Tuesday Morning Reads

Tuesday Morning Reads





Morning Charts:

Open Interest Changes for Today:

Seeking Alpha:

Chinese President Xi Jinping marked 70 years of Communist Party rule during a National Day event by saying the country must maintain lasting prosperity and stability in Hong Kong and Macau. While the Hong Kong Stock Exchange and Shanghai Stock Exchange were both closed for the holiday, trading was active on other Asia markets. Japan's Nikkei rose 0.6% amid a weaker yen and after a Bank of Japan survey of business sentiment at large manufacturers came in better than expected. South Korea's Kospi rose 0.4%, while Australia's ASX 200 finished 0.8% higher after the Reserve Bank of Australia cut a key interest rate. Meanwhile, European stocks are having a softer day, with the Stoxx 600 Index slipping 0.1% at midday after PMI reports limped in. U.S. stock futures are pointing higher ahead of the trading day, with the earnings calendar highlighted by reports from Stitch Fix (NASDAQ:SFIX), McCormick (NYSE:MKC) and United Natural Foods (NYSE:UNFI).

Spotlight on oil

Oil prices are tracking higher on reports that production in the U.S. and Russia fell during the third quarter. While oil prices are forecast to remain fairly steady for the balance of the year, many market watchers think upward pricing pressure is fading away with Saudi Arabia believed to have restored capacity to 11.3M barrels per day after the attack on September 14 knocked out 5.7M bpd of output. "Demand growth is weakening, oil supply outside OPEC is rising significantly and OPEC+'s production discipline has recently faded," noted Commerzbank analyst Carsten Fritsch. In today's early action, WTI crude oil futures +1.3% to $54.77/bbl and Brent crude +1.2% to $59.96/bbl.

Japan close to full employment

Unemployment in Japan remained at 2.2% in August to match the lowest level of the last 26 years. Government officials say the labor market is close to "full employment" with a record 67.51M people working. Another significant economic development in Japan occurs today with the consumption tax rising to 10% from 8%. The government maintains the increased burden on consumers is necessary to boost social welfare programs and reduce the mounting national debt. Prime Minister Shinzo Abe aims to prop up consumer spending through fiscal policy moves.

Waiting on Tesla

Tesla (NASDAQ:TSLA) is expected to update on deliveries sometime during the first few days of October. The EV automaker delivered 95,356 cars in Q2 and is forecast by analysts to deliver around 97K in Q3, although Elon Musk told employees last week the company has a shot at hitting 100K deliveries. Looking ahead to Q4, the consensus estimate from analysts is for deliveries of 104K, consisting of 85K Model 3s, 10K Model X SUVs and 9K Model S cars.
Go deeper: See a breakdown of Tesla's profitability grade.

U.S. auto sales preview

U.S. auto sales are forecast by Edmunds to fall 11.6% in September to 1,267,607 new cars and trucks for an estimated seasonally adjusted annual rate of 17.1M. "September auto sales look a little bleak on paper, but it's just a matter of a tough year-over-year comparison," noted Edmunds analyst Jeremy Acevedo on the timing of the Labor Day holiday. Unit sales are expected to drop 5.2% for General Motors (NYSE:GM) in September, while Toyota (NYSE:TM), Ford (NYSE:F) and Fiat Chrysler Automobiles (NYSE:FCAU) are all expected to post a double-digit drop for the month. Incentive spending in Q3 is projected to rise 6% to $4,159 to mark the highest level ever for the period and fall just $28 short of the all-time quarter high set in Q4 of 2017. In addition to the sales updates, commentary from Ford execs on demand trends and GM management on the impact of the workers strike will be closely watched this week.

Macau shows growth

The Macau sector is being watched closely with China's National Day holiday in full swing and the report on gross gaming revenue for September showing 0.6% growth vs. +1.0% consensus. Hong Kong-listed names took a day off from trading due to the holiday, but U.S. parents Wynn Resorts (NASDAQ:WYNN), MGM Resorts (NYSE:MGM) and Las Vegas Sands (NYSE:LVS) could see some volatility off the developments. Looking ahead at the full Golden Week period (October 1-7), analysts think the mix of mass-market traffic will be higher this year based on hotel booking trends.

Drugmakers pursue new plan to wrap opioid suits

Five drugmakers tied up in sprawling opioid crisis lawsuits are pressing a novel plan to shrink or end the litigation: latching on to the bankruptcy of OxyContin maker Purdue Pharma. Johnson & Johnson (NYSE:JNJ), Teva (NYSE:TEVA), Endo International (NASDAQ:ENDP), Allergan (NYSE:AGN) and Mallinckrodt (NYSE:MNK) are pursuing a global settlement where they'd fund a trust through Purdue's case, in exchange for release from liability - a plan not dissimilar to an approach tried in the Takata airbag litigation.

Three pharmacies now pulling Zantac over FDA alert

Walgreens (NASDAQ:WBA) and Rite Aid (NYSE:RAD) have joined CVS (NYSE:CVS) in pulling Zantac off their shelves. The FDA issued an alert about potential low levels of a known human carcinogen in ranitidine medicines like Zantac, made by Sanofi (NASDAQ:SNY). There's no recall of the medication, but the three pharmacies are refunding money to purchasers returning it.

Credit Suisse clears CEO in surveillance imbroglio

A Credit Suisse (NYSE:CS) investigation has cleared its CEO Tidjane Thiam in the case of botched surveillance of the bank's ex-head of wealth management. Iqbal Khan abruptly left his position at Credit Suisse in July before joining rival UBS, and private detectives observed him on suspicion that he'd poach employees from his former bank (but found no evidence). The internal probe said Credit Suisse Chief Operating Officer Pierre-Olivier Bouee acted alone in the case, and he has resigned.

What else is happening...

General Motors (GMstrike to take a toll.

Meritor (NYSE:MTORlaunches restructuring.

Facebook (NASDAQ:FB) will exempt opinion pieces and satire from its fact-checking program.

REITs in harm's way from Forever 21 bankruptcy.

Today's Markets
In Asia, Japan +0.6%. Hong Kong closed. China closed. India -1.0%.
In Europe, at midday, London -0.16%. Paris -0.12%. Frankfurt -0.07%.
Futures at 6:20, Dow +0.30%. S&P +0.27%. Nasdaq +0.38%. Crude +1.29% to $54.77. Gold -0.20% to $1,470. Bitcoin +4% to $8,361.
Ten-year Treasury Yield +7 bps to 1.743%.

Today's Economic Calendar
4:15 Fed's Evans Speech
8:50 Fed’s Clarida Speech
8:55 Redbook Chain Store Sales
9:15 Fed's Bullard Speech
9:30 Fed’s Bowman Speech
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending

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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