Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Wed, 20 Jan 2021, 8:50 AM

 

Wall Street Breakfast: iCar?

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Apple's (NASDAQ:AAPL) Project Titan is not only alive, but plans to produce an electric passenger vehicle with "breakthrough battery technology" and self-driving capabilities by 2024, according to a fresh report from Reuters. The news sent AAPL shares nearly 3% higher in premarket trade after closing up yesterday on the news.

Backdrop: Project Titan has been moving in fits and starts since 2014. It first began to design its own vehicle from scratch, but reverted back to a software push at one point and reassessed its goals. It remains unclear who would assemble a possible iCar, but sources have said they expect Apple to rely on a manufacturing partner.

Other movement: Shares of Tesla (NASDAQ:TSLA) initially spun lower on the report (amid the EV maker's first day as part of S&P 500), but erased the losses as Loup Ventures' Gene Munster weighed in on the impact. "We believe in 5 years Tesla will hold around one third global EV market share, leaving two-thirds of the market up for grabs. The bigger impact of an Apple Car will be on traditional automakers." Lidar sensor makers like Luminar (NASDAQ:LAZR) and Velodyne (NASDAQ:VLDR) also revved their engines on the news, with Apple deciding to tap outside partners for elements of its self-driving car system. (428 comments)

Covid - Will vaccines work against the U.K. coronavirus variant?

"We don't know at the moment if our vaccine is also able to provide protection against this new variant," but because the proteins on the variant are 99% the same as the prevailing strains, BioNTech (NASDAQ:BNTX) has "scientific confidence” in the vaccine. "The likelihood that our vaccine works... is relatively high," CEO Ugur Sahin declared, saying the company is currently conducting further studies and hopes to have certainty within the coming weeks.

More views: Dr. Moncef Slaoui, head of Operation Warp Speed, also expects the BioNTech/Pfizer (NYSE:PFE) shot and jab from Moderna's (NASDAQ:MRNA) to be effective against a new mutation of the virus, dubbed B117. The chances one set of mutations would completely alter the structures found around the spike proteins "are extremely low," he declared.

"It stands to reason that this mutation isn't a threat, but you never know. We still have to be diligent and continue to look," added Dr. Nelson Michael, director of the Center for Infectious Diseases Research at the Walter Reed Army Institute of Research. U.S. army scientists have already started doing a computer analysis on genetic sequences of the new U.K. variant, and if there's additional concern, studies would need to be done in the laboratory and on animals.

World Health Organization officials meanwhile said the coronavirus is mutating "at a much slower rate" than seasonal influenza and "so far, even though we've seen a number of changes and a number of mutations, none has made a significant impact on either the susceptibility of the virus to any of the currently used therapeutics, drugs, or the vaccines under development, and one hopes that that will continue to be the case."

While many nations have banned travel with countries where the strain has been identified, former FDA chief Dr. Scott Gottlieb doesn't think that's necessary in the U.S., as the strain is "already" present in the population. "We're going to have an epidemic that continues to build over the course of the next three or four weeks, we'll reach a peak, and then we'll start to see infection rates decline as we see vaccinations get rolled out." (19 comments)

On The Move - Crypto crackdown

Regulators appear to be getting serious about crypto as the space turns into one of the investing themes of 2020. A day after the Treasury proposed new rules on crypto movement, the SEC is expected to bring a lawsuit against Ripple Inc. by alleging it violated investor protection laws by selling unregistered securities when it sold (XRP-USD) to investors.

Selloff: Ripple led cryptocurrency losses overnight on the news, down over 17% to $0.4630. Others: Bitcoin (BTC-USD) -5.2%; Ethereum (ETH-USD) -7.2%; Bitcoin Cash (BCH-USD) -14.2%; Litecoin (LTC-USD) -11.4%.

"XRP is a currency, and does not have to be registered as an investment contract," Ripple CEO Brad Garlinghouse said in a statement. "In fact, the Justice Department and the Treasury's FinCEN already determined that XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified XRP as a security."

"Chairman Jay Clayton - in his final act - is picking winners and trying to limit US innovation in the crypto industry to BTC and ETH," he added over Twitter. He is "taking notes from the Grinch this holiday season, leaving the actual legal work to the next Administration." Clayton steps down as SEC chair at the end of the year, ahead of the expiration of his term in June.

Tech - Teaming up against antitrust action

Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) agreed to "cooperate and assist one another" if they ever faced an antitrust investigation into their pact to work together in online advertising. That's according to an unredacted version of a draft lawsuit - seen by the WSJ - that was filed last week by ten Republican attorneys general, led by Texas (the suit, as filed, cites internal company documents that were heavily redacted).

The case: The AGs allege that the two tech giants cut a deal in September 2018 in which Facebook agreed not to compete with Google's online advertising tools in return for special treatment when it used them. The final version of the lawsuit didn't make public details about the value of the agreement, but the draft states that starting in the deal's fourth year, Facebook was locked into spending a minimum of $500M annually in Google-run ad auctions. Facebook COO Sheryl Sandberg also signed the deal with Google and told CEO Mark Zuckerberg and other executives: "This is a big deal strategically."

Response: The states' "claims are inaccurate. We don't manipulate the auction," a Google spokesperson declared, saying that the deal wasn't secret and that Facebook participates in other ad auctions. "There's nothing exclusive about [Facebook's] involvement and they don't receive data that is not similarly made available to other buyers." Facebook has also disputed the allegations, saying its ad bidding arrangements promote choice and create clear benefits for advertisers, publishers and small businesses.

Road to the courthouse: In addition to the suit filed in Texas, Google was hit last week in a separate antitrust lawsuit joined by 38 attorneys general, which alleged that it maintained monopoly power over the internet search market, as well as a DOJ suit filed in October.

Consumer - How will retail fare into 2021?

More than 11,000 retail location closures have been announced in 2020, according to a report from real estate firm CoStar Group, as the pandemic helped usher in an acceleration of online shopping. "This movie is not finished. I suspect we're going to see more closings throughout 2021," said former Macy's CEO and Chairman Terry Lundgren. "We're not done yet. ... We’re going to learn even more when we get through the holiday season."

How far back will the effects reverberate into the chain? S&P Global Market Intelligence has picked seven mall owners that face exceptional risks in the coming months like Simon Property Group (NYSE:SPG), Taubman Centers (NYSE:TCO) and Macerich (NYSE:MAC). See more here.

"Retailers which have a weak balance sheet today aren't going to get relief in January. It's going to get tougher," according to Lundgren. "When the volume of purchases drops dramatically after Christmas, the expenses remain."

Outlook: Many brands have already filed for bankruptcy during the pandemic including Ascena Retail (NASDAQ:ASNA), Brooks Brothers, Century 21, GNC (NYSE:GNC), Guitar Center, J.C. Penney (OTCPK:JCPNQ), J. Crew, Lord & Taylor, Neiman Marcus and Tailored Brands (NYSE:TLRD). Others have been doing exceptionally well like Nike (NYSE:NKE) and Lululemon (NASDAQ:LULU), as workers ditched the office clothes for work-from-home casual wear.

"Businesses with brick-and-mortar locations that outlast the pandemic will benefit," Lundgren continued. "They're actually going to have an opportunity to grow again," he said, predicting it is "probably not too much more than six months from now."

What else is happening...

Peloton (NASDAQ:PTON) to buy Precor in company's biggest deal yet.
Streaming shift... Disney's (NYSE:DIS) legendary studio head steps aside.
Sinovac's (NASDAQ:SVA) COVID-19 vaccine shown effective in Brazil trials.
Sportsman's Warehouse (NASDAQ:SPWH) soars on acquisition by Great American Outdoors.
    
Today's Markets

In Asia, Japan -1%. Hong Kong -0.7%. China -1.9%. India +1%.
In Europe, at midday, London +0.3%. Paris +0.9%. Frankfurt +1%.
Futures at 6:20, Dow -0.1%. S&P +0.1%. Nasdaq +0.4%. Crude -1.1% to $47.46. Gold -0.2% at $1878.60. Bitcoin -5.2% to $22467.
Ten-year Treasury Yield flat at 0.93%

Today's Economic Calendar

8:30 GDP Q3
8:30 Corporate profits
8:55 Redbook Chain Store Sales
10:00 Consumer Confidence
10:00 Existing Home Sales
10:00 Richmond Fed Mfg.

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