Friday Morning Reads

Friday Morning Reads





While news of Morgan Stanley's (NYSE:MS) $13B acquisition of E*Trade (NASDAQ:ETFC) broke shortly after publishing on Thursday, the deal is still being discussed all around the Street. That's because it's the biggest takeover by a major American lender since the 2008 financial crisis and highlights a continuing trend of Wall Street giants striving to get even bigger. The transaction will give Morgan Stanley a larger share of the online trading market amid a zero commissions war in the brokerage industry that has weighed heavily on profit margins. Morgan Stanley shares fell 4.6% on Thursday on a pending share dilution, while E-Trade surged 21.8%.

Renewed coronavirus fears

Jitters over the virus are sending investors to safe haven assets following another upward revision in cases, which now stand at 75,465 in China and 2,236 deaths nationwide. U.S. equity futures slipped 0.5% and oil fell nearly 2%, though gold remains on a tear, rising 1.1% to $1638/oz. Impacts of the virus were laid bare once again by Chinese car sales, which crumbled 92% in the first 16 days of February, while the IATA estimated losses for Asian airlines alone could amount to almost $28B in 2020.

A look into farm spending

Releasing FQ1 results before the bell, Deere (NYSE:DE) is projected to report $1.27 in earnings per share and $6.17B in revenue, both of which would be big declines from the same quarter a year ago. A beat for any of those estimates could turn shares around, sending the stock northward. Amid international trade disputes and soft demand, CFO Ryan Campbell said at an analyst day last month that Deere anticipated agricultural retail sales to be down 5% in the U.S. and Canada this year and flat in other major markets.

Buffett's annual letter

Warren Buffett will release his annual letter to Berkshire Hathaway (BRK.ABRK.B) shareholders this weekend following another lackluster year that saw the conglomerate's stock price lag the broader market. Class A shares, at about $339,000, were up 16% in 2019, against a 29% return for the S&P 500. Investors will also be watching what the Oracle writes about the acquisition environment - after exiting the newspaper business last month - as well as Berkshire's recent move to pare longtime holdings in Wells Fargo.

Clearing operations resume at Giga Berlin

In a defeat for local environmental activists, Tesla (NASDAQ:TSLA) has received the green light from a German court to clear 220 acres of forest for Giga Berlin. The new ruling will help Tesla keep to a proposed timeline for beginning construction on its first European car and battery factory by mid-March. Lawmakers from Germany's Christian Democrat and Free Democrat parties had warned that the legal battle waged against the Gigafactory would harm Germany's image as a place to do business, and the Green Party even voiced its displeasure with the environmental complaints.

Biggest thing since light beer?

Within weeks of launching, Bud Light Seltzer is already the country's third-most popular hard seltzer, according to sales data from Nielsen. White Claw is still the most dominant brand, controlling about 60% of the category, followed by Truly from Boston Beer (NYSE:SAM). By adding in Bud Light Seltzer, AB InBev (NYSE:BUD) now sells three of the top five spiked seltzer brands: Natural Light Seltzer sits in fourth place, and its original spiked seltzer, Bon & Viv, is in fifth place.

Alternative 5G

U.S. plans to create a 5G rival to Huawei "would be a challenge," Huawei CTO Paul Scanlan declared, noting that technical standards and actual implementation of 5G have taken about 10 years to create. "That's a very very long game and that has its own sort of complexity built into (it)," he added. The U.S. has been considering providing over $1B to invest in Western-based 5G alternatives, while Larry Kudlow has said the "big-picture concept is to have all of the US 5G architecture and infrastructure done by American firms, principally."

New terms for T-Mobile, Sprint deal

Immediately following the merger's closing, Deutsche Telekom (OTCQX:DTEGY) and SoftBank (OTCPK:SFTBY) will hold stakes of approximately 43% and 24%, respectively (the remaining percentage will be held by public shareholders). A separate agreement entered into by SoftBank will result in an effective exchange ratio of 11 Sprint (NYSE:S) shares for each T-Mobile (NASDAQ:TMUS) share, up from the original 9.75 shares. The ratio change was due to SoftBank agreeing to surrender 48.8M T-Mobile shares acquired in the merger to the new company immediately after closing.

Fighting misinformation

Twitter (NYSE:TWTR) could start labeling lies and misinformation from politicians and public figures, according to a new feature demo obtained by NBC News. The company confirmed the design, which features brightly colored labels beneath inaccurate tweets, and is one possible path for a new misinformation policy that rolls out on March 5. The tweet corrections will come from fact checkers and journalists verified on the site, and possibly from other users participating in a Wikipedia-like "community reports" feature.

What else is happening...

G20 finance ministers gather for summit in Riyadh.

HP (NYSE:HPQ) responds to Xerox's (NYSE:XRX) advances with poison pill.

More financing for Sears (OTCPK:SHLDQ) as losses continue.

Apple (NASDAQ:AAPL) considers loosening grip on App Store.

New Mexico sues Google (GOOGGOOGL) over school kids' data.

Sikorsky (NYSE:LMTgrabs contract for presidential helicopters.

Thursday's Key Earnings
Domino's Pizza (NYSE:DPZ+25.6% delivering strong profit, dividend boost.
Dropbox (NASDAQ:DBX+10.7% AH on Q4 beats, $600M buyback.
First Solar (NASDAQ:FSLR-15% AH posting surprise loss, reviewing options.
Fitbit (NYSE:FIT-1.2% AH missing expectations, lower ASP.
Southern Co. (NYSE:SO+1.8% hitting EPS estimates.
ViacomCBS (NASDAQ:VIAC-17.9% dragged down by merger expenses.

Today's Markets
In Asia, Japan -0.4%. Hong Kong -1.1%. China +0.3%. India closed.
In Europe, at midday, London -0.2%. Paris -0.1%. Frankfurt flat.
Futures at 6:20, Dow -0.5%. S&P -0.5%. Nasdaq -0.6%. Crude -1.9% to $52.84 Gold +1.1% to $1637.80. Bitcoin +1.2% to $9720.
Ten-year Treasury Yield -3 bps to 1.49%

Today's Economic Calendar
9:35 Fed's Kaplan: “Room to Grow: Housing for a New Economy”
9:45 PMI Composite Flash
10:00 Existing Home Sales
10:00 Fed's Brainard: “Monetary Policy for the Next Recession”
10:00 Fed's Bostic: “Monetary Policy for the Next Recession”
1:00 PM Baker-Hughes Rig Count
1:30 PM Fed's Mester: “Monetary Policy for the Next Recession”
1:30 PM Fed's Clarida: “Financial Markets and Monetary Policy: Is There a Hall of Mirrors Problem?”

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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