Friday Morning Reads

Friday Morning Reads





The Labor Department's closely watched monthly employment report this morning could buttress the Fed's assessment that both the economy and monetary policy are in a "good place." U.S. stock futures are pointing to more records (Dow 29K?) ahead of the data, which is expected to show nonfarm payrolls increasing by 164,000 in December, a near 50-year low unemployment rate of 3.5%, along with modest wage gains. The pace of hiring remains more than enough to keep the longest economic expansion in U.S. history on track despite a deepening downturn in manufacturing and unsettled trade disputes.

Six figures at Taco Bell

Speaking of a crowded labor market, Yum Brands (NYSE:YUM) is reportedly offering a $100K per year salary for manager-level positions at select Taco Bell locations in the Midwest and Northeast. The development is just one of many examples of the wage inflation pressure being felt in parts of the restaurant sector. That wildcard is part of the 2020 earnings matrix across the fast food industry, which for decades had been seen as offering the quintessential low-wage job.
Go deeper: 'Yum Brands' Big, New, Growth 'Habit'' by J.G. Collins.

Internal messages deepen MAX crisis

A new trove of internal messages released by Boeing (NYSE:BA) will add to the hurdles of David Calhoun, a longtime board member who will take over as CEO next week. "This airplane (737 MAX) is designed by clowns, who in turn are supervised by monkeys," said one company pilot in 2016, while another employee asks: "Would you put your family on a MAX simulator trained aircraft? I wouldn't." Perhaps most notable among the communications are efforts to avoid simulator training - an expensive and time consuming process - which helped make the 737 MAX Boeing's best-selling jetliner.
Go deeper: Read all the emails here.

Iran denies missile downed Boeing 737

Canada's Justin Trudeau, along with several other Western leaders, has accused Iran of unintentionally downing Flight PS752 with a surface-to-air missile, though the head of the country's national aviation department has denied those allegations. Iran has now invited the U.S. National Transportation Safety Board to take part in the investigation after initially stating it would not allow Boeing (BA) to take part in the probe or inspect the black boxes from the crash. U.S. officials have expressed concern about sending employees to Iran because of the heightened tensions, while their role could be limited by sanctions.
Go deeper: Muilenburg's greatest strength and weakness was his optimism, quotes John Mason.

First state to sell own prescription drugs?

A new budget proposed by California Governor Gavin Newsom includes a plan to allow the state to contract with generic drug makers to provide medicines to all Californians. He believes that the government's purchasing power may be sufficient to cut drug prices to the state's 40M residents, almost 33% Medicaid enrollees. Newsom is also in favor of authorizing the California Department of Health Care Services to negotiate drug prices for international buyers, a situation that could potentially enable the state to achieve discounts on par with Canada.

AR breakout in the 2020s

Instead of setting a yearly challenge for himself as he has done annually for the past ten years, Facebook (NASDAQ:FB) CEO Mark Zuckerberg is predicting major developments over the next decade. "While I expect phones to still be our primary devices through most of this decade, at some point in the 2020s, we will get breakthrough augmented reality glasses that will redefine our relationship with technology," he wrote in a post. Other important themes Zuckerberg is forecasting are a private social platform, decentralizing opportunities and new forms of digital governance.
Go deeper: Elazar Advisors says FB has multiple earnings drivers starting now.

Amazon explores streaming TV ad expansion

Amazon (NASDAQ:AMZN) has been building a business selling ads on its Fire streaming television platform, and now it wants to sell some ads for the first time on other streaming TV systems such as Apple TV and Xbox, WSJ reports. Publishers were told the company could fill ads at higher prices - as much as $40 per thousand impressions - than other third-party ad-selling platforms. Connected TV ad spending is expected to rise to nearly $8.9B this year, up from $6.9B in 2019, according to eMarketer.
Go deeper: Kwan-Chen Ma stacks up Amazon against Facebook and Google.

California 'gig worker' law

Many are looking to carve out exemptions from California's new "gig worker" rule - which obligates companies to pay overtime, healthcare and workers' compensation - and one industry just scored a victory. Los Angeles Superior Court judge William Highberger has issued a temporary restraining order, saying AB5 does not apply to independent truck drivers because they are subject to federal statute. California is home to 450,000 contract workers, and roughly 70,000 of them are independent big-rig owner-operators.

Mercedes keeps luxury car sales crown

Mercedes-Benz (OTCPK:DDAIF) successfully defended its title as the world's best-selling luxury-car brand in 2019, topping archrivals BMW (OTCPK:BAMXF) and Audi (OTCPK:AUDVF) for the fourth year in a row. The automaker's sales increased 1.3% to 2.34M vehicles, making it the highest annual sales volume in its history. "The record year underscores once more the strong demand for Mercedes-Benz vehicles, even amidst far-reaching changes in the mobility landscape," said Mercedes Chairman Ola Kaellenius.

Changing dynamics for U.S. refineries

Even with U.S. energy production at an all-time record, seven different U.S. refineries are on the block now, accounting for about 5% of U.S. crude oil processing capacity, according to data compiled by Reuters. The properties are having trouble finding bidders because of unfavorable locales, worries about falling margins, and the coming restart of nearby facilities in the Caribbean. There's also pressure from new international shipping fuel regulations, known as IMO 2020, and U.S. renewable fuels standards that require refineries to blend in biofuels.

What else is happening...

Grubhub (NYSE:GRUBdenies reports of sale; shares plunge.

Aurora Cannabis (NYSE:ACB) lands a $1 price target.

iPhone (NASDAQ:AAPL) sales in China up 18% in December.

Tough holiday season for J.C. Penney (NYSE:JCP).

Lockheed Martin (NYSE:LMTnames former DARPA director as CTO.

Boeing (BA) may have to lower 787 production rate - Air Lease.

Thursday's Key Earnings
Kohl's (NYSE:KSS-6.5% on disappointing holiday sales.

Today's Markets
In Asia, Japan +0.5%. Hong Kong +0.3%. China -0.1%. India +0.4%.
In Europe, at midday, London flat. Paris +0.1%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.4%. Crude -0.2% to $59.46. Gold -0.3% to $1549.30. Bitcoin -1.1% to $7808.
Ten-year Treasury Yield flat at 1.86%

Today's Economic Calendar
8:30 Non-farm payrolls
10:00 Wholesale Trade
1:00 PM Baker-Hughes Rig Count

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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