Morning Reads








Retailer stocks are rising slightly in premarket after a selloff spurred by a holiday sales warning from Target (TGT). Shares of Target are up slightly before the bell after falling more than 13% in the previous session. The SPDR S&P Retail ETF (XRT) is also rebounding premarket following a 3.7% drop.

EPS, EBITDA, and operating margin all came in short of expectations for Q3. Target also rattled investors by warning that softening sales and profit trends that emerged late in Q3 and have persisted into November. Guidance is now for a wide range of sales outcomes for the holiday quarter, centered around a low-single-digit decline in comparable sales.

Looking further ahead, TGT is undertaking an enterprise-wide effort to simplify and gain efficiencies across its business, with a focus on reducing complexities and lowering costs. The aim is to save $2B to $3B over the next three years. Layoffs are not expected to be part of the efficiency push.

Among the damage to retail shares, Macy's (M) peeled off 8%, Dollar Tree (DLTR) fell 1.5% and Dollar General (DG) shed 0.4%. (47 comments)

Genesis jitters

Crypto prices are stabilizing, with bitcoin (BTC-USD), Ethereum (ETH-USD) and Dogecoin (DOGE-USD) off slightly in morning trading. Traders are trying to gauge the fallout from crypto broker Genesis Global halting redemptions and new loan originations on Wednesday as the implosion of crypto exchange FTX continues to rattle the broader ecosystem.

The FTX downfall has resulted in "abnormal withdrawal requests which have exceeded our current liquidity," Genesis wrote in a string of Twitter posts. The company said it hired advisors to "explore possible options," including sourcing new liquidity, and will deliver a plan for its lending arm next week. Of note, Genesis Global Capital, which serves institutional clients, had $8.4B in loan originations in Q3, down from $44.3B in Q1, according to its website. Genesis's spot and derivatives trading and custody businesses, meanwhile, "remain fully operational," it said.

A broader failure at Genesis could have a huge impact on companies that give customers yield by going through Genesis, which lends cryptocurrency to funds, according to Jason Yanowitz, co-founder of BlockWorks Group. “If you're a CeFi platform that offers yield, you probably use Genesis," he tweeted. "FTX hurt liquid funds and consumers," Yanowitz said. "Genesis impacts nearly every company in crypto."

Congressional hearings: Rep. Maxine Waters (D-CA) and Rep. Patrick McHenry (R-NC), ranking members of the House Financial Services Committee, said that they are planning to hold a bipartisan hearing in December to scrutinize the collapse of FTX and its "broader consequences" for the digital asset space.

FTX founder and ex-CEO Sam Bankman-Fried along with his hedge fund, Alameda Research and rival exchange Binance, which temporarily offered to bail out FTX, are all expected to attend the hearing.

“The fall of FTX has posed tremendous harm to over one million users, many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear within a matter of seconds,” Waters said in a statement.

Fewer rescue scenarios: "What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking within the crypto ecosystem," J.P. Morgan’s Nikolaos Panigirtzoglou wrote in a note this week.

"Investor and regulatory pressure on crypto entities to disclose more information about their balance sheets, to safeguard client assets and to limit asset concentration is likely to increase and crypto market participants are likely to adopt more diligent risk management including management of counterparty risk," he added. (15 comments)

Too much Twitter time?

Twitter (TWTR) may not have Elon Musk as an active executive for the long haul, according to statements made by Musk himself on Wednesday.

During Musk’s testimony in a case concerning his $55B pay package, the current Tesla (TSLA) and Twitter chief said he will “find somebody else to run Twitter over time" and gradually step away from an active role in the social media giant. He added that his current focus on the company comes as a result of the freshness of the $44B acquisition.

"There's an initial burst of activity needed post-acquisition to reorganize the company,” he explained. "But then I expect to reduce my time at Twitter."

Easing up on the SEC, a bit: Musk attempted to soften his often caustic rhetoric toward the SEC in testimony, but nonetheless panned the agency's handling of the FTX collapse.

Musk walked back some statements about the Securities and Exchange Commission that he has made over the years. Musk has taken an antagonistic tone with regulators for quite some time, terming the SEC the "Shortseller Enrichment Commission" in late 2018 and again in mid-2020, escalating his vocal displeasure with the agency amid his attempts to nullify his Twitter takeover.

Musk clarified that he believes “the mission of the SEC is good.” Rather, he takes issue with specific enforcement decisions. Specifically, Musk took issue with the SEC’s handling of cryptocurrency regulation, such as in the case of the recent FTX bankruptcy.

“The SEC fails to investigate things that they should and places far too much attention on things that are not relevant. The recent FTX thing I think is an example of that,” he said in court. “Why was there no attention given to FTX? Investors lost billions, yet the SEC continues to hound me despite shareholders being greatly rewarded.” (26 comments)

Today's Markets

In Asia, Japan -0.35%. Hong Kong -1.15%. China -0.13%. India -0.42%.
In Europe, at midday, London -0.50%. Paris +0.10%. Frankfurt -0.50%.
Futures at 6:30, Dow -0.22%. S&P -0.18%. Nasdaq -0.08%. Crude -0.56% to $85.11. Gold -0.49% to $1767.45. Bitcoin -1.22% to $16,531.9.
Ten-year Treasury Yield +4 bps to 3.73%

Today's Economic Calendar

7:30 Fed's Bostic Speech
8:30 Housing Starts and Permits
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:15 Fed's Bowman Speech
9:40 Fed's Mester Speech
10:30 EIA Natural Gas Inventory
10:40 Fed's Kashkari Speech
11:00 Kansas City Fed Mfg Survey
1:45 PM Fed's Kashkari Speech
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

3M (MMM) viewed as potential activist target after 13F filing.

Nvidia (NVDA): The China question will weigh on business for some time.

Cisco (CSCO) pops as tech giant raises full-year guidance, Q1 results surpass expectations.

Diesel hits record premium over gasoline, crude oil.

Blizzard Entertainment (ATVI), NetEase (NTESsuspending game services in China.

Diamondback Energy (FANGto buy Permian Basin assets in cash and stock deal.

Robinhood (HOOD) net cumulative funded accounts roughly flat from September.

SPAC Digital World (DWAC) drops after Trump announces re-election campaign.

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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