Tuesday Morning Reads

Tuesday Morning Reads




Chart of the Day:

Small cap momentum change coming?


Open Interest Changes:




Investors' attention is back on Italian politics, with the euro weakening overnight and local stocks declining after the head of Italy’s lower house budget committee said the nation would have solved its fiscal problems with its own currency. Meanwhile, Italian 10-year bond yields hit a four-year high as European Commission President Jean-Claude Juncker sounded the alarm, saying, "We have to do everything to avoid a new Greece - this time an Italy - crisis." Rome has until October 15 to finish its 2019 budget plan and submit it to the European Commission.


As the annual Tory conference begins in Birmingham... Boris Johnson has reportedly told senior members of the governing Conservative Party he would delay Brexit by at least six months if he became prime minister to reset stalled Brexit negotiations. Theresa May meanwhile called on her party to get back together, saying she planned to remain in the job "for the long term" and was prepared to make a new offer to the EU aimed at breaking the deadlock.

"The announced concessions on dairy in the new USMCA deal demonstrates once again that the Canadian government is willing to sacrifice our domestic dairy production when it comes time to make a deal," said Pierre Lampron, president of trade group Dairy Farmers of Canada. The revamped NAFTA agreement grants the U.S. an expanded 3.6% access to Canada's dairy market and gets rid of a controversial domestic milk pricing class Ottawa had previously defended.

The U.S. federal debt increased by $1.27T in fiscal 2018 - which runs from October 1 through September 30 - according to data released by the Treasury. The figure marks the eighth fiscal year in the last eleven in which the debt increased by at least one trillion dollars and was the sixth largest fiscal-year debt increase in U.S. history. The national debt now totals $21.51T.

With oil prices hitting fresh four-year highs, long-dormant proposals to allow the U.S. to sue OPEC nations are getting a fresh look by Congress. A U.S. Senate subcommittee on Wednesday will hear testimony on the so-called No Oil Producing and Exporting Cartels Act, or NOPEC, which would allow OPEC members to be sued for collusion on setting prices. Business groups and oil companies oppose the bill, citing the possibility of retaliation from other countries.

Nearly 2M people have fled Venezuela's economic and political crisis since 2015, according to the U.N., which appealed for a "non-political" answer to an exodus that now numbers "some 5,000 people leaving Venezuela daily." Colombia, which has taken in more than a million Venezuelans, called last week for a response, saying the migrant crisis was biting into its GDP and straining regional resources.


General Electric shares soared yesterday 7% after CEO John Flannery got the boot after 13 months into the job, with former Danaher CEO Lawrence Culp taking the helm at the troubled conglomerate. Shares are up another 1.4% premarket despite concerns over a dividend cut and the abrupt CEO change. "The presumption is that the company's doing far worse than you think," according to Jim Cramer, while longtime GE bear, JPMorgan's Stephen Tulsa, said it could mean more "serious issues at play."

The man leading Google's most important business is leaving after 15 years at the company. Advertising chief Sridhar Ramaswamy will be replaced by Prabhakar Raghavan, formerly a vice president of engineering for Google's (GOOGGOOGL) Cloud apps, with CEO Sundar Pichai saying there was "no better person to lead our monetization efforts." Last quarter, Alphabet made 86% of its $32.65B in revenue from advertising.

More executive moves... Ian Read is stepping down after eight years as chief executive of Pfizer (NYSE:PFE), with COO Albert Bourla taking his place. During his tenure, Read emphasized reshaping one of the world's biggest pharmaceutical companies through dealmaking. He acquired companies like Hospira and spun off divisions, but failed to strike deals for AstraZeneca (NYSE:AZN) and Allergan (NYSE:AGN).

Standard Chartered is bracing for a potential fine of around $1.5B from U.S. authorities for allowing customers to violate Iran sanctions, Bloomberg reports. American regulators have been keeping an eye on StanChart (OTCPK:SCBFF) since 2012, when the lender entered into a deferred prosecution agreement to resolve allegations that the bank facilitated business with Iranian parties. The U.S. extended the DPA in 2014.

Amazon subsidiary IMDb will announce a new ad-supported free video service this week for Amazon Fire TV (NASDAQ:AMZN) users, according to CNBC. The new service, which will be similar to The Roku Channel (NASDAQ:ROKU) or some parts of Hulu (CMCSAFOXADIS), will feature libraries of past TV shows and movies from at least three major media companies, and will be available to all Fire TV users (not just Prime Video subscribers).

United Technologies has won U.S. approval to buy avionics maker Rockwell Collins (NYSE:COL) for $23B, leaving China as the last authorization needed for the deal. The U.S. Justice Department required divestments for the go-ahead. UTC (NYSE:UTX) will have to sell two businesses - one that sells systems that de-ice planes and another that vends stabilizer actuators that help aircraft maintain altitude.

Renault is offering owners of older diesel vehicles in Germany incentives to trade in their cars for newer cleaner ones, becoming the first foreign carmaker to play a role in Germany’s anti-pollution efforts. "Diesel is condemned because policymakers have condemned diesel," said Carlos Ghosn, who heads the global alliance of Renault (OTCPK:RNLSY), Nissan (OTCPK:NSANY) and Mitsubishi (OTC:MMTOY). "We have to follow the technology but at the same time listen to political trends."

Considered one of the industry's laggards in electrification, Mazda (OTCPK:MZDAY) has laid out plans to revamp its product lineup. All the automaker's vehicles will come with electric power by 2030, with 5% of cars being fully battery-powered by that year. The target is more aggressive than rival Toyota (NYSE:TM), which aims for half of its cars sold by 2030 to be electrified.

New wave of LNG investment? Royal Dutch Shell (RDS.ARDS.B) is pressing ahead with Canada's largest-ever infrastructure project, designed to send gas from Canada, where prices are relatively low, to demand centers in Asia. Construction of the 14M tons/year venture - which is expected to generate an internal rate of return of around 13% - will start immediately, with LNG production expected to begin before the mid-2020s. Minority partners include PetroChina (NYSE:PTR), Mitsubishi (OTCPK:MSBHY), Korea Gas and Malaysia’s Petroliam Nasional Bhd.

Today's Markets 
In Asia, Japan -0.1%. Hong Kong -2.4%. China closed. India closed.
In Europe, at midday, London -0.5%. Paris -1%. Frankfurt -0.8%.
Futures at 6:20, Dow -0.4%. S&P -0.3%. Nasdaq -0.5%. Crude +0.5% to $75.68. Gold +0.2% to $1194.30. Bitcoin -0.3% to $6557.
Ten-year Treasury Yield -2 bps to 3.06%

Today's Economic Calendar
Auto Sales
8:55 Redbook Chain Store Sales
10:00 Randal Quarles: “Testimony on Implementation of the Economic Growth Regulatory Relief and Consumer Protection Act”
12:00 PM Jerome Powell 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.

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