Tuesday Morning Reads
- Its 1929 1987 2000 and 2007 All Over
- Fishy Letters in Support of Policy Change
- ‘Protested’ About U.S. Interest Rates
- Face Squeeze
- Silicon Valley’s Biggest Foe
- Replace Your Video Game Console? Don’t.
- What Would You Have Done in 2009?
- Flurry of retailer earnings on tap
- Tesla will top biggest battery record
- Vote of confidence for 737 MAX as orders inked in Dubai
- Kohl's EPS misses by $0.12, beats on revenue
- Medtronic EPS beats by $0.03, beats on revenue
- Comp sales shy at Home Depot, shares down 4.6%
- FedEx discontinues pension for new hires
- Kohl's declares $0.67 dividend
- Emissions fight escalates as California issues ban
- Kohl's -11% after profit view slashed
- Duke Energy prices 25M equity offering
- DOJ moves to scrap decades-old movie distribution rules
Just as earnings season comes to a close, retailers are set to light up the scoreboard. Reporting today are Home Depot (NYSE:HD), Kohl's (NYSE:KSS) and TJX Companies (NYSE:TJX), while Target (NYSE:TGT), Lowe's (NYSE:LOW), Macy's (NYSE:M) and BJ's (NYSE:BJ), as well as Nordstrom (NYSE:JWN), Gap (NYSE:GPS), L Brands (NYSE:LB) and Foot Locker (NYSE:FL) release results the rest of the week. Traders are particularly watching discounting trends and the impact from the ongoing U.S.-China trade war ahead of the critical holiday shopping period. While the broader retail industry has been relatively subdued, individual stock prices have diverged radically, with Macy's down 50% YTD and Target skyrocketing nearly 70%.
Go deeper: Harrison Schwartz writes the 'retail apocalypse' is far from over.
Equities posted fresh records on Monday, but closed little changed, as the Trump administration issued a new 90-day extension allowing U.S. companies to continue doing business with China's Huawei. The next catalyst for stock market movement is the flood of retailer earnings, and U.S. index futures are up about 0.3% before the results. About three-fourths of S&P 500 companies have already topped earnings estimates in their Q3 reports, but they are still expected to have posted an overall 0.5% decline in earnings, according to Refinitiv data.
Tesla's (NASDAQ:TSLA) battery project with Neoen (OTC:NOSPF) in South Australia became "the world's largest battery" when it was completed two years ago, and now it's expanding by 50% to 150 megawatts. The storage site has already saved more than A$50M in its first year of operation, meaning that the A$66M venture is quickly on its way to paying for itself. Australian Energy Market Operator confirmed the system is much more rapid, accurate and valuable than a conventional steam turbine in a report published last year.
Go deeper: TickerSquare analyzes Tesla demand.
FCC Chairman Ajit Pai announced his support Monday for a public auction to free up C-band spectrum, a key band currently used for delivering video content for next-generation 5G wireless networks. The news sent Intelsat's (NYSE:I) stock crashing 40%. Major satellite service providers, which hold existing C-band licenses, had proposed selling the spectrum privately to wireless carriers, arguing a private sale would make the spectrum available for 5G faster.
Go deeper: David Orr seemingly predicted the plunge weeks ago.
Joining the growing ranks of large U.S. companies phasing out guaranteed retirement benefits, FedEx (NYSE:FDX) is closing its pension plan to new U.S. hires starting in 2020. The shipping giant instead will launch a new 401(k) plan at the start of 2021 with a higher company match (contributing up to 8% of employee salaries, if employees provide 6% of their salary). Just 22% of Fortune 50 companies and 11% of transportation companies offer pensions to new employees.
Go deeper: FedEx's weak free cash flow limits value creation, writes Chad Brand.
"Just finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve. Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.," President Trump tweeted late Monday. "I protested fact that our Fed Rate is set too high relative to the interest rates of other competitor countries," adding that it should be lower than theirs. Trump has slammed the central bank dozens of times this year, calling Powell a "terrible communicator" and an enemy of the state.
The House will vote today on a stopgap bill aimed at preventing a government shutdown at midnight on Thursday. While Congress passed a two-year agreement to set budget levels and suspend the U.S. debt ceiling earlier this year, lawmakers have failed to come to terms on where to allocate the money amid disagreements over immigration and military funding. The Senate and White House will likely support the continuing resolution, hoping to avoid another partial government shutdown like the record-long one that began last December.
A delay of rules that would restrict flavored e-cigarettes is a "Pyrrhic victory" for the industry right now, according to former FDA Commissioner Scott Gottlieb, but the longer the trends in teen vaping continue, the "more draconian the regulatory action" will be. President Trump had previously planned to meet with industry executives this week, citing a focus on health and jobs. Meanwhile, California is suing Juul (JUUL) over its marketing practices, alleging the company targeted teens and its age-verification system did not adequately vet customers.
California is taking further action, saying it will no longer purchase new vehicles for state government fleets from GM (NYSE:GM), Toyota (NYSE:TM) and Fiat Chrysler (NYSE:FCAU), as well as other automakers that have backed the Trump administration in a battle to strip the state of authority to regulate tailpipe emissions. Going forward, California's state agencies will chiefly purchase cars from Ford (NYSE:F), Honda (NYSE:HMC), Volkswagen (OTCPK:VWAGY) and BMW (OTCPK:BMWYY). The state also said it will immediately ban state entities from buying sedans powered by an internal combustion engine, with exemptions for certain public safety vehicles.
Day 3 at the Dubai Air Show fared much better for Boeing (NYSE:BA), as the world's biggest planemaker received bids for 50 737 MAX jets amid forecasts of a potential December return for the grounded aircraft. Kazakhstan-based Air Astanta said it plans to purchase 30 737 MAX 8s, an undisclosed buyer purchased 10 MAX 10s, while Turkey's Sunexpress ordered 10 MAX 8 jets. Boeing this week will also present to the board of Southwest Airlines (NYSE:LUV), its largest 737 MAX customer, an overview of its plans to return the grounded 737 MAX to service. BA +0.8% premarket.
What else is happening...
In Asia, Japan -0.5%. Hong Kong +1.6%. China +0.9%. India +0.5%.
In Europe, at midday, London +1.3%. Paris +0.4%. Frankfurt +1%.
Futures at 6:20, Dow +0.2%. S&P +0.3%. Nasdaq +0.4%. Crude -0.9% to $56.61. Gold -0.3% to $1467.20. Bitcoin -4.2% to $8082.
Ten-year Treasury Yield flat at 1.82%Today's Economic Calendar
8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:00 Fed's Williams Speech
10:00 Quarterly Services Report (Advance)
10:00 E-Commerce Retail Sales