2 Jul 2020, 7:42 AM


Wall Street Breakfast: Traders Return With A Bang

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U.S. stock index futures soared 2% overnight, suggesting the S&P 500 will open above its 200-day moving average as trading resumes after Memorial Day. Americans were drawn to bars, beaches and parks during the holiday despite the number of U.S. deaths from COVID-19 approaching 100,000, while biotech company Novavax (NASDAQ:NVAX) started the first human study of its experimental coronavirus vaccine. "It's the grand re-opening that matters, with the S&P 500 within earshot of the psychologically fundamental 3,000 mark," said Stephen Innes, chief global markets strategist at AxiCorp. NVAX +22% premarket.

NYSE reopens

Only a quarter of the NYSE's (NYSE:ICE) usual population of traders will be back on the floor today as the exchange reopens following a two-month closure prompted by the COVID-19 pandemic. Traders who return must wear masks, avoid taking public transportation and follow social-distancing rules, with newly erected Plexiglas barriers to help them stay apart. Liability waivers must also be signed that prevent them from suing the NYSE if they get infected at the exchange. Splashy bell ringings and IPO celebrations will remain absent, as well as media broadcasts from the floor, like CNBC and Cheddar.

Sanofi sheds stake in Regeneron

Giving the French drugmaker more firepower to invest in fields like cancer, Sanofi (NASDAQ:SNY) is selling most of its $13.2B stake in U.S. partner Regeneron Pharmaceuticals (NASDAQ:REGN) through a public offering and related share repurchase. Sanofi currently holds about 23.2M shares of Regeneron’s common stock, representing 20.6% ownership, which it bought in 2007 for $26/share (now worth $570). The transactions will have no impact on the two companies' ongoing collaboration.

Latam Airlines files for bankruptcy

Latin America's biggest air carrier initiated a voluntary restructuring under Chapter 11 protection in New York, with the support of the Cueto family and Qatar Airways, two of its largest shareholders. Latam (NYSE:LTM) also sold a 20% stake to Delta Air Lines (NYSE:DAL) for $1.9B in 2019. "We are looking ahead to a post-Covid-19 future and are focused on transforming our group to adapt to a new and evolving way of flying, with the health and safety of our passengers and employees being paramount," said CEO Roberto Alvo.

Historic launch

Scheduled to blast off tomorrow at 4:33 p.m. ET, the NASA/SpaceX (SPACE) Commercial Crew flight test launch will carry Doug Hurley and Bob Behnken aboard a SpaceX Crew Dragon capsule on a Falcon 9 rocket. It'll be the first time since the space shuttle program ended in 2011 that U.S. astronauts will be sent into space aboard an American rocket from American soil. The shift to private companies allows NASA to zero in on deep space travel. Those would include company-led endeavors - with relatively limited federal oversight - taking astronauts to the moon as soon as 2024 and later to Mars or beyond.

VW loses landmark Dieselgate case

Germany's highest civil court has ruled that Volkswagen (OTCPK:VWAGY) must pay compensation to motorists who purchased vehicles with manipulated diesel engines. The ruling, which will allow owners to return their vehicles for partial reimbursement of the purchase price, sets a benchmark for about 60K lawsuits that are still pending with lower German courts. VW has already paid out more than €30B in damages, fines and buyback schemes worldwide since its Dieselgate scandal first broke in 2015.

Fresh tensions

"Some U.S. political forces are taking hostage of China-U.S. relations, attempting to push ties to the brink of a so-called 'new Cold War,'" China's Foreign Minister Wang Yi said during his annual news briefing at the National People's Congress. Thousands of protestors also gathered in Hong Kong over the weekend to demonstrate against Beijing's plan to directly impose national security laws on the city. The U.S. might impose sanctions on Hong Kong and China if the legislation proceeds, warned White House National Security Adviser Robert O'Brien.

JioMart takes on Amazon, Flipkart

Reliance Industries unveiled a small pilot of JioMart deliveries in select areas of Mumbai in April, days after announcing that Facebook (NASDAQ:FB) would spend $5.7B for 9.99% stake in Jio Platforms. The company is now launching an online grocery service by capitalizing on the 400M-strong user base of Facebook-owned WhatsApp, challenging Amazon's (NASDAQ:AMZN) local unit and Walmart's (NYSE:WMT) Flipkart in more than 200 towns across India. "Never waste a crisis, they say!" tweeted Damodar Mall, CEO of grocery retail at Reliance. "A wise colleague mentioned today, 'Alibaba (NYSE:BABA) also flourished starting from the SARS crisis.'"

Signs of U.S. IPO market reopening

The market for public equity sales "is picking up sooner than anticipated," said Neil Kell, chairman of global capital markets for Bank of America. "You're going to see a wave of IPOs come to market that are larger rather than smaller because in volatile markets investors want more liquidity." Six companies have filed plans to float in the U.S. in the past two weeks, surpassing all the filings in April, according to Refinitiv. The list includes online car seller Vroom (VRM) and fintech provider Shift4 Payments (FOUR). Others that have registered to list this year include Warner Music (WMGC) and Albertsons (ACI).

PPP loans

More than four-fifths of publicly listed companies that received Paycheck Protection Program forgivable loans under the CARES Act have held onto them, Reuters reports, citing data from market research firm FactSquared. Sixty-eight companies returned $435.8M in loans out of a total of 424 public companies that were granted $1.35B. The PPP program has drawn criticism from small business owners and others for the inclusion of funding for public companies, given their easier access to capital markets.

Today's Markets

In Asia, Japan +2.6%. Hong Kong +1.9%. China +1%. India -0.1%.
In Europe, at midday, London +1.4%. Paris +1.4%. Frankfurt +0.7%.
Futures at 6:20, Dow +2.2%. S&P +2%. Nasdaq +1.9%. Crude +2.5% to $34.07. Gold -0.8% to $1722.50. Bitcoin +1.8% to $8893.
Ten-year Treasury Yield +4 bps to 0.70%

Today's Economic Calendar

8:30 Chicago Fed National Activity Index
9:00 S&P Corelogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 New Home Sales
10:30 Dallas Fed Manufacturing Survey
11:00 Survey of Business Uncertainty
1:00 PM Results of $44B, 2-Year Note Auction
1:00 PM Fed's Kashkari Speech


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