Monday Morning Reads

Monday Morning Reads





Open Interest Changes:

From The Weekend:

  • MoneyGram (MGI) considering strategic alternatives including sale. Reuters Report
  • GameStop (GME) cancelling pre orders of Kingdom Hearts game Kotaku Report
  • Saudi Aramco will maintain rights to develop oil in Saudi Arabia (USO, XLE). Bloomberg Report
  • Brazil's pro business stance could be tested by Vale (VALE) dam collapse (EWZ). Bloomberg Report
  • Deutsche Bank (DB) will get funding commitments from Qatari. Bloomberg Report
  • Walgreens (WBA) will be bidder for 120 Shopko pharmacies. WSJ Report
  • PG&E (PCG) still planning bankruptcy. Axios Report
  • Amazon (AMZN) planning UK physical stores. Daily Mail Report
  • John Bolton says U.S. will act if there is violence against staff in Venezuela (USO, XLE). Bloomberg Report
  • Pfizer (PFE) is investing in cancer drugs to fuel growth. WSJ Report
  • China Ambassador to EU warned that allies efforts to exclude China from 5G mobile projects could hurt development of the technology (T, VZ, S, TMUS, XLK). FT Report




Global shares are starting the week on the back foot ahead of some big upcoming events that could weigh on investor sentiment. Among them: Key votes on Brexit, U.S.-China trade talks, a Federal Reserve policy decision and a deluge of high profile corporate earnings. More tensions? President Trump said another government shutdown is "certainly an option" after signing a bill to temporarily reopen government following the longest shutdown in history.


With 22% of companies in the S&P 500 so far reporting Q4 results, the percentage of actual EPS above estimates (71%) is equal to the five-year average, according to FactSet. However, firms are reporting earnings in aggregate that are 3.0% above estimates, which is below the five-year average. Combined with estimated results for companies that have yet to report, Q4's Y/Y earnings growth rate is currently 10.9%, marking the fifth straight quarter of double-digit earnings growth, but the first time since Q4 2017 that growth hasn't reached above 20%.

In an attempt to break the deadlock over Brexit, Theresa May will seek legally binding changes from the EU regarding the Irish backstop, lawmaker Boris Johnson wrote in The Telegraph, citing senior government sources. "If the PM secures a 'Freedom Clause' - for the U.K. to escape the backstop without reference to the bloc - I have no doubt that she will have the whole country full-throatedly behind her."

There's more downbeat data for China's vast manufacturing sector. Industrial profits in December fell 1.9% from a year earlier to 680.8B yuan ($100.9B), weighed down by weak factory-gate prices, soft demand and a protracted U.S.-Sino trade war. This is on top of a decline of 1.8% in November - the first contraction in profits in nearly three years - and China's slowest economic growth in three decades.

Shift to renewables? Germany should shut down all of its coal-fired power plants by 2038 at the latest, a government-appointed commission said over the weekend, proposing at least €40B in aid to regions affected by the phase-out. Renewables made up more than 40% of Germany's energy mix last year - beating coal for the first time - following a 2011 decision to halt nuclear power.

Despite the rhetoric between Nicolas Maduro and President Trump, U.S. refineries are still buying Venezuelan petroleum. But with the crisis escalating after Washington backed opposition leader Juan Guaido, a new round of sanctions is expected in the coming days. The U.S. on Saturday called on the world to "pick a side" on Venezuela and urged countries to financially disconnect from the Maduro government.

Vision 2030... Saudi Arabia will spend 100B riyals ($27B) in 2019 and 2020 on its industrial development program, more than three times the amount allocated in the previous budget, to keep up its economic diversification campaign. Riyadh is also seeking to attract 1.6T riyals (nearly $429B) in private sector infrastructure and industrial investment over the next 10 years as it seeks to wean the kingdom off oil.


Metal prices are in focus this morning after some market-moving news in the sector. Aluminum fell 1.4% in London to $1,892.50 a ton after the U.S. formally lifted sanctions on Russia's Rusal (OTC:RUALF), while shares of the aluminum giant leapt 5% as Jean-Pierre Thomas resigned as chairman. Chinese iron futures are separately on the rise following a dam collapse at a Vale (NYSE:VALE) mine in Brazil, which killed at least 58 people and fueled supply concerns over the commodity.

The financial implications of Vale's (VALE) latest dam disaster may be crippling for the mining giant and a blow to an industry grappling with investor wariness. Court orders have already frozen 11B reais ($2.9B) of Vale assets pending damages, environmental agency Ibama fined the miner 250M reais ($66.3M); and its CEO, deals and dividends are under scrutiny. It comes on top of billions of dollars in damages Vale shelled out following its Samarco dam collapse in 2015. VALE -7.8% premarket.

A last-ditch bid by Siemens (OTCPK:SIEGY) and Alstom (OTCPK:ALSMY) to win EU approval for their planned rail merger isn't good enough to allay concerns about competition, sources told Bloomberg. A collapse of the deal would be a setback for the two major European industrial manufacturers. Their plan, unveiled in September 2017, intended to build a transportation giant to counter global competition, especially from China.

Expanding its technical capabilities, Dropbox (NASDAQ:DBX) is acquiring electronic signature startup HelloSign for $230M, putting it in competition with DocuSign (NASDAQ:DOCU) and Adobe (NASDAQ:ADBE). HelloSign will operate independently, although it hopes to get a boost from its new parent-company's sales organization. While Dropbox has exceeded analysts' estimates in each of its first three quarterly earnings reports, stock growth has not expanded meaningfully since its IPO in March.

It's the latest international company to reduce its plastic waste footprint. Samsung (OTC:SSNLF) will soon begin packaging its phones, tablets, wearables and appliances in paper, pulp molds and bio-based or recycled plastics. It will also alter the design of its phone charger, replacing the glossy exterior with a matte finish and ditching plastic protection films.

The SEC is investigating whether Nissan (OTCPK:NSANY) accurately disclosed its executive pay in the U.S., adding to the automaker's woes as it grapples with the aftermath of former chairman Carlos Ghosn's arrest. Nissan is fully cooperating with the inquiry, according to a spokeswoman, though shares fell as much as 2.7% in Tokyo trading, marking their biggest intraday decline in three weeks.

Ghosn's severance package at Renault (OTCPK:RNLSY) is also going under the microscope after the former CEO was forced to resign in a financial scandal. "We are going to be extremely vigilant," Finance Minister Bruno Le Maire told France Inter radio, outlining that the pay should not be "exorbitant." The French state is Renault's largest shareholder, with a stake of around 15%, and holds two board seats.

The PBOC has approved the entry of S&P Global (NYSE:SPGI) into China's credit rating market as part of a wider drive to encourage foreign investors to diversify into yuan-denominated assets. The agency will also be allowed to register for a bond ratings service in the country's interbank market as China continues to push the opening up of its credit rating industry.

Today's Markets 
In Asia, Japan -0.6%. Hong Kong flat. China -0.2%. India -1%.
In Europe, at midday, London -0.4%. Paris -0.5%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.4%. S&P -0.4%. Nasdaq -0.5%. Crude -1.6% to $52.82. Gold +0.2% to $1300.20. Bitcoin -3.6% to $3409.
Ten-year Treasury Yield flat at 2.76%

Today's Economic Calendar
8:30 Chicago Fed National Activity Index
10:30 Dallas Fed Manufacturing Survey
1:00 PM Results of $41B, 5-Year Note Auction

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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