Wednesday Morning Reads

Wednesday Morning Reads




Open Interest:




Sizing up bank earnings

Investors are hoping for lower loan provisions and higher trading revenues as Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) announce Q3 results this morning. Wells Fargo (NYSE:WFC) is also due to report, but without a significant trading operation like its Wall Street peers, the focus will be on how its customers are spending or saving during the COVID-19 pandemic. On Tuesday, Citigroup's (NYSE:C) outgoing CEO Mike Corbat came under fire over regulatory penalties during a conference call, while JPMorgan (NYSE:JPM) said it was confident enough in the bank's financial position to resume share buybacks as soon as regulators allow them.

Snapping winning streak

The broader financial sector is on watch again this morning as U.S. stock index futures inched down overnight after snapping a four-day winning streak on Tuesday. The latest reading on wholesale inflation will also be released today, with September producer prices forecast to have increased 0.2%, just below the 0.3% rise in August. On the stimulus front, House Speaker Nancy Pelosi insisted the Trump administration revamp its latest $1.8T offer, while Senate Republican leader Mitch McConnell pushed a smaller-scale strategy that she quickly rebuffed.

Eli Lilly pauses antibody trial

The race to find medical breakthroughs to contain COVID-19 is running into some speed bumps. Eli Lilly (NYSE:LLY) has paused a government-sponsored trial of its antibody therapy due to safety concerns, less than 24 hours after Johnson & Johnson (NYSE:JNJ) said research on its experimental vaccine was put on hold after a participant fell ill. Lilly's therapy, part of the National Institute of Health's "Activ" program and backed by Operation Warp Speed, is similar to a drug from Regeneron (NASDAQ:REGN) that was given to President Trump during his bout with COVID-19.
Go Deeper: Quality control lapses at plant making Eli Lilly COVID drug.

Apple enters the 5G race

Apple (AAPL) launched four versions of the iPhone 12 with faster 5G connectivity on Tuesday, as well as unveiling the HomePod Mini, a $99 smart speaker. Wider product shot... The base model iPhone 12 (6.1-inch) and iPhone 12 Mini (5.4-inch) start at $699 and $799, and are available in five color options (pre-orders start October 16). The iPhone 12 Pro (6.1-inch) and Pro Max (6.7-inch) start at $999 and $1,099 for 128GB of storage, respectively, featuring a more premium design and extra camera power.

Let the promos begin...

The arrival of 5G iPhone 12 is anticipated to result in a robust upgrade cycle, triggering a battle in the carrier sphere, and a boon for iPhone maker Apple (NASDAQ:AAPL). Both AT&T (NYSE:T) and Verizon (NYSE:VZ) are giving away models for free, provided that customers sign up for unlimited plans and trade in qualifying phones. T-Mobile US (NASDAQ:TMUS) is also in the promotion game. It's offering two iPhone 12 Pros for $100 each to new customers with trade-ins, as well as selling the new iPhone for half off with a trade-in.

Making remote work permanent

Calling the initiative "Virtual First," Dropbox (NASDAQ:DBX) will stop asking employees to come into its offices and instead make remote work the standard practice, even after the coronavirus pandemic ends. For employees who need to meet up or work together in person, the company is establishing "Dropbox Studios" in San Francisco, Seattle, Austin and Dublin. Twitter (NYSE:TWTR) and Square (NYSE:SQ) are also letting employees work from home "forever," while Microsoft (NASDAQ:MSFT) is giving staff more flexibility in working from home.

Chicken price-fixing

Pilgrim's Pride (NASDAQ:PPC) has agreed to a plea deal with the U.S. Justice Department to resolve price-fixing charges, and will pay a fine of $110.5M. A guilty plea by the poultry giant will make Pilgrim's the first business to admit in court to what prosecutors have alleged was a roughly seven-year effort (from 2012 to early 2019) to inflate prices across much of the U.S. chicken industry. Current and former employees of other chicken companies, including Tyson Foods (NYSE:TSN), have also been charged, and the latter has been cooperating with the government's investigation under a corporate leniency program.

Largest ever corporate trade dispute

The World Trade Organization has awarded the EU the right to impose tariffs on about $4B in American goods in retaliation for subsidies granted to Boeing (NYSE:BA). The decision follows a similar WTO ruling from last year that allowed the U.S. to impose tariffs on $7.5B in EU goods over state support for Airbus (OTCPK:EADSY). "The EU will immediately re-engage with the U.S. in a positive and constructive manner to decide on next steps. Our strong preference is for a negotiated settlement. Otherwise, we will be forced to defend our interests & respond in a proportionate way," tweeted Valdis Dombrovskis, EU Commission EVP for Economy.
Go Deeper: No new orders for Boeing in September.

Last-ditch Brexit talks

Both the U.K. and EU don't appear to be making any headway as the clock ticks down to Boris Johnson's deadline for abandoning negotiations over their future trade relationship. The bloc's chief negotiator, Michel Barnier, said the discussions haven’t sufficiently advanced for them to enter the intensive final phase, though he has suggested that talks could go beyond Oct. 15. Johnson has meanwhile maintained the U.K. is "ready and willing" to leave the single market without a deal as tensions remain over fisheries and business subsidies. Sterling -0.4% to $1.2884.

What else is happening...

Walmart (NYSE:WMT) staggers Black Friday deals into separate events.

Netflix (NASDAQ:NFLX) is ending its free trials in the U.S. - The Verge.

Ford (NYSE:F) delays launch of plug-in Escape SUV after fires.

New Tesla (NASDAQ:TSLA) Model X version said to have higher range.

Coming 2 America moves from theaters to Amazon (NASDAQ:AMZN).

AMC (NYSE:AMC) says it could run out of cash by year-end.

Today's Economic Calendar

In Asia, Japan +0.1%. Hong Kong +0.1%. China -0.6%. India +0.4%.
In Europe, at midday, London -0.2%. Paris -0.3%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude -0.8% to $39.87. Gold +0.4% at $1901.90. Bitcoin -1.4% to $11391.
Ten-year Treasury Yield -1 bps to 0.71%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Producer Price Index
8:35 Fed's Barkin Speech
10:00 Atlanta Fed's Business Inflation Expectations
6:00 PM Fed's Barkin 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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