Friday Morning Reads
- Real Quick
- This Doesn't Look Like A Bear Market
- Malaysia could absolve Goldman Sachs (GS) for blame in 1MDB scandal. Bloomberg Report
- Alibaba (BABA) plans to postpone some hiring plans. Bloomberg Report
- Several drug makers are increasing prices despite pressure from Washington (IBB, XLV). WSJ Report
- Tesla (TSLA) to recall 14K cars over airbag issue. TechCrunch Report
- FDA directing limited resources during partial government shutdown to approving new drugs (XLV, IBB). Washington Post Report
- Foxconn (FXCNY) to eliminate 50000 seasonal jobs. NAR Report
- TSMC (TSM) plans renegotiation of prices from wafer suppliers. Digitimes Report
- Tesla cuts workforce by around 7%
- Trade war hopes lift global equities
- IEA sees 'gradual' oil market rebalancing
- Deadlock continues over Brexit 'Plan B'
- Malaysia wants $7.5B from Goldman for 1MDB
- China warns Canada if Huawei blocked from 5G
- DeSantis wants end to medical marijuana smoking ban
- Schlumberger EPS in-line, beats on revenue
- Shutdown will not delay net neutrality case
- Schlumberger declares $0.50 dividend
- Key events next week - healthcare
- V.F. Corp beats by $0.20, beats on revenue
Tesla -8% premarket after slashing its full-time staff headcount by approximately 7%. The layoffs come on the back of various cost-cutting measures the EV maker has made of late as it looks to boost margins and ramp up production of the Model 3. "In Q4, preliminary, unaudited results indicate that we again made a GAAP profit, but less than Q3," Elon Musk wrote in an email to Tesla (NASDAQ:TSLA) employees. "We must do everything we can to advance the cause of building affordable clean energy products at scale."
Responding to reports of a possible trade detente between the U.S. and China, stocks across the globe are continuing their climb higher. On Thursday, the WSJ quoted Treasury Secretary Steven Mnuchin as saying Washington could ease tariffs on Beijing, although the suggestion faced pushback from U.S. Trade Representative Robert Lighthizer. Earnings season remains in full swing, and investors today will also be watching figures on U.S. industrial production and consumer sentiment.
"Out of consideration for the 800,000 great American workers not receiving pay and to ensure his team can assist as needed, President Trump has canceled his Delegation's trip to the World Economic Forum in Davos, Switzerland," Press Secretary Sarah Sanders said in a statement. Trump had already scrapped his own trip, but Steven Mnuchin, Mike Pompeo, Wilbur Ross, Robert Lighthizer and Chris Liddell were supposed to attend the meeting.
With just 70 days to go until Brexit day, compromise on a deal is still a long way away. Opposition Labour leader Jeremy Corbyn is boycotting talks as Prime Minister Theresa May refuses to rule out a no-deal Brexit. She's also promised Brexiteers she won’t cave in on their key demands, making it more likely that Parliament will take control of the Brexit process.
Sweden's parliament has voted to give Social Democrat leader Stefan Lofven a second term in office, ending more than four months of deadlock after an inconclusive election. The coalition deal will see Lofven cut taxes and deregulate the labor and property rental market, as well as prevent the anti-immigration Sweden Democrats from having a voice in policy.
Germany and China have signed agreements to strengthen coordination in banking, finance and capital markets, pledging to further open market access and deepen cooperation to broaden economic ties. Trade between the two nations has softened amid uncertainty caused by the U.S.-China trade war, but both have shown a willingness to demonstrate that the world remains multilateral.
Centralizing economic defenses six months after the lira's crash rippled through the economy, Turkey's President Erdogan has been granted emergency powers that give him broad authority to act when financial stability is deemed to be under threat. The Turkish parliament also approved the formation of a Financial Stability and Development Committee that will work to curb financial risks and provide security.
"The journey to a balanced oil market will take time, and is more likely to be a marathon than a sprint," according to the IEA's closely watched monthly report. Production cuts by OPEC and Russia are being offset by swelling U.S. shale oil supply and an uncertain demand outlook. In fact, the U.S. in 2019 "will reinforce its leadership as the world's number one crude producer."
Earnings... Netflix (NASDAQ:NFLX) forecast Q1 revenue slightly below Wall Street estimates, even after a record quarter for new customers, sending shares of the streaming service down almost 4% AH. There were also fears that spending on content and willingness to take on new debt were not justified by the latest figures. Alternatively, investors may have been hoping for more after a U.S. price hike earlier this week.
Former CBS head Leslie Moonves is challenging the company's decision last month to deny him a severance package of $120M, a move that will further prolong a months-long drama at the media conglomerate. Moonves resigned as CEO in September amid accusations of sexual harassment, and was denied severance by the CBS board over policy violations, breach of contract and failing to fully cooperate with the investigation.
There's new allegations against Carlos Ghosn, but this time they're coming from Mitsubishi Motors (OTC:MMTOY). The claims, examined at a board meeting today, center around a €7.8M payment made to the car titan last year by a 50-50 joint venture between Nissan (OTCPK:NSANY) and Mitsubishi. The unit was set up in Amsterdam in 2017 - a year after their alliance began - and only Ghosn and a handful of aides knew about the money.
America's most popular vehicle is going electric. While a timeline wasn't given, Ford (NYSE:F) announced an all-electric plugin version of its F-150 pickup truck at the Detroit Auto Show - a decision the automaker says will "future-proof" the model and F-Series franchise. It's big news, given that the F-150 is pretty much the quintessential symbol of a fossil fuel-powered workhorse.
U.S. refiners are bidding up prices for scarce types of crude oil needed for their most sophisticated plants as the White House reconsiders harsher oil sanctions on Venezuela. 500,013 barrels per day were exported from the country to the U.S. last year, down from 591,422 bpd in 2017. The largest American importers currently include Citgo Petroleum, Valero Energy (NYSE:VLO), Chevron (NYSE:CVX) and PBF Energy (NYSE:PBF).
Florida Governor Ron DeSantis, who took control on Jan. 8, is paving the way to end legal wrangling over smokable medical marijuana. Patients can currently only use oils, sprays, edibles and vaping due to a "slippery slope toward recreational use," but if the Florida legislature does not change the law by mid-March, DeSantis said he'll drop the state's appeal in the case.
Malaysia would consider dropping charges against Goldman Sachs (NYSE:GS) if it was compensated for the full amount raised for the 1MDB fund. That's according to Malaysian finance minister Lim Guan Eng, who added that an appropriate figure would be $7.5B. "Goldman Sachs was lied to by certain members of the former Malaysian government and 1MDB," an investment bank spokesman declared. "We intend to vigorously contest the charges brought against us."
JPMorgan CEO Jamie Dimon received a compensation package valued at $31M last year, up 5% from $29.5M in 2017 and exceeding his record $30M compensation in 2007 before the financial crisis. JPMorgan's (NYSE:JPM) shares fell 9% in 2018, trailing the wider market but easily outperforming other large U.S. banks. It also recorded a profit of $32.5B, the highest profit in U.S. banking history.
China's ambassador to Canada has warned of "repercussions" if Huawei is blocked from participating in building the country's 5G network. The sharp warning comes as the Chinese telecom equipment supplier fights to maintain a foothold in the West and follows the arrest of Huawei CFO Meng Wanzhou in Vancouver last month. Canada has seen a flood of Chinese money in recent years, particularly in the energy and mining sector.
According to a federal appeals court, the government shutdown will not delay oral arguments set for Feb. 1 on the Trump administration's decision to repeal the 2015 net neutrality rules governing internet providers. A group of 22 state attorneys general, as well as companies like Mozilla, Vimeo and Etsy (NASDAQ:ETSY), have asked the court to reinstate the rules and block the FCC's effort to pre-empt states from imposing their own guidelines guaranteeing an open internet. Related stocks: ATUS, CMCSA, CTL, CHTR, FTR, T, VZ, NFLX, DISH, CCOI, S, TMUS
In Asia, Japan +1.3%. Hong Kong +1.3%. China +1.4%. India flat.
In Europe, at midday, London +1.4%. Paris +1.6%. Frankfurt +1.5%.
Futures at 6:20, Dow +0.6%. S&P +0.4%. Nasdaq +0.4%. Crude +1.4% to $53.11. Gold -0.6% to $1284.80. Bitcoin +0.6% to $3608.
Ten-year Treasury Yield +2 bps to 2.77%Today's Economic Calendar
9:05 Fed's Williams: Economic Outlook and Monetary Policy
9:15 Industrial Production
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count