Editorial Staff1. — Stock Futures Lower On China Covid Concerns
U.S. equity futures slipped lower Monday, while the dollar built solid gains against its global peers, as markets took a defensive stance into the short Thanksgiving week amid renewed concerns over the pace of Covid infections in China.
Schools were closed in the capital city of Beijing Monday, with residents urged to stay at home, following a spike in infections and the first Covid-related deaths in more than six months. Nationally, cases have risen close to 27,000, the highest since April, casting further doubt on any near-term ‘pivot’ in health policy from President Xi Jinping.
Investors, therefore, are hoarding cash and moving into defensive positions, according to Bank of America’s closely-tracked Global Fund Manager’s survey, which showed cash levels in November of 6.2%, just shy of the highest in more than two decades. Around 92% of participants in the poll think the global economy is set for a bout of stagflation — negative growth with rising inflation — sometime next year.
Minutes from the Federal Reserve’s November policy meeting Wednesday may offer clues as to how, or if, members of the Open Markets Committee are prepared to alter their policy stance in the face of weakening growth prospects, although Atlanta Federal Reserve President Raphael Bostic hinted Sunday that it may be soon to “let the economic dynamics play out” once another 0.75% to 1% is added to the current Fed Funds rate.
“Being more cautious as policy moves deeper into restrictive territory seems prudent,” Bostic said in a speech to the Southern Economic Association in Washington.
Heading into the start of the trading day on Wall Street, Futures contracts tied to the S&P 500 are priced for an 18 point opening bell decline while those linked to the Dow Jones Industrial Average are indicating a 90 point pullback. The tech-heavy Nasdaq is priced for a 75 point retreat.
Overnight in Asia, rising Covid infections in China kept a lid on regional gains, with the MSCI ex-Japan index falling 1.34% into the close of trading. Japan’s Nikkei 225 closed 0.16% higher as the yen slipped to 141.80 against the greeback.
In Europe the region-wide Stoxx 600 was marked 0.11% lower in the opening hours of trading in Frankfurt, with London’s FTSE 10 down 0.09%.
2. — Week Ahead: Black Friday, Fed Minutes In Focus
Wall Street is likely to focus on the run-up to Black Friday this week amid a light calendar of economic and corporate earnings and the traditional Thanksgiving holiday lull in market liquidity.
Credit card issuer Mastercard (MA) – said earlier this month that Black Friday sales are likely to rise 15% from last year, lead by a comeback in department store and brick-and-mortar sales pared with better online offerings as well as a surge in travel and dining.
A host of retailers reported better-than-expected October quarter earnings last week, although there was a lack of consensus among the biggest names, including Walmart (WMT) -and Target (TGT) – as to the strength of the holiday season.
Best Buy (BBY) – Dollar General (DG) – and Dollar Tree (DLTR) -will report this week, alongside Zoom Video Communications (ZM) – and HP Inc (HPQ)
On the data release front, the holiday-shortened week will see a closely-watched auction of $35 billion in 2-year notes Monday, with new homes sales and durable goods data published on Wednesday, just hours before minutes of the Federal Reserve’s November policy meeting.
U.S. markets will remain shut for the whole of the Thursday Thanksgiving holiday, with an early close of 1pm Eastern time on Wall Street Friday.
3. — Disney Shares Soar After Shock Return of Bob Iger As CEO
Disney (DIS) – shares soared higher in pre-market trading following the shock departure of CEO Bob Chapek and the return of former boss Bob Iger to lead the media and entertainment group amid its worst annual stock price decline in five decades.
Iger, 71 and a long-time veteran of Disney’s senior management, agreed to lead the group for two years as it searches for a permanent replacement. His first task, however, could be managing the competing interest of activists investors Dan Loeb and Nelson Peltz, each of which have established stakes in the group, and the mounting losses at Disney+, which isn’t forecast to turn a profit until least late 2023.
“We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” said board chairman Susan Arnold. “The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period.”
Disney shares were marked 8.1% higher in pre-market trading to indicate an opening bell price of $99.20 each.
4. — Twitter Reinstates Trump, Mulls New Job Cuts
Former President Donald Trump was invited to return to Twitter, nearly a year after being banned by the group’s former executives, following a weekend poll conducted by new CEO Elon Musk.
Musk, who had previously insisted that banned accounts could only return after establishing a “clear process for doing so”, instead ran a poll from his personal account over the weekend that garnered more than 15 million user replies.
“The people have spoken. Trump will be reinstated,” Musk declared after results of the poll showed around 51.8% favored his return.
The former President himself, banned for inciting a deadly riot that ultimately stormed the U.S. Capitol on January 6, 2021, said the Twitter platform has “a lot of problems” when informed of his invitation to return, adding he’ll stick to communicating his 2024 election run through Truth Social, a platform he developed through his Trump Media group and plans to list on the Nasdaq through Digital World Acquisition Corp.
Bloomberg, meanwhile, reported Sunday that Musk plans further culls to Twitter staff, even after last week’s disastrous threat to fire several hundred engineers — many of whom left of their own volition — and the locking of the doors of the company’s San Francisco headquarters.
The report said Musk may reduce headcount in Twitter’s sales and partnerships divisions.
5. — FTX Collapse: Top Creditors Owed $3.1 Billion
FTX, the bankrupt crypto exchange once run by Sam Bankman-Fried, owes its top 50 creditors more than $3 billion, court papers indicated this weekend.
John J. Ray, a bankruptcy specialist appointed to oversee the group’s Chapter 11 filing, told the court in Delaware that the claims for each of the top 50 creditors range between $21 and $226 million, with at least two unnamed entities owned more than $200 million each.
Ray, who is scheduled to file first-day motions to the court on Tuesday, also said over the weekend that he plans to launch a “strategic review” of the various businesses in order to determine which can be salvaged, or possibly sold, and which can be restructured.
Chapter 11 bankruptcy laws typically allow for companies to buy time from creditors in order to either renegotiate terms, restructure and emerge as a new business or seek liquidation under a separate Chapter 7 petition.
“Based on our review over the past week, we are pleased to learn that many regulated or licensed subsidiaries of FTX, within and outside of the United States, have solvent balance sheets, responsible management and valuable franchises,” Ray said, while asking for patience “as we put in place the arrangements that corporate governance failures at FTX prevented us from putting in place prior to filing our chapter 11 cases.”.
Bitcoin prices, meanwhile, were marked 1.2% lower on the session and trading just a few dollars above the $16,000 level.
Source: The Street
