Thursday Morning Reads
- Little Help From Trade Deal
- Helping the Fed
- Tesla Profit Blowout Reverses Much of Damage
- Apple’s Radical Approach to News
- Twitter Monthly Usage Drops
- Seven Minute Charts
- The Next Subprime
- Go Down With The Ship?
Todays Open Interest Changes:
The selloff in U.S. stocks accelerated on Wednesday, wiping out gains for the year in both the DJIA and S&P 500 Index, while the Nasdaq lapsed into a correction. It was the largest daily decline on Wall Street since 2011, but the volatility pendulum is attempting to swing back, with U.S. stock index futures posting gains ahead of the open. The needed boost is coming ahead of some big name earnings results today, including reports from Amazon (NASDAQ:AMZN) and Google (GOOG, GOOGL).
Corrections plaguing Asian indices extended to Japan overnight as the Nikkei 225 dropped 3.7% on the heels of a sharp Wall Street selloff. While concerns are growing that the Bank of Japan's prolonged easing may be causing financial overheating, BOJ Deputy Governor Masazumi Wakatabe said it's still debatable whether the central bank should tighten monetary policy as a preemptive measure against risnig asset prices.
ECB President Mario Draghi is in the hot seat today, giving a tough press conference following a rate decision from the central bank. Besides concerns over Italy and Brexit, there are worries that tightening financial conditions in the U.S. could eventually spill over into Europe. Draghi has also not yet confirmed that the ECB will end its quantitative easing program at the end of this year.
In his first public remarks about the Khashoggi case, Saudi Crown Prince Mohammed bin Salman called the killing "hideous" and struck a conciliatory tone with Turkey, but the backlash may still pose a threat to investment in the kingdom. Adding to the concerns, a new IEA report said Riyadh has no choice but to diversify its economy as the challenges it faces will deepen even if oil prices remain elevated.
Iraq's new prime minister has been sworn into office after lawmakers approved a majority of his cabinet, giving the country a government five months after elections. The session highlighted the challenges that Adel Abdul-Mahdi faces in fixing a dysfunctional political system, while revamping Iraq's struggling oil-dependent economy and rebuilding infrastructure destroyed in the war against ISIS.
Vladimir Putin has warned of a new arms race if America pulls out of the three-decade-old Intermediate-Range Nuclear Forces Treaty, saying Russia would target European countries if they host U.S. nuclear missiles. NATO Secretary-General Jens Stoltenberg also blamed Moscow for breaching the treaty, but said he didn't believe the Russian threat would lead to new U.S. missile deployments to Europe.
Tesla soared almost 10% AH after reporting its first quarterly profit in two years, as well as its biggest ever. Earnings were helped by a surge in production of its Model 3 sedan, cost-cutting, and delayed payments to suppliers. "Tesla (NASDAQ:TSLA) will operate its own ride-hailing services and compete directly with UBER and LYFT, obviously," Elon Musk added on a conference call.
It was also a great quarter for Microsoft (NASDAQ:MSFT). Shares rose 4%AH as the company posted better-than-expected earnings as more businesses signed up for Azure cloud computing services and Office 365 software. Microsoft shares have tripled since Satya Nadella became CEO in 2014 and refocused the company on building data center software and services.
European earnings roundup: AB InBev (NYSE:BUD) -10% premarket after cutting its dividend amid in-line Q3 earnings. Nokia (NYSE:NOK) +2.5%announcing global job cuts and a new cost-cutting program. UBS (NYSE:UBS) +3% on higher loan volumes, as well as strong growth in equities and forex trading. ABB (NYSE:ABB) -2% with geopolitical headwinds hitting the industrial sector. WPP (NYSE:WPP) plunged 20%, falling behind ad rivals in the post-Sorrell era, while Daimler (OTCPK:DDAIF) rose 2% in Frankfurt after forecasting higher Q4 demand.
Megyn Kelly won't be on the air on NBC (NASDAQ:CMCSA) this morning, and her show's future and tenure at the network are in doubt, WSJ reports. It follows a controversy over comments she made about using blackface for Halloween costumes, which led to apologies from Kelly on Tuesday and Wednesday. Her three-year deal was valued at $69M when she was hired away from Fox News in 2017, but ratings haven't been up to par at NBC
Broadcom is facing antitrust scrutiny from the EU over the possible use of market dominance to pressure customers to buy its semiconductors, Bloomberg reports. The preliminary inquiry focuses on sales of chips in set-top box hardware used by the cable and satellite industry. Broadcom's (NASDAQ:AVGO) practices are also being examined by the U.S. Federal Trade Commission.
The U.K. chiefs of Microsoft (MSFT), Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) met with British government ministers on Wednesday to seek assurances over the impact of a no-deal Brexit on jobs and investment, the Telegraph reports. The executives, part of the government's Digital Economy Council, particularly expressed mounting concern over the potential impact on staff visas, rules on data sharing, and U.K. research and education.
Verizon is shelling out $25M to update its network in Florida’s Panhandle, an area hard-hit by service outages after Hurricane Michael. It will "build the most technologically advanced wireless network in the area" and add 5G technology to Panama City. Due to Michael, Verizon (NYSE:VZ) said last week it would also waive bills for consumer and business customers in nine Florida counties for three months.
Following a big recent position in Starbucks (NASDAQ:SBUX), Activist investor Bill Ackman's Pershing Square (OTCPK:PSHZF) has acquired a 3.7% stake in hotel operator Hilton Worldwide (NYSE:HLT). He'll talk about the investment in greater detail on Pershing's Q3 letter and conference call. Hilton shares recently hit a more than one year low on concerns over a slowdown in the hotel industry and international trade worries.
New York state's attorney general has filed a lawsuit against ExxonMobil (NYSE:XOM), alleging the oil giant misled investors regarding the financial risk it faces from climate change. It expands on allegations the state filed in court last year attempting to compel Exxon to release additional documents and comply with requests in its investigation. A similar probe was ended by the SEC earlier this year without penalizing the company.
AMD (NASDAQ:AMD) -22.4% AH giving soft revenue guidance.
AT&T (NYSE:T) -8.1% on entertainment, wireline weakness.
Boeing (NYSE:BA) +1.3% raising guidance for 2018.
Ford (NYSE:F) +3.7% AH boosted by its N.America segment.
Freeport-McMoRan (NYSE:FCX) -7.8% amid production rises.
General Dynamics (NYSE:GD) -7.7% after lower core sales.
Las Vegas Sands (NYSE:LVS) +0.7% on a weaker quarter.
Microsoft (MSFT) +4% AH following cloud strength.
Northrop Grumman (NYSE:NOC) -6% despite raising guidance.
Sirius XM (NASDAQ:SIRI) -5% following record revenues.
Tesla (TSLA) +9.8% AH posting a quarterly profit.
UPS (NYSE:UPS) -5.5% lifting its free cash flow view.
Visa (NYSE:V) +1.7% AH on growing consumer spending.
In Asia, Japan -3.7%. Hong Kong -1%. China flat. India -1%.
In Europe, at midday, London +0.1%. Paris +1.4%. Frankfurt +0.4%.
Futures at 6:20, Dow +0.6%. S&P +0.7%. Nasdaq +1.4%. Crude -0.2% to $66.70. Gold +0.3% to $1235.30. Bitcoin -0.3% to $6430.
Ten-year Treasury Yield flat at 3.12%
Today's Economic Calendar
8:30 Durable Goods
8:30 Initial Jobless Claims
8:30 International trade in goods
8:30 Retail Inventories
8:30 Wholesale Inventories
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
12:15 PM Richard Clarida: Economic Outlook and Monetary Policy
1:00 PM Results of $31B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:00 PM Fed's Mester Speech: Monetary Policy and Economic Outlook