Monday Morning Reads
- ‘Abenomics’ Will Remain, for Good or Ill
- Buffett’s Berkshire Wagers $6 Billion
- No Urgency for Fed to Update Rate Guidance
- Steven Mnuchin Tried to Save the Economy
- Staying Afloat
- A Great Year To Test Alternative Strategies
- Lumbering Along
- Risky Business or Business as Usual?
- It Will Happen
Excitement is percolating around two of the market's favorite stocks as Apple (NASDAQ:AAPL) begins trading today (at $125/share) following a 4-for-1 split, while Tesla (NASDAQ:TSLA) starts trading (at $443/share) on a 5-for-1 split-adjusted basis. While the market caps of the companies will remain the same, some are saying the moves will make shares "more accessible to a broader base of investors" and therefore a new catalyst for the "Retail Bros." Others say it could lead to some profit-taking, with traders cashing in on a record run following the recent split announcements. AAPL +1%; TSLA +2.3% premarket.
U.S. equity futures are starting the week up 0.3% after the DJIA turned positive for 2020 and Wall Street posted its fifth consecutive week of gains. Q2 earnings are expected today from Zoom Video Communications (NASDAQ:ZM) and Rackspace Technology (NASDAQ:RXT), though the economic calendar is light. Later in the week, investors will get reports on construction spending, manufacturing, the trade gap and the Fed's "Beige Book" before the highly-awaited U.S. jobs report for August on Friday. This month’s stock market gains have pushed the S&P 500 to record levels, officially confirming a new bull market.
Important adjustments to the Dow Jones Industrial Average (DJI) are set to take effect this morning. Apple's (AAPL) 4-for-1 stock split set off a cascade of changes as it shrank the weighting of formerly the most important Dow member to 3% from around 12%, and the overall technology representation in the index to around 20% from 27%. The new addition of Salesforce (NYSE:CRM) to the Dow will bring the share of tech in the index to about 23%, and will also see Amgen (NASDAQ:AMGN) and Honeywell (NYSE:HON) replace iconic Exxon Mobil (NYSE:XOM), Pfizer (NYSE:PFE) and Raytheon (NYSE:RTX). The new divisor is likely to be 0.152 from around 0.147, meaning a $1 price move in any Dow component translates to a swing of 6.579 points from around 6.8 points.
"If the benefits outweigh the risks," FDA Commissioner Stephen Hahn would be willing to bypass the full federal approval process in order to make a COVID-19 vaccine available as soon as possible. That would mean emergency authorization could be appropriate before Phase 3 clinical trials are completed. "This is going to be a science, medicine, data decision," Hahn added. "This is not going to be a political decision." Three Western drugmakers are well along with their Phase 3 clinical trials, including AstraZeneca (NYSE:AZN), Moderna (NASDAQ:MRNA) and the Pfizer (PFE)/BioNTech (NASDAQ:BNTX) alliance.
Nestle's (OTCPK:NSRGY) health sciences division already owns a 26% stake in Aimmune (NASDAQ:AIMT), but the company is paying $34.50 a share for the rest of the peanut allergy treatment maker. Including that stake, the deal - expected to close in Q4 - has an enterprise value of about $2.6B. "Together we will be able to offer a wide range of solutions that can transform the lives of people suffering from food allergies around the world," said Nestle Health Science CEO Greg Behar. AIMT +170% premarket.
Privacy changes in Apple's (AAPL) upcoming iOS 14 operating system upgrade have drawn an increasing amount of attention before a fall release, mainly from those who benefit from the advertising industry. Facebook (NASDAQ:FB) has made its strongest statement yet about what the changes could mean, suggesting it could halve revenues from its Audience Network business, a multibillion-dollar operation. The upgrade will require apps to ask users whether or not they want their web activity tracked and some publishers worry that most users will opt out, hobbling their ability to show personalized ads in apps.
ByteDance (BDNCE) "will strictly abide" by China's newly amended rules on exporting technology and that could make any sale of TikTok's U.S. operations more complicated. On Friday, China updated its list of technologies subject to export restrictions to include a number of areas like voice recognition, chip design, recommendation algorithms and artificial intelligence. Microsoft (NASDAQ:MSFT) and Walmart (NYSE:WMT), as well as Oracle (NYSE:ORCL), have submitted rival bids to acquire TikTok's U.S. business, while Centricus Asset Management and Triller were said to have made a last-minute pitch on Friday, though the latter claim was denied by ByteDance.
Things are changing rapidly in the Middle East as the first Israeli commercial airliner flew over Saudi Arabia on a non-stop flight from Israel. Aboard the El Al (OTC:ELALF) Boeing 737 were top aides to President Trump and Israeli Prime Minister Benjamin Netanyahu, who were flying to the United Arab Emirates to put the final touches on a pact establishing open relations between the Gulf power and Israel. Talks will initially focus on fields like tourism, finance, investment and health, with Israel's finance ministry seeing potential for annual bilateral trade starting at $2B and building up to $6.5B once cooperation matures.
What else is happening...
China's largest banks post worst profit decline in more than a decade.
In Asia, Japan +1.1%. Hong Kong -1%. China -0.2%. India -2.1%.
In Europe, at midday, London -0.6%. Paris +0.5%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.4%. Crude +1.3% to $43.53. Gold -0.1% to $1973.20. Bitcoin +0.4% to $11626.
Ten-year Treasury Yield +1 bps to 0.74%
Today's Economic Calendar