Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Mon, 3 Aug 2020, 9:54 AM

 

Wall Street Breakfast: The Big Banks

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"This is the week when we find out if the real world is going to intrude on the stock market world," CNBC's Jim Cramer declared as the largest U.S. banks begin reporting their Q2 results. "If the banks can rally, then maybe we've gone 'through the looking glass,'" he said. "If the banks get hammered, things could get ugly." While investors should expect another big hit as lenders set aside more loan loss provisions, that could be offset by a boost in fee incomes from elevated investment banking and trading activity, as well as mortgage demand. Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) will all release earnings before the opening bell, followed by Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) later this week.

Futures rise after volatile session

U.S. stock futures moved higher in overnight trade following a stunning reversal on Monday as California rolled back its reopening plans, triggering worries about another coronavirus lockdown (see below). Contracts tied to the Dow, S&P 500 and Nasdaq are all up 0.4% as investors get ready for earnings reports from some of the nation's largest banks. A senior Trump administration official also announced that production of a potential coronavirus vaccine was expected to begin before the end of the summer following news that Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) were granted fast track designation by the FDA for two of the companies' four COVID-19 vaccine candidates.

Biggest reopening rollback in the U.S.

California is the latest to roll back reopening plans as the coronavirus continues to surge in some of the most populous U.S. states. Governor Gavin Newsom ordered a full shutdown of bars, movie theaters, museums and dine-in restaurants, while forcing gyms, barbers and places of worship to close in the state's hardest hit regions. The closures are similar to the recent, but less extensive, U-turns taken by Arizona and Texas. In addition to the statewide bans in California, school districts in Los Angeles and San Diego announced they would not reopen their buildings for students in the fall.

Wild Tesla

In a volatile session on Monday, shares of Tesla (NASDAQ:TSLA) closed down 3%, giving back an earlier 16% jump that had pushed the stock to a new all-time intraday high of $1,794.99. At one point Tesla's market cap reached $321B, briefly making it the 10th-largest U.S. stock by market value. As the company's valuation climbs higher, speculation is growing that it will soon join the S&P 500. In fact, Tesla CEO Elon Musk is now the seventh-richest person in the world, surpassing legendary investor Warren Buffett. TSLA +4.7% premarket.
Go deeper: Tesla short sellers may be key to stock's momentum.

Ford goes off-road with revived Bronco

Nearly a decade since plotting its return, Ford (NYSE:F) has unveiled a new retro-looking Bronco reminiscent of the rugged, boxy original from the 1960s. The new SUV will have two sizes: a smaller Bronco Sport to be released later this year, and two- and four-door versions arriving next spring and priced starting at $29,995, just $205 above a base Jeep (NYSE:FCAU) Wrangler. Reviving the Bronco is a key piece of Ford CEO Jim Hackett's turnaround plan, which is sharpening the company's focus on more-profitable pickup trucks (2021 F-150) and SUVs (the electric Mustang), while purging passenger cars from Ford's U.S. showrooms.

Beijing reports trade data as tensions rise

China's exports rose 0.5% in dollar terms in June from a year earlier, while imports climbed 2.7%, resulting in a trade surplus of $46.42B for the month (below the $59.3B surplus expected by economists). The figures also showed China's trade surplus with the U.S. widening to $29.41B, compared to $27.89B in May. Tensions between the countries have worsened this year, with President Trump blaming China for the pandemic, saying last week that he wasn't even thinking about Phase Two of the trade deal and formally rejecting Beijing's expansive claims in the South China Sea.
Go deeper: China to sanction Lockheed Martin over Taiwan arms sale.

More semiconductor dealmaking

SoftBank (OTCPK:SFTBY) is exploring alternatives including a full or partial sale or public offering of British chip designer Arm Holdings, which the Japanese conglomerate bought four years ago for $32B, WSJ reports. Goldman Sachs is advising the company on the review, which is still in the early stages. It isn't known how much interest industry players might have in Arm, but the division has announced plans to spin off its two IoT businesses to SoftBank - to focus on its core semiconductor business - while Apple's (NASDAQ:AAPL) recently announced in-house silicon is based on Arm architecture.

Skipping the checkout line

After opening its first Amazon Go stores to the public in 2018, Amazon (NASDAQ:AMZN) is doubling down on cashierless technology with innovative smart shopping carts. The Dash Carts are embedded with cameras, sensors, a weighing component and a smart display that automatically track a shopper's order, and allow for a digital checkout without a human cashier. The carts, designed for small- to mid-sized grocery trips, will come first to Amazon's grocery store in the Woodland Hills neighborhood of Los Angeles, which is slated to open in 2020.

Monday's Key Earnings

PepsiCo's (NASDAQ:PEP) +0.3% as lockdowns boosted snack sales.

Today's Markets

In Asia, Japan -0.9%. Hong Kong -1.1%. China -0.8%. India -1.5%.
In Europe, at midday, London -0.5%. Paris -1.6%. Frankfurt -1.5%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude -1.3% to $39.57. Gold -0.5% to $1804.40. Bitcoin -0.3% to $9196.
Ten-year Treasury Yield -1 bps to 0.63%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:30 Consumer Price Index
8:55 Redbook Chain Store Sales
2:00 PM Fed's Brainard Speech
2:30 PM Fed's Bullard: U.S. Monetary and Economic Policy

 

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