Wednesday Morning Reads

Wednesday Morning Reads





Todays Top Open Interest Changes:

Morning Charts:



The yield on the benchmark 10-year Treasury note is ticking lower, down 2 bps to 2.59%, as investors await a policy decision by the Federal Reserve. The U.S. central bank is widely expected to keep rates steady and lower its "dot plot," boosting U.S. stock index futures overnight by 0.2%. Jerome Powell has also signaled an announcement on when the Fed will end the runoff of its $4T portfolio later this year, as well as disclosing the right combination of Treasurys to hold.


Theresa May is set to request a short delay to Brexit in a letter to the EU, according to the BBC and Sky News. Risks? A short extension could just postpone a chaotic cliff-edge departure by three months, prolonging the uncertainty and increasing the potential costs for business. EU Brexit negotiator Michel Barnier has also said any delay has to serve a purpose and France said it won’t approve a delay without plans to get a deal through the U.K. Parliament. Sterling -0.3% to $1.3225.

Two indicators for how trade-sensitive sectors are faring in Europe reported quarterly results today. German carmaker BMW (OTCPK:BMWYY) warned of significant profit falls in 2019, while announcing a sweeping €12B cost savings plan to help offset higher tech investment and currency costs. However, French luxury goods house Hermes said it had not observed any change in sales trends so far this year after posting a 15% rise in net profit for 2018 to €1.4B.

Attempting to soften the blow from a damaging political crisis, Canada's government has presented a pre-election budget that offers over $10B in new, short-term spending, spread across a range of constituencies. It also plans to increase federal bond issuance by almost 20% next fiscal year to C$119B ($89.1B). After leading the G7 in 2017 with growth of 3%, Canada’s economic expansion slowed to 1.8% in 2018 and is expected to remain below 2% over the next two years.

As the leaders of the two largest economies in the Western Hemisphere, Presidents Trump and Jair Bolsonaro discussed yesterday how to increase trade and reduce barriers. They struck initial agreements on agriculture, with better access for American wheat and pork exports to Brazil and the possibility of restarting sales of Brazilian fresh beef to the U.S. Other topics explored were the admission of Brazil to NATO and U.S. rocket launches from Brazil's Atlantic coast.


European Competition Commissioner Margrethe Vestager is expected to hand Google (GOOGGOOGL) a third fine today over anti-competitive practices related to its AdSense advertising service. Google was already fined €6.7B in two previous EU antitrust cases: One for unfairly pushing its apps on smartphone users and one for using its search engine to steer consumers to its own shopping platform.

Investors are also reacting to Google's (GOOGGOOGL) push into the $135B gaming industry with a cloud-based offering, bypassing the need for traditional hardware. Shares in Japanese console makers dropped, with Nintendo (OTCPK:NTDOYfalling 3.2% and Sony (NYSE:SNEsinking 3.4% in Tokyo. Google CEO Sundar Pichai said "Stadia" will be launched this year in the U.S., Canada, the U.K. and "most of Europe."

"We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts," Samsung Electronics (OTC:SSNLF) co-CEO Kim Ki-nam declared during an annual general meeting in Seoul. The company will continue to make bold investments in semiconductor production in the face of stiffening Chinese competition, but it's seeking new growth in areas such as network equipment manufacturing.

Lyft won't list on the Nasdaq until the end of March, but one investment firm has already rated the ride-hailing company a Buy. D.A. Davidson has initiated coverage with a $75 price target (shares are expected to be priced between $62 and $68). Analyst Tom White cited LYFT's ability to chip away at UBER, while "deftly maximizing the benefits by aggressively differentiating its brand and mission around socially-conscious values."

Facebook has apologized to Trump administration social media director Dan Scavino for a temporary block caused by mistaking him for a bot. Facebook (NASDAQ:FB) also settled several lawsuits that said its advertising platform provided for discrimination in housing, employment and credit. Litigation was filed by the National Fair Housing Alliance, the American Civil Liberties Union, the Communication Workers of America and other parties.

Bayer shares plunged 13% in Frankfurt after a U.S. jury found that the company's Roundup weed killer caused cancer. It's a blow to the firm eight months after another jury issued a $289M verdict over similar claims in a different case. Bayer (OTCPK:BAYRY) acquired Monsanto, the longtime maker of glyphosate-based Roundup, for $63B last year.

As part of the city's efforts to tackle underage vaping, San Francisco officials have proposed legislation that would ban the sale of e-cigarettes from companies such as Juul until a review by the FDA. District Supervisor Shamann Walton will also introduce legislation to prohibit the manufacture and distribution of all tobacco products, including e-cigarettes, on city property. Related tickers: MOBTIPM

Healthcare roundup: Sage Therapeutics (NASDAQ:SAGE+5.6% premarket after the FDA approved the first postpartum depression drug called Zulresso. It will be available only through a restricted program requiring administration by a healthcare provider in a certified facility. The FDA further issued warning letters to Sientra (NASDAQ:SIEN) and Johnson & Johnson (NYSE:JNJ) for failing to comply with the post-approval study requirements for their breast implants.

In the past three years Occidental Petroleum (NYSE:OXY) has more than doubled its Permian shale output, and expects to double it again to 600K barrels of oil equivalent a day in the next five years. At the same time, the company is committed to reducing its carbon footprint. "I'm thinking about the long term for our shareholders," CEO Vicki Hollub told the FT, saying ultimately she wants Occidental to be "carbon neutral."

There's a lot of news surrounding Boeing (NYSE:BA) this morning. The planemaker reshuffled its top engineers amid its 737 MAX crisis, while the U.S. Transportation Department demanded an audit of plane's certification from the FAA. Meanwhile, the cockpit voice recorder of the doomed Lion Air 737 MAX flight in October revealed pilots' frantic search for a fix to overpower the MCAS system, although a different crew the evening before encountered the same problem but solved it after running through three checklists.

Jeff Bezos is hosting his annual Mars Conference this week in Palm Springs, California. The closed-door showcase displays the latest from the fields of machine learning, automation, robotics and space - hence the name, MARS. It's an annual reminder of Bezos' passion for cutting-edge tech and how the four fields will impact the future as the Amazon (NASDAQ:AMZN) founder races toward commercial space travel with Blue Origin (BORGN).

Tuesday's Key Earnings
FedEx (NYSE:FDX-5.7% on weaker global trade trends.
Tencent Music (NYSE:TME-7.1% AH posting first earnings since its IPO.

Today's Markets 
In Asia, Japan +0.2%. Hong Kong -0.5%. China flat. India +0.1%.
In Europe, at midday, London flat. Paris -0.1%. Frankfurt -1.3%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude -0.9% to $58.78. Gold -0.3% to $1303. Bitcoin +0.5% to $3988.
Ten-year Treasury Yield -2 bps to 2.59%

Today's Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM FOMC Forecast
2:00 PM Chairman Press Conference

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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