Wall Street Breakfast: Nonfarm Payrolls And Benchmark Revisions

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Economic impacts of coronavirus

Due to the ongoing coronavirus outbreak, China has delayed trade figures for January and said it would combine the data with next month’s release. The epidemic has also led to growth forecasts being cut, with S&P Global Ratings revising its estimation of China’s GDP growth for 2020 from 5.7% before the outbreak to 5%. “Coronavirus will have a larger negative effect on the global economy than the SARS outbreak,” added IHS Markit, explaining that China accounted for 4.2% of the global economy in 2003 vs. 16.3% of the world’s GDP today.

Thiam gets the boot at Credit Suisse

Pressure over a widening spying scandal has weighed over Credit Suisse (NYSE:CS) for months, denting the bank’s reputation and prompting difficult questions about the culture at the top of the firm. Looking to move past the damaging period, CEO Tidjane Thiam has announced his resignation despite being cleared in an internal probe and receiving the backing of key shareholders. He’ll be replaced by Thomas Gottstein, a 20-year veteran of the bank who leads the Swiss unit.
Go deeper: Labutes IR says Credit Suisse is moving in the right direction.

Starlink IPO

SpaceX (SPACE) is likely to spin off its satellite-based broadband business and pursue an IPO, according to COO Gwynne Shotwell. The company has been launching Starlink satellites in batches of 60 since May (there’s currently 240 orbiting Earth) and aims to make its broadband internet service operational by the end of 2020. Last year, Morgan Stanley set a bull case valuation of $120B on SpaceX (Starlink satellite and rocket business), which could also give a boost to Virgin Galactic (NYSE:SPCE).
Go deeper: Boeing’s Starliner test nearly a ‘catastrophic’ failure.

Casper the Friendly IPO?

After slashing its IPO share price to $12 (from an original range of $17 to $19), Casper (CSPR) climbed 13% yesterday to finish the session at $13.50 (with a market cap of $575M). The online mattress startup had been valued at $1.1B by private investors last year, but that was before the five-year-old company revealed in January that it lost $67M on $312M in revenue in the first nine months of 2019. Casper’s lower IPO valuation was just a moment in time, said CEO Philip Krim, adding that, “our business is not what investors are used to seeing at this scale.”

OPEC+ consensus

Russia is supporting a recommendation to deepen OPEC+ oil supply curbs amid falling demand for crude as China battles a coronavirus outbreak. The proposal could lead to a provisional cut in output of 600,000 barrels per day, which is about 0.6% of global supply and would extend current curbs of 1.7M bpd. It would also pave the way for OPEC to bring forward to February a ministerial policy meeting planned for early March to formalize the decision.

Risk of recession returns to Germany

The manufacturing slump continues in Germany as industrial production fell by 3.5% M/M in December, a day after factory orders were shown to have declined at the fastest pace in more than a decade. That suggests Europe’s largest economy may have contracted at the end of 2019. Germany has already been pummeled by trade tensions, Brexit and climate change regulation engulfing its auto industry, and the latest data will likely dampen budding optimism of a recovery.

Ride-hailing to profitability

Uber’s (NYSE:UBER) stock rose 6% in extended trading on Thursday after announcing a fourth-quarter loss that was narrower than analysts had expected. The firm also moved its EBITDA profitability target to Q4 2020, ahead of its original promise of profitability in 2021. “2020 is going to be the year of subscriptions at Uber,” added CEO Dara Khosrowshahi, noting that when a user tries at least two different company services, like ridesharing and food delivery, they triple their overall usage of Uber.
Go deeper: ‘Uber: Selling Eats Won’t Solve Problem’ by Stone Fox Capital.

Countering Huawei dominance

The U.S. should neutralize a threat of Huawei’s next-generation equipment by taking a controlling stake in Nokia (NYSE:NOK) or Ericsson (NASDAQ:ERIC), according to U.S. Attorney General William Barr. “There are only two companies that can compete with Huawei right now… putting our large market and financial muscle behind one or both of these firms would make it a more formidable competitor.” The stance is dismissive of recent White House efforts to blunt Huawei’s threat by investing in homegrown 5G equipment – signaling a split between government approaches.

Got streaming?

ViacomCBS (NASDAQ:VIAC) is taking steps to make programming across the media company’s properties available through one video-streaming offering, CNBC reports. Plans aren’t final, but the new, bigger service might offer not only what’s part of CBS All Access, but also (with the merger complete) Viacom assets such as Paramount films and its TV networks (Nickelodeon, Comedy Central, MTV, BET and Pluto TV). The service would come in an ad-free version, along with a premium paid version that would include Showtime.

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