Thursday Morning Reads
- The Bubble Has Popped
- The Virus Changed That
- Prefer ‘Scalpel’ Over ‘Jackhammer’
- An Avalanche of Fraud
- Eyeing an IPO Again — After He Turns Profit
- Lost Nearly $125 Million This Season
- More Horsepower Than Churchill Downs
- Progressive Taxation
U.S. GDP data due out at 8:30 a.m. ET will be one for the record books, with forecasts of annualized growth of 31% in Q3, but it also follows an annualized decline of 31.4% in Q2, which marked the sharpest pullback in modern American history. Many statistics go into measuring the scale of an economic rebound, and figures seen earlier this week showed another mixed bag of data. Durable goods orders and home price growth came in ahead of expectations, while new home sales and consumer confidence numbers recorded a bit of a miss. With both parties arguing about the scale of the recovery (V-shaped vs. K-shaped), as well as what is needed going forward, don't think the latest GDP figure will be any different just five days before the presidential election.
Futures are trading higher following a session that saw the biggest plunge for stocks since June on a resurgence in the number of deaths and hospitalizations due to COVID-19: Dow +0.8%; S&P +1%; Nasdaq +1.3%. "There's a degree of short covering and opportunistic buying after the big selloff," said Ilya Spivak, head Asia-Pacific strategist at DailyFX. "I don’t think it means anything in terms of a big leg up for U.S. stocks. This is just a short-term, tactical move." While targeted lockdowns may be reimposed at the state or local level in the U.S., the discussions come on the back of faded stimulus negotiations and election uncertainty.
How should social media moderate online speech? What should their role be in public discourse (especially around the election)? Is too much power being given to Big Tech? Those were some of the questions asked yesterday as CEOs of Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and Google (GOOG, GOOGL) tangled with U.S. senators, in a hearing that centered around a 1996 law known as Section 230. Republicans voiced concern that the content liability shield has been misused to censor conservative views, while Democrats expressed fears over disinformation campaigns and political polarization. While the CEOs denied any political bias, they conveyed varying degrees of openness toward amending Section 230, including more transparency around content moderation.
Four of the big five - Alphabet (GOOG, (GOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Facebook (FB) - are set to report earnings after the bell, alongside Twitter (TWTR). Also known as FAAMG, the stocks account for $7T in market value, or nearly 46% of the Nasdaq 100, while the group's scale and influence has made it an outsized target for lawmakers in Washington. The stocks sold off yesterday, each dropping around 5% with the broader market, though they pared back some of those losses in the AH trading session.
Following a tough week for oil, Shell (RDS.A, RDS.B) shares climbed 4.7% in premarket trade after a better-than-expected Q3 earnings report and accompanying dividend raise. The payout for ADSs listed on the NYSE will rise by around 4% to $0.333 for Q3 and on an annual basis going forward, just six months after the oil major slashed its dividend for the first time since WWII. Hit by lower crude prices and weaker refining, Shell's adjusted net income was $955M for Q3, down 80% from the same period a year ago, but better than even the highest analyst estimate.
Slowing of economic activity across the eurozone could prompt the ECB to unveil preemptive stimulus measures at its meeting today, though analysts say the bank is more likely to take action at its December gathering. On Wednesday, Germany announced a four-week shutdown of restaurants, bars, cinemas and theaters, while France said it would impose a second national lockdown as coronavirus infections surge across the region. The ECB will announce its interest-rate decision at 8:45 a.m. ET, followed by a press conference with President Christine Lagarde that will present new staff forecasts, as well as the latest commentary on inflation.
The deal was on its way to court, but the two luxury giants have worked out a bitter legal dispute on their own. A slightly lower price will see LVMH (OTCPK:LVMHF) take over Tiffany (NYSE:TIF) at $131.5 per share, down from $135 in the original transaction, bringing the price tag to around $15.8B (or a discount of $425M). After sealing an agreement last November, the French conglomerate had argued Tiffany should have a lower valuation due to the effect of the coronavirus pandemic on its business.
Go Deeper: Tiffany continues paying a dividend despite LVMH criticism.
Marvell Technology (NASDAQ:MRVL) is reportedly nearing a deal to acquire Inphi (NASDAQ:IPHI) for about $10B, adding to an already record year for chip industry deals. Previous acquisitions: Advanced Micro Devices' (NASDAQ:AMD) $35B takeover of Xilinx (NASDAQ:XLNX), Nvidia's (NASDAQ:NVDA) $40B purchase of Arm and Analog Devices' (NASDAQ:ADI) agreement to acquire Maxim Integrated Products (NASDAQ:MXIM) for $20.9B. Marvell will pay 60% of the acquisition in stock, with the rest in cash, while an announcement could come as soon as today. IPHI +40.6% premarket.
What else is happening...
With bottom not yet in for tankers, Evercore downgrades a key player.
Wednesday's Key Earnings
Amgen (NASDAQ:AMGN) +0.3% AH with product sales up 12%, non-GAAP earnings up 17%.
Blackstone (NYSE:BX) -3.1% despite corporate private equity performance.
Boeing (NYSE:BA) -4.6% seeing historic passenger traffic returning in ~3 years.
Enterprise Products (NYSE:EPD) -1.8% as crude pipeline transport volumes plunge.
Ford (NYSE:F) +4.7% AH posting strong results for North America.
General Electric (NYSE:GE) +4.5% avoiding Q3 loss, positive cash flow.
Gilead Sciences (NASDAQ:GILD) -1.3% AH lowering guidance for 2020.
Mastercard (NYSE:MA) -8.1% as COVID-19 hit cross-border volumes.
UPS (NYSE:UPS) -8.8% on concerns over the margin outlook.
Visa (NYSE:V) +0.3% AH amid payments volume growth, processed transactions.
In Asia, Japan -0.4%. Hong Kong -0.5%. China +0.1%. India -0.4%.
In Europe, at midday, London +0.2%. Paris +0.1%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.8%. S&P +1%. Nasdaq +1.3%. Crude -3.5% to $36.10. Gold -0.1% at $1878.10. Bitcoin -3.4% to $13109.
Ten-year Treasury Yield flat at 0.78%
Today's Economic Calendar