Thursday Morning Reads
- Growth Falls Sharply as Exports Slow
- Record Low
- Method to Madness
- Narrowly Escapes Recession
- Lay Off the Stocks
- Google Makes a Bid for Banking
- ‘Broad-Based’ Slowdown in Tech Spending
- A Milk Giant Goes Broke
- I’ve Never Used an Emoji
- Stock Buybacks Driving Wealth Inequality?
- Walmart +3% after profit beat
- Futures inch lower after record highs
- Disney market cap now twice Netflix
- Walmart EPS beats by $0.07, revenue in-line
- Canopy Growth EPS misses by C$0.73, misses on revenue
- Brookfield Asset Management FFO beats by $0.06, beats on revenue
- Amarin shares halted pending news
- FDA accepts selumetinib marketing application for
- Facebook removes 3.2B fake accounts, details moderation
- Icahn takes HP stake, pushes Xerox merger
- Cisco -4.7% as Q2 forecast disappoints
- HP declares $0.1762 dividend
Open Interest Changes for Today:
Following yesterday's disappointing guidance from Cisco (NASDAQ:CSCO), market focus is turning back to the tail end of earnings season, with Walmart (NYSE:WMT) set to report before the opening bell. Major growth is expected across the retailer's e-commerce business, supported by expansion of grocery pick-up and delivery. Chipmaker Nvidia (NASDAQ:NVDA) will report after the close and should benefit from the post-crypto rebound in core gaming, as well as increased spending on data centers and the cloud. About three-fourths of S&P 500 companies have already topped earnings estimates in their Q3 reports, but they are still expected to have posted an overall 0.5% decline in earnings, according to Refinitiv.
Go deeper: Crispus Nyaga breaks down Walmart vs. Target.
U.S. stock index futures are pulling back slightly, edging down 0.2%, after Disney (NYSE:DIS) shares on Wednesday lifted the DJIA and S&P 500 to record closing highs. Talks between Washington and Beijing are thought to have hit a snag over agricultural purchases, while weak industrial output data was seen in China and Europe's largest economy narrowly avoided a recession. Jerome Powell is also continuing his second day of testimony on Capitol Hill - before the House Budget Committee - after saying negative interest rates aren't needed in the U.S. and monetary policy will remain in place unless there is a "material" change in the economic outlook.
Go deeper: Check the SA newsfeed throughout the day as seven other Fed officials deliver remarks.
Powell further warned that the federal budget is on "an unsustainable path," and with the national debt now topping $23T, it could make it difficult for the economy to recover from future market downturns. According to the Treasury Department, the federal deficit reached $134B in October - the first month of fiscal 2020. The figure has spiked following the GOP tax law and multiple bipartisan agreements to increase spending on defense and domestic programs.
Go deeper: Cullen Roche asks if deficits will drive up interest rates.
Disney (DIS) shares surged 7.3% to a record $148.72/share on Wednesday after passing 10M subscribers to streaming service Disney+, which only debuted a day earlier. With a market capitalization now totaling $268B, the Mouse House is now twice as valuable as Netflix (NASDAQ:NFLX), which saw its market value tumble to about $124B amid slowing revenue growth and increasing competition. Important to note: Disney's increase was aided by its $71B acquisition of 21st Century Fox's entertainment assets, which was completed in March.
Go deeper: 'Netflix Is Not Dead Money' writes Kwan-Chen Ma.
In its latest Community Standards Enforcement Report, Facebook (NASDAQ:FB) said it removed 3.2B fake accounts from April to September. That's more than double the number of fake accounts taken down during the same period last year, when 1.55B accounts were removed. Some other figures... The social network removed more than 11.6M pieces of content depicting child nudity and sexual exploitation, 2.5M posts that depicted or encouraged suicide or self-injury, and 4.4M pieces involving drug sales.
Go deeper: Terracotta Investments discusses Facebook Pay, calling the service "late in the game."
Motorola (OTCPK:LNVGY) has announced a new version of its iconic Razr, succeeding the Samsung (OTC:SSNLF) Galaxy Fold as the second foldable phone in the U.S. when it launches with Verizon (NYSE:VZ) for $1,499 in January. No keypad... The gadget has a full touch screen display inside, but still folds in half like the clamshell design from the 1990s and early 2000s. While the Razr's outside features a 2.7-inch "Quick View" display, it opens vertically to a 6.2-inch screen (vs. the Galaxy Fold's horizontal fold that enables a tablet-sized device).
The latest tech heavyweight to take on finance, Google (GOOG, GOOGL) expects to offer checking accounts to consumers next year under a project code-named Cache. The accounts will be run by Citigroup (NYSE:C) and a credit union at Stanford University. Big tech companies, such as Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Facebook (FB), see financial services as a way to learn more about consumers and reap valuable data, as well as opportunities to strengthen ties with users.
Scuttling Xerox's (NYSE:XRX) planned merger with Fujifilm (OTCPK:FUJIY) last year and taking control of its board, Carl Icahn is now pushing for a merger with HP (NYSE:HPQ). Xerox last week made an offer to buy HP for $33B, more than three times the printer maker's market cap, aiming to unite the companies whose fortunes have waned in the digital age. In fact, Icahn, who owns a 10.6% stake in Xerox, has now taken a 4.24% stake in HP, valued at roughly $1.2B, sources told WSJ.
On an earnings call with qualified bondholders, WeWork (WE) revealed the soaring net loss for the final quarter under Adam Neumann's leadership, according to slides viewed by Axios. The figure was up from $497M in last year's quarter, while its annual revenue run rate was up 25% Q/Q to nearly $4.2B. The loss came ahead of a bailout in October by Japan's SoftBank (OTCPK:SFTBY), which gave WeWork a $3B investment after its plans fell through for an initial public offering.
"While the numbers show the country avoided a technical recession in the third quarter, economic development in the region is still fragile," said German Economy Minister Peter Altmaier. The latest GDP growth figures showed the economy grew by 0.1% in Q3 following a "solid" rise in factory orders in September. "In some sense, this is the 'worst' of both worlds for markets," wrote Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. "Today's data confirm that the German economy has now stalled, but the headlines are probably not dire enough to prompt an immediate and aggressive fiscal response from Berlin."
What else is happening...
In Asia, Japan -0.8%. Hong Kong -0.9%. China +0.2%. India +0.4%.
In Europe, at midday, London -0.4%. Paris +0.1%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.2%. Crude +1.1% to $57.74. Gold +0.4% to $1469.10. Bitcoin -1.8% to $8586.
Ten-year Treasury Yield -3 bps to 1.84
Today's Economic Calendar
5:30 Fed's Quarles Speech
8:30 Initial Jobless Claims
8:30 Producer Price Index
9:10 Fed's Evans Speech
9:10 Fed's Clarida Speech
10:00 Powell To Testify Before The House Budget Committee
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
11:45 Fed's Daly Speech
12:00 PM Fed's Williams Speech
12:20 PM Fed's Bullard Speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
5:00 PM Fed's Kaplan Speech