Wednesday Morning Reads
- Ugliest GDP Report Ever Recorded
- That’s Bad for the Economy
- Fed Faces Viral Wave
- A Handbook to Today’s Tech Hearing
- Fintechs Face Pressure To Grow Up
- All Eyes On Pandemic
- What If We Get Inflation But Interest Rates Don’t Rise?
- All Weather Life
- You Don’t Need Alpha
- Does the Financial Media Affect the Stock Market?
Big Tech comes under the national spotlight today as four of its leaders - Amazon's (NASDAQ:AMZN) Jeff Bezos, Google's (GOOG, GOOGL) Sundar Pichai, Apple's (NASDAQ:AAPL) Tim Cook and Facebook's (NASDAQ:FB) Mark Zuckerberg - appear before the House Antitrust Subcommittee investigating the market dominance of online platforms. The hearing will offer a window into the thinking of 15 members of Congress, who will then make potential recommendations like new competition laws or company breakups. As of Monday, the four tech giants and Microsoft (NASDAQ:MSFT) represented the five most valuable U.S. companies. While Silicon Valley has vast control over what the world sees, reads, buys and does online, it has also showered blessings on the consumer and has allowed people around the globe to stay connected even during an unprecedented pandemic.
While stocks ended lower on Tuesday amid concerns over stimulus negotiations, U.S. futures inched into the green overnight as traders awaited the Fed's latest policy decision. The central bank is expected to keep interest rates at near zero to support the pandemic-hit economy, while Jerome Powell will deliver a press conference at 2:30 p.m. He's expected to sound reassuringly accommodative and perhaps open the door to a higher tolerance for inflation, though some think that could squash real yields and the dollar and are therefore not expecting any meaningful policy announcements. On Tuesday, the Fed announced it would extend all its emergency lending programs through the remainder of 2020.
Goldman Sachs put out a note yesterday that warned on the dollar's reserve currency status as Congress closes in on another round of fiscal stimulus. Contrarians are loving it, and the Goldman analysts say they don't believe it will necessarily happen, but it highlights a worry that money-printing will trigger inflation in years to come. Putting it in perspective: The dollar is down 10% since mid-March, but it's 30% higher than at its financial crisis lows, and 15% higher than it was in 2005 when Ben Bernanke and team were in the middle of a years-long rate hike cycle.
Go deeper: Goldman also raised its one-year forecast for gold to $2,300 per ounce.
A day after the ECB requested eurozone banks suspend their dividends until January 2021, big lenders across Europe posted their earnings. Banco Santander (NYSE:SAN) is off more than 3% premarket after posting a net loss of €11.1B for Q2 - the first in its 160-year history - as a deterioration of the economic outlook forced it to cut its goodwill on past acquisitions. Shares of Deutsche Bank (NYSE:DB) and Barclays (NYSE:BCS) meanwhile fell 2% and 3%, respectively, as the two set aside billions of euros to deal with loans and mortgages going bad as a result of the coronavirus pandemic.
Eastman Kodak (NYSE:KODK) is up another 60% in premarket trade, after skyrocketing 203% on Tuesday, following the receipt of a $765M government loan under the Defense Production Act, the first of its kind. The company, once a giant in photography, will help speed the domestic production of drugs that can treat a range of medical conditions and reduce U.S. reliance on foreign sources. "We will bring back our jobs and we will make America the world’s premier medical manufacturer and supplier," President Trump told a press conference.
Following the release of its Q2 results, Sanofi (NASDAQ:SNY), as well as partner GlaxoSmithKline (NYSE:GSK), confirmed that they would supply the U.K. with up to 60M doses of their experimental COVID-19 vaccine. The two are also in talks to sell the shot to the U.S., the EU and global organizations, and plan to start a study compressing the early and middle stages of clinical tests in September (their targeting approval in the first half of 2021). The companies are among dozens of others rushing to deliver a vaccine to help curb the coronavirus pandemic as governments around the world jockey to secure doses in advance.
Go deeper: Moderna vaccine priced up to $60 per course.
What does a $250K space flight look like?
Virgin Galactic (NYSE:SPCE) revealed the interior design of its SpaceShipTwo space planes in a live-streamed event. Each cabin houses six reclining seats tailored to each passenger's height and weight, which are designed to blend into the darkness of outer space. LED lighting will switch off at the flight's peak, putting the focus on the Earth, while passengers will experience a few minutes of weightlessness before they come back home for a runway landing. With SPCE shares up more than 110% YTD, analysts are looking for more color on flight reservations and increased visibility under new CEO Michael Colglazier.
Tesla would supply batteries to rival automakers
Back in April, Volkswagen (OTCPK:VWAGY) Chairman Herbert Diess said the automaker was implementing what he internally called the "Tesla catch-up plan" in order to close the software gap between the company and Tesla (NASDAQ:TSLA). Now, Elon Musk tweeted that he's willing to help. "Tesla is open to licensing software and supplying powertrains and batteries. We're just trying to accelerate sustainable energy, not crush competitors!" It's unclear which types of batteries would be supplied, but Tesla currently runs several joint ventures in Asia and is building its own battery manufacturing facility at its Fremont plant under its "roadrunner" project.
What else is happening...
More virus cases threaten MLB's shortened season.
Victoria's Secret parent, L Brands (NYSE:LB), slashes 15% of corporate workforce.
Best Buy (NYSE:BBY) joins retailers in closing for Thanksgiving Day.
AMC (NYSE:AMC) reaches landmark release window deal with Universal (NASDAQ:CMCSA).
CES goes digital next year in blow to Las Vegas.
3M (NYSE:MMM) -4.9% with recovery timeline uncertain.
AMD (NASDAQ:AMD) +10.3% AH raising revenue forecast for the year.
McDonald's (NYSE:MCD) -2.5% as comparable sales plunged 23.9% in Q2.
Pfizer (NYSE:PFE) +3.9% posting a strong outlook.
Raytheon (NYSE:RTX) -0.2% on commercial aerospace worries.
Starbucks (NASDAQ:SBUX) +5.6% AH as large order sizes cut into traffic decline.
In Asia, Japan -1.2%. Hong Kong +0.5%. China +2.1%. India -1.1%.
In Europe, at midday, London +0.3%. Paris +0.6%. Frankfurt -0.2%.
Futures at 6:20, Dow +0.1%. S&P +0.2%. Nasdaq +0.5%. Crude +1.1% to $41.49. Gold +0.4% to $1952.20. Bitcoin +1% to $11034.
Ten-year Treasury Yield flat at 0.59%
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