Thursday Morning Reads

Thursday Morning Reads





With the first trading session of the year on deck, investors are sketching their market predictions for 2020. Will the decade-long bull run continue? What's next in the Fed's rate cycle? Will the labor market remain strong? An earnings lift? How about upcoming phases of the U.S.-China trade deal? Robotics, wearable AR, space tourism? Will shale producers tap the brakes? How will the 2020 presidential election affect the market? Any other stock-related tea leaves?
Go deeper: Eric Parnell makes five bold predictions for the decade ahead.

Traders return to work

Equities are starting the new year on the right foot, with Dow futures pointing to a 150-point advance at the open following a market boom in 2019. The festivities kicked off in Asia overnight, where the PBOC slashed its required cash reserve ratio for commercial lenders by 50 basis points, unleashing about 800B yuan ($115B) of liquidity into the financial system. The move to shore up the local economy saw the Shanghai Composite Index end the session up 1.2%, adding to the overall positive sentiment ahead of the signing of a 'Phase One' U.S.-China trade deal on Jan. 15.
Go deeper: Check out Stanley Druckenmiller's picks for 2020.

Airbus seizes planemaker crown from Boeing

Airbus (OTCPK:EADSY) has become the world's largest planemaker for the first time since 2011 after delivering a forecast-beating 863 aircraft in 2019, according to airport and tracking sources. The race was overshadowed by Boeing's (NYSE:BA) 737 MAX crisis and underscores the distance the U.S. company must travel to recoup its market position in 2020. Boeing delivered 345 jets between January and November, less than half the number of 704 achieved in the same period of 2018, when the MAX was being delivered.
Go deeper: New Boeing CEO won't solve the underlying problem, writes Adam Levine-Weinberg.

Recreational marijuana legal in Illinois

Illinois is ringing in the new decade by becoming the 11th state in the country, as well as the District of Columbia, to allow the legal sale and purchase of marijuana. Under the new state law, adults over the age of 21 may own 30 grams of cannabis flower, 500 milligrams of THC in pot products and 5 grams of cannabis concentrate. Consulting firm Freedman and Koski expects the weed industry to bring the state $440M-676M in annual tax revenue.
Go deeper: Canopy Growth dealmaking appears to be overvalued, according to Cornerstone Investments.

Vaping crackdown

The FDA plans to ban the sale of flavors (except menthol and tobacco) in pod-based e-cigarettes, though the restriction won't apply to open-tank vaping devices, which allow users to mix their own nicotine liquids, WSJ reports. The policy, intended to curb a surge in underage vaping, will likely be announced tomorrow and deal a blow to an industry estimated to have $9B in annual revenue. A deadly vaping lung illness has now taken the lives of 55 people across 27 states, according to the latest data from the CDC.
Go deeper: 'Altria's 2020 Rally May Only Be Starting' by Mott Capital Management.

Healthcare breakthrough for artificial intelligence

In a study published Jan. 1 in Nature, researchers showed that Alphabet's (GOOGGOOGL) DeepMind AI unit could match or outperform radiologists at detecting breast cancer, though doctors still beat the machines in some cases. The model reduced false positive rates by 5.7% in the U.S. and by 1.2% in the U.K., while also lowering false negatives by 9.4% in the U.S. and by 2.7% in the U.K. While the algorithm isn't yet ready for clinical use, it marks the latest step in Google's push into healthcare.

Soaring prescription drug prices

The drug price hike of 2020 has commenced, with costs rising for more than 250 medications, according to data analyzed by 3 Axis Advisors. Bristol-Myers Squibb (NYSE:BMY), Gilead Sciences (NASDAQ:GILD), and Biogen (NASDAQ:BIIB) hiked U.S. list prices on more than 50 drugs on New Year's Day, adding to the couple hundred increases from drugmakers including Pfizer (NYSE:PFE), GlaxoSmithKline (NYSE:GSK) and Sanofi (NASDAQ:SNY). While nearly all of the price increases are below 10% and the median price increase is around 5%, more early year price increases could still be announced.
Go deeper: Study suggests benefits from hospital M&A are not there.

HSBC tangled in Hong Kong protests

Two HSBC (NYSE:HSBC) branches and seven indoor ATM clusters were closed today, the first working day of the year, after protesters attacked some of the bank's offices and graffiti was sprayed on the famous pair of lions that guard its city-center headquarters. Some demonstrators accuse the lender of being complicit against activists that are trying to raise money to support their campaign. Upcoming financial hit? More than 90% of the $4.4B generated by HSBC’s retail banking and wealth management unit in the six months to last June came from the territory.

High rollers stay away from Macau

Gambling revenue in the Chinese territory of Macau tumbled 13.7% in December from a year earlier, marking the steepest decline in close to four years. Overall revenues in 2019 fell 3.4%, following two years of gains, due to the ongoing Sino-U.S. trade war and protests in neighboring Hong Kong. The decline may come to an end in 2020 as President Xi Jinping looks to diversify the city into a financial center and boost its economy.

TikTok banned from U.S. Army devices

Following the lead of the Navy and guidance from the Pentagon, the U.S. Army has banned ByteDance's (BDNCE) social media app TikTok from all government-owned phones. "It is considered a cyber threat," said Lt. Col. Robin Ochoa, a spokeswoman for the Army. The military had been using TikTok as a recruitment tool and as a way to reach young people, but it began dissuading personnel from using the app in mid-December.

What else is happening...

List of U.S. stock leaders and laggards from 2019.

Buffett's worst year in decade marked by cash hoard.

Prominent Twitter (NYSE:TWTR) user, Josh Brown, dumps the stock.

'Friends' bids farewell to Netflix (NASDAQ:NFLX).

First customers to receive China-made Model 3s (NASDAQ:TSLA).

Carlos Ghosn will hold press conference on Jan. 8.

Politics prompt China to suspend British stock link.

Today's Markets
In Asia, Japan closed. Hong Kong +1.3%. China +1.2%. India +0.8%.
In Europe, at midday, London +1%. Paris +1.3%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.6%. S&P +0.6%. Nasdaq +0.7%. Crude +0.3% to $61.24. Gold flat at $1522.80. Bitcoin -0.5% to $7143.
Ten-year Treasury Yield +2 bps to 1.93%

Today's Economic Calendar
8:30 Initial Jobless Claims
9:45 PMI Manufacturing Index
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.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)