Wednesday Morning Reads, Charts, Options

Wednesday Morning Reads






Stocks across the globe saw some relief overnight, though equities in the U.S. are still spooked with volatility returning to the market. Wall Street's three major indexes slumped early Tuesday, but ended well off the day’s lows as investors snapped up beaten-down shares late in the session. Futures are now posting steep declines ahead of the open amid worries over rising rates and tariff impacts on U.S. earnings.


"Every time we do something great, he raises interest rates," President Trump declared, referring to Fed Chair Jerome Powell. "I'm just saying this: I'm very unhappy with the Fed because Obama had zero interest rates." He also said it was "too early to tell, but maybe" he regrets Powell's nomination. For now, a more than 7% fall this month in the S&P 500 is unlikely to derail plans for more U.S. monetary tightening in December, according to Fed policymakers.

"There isn't any B plan," Italian Prime Minister Giuseppe Conte told Bloomberg as the European Commission formally rejected Italy's draft budget. "I said that the deficit at 2.4% of GDP is the cap. I can say this will be our cap." While actual sanctions are improbable and wouldn't be levied for months, European officials have also been wary of handing more ammunition to Italy's euroskeptic government.

Following a rally earlier this week after Moody's decided against cutting Italian debt ratings to junk, the euro is under pressure amid a bout of disappointing data on the eurozone's two largest economies. German business activity was shown to have grown by its slowest rate for nearly three and a half years, while French manufacturing also struggled as its PMI index hit a 25-month low.

British Prime Minister Theresa May will face another Brexit showdown with her party today, this time confronting a gathering of the so-called 1922 Committee of rank-and-file Tory MPs. Her strategy has stalled over a disagreement on the Irish "backstop" clause, an insurance policy to ensure there will be no return to a hard border on the island if a future trading relationship is not agreed in time.

Canada is hosting a summit today with a dozen other partners to address Washington's criticisms of the World Trade Organization. On the list are concerns that the WTO doesn't do enough to publicize and penalize government subsidies and weak intellectual-property protections. The Bank of Canada is also expected to raise its benchmark overnight interest rate by a quarter of a percentage point to 1.75% in response to solid economic growth and the newly upgraded NAFTA.

The world's longest sea bridge has opened over a 34-mile stretch linking Hong Kong to mainland China. The $20B project will cut travel time from several hours to just 30 minutes, something China hopes will bind the region together as a major driver of future economic growth. It took almost a decade to build, and includes an undersea tunnel allowing ships to pass through the Pearl River delta, the heart of China's manufacturing sector.

Pakistan will still seek a bailout from the IMF even after it secured $6B in financial support from Saudi Arabia. Islamabad will now negotiate from an "improved position," Finance Ministry spokesman Noor Ahmed told Bloomberg. It would be Pakistan's 13th bailout since the late 1980s, as imports for Chinese-financed infrastructure projects rise while its exports lag the region.

President Trump said he is passing responsibility to Congress for responding to the killing of Jamal Khashoggi, criticizing the conflicting accounts from Saudi Arabia as "one of the worst" cover-ups in history. Meanwhile, the U.S. is revoking or blocking visas for 21 individuals it suspects were involved in the incident and is reviewing the possibility of sanctions against those people.


European earnings roundup: Deutsche Bank (NYSE:DB-4% premarket with profits sliding 65% as the lender continued to restructure under new leadership. Barclays (NYSE:BCS+2% posting trading strength against a backdrop of macroeconomic uncertainty and Brexit concerns. Heineken (OTCQX:HEINYslipped 1% in Amsterdam overnight as sales rose despite a wider slowdown.

Apple CEO Tim Cook is expected to praise new European GDPR privacy rules today at a data protection summit in Brussels. He's further expected to endorse a comprehensive federal privacy law in the U.S., the strongest statement made by Apple (NASDAQ:AAPL) to date. Also sharing their thoughts are Facebook (NASDAQ:FB) CEO Mark Zuckerberg and Google (GOOGGOOGL) CEO Sundar Pichai via video messages.

In a bid to win shoppers over rivals like Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN), Target (NYSE:TGT) for the first time ever is offering free two-day shipping - with no minimum purchase required - this holiday season. Target said its "Drive Up" service - where shoppers can place their orders online and have them brought directly to their cars - will also be available at nearly 1,000 stores.

Ending a nine-month search, Ford (NYSE:F) has hired a new chief for its troubled China operations, tasking him with fixing a deep sales slump in the world's largest car market. Anning Chen, a former Ford (F) engineer and chairman of Chery Jaguar Land Rover (NYSE:TTM) in China, will take the helm from Nov. 1. An American national, he has roughly 14 years' experience working in China.

Tesla shares soared 12% on Tuesday on positive comments from Wall Street. The EV maker announced plans to report quarterly results today (sooner than expected), fueling speculation that it has good news to deliver. Tesla (NASDAQ:TSLA) Elon Musk has promised to record a net profit and positive cash flow for the three-month period.

Another bank fine... Capital One (NYSE:COF) has paid $100M to the U.S. Treasury for failing to enforce anti-money laundering controls that have been in place for years. The Office of the Comptroller of the Currency levied the penalty, saying the lender had several weaknesses in its compliance programs and risk assessment, and failed to file some suspicious activity reports.

Six former child slaves from Mali who accused food producers Nestle (OTCPK:NSRGY) and Cargill of aiding and abetting their forced labor in African cocoa fields have won another chance at making their case in the U.S. The foreign plaintiffs linked U.S. conduct to the alleged enslavement, pointing to the companies' American offices approving off-contract payments to farmers to ensure the low prices made possible by slave labor.

Apple is planning to launch its upcoming TV subscription service in more than 100 countries, pushing into more markets of competitors Netflix (NASDAQ:NFLX) and Amazon (AMZN). The service could debut in the U.S. early next year, with the global rollout coming in the following months, according to The Information. Apple (AAPL) device owners will get free access to the company’s original programs.

Tuesday's Key Earnings
3M (NYSE:MMM-4.4% on forex headwinds.
Biogen (NASDAQ:BIIB+0.2% beating expectations.
Caterpillar (NYSE:CAT-7.6% as costs rose from tariffs.
Lockheed Martin (NYSE:LMT-1.7% despite raising guidance.
McDonald's (NYSE:MCD+6.3% after strong global comps.
Texas Instruments (NYSE:TXN-6% AH on processor weakness.
United Technologies (NYSE:UTX+2.9% upping its outlook.
Verizon (NYSE:VZ+4.1% with phone subscriber strength.

Today's Markets 
In Asia, Japan +0.4%. Hong Kong -0.4%. China +0.3%. India +0.6%.
In Europe, at midday, London +0.7%. Paris +0.7%. Frankfurt +0.3%.
Futures at 6:20, Dow -0.6%. S&P -0.7%. Nasdaq -0.8%. Crude -0.2% to $66.31. Gold -0.3% to $1233.60. Bitcoin +0.7% to $6478.
Ten-year Treasury Yield -2 bps to 3.14

Today's Economic Calendar
7:00 MBA Mortgage Applications
9:00 FHFA House Price Index
9:45 PMI Composite Flash
10:00 Fed's Bostic Speech
10:00 New Home Sales
10:30 EIA Petroleum Inventories
11:30 Fed's Bullard: U.S. Economic and Monetary Policy
11:30 Results of $19B, 2-Year FRN Auction
12:30 PM Fed's Mester Speech
1:00 PM Results of $39B, 5-Year Note Auction
2:00 PM Fed's Beige Book
2:00 PM Fed's Bostic Speech

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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