Morning Reads

Morning Reads

Open Interest Changes



U.S. forms naval taskforce to protect ships in Red Sea (1:32) Google to pay $700 million to settle Play Store lawsuit (2:30) and Japanese takeover of iconic U.S. Steel sees bipartisan opposition (3:42).

This is an abridged transcript of the podcast:

On Monday, all three major indexes ended higher, as investors continue to anticipate lower interest rates next year, despite conflicting views from policymakers such as NY Fed President John Williams and Atlanta Fed President Raphael Bostic.

Stock futures were little changed on Tuesday after the major averages extended gains in the last session, as Fed officials attempt to rein in bets for earlier and deeper-than-expected rate cuts next year.

Here are some of Tuesday's biggest stock movers:

  • Shares in Innate Pharma (IPHA) are up 16.3% in early trading after it announced licensing of a fourth natural killer (NK) cell engager in oncology to Sanofi (SNY).
  • Cipher Mining (CIFR) extended its gains, rising by 11.5% in early trading on Tuesday following a 17% surge the previous day. The boost came after the company agreed to purchase 37,396 bitcoin miners, representing 7.1 exa hash/second of self-mining capacity, from Bitmain.
  • bluebird bio (BLUE) shares fell 15.4% following the commencement of an underwritten public offering of $150M of shares of its common stock.

Our Top Stories:

The U.S. and other countries have formed a naval taskforce to protect commercial vessels traveling though the Red Sea from Houthi rebel attacks.

The escalating attacks have damaged ships and threatened crew safety, forcing shipping companies to stop their vessels from entering the Bab el-Mandeb Strait until security improves.

The Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden, is a key shipping passage that facilitates a sixth of the world's trade.

Other countries in the coalition are the U.K., Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain.

Under the new mission, military ships in the region will be positioned in a way that would provide umbrella protections to as many vessels as possible, an unnamed military official told Associated Press.

The attacks have lifted ocean freight rates, as shipping companies avoid the Suez Canal and instead go around Africa to reach the Indian Ocean. This adds up to 14 days to the journey, driving fuel costs higher, and increases carbon charges due to more emissions.

Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) will pay $700 million and expand billing options in Google's Play app store as part of a settlement of an antitrust lawsuit brought on by 36 U.S. states and Washington, D.C. against the search giant.

Google (GOOG) (GOOGL) will pay $630 million into a settlement fund for customers and $70 million into a fund that will be used by the states, according to the settlement.

App developers will also be able to implement an alternative billing option besides that of Google Play, a program that Google (GOOG) (GOOGL) has been piloting in the U.S. for over a year. The settlement also requires Google to simplify app downloads directly from developers' websites.

The company had been accused of overcharging consumers by unlawfully restricting the distribution of apps on Android devices and charging unnecessary fees for in-app transactions. Google (GOOG) (GOOGL) has not admitted any wrongdoing.

The firm had struck a tentative deal with state attorneys general in September, but the terms weren't revealed at the time.

The settlement comes as Google (GOOG) (GOOGL) faces multiple antitrust lawsuits. It recently lost a legal battle over its alleged app store monopoly against Fortnite maker Epic Games, although it plans to challenge the verdict.

In an industry-shaking transaction announced before the market open on Monday, Nippon Steel (OTCPK:NPSCY) of Japan agreed to scoop up U.S. Steel (NYSE:X) for a whopping $14.9B. The all-cash transaction at $55.00 per share represented a 40% premium to the closing price of U.S. Steel (X) on Dec. 15, and sent the stock up 26% during the session to close at $49.59.

Deep-pocketed Nippon (OTCPK:NPSCY) hopes the acquisition will expand its global footprint at a time when many Japanese firms are looking for international growth as their country deals with a shrinking population crisis. Recall that the steel industry has also been in focus following the approval of the Infrastructure Investment and Jobs Act, which is expected to boost U.S. steel demand for investment in bridges, railways and other projects due to "Buy American" provisions in the legislation.

A bidding war for U.S. Steel (X) ensued in the summer after the company rejected an unsolicited $7.3B cash-and-stock bid from rival Cleveland-Cliffs (NYSE:CLF). That deal was less than half of what Nippon would pay for the company only four months later.

It's not without controversy. Having a 122-year-old iconic American steel giant being taken over by a Japanese producer is prompting unions and politicians to speak up. The United Steelworkers are urging regulators to "fully scrutinize" the transaction and determine if the combination "serves the national security interests of the United States and benefits workers."

A number of Senators are also voicing opposition, like Pennsylvania's John Fetterman, who represents one of most important states involved in the American steel industry. "It's absolutely outrageous," he declared. "Steel is always about security - both our national security and the economic security of our steel communities. I am committed to doing anything I can do, using my platform and my position, to block this foreign." Fellow Democratic Senator Bob Casey of Pennsylvania has also expressed his disapproval, as well as Republican Senator J. D. Vance of Ohio, showing some bipartisan support against the foreign takeover.

Kenvue (NYSE:KVUE) rose 5% Monday in after hours trading after a court ruled in its favor in a class action lawsuit alleging prenatal exposure to Tylenol may contribute to autism or attention-deficit hyperactivity disorder.

Kenvue plans to seek dismissal of the lawsuits, according to a statement emailed to Seeking Alpha.

Kenvue shares jumped 7% on Dec. 7 after a hearing to determine whether the plaintiffs had enough expert evidence to prove their claims and to determine the admissibility of the evidence.

The parties are expected to meet and confer as to next steps in the litigation and file a joint status letter by Jan. 12, according to a court filing on Monday.

Kenvue (KVUE) shares had dropped 12% through Dec. 6, the day before the hearing, since the company was spun off from JNJ in early May, at least partly due to investor concerns about the overhang from the Tylenol potential litigation liability.

Enphase Energy (NASDAQ:ENPH) on Monday said it would reduce its workforce by about 10%, impacting about 350 contractors and employees, and would stop contract manufacturing operations at two of its locations.

The company will also resize other contract manufacturing sites and will continue its hiring and travel freeze through 2024.

The two locations in which operations will stop are in Romania and in Wisconsin. Equipment located there will be redeployed for use at ENPH's two existing contract manufacturing partners in the U.S. states of South Carolina and Texas.

The layoffs from Enphase (ENPH) come after the solar equipment maker in October provided dismal guidance for the current quarter which prompted several stock downgrades from analysts. The company on Monday said its Q4 outlook remained unchanged except for a $15M increase to its GAAP operating expenses forecast in connection with the announcement.

Location solutions provider TomTom (OTCPK:TMOAF) (OTCPK:TMOAY) is collaborating with Microsoft (NASDAQ:MSFT) to bring generative artificial intelligence, or AI, into vehicles.

Using Microsoft's advancements in AI, the Dutch company has developed an integrated, AI-powered conversational automotive assistant which enables voice interaction with infotainment, location search, and vehicle command systems.

Drivers can talk naturally with their vehicle and ask the AI assistant to navigate to a location, find specific stops, controls systems such as turning up the temperature, open windows or change radio stations, the company added.

TomTom competes with Alphabet's (GOOG) (GOOGL) Google Maps and the world's biggest mapping platform HERE Technologies.

Digital asset investments snapped an 11-week streak of inflows, with a small outflow of $16M in the week ended Dec. 16, 2023, as investors appeared to take some profits after bitcoin (BTC-USD) rose 9.5% in the prior week, according to CoinShares.

Bitcoin (BTC-USD) suffered the biggest outflows at $32.8M, followed by ethereum (ETH-USD) with $4.3M of outflows.

Some altcoins, though, experienced inflows. Solana (SOL-USD) brought in $10.6M, cardano (ADA-USD) attracted $3.0M, and XRP (XRP-USD) experienced $2.7M of inflows.

By region, outflows from digital assets primarily occurred in the U.S., which saw $18M of outflows. Germany saw $10M of outflows. Those were partly offset by continued inflows into Canada ($6.9M) and Switzerland ($9.1M). The mix suggests this the outflows were more related to profit-taking than a turn in sentiment towards the asset class, CoinShares James Butterfill wrote.

Blockchain equities, meanwhile, saw the positive sentiment extend, with inflows totaling $122M in the past week, bringing them to a nine-week run totaling $294M, the largest run on record, CoinShares said.

The Bank of Japan maintained its ultra-loose monetary policy and provided no guidance on whether it may scrap the policy next year.

At the end of a two-day meeting, the BOJ kept its short-term rate at -0.1% and the 10-year government bond yields around 0%, as widely expected.

The board also retained a loose upper band of 1% set for the long-term government yield.

The decision was made based on high uncertainties surrounding the economy and price movement.

With the move, the BoJ aims to achieve a price stability target of 2% in a sustainable manner, accompanied by wage increases. The committee reiterated that it will not hesitate to take extra easing measures if needed.

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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