Wednesday Morning Reads

Wednesday Morning Reads



Stock Options:



Mass vaccination

The U.K. has become the first country in the world to approve the coronavirus vaccine from Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX), which has been shown to offer up to 95% protection against COVID-19. The first 800,000 doses will be available in the U.K. from next week (another 40M doses are on order), with the jabs being rolled out at hospitals, vaccination centers, and in the community via GPs and pharmacists. Two doses three weeks apart are required for protection and will first be offered to frontline health care workers and nursing home residents, followed by older adults. Other countries aren't far behind: The U.S. and the EU also are vetting the Pfizer shot along with a similar vaccine made by competitor Moderna (NASDAQ:MRNA), and a similar nod by the FDA is expected as early as next week. (22 comments)

Slight pullback

U.S. stock index futures inched down 0.2% overnight after the market's historic rally extended to December and the S&P 500 hit a fresh record high. Sentiment got a boost after a group of lawmakers unveiled a $908B bipartisan stimulus plan, and while Senate Majority Leader Mitch McConnell rejected the proposal, investors are still hopeful for a second stimulus package in the lame-duck period for Congress. It comes after Fed Chair Jerome Powell called the economic outlook "extraordinarily uncertain" on Tuesday when he and Treasury Secretary Steven Mnuchin spoke before Congress as part of mandated updates on CARES Act funding. Powell will speak again today at 10 a.m. ET.

Salesforce shakes hands with Slack

The cash-and-stock deal will see the cloud software company buy the messaging app for nearly $28B. It underpins CEO Marc Benioff’s effort to move Salesforce (NYSE:CRM) beyond its core product, which helps manage customer relationships, to providing the software tools for day-to-day operations. The company shelled out $15.3B on data visualization company Tableau in 2019 and, a year earlier, spent $6.5B to acquire MuleSoft, whose back-end software connects data stored in disparate places. Salesforce shares are off 4.4% premarket and Slack (NYSE:WORK) is down nearly 1%, likely because investors were already expecting the announcement. (162 comments)

Silicon Valley exodus

The coronavirus pandemic has given a number of tech companies an excuse to exit California as many question the high cost of living and the state's hefty taxes amid a broader shift to remote work. Hewlett Packard Enterprise (NYSE:HPE) has become the latest to relocate its headquarters from San Jose, California, to Houston, Texas, following a difficult year that generated a full-year loss. Palantir (NYSE:PTR) recently moved its headquarters to Denver from Palo Alto, while Silicon Valley electric carmaker Tesla (NASDAQ:TSLA) has long-complained about the state's regulations and is opening a factory in Austin next year. San Jose Mayor Sam Liccardo called HPE's decision "a wake-up call," saying the region needed to "stop demonizing our tech employers, and start working with them to chart a path to a strong recovery."

Airbnb listing could come before Christmas

Airbnb (ABNB) is making some headlines this week as the vacation rental company begins its IPO roadshow. Terms include 51.9M shares at a price range of $44-$50, which would raise as much as $2.6B at a $35B valuation. At one point Airbnb was even leaning towards a direct listing, where it wouldn't sell any new shares, but after the pandemic struck it realized it needed the money. The company then raised $2B in debt to bolster its balance sheet and it's now looking to raise even more. (32 comments)

Walmart+ vs. Amazon Prime

Walmart+ (NYSE:WMT) members will no longer have to spend $35 for next-day or two-day shipping as the service looks to better compete with Amazon Prime (NASDAQ:AMZN) during the coronavirus pandemic. In fact, the number of online-only shoppers across the U.S. jumped 44% over the Thanksgiving holiday weekend, according to the National Retail Federation. The change, effective Friday, only applies to items on Walmart's website like toys, appliances and clothing, though groceries (which are delivered from stores) will still have the $35 minimum. Bigger picture: Walmart+ was launched just over two months ago, and while the retailer hasn't yet shared how many customers have joined, BMO Capital Markets estimates that as many as 19M U.S. households may have signed up based on a survey of about 1,000 U.S. shoppers. Amazon Prime had approximately 126M U.S. subscribers as of October, according to an estimate from Consumer Intelligence Research Partners. Walmart+ is also priced at $98 a year or $12.95 a month compared with Amazon Prime, which costs $119 a year or $12.99 a month.

OPEC+ attempts to mend differences

Diplomatic efforts are currently underway to repair that cracks in the 23-nation OPEC alliance as a dispute over how much crude to pump in 2021 broke into the open. The UAE has grown impatient to use its new production capacity, while also planning to launch a regional oil benchmark contract around its Murban crude variety, which needs the kind of volumes that clash with output limits. However, Saudi Arabia's Energy Minister Prince Abdulaziz Bin Salman signaled his dissatisfaction with the situation on Monday by telling others he may resign as co-chair of a committee that oversees the OPEC+ deal. Members need to hash out a compromise before ministers gather on Thursday, at a meeting that's been postponed because of the impasse. Most other nations support maintaining the existing curbs into the first quarter and deferring the 1.9M-barrel daily supply increase due to take effect in January by three months. "The risks of the OPEC+ alliance failing to reach an agreement are high as a resurgent virus has seen restrictions on travel increase across Europe and the U.S," ANZ analysts said in a note, though others are more skeptical. "OPEC+ often generates drama," declared Helima Croft, chief commodities strategist at RBC. "But we still believe that the group will probably find some face-saving compromise, with a short extension of the current cuts being the most likely outcome."

How would a Biden administration approach China?

Joe Biden won't immediately remove the tariffs that the Trump administration imposed on China, but intends to first review the existing U.S.-China agreement, and develop a "coherent strategy" with traditional allies in Europe and Asia. "The best China strategy, I think, is one which gets every one of our - or at least what used to be our - allies on the same page. It's going to be a major priority for me in the opening weeks of my presidency to try to get us back on the same page with our allies," Biden told NYT opinion columnist Thomas Friedman. While Trump was focused on the trade deficit with China, Biden says his "goal would be to pursue trade policies that actually produce progress on China's abusive practices - that's stealing intellectual property, dumping products, illegal subsidies to corporations" and forcing "tech transfers" from American companies to their Chinese counterparts.

What else is happening...

Nasdaq (NASDAQ:NDAQ) proposes new listing rules to advance board diversity.

Tesla (TSLAopen to talks on auto merger; pushes 'Game of Pennies.'

FAA issues first certificate for Boeing (NYSE:BA) 737 MAX since 2019 grounding.

Facebook's (NASDAQ:FB) Oversight Board chooses its first cases.

Tailored Brands (NYSE:TLRD) emerges from Chapter 11 after restructuring.

Tuesday's Key Earnings

Box (NYSE:BOX) -6.8% AH following a disappointing outlook.
Hewlett Packard Enterprise (HPE-1.4% AH recording a full-year loss.
Salesforce (CRM-4.4% AH acquiring Slack for $27.7B.
Slack (WORK-0.9% AH despite 12K net new paid customers, up 140% Y/Y.

Today's Markets

In Asia, Japan +0.1%. Hong Kong -0.1%. China -0.1%. India -0.1%.
In Europe, at midday, London flat. Paris -0.3%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.3%. S&P -0.2%. Nasdaq -0.2%. Crude -0.8% to $44.18. Gold +0.6% at $1830. Bitcoin -2% to $19119.
Ten-year Treasury Yield -1 bps to 0.92%

Today's Economic Calendar

Auto Sales
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
9:00 Fed's Quarles: “Financial Regulation”
9:00 Fed's Williams Speech
10:00 Fed's Harker: Economic Outlook
10:00 Powell Testifies Before House Financial Services Committee
10:30 EIA Petroleum Inventories
1:00 PM Fed's Williams Speech
2:00 PM Fed's Beige Book

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.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)