Wednesday Morning Reads
- Risk of Further Sanctions
- The Hottest Hedge-Fund Strategy
- Many Americans Will Rein in Spending
- Coronavirus ‘Collateral Damage’
- New Industry Giant
- Facebook Fails
- Disney World Draws Excitement
- Carriers Detect an Opening
- No Yield
- The Future of Education
Open Interest Changes:
U.S. stock index futures are trading cautiously after snapping a five-day winning streak in the previous session amid the latest uncertainty surrounding the coronavirus pandemic: Dow -0.2%; S&P -0.1%; Nasdaq +0.1%. "While significant gains in technology stocks kept the market afloat yesterday, even these market darlings capitulated during the afternoon hours today," said Jim Paulsen, chief investment strategist at the Leuthold Group. The COVID-19 outbreak crossed the grim milestone of over 3M confirmed cases on Tuesday as more states reported record numbers of new infections, while Florida faced an impending shortage of ICU hospital beds.
Organizers of the "Stop Hate for Profit" campaign weren't impressed after meeting with Facebook (NASDAQ:FB) executives on Tuesday. "We had 10 demands and literally we went through the 10 and we didn’t get commitments or timeframes or clear outcomes. We expected specifics, and that's not what we heard," Anti-Defamation League CEO Jonathan Greenblatt declared. The gathering also included leaders from the NAACP, Color of Change and Free Press. Prior to the meeting, Facebook COO Sheryl Sandberg said the company is "making changes - not for financial reasons or advertiser pressure, but because it is the right thing to do."
Go deeper: Facebook accused of 'unkept promises' by the DNC.
Shares of Walmart (NYSE:WMT) soared 7% on Tuesday on reports that the retailer's same-day delivery program, dubbed an "Amazon Prime Killer" by some, is due to launch in July. The service, named Walmart+, is priced at $98 per year and undercuts Amazon Prime (NASDAQ:AMZN) at $119, according to Recode. It will also include video entertainment, as well as other perks like discounts on gas, product deals, reserved delivery and two-hour delivery offers.
Allstate (NYSE:ALL) has agreed to acquire National General Holdings (NASDAQ:NGHC) for nearly $4B in cash as the U.S. insurance giant looks to "increase market share in personal property-liability." Shareholders of National General will receive a total of $34.50 a share - comprised of $32 in cash and closing dividends of $2.50 - representing a 69% premium to the stock's closing price on Tuesday. The deal, which includes a breakup fee of $132.5M, will be "accretive to adjusted net income earnings per share and return on equity beginning in the first year," said Allstate CEO Tom Wilson.
Small business owners and employees were not the only beneficiaries of the Payment Protection Program. JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) are in line to split between $1.5B-$2.6B in fees for being the conduits of the government aid, according to an analysis of newly released data. The government prioritized speed when it designed the $670B program - betting banks would be able to get huge sums out faster than a federal agency - but that decision also required giving lenders a financial incentive and boosted associated PPP costs. Other banks in line to receive hundreds of millions of dollars in processing fees include Wells Fargo (NYSE:WFC), Truist (NYSE:TFC), PNC (NYSE:PNC), TD Bank (NYSE:TD), U.S. Bank (NYSE:USB), KeyBank (NYSE:KEY) and Zions (NASDAQ:ZION).
Hot topics like Brexit have been buried in the news cycle over the past few months as coronavirus headlines grabbed most of the attention. Not overnight... U.K. Prime Minister Boris Johnson told German Chancellor Angela Merkel he is prepared to leave the EU without a trade deal if no compromise can be reached over disputes like fishing rights and the influence of European courts on British legislation. What would happen in that case? The U.K. would leave the bloc with the same terms as Australia - no comprehensive trade deal, following default WTO rules and specific agreements for certain goods.
The Trump administration has officially given the required one-year notice for the U.S. to quit the World Health Organization, citing "undue deference to China and failure to provide accurate information about the coronavirus." Responding to the decision, the United Nations Foundation called the move "shortsighted, unnecessary, and unequivocally dangerous amid the greatest public health crisis that Americans and the world have faced in a century." The U.S. is the global health agency's largest single contributor, providing more than $400M in 2019, or around 15% of its total budget.
Berkshire Hathaway (BRK.A, BRK.B) held 245M shares of Apple (NASDAQ:AAPL) at the last count in May, making it Apple's second-largest shareholder with about 5.5% ownership of the company's public stock. Given the tech giant's stellar run over the past few months, the Buffett conglomerate now owns more than $91B worth of Apple, comprising 43% of its portfolio, according to The Motley Fool. "Diversification is protection against ignorance," The Oracle once declared. "It makes little sense if you know what you are doing." "I don't think of Apple as a stock. I think of it as our third business," he added, referring to wholly owned subsidiaries Geico and BNSF. "It's probably the best business I know in the world."
A retired police captain who oversaw security operations at eBay (NASDAQ:EBAY) is next to be charged in the alleged cyberstalking campaign that targeted a Massachusetts couple who wrote critical content about the company on e-commerce blog, EcommerceBytes. The alleged harassment included sending the couple threatening messages, as well as disturbing deliveries like live cockroaches, a preserved fetal pig and a bloody-pig Halloween mask, along with a funeral wreath and a book on surviving the loss of a spouse. "The events from last year never should have happened, yet it gives us a chance to reflect, to reset and to act," said eBay CEO Jamie Iannone. "Integrity is the foundation of how I work, and as CEO, I will hold our leadership team and all employees to this same standard."
What else is happening...
In Asia, Japan -0.8%. Hong Kong +0.6%. China +1.7%. India -0.9%.
In Europe, at midday, London -0.1%. Paris -0.8%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.2%. S&P -0.1%. Nasdaq +0.1%. Crude -0.4% to $40.45. Gold +0.3% to $1815.10. Bitcoin +0.6% to $9289.
Ten-year Treasury Yield flat at 0.65%
Today's Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
12:15 PM Fed's Bostic: "Federal Reserve's Response to COVID-19"
1:00 PM Results of $29B, 10-Year Note Auction
3:00 PM Consumer Credit