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Morning Reads

Open Interest Changes



In the U.S. on Wednesday, all three major indexes ended higher, as expectations mounted that the Fed will cut interest rates as soon as next March.

Traders took the riding momentum of a year-end rally amid easing US Treasury yields and positive domestic economic data ahead of Friday's final trading day in the year.

Stock index futures were mixed Thursday with traders finally getting some macro data on which to trade. Nasdaq 100 futures (NDX:IND) +0.3% and S&P futures (SPX) +0.2% were higher. Dow futures (INDU) were down slightly.

Traders await jobless claims and pending home sales data on Thursday for further guidance.

Rates were higher. The 10-year Treasury yield (US10Y) rose 3 basis points to 3.82%. The 2-year yield (US2Y) rose 2 basis points to 4.26%.

Some of Thursday's biggest stock movers:

Shares of companies in the cryptocurrency industry extended their gains on Thursday following a surge Wednesday as the rally in digital currencies continued on optimism that the U.S. Securities and Exchange Commission will approve a spot bitcoin ETF early next month and in anticipation of interest rate cuts in 2024. Bitcoin miners saw some solid gains, with Bit Mining (BTCM) +7.2%, Bit Digital (BTBT) +7%, Bakkt Holdings (BKKT) +13.6%, and Greenidge Generation (GREE) +10.5%.

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We’re not done talking about the Apple Watch ban. According to Bloomberg, both the Apple Watch Series 9 and Ultra 2 smartwatches will return to Apple stores by the end of the day and Apple's website by 12 p.m. PST tomorrow.

The Apple (NASDAQ:AAPL) Watch sales ban was paused by a U.S. appeals court.

The company requested a pause until January 12 pending a U.S. customs decision on whether a redesigned version of the devices falls outside the scope of the International Trade Commission's remedial orders.

Masimo (NASDAQ:MASI) shares fell 5% on back of the news, while Apple slipped 0.6%.

Shares in Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), the mortgage giants in U.S. government conservatorship since 2008, both partly retraced on Wednesday the outsized gains they made in the previous six sessions.

Early Wednesday afternoon, FNMA stock sank 16% after rising 33% on Tuesday and 14% on Friday. FMCC dropped 11%, following a 23% gain on Tuesday and an 8.3% increase on Friday. Year-to-date, (before Wednesday's drop), Fannie (OTCQB:FNMAstock climbed 156% and Freddie's (OTCQB:FMCC) gained 103%.

On Tuesday, Odeon Capital analyst Dick Bove (AY) attributed the government-sponsored enterprises' (GSEs) recent gains to a potential legal decision, as well as political and economic speculation.

A potential breakthrough in a shareholder lawsuit against the U.S. government may have some investors bullish on Fannie (OTCQB:FNMA) and Freddie's (OTCQB:FMCC) stock. In August, a jury found in favor of the plaintiffs and awarded them $612M. But Bove said the presiding judge, Senior Judge Royce Lamberth, hasn't yet issued a verdict or determined who payments to shareholders should be made.

He noted that, whatever the verdict, it's believed there will be an appeal. "The timing for this could be as long as 18 months away," he said.

The potential political catalyst is the U.S. presidential election. Donald Trump's previous intention to release FNMA and FMCC from government control has investors believing that if he is elected, he'll take steps to ensure that shareholders will be treated well. "Thus, investors tend to buy these stocks whenever it appears Mr. Trump's ratings rise in the polls," Bove said.

However, the analyst sees little chance of Trump succeeding in spinning out Fannie (OTCQB:FNMA) and Freddie (OTCQB:FMCC) if he wins the presidency. He pointed out that the two GSEs paid the U.S. government $34.8B in the past four quarters. "If elected, I am not sure at all that a new Trump administration will do what the old Trump administration refused to do," Bove said.

In a third potential catalyst, a housing crisis would precipitate the release of Fannie and Freddie from their conservatorships. Bove sees no housing crisis imminent.

He does, however, see two events that could bolster the stock eventually. There could be a breakthrough in the Washington, DC, legal case years from now. And newly proposed Basel "endgame" regulations could push traditional banks out of home finance, prompting the government to release Fannie (OTCQB:FNMA) and Freddie (OTCQB:FMCC) to replace them with traditional banks.

"I am holding on to my stock and I suggest that other holders do the same," Bove wrote. "The prize, if we ever receive it, promises to be unusually large."

As we shared yesterday in Wall Street Lunch, The New York Times Company (NYSE:NYT) sued Microsoft (NASDAQ:MSFT) and OpenAI for copyright infringement on Wednesday, alleging the companies have illegally used the newspaper's content to train artificial intelligence models.

The lawsuit alleges millions of articles from The Times were used to train the AI models.

The lawsuit comes days after a group of 11 nonfiction writers joined a lawsuit in Manhattan federal court alleging OpenAI and Microsoft misused their books to train the companies' artificial intelligence models such as those powering ChatGPT, and other AI-based software.

Earlier this month, OpenAI announced it signed a deal with publishing company Axel Springer to use the media company's content to train its AI models.

General Motors' (NYSE:GM) Chevrolet division has temporarily stopped selling the 2024 Blazer EV following a number of software-related complaints from customers.

The electric SUV went on sale in September and was named the MotorTrend 2024 SUV of the Year. "Our team is working quickly to roll out a fix, and owners will be contacted with further information on how to schedule their update," Chevrolet told FOX Business in a statement. "We apologize for the inconvenience."

The financial news outlet said the car maker didn't provide a timeline for when the fix would be ready or when sales would resume.

FOX Business also cited an Edmunds report involving a 2024 Blazer EV it bought that saw the infotainment system crash and the vehicle providing several warnings about its electric and charging systems.

Reuters reported that a U.S. judge on Wednesday rejected Alibaba's (NYSE:BABA) efforts to dismiss a suit related to alleged sale of counterfeit versions of popular children's toy Squishmallows by several merchants on its online platforms.

The judge noted that Kelly Toys — a unit of Jazwares, owned by Warren Buffett's Berkshire Hathaway — plausibly alleged that Alibaba knew about and contributed to the merchants' infringement of its copyrights and trademarks, the report added.

Kelly Toys said the sale of knock-offs on Alibaba has continued in spite of six earlier lawsuits to stop it, with Alibaba ignoring its own "three-strike" policies and giving some infringing merchants "Gold Supplier" and "Verified" status, the report noted.

In November 2022, Kelly Toys sued around 90 merchants accusing them of selling counterfeit Squishmallows, and got an injunction two months later. The company added Alibaba as a defendant in March.

In trying to obtain a dismissal, Alibaba said Kelly Toys failed to allege it had any involvement in infringements, and was trying to inaccurately shift the burden of policing its intellectual property by requiring "draconian" measures against sellers, according to the report.

Jazwares acquired a majority stake in Kelly Toys in April 2020. Berkshire acquired Jazwares' parent, an insurance holding company Alleghany, in October 2022. BABA +1.73% to $77.43

Bloomberg News reported that (NASDAQ:JD) plans to increase the salary of its employees next year, a major move by an e-commerce company in a time of intense competition and uncertain Chinese consumption in 2024.

The company's stock is up about 4% premarket on Thursday. Year-to-date the stock slumped about 51%.

Coinbase Global’s (NASDAQ:COIN) CFO on Wednesday disclosed the sale of 1,000 shares priced at $175 apiece for $175,000 pursuant to a Rule 10b5-1 trading plan. In the past 12 months, there have been a total of 145 insider trades on COIN, which resulted in the purchase of 2.25M shares and the sale of 2.26M shares.

Levi Strauss’s (NYSE:LEVI) COO on Wednesday disclosed the sale of about 38,975 shares priced at $17 apiece for $662,575 pursuant to a previously established Rule 10b5-1 plan.

In the past 12 months, there have been a total of 103 insider trades on LEVI, which resulted in the purchase of 1.54M shares and the sale of 394,016 shares.

Grand Canyon Education (NASDAQ:LOPE) and the president of Grand Canyon University have been sued by the Federal Trade Commission for deceptive advertising, violating the agency's telemarketing sales rule, and for falsely marketing the university as a nonprofit entity.

The FTC has asked the court to enter a permanent injunction against Grand Canyon Education to prevent future violation and award monetary and other relief the court determines in its judgment.

Look for Initial jobless claims for the week before the bell at 8:30. The consensus is for a rise to 210K.

Regarding the employment picture, SA Analyst Lawrence Fuller commented that:

We need approximately 100,000 jobs per month to absorb growth in the workforce, and I think we gradually soften to that level, as we have been throughout 2023. Fortunately, there's still an abundance of job openings at 8.7 million, which is more than the number of unemployed and above pre-pandemic levels. That should reduce the likelihood that we see job losses in 2024.

Preliminary November wholesale inventories also hits today and economists expect a decline of 0.2%.

After the start of trading, at 10 am, November pending home sales figures are due. The forecast is for a rise of 1%.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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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