Wednesday Morning Reads
- Machines Will Create More Jobs Than They Destroy
- The Fed’s $4 Trillion Lifeline
- Bet Against Election Fireworks
- Worries About Election Unrest Mount
- Apartment Rents Are Plunging
- Why Own Bonds When Rates are So Low?
- Volatility in Their Portfolios
- Bad Ideas
All eyes will be on Tesla's (TSLA) Q3 results this afternoon after the electric carmaker reported record vehicle deliveries earlier this month. Despite a global pandemic and economic upheaval, Elon Musk has stuck to a forecast of delivering half a million vehicles in 2020 and his latest commentary will be of particular note. While several analysts believe the goal is attainable, it would mean Tesla must deliver more than 181,600 vehicles in Q4, a 30% increase from record Q3 deliveries.
Snap (NYSE:SNAP) soared 24% AH on record Q3 revenues that crushed estimates (+52% to $679M), while attracting the highest-ever number of advertisers to its platform. That's due in part to the summer boycott against Facebook (NASDAQ:FB), which saw advertisers take their money elsewhere due to the social network's stance on hate speech. Meanwhile, the pandemic subscription boom faded for Netflix (NASDAQ:NFLX), which only added a little over 2M subscribers last quarter (vs. 16M in Q1 and 10M in Q2). Shares fell 5.4%, as the company said additions in 2021 would be down compared to this year if the world recovered from the COVID pandemic.
U.S. stock index futures are hugging the flatline with traders in wait-and-see mode as coronavirus aid negotiations continue to drag along. Citing progress in talks, White House Chief of Staff Mark Meadows said the administration's offer is now $1.88T, while House Speaker Nancy Pelosi is pushing for $2.2T along with a number of requirements for how the money should be deployed. The biggest differences center around state and local government aid and liability protections for businesses, but an agreement must be reached by the end of the week in order to have legislation ready before Election Day.
While the U.S. Department of Justice and 11 states filed an antitrust suit against Google (GOOG, GOOGL) on Tuesday, shares of the tech giant closed higher, due to the case's narrower scope and the latter pledging to fight back. It's still being called the highest profile antitrust case by the U.S. government since it took on Microsoft (NASDAQ:MSFT) in the 1990s, which resulted in the company agreeing to share computing interfaces (though it was not broken up). At the heart of the current lawsuit is Google's search business and allegations that the tech giant uses deals with distributors to make sure its search engine is the default for U.S. customers.
Chinese technology companies including Huawei have expressed strong concerns to local regulators about Nvidia's (NASDAQ:NVDA) proposed acquisition of Arm (OTCPK:SFTBY), Bloomberg reports, potentially jeopardizing the $40B semiconductor deal. One of the chief concerns is that Nvidia may force Arm to cut off Chinese clients, becoming yet another pawn in a U.S.-Chinese struggle for tech supremacy. Nvidia and Arm have said they're confident they'll get sign-offs from China, the U.K., the EU and the U.S., but it may take as long as 18 months to secure the necessary approvals. NVDA -1.4% premarket.
Playing catch up in the business merchant sector, JPMorgan (NYSE:JPM) is rolling out a checking account paired with QuickAccept, pushing into an area pioneered by Square (NYSE:SQ) and PayPal (NASDAQ:PYPL). The service lets businesses take card payments through a mobile app or contactless card reader, while users will see sales hit their Chase accounts on the same day. The company will soon migrate "a large portion" of its more than 3M small business customers to the new service, according to Jen Roberts, CEO of the Chase business banking unit.
J.C. Penney (OTCPK:JCPNQ) expects to exit Chapter 11 ahead of the holiday season after taking another step toward a sale to U.S. mall owners. Brookfield Property Partners (NASDAQ:BPY) and Simon Property Group (NYSE:SPG) would own and operate its retail assets, while 160 of its real estate properties and its distribution centers will become part of a separate holding company owned by a group of its lenders. J.C. Penney has filed a draft asset purchase agreement, which gets it closer to a deal, but it is still subject to court approval and other conditions (a hearing is set for early November).
Walt Disney (NYSE:DIS) is blasting California's new protocols for reopening theme parks, saying the strict guidance would complicate the company's efforts to reopen Disneyland (which has been shut for seven months). Parks can only operate under Tier 4 (yellow) restrictions - limiting capacity to 25%, a reservation will be required and no day of sales. Disneyland Resort President Ken Potrock also pointed to the company's record in reopening theme parks in Florida, Asia and Europe, as well as what he called inconsistent standards for different California businesses.
The latest edition of GM's (NYSE:GM) plan to shift to "electric and autonomous vehicles through 2025" is the GMC Hummer EV sport utility truck, which will become available next fall at a starting price of $112,595. Specs: Zero to 60 mph in 3 seconds, and estimated best-in-class 1,000 horsepower and 11,500 lb.-ft. of torque, fast charging of up to 100 miles of range in 10 minutes and more than 350 miles of range on a full charge. The Hummer will hit the road alongside significantly cheaper models from rivals, like Ford's (NYSE:F) electric F-150, Tesla's (NASDAQ:TSLA) Cybertruck and pickups from four startup companies.
Go Deeper: Ford plans for self-driving commercial service launch in 2022.
What else is happening...
Pound jumps as EU says Brexit trade deal still 'within reach.'
Tuesday's Key Earnings
Lockheed Martin (NYSE:LMT) -3% as 2021 sales outlook lagged expectations.
Netflix (NFLX) -5.7% AH posting slowing subscriber growth numbers.
Philip Morris (NYSE:PM) -5.8% amid slipping tobacco shipment unit volumes.
Procter & Gamble (NYSE:PG) +0.4% reporting a 9% rise in organic sales.
Snap (SNAP) +24% AH as advertisers lifted platform spending.
Texas Instruments (NASDAQ:TXN) +2.3% AH with upside guidance driven by auto rebound.
Travelers (NYSE:TRV) +5.6% benefiting from underwriting gains.
In Asia, Japan +0.3%. Hong Kong +0.8%. China -0.1%. India +0.4%.
In Europe, at midday, London -1.2%. Paris -0.9%. Frankfurt -0.7%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude +0.3% to $1921.40. Gold +0.4% at $1950.20. Bitcoin +3.7% to $12233.
Ten-year Treasury Yield +1 bps to 0.8%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:50 Fed's Brainard: Economic and Monetary Policy Outlook
10:00 Fed's Mester: U.S. Monetary Policy
10:30 EIA Petroleum Inventories
12:00 PM Fed's Daly Speech
12:00 PM Fed's Kashkari Speech
12:00 PM Fed's Kaplan: “The Current State of the Economy”
1:00 PM Fed's Barkin: “Rural Virginia’s Economic Recovery”
1:00 PM Results of $22B, 20