Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 27 Nov 2020, 6:40 AM


Wall Street Breakfast: Black Friday In Full Swing

Author: bmotrader   |  Publish date: Fri, 27 Nov 2020, 6:40 AM

The biggest shopping weekend of the year is here, with bargain hunters across the U.S. planning to spend the next few days searching for discounts in stores and online despite the coronavirus pandemic. With rising wages and increasing consumer confidence, U.S. holiday sales are expected to grow between 3.6% and 5.2%, compared with the 4% growth last year, while online sales are seen rising 20% to 30%, according to the National Retail Federation. From a market perspective, history suggests this is a very good time for retail stocks. Since 2007, the week before Black Friday to a week after, the sector usually gains about 5%.

Stocks - Holiday-shortened session

No Thanksgiving hangover is being seen on Wall Street, with Dow and S&P 500 futures up 0.2% and contracts tied to the Nasdaq up 0.4%, ahead of a half-day trading session. The stock market will close at 1 p.m. ET, bond markets will close an hour later, and metals and U.S. crude oil will settle at 12:30 p.m. and 1:30 p.m., respectively. Over at the White House, President Trump said he would leave the Oval Office if the Electoral College votes for Joe Biden on Dec. 14, though it would be hard for him to concede because "we know there was massive fraud." "Certainly I will. And you know that," he said at a press conference after taking questions from reporters for the first time since Election Day.

Covid - More trials

AstraZeneca (NASDAQ:AZN) is likely to conduct an additional global trial to assess the efficacy of its COVID-19 vaccine using a lower dosage, after the latest studies raised questions over its level of protection. The new assessment would be run instead of adding an arm to an ongoing U.S. trial and would evaluate a lower dosage that performed better than a full amount in Astra's studies, CEO Pascal Soriot told Bloomberg. Soriot does not expect the additional testing to hold up regulatory approvals in the U.K. and EU, though clearance from the FDA may take longer because the regulator is unlikely to approve the vaccine on the basis of studies conducted elsewhere. AZN -1.8% premarket.

Digital - No more extensions

France has sent out notices to Big Tech companies to pay its digital service tax as planned in December. The levy was suspended earlier this year while negotiations played out at the OECD regarding an overhaul of cross-border taxation rules, but with the group stretching negotiations in 2021, France chose not to wait. The country will apply a 3% tax on revenue from digital services earned in France by companies with local revenues of more than €25M and €750M worldwide, but will withdraw the tax as soon as an OECD deal is reached. Amazon (NASDAQ:AMZN) already received a reminder from the French authorities to pay the tax, and will comply, a source told Reuters, while Facebook (NASDAQ:FB) said it had also received a bill and would "ensure compliance with all tax laws in the jurisdictions where we operate."

On The Move - Crypto selloff

While equity markets were closed for Thanksgiving, crypto traders did not take the day off. Bitcoin (BTC-USD) plunged by 15%, or nearly $3,000, to as low as $16,328, while other cryptocurrencies tumbled by as much as 20%. The move is notable, as many in the industry had been expecting a $20K milestone for Bitcoin in the next few days after it hit highs not seen since the end of 2017. "Any healthy market needs to have pullbacks and periods of consolidation. Already in 2020 we've seen a gain of 160%," said Antoni Trenchev, a managing partner and co-founder of Nexo, which bills itself as the world's biggest crypto lender. "Long term I don't see anything derailing Bitcoin's irrevocable rise higher."

Cryptocurrency - Facebook's Libra could come in January

Many speed bumps have plagued the launch of Facebook's (NASDAQ:FB) Libra, but the digital currency may soon see the light of day. The exact launch date depends on when the project receives approval to operate as a payments service from the Swiss Financial Market Supervisory Authority, but could come as early as January, FT reports. The 27-strong Libra Association would initially launch a single coin backed one-for-one by the dollar, while other currencies and a "digital composite" of all of its coins would be rolled out at a later point. The more limited scope may appease regulators, but critics have complained that a move to single-currency coins could result in additional costs for currency conversion, undermining the project's goal of greater financial inclusion.

Trending - Layoffs swell at the House of Mouse

Walt Disney (NYSE:DIS) is letting go of 32,000 workers - primarily at its theme parks business - marking an increase from the 28,000 it announced in September. The cuts will go into effect in the first half of 2021 due to the "current climate, including COVID-19 impacts, and changing environment in which we are operating." Disney's California-based theme parks have faced prolonged closures, while limited attendance at its parks in Florida has weighed on the company. Internationally, Disneyland Paris was forced to close again late last month when France imposed a new lockdown, though the company's theme parks in Shanghai, Hong Kong and Tokyo remain open.

Outlook - Worst haul in decades

The only major Thanksgiving title arriving in movie theaters this year is DreamWorks' (NASDAQ:CMCSA) The Croods: A New Age. At best, the film could reach between $10M-$15M during its first five days, said Doug Stone, president of Box Office Analyst. Comparing that to the last decade, the five-day Thanksgiving spread - consisting of the Wednesday before Thanksgiving through Sunday - has resulted in more than $230M in ticket sales each year. The annual box office is already a fraction of what it was last year, tumbling more than 77% to $2.18B. Since August, when major theater chains reopened, through Nov. 22, the box office has only collected $279M (during the same period last year, the box office brought in $2.86B).
What else is happening...

Delta (NYSE:DAL) launches first quarantine-free, COVID-free travel to Europe.
Drones come to Wall Street via pandemic dealmaking.
Salesforce (NYSE:CRM) in advanced talks to buy Slack (NYSE:WORK) - WSJ.
Fintech crackdown has Ant Group (NYSE:BABA) explore capital injections.
ByteDance (BDNCE) gets another week to sell TikTok's U.S. business.
Today's Markets

In Asia, Japan +0.4%. Hong Kong +0.3%. China +1.1%. India -0.3%.
In Europe, at midday, London -0.8%. Paris +0.3%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.4%. Crude -0.9% to $45.31. Gold +0.4% at $1812.20. Bitcoin -2.6% to $16891.
Ten-year Treasury Yield -2 bps to 0.86%

Today's Economic Calendar

4:30 PM Money Supply
4:30 PM Fed Balance Sheet


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Wall Street Breakfast: Investors Get Thanksgiving Gift At Dow 30,000

Author: bmotrader   |  Publish date: Wed, 25 Nov 2020, 9:13 AM

The Dow Jones Industrial Average hit and closed above 30,000 on Tuesday for the first time since its inception in 1896. Vaccine sentiment reignited the recovery rally on hope that the economy will soon get back to normal, and was topped off by the GSA clearing the way for a presidential transition process and reports that Janet Yellen could head up the Treasury. Who would've thought this in April? The climb has been astounding given that it took 18 years for the index to get from 10,000 to 20,000, but less than four years to climb from that level to 30,000 (and that was with the coronavirus pandemic). Catalysts that were also supposed to put a break on the rally haven't materialized, including the end of enhanced federal jobless benefits, the lack of another stimulus bill and the Treasury ending the Fed's special pandemic facilities. That comes as overall U.S. growth continues to surprise for the better, including GDP figures, a booming housing market and auto sales, strong consumer confidence and the unemployment rate down to 6.9%. Investors say the fundamentals of the strong run are still intact, particularly for tech companies, whose growth is more appealing in a world of ultra-low interest rates. Each 10,000 points also just gets easier, so Dow 40,000 could be another record in the making.

Stocks - Market times and hours

While equity markets are open today, a slower session is likely on tap with many traders absent from their desks ahead of Thanksgiving weekend. Financial markets will be closed tomorrow, but U.S. floor trading for metals and energy futures on Comex and the New York Mercantile Exchange will still be open. Following Turkey Day, the stock market will shut early on Black Friday, though low volumes and trading activity are typically seen until the close at 1 p.m. ET. Bond markets will close an hour later, while metals and U.S. crude oil will settle at 12:30 p.m. and 1:30 p.m., respectively.

On The Move - No comment

After racing higher with green energy names on Tuesday (see our coverage here), Nikola (NASDAQ:NKLA) shares fell back nearly 8% in AH trading following CEO Mark Russell's interview on CNBC's Mad Money with Jim Cramer. Russell failed to reassure investors that the company's $2B deal with General Motors (NYSE:GM) would go through, echoing a similar position the automaker took when it held an investor conference last week (both sides can walk away if a deal isn't finalized by Dec. 3). He also declined to speculate about what ousted founder Trevor Milton plans to do with the 85.6M shares (24% stake in the company) he owns after a lock-up period ends on Dec. 1. Milton resigned after the DOJ and SEC began investigating allegations of fraud raised by short-seller Hindenburg in September. (14 comments)

Media - YouTube suspends One America News

YouTube (GOOG, GOOGL) has been criticized for taking a more hands-off approach to election or coronavirus misinformation than Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR), though the platform just suspended One America News Network for promoting a false COVID-19 cure. While OANN's channel will stay online, it will be prevented from uploading new videos for a week, and will have to reapply to YouTube's advertising partner program if it wants to monetize its videos. The channel will also receive one strike under YouTube's three-strikes policy for termination. President Trump has been urging his followers to tune into alternative news sources such as OANN and Newsmax that have questioned the outcome of the election, eschewing Fox News (NASDAQ:FOX) since the network called Arizona for Joe Biden. (33 comments)

Trending - Opioid crisis criminality

Purdue Pharma has formally admitted its role in an opioid epidemic that has contributed to hundreds of thousands of deaths over the past two decades. The OxyContin maker pleaded guilty to three federal criminal charges - conspiring to defraud U.S. officials and paying illegal kickbacks to doctors and a healthcare records vendor - all to help keep prescriptions flowing. While the plea deal carries more than $8.3B in penalties and forfeitures, most of those will go unpaid, with Purdue only on the hook for $225M. The DOJ will forego the rest if the bankrupt company completes a reorganization dissolving itself and shifting assets to a "public benefit company" that steers $1.78B to combat the opioid crisis. Members of the wealthy Sackler family who own the company have also agreed to pay $225M to settle civil claims. No criminal charges have been filed against family members, but it remains a possibility in the future.

M&A - Sale of Simon & Schuster

German media giant Bertelsmann is in "pole position" for a purchase of book publisher Simon & Schuster from ViacomCBS (NASDAQ:VIAC), FT reports, adding that deal would value the business at $2.1B. An announcement could happen this week and would mean Bertelsmann's Penguin Random House is set to edge out rival suitor HarperCollins (NASDAQ:NWS), as well as reported interest from Vivendi (OTCPK:VIVHY). News Corp. has argued that a combination of Simon & Schuster with Penguin Random House (America's dominant book publisher) would have trouble gaining antitrust approval, since it would create a "book behemoth," but that still remains to be seen. (4 comments)

Legislation - Stock options for gig workers

Some new developments are taking place in the gig space after the SEC unveiled a new proposal that would allow privately held internet-based platforms to pay as much as 15% of a gig worker's annual compensation in the form of equity (up to a limit of $75,000 over three years). "The rules we are proposing today are intended to allow platform workers to participate in the growth of the companies that their efforts support," said Chairman Jay Clayton, though critics say it is yet another instance of avoiding responsibilities like full employee benefits and paying the minimum wage. While it makes for an interesting discussion, the plan is unlikely to advance in its current form. The 60-day public comment period won't allow the SEC to complete the rule before Clayton departs around the end of the year (his successor would be appointed by the Biden administration).

What else is happening...

Black Friday cheer: Holiday sales forecast to rise 3.6% to 5.2%.
Germany plans to extend partial shutdown until Dec. 20.
U.S. aims to release 6.4M COVID-19 vaccine doses in first tranche.
California may face more blackouts on Thanksgiving.
Movie theater stocks gain after Cineworld gets $750M lifeline.
Tuesday's Key Earnings

Best Buy (NYSE:BBY) -7% warning on margins and tip buyback restart.
Dell (NYSE:DELL) +3.1% AH with record revenue from Client Solutions.
Gap (NYSE:GPS) -11.3% AH as higher shipping costs weighed on profit.
HP Inc. (NYSE:HPQ) +5.8% AH on rising PC notebook sales.
Medtronic (NYSE:MDT) +2.8% topping earnings expectations.
Nordstrom (NYSE:JWN) +7.7% AH posting an impressive bottom line.
VMware (NYSE:VMW) -1.3% AH despite raising FY21 guidance.

Today's Markets

In Asia, Japan +0.6%. Hong Kong +0.3%. China -1.2%. India -1.5%.
In Europe, at midday, London -0.5%. Paris -0.1%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.2%. S&P -0.1%. Nasdaq +0.2%. Crude +1.1% to $45.39. Gold +0.1% at $1805.80. Bitcoin +1.7% to $19278.
Ten-year Treasury Yield -1 bps to 0.87%

Today's Markets

7:00 MBA Mortgage Applications
8:30 Durable Goods
8:30 GDP Q3
8:30 International Trade in Goods (Advance)
8:30 Initial Jobless Claims
8:30 Corporate profits
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:00 New Home Sales
10:00 Consumer Sentiment
10:00 Personal Income and Outlays
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
12:00 PM EIA Natural Gas Inventory
1:00 PM Baker-Hughes Rig Count
2:00 PM FOMC Minutes


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Wall Street Breakfast: Second Act For Janet Yellen

Author: bmotrader   |  Publish date: Tue, 24 Nov 2020, 7:20 AM

A familiar face and uber-dove will likely be heading up the Treasury under Joe Biden - former Federal Reserve Chair Janet Yellen. Many see Yellen as a market-friendly pick considering that she oversaw a long economic expansion with historically low interest rates and she's likely to push for further fiscal stimulus. The pick will also put an end to Wall Street's fretting over Senator Elizabeth Warren, who had pledged to clip big banks with a tighter financial policy regime. "I think this is a strong sign that Biden will be focused on rebuilding the economy vs. pursuing aggressive regulatory policy," added Ed Mills, Washington policy analyst at Raymond James. “She will be an effective voice of more fiscal support vs. someone who was seen as a partisan." Not only is Yellen the first woman to hold the position of Fed Chair, but if she is confirmed by the Senate, she'll become the first woman to serve as Treasury Secretary.

Stocks - Futures rise on transition process

We've had the recovery trade, the vaccine trade, now they're talking about the transition trade. Nearly three weeks since Election Day, the head of the General Services Administration has signed off on the handover process, meaning Joe Biden's team will now receive national security briefings and have access to federal funds to transition the administration. That takes some risk off the table, with S&P 500 futures climbing nearly 1% overnight, along with boosted optimism about Janet Yellen's possible nomination. President Trump is still pressing ahead with a long shot legal challenge of overturning the election results, appealing a decision in Pennsylvania that rejected claims of widespread problems with mail-in ballots, while attempting to halt officials from declaring Biden the winner of the battleground state. (13 comments)

On The Move - Tesla valuation nears half a trillion

Driven by another surge in Tesla's (NASDAQ:TSLA) share price, Elon Musk's net worth soared $7.2B to $127.9B on Monday, passing Bill Gates to become the world's second-richest person. Not looking to take any cheap shots at Ford (NYSE:F), but yesterday's market cap gain for Tesla isn't all that far off from the total market cap for the Blue Oval of about $35B. There is plenty of general enthusiasm over the impact of a Biden administration for the EV sector and hopes that EV sales in China will accelerate with the support of Beijing. On the latter note, Wedbush Securities analyst Dan Ives thinks China presents eight to nine times the opportunity for EVs in the near term as sales in the U.S. TSLA +4.6% premarket. (202 comments)

Trending - Travel sector extends rally before Thanksgiving

It was only a week ago that the CDC urged Americans not to travel or spend the holiday with people outside their household, but pandemic fatigue appears to be setting in before the holidays. More than 3M people passed through U.S. airports last weekend, according to the TSA, marking the busiest weekend since mid-March, when the coronavirus began spreading across the nation. Likewise, the American Automobile Association has forecast that 45M-50M people will take to the highways over the holiday, compared with 55M in 2019. New coronavirus cases in the U.S. have surged to all-time highs, averaging more than 170,000 per day, and deaths have soared to over 1,500 a day, the highest level since the spring. Premarket: American Airlines (AAL +7.2%), United (UAL +4.2%), Southwest (LUV +3.6%), Delta (DAL +3.4%), Carnival (CCL +6.9%), Norwegian Cruise Line (NCLH +4.8%), Royal Caribbean (RCL +4.2%).

Covid - Quick deployment of Astra-Oxford vaccine

Investors are still sizing up the COVID-19 vaccine developed by the University of Oxford and AstraZeneca (NASDAQ:AZN), with shares of the latter falling 1% yesterday before recovering the ground in AH trading. The vaccine can be stored at refrigerator temperatures and is much cheaper ($3-$4 per dose) than jabs from rivals Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA), offering hope for the developing world. More bang for your buck... Interim trial results also suggested that those that use less of the vaccine (a dose and half vs. two doses) will have more protection with an efficacy of 90% (compared to 70% for the other regimen). Still, SVB Leerink analyst Geoffrey Porges called the results "embellished," saying they were from a "relatively small" group of volunteers and the shot would never be licensed in the U.S. However, the rollout of the Astra-Oxford jab could begin next month in the U.K., according to Health Secretary Matt Hancock, along with a vaccine from Pfizer, though both need to be assessed by the U.K. health regulator before they can be administered to the public.

Cryptocurrency - Is Bitcoin going to $100K in 2021?

Bitcoin (BTC-USD) has skyrocketed 160% since January, supported by strong institutional demand as well as scarcity, with payment companies like Square and PayPal buying it on behalf of customers. The currency touched $19,000 overnight, within sight of its all-time peak of just under $20,000 hit in December 2017. "I have seen bitcoin go up 10X, 20X, 30X in a year. So going up 5X is not a big deal," said Brian Estes, chief investment officer at hedge fund Off the Chain Capital. He predicts the cryptocurrency could hit between $100,000 and $288,000 by end-2021, based on a model that utilizes the stock-to-flow ratio measuring the scarcity of commodities like gold. In a note last week, Citi technical analyst Tom Fitzpatrick added that Bitcoin could climb as high as $318,000 by the end of next year, citing its limited supply, ease of movement across borders and opaque ownership. (14 comments)

M&A - Some more spice

McCormick (NYSE:MKC) is moving over the bottle of Frank's as it eyes a new hot sauce. The seasonings company has agreed to a deal with L Catterton, the private-equity firm that has owned Cholula since 2019, that would value the brand at around $800M. McCormick already acquired Frank's RedHot, best known for its buffalo wing sauce, back in 2017, as consumers look for low calorie condiments and millennials flock to spicy flavors. In fact, retail sales of hot sauces in the U.S., including Sriracha and Tabasco, are on track to near $1B this year, which would be just shy of ketchup sales, according to estimates from Euromonitor.

Tech - Come together

A reported meeting between Bibi Netanyahu and Crown Prince Mohammed bin Salman this week may lay the groundwork for business development in the Middle East amid a U.S. push to normalize ties between the longtime foes. Google (GOOG, GOOGL) is looking to open a new corridor for global internet traffic that would link India to Europe via Israel and Saudi Arabia. With a capacity of hundreds of terabits per second, the fiber-optic network would help the tech giant roll out data centers globally and catch up to rivals Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) in on-demand cloud computing. Israel has recently formalized government ties with the U.A.E., Bahrain and Sudan, and Israeli and American officials have said other such deals are underway.

What else is happening...

Holiday delivery crunch? Amazon (NASDAQ:AMZN) encourages local pickup.
Did Apple's (NASDAQ:AAPL) security chief trade iPads for concealed carry permits?
GM (NYSE:GM) air bag problem could cost more than $1B.
Merck (NYSE:MRK) splashes out on a deal for severe COVID infection therapy.
Black Friday challenge: Finding a PlayStation or Xbox in stock.
Today's Markets

In Asia, Japan +2.5%. Hong Kong +0.4%. China -0.3%. India +1%.
In Europe, at midday, London +1.1%. Paris +1.3%. Frankfurt +0.9%.
Futures at 6:20, Dow +1.1%. S&P +0.8%. Nasdaq +0.4%. Crude +1.4% to $43.64. Gold -1.5% at $1809.80. Bitcoin +2.3% to $19137.
Ten-year Treasury Yield flat at 0.86%

Today's Markets

8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg.
11:00 Fed's Bullard Speech
12:00 PM Fed's Williams Speech
12:45 PM Fed's Clarida Speech
1:00 PM Results of $24B, 2-Year FRN Auction
1:00 PM Results of $56B, 5-Year Note Auction

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Wall Street Breakfast: The Vaccine Trade

Author: bmotrader   |  Publish date: Mon, 23 Nov 2020, 8:07 AM

The tug of war between cyclicals and tech stocks will likely continue for the next few weeks as traders weigh growing vaccine optimism against rising coronavirus cases and lockdown measures. The last few Mondays have seen outsized gains given strong vaccine results from Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA), while AstraZeneca (NASDAQ:AZN) and the University of Oxford became the latest to report an interim analysis of their clinical trials overnight (see below). Cyclicals will likely start today's session with a leg up given the news as Dow futures rose 0.7% vs. the 0.4% advance of the Nasdaq. Predictions are also growing that the Fed will unveil more monetary action when it meets in December after the central bank said it will comply with a Treasury request to return unused funds meant to backstop five emergency lending programs.

Covid - Interim results from Astra-Oxford jab

One regimen, given to some 2,700 people, showed an effectiveness of 90% when trial participants received a half dose, followed by a full dose at least one month apart. The other dosing regimen, given to nearly 9,000 people, showed 62% efficacy when given as two full doses at least one month apart. The combined analysis from both dosing regimens found average vaccine effectiveness of 70%. Despite a lower average efficacy rate than its rivals, the British shot has some distribution advantages. While vaccines from Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) have to be stored frozen, the Astra-Oxford (NASDAQ:AZN) shot can be kept at refrigerator temperature and comes at a potentially lower cost.

Trending - Vaccine access and distribution

At this weekend's summit in Riyadh, G20 leaders pledged to ensure fair distribution of COVID-19 vaccines, drugs and tests around the world so that poorer countries were not left out of a post-coronavirus recovery. "We will spare no effort to ensure their affordable and equitable access for all people," read the communique. "We recognize the role of extensive immunization as a global public good." One of the questions still out there is what role America will play in the process. So far the U.S. hasn't joined COVAX, which is the WHO's flagship vaccine distribution plan.

Healthcare - Less than three weeks

"On the 11th or on the 12th of December, hopefully the first people will be immunized across the U.S., across all states, in all the areas where the state departments of health will have told us where to deliver the vaccines," Moncef Slaoui, head of the government's Operation Warp Speed, told CNN's State of the Union. Current plans forecast another milestone around May: a 70% immunization rate across the U.S., which "would allow for true herd immunity to take place." Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) have already requested emergency use authorization for their product, while Moderna (NASDAQ:MRNA) will finish its application by the end of the month. Even if (or when) approved, there is uncertainty over whether the general public will trust the jab enough to take it. According to a Pew Research Center report in September, only about half of U.S. adults say they would get a COVID-19 vaccine.

Covid - Coronavirus therapies

A COVID-19 antibody cocktail from Regeneron Pharmaceuticals (NASDAQ:REGN), including casirivimab and imdevimab, has received Emergency Use Authorization from the FDA to treat patients who are not hospitalized but are at high risk of developing the disease. The cocktail was one of three pharmaceutical treatments given to President Trump for treatment of COVID-19 in October. It's the second antibody drug cleared this month for emergency authorization to use in a similar set of COVID-19 patients after Eli Lilly's (NYSE:LLY) bamlanivimab previously had won approval. Previous drugs cleared for COVID-19 use, such as Gilead's (NASDAQ:GILD) remdesivir, were only authorized for hospitalized patients. REGN +4.9% premarket.

Stocks - Portfolio rebalancing

"We see some vulnerability in equity markets in the near term from balanced mutual funds, a $7T universe, having to sell around $160B of equities globally to revert to their target 60:40 allocation either by the end of November or by the end of December at the latest,” according to JPMorgan Chase. "If the stock market rallies into December, there could be an additional $150B of equity selling into the end of the month by pension funds that tend to rebalance on a quarterly basis," added strategists led by Nikolaos Panigirtzoglou. For the retail investor, is the 60/40 portfolio still the way to go? Recent contributors on Seeking Alpha have suggested otherwise based on pricing and real returns. See articles by Jussi Askola and KCI Research.

Bankruptcy - Pandemic hammers retail

Guitar Center, owned by private equity firm Ares Management (NYSE:ARES), has filed for Chapter 11 bankruptcy as the coronavirus pandemic moved shopping online and weighed on purchases of new music gear. The company, which has nearly 300 stores across the U.S., as well as subsidiaries including Music & Arts, has negotiated to have $375M in debtor-in-possession financing from its existing lenders and intends to raise $335M in new senior secured notes. Guitar Center will continue to stay in business during the bankruptcy process, but it could miss another major shopping period due to weaker consumer spending this holiday season.

Global - Lockdowns bite

Economic activity across the eurozone plunged in November after members of the bloc introduced new lockdowns and social restrictions to contain the spread of coronavirus. The flash eurozone PMI composite output index, which tracks both manufacturing and services sectors, came in at 45.1, marking the lowest reading in six months. Meanwhile, the ECB said it will continue its pandemic emergency purchase program as long as COVID-19 persists and continues to disrupt regular economic activity. Things aren't looking brighter. Germany is looking to extend its current lockdown into December as the number of coronavirus infections remains high across the country.

Latest China crackdown

The Trump administration is close to issuing a list of 89 Chinese aerospace and other companies that would be unable to access U.S. technology exports due to their military ties, according to Reuters. That would restrict companies like Commercial Aircraft Corp of China, which is looking to compete with Boeing (NYSE:BA) and Airbus (OTCPK:EADSY), as well as Aviation Industry Corporation of China. The list, if published, could further escalate trade tensions and comes just ten days after President Trump unveiled an executive order prohibiting U.S. investments in Chinese companies that Washington said are owned or controlled by the Chinese military.

What else is happening...

Nevada cuts capacity limit for casinos and entertainment.
Zucker expected to leave CNN (NYSE:T) in early 2021 - Vanity Fair.
Retail rotation faces reversal with COVID Black Friday.
Can the SPAC-tacular returns in the EV space ride on?
Drilling rig operator Noble Corp. (NYSE:NE) to exit Chapter 11.
Europe likely to lift Boeing (NYSE:BA) 737 MAX grounding in January.
Today's Markets

In Asia, Japan closed. Hong Kong +0.1%. China +1.1%. India +0.4%.
In Europe, at midday, London +0.3%. Paris +0.6%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.7%. S&P +0.6%. Nasdaq +0.4%. Crude +1.4% to $43.01. Gold -0.4% at $1865.70. Bitcoin +3.1% to $18693.
Ten-year Treasury Yield +2 bps to 0.85%

Today's Economic Calendar

8:30 Chicago Fed National Activity Index
9:45 PMI Composite Flash
11:30 Results of $56B, 2-Year Note Auction
1:00 PM Results of $57B, 5-Year Note Auction

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Wall Street Breakfast: Emergency Lending Pullback

Author: bmotrader   |  Publish date: Fri, 20 Nov 2020, 9:15 AM

Getting a lot of attention overnight was a decision by Treasury Secretary Steven Mnuchin to not renew some emergency Fed programs that tapped funds from the CARES Act. Those include ones that support the markets for corporate bonds and municipal debt, as well as the Main Street Lending Program to small- and medium-size businesses, which had been lightly used. "Companies don't need more loans, and instead require more grant money, which requires action from Congress," Mnuchin declared, adding that the programs "have clearly achieved their objectives." While four other programs will be kept in place for an additional 90 days, the Fed responded that it "would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy." Do they need to be extended? "This is getting a lot of debate, but I'm going to make the case that whether we extend them or not may not be that material to financial markets," St. Louis Fed President James Bullard said earlier this week. "We can always start up the liquidity programs again in the future."

Stocks - Coronavirus cases continue to surge

Not much movement was seen from futures overnight, with contracts tied to the Dow and S&P 500 dipping slightly and the Nasdaq inching up. Things have been choppy in recent days amid soaring coronavirus infections and what that will mean for the economy, while the development of an effective vaccine stokes hopes of a post-pandemic world. Many states have already rolled back reopening plans and implemented new restrictions to curb the spread of COVID-19 as the U.S. logged its highest-ever number of daily reported infections at 187,833, as well as a record amount of hospitalizations. On Thursday, California governor Gavin Newsom issued a "limited Stay at Home Order" on a majority of the state's residents, though Joe Biden said he will not pursue a "national shutdown - period."
Economy - Lack of fiscal stimulus

"Last night, McConnell's folks agreed to sit down and the staffs are going to sit down today or tomorrow to try to begin to see if we can get a real good Covid relief bill," Sen. Chuck Schumer said during a press conference on Thursday. Sound familiar? Congress has been at the table for months, but both sides want to claim a victory in the negotiations, with politics still at the center of the deadlock. Many point to the Senate runoffs in Georgia on Jan. 5 as the earliest date that we could see some action, meaning the next coronavirus aid package is at least a month away. A lack of stimulus and surging cases haven't so far derailed the recent rally, given the crosscurrent of vaccine optimism and holiday spending.

Outlook - Retail Bros. vs. Wall Street

It's one of the topics that has been widely discussed since the sharp market drop in March, only to see a record recovery that took months instead of years. While many hedge fund managers have said retail investors were responsible for driving some U.S. stocks to "nightmare" valuations, Robinhood (RBNHD) co-CEO Vlad Tenev sees his customer base as a "market-stabilizing force during the volatility." New entrants to the market actually played a key part in the quick recovery, taking on more risk and carrying a long-term outlook, he told Jim Cramer during a Mad Money interview. "People who are investing for the first time in their 20s or 30s have a very different outlook than people that are maybe a handful of years away from retirement. When you're younger you know that there are decades of compound returns and decades of riding out the ups and downs of the market." (16 comments)
Covid - Emergency use authorization

Pfizer (NYSE:PFE) intends to file an application to the FDA for emergency use of its coronavirus vaccine today, according to Health and Human Services Secretary Alex Azar, with Moderna (NASDAQ:MRNA) soon to follow. Earlier this week, Azar said there will be roughly 40M doses of vaccine available by the end of this year between the two companies, enough to inoculate about 20M people. Both vaccines have shown about 95% efficacy rates in late-stage trials and are seen by investors and policymakers as a solution to get the economy going again. Meanwhile, the WHO recommended against the use of Gilead's (NASDAQ:GILD) remdesivir to treat hospitalized COVID-19 patients, saying there was no evidence that it improves survival or the need for ventilation. (167 comments)

Trending - CDC warns against Thanksgiving travel

"Postponing travel and staying home is the best way to protect yourself and others this year," the CDC says in a new advisory. For Americans who do choose to travel, the CDC advised doing so as safely as possible, by following the same everyday recommendations like wearing a mask in public places, social distancing and washing hands frequently. "The reason that we made the update is that the fact that over the week we've seen over a million new cases in the country," said Dr. Erin Sauber-Schatz, the CDC's lead for Community Intervention and Critical Population Task Force.

Media - Buzz & Huff

BuzzFeed has agreed to acquire Verizon Media's (NYSE:VZ) HuffPost in a stock deal as tech goliaths Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) continue to suck up digital ad dollars. BuzzFeed will give Verizon Media a minority stake through the transaction and draw some cash in return, while the companies will syndicate content on each other's platforms and explore joint advertising opportunities. Many players in the sector have pursued mergers to chart a path forward amid a struggle to develop revenue from subscriptions and e-commerce. In the last year, Vice Media acquired Refinery29, Vox scooped up New York Media and Group Nine acquired PopSugar.

What else is happening...

Gaming platform Roblox files IPO prospectus.
On a tear... S&P 500 inclusion sees Tesla (NASDAQ:TSLA) shares touch $500.
General Motors (NYSE:GM) commits to EV investment, quiet on Nikola (NASDAQ:NKLA).
McAfee (NASDAQ:MCFE) breaks even in first post-IPO print.

Thursday's Key Earnings

Macy's (NYSE:M) +2.1% posting a smaller-than-expected loss.
Workday (NASDAQ:WDAY) -4% AH warning of coming COVID-19 effects.

Today's Markets

In Asia, Japan -0.4%. Hong Kong +0.4%. China +0.4%. India +0.7%.
In Europe, at midday, London +0.5%. Paris +0.5%. Frankfurt +0.5%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq +0.1%. Crude +0.7% to $42.21. Gold +0.2% at $1864.60. Bitcoin +2.9% to $18250.
Ten-year Treasury Yield flat at 0.85%

Today's Economic Calendar

9:00 Fed's Barkin Speech
9:00 Fed's Bostic Speech
9:30 Fed's Kaplan Speech
1:00 PM Baker-Hughes Rig Count

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Wall Street Breakfast: Coronavirus Concerns Resurface

Author: bmotrader   |  Publish date: Thu, 19 Nov 2020, 9:25 AM

Vaccine euphoria that helped propel stocks to record highs is wearing off as traders focus on a surge in coronavirus transmission rates in the U.S., where deaths from the illness surpassed 250,000. According to Johns Hopkins University, the number of fatalities has remained above 1,000 a day for eight of the past nine days, a tally that was last seen in late August. Sentiment was particularly dented after New York City shut schools and switched to fully remote learning for its students because of surging cases of COVID-19. U.S. stock index futures fell 0.4% overnight on the news after bouncing around the flat line for most of Wednesday, only to turn south in the final hour of trading. Chances of stimulus from Washington are also dim as lawmakers remain deadlocked over the size of a coronavirus aid package.

Covid - Encouraging results for the elderly

Some positive news was still seen overnight after a jab from the University of Oxford, which is working in collaboration with AstraZeneca (NASDAQ:AZN), was shown to have generated a robust immune response in adults in their 60s and 70s. Preliminary results revealed that the vaccine, ChAdOx1 nCoV-19, prompted what's known as a "T-cell response" within 14 days of the first dose, as well as an antibody response within 28 days of a booster dose."We hope that this means our vaccine will help to protect some of the most vulnerable people in society," said Dr. Maheshi Ramasamy, a co-author of the study at the University of Oxford. Phase three trials of the vaccine are still ongoing, with early efficacy readings possible in the coming weeks. (31 comments)

Healthcare - Deliveries before Christmas

With Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) having concluded their Phase 3 study of COVID-19 vaccine candidate, which showed a success rate of 95% and no serious adverse events, the drugmakers might be headed to securing an emergency-use approval next month. "If all goes well I could imagine that we gain approval in the second half of December and start deliveries before Christmas, but really only if all goes positively," BioNTech CEO Ugur Sahin told Reuters TV. Storage and distribution is still complicated. Pfizer's (NYSE:PFE) vaccine must be stored frozen at negative 94 degrees Fahrenheit (-70° C), most likely needing dry ice (-109 degrees Fahrenheit) for shipment.

Manufacturing - Development deal with TSMC

City officials in Phoenix have unanimously voted to authorize a slate of financial incentives and government support for Taiwan Semiconductor Manufacturing's (NYSE:TSM) planned $12B chip plant. In May, the company disclosed its intentions to build a 5-nanometer chip factory in Arizona, which would be its first advanced manufacturing facility in the U.S. American lawmakers have been pushing for high-tech manufacturing to address national security concerns over the industry supply chain, and even proposed billions of dollars in subsidies to the sector in June. Not everything has gone as planned. A heavily touted deal by Foxconn (OTC:FXCOF) in Wisconsin back in 2018 still hasn't fully materialized, and was recently denied tax credits for failing to meet investment and hiring goals.

Global - Virtual APEC summit

President Trump plans to attend a virtual APEC summit on Friday following a similar high-level meeting of Asia-Pacific leaders last week that saw the signing of the Regional Comprehensive Partnership Agreement. Trump's involvement will mark his first participation in the event since 2017. The following year, a delegation from the U.S. and China failed to agree on a joint communique for the first time in the bloc's history, given opposing stances on trade and investments. "We will not reverse course or run against the historical trend by decoupling... openness enables a country to move forward, while seclusion holds it back," China's Xi Jinping said ahead of the gathering. It's unclear whether Joe Biden would roll back tariffs on China, but analysts have said the U.S. will likely continue to take a tough stance on Beijing under the new administration.

Digital - What's a studio to do during a pandemic?

Universal (NASDAQ:CMCSA) had explored a direct-to-digital release earlier this year, but ultimately reached a deal with AMC (NYSE:AMC) that saw films hit the box office for three weekends before going online, as well as a truncated theatrical window with Cinemark (NYSE:CNK). Warner Bros. (NYSE:T) is now experimenting with its playbook, announcing that Wonder Woman 1984 would arrive on HBO MAX on Dec. 25, the same day it hits theaters. The decision to keep the coming blockbuster on the 2020 calendar will allow theater chains to make cash off ticket sales and also drive subscriber sign-ups to the streaming service. The first Wonder Woman film had a $100M opening weekend domestically and went on to notch more than $820M at the global box office. (6 comments)

Financials - GM gets back in the insurance game

As more vehicles are sold with built-in internet connections, automakers are branching into services that capitalize on the data produced by their systems. General Motors (NYSE:GM) is launching a car-insurance business through its OnStar connected-car service, which will set insurance rates by remotely tracking drivers' behavior like obeying the speed limit and avoiding sudden stops. GM will begin a pilot this week for its own employees in Arizona and plans to offer it nationwide later in 2021. For much of its history, GM offered insurance to drivers, but ended the business during its 2009 bankruptcy after unloading its GMAC financial-services arm.

New Technology - Ways to go for Prime Air

Amazon's (NASDAQ:AMZN) drone project has already been seven years in the making, completing its first delivery in 2016 and receiving U.S. regulatory approval (Part 135 certification) to begin limited testing in August. Now, the unit is laying off dozens of R&D and manufacturing staff as it reached tentative component deals with two external manufacturers - Austria's FACC Aerospace and Spain's Aernnova Aerospace, FT reports. Keep in mind that Amazon brought in former Boeing executive David Carbon to run the unit in March, replacing Gur Kimchi, who ran the operation since 2013. According to details released in mid-2019, Prime Air will make use of a hexagon-shaped, fully-electric drone that can fly up to 15 miles and carry packages weighing under five pounds. (5 comments)

What else is happening...

Boeing's (NYSE:BA) 737 MAX reinstated but will customers fly it?
Delta (NYSE:DAL) to keep middle seats empty until spring.
Starbucks (NASDAQ:SBUX) raises U.S. employee pay by at least 10%.
Apple (NASDAQ:AAPL) slashes App Store tax for smaller developers.

Wednesday's Key Earnings

L Brands (NYSE:LB) +15% AH as comparable sales popped 56%.
Lowe's (NYSE:LOW) -8.2% on slightly weak profit guidance.
Nvidia (NASDAQ:NVDA) -1.7% AH despite record gaming, data center sales.
Target (NYSE:TGT) +2.8% revealing sizzling digital sales.
TJX Companies (NYSE:TJX) +1.9% driven by HomeGoods strength.

Today's Markets

In Asia, Japan -0.4%. Hong Kong -0.7%. China +0.5%. India -1.3%.
In Europe, at midday, London -1%. Paris -0.9%. Frankfurt -1.1%.
Futures at 6:20, Dow -0.4%. S&P -0.4%. Nasdaq -0.4%. Crude -1.4% to $41.43. Gold -0.9% at $1857.30. Bitcoin -2.4% to $17742.
Ten-year Treasury Yield -3 bps to 0.85%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Fed's Mester: "Stress, Contagion, and Transmission"
10:00 Leading Indicators
10:00 Existing Home Sales
10:00 E-Commerce Retail Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
12:35 PM Fed's Bowman: "Stress, Contagion, and Transmission"
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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