Friday Morning Reads

Friday  Morning Reads





"The path of this scourge is unknown, therefore you can't know the economic impact. You can roll the dice but it's a guess," said Brian Battle, director of trading at Performance Trust Capital Partners. On that note, stock sentiment swung wildly overnight, with DJIA futures plunging as much as 600 points only to recover those losses, and are now off 0.9%. It's been an overall wild week: The Dow, S&P 500 and Nasdaq all entered correction territory on Thursday, as well as European stocks and seven major Asia-Pacific markets. Crude prices are down around 14% since Monday, while the benchmark U.S. 10-year Treasury yield just hit another all-time low of 1.19%.
Go deeper: The equity carnage is bonds' good fortune, writes Mark Grant.

What's driving the plunge?

Besides risks to global supply chains, travel restrictions and profit warnings, many are seeing other dangers as part of a worsening economic picture. "The risk to the global consumer is the real problem. Starbucks (NASDAQ:SBUX) and Apple (NASDAQ:AAPL) can reopen their stores in China, but few people will go into them," said Michael O'Rourke, chief market strategist at JonesTrading. Uncertainty about the U.S. presidential election's outcome is also starting to drive markets, while even before the selloff this week, equities were being measured at lofty valuations.
Go deeper: 'Quantitatively Combining 7 Ways To Beat The Market' by Ploutos.

Change in forecasts

"U.S. companies will generate no earnings growth in 2020," wrote David Kostin, Goldman's chief U.S. equity strategist, despite a consensus from Wall Street that still calls for earnings to climb 7% this year. "We have cut our 2020 global growth forecast to 2.8% (from 3.2%). This would be the lowest reading since 2009," economists at Bank of America added, saying it would also be the first time since the financial crisis that it was expected to be under 3%. "Cases of the new coronavirus disease are rising quickly outside China, and the odds of the outbreak turning into a pandemic have now doubled - from 20% to 40%," according to a report from Moody's Analytics.
Go deeper: Shareholders Unite says a recession is looming.

New testing protocols

The CDC has revised its guidelines to give clinicians across the U.S. more power to test people suspected of carrying the new coronavirus. Under prior rules, clinicians only tested suspected COVID-19 patients if they had traveled recently from China or had been in contact with someone known to be infected. California recently confirmed the first U.S. coronavirus case of unknown origin, while Governor Gavin Newsom said the state is currently monitoring 8,400 people for the disease.

Masks run short

The Trump administration is considering invoking special powers through a law called the Defense Production Act of 1950 to rapidly expand domestic manufacturing of protective masks and clothing to combat the coronavirus. "We will have the ability to tell corporations, 'No, you change your production line so it is now 80% of the N95 masks and 20% painter masks," White House sources told Reuters. The biggest producers of face masks in the United States include 3M (NYSE:MMM) and Honeywell (NYSE:HON). Shares of Alpha Pro Tech (NYSEMKT:APT), another N-95 maker, has surged over 620% since the beginning of the outbreak.

DoorDash takes step toward IPO

Valued at $13B during its last funding round in November, DoorDash (DOORD) has confidentially filed for an IPO with the SEC. Not too many details were offered. The draft registration statement didn't indicate a price range or number of shares that DoorDash wants to offer, and there was no proposed date for the offering. DoorDash has overtaken Grubhub (NYSE:GRUB) as the top digital food delivery company in the U.S., according to data analytics firm Second Measure.

Hungry for profits

Beyond Meat (NASDAQ:BYND) shares fell 6% AH on Thursday after reporting a Q4 net loss of $452,000, or 1 cent per share, falling shy of reporting a second profitable quarter. While Beyond continues to rack up partnerships with large chains including KFC (NYSE:YUM), Denny's (NASDAQ:DENN), McDonald's (NYSE:MCD) and Starbucks (SBUX), its products don't always become permanent menu additions. In September, Tim Hortons (NYSE:QSR) removed its Beyond burgers and sausage from all Canadian provinces except for Ontario and British Columbia.
Go deeper: BYND has no real fundamental backing, writes Bears of Wall Street.

Restructuring at Bed Bath & Beyond

The plan includes a reorganization and simplification of Bed Bath's (NASDAQ:BBBY) field operations, a 10% reduction of its corporate workforce (about 500 jobs) and the outsourcing of several functions. "This will reset our cost structure, allowing us to re-invest where it matters," CEO Mark Tritton declared. The company sees the program reducing expenses by roughly $85M annually and re-establishing the retailer's "authority in the home space."

Fines for U.S. cellphone carriers

The FCC is looking to draw hundreds of millions of dollars from top U.S. wireless carriers after an investigation found the companies failed to safeguard critical data about customers' real-time locations, WSJ reports. AT&T (NYSE:T), Verizon (NYSE:VZ), T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) are set to receive notices of apparent liability. The companies reportedly continued sharing subscriber coordinates even after they told Congress they were cutting out middleman companies from those data feeds.

What else is happening...

All of Disney's (NYSE:DIStheme parks in Asia are now shut.

Cisco (NASDAQ:CSCObegins new round of layoffs.

Coty (NYSE:COTY+4.5% premarket on new chief executive.

Turkey bans shorting after its deadliest day in Syria.

Starbucks (SBUXreopens 85% of stores in China.

JPMorgan (NYSE:JPMcurbs global travel due to coronavirus.

California regulator proposes record $2.1B fine on PG&E (NYSE:PCG).

Thursday's Key Earnings
Anheuser-Busch InBev (NYSE:BUD-9.2% as coronavirus hit guidance.
Baidu (NASDAQ:BIDU-2.9% AH expecting Q1 declines.
Best Buy (NYSE:BBY-4.7% despite comp sales beat.
Beyond Meat (BYND-10.4% AH following penny Q4 loss.
BP Midstream (NYSE:BPMP+0.7% topping estimates.
Dell (NYSE:DELL-2.3% AH after in-line EPS, $1B buyback.
J.C. Penney (NYSE:JCP-5% closing more stores this year.
Keurig Dr Pepper (NYSE:KDP-1.7% with in-line EPS, revenue miss.
Occidental Petroleum (NYSE:OXY+1.2% AH on mixed Q4 results.
Seadrill (NYSE:SDRL-15% amid weak offshore drilling environment.
TD Bank (NYSE:TD-5.4% missing EPS estimates.

Today's Markets
In Asia, Japan -3.7%. Hong Kong -2.4%. China -3.7%. India -3.6%.
In Europe, at midday, London -3%. Paris -2.8%. Frankfurt -3.6%.
Futures at 6:20, Dow -0.9%. S&P -0.9%. Nasdaq -0.9%. Crude -3.5% to $45.43. Gold -0.7% to $1631.60. Bitcoin -2.4% to $8620.
Ten-year Treasury Yield -1 bps to 1.19%

Today's Economic Calendar
8:30 International Trade in Goods
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
8:30 Personal Income and Outlays
9:15 Fed's Bullard: U.S. Monetary and Economic Policy
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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