Friday Morning Reads
- China Trade Deal?
- AT&T (T) has accused DoJ of collaborating with HBO in Dish Network dispute. Reuters Report
- Sunoco (SUN) has received unfavorable ruling in excise tax case. Reuters Report
- Apple Hides its Numbers
- Prosecutors announced a guilty plea from an ex-Goldman Sachs (GS) banker. NY Times Report
- Caesars (CZR) receiving takeover speculation following CEO exit. NY Post Report
- Re Code interviews Tesla (TSLA) Elon Musk who discussed his obsession with Twitter and other self inflicted wounds. Re Code Report
- CBS (CBS) CEO search is more difficult that it first thought. NY Times Report
- Bayer (BAYRY) execs considering glyphosate settlement. Reuters Report
- Investors await nonfarm payroll data
- U.S. grants oil waivers under Iran sanctions
- Alibaba beats by $0.33, misses on revenue
- WarnerMedia accuses DOJ of 'collaborating' with Dish
- Equities roar on U.S.-China trade developments
- Buckeye Partners EPS of -$4.86
- Newell Brands misses by $0.11, misses on revenue
- Apple down 7% on soft guidance
U.S. job growth likely rebounded in October, with nonfarm payrolls probably increasing by 193,000 and the unemployment rate holding steady at a 49-year low of 3.7%. Wages are further expected to break through the psychologically important 3% annual growth ceiling that's held firm for nearly a decade. Sustained labor market strength could ease fears about the economy's health following weak housing data and stalling business investment, encouraging the Fed to raise rates again in December.
Stocks across the globe are advancing rapidly on positive trade developments between the U.S and China. President Trump has asked officials in his administration to start drafting terms of a trade deal with Beijing, sources told Bloomberg, which reported that multiple agencies are involved in the effort. Hopes are for reaching an agreement with Chinese President Xi Jinping later this month at the G20 summit in Argentina.
Oil is set for its biggest weekly loss since February as the U.S. reportedly agreed to let eight countries - including Japan, India and South Korea - keep buying Iranian oil after it reimposes sanctions on the OPEC producer. Secretary of State Michael Pompeo will formally announce the number of exemptions later today ahead of a deadline at midnight on Sunday. Beyond that point, any country unloading a tanker from Iran risks the full wrath of the U.S. government.
It's the latest in reversing the Obama administration's move to normalize relations with Cuba, after tightening travel and financial transactions by Americans. National Security Adviser John Bolton has branded Cuba, Venezuela and Nicaragua a "troika of tyranny" and announced new sanctions against the countries. He also praised Brazil's newly elected conservative firebrand, Jair Bolsonaro, as "positive signs for the future of the region."
EU negotiators have floated a tentative Brexit plan to avoid a hard border on the island of Ireland, FT reports. Northern Ireland would remain in a deep customs union with the bloc, applying the union's full "customs code" and following many single market regulations, while the U.K. would be in a more "bare-bones" customs arrangement, in which it would apply a common external tariff on imports from outside the union and rules of origin.
Apple slumped as much as 7% in after-hours trading, briefly falling below its $1T market cap, despite crushing expectations with Q4 revenue up 20% Y/Y to $62.9B. What happened? The company missed iPhone sales estimates, offered weak guidance and said it would no longer report iPhone, iPad and Mac unit sales. "When you look at our financial performance... the number of units sold during any quarter has not been necessarily representative of the underlying strength of our business," CFO Luca Maestri said on a conference call.
In other earnings news, Starbucks (NASDAQ:SBUX) reported its strongest quarterly sales gain in more than a year, boosting the stock up 9% AH. The period marked the first full quarter that CEO Kevin Johnson led the company without the presence of longtime leader Howard Schultz, who stepped down as chairman in June. Big expansion? Starbucks announced plans to open 2,100 new stores globally in 2019.
It's still an "open question" whether Twenty-First Century Fox (NASDAQ:FOXA) will buy back the regional sports networks it sold to Walt Disney (NYSE:DIS) in July as part of a $71B deal, according to Executive Chairman Lachlan Murdoch. Disney won a bidding war earlier this year to acquire Fox’s film and TV assets, but it must divest Fox's 22 networks that provide sports programming for regulatory approval.
For the first time in its 40-year history, WarnerMedia's (NYSE:T) HBO went dark on the Dish Network (NASDAQ:DISH) following a disagreement over a new distribution deal. It's getting dirty. AT&T has accused the Justice Department, which opposed its merger with Time Warner, of collaborating with the satellite TV service, while the DOJ said "this behavior is consistent" with what was predicted as a result of the combination. The appealed antitrust case heads back to court in December.
Latest allegations of Chinese technology theft... The DOJ has unsealed charges against a Chinese state-owned firm and its Taiwan partner - United Microelectronics (NYSE:UMC) - for allegedly stealing trade secrets from Micron Technology (NASDAQ:MU), the largest U.S. memory chip maker. "In 2015, China committed publicly that it would not target American companies for economic gain," Attorney General Jeff Sessions declared. "Obviously, that commitment has not been kept."
UPS will stop picking up shipments of heavy items next Wednesday before union voting on a tentative contract ends on Nov. 11. "Because we do not have a guarantee against a work stoppage, we cannot afford to put our customers' volume at risk," the company said in a statement. The union issues are surfacing as UPS tries to lower delivery costs associated with a surge in online orders from Amazon (NASDAQ:AMZN) and others.
General Motors is "on track" to roll out a ride-sharing service in 2019 that would rely on autonomous vehicles. The self-driving cars can currently run safely at speeds of up to about 30 miles per hour and the service will be limited to a small geographical area. After substantial investments this year from SoftBank (OTCPK:SFTBY) and Honda (NYSE:HMC), GM's autonomous vehicle unit, Cruise, is now valued at $14.6B.
Apple (NASDAQ:AAPL) -6.7% AH following soft guidance.
CBS (NYSE:CBS) +0.9% on an upbeat quarter post-Moonves.
Caesars (NASDAQ:CZR) +11.3% posting an unexpected profit, CEO resignation.
DowDuPont (NYSE:DWDP) +8.1% with a new stock buyback.
EOG Resources (NYSE:EOG) -0.8% AH upping its spending forecast.
GoPro (NASDAQ:GPRO) -16.4% AH missing margins.
Kraft Heinz (NASDAQ:KHC) -7.3% AH following a profit miss.
Shake Shack (NYSE:SHAK) -5.5% AH missing same-store sales.
Starbucks (SBUX) +9.2% AH posting stronger revenues.
Teva (NYSE:TEVA) +15.1% raising its outlook for 2018.
U.S. Steel (NYSE:X) +0.5% AH despite a Q3 earnings beat.
In Asia, Japan +2.6%. Hong Kong +4.2%. China +2.7%. India +1.7%.
In Europe, at midday, London +0.7%. Paris +1.3%. Frankfurt +1.4%.
Futures at 6:20, Dow +0.9%. S&P +0.8%. Nasdaq +0.3%. Crude -0.2% to $63.58. Gold +0.1% to $1237.40. Bitcoin -0.1% to $6351.
Ten-year Treasury Yield +2 bps to 3.17%