Highlights

Wall Street Breakfast

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

 

Wall Street Breakfast: Santa Brings Stimulus Checks

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While it wasn't in time for Christmas, a $900B COVID-19 relief bill has finally been signed by President Trump that will avert a government shutdown and extend economic relief to millions of Americans. The decision caps days of uncertainty and confusion in Washington, and markets are celebrating once again, with S&P 500 futures (NYSEARCA:SPY) ahead by 0.7%. Trump previously called the bill a "disgrace" and demanded lawmakers raise the second round of stimulus payments to $2,000 per person (from $600). Larger checks may still be in the making... While the House is planning to vote on such a measure today, Senate Majority Leader Mitch McConnell made no mention of plans to consider the legislation, though he's likely to address the matter when the Senate returns on Tuesday.

Media - Best pandemic box office debut

Wonder Woman 1984 pulled in $16.7M in the U.S. and Canada over the Christmas holiday weekend, prompting distributor Warner Bros (NYSE:T) to "accelerate development" for a third film in the superhero franchise. Nearly half of HBO Max's retail subscriber base (which purchased the streaming service directly) also viewed WW84 on Christmas Day. The simultaneous release was meant to accommodate for a limited number of open movie theaters and a general public that continues to be fearful of returning to cinemas, but the move has come under criticism throughout Hollywood. Warner Bros. intends to release all of its 2021 titles to HBO Max, along with a theatrical run, in a bid to boost subscribers. At the beginning of December, the service had 12.6M "activated users," up from 8.6M on September 30. T +1.1% premarket. (15 comments)

Trending - Nashville bombing

63-year-old Anthony Quinn Warner has been identified as the bomber in the Christmas morning Nashville blast after FBI forensic experts matched DNA samples recovered from the scene. The explosion caused a widespread service interruption in Tennessee and other U.S. states due to extensive damage at a nearby AT&T (NYSE:T) data center. "As of now, 96% of our wireless network is restored, 60% of our business services are restored, and 86% of our consumer broadband and entertainment services are restored," AT&T Communications CEO Jeff McElfresh said late Sunday. Local officials feel there has to be some connection between the bombing and the AT&T facility, according to Nashville Mayor John Cooper, and FBI agents are investigating whether Warner, who provided computer consulting services, had paranoia that 5G technology was being used to spy on Americans.

Covid - Another vaccine on the market

The jab from Oxford/AstraZeneca (NASDAQ:AZN) is likely to be rolled out across Britain from Jan. 4, the Sunday Telegraph reports, adding that "mass vaccination centers at sports stadiums and conference venues" could launch as soon as the second week of January. The Medicines and Healthcare Products Regulatory Agency is expected to give the green light for the vaccine within days, and it could be a game changer, given that it's easier to transport and store than the shot from Pfizer (NYSE:PFE)-BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA). As the new COVID-19 variant continues to spread across the U.K., AstraZeneca CEO Pascal Soriot told the Sunday Times that new data will show the vaccine is comparable to the 95% effectiveness rate reported by the rival developers. "We think we have figured out the winning formula and how to get efficacy that, after two doses, is up there with everybody else."

Trade - Some loose ends untied

Don't expect the negotiations to stop now that a Brexit deal is signed, which gives Britain and the EU tariff- and quota-free access to each other's goods. The thin trade agreement may help solve issues in the worst-affected sectors, such as farming and car manufacturing, but there are other big obstacles that can interrupt the flow of trade. Negotiations on service industries - the bulk of U.K. exports to the EU - and financial services, in particular, have been moving slowly, while border bureaucracy, new paperwork and regulatory cooperation can still cause disruption. "The deal is done, but with big change comes challenge and opportunity," Cabinet Secretary Michael Gove said in a statement, adding that U.K. businesses need to adjust to the departure from the EU's single market.

On The Move - Regulatory heat

Shares of Alibaba (NYSE:BABA) continue to fall, down 3% in premarket trade, following an over 13% plunge on Christmas Eve. Broad crackdown... Chinese regulators have ordered affiliate Ant Group to shift its focus back to its main payments business after launching a probe into Alibaba for suspected monopolistic behavior. The tech behemoth even increased its stock repurchase program late Sunday to $10B (from $6B), but the news isn't helping the stock. The regulatory onslaught began last month after China stopped Ant Group from going public, in what would have been the world's largest IPO, amid reports that founder Jack Ma criticized the Chinese government for tightening financial regulation. (23 comments)

Cryptocurrency - Bitcoin breakout

Bitcoin (BTC-USD) broke through $24K in a big way on Christmas day, and then took out $25K, $26K, $27K and $28K over the ensuing 36 hours, before pulling back (it's now hovering at $26.7K). Some are suggesting the Holiday Effect as among the reasons for the big move, as dinner table stories of monies made investing in crypto stir interest among family members. The space has been one of the big winners of 2020. A retail-investor led rally in cryptocurrencies pushed total assets invested in crypto funds to a record $15B this year, up from $2.57B at the end of 2019, according to digital asset manager CoinShares. Names to watch: Grayscale Bitcoin Trust (OTC:GBTC), Riot Blockchain (NASDAQ:RIOT), Marathon Patent (NASDAQ:MARA) and Bitwise 10 Crypto Index Fund (OTC:BITW). (195 comments)

Stocks - Margin debt hits new record

Investors borrowed a record $722.1B against their investment portfolios through November, according to the FINRA, exceeding the previous high of $668.9B from May 2018. The milestone is worrying for the stock market because margin debt highs tend to precede periods of volatility as experienced in 2000 and 2008, though many see more fresh highs on the horizon, given easy money policies and the appetite of retail traders. Many have been using their margin balances to trade options contracts that give them the right to either buy or sell shares at a predetermined price later. Options activity has surged along the rise of commission-free trading, with an average of 29M contracts traded this year, up 48% vs. 2019. (106 comments)

Outlook - World's top economy

Due to the contrasting recoveries from the COVID-19 pandemic, China will overtake the U.S. to become the world's biggest economy in 2028, five years earlier than previously estimated. Given its strict early lockdown and "skillful management of the pandemic," China looks set for average economic growth of 5.7% a year from 2021-25, before slowing to 4.5% a year from 2026-30, according to the Center for Economics and Business Research. The U.S. will also see a strong post-pandemic rebound in 2021, but its growth is likely to slow to 1.9% a year between 2022 and 2024, and then to 1.6% after that. Further cementing Asia's growing might, Japan will remain the world's third-biggest economy, in dollar terms, until the early 2030s when it would be overtaken by India, pushing Germany down from fourth place to fifth. (247 comments)

What else is happening...

U.S. is bracing for a post-Christmas COVID-19 surge.
Apple Car (NASDAQ:AAPL) developments could kickstart big partnerships in 2021.
Tesla's (NASDAQ:TSLA) choppy action unlikely to calm like other S&P entrants.
Pandemic tailwinds may continue for PC industry after vaccines.
    
Today's Markets

In Asia, Japan +0.7%. Hong Kong -0.3%. China flat. India +0.8%.
In Europe, at midday, London closed. Paris +1.1. Frankfurt +1.6%.
Futures at 6:20, Dow +0.6%. S&P +0.7%. Nasdaq +0.7%. Crude +0.7% to $48.58. Gold flat at $1882.80. Bitcoin -4.1% to $26688.
Ten-year Treasury Yield +2 bps to 0.95%

Today's Economic Calendar

10:30 Dallas Fed Manufacturing Survey
11:30 Results of $58B, 2-Year Note Auction
1:00 PM Results of $59B, 5-Year Note Auction

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