Friday Morning Reads
- E.C.B. Acts to Head Off Recession
- Frustration in Farm Country
- Gig Economy in Crosshairs
- Trump Hits the Panic Button
- Passive Bubble Feedback
- The Low Volatility Dilemma
- Dow and S&P closing in on records
- Vaping restrictions likely coming to NJ
- Fracking ban would slash U.S. oil production by 60%, Pioneer CEO says
- Paulson's gold group urges more deals, lower costs
- GE's Culp sees asset sales reaping $38B, power demand strengthening
- U.S. nat gas price to fall to lowest levels since 1970s - IHS Markit
- Innovative Industrial Properties declares $0.78 dividend
- UAW corruption case broadens
- Enphase, SolarEdge tumble after critical Citron report
- Catalyst Pharma to discontinue stock offering; shares up 10% premarket
- France calls for EU rules on cryptos
- Cloudflare prices IPO at $15, above high end of range
- Carl Icahn (IEP) will close his offices in New York City due to high tax rates and move to Florida. Bloomberg Report
- CDC has narrowed vaping investigation to 380 cases. Victims vaped both nicotine and marijuana compound THC in many cases (MO). CNBC Report
- Toyota (TM) will use Panasonic (PCRFY) batteries for hybrid cars. Nikkei Report
- FTC to clarify antitrust regulations for technology regulations (XLK). WSJ Report
- House investigators want to speak to Boeing (BA) workers about 737 Max 8. Bloomberg Report
- Ford (F) and General Motors (GM) aim to design new electric pickup trucks. Reuters Report
- Juul is debating internally if it should support or oppose flavored e-cigarette ban from the Trump administration (MO). WSJ Report
- State AGs want information from Google (GOOG) on digital advertising market. WSJ Report
- White House aims to revoke California's authority on automobile emissions (CARZ, F, GM, FCAU, VWAGY, HMC). Reuters Report
- Bunge (BG) purchased a 30% stake in Agrofel Graos. Reuters Report
Open Interest Changes for Today:
The Dow this session is looking to surpass an intraday record high of 27,398.68, while the S&P 500 is closing in on its previous record of 3,027.98, as the rally continues with stock index futures ahead by 0.3%. Leading the rise is a new round of bond-buying at the ECB, positive developments on the U.S.-China trade front and a tame inflation reading yesterday morning that cleared the way for a Fed rate cut next week. U.S. Treasury bond yields are also extending their seemingly relentless advance, topping the 1.8% mark in early European trading to reach their highest level since late July.
The central bank cut its deposit rate by 10 basis points to -0.50%, while QE will be restarted on Nov. 1 to the tune of €20B per month. That amount might be a bit of a disappointment to those looking for something more dovish, but the program is open-ended, and that's going to excite the dovish fans. Speaking at a press conference, ECB President Mario Draghi said that economic risks remain titled to the downside, while growth and inflation forecasts were cut across the board (inflation in 2021 is now seen at 1.5%).
New Jersey could become the latest state to restrict e-cigarette use, with Governor Phil Murphy launching a task force to find ways to curb vaping. The CDC has already narrowed its investigation of mysterious vaping-related lung disease to 380 cases, which doctors say resembles lipoid pneumonia. Earlier this week, New York Governor Andrew Cuomo proposed banning flavored e-cigarettes - following a ban imposed in Michigan - while San Francisco took it one step further in June, prohibiting the sale of all e-cigs starting in 2020.
Go deeper: How will Atria's (NYSE:MO) 35% share in Juul affect the stock?
In the company's first day of trade, SmileDirectClub (NASDAQ:SDC) plunged 28%, marking the year's worst stock market debut for a U.S. company valued at over $1B. IPO misery of late has plagued the markets, with WeWork (WE) weighing whether to drastically cut its targeted IPO valuation, and Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) hitting all-time lows. SmileDirectClub sells clear teeth aligners directly to consumers without requiring visits to orthodontists' offices.
Go deeper: SA authors have a Neutral rating on SDC.
After much debate on whether and how to IPO, WeWork's (WE) parent company has chosen to list its shares on Nasdaq and introduce sweeping changes in its governance. Those could include curbing the voting power of founder Adam Neumann, as well as removing his wife - also a co-founder - from participating in succession planning. Sources told WSJ that WeWork would officially begin marketing shares to investors next week ahead of a trading debut the week of Sept. 23.
During a speech before House Republicans in Baltimore, President Trump said his administration would unveil a tax overhaul plan aimed at middle-income households in 2020. "It will be a very, very substantial tax cut for middle-income folks, who work so hard," he declared, adding that it's going to be something that "everyone's really looking for." Other tax reform proposals, including indexing capital gains and a payroll tax cut, have recently been ruled out by the administration.
General Electric (NYSE:GE) expects asset sales to bring in $38B in cash to help the company trim its massive debt load, though falling interest rates will boost its pension benefits obligation by $7B net of investment returns. Earlier this year, GE offloaded its stake in Wabtec (NYSE:WAB), sold airplane finance operation GECAS and is in the process of offloading its biotech business to Danaher (NYSE:DHR) for $21B. This week, GE also began selling down its controlling stake in Baker Hughes (NYSE:BHGE), giving up its majority holding and getting net proceeds of about $2.7B.
Go deeper: GE had $13.6B in cash and equivalents as of its last report.
As Facebook (NASDAQ:FB) aims to get a payment system license from Switzerland's FINMA, France said it will block the crypto's development until consumer risk and governments' monetary sovereignty were addressed. Finance Minister Bruno Le Maire added that the EU should introduce a common set of rules to govern virtual currencies and urged for the creation of a European "public digital currency." Facebook unveiled plans for Libra in June, triggering concerns about shifting control over the economy from governments and central banks to big business.
Go deeper: Most recent SA articles about the crypto space.
Hard hit by U.S.-China trade tensions and export restrictions to Huawei, Broadcom (NASDAQ:AVGO) now believes its core semiconductor unit has bottomed out but is not yet in recovery mode. "We are managing the business with an expectation that we will continue to operate in a very low-growth, uncertain macro environment for the foreseeable future," CEO Hock Tan said on a conference call. Managing the risks? Broadcom last month struck a roughly $10.7B deal to buy Symantec's (NASDAQ:SYMC) enterprise security business, making a big bet on infrastructure software.
What else is happening...
OPEC punts on further production cuts.
Fracking ban would slash U.S. oil production by 60%.
100-year Treasury bonds are possible - Mnuchin.
China makes biggest U.S. soybean purchase since June.
In Asia, Japan +1.1%. Hong Kong +1%. China +0.8%. India +0.8%.
In Europe, at midday, London -0.1%. Paris +0.4%. Frankfurt +0.4%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -0.6% to $54.76. Gold -0.5% to $1514.50. Bitcoin +1.8% to $10321.
Ten-year Treasury Yield +1 bps to 1.8%Today's Economic Calendar
8:30 Retail Sales
8:30 Import/Export Prices
10:00 Business Inventories
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count