Monday Morning Reads
- China’s Worst Rout in Years
- The Coronavirus Is a Greater Menace.
- Super Bowl Ads Hyped Electric Cars
- Would Your Wages Rise
- Bezos Was Jealous of Elon Musk
- Cause for Analysis or Paralysis?
- Investment Process
- When Does the Federal Deficit Matter?
- Gilead +12% on coronavirus treatment testing
- Forever 21 enters deal to sell for $81M
- Glaxo teams up with CEPI to develop coronavirus vaccine
- Goldman feels this oil major won't meet targeted returns
- GEO Group declares $0.48 dividend
- Here's what's changed about the coronavirus over the weekend
- U.S. futures in the green as China plunges
- Nearly $400B wiped off of China's stock market
- Two-thirds of China's economy remains closed
- Oil plunge has OPEC+ weigh emergency meeting
- Wiring is latest hurdle for 737 MAX return
- Alphabet Q4 2019 Earnings Preview
Worried by the mounting death toll from the coronavirus and drastic efforts to contain it, investors dashed for the exits as Chinese markets reopened following an extended Lunar New Year break (markets have been closed since Jan. 23). Shanghai plunged 7.7%, Shenzhen tanked 8.5% and the tech-heavy Chinext Composite slumped 6.9%, marking the heaviest loss since August 2015 in the aftermath of the bursting of an equity bubble. Officials tried to head off the panic, but to little avail. The PBOC injected $174B into money markets via reverse repo agreements and cut rates on the funds by 10 basis points, while the China Securities Regulatory Commission told some brokerages that their prop traders weren't allowed to be net sellers of equities this week and brokerages were only allowed to sell to meet redemptions.
Go deeper: U.S. futures are in the green as China plunges.
More than a dozen Chinese provinces have announced an extension of the current Lunar New Year holiday by more than a week as the nation attempts to halt the rapidly spreading coronavirus that has so far claimed 362 lives, all but one in China. The areas accounted for almost 69% of China's gross domestic product in 2019, according to Bloomberg. Economists now expect that this virus will deal a more severe blow to the economy in the near term than the SARS epidemic, which subtracted an estimated 0.8 percentage point from GDP growth in 2003.
Go deeper: Apple has closed 42 stores in mainland China through Feb. 9.
New U.S. travel restrictions aimed at combating the spread of the coronavirus took effect on Sunday afternoon, leaving airline employees across the globe scrambling to enforce them. While the three major U.S. carriers - American (NASDAQ:AAL), Delta (NYSE:DAL) and United (NASDAQ:UAL) - have suspended direct flights to China, the TSA has instructed airlines with flights to the U.S. from other countries to screen passengers before boarding to find out whether they've been in China recently. Check-in and gate agents are also required to question travelers, look through recent reservations and possibly their passports for entry or exit stamps, and must work with U.S. Customs and Border Protection to make determinations.
Shares of Gilead Sciences (NASDAQ:GILD) are up 12% premarket after formalizing an agreement with Chinese authorities to study the effectiveness of an experimental Ebola and SARS treatment on patients infected with the coronavirus. "While there are no antiviral data for remdesivir that show activity against 2019-nCoV at this time, available data in other coronaviruses give us hope," the company said in a statement. Trials for the drug will be conducted in Wuhan, the central Chinese city that is ground zero for the current outbreak.
Go deeper: 'Play Defense With Gilead Sciences' by Oyat.
Get ready for Alphabet's (GOOG, GOOGL) first quarterly report since Sundar Pichai, who had been CEO of Google, took the reins of the parent company (founders Larry Page and Sergey Brin stepped back from day-to-day management in December). Wall Street analysts project fourth-quarter revenue of $46.87B (+19.3% Y/Y), with profits of $12.76 per share (-0.1% Y/Y). Investors are also hoping the tech titan will provide more detailed disclosure around its business lines, Google Cloud and antitrust scrutiny, as well as find a way to scale back losses on non-core "other bets."
Go deeper: Kwan-Chen Ma breaks down Alphabet stock price into three parts.
With crude trading near $51 a barrel - after a slump of about 16% in January - OPEC and its allies are considering calling an emergency meeting. Potential dates being discussed are Feb. 8-9 and Feb. 14-15, though for now the next regular meeting on March 5-6 remains on schedule. OPEC, meanwhile, is holding a meeting of technical representatives - the Joint Technical Committee - on Tuesday and Wednesday to assess the coronavirus's effect on markets and demand, according to delegates.
"I hope you've got the message by now, we've made a choice, we want a comprehensive free trade agreement, similar to Canada's," Boris Johnson said in his first speech on Brexit since the U.K. left the EU on Friday. "There is no need for a free trade agreement to involve accepting EU rules... any more than the EU should be obliged to accept U.K. rules." Ahead of the speech, EU Brexit negotiator Michel Barnier set out battle lines for the bloc's post-Brexit trade negotiations, including measures to ensure competition remains open and fair, and an agreement on fisheries with "reciprocal access." Sterling -1% to $1.3066.
Four months after filing for Chapter 11 bankruptcy, Forever 21 has reached a deal to sell off its assets for $81M, a fraction of what the international fashion pioneer was once worth. As part of the deal, Forever 21, which has struggled in the online age, would be sold to a consortium made up of mall operators Simon Property Group (NYSE:SPG) and Brookfield Properties (NASDAQ:BPY), and brand management firm Authentic Brands. The group has been designated as the "stalking horse bidder," meaning the deal remains subject to approval by a judge and other potential buyers have until Feb. 7 to place bids for the company.
WeWork (WE) is looking to turn over a new leaf by naming real estate industry veteran Sandeep Mathrani as its new chief executive. It's a critical step in the company's bid to rebuild its image following a failed IPO attempt last year that saw the departure of co-founder and former CEO Adam Neumann, a subsequent bailout by major stakeholder Softbank (OTCPK:SFTBY), and steep plunge in valuation to less than $8B (from $47B). Mathrani currently serves as CEO of Brookfield Property Partners' (BPY) retail group, and prior to that he was an executive at real estate firms including Vornado Realty Trust (NYSE:VNO).
What else is happening...
Macau casino revenue plunges in January.
In Asia, Japan -1%. Hong Kong +0.2%. China -7.7%. India +0.3%.
In Europe, at midday, London +0.4%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude flat at $51.56. Gold -0.4% to $1580.90. Bitcoin -0.7% to $9361.
Ten-year Treasury Yield +2 bps to 1.54%Today's Economic Calendar
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
4:30 PM Fed's Bostic Speech