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Monday’s Wall Street Highlights: Berkshire Hathaway, Tesla, BP, Yellow, UBS and more

Fernanda T
Latest News
August 07 2023 03:26AM

US index futures rose in premarket trading on Monday, as investors looked ahead to earnings and the inflation index later in the week. European markets, on the other hand, are operating in decline impacted by weak industrial data in Germany.

By 6:57 AM, Dow Jones (DOWI:DJI) futures were up 45 points, or 0.13%. S&P 500 futures were up 0.24%, while Nasdaq-100 futures were up 0.40%. The 10-year Treasury yield was at 4.107%.

Industrial production in Germany contracted by 1.5% in June on a monthly basis, greater than analysts’ forecasts, raising doubts about the recovery of the region’s largest economy. In the UK, house prices fell 0.3% in July compared with May, registering the fourth decline, according to the Halifax bank.

In Asia, markets closed with no clear direction, amid rumors that a regional government in China could take control of indebted Country Garden, one of the biggest companies in the Chinese real estate sector.

On Monday’s American economic agenda, investors will follow, at 8:30 am, the speech by the director of the Federal Reserve, Michelle Bowman, which should indicate that monetary policy in the US is not on track, although there are positive signs in the fall in core inflation.

In commodities markets, West Texas Intermediate crude for September is down 1.04% at $81.96 a barrel. Brent crude for October is down 0.99% near $85.39 a barrel. Iron ore futures traded in Dalian, China fell 1.57% to $99.99 a tonne on doubts about the US and Chinese economy.

The stock market continued to post losses on Friday after an initially positive reaction to the US Payroll data. The number of job creations was below expectations, with a total of 187,000 jobs created in July, below expectations of 200,000. Initially, the rise was justified by the prospect of a “soft landing” by the Fed.

However, this optimistic view soon dissipated as the market realized that the data was not as favorable as it appeared. Although the number of jobs created was smaller, the unemployment rate dropped to 3.5%, and monthly wage earnings increased, which raised concerns about the pace of decline in inflation.

However, the Phillips Curve, which relates inflation to unemployment, suggests that the Fed managed to reduce inflation considerably without causing a significant economic impact. It is possible that the effects of monetary policy are manifesting themselves with a delay in this cycle, which means that its impact on the economy and on corporate profits will still be felt with some intensity in the coming months. However, it is already noticeable that we are moving away from the risk of recession.

Ahead of Monday’s corporate results, investors await reports from Tyson Foods (NYSE:TSN), Lucid Group (NASDAQ:FTNT), Skyworks Solutions (NASDAQ:SWKS), Paramount Global (NASDAQ:PARA), and Palantir Technologies (NYSE:PLTR).

Wall Street Corporate Highlights for Today

Amazon  (NASDAQ:AMZN) – is preparing to launch a credit card in Brazil in partnership with Banco Bradesco, with credit risk management by the bank and powered by Mastercard  (NYSE:MA). More details on rewards and limits will be revealed soon. The offer comes at a time of falling interest rates in Brazil. 

Alphabet  (NASDAQ:GOOGL)Robinhood Markets  (NASDAQ:HOOD) – Google parent Alphabet has reduced its stake in Robinhood Markets by nearly 90%, decreasing its exposure to the trading application operator. Robinhood faces a slump after its initial success during the pandemic, but has seen its stock plummet since then. To combat weakness in the negotiations, the company is looking to expand revenue streams through acquisitions.

Meta Platforms  (NASDAQ:META)Tesla  (NASDAQ:TSLA) – Elon Musk has announced that his proposed fight with Meta CEO Mark Zuckerberg will be streamed live on the X platform. Proceeds will go to charity for veterans. The two tech moguls have been teasing each other for a mixed martial arts bout in Las Vegas since June. Zuckerberg suggested a “more reliable platform” to raise money for charity and suggested an August 26 date for the fight. At the same time, Bloomberg announced that Elon Musk will have an MRI of his neck and back and may need surgery. The health of the Tesla and SpaceX CEO is of great interest to the public, who say he is preparing for the fight by lifting weights.

BP Plc  (NYSE:BP) – BP is considering construction of two offshore wind farms in the Irish Sea without government support for the first time in the industry. The company intends to use its own generated electricity, not participating in the UK difference auctions. The projects could supply 3.4 million homes. BP steps up its plans to invest in offshore wind, pledging to increase spending on renewables. Other wind energy projects face challenges and rising costs around the world. The company seeks to expand its green energy capacity to meet its growing needs.

Icahn Enterprises  (NASDAQ:IEP) – Icahn Enterprises, Carl Icahn’s company, slashed its dividend by half following a negative report from Hindenburg Research. The shares are down 23% and more than half their value since May. Icahn has restructured personal loans and plans to focus on activism. The company is cooperating with the US SEC in an investigation. Hindenburg’s allegations remain unanswered.

Blackstone  (NYSE:BX) – US private equity fund Blackstone will make a bid to acquire 33.47% of Indian drugmaker Cipla  (USOTC:CPLFY), leading to the departure of the founding family. Blackstone could have 59.4% of the stake after open offer for another 26%. Cipla shares are up more than 14% since the previous report.

KKR & Co  (NYSE:KKR) – KKR & Co. plans to take German space technology company OHB SE (NASDAQ:FTNT) private by offering €44 a share, valuing OHB at around €1bn. The offer aims to compete in the satellite industry, driven by plans by Elon Musk and Jeff Bezos to launch thousands of spacecraft into orbit. The Fuchs family group of shareholders, with 70% of the company, will not sell shares. OHB provides technology for projects such as the Galileo navigation system and the International Space Station.

TPG Inc  (NASDAQ:FTNT) – Private equity firm TPG has made a revised takeover bid for Australian funeral home operator InvoCare Ltd. of about US$1.21 billion. The offer was reduced following exclusive due diligence requested by InvoCare to halt negotiations. TPG has accumulated a 19.9% ​​stake in the company. Discussions continue and details may change. InvoCare provides funeral services in Australia, New Zealand and Singapore.

Moody’s  (NASDAQ:FTNT) – Moody’s is the last of the three major credit rating agencies to maintain the top US rating, despite Fitch’s downgrade to AA+. Investors are not worried as US debt is seen as a safe haven. Moody’s considers “exceptional economic strength” and sound governance in assigning the AAA rating, but could downgrade if fiscal challenges are not addressed. The debt crisis is also a concern.

JPMorgan Chase  (NASDAQ:FTNT) – JPMorgan has revised its US growth forecasts and ruled out a recession this year, citing an economy expanding at a “healthy pace”. The annualized GDP growth estimate was raised to 2.5%. Recession risks are still high for next year, but modest and below-average growth is expected. The bank warned of the need for a rate hike by the Fed. In other news, JPMorgan has stopped processing payments to the Russian Agricultural Bank, and Russia is demanding action from Washington to help its grain and fertilizer exports. Russia seeks reconnection to SWIFT and hopes to resume Black Sea agreement.

Morgan Stanley  (NASDAQ:FTNT) – Michael Wilson, strategist at Morgan Stanley, warned that high fiscal spending underpinning US economic growth is unsustainable. Fitch’s downgrade of US debt indicates a potential letdown in earnings and economic growth.

Bain Capital  (NASDAQ:FTNT) – Bain Capital will acquire Australian senior care operator Estia Health for A$838 million, a premium of 25.5% over Estia’s closing share price. The purchase expands Bain’s focus in Australia, strengthening its position in the global healthcare industry. The transaction is awaiting shareholder approval.

UBS Group AG (NASDAQ:FTNT) – UBS is restructuring its technology, media and telecommunications team, promoting some bankers and looking to increase its share of the transaction market, particularly in the US. The reorganization is led by CEO Sergio Ermotti following the acquisition of Credit Suisse. UBS Group AG has announced that it is considering cutting approximately two-thirds of Credit Suisse Group’s investment bankers in Asia Pacific following the merger of the two Swiss creditors. Around 200 jobs could be affected at its global banking division in Asia in the coming months. UBS still intends to retain more than 100 Credit Suisse investment bankers in the region. The Credit Suisse acquisition increased UBS’s workforce to around 120,000, which it intends to reduce by around 30% to reduce personnel costs by approximately $6 billion over the next few years.

HSBC  (NASDAQ:FTNT) – Sherard Cowper-Coles, head of public relations at HSBC Holdings Plc, has criticized the US for forcing the UK to cut business with China. He accused the British government of being “weak” for blindly following the US. The US-China political disputes have created tensions for US companies and allies. HSBC faces a delicate balancing act as it makes much of its money in China but is listed in London and relies on access to the US financial system. Cowper-Coles’ comments reveal the private sector’s frustration with these issues.

Berkshire Hathaway  (NASDAQ:FTNT) – Berkshire Hathaway posted its highest quarterly operating profit, reaching nearly $36 billion, driven by equity earnings and better performance from insurer Geico. However, rising interest rates negatively affected the results of the construction and RV acquisition business.

Biogen  (NASDAQ:FTNT),  Sage Therapeutics  (NASDAQ:FTNT) – The U.S. Food and Drug Administration (FDA) has approved Zurzuvae oral pill by Biogen and Sage Therapeutics to treat postpartum depression and major depressive disorder (MDD). The medication will be commercially available in the fourth quarter of 2023 pending schedule as a controlled substance. About 21 million adults in the US are estimated to have MDD, while PPD affects about one in seven women after giving birth.

Lucid   (NASDAQ:FTNT) – Electric vehicle maker Lucid has cut prices on its Air luxury sedans by up to $12,400 as part of an offer, in response to competition and a price war led by Tesla. The offer is valid while supplies last.

Toyota  (NASDAQ:FTNT) – Toyota and plan to mass-produce robot taxis in China in a joint venture. The companies will invest more than $140 million and aim to build self-driving cars with ride-sharing services. China is leading the development of self-driving cars as global automakers adapt to the local market.

General Motors  (NASDAQ:FTNT) – General Motors plans to increase jobs next year despite worker concerns about electric vehicles. The company disagrees with the idea that they require fewer workers. Negotiations with the UAW union include pay and treatment at battery plants. CFRA Research downgraded GM over concerns of a possible strike due to UAW demands.

Nikola  (NASDAQ:FTNT) – Shares in US electric truck maker Nikola fell more than 25% on Friday after naming its fourth CEO in four years and expressing doubts about its continuity. Shareholders approved a plan to issue more shares to bolster cash but face dilution concerns. The company faces supply chain challenges and is focusing on hydrogen fuel cell technology.

Magna International  (NASDAQ:FTNT) – Magna International raised its full-year earnings and sales outlook after quarterly results beat estimates of solid demand. However, shares fell on labor concerns over union contract negotiations that could affect production in the near term. The company expects revenue of between $41.90 billion and $43.50 billion in 2023, reflecting a stronger recovery in global vehicle production.

Yellow Corp  (NASDAQ:FTNT) – Yellow has filed for Chapter 11 bankruptcy, with liabilities of $1 billion to $10 billion, after heavy debt and tense negotiations with the Truck Drivers Union. The company will close after almost 100 years in the market. Customers including Walmart  (NASDAQ:FTNT) and Home Depot  (NASDAQ:FTNT) fear losses. The company faces disputes with the union and has accumulated debt from its previous mergers. The US government faces potential losses from a bailout loan issued in 2020.

Altice  (NASDAQ:FTNT) – Billionaire Patrick Drahi, of Altice, will face the corruption investigation that affected his telecommunications empire, in teleconferences for investors. Altice denied involvement in irregularities and reinforced processes. The company’s bonds were devalued, and the scandal hit executives and suppliers. Drahi will hold investor meetings in September.

Wayfair  (NASDAQ:FTNT) – Wayfair was up 2.5% in pre-market trade to hit $85.15 after the online home furnishings retailer was upgraded from “Neutral” to “Buy” by UBS , and with the price target increased from $72 to $110.

Fortinet (NASDAQ:FTNT) – Fortinet received an update to “buy” from “neutral” with a $70 Guggenheim price target. Shares rose 3.05% to $58.29 in premarket trade, after falling 25% on Friday due to lower-than-expected second-quarter earnings and the postponement of deals to the next quarter.