Wednesday Morning Reads

Morning Reads










Today's earnings from Disney (DIS) could give it a chance to regain some momentum, with the stock off 30% since its all-time high of $202 seen a year ago. The post-pandemic traffic recovery at its theme parks segment has been slow to pick up over the past few quarters, while its hedge on streaming has seen a slowdown in subscribers. The company still continues to spend big on its content slate, including sports, assigning a budget of as much as $33B for fiscal 2022.

By the numbers: The consensus EPS estimate is $0.63 (+96.9% Y/Y), while the consensus revenue estimate is $20.96B (+29% Y/Y). Disney+ streaming subscribers are anticipated to grow by about 7M on a Q/Q basis, compared to the just 2.1M new subscribers brought on during the prior quarter (which sent the stock down 7% on Nov. 10). The company is also expected to see its theme parks, experiences and consumer business grow sales by 72% to reach $6.2B as mobility picked up at live events and locations globally.

Meanwhile, streaming rival Netflix (NFLX) cratered 20% a couple of weeks ago, after reporting new subscriber additions that narrowly missed forecasts (8.28M vs. 8.5M) and publishing soft guidance for the coming quarter. That could set a tough bar for Disney, with a continued slowdown likely to impact investor sentiment. The House of Mouse ended FY 2021 with just over 118M subscribers to Disney+ and is targeting a total of 230M-260M by the end of FY24.

On watch: An earnings call will follow the Q4 results, which will be released after the market's closing bell at 4:00 p.m. Another item to watch will be the Q&A session with CEO Bob Chapek, CFO Christine McCarthy and Wall Street analysts. There is also a slew of other reports on today's calendar, including earnings from CVS Health (CVS), Mattel (MAT), MGM Resorts (MGM) and Uber Technologies (UBER).

Super Crypto

Crypto companies are set to take a big part in Super Bowl LVI, with the ability to advertise on the largest stage in the world. In recent times, watching commercials has turned into somewhat of a similar tradition as the game itself, with many firms shelling out up to $7M for a 30-second slot. Some are even calling it the "Crypto Bowl," a play on the "Dot-Com Bowl" in 2000, when early, speculative internet companies sought to gain mainstream acceptance (remember the liquidation?).

Snapshot: New crypto brands like Coinbase (NASDAQ:COIN) and are not the only ones getting in on the action. Old timers, like Budweiser (NYSE:BUD), are also throwing their hat in the ring, running an online NFT contest during the big game. Others will make a point of exploring blockchain technologies, while an ad from crypto exchange FTX features a trading spoof on now-retired quarterback Tom Brady. "I've missed out on a lot, but I'm not going to miss out on this," reads another FTX commercial called "The Dust Bowl," which warns viewers to get into the sector while they still can.

Elsewhere, the U.S. has seized about $3.6B in Bitcoin (BTC-USD) stolen during a 2016 hack of the Bitfinex currency exchange - the largest financial confiscation to date. Ilya Lichtenstein and his wife Heather Morgan were arrested for the alleged conspiracy, and were accused of conspiring to launder 119,754 Bitcoins (BTC-USD) that were stolen from the platform. Using fictitious identities, the couple deposited stolen funds into accounts at a number of virtual currency exchanges and darknet markets, and then withdrew the capital in a practice known as "chain-hopping."

What's the fair value of Bitcoin? Around $38,000, or 13% below the current trading price, according to JPMorgan analysts led by Nikolaos Panigirtzoglou. The estimate is based on Bitcoin (BTC-USD) being about four times as volatile as gold, though JPMorgan's long-term theoretical target - which would mirror the total amount of gold held privately for investment purposes - suggests the crypto could potentially reach $150,000. "The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption," the strategists added in the research note.

Tap to Pay

Following several reports, Apple (AAPL) has officially unveiled a new iPhone feature called "Tap to Pay" that will let small businesses take payments directly from their devices. The new method will work by tapping phones together or via contactless credit cards, without the need for additional hardware. Stripe will be the first payment platform to offer the service, including Shopify's (SHOP) Point-of-Sale app this spring, with additional platforms and apps to come later this year.

Bigger picture: The move puts Apple in direct competition with Block (SQ) and other fintech companies like PayPal (PYPL), Verifone (PAY) and Ingenico. Apple was quick to note that it won't be able to access what is being bought or who is purchasing it. The tech giant also said payment data is encrypted and protected by the same technology that makes Apple Pay private and secure.

"In collaboration with payment platforms, app developers, and payment networks, we're making it easier than ever for businesses of all sizes - from solopreneurs to large retailers - to seamlessly accept contactless payments and continue to grow their business," said Jennifer Bailey, Vice President of Apple Pay and Apple Wallet.

Push into payments: Apple already introduced the Apple Card in the U.S. in 2019, as well as installment plans on the credit card later that year. The Apple Cash card also offers digital peer-to-peer payments, and a "buy now, pay later" option for Apple Pay is reportedly in the works.

Protests spread

Demonstrations against vaccine mandates, or a movement that started as the "Freedom Convoy" in Ottawa, has made a landing in the U.S. Pickup trucks, cars and trailers shut down traffic on the Ambassador Bridge all day Tuesday, blocking a critical corridor that connects downtown Detroit with Windsor, Ontario. Another group of truckers blocked access to the Coutts border crossing in western Canada, connecting the province of Alberta with Montana.

Snapshot: The Ambassador Bridge is the busiest international land-border crossing in North America, responsible for 30% of about $600B in annual two-way trade between Canada and the U.S. Tensions began several weeks ago when trucker vaccine mandates kicked in north of the border on Jan. 15, while an American ban followed shortly thereafter.

"We of course support, as you know, the right to freedom of speech and protest," White House Press Secretary Jen Psaki told reporters. "While we do see some of this congestion due to protests, it is clear that these disruptions have broadened in scope beyond the vaccine requirement implementation."

Outlook: Ford (NYSE:F) and Stellantis (NYSE:STLA), which have auto parts and assembly plants in Windsor, said they have yet to see impacts from the blockade, but are paying close attention to developments. However, some are warning of further disruptions, which can undermine a supply chain that is still reeling from the pandemic. "Basically if there's a shutdown of transportation routes, the auto industry comes to a screeching halt in about two days," declared Robert Wildeboer, executive chairman of Canadian auto parts maker Martinrea International (OTCPK:MRETF).

Today's Markets

In Asia, Japan +1.1%. Hong Kong +2.1%. China +0.8%. India +1.1%.
In Europe, at midday, London +0.7%. Paris +1.6%. Frankfurt +1.6%.
Futures at 6:20, Dow +0.6%. S&P +0.7%. Nasdaq +1%. Crude -0.4% $88.98. Gold flat at $1828. Bitcoin -0.9% to $43,555.
Ten-year Treasury Yield -2 bps to 1.93%

Today's Markets

7:00 MBA Mortgage Applications
10:00 Wholesale Inventories (Preliminary)
10:30 EIA Petroleum Inventories
10:30 Fed's Bowman Speech
12:00 PM Fed's Mester: U.S. Economic Outlook and Monetary Policy
1:00 PM Results of $37B, 10-Year Bond Auction

Companies reporting earnings today »

What else is happening...

Meta (FB) slides for fourth day, company now under $600B market cap.

Alphabet's (NASDAQ:GOOGL) split decision bodes well for shares - BofA.

Chipotle (NYSE:CMG) rallies on comp sales beat, new store openings.

Vaccine makers dragged lower on Pfizer's (NYSE:PFEsoft 2022 guidance.

J&J (NYSE:JNJ) shuts down production at sole COVID vaccine plant - NYT.

Lyft (NASDAQ:LYFT) taps brakes on active rider outlook.

Harley-Davidson (NYSE:HOG) hogs the spotlight with revved-up earnings.

Korean air taxi deal sends Joby Aviation (NYSE:JOBYsoaring.

Microsoft (MSFT) looking to buy cyber firm Mandiant (MNDT) - Bloomberg.

Three charts explaining what has happened to SaaS stocks; is a bottom close?

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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