Thursday Morning Reads

Thursday Morning Reads




Morning Charts:

Open Interest Changes



Ahead of their G20 meeting in Osaka, President Xi plans to present President Trump with a set of terms the U.S. should meet before China is ready to settle their market-rattling trade confrontation, WSJ reports. Among the preconditions, Beijing is insisting that Washington remove its ban on the sale of American technology to Huawei and also wants the U.S. to lift all punitive tariffs. The nation additionally wants the Trump administration to drop efforts to get China to buy even more U.S. exports than Beijing said it would when the two leaders last met in December.

Dow futures turn lower

Following solid overnight gains in Asia, U.S. futures are suggesting the first positive session in five for the S&P 500, though the DJIA turned lower by 90 points as shares of Boeing weighed on the index. The FAA on Wednesday said it found a new issue with the 737 Max that the planemaker must address before it lifts the national grounding order (see below). President Trump further announced that a bilateral meeting with his Chinese counterpart could lead to a trade deal, but warned that he was prepared to impose tariffs on virtually all remaining Chinese imports if talks once again faltered.

737 MAX continues

Boeing (NYSE:BA-5.1% premarket following a Reuters report stating the FAA had found a new "potential risk" the company must fix before the 737 MAX can return to service. The risk was discovered during a simulator test last week, which likely will prevent BA from running a certification test flight until at least July 8. In an SEC filing, Boeing said the FAA has asked it to address a specific condition of flight not covered by planned software changes.

Stressed out, or not

The Fed is set to report results today from its annual stress test of large bank operations, including the Comprehensive Capital Analysis and Review (CCAR). All eyes will be on Deutsche Bank's (NYSE:DB) U.S. subsidiary, which failed last year's test over concerns around its data collection and risk management. Analysts are forecasting higher payouts in dividends and buybacks compared to 2018 due to the promising first round results.

Amazon expands delivery network

Car trunks, home garages and potentially by drone, Amazon (NASDAQ:AMZN) has been steadily adding options for customers to receive their packages. A new option, called Counter, will allow shoppers to pick up purchases - at no additional cost - across specialized counters in more than 1,500 Rite Aid (NYSE:RAD) locations by the end of the year. Amazon is also looking to get other retailers, including small businesses, to join the program as it expands.

Donning the Red Hat

After getting the green light from U.S. regulatory authorities last month, IBM (NYSE:IBM) is expected to win unconditional EU approval today for its largest ever takeover, a $33B bid for open-source provider Red Hat (NYSE:RHT). The deal would expand the firm's subscription-based software offerings to counter slowing software sales and waning demand for mainframe servers. It would also help IBM catch up with Amazon (AMZN), Alphabet (GOOGGOOGL) and Microsoft (NYSE:MFT) in the fast-growing cloud computing business.

OXY proxy fight

Billionaire investor Carl Icahn is ratcheting up his fight with Occidental Petroleum (NYSE:OXY) over its pending purchase of rival Anadarko Petroleum (NYSE:APC). He's calling for a special shareholder meeting where he hopes to win four board seats and change the company's charter through a stockholder consent solicitation to prevent it from ever engineering a similar takeover again. Icahn argues the $38B takeover, expected to close in the second half of the year, is too expensive and could endanger Occidental’s future if oil prices sink.

Iran trade efforts

In the next 48 hours, France, Britain and Germany are set to double down on their efforts to keep alive economic ties with Iran by providing a credit line to help a special mechanism called INSTEX, or Instrument in Support of Trade Exchanges. The European governments are set to provide a capital injection of at least a few million euros to hasten the first transactions, allowing the import and export of goods without the need for any direct financial flows.


Saudi Arabia has removed a 49% cap on ownership of publicly traded companies for foreign strategic investors, paving the way for foreigners to take controlling stakes in sectors from banking to petrochemicals. The decision is a milestone for the kingdom, which started opening its market about four years ago when it first allowed international investors to trade stocks directly. MSCI last month started to include the kingdom’s equities in its emerging-market index (ETF: EEM).

What else is happening...

Be careful not to assume that "easy money" means "rising market," writescontributor John Hussman.

Big business targeted during first Democratic debate.

Cyber risk rating created by Moody's (NYSE:MCO) and Israeli startup Team8.

Huawei employees collaborated with Chinese military on research.

Elliott discloses $1.1B stake in Bayer (OTCPK:BAYRY) amid Roundup trouble.

Machinists at General Electric (NYSE:GEoppose tentative labor deal.

Wednesday's Key Earnings
BlackBerry (NYSE:BB-8.8% on disappointing software, services revenue.
General Mills (NYSE:GIS-4.5% amid a U.S. snacks sales drop.
Rite Aid (RAD-10.4% AH as Q1 loss more than doubled.

Today's Markets 
In Asia, Japan +1.2%. Hong Kong +1.4%. China +0.7%. India -0.1%.
In Europe, at midday, London +0.1%. Paris flat. Frankfurt +0.5%.
Futures at 6:20, Dow -0.3%. S&P +0.2%. Nasdaq +0.2%. Crude -1.1% to $58.85. Gold -0.7% to $1405.90. Bitcoin -7.7% to $11619.
Ten-year Treasury Yield flat at 2.05%

Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 GDP Q1
8:30 Corporate profits
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $32B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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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