Friday Morning Reads

Friday Morning Reads



Open Interest Changes:



The U.S. House of Representatives passed a $484B coronavirus aid package last night that will replenish funding for PPP loans and SBA disaster assistance, as well as grants to hospitals and COVID-19 testing. Treasury Secretary Steven Mnuchin will also require public companies deemed critical to national security that seek a share of $17B in virus-related relief to offer an equity stake to the government. For private companies, Mnuchin "may, in his discretion, accept senior debt instruments" or other financial interests.

On the economy

U.S. stock index futures are ahead by 0.5%, with President Trump scheduled to pass the follow-on bill for the CARES Act and 16 states unveiling plans to lift coronavirus restrictions. Data yesterday showed 4.4M Americans filed for unemployment benefits last week, bringing the 5-week total to more than 26M and wiping out all job gains since the global financial crisis. On the earnings front, stay on the lookout this morning for corporate outlooks from Verizon (NYSE:VZ) and American Express (NYSE:AXP).

Gilead drug trial

Gilead (NASDAQ:GILD) shares were whipsawed on Thursday for the second time in a week after a summary of its remdesivir trial appeared to show that it was a failure against COVID-19. Fighting back, the drugmaker said that the results were mistakenly published and removed from the WHO's website, and referred to the findings as "inappropriate characterizations." Gilead's own clinical trial of the therapeutic is slated to be released at the end of the month.

Shale bust

Continental Resources (NYSE:CLR), the company controlled by billionaire Harold Hamm, has ceased production in North Dakota and shut in most of its wells in the state's Bakken shale field. According to Bloomberg, the producer also declared force majeure on at least one of its contracts this week after crude went negative. Betting economic growth would lift prices, Continental was more exposed to weak prices because it didn't hedge future production with derivatives, a common strategy within the industry.

Surging meat prices coming to a store near you

The closings of the nation's meat processors are picking up steam, with Tyson's (NYSE:TSN) Waterloo, Iowa plant being the latest. The situation has gotten so dire in the state that the National Guard has been activated to protect supplies. It's also led to some weird action, with prices for hogs headed sharply lower but prices for pork belly (used to make bacon) doubling in the last four days. That means soaring margins for slaughterhouses, with one outfit figuring pork margins as up 340% since the start of the month.

Not so fast

It's "too soon and too risky" to reopen auto plants and Michigan's economy in early May, according to UAW President Rory Gamble, who cited insufficient scientific data and coronavirus testing to assure workplaces are safe. The statement appeared to derail plans by the Detroit Three that aimed to return UAW workers to manufacturing lines on May 4. As part of a restart, GM (NYSE:GM), Ford (NYSE:F) and Fiat Chrysler (NYSE:FCAU) outlined training programs and new safety protocols designed to prevent the spread of COVID-19.

Mandating worker testing

Companies can test employees for COVID-19 before permitting them to enter the workplace as long as the tests are accurate and reliable. That's according to the Equal Employment Opportunity Commission, the U.S. agency that enforces civil rights laws against disability discrimination. Mandatory medical testing is generally prohibited by the ADA, but is allowed if it is "job related and consistent with business necessity."

Compelled to wear masks?

As of today, United Airlines (NASDAQ:UAL) flight attendants will be required to wear face coverings while on duty, a measure aimed at stopping the spread of COVID-19. The airline will provide flight attendants with surgical masks, but they are also permitted to don their own cloth masks. The Association of Flight Attendants wants the order to go further, asking federal authorities to require travelers to wear masks to reduce the risk of spreading disease.

Using blockchain to tackle COVID-19

Blockchain technology schemes are being developed by companies like IBM (NYSE:IBM) and Ernst & Young to help with different aspects of the coronavirus pandemic. Applications? The projects can be an efficient way of connecting healthcare providers in need of medical equipment or help validate a person's immunity. Programs could run into challenges, however, if the data that goes on the blockchain is inaccurate and difficult to verify.

Spending limits

Credit card companies are offering customers relief in the form of waiving fees and adjusting payment schedules, but they're also keeping a tighter rein on spending limits. Discover Financial Services (NYSE:DFS) is tightening underwriting strategies for new accounts as well as credit line management amid coronavirus uncertainty. Meanwhile, Synchrony Financial (NYSE:SYF), which handles credit card programs for J.C. Penney (NYSE:JCP), Gap (NYSE:GPS) and American Eagle (NYSE:AEO), is using "internal and credit bureau triggers to dynamically reevaluate customers' creditworthiness."

What else is happening...

TD Ameritrade (NASDAQ:AMTDrestricts oil futures trading.

DraftKings (DKNGgoes public with no live sports.

Ruth's Chris (NASDAQ:RUTH) to repay $20M in small business loans.

J. C. Penney (JCP) closer to bankruptcy; Hertz (NYSE:HTZ) in debt restructuring.

ADM (NYSE:ADM) idles some ethanol output on lower gasoline demand.

New reality at Boeing (NYSE:BA) after cuts to 787 Dreamliner output.

Twitter (NYSE:TWTR) blocks 5G conspiracy tweets.

Google (GOOGGOOGLslashing marketing by up to half.

Thursday's Key Earnings
Blackstone (NYSE:BX+4.5% keeping dividend despite performance hit.
Capital One (NYSE:COF-0.8% AH as reserve build led to quarterly loss.
Eli Lilly (NYSE:LLY+2.1% beating expectations.
Intel (NASDAQ:INTC-6% AH on soft EPS outlook for Q2.
Union Pacific (NYSE:UNP+3.5% following an earnings topper.

Today's Markets
In Asia, Japan -0.9%. Hong Kong -0.6%. China -1.1%. India -1.7%.
In Europe, at midday, London -0.8%. Paris -0.8%. Frankfurt -0.8%.
Futures at 6:20, Dow +0.4%. S&P +0.5%. Nasdaq +0.3%. Crude -0.6% to $16.40. Gold +0.6% to $1755.30. Bitcoin +6% to $7517.
Ten-year Treasury Yield flat 0.61%

Today's Economic Calendar
8:30 Durable Goods
10:00 Consumer Sentiment
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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