Plus, trade talks between the U.S. and China began today, there may be hope for a Brexit deal, and PG&E shares are tanking.
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Stocks gained to start Thursday, with all three major indexes up 0.8%.
The long-awaited trade talks between the U.S. and China begin today in Washington, and conflicting reports on the talks made for a volatile trading session in Asia, a well as wild swings in U.S. futures overnight. First there were reports that China would be cutting its visit short, and that Chinese Vice Premier Liu He and the rest of China’s delegation were scheduled to leave Thursday night. Then the White House said that they were unaware of any change of plans and expected the delegation to leave Friday night, and President Trump tweeted that he would be meeting the Vice Premier tomorrow. Then Bloomberg reported that the U.S. may try to push agreeing to a currency pact as part of a partial deal. The New York Times reported that the Trump administration could allow some sales to Chinese telecom giant Huawei. And then there were reports that China would ask the U.S. to lift sanctions on its biggest shipping company. “The ongoing back-and-forth continues to offer opportunities to fade over-reactions in the market,” said Ian Lyngen, head of U.S. rates at BMO Capital Markets. “At some point, however, there will be some semblance of outcomes across these dimensions, though we fear the finales may underwhelm as they are wont to do.”
There may be hope for a Brexit deal following positive comments from the leaders of the Republic of Ireland and the U.K. Prime Minister Boris Johnson met with his Irish counterpart Leo Varadkar Thursday to discuss Brexit. “The Prime Minister (Johnson) and Taoiseach (Varadkar) have had detailed and constructive discussions,” said a joint statement. “Both continue to believe that a deal is in everybody’s interest. They agreed that they could see a pathway to a possible deal.” Ireland is at the center of the Brexit debate because of the land border between Northern Ireland—which would leave the EU as it is part of the U.K.—and the Republic of Ireland, which would remain in the EU. The Irish backstop—which would allow Northern Ireland to remain in the EU customs union until a solution for checks on goods between the border can be found—has been criticized by opponents as they say it would keep the U.K. trapped in the EU. While the tone of the joint statement following the meeting was positive, it also highlighted the difficulties they face. “Their discussion concentrated on challenges of customs and consent,” the statement read. “They agreed to reflect further on their discussions and that officials would continue to engage intensively on them.”
Shares of PG&E are down -29% this morning after a judge stripped it of exclusive control over its bankruptcy plan, opening the door for bondholders like Pimco and Elliott Management to put forth their own restructuring plans for the California utility. “We are disappointed that the Bankruptcy Court has opened the door to consideration of a plan designed to unjustly enrich Elliott and the other ad hoc bondholders and seize control of PG&E at a substantial discount,” PG&E said in a statement. “We are confident that our fully funded Plan of Reorganization, which will satisfy all wildfire claims in full while treating all stakeholders fairly and protecting customers, is the better solution for all constituencies and will be confirmed.” The ruling comes as PG&E began shutting off power to 800,000 customers in Northern California in order to try to prevent the type of deadly forest fires caused by its equipment last year.
Bed Bath & Beyond announced yesterday that Mark Tritton would become its new president and CEO on November 4. Tritton comes from Target, where he has been the chief merchandising officer since 2016. Tritton has been instrumental in revamping Target stores, and Target’s recent turnaround can be thanked in part to better merchandising in its home-goods department. “Mark’s ability to re-define the retail experience and drive growth at some of the world’s most successful retailers and brands makes him uniquely equipped to lead Bed Bath & Beyond during this critical time in our evolution,” said Patrick Gaston, Bed Bath & Beyond’s board chairman. “As an integral contributor to Targets impressive transformation, we will benefit from his vision, leadership, and creativity to successfully transform our business.” The announcement comes just a week after the struggling retailer announced that it would be closing 60 underperforming stores by the end of this year. Bed Bath & Beyond shares are up 20% this morning.
Delta shares are down -3% this morning after the airline forecast earnings per share of $1.20 to $1.50 in its Q4, while analysts had expected earnings per share of $1.51. Delta said it expects its costs, excluding fuel, to climb as much as 5% year-over-year in Q4. JPMorgan analysts said Delta’s outlook for the last three months of the year look like it is “limping across the finish line.” The airline reported its Q3 results this morning, and also said that it is expanding its workforce by 12,000 as it expands its operations. “We’re hiring pilots, we’re hiring flight attendants, we’re hiring ground staff. We’re hiring in all categories of the company,” said CEO Ed Bastian. “We’re in the process of hiring 6,000 people this year and at least a like amount next year.”
Stocks We’re Watching
Sleep Number Corp (NASDAQ: SNBR): Shares of Sleep Number were up as much as 12.8% yesterday after the stock was upgraded to Outperform by Raymond James analyst Bobby Griffin. The firm applauded the mattress manufacturer’s product lines and overall business. Griffin also said Sleep Number’s recent pullback over the last few months creates a more favorable risk/reward setup heading into third quarter earnings. Sleep Number reports earnings next Tuesday, October 15.
Star Bulk Carriers (NASDAQ: SBLK): Star Bulk Carriers shares are up nearly 2% this morning after the global shipping company announced its first Annual Sustainability Report for 2018 developed in accordance with the Global Reporting Initiative Standards. “Monitoring, reporting and strengthening our Environmental, Social and Governance activities is at the top of our strategic agenda,” said Star Bulk CEO Petros Pappas. “With this Report we aim to enhance the transparency of our Sustainability performance, contribute to the United Nations’ Sustainable Development Goals (SDGs), and present our action plan for continuous improvement.”