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Fly Intel - End of Day Brief - Friday August 23, 2019

Stocks end week on a slide as China hits back on tariffs

The stock market was largely on hold in early trading, despite China's announcement of retaliatory tariffs against the U.S., as investors awaited Fed Chair Jerome Powell's speech from Jackson Hole. That, however, came and went without a definitive reaction and turned out not to be the day's defining event in terms of determining the direction of trading. That event came soon afterward, when President Trump fumed that Powell "did NOTHING" in a tweet and then promised an announcement this afternoon regarding his plans in response to China's tariff reaction. In his tweets, Trump also "ordered" U.S. companies to find alternatives to producing goods in China.

ECONOMIC EVENTS: In the U.S., new home sales fell 12.8% to a 635,000 rate in July, which was a little weaker than expected but that followed a big upward revision to June. Meanwhile, President Donald Trump, in a series of tweets, "ordered" U.S. companies to look for an alternative to China, including bringing companies back to the U.S. and making products at home. He also promised an announcement today about the U.S. response to China's retaliatory tariff plans.

In energy news, Baker Hughes reported that the U.S. rig count is down 19 from last week to 916 rigs.

TOP NEWS: Shares of Salesforce (CRM) rose 2.2% following the company's Q2 report. Morgan Stanley analyst Keith Weiss said Salesforce's "solid" constant currency growth in bookings and raised organic FY20 revenue outlook should help restore investor confidence and put the stock back on an upward trajectory.

VMware (VMW) announced Thursday after the close that it is acquiring Carbon Black (CBLK), a cybersecurity company that went public in 2018, for $26 per share, representing an enterprise value of $2.1B. VMware is also moving ahead on its recently disclosed plan to acquire outstanding class A shares of Pivotal Software (PVTL) for a blended price per share of $11.71. The Pivotal transaction, which will see the company pay $15 per share in cash to Class A stockholders, has an enterprise value of $2.7B, VMware stated.

In other M&A news, Hasbro (HAS) announced an agreement to acquire Entertainment One, the owner of Peppa Pig and other preschool properties, in an all-cash transaction valued at approximately $4B.

Shares of HP Inc. (HPQ) following the company's quarterly report, as Evercore ISI analyst Amit Daryanani downgraded the stock to In Line from Outperform. Additionally, HP announced last night that CEO Dion Weisler will step down to deal with a family health matter. Enrique Lores, the head of the company's imaging, printing and solutions business, will be succeeding Weisler as CEO.

Meanwhile, Qualcomm (QCOM) shares were 4.7% lower after a San Francisco-based appeals court granted in its entirety the company's request for a partial stay, pending appeal, of an injunction from the U.S. District Court for the Northern District of California. The move occurred in response to a decision by U.S. District Judge Lucy Koh that ordered major changes to how Qualcomm licenses its technology.

Additionally, Sinclair (SBGI) announced that it has completed the acquisition of 21 regional sports networks from Disney (DIS). Following the news, the Wall Street Journal reported that Sinclair CEO Chris Ripley is eyeing more regional sports network acquisitions, and in particular is looking at the four regional sports outlets that AT&T (T) owns in Seattle, Colorado, Pittsburgh, and the Southwest.

MAJOR MOVERS: Among the noteworthy gainers was Qudian (QD), which rose 2.3% after it announced a $195M forward share repurchase plan. Also higher was Intuit (INTU), which gained 1.1% after reporting quarterly results.

Among the notable losers was Foot Locker (FL), which fell 18.9% after it reported downbeat quarterly results and reaffirmed its guidance for fiscal 2019. Also lower was Adtalem Global Education (ATGE), which declined 11.8% after reporting quarterly results.

INDEXES: The Dow fell 623.34, or 2.37%, to 25,628.90, the Nasdaq lost 239.62, or 3%, to 7,751.77, and the S&P 500 declined 75.84, or 2.59%, to 2,847.1.


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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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