Thursday Morning Reads
- It's All Going to End Badly
- What’s In (and Not In) the Trade Deal
- The $95 Billion Centerpiece
- Will Beyond Meat Get Nibbled to Death?
- Ruthless Founder Leon Black
- Flash Crash Culprit
- War & The Stock Market
- Markets And Preferences And Longevity
- Risks to oil supply have receded
- New Tesla registrations nearly halve in California
- Universal, Warner propose physical-disc joint venture
- Nike Vaporfly may face World Athletics ban
- Morgan Stanley EPS beats by $0.18, beats on revenue
- Qudian withdraws FY19 guidance, declares $500M new share repurchase program
- Signet +8% after strong guidance
- Juul scales back overseas expansion
- PPG EPS misses by $0.03, revenue in-line
- Credit Suisse's top mining stocks for 2020 to generate strong free cash flow
- Trade deal welcome news for U.S. energy firms but tariffs still cloud outlook
Wall Street will be looking for more record highs during today's session, as Dow futures point to a 75-point advance after closing above 29,000 for the first time on Wednesday. Investors are reacting to details of the U.S.-China "Phase One" trade agreement, a first step in ending an 18-month trade war between the world's two largest economies. President Trump said the deal restored "economic justice" as China committed to $200B in additional purchases of U.S. goods and pledged to "enhance" intellectual property protections. All U.S. tariffs on Chinese imports will be removed as soon as the two countries complete a "Phase Two" trade pact.
Go deeper: 'The Difficulty With Being Contrarian: A Case For Optimism' by Craig Blanchfield.
"Today's market, where non-OPEC production is rising strongly and OECD stocks are 9M barrels above the five-year average, provides a solid base from which to react to any escalation in geopolitical tension," the IEA said in its monthly report. "Even if they (OPEC+) adhere strictly to the cuts, there is still likely to be a strong build in inventories during the first half of 2020," the agency declared, adding that recently signed trade deals should "support growth."
Go deeper: Price gains are likely to be seen in crude oil, according to QuandaryFX.
The Bank of England and Financial Conduct Authority are demanding to see "clear evidence of engagement" from firms to make sure they move away from scandal-tainted LIBOR by next year. The shift is proving tricky as the rate underpins $350T of financial products around the world, though regulators are pushing alternatives like SONIA. The BOE is "keeping the potential use of supervisory tools under review" if banks and insurers do not comply, meaning senior managers could be in the line of fire or capital ratios could be jacked up.
Brexit should be a "wake-up call" for the European Union, German Chancellor Angela Merkel warned in a rare interview with the FT. "I see the European Union as our life insurance. Germany is far too small to exert geopolitical influence on its own, and that’s why we need to make use of all the benefits of the single market," she added. "President Obama already spoke about the Asian century, as seen from the U.S. perspective. This also means that Europe is no longer, so to say, at the center of world events... that will be the case under any president."
Once a bedrock of the movie business, Comcast's (NASDAQ:CMCSA) Universal Pictures and AT&T's (NYSE:T) Warner Bros. are planning to form a joint venture tasked with distributing DVDs and Blu-ray discs in the U.S. and Canada. If approved, the joint venture would likely help Universal and Warner trim costs as both companies prepare to launch their own streaming services. Last year digital sales in the U.S., which includes streaming and downloads, rose to $20.4B, compared to the just $3.3B Americans spent on all packaged home-entertainment products.
Go deeper: Safety In Value discusses potential Comcast catalysts in 2020/2021.
Shares in Asics (OTCPK:ASCCY) surged as much as 8% in Tokyo overnight after several reports suggested that World Athletics was mulling a ban for Nike's (NYSE:NKE) Vaporfly shoes in professional competition. The sneaker has come under scrutiny amid claims that its foam and carbon fiber sole plate serves as a spring that gives runners an extra edge. Five of the fastest marathon times on record have been recorded by Vaporfly-wearing athletes over the past 18 months.
Go deeper: Wealth Insights is fearful of Nike's valuation.
Talk about marketing... PepsiCo (NASDAQ:PEP) will give everyone in the U.S. a free Pepsi Zero Sugar (via refund) if the final score of either of this year's Super Bowl teams ends in a zero. "We are going 'all in' on Pepsi Zero Sugar this year and have created a bold, unapologetic new look to match its great taste, with a new matte black can and a black tab that will stand out anywhere," said Todd Kaplan, Pepsi's VP of Marketing. In 25% of previous Super Bowl games, at least one team finished with a score ending in zero.
Go deeper: PepsiCo's dividends are above average at 2.8%, writes William Stamm.
Vowing to make 100% of its packaging recyclable or reusable by 2025, Nestle (OTCPK:NSRGY) is investing as much as 2B Swiss francs to source more recycled plastics to package its products. It will also try to keep the plastic purchasing neutral on earnings through efficiencies. Rival Unilever (NYSE:UN) has further pledged to halve its use of newly made plastic by 2025 as food and beverage makers increasingly come under fire for polluting oceans and landfills.
Toyota (NYSE:TM) is the lead investor in a Series C funding round of Joby Aviation, a startup aimed at delivering safe and affordable public air travel while advancing the transition to sustainable transportation. The company already has a prototype with six electric propellers and is capable of flying 150 miles on a single charge, at speeds of up to 200 miles per hour. "Air transportation has been a long-term goal for Toyota, and while we continue our work in the automobile business, this agreement sets our sights to the sky," said CEO Akio Toyoda.
Competition between the two companies already heated up in Europe after Uber (NYSE:UBER) was blocked from operating in London by local transport regulators. Now, Bolt has secured €50M in debt financing from the lending arm of the EU, the European Investment Bank, to invest in ride hailing and food delivery. EIB Vice President Alexander Stubb called Bolt a "good example of European excellence in tech and innovation," while Bolt CEO Markus Villig said the loan "enables us to move faster towards serving many more people in Europe."
What else is happening...
Ruble falls as Putin calls for constitutional revamp.
Alcoa (NYSE:AA) -3% AH seeing 2020 global aluminum surplus.
Bank of America (NYSE:BAC) -1.9% growing loans and deposits.
BlackRock (NYSE:BLK) +2.3% as assets blew past $7T.
Goldman Sachs (NYSE:GS) -0.2% after expenses increased for 1MDB scandal.
PNC Financial (NYSE:PNC) -3.6% revealing escalating costs.
U.S. Bancorp (NYSE:USB) missing estimates.
UnitedHealth (NYSE:UNH) +2.8% amid improving margins.
In Asia, Japan +0.1%. Hong Kong +0.4%. China -0.5%. India +0.1%.
In Europe, at midday, London -0.5%. Paris flat. Frankfurt -0.2%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.4%. Crude +0.4% to $58.03. Gold +0.1% to $1554.80. Bitcoin -1.5% to $8644.
Ten-year Treasury Yield flat at 1.79%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Retail Sales
8:30 Import/Export Prices
10:00 Business Inventories
10:00 NAHB Housing Market Index
10:00 Fed’s Bowman Speech
10:30 EIA Natural Gas Inventory
4:00 PM Treasury International Capital
4:30 PM Money Supply
4:30 PM Fed Balance Sheet