Highlights

Wall Street Breakfast

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

 

Wall Street Breakfast: The Great Delisting

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Congress has set the stage for exiling Chinese stocks from the U.S. after approving a bill that would kick foreign companies off U.S. exchanges if they have failed to comply with the U.S. Public Accounting Oversight Board's audits for three years in a row. The legislation easily cleared the Senate in May, but has now won bipartisan support in the House and President Trump is expected to sign the bill. Chinese firms have raised money from U.S. shareholders for years, but their auditors violate a fundamental investor protection: China typically will not allow American regulators to inspect their work. Several U.S.-listed Chinese firms, including Alibaba (NYSE:BABA), NetEase (NASDAQ:NTES) and Yum China (NYSE:YUMC), have also recently carried out secondary listings in Hong Kong, which would become more frequent if the law takes effect. (87 comments)

Stocks - Stimulus headwinds

After an initial tumble on Wednesday, stock indexes mostly closed up later in the day, but couldn't quite build support for a meaningful rally. Futures are largely unchanged this morning as investors monitor the latest developments from Washington on a possible stimulus bill. What's going on? Prior to the election, Democrats and Republicans had been sparring over the price tag of a coronavirus aid package and couldn't narrow differences between a spread of $1.8T and $2.2T. Now, a bipartisan group of lawmakers from the House and Senate have offered a $908B compromise package, but it so far hasn't been embraced by leaders in either party (only as a "starting point" or has been outright rejected). While initial jobless claims today will give investors a final reading on the labor market before tomorrow's closely-watched jobs report, the data has so far failed to move the needle on stimulus.
 
Covid - Third of population within three months

The U.S. should be able to distribute enough coronavirus vaccines from Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) to immunize 100M people by the end of February, which would protect the elderly, healthcare workers and people with pre-existing conditions. There could even be more doses than expected if Johnson & Johnson's (NYSE:JNJ) potential vaccine is authorized before then, according to Dr. Moncef Slaoui, who is leading the Trump administration's vaccine program Operation Warp Speed. CVS (NYSE:CVS) and Walgreens (NASDAQ:WBA) are gearing up to deliver most of the vaccine doses for the nation's approximately 15,600 nursing homes and 29,000 assisted-living communities, but the effort will need to navigate rollout details that may vary by state. Grim milestone... More than 100,000 people are currently sick with coronavirus in hospitals across the U.S., pushing healthcare workers to their limits. (34 comments)

Trending - Delivery stretched to its limits

Amid a pandemic-fueled shopping season, UPS (NYSE:UPS) is reportedly adding shipping restrictions on some large retailers such as Gap (NYSE:GPS) and Nike (NYSE:NKE), and notified drivers across the U.S. to stop picking up packages from L.L. Bean, Hot Topic, New Egg and Macy's (NYSE:M). The National Retail Federation estimated that internet shopping jumped 44% over a recent five-day stretch that included Black Friday and Cyber Monday as orders moved online. UPS and FedEx (NYSE:FDX) have also raised prices in response to the activity and warned merchants that they would hold them to volume agreements. (45 comments)

Consumer - Singapore first to approve lab-grown meat

We've already seen the disruption from plant-based meat suppliers like Beyond Meat (NASDAQ:BYND) and Impossible Foods (IMPF), but another nascent technology that aims to revolutionize meat production has taken a step forward. California food startup Eat Just just won Singapore government approval to sell chicken grown from poultry cells, which are produced in bioreactors without the slaughter of an animal. The company already produces a range of non-animal products, including Just Egg, made with mung beans, and a vegan mayonnaise, but the approval of cultured meat is being hailed as a landmark moment in the industry. The technology has drawn investments from major meatpackers like Cargill and Tyson Foods (NYSE:TSN), and Eat Just is in discussions with American regulators on a potential commercial launch in the U.S. (6 comments)

Energy - Gradual production increase?

OPEC+ delegates may have found a way forward. Earlier talks this week had centered on delaying a January production hike by three months, but that option ran into obstacles due to a clash between Saudi Arabia and the UAE. Now, the group appears to be leaning towards an oil cuts rollover, with a modest boost to their collective oil output - by as much as 500,000 barrels a day - starting next month. A compromise would go a long way among some of the world's biggest producers as they meet later today to formalize a deal.

Aviation - Boeing 737 MAX

Positive milestones are piling up for Boeing (NYSE:BA) again after American Airlines (NASDAQ:AAL) became the first U.S. carrier to fly the 737 MAX after a 20-month grounding. The media flight was a 45-minute hop from Dallas-Fort Worth airport to American's maintenance base in Tulsa, Oklahoma, while Brazil's Gol Linhas Aereas (NYSE:GOL) will become the first to resume 737 MAX commercial service next week. Boeing is also on the cusp of delivering its first MAX - likely to United Airlines (NASDAQ:UAL) - since U.S. regulators reissued an airworthiness certificate. SA contributor Leo Nelissen believes Boeing offers a great investment opportunity as over the past 10 years the stock managed to outperform the S&P 500 despite the post-2018 trouble.

What else is happening...

One of largest SPAC deals: Dyal and Owl Rock (NYSE:ORCC) plan merger.
Up to 40 states plan to sue Facebook (NASDAQ:FB) for antitrust - CNBC.
Southern California braces for area's biggest power cuts this year.
Costco (NASDAQ:COST) November sales tally misses the consensus mark.
Amazon (NASDAQ:AMZN) in exclusive talks for podcasting's Wondery - WSJ.
    
Wednesday's Key Earnings

CrowdStrike (OTC:CRWD) +12% AH on Q3 beats, upside forecast.
Snowflake (NYSE:SNOW) -3.7% AH missing EPS in first report as a public company.

Today's Markets

In Asia, Japan flat. Hong Kong +0.7%. China -0.2%. India flat.
In Europe, at midday, London +0.1%. Paris -0.3%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.1%. S&P flat. Nasdaq +0.2%. Crude -0.8% to $44.90. Gold +0.8% at $1844.30. Bitcoin +1.2% to $19412.
Ten-year Treasury Yield -1 bps to 0.93%

Today's Economic Calendar

7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:45 PMI Composite Final
10:00 ISM Service Index
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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