Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 13 Dec 2019, 9:17 AM

 

Wall Street Breakfast: Massive Disruption In The Brokerage Industry

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Charles Schwab is in talks to buy TD Ameritrade (NASDAQ:AMTD), according to CNBC sources, while Fox Business separately reported Schwab (NYSE:SCHW) would pay $26B for the company. The sector has been under recent pressure by the move to no-fee commissions, leaving brokerages scrambling to find ways to maintain profits. Regulatory pressure? Schwab and TD Ameritrade are the two biggest publicly traded discount brokers and a tie-up would create a behemoth with $5T in combined assets. SCHW -2.3%; AMTD +25.7% premarket.

Exempting Apple from China tariffs

President Trump is "looking at" whether to exempt Apple (NASDAQ:AAPL) from a coming round of tariffs on Chinese imports, adding, "We have to treat Apple on a somewhat similar basis as we treat Samsung." The comments were made during a tour touting U.S. manufacturing at a Mac Pro plant in Austin, Texas. "An additional 10% tariff on China would "ultimately result in a 4% hit to (Apple's) EPS or roughly $0.50 in FY20 if the tariff ultimately went into effect," according to Daniel Ives, an analyst at Wedbush Securities.
 

Tesla reveals pickup truck tonight

The long-awaited electric pickup truck, called Cybertruck, will be unveiled tonight in Los Angeles, and is expected to price at roughly $50,000. That's lower than Rivian's $69,000 starting price for its R1T, while the price of Ford's (NYSE:F) forthcoming electric F-150 is still unknown. Cybertruck has the potential to boost Tesla's (NASDAQ:TSLA) profit margins and Elon Musk has said he is more excited about the model than any other vehicle in the EV maker's future lineup.
 

Racketeering lawsuit against Fiat Chrysler

Talks with Peugeot (OTCPK:PEUGF) to create the world's fourth-largest carmaker are "progressing smoothly," according to Fiat Chrysler (NYSE:FCAU), despite the suit filed by General Motors (NYSE:GM). "We are astonished by this filing, both its content and its timing. We can only assume it was intended to disrupt our proposed merger with PSA," said CEO Mike Manley. GM alleges a bribery and corruption scheme cost the automaker billions of dollars and tainted labor contracts as far back as 2009.

Futures waver with stocks near record highs

Reports surrounding the latest trade developments saw U.S. stock index futures inching between slight gains and losses overnight. Reuters suggested that a so-called Phase One agreement between the U.S. and China may not be completed until next year, though China's foreign ministry attempted to allay fears that talks might be unraveling. Meanwhile, the U.S. House of Representatives passed two bills intended to support protestors in Hong Kong, prompting Beijing to accuse the U.S. of interfering in domestic affairs.

Fed minutes and 'standing repo'

Most FOMC participants agreed that beyond October's cut monetary policy "would be well calibrated to support the outlook of moderate growth," according to the minutes of the FOMC's Oct. 29-30 meeting. Members also debated several options for keeping the repo market stable and one option that received considerable discussion was a so-called standing repo facility. The mechanism would see the Fed step in whenever needed to supply banks with reserves in exchange for ultra-safe collateral like Treasury debt.

OECD forecasts global growth at decade-low

The world economy is growing at the slowest pace since the financial crisis, according to new estimates from the OECD, which cut GDP growth to 2.9% this year and next (from 3% in 2020). "It would be a policy mistake to consider these shifts as temporary factors that can be addressed with monetary or fiscal policy: they are structural," OECD chief economist Laurence Boone wrote in the report. Besides trade wars and a sharp Chinese slowdown, bigger concerns include climate change, digitalization, and the crumbling of the multilateral order.

Tough times for IPO market

Capital-raising in 2019 is running at its lowest level since 2012 as a series of notorious pulled deals (like WeWork) and soggy floats (think UBER and LYFT) have weighed on investment banking. Filings have revealed that 17 banks will split up to $32.3M for Alibaba's (NYSE:BABA) secondary Hong Kong listing, which will raise up to $12.9B for the Chinese e-commerce giant. The numbers pale in comparison to the $300M banks made from Alibaba's own record IPO of $25B in 2014.

Increased LVMH takeover bid

Tiffany (NYSE:TIF) +4% postmarket on reports that LVMH (OTCPK:LVMHF) raised its offer for the U.S. jewelry chain to $130/share, or close to $16B. That bid hike resulted in the French luxury icon getting access to Tiffany's books as part of the due diligence linked to its proposed takeover. Meanwhile, the former CEO of Barney's is moving to Tiffany's newly created chief brand officer position, according to the NY Post. Daniella Vitale stepped down from bankrupt Barney's after it was bought by Authentic Brands.

Vaping meeting back on

Reports earlier this week suggested President Trump would delay a decision on vaping restrictions, though the White House just confirmed his meeting with the industry for tomorrow. "The policy making process is not stalled - it continues to move forward," according to an official statement. In September, the Trump administration said it planned to take off the market any e-cigarettes that weren't formulated to taste like tobacco, but has since decided to make an exception for menthol flavors.

Wednesday's Key Earnings
L Brands (NYSE:LB) +3.4% AH despite Victoria's Secret weakness.
Lowe's (NYSE:LOW) +3.9% rallying on a strong outlook.
Target (NYSE:TGT) +14.1% posting Q3 beat, lifting guidance.

Today's Markets

In Asia, Japan -0.5%. Hong Kong -1.6%. China -0.3%. India -0.2%.
In Europe, at midday, London -0.6%. Paris -0.1%. Frankfurt flat.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -0.4% to $56.78. Gold -0.3% to $1469.20. Bitcoin -2.4% to $7879.
Ten-year Treasury Yield +1 bps to 1.75%

Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Fed's Mester Speech
10:00 Existing Home Sales
10:00 Leading Indicators
10:10 Fed's Kashkari Speech
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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