Market News

A toxic mix of short-sighted policy and isolationist politics is endangering the global economy.

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Investors who were looking forward to Yum Brands' October 31 spinoff of its China division were just thrown a splash of cold water -- one that came in the form of the company's third quarter earnings report. Though the company reported worldwide same store sales growth, its soon-to-be spun off China division proved to be enough of a drag on operations that Yum executives blamed its performance on an ongoing dispute over the South China Sea.

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Recently, Best Buy partnered with PCH international to offer hardware start-ups shelf space in its retail stores. Termed as the 'Ignite Program', under this partnership, a newly opened Best Buy store will have dedicated space for start-up hardware products such as Muzik Spotify enabled headphones, the Noke smartlock and the Zuli smartplug. While Best Buy has been working with start-ups in the past, this program is expected to make it easier and faster for customers to view new products launched by start-ups. We believe that, as e-commerce witnesses rapid growth and consumers prefer the convenience of shopping for standard electronics online, Best Buy can benefit from bringing innovative products to its store. Customers should be drawn to its brick and mortar stores to try out the cool new gadgets displayed by the company. Such gadgets, we note, are less likely to be purchased online without a demo or test. While this is still a pilot plan, we believe this strategy can provide Best Buy with a competitive edge and drive store traffic and revenues over the long term.

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Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in Whole Foods Market, Inc. (NASD: WFM), where a total of 41,774 contracts have traded so far, representing approximately 4.2 million underlying shares. That amounts to about 83.8% of WFM's average daily trading volume over the past month of 5.0 million shares. Particularly high volume was seen for the $28.50 strike call option expiring October 07, 2016, with 6,035 contracts trading so far today, representing approximately 603,500 underlying shares of WFM. Below is a chart showing WFM's trailing twelve month trading history, with the $28.50 strike highlighted in orange:

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Jeff Ubben (Trades, Portfolio), CEO and chief investment officer of ValueAct Holding LP, has been a director of Twenty-First Century Fox Inc. Class B (NASDAQ:FOX) since November 2015. On Oct. 3, the guru purchased 3 million shares at $26.06 per share, according to the company’s Form 4 filing with the Securities and Exchange Commission. The insider transaction cost $78.18 million.

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Job growth in the U.S. continued apace in September, but with the number of jobs added coming in below the economist consensus and the unemployment rate ticking up a hair, the question still remains: is the growth enough for the Fed to raise interest rates this year?

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Despite recent measures by China’s government, Macau continues to remain the world’s largest casino market. The corruption crackdown that started in early 2015 has affected casino activity and as a result, major players such as Las Vegas Sands, MGM Resorts International and Wynn resorts saw their revenues decline over the past five or so quarters. They have responded by diversifying their business by investing in non-gaming segments and shifting focus from VIP gaming to Mass market gaming. We analyse the exposure of these three companies to the global casino market in general, and Macau, Las Vegas and Singapore in particular. We find that Macau continues to remain the key trigger that’s likely to drive investor sentiment. However, the impact will be more visible for Wynn and Las Vegas Sands.

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Looking at the sectors faring worst as of midday Friday, shares of Materials companies are underperforming other sectors, showing a 1.6% loss. Within that group, PPG Industries Inc (NYSE: PPG) and Martin Marietta Materials, Inc. (NYSE: MLM) are two large stocks that are lagging, showing a loss of 8.9% and 4.4%, respectively. Among the high volume ETFs, one ETF closely following materials stocks is the Materials Select Sector SPDR ETF (AMEX: XLB), which is down 1.6% on the day, and up 9.70% year-to-date. PPG Industries Inc, meanwhile, is down 4.57% year-to-date, and Martin Marietta Materials, Inc. is up 25.83% year-to-date. Combined, PPG and MLM make up approximately 6.4% of the underlying holdings of XLB.

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Looking at the sectors faring best as of midday Friday, shares of Utilities companies are outperforming other sectors, up 0.2%. Within the sector, NextEra Energy Inc (NYSE: NEE) and NRG Energy Inc (NYSE: NRG) are two large stocks leading the way, showing a gain of 3.5% and 1.4%, respectively. Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (AMEX: XLU), which is up 0.3% on the day, and up 12.16% year-to-date. NextEra Energy Inc, meanwhile, is up 20.11% year-to-date, and NRG Energy Inc, is down 3.74% year-to-date. Combined, NEE and NRG make up approximately 10.4% of the underlying holdings of XLU.

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Mylan will pay $465 million to settle with the Department of Justice over its classification of EpiPen in Medicaid rebate programs.

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