Monday Morning Market Reads, News, Charts

Monday Morning Market Reads, News, Charts







Tesla is in focus after the very first Model 3 rolled off the company's assembly line and into the hands of CEO Elon Musk. By December, Tesla (NASDAQ:TSLA) aims to release 20K Model 3 cars a month. While there's plenty of debate over the company's pace of production and roadtrack to profitability, it's hard to argue that Tesla hasn't had a major influence on the EV scene as companies such as BMW (OTCPK:BMWYY), Volvo (OTCPK:GELYY), Ford (NYSE:F), Toyota (NYSE:TM), Nissan (OTCPK:NSANY), General Motors (NYSE:GM), Uber (Private:UBER), Lyft (Private:LYFT), Avis Budget (NASDAQ:CAR) and Hertz Global (NYSE:HTZ) plot industry-disrupting electric and autonomous strategies. Tesla is up 1.78% to $318.80 in premarket trading after falling off 18% last week.


World markets: The Shanghai Composite in China closed the day 0.2% lower, while the Nikkei in Japan was up 0.8%. European stocks are edging higher, with the Stoxx 600 up 0.4% as bank stocks lead the way. The dollar rose almost 0.4% to ¥114.30 to mark a two-month high before falling back to ¥114.20. Crude oil prices are slightly lower to extend on the 3% drop in the last session. WTI crude oil futures -0.81% to $43.87/bbl at last check. Brent crude -0.75% to $46.36/bbl. U.S. stock futures are pointing to gains at the open.

The pace of inflation in China held at 1.5% in June to easily stay under the 3% target set by Beijing. Food prices declined 1.2% compared with the same period a year ago, while non-food prices were down 2.2% in the month. Producer prices jumped 5.5% to match the forecast from economists.

The Senate Republicans are still short the 51 votes they need to pass the GOP health care proposal. Senator John McCain said he thinks Republicans should work with Democrats to craft health care legislation, while Senator Ted Cruz called for a measure to simply repeal Obamacare and debate a replacement. "No action is not an alternative," commanded Senate Majority Leader Mitch McConnell.

President Donald Trump made some waves over his suggestion of a potential cybersecurity partnership with Russia. Key lawmakers such as Senator Marco Rubio and Senator Lindsay Graham criticized the idea of working with the nation accused by U.S. intelligence agencies of hacking efforts. Reaction was divided within the Trump team. U.N. Ambassador Nikki Haley was quoted Sunday as saying "we won't ever trust Russia," while Treasury Secretary Steven Mnuchin applauded a potential U.S. plan to "fight cyber" with Russia.

G20 wrap: "We will continue to fight protectionism including all unfair trade practices," G20 leaders declared in a joint communique on Saturday following a meeting in Hamburg, Germany. However, the group stepped back from an unequivocal commitment to free trade for the first time since its inaugural summit in 2008. Instead, it said it would "strive to ensure a level playing field," noting "the importance of reciprocal and mutually advantageous trade and investment frameworks."

Fed watch: San Francisco Federal Reserve Bank President John Williams is due to give a speech today in Sydney titled "Speed Limits and Stall Speeds: Fostering Sustainable Growth in the United States." Williams, considered a down-the-middle Fed centrist, called for three or four rate hikes in a speech in early June before the last FOMC meeting.


Shipping M&A: Cosco Shipping Holdings (OTCPK:CICOF) acquired a majority stake in Orient Overseas (OTCPK:OROVY) for $6.3B to continue the wave of consolidation in the shipping industry. A filing with the Hong Kong Stock Exchange indicates that Cosco paid HKD$10.07 per share to mark a 38% premium over Orient's closing price on Friday. Japanese shipping stocks made gains today in Tokyo, led by a 5% jump for Mitsui O.S.K. (OTCPK:MSLOYOTC:MSLOF).

Susquehanna's Pablo Zuanic set the odds at more than 75% that Kraft Heinz (NASDAQ:KHC) makes a hostile bid for Unilever (UNUL). The analyst says it's "telling" that Kraft hasn't pulled any M&A triggers since being rebuffed by Unilever and notes the company is still a good fit. Influential Kraft investor Warren Buffett is expected to come around on Kraft paying out as much as $200B in the consumer packaged goods mega-merger scenario. Shares of Unilever are up 1.66% in premarket action.

At the movies: Spider-Man: Homecoming took in $140M at the international box office and $117M in the U.S. to mark the second best opening weekend in the history of the Spider-Man franchise. The solid showing for the Sony (NYSE:SNE) feature is the third best opening of the year after Guardians of the Galaxy Vol. 2 and Wonder Woman. Universal's Despicable Me 3 hauled in $34M in the U.S. for the weekend and Sony/Tristar film Baby Driver took in $12.75M. The U.S. box office is down 0.2% YTD at a gross of $6.043B through July 9.

Apple's market share for renting and selling movies is down to between 20% and 35% after Apple (NASDAQ:AAPL) held 50% about five years ago. Market share gains were recorded by Comcast (NASDAQ:CMCSA) and Amazon (NASDAQ:AMZN) through its Prime service over the same time period. Across the industry, video on demand movie rental revenue in the U.S. fell 4% to $1.8B in 2016, while digital movie purchase sales slowed to a 21% growth rate.

Cerner Corporation (NASDAQ:CERN) announced that CEO Neal Patterson passed away on July 9 due to unexpected complications that arose after a recent recurrence of a previously disclosed cancer. Cerner co-founder and vice chairman of the Board Cliff Illig has been named chairman and interim CEO.

G. Willi-Food International (NASDAQ:WILC) announced the appointment of Tim Cranko as its new CEO. Cranko was hired from Galam Ltd., where he served as a food division manager. The board ended Iram Graiver's term in office as president of the company last week.

Movie studios are expected to give serious consideration to premium video on demand as profit margins continue to shrink. Though Disney (NYSE:DIS) pulled in $1.8B in studio EBITDA last year, the rest of the industry only accounted for about $1B, including painful losses at Sony and Paramount (VIAVIAB). If studios pull the PVOD switch, consumers will have the option of paying $30 to $50 for early access to certain movies. Morgan Stanley estimates Hollywood studios could bring in $2B in additional annual revenue, assuming a price point of $35 per premium rental. The firm sees a negative impact on exhibitors such Regal Entertainment (NYSE:RGC) and Cinemark (NYSE:CNK) due to an expected loss of traffic. A possible wildcard in the PVOD mix is Netflix (NASDAQ:NFLX).

A firm part-owned by Siemens (OTCPK:SIEGY) has been hired to help install electricity turbines in Crimea, a region subject to EU sanctions, sources told Reuters. While Siemens has denied the allegations, it said that if one of its customers had re-routed any turbines to Crimea, the company "will not provide any deliveries or services for installation, commissioning support, or warranty."

Department store operator Sears (NASDAQ:SHLD) will close 43 additional stores as it works to cut costs and better match changing consumer behavior with its brick-and-mortar strategy. "This is part of a strategy both to address losses from unprofitable stores and to reduce the square footage of other stores because many of them are simply too big for our current needs," Sears CEO Eddie Lampert said in a blog post.

Barron's mentions: Broadcom (NASDAQ:AVGO) and Finisar (NASDAQ:FNSR) are called out as "new Internet winners." More gains for BorgWarner (NYSE:BWA) are predicted, while Apache (NYSE:APA) is tapped for a major comeback. A Citi analyst pitches the case for a 35% run for crude oil (USO,OIL) to $60 by the end of the year.

Today's Markets 
In Asia, Japan +0.8%. Hong Kong +0.6%. China -0.2%. India +1.2%.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.3%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.3%. Crude -0.8% to $43.87. Gold -0.3% to $1206.60.
Ten-year Treasury Yield -2 bps to 2.92%

Today's Economic Calendar
10:00 Labor market condition index
12:30 PM TD Ameritrade IMX
3:00 PM Consumer Credit

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.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)

Leave a Reply