Monday Morning Reads

Monday Morning Reads



Open Interest:





Merger Monday

U.S. stock index futures are shooting for a comeback after the tech-heavy Nasdaq ended its worst week since March. The Dow is pointing to a 250-point advance, while contracts tied to the S&P 500 and Nasdaq 100 are up 1.2% and 1.7%, respectively. A series of deals are boosting sentiment: Gilead (NASDAQ:GILD) reached a $21B agreement to acquire Immunomedics (NASDAQ:IMMU), Nvidia (NASDAQ:NVDA) is paying $40B to buy Arm Holdings from Japan's SoftBank (OTCPK:SFTBY) and Oracle (NYSE:ORCL) may be taking over TikTok's (BDNCE) U.S. operations (see below). On the coronavirus front, Pfizer (NYSE:PFE) said its coronavirus vaccine could be distributed to Americans before the end of the year, while AstraZeneca (NYSE:AZN) restarted Phase 3 trials in the U.K.

Acquisition details

The dealmaking continues as Nvidia (NVDA) agreed to buy SoftBank's (OTCPK:SFTBY) chip division Arm for $40B in cash and stock, in a deal that could have wide-ranging implications for the global semiconductor industry. Gilead Sciences (GILD) also said it would acquire biotech company Immunomedics (IMMU) in a $21B deal that will expand its availability of cancer treatments through innovative drug Trodelvy, an FDA-approved treatment for metastatic triple-negative breast cancer. The therapy could ring up $3B-$5B a year in annual sales if it proves to work safely against other cancers, Jefferies & Co. analyst Michael Yee said in a research note. NVDA +6%; IMMU +105% premarket.

The clock ticks down

Mixed reports overnight suggested that Oracle (ORCL) may be the suitor in line to acquire TikTok's U.S. operations, though any deal would be structured as a partnership and not an outright sale. That follows Microsoft's (NASDAQ:MSFT) statement that it (along with Walmart (NYSE:WMT)) has been rejected by TikTok owner ByteDance (BDNCE) as a buyer. There's only a few more days until a September 15 deadline imposed by President Trump to prevent a TikTok shutdown. Any deal would also have to receive approval from the Chinese government, which recently outlined a series of technologies that are subject to export bans or restrictions.

Oil demand may never be the same

BP (NYSE:BP) has become the first oil major to call the end of an era many thought would last another decade or more, saying the relentless growth of oil demand is over in its latest energy outlook. Oil consumption may never return to levels seen before the coronavirus crisis took hold and even the firm's most bullish scenario sees demand no better than "broadly flat" for the next two decades as the world moves away from fossil fuels. The forecast helps explain why BP has recently said it would shrink oil and gas output by 40% over the next decade and spend as much as $5B a year building one of the world's largest renewable-power businesses.

Sally set to become hurricane

Gulf of Mexico oil producers like Chevron (NYSE:CVX) and Murphy Oil (NYSE:MUR) have evacuated offshore facilities ahead of the anticipated arrival of tropical storm Sally, which is forecast to strengthen into a hurricane. "That system is forecast to bring not only damaging winds but a dangerous storm surge," said Daniel Brown of the Hurricane Center, warning of storm surge stretching from Morgan City, Louisiana, to Ocean Springs, Mississippi. At least 1.3M bbl/day of oil production was already shut last month as Hurricane Laura ripped through the Gulf of Mexico and the southwest Louisiana coast.

Abenomics here to stay

Yoshihide Suga, Shinzo Abe's right-hand man for nearly eight years, has been elected president of Japan's ruling Liberal Democratic Party, making him all but certain to become prime minister of the world's third-largest economy later this week. "We cannot have any void in policy," Suga said after the vote, adding to statements that he would want to enhance Abenomics, as well keep Bank of Japan Governor Haruhiko Kuroda's ultra-easy monetary policy. Should he be elected by parliament, Suga can stay in office until September 2021, when the party will hold another leadership election.

Second wave, second lockdown

Israel's cabinet has voted to impose a second nationwide lockdown starting Friday, becoming the only developed country to shut down again. Infections have surged ninefold and deaths have quadrupled since late May, while nearly one-fifth of the labor force remains out of work even though most of the economy has been open for months. Other countries dealing with new record infection rates are watching the three-week lockdown closely, which will coincide with a major Jewish holiday season.

Amazon's latest job spree

Amazon (NASDAQ:AMZN) is hiring 100,000 full and part-time employees across the U.S. and Canada to help pack, ship or sort orders, marking the e-commerce behemoth's fourth hiring spree this year. The new jobs include benefits and sign-on bonuses of as much as $1,000 in select cities, as well as starting wages of at least $15 an hour. The company already had to hire 175,000 people earlier this year to keep up with the rush of orders, and last week said it had 33,000 corporate and tech jobs it needed to fill.

Gyms are still struggling

Grappling with heavy debt loads even before COVID-19 shuttered the global economy, Town Sports International (NASDAQ:CLUB), the owner of the New York Sports Clubs chain, has filed for Chapter 11 bankruptcy protection in the District of Delaware. The move allows the company, which has around 600K members, to keep operating while it works out a plan to pay creditors and turn the business around. It's not the only one that has fallen on hard times. Gold's Gym sought court protection from its creditors in May, while 24 Hour Fitness Worldwide filed for bankruptcy in June.
Go Deeper: The fitness-from-home sector has boomed during the coronavirus pandemic.

What else is happening...

BlackRock (NYSE:BLK) and Vanguard poised to dominate active ETF space.

Snowflake (SNOW) heading for blockbuster IPO with Berkshire (BRK.ABRK.B) backing.

ViacomCBS (NASDAQ:VIAC) set to sell CNET to Red Ventures for $500M.

Cord-cutting isn't slowing, as households shed high-dollar packages.

Streaming music revenues may rise by $1B-plus in 2020.

737 MAX crisis: Boeing (NYSE:BA) design flaws vs. pilot mistakes.

Today's Markets

In Asia, Japan +0.7%. Hong Kong +0.6%. China +0.6%. India -0.2%.
In Europe, at midday, London -0.2%. Paris +0.1%. Frankfurt -0.1%.
Futures at 6:20, Dow +0.9%. S&P +1.2%. Nasdaq +1.7%. Crude +0.5% to $37.15. Gold +0.2% to $1951.80. Bitcoin -0.8% to $10418.
Ten-year Treasury Yield flat at 0.67%

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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