Highlights

Wall Street Breakfast

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

 

Wall Street Breakfast: Ending The Week With Some Trade Optimism

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Looking for a catalyst after a muted session on Thursday, U.S. stock index futures advanced 1% overnight after hugging the flatline for most of the session. A report from Bloomberg said China plans to accelerate purchases of American farm goods to comply with the Phase One trade deal after buying fell behind due to "coronavirus disruptions." Don't forget that it's also quad witching day, which refers to the simultaneous expiration of market index futures, stock futures, market index options and stock options. The event can lead to higher volatility and more trading volume, giving speculators an opportunity for quick arbitrage opportunities.

Juneteenth spreads to corporate America

Spurred by weeks of protests for racial justice, many companies are marking Juneteenth this year, the oldest-known holiday honoring the end of slavery in America. Some 200 firms have made the day a paid holiday, including Twitter (NYSE:TWTR), Square (NYSE:SQ), Nike (NYSE:NKE) and Spotify (NYSE:SPOT), as well as Adobe (NASDAQ:ADBE), Altria (NYSE:MO), Lyft (NASDAQ:LYFT) and Uber (NYSE:UBER). JPMorgan Chase (NYSE:JPM) will close bank branches early, while the Detroit Three - GM (NYSE:GM), Ford (NYSE:F) and Fiat Chrysler (NYSE:FCAU) - will hold moments of silence.

Next IPO to watch

After a deep freeze for most of the year, the IPO market has heated up in recent weeks, powered by the strong debuts from Warner Music (NASDAQ:WMG) and ZoomInfo Technologies (NASDAQ:ZI). Albertsons (ACI) is now kicking off the roadshow for its IPO, which would give the nation's second-biggest grocer a more-than-$10B valuation if the stock prices at the midpoint of its $18-$20 target range. The offering, likely to begin trading publicly late next week, won't yield proceeds for Albertsons because the stock sale is coming from existing shareholders like Cerberus Capital, which is cashing out of a roughly 15-year investment.

Sweet deal in Texas?

Tesla (NASDAQ:TSLA) is pushing officials in Travis County, Texas for tax breaks of as much as $68M over ten years in order for the automaker to move ahead with plans to invest about $1B to build a large vehicle assembly plant in the Austin region. The tax breaks are said to be needed to make the site competitive with what Tulsa, Oklahoma officials have offered to Tesla. The new factory is expected to be 4M-5M square feet and able to manufacture both the Cybertruck and Model Y.

Missing cash

German payment processor Wirecard (OTCPK:WCAGY), which has mostly attracted interest from short sellers and some analysts over the past year, is making headlines after auditors couldn't locate €1.9B in cash. The stock crashed in Frankfurt on the news, tumbling as much as 62%, while the company suspended its chief operating officer. Wirecard also said it would delay filing its 2019 annual report for the fourth time, putting it in danger of having banks terminate €2B of loans.

Coronavirus tracing apps

As COVID-19 cases hit 100,000 in Canada, Shopify (NYSE:SHOP) and BlackBerry (NYSE:BB) announced a coronavirus contact tracing app - developed with provincial and federal governments - expected to launch in July. The app, called COVID Alert, will use Bluetooth connections to swap randomly generated codes with users in a geographic vicinity. It may pay off for Canada. The U.K. yesterday switched to the Apple (NASDAQ:AAPL) and Google (GOOG, GOOGL) model for its COVID-19 test-and-trace app after a locally developed system did not work well on the iPhone.

Consumer confidence

There are two major shopping events in China - 618 on June 18, which was started by JD.com (NASDAQ:JD), and Singles Day on Nov. 11, which was created by Alibaba (NYSE:BABA) - though nowadays both companies join in on the promotions. This year's 618 festival was being watched closely for signs about the health of the Chinese consumer amid the coronavirus pandemic, and initial figures may be pointing to a recovery: The two e-commerce giants handled a record $136.51B of sales through their platforms over the last 24 hours. JD.com's U.S.-listed shares are up 72% this year and Alibaba has climbed 5%, while both companies recently carried out secondary listings in Hong Kong.

Retail rebound and U.K. debt load

British retail sales rebounded more strongly than expected last month, jumping by a record 12% as the country relaxed lockdown measures, but government borrowing surged to counter coronavirus impacts on the economy. In fact, public borrowing hit a record high and debt passed 100% of economic output for the first time since 1963. The Office for National Statistics still warned the figures were preliminary and care was needed with the usual measures of public finances.

Stimulus discussion in the EU

The 27 European governments are beginning negotiations today on a €750B stimulus package to tackle the COVID-19 crisis. The plan has sparked division among some EU countries, and differences remain over how much and in which form the money should be borrowed, distributed and repaid. It has become an even more complicated topic after the U.S. pulled out of international digital tax talks, a move the European Commission had suggested could increase revenues and repay some of the new debt.

Thursday's Key Earnings

Kroger (NYSE:KR) -3.1% despite earnings smasher, strong outlook.
Smith & Wesson (NASDAQ:SWBI) -2.5% AH cooling off after a 90-day rally.

Today's Markets

In Asia, Japan +0.6%. Hong Kong +0.7%. China +1%. India +1.4%.
In Europe, at midday, London +1.1%. Paris +1.2%. Frankfurt +0.7%.
Futures at 6:20, Dow +1.1%. S&P +1%. Nasdaq +0.9%. Crude +3% to $40.21. Gold +0.3% to $1736.50. Bitcoin -0.6% to $9368.
Ten-year Treasury Yield +2 bps to 0.72%

Today's Economic Calendar

8:30 Current Account
10:15 Fed's Rosengren: U.S. Economy
12:00 PM Fed’s Quarles: “Stress Testing”
1:00 PM Jerome Powell Speech
1:00 PM Fed’s Mester Speech
1:00 PM Baker-Hughes Rig Count

 

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