Wall Street Breakfast: Wild Stock Market Swings

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Includes: AIRB, ALB, APHA, AXP, BA, CTL, EADSY, F, FB, HYMLF, IBM, NFLX, NSANY, NSRGY, OMVJF, PG, QQQ, RDS.A, RDS.B, RUALF, SHLDQ, SPY, VZ
by: Wall Street Breakfast
Wall Street Breakfast
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It's a roller coaster ride on Wall Street heading into the penultimate trading day of the year. U.S. stocks roared back to end in positive territory on Thursday after suffering steep losses for much of the session, and the same sentiment took place overnight, with futures now pointing to strong gains. "The market is right now in a psychological frenzy," said David Katz, CIO at Matrix Asset Advisors. "There's fear of the market going down; there's fear of missing the rebound."

Economy

House Republicans have informed lawmakers that there will be no votes on spending legislation today or Monday and thus no relief for the 800,000 federal workers who are either furloughed or working without pay. House Democrats, who assume control of the chamber next Thursday, are weighing three approaches to getting federal funds flowing, but none of them include $5B for a border wall with Mexico.

Japan's Nikkei fell on its final trading day of the year, leading to its first annual loss in seven years. The benchmark index booked a 12.1% decline in 2018, breaking the longest winning streak since the late 1980s. Japan's 10-year bond yield also fell overnight below zero for the first time since September 2017, as a recent equity selloff fueled a rally in government debt around the world.

Saudi Arabia's King Salman has ordered his first major cabinet reshuffle since taking the throne nearly four years ago. Crown Prince Mohammed bin Salman will retain his wide-ranging powers, but the shakeup is likely to be viewed as an attempt to "clean house" and send a signal to the international community that he has responded to the crisis that ensued following the killing of Jamal Khashoggi.

Debt "must be kept under surveillance, but it isn't so scary," Prime Minister Giuseppe Conte said at his year-end press conference in Rome. "Italy's economic fundamentals are very solid." He also reaffirmed confidence in his coalition's controversial economic policies following a weeks-long standoff with the EU, as the government races against the clock to pass its 2019 budget law before Dec. 31.

Stocks

The clock is ticking down on Sears' (OTCPK:SHLDQ) survival. The last shot is reportedly a $4.6B proposal put forward by its chairman, Eddie Lampert, to buy the 125-year-old icon out of bankruptcy through his hedge fund, ESL Investments. Lampert, though, hasn't submitted a bid or come up with financing as of Thursday afternoon as he stares down a deadline today at 4:00 p.m. ET.

Many CenturyLink customers were without internet Thursday amid a lengthy outage that even affected some Verizon (NYSE:VZ) customers, for which it helps handle wireless traffic. Engineers have since identified a problematic "network element" and the company was expected to fully restore services within hours. FCC member Jessica Rosenworcel also said via Twitter it was a nationwide outage and her agency needed to investigate. CTL -0.8% premarket.

Netflix has released its first-ever interactive format for adults. An extended 90-minute episode of the British TV series Black Mirror allows users to choose how the story develops and ends by clicking on "Yes" or "No" choices throughout the show. Netflix (NASDAQ:NFLX) previously released several interactive kids titles like Puss in Book and Buddy Thunderstruck: The Maybe Pile, which allowed users to pick between different endings.

More than 7,500 Facebook moderators rely on a series of PowerPoint slides that contain inaccuracies and outdated information to determine what content to allow on the social network, the NYT reports. Facebook (NASDAQ:FB) confirmed the authenticity of the documents, according to the publication. Moderators also say they must make decisions within seconds and often rely on Google Translate as they face pressure to review thousands of posts per day.

Kenneth Chenault, the former chairman and CEO of American Express (NYSE:AXP), is stepping down next year from his board roles at IBM and Procter & Gamble (NYSE:PG), where he has served for decades. Chenault "made this decision in order to allow more time to focus on a range of activities in the next phase of his life" and comes less than a year after he joined the boards of Facebook (FB) and Airbnb (AIRB).

The "Impossible Burger" is getting some new competition called the "Incredible Burger" produced by Nestle (OTCPK:NSRGY). It's the Swiss company's biggest push yet into the booming vegan market, which will be introduced under the Garden Gourmet label next spring. The plant-based business may reach more than $1B in sales within a decade, according to Nestle's Laurent Freixe, CEO of the Americas.

FDA Commissioner Scott Gottlieb is reaching out to e-cigarette manufacturers for meetings regarding "epidemic" teen use of the products. In November, the FDA announced new regulations on flavored tobacco products, like restricting sales at retail stores. Other smoking news... U.S. marijuana company Green Growth Brands intends to make a $2.1B offer for Aphria (NYSE:APHA), sending the latter's shares up nearly 20% AH.

Chile will delay a previously announced arbitration with Albemarle (NYSE:ALB), the world's top lithium producer, in anticipation that the U.S.-based miner will make a new offer to bring it into compliance with a 2016 contract, Reuters reports. Under the contract, Albemarle had agreed to provide as much as 25% of its annual production at a discount to companies seeking to produce battery metals within Chile.

Royal Dutch Shell has officially said goodbye to New Zealand with the sale of its oil and gas assets to Austria's OMV (OTCPK:OMVJF) for $578M. The move is part of a drive to simplify its upstream portfolio and reshape the oil major. Shell's (RDS.A, RDS.B) $30B divestment program for 2016-18 included oil sands interests in Canada, onshore upstream operations in Gabon, as well as assets in the North Sea and Australia.

Russian aluminum giant Rusal has appointed independent non-executive director Jean-Pierre Thomas as its new chairman as part of an agreed-upon restructuring in exchange for the lifting of U.S. sanctions. "Mr. Thomas has in-depth experience with Russian relations, having been tasked with several projects aimed at boosting economic cooperation between France and Russia," Rusal (OTC:RUALF) said in a disclosure.

Following similar moves by Ford (NYSE:F) and Hyundai (OTCPK:HYMLF), Nissan (OTCPK:NSANY) has become the latest automaker to cut output in China. Slowing economic growth and a crippling trade war with the U.S. have pummelled local vehicle sales over the last few months. Nissan reportedly plans to cut production in China - which is its second largest market - by a total of 30K units during the December-February period.

A third prototype of China's home-built C919 passenger jet completed its first test flight today, with the goal of obtaining certification from Chinese and European regulators by the end of 2020. China's first national passenger jet aims to challenge the dominance of Boeing's (NYSE:BA) 737 and Airbus's (OTCPK:EADSY) A320, bringing the Asian nation a step closer to its goal of becoming a global civil aerospace player.

Today's Markets

In Asia, Japan -0.3%. Hong Kong +0.1%. China +0.4%. India +0.8%.
In Europe, at midday, London +1.8%. Paris +1.7%. Frankfurt +1.8%.
Futures at 6:20, Dow +0.8%. S&P +0.8%. Nasdaq +0.7%. Crude +2.2% to $45.58. Gold flat at $1281.10. Bitcoin -3.2% to $3622.
Ten-year Treasury Yield +1 bps to 2.76%

Today's Economic Calendar

8:30 International trade in goods
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
9:45 Chicago PMI
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:00 PM Baker-Hughes Rig Count

Companies reporting earnings today »