Plus, U.K. Prime Minister Johnson is facing difficulties in getting his Brexit deal through Parliament, and Boeing is facing fresh criticism on its handling of the 737 Max scandal.
Stocks inched higher this morning with the Dow adding 17 points, or 0.1%. The S&P 500 and Nasdaq both gained 0.4%, putting the S&P just shy of its record high.
Chinese Vice Premier Liu He said this weekend that China will work with the U.S. to address trade concerns, and said the two countries have made “substantial progress” on trade. “The two sides have made substantial progress in many fields, laying an important foundation for the signing of a phased agreement,” Liu, who is the chief negotiator in the trade talks, said at a virtual reality conference over the weekend. “Stopping the escalation of the trade war benefits China, the U.S. and the whole world. It’s what producers and consumers alike are hoping for,” Liu added.The Vice Premier’s comments come just after China reported that third-quarter economic growth slowed to 6%, its weakest pace in nearly three decades as the tit-for-tat trade war has taken a toll on factory production and investment sentiment.
U.K. Prime Minister Boris Johnson’s attempt to put his Brexit deal to a new vote in Parliament was thwarted today when House of Commons Speaker John Bercow rejected the government’s bid for a fresh vote. This comes after Johnson failed in his first attempt to get his Brexit deal approved by Parliament on Saturday, forcing the prime minister to ask the EU for an extension to the October 31 deadline. The government will publish the draft law on the deal—the Withdrawal Agreement Bill—which will be debated later this week, though MPs are already working on amendments that Johnson’s spokesman said could render the deal “pointless.” Still, traders pushed the pound near its five-month high today on optimism that a deal will still get done.
Boeing’s 737 Max recovery got a whole lot more complicated over the weekend. On Friday, news broke that a Boeing technical pilot had raised concerns in 2016 messages to a colleague about erratic software systems on Boeing’s 737 Max, which were later found to be at fault in two fatal crashes. Boeing said Sunday that it had provided the U.S. government with the messages earlier in 2019, and said in a news release, “It is unfortunate that this document, which was provided early this year to government investigators, couldn’t be released in a manner that would have allowed for meaningful explanation. … We understand entirely the scrutiny this matter is receiving, and are committed to their working with investigative authorities and the U.S. Congress as they continue their investigations.” This morning, consumer advocate Ralph Nader called for the removal of Boeing CEO Dennis Muilenburg as well as the entire Boeing board of directors as the fallout over the 737 Max intensifies. Muilenburg was stripped of his chairman title on October 11, with Boeing saying the separation of the two roles will allow Muilenburg to focus on getting the beleaguered jet back into service. Boeing shares are down more than -10% since Friday morning.
Four big drug companies reached a last-minute settlement of $260 million over their role in the U.S. opioid epidemic, averting the first federal trial which was set to begin this morning in Cleveland. The four drug distributors are AmiersourceBergen, Cardinal Health, McKesson, and Teva Pharmaceutical. The judge overseeing the trial said he will work on a new trial date for the remaining defendant, Walgreens Boots Alliance. The settlement this morning comes after a last-ditch effort to strike a broad $48 billion settlement to end thousands of lawsuits filed by counties, towns, and states across the country fell apart on Friday. This settlement only covers the two Ohio counties acting as plaintiffs in this case, which was considered to be a test trial that could influence the outcome of subsequent cases.
Halliburton shares are up nearly 8% this morning after the oilfield services company reported earnings before the bell. Halliburton matched estimates with earnings per share of $0.34, however, the company reported a 10% drop in quarterly revenue as the company has been met with lower demand from shale oil producers in North America, its biggest market. “These results from Halliburton bring into crystal-clear focus the speed with which North America (NAM) land well construction and completion activity eroded during the course of Q3,” said Tudor, Pickering, Holt & Co analysts in a note. Coming up this week, McDonald’s reports earnings tomorrow morning, Boeing, Microsoft, and Tesla report on Wednesday, and Amazon reports after the bell on Thursday.
Stocks We’re Watching
Chipotle Mexican Grill (NYSE: CMG): Shares of burrito-chain Chipotle are up nearly 1% today after one bear changed his tune on the stock just before it reports earnings tomorrow after the bell. Bank of America Merrill Lynch analyst Gregory Francfort said, “Chipotle has added delivery sales layers, improved customer-facing digital platforms, and turning over the management ranks to improve headquarter and store level operations.” Blue Line Futures’ Bill Baruch also said that shares could be on their way to $1,000. “Chipotle’s been on a tear here for the last couple years,” Baruch told CNBC. “We’ve been consolidating very well out above those 2015 highs [in the] $750, $760 area. As long as that holds, I’m buying dips in Chipotle, and I think we could see a move to about $940 to $1,000 on the next leg higher.”