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Stimulus Deadline, Netflix Results & Shale M&A: What's up in Markets

EconomyOct 20, 2020 06:42
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By Geoffrey Smith -- It's deadline day for the almost-mythical stimulus package, Netflix (NASDAQ:NFLX) reports earnings, Intel (NASDAQ:INTC) sells a big part of its past and there's more shale M&A brewing. Here's what you need to know in financial markets on Tuesday, October 20th.

1. Stimulus deadline day

It’s deadline day for the Trump Administration and GOP-controlled Senate to reach a deal with House Democrats over an economic support package. Allegedly. Given how things tend to slip, self-imposed deadlines tend to have limited meaning, but it is an undeniable fact that there is precious little time left to get anything agreed before the election.

House Speaker Nancy Pelosi said on Monday that the gap between the two sides was narrowing, but in truth neither side has found the need for an agreement to be the most important element of their current election campaign.

Elsewhere on the campaign trail, President Donald Trump downplayed reports of struggles in fundraising, telling a rally that he could raise a billion dollars in a day if he had to, for example by extracting the money from Exxon Mobil (NYSE:XOM) in return for a couple of drilling licenses.

“We are aware of the President’s statement regarding a hypothetical call with our CEO,” Exxon said via Twitter. “And just so we’re all clear, it never happened.”

2. Netflix results

The world’s most famous stay-at-home stock is under the spotlight later as Netflix reports its latest quarterly updates after the closing bell

Analysts expect the company to have added a net 2.5 million subscribers in the quarter, and to have earned $2.12 a share, up some 45% from a year earlier. The company has missed consensus forecasts in both of the last two quarters, but that hasn’t stopped the stock doubling so far this year, as the pandemic accelerates a global, generational shift to streaming services and away from linear TV.

One of the more interesting metrics in tonight’s release may be average watching times per subscriber, given the increasing difficulties of getting new material produced.

3. Stocks set to open higher, with eyes on Washington

U.S. stock markets are set to open Tuesday higher, recouping some of the losses made in late trading on Monday as hopes for a stimulus package faltered yet again.

By 6:25 AM ET (1025 GMT), Dow futures were up 190 points, or 0.7%, while S&P 500 Futures and NASDAQ Futures were both up 0.8%.

Other stocks likely to be in focus later include Intel, after news that the chipmaker agreed to sell its NAND memory chip business for $9 billion to South Korea’s SK Hynix. Hynix stock fell 1.7% in Seoul overnight on the news.

Other stocks reporting include Procter & Gamble, Philip Morris (NYSE:PM) and Lockheed Martin (NYSE:LMT) before the open, and Texas Instruments (NASDAQ:TXN) and America Movil (NYSE:AMX) after the closing bell.

4. Ireland heads into lockdown

Ireland placed all non-essential businesses in lockdown for six weeks, in what is the most dramatic measure yet by a European government to bring the second wave of the Covid-19 pandemic under control.

While other governments across Europe have also tightened restrictions at a local level recently, none has gone so far as Dublin, making it an important test case for the public policy response at the start of what is likely to be a long and difficult winter.

The Irish measures will thus be watched particularly closely for evidence of whether they will succeed in bending the infection curve – and, indeed, whether a second round of lockdowns can actually be enforced on a fatigued population and economy.

Elsewhere in Europe, the U.K. province of Wales also announced a two-week lockdown.

5. Shale M&A continues

The oil M&A boom is on. Pioneer Natural Resources (NYSE:PXD) is in talks with Parsley Energy (NYSE:PE) to merge, in what would be a further consolidation of the struggling shale sector, according to The Wall Street Journal.

The news comes only a day after ConocoPhillips (NYSE:COP) confirmed it will buy Concho Resources (NYSE:CXO) for $9.7 billion in a deal that creates the U.S.’s largest pure upstream play.

Pioneer and Parsley are planning an all-stock deal with a low premium, something that will conserve cash in what remains a challenging price environment.  U.S. Crude prices edged lower overnight on mild disappointment that the OPEC+ bloc didn’t express more clearly its willingness to delay a planned output increase scheduled for January 1.

The American Petroleum Industry’s inventories data are due at 4:30 PM as usual.

Stimulus Deadline, Netflix Results & Shale M&A: What's up in Markets

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Ed Crain Oct 20, 2020 9:01
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