Thursday Morning Reads

Thursday Morning Reads



Open Interest:





Narrowly avoiding a ban in the U.S. earlier this fall, TikTok is again facing an imminent crisis, with a deadline today that requires the company be spun off from its Chinese parent, ByteDance (BDNCE). The video-sharing app is not going down without a fight, and on Tuesday made a significant legal maneuver by filing a petition challenging an executive order by President Trump, as well as a sales process being overseen by CFIUS. TikTok alleged it has been working in good faith toward today's deadline, but said the administration wasn't playing ball and it needed a 30-day extension. It also said in the filing that it proposed a new deal this month that would effectively hand over control of TikTok in the U.S. to Oracle (NYSE:ORCL), Walmart (NYSE:WMT) and Bytdance's U.S. investors. That was important because it appeared to be a U-turn from earlier in the process when Bytedance refused to give up a majority stake in its American operations. Bigger picture: Oracle will manage the data and see TikTok's source code, but the algorithm and technology will still be owned by Bytedance, and there are concerns that data will not be firewalled from China.

Clock ticks down

What will happen if the TikTok divestiture isn't approved by today? We can make some predictions, but it's hard to tell since the executive orders are open-ended. CFIUS could accept the terms of the deal and recommend that Trump submit his final approval (he gave the deal his "blessing" in September) or could support a 30-day extension as the app continues to address national security concerns. Another outcome is that TikTok misses the deadline and Attorney General William Barr takes "any steps necessary" to have Trump's order enforced in court. The last consideration could see the case drag into a Biden administration and he may not care about the app in the same way that Trump does. TikTok has 100M users in the U.S. alone and is one of the world's fastest-growing social media services.

Moderna gets in the vaccine spotlight

Shares of Moderna (NASDAQ:MRNA) are 5% higher in premarket trade after accumulating enough cases of COVID-19 in its vaccine trial to analyze the shot's effectiveness. Preliminary results could be released soon, with the biotech firm saying it could hand the data over to an independent monitoring committee within days. The vaccine, which uses a similar mRNA technology to Pfizer's (NYSE:PFE), will probably prove to be highly effective, and likely mirror Pfizer’s announcement earlier this week with a shot that appears to be more than 90% effective, said Drew Weissman, an immunologist and mRNA expert at the University of Pennsylvania.
Go Deeper: Pfizer execs sell millions of dollars worth of shares.

Is the rotation over?

Contracts linked to the Dow Jones fell 0.5% for a second day, along with S&P 500 futures, while the Nasdaq climbed 0.5% after churning out a 2% gain on Wednesday. "People are waking up to the reality of how long it will take to roll out a vaccine. I'm not a medical expert, but it seems unlikely that we're going to very quickly revert to the pre-Covid world," said Sebastian Mackay, a fund manager at Invesco. Jitters of fresh coronavirus restrictions are also hitting sentiment, with New York putting a 10 p.m. curfew on bars and restaurants and Joe Biden's coronavirus czar backing a four- to six-week lockdown (see below). On the economic front, fresh data on unemployment-benefit claims will be released at 8:30 a.m. ET and Walt Disney (NYSE:DIS) and Cisco (NASDAQ:CSCO) will report earnings after the market close.

Biden coronavirus advisor talks lockdown

A four- to six-week lockdown could bring COVID-19 under control and get the U.S. economy back on track until a vaccine is approved and distributed, said Michael Osterholm, who is advising President-elect Joe Biden on the coronavirus. His plan, though, depends on the government coming up with another relief package. "We could pay for a package right now to cover all of the wages, lost wages for individual workers for losses to small companies to medium-sized companies or city, state, county governments," he declared, after warning earlier this week that the country was heading for "COVID hell."

Racking up records

Singles Day, a major shopping event in China, saw e-commerce giants Alibaba (NYSE:BABA) and (NASDAQ:JD) rack up around $115B in sales across their platforms, both setting new records. Small caveat: The event this year ran from Nov. 1 to midnight on Nov. 12, instead of the usual 24-hours on 11/11 (which represents "bare branches" that are single and unattached). While the GMV numbers continue to show signs of recovery from the coronavirus pandemic, the event was overshadowed by big stock price falls of both Alibaba and due to Chinese regulators releasing draft antitrust rules (see below).
Go Deeper: wants a network of 5M retail stores.

More crackdowns on Big Tech

China's internet sector saw a $260B selloff on Wednesday after Beijing signaled its strongest intention yet to rein in Big Tech by drafting a slew of new anti-monopoly laws. "We believe potential implementation of the new antitrust regulations has negative implications for major Internet companies with dominant positions across segments," Morgan Stanley said in a research note. "That said, competition has already intensified in recent years, with 'incumbents' (e.g., Alibaba, Tencent) losing market share to 'disruptors' (e.g. Pinduoduo, Bytedance), so the consequences will likely be less meaningful given reduced dominance across segments compared to a few years ago." See a full breakdown on the impacts by company.

IEA lowers crude demand outlook

A day after OPEC cut its global oil demand forecasts, the IEA is jumping on the train, as the "task of re-balancing the market will make slow progress unless the fundamentals change." "With a COVID-19 vaccine unlikely to ride to the rescue of the global oil market for some time, the combination of weaker demand and rising oil supply provides a difficult backdrop to the meeting of OPEC+ countries," according to the agency. The IEA now expects world oil demand to contract by 8.8M barrels per day this year, reflecting a downward revision of 0.4M barrels from last month's assessment, but lifted its estimates for 2021.
Go Deeper: IEA sees record new renewable energy capacity.

To extend or cut?

OPEC+ is also sizing up crude output in light of vaccine developments and is having second thoughts about opening the taps in January as originally planned. While a breakthrough announced this week by Pfizer (PFE) could revive fuel demand, the logistical challenges of deploying a vaccine to billions of people mean it won't materially change oil-market conditions over the next six months. A planned output increase is likely to be postponed, while the presidents of both Russia and OPEC have even mentioned the option of cutting production further, though the idea hasn't garnered widespread support so far among other members. We're still three weeks away before the group meets to make a final decision, so expect some more news out of the oil space. The alliance is currently keeping about 7.7M barrels a day offline, or 8% of global output.

What else is happening...

Facebook (NASDAQ:FB), Google (GOOGGOOGLextend post-election political ad ban.

No more natural gas in new San Francisco buildings.

Keystone XL, Dakota Access at risk under a Biden administration.

Target (NYSE:TGT) and Ulta Beauty (NASDAQ:ULTA) pair up for the long term.

Amid cold-storage hurdle, Sanofi (NASDAQ:SNY) and J&J (NYSE:JNJ) may beat logistical challenges.

Today's Markets

In Asia, Japan +0.7%. Hong Kong -0.2%. China -0.1%. India -0.5%.
In Europe, at midday, London -0.4%. Paris -0.8%. Frankfurt -0.7%.
Futures at 6:20, Dow -0.5%. S&P -0.1%. Nasdaq +0.5%. Crude +0.5% to $41.64. Gold +0.5% at $1870.50. Bitcoin +1.4% to $15813.
Ten-year Treasury Yield -5 bps to 0.94%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Consumer Price Index
9:30 Jerome Powell Speech
10:00 Atlanta Fed's Business Inflation Expectations
11:00 EIA Petroleum Inventories
1:00 PM Results of $27B, 30-Year Note Auction
1:00 PM Fed's Evans: "Building a Strong and More Equitable Future"
2:00 PM Treasury Budget
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.

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