Wall Street Breakfast: Futures Kick Off Week On The Back Foot

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Broadly positive U.S. jobs data has quelled some fears about an economic slowdown, but nervousness over U.S.-China trade talks is setting in, as well as more weak economic data out of Europe (see below). The mood is once again weighing on U.S. stock index futures, which have started the week down 0.5%. While Chinese Vice Premier Liu He is expected to resume discussions with U.S. counterparts later this week, there have been a number of reports that Beijing may not be as willing to compromise on a number of issues or agree to a broad trade deal pursued by President Trump.
Go deeper: David Lerner discusses stocks and trade talks.

HSBC to axe 10,000 jobs

HSBC (NYSE:HSBC) is planning the mass layoffs as interim CEO Officer Noel Quinn seeks to reduce costs across the banking group and help prop up share prices, sources told FT. Quinn became interim CEO in August after the bank announced the surprise departure of John Flint, saying it needed a change at the top to address “a challenging global environment.” HSBC could announce the start of the cuts when it reports Q3 results later this month.
Go deeper: Performance remains robust at HSBC, says Regents Research.

Libra network pullout

PayPal (NASDAQ:PYPL) is officially withdrawing from the group of companies Facebook (NASDAQ:FB) had assembled to launch a global crypto-based payments network. Reports first surfaced a week ago that Visa (NYSE:V), Mastercard (NYSE:MA) and other partners would reconsider their support following a backlash from U.S. and European government officials. Libra was envisioned to be a way to send money between people and pay for goods and services online, running on a blockchain network backed by a pool of real assets and currencies.
Go deeper: Earnings and relationships should allow PayPal to grow, writes AllStarTrader.

Germany’s factory slump continues

The data was in focus overnight after a weak reading last month gave weight to concerns that Europe’s biggest economy was teetering toward recession. Factory orders slumped by 6.7% Y/Y in August due to the the U.S.-China trade war, the slowdown in the eurozone, and economic problems at home. Last week, a flurry of PMI and ISM reports showed that global manufacturing is shrinking, hitting markets and equites across the globe.

George isn’t worried about inflation

“The U.S. economy is currently in a good place with low inflation, low unemployment, and an outlook for continued moderate growth,” Kansas City Fed President Esther George said Sunday. George, who dissented against the quarter-percentage-point rate cuts made at the July and September FOMC meetings, didn’t rule out supporting another rate reduction if it’s warranted, but appeared skeptical over the need for further action. “The moderation of economic growth in 2019 has been in line with my own outlook that calls for a gradual decline to a trend level over the medium term.”

Mouse House Bullseye

The partnership between Target (NYSE:TGT) and Disney (NYSE:DIS) has taken another step forward with new Disney stores now open inside 25 Target locations. The large store-in-a-store concept arrives just ahead of the merchandise blitz for the films Frozen 2 and Star Wars: The Rise of Skywalker. Disney is anticipated to debut stores in 40 more Target locations by October of next year. Disney items also have a special page on the Target website.
Go deeper: ‘Target: Still A Very Solid Hold’ by Daniel Schönberger.

October cinematic history

According to preliminary estimates, Joker hauled in $93.5M in the U.S. and Canada in its opening weekend, becoming the highest-grossing October debut in history. An additional $140.5M internationally gave Warner Bros. (NYSE:T) another reason to smile, bringing the movie’s total gross to $234M worldwide. Produced for considerably less than the hundreds of millions of dollars often spent making comic-book films, Joker could end up being one of the studio’s most profitable films of 2019.

GM strike drags on

Contract talks aimed at ending the three-week strike by the United Auto Workers against General Motors (NYSE:GM) have “taken a turn for the worse,” a union official wrote in an email to members. GM made an offer to the union that essentially repeated one already rejected by the UAW, according to Terry Dittes, the UAW VP in charge of the GM department. Analysts estimate the strike has cost GM more than $1B, while LMC Automotive estimates the company has lost production of 118K vehicles through Oct. 2.
Go deeper: Ray Merola is holding GM shares through the full cycle and next upturn.

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