Friday Morning Reads

Friday Morning Reads



Open Interest:




Trump tests positive for COVID-19

Stock index futures are down sharply, sliding around 2% overnight, after President Donald Trump tweeted he and First Lady Melania Trump have begun to quarantine after testing positive for the coronavirus. The price movement contrasts to what would normally be a day of cautious trading ahead of the September nonfarm payrolls report, and comes after Hope Hicks, considered Trump's most trusted adviser, tested positive for the virus. "To say this potentially could be a big deal is an understatement," Rabobank declared, according to the AP. "Anyway, everything now takes a backseat to the latest incredible twist in this U.S. election campaign.”

Is the knee-jerk selloff warranted?

Traders may be adding a blanket uncertainty premium, but Trump's physician expects "the President to continue carrying out his duties without disruption while recovering." "The White House medical team and I will maintain a vigilant watch, and I appreciate the support provided by some of our country's greatest medical professionals and institutions," adds Dr. Sean Conley. If Trump's condition were to worsen, the standard course of action would be for him to hand over executive authority to Vice President Mike Pence, and to take back the reins when he returns to health.

Final jobs report before the presidential election

The September jobs report is out this morning, which will be one of the last major economic releases (besides Q3 GDP data) before the presidential election on Nov. 3. While economists predict the U.S. added another 850,000 jobs last month - marking the first time hiring has fallen below the 1M mark since May - the U.S. has regained about half of the 23M jobs it lost since the start of the coronavirus crisis. The unemployment rate has meanwhile fallen far faster than anyone would have dreamed of six months ago, and it's forecast to dip another 2 percentage points to 8.2% (down from a pandemic high of 14.7%).

Stimulus talks in limbo

The House passed a $2.2T Democratic coronavirus stimulus plan on Thursday night, as a bipartisan deal continued to elude Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, who had suggested a $1.6T response. The two have talked every day this week, but they failed to bridge a gap on a range of issues, including how much aid to send state and local governments, and whether to establish a liability shield for businesses and schools. Time is running out as lawmakers preparing to leave Washington for the remaining weeks of the 2020 presidential and congressional campaign, while the $600 per week supplemental unemployment benefit and window to apply for PPP loans all expired weeks ago.

COVID spread triggers oil demand concerns

Crude futures are off nearly 4% to under $38/barrel, extending losses from yesterday's sharp decline that saw the energy sector sink to a six-month low. Rising coronavirus cases around the world are hurting the demand outlook, with further price pressure from last month's increase in OPEC production. Standard Chartered analysts now expect global demand to fall by 9M bbl/day this year before recovering by ~5.5M bbl/day next year, leaving the 2021 average slightly below the 2016 average.

Nikola volatility

No news appears to be good news for Nikola (NASDAQ:NKLA), which soared by as much as 31% at one point on Thursday, before ultimately closing with a gain of 17.7%. The movement came one day after the company said its production timeline and factory plans remain on track amid widespread investor anxiety regarding the company's business, as well as reports that General Motors (NYSE:GM) could potentially take a stake of greater than 11% in the company. Nikola additionally appointed Steve Shindler as a new independent director to replace the retiring Lonnie Stalsberg.

Amazon reveals first data on coronavirus toll

Early on in the pandemic, warehouse workers raised concerns that Amazon (NASDAQ:AMZN) wasn't doing enough to protect them from getting sick, whereupon the company said it would invest its Q2 profit of $4B into its COVID-19 response and spend $1B on testing throughout the year. The retail giant has now disclosed comprehensive data into the spread of the coronavirus across its front-line workforce, saying 19,816 workers, or 1.44% of the total, contracted COVID-19 this year. The rate of infections is 42% lower than expected, according to the company, compared to the "general population rate" in the U.S.

Another step towards a 'digital euro'

In a sign that the ECB is serious about laying the groundwork for a central bank digital currency (CBDC), it has applied to trademark the term "digital euro." It's currently preparing a report that will detail the advantages and disadvantages of creating a CBDC for retail use across Europe, and afterwards, the public will have a feedback period to shape the future of CBDC policy. In the "investigation phase," the central bank will also begin experimenting with the tender and decide toward mid-2021 whether to launch the digital euro project.

Brexit intervention

A day after the EU launched legal action over Boris Johnson's plan to potentially override the Withdrawal Agreement, the U.K. prime minister said he will intervene in Brexit negotiations for the first time since June. He announced upcoming talks with European Commission President Ursula von der Leyen on Saturday, triggering the pound to erase losses and rise as much as 0.4% to $1.2945 on hopes of a breakthrough. Elsewhere in Europe, EU leaders imposed sanctions on 40 Belarusian officials accused of rigging August's presidential election, and assured Cyprus that the bloc would punish Turkey if it continues oil and gas drilling in disputed areas of the Mediterranean.

What else is happening...

Senate panel subpoenaes CEOs of Facebook (NASDAQ:FB), Google (GOOGGOOGL) and Twitter (NYSE:TWTR).

Twilio (NYSE:TWLO) forecasts more quarterly revenue than expected.

AMC (NYSE:AMC) to reopen North Carolina theaters over next two weeks.

Expanding consumer reach, Goldman (NYSE:GS) buys GM's credit card unit.

Brazil seeks to reopen $27B dam lawsuit against Vale (NYSE:VALE) and BHP (NYSE:BHP).

Sasol (NYSE:SSL) sells $2B U.S. chemicals stake to LyondellBasell (NYSE:LYB).

Today's Economic Calendar

Auto Sales
8:30 Non-farm payrolls
9:00 Fed's Harker: "Inclusive Workforce Recovery"
10:00 Consumer Sentiment
10:00 Factory Orders
1:00 PM Baker-Hughes Rig Count
1:00 PM Fed's Kashkari: "Racial and Economic Disparities in Education"

Today's Markets

In Asia, Japan -0.7%. Hong Kong closed. China closed. India flat.
In Europe, at midday, London -0.9%. Paris -0.8%. Frankfurt -1%.
Futures at 6:20, Dow -1.6%. S&P -1.7%. Nasdaq -2.3%. Crude -3.8% to $37.24. Gold flat at $1916.20. Bitcoin -3.9% to $10468.
Ten-year Treasury Yield -1 bps to 0.66%

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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