Tuesday Morning Reads
- Canaccord Genuity raises Apple target on install base potential
- Cowen boosts AMD target52
- Transocean to buy Ocean Rig in $2.7B cash and stock deal
- MannKind up 59% on collaborating with United Therapeutics for pulmonary hypertension products
- MoffettNathanson steps to Facebook sidelines on revenue deceleration
- Oil jumps as Gulf rigs evacuated
- Southwestern Energy to exit Fayetteville Shale in $1.86B sale
- Lockheed to build F-16 wings in India
- Stocks To Watch
- China Explores Megamerger
- Emerging Markets Aren’t Bargains They Seem
- Factories Feeling the Pinch
- Why Doesn’t the Unemployment Rate Ever Drop Well Below 4%?
- A 25% Yielding Hyper-Growth Stock
- New Life Into Retail Stores
- $88 Billion Online Ad Market
- Revisiting the Melt-Up Scenario
- The Promise of Crypto
- The Watchlist
- Week Ahead Webinar
- Today's Option Recap
- 2018 Top 5 For Back Half of 2018
- 2018 Top 5 Stocks
— Liz Ann Sonders (@LizAnnSonders) September 4, 2018
Crude prices rose sharply to start September, up 2.1% to $71.29/bbl, fueled by the evacuation of two Anadarko (NYSE:APC) platforms in the Gulf of Mexico ahead of the approach of Hurricane Gordon, while ExxonMobil (NYSE:XOM) warned of a supply crunch in Nigeria (see both below). In addition, with "ship-tracking data now pointing at a reduction in Iranian exports, renewed strife in Libya, and Venezuelan export availability hobbled by an accident at the key Jose terminal, the list of bullish headlines is getting longer," said Michael Dei-Michei, head of research at JBC Energy.
Tropical Storm Gordon whipped the southern tip of Florida with high winds and rain on Monday, and is expected to make landfall tonight as a hurricane along the central U.S. Gulf Coast. The storm surge could reach up to 5 feet and it could drop as much as 8 inches of rain across Mississippi, Alabama and Louisiana - areas of the U.S. South still reeling from hurricanes a year ago.
"There is no political necessity to keep Canada in the new NAFTA deal," President Trump tweeted on Saturday. "If we don't make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere with these negotiations or I will simply terminate NAFTA entirely & we will be far better off." While the president has the power to terminate the pact with six months' notice, it isn't clear if such a decision could withstand the many legal challenges that are likely to surface.
The Senate Judiciary Committee will hold four days of hearings this week on Brett Kavanaugh's judicial record and legal philosophy, as the Supreme Court nominee faces questioning on the conservative views he espoused for over 12 years on the U.S. Court of Appeals for the District of Columbia Circuit. Supreme Court confirmation battles are always controversial, but only in recent years have they become so partisan and the Senate votes razor-thin.
Brexit sentiment is souring following clashes from all sides involved in the process. EU chief negotiator Michel Barnier said he strongly opposed parts of Theresa May's Brexit plan after the U.K. prime minister said she would not "be pushed into accepting compromises on the Chequers proposals that are not in our national interest." Boris Johnson may also be eyeing a leadership bid as part of an attempt to deliver a harder Brexit.
Argentina plans to alter the taxes charged on some commodities exports, the first in a series of fiscal measures aimed at shoring up investor confidence after the peso collapsed last week. The announcement did not say whether the taxes would be raised or expanded, but the government of President Mauricio Macri is under strong pressure to increase revenue as it braces for its second recession in three years.
The BOJ is unlikely to raise interest rates for "quite some time," according to Governor Haruhiko Kuroda, and recent steps to make policy more flexible are not a preparation for policy normalization. "As long as uncertainties remain, the commitment is to maintain the current low rates," he added. Prime Minister Shinzo Abe has still vowed to proceed with next year's scheduled sales tax hike "by all means," which would raise the levy to 10% from 8% starting in October.
Chinese President Xi Jinping has pledged $60B in financing for projects in Africa in the form of assistance, investment and loans, following a pledge of another $60B at the previous FOCAC summit in South Africa three years ago. Some Western officials have blamed China for engaging in "debt trap" diplomacy through the financing, with several even accusing Beijing of pursuing colonial exploitation in Africa through the Belt and Road initiative.
Qatar plans to invest billions of dollars more in Germany and will broaden its focus to the country's medium-sized companies, according to Handelsblatt. As the world's biggest exporter of liquefied natural gas, Qatar has shareholdings in companies including Volkswagen (OTCPK:VLKAY), Deutsche Bank (NYSE:DB), Siemens (OTCPK:SIEGY), Hochtief (OTCPK:HOCFY) and SolarWorld (OTCPK:SRWRF), which reportedly amount to $20B.
The Pentagon has made a final decision to cancel $300M in aid to Pakistan that had been suspended over Islamabad's perceived failure to take decisive action against militants. Another $500M in Coalition Support Funds was stripped by Congress earlier this year, piling further pressure on the struggling Pakistani economy. Forex reserves have plummeted this year as the nation debates whether to seek a bailout from the IMF or friendly nations like China.
JD.com's billionaire founder has returned to China after his weekend arrest for alleged sexual misconduct in Minnesota, with local police beginning an investigation into the CEO of one of the Asian country’s largest internet corporations. "Richard Liu was absolutely innocent of any wrongdoing in this case," attorney Earl Gray said in a telephone interview. "Once the police realized it was a mistake to arrest him without proper evidence, they released him without bail and without taking his passport." JD -3.2% premarket.
China is exploring a merger between two of the nation's three wireless carriers amid a race with the U.S. over 5G technology, Bloomberg reports. State-run China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA) both trail China Mobile (NYSE:CHL) in scale, but their joint market value is almost $80B. A deal could speed up the government's 5G ambitions because a combined company could make the necessary investments more easily than separately. CHU +4.2% premarket.
After years of rumors, Samsung (OTC:SSNLF) mobile head DJ Koh has finally confirmed that the company's folding phone is a real product and its "complicated" development process is "nearly concluded." Details? The handset's futuristic design, which (unlike a folding flip phone with a hinge) packs an actual folding screen, will be unveiled at the Samsung Developer Conference in November.
The controversy has already erupted on social media after former NFL quarterback Colin Kaepernick was named as the face of Nike's (NYSE:NKE) ad campaign commemorating the 30th anniversary of its "Just Do It" motto. It comes just days before the first game of the NFL season on Thursday, when the controversy over pre-game protests could flare anew. Players this year must stand for the anthem, but they are allowed to stay off the field until the ceremony is over.
More riches for Crazy Rich Asians... The Warner Bros. (NYSE:T) romantic comedy led the North American box office for the third weekend in a row, continuing to signal the market's desire for more diverse voices in big budget movies. The film collected $22.2M in the U.S and Canada, making the extended Labor Day weekend one of the strongest in years for theater owners. On a roll? The Meg by Warner Bros. also came in second for the third straight weekend.
The Daily Beast's story on NBC News' (NASDAQ:CMCSA) alleged internal efforts to kill Ronan Farrow's expose on Harvey Weinstein is apparently "only the beginning" of their reporting on the network’s misconduct problems. "There's more to come," a source with knowledge told Mediaite. "A lot more." NBC News Chairman Andy Lack responded to the news with a memo and 11-page report defending the network's decision.
WPP has tapped Mark Read, its co-chief operating officer, to be the advertising giant's next CEO, following the departure of founder Martin Sorrell in April amid allegations of personal misconduct. He's got a lot of work to do. Shares sunk 8% overnight following WPP's earnings results, as the advertising industry upheaval took a heavy toll on the world's largest ad company.
Anticipation is building for Mercedes-Benz's (OTCPK:DDAIF) electric SUV, which is set to be unveiled today and called the EQC. Models from BMW (OTCPK:BAMXF), Audi (OTCPK:AUDVF) and Porsche (OTCPK:POAHF) are also in the making. "While Tesla (NASDAQ:TSLA) currently has a strong hold on the luxury electric market, I don't think this will be the case after the arrival of the German premium offerings," said Wajih Hossenally, an automotive analyst with IHS Markit. "Tesla has virtually zero competition - but this will change from 2019 onwards."
Meanwhile, sources told Electrek that Tesla (TSLA) produced about 53K vehicles in the first two months of Q3, bringing the quarter-to-date tally to 34.7K Model 3s. The EV automaker is said to have missed its target for a production run rate of 6K Model 3s per week by the end of August, but is on track to hit its overall Q3 Model 3 production mark of 50K to 55K units. TSLA -1.5% premarket.
Ford has officially canceled its plans to import the Focus Active to the U.S. next year, blaming tariffs put in place by the Trump administration. The crossover's demise could mean that the Mustang will be the only Ford (NYSE:F) passenger car sold in the U.S. by 2020. Reports suggest the Mondeo, Galaxy and S-Max, as well as 24K jobs, are on the chopping block amid declining sales trends.
Germany's Transport Ministry has denied reports that Volkswagen's (OTCPK:VLKAY) emissions test-rigging extended from diesel to petrol-fueled engines. The Federal Motor Transport Authority already examined the allegations brought by Bild am Sonntag, and there has been no indication so far of any fraud concerning certain petrol engines in VW (OTCPK:VLKAY), Audi (OTCPK:AUDVF) and Porsche (OTCPK:POAHF) vehicles.
France's Societe Generale expects penalties relating to its dispute with U.S. authorities over international sanctions violations to be close to $1.4B, a fine which would be almost entirely covered by provisions. It has been dogged for more than a year by a series of costly legal disputes. In June, SocGen (OTCPK:SCGLY) agreed to pay $1.3B to U.S. and French authorities to end disputes over transactions made with Libya and the suspected rigging of Libor.
Novartis plans to streamline its global output and increase its operating profit margin - to around 35% from the current 32% within five years - as it positions for possible further declines in U.S. drug prices. "Overcapacities have accumulated in the area of production over the past years," Novartis (NYSE:NVS) CEO Joerg Reinhardt told NZZ am Sonntag. "We are working on a global optimization... and to operate simply and more efficiently."
A blockade by former employees is threatening crude production at ExxonMobil's (XOM) Qua Iboe oil terminal in southern Nigeria - which exports over 300,000 bpd - and could "impact the company's ability to safely continue production operations." The aggrieved workers, who were ex-security personnel engaged by the U.S. oil firm along with 508 workers that were dismissed in July, have been blockading the company's offices and facilities since July 13.
Kiwi coffee culture... Restaurant Brands New Zealand (OTCPK:RTBRF) is letting its two-decade-old license deal with Starbucks (NASDAQ:SBUX) expire in October, though the U.S. coffee giant will keep its doors open via Tahua Capital, which acquired the license for a price of up to NZ$4.4M ($2.9M). "Starbucks has never delivered its expectation here," said Brian Gaynor, head of Auckland-based Milford Asset Management. "They're up against local competition from either individual coffee shops or local chains."
The EU is willing to start talks with Washington on increasing U.S. beef imports, a move aimed at cementing a trade truce agreed upon in July. The bloc already upped its U.S. soybean imports, which rose 283% Y/Y in July, bringing the EU's total American soybean share to 37%, up from 9% a year ago. Both agricultural products have been hit by retaliatory tariffs from China and Mexico, with U.S. beef producers forced to stockpile meat in cold storage facilities. Related: TSN, JEF, HRL, PPC, SAFM, ALCO, COW, UBC, LSTK
In Asia, Japan -0.1%. Hong Kong +0.9%. China +1.1%. India -0.4%.
In Europe, at midday, London -0.3%. Paris -1.1%. Frankfurt -0.9%.
Futures at 6:20, Dow -0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +2.1% to $71.29. Gold -0.5% to $1200.30. Bitcoin +0.6% to $7307.
Ten-year Treasury Yield +2 bps to 2.87%Today's Economic Calendar
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending