Wall Street Breakfast

Author: bmotrader   |   Latest post: Mon, 25 Jan 2021, 9:24 AM


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

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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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