Wall Street Breakfast: Another Wave Of Easing

Futures bounce

The Dow Jones Industrial Average is primed for a seven-day winning streak as President Trump offered a “goodwill gesture” to China, suggesting potential progress in October talks. U.S. futures gained on the move, which will delay increased tariffs (25% to 30%) on $250B worth of goods by two weeks until Oct. 15. Caution is still in the air… While such de-escalation in tensions between the two countries is welcomed, it’s still difficult to see both sides reaching any “real resolution” anytime soon, said Fitch’s James McCormack.

Up in smoke

The Trump administration is prepping a ban on flavored e-cigarettes as federal agencies probe an outbreak of a lung problem that killed at least six people and reportedly led to the sickness of hundreds of others. Amid a crackdown on vaping in the U.S., Juul (JUUL) is entering China, with online storefronts on e-commerce sites owned by Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD). More trouble in the smoke-sphere? British American Tobacco (NYSE:BTI) is axing 2,300 employees globally by January in a move that will impact over 20% of its senior roles.
Go deeper: ‘British American Vs. Imperial Brands’ by Dividend Sensei.

Opioid crisis settlement

Purdue Pharma has secured support from 23 states and thousands of local governments for a multibillion-dollar deal that could enable the drugmaker to resolve much of the opioid litigation it faces through a planned bankruptcy restructuring, WSJ reports. Resolving the entirety of the litigation at once has proved challenging and the settlement still faces strong opposition. The deal would see Purdue’s owners, the Sackler family, contribute $3B over several years (and potentially another $1.5B or more), as well as exiting the company, which would emerge from bankruptcy run by trustees tasked with paying out claims.
Go deeper: Related tickers include TEVA, JNJ, ENDP and MNK.

OPEC meeting

Traders continue to watch the World Energy Congress in Abu Dhabi for headlines that could move crude prices. OPEC+ is scheduled to hold its ministerial monitoring committee meeting on the sidelines of the conference that includes Saudi Arabia’s new oil minister. “To achieve market stability, it’s important we sustain a high level of cohesiveness,” Prince Abdulaziz bin Salman said ahead of the gathering.
Go deeper: Is the strategy working? Check out the next paragraph and comment below.

Huge crude surplus

“Booming shale production has allowed the U.S. to close in on, and briefly overtake, Saudi Arabia as the world’s top oil exporter,” the IEA said in its closely-watched monthly report. It comes at a time when the U.S. is actively pursuing “energy dominance,” putting downward pressure on prices at a time when the market is already struggling to cope with too much supply. “The installation of the necessary pipelines and terminals is continuing apace, which will ensure that the trend continues.”

Operation Yellowhammer

Rising food and fuel prices, and a disruption of cross-border financial services, are among the possible consequences of a no-deal Brexit, according to a secret file the U.K. government was forced to publish on Wednesday evening. The content of the five-page document, code-named Operation Yellowhammer, is similar to the plan leaked last month to the Sunday Times, but was dismissed by the government as out of date. Where that paper was described as a “base case,” the new file claims to be a “worst-case scenario.”

IPO flakiness

Anheuser-Busch InBev (NYSE:BUD) is continuing to explore an IPO in Hong Kong of its Asia Pacific unit, Budweiser Brewing Company APAC (BUDBC), two months after it pulled the planned listing. The world’s largest brewer was aiming to sell as much as $9.8B in Budweiser stock, but then offloaded its Australian subsidiary for $11.3B, to seek relief from its heavy debt burden. An aggressive spending spree in recent years left the Belgian brewer with more than $100B in debt at a time when beer sales are slowing worldwide.
Go deeper: Balance sheet of Anheuser-Busch.

Baker Hughes independent again

Losing majority control of the oil and gas company, General Electric (NYSE:GE) will reduce its ownership in Baker Hughes (NYSE:BHGE) to 38.4% from 50.4% by June-end, aiming to score $2.7B in the process. It’s raising the amount through a public offering of 115M Baker Hughes Class A shares priced at $21.50 each, and through a private sale of $250M Class B Baker Hughes shares. GE expects to continue divesting the remainder of its holding in the oilfield services provider over time.
Go deeper: BHGE growth grade is rated A+.