Tuesday Morning Reads

Tuesday Morning Reads





The strongest day in more than a decade immediately followed the worst week since the financial crisis (talk about volatility). The Dow surged over 5% on Monday, while the S&P 500 and Nasdaq each jumped more than 4%, boosted by expectations of central bank firepower to battle the economic impacts of the coronavirus. U.S. futures tacked on another 1% advance overnight, with traders now seeing a 100% chance of a 50-basis point rate cut at the Fed's March meeting. For what it's worth, moderate Democrats have also consolidated around Joe Biden's candidacy ahead of Super Tuesday.
Go deeper: John Gilluly says to buy hammered travel stocks.

First developed market to cut rates

G7 finance ministers and central bank governors will hold a conference call today to discuss measures to deal with the coronavirus outbreak. While language of the draft statement (expected today or tomorrow) is subject to change, initial reports suggested it does not detail any fiscal or monetary steps. On Monday, the ECB joined a chorus of central banks signaling a readiness to support financial markets, while the Bank of Australia became the first to cut rates to a record low of 0.5% due to the "significant effect" of the virus.
Go deeper: 'Straightforward Calculations On COVID-19 Risks' by Daniel Nevins.

Trump renews attack on Powell

"Australia's Central Bank cut interest rates and stated it will most likely further ease in order to make up for China's Coronavirus situation and slowdown. Other countries are doing the same thing, if not more so," President Trump tweeted overnight. "Our Federal Reserve has us paying higher rates than many others, when we should be paying less. Tough on our exporters and puts the USA at a competitive disadvantage. Must be the other way around. Should ease and cut rate big. Jerome Powell led Federal Reserve has called it wrong from day one. Sad!"

Investor meetings

U.S. oil majors are in the hot seat this week, facing a grilling from Wall Street as they hold their annual investor days - Chevron (NYSE:CVX) on March 3 and Exxon Mobil (NYSE:XOM) on March 5. "The question is whether they will stick with the status quo or pivot," said Doug Terreson, an analyst at Evercore ISI. "The market does not seem to embrace the current plans." In the early 2000s, the U.S. oil explorers were getting around 20% returns, though it's less than half of that today. Concerns over climate change, fossil fuels and impacts on demand from the coronavirus also loom large.
Go deeper: Chevron offers U.S. workers buyouts to trim staffing.

Waymo raising cash from outside investors

Highlighting the costs of developing self-driving vehicles, Alphabet's (GOOGGOOGL) Waymo has raised $2.25B in its first external investment round and expects to add more outside investors. "It's a long road getting this technology out to the world," said CEO John Krafcik. "This is just a normal part of funding our operations." Waymo didn't disclose its post-investment valuation, a figure analysts have been trying to assess for years as Alphabet continues to pump cash into the venture.
Go deeper: The company disclosed its self-driving trucking business will be called Waymo Via.

Unseating California legislators

Lyft (NASDAQ:LYFT) has placed $2M in a campaign account and Uber (NYSE:UBER) put $200K into a PAC to oppose Tyler Diep, an Orange County assemblyman and the only Republican to vote in favor of California's AB5. The two have argued that the bill takes away driver flexibility and that their drivers are already correctly classified. The Lyft-backed committee Californians for Independent Work has spent $328K on polling, ads and mailers, including one that calls Diep's vote "a mockery of his campaign pledge to roll back regulations and promote jobs."
Go deeper: Uber acknowledges coronavirus could weigh on business.

Healthcare M&A takes off

While talks broke off late last year, Thermo Fisher Scientific (NYSE:TMO) is acquiring Dutch molecular testing firm Qiagen (NYSE:QGEN) for €10.4B, including assumed debt. Investors would get €39 for every Qiagen share, 23% higher than Monday's closing price. It's the second major transaction in the healthcare sector this week after Gilead Sciences (NASDAQ:GILD) agreed to buy Forty Seven (NASDAQ:FTSV) for about $4.9B to advance into cancer treatments. QGEN +16% premarket

Speeding up same-day delivery

Amazon (NASDAQ:AMZN) has quietly opened a series of small warehouses closer to big U.S. cities, including Phoenix, Philadelphia, Dallas and Orlando, in a move to shave hours off delivery times. The same-day offer will guarantee delivery of more than 100,000 products in as little as five hours, said Jon Alexander, Amazon's director of delivery experience, adding that more cities will be added to the program later this year.

Pulling out of SXSW

Facebook (NASDAQ:FB) has withdrawn from the South by Southwest festival this year, the latest big-event business casualty to concerns over the spreading coronavirus. It joins Twitter (NYSE:TWTR) as the second major tech company to skip the festival for that reason. Facebook had a number of speakers set for panels, and was to host a Facebook house and an activation for its artists-in-residence program. SXSW officials say the show will go on.

What else is happening...

Visa (NYSE:Vcuts Q2 revenue guidance due to coronavirus.

Longtime GE (NYSE:GE) boss Jack Welch dies at 84.

Facing activist investor, Musk supports Twitter's (TWTR) Dorsey.

J&J (NYSE:JNJ) should separate CEO and chairman roles?

Xerox (NYSE:XRXlaunches tender offer for HP (NYSE:HPQ).

Apple (NASDAQ:AAPL) settles throttling suit for up to $500M.

Monday's Key Earnings
JD.com (NASDAQ:JD+12.4% AH on Q4 earnings beat.
Tilray (NASDAQ:TLRY-11.7% missing estimates.

Today's Markets
In Asia, Japan -1.2%. Hong Kong flat. China +0.7%. India +1.3%.
In Europe, at midday, London +2.4%. Paris +2.4%. Frankfurt +2.9%.
Futures at 6:20, Dow +1%. S&P +0.9%. Nasdaq +1.2%. Crude +3.3% to $48.30. Gold +0.3% to $1599.50. Bitcoin +1.5% to $8844.
Ten-year Treasury Yield +7 bps to 1.16%

Today's Economic Calendar
Auto Sales
8:55 Redbook Chain Store Sales
6:30 PM Fed's Evans 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.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)