Friday Morning Reads

Friday Morning Reads





A bruising trade war with the U.S. and sputtering investment saw China's GDP growth expand by 6.1% last year, as a slowdown rippled through many sectors of the economy. While that was the lowest level in nearly three decades, the figure met expectations, falling within the government's target of 6% to 6.5% for 2019. Trade deal help... Beijing is counting on improving consumer confidence and consumption to play a major role in boosting growth this year, according to Ning Jizhe, China's chief statistician.
Go deeper: China's birth rate fell to its lowest level (10.48 per thousand) since 1949, posing a long-term challenge for its government.

Alphabet enters four comma club

Despite heightened regulatory scrutiny, Big Tech is bigger than ever before. Alphabet (GOOGGOOGL) became the fourth U.S. technology company to reach the $1T market cap level on Thursday, following Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN), which has since slipped back to about $930B. FAAAM is replacing FAANG? Adding Facebook (NASDAQ:FB) into the group, the five most valuable U.S. tech companies are now worth a massive $5.2T, accounting for over 17% of the S&P 500.
Go deeper: Michael Wiggins De Oliveira calls Alphabet "one of the best opportunities."

Microsoft will erase carbon footprint

Microsoft (MSFT) has thrown down the climate change gauntlet to its big corporate rivals with plans to launch a $1B fund encouraging the development of new carbon reduction and removal technologies. The company pledges to be carbon negative by 2030, and by 2050 will remove enough carbon to make up for the emissions and electrical consumption since Microsoft's founding in 1975. "If the last decade has taught us anything, it's that technology built without these principles can do more harm than good,” CEO Satya Nadella said at a media event.
Go deeper: Beth Kindig comments on Microsoft's JEDI win.

Peacock video service fans its feathers

Coming a bit late to the streaming wars, NBCUniversal's (NASDAQ:CMCSA) new Peacock service will support multiple tiers, including free, ad-supported ($5/month) and advertising-free ($10/month). The Premium tier will have about 15,000 hours of programming including originals, NBC broadcasts series and key reruns, while the lower tier will have about half as much content. By 2024, NBCU expects to reach 30M-35M active accounts for the service, which will launch nationwide on July 15 (and on April 15 for Comcast customers).
Go deeper: 'Comcast: Multi-Year Compounder With Defensive Qualities' by Librarian Capital.

Gap pulls plug on Old Navy spinoff

The board concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited the retailer's ability to create "appropriate value" from the separation plan. Gap (NYSE:GPS) shares are up 5.5% premarket on the news, which also saw the departure of Neil Fiske, president and CEO of the Gap brand. Looking ahead, the board intends to appoint a new CEO to oversee the full portfolio of brands and corporate strategy.
Go deeper: Jefferies was critical of Gap's plans to spin off Old Navy.

More record-setting

Fueled by soaring tech stocks and a solid start to earnings season, the S&P 500 crossed the 3,300 mark for the first time on Thursday, while other main U.S. indexes broke record highs. Sentiment was further lifted by data that showed U.S. retail sales rose 0.3% in December, indicating the U.S. economy maintained a moderate growth pace at the end of 2019. More record highs are in store today as U.S. stock futures point to gains of 0.3% before another round of economic stats that include consumer sentiment figures and the latest JOLTS.

Trump nominates two to Fed board

Christopher Waller, director of research at the St. Louis Fed, will probably hold views on the board similar to his current boss Jim Bullard. The latter was a strong proponent last year of an "insurance cut" to help businesses worried by trade uncertainty, and was in favor of even steeper cuts in September. The nomination of Judy Shelton, an adviser to the Trump campaign in 2016 and recent U.S. director of the EBRD, is more controversial. She has a long history of unorthodox economic commentary like questioning the basic role of the Fed and advocated pegging the dollar to the gold standard.

20-year bond coming soon

The U.S. government will begin issuing 20-year bonds in the first half of 2020, as budget analysts expect years of continued growth in federal budget deficits. "We seek to finance the government at the least possible cost to taxpayers over time, and we will continue to evaluate other potential new products to meet that goal," Treasury Secretary Steven Mnuchin declared. Offering a 20-year bond would be a reintroduction of a security last issued in March 1986.

USMCA clears the Senate

The trade agreement will now head to President Trump's desk - more than 14 months after the three countries agreed to the deal - and will take effect once Canada ratifies the accord. The pact opens Canadian dairy markets to American producers, implements stricter rules for auto part rules of origin, and updates digital trade and copyright rules, among others. Industry groups have hailed the trade deal and said it would provide sorely needed certainty to revive investment flows.

Trade deal challenges?

The "Phase One" U.S.-China trade agreement could violate WTO rules, according to EU Trade Commissioner Phil Hogan, whose team will "analyze the document in detail." At issue is whether China's pledge to increase purchases of U.S. goods and services by at least $200B over the next two years is WTO-compatible. "We're not trigger-happy about taking cases to the WTO - we don't want to create that impression. But we'll stand up for our own economic interests."

What else is happening...

Facebook (FBscraps plan to sell ads in WhatsApp.

McAfee hires new CEO... IPO on tap?

Videogame sales finish year with 15% drop in December.

Eli Lilly (NYSE:LLY) targets buying spree in 2020.

Fiat Chrysler (NYSE:FCAU), Foxconn (OTC:FXCOF) team up for EVs.

Starbucks (NASDAQ:SBUXexpands presence in low-income areas.

Bombardier (OTCQX:BDRAF) suffers deep fall after guidance slashed.

Thursday's Key Earnings
BNY Mellon (NYSE:BK-7.8% on expense concerns.
Charles Schwab (NYSE:SCHW+4% as assets swelled to $4T.
CSX (NASDAQ:CSX-3.4% AH seeing revenue challenges in 2020.
Morgan Stanley (NYSE:MS+6.6% topping off a record year.
PPG Industries -2.6% (NYSE:PPGon Q4 miss, weak guidance.
Taiwan Semiconductor (NYSE:TSM+0.4% reporting profit growth.

Today's Markets
In Asia, Japan +0.5%. Hong Kong +0.6%. China +0.1%. India flat.
In Europe, at midday, London +1%. Paris +0.9%. Frankfurt +0.7%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.4%. Crude +0.6% to $58.90. Gold +0.4% to $1556. Bitcoin +2.3% to $8889.
Ten-year Treasury Yield flat at 1.82%

Today's Economic Calendar
8:30 Housing Starts
9:00 Fed's Harker: Economic Outlook
9:15 Industrial Production
10:00 Consumer Sentiment
10:00 Job Openings and Labor Turnover Survey
12:45 PM Fed's Quarles Speech
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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