Thursday Morning Reads
- Fed Gone Crazy
- The Top Is In
- Fox (FOXA) and Disney (DIS) deal might close on January 1st. Variety Report
- Bernanke End Game
- Senators want investigation into disappearance of prominent Saudi journalist Jamal Khashoggi (XLE, USO). WSJ Report
- U.S. has accused Chinese intelligence operative of stealing GE (GE) secrets. FT Report
- Apple has acquired Spektral, a Danish computer vision startup. Tech Crunch Report
- China car deals want taxes cut in half (KNDI, CARZ). Reuters Report
- CVS (CVS) and Aetna (AET) merger still needs approval from NY State. NY Post Report
- Stock rout continues after major selloff
- Early premarket losers include SQ, AMZN, NFLX
- Michael slams Florida, charges into Southeast
- Traders aren't panicking about Wednesday's selloff
- McDonald's franchisees ready to take action
- Sears skips payments to vendors
- Apple, Dialog sign $600M licensing deal
- Altria eyes cannabis move
Americans have accumulated $28.3 trillion in retirement assets, 19% of which is in 401(k) accounts ($5.3 trillion).
There are 550,000 plans and 54 million participants.
These dollars are coming in every month, the lower the prices for stocks, the better.
F***ing bring it.
— Downtown Josh Brown (@ReformedBroker) October 11, 2018
A mix of higher bond yields and growth worries are continuing to take their toll on the markets, with equities across Asia and Europe getting slammed overnight after a bloodbath in the U.S. Led by tech carnage, the S&P 500 and the Dow posted their biggest daily declines since Feb. 8, while the Cboe Volatility index (VIX) surged 43.9% to 22.96. Adding to the worries were several statements from President Trump that referenced a long-awaited "correction" and said that the "Fed is going loco" by raising rates.
Data from the Labor Department this morning will probably show that the Consumer Price Index increased 0.2% in September after edging up with similar percentage gains in August. The inflation figure will be closely watched by investors as it could signal where Treasury yields will go from here. Separately, data for initial claims for state unemployment benefits is expected to rise to 207K during the week ended Oct. 6, matching the previous number.
Downgraded to a tropical storm early Thursday over south-central Georgia, Michael continued to weaken but was still menacing the Southeast with rains, winds and flooding. The storm knocked out 42% of U.S. Gulf daily crude production yesterday, and left wide range destruction and at least one person dead. Estimated as the strongest hurricane to hit the U.S. since 1969, Michael is projected to cause roughly $30B in damage and lost economic productivity.
Former British Prime Minister Tony Blair sees a 50-50 chance of getting another Brexit referendum as Theresa May is unlikely to secure a majority for any divorce deal in parliament. While she is reportedly moving closer to clinching a pact with the EU, there is uncertainty on whether she could sell it at home with only six months to go before the U.K.'s scheduled exit from the bloc.
It's "not quite fair" to draw comparisons between the current concerns about Italy's budget deficit targets and Greece at the height of the its debt crisis, according to the managing director of Europe's bailout fund. "Because (Italy's) deficits were relatively small, there's a current account surplus for Italy, we know that a lot of the Italian sovereign debt is financed by residents because savings of the Italian private sector is very high," Klaus Regling told CNBC.
Saudi Arabia is continuing to deny its involvement in the disappearance of prominent Saudi journalist and critic Jamal Khashoggi, who Turkish investigators allege was killed in the Saudi consulate in Istanbul. The disappearance presents an increasing challenge to the kingdom's image as a pro-reform investment destination, and comes just a few weeks after Riyadh froze new trade and investment with Canada over arrested civil society activists.
Sears has started to miss payments to vendors, according to Reuters, as it prepares to file for bankruptcy in the coming days. It's not immediately clear how widespread the issue was and how it would affect Sears' (NASDAQ:SHLD) supply chain ahead of the holiday shopping season, but vendors could stop shipments if they are worried about the U.S. department store operator's payments. SHLD -7.5% premarket.
Whitbread shareholders have given their blessing to the £3.9B sale of the Costa Coffee chain to Coca-Cola (NYSE:KO) at a general meeting held in London. Proceeds of the deal will be used to pay down debt and boost the pension fund, as well as returning a significant majority of net cash proceeds to shareholders. Following the sale, Whitbread (OTCPK:WTBCY) will turn its attention to its Premier Inn hotels business.
Apple has agreed to buy a portion of Dialog Semiconductor's (OTCPK:DLGNF) business - including patents, a team of about 300 engineers and European offices - for $600M. Back in May, Dialog shares had tumbled when it revealed Apple (NASDAQ:AAPL) planned to use chips from another supplier, which was widely believed to be Apple itself. The iPhone maker has used Dialog chips for over a decade to help its devices manage battery life.
Square -10% premarket, after falling by the same percentage on Wednesday, following the departure of CFO Sarah Friar. She's leaving the company to become CEO of Nextdoor, a social network for neighborhoods, but will stay at Square (NYSE:SQ) into December to help with the transition. Friar had guided the company through a rocky IPO in 2015, served as the face of Square to Wall Street and played an instrumental role in the firm's expansion into financial services.
More content... AT&T (NYSE:T) is planning a new streaming service to launch in the fourth quarter of 2019 that will feature films and TV shows it acquired from its blockbuster purchase of Time Warner. As part of its new digital TV strategy, Apple (AAPL) is also preparing a video service, which will be given to device owners for free and marry original content and subscription services from legacy media companies.
Samsung has revealed its latest smartphone, the Galaxy A9, featuring the world's first rear camera with four lenses. The selling point is the ability to alternate between different lenses that enable specific features, such as photos taken from a long distance or panoramic shots. Last week, Samsung (OTC:SSNLF) released its earnings guidance, predicting it would be on track to score record profits in the third quarter.
Can a pure-play lithium operation stand on its own? The IPO of Livent, which holds the lithium business of pesticides maker FMC Corp. (NYSE:FMC), has been priced at $17 per share, below a target range and giving the company a market value of $2.43B. Shares will begin trading today on the NYSE under ticker symbol "LTHM." The offering comes when global demand has spiked for the ultralight battery metal used in cell phones and electric vehicles.
Auto news roundup... BMW (OTCPK:BMWYY) is taking majority control of its main Chinese joint venture for €3.6B, the first such move by a global carmaker as Beijing starts to relax ownership rules for the world's largest auto market. Meanwhile, Toyota (NYSE:TM) and SoftBank (OTCPK:SFTBY) are teaming up to develop self-driving services amid deepening alliances between top carmakers and tech firms as the race towards autonomous vehicles continues.
Elon Musk denied an FT report late Wednesday that said 21st Century Fox's (NASDAQ:FOX) James Murdoch is the "favorite" candidate to replace him as chairman of Tesla (NASDAQ:TSLA). His tweet was posted at 4:20 Pacific time - a possible reference to marijuana and his now-infamous tweet saying the company had "funding secured" to go private at $420 a share. FT added that Musk favors current board member Antonio Gracias, but said he may not be seen as independent enough.
As part of an initiative to curb reliance on foreign-made rocket engines, the U.S. Air Force has awarded a total $2.3B in contracts to develop rocket launch systems for national security missions. The contracts go to Blue Origin's (BORGN) New Glenn, Northrop Grumman's (NYSE:NOC) OmegA and United Launch Alliance's (BA, LMT) Vulcan Centaur. SpaceX (SPACE), despite winning an initial development award in 2016, was absent from the deal.
Highlighting the point, a Russian Soyuz rocket carrying a U.S. and Russian astronaut to the International Space Station failed during its ascent early Thursday, sending its crew capsule falling back toward Earth in a ballistic re-entry. "They are in good condition," NASA said, adding "something went wrong minutes after liftoff." It currently costs around $81M per person to ride a Soyuz to the ISS.
In Asia, Japan -4%. Hong Kong -3.5%. China -5.2%. India -2.2%.
In Europe, at midday, London -1.7%. Paris -1.7%. Frankfurt -1.3%.
Futures at 6:20, Dow -1%. S&P -0.9%. Nasdaq -0.9%. Crude -1.9% to $71.76. Gold +1.2% to $1207.90. Bitcoin -4.8% to $6235.
Ten-year Treasury Yield -5 bps to 3.17%
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Consumer Price Index
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:00 PM Results of $15B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet