Tuesday Morning Reads

Tuesday Morning Reads






From The Weekend:

  • Positive views on NEM, GG, GOLD profiled. Barron's Report
  • Positive views on ILMN, A, DHR, TECH, TMO profiled. Barron's Report
  • Positive view on Cigna (CI) profiled. Barron's Report
  • Cautious views on EA and ATVI profiled. Barron's Report
  • Positive view on Cisco (CSCO) profiled. Barron's Report
  • Toyota (TM) and Panasonic (PCRFY) planning electric battery joint venture. Reuters Report
  • Facebook (FB) will introduce German initiatives to defend elections. Reuters Report
  • President Trump considering executive order to restrict China telecoms (LITE, FNSR, SSNLF, AAPL, CHU, CHL, CHA). Bloomberg Report
  • FDA has threatened to pull e cigarettes if companies do not stop marketing to teens (MO, BTI, PM). NY Post Report
  • Italy regulators have rejected plan for Telecom Italia (TI) to separate networks. Reuters Report
  • Tesla (TSLA) Europe deliveries have been approved. Bloomberg Report
  • Investigation into banks allegedly rigging Treasury auctions has stalled (XLF, BAC, JPM, WFC, GS, MS). NY Post Report
  • Private equity interested in Nestle (NSRGY) skin care unit for $7 bln. Reuters Report
  • Enbridge (ENB) pipeline exploded in Ohio. Reuters Report
  • Russia has accused Facebook (FB) and Twitter (TWTR) of not complying with its data laws. WSJ Report


Global equity markets are heading lower as the U.S. comes out of a holiday weekend, after the International Monetary Fund trimmed its world growth outlook for 2019 to 3.5% from 3.7% previously. The S&P 500, Dow and Nasdaq are all indicated to fall roughly 1% at the open, after the U.S. closed out last week with four consecutive advances. Asian markets finished weaker, with China's Shanghai Composite closing 1.2% lower after the government said the economy grew by 6.6% in 2018, the slowest annual pace since 1990. European bourses also opened in the red, with the U.K.'s FTSE lagging following reports of continued Brexit resistance.


The IMF has downgraded its global growth forecast to 3.5% from 3.7% in its October outlook, partly due to the negative impact of U.S. and China tariff increases. Risks to economic growth are “tilted to the downside,’’ citing the threat of a widening trade war, Brexit and a steeper-than-anticipated slowdown in China. "Financial conditions have already tightened since the fall. A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment with adverse growth implications, especially given the high levels of public and private debt."

U.K. Labour Party leader Jeremy Corbyn has announced his support of a plan to give politicians a vote on whether the country should hold a second referendum on its membership in the European Union. It is the first time the opposition leader has added his name to a proposal in Parliament that would prepare a path for a new public vote, and it means the amendment likely will be put to a vote in the House of Commons on Jan. 29. The U.K.’s Brexit policy is essentially deadlocked following last week's crushing defeat of Prime Minister May’s original withdrawal plan.

The U.S. Senate is expected to vote this week on Pres. Trump's new border security proposal that is unlikely to attract the 60 votes necessary to clear procedural hurdles, leaving no clear path forward as the partial government shutdown hits 32 days. Democrats have rejected the proposal, which includes $5.7 billion to pay for steel barriers on the U.S.-Mexico border. Meanwhile, the U.S. Transportation Security Administration said unscheduled absences among U.S. airport security officers rose to a record 10% on Sunday. The shutdown is stalling the approval of new loans, initial public offerings, the processing of tax documents and the approval of new products such as prescription drugs, among other effects.


Private equity firms Cinven and Advent have teamed up to bid in an auction that could value Nestle's (OTCPK:NSRGY) skin health business at about 7 billion Swiss francs ($7 billion), Reuters reports. P-E firms Blackstone (NYSE:BX), KKR (NYSE:KKR), Carlyle (NASDAQ:CG), CVC, EQT and Partners Group reportedly also are expected to bid and might look for partners. Nestle Skin Health, which sells Cetaphil and Proactiv skin care products, Restylane wrinkle fillers and prescription dermatology medicines, had sales of 2.7 billion Swiss francs last year, accounting for roughly 3% of Nestle’s total.

U.K. packaging company RPC is on the verge of being acquired by Apollo Global Management (NYSE:APO) for more than $3.8 billion, and a deal could be announced as soon as today, WSJ reported over the weekend. The deal is not particularly big for Apollo, but it might ease the pressure on the private equity firm to invest its cash hoard after dropping out of some auction processes for big acquisitions, according to the report. Driven largely by acquisitions, RPC grew revenue by 36% to £3.75 billion ($4.83 billion) for the year ended March 31, 2018 while net profit rose 92% to £253.4 million, but the company’s free cash flow fell 4%.

UBS announced adjusted Q4 pre-tax profit fell to $860 million, hurt by a slowdown in its flagship wealth management business and weaker earnings in its investment bank. UBS (NYSE:UBS) says wealth management net new money outflows during the quarter totaled $7.9 billion and adjusted pre-tax earnings in the wealth management business fell 22% year-over-year. The bank also says it will propose a dividend of 0.70 Swiss francs per share ($0.70) for 2018, up from 0.65 Swiss francs, and aims to buy back as much as $1 billion in shares in 2019.

The U.S. government will proceed with the formal extradition from Canada of Huawei executive Meng Wanzhou, Canada's ambassador to the United States told The Globe and Mail, a move certain to ratchet up tensions with China. Ambassador David MacNaughton does not say when the formal extradition request will be made but the deadline for filing it is Jan. 30, according to the report. Meng was arrested at the request of the U.S. over alleged violations of U.S. sanctions on Iran; she was released on bail last month and is due in court in Vancouver on Feb 6.

Google has been fined €50 million ($57 million) by France’s data protection watchdog for breaching European Union online privacy rules, the biggest such penalty levied against a U.S. tech company. France’s National Data Protection Commission, or CNIL, says Google (GOOGGOOGL) violated rules requiring information about data collection to be transparent and did not go far enough in getting valid user consent to gather data for targeted advertising. The French action could signal the opening shot of potentially several regulatory actions as officials wield Europe's new General Data Protection Regulation.

Today's Markets 
In Asia, Japan -0.47%. Hong Kong -0.70%. China -1.18%. India -0.36%.
In Europe, at midday, London -0.58%. Paris -0.68%. Frankfurt -0.59%.
Futures at 6:45, Dow -0.77%. S&P -0.79%. Nasdaq -0.96%. Crude -1.85%to $53.04. Gold +0.03% to $1,282.90.
Ten-year Treasury Yield -3.2 bps to 2.75%

Today's Economic Calendar
8:55 Redbook Chain Store Sales
10:00 Existing Home Sales

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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