Wall Street Breakfast: First U.S.-China Trade Talks Since July

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Day (or night) traders are having a field day as headlines grab hold of market sentiment. While U.S. stocks rallied Wednesday on trade optimism, futures fell sharply after the close on reports that high-level trade talks between the U.S. and China – scheduled for today and tomorrow in Washington – might be cut short. A volatile session then ensued, with futures now back at the starting line. Among the rumors: There has been no change to the negotiation schedule, next week’s tariff hike could be suspended, concessions may be announced for blacklisted Huawei, a currency pact is underway, a partial trade deal is in the works and Beijing is offering to increase agricultural purchases.

Bed Bath nabs Target star

Bed Bath & Beyond (NASDAQ:BBBY) +22% premarket after hiring Target (NYSE:TGT) Chief Merchandising Officer Mark Tritton to take the helm of the struggling home furnishings retailer. Tritton has been credited with launching Target’s private label development, which included more than 30 new brands in just 2.5 years, and helped the group grow comparable sales for eight consecutive quarters. Bed Bath trimmed its full-year profit guidance just a week ago following weak same-store sales for its fiscal second quarter.
Go deeper: Daniel Schönberger discusses strategies for Bed Bath.

Luxury revival

Earnings from LVMH (OTCPK:LVMHF) seem to have restored faith in luxury sales. The Louis Vuitton owner posted 19% growth in revenue from its fashion and leather goods in Q3 despite unrest in Hong Kong that had caused luxury labels to lose out on business there. A near 5% jump in LVMH in Paris saw shares of rivals Hermes (OTC:EUHMF), Burberry (OTCPK:BBRYF), Hugo Boss (OTCPK:BOSSY), Gucci-owner Kering (OTCPK:PPRUF), Christian Dior (OTCPK:CHDRF) and Moncler (OTCPK:MONRF) climb between 1.1% and 4.6% across Europe overnight.
Go deeper: Mark Dockray calls LVMH a high quality investment.

China conundrum

Besides the NBA, many companies are suddenly finding things to be more complicated in China, including Activision Blizzard (NASDAQ:ATVI). The videogame maker is facing a backlash in the U.S. after banning a Hearthstone league player who was publicly supportive of the Hong Kong protests. It’s pretty bad timing. Blizzard had been recently revived with the success of Call of Duty: Mobile following two quarters of slumping revenues and a stock price that is down 28% YTD.
Go deeper: Stone Fox Capital comments on ATVI’s mobile boost.

Rethink possible

Looking to cut its massive debt pile, AT&T (NYSE:T) is selling its wireless and wireline operations in Puerto Rico and U.S. Virgin Islands to Liberty Latin America (NASDAQ:LILA) for $1.95B. 5G dreams? New reports suggest AT&T will start initial standalone deployments of 5G networks in 2020. Verizon (NYSE:VZ) is planning a standalone core in 2020-2021 and T-Mobile (NASDAQ:TMUS) is aiming for a virtualized standalone core next year, while Sprint (NYSE:S) sticks to its non-standalone approach.
Go deeper: Quad 7 Capital says AT&T is all about the leverage.

Power cut in California

More than 700,000 households in the state were without electricity on Wednesday. The state’s largest utility, PG&E (NYSE:PCG), pulled the plug to prevent a repeat of the past two years when windblown power lines sparked deadly wildfires. If things couldn’t get worse, the judge overseeing PG&E’s bankruptcy case said he will allow for the consideration of alternative restructuring plans, stripping the company of the sole right to propose a Chapter 11 plan covering billions of dollars of damages. PCG -24% premarket.
Go deeper: ‘Two Big Tests For PG&E Shareholders’ by Vlae Kershner.

More 737 problems

Boeing (NYSE:BA) is working with airline customers to procure parts, develop repair-and-replace plans and provide technical support to address structural cracks on its 737 NG jetliners. Brazilian airline Gol Linhas Aereas Inteligentes (NYSE:GOL) was forced to ground 11 737 NG aircraft to replace a specific part following inspections at the direction of the FAA. Southwest Airlines (NYSE:LUV) said earlier it had also removed two of the planes from service. BA -0.5% premarket.

More clarity needed

The minutes of the Fed’s September meeting released yesterday showed that “several participants” wanted the FOMC’s post-meeting statement to give more guidance on when they expected the monetary policy rate adjustments to end. Since the meeting, Fed officials’ standard line is “there’s no preset course,” and incoming data will help determine any further actions. As was already disclosed, there were some policymakers that wanted to keep rates unchanged and a couple that wanted to cut rates by 50 basis points instead of the 25-bp cut that was taken.

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