Wall Street Breakfast

Author: bmotrader   |   Latest post: Thu, 15 Apr 2021, 10:13 AM


Wall Street Breakfast: Eyes On Infrastructure

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Stock index futures are mixed in early morning trading with politics in focus. Nasdaq 100 futures (NDX:IND) are up 0.1%, while Dow futures (INDU) are off 0.2% and S&P futures (SPX) are flat.  Treasury yields are also little changed, with the 10-year up 1 basis point to 1.73%.
President Joe Biden will travel to Pittsburgh today to unveil plans for an overhaul of infrastructure and manufacturing. Details are reportedly still being ironed out, but the plan would be another injection of stimulus into the economy. The cost is a major concern for GOP lawmakers, though, as are plans to partially pay for the plan with tax increases.

ADP will report its measure of private sector employment before the bell, with economists predicting a rise of 550K in March payrolls.

Shortly after the open, numbers on February pending home sales arrive, with a drop of 2.6% forecast.

Cannabis stocks could be active today after the New York State Senate and Assembly Tuesday evening approved a bill that would legalize marijuana for recreational use.

Tech - BofA seeks chip industry winners from massive infrastructure spending

With President Biden set to queue up a massive infrastructure plan (ranging to $2 trillion in cost over eight years), BofA zooms in on the semiconductor segment to highlight companies it says could be important beneficiaries as "key building blocks of the digital economy."

BofA calls out four areas ripe for change in a digital infrastructure push: Semicap equipment; 5G infrastructure/broadband; Smart industrial/automation; and Clean energy/electric vehicles. Semicap equipment vendors are ideally positioned to benefit from "silicon nationalism," the BofA team writes, referring to the push to enhance domestic remanufacturing to become more self-sufficient in chips.

U.S. semiconductor manufacturing capacity as a percentage of the total world has fallen from 37% to about 12%, it notes, but the fiscal 2021 defense reauthorization features the CHIPS for America Act as an incentive for domestic manufacturing, with billions in matches to state and local incentives for foundries, along with money for new R&D streams and equipment purchases.

The recent increase in capital expenditures from Intel (NASDAQ:INTC) - and its longer-term plans to rejuvenate the foundry model - is also a positive for semicap vendors, BofA says. Its top pick in the sector is Applied Materials (NASDAQ:AMAT), though other beneficiaries include KLA (NASDAQ:KLAC), Lam Research (NASDAQ:LRCX) and Teradyne (NASDAQ:TER).

Turning to 5G, the Biden administration could use funds to incentivize deployment in the U.S. in order to catch up to China, BofA says. The U.S. has been behind, but the record C-band spectrum auction combined with government support should offer a shot in the arm.

Key beneficiaries in that area include Marvell Technology Group (MRVL) as the leading supplier to Samsung, Nokia and Ericsson; Analog Devices (ADI) a leader in 5G radio; Qorvo (QRVO) a leader in RF radio; and RF power amp suppliers NXP Semiconductors (NASDAQ:NXPI) and Cree (NASDAQ:CREE). Also likely to benefit from increased broadband rollouts are Broadcom (NASDAQ:AVGO), Skyworks Solutions (NASDAQ:SWKS) and MACOM Technology Solutions Holdings (NASDAQ:MTSI), it says.

Amazon-backed Deliveroo tumbles in market debut

Food delivery service Deliveroo's initial public offering continues to see trouble as shares sank on their first day of trading on the London Stock Exchange.

The company priced shares this morning at £3.90 ($5.36), the bottom of its expected range. That gave Deliveroo a market value of £7.59B ($10.44B). Shares slumped as much as 30% in early trading.  Retail investors will not be able to buy shares until April 7.
Last year, Amazon increased its stake in a move that prompted an antitrust investigation. Regulators ultimately determined that Deliveroo, before the pandemic-driven delivery boom, couldn't meet its financial commitments without the infusion. Amazon (NASDAQ:AMZN) is selling 23.3M shares.
The IPO has been plagued by concerns about driver working conditions at the company and also whether Deliveroo will have to classify them as workers owed a minimum wage, as recently occurred with Uber, leading to higher costs for the company,

The company is trading under the symbol "ROO" and narrowed its IPO price range. It cited volatile market conditions, but also said the price point would offer better value for long-term investors.

Covid - Germany to ban AstraZeneca vaccine for those under 60

In a fresh blow to AstraZeneca's (NASDAQ:AZN) COVID-19 vaccine, Germany says it will halt its use for people under 60 starting Wednesday. The move, endorsed by regional health ministers and announced by Chancellor Angela Merkel, comes after new cases of blood clots associated with the vaccine.  The clots mainly occur in those under 60.
“These are findings that we cannot ignore,” Merkel said late Tuesday, according to Bloomberg. “We all know that vaccination is the most important tool against the coronavirus - that we have different vaccines at our disposal is our good fortune.”

The Paul Ehrlich Institute reported that as of March 29, a total of 31 cases of blood clots have been reported out of 2.7M AstraZeneca vaccine doses administered in Germany. The vaccine was already suspended in regions of Germany yesterday.

On the other hand, the U.K. declared the vaccine safe, with Cabinet Minister Robert Jenrick saying the government is "100% confident" in its efficacy.

Shares of AstraZeneca are down 0.3% in premarket trading.

Cannabis - New York State Legislature approves recreational marijuana bill

The New York State Senate and Assembly Tuesday evening approved a bill that would legalize marijuana for recreational use. The Senate vote was 40-23 and the Assembly vote was 100-49.

Gov. Andrew Cuomo (Dem.) has said he will sign the legislation, the Marijuana and Taxation Act, which would take effect immediately. However, marijuana sales in stores would take 18 months to two years to start, according to State Assembly Majority Leader Crystal Peoples-Stokes.

Cuomo's office has said that once fully implemented, marijuana legalization is expected to rake in $350M annually in tax revenue. (57 comments)

Financials - Cathie Wood’s new ETF ARKX saw $295 million in value traded in debut

Cathie Wood’s latest actively managed ETF has completed its trading debut. On its first day, the exchange-traded fund ARK Space Exploration & Innovation ETF (NYSEARCA:ARKX) closed -1.07% and saw $295 million in value traded.

Just under 14.5 million shares exchanged hands on the ARKX launch. To put that into perspective, the total volume of shares traded was higher than ARK's flagship fund, ARK Innovation ETF (NYSEARCA:ARKK) +2.92%, which exchanged 14 million shares and that was above its daily average of 12 million.

ARKX, with its 41 holdings, will invest in domestic and foreign equity securities of companies engaged in the fund’s investment theme of space exploration and innovation.

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