Sears bankruptcy; Saudi trouble; Big week for earnings

1. Sears declares bankruptcy: Retail chain Sears filed for bankruptcy in the early hours of...

Posted: Oct 15, 2018 12:47 PM
Updated: Oct 15, 2018 12:47 PM

1. Sears declares bankruptcy: Retail chain Sears filed for bankruptcy in the early hours of Monday.

The 132-year old company has been struggling with debt for several years. The final straw was a $134 million payment due Monday that it could not afford.

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Sears Holdings (SHLD), the company which owns Sears and Kmart, is among dozens of prominent retailers to declare bankruptcy in the era of Amazon (AMZN).

The company said it intends to stay in business, keeping stores which are profitable open, along with the Sears and Kmart online shopping sites.

But it is looking for a buyer for many of its remaining stores and will shutter at least 142 stores near the end of this year, on top of 46 that are due to close next month. The stock is down 89% so far this year.

2. Saudi trouble: Saudi Arabia is facing growing international pressure to explain the disappearance of prominent journalist Jamal Khashoggi.

More executives, including JPMorgan (JPM) CEO Jamie Dimon and Ford (F) Executive Chairman Bill Ford, bailed out of a major conference in Riyadh — the Future Investment Initiative — scheduled for next week.

Viacom (VIAB) CEO Bob Bakish and Uber CEO Dara Khosrowshahi had already withdrawn from the event last week. Bahrain, a close ally of Saudi Arabia, called for a boycott of Uber on Monday.

Shares in SoftBank (SFTBF) dropped 7.3% on concerns about the investment giant's close links to Saudi Arabia. SoftBank has not responded to requests for comment on whether CEO Masayoshi Son and other company executives still plan to attend the Future Investment Initiative.

Saudi stocks slumped on Sunday, falling as much as 7%, before rebounding a little on Monday. The main index in Riyadh opened 1.7% higher.

Oil prices edged higher in early trading on Monday after Saudi Arabia said it would retaliate against any economic sanctions or political pressure.

In an opinion article written in a personal capacity, Turki Aldakhil, general manager of the Saudi-owned Al-Arabiya news channel, warned that if the US imposed sanctions on Riyadh "it will stab its own economy to death," and cause oil prices to reach as high as $200 a barrel.

US oil futures rose 0.3% to trade at $71.50 per barrel. Prices of Brent crude, the international benchmark, were up 0.5% at $80.80 per barrel.

3. Brexit deadlock: Investors are getting jittery about Brexit again. The pound was trading 0.3% lower against the dollar on Monday, after talks on Sunday between the United Kingdom and the European Union ended in deadlock.

The two sides still need to agree on the future of the border between Northern Ireland, which is part of the United Kingdom, and Ireland, an EU member state, before a deal on the divorce terms can be finalized. EU leaders will gather for a summit on Wednesday.

"The stakes are high. A no-deal hard Brexit would cause serious damage to the UK and -— to a lesser extent — also to the wider European economy," said Holger Schmieding, chief economist at Brenberg.

4. Global market overview: US stock futures were pointing lower early on Monday.

European markets opened mostly down. Trading in Germany started late due to technical problems, before the main Dax index dropped 0.4% after an election in the state of Bavaria spelled trouble for Chancellor Angela Merkel.

Markets in Asia closed mostly lower.

US markets surged on Friday. The Dow Jones industrial average was up 1.2%, while the S&P 500 gained 1.4% and the Nasdaq surged 2.3%.

But the rally was not enough to offset earlier losses. All three major indexes suffered their worst week since March.

5. Earnings and economics: Bank of America (BAC) and Charles Schwab (SCHW) plan to release earnings before the open Monday.

The Census Bureau plans will publish its Retail Sales report for September at 8:30 a.m. ET.

6. Coming this week:
Monday — Bank of America (BAC) and Charles Schwab (SCHW) earnings
Tuesday — IBM (IBM), BlackRock (BLK), United Airlines (UAL), eBay (EBAY), Domino's Pizza (DPZ), UnitedHealth (UNH), Goldman Sachs (GS), Netflix (NFLX), Johnson and Johnson (JNJ) and Morgan Stanley (MS) earnings
Wednesday — Alcoa (AA) and Winnebago (WGO) earnings
Thursday — American Express (AXP), Blackstone (BX), Bank of New York (BK), E*TRADE (ETFC) and PayPal (PYPL) earnings
Friday — Procter & Gamble (PG), VF Corp (VFC) and State Street (STT) earnings

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