Monday Morning Reads
- Recession Looming in 2019
- Economic Uncertainty Grows
- Bad Sign for Sell-off
- ‘I want to be clear, I do not respect the SEC.’
- Ready for Your Holiday Shopping?
- Selloff looks to continue into new week
- It's official! O'Day takes top job at Gilead
- U.K. permitted to unilaterally reverse Brexit
- Australia grabs LNG exporter crown from Qatar
- Slump in the world's third largest economy
- BP faces shareholder challenge over climate goals
- Alibaba takes control of film group
- Highlights from Musk's 60 Minutes interview
- Indian stock weakness as exit polls cast gloom
- Alnylam settles litigation with Silence Therapeutics
- WSJ: Gilead Sciences to hire Roche exec O’Day as its next CEO
- Ship Finance goes ex-dividend tomorrow
From the Weekend:
- Positive view on Applied Materials (AMAT). Barron's Report
- Positive view on Caterpillar (CAT). Barron's Report
- Positive view on Lam Research (LRCX). Barron's Report
- Positive view on PayPal (PYPL). Barron's Report
- Positive view on Apple (AAPL). Barron's Report
- Positive views on SNPS, ADVS, ARBA, CDNS, AZPN, ADBE, ADSK, INTU, MODN, PTC, PRO, GWRE. Barron's Report
- Positive view on Dell (DVMT). Barron's Report
- Uber (UBER) plans to soon file for IPO (IPOXX). Bloomberg Report
- Julius Baer plans to transfer Venezuelan unit to Santander (SAN). Reuters Report
- Bunge (BG) will soon announce departure of CEO Soren Schroder which could open up merger talks with Glencore (GLNCY) unit or ADM (ADM). WSJ Report
- Germany's CDU says that the country does not need to take a stake in Deutsche Bank (DB), but Focus Magazine is reporting that Germany is willing to merge Deutsche Bank (DB) with Commerzbank (CRZBY). Bloomberg Report
- Egypt has approved BP's (BP) purchase of Nour deepwater gas concession. Reuters Report
- President Trump wants $750 bln defense budget for 2020 (LLL, GD, NOC, LMT, BA). Politico Report
- Deutsche Bank (DB) has reported suspicious transactions to German officials. FT Report
- Tesla (TSLA) CEO Elon Musk in 60 Minutes interview says he has no respect for SEC. Production of Model 3 was also discussed. He also said that $35,000 car could be ready in 5-6 months. CBS Interview
- Senate will vote this week on withdrawing support for Saudi Arabia related to the war in Yemen (USO, XLE). WSJ Report
- Federal prosecutors say an unnamed Russian offered Michael Cohen ‘government level' synergy between Russia and the Trump campaign and Paul Manafort lied about his contracts. NY Times Report
- Protests in France continue over cost of living increases and taxes (EWQ). NY Times Report
- China's trade surplus with the U.S. hit a record $35.6 billion in November (FXI). Bloomberg Report
- White House Chief of Staff John Kelly will leave at the end of the year. Nick Ayers will not take the job, even on an interim basis. Mark Meadows, Steven Mnuchin, Robert Lighthizer, and Mick Mulvaney are other possible replacements. NY Times Report
Stocks across the globe are flashing red, while U.S. equity futures were off to a softer start to the new week on fresh worries about U.S.-China trade tensions. Those include frictions over the arrest of Huawei CFO Meng Wanzhou and tariff comments from White House trade adviser Peter Navarro. U.S. Trade Representative Robert Lighthizer also warned Sunday that he considers March 1 - when the current trade truce is scheduled to expire - as "a hard deadline."
China's trade surplus with the U.S. jumped in November, widening to a record $35.5B, upping pressures ahead of trade talks between Beijing and Washington. Despite the increase, China's overall exports grew at their slowest pace in eight months. Import growth was also the slowest since October 2016, raising the possibility authorities will take further measures to revitalize the country's growth rate.
Japan's gross domestic product shrank at an annualized rate of 2.5% in Q3, according to a revised estimate from the country’s Cabinet Office, marking the worst slump since the second quarter of 2014. The downturn, affected by several natural disasters, adds to signs elsewhere in Asia and Europe of weakening momentum, with recent data pointing to concerns about the wider impact of the Sino-U.S trade war.
The British government may reverse its decision to leave the EU without consulting other member states, according to the bloc's top court. The landmark ruling will fuel the campaign to thwart the divorce on the eve of a possible make or break vote in the British parliament. Despite repeatedly saying government will not seek to delay or reverse Brexit, Theresa May must decide today to postpone tomorrow's vote.
A close ally of British Prime Minister Theresa May on Saturday became the first cabinet minister to float a possible Plan B if, as expected, parliament rejects her proposal to leave the EU. "If it (May's plan) doesn't get through anything could happen: people’s vote, Norway plus, any of these options could come forward,” Amber Rudd, the Work and Pensions minister, told BBC radio.
The "Yellow Vest" protests in France over the last month will cost the country's economy 0.1 percentage points in Q4, according to French Finance Minister Bruno Le Maire. Expectations are high that Emmanuel Macron will soothe an angry France tonight with some sort of grand gesture. Some suggest he may reinstate a decades-old wealth tax that he abolished as one of his first acts as president.
Indian stocks are still holding on to gains for the year, but they're disappearing quickly. The BSE Sensex Index fell 2% today, marking its worst close in four weeks. Exit polls in regional elections showed Prime Minister Narendra Modi's party struggling in big heartland states, suggesting that farm distress and a lack of jobs for younger people could prove stumbling blocks for his re-election bid in May.
Australia took the world's largest LNG exporter crown from Qatar for the first time in November, according to data from Refinitiv Eikon. It follows the start up of a number of export projects in the country over the past three years, most recently the Ichthys project offshore its northern coast. "We expect a new wave of projects to be launched which will see Qatar regain its position as the leading exporter by the early 2020s," said Sanford Bernstein analyst Neil Beveridge.
After warning Ottawa of "severe consequences," China's foreign ministry called in the U.S. ambassador on Sunday to lodge a "strong protest" over the arrest of Huawei CFO Meng Wanzhou in Vancouver, and said the U.S. should withdraw its arrest warrant. Meng has argued she should be released on bail while awaiting an extradition hearing, citing her longstanding ties to Canada, properties she owns in Vancouver and fears for her health while incarcerated.
British banks, including Standard Chartered (OTCPK:SCBFF) and HSBC, are reportedly among the financial institutions misled by Chinese technology giant Huawei into funneling illicit payments from Iran. More companies are also ditching current and upcoming 5G gear from Huawei, like Japan's big three telecom operators, Kyodo News reports, amid fears that the equipment could contain "backdoors" for use by spies.
Japanese prosecutors have indicted former Nissan (OTCPK:NSANY) Chairman Carlos Ghosn on charges of underreporting his compensation on five years of Nissan's financial reports. In addition, Nissan as a company was indicted over the same allegations. By citing new suspicions, prosecutors also gained the ability to detain Ghosn without the possibility of bail for as long as 22 more days.
Japan's biggest-ever IPO! SoftBank (OTCPK:SFTBY) has priced its domestic telecom business at ¥1,500 per share and will sell an extra 160M shares to meet strong demand. That will raise ¥2.65T ($23.6B) and make the stock sale one of the largest of all time globally. Shares of the new entity, SoftBank Corp., will begin trading on the Tokyo Stock Exchange on Dec. 19.
Alibaba is increasing its stake in Hong Kong-listed Alibaba Pictures to 51%, taking control of the film unit's board. Alibaba Pictures will issue one billion new shares to Alibaba (NYSE:BABA) at HK$1.25, valuing the exchange at roughly HK$1.25B ($160M). Proceeds from the sale will go toward content investment, customer acquisition, sales and marketing activities, M&A and general corporate purposes.
More media news... Disney's (NYSE:DIS) $71B deal to acquire Fox's (NASDAQ:FOX) film and television divisions and Comcast's (NASDAQ:CMCSA) agreement to buy pay-TV operator Sky (OTCPK:SKYAY) will create companies that together control nearly 40% of all programming spending in the U.S, according to a report by Ampere Analysis. Globally, the two will account for 20% of such spending. "Netflix (NASDAQ:NFLX) was on course to catch - and overtake - the top Hollywood studios by content spend. However, in light of the two new combined entities, Netflix would now need to triple spend to achieve this feat."
Gilead Sciences has named Roche's (OTCQX:RHHBY) Daniel O'Day as its new chief executive officer, tapping an industry veteran to fill a management vacuum. He'll begin the job on March 1, 2019. Up to Friday's close, Gilead's (NASDAQ:GILD) shares have fallen nearly 14% since former CEO John Milligan and Chairman John Martin's departures were announced by the company in late July.
The second-largest Ebola outbreak in history has spread to Butembo, a major city with more than 1M residents in eastern Congo. Health experts now worry whether the stock of an experimental vaccine supplied by Merck (NYSE:MRK) will stand up to the epidemic's demands. According to Congo's health ministry, without the teams that have vaccinated more than 41K people so far, the outbreak could have already seen more than 10K Ebola cases (vs. the current 471).
Pressure on oil companies is building after an activist group filed a shareholder resolution urging BP to set hard targets for reducing overall carbon emissions. "Follow This," a Dutch group that accumulates shares in oil companies in order to press them over greenhouse gases, has already spearheaded a number of climate shareholder resolutions at Royal Dutch Shell (RDS.A, RDS.B) and may also target Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM).
Tesla would consider buying the factories General Motors (NYSE:GM) said it intends to idle, CEO Elon Musk told 60 Minutes in an episode that aired Sunday night. He also revealed that he doesn't want to return to the role of Tesla (NASDAQ:TSLA) chairman, stating, "I actually just prefer to have no titles at all." When will the long-awaited $35K version of the Model 3 finally arrive? "Probably" in five to six months, according to Musk.
There had been some indication that an expansive alliance between Ford (NYSE:F) and Volkswagen (OTCPK:VWAGY) could be announced before the end of the year, but CNBC has been advised by a highly placed source at one of the carmakers, that it now looks like it will take until sometime in January. The tie-up could involve sharing assembly plants in the U.S. and other markets, combining marketing and distribution operations in some areas, working jointly on products, and possibly even partnering on the development of autonomous and electrified vehicles.
In Asia, Japan -2.1%. Hong Kong -1.2%. China -0.8%. India -2%.
In Europe, at midday, London +0.2%. Paris -0.5%. Frankfurt -0.5%.
Futures at 6:20, Dow -0.4%. S&P -0.4%. Nasdaq -0.4%. Crude -1.6% to $51.76. Gold flat at $1252.60. Bitcoin +2.1% to $3491.
Ten-year Treasury Yield unchanged at 2.85%