Morgan Stanley, China Trade Deal, Apple, Schwab, XPO – 5 Things You Must Know Thursday

Morgan Stanley, China Trade Deal, Apple, Schwab, XPO – 5 Things You Must Know Thursday

Stock futures suggest Wall Street will push higher into record territory after the U.S. and China sign preliminary trade pact; Morgan Stanley and Charles Schwab report earnings; Apple buys an AI startup; XPO Logistics exploring alternatives for its business units.

Here are five things you must know for Thursday, Jan. 16:

1. — Stocks Set to Open in Record Territory

Stock futures suggested Wall Street would push further into record territory Thursday after the United States and China, the world’s two biggest economies, signed a preliminary trade agreement.

The so-called phase one trade agreement, signed Wednesday at the While House by President Donald Trump and China Vice Premier Liu He, commits Beijing to an extra $200 billion in purchases of American-made goods over the next two years in exchange for a rollback in some tariffs put in place by Washington over the past 18 months.

China also will pledge to “enhance” intellectual property protections – a key U.S. demand – and crack down on the practice of forced technology transfers for U.S. companies doing business in China.

Several questions over the framework of the deal, however, remain, particularly those related to China’s commitment to agricultural purchases, which, combined with energy purchases, would amount to an additional $95 billion over the next two years just as China’s economy is slowing.

Contracts linked to the Dow Jones Industrial Average rose 61 points, futures for the S&P 500 gained7.45 points and Nasdaq futures were up 28.50 points.

The Dow and the S&P 500 finished at record highs Wednesday after the signing of the trade accord. The Dow finished up 90.55 points, or 0.31%, to 29,030.22, closing above 29,000 for the first time. 

2. — Morgan Stanley and Charles Schwab Report Earnings 

Earnings reports are expected Thursday from Morgan Stanley MS, Charles Schwab SCHW, Bank of New York Mellon BK, CSX CSX, Progress Software PRGS and PPG Industries PPG.

The economic calendar in the U.S. Thursday includes weekly Jobless Claims at 8:30 a.m. ET, the Philadelphia Fed Business Outlook Survey for January at 8:30 a.m., Retail Sales for December at 8:30 a.m., Import and Export Prices for December at 8:30 a.m. and the National Association of Home Builders Housing Market Index for January at 10 a.m. 

3. — Taiwan Semiconductor Profit Gets Boost From Smartphone Demand

Taiwan Semiconductor Manufacturing TSM, the world’s biggest contract chipmaker and a lead supplier for Apple AAPL iPhones, posted better-than-expected fourth-quarter profit, and forecast a surge in first-quarter revenue amid a 5G-led resurgence in global smartphone demand.

Taiwan Semiconductor posted fourth-quarter earnings of T$116.035 billion ($3.88 billion), up 16.1% from the same period last year and ahead of analysts’ forecasts. Revenues rose 10.6% to $10.39 billion, and the company said it expects first-quarter of between $10.2 billion and $10.3 billion, 45% higher than the same period in 2019.

“Our fourth-quarter business benefited from strong demand for high-end smartphones, initial 5G deployment and high performance computing related applications using TSMC’s industry-leading 7-nanometer technology,” said Chief Financial Officer Wendell Huang. “Moving into first quarter 2020, despite mobile product seasonality, we anticipate our business to be supported by the continued ramp of 5G smartphones.”

Fourth-quarter smartphone-related sales rose 16% from last year, with North American sales comprising 59% of total revenue.

4. — Apple Buys Artificial Intelligence Startup 

Speaking of Apple, the tech giant reportedly has acquired, a Seattle startup specializing in low-power, edge-based artificial intelligence tools.

The acquisition, GeekWire reported, echoed Apple’s purchase of AI startup Turi in 2016. Sources with knowledge of the deal told GeekWire that Apple paid an amount similar to what was paid for Turi, in the range of $200 million.

The acquisition suggests that Xnor’s AI-enabled image recognition tools could become standard features in future iPhones and webcams, according to GeekWire.

In a statement to GeekWire, Apple wrote: “Apple buys smaller technology companies from time to time and we generally do not discuss our purpose or plans.” 

5. — XPO Logistics Exploring Alternatives for Business Units

XPO Logistics XPO jumped 19% in premarket trading Thursday to $98.58 after the company said it was exploring the sale or spinoff of one or more of its business units.

The logistics giant said it doesn’t intend to sell or spin off its North American less-than-truckload unit.

“We continue to trade at well below the sum of our parts and at a significant discount to our pure-play peers,” said Bradley Jacobs, XPO chairman and CEO. “That’s why we believe the best way to continue to maximize shareholder value is to explore our options, while remaining intensely committed to the satisfaction of our customers and employees.”

Jacobs told Jim Cramer on “Mad Money” Wednesday that despite being the seventh-best performing stock in the Fortune 500 over the past decade, the market still gives XPO a multiple of just eight to nine times earnings. 

XPO retained Goldman Sachs and JPMorgan Chase as its financial advisers.

Provided by: The Street Retirement

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