Friday Morning Reads
- Futures point to slightly higher open
- GM strike likely to continue into weekend
- McDonald's hikes quarterly dividend to $1.25
- Eighth death in U.S. linked to vaping
- McDermott tacks on another 20% loss, capping two-day 71% plunge
- GE CEO Culp a 'star,' investor Peltz says
- Stock exchange battle heats up in 2020
- Visa doubles its B2B cross-border payment network, adds Infosys as partner
- NY Fed announces fourth overnight repo operation
- European advisory group backs Merck's Bavencio for first-line kidney cancer
- McDermott to explore sale of Lummus Technology business; shares +75%
- EC's Juncker says 'we can have a deal' on Brexit; pound rises 0.5%
Open Interest Changes for Today:
The short-term funding market has apparently not yet recovered from the hysteria seen at the start of the week, which saw repo rates skyrocket to 10%. The New York Fed will conduct another $75B repurchase operation this morning, its fourth in as many days, to help maintain the federal funds rate within the target range of 1.75%-2.00%. While the cause of the interest rate spike remains a mystery, most are suggesting that the Fed's earlier balance sheet reduction left the market with too few dollars relative to Treasuries held by financial institutions.
The U.S. is temporarily exempting more than 400 types of Chinese products - like Christmas lights, plastic straws and printed circuit boards - from tariffs, according to documents set to be published today by the U.S. Trade Representative. The exemptions stem from more than 1,100 exclusion requests made by American companies and other entities, with the move keeping U.S. stock futures in the green, but not by much (up 0.2%). More economic stimulus? China overnight cut its new one-year benchmark lending rate for the second month in a row, taking a more accommodative stance due to the Sino-U.S. trade war.
It's quadruple 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. It also happens four times during the year - on the third Friday of March, June, September and December - and has been historically positive for the markets.
Officials from the United Auto Workers union are saying talks with General Motors (NYSE:GM) aimed at ending a four-day nationwide strike are likely to extend into the weekend. The walkout of 48,000 UAW members has rippled through GM's supply chain, triggering temporary layoffs at its assembly plant in Oshawa, Ontario, as well as the carmaker shifting healthcare insurance costs to the UAW. GM shares are off 0.3% premarket to $37.68/share on the news, extending the stock's decline since the strike action began last week to around 3%.
Lines are forming outside major Apple (NASDAQ:AAPL) stores across the globe as shoppers line up to score the newest models of the iPhone 11. Analysts are betting the new smartphone will be a key sales driver for the tech giant heading into the holiday season, with JPMorgan expecting iPhone 11 shipments to reach 184M units in 2019 and 195M units in 2020. Others focused in on the device's aggressive pricing in U.S. dollars, which was discounted to previous rollouts, and the impact it would have on Apple's overall profit margins.
Go deeper: Bluesea Research says Apple has given the iPhone 11 a big price cut.
Another person has died from a vaping-related lung disease, bringing the nationwide death toll to eight. The Missouri man's lungs were unable to provide enough gas exchange, leading to heart failure and near cardiac arrest (he later died from acute respiratory distress syndrome). Vaping-related illnesses have so far sickened 530 people, according to the CDC, with more than half of those patients under the age of 25.
Go deeper: 'Altria Is In Deep Trouble' by Stefan Redlich.
President Trump and Australian Prime Minister Scott Morrison are set to release a plan today aimed at securing the supply of rare earth minerals amid growing concerns that China could cut off shipments of the treasured commodities. Rare earths are a group of 17 chemical elements used in everything from high-tech consumer electronics to military equipment. Australia contains only 2.8% of the world's rare earth reserves but accounts for more than half of the new projects in the global pipeline.
Ahead of today's big global climate strike that is urging an "end to the age of fossil fuels," Amazon (NASDAQ:AMZN) placed an order for 100K electric delivery vehicles from Rivian. Prototypes of the new vans are expected to take to the road next year, with the entire order being deployed within five years. Current goals? Amazon plans to convert its delivery fleet to 100% renewable energy by 2030 and already runs 40% of its fleet on renewable energy.
Go deeper: Overview of Amazon financials.
Walgreens (NASDAQ:WBA) and FedEx (NYSE:FDX) are partnering with Alphabet's (GOOG, GOOGL) Wing drone business in a new test delivery program. It will see food and beverages, over-the-counter medications and other household items be eligible to be delivered by drones in Christiansburg, Virginia this October. The city was selected as the test market, as Wing has been working closely with nearby Virginia Tech in Blacksburg to explore drone delivery as part of a DOT test program.
What else is happening...
'We can have a deal' on Brexit - EU's Juncker
Stock exchange battle will heat up in 2020.
In Asia, Japan +0.2%. Hong Kong -0.1%. China +0.2%. India +5.3%.
In Europe, at midday, London +0.1%. Paris +0.4%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude +0.8% to $58.63. Gold +0.3% to $1511.10. Bitcoin +2.7% to $10139.
Ten-year Treasury Yield flat at 1.78%
Today's Economic Calendar
8:15 Fed's Williams: “Tying Down the Anchor: Monetary Policy Rules and the Lower Bound on Interest Rates”
11:20 Fed's Rosengren: “Credit markets”
1:00 PM Baker-Hughes Rig Count
1:00 PM Fed's Kaplan Speech