Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 22 Jan 2021, 9:32 AM


Wall Street Breakfast: Devastating Scandal Brings Wirecard To Its Knees

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German payments company Wirecard has filed for insolvency proceedings, a week after auditors found a €1.9B hole in its balance sheet and an admission by the company that the money may never have existed. Shares were suspended from trading before the announcement, but have fallen nearly 90%, wiping out almost $12B of market value since the disclosure last week. CEO Markus Braun was also arrested on suspicion of falsifying accounts at the company, which processes tens of billions of euros in credit and debit transactions every year. Once the darling of Germany's fintech world, Wirecard (OTCPK:WCAGY) eventually ascended to the DAX, the stock index of Germany's 30 largest companies.

Economic reports on watch

Fears over a second wave shook investors on Wednesday as a rise in new coronavirus cases left businesses struggling to decide whether they should open, close or find a compromise. In the red for most of the night, S&P 500 futures have pared most of their losses to trade near the starting line ahead of some important economic data. Weekly jobless claims are expected to have declined to 1.3M in the week ending June 20 (from 1.508M), overall orders for durable goods are seen rebounding 10.6% in May, while the final GDP reading for Q1 probably decreased at a 5.0% annualized rate.

Stress tests

Dividend-focused bank investors will be paying attention this evening to the first round of the Fed's annual stress tests on the largest U.S. financial institutions; they already paused buybacks for the quarter. Complicating things, the Fed this year will not outrightly "pass" or "fail" banks, making the results even more ambiguous for analysts and investors trying to calculate the health of the industry. The Fed also is expected to provide guidance on how banks would fare if the coronavirus crisis worsens.

Built Ford Tough

Ford (NYSE:F) is taking the wraps off its 2021 F-150 tonight and the stakes couldn't be higher. Traditional and hybrid versions of the pickup are scheduled to be unveiled and the all-electric version is seen coming sometime in the next two years - in line or slightly later than new electric pickups from GM (NYSE:GM), Tesla (NASDAQ:TSLA), Rivian and Nikola (NASDAQ:NKLA). Reports suggest the new F-Series will feature a lay-flat "sleeper seat" that mimics a first-class airline experience, Sync 4 infotainment with over-the-air update capabilities and a larger touch screen.

Latest coronavirus bankruptcy

CEC Entertainment (CEC), the parent of Chuck E. Cheese and Peter Piper Pizza, has filed for Chapter 11 after the COVID-19 pandemic closed its locations and kept families at home. The current crisis was described as the "most challenging" in the company's history and it intends to use the bankruptcy process to continue talks with stakeholders and landlords to restructure its balance sheet. CEC Entertainment, which was taken private by Apollo Global Management (NYSE:APO) in 2014, announced plans to go public last year, though the proposal was eventually terminated after its reverse merger with Leo Holdings collapsed.

Apple closes more stores it had reopened

The tech giant is temporarily shuttering seven stores around Houston, Texas as COVID-19 cases rise in the state, following the closure last week of nearly a dozen Apple Stores (NASDAQ:AAPL) across Florida, North and South Carolina, and Arizona. "We take this step with an abundance of caution as we closely monitor the situation and we look forward to having our teams and customers back as soon as possible," the company said in a statement. Apple Stores tend to be located in important shopping centers and malls, which may be a good indicator of how smoothly retail operations are reopening in the U.S.
Go deeper: California Disneyland to delay reopening indefinitely.

Google starts paying some news publishers

It's a significant development in the years-long battle between Google (GOOG, GOOGL) and media companies. "Today, we are announcing a licensing program to pay publishers for high-quality content for a news experience launching later this year," Brad Bender, Google's VP of News, wrote in a blogpost. "This program will help participating publishers monetize their content through an enhanced storytelling experience. Where available, Google will also offer to pay for free access for users to read paywalled articles on a publisher’s site."

SoftBank's Son exits Alibaba board

SoftBank (OTCPK:SFTBY) founder Masayoshi Son says he's left the board of China's Alibaba (NYSE:BABA) coinciding with the departure of Alibaba co-founder Jack Ma. The development doesn't signify any disagreement between him and the company, according to Son, who characterized the move as "graduating" from his most successful investment (now worth about $600B). In the rest of his annual presentation to investors, Son expressed confidence, saying the market is underestimating SoftBank's potential and that its shareholder value is closer to $218B (vs. market capitalization of about $101B).

Battle over 5G

Singapore has given local telcos final approval to start building two 5G networks as it aims to have full islandwide coverage by 2025. Chinese telecom equipment giant Huawei lost out to Nokia (NYSE:NOK) and Ericsson (NASDAQ:ERIC) to build the main next-generation networks, but may be involved in the broader ecosystem at a reduced capacity. The U.S. has urged its allies to exclude Huawei from their 5G networks, accusing the tech firm of being backed by the Chinese military and including security vulnerabilities in its hardware that could be used for espionage by Beijing.

Wednesday's Key Earnings

BlackBerry (NYSE:BB) -5.5% AH after pandemic-hit Q1 results.
KB Home (NYSE:KBH) -13.6% AH missing expectations, weak guidance.

Today's Markets

In Asia, Japan -1.2%. Hong Kong -0.5%. China +0.3%. India -0.1%.
In Europe, at midday, London -0.2%. Paris +0.1%. Frankfurt +0.1%.
Futures at 6:20, Dow -0.3%. S&P -0.2%. Nasdaq flat. Crude -0.5% to $37.81. Gold -0.2% to $1770.90. Bitcoin -2.7% to $9271.
Ten-year Treasury Yield -2 bps to 0.67%

Today's Economic Calendar

8:30 Durable Goods
8:30 Initial Jobless Claims
8:30 International trade in goods
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
8:30 GDP Q1
8:30 Corporate profits
9:30 Fed's Kaplan: “The World Economy Transformed"
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
11:00 Fed's Bostic: "Florida's Economic Relaunch -- What's Next?"
12:00 PM Fed's Mester Speech
1:00 PM Results of $41B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet


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