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Fly Intel - End of Day Brief - Friday Dec 13, 2019

Stocks end higher as U.S. agrees to phase one deal with China

Stocks were on a roller-coaster in morning trading amid conflicting reports about the status of trade negotiations between the U.S. and China. Chinese trade ministers said a deal agreement has been reached, after which President Donald Trump shared some of the trade deal details on Twitter. Despite further clarification from the office of the U.S. Trade Representative, many questions remain, which kept a lid on the market's gains. Meanwhile, beyond the trade front, the day's big political news was the victory of Boris Johnson and his Conservative party in the British election.

ECONOMIC EVENTS: In the U.S., retail sales increased 0.2% in November, and were up 0.1% excluding autos, which was a little disappointing compared to forecasts. Import prices increased 0.2%, with export prices up 0.2% in November. Business inventories rebounded 0.2% in October, while sales declined 0.1%. In energy news, Baker Hughes reported that the U.S. rig count is unchanged from last week at 799.

On the trade front, President Trump tweeted that the U.S. has agreed to "a very large Phase One Deal with China." His tweets went on to say that the "penalty tariffs" set for December 15 will not be charged and negotiations on the "Phase Two Deal" will begin immediately, "rather than waiting until after the 2020 Election." United States Trade Representative Robert Lighthizer called the trade deal "historic and enforceable" in his own announcement on the agreement. The deal requires structural reforms and other changes to China's economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange and also includes a commitment by China that it will make "substantial additional purchases" of U.S. goods and services in the coming years. In exchange, the United States has agreed to modify its Section 301 tariff actions "in a significant way," explained Lighthizer. The U.S. will be maintaining 25% tariffs on approximately $250B of Chinese imports, along with 7.5% tariffs on approximately $120B of Chinese imports.

In Europe, U.K. Conservatives won an overall majority with 641 seats, up 47 from the last election, giving Prime Minister Boris Johnson a sufficiently strong majority to get the Brexit withdrawal agreement bill through parliament and lead the U.K. out of the EU. Additionally, Johnson pledged that the transition period, during which both sides will try to reach an agreement on the future trading relationship, will last no longer than a year and end in December 2020.

TOP NEWS: Oracle (ORCL) shares were 3.45% lower after the company reported mixed results for the second quarter and provided guidance for the third quarter. Of note, chief technology officer Larry Ellison said on the company's quarterly conference call that the company has no plans to hire a second CEO to join Safra Catz following the death of co-CEO Mark Hurd.

In other earnings news, Adobe (ADBE) shares rose 3.9% after the company reported better than expected fourth quarter results and provided guidance for the first quarter and fiscal 2020. Of note, CEO Shantanu Narayen said on CNBC's Mad Money after the report that the company is not overly concerned with the United States' current trade dispute with China.

Meanwhile, shares of several British banks, including Royal Bank of Scotland (RBS), Barclays (BCS), and Lloyds Banking (LYG), were all trading higher near noon as the U.K.'s Conservative party won the election over the Labour party, with Prime Minister Boris Johnson saying the victory gives him "a powerful new mandate to get Brexit done." Royal Bank of Scotland shares trading in New York gained 10.5%, Barclays was 7.3% higher, and Lloyds rose 6.9%.

In other news, AT&T (T) was in focus after the company raised its quarterly dividend by 2%, announced it plans to retire about 100M shares in Q1 of 2020, and said it is "well ahead" of its 2019 deleveraging goals.

Additionally, shares of Live Nation (LYV) dropped 7.3% after the Wall Street Journal reported that the U.S. Department of Justice is preparing to take legal action against the company over ticketing, as the department believes the company has violated its merger settlement agreement by trying to coerce concert venues into using Ticketmaster.

MAJOR MOVERS: Among the noteworthy gainers was Sarepta Therapeutics (SRPT), which surged 31.4% after the company said the FDA approved Vyondys53 injection for Duchenne muscular dystrophy patients amenable to exon 53 skipping. Also higher was Tandem Diabetes (TNDM), which gained 5.3% after it confirmed FDA clearance of the t:slim X2 insulin pump with Control-IQ technology.

Among the notable losers was Athenex (ATNX), which slid 14.2% after it announced results from its Phase 3 trial of oral paclitaxel. Also lower were Broadcom (AVGO) and Costco (COST), which fell a respective 3.8% and 1.8% after reporting quarterly results.

INDEXES: The Dow rose 3.33, or 0.01%, to 28,135.38, the Nasdaq gained 17.56, or 0.2%, to 8,734.88, and the S&P 500 advanced 0.23, or 0.007%, to 3,168.80.


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Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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