Thursday Morning Reads
- Another FED Day
- Demands Must Be Met
- Powell Gave, But the Markets Want Much More
- Bad Move for Facebook
- We Want to Be Helpful
- It’s Slack’s Non-I.P.O. Day!
- What’s Wrong With Modern Buildings?
- Is The Market Just Up?
- Oil +3% as Iran shoots down U.S. drone
- 10-year Treasury yield drops below 2%
- Mexico first to ratify USMCA trade deal
- 'Surveillance as a service' by Amazon
- Cruise line sector reeling after soft Carnival outlook
- Tesla 'throws in the towel' on growing residential solar, report says
- Carnival EPS beats by $0.05, beats on revenue
- Verastem announces leadership changes
- Slack reference price set at $26/share
- Darden Restaurants -5% after light outlook
- Vanguard declares quarterly distribution on ETFs
- Waymo partners with Renault-Nissan alliance
Open Interest Changes
The latest high-profile company to go public in 2019 is Slack Technologies (WORK), which will begin trading this morning on the NYSE through a direct listing. The method allows a firm to simply float its existing stock onto a public exchange without raising money, using underwriters or utilizing a stabilizing agent. Valued at about $15.7B, the NYSE has set a reference price for Slack at $26/share, which will be used by market makers to build an order book to open trading. More firms (like Airbnb) may follow suit if the direct scheme is successful, with the workplace-messaging app being only the second big tech company after Spotify (NYSE:SPOT) to bypass the traditional IPO process.
As the Fed spreads its dovish wings, the yield on the benchmark 10-year Treasury dropped below 2% overnight for the first time since November 2016. The FOMC left interest rates unchanged at its monetary policy meeting on Wednesday, dropped the word "patient" from its statement and said it would "act as appropriate" to sustain the economy. The news is also boosting U.S. stock futures premarket, with the DJIA indicating gains of 228 points at the open and the Fed Funds Futures pointing to a 100% chance of monetary policy easing in July.
Reacting to the downing of a U.S. drone over the Strait of Hormuz, oil prices spiked overnight, with WTI crude soaring 3% to over $55/bbl. The U.S. maintains the RQ-4 Global Hawk (NYSE:NOC) was shot down by an Iranian surface-to-air missile in international airspace, though Iran’s Revolutionary Guard said it was operating over its jurisdiction. It's the latest in a series of apparent Iranian-backed skirmishes in the Middle East that have stoked fears of a wider military conflict.
Just a week after dodging new U.S. tariffs on its exports, Mexico ratified the USMCA trade deal designed to succeed NAFTA, even though the U.S. and Canada have yet to do the same. The new deal is particularly important to the auto industry, since it lifts the proportion of components that have to be made in the region for a vehicle to qualify for duty-free access to 75% from 62.5%. Some inputs must also be made in areas where the average wage is a relatively high $16 an hour.
While he's not planning to do so right now, President Trump told confidants as recently as Wednesday that he believes he has the authority to replace Jerome Powell by demoting him to a board governor role, Bloomberg reports. The Fed Chair has a difference of opinion. "The law is clear that I have a four-year term, and I fully intend to serve it," he declared yesterday. Trump has repeatedly accused Powell of not doing enough to bolster the economy, calling for lower interest rates as he seeks to offset the unfair trade practices and currency manipulation of China and Europe.
Following bombshell remarks on restarting the ECB's bond-buying scheme, European leaders are gathering in Brussels today - for the second round of talks - on who should lead the European Commission after Oct. 31, when the current term expires. Almost all of the final contenders are members of the ECB's Governing Council and are likely to follow the largely dovish strategies of Mario Draghi, except for perhaps Jens Weidmann, current governor of the Bundesbank.
Italy's Prime Minister Giuseppe Conte is making a plea to revamp EU budget rules and economic governance in a bid to avoid disciplinary action over his country's huge debt. Complicating things further, Italy’s economy probably shrank again this quarter, according to the country’s statistics office. A contraction in the three months through June would be the third in a year, highlighting the perilous state of the eurozone's third-largest economy.
Airbus (OTCPK:EADSY) sealed deals with big buyers for its latest passenger jet - the A321XLR - at the expo on Wednesday, battling back a day after a surprise 200-plane order by IAG (OTCPK:ICAGY) for rival Boeing's (NYSE:BA) grounded 737 MAX jet. It's hard to know the exact tally at this point, but the contract value each planemaker has scored is likely around $35B. Other happenings... Mitsubishi Aircraft (OTCPK:MHVYF) said it was in discussions with an unnamed U.S. airline over the sale of its SpaceJet M100 aircraft, while Israeli startup Eviation launched its 9 passenger all-electric plane.
Amazon (NASDAQ:AMZN) Ring may soon have a buddy in the sky. Called "surveillance as a service," the company wants to use its network of delivery drones to keep watch over customers' houses by forming a flying Neighborhood Watch scheme, according to a new patented system. Customers could request that Amazon's drones visit their property hourly, daily, or weekly, while the drones would look for signs of break-ins, such as smashed windows, doors left open, and intruders lurking on people's property.
Up until now, Waymo (GOOG, GOOGL), a subsidiary of Google's parent company Alphabet, has been testing a small fleet of its own self-driving cars - Chrysler Pacifica (NYSE:FCAU) minivans - just outside of Phoenix. The company is now branching out as a technology and services provider in the industry. In a new deal signed with the Renault-Nissan-Mitsubishi Alliance (OTCPK:RNLSY, OTCPK:NSANY, OTC:MMTOY), Waymo and the automakers will study market opportunities related to autonomous transportation systems in France and Japan, hoping to develop profitable driverless services for passengers and deliveries.
What else is happening...
American Outdoor (NASDAQ:AOBC) +8.3% AH as revenues beat high estimates.
Barnes & Noble (NYSE:BKS) -0.6% amid slipping comparable sales.
Oracle (ORCL) +4.5% AH helped by cloud growth.
In Asia, Japan +0.6%. Hong Kong +1.2%. China +2.4%. India +1.3%.
In Europe, at midday, London +0.3%. Paris +0.6%. Frankfurt +0.9%.
Futures at 6:20, Dow +0.9%. S&P +0.9%. Nasdaq +1.2%. Crude +2.9% to $55.52. Gold +2.8% to $1386.60. Bitcoin +1.3% to $9219.
Ten-year Treasury Yield -3 bps to 1.99%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Current Account
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet