Tuesday Morning Reads

Tuesday Morning Reads



Todays Top Open Interest Changes:

Morning Charts:


Reversing much of yesterday's decline, global stocks are in rebound mode following a move by the U.S. Commerce Department to ease restrictions on Huawei Technologies. Secretary Wilbur Ross said the Chinese telecom equipment supplier will be able to access U.S. technology for up to 90 days in order to maintain existing networks and handset updates, while American firms should use the time to source alternative suppliers. DJIA futures are ahead by 128 points on the news, though gains were capped amid tough trade rhetoric from China. Shares in Shanghai meanwhile closed up 1.2% on an injection of fresh liquidity from the PBOC.

Business debt boom no subprime crisis

"Fifteen years ago, everyone was talking about whether households were borrowing too much. Today everyone is talking about whether businesses are borrowing too much," Fed Chair Jerome Powell said last night at the Atlanta Fed's annual Financial Markets Conference. While he cited some caution, he dismissed the comparisons, saying business borrowing is not outsized for such a long expansion, business credit is not fueled by a dramatic asset price bubble and CLO structures are much sounder than during the mortgage credit bubble. Concerns may see the Fed reluctant to cut interest rates, since lower borrowing costs could prompt firms to take on more debt.

Trade rows weakening global economy

Growth in China and the U.S. could be 0.2-0.3% lower on average by 2021 and 2022 if the two countries do not row back on tit-for-tat tariffs in their dispute, according to the OECD's latest Economic Outlook. U.S. consumer prices will also be 0.3% higher in 2020 than they would have been without the new duties. Uncertainty about the extent and duration of the trade disputes is further holding back business investment, which is forecast to grow globally at an average rate of 1.75% this year and next, down from 3.5% in 2017 and 2018.

More central bank rate cuts?

Australia's central bank will consider the case for lower interest rates at its June policy meeting as the country fights to go 28 years without a recession. "A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target," RBA Governor Philip Lowe said in Brisbane. 2019 was supposed to be a year of global quantitative tightening, but things are drifting in the opposite direction. Australia would become the third major central bank to cut rates this year, following New Zealand and India.

Crunch cabinet Brexit meeting

There could be more fireworks today as Theresa May meets her fractious cabinet to shore up support and get her Brexit deal over the line. The prime minister is reportedly considering proposing tighter customs ties with the EU to win Labour support, as it would reflect at least some of the opposition party's key demands, while another big Brexit speech may also be in the making. Sterling -0.3% to below $1.27 for the first time since January.


Morgan Stanley analysts have delivered another blow to Tesla (NASDAQ:TSLA), slashing their worst-case scenario for the stock price to just $10 (from $97) because of concerns the electric car leader has saturated the market. "Demand is at the heart of the problem," analysts led by Adam Jonas said in a note. "Tesla has grown too big relative to near-term demand, putting great strain on the fundamentals." As shares drop under $200 premarket, the Tesla selloff has now exceeded 20%. Jonas kept his main price target for the stock at $230 and also has a bull-case valuation of $391.

Big cost cuts for automakers

Incoming Daimler (OTCPK:DDAIF) boss Ola Kaellenius is working on a program, dubbed "Move," that would cut central administration costs by about 20%, adding billions of euros in efficiency potential amid global trade woes and factory issues, Handelsblatt reports. Yesterday, Ford (NYSE:F) said it planned to cut 7,000 salaried jobs by August as part of a corporate restructuring aimed at saving $600M per year, while GM (NYSE:GM) announced the closure of its Maven car-sharing service in nearly half of its 17 North American cities.

Footwear players press Trump on tariffs

Leading sneaker brands and retailers, including Nike (NYSE:NKE), Under Armour (NYSE:UAA) and Foot Locker (NYSE:FL), are urging President Trump to immediately remove footwear from the proposed additional tariffs of 25% on goods imported from China. "Any action taken to increase duties on Chinese footwear will have an immediate and long-lasting effect on American individuals and families," a coalition of more than 170 footwear firms said in the letter. "It will also threaten the very economic viability of many companies in our industry."

Mixed messages on T-Mobile merger

Sprint (NYSE:S) shares swung wildly on Monday and were even halted after the company received conflicting messages from regulators regarding its proposed merger with T-Mobile (NASDAQ:TMUS). FCC Chairman Ajit Pai said he planned to recommend the agency approve the $26.5B tie-up, but fresh doubts emerged after Bloomberg reported that the DOJ is now "leaning against" the deal. Both companies have argued their merger will help them take on market leaders AT&T (NYSE:T) and Verizon (NYSE:VZ) and lead to a more efficient rollout of 5G networks, though antitrust and pricing concerns have swirled around the transaction.

Federal smoking age to 21?

In an unusual bipartisan moment, Republican Sen. McConnell and Democrat Sen. Kaine introduced a bill that would raise the federal minimum age to buy tobacco products, including e-cigarettes, to 21. Majority Leader McConnell said a spike in vaping use among youth is a public health crisis and notes his home state of Kentucky has the U.S.'s highest rate of cancer tied to smoking. Fourteen states and hundreds of local governments have already raised the minimum age, and federal legislation has been anticipated. Related: MOPMBTIJUUL

What else is happening...

"The story of AMD is a repeat of David and Goliath," says contributor MangoTree Analysis.

Slack changes ticker symbol to "WORK" ahead of NYSE debut.

Snap (NYSE:SNAP) completes overhaul of leadership team.

'Game of Thrones' finale sets HBO (Tratings record.

China Eastern (NYSE:CEA) next to demand 737 MAX compensation from Boeing (NYSE:BA).

Baidu (NASDAQ:BIDU) looking to spin off autonomous car unit?

Contributor Harrison Wealth Management feels U.S. farmland is an "attractive long-term investment."

Today's Markets 
In Asia, Japan -0.1%. Hong Kong -0.5%. China +1.2%. India -0.9%.
In Europe, at midday, London +0.6%. Paris +0.5%. Frankfurt +1%.
Futures at 6:20, Dow +0.5%. S&P +0.6%. Nasdaq +0.9%. Crude +0.3% to $63.38. Gold -0.2% to $1275.40. Bitcoin +0.8% to $7978.
Ten-year Treasury Yield flat at 2.41%

Today's Economic Calendar
7:50 Fed's Bostic Speech
8:55 Redbook Chain Store Sales
10:00 Existing Home Sales
10:45 Fed's Evans Speech
12:00 PM Fed's Rosengren Speech

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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