Wednesday Morning Reads

Wednesday Morning Reads





Will the global equity selloff extend for another day? That's the question traders are asking this morning as U.S. futures hovered between significant gains and losses overnight (they're currently up by 0.2%-0.5%). Nearly 6.3% and an estimated $1.7T in value has been wiped off the S&P 500 over the last two days as the CDC warned the coronavirus is "likely" to spread across the U.S. amid increasing deaths and confirmed cases outside of China. While analysts and policymakers are finding it hard to quantify the economic impact of the virus, many are pricing in a slowdown in world growth, though it's still unclear how far that will extend.
Go deeper: "The disruption of daily life (from coronavirus) might be severe" - CDC.

Too early to tell

Reinforcing other central bank officials' recent comments, Fed Vice Chairman Richard Clarida said the central bank is keeping a close eye on how coronavirus will affect the global and U.S. economies. The outbreak is likely to have a "noticeable impact on Chinese growth... and could spill over to the rest of the global economy," he said at a speech in Washington, DC. So far, he sees no need to change the Fed's current monetary policy, which he feels is in a "good place" and should continue to support sustained growth and inflation returning to the Fed's 2% target.
Go deeper: Markets price in ECB rate cut by December.

Handouts part of Hong Kong stimulus

Hong Kong has announced $120B Hong Kong dollars ($15.4B) worth of measures to support an economy that’s been dragged down by political unrest and the new coronavirus outbreak. One of the notable features is a payment of HK$10,000 ($1,284) to each permanent resident of the city aged 18 or older, aiding the population "overwhelmed by a heavy atmosphere." Financial Secretary Paul Chan estimated the deficit will reach an "an all-time high" of HK$139.1B in 2020/21 and also flagged deficits for the next five years.

Disney's 7th CEO

In a shock announcement late Tuesday, Bob Iger stepped aside as Walt Disney's (NYSE:DIS) chief executive officer, handing the reins of the world's biggest entertainment company to theme parks head Bob Chapek. While Iger will stay to direct the company's creative endeavors as executive chairman through 2021, the news confused Wall Street, sending the shares down 3.6%. Disney's future is supposed to be streaming, not theme parks, and media industry insiders almost unanimously expected streaming chief Kevin Mayer to be Iger's successor.
Go deeper: 'Every Investor Should Consider Holding Disney As Part Of Their Portfolio' by Tech Junkie.

More C-suite changes

Keith Block became co-CEO alongside Salesforce (NYSE:CRM) head Marc Benioff less than two years ago, though he's now stepping down. Block was widely seen as a potential heir to Benioff, who founded the company in 1999, and will continue as chairman. As well as reporting Q4 results that beat expectations, Salesforce said it would acquire cloud and mobile software company Vlocity for $1.33B in cash, adding additional muscle to its suite of cloud products.
Go deeper: Beth Kindig says Salesforce must evolve.

Virgin loss

Virgin Galactic's (NYSE:SPCE) Q4 net loss widened to $73M from a year-ago loss of $46M, in the space company's first results as a publicly traded company. The space firm said it received 7,957 registrations of interest in flight reservations during the quarter, and will begin collecting $1,000 deposits to secure a place in line as seats become available. While Virgin Galactic didn't offer any updates on its spaceflight timetable, it previously said it aimed for a first commercial flight later this year with Richard Branson on board. SPCE -6% premarket.

Beyond Meat is coming to Starbucks

It's the first time the world's biggest coffee chain will offer an imitation meat product. The Beyond Meat (NASDAQ:BYND) sandwich, which will be topped with cheddar cheese and egg on an artisanal bun, will be available at Starbucks' (NASDAQ:SBUX) nearly 1,200 coffee shops across Canada on March 3. It comes as the company aggressively works to build out its food business, which currently makes up at least 20% of revenue at company-operated stores, as well as a surge in popularity for alternative proteins.

Debut of Walmart Fulfillment Services

Looking to position itself better in its fight against Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT) is launching a new service that allows third-party vendors to hire the big-box retailer to store, pack and ship items. Both sellers (low storage and shipping fees) and customers (brand choice and easier returns) will benefit from the new service, according to the company. Walmart's online sales grew by 37% last year, topping its own internal growth targets of 35%.

Eyes on Tesla's solar business

Panasonic (OTCPK:PCRFF) plans to exit solar cell production at Giga New York, though Tesla (NASDAQ:TSLA) has informed the state it will have "no bearing on its current operations." The firm has already secured over 1,500 jobs in the city of Buffalo, clearing its 1,460 commitment before April and thereby avoiding a $41M penalty. The withdrawal puts a spotlight on Tesla's solar business, but also comes as the company diversifies its battery suppliers (Panasonic will reportedly retain its battery JV with Tesla in Nevada).

Surge in streaming

Streaming accounted for 80% of recorded-music sales in 2019, marking the industry's fourth consecutive year of growth, according to a report from the Recording Industry Association of America. In fact, with revenue of $8.8B in 2019, streaming alone was larger than the entire U.S. recorded-music market in 2017. That includes premium subscription services, like Spotify (NYSE:SPOT), Apple Music (NASDAQ:AAPL) and Amazon Music, ad-supported on-demand services, such as YouTube (GOOGGOOGL) and Spotify's ad-supported tier, and streaming radio services such as Pandora and Sirius XM (NASDAQ:SIRI).

What else is happening...

Covid-19... Clinical trials begin for Gilead's (NASDAQ:GILD).

Juul (JUULtargeted by state AGs across the U.S.

Tesla (TSLA) slammed at NTSB hearing, criticized over Autopilot.

Closer look at Mattel (NASDAQ:MAT) accounting error.

Diageo (NYSE:DEOwarns on sales hit from coronavirus.

EU sees transatlantic 'mini deal' with the U.S.

Tuesday's Key Earnings
Amarin (NASDAQ:AMRN-2% AH despite a Q4 beat.
Home Depot (NYSE:HD-1% amid a broad market selloff.
Macy's (NYSE:M-5.5% on a 1.4% drop in revenue.
Salesforce (CRM-2.3% AH as co-CEO stepped down.
SmileDirectClub (NASDAQ:SDC-21.3% AH posting higher costs, big loss.

Today's Markets
In Asia, Japan -0.8%. Hong Kong -0.7%. China -0.8%. India -1%.
In Europe, at midday, London -0.8%. Paris -1.2%. Frankfurt -1.6%.
Futures at 6:20, Dow +0.2%. S&P +0.3%. Nasdaq +0.5%. Crude -1.2% to $49.30. Gold +0.1% to $1650.90. Bitcoin -3.9% to $9165.
Ten-year Treasury Yield +3 bps to 1.36%

Today's Economic Calendar
7:00 MBA Mortgage Applications
10:00 New Home Sales
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $18B, 2-Year FRN Auction
1:00 PM Results of $41B, 5-Year Note Auction

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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