Wednesday Morning Reads

Wednesday Morning Reads 


  • U.S. regulators have rejected Wells Fargo's (WFC) plan to repay customers. Reuters Report
  • President Trump plans to levy sanctions on any country that interferes in elections (RSX). Reuters Report
  • U.S. AG Jeff Sessions to open investigation into practices of social media companies (TWTR, FB, SNAP, GOOG). Bloomberg Report
  • JP Morgan (JPM) CEO Jamie Dimon plans to hand over some more responsibilities to his senior executives. FT Report
  • A former top Goldman Sachs (GS) banker raised concerns regarding ethics in 2014. NY Times Report
  • John Martin & Richard Parsons are top candidates for CBS (CBS) CEO. Variety Report
  • KLA-Tencor (KLAC) growth in China will accelerate. Digitimes Report
  • Several businesses plan coordinated lobbying campaign against President Trump's tariffs (FXI). WSJ Report
  • Canada is ready to allow dairy access in NAFTA talks (EWW, EWC). Reuters Report





Open Interest Changes:



An Early look at today:

Stock futures are flat to slightly higher ahead of several upcoming catalysts the next few days including Apple’s (AAPL) annual product release later today, the Fed Beige Book later this afternoon, central bank policy meetings for both the European Central Bank (ECB) and Bank of England (BOE) tomorrow morning, ad the expected impact of Hurricane Florence as it barrels towards the Carolinas. You can throw in a monthly gauge of inflation in the form of Producer Prices (PPI) this morning and a weekly oil inventory report to the mix as well. Trade tensions between the U.S. and its partners have put pressure on global markets in recent months, but American equities have continued to get a boost despite the disputes between the US and trading partners in China, Canada and the EU. Stocks rose on Tuesday, wiping out earlier losses, as Apple rallied into its product announcement, leading the Dow and Nasdaq Composite higher. Stocks had opened lower as Reuters reported that China plans to ask the World Trade Organization for authority to impose trade sanctions on the U.S. Energy stocks also surged on the back of higher oil prices, with WTI crude jumping 2.5% to one-week closing highs. Overnight in Asian markets, The Nikkei Index fell -60 points to 22,604, the Shanghai Index slipped -8 points to settle at 2,656 and the Hang Seng Index dropped -77 points to end at 26,345. In Europe, the German DAX is up about 20 points trading under 12,000, while the FTSE 100 is down a few points around 7,260.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 10.76 points, or 0.37%, to 2,887.89

· The Dow Jones Industrial Average rose 113.99 points, or 0.44%, to 25,971.06

· The Nasdaq Composite gained 48.31 points, or 0.61%, to 7,972.47

· The Russell 2000 Index advanced 0.94 points, or 0.05% to 1,718.40

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Producer Price Index (PPI) MoM for Aug…est. 0.2%

· 8:30 AM EST PPI Ex: Food & Energy MoM for Aug…est. 0.2%

· 9:30 AM EST Fed’s Bullard speaks to CFA Society in Chicago

· 10:30 AM EST Weekly DOE Inventory Data

· 2:00 PM EST Fed Beige Book Released

Earnings Calendar:

· Earnings Before the Open: COOL, EYPT

· Earnings After the Close: ACET, PVTL, OXM, SAIC, TLRD

Other Key Events:

· Barclay’s Global Financial Services Conference, 9/12-9/14, in New York

· CLSA Investors Forum, 9/11-9/14 in Hong Kong

· Credit Suisse 31st Annual Basic Materials Conference, 9/11-9/13 in New York

· Deutsche Bank Technology Conference, 9/12-9/13, in Las Vegas

· Morgan Stanley 16th Annual Global Healthcare Conference, 9/12-9/14, in New York

· Mobile World Congress Americas, 9/12-9/14

World News

· Hurricane Florence is expected to slow down considerably by late Thursday into Friday, and move through early Saturday, the center of Florence will move over the southwestern Atlantic Ocean between Bermuda and the Bahamas today, and approach the coast of North Carolina or South Carolina in the hurricane warning area on Thursday and Friday

· Vladimir Putin said the two men accused by the UK of being Russian spies who staged a nerve agent attack in Salisbury were ordinary citizens with “nothing criminal” about them – FT

Sector News Breakdown


· An activist investor wants cosmetics company e.l.f. Beauty Inc. (ELF) to give itself a makeover. Marathon Partners Equity Management LLC, which owns about 8.5% of e.l.f., plans to urge the discount cosmetics seller to either start a process to sell itself or refocus on core operations and reduce costs, the WSJ reported

· NIO Inc. (NIO) 160M share IPO priced at $6.26

· Farmer Bros (FARM) Q4 EPS 0c/$149.5M vs. est. 12c/$152.65M; Q4 adjusted Ebitda $14.0M

· New York & Company (NWY) reported a rebranding plan that included a name change to RTW Retailwinds

· PGT, Inc. (PGTI) files to sell 7M shares of common stock


· The American Petroleum Institute (API) reported that U.S. crude supplies dropped by -8.6M barrels for the week ended Sept. 7, while supplies of gasoline rose 2.1M barrels and distillate stockpiles climbed by 5.8M barrels

· SSE PLC (SSE.LN) said it expects adjusted operating profit for the 1H19 to fall by half compared with the year earlier period, citing the impact of high gas prices and warm weather.

· Pioneer Natural Resources Company (PXD) and U.S. Silica Holdings, Inc. (SLCA) announced that the companies have entered into a long-term sand supply agreement by which Pioneer will purchase an interest in U.S. Silica’s sand reserves at its Lamesa, Texas, mine in West Texas.

· Northern Oil (NOG) Q3 production tracking significantly above view as announced preliminary results for July and August averaged over 25,000 Boe/d vs prior est. of 23,000-24,000 Boe/d for 3Q

· The Trump administration on Tuesday proposed less stringent requirements for oil-and-gas companies dealing with methane-gas leaks, weakening an Obama administration rule intended to combat climate change.


· Franklin Resources (BEN) reports preliminary AUM $722.4B as of August 31, down from $733.7B at July 31, 2018. The decrease in assets under management was attributable to net market declines and net outflows.

· Cohen & Steers, Inc. (CNS) preliminary assets under management of $61.3B as of August 31, 2018, an increase of $774M from July 31, 2018; the increase was due to market appreciation of $910 million and net inflows of $71 million, offset by distributions of $207 million.

· Annaly Capital (NLY) files to sell 75M shares of common stock

· Cadence Bancorp (CADE) files to sell 12.1M shares of Class A common stock

· First Republic (FRC) files to sell 2M shares of common stock

· Americold Realty Trust (COLD) announces offering of 31M common shares


· WellCare Health Plans Inc. (WCG) will be added to the S&P 500 index on Monday, replacing XL Group Ltd. (XL), which is being acquired by AXA SA

· Gilead Sciences (GILD) shares rose 3% and Galapagos NV (GLPG) up 16% as announced that FINCH 2, a global, randomized, placebo-controlled, Phase 3 study of filgotinib in adults with moderately-to-severely active rheumatoid arthritis achieved its primary endpoint

· Endocyte (ECYT) 9.459M share Secondary priced at $18.50

· Nuvectra (NVTR) 28.25M share Spot Secondary priced at $21.25

· Pacific Biosciences (PACB) 14.118M share Secondary priced at $4.25

· Bristol-Myers (BMY) announced results from a Phase 2 study of BMS-986165, an investigational oral, selective tyrosine kinase 2 inhibitor, in patients with moderate to severe plaque psoriasis. Efficacy endpoints including greater than or equal to75% and 90% reduction in the Psoriasis Area

· Biohaven Pharmaceutical (BHVN) said it has submitted an Investigational New Drug application to the U.S. Food and Drug Administration to evaluate the safety and tolerability of BHV-3500

· Vital Therapies (VTL) said VTL-308 study for ELAD, a cell-based therapy for treating acute forms of liver failure, failed to meet primary and secondary endpoints of improvement in survival through at least 91 days

· Streamline Health (STRM) Q2 EPS loss (8c)/$5.3M vs. est. loss (3c)/$5.41M; backlog at the end of Q2 $23.4M

Industrials & Materials

· Southwest Airlines (LUV) cuts Q3 capacity view to 3.5%-4% from 4.5%-5% citing cancellation of almost 2,000 flights in July and August due to thunderstorms and weather-related disruptions; also sees 3Q RASM up 1%-1.5% y/y, vs. prior view down 1% – up 1%

· Wabco (WBC) said it sees FY EPS guidance in lower half of $7.10-$7.40 view on geopolitical climate saying the “recent intensification of geopolitical dynamics” is negatively impacting markets and currencies in some of WABCO’s regions; now expects truck & bus production in China will deteriorate by about 30% in 2H and 11% on FY basis

Technology, Media & Telecom

· Late Tuesday, the Federal Communications Commission paused its informal 180-day clock for reviewing T-Mobile US. Inc.’s (TMUS) takeover of Sprint Corp. (S), saying it needs more time to consider information the wireless carriers have provided.

· Verizon Communications Inc. (VZ) said it plans to offer the next generation of wireless technology to customers beginning in October. Verizon said it will offer fifth-generation wireless, or 5G, service in Houston, Indianapolis, Los Angeles and Sacramento, Calif. on October 1, with online ordering beginning on Thursday.

· Semi’s: Advanced Micro (AMD) closed above $30 for the first time in 12-years on Tuesday while Intel (INTC)closed at the lows falling 3% on Tuesday posting its 6th straight session decline (lowest levels since February)

· Nielsen (NLSN) said it expands strategic review to include whether to continue as a independent public company

· Micron Technology (MU) downgraded to Neutral from Buy and lowered his price target for the shares to $50 from $68 at Goldman Sachs

· NXP Semiconductors (NXPI) sees annualized revenue growth in FY18-21 at 5%-7%; at its Analyst Day the company forecast Auto segment growth at 7%-10%, Industrial/IoT growth at 8%-11%, Mobile growth 4%-6%, Comms and Infrastructure growth of 0%-2%. Sees gross margin 53%-57% and operating margin at 31%-34%


Apple is expected to unveil its biggest and most expensive iPhone today at its fall launch event, with most of the buzz swirling around a rumored phablet (iPhone Xs Max?) that's supposed to boast a 6.5-inch OLED screen. Two other models will likely be called the iPhone Xs (5.8-inch OLED) and Xr (6.1-inch LCD). More products anticipated include the Watch Series 4, third-gen iPad Pro, budget MacBook, and updated AirPods with a long-delayed charging mat. AAPL +0.6% premarket.


Canada is reportedly ready to offer the U.S. limited access to the Canadian dairy market as a concession in negotiations to rework NAFTA. American dairy farmers have long demanded more access to Canada’s market and are also unhappy about a Canadian decision to allow farmers to sell milk protein products to the country's processors at a lower price.

More than 60 U.S. industry groups - ranging from retailing, toy manufacturing, farming and tech - will launch a coalition today, called Americans for Free Trade, taking the fight public over billions of dollars of U.S. tariffs. The U.S. Chamber of Commerce, the National Association of Manufacturers, the Business Roundtable and Koch brothers are running separate lobbying efforts to promote free trade.

Hurricane Florence is on track to become the first Category 4 storm to make a direct hit on North Carolina in six decades, with more than 1M people ordered to evacuate the coasts of the state, South Carolina and Virginia. Preparations? Boeing (NYSE:BA) has suspended local operations of 787 jetliner assemblies, while nuclear power operators Duke Energy (NYSE:DUK) and Dominion Energy (NYSE:D) prepare for the "monster" storm. Insurers Hartford Financial Services (NYSE:HIG) and FM Global are also sending additional staff to the region help with anticipated claims.

A California bill that would allow investor-owned utilities to pass on wildfires-related costs to ratepayers via "recovery bonds" could be signed as early as this week by Gov. Jerry Brown. But some consumer groups are calling it a "bailout" for the state's largest electric utility PG&E (NYSE:PCG). Cal Fire has blamed the company for at least 16 of last year's devastating wildfires in Northern California, including some with fatalities.

"Here we are doing something that almost seems like a suicide mission," Jeffrey Gundlach said in a fresh webcast about his DoubleLine Total Return Bond Fund (MUTF:DBLTX). "We are increasing the size of the deficit while we’re raising interest rates... so late in an economic cycle." The rest of the "Bond King's" views: The dollar is going down, oil is headed for $80 to $90 a barrel, and it is now a good time for emerging-market or high-yield bonds.

A day after Russia and China kicked off their largest ever war games, the two countries vowed to stand together against protectionism. "We see a serious challenge for all of the global economy, especially for the dynamically-growing Asia-Pacific and its leadership," Vladimir Putin declared. Both countries are further looking into using national currencies in their transactions, sidelining the dollar.

A group of about 50 lawmakers in Theresa May’s government who oppose her proposals for a post-Brexit deal with the EU have met to discuss how and when they could force her out of her job, the BBC reports. A leadership contest could ensue if 15% of Conservative lawmakers, currently 48, demand a vote of no confidence. Meanwhile, Bank of England Gov. Mark Carney has postponed his departure again - until 2020 - to help steer the U.K. economy past Brexit.


Members of the European Parliament are set to vote today on the EU's new copyright directive, which has sparked a backlash from tech giants over its so-called "link tax." Article 11 could force Google (GOOGGOOGL), Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and others to pay publishers for showing news snippets, while Article 13 would require online platforms like YouTube, Instagram and eBay (NASDAQ:EBAY) to install filters to prevent users from uploading copyrighted materials.

Meanwhile, Attorney General Jeff Sessions is exploring a potential investigation of social media companies and will be briefed on Sept. 25 by Republican state attorneys general who are already examining the firms' practices, Bloomberg reports. At least one of the attorneys general participating in the meeting has indicated he seeks to break up the companies for violating consumer-protection or antitrust laws.

Win for crypto regulation. The SEC has taken its first action against a hedge fund for cryptocurrency investments, while penalizing brokers who ran an "ICO superstore." FINRA also issued its first disciplinary action involving digital currencies, filing a complaint against a distributor of HempCoin. Regulators further scored a victory in their crypto crackdown as a judge ruled that ICOs are subject to U.S. securities-fraud laws.

"In many cases, I'm more like the coach now," Jamie Dimon told the FT, after JPMorgan (NYSE:JPM) named two co-presidents in January - Daniel Pinto and Gordon Smith. According to Pinto: "Jamie is a great CEO but he's human. He has a lot of external engagements, and he travels a lot. So essentially now we share among the three of us."

U.S. regulators have reportedly rejected Wells Fargo's (NYSE:WFC) plan to repay customers who were pushed into unnecessary auto insurance, the latest wrinkle in the bank's list of sales scandals. After reviewing the plan - which could involve contacting 600K drivers - the Office of the Comptroller of the Currency said it needed more assurances that Wells would find and repay everyone who was overcharged.

Big moves for Carlyle Group... The private equity firm is in talks to acquire Sedgwick Claims Management Services, the largest U.S. insurance claims service provider, for more than $6B, sources told Reuters. Carlyle (NASDAQ:CG) and Investindustrial have also signed a joint venture to create a new holding company for high-end interior design brands, in a bid to create an "LVMH of things."

Tesla is eliminating some color options for its electric cars to "simplify manufacturing" as the automaker intensifies its efforts to ramp up production. Obsidian Black & Metallic Silver will still be available as special requests, but at a higher price. There's also word that Tesla's (NASDAQ:TSLA) Semi, which was supposed to hit production lines sometime in 2019, will "earnestly" begin manufacturing by 2020.

Successfully pinging data across a 1,000-kilometer span, Alphabet's (GOOGGOOGL) Project Loon just passed a big test in its plan to beam internet to Earth from giant balloons. Amazon Web Services (NASDAQ:AMZN) may also be heading to space. While job postings for the program have been recently seen, the roles for a spacecraft product manager and data processing engineer have been taken down.

Twitter has struck a host of new media partnerships, bringing "hundreds of hours" of entertainment to audiences in the Asia Pacific region. The deal includes game highlights from the UEFA Champions League, live-streaming from Formula One and live Red Carpet events. Twitter (TWTR) has seen double-digit audience growth in Asia Pacific and is "projecting by about 2020, we'll be at about a billion views here in (Asia Pacific) alone."

The FCC is pausing its 180-day "shot clock" (now at day 55) on reviewing the proposed merger between T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) as additional time is needed for a thorough review of recently submitted and anticipated modeling from the companies. The $26B deal, which would shrink the U.S. wireless market to three big players from four, is also being reviewed by the Justice Department. S -1.4% premarket.

Today's Markets 
In Asia, Japan -0.2%. Hong Kong -0.3%. China -0.3%. India +0.8%.
In Europe, at midday, London flat. Paris +0.6%. Frankfurt +0.2%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq +0.2%. Crude +0.8% to $69.79. Gold flat at $1201.70. Bitcoin -0.7% to $6279.
Ten-year Treasury Yield -1 bps to 2.96%

Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 Producer Price Index
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
12:45 PM Fed's Reserve Gov. Lael Brainard: Economic and Monetary Policy Outlook
1:00 PM Results of $23B, 10-Year Note Auction
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.

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