Friday Morning Reads
- Swallowing Smaller Firms
- People Fear a Market Crash
- Permanent Hit With Few Job Prospects
- Economy Is Struggling Anyway
- Bidding Frenzy In Ant’s Mega IPO
- Are We Trading Our Happiness for Modern Comforts?
Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) must classify their drivers in California as employees, according to a state appeals court ruling that threatens to upend their business models. The order makes the two even more dependent on Proposition 22, a ballot initiative set for Nov. 3 that would supersede any court rulings. It has so far raised more than $189M from the companies, along with DoorDash (DOORD), Postmates (POSTM) and Instacart (ICART), making it the most expensive proposition in California's history. Should it pass, the companies say they will guarantee new protections to workers, but should it fail, they would likely explore other appeals options, like sending the case to the California Supreme Court.
It's been quite a choppy trading week on Wall Street, and the trend didn't stop overnight, with U.S. stock index futures inching into the green after spending the first half of session in the red. While House Speaker Nancy Pelosi said progress on a stimulus deal was "just about there," White House economic adviser Larry Kudlow cautioned "significant policy differences" remained, which were unlikely to be resolved before the election. On the economy, the latest weekly initial jobless claims dropped 55,000 to fall below 800,000 for first time since March, while about a fifth of S&P 500 companies have so far reported Q3 results, of which 84.1% beat earnings estimates.
In a relatively civil debate following a turbulent first faceoff, President Trump and former Vice President Joe Biden traded some barbs last night over the economy. Trump said Biden would "destroy the oil industry" after the latter talked up plans about a "transition to renewable energy over time," as well as ending federal subsidies to the sector. Regarding coronavirus shutdowns... Trump declared, "we can't keep this country closed... the cure cannot be worse than the problem itself," while Biden replied, "I'm going to shut down the virus, not the country," though he didn't rule out additional shutdowns. The two also differed on minimum wage, with Trump stating it should be left up to states and Biden saying it deserves to be $15 an hour on a federal level (from the current $7.25).
Shares of Gilead Sciences (NASDAQ:GILD) are up nearly 6% in premarket trade after its antiviral therapy remdesivir became the first drug to obtain formal FDA clearance for treating COVID-19. That could help solidify its position as the go-to medicine for patients even when other drugs begin to reach the market. In May, the FDA granted remdesivir, sold under the brand name Veklury, emergency use authorization, allowing hospitals and doctors to use the medication even though it had not been formally approved by the agency.
Launching a preemptive strike against an impending opioid-related lawsuit from the Justice Department, Walmart (NYSE:WMT) is suing the federal government regarding the obligations of pharmacists under the Controlled Substances Act. "They are now threatening a completely unjustified lawsuit against Walmart, claiming in hindsight pharmacists should have refused to fill otherwise valid opioid prescriptions that were written by the very doctors that the federal government still approves to write prescriptions," Walmart said in the filing. While the suit won't necessarily head off any DOJ action, a court ruling siding with the company's view of the law could bolster it against any government case.
The Federal Trade Commission is "huddling privately" to discuss its antitrust probe of Facebook (NASDAQ:FB), according to The Washington Post, signaling its investigation has moved closer to an endgame. While the exact timing of any action is unclear, a federal suit would follow closely on the Justice Department's landmark antitrust suit against Google (GOOG, GOOGL). As with Google, the focus is on competition, and specifically Facebook's dominance in social networking along with its purchases of Instagram and WhatsApp.
Adding to fines and settlements in Hong Kong and Malaysia, Goldman Sachs (NYSE:GS) will pay a record $2.9B foreign bribery penalty in the U.S. and plead guilty for its involvement in the scandal-plagued 1MDB investment fund. That brings the global cost for the bank to more than $5B. Those hefty fines are also leading Goldman to claw back some executive compensation from current and former executives, including CEO David Solomon and his predecessor, Lloyd Blankfein.
As the clock ticks down to reach an agreement with the European Union, the U.K. has signed a trade deal with Japan, its first with a major economy since Brexit. The bilateral deal largely preserves the terms under which the U.K. traded with Tokyo when it was part of the EU, but is expected to boost British trade by £15B and GDP by 0.07% over the next 15 years. It will also make it easier for British companies to operate in Japan, with tariff-free trade on 99% of exports to the country, and benefit "all parts of the country and Scotland, London and the East Midlands in particular."
What else is happening...
Thursday's Key Earnings
American Airlines (NASDAQ:AAL) +3.1% seeing improvements in passenger demand.
AT&T (NYSE:T) +5.8% surprising with strong Q3 wireless, broadband net adds.
Coca-Cola (NYSE:KO) striking higher margins despite pandemic pressures.
Dow Inc. (NYSE:DOW) +0.6% as demand picked up from pandemic lows.
Freeport-McMoRan (NYSE:FCX) +3.6% lifted by gold prices, copper volumes.
Intel (INTC) -9.4% AH as Q3 data center sales fell 7%.
Kimberly-Clark (NYSE:KMB) -6.9% posting mixed results.
Mattel (NASDAQ:MAT) +6.1% AH on a big quarter for Barbie sales.
Sirius XM (NASDAQ:SIRI) +2.2% raising full-year subscriber, financial outlook.
Southwest Airlines (NYSE:LUV) +5.3% showing improvement on cash flow, profitability.
Union Pacific (NYSE:UNP) -6.2% despite notching a record operating ratio.
Valero Energy (NYSE:VLO) +1.8% posting a smaller-than-forecast Q3 loss.
In Asia, Japan +0.2%. Hong Kong +0.5%. China -1%. India +0.3%.
In Europe, at midday, London +1.5%. Paris +1.3%. Frankfurt +0.9%.
Futures at 6:20, Dow +0.4%. S&P +0.3%. Nasdaq +0.1%. Crude +0.3% to $40.78. Gold +0.4% at $1911.70. Bitcoin +0.8% to $12984.
Ten-year Treasury Yield flat at 0.86%
Today's Economic Calendar