Tuesday Morning Reads

Tuesday Morning Reads


  • Worried Yet?
  • NY Judge has ruled that fantasy sports betting is unconstitutional (CZR, LVS, MGM, TSG), NY Post Report
  • Defense firms are planning to create hundreds of new jobs from Saudi arms deal, but less than the White House expected. (LMT, NOC, BA, GD). Reuters Report
  • Third Point wants Campbell Soup (CPB) to consider split. WSJ Report
  • Wal-Mart (WMT) plans to add mobile checkout option for holiday season. CNBC Report -- Background Information
  • Two key China brokers are planning IPOs (IPOXX). Bloomberg Report



Some of the Top  Open Interest Changes for Today:

As the S&P 500 closed in the red for three-quarters of October's trading sessions so far, the current narrative has been bleak: Q3 earnings season is a flop for markets. Reports from General Electric (NYSE:GE) and Facebook (NASDAQ:FB) today will kick off the last big week for quarterly results, though U.S. stock index futures are still weary after the S&P 500 closed yesterday in correction territory. With profits still set to rise by more than 20% for the third straight quarter, could equities get a much-needed lift?


Chinese shares recouped early losses and crept higher overnight as Beijing made fresh attempts to stabilize its stock markets. The China Securities Regulatory Commission said it will enhance liquidity, reduce unnecessary interference in trading and create a level playing ground for investors. Gains looked fragile, however, amid reports that the U.S. is planning tariffs on the remaining $257B in Chinese goods if Trump-Xi trade talks fail.

After damaging results for her CDU party in a regional election over the weekend, German Chancellor Angela Merkel announced her intention to retire from politics. Not going quietly, Merkel said she intends to serve until her term expires in 2021, citing need for her expertise in challenges like Brexit and the INF treaty. Her preferred successor is Annegret Kramp-Karrenbauer, the CDU secretary general.

The U.S. Treasury Department expects to issue $425B in debt this quarter, bringing government borrowing this year to $1.34T, more than double from 2017. The borrowing estimate is still $15B lower than its estimate in July. Separately, the Fed is expected this week to vote on standards that would change the way big banks are regulated, dividing institutions into categories based on risk factors.

Mexico’s peso tumbled 3.6% on Monday, blowing past the key 20 per U.S. dollar level, after President-elect Lopez Obrador announced he would cancel construction of a partially built $13B airport for Mexico City. The decision, a response to a referendum on the matter, left investors fretting over how he would manage the economy and made it more likely the central bank would hike interest rates. Mexico's benchmark BIVA stock index also closed down 4.2%.

A week away from the midterm elections, the Pentagon is sending 5,200 troops to the Mexican border to stop Central American migrants traveling north in two caravans from entering the U.S. The number of soldiers is more than double the 2,000 who are fighting in Syria. While the move will stiffen defenses at and near legal entry points, closing busy ports of entry along the border could impede the flow of goods, affecting the U.S. economy.

President Trump plans to sign an executive order that would remove the right to citizenship for babies of non-citizens and unauthorized immigrants born on U.S. soil, he told Axios on HBO. It would be the most dramatic move yet in the adminstration's hardline immigration campaign, this time targeting "anchor babies" and "chain migration," and would likely set off another stand-off with the courts.


The next catalyst for FANGs will come after the bell today, when Facebook (FB) posts its quarterly results. Analysts expect the social network's revenue to have grown 33% in Q3, boosted by its mobile ad business, but that would be the slowest quarterly growth rate since the company listed its shares in 2012. Over the last two trading sessions, about $200B was cleaved off the FANG group's combined market cap, with each company's share price down 14%-24% in October.

It's the most concrete attempt yet by an industrialized nation to rewrite the world's tax code for the digital era. The U.K. is moving ahead with plans to introduce a first-of-its-kind tax on locally generated revenue by large technology firms like Google (GOOGGOOGL) and Facebook (FB). It comes as governments hope to capture more revenue from such services as economic activity increasingly shifts online.

Revealing updated iPhones and smartwatches last month, Apple (NASDAQ:AAPL) is holding another event today that will announce fresh gadgets ahead of the holidays. A new iPad Pro is expected to do away with the home button, include Face ID, and get improved processors and other internal upgrades, reinvigorating Apple's tablet business (whose sales have tumbled 40% from their 2013 peak). The company is also expected to introduce a lower-priced MacBook that features an updated display and a quieter keyboard.

Red Hat probably won't get an offer higher than the $190-per-share price from IBM, because it already spoke with "all of the logical buyers" including Google (GOOGGOOGL), Reuters reports. Another deterrent? Should the current deal be terminated, Red Hat (NYSE:RHT) would be obligated to pay a $975M breakup fee. While it's possible a company - like Cisco (NASDAQ:CSCO) or Oracle (NYSE:ORCL) - could come in with a higher bid, potential suitors view IBM as a safe buyer that won't dramatically alter the competitive landscape.

Overnight earnings roundup: BP (NYSE:BP+5.1% premarket as profits more than doubled and far exceeded analyst expectations amid stronger oil prices. Sony (NYSE:SNE+4.4% hiking its annual profit outlook, thanks to strong performance from its gaming business in Q3. Volkswagen (OTCPK:VWAGY+4% in Frankfurt despite industry headwinds like trade tensions, slowing demand in China and tightened emissions standards in Europe.

Much later than expected... Wells Fargo (NYSE:WFC) will not finish paying back the estimated 600K customers it wrongly charged for auto insurance until at least 2020, according to a letter seen by Reuters. Wells was slapped with a $1B penalty in April when it admitted to wrongly charging "force-place" policies if drivers let their insurance lapse, but that agreement envisioned customer payouts would finish in a matter of months.

Elon Musk keeps testing the limits the SEC has put on his tweeting. Latest move? He deleted all of his titles from the management page of Tesla's (NASDAQ:TSLA) website, becoming the "Nothing of Tesla," but then joked that in doing so, he may have confused "the authorities." Musk earlier trolled the SEC by calling it the "Shortseller Enrichment Commission" and apparently suggested his '420' tweet that cost him $20M was "worth it."

The Lion Air flight that crashed in Indonesia on Monday morning flew erratically during a flight the previous evening when it experienced a "technical problem," but it had been resolved "according to procedure." It was the first crash for Boeing's 737 MAX (NYSE:BA) jetliner. Shares plunged almost 7%following the news, as well as on reports that the U.S. was preparing to add tariffs to all remaining Chinese imports.

More self-driving ventures... Volkswagen (OTCPK:VWAGY) and Intel's (NASDAQ:INTC) Mobileye are planning to roll out Israel's first ride-hailing service using self-driving cars starting early next year. Called "Mobility-as-a-Service," the business is expected to be commercialized by 2022. The Israeli government, which has accepted the proposal, will also support it by sharing required infrastructure and traffic data.

Monday's Key Earnings
Mondelez (NASDAQ:MDLZ+2.7% AH on higher pricing.
Transocean (NYSE:RIG+3.2% AH beating expectations.

Today's Markets 
In Asia, Japan +1.4%. Hong Kong -0.9%. China +1%. India -0.5%.
In Europe, at midday, London +0.2%. Paris -0.4%. Frankfurt -0.3%.
Futures at 6:20, Dow +0.2%. S&P +0.3%. Nasdaq +0.2%. Crude -0.8% to $66.51. Gold -0.5% to $1222.10. Bitcoin % to $..
Ten-year Treasury Yield +2 bps to 3.12%

Today's Economic Calendar
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
3:00 PM Farm Prices


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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