Wall Street Breakfast: Biggest Healthcare Deal On Record?

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Two drugmakers at the forefront of the industry's efforts to fight the novel coronavirus are exploring a combined future. AstraZeneca (AZN), co-developer of one of the fastest-moving experimental coronavirus vaccines, has made a preliminary approach to Gilead Sciences (GILD), the only company to have received FDA emergency authorization for its COVID-19 treatment remdesivir. Formal talks are not yet underway, but if combined, the two companies would have a market capitalization of $232B, based on Friday's closing share prices. AZN -2.2%; GILD +3.2% premarket.

Higher and higher

Futures suggest equities are looking to extend a record rally at the open following the U.S. jobs report on Friday which smashed expectations and underpinned risk assets. "The reopening of the economy has seen financials, industrials, energy and real-estate stocks rallying and investors will continue to rotate funds into sectors such as these for a few more months," said Eli Lee, head of investment strategy at Bank of Singapore. A weekend agreement by OPEC+ to an extension of output cuts saw oil climb to over $40 overnight, while investors get ready for Tuesday's kickoff of the Fed's June policy meeting.

Details of the OPEC+ deal

The finalized pact calls for collective cuts of 9.6M daily barrels until the end of next month, with Nigeria and Iraq making up for their backlog of reductions with deeper cuts over the next three months. Mexico won't pursue curbs beyond June, as it aims to implement longstanding plans to revive its oil industry. The cuts will be reviewed on a monthly basis, with the next meeting set for June 18. OPEC+ compliance with the May deal was 89%, meaning the group fell some 1.1M barrels short of the target set in the April agreement, according to commodities data firm Kpler.

'Worst month ever' for Germany's economy

German industrial output posted its steepest decline on record in April, plunging 17.9% during the month that saw unprecedented closures of factories and shops due to COVID-19. ING economist Carsten Brzeski called it "the worst month ever" for the eurozone powerhouse, but the Bundesbank feels the peak of the economic crisis is likely over. It sees a contraction of 6.3% this year, based on the assumption that a €130B fiscal stimulus package will help economic activity pick up again in the second half of 2020.

'All the news that's fit to print'

The New York Times' (NYT) editorial page editor, James Bennet, has resigned following significant criticism over the paper’s decision to publish an op-ed by Republican Senator Tom Cotton under the headline "Send in the Troops." Until recently, Bennet was viewed internally as a candidate to succeed NYT Executive Editor Dean Baquet when he retired. Stan Wischnowski, the top news editor of the Philadelphia Inquirer, also resigned over the weekend following the publication of a headline entitled "Buildings Matter, Too" that drew condemnation from readers and the newspaper's staff.

Reviewing content policies at Facebook

Facing criticism for not moderating or removing controversial posts from President Trump, Facebook (FB) CEO Mark Zuckerberg said the company will review policies on posts that promote or threaten state use of force or voter suppression techniques. "While we will continue to stand for giving everyone a voice and erring on the side of free expression in these difficult decisions - even when it's speech we strongly and viscerally disagree with - I'm committed to making sure we also fight for voter engagement and racial justice."

Uber takes steps to support the Black community

"As a starting point, we will use Uber Eats to promote Black-owned restaurants while making it easier for you to support them, with no delivery fees for the remainder of the year," Uber (UBER) CEO Dara Khosrowshahi wrote in a letter. "In the coming weeks, we will offer discounted rides to Black-owned small businesses, who have been hit hard by COVID-19, to help in their recovery. We know this isn't enough. It won't be enough until we see true racial justice. But we plan to work day in and day out to improve, learn, and grow as a company."

Airlines rip U.K. quarantine plan

British Airways (OTCPK:ICAGY), EasyJet (OTCQX:ESYJY) and Ryanair (RYAAY) have written to the British government in protest at its "wholly unjustified and disproportionate" quarantine rules and are threatening legal action over the policy. Starting June 8, nearly all international arrivals in the U.K. will be required to self-isolate for 14 days and to supply details of their accommodation. The three carriers say the moves will devastate tourism and wreck any chance of salvaging the summer season when tens of millions of people generally travel, while also destroying thousands of jobs.

HSBC warns on Chinese reprisals

After backing China's controversial national security law last week, HSBC is now warning Downing Street against a ban on Huawei in 5G telecoms networks, saying it could face reprisals in China over such a motion. Chairman Mark Tucker made the claim in private conversations with British Prime Minster Boris Johnson's advisers, according to The Telegraph. The U.K. classified Huawei as a "high-risk vendor" in January, limiting its 5G involvement to 35% and excluding it from the core of the network, but could phase Huawei out completely by 2023.

Samsung leader faces jail again

A court ruling expected today or early Tuesday will decide whether the de facto leader of Samsung Group, Jay Y. Lee, will head back to jail after more than two years of freedom. He's accused of stock price manipulation and audit rule violations, among other offenses. The risk of more jail time for Lee has cast a cloud over the sprawling conglomerate and its crown jewel, Samsung Electronics (OTCPK:SSNLF), whose annual revenue alone is equivalent to 12% of South Korea's GDP.

What else is happening...

American Airlines (AAL) draws severance packages for high-level employees.

What's going on with Amazon's (AMZN) Prime Air drone program?

China's trade surplus climbs to new record.

Nasdaq (NDAQ) tops NYSE (ICE) in coronavirus-era IPOs.

Barron's is positive on Twitter (TWTR) as global influence grows.

Ann Taylor parent Ascena (ASNA) weighs bankruptcy filing.

Today's Markets

In Asia, Japan +1.4%. Hong Kong flat. China +0.2%. India +0.4%.
In Europe, at midday, London +0.2%. Paris -0.4%. Frankfurt -0.5%.
Futures at 6:20, Dow +0.6%. S&P +0.4%. Nasdaq +0.2%. Crude +1.6% to $40.02. Gold +0.9% to $1607.90. Bitcoin +1.2% to $9750.
Ten-year Treasury Yield flat at 0.91%

Today's Economic Calendar

12:30 PM TD Ameritrade IMX
1:00 PM Results of $44B, 3-Year Note Auction

Companies reporting earnings today »

Comments

[Cryptoanalytic]

Took big bites out of ERI, NCLH, MAC, RCL, and BA in late March through May. Also added to Nividia, AMD The Trade Desk, Microsoft, Roku, SPCE, SQ, SPLK, JNJ, HD and ABBVIE during March lows. Held LMT and GD, sold NOC. Averaged down into T, WFC, UPS, SPYD and IP to counter my losses, also during March lows. Just sold Facebook and BA.(Sold all my original BA from 2016 at highs last year. Bought SDOW Last Friday and today as hedge. Sold all DIA, BABA, BZUN, CRM, MCSI emerging markets and RIO back in January to accumulate cash. Haven't taken profits on ERI, NCLH, MAC. Glad I didn't sell more to raise capital. Most buying I have down since lows in 2016. Shared casino, retail, cruise picks with family and friends in March. They are pleased. Telling them this is not the new normal.
Wish I had taken more profits in January, accumulated more capital. But then again, maybe not. Hindsight is 20/20. Glad I listened to F & G Trader, Bill Gunderson, Seeking Alpha roundtables. Appreciate WSB.
My best to you and yours.
Sincerely,
Mikael

[nonameneeded]

Congratulations on your egotistical mast*rbation!

[nonameneeded]

This is quite possibly the most ridiculous, self-centered pontification i have ever seen on SA. Im doing well too but why would people care about your personal ‘big’ bites and selling ba highs from 2016 buys only to do well again from buying 2020 dips, averaging down, your sharing with friends and family, your 15 stocks? Who cares? Be humble when you win.

[WWG1_WGA_Q]

Hope everybody was happy with the Markets continued bull run. Have a great rest of the day & evening. Ciao...until tomorrow.

[tiffiny vanvorken]

good work, thx

[SB Pirate]

QQQ & Stuff

With family visiting (glad things are opening up) end of last week there was no time to post. Caught a bit off guard by the BIG Friday rally but the lagging open of the QQQ gave me a chance to lift a hedge and the day was saved.

Short Term:
IWM and EEM above their upper B-band QQQ Just kissed it and fell back now down a bit this morning. Not adding anything. Some hedging indicated but that has not been working except for tiny intra-day scalps which I am not good at.

Medium Term: Buy the dip indicated QQQ, IWM, EEM. as well as TBT, UDN.

Long Term: IWM now above the 260sma as is EEM (just barely) QQQ well above 260sma.

Some months ago when the market was also roaring higher after 9/17/19 " The Heisenberg" (sp) posted on SA about an option strategy that was in play that prevented the market from any significant decline. I wonder if the same situation is happening today? Anyone have any insight?

All a great day!

[Invader from Earth]

Airlines are being stubborn in their delay to reconfigure cabin interiors for the post COVID world. They may have to be encouraged...?

[Ben Gee]

How do people stay 6 ft apart in an airplane?

[cantwin]

Ben Gee 3 feet would be nice........ any thing would be better than sittin with my knees against the seat in front and shoulders crunched together I still say if they could figure a way to make us stand up they would do it in a heartbeat......Rawhide!!

[john boy]

Irredeemable
There is a more than 50% chance that the virus dies out in 18 months. So the airlines are going to spend more money to change back their cabins.

[Chris Lau]

High airline debt levels and a tripling in oil prices may send airline stocks lower. Not today: aff.whotrades.com/...

The GILD AGN rumor effectively ends the Gilead fade. AGN is slow and would hurt Gilead's long-term growth prospects.
..
Events in the US Today (EDT):

10:00am - CB Employment Trends Index (May) [1/3 Volatility]
11:30am - 3-Mo Bill, 3-Yr Note, and 6-Mo Bill Auction [1/3 Volatility]
3:00pm - The Senate will convene to consider motion to proceed to the Great American Outdoors Act
NYC begins reopening today
Events in Canada Today (EDT):

8:15am - Housing Starts (May) [2/3 Volatility]
8:30am - Building Permits (MoM-May) [2/3 Volatility]
Events in the Euro Zone Today (EDT):

9:45am - ECB President Lagarde Speaks [3/3 Volatility]
Lawmakers will have the opportunity to ask questions about the reasons behind the ECB’s larger-than-expected increase in its emergency bond buying stimulus program.
Events in the World Today:

Brazil Iron ore mine hit with Covid-19 infections suspends operations
Brazil stops releasing Covid-19 death toll and wipes data from official site
OPEC and its allies agreed to extend historic output curbs by an extra month
Earnings Before Open:

REV
Thor Industries
Earnings After Close:

Coupa
Stitch Fix
Casey's General store
Calavo
Phreesia
Safe Bulkers
Ferroglobe
BBVA USA

[blueline]

I would think that the airlines locked in future fuel prices when oil was at all time lows.

[SayItWithLyrics]

Curious that the NASDAQ is negative, and that oil (which was up a bit a few hours ago) has rolled over.

Looks like we may soon get a test of whether SP500 3000 is the new support level.

[WWG1_WGA_Q]

"Druckenmiller 'humbled' by market rally." Get used to it , as the 'new bull' market is just getting warmed up. Lots of $$ coming in off the sidelines, not wanting to miss this rally. As all the naysayers are proven wrong, once again.

[New Adams]

@Novavax Op Warp Speed - yup, FREE MONEY, never mind the world is falling apart. PIGS make money!

[john boy]

Where else can you get a decent return except dividend stocks. Junk bonds maybe but you still have more risk and stocks could rise creating capital appreciation.

[john boy]

New adams
Pigs get slaughtered.

[Printing$]

So the NYT & Philly Inquirer both cave to the cancel culture. Freedom of speech or the press is a thing of the past.

[grharmon]

Total BS, newspapers editors and 99% of workers have people to answer to when they piss people off, just like you and me. You have freedom of speech when you go protest at the state capital. But when you are at your job you do not have some shroud of protection to say whatever you want with no consequences. The right wingers are trying to create a new ideal to protect themselves. Just like the idea that the 2nd amendment doesn’t allow any restrictions on guns. This idea was created recently in the last few decades and was never even offered or accepted by anyone in the 200 years before.

[bensacc]

"freedom" of speech and the press, pertains to government suppression. It has nothing to do with a news organisation having editorial standards. In the NYT case, Sen. Cotton's piece contained factual errors (including misquotations of the Constitution) that should have kept it from publication in the first place. It was actually the NYT's effort to present a range of views that caused the problem in the first place (I'm not as familiar with the Philly Inquirer piece). We can all agree or disagree with the application of those standards, but this has nothing to do with freedom of the speech.

[Buckoux]

@grharmon,

"Just like the idea that the 2nd amendment doesn’t allow any restrictions on guns."

Why, whatever do you mean?

[RSloan]

Thank you for this podcast series. I look forward to it every day.

[blueline]

"In the coming weeks, we will offer discounted rides to Black-owned small businesses"

Because there is nothing that promotes your business more than riots and looting. 😎

[JDoe20]

@blueline

In the coming weeks, we will offer discounted rides to Black-owned small businesses"

Because we shouldn’t foster discrimination according to
one’s skin color . . . . . .

[wyostocks]

@JDoe20
Hmmm. Is it now OK to offer discounted rides to white owned businesses? Just wondering.

[blueline]

"The New York Times' (NYSE:NYT) editorial page editor, James Bennet, has resigned"

I heard the entire editorial page staff resigned.

Also over 60 Minneapolis police officers resigned or took early retirement.

[WWG1_WGA_Q]

The liberal fake newspaper's can't handle the truth being printed, because it doesn't fit their fake agenda. They're all worse than the gossip tabloids in the supermarkets. Same goes for some of the major media outlets.

[reditus55]

Interesting. Supermarket tablets is where owner of fox made his money!

[Kelly K]

Everyone it seems is calling for a national dialogue on race. The problem is they do not really want this as evidenced by the fact these people got fired, i mean resigned ;) Anyone saying "all lives matter" or any number of seemingly innocuous things will get you fired. No, most people do not want a healthy debate where both sides actually listen to each other.

[WWG1_WGA_Q]

Hopefully the U. K. will stand by its decision to ban Huawei on 5G telecom networks. HSBC will survive to live another day. Oh the power of $$ & greed to try & influence & mettle in ones own interests. More countries need to follow suite on banning Huawei .

[Cryptoanalytic]

Its time we wise up to the rigged game that the CCP is propagating. We owe it to our children.

[WWG1_WGA_Q]

The Saudis made the biggest oil price hike in 20 yrs after OPEC+ cuts. They're doubling down on their strategy to bolster the oil market after OPEC+ producers extended their historic output cuts. The sharp Saudi price hikes will likely exacerbate the profits that the oil refiners make from processing crude into fuel, as the refiners struggle to keep up with the rising oil market. This in part will crush the margins for the refiners like VLO, HFC, PSX & others. There's to much emphasis being placed on the supply cuts, where's the oil demand? As the fundamentals just don't add up imho.

[webchow]

Ah, the Euphoria is thick.
Any pullback has been taken off the table.

That means the top is in...

[WWG1_WGA_Q]

The jobs report & Markets signal the worst is over, as the stunning jobs report is a gift to the Markets, as it'll support a run to new all-time highs. Its a pleasure to be a part of this "new bull" Market rally & witness this great economic recovery, after the shortest "bear" Market in history.

[matttrakker]

Yeah, it’s almost like it was a fake bear market caused by something bizarre like putting the entire world on house arrest for 2 months.sarcasm intended.

[DanielGannon1]

It looked to me like +60% were from industries with temporary layoffs from Corona. Seems like a useless report (per usual) without considering what portion are just returning back to work after not being deemed essential and still ignoring long term unemployed.

[$23,000,000,000,000]

All you need to know is Jerome's got your back. Unlimited resources to keep the market going up! New highs this month. S&P 4k by election day.

[SA Editor Jeanne Yael Klempner]

Dear Readers,
We recognize that politics often intersects with the financial news of the day, so we invite you to click here - seekingalpha.com/... - to join the separate political discussion. [Posted on behalf of 'Political Comments']

[deercreekvols]

Open invitation to Brunch.

Link to Wall Street Breakfast is always provided.

Leave all political and COVID-19 related comments at the door.

seekingalpha.com/...

Hope to see you there!