Thursday Morning Reads
- Falls Into Recession
- Unlikely to Last the Summer
- Stimulus Bets Buoy Futures
- Big Losses for Fund Managers
- Private Equity’s Biggest Critic
- Big Tech CEOs Ready Defenses
- The Amazon Critic Who Saw Its Power From the Inside
- Tesla Boosts Production
- Surge In Eating At Home
- Escape From New York
- 10,000 Day Traders
- Corporate America is beginning to downsize commercial real estate footprints due to remote work (SLG, ESRT, VNO). Reuters
- Amazon (AMZN) aims to offer auto insurance in India. Reuters
- Twitter (TWTR) private messages were accessed in recent cyber attack. FT
- The Trump administration aims to eliminate affirmatively furthering fair housing rule and replace it with a weaker regulation (XHB). Politico
- Wal Mart (WMT) to sell Indian stores to Flipkart. WSJ
Open Interest Changes:
Tesla is up another 5.3% to $1,677 in premarket trade after posting its fourth consecutive quarter of profit, opening the door for the company's inclusion in the S&P 500. Adjusted for one-time items, Tesla (NASDAQ:TSLA) earned $2.18 a share, swinging from an adjusted loss of $1.12 a share a year ago, while sales fell 5% to $6.04B. On the earnings call, Elon Musk announced that Tesla will build its next "massive" factory near Austin, Texas, which will produce the Cybertruck, a pickup truck and the Tesla Semi, as well as the Model 3 and Y for the East Coast. He also talked up the development of the autonomous driving program, promising more developments by the end of 2020.
Despite fiscal Q4 results that were largely positive, shares of Microsoft (NASDAQ:MSFT) fell as much as 3% in AH trading on Wednesday. The software giant easily beat analyst estimates, reporting a net profit of $11.2B and revenue that rose 13% to $38B. Traders may have been looking for more. The company's cloud computing operation saw sales growth under 50% for the first time, while transactional license purchasing continued to slow and subsidiary LinkedIn was negatively impacted by the weak job market.
Traders are barely digesting the high-profile results from Tesla (TSLA) and Microsoft (MSFT) before the next round of earnings make headlines. Dow and S&P 500 futures are ahead by 0.4%, while the Nasdaq advanced 0.9%, ahead of figures from Twitter (NYSE:TWTR), AT&T (NYSE:T) and Intel (NASDAQ:INTC), as well as American (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV). Weekly jobless claims are also on the radar. Another 1.3M American workers are expected to have filed for first-time benefits during the week ended July 18, bringing that total to 52.58M since coronavirus lockdowns began in mid-March.
Senate Republicans have "reached a fundamental agreement" with White House negotiators Steven Mnuchin and Mark Meadows on how to move forward with the next coronavirus relief bill. What's in the proposal? Another round of direct stimulus payments, $16B for coronavirus testing, $105B for K-12 education, colleges and universities, though there was no agreement on a payroll tax cut. The plan, set to be unveiled today, will serve as a starting point for negotiations with Democrats, who have passed a $3.4T bill in the House. Lawmakers are also racing to reach a deal on the $600 weekly supplement to unemployment benefits that's due to expire on July 31.
With the coronavirus pandemic weighing heavily on Europe's economy, the EU is now arguing that softer rules on the finance industry are needed to help the recovery. The bloc is planning to loosen a key plank of MiFID II that forces investors to pay banks and brokerages for research separately from their trading fees. The proposal also trims investor protection rules like record keeping and disclosure requirements primarily focused on professional investors. Over in the U.S., the SEC has proposed raising the Form 13F reporting threshold and voted to regulate proxy advisers more closely, while a new U.S. derivatives rule is set to complete Dodd-Frank.
Warren Buffett scooped up 34M shares of Bank of America (NYSE:BAC) over the last few days - at an average price of about $24 - taking his stake in the banking giant to over 11% (from about 7.4%). Big discount? The Oracle spent the $816M after BAC shares plunged nearly 32% since the beginning of the year. Buffett has been criticized in recent weeks over failing to deploy Berkshire Hathaway's (BRK.A, BRK.B) enormous cash hoard, which climbed to $137B in Q1. BAC +1.6% premarket.
There was big news from India overnight as Amazon Pay (NASDAQ:AMZN) partnered with private firm Acko General Insurance to offer car and motorcycle insurance. It's the e-commerce giant's first market for the service, where it will compete with local rivals including Paytm and Policybazaar. Amazon is moving fast to become a full-fledged financial services platform, with Amazon Pay supporting a range of payments services, including the popular UPI, and debit and credit cards. Meanwhile, India's Flipkart (FPKT) announced it would acquire parent Walmart's (NYSE:WMT) local cash-and-carry business, attempting to strengthen its wholesale offering to compete better with Amazon.
The hackers who took over prominent accounts on Twitter (TWTR) last week were able to access direct messages. "We believe that for up to 36 of the 130 targeted accounts, the attackers accessed the DM inbox, including 1 elected official in the Netherlands," the company said in its latest update. While many of the high-profile hacked accounts tweeted a scam asking for bitcoin, an analysis of transactions showed that the scheme only collected $121,000. Direct messages, however, could be used or publicized by hackers at a later point in the future.
Go deeper: The cyber attack will likely be discussed this morning as Twitter reports earnings.
What else is happening...
U.S. may label Switzerland a currency manipulator.
Chipotle (NYSE:CMG) -1.3% AH reporting comparable sales decline of 9.8%.
Kinder Morgan (NYSE:KMI) -3.1% AH as demand drop hit pipeline volumes.
Las Vegas Sands (NYSE:LVS) -0.6% AH posting a 51% plunge in Q2 revenue.
Microsoft (MSFT) -2.5% AH on decelerating cloud sales growth.
Spirit Airlines (NYSE:SAVE) +2.3% following mixed results.
Tesla (TSLA) +6.2% AH after fourth straight quarter of profitability.
In Asia, Japan closed. Hong Kong +0.8%. China -0.2%. India +0.7%.
In Europe, at midday, London +0.6%. Paris +0.4%. Frankfurt +0.5%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.9%. Crude +0.1% to $4194. Gold +0.8% to $1880.20. Bitcoin -0.2% to $9508.
Ten-year Treasury Yield flat at 0.59%