Monday Morning Reads

Monday Morning Reads


Open Interest Changes:



Coronavirus vaccine players are on watch this morning ahead of Phase 1 trial results of AstraZeneca's (NYSE:AZN) COVID-19 vaccine developed with the University of Oxford, which are set to be published in The Lancet. Reports last week suggested the journal will release positive news - the vaccine is believed to be in one of the most advanced stages of clinical trials (involving 9,000 patients in South Africa and Brazil). Overnight, the U.K. also secured early access to 90M doses of vaccines in development by drugmakers including Pfizer (NYSE:PFE), BioNTech (NASDAQ:BNTX) and Valneva (OTC:INRLF), while GlaxoSmithKline (NYSE:GSK) inked a deal with CureVac to develop mRNA-based vaccines and antibodies. In just six months since the coronavirus outbreak, 140 vaccine candidates are in the pre-clinical trial stage and 23 have entered the clinical evaluation stage, according to the World Health Organization.

Big week ahead

U.S. stock futures have pared almost all overnight losses to trade back at the starting line after shares in Shanghai closed up 3% (see story below). Earnings season is set to kick into high gear this week with Q2 results from Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA), Intel (NASDAQ:INTC) and American Airlines (NASDAQ:AAL), while coronavirus cases continue to rise at an alarming rate. Hot-spots are flaring in the country's South and West, though New York City will enter its final Phase Four reopening. Zoos and botanical gardens can unlock their doors, sports can restart (without fans), but gyms, museums and indoor dining will remain closed.

China scraps insurer caps

It was only four days ago that Chinese stocks plunged more than 4% after surprisingly upbeat GDP data, though shares are now looking to make a return. The Shanghai Composite closed up 3.1% overnight after China's regulators raised the limit on how much insurers can invest in equity assets to 45%, bringing fresh money into the stock market. The PBOC also kept prime rates on both its one-year and five-year loans unchanged for the third straight month as the economy continues to recover from the coronavirus crisis.

Facebook's No.1 advertiser slashes its spend

Walt Disney (NYSE:DIS) has dramatically cut back on its Facebook (NASDAQ:FB) advertising spending, WSJ reports, marking the latest difficulty for the tech giant as it faces a boycott from companies upset with its handling of hate speech and divisive content. According to research firm Pathmatics, Disney was Facebook's top U.S. advertiser for the first six months of 2020, spending $210M on Facebook ads for Disney+ in the U.S. The House of Mouse also halted advertising Hulu on Instagram, owned by Facebook (Hulu spent $16M on Instagram from April 15 to June 30).
Go deeper: Gary Alexander believes concerns over Facebook ad spend are overblown.

Largest auction process this year

Adevinta (OTCPK:ADEVF) shares are halted in Oslo on reports that eBay (NASDAQ:EBAY) is close to selling its classified-ads unit for more than $8B, while retaining a stake in the business. It's a surprise boost to a bid from the Norwegian online marketplace, which offered a mix of cash and stock, and lessened the chances Prosus (OTCPK:PROSY) would win the hotly-contested auction after its higher all-cash offer was made on the entire unit. A private equity consortium backed by Blackstone (NYSE:BX), Permira and Hellman & Friedman has separately been pursuing the division and also offered to let eBay keep a minority stake. EBAY +1.8% premarket.

Next round of coronavirus aid

Congress begins debating a fifth COVID-19 aid package today as several states in the country's South and West implement fresh lockdown measures to curb the virus. Democrats want to continue enhanced unemployment payments through January, while Republicans have criticized providing that much aid, which runs at $15B per week, arguing that it discourages people from returning to work by paying them more to stay home. President Trump has also suggested that he wouldn't sign a bill without a payroll tax cut, but has backed a new round of stimulus payments for Americans.

Breakthrough in EU talks

Negotiations over the EU's €750B coronavirus stimulus plan appear to be making some headway after three days of deadlock. The leaders of the "Frugal Four" - Austria, Denmark, the Netherlands and Sweden - say they are now ready to accept €390B in grants, with talks still ongoing on other elements of the package. Failure to come together would raise serious questions about the continued viability of the bloc, officials and experts say, with the summit being framed as a "make-or-break" moment for nearly 70 years of European integration. There's also more regional action today as the latest round of talks kick off to define Britain's post-Brexit relationship with the EU.

'No alternative'

Additional spending will worsen the balance sheets of governments, but it is necessary to "prevent things from getting even worse," said Shaun Roache, chief economist for Asia Pacific at S&P Global Ratings. "We're seeing some fiscal policymakers think about pulling back some of their measures or maybe letting them expire without renewing them, and that's quite a dangerous thing to do when demand in the rest of the economy still remains quite suppressed. We hope to see some of those fiscal measures being renewed, pushed forward into the next year. That is going to mean more fiscal easing but at the moment there is no alternative."
Go deeper: S&P Global Ratings expects global GDP to shrink by 3.8% in 2020.

What else is happening...

JPMorgan uncovers why 'day' traders in S&P 500 were left behind.

TikTok (BDNCEshelves plan for HQ in Britain - Sunday Times.

Banks are probing pro-democracy ties of Hong Kong clients.

Boeing (NYSE:BA) running out of space to store newly built Dreamliners.

U.K. asks Japan for 5G alternatives to Huawei - Nikkei

Today's Markets
In Asia, Japan +0.1%. Hong Kong -0.1%. China +3.1%. India +1.1%.
In Europe, at midday, London -0.7%. Paris -0.2%. Frankfurt +0.3%.
Futures at 6:20, Dow flat. S&P -0.1%. Nasdaq flat. Crude -0.8% to $40.43. Gold +0.1% to $1812.50. Bitcoin flat at $9191.
Ten-year Treasury Yield -1 bps to 0.62%

Today's Economic Calendar
No events scheduled

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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