Monday Morning Reads

Monday Morning Reads





Morning Charts:

Open Interest Changes
From The Weekend
  • Positive views on DAR, CODI, QLYS, LECO, HASIBarron's
  • Positive view on Expedia (EXPE). Barron's
  • Positive view on Cleveland-Cliffs (CLF). Barron's
  • Positive view on Google (GOOG). Barron's
  • Positive view on Skechers (SKX). Barron's
  • Tesla (TSLA) CEO Elon Musk was found not liable in defamation trial. CNBC
  • Legal and illegal marijuana vaping products are being linked to recent lung illnesses (MO, MJ, TLRY, CGC, CRON, ACB, APHA). NBC News
  • PG&E (PCG) wildfire settlement could force bondholders to rethink strategy. WSJ
  • International Flavors & Fragrances (IFF) is another potential bidder for DuPont's (DD) nutrition unit. Bloomberg
  • Sprint (S) and T-Mobile (TMUS) trial that will challenge merger will begin Monday. WSJ
  • China has ordered removal of foreign computer equipment and software from government offices (HPQ, MSFT, DELL, XLK). FT

U.S. stock index futures are suggesting a pause from Friday's job-fueled rally as investors prepare for a series of major risk events later this week. Brexit is on watch ahead of a U.K. general election, a tariff deadline looms with China, and the Fed and ECB will hold their final policy meetings of the year. House Democrats could also vote on articles of impeachment against President Trump, while economic reports will reveal details on producer/consumer prices and retail sales.
Go deeper: Jeff Miller discusses investment themes in the current climate.

Disney scores $10B at global box office

Frozen II pushed the studio past the milestone this weekend by bringing in another $125M worldwide. Disney (NYSE:DIS) already broke the annual global box office record back in July, as a Lion King remake pushed the company past its own $7.6B record set in 2016. It's also pretty remarkable as Disney reached the mark without the help of recently acquired 20th Century Fox (which grossed $2B at the box office this year), or Star Wars, which will likely provide another $500M+ before the end of 2019.
Go deeper: Despite the milestones, Corey Yeap recommends shorting Disney's stock.

Future of U.S. wireless industry

In a case slated to start this morning, a coalition of 13 states and the District of Columbia, all led by their attorneys general, will face off against T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) over their $26.5B merger. Both the DOJ and the FCC have already allowed the deal to proceed after reaching an agreement with Dish Network (NASDAQ:DISH), which will buy Sprint's prepaid businesses including Boost and Virgin Mobile. The states argue, however, that the regulators erred in their decision, stating the tie-up of the third and fourth largest wireless carrier will limit competition and lead to higher prices.
Go deeper: With the departure of its CEO, Stone Fox Capital says to stay away from TMUS.

Big Tech may pose risk to financial stability

The Financial Stability Board called for "vigilant monitoring" of the tech industry's shift into financial services in a new report released Sunday. "The risks are similar to those from financial firms more broadly, stemming from leverage, maturity transformation and liquidity mismatches, as well as operational risks." They would also crimp the ability of banks to generate capital through retained profits, while widespread access to customer data may mean that Big Tech could dominate the market for certain services.
Go deeper: Small cap tech investing? Check out an interview with Cobiaman.

China makes move against foreign tech

China's Communist Party has ordered all state offices to remove foreign hardware and software within three years, FT reports, in a move which could hit Microsoft (NASDAQ:MSFT), Dell (NYSE:DELL) and HP (NYSE:HPQ). Substitutions will take place at a pace of 30% in 2020, 50% in 2021, and 20% the year after, earning the policy the nickname "3-5-2." Earlier this year, Washington banned U.S. companies from doing business with China's Huawei, and expanded its blacklist in October to include a number of Chinese surveillance firms like Hikvision.

Hong Kong protests mark six-month anniversary

Hundreds of thousands of black-clad protesters thronged the streets of Hong Kong on Sunday, ahead of the six-month anniversary marking anti-government unrest. Authorities gave the green light to Civil Human Rights Front to hold the rally for the first time since August 18, while the city appealed for calm, saying, it had "learned its lesson and will humbly listen to and accept criticism." The Hang Seng Index is down 4% since the protests ramped up in June, with around 6,000 people arrested and hundreds injured, including police.

Trade war weighs on Chinese exports

China's exports dropped 1.1% in dollar terms in November from a year earlier, while imports rose 0.3% (the first Y/Y growth since April), resulting in a trade surplus of $38.73B for the month. "If a phase one trade deal is struck and there is no further escalation of U.S.-China trade tensions, the drag on China's exports from higher U.S. tariffs will likely ease through 2020," said Sylvia Sheng, global multi-asset strategist at JPMorgan. Imports from the U.S. rose for the first time since August last year, with China's trade surplus with the U.S. for November standing at $24.6B, easing from the previous month's surplus of $26.45B.

Another bite in the delivery wars

Naspers' Prosus (OTCPK:PROSF) raised its unsolicited cash offer for Just Eat (OTC:JSTLF) to $6.5B, ratcheting up the bidding war over the British food delivery service. That's about 5% higher than a rival all-share deal from (OTCPK:TKAYF), which has the backing of the board of Just Eat. Both sides are due to report on how many shares their offers have won by Dec. 12. If neither emerges as a winner, Britain's Takeover Panel will start an auction process from Dec. 27.

Sanofi bolsters immuno-oncology pipeline

Sanofi (NASDAQ:SNY) will acquire all of the outstanding shares of Synthorx (NASDAQ:THOR) for $68 per share in cash, representing a 172% premium to the latter's closing price on Dec. 6. "This acquisition fits perfectly with our strategy to build a portfolio of high-quality assets and to lead with innovation, as you will hear at our Capital Markets Day tomorrow," said CEO Paul Hudson. "Additionally, it is aligned with our goal to build our oncology franchise with potentially practice-changing medicines and novel combinations." THOR +171% premarket.
Go deeper: Daniel Schönberger stacks up Novo Nordisk against Sanofi.

Fed balance sheet reaches $4.07T

The expansion of the Federal Reserve's balance sheet continues as $72.8B in temporary liquidity was added to financial markets on Friday. While repo interventions have become mainstream since mid-September - when short-term rates unexpectedly shot up - Fed Chair Jerome Powell has maintained the ongoing program is not quantitative easing, though some believe the central bank is in effect implementing round four of QE. Last Thursday, the Fed reported that its balance sheet had risen from $3.8T in September to $4.07T.

What else is happening...

USMCA may be approved before Christmas.

Netflix (NASDAQ:NFLX), Sony (NYSE:SNE) and Warner Bros. (NYSE:T) eye Golden Globes nominations.

Tullow Oil (OTCPK:TUWLFtanks after CEO resigns, dividend suspended.

Fiat Chrysler (NYSE:FCAU) is appealing the EU's back-taxes order.

Microsoft (MSFTworking on JEDI despite Amazon (NASDAQ:AMZN) protest.

PG&E (NYSE:PCG) reaches $13.5B settlement for California wildfires.

Today's Markets
In Asia, Japan +0.3%. Hong Kong flat. China +0.1%. India +0.1%.
In Europe, at midday, London -0.2%. Paris -0.4%. Frankfurt -0.1%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude -0.8% to $58.75. Gold +0.2% to $1467.50. Bitcoin -0.5% to $7488.
Ten-year Treasury Yield -2 bps to 1.82%Today's Economic Calendar
12:30 PM TD Ameritrade IMX
1:00 PM Results of $38B, 3-Year Note Auction

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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