Wednesday Morning Reads

Wednesday Morning Reads


  • Two Risks
  • U.S. Senate passes Hong Kong Human Rights and Democracy Act, which was quickly condemned by China -- Reuters
  • AI   Cool Off
  • Apple (AAPL) piloting version of Apple Music for commercial use (Related: SIRISPOT) -- WSJ
  • DoorDash said to weigh direct listing instead of traditional IPO  -- Bloomberg
  • Top Strategy
  • Westpac Banking (WBK) accused of breaching money laundering laws -- WSJ



Morning Charts:

Open Interest Changes

Seeking Alpha:

Emirates and Boeing are reportedly on the verge of striking a compromise deal for the Middle East's biggest carrier to order around 30 787 Dreamliners, but fewer 777X jets as part of a delayed order. Boeing (NYSE:BA) has only landed about a third of the orders scored by Airbus (OTCPK:EADSYOTCPK:EADSF) at the biennial event. Meanwhile, FAA Administrator Steve Dickson stated on the sidelines of the show that the FAA will be tougher on the certification of the Boeing 777X and isn't following any specific timeline for the return to service of the grounded 737 MAX model. Boeing fell 1% yesterday after the National Transportation Safety Board called on the company to redesign thousands of its 737 planes to better protect against the impact of engine failures. Shares are down another 0.5% in premarket action today.

Global markets fall back

Asian stocks fell back after President Trump's threat to raise tariffs on Chinese goods reverberated across the Pacific Ocean. The Shanghai Composite Index fell 0.8% and Hong Kong's Hang Seng Index was off 0.75%. Japan's Nikkei slipped 0.6% and Australia's ASX 200 dropped dropped 1.2% after a financial regulator cracked down on Westpac Banking (NYSE:WBK). Meanwhile, European stocks are also having a soft day, with the Stoxx 600 Index slipping 0.7%. U.S. stock futures are pointing lower, two days removed from the Dow Jones Industrial Average and S&P 500 Index carving out new record highs.

Fed watch

The Federal Reserve is due to release minutes today of its last meeting in a development that will pull back the curtain on just how much support there is for a long pause before any further interest rate actions. Economists will also find out if Jerome Powell's view that it would take a "material reassessment" before rates are cut again is on target with the rest of the committee. The consensus view is that the Federal Reserve is right where it wants to be going into an election year as long as no data surprises occur.

Tension in Hong Kong simmers on

Hong Kong riot police are still surrounding a university campus with a small number of protesters a day after the largest number of arrests and injuries were reported in the city. The protests in Hong Kong continue to draw attention from outside of China. The latest show of support was from the U.S. Senate, which unanimously passed legislation that supports human rights in Hong Kong. That action drew almost immediate criticism from China's foreign ministry. On the investing front, the disruption in Hong Kong has held back investor enthusiasm for casino companies with Macau properties, including Wynn Resorts (NASDAQ:WYNN), Las Vegas Sands (NYSE:LVS), MGM Resorts (NYSE:MGM) and Melco Resorts & Entertainment (NASDAQ:MLCO).

Corporate events to watch

Canaan (CAN) and SiTime (SITM) are expected to price their IPOs today. Canaan designs ASICs for Bitcoin mining and AI applications, while SiTime offers MEMS-based silicon timing solutions that benefit a wide range of applications. Retail will be on display, with Lowe's (NYSE:LOW), Target (NYSE:TGT), Jack in the Box (NASDAQ:JACK) and Sonos (NASDAQ:SONO) all stepping into the earnings confessional. Also, a number of companies are hosting analyst day events, during which guidance could be refreshed. Watch for updates from (NASDAQ:OSTK), Honeywell (NYSE:HON), and Rockwell Automation (NYSE:ROK).

EV truck talk

The buzz is building up for Tesla's (NASDAQ:TSLA) truck event that is scheduled for tomorrow night in California. Pricing on the Tesla truck will be closely watched with EV startup Rivian setting a starting price of $69K. Details on towing capacity, power output, and off-road capabilities will also be crucially important as Tesla looks to compete with Ford's (NYSE:F) F-150 line and Ram (NYSE:FCAU) trucks. In other electric truck news, startup Nikola claimed yesterday to have made a huge breakthrough in battery technology that it predicts will disrupt the market. Nikola says it's in discussions with customers for truck orders that could fill production slots for more than ten years and propel Nikola to become the top truck manufacturer in the world by revenue. The next-gen battery technology is also said to have the potential to increase the range of current EV passenger cars to 600 miles from 300 miles.
Go deeper: See a breakdown of Tesla's profitability grade.

Disney expects Frozen bonanza

Disney (NYSE:DIS) is forecasting a hot debut for long-awaited sequel Frozen 2 when it opens on Friday. The company expects the film to draw $100M or so domestically in its first weekend, while some Hollywood estimates are ranging to as high as $105M. The film is set to debut in more than 4,400 theaters in North America. The first Frozen film is the 2nd highest-grossing animated movie of all-time with a global box office haul of $1.29B.

Volkswagen talks up next-gen EV wagon

Volkswagen (OTCPK:VLKAF) showed off its Space Vizzion Concept at the Los Angeles Auto Show. The EV wagon is slated to top 300 miles of EPA-estimated range out of an 82kWh battery and accelerate from 0 mph to 60 mph in just five seconds flat. The German automaker says a production version is expected to be on the market in late 2021.

Legal win for GM

A federal appeals court in New York found that General Motors (NYSE:GM) won't be liable for punitive damages over accidents that occurred after its 2009 bankruptcy involving cars made before its bankruptcy. The decision includes vehicles with faulty ignition switches, which are still the subject of class action lawsuits trying to pierce new GM's legal shield.
Go deeper: See how GM stacks up with sell-side analysts.

What else is happening...

SEC opens preliminary probe of Vale (NYSE:VALE) in dam tragedy.

Alibaba (NYSE:BABAupdates on Hong Kong listing.

Morgan Stanley (NYSE:MSjoins mortgage sector bulls.

U.S. House passes stopgap bill to avert government shutdown.

Tuesday's Key Earnings
Alcon (NYSE:ALC-3.9% PM on in-line Q3 earnings.
Urban Outfitters (NASDAQ:URBN-15.4% PM on lagging store sales.
PagSeguro Digital (NYSE:PAGS-7.5% PM on Q3 earnings and revenue miss.

Today's Markets
In Asia, Japan -0.62%. Hong Kong -0.75%. China -0.78%. India +0.49%.
In Europe, at midday, London -1.36%. Paris -0.75%. Frankfurt -1.01%.
Futures at 6:00, Dow -0.42%. S&P -0.38%. Nasdaq -0.49%. Crude -0.11% to $55.41. Gold +0.14% to $1,476.30. Bitcoin -1.03% to $8.102.
Ten-year Treasury Yield -4.3 bps to 1.745%.

Today's Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
2:00 PM FOMC minutes

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.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)