Wednesday Morning Reads
- Trouble Brews
- Lot of Money Riding on the 2020 Election
- Breakthrough That Could Change Computing
- Costly Failure
- Facebook Has Trust Issues
- Outrage at Founder Payout
- Crisis Swells
- Escape the Fee Prison Now
- Uncomfortable Reading
- Futures steady ahead of earnings deluge
- Caterpillar -5% after slashing profit forecast, missing estimates
- Google lays claim to quantum supremacy
- Facebook antitrust probe expands to 47 AGs
- Caterpillar EPS misses by $0.24, misses on revenue
- Boeing design faulted in Lion Air crash
- Texas Instruments -9% after misses, downside forecast
- Cleveland-Cliffs EPS beats by $0.14, beats on revenue
- Thermo Fisher beats Q3 consensus; guidance raised
- Invesco EPS beats by $0.13, beats on revenue
- Alexion Pharmaceuticals EPS beats by $0.31, beats on revenue
- Chip stocks slide after Texas Instruments guidance
Open Interest Changes for Today:
A slowdown warning from Texas Instruments (NASDAQ:TXN) and widened antitrust probe into Facebook (NASDAQ:FB) weighed on the tech sector overnight, though U.S. stock index futures are heading back to the starting line as the next wave of Q3 earnings roll in. Big names on the radar today include Boeing (NYSE:BA) and Caterpillar (NYSE:CAT), which post results before the bell, and Microsoft (NASDAQ:MSFT) and Tesla (NASDAQ:TSLA), which report after the close. Profits for the S&P 500 are expected to fall by 3.1% for the quarter, after growing by more than 3% in Q2, according to Refinitiv, but it may be like other quarters where results beat forecasts and overall earnings gain.
There's a lot of news swirling around Facebook (FB) as Mark Zuckerberg prepares to testify on cryptocurrency plans today before the House Financial Services Committee. According to his prepared testimony, Facebook will support delaying Libra's launch, currently set for mid-2020, and won't introduce its Libra payments system anywhere in the world unless all U.S. regulators approve it. Competition concerns? FB shares slipped almost 4% yesterday as New York AG Letitia James announced that 47 attorneys general from states and U.S. territories plan to take part in an antitrust probe into Facebook.
Go deeper: Michael Wiggins De Oliveira reassesses Facebook's underlying investment thesis.
Shares of SoftBank (OTCPK:SFTBY) fell as much as 3% overnight as the tech conglomerate agreed to spend more than $10B for an 80% stake in WeWork (WE), which is in danger of running out of cash in the coming weeks. The deal takes its total investment to more than $13B, though the office-space sharing startup is now valued at just $8B. As part of the deal, WeWork will appoint SoftBank COO Marcelo Claure to executive chairman of its board of directors, while former WeWork CEO Adam Neumann will become a "board observer."
Go deeper: '10 Reasons Not To Invest In The We Company' by Christoph Liu.
Long-time Nike (NYSE:NKE) CEO Mark Parker will step down next year and be replaced by board member and former eBay (NASDAQ:EBAY) CEO John Donahoe, who will be tasked with bolstering the company's online strategy. Parker said that recent Nike scandals, including one involving track coach Alberto Salazar, had "absolutely nothing" to do with him leaving the top job and that succession plans have been months in the making. "This is not something that happens in a matter of weeks," he told CNBC.
Go deeper: Discount Fountain remains optimistic on Nike.
Brexit is set to be delayed for a third time after U.K. lawmakers accepted the principles of Boris Johnson's deal but rejected his timetable for implementing it by Oct. 31. Reports in Britain now suggest that Downing Street will push for an election if Brexit is delayed until January - as indicated by European Council President Donald Tusk. Sterling slid below $1.2850 on the news, but with the final outcome still up in the air, the decline was contained overnight.
Malaysia has continuously demanded Goldman Sachs (NYSE:GS) pay an eye-popping $7.5B for its role in the 1MDB scandal, but privately, negotiators are considering settling for less than half of that, Bloomberg reports. Discussions are now centering on a $2B-$3B payment, with Prime Minister Mahathir Mohamad keen to reach a deal with Goldman this year as the government grapples with a high debt burden. Simultaneously, Malaysian prosecutors are trying to turn up the pressure by pushing for the bank's criminal case to be heard at the country's High Court.
Go deeper: Goldman is paying for lagging behind, writes John Mason.
Jeff Bezos is making some space headlines, with his Blue Origin (BORGN) partnering with industry giants to land humans back on the surface of the moon under NASA's Artemis program. The company is the new group's prime contractor and will provide its lunar lander called Blue Moon. Others? Lockheed Martin (NYSE:LMT) is building the reusable vehicle that will then return astronauts from the surface of the Moon, known as the "Ascent Element," Northrop Grumman (NYSE:NOC) will supply the "Transfer Element" and landing gear, while Draper will provide flight avionics.
Flaws in the design of Boeing's (BA) 737 MAX and lack of information on how to deal with MCAS malfunctions contributed to last year's crash of Lion Air Flight 610, which killed 189 people, according to Indonesian investigators. The findings could influence regulators worldwide as they assess the fate of the plane, which has been grounded globally since March 13, costing the company over $8B. Boeing shuffled the ranks of top management on Tuesday, replacing the head of its jetliner business as it struggles to shore up confidence in its handling of the 737 MAX crisis.
Go deeper: Ahead of earnings, Philip Davis thinks most of Boeing's bad news is priced in.
In opening arguments at New York's climate change fraud trial, a lawyer for the state attorney general argued that Exxon Mobil (NYSE:XOM) used two sets of books to hide the true cost of climate change regulations from investors, while an attorney for XOM blasted the claims as politically motivated. The statements launched the long-awaited trial in a civil lawsuit filed by the New York AG's office last year accusing Exxon of defrauding investors out of $1.6B by causing them to overvalue its stock.
Emerging market investors trading the Chilean peso have taken a hit as the worst protests in decades hit the country, leading to thousands of arrests and 15 deaths. Some European companies are exposed, like miners with operations in the copper-rich nation, while JPMorgan has turned bearish on the country's domestic stocks, lowering the country to underweight from neutral. Chile's President Sebastián Piñera acknowledged government failures overnight and announced economic reforms intended to restore calm to the country.
What else is happening...
Pentagon chief recuses himself from JEDI review.
The Fed could soon own 12% of U.S. Treasury bill market.
Biogen (NASDAQ:BIIB) +26.1% resurrecting Alzheimer's drug.
Chipotle (NYSE:CMG) -2.1% AH reversing after crushing estimates.
Harley-Davidson (NYSE:HOG) +8% riding through tariff-impacted quarter.
Hasbro (NASDAQ:HAS) -16.8% stung by the trade war.
JetBlue (NASDAQ:JBLU) +7.3% topping Q3 profit expectations.
Kimberly-Clark (NYSE:KMB) -7.1% trailing the report from P&G.
Lockheed Martin (LMT) -0.1% held back by FCF concerns.
McDonald's (NYSE:MCD) -5% posting a rare earnings miss.
Novartis (NYSE:NVS) +0.5% with a strong start to Zolgensma.
Procter & Gamble (NYSE:PG) +2.6% amid strong organic sales.
Snap (NYSE:SNAP) -3.4% AH on light guidance.
Texas Instruments (TXN) -9.8% AH posting a downside forecast.
Travelers (NYSE:TRV) -8.3% amid a "challenging tort environment."
United Technologies (NYSE:UTX) +2.2% increasing guidance.
UPS (NYSE:UPS) -2% announcing its COO retirement.
In Asia, Japan +0.3%. Hong Kong -0.8%. China -0.4%. India +0.1%.
In Europe, at midday, London +0.4%. Paris -0.4%. Frankfurt flat.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude -1.1% to $53.90. Gold +0.7% to $1497.40. Bitcoin -3.3% to $7996.
Ten-year Treasury Yield -3 bps to 1.74%
Today's Economic Calendar
7:00 MBA Mortgage Applications
9:00 FHFA House Price Index
10:30 EIA Petroleum Inventories
11:30 Results of $20B, 2-Year FRN Auction
1:00 PM Results of $41B, 5-Year Note Auction