Monday Morning Reads

Sell-side weighs in

"No matter whether it takes Saudi Arabia 5 days or a lot longer to get oil back into production, there is but one rational takeaway from this weekend's drone attacks on the Kingdom's infrastructure - that infrastructure is highly vulnerable to attack," according to analysts at Citi. "The market needs to price in a new level of supply chain vulnerability, with the speed Saudi can come back important not just for this instance but for future disruptions as well," added JPMorgan. For the global oil market, the 5.7M bpd Saudi halt is the single worst sudden disruption ever, surpassing the loss following the Invasion of Kuwait and Iranian Revolution.

Futures retreat

The Saudi oil interruption is weighing on equities just as they were getting back into rally mode, with Dow and S&P futures down 0.4% and Nasdaq futures off by 0.6%. It would be the first decline in nine days for the DJIA, which had climbed back to within 1% from a record on Friday. Weak industrial output data from China (see below) further hammered market sentiment, as well as geopolitical worries. Some U.S. officials blamed Iran for the strikes on Aramco's (ARMCO) facilities, with President Trump saying he was "locked and loaded" for a response "depending on verification."

China's slowdown deepens

Industrial output growth weakened to 4.4% in August, the weakest in 17.5 years, amid spreading pain from the trade war with the U.S. and softening domestic demand. Retail sales and investment gauges worsened as well, reinforcing views that China is likely to cut some key interest rates this week. Ahead of the data, Premier Li Keqiang said it would be "very difficult" for the economy to grow at 6% or more and that it faced "downward pressure."
Go deeper: China investing analysis at the Global Investing Center.

National strike against GM

The United Auto Workers union has begun a nationwide strike against General Motors (NYSE:GM), with some 46,000 members walking off the job after contract talks hit an impasse. Shutting down North American production will cost GM about $400M/day, according to Kristin Dziczek of the Center for Automotive Research, adding that "GM has enough inventory for a short strike of one or two weeks. After that it starts to get painful." The strike does not include Ford (NYSE:F) and Fiat Chrysler (NYSE:FCAU), whose UAW contracts were extended while the union tries to negotiate a deal with GM.
Go deeper: 'GM Shareholders Should Fasten Their Seat Belts' by David Pinsen.

OxyContin maker bites the dust

Purdue Pharma has filed for bankruptcy protection, days after reaching a tentative deal to settle more than 2,600 lawsuits alleging the company helped fuel the deadly U.S. opioid epidemic. The settlement calls for the Sackler family to hand over Purdue to a trust controlled by the states, cities and counties that have sued to recoup billions of dollars they spent battling addictions and overdoses. Opioid maker Insys Therapeutics (OTCPK:INSYQ) filed for Chapter 11 bankruptcy protection on June 10, while reports suggest Mallinckrodt (NYSE:MNK) may be next.
Go deeper: $8B in opioid damage demanded from J&J (NYSE:JNJ) and McKesson (NYSE:MCK).

No flavored ecigs allowed

New York Governor Andrew Cuomo is taking an emergency executive action to ban the sale of flavored electronic cigarettes in the state, amid a surge of vaping-related illnesses and deaths nationwide. The ban would not include menthol and tobacco flavored products, which Cuomo said can help people wean off of regular cigarettes. New York would become the second state in the country behind Michigan to ban the candy flavored products, which are popular with teenagers.
Go deeper: Related stocks include, MO, PM, BTI, VGR and OTCQX:IMBBY.

Apple's Irish tax bill

The world's biggest tax case hits the courtroom this week. Apple (NASDAQ:AAPL) is battling the EU's Competition Commissioner Margrethe Vestager, who in 2016 ruled that Apple's tax deals with Ireland allowed the company to pay far less than other businesses and levied a €13B tax bill on the iPhone maker. The first hints of how the Apple case may turn out will come from a pair of rulings scheduled for Sept. 24, but a final ruling could take months and empower a potential new crackdown on internet giants.

Firm Brexit deadline

"Despite the Remainer attempt to crush Brexit, I am working flat out to ensure we leave on Oct. 31," U.K. Prime Minister Boris Johnson wrote in The Daily Telegraph. Multiple reports suggest he will reiterate that he wants to secure a deal by Oct. 18 in his first face-to-face meeting today with EU chief Jean-Claude Juncker, but will reject any delay after Halloween. He's also prepared to go to court to fight against legal challenges from his opponents on the matter.

What else is happening...

Top tech IPOs in 2019 outperform S&P 500.

WTO clears U.S. tariff request in aircraft subsidy row.

Volkswagen (OTCPK:VWAGY) makes Dieselgate settlement Down Under.

Structural changes coming to Boeing (NYSE:BA) after 737 MAX crisis.

HK exchange (OTCPK:HKXCY) presses on with £32B LSE (OTCPK:LDNXF) bid.