Day Ahead: Top 3 Things to Watch

Aug 07, 2018

Here’s a preview of the top 3 things that could rock markets tomorrow.

1. Snap Jumps and Disney Slumps

Shares of Snap (NYSE:SNAP) bounced around sharply in after-hours trading Tuesday. After disappointing quarters from Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR), Snap gave mixed signals to social media investors.

Snap’s quarterly loss was narrower than expected and the company beat revenue forecasts. But daily active users were down in the second quarter, compared with the first, and missed estimates.

In addition, after the numbers it was disclosed that Saudi Prince Alwaleed Bin Talal acquired a 2.3% stake in Snap.

The bulls seemed to take control following the release and shares rose about 7%.

Also after hours, Walt Disney (NYSE:DIS) stock fell about 2.5%. The company’s quarterly numbers missed on the top and bottom lines.

Operating income at its cable networks fell 5% from the year-ago period.

2. Can Musk’s Plan to Possibly Take Tesla Private Work?

There will still be talk among traders tomorrow about Tesla (NASDAQ:TSLA) CEO Elon Musk saying he was considering taking the company private.

Musk tweeted out of the blue he had funding to buy the automaker at $420 per share. And many market watchers wondered about the intent of the tweet at the time.

Musk has had an antagonistic relationship with short-sellers and his tweet and the subsequent stock rise would have certainly shaken the confidence of those betting on shares falling. The use of $420 as a price, a number well know in marijuana-smoking circles, also raised questions about whether this was tweeted more as a gag than a business strategy.

Now, with the official statement, there will be more focus on whether Musk could pull off a $71 billion leveraged buyout.

Musk’s plan to give shareholders the option of being bought out at $420 or staying on as shareholders of a private company will be a tricky road to navigate.

The stock finished the day up about 11%.

3. Drawdown in Crude Inventories Forecast

Oil inventory numbers will probably have the most market impact when they are released at 10:30 AM ET (14:30 GMT) tomorrow.

Crude oil futures have been rising after the first wave of U.S. sanctions on Iran came into effect first thing Tuesday.

A report from the Energy Information Administration (EIA) on Tuesday, estimated domestic oil production will grow at a slower rate than previously forecast.

The EIA cut its 2018 crude output estimate to 10.68 million bpd from 10.79 million bpd and its 2019 output estimate to 11.7 million bpd from 11.8 million bpd, citing lower crude prices are expected to curb U.S. shale oil output.

For Wednesday, analysts are predicting that U.S. crude stockpiles fell by 3.333 million barrels last week, compared with a surprise build in inventories the week before.

A small rise is expected in distillate stocks, while a drawdown in gasoline inventories is forecast.

Economic data heats up later in the week with the measure of wholesale and consumer inflation on the calendar.