Thursday Morning Reads

Thursday Morning Reads




Morning Charts:

The record bull market run capped another milestone on Wednesday as the S&P 500 jumped above 3,000 for the first time, nearly five years after the index hit 2,000. Stocks in the tech sector powered the historic rally since August 26, 2014, including Nvidia (NASDAQ:NVDA) (+728%), Advanced Micro Devices (NASDAQ:AMD) (+707%), Amazon (NASDAQ:AMZN) (+489%) and Netflix (NASDAQ:NFLX) (+455%), while oil companies were among the laggards. Medical implant manufacturer Abiomed (NASDAQ:ABMD) led the herd by far, surging a whopping 909%, while fifth best was MarketAxess (NASDAQ:MKTX), which climbed 487% on a rising tide of interest in electronic bond trading on Wall Street.

Firing up the 'half pointers'

Building on yesterday's momentum that vaulted the S&P 500 over the 3,000 level, U.S. stock index futures are extending gains by a modest 0.2%. Although Jerome Powell's congressional testimony merely underlined the Fed case for easing policy to insure against the economic effects of a trade war and sub-target inflation, it was enough to get futures markets back pricing in a 1-in-4 chance of 50 bps cut later this month. Powell is back in the spotlight today, testifying before the Senate Banking Committee and likely emphasizing his dovish outlook in the Q&A with senators.

French tax adds to trade tensions

New U.S. tariffs or other trade restrictions may be in the pipeline as Washington launches a probe into France's planned digital services tax. The proposal, which was passed by the French Senate today, will likely be the first in a wave of proposed DSTs to take effect in Europe. It will apply a 3% levy on revenue that companies like Google (GOOGGOOGL), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Amazon (AMZN) reap in France from activities like targeted online advertising or running a digital marketplace.

Raising the debt ceiling

The debt limit has been far from the front page as lawmakers debate the treatment of migrants at the border and battle over nominations and spending bills, but that may be changing. The Treasury Department is now taking steps known as "extraordinary measures" to prevent the government from going over its borrowing limit, with senators growing anxious that they might have to vote to raise the nation’s debt ceiling in a matter of weeks given new estimates that the government could hit its borrowing limit earlier than expected.

Iran 'harasses' British tanker

Continuing yesterday's big advance that brought crude over $60, oil prices extended gains overnight by 0.7% to $60.82/bbl amid the latest Persian Gulf tensions. Three Iranian vessels tried to block the passage of the BP (NYSE:BP)-operated British Heritage through the Straits of Hormuz, but backed off after the HMS Montrose - an escorting military ship - "pointed its guns" and "warned them over radio." The incident comes almost a week after British Royal Marines boarded an Iranian tanker, Grace 1, off Gibraltar and seized it on suspicion that it was breaking sanctions by transporting oil to Syria.

Crypto trouble

Are 10% moves for Bitcoin (BTC-USD) still newsworthy? Probably not, but uncertainty in the crypto space definitely made headlines after Jerome Powell said Facebook's (FB) Libra offering should "not go forward" without addressing concerns. Those include privacy, money laundering, consumer protection and financial stability, the Fed Chair declared during his semi-annual testimony before the House Financial Services Committee. The crypto shed close to $1500 to the mid-$11K level following the comments, which echoed a growing chorus of doubts about Libra from authorities around the world.

Beetle drives into the sunset

The last Volkswagen (OTCPK:VWAGY) Beetle has rolled off the assembly line in Mexico's central Puebla state, serenaded by a mariachi band and surrounded by proud factory workers. It marks the end of the road for an iconic car that ran from Nazi Germany in the 1940s through the hippie counterculture in the 1960s but failed to navigate a current swerve in consumer tastes toward SUVs. The Puebla factory, which already produces VW's Tiguan SUV, will make the Tarek SUV in place of the "bug" starting in late 2020.

U.S. reaches next opioid settlement

Reckitt Benckiser (OTCPK:RBGLY) has agreed to pay up to $1.4B to resolve all U.S. federal investigations into the sales and marketing of an opioid addiction treatment, called Suboxone Film, by its former pharmaceuticals subsidiary Indivior (OTCPK:INVVY). "$1.4B is materially larger than the $400M RB had previously provisioned and represents about 2% of its market cap. On the other hand, this settlement removes some uncertainty from the investment case," Credit Suisse analyst Alan Erskine said. Reckitt shares advanced 2.5%in London on the news.

Reform hearing on marijuana

U.S. lawmakers weighed reforming pot laws in what advocates called a "historic” hearing on Wednesday, though there didn't appear to be a clear consensus approach, such as giving states the right for legalization, removing weed from schedule 1 of the Controlled Substances Act, or promoting social and racial equity in marijuana laws. "Marijuana decriminalization may be one of the very few issues upon which bipartisan agreement can still be reached in this session," said Rep. Tom McClintock, R-Calif., adding, "it ought to be crystal clear to everyone that our laws have not accomplished their goals." Eleven states have already legalized adult recreational use and a majority of Americans support legalization.

What else is happening...

Returning to the gold standard wouldn't be a good idea, says Powell.

SEC clears first regulated version of initial coin offering.

Tech supply chain may be hurt by Japan, South Korea row.

McAfee readies return to .

Pricing at low end of range, Budweiser APAC (BUDBCreadies for biggest IPO of 2019.

U.S. probes Deutsche Bank's (NYSE:DB) dealings with Malaysian Fund 1MDB.

Lockheed Martin (NYSE:LMTkeeps Pennsylvania plant open at Trump's request.

Wednesday's Key Earnings
Bed Bath & Beyond (NASDAQ:BBBY-4.5% hit by another large impairment charge
Today's Markets 
In Asia, Japan +0.5%. Hong Kong +0.8%. China +0.1%. India +0.7%.
In Europe, at midday, London -0.1%. Paris flat. Frankfurt +0.3%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude +0.7% to $60.82. Gold +0.8% to $1423.70. Bitcoin -11% to $11417.
Ten-year Treasury Yield flat at 2.06%Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Consumer Price Index
10:00 Powell to deliver semi-annual monetary policy report
10:30 EIA Natural Gas Inventory
11:00 Fed's Williams Speech
1:00 PM Results of $16B, 30-Year Note Auction
1:30 PM Fed's Williams Speech
1:30 PM Fed’s Quarles Speech
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
5:00 PM Fed's Kashkari Speech

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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