Prepare for a Wild Stock Market Ride. It’s Quadruple Witching Day. - Barron's

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People walk through the Oculus transportation hub and mall in the Financial District on September 02, 2020 in New York City.

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Get ready for quadruple witching day.

It sounds spooky. The witching hour, after all, comes in the middle of the night when strange, potentially magical, things occur.

The stock market has entire witching days. These are the days when stock index futures, stock index options, single stock options, and single stock futures all expire.

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A morning briefing on what you need to know in the day ahead, including exclusive commentary from Barron's and MarketWatch writers.

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Options contracts typically expire on the third Friday of every month. Future contracts expire on the third Friday of March, June, September and December. So investors have to deal with four quadruple witching days a year.

There really isn’t anything to fear. Strange things don’t typically occur. Witching days, however, can mean higher-than-average trading volumes and volatility as investors, and traders, close out profitable positions.

A call option is a right to buy a stock at a set price. If the price in the options contract is below where the stock is trading that’s good for the option holder. But the trade has to be executed or any potential profit goes to money heaven.

Quadruple witching days are a watch item for investors. They amount to days when other factors can move stock indexes, beyond the regular news flow about earnings, deals, and politics.

—Al Root

*** Listen to the latest episode of Barron’s Streetwise podcast with Jack Hough. On this week’s episode, chief executive Reed Hastings shares Netflix’s secret sauce. Download here.

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Trump Administration to Block WeChat and TikTok Downloads in the U.S.

The Commerce Department on Friday announced that it would begin blocking people from downloading TikTok and WeChat to “safeguard the national security” of the U.S. starting Sunday, Sept. 20.

• “[TikTok and WeChat]collects vast swaths of data from users, including network activity, location data, and browsing and search histories. Each is an active participant in China’s civil-military fusion and is subject to mandatory cooperation with the intelligence services of the [Chinese Communist Party],” Commerce Department Secretary Wilbur Ross said in the release.
• The order prohibits WeChat or TikTok from being distributed or maintained in any U.S. mobile application store. Usage of WeChat will be banned beginning Sunday night, while usage of TikTok will be banned Nov. 12 unless national security concerns are “resolved.”
• The announcement does not block Oracle’s deal to acquire TikTok’s U.S. operations. The software giant is working to allay the president’s concerns about security threats.
• ByteDance has agreed to revisions to its latest deal from the Treasury Department, some of which “address how TikTok’s data and source code would be handled and secured,” the New York Times reported, citing people with knowledge of the talks.
• Under the latest plan, Oracle and Walmart would partner in a structure that, when combined with TikTok’s current U.S. venture-capital investors, would bring a majority of the company under American owners, The Wall Street Journal reported.
• It remains unclear exactly how the ownership will be structured, and many details have yet to be hammered out.

What’s Next: A deal for TikTok’s sale must now be agreed upon by Nov. 12, and must satisfy these national security concerns. Trump and Chinese authorities must sign off on any deal.

—Ben Walsh

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Opinion: CFIUS is a Black Box. The TikTok Deal Is Threatening to Crack It Open.

Martin Chorzempa of the Peterson Institute for International Economics argues in a Barron’s commentary that the TikTok-Oracle deal is putting the Committee on Foreign Investment in the U.S. in a difficult position.

The deliberations of the Committee on Foreign Investment in the U.S. rely on information that must for good reason be kept secret. CFIUS does not comment on the reasons behind any individual decision, nor does it publish even a list of the cases it has handled.

CFIUS’ recent expansion has made it harder for companies to know if they need to submit a transaction for review. Some companies that aren’t threats file just in case; CFIUS must waste resources reviewing them. Deals that do affect national security might not file because it isn’t clear they should.

In 2017, a Chinese’s company’s purchase of a lip-syncing app used mostly by teenagers did not obviously raise enough national security alarm bells among its lawyers to recommend a filing. If it had back then, none of the current divestment mess would have happened.

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Moderna CEO Says It Might Have Vaccine Answer by November

Moderna could know as early as November if its possible Covid-19 vaccine is effective, the pharmaceutical company said Thursday. The company will ask the Food and Drug Administration for an emergency use authorization for high-risk groups if its potential vaccine is at least 70% effective, CEO Stephane Bancel said.

• Moderna released details of its Phase 3 trial that is currently under way on Thursday. The study has enrolled 25,296 of its goal of 30,000 participants for its vaccine candidate mRNA-1273.
• The company indicated it could conduct an initial analysis of its Phase 3 trial results as early as November, but more likely by late December. That initial analysis might provide enough evidence that the vaccine is effective or it could show that more data from the trial is necessary before a conclusion can be reached.
• Pfizer, which is working with BioNTech on its vaccine, is hoping that an initial analysis of its potential vaccine will be enough to prove its efficacy, Reuters reported Thursday. The company has said it hopes to have the vaccine ready by the end of October.

What’s Next: Vaccine makers’ optimistic time frames could set investors up for wild swings in company stock prices should the early evaluations prove disappointing. They could also undermine the public’s trust in the approval process.

—Ben Walsh

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New York City Schools Reopening Delayed Again

New York City public schools delayed reopening for in-person instruction for a second time, just days before classes were to start.

• Mayor Bill de Blasio pointed to concerns about staffing, but said the system will bring in another 4,500 teachers.
• The city’s plan to shift between in-class and online sessions has raised some eyebrows, as teachers expressed concerns about Covid-19. Parents were given a choice between fully remote or split schedules. About 40% chose remote only learning.
• New York is the largest public school system in the U.S. Most other large cities opted to remain online. But operating online only has its own challenges, especially for working parents.

What’s Next: The 3-K preschool, and special education schools will reopen as planned Sept. 21, but the return to elementary schools has been pushed to Sept. 29. Middle and high-school students are slated to be back in class Oct. 1.

—Connor Smith

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Airline CEOs Ask White House for More Aid

The chief executives from major U.S. commercial airlines met with White House chief of staff Mark Meadows Thursday to plead for an additional $25 billion in aid for the industry.

• After the meeting, the White House said the president would support a stand-alone bill giving more money to the airline industry.
• The likelihood of Congress approving such a measure absent a still-elusive agreement on a broader coronavirus relief package is extremely low. Airlines have already tapped the $25 billion in payroll support they received in the spring, and a measure to extend that program through next March has stalled.
• Air travel remains depressed. United recently reported that its flight capacity would be down 70% in the third quarter compared to the same period last year. Globally, flights are down nearly 50% compared to last year.
• It’s not just airlines themselves that are hurting financially. On Thursday, aerospace and defense giant Raytheon said it was doubling layoffs to 15,000 due to a dramatic drop-off in demand for spare parts and services.

What’s Next: As part of the billions of dollars pumped into the airline industry in the Cares Act, airlines were prohibited from cutting workers until the end of September. Airlines have said they plan to cut more than 76,000 jobs unless they get more aid.

—Ben Walsh

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U.K. Edges Closer to Second National Lockdown

The British government has been advised by its leading scientific advisers to proclaim a national lockdown to help contain a second coronavirus spike, as Health Secretary Matt Hancock declined on Friday to comment on whether such a measure would have to be taken in the coming weeks.

• Many U.K. regions and cities are currently under local lockdowns, after infections started rising significantly in August, following other European countries such as Spain and France. But the government had until now pledged to do everything possible to avoid such measures on a national scale.
• According to the Financial Times, the government’s scientific advisers have suggested a two-week lockdown that would coincide with the October school holiday, in order to avoid the punitive economic price inflicted on the country by the first lockdown, which lasted from March to May.
• The government’s hope is that the new restrictions, which will involve the renewed closure of restaurants and other hospitality businesses might act as a “circuit break” while schools and workplaces would remain open. The U.K. already banned two weeks ago the gatherings of more than six persons.
• The British government is also trying to cope with insufficient testing capacity amid a surge in demand for tests. Officials said the situation may last until the end of October, which will make it difficult in the next few weeks to assess the actual impact of the pandemic.

What’s Next: The government is doing its utmost to try to “protect the economy” after the U.K. suffered Europe’s most severe GDP decline on the virus impact. It will be struggling to avoid drastic measures if infections keep rising, especially if deprived of indicators to help it accurately assess the situation.

—Pierre Briançon

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Do you remember this week’s news? Take our quiz below and tell us how you did by emailing thebarronsdaily@barrons.com.

1. After its IPO on Wednesday, which company became the largest by market cap to end its first day of trading at double its opening price?

a. Sumo Logic
b. Ribbit LEAP
c. Snowflake
d. JFrog

2. Scientists reported the detection of phosphine gas, a possible sign of biological life, in the atmosphere of which planet?

a. Venus
b. Mars
c. Jupiter
d. Saturn

3. Verizon agreed to buy which company’s TracFone unit, which has 21 million prepaid cellphone customers in the U.S., for nearly $7 billion in cash and stock?

a. América Móvil
b. Vodafone
c. Telefónica
d. Claro

4. Who became the new prime minister of Japan, the world’s third-largest economy behind the U.S. and China?

a. Yoshihide Suga
b. Shinzo Abe
c. Hiroaki Nakanishi
d. Yoshiyuki Kasai

5. Kraft Heinz announced plans to sell part of its cheese business to which company for $3.2 billion?

a. Sodiaal
b. Mondelez
c. Lactalis
d. Conagra Brands

6. Who reached an agreement to purchase the New York Mets for between $2.4 billion and $2.5 billion?

a. Alex Rodriguez
b. Mark Walter
c. Earvin Johnson
d. Steven Cohen

Answers: 1(c); 2(a); 3(a); 4(a); 5(c); 6(d)

—Bonnie Bennett Slater

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—Newsletter edited by Stacy Ozol, Anita Hamilton, Mary Romano, Matt Bemer, Bob Rose

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