Friday Morning Reads

Friday Morning Reads




Morning Charts:


U.S. stock index futures wavered overnight, currently down around 0.2%, after a major session for Wall Street yesterday that saw the S&P 500 surge almost 1% to its first record close since April. Iran is as good excuse as any for the slight pullback this morning, with reports suggesting President Trump ordered, and then rescinded, an airstrike on military installations in the Islamic Republic. Oil prices are adding to yesterday's massive 6% jump as WTI tops $57 a barrel, while gold dips 0.3% after spiking above $1,400 per ounce to prices not seen in nearly six years.

Stress tests

Dividend-focused bank investors will be paying attention this afternoon to the first round of the Fed's annual stress tests on 18 of the largest U.S. financial institutions. The quantitative part will show the impact of hypothetical scenarios on banks' capital levels, with a consensus that most lenders will pass the exam. A second round next week will say whether any firm failed because of either insufficient capital or on qualitative grounds.

Not slacking off

Shares of Slack Technologies (NYSE:WORKsoared nearly 50% in their public trading debut on Thursday, valuing the company at more than $23B. The strong performance helped validate the unusual direct listing model the company used to go public, as well as underscoring investor demand for business software makers. Revenues for Slack soared more than 80% to $400M in 2018, but it reported losses from operations of $143.85M. The app has more than 90M users, but so far has only around 100K paid customers.

GE... Air Show winner?

Marking its highest close in four months, General Electric (NYSE:GE) closed up 2.8% to $10.63/share on Thursday after emerging as the surprise winner at the Paris Air Show. Its CFM International joint venture with Safran (OTCPK:SAFRY) tallied a total of $55B in orders, including more than 1,150 LEAP engines. "Once we introduced a final design of the LEAP engine with the larger fan, the floodgates opened," said GE Aviation marketing manager Bill Brown. Technicians will note GE also closed above its 50-day and 200-day moving averages.

Renault, Nissan strengthen bond

Calming tensions within their two-decade-old alliance, Nissan (OTCPK:NSANY) has agreed to grant Renault (OTCPK:RNLSY) CEO Thierry Bollore a seat on its board's audit panel and Chairman Jean-Dominique Senard a seat on its nomination committee. Renault in return will approve Nissan's overhauled governance structure, confirming the "spirit of dialogue and mutual respect that exists within the alliance." Stabilizing the partnership's foundation could allow for further consolidation with the likes of Fiat-Chrysler (NYSE:FCAU), after talks broke down earlier this month.

Johnson vs. Hunt

After five rounds of voting by Tory lawmakers, two candidates are left standing: Frontrunner Boris Johnson and current U.K. Foreign Secretary Jeremy Hunt. The two candidates must now woo 160,000 members of the Conservative Party during a month-long tour of the country, with the winner expected to be announced in late July. As the prospect of Johnson’s victory has risen, the pound has fallen against the dollar amid worries that the U.K. will rupture ties with the EU, but you never know what might happen over the next few weeks.

Exxon's latest Iraq move?

ExxonMobil's (NYSE:XOM) $53B project to boost Iraq's oil output might be in jeopardy amid a combination of contractual wrangling and security concerns, Iraqi government officials told Reuters. The main sticking point is the means by which Exxon proposes to recoup its development costs, with the company aiming to share the oil produced by two southern fields - something Iraq says encroaches on state ownership of production. Adding to the problems was a rocket attack this week thought to have targeted the company, which local officials blamed on Iranian-backed militias.


Escalating fears of a military confrontation in the Middle East are having global airlines redirect and suspend some flights to avoid Iran-controlled airspace over the Gulf of Oman and the Strait of Hormuz. They include United Airlines (NASDAQ:UAL), British Airways (OTCPK:ICAGY), Qantas (OTCPK:QABSY), Lufthansa (OTCQX:DLAKY), Singapore Airlines (OTCPK:SINGY) and Air-France KLM (OTCPK:AFLYY). In a separate advisory to operators, the FAA said the nearest civil aircraft was operating within 45 nautical miles of a U.S. Global Hawk drone (NYSE:NOC) when it was shot down yesterday by an Iranian surface-to-air missile.

What else is happening...

"We have the run-up to the G20 to trade without fear," writes contributor David Lerner.

Renewed protests flood streets of Hong Kong.

Walmart (NYSE:WMT) to pay $282M to settle global corruption probe.

M&A push? UnitedHealth (NYSE:UNH) agrees to buy healthcare payments firm Equian for $3.2B - WSJ.

DOJ clears Harris-L3 (HRSLLL) merger after night-vision divestment.

Could the U.S. unilaterally remove Turkey from the F-35 (NYSE:LMT) program?

France sets up a G7 taskforce on "stable coin" projects.

Thursday's Key Earnings
Canopy Growth (NYSE:CGC+0.7% AH on four-fold rise in Q4 revenue.
Darden Restaurants (NYSE:DRI+1.1% called cheap in post-earnings assessment.
Kroger (NYSE:KR-2.2% following in-line sales in Q1.
Red Hat (NYSE:RHT+0.1% AH not providing guidance before IBM acquisition.

Today's Markets 
In Asia, Japan -1%. Hong Kong -0.3%. China +0.5%. India -1%.
In Europe, at midday, London +0.1%. Paris +0.2%. Frankfurt flat.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude +0.2% to $57.17. Gold -0.3% to $1392.20. Bitcoin +5.9% to $9758.
Ten-year Treasury Yield +4 bps to 2.04%

Today's Economic Calendar
3:30 Fed's Rosengren: “Causes of Japanese Financial Crisis in the Late 1990s”
9:45 PMI Composite Flash
10:00 Existing Home Sales
12:00 PM Fed's Brainard Speech
12:00 PM Fed's Mester Speech
12:30 PM Fed's Maly Speech
1:00 PM Baker-Hughes Rig Count
10:00 Fed's Harker Speech on Sunday

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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