China threatens countermeasures in trade war: Morning Brief

Thursday, August 15, 2019

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It’s been a wild week as markets tanked after the U.S. Treasury yield curve — a key metric of the health of the global economy — inverted Wednesday morning for the first time since 2007. And there's no sign that volatility is subsiding as markets continue to fall early Thursday. Today, investors will be looking to some key earnings reports and economic data for more clues on the health of the economy.

The U.S. Census Bureau will release retail sales data for July at 8:30 a.m. ET. As other parts of the economy, such as manufacturing, get hit by the trade war, consumer spending has remained a bright spot and the main driver of GDP growth in the U.S. However, the main question now is whether or not consumers will be able to continue doing the heavy lifting as the U.S. looks to impose more tariffs on Chinese imports September 1 and December 15.

Meanwhile, Walmart (WMT) is set to release quarterly results ahead of the market open. Walmart has been thrust into the spotlight recently on criticism of its gun sales and concerns over looming tariffs. Nevertheless, the retailer is expected to continue its strong momentum. Wall Street analysts are expecting the company to report same-store sales that are at least in-line with estimates and boost its fiscal 2020 outlook. Analysts polled by Bloomberg expect Walmart to report adjusted earnings of $1.22 per share on $130.08 billion in revenue.

Investors will shift their focus to Nvidia (NVDA) after the bell when the chipmaker reports second quarter financial results. Trade tensions between the U.S. and China have rocked the chip stocks this week, and Nvidia shares have fallen 2.67% as of Wednesday’s close. Nvidia’s report will be closely monitored for any commentary from management on whether or not the company will see a negative impact from the escalating trade war. Nvidia is expected to report adjusted earnings of $1.14 per share on $2.54 billion in revenue during the quarter, according to data compiled by Bloomberg.

Other notable earnings announcements scheduled for Thursday include Alibaba (BABA), JCPenney (JCP), Tapestry (TPR) before market open; Applied Materials (AMAT) after market close.

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China threatens countermeasures in trade war: Stock markets sold off sharply on Thursday morning after China warned that recent tariffs from the U.S. threatened to derail trade talks. China’s Ministry of Finance said that fresh 10% tariffs on $300bn of Chinese goods violated a consensus reached with the US and threatened trade talks, Bloomberg reported. China also warned it would put in place counter measures. [Yahoo Finance UK]

Also: Trump says China should treat Hong Kong 'humanely' before trade deal can be agreed [Reuters]

Bill Ackman's Pershing Square makes big bet on Buffett's Berkshire Hathaway: Pershing Square holdings snapped up a huge stake in Warren Buffett’s Berkshire Hathaway (BRK-B), according to a 13-F regulatory filing. As of the second quarter ended June 30, Pershing Square owned 3.51 million shares of Berkshire Hathaway’s B shares, a position that would be worth $686 million based on Wednesday’s close.[Yahoo Finance]

Buffett's Berkshire increases bet on Warren Buffett's Berkshire Hathaway Inc on Wednesday said it boosted its stake in Inc. (AMZN) by 11% during the second quarter, as U.S. stock indexes traded near record highs. Berkshire said it owned 537,300 Amazon shares worth about $1.02 billion as of June 30, up from 483,300 shares three months earlier. [Reuters]

Also: Berkshire adds to Bank of America stake, now valued at $27 billion [Yahoo Finance]

Stronger retail sales in July keep UK recession fears at bay: Retail sales in the UK unexpectedly climbed by 0.2% in July compared to the previous month, even after retail industry bodies had warned of a dire month for the sector. The boost was mainly driven by growth in online and non-store retailing, which surged 6.9% compared to June, according to the Office for National Statistics (ONS). [Yahoo Finance UK]

Canopy Growth shares collapse after company reports disappointing quarter: Canopy Growth (CGC) shares tanked 11% in after-hours trading Wednesday following another disappointing quarter during which the company missed expectations on both the top and bottom lines. [Yahoo Finance]


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