Wall Street Breakfast: Recession Red Flags?

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Markets are still on edge following data that showed U.S. factory activity shrinking in September to its weakest level since 2009, ratcheting up fears that the U.S.-China trade war is hobbling the world’s largest economy. The weak print saw the Dow drop nearly 350 points yesterday – with another 173-point loss likely at the open – while stocks flashed red across Europe and Asia overnight. Wall Street’s next focus is this morning’s ADP private payrolls report, which will give further clues about the labor market and broader economy ahead of the government’s monthly jobs report on Friday.
Go deeper: The Heisenberg comments on the manufacturing meltdown.

Largest online gambling operator

Flutter Entertainment (OTC:PDYPF), operator of Betfair and Paddy Power, is merging with Stars Group (NASDAQ:TSG) via an all share combination. Peter Jackson, currently CEO of Flutter, will assume the role of CEO of the combined group (which will be domiciled in Dublin, Ireland with a premium listing on the London Stock Exchange). The merger is expected to deliver substantial value creation for shareholders from pre-tax cost synergies of £140M per annum, along with potential revenue cross-sell in international markets and lower finance costs.
Go deeper: See more M&A news.

Juul seeks more help from Altria

Joe Murillo, who headed regulatory affairs for Altria (NYSE:MO) and previously ran the company’s e-cig business, is now Juul’s (JUUL) chief regulatory officer. He’s the first big hire made by new Juul CEO K.C. Crosthwaite, who himself moved over from Altria last week to take the helm of the startup. Facing a proposed U.S. ban on flavored e-cigarettes, Murillo will gather the applications that Juul must submit to the FDA by May 2020 for any products it wants to keep on the market beyond that point.
Go deeper: Altria last year invested $12.8B for a 35% stake in Juul.

Libra trouble

Cracks are showing up in Facebook’s (NASDAQ:FB) Libra payments coalition, with key financial partners reconsidering their participation after a backlash from government officials. Visa (NYSE:V), Mastercard (NYSE:MA) and other backers are rethinking the project as officials in the U.S. and Europe raise the specter of regulatory scrutiny. Executives from Libra backers are now being summoned to a Thursday meeting in Washington, D.C., ahead of an Oct. 14 meeting in Geneva to go over a Libra Association charter and name a board.
Go deeper: Latest crypto articles.

Opioid settlements

Johnson & Johnson (NYSE:JNJ) is paying $20.4M to settle claims by two Ohio counties, allowing the U.S. healthcare giant to avoid an upcoming federal trial seeking to hold the industry responsible for the nation’s opioid epidemic. On Monday, Mallinckrodt (NYSE:MNK) announced a $24M settlement with the same two counties, while Endo International (NASDAQ:ENDP) and Allergan (NYSE:AGN) settled with the counties in August to avoid going to trial. Remaining defendants in the Oct. 21 court case include McKesson (NYSE:MCK), AmerisourceBergen (NYSE:ABC), Cardinal Health (NYSE:CAH), Teva (NYSE:TEVA), Walgreens (NASDAQ:WBA) and Henry Schein (NASDAQ:HSIC).
Go deeper: ‘Halftime report on Johnson & Johnson’ by David Pinsen.

Trading war

Billions of dollars were wiped off the market values of top stock-trading platforms on Tuesday as Charles Schwab (NYSE:SCHW) intensified a price war by scrapping trading fees. “We don’t want to fall into the trap that a myriad of other firms in a variety of industries have fallen into, and wait too long to respond to new entrants,” said CFO Peter Crawford. Movement: TD Ameritrade (NASDAQ:AMTD) plunged 25%, E*Trade (NASDAQ:ETFC) sunk 16%, Interactive Brokers (IEX:IBKR) fell 9% and Charles Schwab declined 10%.

Drone deliveries

The Department of Transportation has given UPS (NYSE:UPS) the green light to operate a drone airline in a landmark development. The company will be allowed to deliver vital healthcare supplies nationwide after testing the program successfully on a hospital campus in Raleigh, North Carolina. As delivery options expand, future steps may include a single operator on the ground controlling multiple flights, or using drones to supplement traditional package delivery by trucks in rural areas.
Go deeper: The Dividend Bro says buy UPS on FedEx weakness.

Big bet on EVs

Volkswagen’s (OTCPK:VWAGY) Traton truck division plans to spend more than €2B over the next five years on electric vehicles and digital offerings to keep up with the industry’s “radical’ transformation. While most passenger carmakers have already jumped into the EV revolution, the weight of trucks and the goods they transport has so far prevented a similar shift toward battery-powered heavy vehicles. Daimler (OTCPK:DDAIF) and Volvo (OTCPK:VOLVY) have embarked on some electric truck projects, while Tesla (NASDAQ:TSLA) has been aiming to launch a semi truck as well, though details remain scarce.

Brexit ultimatum

Boris Johnson will send his final Brexit offer to the EU today, according to the Telegraph. The “two borders for four years” plan would scrap the so-called Irish border backstop and instead place Northern Ireland in a temporary regime with a time limit. Customs checks would be required between Northern Ireland and the Republic of Ireland – something the latter and the EU oppose – as well as creating a regulatory border between Great Britain and Northern Ireland in the Irish Sea.

Unrest in Hong Kong

The Hang Seng Index was closed for a market holiday on Tuesday, though things quickly went south during today’s open, before the benchmark ended the session 0.2% lower. In an escalation of violence, Hong Kong police yesterday shot a teenage protester, the first to be hit by live ammunition in almost four months of unrest in the Chinese-ruled city. Data also showed retail sales in the Asian financial hub slumping 23% in August, marking a seventh consecutive month of decline (July’s drop was 11.4%).

What else is happening…

UAW rejects GM (NYSE:GM) offer as strike forces 6,000 layoffs.

Tesla (TSLA) acquires DeepScale to develop fully autonomous vehicles.

Growth plans… Coke Energy (NYSE:KO) is coming to the U.S.

Nike (NYSE:NKE) CEO was briefed on doping efforts.

U.S. repos and the JPMorgan (NYSE:JPM) factor.

Crude prices dent Exxon’s (NYSE:XOM) Q3 profits.

Fitch cuts WeWork (WE) deeper into junk territory.

American (NASDAQ:AAL) pilots demand 737 MAX (NYSE:BA)-related compensation.

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