Wall Street Breakfast: What Moved Markets This Week

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Trade deal clarification

Trade-related headlines cast light on the delicate state of the markets after a comment from Peter Navarro sent assets whipsawing on Monday. In an interview on Fox News, the White House trade adviser said a hard-won U.S.-China trade deal was “over,” though he later clarified that his remark had referred to the “lack of trust” in the Chinese administration. President Trump later confirmed the trade deal between the U.S. and China was “fully intact,” adding he hoped Beijing would continue to live up to the terms of the agreement.
Go deeper: U.S. weighs new tariffs on $3.1B of imports from Europe.

Phase four

Another stimulus package is in the making, though what form it will take is still being debated. “Whatever we do it’ll be much more targeted, much more focused on jobs, bringing back jobs and making sure we take care of our kids,” Treasury Secretary Steven Mnuchin told reporters. Early in the week, President Trump also appeared to suggest that there could be another round of stimulus checks on the way for Americans and details would likely be released “over the next couple of weeks.” Some other policies under consideration include a payroll tax cut and protections for businesses from coronavirus-related liabilities.

Macs leave Intel for custom silicon

At its Worldwide Developers Conference, Apple (NASDAQ:AAPL) officially announced the transition from Intel (NASDAQ:INTC) chips to custom silicon for Macs based on ARM (OTCPK:SFTBY) architecture. It also made two changes to its app approval policies and will let iPhone users change default mail and browser apps, helping address antitrust concerns. Other highlights: A CarKey feature will enable iPhones and Apple Watches to unlock, lock, and start NFC-compatible cars, while some COVID-19 features were introduced like hand washing reminders.

Skin-lightening products

Unilever (UN, UL) said it will change the name of its skin-lightening cream away from Fair & Lovely amid growing criticism that it suggests light skin is more attractive than dark. The company plans to stop using words like white, whitening, light and lightening when describing benefits of its products in order to evolve the skincare portfolio to a more inclusive vision of beauty. Activists have been protesting against Fair & Lovely for years, one of the firm’s best-selling products in India with $560M in annual sales. Johnson & Johnson (NYSE:JNJ) also announced recently it would stop selling similar skin-lightening products under its Clean & Clear and Neutrogena brands.

Scandal brings Wirecard to its knees

German payments company Wirecard (OTCPK:WCAGY) filed for insolvency proceedings on Wednesday, a week after auditors found a €1.9B hole in its balance sheet and an admission by the company that the money may never have existed. Shares were suspended from trading before the announcement, but had fallen nearly 90%, wiping out almost $12B of market value since the disclosure last week. CEO Markus Braun was also arrested on suspicion of falsifying accounts at the company, which processes tens of billions of euros in credit and debit transactions every year. Once the darling of Germany’s fintech world, Wirecard eventually ascended to the DAX, the stock index of Germany’s 30 largest companies.

Latest coronavirus bankruptcy

CEC Entertainment (CEC), the parent of Chuck E. Cheese and Peter Piper Pizza, filed for Chapter 11 after the COVID-19 pandemic closed its locations and kept families at home. The current crisis was described as the “most challenging” in the company’s history and it intends to use the bankruptcy process to continue talks with stakeholders and landlords to restructure its balance sheet. CEC Entertainment, which was taken private by Apollo Global Management (NYSE:APO) in 2014, announced plans to go public last year, though the proposal was eventually terminated after its reverse merger with Leo Holdings collapsed.

Built Ford Tough

Ford (NYSE:F) took the wraps off its 2021 F-150, unveiling a traditional model and hybrid version set to achieve 700 miles on a single tank of gas. Specs: An integrated generator, optional hands-free driver-assist system, 12-inch screens, lay-flat sleeper seats and over-the-air updates. An all-electric version is seen coming sometime in the next two years – in line or slightly later than new electric pickups from GM (NYSE:GM), Tesla (NASDAQ:TSLA), Rivian and Nikola (NASDAQ:NKLA). Almost 900K F-Series pickups sold last year generating about $42B in revenue, ranking near the iPhone among the biggest U.S. consumer products.

Surprise loss for Nike

Shares of the sneaker giant fell nearly 4% AH on Thursday on the back of an unexpected quarterly loss and a sales decline of 38% Y/Y. Results were significantly impacted by the closings of stores during global lockdowns, though digital sales soared 75%, representing about 30% of total revenue. Expenses for shipping and returns also put more pressure on Nike’s (NYSE:NKE) profits – gross margin came in at 37.3% of sales vs. 45.7% a year ago and 43.3% consensus.

#BoycottFacebook

Verizon (NYSE:VZ) became the latest firm to pull advertising from Facebook (NASDAQ:FB) in the “Stop Hate for Profit” campaign, following in the footsteps of Ben & Jerry’s, REI, Patagonia and The North Face. Last week, six organizations, including the ADL and NAACP, called on companies to pause advertising on the social network for July “to show they will not support a company that puts profit over safety.” A Verizon spokesperson said the decision would stand until Facebook and Instagram “can create an acceptable solution that makes us comfortable.”

Stressed out

The Federal Reserve put fresh limits on the U.S. banking industry after annual stress tests found that several institutions could get close to minimum capital levels in scenarios tied to the coronavirus pandemic. Big banks will be required to suspend share buybacks for the third quarter (most of them already paused repurchases in Q2) and limit dividend payments at their current level. While “all large banks remain strongly capitalized,” the Fed – for the first time in the decade-long history of the stress test – is requiring banks to resubmit updated capital plans later this year.

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