Plus, it’s merger Monday, Uber lost its license to operate in London, and Tesla has 200,000 preorders for its Cybertruck.
Stocks rose to start Monday with the Dow adding 103 points, or 0.4%. The S&P 500 advanced 0.5%, while the Nasdaq gained 0.8%.
China said it will raise penalties for violating intellectual property rights and is considering lowering the threshold for criminal punishment for those involved in IP theft, according to guidelines put forth by the Chinese government on Sunday, addressing one of the major sticking points in trade talks between it and the U.S. China’s Global Times tweeted over the weekend that the two countries “are very close to the phase one trade deal, and China remains committed to continuing talks for a phase two or even a phase three deal with the US, on equal footing.”
Pro-democracy candidates in Hong Kong overwhelmingly took victory in local elections over the weekend, taking control of 85% of the 452 district council seats on the ballot. The results are in sharp rebuke to the city’s government and put pressure on Chief Executive Carrie Lam to meet the demands of protesters there, including an inquiry into police abuses and the right to choose the city’s leader. “The high turnout rate did benefit the pro-democracy camp,” said pro-democracy candidate Kelvin Lam, a winner in the weekend’s elections. “The result is like a referendum of the current administration, like a confidence vote.” Investors reacted positively to the developments with the Hang Sent index surging 1.5% to close at 26,993.04.
It’s merger Monday. Charles Schwab announced this morning it has reached an agreement to buy TD Ameritrade in an all-stock deal valued at $26 billion. “We believe the combination of our two great companies positions us to be competing and winning in the investment services business for the long run – the very long run,” said Charles Schwab president and CEO Walter Bettinger. LVMH has reached a deal to buy Tiffany & Co at $135 a share in cash, or $16.2 billion. LVMH said in a statement yesterday that “the acquisition of Tiffany will strengthen LVMH’s position in jewelry and further increase its presence in the United States.” And Novartis has agreed to buy Medicines Co and its promising heart drug inclisiran for $9.7 billion. “We see returns well in excess of cost of capital,” said Novartis CFO Harry Kirsch in reference to the one-third cash, two-thirds long-term borrowings deal.
Uber shares have taking a hit this morning after the ride-hail company was stripped of its license to operate in London by the city’s transport regulator. The authority cited a “pattern of failures” that “placed passenger safety and security at risk” as cause for revoking the license. “Uber has made a number of positive changes and improvements to its culture, leadership and systems in the period since the Chief Magistrate granted it a license in June 2018,” said Transport for London (TfL). “However, TfL has identified a pattern of failures by the company including several breaches that placed passengers and their safety at risk. Despite addressing some of these issues, TfL does not have confidence that similar issues will not reoccur in the future, which has led it to conclude that the company is not fit and proper at this time.” Uber said it will appeal the decision, which will mean nothing will change for passengers and drivers who use Uber for the time being, though the decision does represent a huge blow to the ride-sharing firm. “On behalf of the 3.5 million riders and 45,000 licensed drivers who depend on Uber in London, we will continue to operate as normal and will do everything we can to work with TfL to resolve this situation,” the company said in a statement.
Memes roasting Tesla’s new Cybertruck haven’t hurt demand for the futuristic vehicle. Elon Musk tweeted on Sunday that Tesla has so far received 200,000 “orders” for the Cybertruck since its embarrassing unveiling last Thursday. A prospective Cybertruck buyer must pay Tesla a refundable $100 preorder fee, with the starting price for the base model of $39,900. Despite the impressive preorder figures, Credit Suisse says legacy truck manufactures won’t have much to worry about with the Cybertruck. “Tesla tried to throw a lot of stones at the legacy pickups on the market, with Tesla highlighting advantages in durability, towing, payload, and 0-60,” Credit Suisse wrote in a note. “Yet we think the legacy OEMs can breathe a sigh of relief, as we don’t expect Cybertruck to encroach on large pickup share.”
Stocks We’re Watching
StoneCo Ltd (NASDAQ: STNE): StoneCo shares surged more than 10% on Friday after the Brazilian fintech company posted strong Q3 results. The company reported adjusted net income of 201.9 million reals ($48.2 million) on revenue of 671.1 million reals ($160 million), up 126% and 62%, respectively, year-over-year. “I remain very excited to continue to implement ou vision of becoming more present in our merchants’ daily activities, helping them to manage their businesses more effectively, become more productive and grow faster,” said CEO Thiago Piau in a letter to shareholders.
Hibbett Sports Inc (NASDAQ: HIBB): Shares of this athletic footwear company jumped 24% on Friday after it reported blowout Q3 results. Hibbett Sports reported an increase in earnings per share of 129% to $0.32, smashing analysts’ estimates of $0.13, while revenue came in at $276 million, a jump of 27% year-over-year. “The business continues to perform very well as evidenced by the positive comparable performance in both our brick-and-mortar locations and our e-commerce business,” said Hibbett Sports’ President and CEO Jeff Rosenthal. “This sales growth has been made possible by our team’s execution of our strategic focus to lead with sneakers and connect toe-to-head concepts within our apparel and team sports businesses.”