Thursday Morning Reads
- The Global Fertility Crash
- China Doubts Long-Term Trade Deal
- Melting Down
- Lots of Job Hunting
- Shocks of the New Economy
- Housing Rally
- Record Deal
- Addition by Subtraction
- Altria takes a $4.5B hit on Juul
- Futures fall back on trade doubts
- 'Phase One' trade deal pushed to November
- Altria EPS beats by $0.04, beats on revenue
- Bristol-Myers Squibb EPS beats by $0.10, beats on revenue
- Marathon Petroleum to spin off Speedway; CEO Heminger to retire
- Macquarie Infrastructure EPS misses by $0.14, misses on revenue
- Iron Mountain FFO beats by $0.03, misses on revenue
- Archer Daniels Midland EPS beats by $0.06, beats on revenue
- American Tower FFO beats by $0.16, beats on revenue
- Macerich FFO beats by $0.01, beats on revenue
- MPLX EPS beats by $0.01, beats on revenue
Open Interest Changes for Today:
Consumer Confidence for Stocks (updated from Sep 25).
In 32 years of this survey, consumers expected Stocks to fall 29 times.
They were right twice when the US was in recession. The other 27 not so much.
Again the same pessimism with Stocks at highs seen 92,97,05-06,12-14,16. pic.twitter.com/2s6b4xeOSl
— Macro Charts (@MacroCharts) October 31, 2019
Fiat Chrysler and Peugeot owner PSA have officially agreed to join forces through a 50-50 share swap, creating the world's fourth-largest automaker. "In a rapidly changing environment, with new challenges in connected, electrified, shared and autonomous mobility, the combined entity would leverage its strong global R&D footprint and ecosystem," the companies said in a statement. The deal calls for paying a special dividend of €5.5B to Fiat (NYSE:FCAU) investors and for PSA (OTCPK:PEUGF) to spin off to its shareholders a €3B stake in parts maker Faurecia (OTCPK:FURCF). It's also likely to be approved by the French government, which shot down a merger with PSA's French rival Renault (OTCPK:RNLSY) just five months ago.
Ford (NYSE:F) has reached a tentative agreement with the United Auto Workers union on a new labor contract for its U.S. workers, likely avoiding a strike that cost its larger rival General Motors (NYSE:GM) about $3B. The deal includes $6B in new investments from Ford and the creation and retention of more than 8,500 jobs. Other details were not disclosed, but they are expected to follow the basic pattern set in the GM contract, which includes lump-sum payments and annual pay increases that lift production wages up to $32.32/hour by 2023.
Go deeper: Ford's 4Q guide indicates all is not well, says Bernard Keightley.
Up for most of the night after the Fed cut rates for the third time this year - and indicated the possibility of a pause in the easing cycle - U.S. stock index futures are turning around sharply. The DJIA is now pointing to a 100-point decline at the open following a report from Bloomberg that said Beijing has doubts about reaching a comprehensive long-term trade agreement with the U.S. Chinese officials have warned they won't budge on the thorniest issues and they remain concerned about President Trump's impulsive nature, as well as the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks.
Showing it has life beyond the iPhone, Apple (NASDAQ:AAPL) beat Wall Street's fiscal fourth-quarter expectations and issued strong guidance for the holiday quarter. The stock rose 2% AH on a big boost from its Wearables, Home & Accessories segment, which saw revenue grow 54% Y/Y, comfortably beating a $5.94B consensus. Facebook (NASDAQ:FB) shares also traveled upward, rising 4.6% AH, as strong double-digit gains were seen across nearly all metrics.
Go deeper: 'Apple: These Numbers Will Work' writes Bill Maurer.
Twitter (NYSE:TWTR) will ban political advertising on its platform next month in an apparent swipe at Facebook (FB), which has received criticism in recent weeks over its policy to neither fact check nor remove political ads placed by politicians. "We believe political message reach should be earned, not bought," Twitter's Jack Dorsey declared. Paying for reach removes individual decisions to follow an account or retweet, he points out, "forcing highly optimized and targeted political messages on people. We believe this decision should not be compromised by money." TWTR -2% premarket.
Go deeper: Michael Wiggins De Oliveira says Twitter's bugs dampen its outlook for Q4.
Samsung Electronics' (OTC:SSNLF) operating profit for the three months ending in September fell 56% versus the same period a year ago. While that number ticked up almost 18% from the previous quarter and beat the company's own guidance from earlier this month, Samsung expects "demand for components to turn sluggish in general amid weak seasonal effects." Analysts say there could be a slow recovery in the semiconductor space, with chipmakers struggling due to low prices and demand for memory chips.
The Hong Kong Monetary Authority chopped its policy rate by 25 basis points overnight, tracking the Federal Reserve as obligated by Hong Kong’s currency peg with the greenback. Two of Hong Kong’s biggest banks, HSBC (NYSE:HSBC) and Standard Chartered (OTCPK:SCBFF), also cut their key benchmark rates in the city, their largest market, which officially fell into a recession amid the months-long protests. The economy shrank 3.2% in Q3 from the period just before, marking the worst quarter-to-quarter drop since 2009.
Factory activity in China contracted for the sixth straight month in October and by more than expected, while service sector growth eased as companies face the weakest economic growth in nearly 30 years. Weighed down by slowing global demand and the Sino-U.S. trade war, the manufacturing PMI fell to 49.3, versus 49.8 in September, according to the country's statistics bureau. The figures will heap pressure on policymakers to roll out more stimulus to avoid a sharper slowdown and job losses.
The Trump administration still expects to sign an initial trade deal with China next month, even as Chile said ongoing protests in the country would prevent it from hosting the APEC summit, where both sides were expected to finalize the accord. Chinese officials also voiced optimism that Beijing and Washington can find a way to clinch the so-called Phase One trade agreement in November. Bilateral talks will continue to proceed as previously planned and the lead trade negotiators from both countries will speak by telephone on Friday.
More than 172M Americans plan to celebrate Halloween this year and are expected to spend about $8.8B on the holiday, according to the National Retail Federation. That's the third-highest figure in the survey's 15-year history, after the record $9.1B set in 2017. "We are seeing a noticeable increase in consumers whose Halloween purchases are inspired by their friends, neighbors and even celebrities on social media," NRF President and CEO Matthew Shay said. "Retailers expect to have another strong Halloween season and have stocked up on candy, decorations and the season’s most popular costumes."
What else is happening...
Apple (AAPL) +2% AH as iPhone, Wearables drove beats.
Facebook (FB) +4.6% AH amid double-digit Q3 gains.
General Electric (NYSE:GE) +11.5% on beat, FCF guidance raise.
Lyft (NASDAQ:LYFT) +2.2% AH blasting past sales estimates.
McKesson (NYSE:MCK) -8.4% as U.S. drug unit margins compressed.
Molson Coors (NYSE:TAP) -3.1% with reorganization on tap.
Southern Company (NYSE:SO) +2.8% posting impressive Q3 beat.
Starbucks (NASDAQ:SBUX) +3% AH on strong U.S., China sales growth.
Twilio (NYSE:TWLO) -7.8% AH giving disappointing forecast.
Western Digital (NASDAQ:WDC) -9.9% AH announcing CEO succession plan.
YUM! Brands (NYSE:YUM) -5.8% after comp sales miss.
In Asia, Japan +0.4%. Hong Kong +0.9%. China -0.4%. India +0.2%.
In Europe, at midday, London -1%. Paris -0.6%. Frankfurt -0.5%.
Futures at 6:20, Dow -0.4%. S&P -0.4%. Nasdaq -0.3%. Crude -0.3% to $54.89. Gold +0.8% to $1507.90. Bitcoin -1.7% to $9028.
Ten-year Treasury Yield -5 bps to 1.74%
Today's Economic Calendar
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
8:30 Employment Cost Index
9:45 Chicago PMI
10:30 EIA Natural Gas Inventory
3:00 PM Farm Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet