Wednesday Morning Reads

Wednesday Morning Reads



Open Interest:





Markets snap losing streak

U.S. stocks look set to climb again, with Dow futures up 0.7% and S&P 500/Nasdaq futures ahead by 0.5%, after a bout of volatility that had tested the market's monthslong rebound. Better-than-expected earnings from Nike (NYSE:NKE) lifted sentiment after the bell on Tuesday, with the sneaker giant seeing digital sales grow 82%, driving shares up 13% AH. In Washington, Jerome Powell and Steven Mnuchin urged more spending to help the economy recover from COVID-19, and the Fed Chair will head back to Capitol Hill today to testify about the government's pandemic response. President Trump also confirmed the U.S. would not impose a lockdown to curb the spread of the coronavirus after Boris Johnson walked back some eased restrictions in the U.K.

Avoiding a government shutdown

The House passed a short-term spending bill Tuesday night in a 359-57 vote, which would keep the government funded through Dec. 11. In addition to funding most government agencies, the measure would add back dropped farm payments (sought by the Trump administration) in return for expanded nutrition assistance for low-income households (sought by the Democrats). Lawmakers have said they want to get past the shutdown threat to focus on passing more coronavirus relief, which they have failed to do for months amid disagreements over the size and scope of a fifth stimulus package.

Stricter vaccine standards

Tougher FDA standards for emergency use authorization of a COVID-19 vaccine will extend the review timeline and make it unlikely that a nod could happen by election day, The Washington Post reports. The agency is tightening the criteria to boost transparency and public trust amid perceptions that the review process is being politicized. Just over 50% of people would get the vaccine if it was available today, down from 72% in May, according to Pew Research Center.

Promises of battery breakthroughs

At its Battery Day event, Tesla (NASDAQ:TSLA) promised a $25,000 car (with full autonomy), as well as plans to halve the cost of batteries, but the three year timeline disappointed investors. Shares stumbled nearly 7% in AH trading after initially turning higher following the company's 2020 shareholder meeting. Elon Musk also forecast eventual annual production of 20M vehicles, or almost twice as many as output leader Volkswagen (OTCPK:VWAGY) sold last year. "One of the things that troubles me the most is that we don't yet have a truly affordable car... in order to do that, we've got to get the cost of batteries down."
Go Deeper: Tesla reiterates vehicle deliveries to increase 30%-40% in 2020.

Apple launches first online store in India

The launch marks a new chapter in Apple's (NASDAQ:AAPL) business in India, where about 99% of the market is dominated by Android. Nearly the entire Apple lineup, including new products announced last week, will be offered directly to customers for the first time (users had to previously buy items from Amazon India, Flipkart or authorized franchises). India is becoming increasingly important for Apple. In recent years, the tech giant has started manufacturing some of its devices in the country - Foxconn began building the iPhone 11 near Chennai in July, while the company has made other iPhone models in India since as early as 2017.

Latest Peloton challenger burns out

Peloton (NASDAQ:PTON) shares fell as much as 6% on Tuesday after Echelon announced an EX-Prime Smart Connect Bike that was developed "in collaboration with Amazon (NASDAQ:AMZN)." The machine was listed on Amazon's website for $499, a steep discount to machines offered by Peloton, but has since been listed as "currently unavailable." "This bike is not an Amazon product or related to Amazon Prime," a spokeswoman wrote by email. "Echelon does not have a formal partnership with Amazon. We are working with Echelon to clarify this in its communications, stop the sale of the product, and change the product branding." PTON +1.7% premarket.

Market making competition

The shift to zero-fee trading has not only upended the brokerage industry, but also the market makers, which do the buying and selling of financial instruments via a bid-ask spread. The latest? Citigroup (NYSE:C) has closed its market making business in retail options as it was "unable to compete in a technology arms race to be among the fastest and most reliable," FT reports. The decision leaves Morgan Stanley (NYSE:MS) as the sole major Wall Street bank in the sector, which is dominated by other market makers like Citadel Securities, Susquehanna, Simplex Trading and Optiver.

Social media advertising

Back at the start of the summer - at the height of the George Floyd protests - more than 200 companies pulled their advertising from Facebook (NASDAQ:FB), citing problems with hate speech and aggressive content. The #StopHateforProfit campaign then picked up steam with celebrities, like Kim Kardashian West, though a truce now appears to be in the making. The World Federation of Advertisers has helped negotiate a deal on posting statements, which sets some ground rules on what counts as hate speech and empowers external auditors to oversee the new system. The reporting standards, as well as tools to custom tailor ad placement, are set to launch in the second half of 2021 and will also incorporate platforms like YouTube (GOOGGOOGL) and Twitter (NYSE:TWTR).

What else is happening...

Amazon (AMZN) signals Prime Day will start Oct. 13.

Palantir (PLTR) expects 42% revenue growth this year to $1.06B.

Nikola (NASDAQ:NKLA) CFO says company has support from all its auto partners.

Hong Kong Disneyland (NYSE:DIS) is set to reopen this weekend.

3M (NYSE:MMM) explores $3.5B sale of food safety business - Bloomberg.

Is gold really a safe haven? Recent track record should give pause.

Tuesday's Key Earnings

KB Home (NYSE:KBH) +2.3% AH on strengthening net order growth.
Nike (NKE+13.4% AH as digital sales rose 82%.

Today's Markets

In Asia, Japan -0.1%. Hong Kong +0.1%. China +0.2%. India -0.2%.
In Europe, at midday, London +2.2%. Paris +1.8%. Frankfurt +1.5%.
Futures at 6:20, Dow +0.7%. S&P +0.5%. Nasdaq +0.5%. Crude +0.4% to $39.94. Gold -0.6% to $1896. Bitcoin flat at $10475.
Ten-year Treasury Yield +1 bps to 0.68%

Today's Economic Calendar

7:00 MBA Mortgage Applications
9:00 Fed's Mester Speech
9:00 FHFA House Price Index
9:45 PMI Composite Flash
10:00 Powell Testifies Before the House Select Subcommittee
10:30 EIA Petroleum Inventories
11:00 Fed's Evans: Economic Outlook
11:30 Results of $22B, 2-Year FRN Auction
12:00 PM Fed's Rosengren Speech
1:00 PM Results of $53B, 5-Year Note Auction
1:00 PM Fed's Bostic Speech
1:00 PM Fed's Kashkari Speech
3:00 PM Fed's Daly Speech

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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