Wall Street Breakfast

Author: bmotrader   |   Latest post: Tue, 19 Jan 2021, 8:43 AM


Wall Street Breakfast: Locked And Loaded

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"The Fed hasn't run out of ammunition by a long shot," Jay Powell said in an interview last night on CBS's 60 Minutes. "There's really no limit to what we can do in lending programs." S&P 500 futures climbed 1.5% on the news, while oil soared 5% to top $30 per barrel for the first time in a couple of months. "Assuming there is not a second wave of the coronavirus, I think you will see the economy recover steadily through the second half of this year," the Fed Chair added, cautioning that unemployment and GDP may contract further before beginning to stabilize.

Start your engines

The U.S. auto industry, which accounts for about 6% of economic activity, is set to come back online today after being idle for nearly two months. Some carmakers, like General Motors (NYSE:GM), are restarting slowly, only bringing back workers on one shift in factories, while others, like Tesla (NASDAQ:TSLA), are shooting for full production. The reopening will be a closely watched test of whether employees can return to factories in large numbers without a resurgence of infections.

Apple's reopening plan

25 Apple (NASDAQ:AAPL) stores in the U.S. will reopen this week, taking its open store tally to nearly 100 outlets worldwide. Customers will be required to submit to a temperature check and wear a mask before entering, and will be screened for other symptoms caused by COVID-19, like a cough. According to the guidelines, occupancy will also be limited as staff focuses on "one-on-one, personalized service."

'Super' cold war in the making?

Taiwan Semiconductor (NYSE:TSM), the world's biggest contract chipmaker, has halted new orders from Huawei Technologies after the U.S. Commerce Department unveiled new restrictions on Friday. Huawei is TSMC's second-largest client only after Apple (AAPL), accounting for 15-20% of its annual revenue, and was seen as a vital lifeline after Washington placed the Chinese firm on a trade blacklist last May. "The proposed legislation likely aims to stop Huawei's tech progress and quash China's 5G ambitions," Jefferies analysts said in a research note. "We expect China to retaliate if this materializes. The risk of a 'super' cold war is mounting."

Jack Ma is leaving SoftBank's board

Continuing to pull back from business roles as he focuses on philanthropy, Jack Ma is resigning from SoftBank's (OTCPK:SFTBY) board after retiring as Alibaba's (NYSE:BABA) executive chairman in September. SoftBank will propose three new board appointments in his place, meeting a demand from activist investor Elliott Management, which has pressured the tech investment company to improve board diversity and wants a new subcommittee to oversee the $100B Vision Fund. Portfolio underwater? SoftBank reported an $18B annual loss for the fund after booking mega losses on WeWork (WE) and Uber (NYSE:UBER).

Every day matters

J.C. Penney (NYSE:JCP) has filed for Chapter 11, ending weeks of speculation on the ways forward for the struggling retailer. The bankruptcy plan includes a proposal to spin some of its property into a real estate investment trust, along with a new operating company, with the intention of listing both on a national securities exchange. J.C. Penney also received court approval for its "first day" motions, including tapping cash on hand, paving the way to continued operations and pay for associates and vendors.

Grubhub rebuffs latest offer from Uber

While merger discussions between Uber (UBER) and Grubhub (NYSE:GRUB) continued over the weekend, price remained a sticking point, WSJ reports. Uber's latest offer of 1.9 of its shares for each Grubhub share was deemed too low by CEO Matt Maloney, and while Uber suggested it could go up to 1.925, it was still well below the price Grubhub is seeking. Regulators would also need to sign off on the deal and a number of politicians have already signaled opposition to the combination.

Vaccine optimism

The COVID-19 vaccine spotlight is shining on the U.K. today after AstraZeneca (NYSE:AZN) said it aims to make as many as 30M doses available in Britain by September. It also committed to delivering 100M doses in 2020, if the inoculation, which is already being studied in humans and could reach late-stage trials by the middle of the year, is successful. Priority access? The U.K. will be the first country to get the vaccine should everything go smoothly.

No poker when Wynn Resorts reopens

Going without poker for a while won't bring a significant dent to Wynn's (NASDAQ:WYNN) top and bottom lines - the game is one of the least profitable for casinos - but it may hurt when trying to get people back in the door. It also won't be as easy to play craps. At the company's Encore Boston Harbor resort, the game will only be allowed in the high-limit area, where crowds are typically smaller. In addition to select temperature checks, casino operators plan to open with every other slot machine closed and will impose limits on how many people can play at a table.

U.S. expected to revise terms of PPP loans

Changes are likely to include giving businesses more flexibility to spend the money (under the original terms, 75% of the funds were required to be spent on employee salaries for the loans to be forgiven). The government is also expected to extend the time to spend the loan money beyond the two months it originally set. "When we conceived the program, we thought businesses would be able to get up and running after eight weeks, but we know now that's not the case," said Senator Ben Cardin of the small business panel.

Today's Markets

In Asia, Japan +0.5%. Hong Kong +0.6%. China +0.2%. India -3%.
In Europe, at midday, London +2.1%. Paris +2.2%. Frankfurt +2.2%.
Futures at 6:20, Dow +1.5%. S&P +1.5%. Nasdaq +1.3%. Crude +5.1% to $31.02. Gold +0.9% to $1771.90. Bitcoin +1.1% to $9593.
Ten-year Treasury Yield flat at 0.64%

Today's Economic Calendar
10:00 NAHB Housing Market Index

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