Thursday Morning Reads
- Is it Different This Time
- Private Equity Mega-Deals
- China’s Economy Rebounds
- A Brazen Online Attack Targets V.I.P. Twitter Users
- TikTok Enlists Army of Lobbyists
- ‘I Wouldn’t Do That’
- Where to Invest $10,000 Right Now
- Big Warning
- This is A Bubble
- High on Highs
- FDA OKs data streaming from Abiomed heart pump controller
- Linde signs MoU with China Power to develop green hydrogen energy in China
- Dick's adds NFL legend to the board
- Jabil upgraded to Buy on growth profile improvement
- Kalytera secures exclusive rights to drug candidate for COVID-19
Open Interest Changes:
In a major case surrounding data privacy, Europe's top court has invalidated the "Privacy Shield," an EU-U.S. framework used to transfer personal data across the Atlantic. The ruling came in a clash between Facebook (NASDAQ:FB) and Austrian privacy activist Max Schrems, who has challenged the tech giant's handling of EU citizens' data ever since Edward Snowden's spying revelations in 2013. While the ruling does not mean an immediate halt to all data transfers outside the EU - the court upheld the validity of "Standard Contractual Clauses" to processors established in third countries - scrutiny over data transfers will be ramped up. A new system may also have to be implemented which guarantees that Europeans' data is afforded the same EU standard of privacy protection in the U.S.
"Tough day for us at Twitter. We all feel terrible this happened," CEO Jack Dorsey tweeted following a day where hackers hijacked some of the platform's top accounts in an attempt to siphon bitcoin from their social media followers. The breach specifically targeted verified badge accounts, or "Blue Checks," including Bill Gates, Elon Musk, Jeff Bezos, Warren Buffett, Joe Biden, President Obama, Kim Kardashian and Kanye West. What happened? Twitter (NYSE:TWTR) said it detected a "coordinated social engineering attack by people who successfully targeted some of our employees with access to internal systems and tools." TWTR -6.1% premarket.
Following a record first quarter in which a home-bound audience saw Netflix (NASDAQ:NFLX) add 15.8M new subscribers, all eyes are on the streamer's Q2 earnings report, which will be released after the close. "Subscriber growth is key, then margins, then free cash flow," said Steve Birenberg of Northlake Capital Management, and don't forget forward-looking guidance. While Netflix expects 7.5M global paid net additions this time around, recent analyst estimates have put the number as high as 12M-15M. As for earnings, consensus forecasts see EPS of $1.83, up from $0.60 a year earlier, and revenues of $6.08B, a nearly 24% increase Y/Y.
Go deeper: NFLX has been one of the best S&P 500 performers this year.
Global markets are sliding after a vaccine-induced rally, with Dow and S&P 500 futures off 0.7% and contracts tied to the Nasdaq down 1.6%. Data overnight showed that China's economy grew 3.2% in annual terms in Q2, following a 6.8% contraction in the previous quarter, though that data failed to excite investors. On the U.S. economic calendar, weekly jobless claims reported today are expected to decline for the 15th week in a row to 1.25M, while retail sales are forecast to have jumped 5% in June. It will also be a busy day for earnings as Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), Johnson & Johnson (NYSE:JNJ) and Netflix (NFLX) release Q2 results. Coronavirus updates: Johns Hopkins University said late Wednesday that 67,632 cases of COVID-19 had been reported in the U.S. over the last 24 hours, marking a new national record.
The European Central Bank is all but certain to keep policy on hold today after a series of extraordinary moves. Asset purchases are also forecast to remain steady, though there is a chance the central bank could tinker cash deposit rules to help lenders cope with the pain of negative interest rates. Many are also seeking clarity on whether the ECB plans to spend all of its €1.3T Pandemic Emergency Purchase Program or exit early if Europe's recovery beats expectations.
The U.S. is imposing sanctions on some employees of Chinese tech firms over their role in providing "material support to the CCP (Chinese Communist Party) regime that commits human rights abuses." "Companies impacted by today's action include Huawei, an arm of the CCP's surveillance state that censors political dissidents and enables mass internment camps in Xinjiang and the indentured servitude of its population shipped all over China," said Secretary of State Mike Pompeo. "Telecommunications companies around the world should consider themselves on notice: If they are doing business with Huawei, they are doing business with human rights abusers."
The Oil and Gas Climate Initiative, a group that aims to accelerate the industry response to climate change, has for the first time set targets to cut greenhouse gas emissions as a proportion of production. The average carbon intensity of their aggregated upstream oil and gas operations will be reduced to between 20 kg and 21 kg CO2e/boe by 2025, from a collective baseline of 23 kg CO2e/boe in 2017, while the goals could be extended to other sectors like LNG and refining in the future. The OGCI includes BP (NYSE:BP), Chevron (NYSE:CVX), CNPC (NYSE:PTR), Eni (NYSE:E), Equinor (NYSE:EQNR), Exxon (NYSE:XOM), Occidental Petroleum (NYSE:OXY), Petrobras (NYSE:PBR), Repsol (OTCQX:REPYY), Saudi Aramco (ARMCO), Shell (RDS.A, RDS.B) and Total (NYSE:TOT), which together account for over 30% of the world's oil and gas production.
Owing more than 50,000 creditors about $6.1B, California's top oil driller has filed for Chapter 11 bankruptcy protection, kicking off what could turn into the next wave of collapses. While California Resources (NYSE:CRC) has received a commitment of more than $1B in debtor-in-possession financing, it joins more than 200 oil explorers that have filed for court protection since 2015. Denbury Resources (NYSE:DNR) and Noble Corp. (NYSE:NE) missed their July debt payments, and Chaparral Energy (NYSE:CHAP) has asked lenders for more time, setting them on course for a possible default.
Fiat Chrysler (NYSE:FCAU) and Peugeot (OTCPK:PUGOY) will become "Stellantis" after their merger is complete early next year. The name, with roots in the Latin verb "stello," meaning "to brighten with stars," is inspired by "this new and ambitious alignment of storied automotive brands and strong company cultures that in coming together are creating one of the new leaders in the next era of mobility." Despite the difficulties from the COVID-19 pandemic, the two carmakers said they are pressing ahead with the combination, and the deal is still on track to close in early 2021.
What else is happening...
Crude inventory draw and OPEC+ tapers output cuts.
Alcoa (NYSE:AA) +6.7% AH topping Q2 earnings view.
BNY Mellon (NYSE:BK) -5.4% seeing downside risks for 2020.
Goldman Sachs (NYSE:GS) +1.4% posting record investment banking results.
PNC Financial (NYSE:PNC) +2.8% reflecting BlackRock sale gain.
U.S. Bancorp (NYSE:USB) +3.7% on EPS beat in 'challenging' environment.
UnitedHealth (NYSE:UNH) -1.4% despite record quarterly profits.
In Asia, Japan -0.8%. Hong Kong -2%. China -4.5%. India +1.2%.
In Europe, at midday, London -0.5%. Paris -0.7%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.7%. S&P -0.7%. Nasdaq -1.6%. Crude -1.1% to $40.73. Gold -0.4% to $1806.50. Bitcoin -1.5% to $9080.
Ten-year Treasury Yield -1 bps to 0.62%Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Retail Sales
10:00 Business Inventories
10:00 NAHB Housing Market Index
10:30 EIA Natural Gas Inventory
11:10 Fed's Williams Speech
12:00 PM Fed's Bostic Speech
1:30 PM Fed's Evans: Monetary Policy
2:00 PM Fed's Bostic: "Racial Equity and the Federal Reserve"
4:00 PM Treasury International Capital
4:30 PM Money Supply
4:30 PM Fed Balance Sheet