Tuesday Morning Reads

Tuesday Morning Reads




Open Interest Changes for Today:


Morning Charts:

Seeking Alpha:

There wasn't much movement for U.S. stock index futures overnight as traders held their breath after pushing the S&P 500 index to a closing high of 3,039.42 on Monday. The rise was propelled by expectations of a third consecutive rate cut from the Federal Reserve, which has started a program to purchase $60B/month in Treasury bills until the end of 2019 and took the extraordinary action to shore up overnight liquidity starting in September. Trade optimism is also in the air after the USTR said Washington will consider extending certain tariff exclusions on $34B worth of imports from China.
Go deeper: Ironman at Political Calculations comments on shifting S&P 500 expectations.

Growing costs at Alphabet

Alphabet (GOOGGOOGL) reported quarterly figures on Monday that showed costs (like spending on R&D) continuing to rise faster than revenue, dampening investor enthusiasm despite Google's continued dominance in ad sales. The stock fell as much as 4% AH, after a rare 23% decline in profits and warnings of forex headwinds, but recovered and settled down around 2%. The latest results add to a tricky dance Google must execute as regulation remains an overhang for the company.
Go deeper: Valuentum forecasts Alphabet free cash flows will grow materially in the coming years.

Oil majors commence earnings

Citing lower upstream earnings, weaker oil prices and weather-related impacts, BP (NYSE:BP) posted Q3 underlying replacement cost profit, used as a proxy for net income, of $2.3B. While the figure beat expectations, it fell 41% compared with earnings of $3.8B over the same period a year earlier. The report comes shortly after Bob Dudley, who has held the position of CEO for almost a decade, announced he would be soon be stepping down from his role. BP -2.9% premarket.
Go deeper: Royal Dutch Shell (NYSE:RDS.A) will publish its latest quarterly figures tomorrow, with U.S. rivals Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) reporting earnings on Friday.

Details on HBO Max

The high stakes streaming wars will light up again today as AT&T (NYSE:T) unveils its answer to Netflix (NASDAQ:NFLX) and Disney Plus (NYSE:DIS) at WarnerMedia Day. Set for a spring launch, the HBO Max offering is targeting 80M global subscribers by 2025 (50M of those in the U.S.). The iconic Warner Bros. water tower has been rechristened with an HBO Max logo for the event, which will reveal financial details and expectations, as well as decide the fate of its senior executives, including AT&T heir apparent John Stankey.
Go deeper: Daniel Jones discusses AT&T's streaming edge.

Housing market

A slew of data this morning will clarify whether the housing market is heating back up. The S&P CoreLogic Case-Shiller U.S. National Home Price Index is expected to rise 2% annually in August, the same as last month, while pending home sales for September are estimated to rise 0.7%, rebounding from August’s drop of 1.6% (consumer confidence figures will also be watched). Though marked with low supply, the housing market is further benefiting from outsized demand and lower mortgage rates.

Another election bid in the U.K.

With Britain's exit from the EU officially delayed until Jan. 31, 2020, Boris Johnson is trying for a fourth time to trigger an election to break the Brexit impasse. This time he'll only need a simple majority to get an early vote, compared to previous attempts that required a two-thirds "super-majority." Johnson has made clear he is giving up on trying to get his Brexit deal passed before an election, but feels parliament is broken and "dead," and needs to be dissolved.

'Davos in the Desert'

Lured by the looming IPO of Saudi Aramco (ARMCO), top executives from Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM), as well as CEOs from Blackstone (NYSE:BX) and SoftBank (OTCPK:SFTBY), are gathering at Saudi Arabia's Future Investment Initiative - popularly known as "Davos in the Desert." It's a big contrast from last year when outrage over Jamal Khashoggi's murder sparked a mass boycott of the conference. The annual summit seeks to project the insular kingdom as a dynamic investment destination and draws 6,000 people and international firms to Riyadh.
Go deeper: Aramco is aiming to begin its IPO this Sunday.

Unprecedented blackouts

PG&E's (NYSE:PCG) power lines may have started two wildfires over the weekend in the San Francisco Bay Area, according to the utility, despite the widespread blackouts in place to prevent downed lines from starting fires during windy weather. More than 2.5M people were without power at the height of the latest blackout and another 1.5M people will be hit with more shutoffs starting today. Legalities? California regulators have said they will open a formal probe of whether utilities violated any rules by cutting power to millions of residents for as much as five days.
Go deeper: 'How To Avoid The Next PG&E' by David Pinsen.

Industry divide over emissions standards

Along with Toyota (NYSE:TM) and Fiat Chrysler (NYSE:FCAU), General Motors (NYSE:GM) is backing the Trump administration in its clash with California over pollution standards. The decision pits them against leading competitors, including Honda (NYSE:HMC) and Ford (NYSE:F), who this year reached a deal to follow the state's stricter policies. Obama-era rules from 2012 called for a fleet-wide fuel efficiency average of 46.7 mpg by 2026, compared with 37 mpg by 2026 under the Trump plan.
Go deeper: Zoltan Ban examines GM's new electric vehicle strategy.

Boeing CEO faces Congress

Dennis Muilenburg, who was stripped of his chairman title by the board earlier this month, is due to testify today at a congressional hearing after two 737 MAX crashes killed 346 people. "We know we made mistakes and got some things wrong," he'll reportedly tell the U.S. Senate Commerce Committee, adding that Boeing (NYSE:BA) has made improvements to the now-grounded plane "that will ensure that accidents like these never happen again." Muilenburg will also testify before the House Transportation and Infrastructure Committee this week, where he will face tough questions about the MCAS flight control system and how the company works with the FAA to certify aircraft as safe.

What else is happening...

Amazon Fresh (NASDAQ:AMZNnow free for Prime members.

Virgin Galactic (SPCE) takes off, then crashes, in NYSE debut.

CBS (NYSE:CBS), Viacom (NASDAQ:VIA) see merger on track for December.

Uber (NYSE:UBER) announces deeper push into financial services.

Lockheed (NYSE:LMT), DoD set to finalize $34B F-35 government contract.

Necessary reset? Juul (JUULreverses a fast expansion.

Fitbit (NASDAQ:FITB) jumps on report of Google (GOOGGOOGL) acquisition talks.

Tencent (OTCPK:TCEHY) wins China approval for Switch 'Mario' game.

Monday's Key Earnings
Alphabet (NASDAQ:GOOG-1.3% AH on profit miss, seeing FX impacts.
AT&T (T+4.3% giving upside outlook, strategic review.
Beyond Meat (NASDAQ:BYND-10.2% AH despite turning its first profit.
Enterprise Products Partners (NYSE:EPD-2.4% missing estimates.
Grubhub (NYSE:GRUB-31.6% AH posting weak revenues, lame guidance.
NXP Semiconductors (NASDAQ:NXPI+5.3% AH following Q3 beats, in-line outlook.
Restaurant Brands (NYSE:QSR-3.8% on disappointing Tim Hortons sales.
Spotify (NYSE:SPOT+16.2% reporting a surprise profit.
T-Mobile (NASDAQ:TMUS-0.4% AH falling short of expectations.
Transocean (NYSE:RIG+1.7% AH after an in-line quarter.
Walgreens (NASDAQ:WBA+0.7% topping expectations.

Today's Markets
In Asia, Japan +0.5%. Hong Kong -0.4%. China -0.9%. India +1.5%.
In Europe, at midday, London -0.5%. Paris -0.2%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.1%. S&P flat. Nasdaq +0.1%. Crude -0.7% to $55.42. Gold flat at $1495.60. Bitcoin unchanged at $9401.
Ten-year Treasury Yield -3 bps to 1.82%

Today's Economic Calendar
FOMC meeting begins
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 Pending Home Sales

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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