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Wall Street Breakfast: Traders Buy The Dip

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Wall Street Breakfast

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The strongest day in more than a decade immediately followed the worst week since the financial crisis (talk about volatility). The Dow surged over 5% on Monday, while the S&P 500 and Nasdaq each jumped more than 4%, boosted by expectations of central bank firepower to battle the economic impacts of the coronavirus. U.S. futures tacked on another 1% advance overnight, with traders now seeing a 100% chance of a 50-basis point rate cut at the Fed's March meeting. For what it's worth, moderate Democrats have also consolidated around Joe Biden's candidacy ahead of Super Tuesday.
Go deeper: John Gilluly says to buy hammered travel stocks.

First developed market to cut rates

G7 finance ministers and central bank governors will hold a conference call today to discuss measures to deal with the coronavirus outbreak. While language of the draft statement (expected today or tomorrow) is subject to change, initial reports suggested it does not detail any fiscal or monetary steps. On Monday, the ECB joined a chorus of central banks signaling a readiness to support financial markets, while the Bank of Australia became the first to cut rates to a record low of 0.5% due to the "significant effect" of the virus.
Go deeper: 'Straightforward Calculations On COVID-19 Risks' by Daniel Nevins.

Trump renews attack on Powell

"Australia's Central Bank cut interest rates and stated it will most likely further ease in order to make up for China's Coronavirus situation and slowdown. Other countries are doing the same thing, if not more so," President Trump tweeted overnight. "Our Federal Reserve has us paying higher rates than many others, when we should be paying less. Tough on our exporters and puts the USA at a competitive disadvantage. Must be the other way around. Should ease and cut rate big. Jerome Powell led Federal Reserve has called it wrong from day one. Sad!"

Investor meetings

U.S. oil majors are in the hot seat this week, facing a grilling from Wall Street as they hold their annual investor days - Chevron (CVX) on March 3 and Exxon Mobil (XOM) on March 5. "The question is whether they will stick with the status quo or pivot," said Doug Terreson, an analyst at Evercore ISI. "The market does not seem to embrace the current plans." In the early 2000s, the U.S. oil explorers were getting around 20% returns, though it's less than half of that today. Concerns over climate change, fossil fuels and impacts on demand from the coronavirus also loom large.
Go deeper: Chevron offers U.S. workers buyouts to trim staffing.

Waymo raising cash from outside investors

Highlighting the costs of developing self-driving vehicles, Alphabet's (GOOG, GOOGL) Waymo has raised $2.25B in its first external investment round and expects to add more outside investors. "It's a long road getting this technology out to the world," said CEO John Krafcik. "This is just a normal part of funding our operations." Waymo didn't disclose its post-investment valuation, a figure analysts have been trying to assess for years as Alphabet continues to pump cash into the venture.
Go deeper: The company disclosed its self-driving trucking business will be called Waymo Via.

Unseating California legislators

Lyft (LYFT) has placed $2M in a campaign account and Uber (UBER) put $200K into a PAC to oppose Tyler Diep, an Orange County assemblyman and the only Republican to vote in favor of California's AB5. The two have argued that the bill takes away driver flexibility and that their drivers are already correctly classified. The Lyft-backed committee Californians for Independent Work has spent $328K on polling, ads and mailers, including one that calls Diep's vote "a mockery of his campaign pledge to roll back regulations and promote jobs."
Go deeper: Uber acknowledges coronavirus could weigh on business.

Healthcare M&A takes off

While talks broke off late last year, Thermo Fisher Scientific (TMO) is acquiring Dutch molecular testing firm Qiagen (QGEN) for €10.4B, including assumed debt. Investors would get €39 for every Qiagen share, 23% higher than Monday's closing price. It's the second major transaction in the healthcare sector this week after Gilead Sciences (GILD) agreed to buy Forty Seven (FTSV) for about $4.9B to advance into cancer treatments. QGEN +16% premarket

Speeding up same-day delivery

Amazon (AMZN) has quietly opened a series of small warehouses closer to big U.S. cities, including Phoenix, Philadelphia, Dallas and Orlando, in a move to shave hours off delivery times. The same-day offer will guarantee delivery of more than 100,000 products in as little as five hours, said Jon Alexander, Amazon's director of delivery experience, adding that more cities will be added to the program later this year.

Pulling out of SXSW

Facebook (FB) has withdrawn from the South by Southwest festival this year, the latest big-event business casualty to concerns over the spreading coronavirus. It joins Twitter (TWTR) as the second major tech company to skip the festival for that reason. Facebook had a number of speakers set for panels, and was to host a Facebook house and an activation for its artists-in-residence program. SXSW officials say the show will go on.

What else is happening...

Visa (V) cuts Q2 revenue guidance due to coronavirus.

Longtime GE (GE) boss Jack Welch dies at 84.

Facing activist investor, Musk supports Twitter's (TWTR) Dorsey.

J&J (JNJ) should separate CEO and chairman roles?

Xerox (XRX) launches tender offer for HP (HPQ).

Apple (AAPL) settles throttling suit for up to $500M.

Monday's Key Earnings

JD.com (JD) +12.4% AH on Q4 earnings beat.
Tilray (TLRY) -11.7% missing estimates.

Today's Markets

In Asia, Japan -1.2%. Hong Kong flat. China +0.7%. India +1.3%.
In Europe, at midday, London +2.4%. Paris +2.4%. Frankfurt +2.9%.
Futures at 6:20, Dow +1%. S&P +0.9%. Nasdaq +1.2%. Crude +3.3% to $48.30. Gold +0.3% to $1599.50. Bitcoin +1.5% to $8844.
Ten-year Treasury Yield +7 bps to 1.16%

Today's Economic Calendar

Auto Sales
8:55 Redbook Chain Store Sales
6:30 PM Fed's Evans Speech

Companies reporting earnings today »

This article was written by

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Comments (53)

matt.wood profile picture
-2.9% still buying the dip?
COVID-19, after a brief uptick, resumes its downward trend www.worldometers.info/...
techy46 profile picture
Yelp, recoveries outpace new cases!

FED's about 4 weeks late an 2 points short.

They should raised rates at last two cuts.

I'm 90% cash and CDs!
CapeHornInvesting profile picture
"Traders Buy the Dip."

Not really.

Really strong preferreds that have rarely traded even close to par and usually trade a dollar over went way below par. I snapped up a boatload. The yields are eye-popping.

Also snapped up some companies I have been meaning to buy at way below a price I never expected to get.

I sold absolutely nothing. Not only did I get beautiful new yields, but those preferreds have all recovered, and I never thought I would get THAT kind of portfolio growth out of preferreds!

My next move will be to watch for the bottom and snap up as much airline stock as I can afford.
Good idea!
1/2% rate cut! Ugh! rates are not the problem! near zero growth and speculation are the problem. Gotta put $ into R&D. 1/2% seems like panic. Sitting tight. Too old and can't move that fast! Gona see how things look after lunch. QQQ 8 ema seems to be the line in the sand. Keep in mind when a certain person has won the primary and we have a lot of them tonight...the market has gone down the next day.
SB Pirate
I'm fine with a .5% rate cut means when we buy another car this fall my car payment will be lower.
Lets see: save 1/2% on a $30-40k car and loose 1/2% interest income on any amount greater than the financed part of the car and hows that a win?
Its a win because i don' wast my money in money markets, but in mortgage reits if i want income. see capehorninvesting statement.
Buyandhold 2012 profile picture
Trump renews attack on Powell.

I thought the Fed was supposed to be independent.
techy46 profile picture
"G7 finance ministers and central bank governors will hold a conference call today to discuss measures to deal with the coronavirus outbreak."

Ok, the central banks low rates cause this bubble and more will fix it?

Banks can't deal with a coronavirus outbreak only physicians can!
"Socialism for the rich" here we go again...market goes down and shareholders are screaming for a bailout. And as per usual the free money increases the wealth disparity in an exponential way. Will this immoral cycle ever end?
If the market crashes, the rich will still be rich. The poor will lose what little they have, principally their jobs. We've got to live with that. There is no way back.
There are likely ways back, perhaps just none that are particularly easy or generally palatable.
well profile picture
sadly this is true.
blueline profile picture
"Facing activist investor, Musk supports Twitter's (TWTR) Dorsey."

I consider activist investors to be someone that has some social justice agenda. Paul Singer's Elliott Management is going after Jack because he is the CEO of two companies and wants to spend 6 months in Africa every year. Singer wants a better CEO to increase profits and stock price. Twitter needs a CEO that works full time for the stockholders.
Paul Singer is going after Jack Dorsey because he will not allow political ads on Twitter against the wishes of someone i don't need to name
Rabbit1960 profile picture
"I consider activist investors to be someone that has some social justice agenda."

The term "activist investor" has NOTHING to do with politics, blue. History is full of activist investors calling for the break up of companies in order to make money for stockholders, often at the expense of the workers.
blueline profile picture

If Twitter stops discriminating against half of their potential customers the accounts will increase and the ad revenue will go up and the stock price will go up.
blueline profile picture
"The question is whether they will stick with the status quo or pivot,"

Pivot to what? We don't have anything other than the status quo to power the world.

"In the early 2000s, the U.S. oil explorers were getting around 20% returns, though it's less than half of that today."

Oil was trading at double the amount that it is trading today. That's what happens when the price drops the profit margins usually drop in sync.
Pivot to what? Perhaps you should ask Shell oil: finance.yahoo.com/...

"This is a matter of, How do you actually build a whole new industrial complex where electricity is the main way of doing things?"

Don't feel bad @blueline. They have thought about the problem longer than you have and are less burdened with your willful preconceptions.
Speaking of status quo--how did that work out for Kodak, Blockbuster, Wang, Blackberry....?
Shaggieman profile picture
@genomegk if this CV-19 turns out to be a huge killer maybe we could foregone building out new electrical grids and use what we have in place.
Yesterday was TOO much imo. But, had a good day (for me) on top of avoiding almost the entire draw down last week which were augmented by 2 positive trades using EEV, and IOO. I'll take it. Near the close yesterday I put on a small hedge with QID which immediately went underwater but might be salvageable given the premarkets indications of a drop at the open (8 am). Things could change.

Anything below the 260sma I am still out of, that would be EEM and IWM. So QQQ related and IOO (for some global exposure) make up my 5% long position by the end of yesterday. and then about 2% hedge with QID which I hope to close this morning. Will "hammers" kin show up is the question? Looks like a perfect morning for the trade they described last year.

Looking closely at bond cef's: MGF, BTZ, MCR to establish a position. Looks like Certificates of Deposit are sadly done yield wise. Amazing drop in one week! Still trying to figure out what will happen when the Fed announces "curve control" . Will the curve look like CD's do today? Will it be good, bad or not matter in these crazy markets?

All have a great day!
TK8500 profile picture
We’re going to rip higher. Global synchronized central bank stimulus.
Can't they lower the rate for current loans and keep future loans at the same rate? Or possibly higher.
deercreekvols profile picture
Futures pointing upward. Shades are ready! Hoping that this rise stays and the old roller coaster is broken today! Crude up 3.3% at the start. Gold up fractionally. No comment from King Midas who is reportedly going to mic'd up at some point. Bitcoin up 1.5% for no reason at all. Holding far below the All-Important $10,000 level.

Elon Musk is excommunicado. The Continental and its services are closed to him.

Speaking of Tesla, they are officially starting to offer an infotainment upgrade (MCU1 to MCU2 upgrade) to owners of older Model S and Model X vehicles. The cost? $2,500. What do you get? New features, as well as a more advanced and smoother user experience. Access to some of Tesla's favorite features like video streaming and an expanded Tesla Arcade, in addition to a more responsive and faster touchscreen experience. On the negative side, they will lose access to AM, FM or Sirius XM radio since it’s not a feature that Tesla built into the new computer as it moves toward music streaming. Wait. What? No radio or Sirius XM? Guess there wasn't room in the new computer. 🔥🔥🔥 I'm too S3XY for Sirius XM or terrestrial radio! (Right Said Fred reference- bonus points if you knew this)

"Just want say that I support @jack as Twitter CEO. He has a good heart," tweeted Elon Musk, coming to the defense of Jack Dorsey as the latter faces pressure from an activist investor. Got it. Thanks for the update on what Elon Musk Tweets.

Highlighting the costs of developing self-driving vehicles, Alphabet's Waymo has raised $2.25B in its first external investment round and expects to add more outside investors. "It's a long road getting this technology out to the world," said CEO John Krafcik. This might explain the crickets that are heard anytime anyone asks about Tesla's Robotaxi fleet.

Amazon has quietly opened a series of small warehouses closer to big U.S. cities, including Phoenix, Philadelphia, Dallas and Orlando, in a move to shave hours off delivery times. The same-day offer will guarantee delivery of more than 100,000 products in as little as five hours. Now that the news is out there, it is no longer quiet. Long $AMZN.

The House of Buffett took advantage of last week's swoon in Delta to add to its holdings, purchasing nearly 1M shares on Thursday at prices ranging from $45.48-47.14. The House of Buffet? Is this a new nickname for Berkshire Hathaway?

Target reports comparable sales rose 1.5% in Q4 to fall short of the consensus expectation for a rise of 2.1%. Shares are down 3% on the "disappointing" report. Didn't Target have a great Christmas season?

WeWork has named former Baker Hughes executive Kimberly Ross as its finance chief, effective March 16, a key appointment as new Chief Executive Sandeep Mathrani looks to move the office-sharing startup forward. It had been some time since WeWork news was offered at the breakfast table I thought I would throw it in.

Where is Jon Corzine and has MF Global been buying airline stocks too at the House of The Honorable Jon?

Where is Marissa Mayer and has she been buying shares of Yahoo?

Where is Elizabeth Holmes and what surprises does she have for her massive fraud trial?

Have a great day everyone. Stay safe out there.
WeWork - did anyone see clear fluid when we poked that turkey with a fork?

Hoping self-driving cars become a reality before I become a dangerous driver (still have a fair amount of time - so feel confident)
deercreekvols profile picture
Breaking News- JMP Securities, not to be confused with JPM, upgraded $TSLA. Stock is up 7% premarket.

But who at JMP made the call?

Joseph Osha is the analyst, according the to the SA link.

TipRanks shows that JMP analyst Joseph Osha has a 25% Success Rating on his Tesla calls. His average profit on the stock is -9.5%.

Seems like a good reason that $TSLA is up 7% on such a call from such a successful Tesla analyst.

Hyper-sensitive stock anyone?
blueline profile picture

If they can replace Jack Dorsey with a full time CEO that has profits and stock prices as the priority the stock will boom.
VanWelij profile picture
Traders at Robinhood sure didn’t!
Chris Lau profile picture
Back story: coders forgot to code the leap year and robin hood was closed all day for trading yesterday.
@Chris Lau
That would be surprising as software developers usually don't have to code for that type of date logic - the underlying components already handle it.

I got my trades in at the opening bell and they went through before I was locked out.
that’s not true, none of the API calls were working, regardless of the date that was put in. someone happened to find that nugget in the developer logs in their console and everyone ran with it. fake news at its finest.
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