Monday Morning Reads

Monday Morning Reads



From the Weekend
  • Cautious view on Kroger (KR). Barron's Report
  • Positive views on CSCO, INTC, AAPL, KEYS, NATI, QCOM, COMMBarron's Report
  • Positive view on Dollar Tree (DLTR). Barron's Report
  • Over 20 people are dead from California wildfires (PCG). CNN Report
  • Netflix (NFLX) is not planning India offerings. Reuters Report
  • Vodafone (VOD) unlikely to cut its dividend, despite pressure. Telegraph UK Report
  • BaE Systems' (BEASY) deal to sell 8 Eurofighter Typhoon jets is In jeopardy amid Germany's ban on sales to Saudi Arabia. Sunday Times UK Report
  • OPEC and other allied oil producers considering output cuts (USO, XLE). Bloomberg Report
  • Telecom Italia (TI) will not seek to replace its CEO. Bloomberg Report
  • Iran selling oil to private exporters to bypass sanctions (USO, XLE). Reuters Report
  • House Democrats plan to investigate President Trump's actions toward CNN & Washington Post (AMZN, T). Axios Report
  • With Congress divided, White House could take steps to reduce Government backstop in Fannie (FNMA) and Freddie (FMCC). WSJ Report
  • Veritas Capital and Elliott Management plan to bid for Athenahealth (ATHN) for $5.5 billion. Reuters Report
  • President Trump wants to eliminate hurricane relief funding for Puerto Rico (MUB, MBI, AGO). Axios Report
Some of the Top  Open Interest Changes for Today:




Saudi Arabia annunced it will slash its oil exports unilaterally next month - by 500K barrels per day - as OPEC producers met over the weekend to halt a market slump that had seen crude decline by 20% since early October. A broader OPEC output cut was also debated in Abu Dhabi, but with Russia warning of "hasty decisions," a verdict was postponed until the next full OPEC meeting, scheduled to take place in Vienna on Dec. 6.


Sterling slipped 0.8% overnight to $1.1269 as former British Foreign Minister Boris Johnson came out swinging against Theresa May, stating the U.K. is on the verge of "total surrender" in Brexit negotiations. May also faces the threat of further resignations from several pro-EU ministers following the departure of transport minister Jo Johnson on Friday, while the Labour party said leaving the bloc without a deal would be blocked by parliament.

The euro is not "a clear alternative" to the dollar thanks to the U.S. currency's international "strengths," French President Emmanuel Macron told CNN. "This is an issue of sovereignty for me. We made a great job during the past years but it’s not yet sufficient... That’s why I want us to work very closely with our financial institutions, at the European levels and with all the partners."

Alternatives to Libor underpinned less than 5% of interest rate derivatives traded last quarter, FT reports, with regulators like the U.S. Fed and Bank of England trying to wean financial markets off the scandal-tainted benchmark. Banks will no longer be required to submit the daily rates that together form Libor from 2021 as many believe the benchmark no longer accurately reflects the cost of unsecured borrowing between banks.

World leaders are heading to Singapore for the semiannual ASEAN summit, where Chinese Premier Li Keqiang is expected to rally support for the Regional Comprehensive Economic Partnership, a free trade deal that will encompass more than a third of the world's GDP. The pact currently includes 16 countries, including China, India, Japan and South Korea, but not the United States.

Meanwhile, Vietnam's National Assembly has unanimously ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the updated version of the TPP following the U.S.'s withdrawal in 2017. Brunei, Chile, Malaysia and Peru are now the four remaining member nations that are yet to ratify the 11-nation trade pact, which will slash tariffs across much of the Asia-Pacific.

U.S. stock index futures are starting the week not far from the flatline. No major economic data is expected and the session could see low trading volumes as U.S. bond markets are closed for Veterans Day. In earnings news, several retailers including Walmart (NYSE:WMT) and Macy’s (NYSE:M) will be on the radar this week, with investors keen on hearing what they say about consumer sentiment.

Wildfires raging north of San Francisco and near Los Angeles have killed at least 31 people, as more than 250K people flee the areas against a backdrop of damages that could reach $19B. In the past, PG&E (NYSE:PCG) has been faulted for several deadly blazes across the state, and many are now pointing fingers at the utility, causing the stock to close down 16% on Friday. President Trump has also blamed the wildfires on poor forest management, threatening to cut off funding to California.


Alibaba clocked in sales of $30.8B during its annual Singles' Day extravaganza, representing a rise of nearly 27% year-on-year, but smaller than the 39% Y/Y growth recorded in 2017. In the past few years, Singles' Day (NYSE:BABA) has exceeded the transaction volume of both Black Friday and Cyber Monday combined. The event has also far surpassed Amazon's (NASDAQ:AMZN) Prime Day, which is the most similar to Singles' Day because it is also a 24-hour, online shopping event.

Paving the way for Japan's largest ever share listing, SoftBank (OTCPK:SFTBY) has received clearance from the Tokyo Stock Exchange for a ¥2.4T ($21B) IPO of its mobile unit. The new share issuance, pegged for Dec. 19, will add more fuel to its nearly $100B Vision Fund and mark the transformation of the mobile phone network provider into one of the world’s biggest technology investors under CEO Masayoshi Son.

Less than a week after Samsung (OTC:SSNLF) unveiled its "Infinity Flex Display," a new report from Yonhap News claims to have details about the upcoming bendy device. The smartphone will be dubbed the "Galaxy F" and debut in March, shortly after the 5G-enabled S10. While the company hasn't settled on a price, it likely won't come cheap, with a cost of as much as 2M won, or $1,770.

Once Democrats take control of the House, they are planning to investigate whether President Trump abused "instruments of state power" to penalize companies, incoming House intelligence committee chairman Adam Schiff told Axios on HBO. That includes probes on whether the Trump administration attempted to block AT&T (NYSE:T) from acquiring Time Warner "to punish CNN," and whether officials sought to hit Washington Post relative Amazon (AMZN) by prodding the USPS to hike shipping prices.

M&A roundup: SAP has joined a growing list of software giants making big acquisitions in 2018, scooping up business software company Qualtrics for $8B just before its IPO. Reports also suggest private equity firm Vista Equity Partners reached a deal to buy software company Apptio (NASDAQ:APTI) for $1.94B, while Veritas Capital and Elliott Management agreed to acquire Athenahealth (NASDAQ:ATHN) for $5.5B in cash.

Diageo is selling a portfolio of 19 brands, including Seagram's whisky varieties and Romana Sambuca, to privately owned Sazerac for $550M. While proceeds will be returned to shareholders through a share buyback, the sale will be dilutive to pre-exceptional earnings per share in the first full financial year after closing. The deal will allow Diageo (NYSE:DEO) to have "greater focus" on its premium brands in the U.S.

The last ten years it was clove cigarettes, but this decade may see a menthol ban. Following a 4% fall on Friday, British American Tobacco (NYSEMKT:BTI) shares are down over 7% premarket on news that the FDA may take the minty product off the market. "BAT is the most exposed name to the potential risk," wrote Morgan Stanley's Richard Taylor, who estimates that U.S. menthol cigarettes (and its Newport brand) account for 25% of total earnings.

Aiming to close its deal for Shire (NASDAQ:SHPG) on Jan. 8, Takeda Pharmaceutical (OTCPK:TKPYY) will hold an extraordinary general meeting of shareholders to vote on the $62B transaction on Dec. 5. The deal would be the largest-ever overseas acquisition by a Japanese company, but it still needs two-thirds support from shareholders, some of whom are worried about the enlarged company's resulting debt burden, as well as regulatory approval from the EU. SHPG +1% premarket.

UPS freight workers have voted to approve a new labor contract, averting a strike that could have affected shippers transporting their goods around the country. UPS said it will immediately resume pickups for the division's customers, after its 11,600 workers stopped picking up orders earlier this month so freight cargo wouldn't be stranded in the network during a strike.

Ford is open to working with foreign rivals to expand self-driving services internationally, but declined to comment on reports that the company was in collaboration talks with Volkswagen (OTCPK:VWAGY). Development and business costs "billions and billions of dollars" per region, Ford's (NYSE:F) Autonomous Vehicles' CEO Sherif Marakby told the FT, so it's cost effective on "risk and the reward" to work together to deploy the technology across territories.

The market is predominantly filled with massive contractors - Boeing (NYSE:BA), Lockheed Martin (NYSE:LMT) and SpaceX (SPACE) - but there's a new side to the commercial space sector. Rocket Lab put seven spacecraft in orbit on Saturday with its first commercial launch, hoping to be at the forefront of the small satellite industry. Big price point... The company's 56-foot tall Electron rocket costs $5.7M per launch, compared to almost $60M for SpaceX's 230-foot Falcon 9.

Today's Markets 
In Asia, Japan +0.1%. Hong Kong +0.1%. China +1.2%. India -1%.
In Europe, at midday, London -0.1%. Paris -0.2%. Frankfurt -0.7%.
Futures at 6:20, Dow -0.1%. S&P flat. Nasdaq +0.1%. Crude +0.3% to $60.39. Gold -0.2% to $1206.80. Bitcoin -0.1% to $6372.
Ten-year Treasury Yield -5 bps to 3.18%

Today's Economic Calendar
2:30 PM Fed's Daly Speech

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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