Friday Morning Reads

Friday Morning Reads






Brushing off concerns about the cost of one-day delivery, Amazon shares surged 10% AH on Thursday as the e-commerce giant crushed expectations for the key holiday season with sales of $87.4B and profit of $6.47/share. AWS revenue was up 34% to $9.95B, while the company continued to plow money into overseas markets such as India and Brazil. The impressive results and over $2,000 share price will see Amazon (NASDAQ:AMZN) re-enter the elite $1T market cap club - which has already extended membership to Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Alphabet (GOOGGOOGL) - during today's session.

A Brexit goodbye

After more than three years of economic uncertainty, political division and missed deadlines, the U.K. is set to leave the EU at the stroke of midnight Brussels time. A potentially volatile new chapter lies ahead: London and Brussels will try to hash out a trade deal by the end of the year as Britain enters a transition phase. On the eve of Brexit, the Bank of England opted to leave interest rates on hold at 0.75%, citing a pickup in business activity since the election of Boris Johnson and defying some market speculation that a cut was in the cards.
Go deeper: Andrew Hecht discusses future movement of the British pound.

Struggling for footing

Mixed market signals are sending U.S. indices on a roller-coaster ride as futures head into the final day of January down 0.7%, continuing a volatile month for global equities. Stocks rebounded yesterday after the WHO dubbed the coronavirus a global health emergency - but did not recommend restrictions on international trade and travel - though fears are growing as new countries confirm their first cases of the disease. Earnings sentiment is also being reassessed after Amazon's (AMZN) blowout results and Visa's (NYSE:V) disappointing quarter, while economists weigh in on the U.S. GDP growth rate of 2.3% in 2019.
Go deeper: Victor Dergunov says stocks are likely to head lower from here.

Oil majors set to report

Traders will digest Q4 results this morning from the U.S. oil majors after Shell's (NYSE:RDS.A) big slide raised red flags for the industry. Chevron's (NYSE:CVX) earnings are expected to be affected by a sharp decline in natural gas prices and an $11B charge related to asset impairment. Exxon (NYSE:XOM), whose stock hit a decade low this week, is likely to reveal a heavy drop from a year ago on weakness in chemicals and refining, while Phillips 66 (NYSE:PSX) is anticipated to post softer profits and revenue. 2020 capital spending budgets, as well as updates on new projects, will also be in focus.
Go deeper: More upcoming results... Industrial giants Caterpillar and Honeywell.

New face of Big Blue

After a 40-year career at IBM (NYSE:IBM), CEO Ginni Rometty is handing over the reins to Arvind Krishna, the head of the company's cloud business. Her announcement comes only days after IBM reported its first revenue growth in six quarters, though shares have lost about a quarter of their value since she took charge of the company in 2012. During her tenure, Big Blue completed 65 acquisitions, culminating in the $34B deal for Red Hat last year, while selling some legacy businesses as it put a greater focus on the cloud.
Go deeper: The move reminds Bill Maurer of Microsoft 2013.

Up in smoke

Reworking its deal terms, Altria (NYSE:MO) is taking another $4B charge on its investment in Juul Labs (JUUL), which faces heightened scrutiny amid a backlash against vaping. "I'm highly disappointed in the financial performance of the investment," CEO Howard Willard said on an earnings call, adding that the charge is mainly due to the increased number of legal (and future) cases against Juul. Altria has now recorded $8.6B in impairment charges after it took a 35% stake in Juul for $12.8B in December 2018.

Hummer EV

Get ready for the resurrection of the Hummer, the military-style SUV that was discontinued as part of GM's (NYSE:GM) 2009 bankruptcy and sour reputation for polluting the planet. This time around, it will be released as an all-electric "super truck" under the GMC brand, featuring 1,000 horsepower, 0 to 60 acceleration in three seconds and 11,500 pound feet of torque. A 30-second Super Bowl ad for the vehicle will feature NBA star LeBron James, though a price was not announced.

American pilots sue to halt service to China

While U.S. airlines have already reduced flights to China due to the coronavirus, some are demanding more action. American Airlines' (NASDAQ:AAL) pilots have filed a lawsuit seeking an immediate halt to U.S.-China service as health officials declared a global emergency over the rapidly spreading disease. The U.S. government on Thursday also advised its citizens not to travel to China, raising its warning to the same level as those for Iraq and Afghanistan.
Go deeper: American Airlines announces tentative deal with mechanics union.

Coronavirus misinformation

Facebook (NASDAQ:FB) is taking the rare step of removing false claims about cures and prevention methods for the coronavirus, saying such content would violate its ban on misinformation leading to "physical harm." Hashtags used to spread fictitious material on Instagram will be blocked or restricted, as well as alerts by users who share content about the disease that third-party fact-checkers deem false. It's an unusual move for the social network, which generally limits the distribution of health misinformation through restrictions on search results and advertising, but permits original posts to stay up.

What else is happening...

VW (OTCPK:VWAGYoffers $2.9B for U.S. truckmaker Navistar (NYSE:NAV).

Cheniere Energy (NYSEMKT:LNGdrops suit against Tellurian (NASDAQ:TELL) chairman.

J&J (NYSE:JNJ) ordered to pay $344M in pelvic mesh case.

Nintendo (OTCPK:NTDOY) says no new Switch planned for 2020.

Southwest (NYSE:LUVfailed to prioritize safety - DOT report.

Thursday's Key Earnings
Altria (MO-4.2% recording a $4.1B Juul impairment charge.
Amazon (AMZN+9.8% AH on blowout holiday quarter.
Amgen (NASDAQ:AMGN-2.5% posting soft earnings guidance.
Biogen (NASDAQ:BIIB-1.8% with Spinraza short of consensus.
Blackstone (NYSE:BX-2.5% despite $26B in Q4 inflows.
Coca-Cola (NYSE:KO+3.3% showing off organic sales growth.
DuPont (NYSE:DD-8.6% giving a disappointing outlook.
Electronic Arts (NASDAQ:EA-3.1% seeing revenue below estimates.
Eli Lilly (NYSE:LLY+2% raising revenue forecast.
Enterprise Products (NYSE:EPD-1.1% as profits dropped in Q4.
Northrop Grumman (NYSE:NOC+0.6% on mixed results.
Raytheon (NYSE:RTN-0.6% on EPS beat, revenue miss.
U.S. Steel (NYSE:X+5% AH expecting improved results in 2020.
UPS (NYSE:UPS-6.7% dented by light profit guidance.
Valero Energy (NYSE:VLO+2% topping estimates.
Verizon (NYSE:VZ-0.3% following a Q4 miss.
Visa (V-2.4% AH as fiscal Q1 underwhelmed.
Western Digital (NASDAQ:WDC+6% AH giving an upside Q3 outlook.

Today's Markets
In Asia, Japan +1%. Hong Kong -0.5%. China closed. India -0.5%.
In Europe, at midday, London +0.9%. Paris +0.8%. Frankfurt +0.5%.
Futures at 6:20, Dow -0.7%. S&P -0.7%. Nasdaq -0.8%. Crude +0.4% to $52.33. Gold -0.2% to $1585.50. Bitcoin +0.3% to $9349.
Ten-year Treasury Yield flat at 1.56%

Today's Economic Calendar
8:30 Personal Income and Outlays
8:30 Employment Cost Index
9:45 Chicago PMI
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
3:00 PM Farm Prices

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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