Tuesday Morning Reads

Tuesday Morning Reads


  • Activist CIAM says will oppose Renault (RNSDF) merger with Fiat (FCAU) -- Reuters
  • AstraZeneca (AZN) launches search for next Chairman -- SkyNews
  • China issues U.S. travel advisory for the remainder of 2019 (Related: AALBKNGCEACTRPDALJBLULUVSAVETRIPTZOOUALZNH, etc...) -- Bloomberg
  • China to audit 77 pharmaceutical companies (Related: BMYLLYSNY, etc...) -- Nikkei Asian Review
  • GrubHub (GRUB) seeking to dismiss lawsuit that alleges the company charged restaurant customers for simply picking up the phone -- NYPost
  • Nissan (NSANY) representative on Renault (RNSDF) Board expected to abstain from Fiat (FCAU) merger vote -- FT
  • SEC investigating GE (GE), Philips (PHG), & Siemens (SIEGY) over China medical equipment scheme allegations -- Reuters



Todays Top Open Interest Changes:

Morning Charts:


The House Judiciary Committee unveiled a sweeping "top-to-bottom" review of unnamed tech companies late Monday as reports surfaced of a dual effort from the DOJ and the FTC to tackle the perceived dominance and potential abuses of Big Tech. Shares yesterday plummeted in response: Facebook (NASDAQ:FB-7.5%, Alphabet (NASDAQ:GOOGL-6.1%, Amazon (NASDAQ:AMZN-4.6% and Apple (NASDAQ:AAPL-1%. "The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today," said David Cicilline, who chairs the Antitrust Subcommittee, adding that "market power in digital markets presents a whole new set of dangers."

Futures advance after tech rout

Paring some earlier losses, U.S. equity futures are now up by 0.5% following yesterday's slide into correction territory for the Nasdaq Composite. While U.S. lawmakers are gearing up for what could be lengthy investigations into the biggest and most influential companies in the tech sector, the probes are at their early stages, based on the published accounts, so no significant fines, forced company breakups or changes in business practices are expected anytime soon. The dollar also steadied overnight, while Treasuries were set to halt a one-week rally.

Eyes on Powell

Fed Chair Jerome Powell will have a chance to share his latest thoughts this morning when he delivers the opening remarks to the "Conference on Monetary Policy Strategy, Tools And Communication Practices." The speech comes after St. Louis Fed President James Bullard said on Monday that unresolved trade disputes and below-target inflation "suggest that the central bank needs to tread carefully in order to help sustain the economic expansion" and indicated that a rate cut could be warranted. Policymakers up to this point have largely stood by their outlook that interest rates were at an appropriate level and would likely remain unchanged throughout the year, though fed fund futures have steadily upped bets for a cut in 2019.

Day 2 of state visit

"I think we'll have a very very substantial trade deal, it'll be a very fair deal, and I think it’s something we both want to do," President Trump told Theresa May and business leaders at the start of a roundtable meeting. During his state visit to the U.K., Trump is also likely to demand that May's successor ban China's Huawei from 5G networks. Britain has yet to make a final decision, security minister Ben Wallace declared, adding, "we listen to our allies in the Five Eyes, we listen to our European partners. If we want to allow people access to our markets we have to say that there are rules."

Red line ahead of tariff talks

Mexico would reject a U.S. idea to take in all Central American asylum seekers if it is raised at talks this week with the Trump administration, which has threatened to impose tariffs if Mexico does not crack down on illegal immigration. The Mexican economy, which is heavily reliant on exports to the United States, shrank in the first quarter and would reel under U.S. levies. Goldman Sachs economists on Monday gave a 70% chance of the tariffs on Mexican imports coming into effect on June 10.

Rates to record lows

Australia overnight lowered its key cash rate to a record low of 1.25%, marking the first cut in almost three years and the latest in a swing by central banks around the world toward looser monetary policies. It's an attempt by the RBA to revive a slowing economy and tepid inflation at home, as well as guard against a darkening global backdrop. The Australian dollar inched up 0.2% to $0.6987 following the decision, while financial markets now predict a second rate cut by September with a 50-50 chance of a third move before the end of the year.

Highlights from WWDC 2019

A new version of iOS, which powers iPhone and iPad, will introduce a dark mode and an abundance of new features for stock apps like Mail and Maps. Apple (AAPL) also confirmed it will ditch iTunes in favor of three separate apps for music, podcasts and films and shows. The new Mac Pro - a high-powered, professional desktop computer - was unveiled with a starting price of $5,999, but could top $11,000 if the monitor and stand are included. Apple also spent time talking about Watch upgrades and showed off a series of new health apps.

Renault board weighs FCA talks

As Renault (OTCPK:RNLSY) board members meet today to consider merger talks with Fiat Chrysler (NYSE:FCAU), the French government is scrambling to ensure that it will have influence over the proposed deal that could significantly change the balance of power in the global auto industry. To ensure that its interests were protected, alliance member Nissan (OTCPK:NSANY) also said that a tie-up would "require a fundamental review of the existing relationship." The merger would create a behemoth that would displace General Motors (NYSE:GM) as the third-largest car company in the world, behind Volkswagen (OTCPK:VWAGY) and Toyota (NYSE:TM).

Analyst quiet period ends for Uber

Uber (NYSE:UBER) will likely be the focus of dozens of fresh research reports starting today as the quiet period ends for the 29 investment banks that underwrote its IPO. After a rocky debut, followed by the ride-hailing giant’s $1B loss in the first quarter, there will be plenty to weigh in on, including valuation, prospects for revenue growth, spending and possible paths to profitability. Trading about 8% below its IPO price, Uber is valued at roughly 5.08 times 2019 estimated sales, a slight discount to rival Lyft (NASDAQ:LYFT).

What else is happening...

Latest retail hit as Forever 21 explores restructuring.

Siemens (OTCPK:SIEGY), GE (NYSE:GE), Philips (NYSE:PHG) in alleged medical equipment scheme?

Royal Dutch Shell (RDS.ARDS.Bsees dividend, spending boost after 2020.

Some countries are benefiting from the trade war.

SoftBank (OTCPK:SFTBY) to book $11B profit on Alibaba (NYSE:BABA) share sale.

Internal changes blamed for FedEx (NYSE:FDX) misrouted Huawei packages.

Talent war sees Walmart (NYSE:WMTtarget high-school students.

Monday's Key Earnings
Box (NYSE:BOX-14.3% AH on downside revenue outlook.

Today's Markets 
In Asia, Japan flat. Hong Kong -0.5%. China -1%. India -0.5%.
In Europe, at midday, London +0.9%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.5%. S&P +0.5%. Nasdaq +0.5%. Crude -0.8% to $52.84. Gold +0.2% to $1331. Bitcoin -6.9% to $7928.
Ten-year Treasury Yield +2 bps to 2.1%

Today's Economic Calendar
Auto Sales
7:00 Fed's Evans Speech
8:30 Fed's Williams: "Building Cultural Capital in the Financial Services Industry: Emerging Practices, Risks and Opportunities"
8:55 Redbook Chain Store Sales
9:45 Fed's Evans: "Monetary Policy Strategy, Tools and Communications Practices"
9:55 Jerome Powell: "Monetary Policy Strategy, Tools and Communications Practices"
10:00 Factory Orders
3:45 PM Fed's Reserve Gov. Lael Brainard” “What Does Full Employment Look Like for Your Community or Constituency?”
6:45 PM Fed's Kaplan: "Monetary Policy Strategy, Tools and Communications Practices"

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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