Wednesday Morning Reads

Wednesday Morning Reads



Open Interest:




Another hearing for Big Tech

It's been a common sight over the past few years, but Big Tech leaders are again going before Congress. The CEOs of Facebook (FB), Twitter (NYSE:TWTR) and Alphabet (GOOGGOOGL) are scheduled to appear virtually today before the Senate over Section 230 of the Communications Decency Act. The law allows social media companies to be exempted from the content third parties post on their platforms - because they are not deemed to be "publishers" - but critics take issue with the classification, given their current moderation policies. In prepared testimony, Mark Zuckerberg said Congress needs to "update" Section 230, while Jack Dorsey feels "eroding" the legislation would "collapse how we communicate on the Internet."

Selling picks up, oil tumbles

An alarming rise in new COVID-19 cases continues to weigh on market sentiment, with U.S. stock index futures sliding over 1% overnight and crude futures off 4% to under $38/bbl. Many European nations are tightening restrictions on business activity, clouding the global economic outlook and recovery, while investors are still waiting for more stimulus for the U.S. economy. Election uncertainty also has market players hesitant to make big moves despite the earnings parade coming down Wall Street. Today's Q3 results feature three Dow members, including Boeing (NYSE:BA), Amgen (NASDAQ:AMGN) and Visa (NYSE:V).

Microsoft kicks off tech heavyweight reports

The software giant beat estimates after the bell on Tuesday, but its stock slipped 1.7% AH on a weak forecast for its "More Personal Computing" category. While growth is expected to continue through FQ2, the growth rate will be smaller due to the seasonably higher sales during the previous three months. It was an all-out impressive quarter for Microsoft (NASDAQ:MSFT) as pandemic tailwinds continued, though some noted that Azure growth was also slightly below estimates (even though the figure skyrocketed 48% Y/Y).

Gulf Coast braces for Zeta

Gulf of Mexico operators like BP (NYSE:BP) and Chevron (NYSE:CVX) have shut roughly half of all oil and gas production in the basin ahead of Hurricane Zeta. The storm is forecast to be a Category 2 at landfall and could make a direct hit on New Orleans. Already this year, Louisiana has been hit by two tropical storms and two hurricanes: Laura, which caused at least 27 deaths after it struck in August, and Delta, which worsened Laura's damage in the same area weeks later.

Apple bolsters search efforts

There may be a new search player on the block. Apple (NASDAQ:AAPL) has started to show its own website search results when iPhone users type in a query from the home screen on iOS 14. While this might seem small, sources tell the FT that it's an important advance in Apple's in-house development and the latest in the Google/DOJ saga. Google (GOOGGOOGL) currently pays Apple an estimated $8B-12B to be the iPhone's default search tool, but if regulators block the partnership, Apple would be able to use its own search capability as an alternative.
Go Deeper: Apple signs former 'Daily Show' host Jon Stewart.

Rocky start to Facebook's political ad ban

Political advertisers are complaining that some ads were incorrectly blocked as the blackout period went into effect, while others criticized rule-breaking posts that could be misleading. In an attempt to clamp down on misinformation, Facebook (NASDAQ:FB) said last month it would impose a moratorium on new political ads in the week before the Nov. 3 election. The changes apparently set off some technological issues for advertisers, as well as glitches in Facebook's system. "We're working quickly on these fixes, and will share an update once they are resolved," tweeted Rob Leathern, Facebook director of product management.

Drive-thru is changing in the coronavirus age

Restaurant Brands (NYSE:QSR), the company that owns Burger King, Popeyes and Tim Hortons, is planning to modernize and speed up the drive-thru experience at over 10,000 restaurants in North America by mid-2022. That includes the installation of over 40,000 digital menu screens, or four per drive-thru lane, which offer contactless payment, integrate loyalty programs and use predictive technology to suggest products based on weather, time of day and trending items. Last month, Burger King also unveiled two new restaurant designs that feature food delivered via conveyor belt at drive-thru lanes, a dedicated delivery drive-thru lane and burger pickup lockers.

Dodgers win World Series, losses pile up for MLB

The Los Angeles Dodgers may have reason to celebrate after winning the 2020 World Series, but the league as a whole is reeling from financial difficulties. The MLB lost $3.1B this year, according to The Athletic, due to the shortened season, fan-less games and other disruptions related to the coronavirus pandemic. While there are very few publicly traded MLB teams - Atlanta Braves (NASDAQ:BATRA) and Toronto Blue Jays (NYSE:RCI) - additional cuts to advertising and broadcast revenues may weigh on ESPN (NYSE:DIS), TBS (NYSE:T) and Fox Sports (NASDAQ:FOX).

What else is happening...

Amazon (NASDAQ:AMZN) to hire 100,000 seasonal workers for holidays.

An 'enormous tech bubble' has already popped - David Einhorn.

Deutsche Bank (NYSE:DB) swings back to profit driven by growth in the Core Bank.

Antitrust probe puts Visa's (V) planned Plaid acquisition in jeopardy.

Sanofi (NASDAQ:SNY), Glaxo (NYSE:GSK) to supply 200M doses to COVID-19 vaccine alliance.

Is Jeff Bezos interested in CNN (T)?

Tuesday's Key Earnings

3M (NYSE:MMM) -3.1% on soaring healthcare sales, holding off on guidance.
Advanced Micro Devices (NASDAQ:AMD) +0.3% AH reporting record revenue, raising FY view.
Caterpillar (NYSE:CAT) -3.2% warning on heavy machinery demand, no outlook.
Eli Lilly (NYSE:LLY) -6.9% missing expectations, lower guidance.
First Solar (NASDAQ:FSLR) +12.6% AH on big earnings beat, 70% sales increase.
JetBlue (NASDAQ:JBLU) -5.4% predicting continued cash burn for Q4.
Merck & Co. (NYSE:MRK) -1.1% falling back after strong earnings.
Microsoft (MSFT-1.8% AH with Azure growth below estimates, weaker PC forecast.
Pfizer (NYSE:PFE) -1.3% ruling out vaccine before election day.
Raytheon (NYSE:RTX) -7% as defense weakness added to commercial aerospace woes.

Today's Markets

In Asia, Japan -0.3%. Hong Kong +0.5%. China -0.3%. India -1.3%.
In Europe, at midday, London -1.4%. Paris -2.5%. Frankfurt -2.8%.
Futures at 6:20, Dow -1.5%. S&P -1.3%. Nasdaq -1%. Crude -4% to $37.98. Gold -0.6% at $1901.40. Bitcoin +3.2% to $13636.
Ten-year Treasury Yield -3 bps to 0.75%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 International trade in goods (Advance)
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $26B, 2-Year FRN Auction
1:00 PM Results of $55B, 5-Year Note Auction

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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