Friday Morning Reads
Reads:
- Worst Day in Months
- Removal of Froth Rather Than a Warning Sign
- 2016 All Over Again?
- Layoffs Continue to Batter Economy
- Manipulation Mirage
- Fed’s New Long-Run Inflation Outlook
- Billion-Dollar Shoe Company
- Why Do Poor People Stay Poor?
- The COVID Price Compression in Technology
Futures:
Open Interest:
Premium:
Seekingalpha
Jobs report on tap after tech bloodbath
Traders are closely monitoring today's non-farm payrolls report, one of just two monthly labor market scorecards left on the calendar before the Nov. 3 presidential election. While the pace of rehiring is expected to have moderated in August, economists expect 1.4M jobs were added last month (from 1.76M in July) and see the unemployment rate ticking down to 9.8% (from 10.2%). Average hourly earnings are forecast to be unchanged in August after rising 0.2% in July. The figures could add pressure on the White House and Democratic leaders to restart stimulus negotiations, which have been stalled for weeks over the size and scope of the next fiscal package.
Tech stocks that have powered U.S. equities to record highs this summer went into sharp reverse on Thursday, with the Nasdaq Composite dropping 5%, and the Dow and S&P 500 falling 2.8% and 3.5%, respectively. Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) contributed a big portion of those losses, falling over 8%, while Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), Alphabet (GOOG, GOOGL) and Microsoft (NASDAQ:MSFT) also closed the session sharply lower. Futures were still red at the start of the night, though contracts tied to the Dow and S&P 500 have changed direction to trade 0.8% higher, while the Nasdaq erased its losses.
The tech bloodbath is still being analyzed by analysts and traders alike, with opinions spanning the spectrum as to what drove the market selloff. Some are pointing to profit-taking, the "Retail Bros" and a long-due breather, while others are drawing attention to record valuations and a rotation out of tech. How long will it last? That's also a matter of debate. Was it just a flash crash, or the start of a correction that signals a broader sentiment shift? Join the discussion in the comments section.
Apple (AAPL) is postponing a privacy feature in its upcoming iOS 14 release (until early 2021) that would prompt users to consent to having their behavior tracked on an app-by-app basis. Critics of the change, like Facebook (FB), expect most users to opt out and said it would hurt app makers by making it harder to sell personalized ads. "We want to give developers the time they need to make the necessary changes," an Apple spokesman said in a statement. "More information, including an update to the App Store Review Guidelines, will follow this fall."
The DOJ plans to bring an antitrust case against Google (GOOG, GOOGL) in coming weeks after Attorney General William Barr overruled career lawyers who hoped to have more time to build the case, NYT reports. Some of the vulnerabilities they were worried about had to do with the part that focused on Google's search practices, while other attorneys probing Google's online ad business wanted more time to deal with complexities there. A coalition of 50 states and territories currently support antitrust action against Google, reflecting an area of broad bipartisan support.
The Trump administration is looking into banning more Chinese apps that could pose a threat to national security, White House chief of staff Mark Meadows said late Thursday. An upcoming ban of TikTok (BDNCE) in the U.S. has prompted flash takeover talks with parties including Microsoft (MSFT) and Walmart (NYSE:WMT), as well as Oracle (NYSE:ORCL), though negotiations are said to have stalled after China updated its technology export restriction list. In a bid to counter the U.S. restrictions, Beijing is also planning to develop a set of sweeping government policies to develop its domestic semiconductor industry.
Facebook (FB) won't accept new political ads in the week heading into the U.S. presidential election in an effort to limit the spread of misinformation. The new rule only applies to purchases made that week, not ads purchased now and scheduled for that window. Facebook's other new election efforts include partnering with Reuters to provide live, official election results and plans to add a label to any candidate or campaign post that tries to declare victory before the official declaration.
Chances dim for Brexit trade deal
Senior Downing Street figures are putting the chances of a Brexit trade agreement with the European Union deal at 30-40%, according to The Times. The two sides are at loggerheads over state aid, with no sign that either London or Brussels is prepared to compromise ahead of a "critical" negotiating round next week. Boris Johnson has also demanded that British fishermen double the size of their catch from coastal waters, though EU negotiators feel that would lead to the loss of one in three fishing boats in Europe.
What else is happening...
Facebook (FB), Twitter (NYSE:TWTR) flag Trump posts about voting twice.
COVID-19 vaccine from J&J (NYSE:JNJ) prevents severe disease in preclinical studies.
Splashy return planned for Fiat Chrysler's (NYSE:FCAU) Jeep Grand Wagoneer.
Hawaiian Airlines (NASDAQ:HA) follows other carriers in dropping change fees.
Thursday's Key Earnings
Broadcom (NASDAQ:AVGO) -2.6% AH despite infrastructure software strength.
DocuSign (NASDAQ:DOCU) -9% AH on broad tech market weakness.
Smith & Wesson (NASDAQ:SWBI) -1.4% AH giving back gains after a record quarter.
Today's Markets
In Asia, Japan -1.1%. Hong Kong -1.3%. China -0.9%. India -1.5%.
In Europe, at midday, London +0.8%. Paris +1%. Frankfurt +0.4%.
Futures at 6:20, Dow +0.8%. S&P +0.6%. Nasdaq flat. Crude +1.1% to $41.81. Gold +0.4% to $1945.70. Bitcoin -7.2% to $10512.
Ten-year Treasury Yield +3 bps to 0.65%
Today's Economic Calendar
8:30 Non-farm payrolls
1:00 PM Baker-Hughes Rig Count