Wednesday Morning Reads
- Cracks in China’s Facade of Unity
- Buoyed by Company Earnings
- Ordinary or ‘Enemy’?
- Fed to Keep Rates Steady
- New iPhones Fuel Strong Profit for Apple
- Bitcoin Has Lost Steam
- Market Timing Can Be So Appealing
- What the 2020s Will Look Like For the Markets
- Futures extend gains after Apple blowout
- Analysts weigh in on Apple's 'Picasso-like' earnings
- Boeing's first annual loss in over two decades
- GE +5% on Q4 beats, strong FCF guidance
- HBO Max prep hits AT&T earnings
- Chesapeake's Q4 production results lift shares
- Mastercard EPS beats by $0.09, beats on revenue
- Marathon Petroleum pops after Q4 earnings topper
- Corning +5% after beats, long-term outlook
- WWII bombs defused at Tesla's German site
- Mastercard sees 2020 revenue growth in low teens
- Canadian Natural confronts Enbridge's Mainline proposal
"It was sort of a blockbuster quarter all the way around,” Apple (NASDAQ:AAPL) CEO Tim Cook declared after blowout earnings and revenue during the holiday quarter. Net income for the latest period rose 11% to $22.24B, thanks to rising iPhone sales for the first time in a year and soaring demand for add-ons like AirPods. In fact, Apple’s fastest-growing business segment, "Wearables, Home and Accessories," is now bigger than Mac. Apple also reported $207.06B in cash on hand, hosting one of the largest cash piles of any U.S. company. AAPL +2% premarket.
Go deeper: Apple destroyed top and bottom line estimates, writes Bill Maurer.
Earnings season put a renewed spirit into the market yesterday, with big gains being seen across all three U.S. indices, while remarkable results from Apple helped U.S. futures continue the advance overnight. Besides a Fed rate decision later in the day, traders are looking forward to another busy session of corporate reporting, offsetting concerns for the rapidly spreading coronavirus. On the radar: McDonald's (NYSE:MCD) menu changes amid the chicken sandwich wars? Will Tesla (NASDAQ:TSLA) justify its fundamentals? Cloud Services are in focus in Microsoft's (NASDAQ:MSFT) results, while turnaround efforts will be analyzed at Boeing (NYSE:BA) and GE (NYSE:GE). An earnings showdown from telecom rivals is also on the calendar. AT&T (NYSE:T) reports today, while Verizon (NYSE:VZ) discloses results tomorrow.
Go deeper: 'General Electric's Big Moment Of Truth' by Daniel Jones.
Economists aren't expecting a change in the Fed's key rate range of 1.5% to 1.75% at a policy meeting today, but Chairman Jerome Powell could signal tweaks to the central bank's repo program. In an effort to stabilize overnight and short-term lending market rates, it has been conducting about $60B per month in bond purchase. The Fed might also discuss how global growth and the coronavirus outbreak may influence future rate decisions, as well as hints of any operational changes.
Despite posting strong holiday sales in the U.S., Starbucks (NASDAQ:SBUX) shares fell nearly 2% AH after warning about the scale of the coronavirus disruption in China. The coffee chain is temporarily shutting more than half of its near-4,300 cafes in the country - its largest market outside the U.S. - and had intended to upgrade its 2020 profit forecasts, but has now put those plans on hold. KFC (NYSE:YUM), Pizza Hut and McDonald's (MCD) have also closed outlets in China, with the latter expected to divulge more details about its exposure in its earnings report today.
A hefty dose of back-to-work blues plagued Hong Kong traders today as trading resumed after the Lunar New Year break. The Hang Seng index tumbled 2.8%, its worst opening since 2016, led lower by real estate firms Hang Lung Properties (OTCPK:HLPPY) and Country Garden Holdings (OTCPK:CTRYY), and Macao casino operators Sands China (OTCPK:SCHYY) and Galaxy Entertainment Group (OTCPK:GXYEY). China's financial markets will remain closed until next Monday after authorities extended the Lunar New Year break by three days as they grapple with the worsening virus that has now recorded more cases than SARS.
Go deeper: China's coronavirus is the new trade war, according to Jeffrey Snider.
The company led by David Solomon is widely expected to give updates on how it plans to improve shareholder returns after more than a decade of trading sideways and lagging behind peers such as JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS). Analysts and investors are particularly eager to hear more about the consumer bank, which consists of Goldman Sachs' (NYSE:GS) online bank Marcus and credit card with Apple (AAPL). At the moment, that consumer bank generates just 2.4% of Goldman's annual revenue, compared to almost 40% of revenue that comes from the bank's securities division.
Tim Hortons (NYSE:QSR) has removed Beyond Meat (NASDAQ:BYND) products from its shops in Ontario and British Columbia, after eliminating the meatless items from all of Canada in September except the two provinces. "The product was not embraced by our guests as we thought it would be," said a spokeswoman for Tim Hortons. While plant-based fast food has been gaining in popularity, some are questioning its environmental and health benefits.
The U.K. has granted Huawei a limited role in developing its new high-speed 5G wireless network, hindering a global attempt by the U.S. to exclude the Chinese telecom equipment giant from the West's next-generation communications. Both the U.S. and China, vying for tech supremacy, had tried to sway the nation's decision. The verdict could complicate Britain's membership in the so-called Five Eyes intelligence sharing group, as well as upcoming plans for a new U.S.-U.K. trade agreement.
Go deeper: EU countries will announce 5G guidelines today.
During a ceremony at the White House today, President Trump is set to finally sign the USMCA trade pact, which still needs to be formally approved by Canada. The deal is aimed at protecting farmers, changing car industry rules, strengthening labor and environmental standards, and will set terms of digital trade. Two trade achievements... The signing comes just two weeks after the president celebrated a "phase one" trade pact with China following a years-long trade war.
Federal debt held by the public is projected to balloon to 98% of the U.S. gross domestic product in 2030, its highest percentage since 1946, vs. 81% in 2020, according to a report by the Congressional Budget Office. By 2050, debt would be 180% of GDP, far higher than it's ever been. It stems from the combination of tax cuts and projected increases in spending - particularly on safety net programs such as Medicare and Social Security.
What else is happening...
3M (NYSE:MMM) -5.7% cutting 1,500 employees in restructuring.
AMD (NASDAQ:AMD) -4.4% posting a soft revenue projection.
Apple (AAPL) +2.2% AH on strong iPhone and wearables sales.
eBay (NASDAQ:EBAY) -5.2% AH giving light revenue guidance.
Harley-Davidson (NYSE:HOG) -3% amid sales growth struggles.
Lockheed Martin (NYSE:LMT) +1.1% ending 2019 on strong note.
Pfizer (NYSE:PFE) -5% after missing estimates.
Starbucks (SBUX) -1.8% AH on a coronavirus warning.
In Asia, Japan +0.7%. Hong Kong -2.8%. China closed. India +0.6%.
In Europe, at midday, London +0.1%. Paris +0.3%. Frankfurt flat.
Futures at 6:20, Dow +0.2%. S&P +0.3%. Nasdaq +0.4%. Crude +0.8% to $53.90. Gold flat at $1569.90. Bitcoin +3.7% to $9289.
Ten-year Treasury Yield -2 bps to 1.62%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 International trade in goods
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:00 Pending Home Sales
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
2:00 PM FOMC Announcement
2:00 PM Chairman Press Conference