Wednesday Morning Reads
- Better Than Forecast
- Pumping Too Much Oil
- ‘Farewell, Fossil Fuels’?
- Europe’s Economic Revival Is Imperiled
- Fed Debates Next Steps
- Both Are Wrong
- U.S. House Report Blasts Failures Of Boeing, FAA In 737 MAX Certification
- Record-Breaking Software IPO
- Ex-GM Executive Moonlights as Matchmaker
- Movie Theaters Returned
- US Retailers Roll Out Foreign Toilet Pape
- What Should Young Investors Read?
While 2020 may be the year of the SPAC, the U.S. IPO market is gearing up for its busiest week since May of 2019. Making headlines is data warehouse firm Snowflake (SNOW), which is backed by Warren Buffett (BRK.A, BRK.B) and Salesforce (NYSE:CRM), and will begin trading on the NYSE today at a valuation of almost $33B (shares will be priced at $120). That would make it the biggest deal of the year, as well as the largest software IPO of all time. Also on the calendar this week are the IPOs of software videogame maker Unity Software (U), a direct rival of Epic Games, and packaging company Pactiv Evergreen (PTVE).
Get ready for another Fed-filled session following the recent symposium in Jackson Hole and the first meeting since Chairman Jerome Powell announced a greater tolerance for inflation. While the central bank is expected to keep rates on hold, the "dot plot" is likely to show interest rates will stay close to zero through the end of 2023. The Fed may also note an improved economy, but not celebrate it, and markets are hoping for a more accommodative stance. Bigger questions will touch on the scale and composition of its bond buying, and the Fed's long-term plan with its $7T balance sheet.
U.S. stock futures are continuing their march higher, now ahead by 0.5%, on the back of broad market gains and solid economic data. August retail sales data will be released at 8:30 a.m., while investors will eye the Fed's latest policy meeting this afternoon. Meanwhile, House Speaker Nancy Pelosi has signaled the chamber should postpone the planned October recess until lawmakers can strike a bipartisan agreement on a new coronavirus relief bill, though it's unclear how Congress will be able to break the impasse. Oil is also on the rise again as Hurricane Sally disrupted more than 25% of U.S. offshore oil and gas output and the API showed a big drop in U.S. crude stockpiles.
Facebook (NASDAQ:FB) may be in for a rough session after Kim Kardashian West, as well as a group of other celebrities, said they would participate in the Stop Hate For Profit movement and "freeze" their Instagram activity for 24 hours. "I can't sit by and stay silent while these platforms continue to allow the spreading of hate, propaganda and misinformation," she wrote, encouraging her 188M followers to do the same. Reports also suggest the FTC would challenge Facebook's dominant position in social media by filing a possible antitrust lawsuit by the end of the year. FB -1.3% premarket.
Instead of an iPhone 12, Apple (NASDAQ:AAPL) yesterday unveiled its latest watch models (some versions don't need to be paired to a phone) and a refreshed line of mid-range and low-cost iPads. It also talked software at the "Time Flies" event, with iOS 14 now set to be released on Sept. 16. One of the biggest announcements was the long-awaited services bundle. Called Apple One, customers will be able to access iCloud, Apple Music, TV+, Arcade, News+, and Fitness+ for $15/month for individuals or $20/month for families.
While several governance problems stemmed from Eastman Kodak's (NYSE:KODK) July announcement of a planned $765M loan from the U.S. government, a special committee hired by the board said none of those issues violated the law. The stock soared before, and after, the announcement - which vaulted the one-time photography giant into drug manufacturing - but quickly turned into a roller coaster ride as shares fell precipitously. Kodak seems to be getting back to its old ways on the news, with the stock up 41% premarket to $8.80/share.
The House Committee on Transportation and Infrastructure has released a 238-page filing, in the works for about 18 months, that paints a Boeing (NYSE:BA) that prioritized profits over safety. Numerous design, management and regulatory failures during the development phase of the 737 MAX had preceded the "preventable death" of 346 people in two crashes of the popular jetliner, as well as an FAA that was unable to ensure passenger safety. The report comes as regulators are in the final stretch of recertifying the 737 MAX, which has been grounded worldwide since March 2019. Boeing has also been hit with the coronavirus pandemic that has roiled air travel demand and recently discovered flaws on some 787 Dreamliners.
The U.S. violated international regulation when it imposed tariffs on Chinese goods in 2018, the World Trade Organization said in a ruling that is likely to go nowhere. The U.S. is likely to appeal, which would put the case into a legal void since Washington has already blocked the appointment of judges to the WTO's appellate body. Any decision would also be the start of a legal process that could take years to play out, and if upheld, would ultimately lead to the WTO approving retaliatory measures by China (a move it has already taken on its own).
Go Deeper: Trump removes 10% tariffs on imports of aluminum from Canada.
What else is happening...
Abe era ends as Yoshihide Suga becomes Japan's prime minister.
Tuesday's Key Earnings
In Asia, Japan +0.1%. Hong Kong flat. China -0.4%. India +0.7%.
In Europe, at midday, London -0.1%. Paris +0.2%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.5%. S&P +0.5%. Nasdaq +0.5%. Crude +2.3% to $39.17. Gold +0.4% to $1973. Bitcoin +1.8% to $10901.
Ten-year Treasury Yield flat at 0.68%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 Retail Sales
10:00 Business Inventories
10:00 NAHB Housing Market Index
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:30 PM Chairman Press Conference
4:00 PM Treasury International Capital