Friday Morning Reads

Friday Morning Reads




Todays Top Open Interest Changes:

Morning Charts:



As consumers change rapidly on every facet, investors this week focused on retailers as Q4 results poured in from every corner of the sector. Earnings from some brick-and-mortar stores revealed that many are struggling in the digital age, but for others - which have executed restructuring actions and adjusted to buying trends - the death by e-commerce appears to be exaggerated. Foot Locker (NYSE:FL) closes out the week today - with the stock up 5% premarket and many analysts expecting some great results.


U.S. stock index futures are ahead by 0.6% as the S&P 500 points to a major inflection point at 2,800, a level widely watched by technical analysts and nearly everyone else. Data yesterday showed gross domestic product rising 2.9% in 2018, just shy of the Trump administration's 3% target. White House economic advisor Larry Kudlow also said Chinese trade talks between high-level officials had been "fantastic," and both sides were on track to reach a "remarkable, historic deal."

Asian equities rose overnight, driven by a 1.8% rally in China, after index publisher MSCI announced it would quadruple the weighting of mainland shares in its global benchmarks. The move could potentially draw more than $80B of fresh foreign inflows to the world's second largest economy, which is showing some signs of bottoming. The Caixin Manufacturing PMI rose to 49.9 in February, recovering from its biggest drop since July 2015, even as factory activity contracted for the third straight month.

A planned revision to international tax rules for the digital era could be drawn up within 2019 after the U.S. and Ireland indicated that they wanted a deal, according to French Finance Minister Bruno Le Maire. The comments came after he met with Steven Mnuchin in Paris. The U.S. Treasury Secretary cited hopes for a "global solution at the OECD, that that would replace" the French digital tax, which is expected to be introduced shortly.

The U.S. Energy Department is offering up to 6M barrels of sweet crude oil from the national emergency reserve in a sale mandated by a previous law to raise funds to modernize the facility. The timing may also "serve as a warning to OPEC producers that a larger deployment of the Strategic Petroleum Reserve in the future could undermine," efforts to boost the oil price, at least temporarily, said analysts at ClearView Energy Partners.


There was lots of big news from Tesla (NASDAQ:TSLA) yesterday, with Elon Musk announcing a move to sell vehicles only over the internet. The decision will lower the price of the Model 3 to $35,000 - a key part of the company's effort to become a mainstream automaker. Tesla shares fell 4% after Musk said he doesn't expect the company to be profitable in Q1, based on his expectations for one-time charges and other financial commitments.

Apple's annual shareholders' meeting will kick off at 9 a.m. PT at its Cupertino headquarters, providing investors with updates on the company’s performance and plans for the next 12 months. The gathering comes after Apple (NASDAQ:AAPL) was forced to issue a guidance cut in January, which CEO Tim Cook blamed on weaker iPhone sales and the economic slowdown in China. A month later, the tech giant announced Q4 revenue had fallen 5% Y/Y to $84.3B.

New York Governor Andrew Cuomo has been pleading with Amazon (NASDAQ:AMZN) executives, including CEO Jeff Bezos, to reconsider their decision to abandon plans to build a new office there, NYT reports. In the past two weeks, he's offered to help top brass cut through New York’s byzantine governmental process following opposition by local politicians who assailed Amazon's "abuse of corporate power" and torpedoed the deal.

Meanwhile, Amazon's press-to-order Dash buttons have been officially discontinued, although existing devices will continue to function "so long as the public keeps using them." Amazon (AMZN) VP Daniel Rausch called them an "awesome stepping stone into the world of connected home," but one that no longer fits a world where smart speakers and connected appliances are becoming more common.

Alongside its Q4 results, Gap (NYSE:GPS) announced restructuring plans which will include the spin-off of Old Navy, sending GPS shares up 23% AH. The company also plans the closing of about 230 Gap speciality stores over the next two years. The shutterings should hit annual sales by about $625M and result in pretax costs of $250M-$300M. Annualized pretax savings are seen at roughly $90M.

"From 0 to 2M paid users in less than two years," reads a blog post from Workplace, Facebook's (NASDAQ:FB) communications tool for companies. The announcement comes after Karandeep Anand was appointed as new leader of product development and the relocation of Workplace to a separate website domain. Despite the progress, Workplace remains in a crowded market that includes the likes of Microsoft (NASDAQ:MSFT) and Slack (SLACK), which is preparing to go public this year.

WPP +6.7% premarket after the advertising giant offered investors some relief after a year of account losses, reporting 2018 revenues that only fell 0.4% Y/Y, once pass-through costs were excluded, to £12.8B. Overall group billings rose 3.2% on a comparable basis to £55.8B. Vowing to continue its current turnaround plan, WPP also pledged to strengthen its digital marketing instead of traditional ads, where it has been historically strong.

YouTube will temporarily disable comments on most videos featuring minors in the coming months. It follows the latest advertiser spending pause after ads appeared alongside inappropriate content (in this case, clips with predatory comments). YouTube (GOOGGOOGL) has also launched a better algorithm, which has a broader scope that the company said can catch twice as many offending remarks.

The next episode in the Huawei drama taking place in Canada will be aired today as Canada's Department of Justice decides whether to proceed with the extradition of CFO Meng Wanzhou to the U.S. She has been accused of breaching bans on dealings involving Iran and defrauding financial institutions. Huawei is currently at odds with the U.S., which has banned the company from participating in the development of its next-generation 5G infrastructure.

As part of a U.S. investigation, Pfizer (NYSE:PFE) has received a request for documents related to quality issues involving the manufacture of EpiPen auto-injectors at its Meridian Medical Technologies site. The unit has been hit by a series of production problems in recent years. Mylan (NASDAQ:MYL), which markets EpiPens, has recalled tens of thousands of the devices after complaints that some had failed to activate.

Subaru is recalling around 2.3M vehicles globally over a brake light issue that can lead to ignition difficulties, marking the automaker's biggest-ever worldwide recall. Since late 2017, Subaru (OTCPK:FUJHY) has been reeling from a series of problems ranging from faulty components to inspection re-dos, which, coupled with weakening sales in the U.S., has forced the company to slash its full-year profit outlook to its weakest in six years.

The U.S. Navy has declared its fleet of F-35C fighter jets ready for war, marking a major milestone nearly two decades in the making. That means all three variants of Lockheed Martin's (NYSE:LMT) fifth-generation stealth fighter have achieved Initial Operating Capability (i.e., it passed the proper tests to be flown on missions). They include the F-35A for the Air Force, F-35B for the Marine Corps and F-35C for the Navy.

SpaceX is set to launch its astronaut capsule - called Crew Dragon or Dragon V2 - to space for the first time in the early hours of Saturday morning. A humanoid mannequin will be on board - much like the "Starman" that was launched in a Tesla Roadster (TSLA) for last year's maiden Falcon Heavy launch. If the test proves successful, SpaceX (SPACE) would send up its first crewed flight in July, becoming the first to launch astronauts from U.S. soil since 2011.

Thursday's Key Earnings
3D Systems (NYSE:DDD+5.9% AH growing printer unit sales.
AB InBev (NYSE:BUD+4.6% on strong beer brand performance.
Dell (NYSE:DELL-0.1% AH after its first report as a public company.
J.C. Penney (NYSE:JCP+22.6% on Q4 beat, store closures. (NASDAQ:JD+6.7% following a profit surprise.
Marriott (NYSE:MAR-1% AH as weak demand dinged forecast.
Nordstrom (NYSE:JWN+1.2% AH on an adjusted comp sales gain.
TD Bank (NYSE:TD+0.7% helped by retail, hurt by wholesale.
Workday (NYSE:WDAY+1.2% AH raising subscription revenue outlook.
VMware (NYSE:VMW+3.6% AH posting Q4 beat, licensing growth.

Today's Markets 
In Asia, Japan +1%. Hong Kong +0.6%. China +1.8%. India +0.6%.
In Europe, at midday, London +0.6%. Paris +0.7%. Frankfurt +1.2%.
Futures at 6:20, Dow +0.7%. S&P +0.6%. Nasdaq +0.8%. Crude +0.4% to $57.42. Gold -0.5% to $1310.20. Bitcoin -0.3% to $3807.
Ten-year Treasury Yield +2 bps to 2.73%

Today's Economic Calendar
8:30 Personal Income and Outlays
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Consumer Sentiment
12:50 PM Fed's Bostic: Economic Outlook and Monetary Policy
1:00 PM Baker-Hughes Rig Count

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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