Wall Street Breakfast: Market's Roller Coaster Ride Continues

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There’s a bunch of news weighing on stocks today, though some Asian shares caught the tail end of yesterday’s big rally on Wall Street. The latest? The White House is reportedly delaying a decision on whether to allow U.S. companies to do business with Huawei, while China released weaker economic data and pegged the yuan north of the $7 mark for the second consecutive session. European sentiment was also hit by the collapse of Italy’s coalition government, as well as GDP figures showing that the British economy contracted for the first time since late 2012. U.S. futures are pointing to opening declines ahead of the bell, with the Dow and S&P 500 down 0.5%, and the Nasdaq off by 0.7%.

Tech war (already) in the making?

Huawei has launched its own operating system – the HongmengOS, known in English as the HarmonyOS – at the Huawei Developer Conference 2019. The system can be used across different devices, from smartphones to smart speakers, and is part of Huawei’s play into the so-called Internet of Things. It may also shield the company after being placed on a U.S. blacklist, which essentially restricts some U.S. companies from selling their products – like Google’s Android (GOOG, GOOGL) – to the Chinese tech giant.

Facebook news

Set to launch this fall, Facebook (NASDAQ:FB) has confirmed that it’s working on a news tab to deliver “trustworthy news” to users. The announcement follows a WSJ report that said the social network had approached numerous news outlets like ABC News, Dow Jones, The Washington Post and Bloomberg about paying them as much as $3M annually to license their news articles. The tab would give news high prominence on Facebook, alongside core features like the News Feed (which includes updates from friends), Messenger and Watch (for videos).
Go deeper: Bill Maurer says to buy the Facebook pullback.

Largest quarterly loss

Following a miss on both top and bottom lines, Uber (NYSE:UBER) shares dropped as much as 12% AH on Thursday, before settling down about 4%. Net losses for the ride-hailing company soared to $5.24B, largely owing to stock-based compensation related to its IPO. “We think that 2019 will be our peak investment year and we think that 2020, 2021, you’ll see losses come down,” said CEO Dara Khosrowshahi. “No doubt in my mind that the business will eventually be a break even and profitable business.”
Go deeper: James Mase comments on IPO bubbles.

Goldman execs charged over 1MDB

Malaysia has filed criminal charges against 17 current and former directors at subsidiaries of Goldman Sachs (NYSE:GS) over the multi-billion dollar corruption probe at state fund 1MDB. “Custodial sentences and criminal fines will be sought against the accused,” according to Malaysia’s Attorney General Tommy Thomas. They include Richard Gnodde, CEO of Goldman Sachs International, and Michael Sherwood, vice chairman of Goldman Sachs Group and co-CEO of Goldman Sachs International.

Forgiving all debt

Chase Bank, which is operated by JPMorgan Chase (NYSE:JPM), has agreed to “forgive” the outstanding credit card debt of its Canadian cardholders as part of the U.S. bank’s move to exit the Canadian credit card market. An alternative would have been to sell the debt to a third party, but the company felt that simply cancelling the debt entirely “was a better decision for all parties,” said Chase Card’s Maria Martinez. It’s a unique situation that is “unlikely to be repeated,” added Scott Hannah, president of the Credit Counselling Society.
Go deeper: JPM’s profitability gets an “F.”

Dealmaking

Symantec’s (NASDAQ:SYMC) has confirmed its enterprise security business will be acquired by Broadcom (NASDAQ:AVGO) for $10.7B in cash. “M&A has played a central role in Broadcom’s growth strategy and this transaction represents the next logical step in our strategy,” said CEO Hock Tan. Shareholders of Anadarko (NYSE:APC) also voted overwhelmingly to sell the company for $38B to rival Occidental Petroleum (NYSE:OXY), ending a short-lived contest that pitted two of the most storied names in the oil industry against each other.
Go deeper: Latest M&A news.

IEA cuts oil demand forecasts

“Growing evidence of an economic slowdown” has caused global oil demand to grow at its slowest pace since the financial crisis, according to the International Energy Agency. It now expects oil demand growth to reach 1.1M barrels per day in 2019 and 1.3M bpd in 2020 (a downward revision of 100K bpd for this year and 50K bpd for next year). “Meanwhile, the prospects for a political agreement between China and the United States on trade have worsened. This could lead to reduced trade activity and less oil demand growth.”
Go deeper: USO ETF has tracked crude performance closely.

Iran-Europe trade hitch

European efforts to launch a payments channel to facilitate trade with Iran have suffered a fresh setback after the German former diplomat set to take over as the new chief of Instex was forced to pull out of the position. Revelations in the German daily Bild of a recent interview with Bernd Erbel displayed sympathy for Iran along with pointed criticism of Israel. Instex was launched in January as part of a broader effort by Germany, France and Britain – the so-called E3 – to preserve the 2015 nuclear deal with Iran after the U.S. abandoned the accord.

Thursday’s Key Earnings

Activision Blizzard (NASDAQ:ATVI) -1.8% AH on lack of new games.
BP Midstream (NYSE:BPMP) +2% weighing other product shipments.
Cheniere Energy (NYSEMKT:LNG) +3% with 16% rise in EBITDA.
Dropbox (NASDAQ:DBX) -5.9% AH amid slowest user growth since IPO.
Kraft Heinz (NASDAQ:KHC) -8.6% withdrawing outlook after dismal Q2.
Uber (UBER) -4.3% after sales, bookings misses.
Viacom (NASDAQ:VIA) +2.6% returning to domestic ad growth.
Yelp (NYSE:YELP) +5% on profit beat, reaffirming guidance.

Today’s Markets

In Asia, Japan +0.4%. Hong Kong -0.7%. China -0.7%. India +0.7%.
In Europe, at midday, London -1.1%. Paris -0.2%. Frankfurt -1%.
Futures at 6:20, Dow -0.5%. S&P -0.5%. Nasdaq -0.7%. Crude +1.1% to $53.13. Gold +0.4% to $1514.80. Bitcoin -0.8% to $11765.
Ten-year Treasury Yield -2 bps to 1.69%

Today’s Economic Calendar

8:30 Producer Price Index
1:00 PM Baker-Hughes Rig Count

Companies reporting earnings today »

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