Monday Morning Reads

Monday Morning Reads



Open Interest:





Largest trade deal ever

Fifteen countries that make up nearly a third of the world's population and gross domestic product formed the world's biggest trading bloc over the weekend. The Regional Comprehensive Economic Partnership, or RCEP, was signed by China, Japan, South Korea, Australia, New Zealand and the 10 ASEAN member countries, wrapping up eight years of negotiations before the next U.S. administration comes into office. The deal aims to strengthen supply chains with common rules of origin, reduce tariffs and codify new e-commerce laws. Bigger picture: Beijing has specifically looked to RCEP as an opportunity to write regional rules and diversify its avenues of trade amid declining economic relations with the U.S. after it pulled out of the Trans-Pacific Partnership in 2017 and engaged in a broader tariff war.

Analysts size up RCEP

"The diplomatic messaging of RCEP may be just as important as the economics - a coup for China," wrote analysts from Citi Research, though others are more skeptical, saying the deal was much weaker than TPP. Tariffs among many RCEP member countries are already low given existing bilateral or smaller multilateral trade agreements. Example: More than 70% of trade among the 10 ASEAN countries are conducted with zero tariffs, while additional tariff reductions under RCEP "will only come into force gradually, and it will be years before the treaty is fully operational," said Gareth Leather, senior Asia economist at consultancy Capital Economics.

Rally goes on

Traders are once again shaking off fears about rising coronavirus cases after Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) last week announced strong results for their COVID-19 vaccine. Dow futures are ahead by 1%, while contracts tied to the S&P 500 and Nasdaq are up 0.9% and 0.6%, respectively, building on a recent rotation into value stocks. Expectations are high that Moderna (NASDAQ:MRNA) will report a similar performance for its coronavirus vaccine, which also uses mRNA technology, perhaps as early as today. An average of nearly 150,000 new daily infections have been recorded in the U.S. over the past week, while deaths approached 250,000 as of Sunday, according to data from Johns Hopkins.

National lockdown unlikely under Biden

A clearer picture is emerging of how a Biden administration will handle the coronavirus as more advisors from his task force weigh in on the pandemic. Vivek Murthy, a former U.S. surgeon general and one of three leaders of the task force, as well as Atul Gawande, a senior adviser in the Department of Health and Human Services in the Clinton administration and medical writer, say they favor targeted local measures to stem the pandemic rather than a nationwide lockdown. Biden's coronavirus team will also meet with leading drugmakers developing coronavirus vaccines this week to discuss the "mechanics of manufacture and distribution."

Trump TV?

Newsmax Media is not actively looking to sell itself, CEO Christopher Ruddy told Variety, following a WSJ report that said Trump allies were targeting a buyout to rival Fox News (NASDAQ:FOX). "Newsmax would never become 'Trump TV,'" he said during the interview. "We have always seen ourselves as an independent news agency, and we want to continue with that mission. But we are open - [Trump] is going to be a political and media force after he leaves the White House, and we would be open to talking to him about a weekly show." Trump has tweeted his displeasure with Fox about "calling Arizona early" in the recent presidential election and has reportedly told friends he wants to "wreck" the network.
Go Deeper: Newsmax sees possibility to overtake Fox News in the next 12 months.

SpaceX makes history

Fresh off of receiving certification for human travel, Elon Musk's SpaceX (SPACE) launched four astronauts into orbit Sunday evening, marking the beginning of regularly scheduled commercial flights to the International Space Station. Everything appeared to go as planned, with the first-stage rocket booster successfully landing in a sea-borne droneship and the Crew Dragon capsule expected to link up with the ISS tonight. SpaceX launches are projected to cost NASA about 40% less on a per astronaut basis than Russian Soyuz missions, freeing up agency funds to explore deeper into the solar system.

Bringing batteries in-house

Some jolting news has arrived out of Detroit after Ford (NYSE:F) CEO Jim Farley made it clear the company is now interested in making its own electric batteries, instead of relying on third-party suppliers. "Absolutely, we're discussing it as a team... We think that it's a natural time now because our volume is really growing," Farley declared, nearly two months after Tesla (NASDAQ:TSLA) held its Battery Day with promises of new breakthroughs. Ford is set to release its all-electric Mustang Mach-E very shortly, to be followed by the electric Transit commercial van next year and an all-electric version of its flagship F-150 pickup in 2022.

Walmart throws in the towel on Japan

Walmart (NYSE:WMT) first entered the Japanese market in 2002 by buying a 6% stake in Japanese supermarket chain Seiyu, and gradually built up its stake before a full takeover in 2008, but things didn't go exactly as planned. The retailer has had a tough time in the country like foreign entrants such as Tesco (OTCQX:TSCDY) and Carrefour (OTCPK:CRRFY), which were lured by the high spending power of the Japanese consumers but were hit by stiff competition. Struggling to make money, Walmart is selling a majority stake (65%) in Seiyu to investment firm KKR (NYSE:KKR) and (20% stake) to e-commerce company Rakuten (OTCPK:RKUNF) for a total of $1B. The deal is the latest divestiture of underperforming assets by Walmart, following its exits in Britain, Argentina and Brazil.

Algos to maintain meat output

Back in April, widespread coronavirus outbreaks among employees in the U.S. meatpacking industry forced companies and others to shut dozens of plants across the country. More than 16,000 workers were infected and 86 died, according to the CDC, while farmers had to euthanize tens of thousands of animals and some supermarkets had to ration meat purchases. The response: Besides spending heavily on protective gear and redesigning workstations, companies like Tyson (NYSE:TSN) are using infection-tracking algorithms and ongoing employee testing. The system compares positive employee tests with where they work in the plants, along with publicly reported infection rates in the counties and towns around its 241 U.S. processing facilities. "We can dial up the algorithm when we sense there’s something going on in the community, and we're much more prepared for a second wave," said CEO Dean Banks.
Go Deeper: McDonald's doubles down on safety as COVID cases soar.

What else is happening...

Walmart (WMT) resumes metering customers in stores.

Wall Street bonuses likely to be smaller this year.

PNC (NYSE:PNC) to acquire U.S. arm of Spain's BBVA for $11.6B.

Mall owners Simon (NYSE:SPG) and Taubman (NYSE:TCO) revise merger terms.

Ant valuation likely cut in half, IPO at least six months away - China ETF issuer

Today's Markets

In Asia, Japan +2.1%. Hong Kong +0.9%. China +1.1%. India +0.5%.
In Europe, at midday, London +0.7%. Paris +1.1%. Frankfurt +0.5%.
Futures at 6:20, Dow +1%. S&P +0.9%. Nasdaq +0.6%. Crude +1.9% to $40.89. Gold +0.1% at $1888.40. Bitcoin +1.9% to $16318.
Ten-year Treasury Yield -1 bps to 0.88%

Today's Economic Calendar

8:30 Empire State Mfg Survey
1:45 PM Fed's Daly Speech
2:00 PM Fed's Clarida: U.S. Economy and Monetary Policy

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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