Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 10 Jul 2020, 7:55 AM


Wall Street Breakfast: Biggest Healthcare Deal On Record?

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Two drugmakers at the forefront of the industry's efforts to fight the novel coronavirus are exploring a combined future. AstraZeneca (NYSE:AZN), co-developer of one of the fastest-moving experimental coronavirus vaccines, has made a preliminary approach to Gilead Sciences (NASDAQ:GILD), the only company to have received FDA emergency authorization for its COVID-19 treatment remdesivir. Formal talks are not yet underway, but if combined, the two companies would have a market capitalization of $232B, based on Friday's closing share prices. AZN -2.2%; GILD +3.2% premarket.

Higher and higher

Futures suggest equities are looking to extend a record rally at the open following the U.S. jobs report on Friday which smashed expectations and underpinned risk assets. "The reopening of the economy has seen financials, industrials, energy and real-estate stocks rallying and investors will continue to rotate funds into sectors such as these for a few more months," said Eli Lee, head of investment strategy at Bank of Singapore. A weekend agreement by OPEC+ to an extension of output cuts saw oil climb to over $40 overnight, while investors get ready for Tuesday's kickoff of the Fed's June policy meeting.

Details of the OPEC+ deal

The finalized pact calls for collective cuts of 9.6M daily barrels until the end of next month, with Nigeria and Iraq making up for their backlog of reductions with deeper cuts over the next three months. Mexico won't pursue curbs beyond June, as it aims to implement longstanding plans to revive its oil industry. The cuts will be reviewed on a monthly basis, with the next meeting set for June 18. OPEC+ compliance with the May deal was 89%, meaning the group fell some 1.1M barrels short of the target set in the April agreement, according to commodities data firm Kpler.

'Worst month ever' for Germany's economy

German industrial output posted its steepest decline on record in April, plunging 17.9% during the month that saw unprecedented closures of factories and shops due to COVID-19. ING economist Carsten Brzeski called it "the worst month ever" for the eurozone powerhouse, but the Bundesbank feels the peak of the economic crisis is likely over. It sees a contraction of 6.3% this year, based on the assumption that a €130B fiscal stimulus package will help economic activity pick up again in the second half of 2020.

'All the news that's fit to print'

The New York Times' (NYSE:NYT) editorial page editor, James Bennet, has resigned following significant criticism over the paper’s decision to publish an op-ed by Republican Senator Tom Cotton under the headline "Send in the Troops." Until recently, Bennet was viewed internally as a candidate to succeed NYT Executive Editor Dean Baquet when he retired. Stan Wischnowski, the top news editor of the Philadelphia Inquirer, also resigned over the weekend following the publication of a headline entitled "Buildings Matter, Too" that drew condemnation from readers and the newspaper's staff.

Reviewing content policies at Facebook

Facing criticism for not moderating or removing controversial posts from President Trump, Facebook (NASDAQ:FB) CEO Mark Zuckerberg said the company will review policies on posts that promote or threaten state use of force or voter suppression techniques. "While we will continue to stand for giving everyone a voice and erring on the side of free expression in these difficult decisions - even when it's speech we strongly and viscerally disagree with - I'm committed to making sure we also fight for voter engagement and racial justice."

Uber takes steps to support the Black community

"As a starting point, we will use Uber Eats to promote Black-owned restaurants while making it easier for you to support them, with no delivery fees for the remainder of the year," Uber (NYSE:UBER) CEO Dara Khosrowshahi wrote in a letter. "In the coming weeks, we will offer discounted rides to Black-owned small businesses, who have been hit hard by COVID-19, to help in their recovery. We know this isn't enough. It won't be enough until we see true racial justice. But we plan to work day in and day out to improve, learn, and grow as a company."

Airlines rip U.K. quarantine plan

British Airways (OTCPK:ICAGY), EasyJet (OTCQX:ESYJY) and Ryanair (NASDAQ:RYAAY) have written to the British government in protest at its "wholly unjustified and disproportionate" quarantine rules and are threatening legal action over the policy. Starting June 8, nearly all international arrivals in the U.K. will be required to self-isolate for 14 days and to supply details of their accommodation. The three carriers say the moves will devastate tourism and wreck any chance of salvaging the summer season when tens of millions of people generally travel, while also destroying thousands of jobs.

HSBC warns on Chinese reprisals

After backing China's controversial national security law last week, HSBC is now warning Downing Street against a ban on Huawei in 5G telecoms networks, saying it could face reprisals in China over such a motion. Chairman Mark Tucker made the claim in private conversations with British Prime Minster Boris Johnson's advisers, according to The Telegraph. The U.K. classified Huawei as a "high-risk vendor" in January, limiting its 5G involvement to 35% and excluding it from the core of the network, but could phase Huawei out completely by 2023.

Samsung leader faces jail again

A court ruling expected today or early Tuesday will decide whether the de facto leader of Samsung Group, Jay Y. Lee, will head back to jail after more than two years of freedom. He's accused of stock price manipulation and audit rule violations, among other offenses. The risk of more jail time for Lee has cast a cloud over the sprawling conglomerate and its crown jewel, Samsung Electronics (OTC:SSNLF), whose annual revenue alone is equivalent to 12% of South Korea's GDP.

Today's Markets

In Asia, Japan +1.4%. Hong Kong flat. China +0.2%. India +0.4%.
In Europe, at midday, London +0.2%. Paris -0.4%. Frankfurt -0.5%.
Futures at 6:20, Dow +0.6%. S&P +0.4%. Nasdaq +0.2%. Crude +1.6% to $40.02. Gold +0.9% to $1607.90. Bitcoin +1.2% to $9750.
Ten-year Treasury Yield flat at 0.91%

Today's Economic Calendar

12:30 PM TD Ameritrade IMX
1:00 PM Results of $44B, 3-Year Note Auction


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